Costamare Inc. Annual Report 2014

FY2014 Annual Report · Costamare Inc.

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48576

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
(Mark One)
(cid:2) REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE

ACT OF 1934

(cid:3) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2014

(cid:2) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

OF 1934

(cid:2) SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

COSTAMARE INC.

(Exact name of Registrant as specified in its charter)
NOT APPLICABLE
(Translation of Registrant’s name into English)

Republic of The Marshall Islands
(Jurisdiction of incorporation or organization)
60 Zephyrou Street &
Syngrou Avenue
17564 Athens Greece
(Address of principal executive offices)
Anastassios Gabrielides, Secretary
60 Zephyrou Street &
Syngrou Avenue
17564 Athens Greece
Telephone: +30-210-949-0050 Facsimile: +30-210-949-6454
(Name, Address, Telephone Number and Facsimile Number of Company contact person)

SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of Each Class

Name of Each Exchange on Which Registered

Common Stock, $0.0001 par value per share
Preferred stock purchase rights
Series B Preferred Shares, $0.0001 par value per share
Series C Preferred Shares, $0.0001 par value per share

New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
SECURITIES FOR WHICH THERE IS A REPORTING OBLIGATION PURSUANT TO SECTION 15(d)
OF THE ACT: None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of

the period covered by the annual report.

74,800,000 shares of Common Stock
2,000,000 Series B Preferred Shares, $0.0001 par value per share
4,000,000 Series C Preferred Shares, $0.0001 par value per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes (cid:2) No (cid:3)

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports

pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes (cid:2) No (cid:3)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of

the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (cid:3) No (cid:2)
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if
any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of
this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post
such files). Yes (cid:3) No (cid:2)

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated

filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Accelerated filer (cid:3)
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included

Large accelerated filer (cid:2)

Non-accelerated filer (cid:2)

in this filing.

Board (cid:2) Other (cid:2)

U.S. GAAP (cid:3) International Financial Reporting Standards as issued by the International Accounting Standards

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement

item the registrant has elected to follow. Item 17 (cid:2) Item 18 (cid:2)

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2

of the Exchange Act). Yes (cid:2)

No (cid:3)

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Page

TABLE OF CONTENTS

ABOUT THIS REPORT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ITEM 1.

ITEM 2.

ITEM 3.

ITEM 4.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND
ADVISERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

OFFER STATISTICS AND EXPECTED TIMETABLE . . . . . . . . . . . . . . . . . .

KEY INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

INFORMATION ON THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ITEM 4.A.

UNRESOLVED STAFF COMMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ITEM 5.

ITEM 6.

ITEM 7.

ITEM 8.

ITEM 9.

ITEM 10.

ITEM 11.

ITEM 12.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS . . . . . . . . .

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES . . . . . . . . . .

MAJOR SHAREHOLDERS AND RELATED PARTY
TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

THE OFFER AND LISTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ADDITIONAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

101

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

DESCRIPTION OF SECURITIES OTHER THAN EQUITY
SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART II. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ITEM 13.

ITEM 14.

DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES . . .

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY
HOLDERS AND USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ITEM 15.

CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ITEM 16.A.

AUDIT COMMITTEE FINANCIAL EXPERT . . . . . . . . . . . . . . . . . . . . . . . . . . .

ITEM 16.B.

CODE OF ETHICS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ITEM 16.C.

PRINCIPAL ACCOUNTANT FEES AND SERVICES . . . . . . . . . . . . . . . . . . .

ITEM 16.D.

ITEM 16.E.

EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT
COMMITTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND
AFFILIATED PURCHASERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ITEM 16.F.

CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT . . . . . . . . .

ITEM 16.G.

CORPORATE GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ITEM 16.H. MINE SAFETY DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ITEM 17.

ITEM 18.

ITEM 19.

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . .

117

118

119

120

121

122

123

F-1

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ABOUT THIS REPORT

In this annual report, unless otherwise indicated, references to:
• “Costamare”, the “Company”, “we”, “our”, “us” or similar terms when used in a historical

context refer to Costamare Inc., or any one or more of its subsidiaries or their predecessors,
or to such entities collectively, except that when such terms are used in this annual report in
reference to the common stock, the 7.625% Series B Cumulative Redeemable Perpetual
Preferred Stock (the “Series B Preferred Stock”) or the 8.50% Series C Cumulative
Redeemable Perpetual Preferred Stock (the “Series C Preferred Stock” and, together with the
Series B Preferred Stock, the “Preferred Stock”), they refer specifically to Costamare Inc.;
• currency amounts in this annual report and the accompanying prospectus are in U.S. dollars;

and

• all data regarding our fleet and the terms of our charters is as of February 27, 2015; 13 of our
68 containerships, including nine newbuilds, have been acquired pursuant to the Framework
Deed dated May 15, 2013 (the “Framework Agreement”), between the Company and its
wholly-owned subsidiary, Costamare Ventures Inc. (“Costamare Ventures”), on the one hand,
and York Capital Management Global Advisors LLC and its affiliated fund, Sparrow
Holdings, L.P. (collectively, together with certain affiliated funds it manages or advises,
“York”), on the other, by vessel-owning joint venture entities in which we hold a minority
equity interest (any such entity, referred to as a “Joint Venture entity”, and any such jointly-
owned vessel, including any vessel under construction, referred to as a “Joint Venture
vessel”). The parties entered into an Amended and Restated Framework Agreement on
October 1, 2014, but such agreement will only become effective upon the closing of an initial
public offering by Costamare Partners LP, our wholly-owned subsidiary, of common units
representing limited partnership interests. See “Item 4. Information on the Company—B.
Business Overview—Our Fleet, Acquisitions and Newbuild Vessels”.

We use the term “twenty foot equivalent unit” (“TEU”), the international standard measure of

containers, in describing the capacity of our containerships.

FORWARD-LOOKING STATEMENTS

All statements in this annual report that are not statements of historical fact are “forward-

looking statements” within the meaning of the United States Private Securities Litigation Reform
Act of 1995. The disclosure and analysis set forth in this annual report includes assumptions,
expectations, projections, intentions and beliefs about future events in a number of places,
particularly in relation to our operations, cash flows, financial position, plans, strategies, business
prospects, changes and trends in our business and the markets in which we operate. These
statements are intended as “forward-looking statements”. In some cases, predictive, future-tense or
forward-looking words such as “believe”, “intend”, “anticipate”, “estimate”, “project”, “forecast”,
“plan”, “potential”, “may”, “should”, “could” and “expect” and similar expressions are intended to
identify forward-looking statements, but are not the exclusive means of identifying such statements.
In addition, we and our representatives may from time to time make other oral or written
statements which are forward-looking statements, including in our periodic reports that we file with
the Securities and Exchange Commission (“SEC”), other information sent to our security holders,
and other written materials.

Forward-looking statements include, but are not limited to, such matters as:
• general market conditions and shipping industry trends, including charter rates, vessel values

and factors affecting supply and demand;

• our continued ability to enter into time charters with existing customers as well as new

customers;

• our contracted revenue;
• future operating or financial results and future revenues and expenses;
• our future financial condition and liquidity;

47278

• our ability to obtain financing to fund capital expenditures, acquisitions and other corporate
activities, funding by banks of their financial commitments, and our ability to meet our
obligations under our credit facilities and comply with our loan covenants;

• the overall health and condition of the U.S. and global financial markets, including the value

of the U.S. dollar relative to other currencies;

• the financial health of our counterparties, both to our time charters and our credit facilities,

and the ability of such counterparties to perform their obligations;

• future, pending or recent acquisitions of vessels or other assets, business strategy, areas of

possible expansion and expected capital spending or operating expenses;

• our ability to complete the formation of a proposed master limited partnership;
• our expectations relating to dividend payments and our ability to make such payments;
• our expectations about availability of existing vessels to acquire or newbuilds to purchase, the
time that it may take to construct and take delivery of new vessels, including our newbuild
vessels currently on order, or the useful lives of our vessels;

• availability of key employees and crew, length and number of off-hire days, dry-docking

requirements and fuel and insurance costs;

• our anticipated general and administrative expenses;
• our ability to leverage to our advantage our managers’ relationships and reputation within the

container shipping industry;

• expiration dates and extensions of charters;
• our fees and expenses payable under the group management agreement, as amended from

time to time;

• expected compliance with financing agreements and the expected effect of restrictive

covenants in such agreements;

• environmental and regulatory conditions, including changes in laws and regulations or actions

taken by regulatory authorities;

• expected cost of, and our ability to comply with, governmental regulations and maritime self-
regulatory organization standards, as well as standards imposed by our charterers applicable to
our business;

• requirements imposed by classification societies;
• risks inherent in vessel operation, including terrorism, piracy and discharge of pollutants;
• potential disruption of shipping routes due to accidents, political events, piracy or acts by

terrorists;

• potential liability from future litigation;
• our cooperation with our joint venture partners and any expected benefits from such joint

venture arrangement;

• our business strategy and other plans and objectives for future operations; and
• other factors discussed in “Item 3. Key Information—D. Risk Factors” of this annual report.
We caution that the forward-looking statements included in this annual report represent our
estimates and assumptions only as of the date of this annual report about factors that are beyond
our ability to control or predict, and are not intended to give any assurance as to future results. Any
of these factors or a combination of these factors could materially affect future results of operations
and the ultimate accuracy of the forward-looking statements. Assumptions, expectations, projections,
intentions and beliefs about future events may, and often do, vary from actual results and these
differences can be material. As a result, the forward-looking events discussed in this annual report
might not occur and our actual results may differ materially from those anticipated in the
forward-looking statements. Accordingly, you should not unduly rely on any forward-looking

iii

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statements. Factors that might cause future results to differ include, but are not limited to, the
following:

• changes in law, governmental rules and regulations, or actions taken by regulatory authorities;
• changes in economic and competitive conditions affecting our business;
• potential liability from future litigation;
• length and number of off-hire periods and dependence on affiliated managers; and
• other factors discussed in “Item 3. Key Information—D. Risk Factors” of this annual report.
We undertake no obligation to update or revise any forward-looking statements contained in

this annual report, whether as a result of new information, future events, a change in our views or
expectations or otherwise. New factors emerge from time to time, and it is not possible for us to
predict all of these factors. Further, we cannot assess the impact of each such factor on our business
or the extent to which any factor, or combination of factors, may cause actual results to be
materially different from those contained in any forward-looking statement.

15107

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

A. Selected Financial Data

The following table presents selected consolidated financial and other data of Costamare Inc. for

each of the five years in the five-year period ended December 31, 2014. The table should be read
together with “Item 5. Operating and Financial Review and Prospects”. The selected consolidated
financial data of Costamare Inc. is a summary of and is derived from our audited consolidated
financial statements and notes thereto, which have been prepared in accordance with U.S. generally
accepted accounting principles (“U.S. GAAP”). Our audited consolidated statements of income,
stockholders’ equity and cash flows for the years ended December 31, 2012, 2013 and 2014 and the
consolidated balance sheets at December 31, 2013 and 2014, together with the notes thereto, are
included in “Item 18. Financial Statements” and should be read in their entirety.

Year Ended December 31,
2012
(Expressed in thousands of U.S. dollars, except for share and per share data)

2010

2011

2013

2014

STATEMENT OF INCOME

Revenues:

Voyage revenue . . . . . . . . . . . . . . . . . . . . $

353,151 $

382,155 $

386,155 $

414,249 $

483,995

Expenses:

Voyage expenses . . . . . . . . . . . . . . . . . . .
Voyage expenses—related parties . .
Charter agreement early

termination fee . . . . . . . . . . . . . . . . . . .
Vessels’ operating expenses. . . . . . . . .
General and administrative

expenses. . . . . . . . . . . . . . . . . . . . . . . . . .
Management fees—related parties . .
Amortization of dry-docking and

special survey costs. . . . . . . . . . . . . . .
Depreciation. . . . . . . . . . . . . . . . . . . . . . . .
Amortization of prepaid lease

rentals. . . . . . . . . . . . . . . . . . . . . . . . . . . .

(Gain) / Loss on sale of vessels,

net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Foreign exchange (gains) / losses,

net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . $

2,076
410

4,218
2,877

5,533
2,873

3,484
3,139

9,500
102,771

—
110,359

—
112,462

—
115,998

1,224
11,256

8,465
70,887

4,958
15,349

8,139
78,803

4,045
15,171

8,179
80,333

8,517
16,580

8,084
89,958

3,608
3,629

—
120,815

7,708
18,469

7,814
105,787

—

4,024

(9,588)

(13,077)

2,796

(518)

(2,543)

273
155,877 $

(133)
170,662 $

(110)
154,873 $

(8)

169,015 $

(7)
214,691

Other Income / (expenses):

Interest income . . . . . . . . . . . . . . . . . . . . . $
Interest and finance costs. . . . . . . . . . .
Swaps breakage cost. . . . . . . . . . . . . . . .
Equity in net earnings of

investments. . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain / (Loss) on derivative

instruments, net . . . . . . . . . . . . . . . . . .
Total other income (expenses). . . . . . $
Net Income. . . . . . . . . . . . . . . . . . . . . . . . . $

Earnings allocated to Preferred

Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,449 $

(71,949)
—

477 $

1,495 $

543 $

(75,441)
—

(74,734)
—

(74,533)
—

815
(95,562)
(10,192)

—
306

—
603

—
(43)

692
822

(3,428)
3,294

(4,459)
(74,653) $
81,224 $

(8,709)
(83,070) $
87,592 $

(462)
(73,744) $
81,129 $

6,548
(65,928) $
103,087 $

5,469
(99,604)
115,087

—

(1,536)

(11,909)

—

69905

Year Ended December 31,
2012
(Expressed in thousands of U.S. dollars, except for share and per share data)

2011

2010

2014

2013

Net income available to Common

Stockholders . . . . . . . . . . . . . . . . . . . . . $

81,224 $

87,592 $

81,129 $

101,551 $

103,178

Earnings per common share, basic

and diluted . . . . . . . . . . . . . . . . . . . . . . . $

1.65 $

1.45 $

1.20 $

1.36 $

1.38

Weighted average number of

shares, basic and diluted . . . . . . . . .

49,113,425 60,300,000

67,612,842 74,800,000

74,800,000

OTHER FINANCIAL DATA

Net cash provided by operating

activities. . . . . . . . . . . . . . . . . . . . . . . . . . $

127,946 $

195,179 $

168,114 $

186,681 $

243,270

Net cash (used in) / provided by

investing activities . . . . . . . . . . . . . . . .

(23,850)

(283,758)

(236,509)

(621,056)

(119,263)

Net cash (used in) / provided by

financing activities. . . . . . . . . . . . . . . .

Net increase / (decrease) in cash

and cash equivalents . . . . . . . . . . . . .
Dividends and distributions paid. . . .
Ratio of earnings to fixed charges(1)
Ratio of earnings to fixed charges

and preferred stock dividends(1) . .

BALANCE SHEET DATA (at year end)
Total current assets. . . . . . . . . . . . . . . . . $
Total assets . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . .
Total long-term debt, including

43,396

26,801

237,720

260,433

(104,297)

147,492
(10,000)
2.18

(61,778)
(61,506)
2.16

169,325
(73,089)
2.00

(173,942)
(81,515)
2.19

19,710
(93,074)
2.25

2.18

2.16

2.00

2.14

1.99

211,212 $

138,851 $

299,924 $

136,563 $

1,828,782
184,788

1,982,545
226,589

2,311,334
249,411

2,685,842
294,980

157,975
2,714,740
290,376

current portion . . . . . . . . . . . . . . . . . . .
Total stockholders’ equity . . . . . . . . . .

1,341,737
362,142

1,443,420
329,986

1,561,889
520,452

1,867,576
656,949

1,519,941
802,642

FLEET DATA

2010

Average for the Year Ended December 31,
2012

2011

2013

2014

Number of vessels . . . . . . . . . . . . . . . . . .
TEU capacity. . . . . . . . . . . . . . . . . . . . . . .

42.4
211,185

47.8
231,990

46.8
237,975

49.6
263,899

54.5
317,006

(1) For purposes of calculating these ratios:

• “earnings” consist of pre-tax income from continuing operations (which includes non-cash unrealized gains and losses

on derivative financial instruments not designated as a hedge) plus fixed charges, net of capitalized interest and
capitalized amortization of deferred financing fees;

• “fixed charges” represent interest incurred (whether expensed or capitalized) and amortization of deferred financing

costs (whether expensed or capitalized) and accretion of discount; and

• “preferred stock dividends” refers to the amount of pre-tax earnings that is accrued for dividends on outstanding

preferred stock. Beginning on August 7, 2013, we had 2,000,000 shares of Series B Preferred Stock outstanding, and
beginning on January 21, 2014, we had 4,000,000 shares of Series C Preferred Stock outstanding.

B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

55119

D. Risk Factors

Risks Inherent in Our Business

Our growth depends upon continued increases in world and regional demand for chartering
containerships, and the slow pace of global economic recovery may impede our ability to continue
to grow our business.

The ocean-going container shipping industry is both cyclical and volatile in terms of charter
rates and profitability. According to Clarkson Research, containership charter rates peaked in 2005,
with the Containership Timecharter Rate Index (a per TEU weighted average of 6-12 month time
charter rates of Panamax and smaller vessels (1993=100)) reaching 172 points in March and April
2005, and generally stayed strong until the middle of 2008, when the effects of the economic crisis
began to affect global container trade, driving the Containership Timecharter Rate Index to a
10-year low of 32 points in the period from November 2009 to January 2010. As of the end of
December 2014, the Containership Timecharter Rate Index stood at 47 points.

According to Clarkson Research, demand for containerships declined significantly, following the

onset of the global economic downturn. After growing by just 4.0% in 2008, container trade
contracted by 9.2% in 2009 before rebounding by 13.8% in 2010. While container trade grew by a
CAGR of 5.0% per annum between 2010 and 2013 and is estimated to have risen by 6.0% in 2014
and is projected to grow by a further 6.7% in 2015, such projections are subject to a wide range of
risks. In 2014, worldwide trade volumes increased, but containership supply continued to exceed
demand during the year as more large vessels were delivered. In addition, according to Clarkson
Research, as of January 2015, the containership order-book for vessels with carrying capacity of
8,000-12,000 TEU represented 29% of the existing fleet capacity, and for vessels with carrying
capacity of 12,000 TEU and above, the containership order-book represented 58% of the existing
fleet capacity, both increasing the expected future supply of larger vessels and having a spillover
effect on the market segment for smaller vessels. An oversupply in the containership market may
negatively affected time charter rates for both short- and long-term periods as well as box freight
rates charged by liner companies to shippers.

Freight rates have become more volatile since the downturn in 2009 and, despite some short-
term improvements, freight rates have remained under pressure. Starting from the second half of
2014, liner companies, to which we seek to charter our containerships, have benefited from the
recent collapse in the price of oil. Relatively weak trade growth coupled with the on-going delivery
of high capacity containerships has placed significant pressure on certain trade routes as well. The
continuation of such low freight rates or any further declines in freight rates, coupled with a sudden
increase in oil price, would negatively affect liner companies and could lower prevailing charter
rates. Weak or volatile conditions in the containership sector may affect our ability to generate cash
flows and maintain liquidity, as well as adversely affect our ability to obtain financing.

The factors affecting the supply and demand for containerships are outside of our control, and
the nature, timing and degree of changes in industry conditions are unpredictable. The factors that
influence demand for containership capacity include:

• supply and demand for products shipped in containers;
• changes in global production of products transported by containerships;
• global and regional economic and political conditions;
• developments in international trade;
• environmental and other regulatory developments;
• the distance container cargo products are to be moved by sea;
• changes in seaborne and other transportation patterns;
• port and canal congestion; and
• currency exchange rates.

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The factors that influence the supply of containership capacity include:
• the availability of financing;
• the price of steel and other raw materials;
• the number of newbuild vessel deliveries;
• the availability of shipyard capacity;
• the scrapping rate of older containerships;
• the number of containerships that are out of service;
• changes in environmental and other regulations that may limit the useful lives of

containerships;

• the price of fuel; and
• the economics of slow steaming.
Our ability to re-charter our containerships upon the expiration or termination of their current
time charters and the charter rates payable under any renewal options or replacement time charters
will depend upon, among other things, the prevailing state of the containership charter market,
which can be affected by consumer demand for products shipped in containers. If the charter market
is depressed when our containerships’ time charters expire, we may be forced to re-charter our
containerships at reduced or even unprofitable rates, or we may not be able to re-charter them at all
and/or we may be forced to scrap them, which may reduce or eliminate our earnings or make our
earnings volatile. The same issues will be faced if we acquire additional vessels and attempt to
obtain long-term time charters as part of our acquisition and financing plan.

Our liner company customers have been placed under significant financial pressure, thereby
increasing our charter counterparty risk.

The continuing weakness in demand for container shipping services and the oversupply of large

containerships (as well as potential oversupply of smaller size vessels due to a cascading effect)
places our liner company customers under financial pressure. Any future declines in demand could
result in worsening financial challenges to our liner company customers and may increase the
likelihood of one or more of our customers being unable or unwilling to pay us contracted charter
rates. We expect to generate most of our revenues from these charters and if our charterers fail to
meet their obligations to us, we will sustain significant losses which could have a material adverse
effect on our financial condition and results of operations. One of our charterers, Zim Integrated
Shipping Services (“ZIM”), finalized the terms of its comprehensive financial restructuring plan with
its shareholders and its creditors, including vessel and container lenders, ship-owners, shipyards,
unsecured lenders and bond holders, in July 2014. Based on this agreement, the Company has been
granted charter extensions and has been issued equity securities representing 1.2% of ZIM’s equity
and approximately $8.2 million principal amount of unsecured interest bearing notes maturing in
2023. If the fair value of the ZIM equity and debt securities fall below their carrying values, we may
be required to record an impairment charge in our financial statements, which could adversely affect
our results of operations. In addition, there can be no assurance that there will be no further
concessions or modification to the charter arrangements with ZIM. See “Item 4. Information on the
Company—B. Business Overview—Our Fleet, Acquisitions and Newbuild Vessels”.

An oversupply of containership capacity may prolong or further depress the current charter rates
and adversely affect our ability to re-charter our existing containerships at profitable rates or at
all.

From 2005 through the first quarter of 2010, the containership order-book was at historically high
levels as a percentage of the in-water fleet. Although order-book volumes have decreased as deliveries
of previously ordered containerships increased substantially, some renewed ordering in late 2012 of
mainly larger vessels maintained the order-book at average levels. According to Clarkson Research, as
of January 2015, the containership order-book for vessels with carrying capacity of 8,000-12,000 TEU

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represented 29% of the existing fleet capacity, and for vessels with carrying capacity of 12,000 TEU
and above, the containership order-book represented 58% of the existing fleet capacity. An oversupply
of large newbuild vessel and/or re-chartered containership capacity entering the market, combined with
any future decline in the demand for containerships, may result in a reduction of charter rates and
may decrease our ability to re-charter our containerships other than for reduced rates or unprofitable
rates, or we may not be able to re-charter our containerships at all.

Weak economic conditions throughout the world, particularly the Asia Pacific region and a
renewed European Union sovereign debt crisis, could have a material adverse effect on our business,
financial condition and results of operations.

The global economy remains relatively weak, when compared to the period prior to the 2008-
2009 financial crisis. The current global recovery is proceeding at varying speeds across regions and
is still subject to downside risks stemming from factors like fiscal fragility in advanced economies,
high sovereign debt levels, highly accommodative macroeconomic policies and persistent difficulties
in access to credit. In particular, concerns regarding the possibility of a renewed financial crisis in
Greece and a possible exit from the eurozone may disrupt financial markets, and may lead to
weaker consumer demand in the European Union, the United States, and other parts of the world.
The deterioration in the global economy has caused, and may continue to cause, a decrease in
worldwide demand for certain goods shipped in containerized form. In addition, the possibility of a
renewed financial crisis in Greece may spread throughout Europe and could impact the global
economy and have a material adverse effect on our business.

We anticipate that a significant number of port calls made by our containerships will continue

to involve the loading or unloading of container cargoes in ports in the Asia Pacific region. In
recent years, China has been one of the world’s fastest growing economies in terms of gross
domestic product, which has had a significant impact on shipping demand. However, if China’s
growth in gross domestic product declines and other countries in the Asia Pacific region experience
slowed or experience negative economic growth in the future, this may negatively affect the fragile
recovery of the economies of the United States and the European Union, and thus, may negatively
impact container shipping demand. For example, the possibility of sovereign debt defaults by
European Union member countries, including Greece, and the possibility of market reforms to float
the Chinese renminbi, either of which development could weaken the Euro against the Chinese
renminbi, could adversely affect consumer demand in the European Union. Moreover, the
revaluation of the renminbi may negatively impact the United States’ demand for imported goods,
many of which are shipped from China in containerized form. Such weak economic conditions could
have a material adverse effect on our business, results of operations and financial condition and our
ability to pay dividends to our stockholders.

Disruptions in world financial markets and the resulting governmental action could have a material
adverse impact on our results of operations, financial condition and cash flows.

Global financial markets and economic conditions have been severely disrupted and volatile in

recent years and remain subject to significant vulnerabilities, such as the deterioration of fiscal
balances and the rapid accumulation of public debt, continued deleveraging in the banking sector
and a limited supply of credit. Credit markets as well as the debt and equity capital markets were
exceedingly distressed during 2008 and 2009 and have been volatile since that time. The continuing
sovereign debt crisis in Greece and other eurozone countries, civil unrest in Ukraine and advances
of terrorist organizations in the Middle East have led to increased volatility in global credit and
equity markets. These issues, along with the re-pricing of credit risk and the difficulties currently
experienced by financial institutions have made, and will likely continue to make, it difficult to
obtain financing. As a result of the disruptions in the credit markets and higher capital requirements,
many lenders have increased margins on lending rates, enacted tighter lending standards, required
more restrictive terms (including higher collateral ratios for advances, shorter maturities and smaller
loan amounts), or have refused to refinance existing debt at all. Furthermore, certain banks that
have historically been significant lenders to the shipping industry have reduced or ceased lending

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activities in the shipping industry. Additional tightening of capital requirements and the resulting
policies adopted by lenders, could further reduce lending activities. We may experience difficulties
obtaining financing commitments or be unable to fully draw on the capacity under our committed
term loans in the future if our lenders are unwilling to extend financing to us or unable to meet
their funding obligations due to their own liquidity, capital or solvency issues. We cannot be certain
that financing will be available on acceptable terms or at all. If financing is not available when
needed, or is available only on unfavorable terms, we may be unable to meet our future obligations
as they come due. Our failure to obtain such funds could have a material adverse effect on our
business, results of operations and financial condition, as well as our cash flows, including cash
available for dividends to our stockholders. In the absence of available financing, we also may be
unable to take advantage of business opportunities or respond to competitive pressures.

In addition, as a result of the ongoing economic slump in Greece resulting from the sovereign
debt crisis and the related austerity measures implemented by the Greek government, our operations
in Greece may be subjected to new regulations that may require us to incur new or additional
compliance or other administrative costs and may require that we pay to the Greek government new
taxes or other fees. Furthermore, the change in the Greek government and potential shift in its
policies may undermine Greece’s political and economic stability and may lead it exit the eurozone,
which may adversely affect our operations and those of our managers located in Greece. We also
face the risk that capital controls, strikes, work stoppages, civil unrest and violence within Greece
may disrupt our shoreside operations and those of our managers located in Greece.

We are dependent on our charterers and other counterparties fulfilling their obligations under
agreements with us, and their inability or unwillingness to honor these obligations could
significantly reduce our revenues and cash flow.

We expect that our containerships will continue to be chartered to customers mainly under
long-term fixed rate time charters. Payments to us under these time charters are and will be our sole
source of operating cash flow. Many of our charterers finance their activities through cash from
operations, the incurrence of debt or the issuance of equity. Since 2008, there has been a significant
decline in the credit markets and the availability of credit, and the equity markets have been
volatile. The combination of a reduction of cash flow resulting from lower demand for our ships due
to declines in world trade, a reduction in borrowing bases under any credit facilities and the lack of
availability of debt or equity financing may result in a significant reduction in the ability of our
charterers to make charter payments to us. Additionally, we could lose a time charter if the
charterer exercises certain specified, limited termination rights.

If we lose a time charter because the charterer is unable to pay us or for any other reason, we

may be unable to re-deploy the related vessel on similarly favorable terms or at all. Also, we will
not receive any revenues from such a vessel while it is un-chartered, but we will be required to pay
expenses necessary to maintain and insure the vessel and service any indebtedness on it. The
combination of any surplus of containership capacity and the expected increase in the size of the
world containership fleet over the next few years may make it difficult to secure substitute
employment for any of our containerships if our counterparties fail to perform their obligations
under the currently arranged time charters, and any new charter arrangements we are able to secure
may be at lower rates. Furthermore, the surplus of containerships available at lower charter rates
and lack of demand for our customers’ liner services could negatively affect our charterers’
willingness to perform their obligations under our time charters, particularly if the charter rates in
such time charters are significantly above the prevailing market rates. Accordingly we may have to
grant concessions to our charterers in the form of lower charter rates for the remaining duration of
the relevant charter or part thereof, or to agree to re-charter vessels coming off charter at reduced
rates compared to the charter then ended. While we have agreed in certain cases to charter rate re-
arrangements entailing reductions for specified periods, we have been compensated for these
adjustments by, among other things, subsequent rate increases, so that the aggregate payments under
the charters are not materially reduced, and in some cases we also have arranged for term
extensions. However, there is no assurance that any future charter re-arrangements will be on
similarly favorable terms.

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The loss of any of our charterers, time charters or vessels, or a decline in payments under our

time charters, could have a material adverse effect on our business, results of operations and
financial condition and our ability to pay dividends to our stockholders.

We may, among other things, enter into shipbuilding contracts, provide performance guarantees

relating to shipbuilding contracts or to charters, enter into credit facilities or other financing
arrangements, accept commitment letters from banks, or enter into insurance contracts and interest
or exchange rate swaps. Such agreements expose us to counterparty credit risk. The ability and
willingness of each of our counterparties to perform its obligations under a contract with us will
depend upon a number of factors that are beyond our control and may include, among other things,
general economic conditions, the state of the capital markets, the condition of the ocean-going
container shipping industry and charter hire rates. Should a counterparty fail to honor its obligations
under agreements with us, we could sustain significant losses, which in turn could have a material
adverse effect on our business, results of operations and financial condition and our ability to pay
dividends to our stockholders.

A limited number of customers operating in a consolidating industry comprise a large part of our
revenues. The loss of these customers could adversely affect our results of operations, cash flows and
competitive position.

Our customers in the containership sector consist of a limited number of liner companies. A.P.

Moller-Maersk A/S (“A.P. Moller-Maersk”), Mediterranean Shipping Company, S.A. (“MSC”),
members of the Evergreen Group (“Evergreen”), Hapag Lloyd Aktiengesellschaft (“Hapag Lloyd”)
and Cosco Container Lines Co., Ltd. (“COSCO”) together represented 91%, 93% and 94% of our
revenue in 2012, 2013 and 2014, respectively. We expect that a limited number of leading liner
companies will continue to generate a substantial portion of our revenues. The cessation of business
with these liner companies or their failure to fulfill their obligations under the time charters for our
containerships could have a material adverse effect on our financial condition and results of
operations, as well as our cash flows. In addition, any consolidations or alliances involving our
customers could further increase the concentration of our business. We could lose a customer or the
benefits of our time charter arrangements for many different reasons, including if the customer is
unable or unwilling to make charter hire or other payments to us because of a deterioration in its
financial condition, disagreements with us or otherwise. If any of these customers terminate their
charters or are unable to perform under its charters and we are not able to find replacement
charters on similar terms, we will suffer a loss of revenues that could have a material adverse effect
on our business, results of operations and financial condition and our ability to pay dividends to our
stockholders. See “Item 4. Information on the Company—B. Business Overview—Our Fleet,
Acquisitions and Newbuild Vessels”.

A decrease in the level of China’s export of goods or an increase in trade protectionism could have
a material adverse impact on our charterers’ business and, in turn, could cause a material adverse
impact on our results of operations, financial condition and cash flows.

China exports considerably more goods than it imports. Our containerships are deployed on

routes involving containerized trade in and out of emerging markets, and our charterers’ container
shipping and business revenue may be derived from the shipment of goods from the Asia Pacific
region to various overseas export markets including the United States and Europe. Any reduction in
or hindrance to the output of China-based exporters could have a material adverse effect on the
growth rate of China’s exports and on our charterers’ business. For instance, the government of
China has recently implemented economic policies aimed at increasing domestic consumption of
Chinese-made goods. This may have the effect of reducing the supply of goods available for export
and may, in turn, result in a decrease of demand for container shipping. Additionally, though in
China there is an increasing level of autonomy and a gradual shift in emphasis to a “market
economy” and enterprise reform, many of the reforms, particularly some limited price reforms that
result in the prices for certain commodities being principally determined by market forces, are
unprecedented or experimental and may be subject to revision, change or abolition. The level of

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imports to and exports from China could be adversely affected by changes to these economic
reforms by the Chinese government, as well as by changes in political, economic and social
conditions or other relevant policies of the Chinese government.

Our operations expose us to the risk that increased trade protectionism will adversely affect our

business. If global economic recovery is undermined by downside risks and the economic downturn
continues, governments may turn to trade barriers to protect their domestic industries against foreign
imports, thereby depressing the demand for shipping. Specifically, increasing trade protectionism in
the markets that our charterers serve has caused and may continue to cause an increase in (i) the
cost of goods exported from China, (ii) the length of time required to deliver goods from China and
(iii) the risks associated with exporting goods from China, as well as a decrease in the quantity of
goods to be shipped.

Any increased trade barriers or restrictions on trade, especially trade with China, would have an

adverse impact on our charterers’ business, operating results and financial condition and could
thereby affect their ability to make timely charter hire payments to us and to renew and increase
the number of their time charters with us. This could have a material adverse effect on our business,
results of operations and financial condition and our ability to pay dividends to our stockholders.

We conduct a substantial amount of business in China, including through one of our managers,
Shanghai Costamare, a Chinese corporation, and our time charters with COSCO. The legal system
in China is not fully developed and has inherent uncertainties that could limit the legal protections
available to us.

The Chinese legal system is based on written statutes and their legal interpretation by the
Standing Committee of the National People’s Congress. Prior court decisions may be cited for
reference but have limited precedential value. Since 1979, the Chinese government has been
developing a comprehensive system of commercial laws, and considerable progress has been made in
introducing laws and regulations dealing with economic matters such as foreign investment,
corporate organization and governance, commerce, taxation and trade. However, because these laws
and regulations are relatively new, and because of the limited volume of published cases and their
non-binding nature, interpretation and enforcement of these laws and regulations involve
uncertainties. We do a substantial amount of business in China, including through one of our
managers, Shanghai Costamare Ship Management Co., Ltd. (“Shanghai Costamare”), a Chinese
corporation which, as of February 27, 2015, operated 13 vessels that were exclusively manned by
Chinese crews, including two vessels purchased pursuant to the Framework Agreement with York,
which exposes us to potential litigation in China. Additionally, we have charters with COSCO, a
Chinese corporation, and though these charters are governed by English law, we may have
difficulties enforcing a judgment rendered by an English court (or other non-Chinese court) in
China. Such charters, and any additional charters that we enter into with Chinese customers, may be
subject to new regulations in China that may require us to incur new or additional compliance or
other administrative costs and may require that we pay to the Chinese government new taxes or
other fees. Changes in laws and regulations, including with regards to tax matters, and their
implementation by local authorities could affect our vessels chartered to Chinese customers as well
as our vessels calling to Chinese ports and could have a material adverse effect on our business,
results of operations and financial condition and our ability to pay dividends to our stockholders.

We may be unable to obtain additional debt financing for future acquisitions of vessels and to fund
payments in respect of the newbuild orders.

We intend to borrow against unencumbered containerships in our existing fleet and vessels we
may acquire in the future as part of our growth plan. Our ability to borrow against the ships in our
existing fleet and any ships we may acquire in the future largely depends on the value of the ships,
which in turn depends in part on charter hire rates and the creditworthiness of our charterers. The
actual or perceived credit quality of our charterers, and any defaults by them, and any decline in the
market value of our fleet may materially affect our ability to obtain the additional capital resources
that we will require to purchase additional vessels or may significantly increase our costs of

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obtaining such capital. Our inability to obtain additional financing or committing to financing on
unattractive terms could have a material adverse effect on our business, results of operations and
financial condition and our ability to pay dividends to our stockholders.

We have not obtained financing for four newbuilds ordered pursuant to the Framework

Agreement. The ownership structure under the Framework Agreement and the lack of time charters
for these four newbuilds may make it more difficult or expensive to obtain third party debt
financing for these newbuilds.

Our ability to pay dividends or to redeem our Preferred Stock may be limited by the amount of
cash we generate from operations following the payment of fees and expenses, by the establishment
of any reserves, by restrictions in our debt instruments and by additional factors unrelated to our
profitability.

We intend to pay regular quarterly dividends. The declaration and payment of dividends

(including cumulative dividends payable with respect to our Preferred Stock) is, however, subject to
the discretion of our board of directors and the requirements of Marshall Islands law. The timing
and amount of any dividends declared will depend on, among other things (a) our earnings, financial
condition, cash flow and cash requirements, (b) our liquidity, including our ability to obtain debt and
equity financing on acceptable terms as contemplated by our vessel acquisition strategy, (c)
restrictive covenants in our existing and future debt instruments and (d) provisions of Marshall
Islands law governing the payment of dividends.

The international containership industry is highly volatile, and we cannot predict with certainty

the amount of cash, if any, that will be available for distribution as dividends or to redeem our
Preferred Stock in any period. Also, there may be a high degree of variability from period to period
in the amount of cash, if any, that is available for the payment of dividends or the redemption of
our Preferred Stock and our obligation to pay dividends to holders of our Preferred Stock will
reduce the amount of cash available for the payment of dividends to holders of our common stock.
The amount of cash we generate from operations and the actual amount of cash we will have
available for dividends will vary based upon, among other things:

• the charter hire payments we obtain from our charters as well as our ability to re-charter the

vessels and the rates obtained upon the expiration of our existing charters;

• the due performance by our charterers of their obligations;
• our fleet expansion strategy and associated uses of our cash and our financing requirements;
• delays in the delivery of newbuild vessels and the beginning of payments under charters

relating to those vessels;

• the level of our operating costs, such as the costs of crews, lubricants and insurance;
• the number of unscheduled off-hire days for our fleet and the timing of, and number of days

required for, scheduled dry-docking of our containerships;

• prevailing global and regional economic and political conditions;
• changes in interest rates;
• the effect of governmental regulations and maritime self-regulatory organization standards on

the conduct of our business;

• changes in the basis of taxation of our activities in various jurisdictions;
• modification or revocation of our dividend policy by our board of directors;
• the dividend policy adopted by Costamare Ventures and the vessel-owning entities for the

Joint Venture vessels; and

• the amount of any cash reserves established by our board of directors.
The amount of cash we generate from our operations may differ materially from our net income

or loss for the period, which will be affected by non-cash items. We may incur other expenses or
liabilities that could reduce or eliminate the cash available for distribution as dividends.

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In addition, our credit facilities and other financing agreements prohibit the payment of
dividends if an event of default has occurred and is continuing or would occur as a result of the
payment of such dividends.

For more information regarding our financing arrangements, please read “Item 5. Operating and

Financial Review and Prospects”.

In addition, Marshall Islands law generally prohibits the payment of dividends other than from
surplus (retained earnings and the excess of consideration received for the sale of shares above the
par value of the shares) or if there is no surplus, from the net profits for the current and prior fiscal
year, or while a company is insolvent or if it would be rendered insolvent by the payment of such a
dividend. We may not have sufficient surplus or net profits in the future to pay dividends, and our
subsidiaries may not have sufficient funds, surplus or net profits to make distributions to us. As a
result of these and other factors, we may pay dividends during periods when we record losses and
may not pay dividends during periods when we record net income. We can give no assurance that
dividends will be paid in the future or the amounts of dividends which may be paid.

We may have difficulty properly managing our growth through acquisitions of new or secondhand
vessels and we may not realize expected benefits from these acquisitions, which may negatively
impact our cash flows, liquidity and our ability to pay dividends to our stockholders.

We intend to grow our business by ordering newbuild vessels and through selective acquisitions

of high-quality secondhand vessels to the extent that they are available. Our future growth will
primarily depend on:

• the operations of the shipyards that build any newbuild vessels we may order;
• locating and identifying suitable high-quality secondhand vessels;
• obtaining required financing on acceptable terms;
• consummating vessel acquisitions;
• enlarging our customer base;
• hiring additional shore-based employees and seafarers;
• continuing to meet technical and safety performance standards; and
• managing joint ventures or significant acquisitions and integrating the new ships into our fleet.
During periods in which charter rates are high, ships values are generally high as well, and it
may be difficult to consummate ship acquisitions or enter into shipbuilding contracts at favorable
prices. In addition, any vessel acquisition may not be profitable at or after the time of acquisition
and may not generate cash flows sufficient to justify the investment. We may not be successful in
executing any future growth plans and we cannot give any assurance that we will not incur
significant expenses and losses in connection with such growth efforts. Other risks associated with
vessel acquisitions that may harm our business, financial condition and operating results include the
risks that we may:

• fail to realize anticipated benefits, such as new customer relationships, cost-savings or cash

flow enhancements;

• be unable to hire, train or retain qualified shore and seafaring personnel to manage and

operate our growing business and fleet;

• decrease our liquidity by using a significant portion of available cash or borrowing capacity to

finance acquisitions;

• significantly increase our interest expense or financial leverage if we incur additional debt to

finance acquisitions;

• incur or assume unanticipated liabilities, losses or costs associated with any vessels or

businesses acquired; or

• incur other significant charges, such as impairment of goodwill or other intangible assets, asset

devaluation or restructuring charges.

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Unlike newbuild vessels, secondhand vessels typically do not carry warranties as to their
condition. While we generally inspect existing vessels prior to purchase, such an inspection would
normally not provide us with as much knowledge of a vessel’s condition as we would possess if it
had been built for us and operated by us during its life. Repairs and maintenance costs for
secondhand vessels are difficult to predict and may be substantially higher than for vessels we have
operated since they were built. These costs could decrease our cash flows, liquidity and our ability to
pay dividends to our stockholders.

Our operations and results may be adversely affected by the Framework Agreement or by a default
by our partner under the Framework Agreement.

The joint venture governed by the Framework Agreement is the exclusive joint venture of the

Company for the acquisition of new vessels during a commitment period ending May 15, 2015,
unless terminated earlier in certain circumstances (although we may acquire vessels outside the joint
venture where York rejects a vessel acquisition opportunity). If York decides to participate in a new
vessel acquisition, we will hold a 25% to 49% equity interest in such vessel. An Amended and
Restated Framework Agreement was executed by the parties thereto on October 1, 2014, which
would extend the commitment period to May 15, 2020 and increase the range of our equity interest
in each Joint Venture vessel to a range of 25% to 75%. Such Amended and Restated Framework
Agreement will only become effective upon the closing of an initial public offering by Costamare
Partners LP, our wholly-owned subsidiary, of common units representing limited partnership
interests. There is no assurance that the proposed initial public offering will be consummated. See
“Item 4. Information on the Company—B. Business Overview—Our Fleet, Acquisitions and
Newbuild Vessels”.

The operation of the Framework Agreement may increase certain administrative burdens, delay
decision-making, make it more difficult to obtain debt financing and complicate the operation of the
vessels acquired under the Framework Agreement. For example, the Framework Agreement requires
that decisions regarding the Joint Venture vessel’s acquisition be made jointly by Costamare and
York. If York fails to cooperate in the acquisition process, we may not be able to consummate the
acquisition in a timely and cost-effective manner. In addition, our managers may face conflicts of
interest in the course of managing both our wholly-owned vessels and the Joint Venture vessels, the
outcome of which may favor the Joint Venture vessels.

Furthermore, if York were to delay or default in meeting its commitments under the
Framework Agreement to provide equity or under any guarantee it provides to support a
shipbuilding contract or a charter, our commercial relations with shipbuilders and charterers could
be adversely affected. Under such circumstances, we may be required to provide additional funding.

Delay in the delivery of our newbuild vessels on order, or any future newbuild vessel orders, could
adversely affect our earnings.

The expected delivery dates under our current shipbuilding contracts for newbuild vessels, and

any additional shipbuilding contracts we may enter into in the future, may be delayed for reasons
not under our control, including, among other things:

• quality or engineering programs;
• changes in governmental regulations or maritime self-regulatory organization standards;
• work stoppages or other labor disturbances at the shipyard;
• bankruptcy of or other financial crisis involving the shipyard;
• financial instability of the lenders under our committed credit facilities, resulting in potential

delay or inability to draw down on such facilities;

• financial instability of the charterers under our agreed time charters for the newbuild vessels,

resulting in potential delay or inability to charter the newbuild vessels;

• a backlog of orders at the shipyard;

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• any delay or default by our joint venture partner in meeting its financial commitments;
• political, social or economic disturbances;
• weather interference or a catastrophic event, such as a major earthquake, fire or other

accident;

• requests for changes to the original vessel specifications;
• shortages of or delays in the receipt of necessary construction materials, such as steel; and
• an inability to obtain requisite permits or approvals.
If the seller of any newbuild vessel we have contracted to purchase is not able to deliver the

vessel to us as agreed, or if we cancel a purchase agreement because a seller has not met his
obligations, it may result in a material adverse effect on our business, results of operations and
financial condition and our ability to pay dividends to our stockholders.

Rising crew and other vessel operating costs may adversely affect our profits.

Acquiring and renewing long-term time charters with leading liner companies depend on a
number of factors, including our ability to man our containerships with suitably experienced, high-
quality masters, officers and crews. Our success will depend in large part on our managers’ ability to
attract, hire, train and retain highly skilled and qualified personnel. In recent years, the limited
supply of and the increased demand for well-qualified crew, due to the increase in the size of the
global shipping fleet, has created upward pressure on crewing costs, which we bear under our time
charters. Changing conditions in the home country of our seafarers, such as increases in the local
general living standards or changes in taxation, may make serving at sea less appealing and thus
further reduce the supply of crew. If we cannot retain sufficient numbers of quality onboard
seafaring personnel, our fleet utilization will decrease, which could also have a material adverse
effect on our business, results of operations and financial condition and our ability to pay dividends
to our stockholders. Furthermore, increases in crew costs and other vessel operating costs such as
insurance, repairs and maintenance, and lubricants may adversely affect our profitability.

Fuel price fluctuations may have an adverse effect on our profits.

The cost of fuel is a significant factor in negotiating charter rates and can affect us in both

direct and indirect ways. This cost will be borne by us when our containerships are employed on
voyage charters or contracts of affreightment. We currently have no voyage charters or contracts of
affreightment, but we may enter into such arrangements in the future, and to the extent we do so,
an increase in the price of fuel beyond our expectations may adversely affect our profitability. Even
where the cost of fuel is borne by the charterer, which is the case with all of our existing time
charters, that cost will affect the level of charter rates that charterers are prepared to pay. Rising
costs of fuel will make our older and less fuel efficient vessels less competitive compared to the
more fuel efficient newer vessels and may limit their employment opportunities and force us to
employ them at a discount compared to the charter rates commanded by more fuel efficient vessels
or not at all. Falling costs of fuel may lead our charterers to abandon slow steaming, thereby
releasing additional capacity into the market and exerting downward pressure on charter rates.

The price and supply of fuel is unpredictable and fluctuates based on events outside our control,

including geo-political developments, supply and demand for oil, actions by members of the OPEC
and other oil and gas producers, economic or other sanctions levied against oil and gas producing
countries, war and unrest in oil producing countries and regions, regional production patterns and
environmental concerns and regulations.

We must make substantial capital expenditures to maintain the operating capacity of our fleet and
acquire vessels, which may reduce or eliminate the amount of cash for dividends to our
stockholders.

We must make substantial capital expenditures to maintain the operating capacity of our fleet

and we generally expect to finance these maintenance capital expenditures with cash balances or

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credit facilities. In addition, we will need to make substantial capital expenditures to acquire vessels
in accordance with our growth strategy. Expenditures could increase as a result of, among other
things, the cost of labor and materials, customer requirements and governmental regulations and
maritime self-regulatory organization standards relating to safety, security or the environment.
Significant capital expenditures, including to maintain the operating capacity of our fleet, may reduce
or eliminate the amount of cash available for distribution to our stockholders.

The aging of our fleet may result in increased operating costs in the future, which could adversely
affect our earnings.

In general, the cost of maintaining a vessel in good operating condition increases with the age
of the vessel. As our fleet ages, we will incur increased costs. Older vessels may require longer and
more expensive dry-dockings, resulting in more off-hire days and reduced revenue. Older vessels are
typically less fuel efficient and more costly to maintain than more recently constructed vessels due to
improvements in engine technology. In addition, older vessels are often less desirable to charterers.
Governmental regulations and safety or other equipment standards related to the age of a vessel
may also require expenditures for alterations or the addition of new equipment to our vessels and
may restrict the type of activities in which our containerships may engage.

Our current fleet of 68 containerships, including nine newbuild vessels on order, as of

Unless we set aside reserves or are able to borrow funds for vessel replacement, at the end of the
useful lives of our vessels our revenue will decline, which would adversely affect our business,
results of operations and financial condition.

Our current fleet of 68 containerships, including nine newbuild vessels on order, as of

February 27, 2015, of which nine newbuilds and four existing vessels are Joint Venture vessels, had
an average age (weighted by TEU capacity) of 7.9 years. See “Item 4. Information on the
Company—B. Business Overview—Our Fleet, Acquisitions and Newbuild Vessels”. Unless we
maintain reserves or are able to borrow or raise funds for vessel replacement, we will be unable to
replace the older vessels in our fleet. Our cash flows and income are dependent on the revenues
earned by the chartering of our containerships. The inability to replace the vessels in our fleet upon
the expiration of their useful lives could have a material adverse effect on our business, results of
operations and financial condition and our ability to pay dividends to our stockholders.

Containership values decreased significantly since 2008 and have remained at depressed levels
through 2014. Containership values may decrease further and over time may fluctuate substantially.
If these values are low at a time when we are attempting to dispose of a vessel, we could incur a
loss.

Containership values can fluctuate substantially over time due to a number of different factors,

including:

• prevailing economic conditions in the markets in which containerships operate;
• reduced demand for containerships, including as a result of a substantial or extended decline

in world trade;

• increases in the supply of containership capacity;
• changes in prevailing charter rates;
• the costs of building new vessels; and

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• the cost of retrofitting or modifying existing ships to respond to technological advances in
vessel design or equipment, changes in applicable environmental or other regulations or
standards, or otherwise.

If the market values of our vessels further deteriorate, we may be required to record an

impairment charge in our financial statements, which could adversely affect our results of operations.
In addition, any such deterioration in the market values of our vessels could trigger a breach under
our credit facilities, which could adversely affect our operations. If a charter expires or is terminated,
we may be unable to re-charter the vessel at an acceptable rate and, rather than continue to incur
costs to maintain the vessel, may seek to dispose of it. Our inability to dispose of the containership
at a reasonable price could result in a loss on its sale and could materially and adversely affect our
business, results of operations and financial condition and our ability to pay dividends to our
stockholders.

Our growth depends on our ability to expand relationships with existing charterers, establish
relationships with new customers and obtain new time charters, for which we will face substantial
competition from new entrants and established companies with significant resources.

One of our principal objectives is to acquire additional containerships in conjunction with

entering into additional long-term, fixed-rate charters for these vessels. The process of obtaining new
long-term, fixed-rate charters is highly competitive and generally involves an intensive screening
process and competitive bids, and often extends for several months. Generally, we compete for
charters based upon charter rate, customer relationships, operating expertise, professional reputation
and containership specifications, including size, age and condition.

In addition, as vessels age, it can be more difficult to employ them on profitable time charters,
particularly during periods of decreased demand in the charter market. Accordingly, we may find it
difficult to continue to find profitable employment for our older vessels.

We face substantial competition from a number of experienced companies, including state-
sponsored entities and financial organizations. Some of these competitors have significantly greater
financial resources than we do, and can therefore operate larger fleets and may be able to offer
better charter rates. In the future, we may also face competition from reputable, experienced and
well-capitalized marine transportation companies, including state-sponsored entities, that do not
currently own containerships, but may choose to do so. Any increased competition may cause
greater price competition for time charters, as well as for the acquisition of high-quality secondhand
vessels and newbuild vessels. Further, since the charter rate is generally considered to be one of the
principal factors in a charterer’s decision to charter a vessel, the rates offered by our competitors
can place downward pressure on rates throughout the charter market. As a result of these factors,
we may be unable to re-charter our containerships, expand our relationships with existing customers
or to obtain new customers on a profitable basis, if at all, which could have a material adverse
effect on our business, results of operations and financial condition and our ability to pay dividends
to our stockholders.

Due to our lack of diversification, adverse developments in the containership transportation
business could reduce our ability to service our debt obligations and pay dividends to our
stockholders.

We rely exclusively on the cash flow generated from charters for our containerships. Due to our

lack of diversification, an adverse development in the container shipping industry would have a
significantly greater impact on our financial condition and results of operations than if we
maintained more diverse assets or lines of business. An adverse development could also impair our
ability to service debt or pay dividends to our stockholders.

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We may have more difficulty entering into long-term, fixed-rate time charters if a more active
short-term or spot container shipping market develops.

One of our principal strategies is to enter into long-term, fixed-rate time charters in both strong

and weak charter rate environments, although in weaker charter rate environments we would
generally expect to target somewhat shorter charter terms. If more containerships become available
for the spot or short-term charter market, we may have difficulty entering into additional long-term,
fixed-rate time charters for our containerships due to the increased supply of containerships and the
possibility of lower rates in the spot market. We may then have to charter more of our
containerships for shorter periods. As a result, our revenues, cash flows and profitability could then
reflect fluctuations in the short-term charter market and become more volatile. In addition, an active
short-term or spot charter market may require us to enter into charters based on changing market
prices, as opposed to contracts based on fixed rates, which could result in a decrease in our revenues
and cash flows, including our ability to pay dividends to our stockholders, if we enter into charters
during periods when the market price for container shipping is depressed.

We may be unable to re-charter our vessels at profitable rates, if at all, upon their time charter
expiry.

As of February 27, 2015, the current time charters for 19 of our 59 containerships in the water,
including the charters for our four Joint Venture vessels in the water, will expire before the end of
2015. We have options to extend the charters for two of these vessels for successive one year
periods. While we generally expect to be able to obtain time charters for our vessels within a
reasonable period prior to their time charter expiry, we cannot be assured that this will occur in any
particular case, or at all. In addition, demand for containerships may weaken and we may be unable
to secure re-chartering rates that are as profitable as the current time charters. If we are unable to
re-charter these containerships or obtain new time charters at favorable rates, it could have a
material adverse effect on our business, results of operations and financial condition and our ability
to pay dividends to our stockholders.

We are a holding company and we depend on the ability of our subsidiaries to distribute funds to
us in order to satisfy our financial obligations and to make dividend payments.

We are a holding company and our subsidiaries conduct all of our operations and own all of

our operating assets, including our ships. We have no significant assets other than the equity
interests in our subsidiaries. As a result, our ability to pay our obligations and to make dividend
payments depends entirely on our subsidiaries and their ability to distribute funds to us. The ability
of a subsidiary to make these distributions could be affected by a claim or other action by a third
party, including a creditor, or by the law of their respective jurisdiction of incorporation which
regulates the payment of dividends. If we are unable to obtain funds from our subsidiaries, our
board of directors may exercise its discretion not to declare or pay dividends.

Our credit facilities or other financing arrangements contain payment obligations and restrictive
covenants that may limit our liquidity and our ability to expand our fleet. A failure by us to meet
our obligations under our credit facilities could result in an event of default under such credit
facilities and foreclosure on our vessels.

Our credit facilities impose certain operating and financial restrictions on us. These restrictions
in our existing credit facilities generally limit Costamare Inc., and our subsidiaries’ ability to, among
other things:

• pay dividends if an event of default has occurred and is continuing or would occur as a result

of the payment of such dividends;

• purchase or otherwise acquire for value any shares of our subsidiaries’ capital;
• make or repay loans or advances, other than repayment of the credit facilities;
• make investments in or provide guarantees to other persons;

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• sell or transfer significant assets, including any vessel or vessels mortgaged under the credit

facilities, to any person, including Costamare Inc. and our subsidiaries;

• create liens on assets; or
• allow the Konstantakopoulos family’s direct or indirect holding in Costamare Inc. to fall

below 40% of the total issued share capital.

Our existing credit facilities also require Costamare Inc. and certain of our subsidiaries to

maintain the aggregate of (a) the market value, primarily on a charter inclusive basis, of the
mortgaged vessel or vessels and (b) the market value of any additional security provided to the
lenders, above a percentage ranging between 100% to 125% of the then outstanding amount of the
credit facility and any related swap exposure.

Costamare Inc. is required to maintain compliance with the following financial covenants:
• the ratio of our total liabilities (after deducting all cash and cash equivalents) to market value
adjusted total assets (after deducting all cash and cash equivalents) may not exceed 0.75:1;

• the ratio of EBITDA over net interest expense must be equal to or higher than 2.5:1;
• the aggregate amount of all cash and cash equivalents may not be less than the greater of (i)

$30 million or (ii) 3% of the total debt; provided, however, that under two of our credit
facilities, a minimum cash amount equal to 3% of the loan outstanding must be maintained in
accounts with the lender;

• the market value adjusted net worth must at all times exceed $500 million; and
• the ratio of net funded debt to total net assets may not exceed 80% on a charter inclusive

valuation basis.

A failure to meet our payment and other obligations could lead to defaults under our credit
facilities. Our lenders could then accelerate our indebtedness and foreclose on the vessels in our
fleet securing those credit facilities, which could result in the acceleration of other indebtedness that
we may have at such time and the commencement of similar foreclosure proceedings by other
lenders. If any of these events occur, we cannot guarantee that our assets will be sufficient to repay
in full all of our outstanding indebtedness and we may be unable to find alternative financing. Even
if we could obtain alternative financing, such financing may not be on terms that are favorable or
acceptable. The loss of these vessels would have a material adverse effect on our operating results
and financial condition. For additional information see “Item 5. Operating and Financial Review and
Prospects—B. Liquidity and Capital Resources—Credit Facilities and Finance Leases”.

Substantial debt levels may limit our ability to obtain additional financing and pursue other
business opportunities.

As of December 31, 2014, we had outstanding indebtedness of $1.77 billion, including the
obligations under our finance leases, and we expect to incur additional indebtedness as we grow our
fleet. This level of debt could have important consequences to us, including the following:

• our ability to obtain additional financing for working capital, capital expenditures, acquisitions
or other purposes may be impaired or such financing may be unavailable on favorable terms;
• we may need to use a substantial portion of our cash from operations to make principal and
interest payments on our debt, thereby reducing the funds that would otherwise be available
for operations, future business opportunities and dividends to our stockholders;

• our debt level could make us more vulnerable than our competitors with less debt to
competitive pressures or a downturn in our business or the economy generally; and

• our debt level may limit our flexibility in responding to changing business and economic

conditions.

Our ability to service our debt depends upon, among other things, our future financial and
operating performance, which will be affected by prevailing economic conditions and financial,
business, regulatory and other factors, some of which are beyond our control. We may not be able

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to refinance all or part of our maturing debt on favorable terms, or at all. If our operating income is
not sufficient to service our current or future indebtedness, we will be forced to take actions such as
reducing or discontinuing dividend payments, reducing or delaying our business activities,
acquisitions, investments or capital expenditures, selling assets, restructuring or refinancing our debt,
or seeking additional equity capital or bankruptcy protection. We may not be able to effect any of
these remedies on satisfactory terms, or at all.

In the future we may change our operational and financial model by replacing amortizing debt

in favor of non-amortizing debt with a higher fixed or floating rate without shareholder approval,
which may increase our risk of defaulting on our indebtedness if market conditions become
unfavorable.

The derivative contracts we have entered into to hedge our exposure to fluctuations in interest rates
could result in higher than market interest rates and reductions in our stockholders’ equity, as well
as charges against our income.

We have entered into interest rate swaps generally for purposes of managing our exposure to

fluctuations in interest rates applicable to indebtedness under our credit facilities which were
advanced at floating rates based on LIBOR. As of December 31, 2014, the aggregate notional
amount of interest rate swaps relating to our fleet as of such date was $1.25 billion. We unwound
three interest rate swaps in 2014 in connection with the refinancing of the underlying credit facility
through the sale and leaseback transaction entered into with affiliates of CDB Leasing Company
Ltd. (“CLC”). See “Item 5. Operating and Financial Review and Prospects—B. Liquidity and
Capital Resources—Credit Facilities and Finance Leases—CLC Sale and Leaseback”. From time to
time we also enter into certain currency hedges. There is no assurance that our derivative contracts
or any that we enter into in the future will provide adequate protection against adverse changes in
interest rates or currency exchange rates or that our bank counterparties will be able to perform
their obligations. In addition, as a result of the implementation of new regulation of the swaps
markets in the United States, the European Union and elsewhere over the next few years, the cost
of interest rate and currency hedges may increase or suitable hedges may not be available.

While we monitor the credit risks associated with our bank counterparties, there can be no
assurance that these counterparties would be able to meet their commitments under our derivative
contracts or any future derivate contract. Our bank counterparties include financial institutions that
are based in European Union countries that have faced and continue to face severe financial stress
due to the ongoing sovereign debt crisis. The potential for our bank counterparties to default on
their obligations under our derivative contracts may be highest when we are most exposed to the
fluctuations in interest and currency rates such contracts are designed to hedge, and several or all of
our bank counterparties may simultaneously be unable to perform their obligations due to the same
events or occurrences in global financial markets.

To the extent our existing interest rate swaps do not, and future derivative contracts may not,
qualify for treatment as hedges for accounting purposes we would recognize fluctuations in the fair
value of such contracts in our income statement. In addition, changes in the fair value of our
derivative contracts are recognized in “Accumulated Other Comprehensive Loss” on our balance
sheet, and can affect compliance with the net worth covenant requirements in our credit facilities.
Changes in the fair value of our derivative contracts that do not qualify for treatment as hedges for
accounting and financial reporting purposes affect, among other things, our net income, earnings per
share and EBITDA coverage ratio. For additional information see “Item 5. Operating and Financial
Review and Prospects”.

Because we generate all of our revenues in United States dollars but incur a significant portion of
our expenses in other currencies, exchange rate fluctuations could hurt our results of operations.

Fluctuations in currency exchange rates may have a material impact on our financial
performance. We generate all of our revenues in United States dollars and for the year ended
December 31, 2014, we incurred a substantial portion of our vessels’ operating expenses in
currencies other than United States dollars. This difference could lead to fluctuations in net income

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due to changes in the value of the United States dollar relative to other currencies, in particular the
Euro. Expenses incurred in foreign currencies against which the United States dollar falls in value
could increase, thereby decreasing our net income. While we hedge some of this exposure from time
to time, our U.S. dollar denominated results of operations and financial condition and ability to pay
dividends could suffer from adverse currency exchange rate movements.

Increased competition in technology and innovation could reduce our charter hire income and the
value of our vessels.

The charter rates and the value and operational life of a vessel are determined by a number of

factors, including the vessel’s efficiency, operational flexibility and physical life. Efficiency includes
speed and fuel economy. Flexibility includes the ability to enter harbors, utilize related docking
facilities and pass through canals and straits. Physical life is related to the original design and
construction, maintenance and the impact of the stress of operations. If new ship designs currently
promoted by shipyards as being more fuel efficient perform as promoted, or if new containerships
are built in the future that are more efficient or flexible or have longer physical lives than our
vessels, competition from these more technologically advanced containerships could adversely affect
our ability to re-charter, the amount of charter hire payments that we receive for our containerships
once their current time charters expire and the resale value of our containerships. This could
adversely affect our revenues and cash flows, and our ability to service our debt or pay dividends to
our stockholders.

We are subject to regulation and liability under environmental and operational safety laws that
could require significant expenditures and affect our cash flows and net income.

Our business and the operation of our vessels are materially affected by environmental
regulation in the form of international, national, state and local laws, regulations, conventions,
treaties and standards in force in international waters and the jurisdictions in which our
containerships operate, as well as in the country or countries of their registration, including those
governing the management and disposal of hazardous substances and wastes, the cleanup of oil spills
and other contamination, air emissions, water discharges and ballast water management. We may
incur substantial costs in complying with these requirements, including costs for ship modifications
and changes in operating procedures. Because such conventions, laws and regulations are often
revised, it is difficult to predict the ultimate cost of compliance with such requirements or their
impact on the resale value or useful lives of our containerships.

Environmental requirements can also affect the resale value or useful lives of our vessels,

require a reduction in cargo capacity, vessel modifications or operational changes or restrictions, lead
to decreased availability of, or more costly insurance coverage for, environmental matters or result
in the denial of access to certain jurisdictional waters or ports. Under local, national and foreign
laws, as well as international treaties and conventions, we could incur material liabilities, including
cleanup obligations and claims for natural resource damages, personal injury and/or property
damages in the event that there is a release of petroleum or other hazardous materials from our
vessels or otherwise in connection with our operations. Violations of, or liabilities under,
environmental requirements can also result in substantial penalties, fines and other sanctions,
including criminal sanctions, and, in certain instances, seizure or detention of our containerships.
Events of this nature or additional environmental conventions, laws and regulations could have a
material adverse effect on our business, results of operations and financial condition and our ability
to pay dividends to our stockholders.

The operation of vessels is based on the requirements set forth in the International Safety
Management Code (the “ISM Code”). The ISM Code requires vessel managers to develop and
maintain an extensive “Safety Management System” (“SMS”) that includes the adoption of a safety
and environmental protection policy, sets forth instructions and procedures for safe vessel operation
and describes procedures for dealing with emergencies. The ISM Code requires that vessel operators
obtain a Safety Management Certificate (“SMC”) for each vessel they operate from the government
of the vessel’s flag state. The certificate verifies that the vessel operates in compliance with its

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approved SMS. No vessel can obtain a certificate unless the flag state has issued a document of
compliance with the ISM Code to the vessel’s manager. Failure to comply with the ISM Code may
lead to withdrawal of the permit to operate or manage the vessels, subject us to increased liability,
decrease or suspend available insurance coverage for the affected vessels, or result in a denial of
access to, or detention in, certain ports. Each of the containerships in our fleet and each of our
affiliated managers and third-party managers are ISM Code-certified. However, there can be no
assurance that such certifications can be maintained indefinitely.

Governmental regulation of the shipping industry, particularly in the areas of safety and

environmental requirements, can be expected to become stricter in the future. In addition, we
believe that the heightened environmental, quality and security concerns of insurance underwriters,
regulators and charterers will lead to additional requirements, including enhanced risk assessment
and security requirements and greater inspection and safety requirements for vessels. In complying
with new environmental laws and regulations and other requirements that may be adopted, we may
have to incur significant capital and operational expenditures to keep our containerships in
compliance, or even to scrap or sell certain containerships altogether. For additional information see
“Item 4. Information on the Company—B. Business Overview—Risk of Loss and Liability
Insurance—Environmental and Other Regulations”.

The smuggling of drugs or other contraband onto our vessels may lead to governmental claims
against us.

We expect that our vessels will call in ports in South America and other areas where smugglers

attempt to hide drugs and other contraband on vessels, with or without the knowledge of crew
members. To the extent our vessels are found with contraband, whether inside or attached to the
hull of our vessel and whether with or without the knowledge of any of our crew, we may face
governmental or other regulatory claims or penalties which could have an adverse effect on our
business, results of operations, cash flows, financial condition and ability to pay dividends.

Increased inspection procedures, tighter import and export controls and new security regulations
could increase costs and cause disruption of our containership business.

International container shipping is subject to security and customs inspection and related
procedures in countries of origin, destination, and certain trans-shipment points. These inspection
procedures can result in cargo seizure, delays in the loading, offloading, trans-shipment, or delivery
of containers, and the levying of customs duties, fines and other penalties against us.

Since the events of September 11, 2001, United States authorities have substantially increased
container inspections. Government investment in non-intrusive container scanning technology has
grown and there is interest in electronic monitoring technology, including so-called “e-seals” and
“smart” containers, that would enable remote, centralized monitoring of containers during shipment
to identify tampering with or opening of the containers, along with potentially measuring other
characteristics such as temperature, air pressure, motion, chemicals, biological agents and radiation.
Also, as a response to the events of September 11, 2001, additional vessel security requirements
have been imposed, including the installation of security alert and automatic identification systems
on board vessels.

It is unclear what additional changes, if any, to the existing inspection and security procedures
may ultimately be proposed or implemented in the future, or how any such changes will affect the
industry. It is possible that such changes could impose additional financial and legal obligations on
us. Furthermore, changes to inspection and security procedures could also impose additional costs
and obligations on our customers and may, in certain cases, render the shipment of certain types of
goods in containers uneconomical or impractical. Any such changes or developments could have a
material adverse effect on our business, results of operations and financial condition and our ability
to pay dividends to our stockholders.

The operation of our vessels is also affected by the requirements set forth in the International

Ship and Port Facilities Security Code (the “ISPS Code”). The ISPS Code requires vessels to

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develop and maintain a ship security plan that provides security measures to address potential
threats to the security of ships or port facilities. Although each of our containerships is ISPS Code-
certified, any failure to comply with the ISPS Code or maintain such certifications may subject us to
increased liability and may result in denial of access to, or detention in, certain ports. Furthermore,
compliance with the ISPS Code requires us to incur certain costs. Although such costs have not been
material to date, if new or more stringent regulations relating to the ISPS Code are adopted by the
IMO and the flag states, these requirements could require significant additional capital expenditures
or otherwise increase the costs of our operations.

Governments could requisition our vessels during a period of war or emergency, resulting in loss of
earnings.

A government of the jurisdiction where one or more of our containerships are registered could
requisition for title or seize our containerships. Requisition for title occurs when a government takes
control of a vessel and becomes its owner. Also, a government could requisition our containerships
for hire. Requisition for hire occurs when a government takes control of a ship and effectively
becomes the charterer at dictated charter rates. Generally, requisitions occur during a period of war
or emergency, although governments may elect to requisition vessels in other circumstances.
Although we would expect to be entitled to compensation in the event of a requisition of one or
more of our vessels, the amount and timing of payment, if any, would be uncertain. Government
requisition of one or more of our containerships may cause us to breach covenants in certain of our
credit facilities, and could have a material adverse effect on our business, results of operations and
financial condition and our ability to pay dividends to our stockholders.

The global financial markets continue to experience economic instability resulting from terrorist
attacks, regional armed conflicts and general political unrest.

Terrorist attacks in certain parts of the world over the last decade, such as the attacks on the
United States on September 11, 2001, and the continuing response of the United States and other
countries to these attacks, as well as the threat of future terrorist attacks, continue to cause
uncertainty and volatility in the world financial markets and may affect our business, results of
operations and financial condition. In addition, current conflicts in Afghanistan and general political
unrest in Ukraine, certain African nations and the Middle East may lead to additional regional
conflicts and acts of terrorism around the world, which may contribute to further economic
instability in the global financial markets. Political tension or conflicts in the Asia Pacific Region
may also reduce the demand for our services. These uncertainties, as well as future hostilities or
other political instability in regions where our vessels trade, could also affect trade volumes and
patterns and adversely affect our operations, our ability to obtain financing and otherwise have a
material adverse effect on our business, results of operations and financial condition and our ability
to pay dividends to our stockholders.

Acts of piracy on ocean-going vessels have recently increased in frequency, which could adversely
affect our business.

Acts of piracy have historically affected ocean-going vessels trading in certain regions of the
world, such as the South China Sea and the Gulf of Aden off the coast of Somalia. Piracy continues
to occur in the Gulf of Aden off the coast of Somalia and increasingly in the Gulf of Guinea.
Although both the frequency and success of attacks have diminished recently, we still consider
potential acts of piracy to be a material risk to the international container shipping industry, and
protection against this risk requires vigilance. Our vessels regularly travel through regions where
pirates are active. We may not be adequately insured to cover losses from these incidents, which
could have a material adverse effect on our results of operations, financial condition and ability to
pay dividends. Crew costs could also increase in such circumstances. We may not be adequately
insured to cover losses from acts of terrorism, piracy, regional conflicts and other armed actions.

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Risks inherent in the operation of ocean-going vessels could affect our business and reputation,
which could adversely affect our expenses, net income, cash flow and stock price.

The operation of ocean-going vessels carries inherent risks. These risks include the possibility of:
• marine disaster;
• piracy;
• environmental accidents;
• grounding, fire, explosions and collisions;
• cargo and property loss or damage;
• business interruptions caused by mechanical failure, human error, war, terrorism, political

action in various countries, or adverse weather conditions; and

• work stoppages or other labor problems with crew members serving on our containerships,

some of whom are unionized and covered by collective bargaining agreements.

Such occurrences could result in death or injury to persons, loss of property or environmental
damage, delays in the delivery of cargo, loss of revenues from or termination of charter contracts,
governmental fines, penalties or restrictions on conducting business, litigation with our employees,
customers or third parties, higher insurance rates, and damage to our reputation and customer
relationships generally. Although we maintain hull and machinery and war risks insurance, as well as
protection and indemnity insurance, which may cover certain risks of loss resulting from such
occurrences, our insurance coverage may be subject to caps or not cover such losses, and any of
these circumstances or events could increase our costs or lower our revenues. The involvement of
our vessels in an environmental disaster may harm our reputation as a safe and reliable vessel owner
and operator. Any of these results could have a material adverse effect on business, results of
operations and financial condition and our ability to pay dividends to our stockholders.

On October 5, 2011, our vessel Rena ran aground on the Astrolabe Reef off New Zealand and
sustained significant damage. The vessel was determined to be a constructive total loss for insurance
purposes. While we anticipate that our insurance policies will cover most costs and losses associated
with the incident, such insurance may not be sufficient to cover all risks. As a result, claims against
us or our subsidiaries as a result of the grounding of the Rena could have a material adverse effect
on our business.

Our insurance may be insufficient to cover losses that may occur to our property or result from our
operations.

The operation of any vessel includes risks such as mechanical failure, collision, fire, contact with

floating objects, property loss, cargo loss or damage and business interruption due to political
circumstances in foreign countries, hostilities and labor strikes. In addition, there is always an
inherent possibility of a marine disaster, including oil spills and other environmental mishaps. There
are also liabilities arising from owning and operating vessels in international trade. We procure
insurance for our fleet of containerships in relation to risks commonly insured against by vessel
owners and operators. Our current insurance includes (i) hull and machinery insurance covering
damage to our and third-party vessels’ hulls and machinery from, among other things, collisions and
contact with fixed and floating objects, (ii) war risks insurance covering losses associated with the
outbreak or escalation of hostilities and (iii) protection and indemnity insurance (which includes
environmental damage) covering, among other things, third-party and crew liabilities such as
expenses resulting from the injury or death of crew members, passengers and other third parties, the
loss or damage to cargo, third-party claims arising from collisions with other vessels, damage to
other third-party property and pollution arising from oil or other substances.

We can give no assurance that we are adequately insured against all risks or that our insurers
will pay a particular claim. Even if our insurance coverage is adequate to cover our losses, we may
not be able to obtain a timely replacement containership in the event of a loss of a containership.
Under the terms of our credit facilities, we are subject to restrictions on the use of any proceeds we
may receive from claims under our insurance policies. Furthermore, in the future, we may not be

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able to obtain adequate insurance coverage at reasonable rates for our fleet. For example, more
stringent environmental regulations have led to increased costs for, and in the future may result in
the lack of availability of, insurance against risks of environmental damage or pollution. We may
also be subject to calls, or premiums, in amounts based not only on our own claim records but also
the claim records of all other members of the protection and indemnity associations through which
we receive indemnity insurance coverage. There is no cap on our liability exposure for such calls or
premiums payable to our protection and indemnity association. Our insurance policies also contain
deductibles, limitations and exclusions which, although we believe are standard in the shipping
industry, may nevertheless increase our costs. A catastrophic oil spill or marine disaster could exceed
our insurance coverage, which could have a material adverse effect on our business, results of
operations and financial condition and our ability to pay dividends to our stockholders. Any
uninsured or underinsured loss could harm our business and financial condition. In addition, the
insurance may be voidable by the insurers as a result of certain actions, such as vessels failing to
maintain required certification.

We do not carry loss of hire insurance. Loss of hire insurance covers the loss of revenue during
extended vessel off-hire periods, such as those that occur during an unscheduled dry-docking due to
damage to the vessel from accidents. Accordingly, any loss of a vessel or any extended period of
vessel off-hire, due to an accident or otherwise, could have a material adverse effect on our
business, results of operations and financial condition and our ability to pay dividends to our
stockholders.

Maritime claimants could arrest our vessels, which could interrupt our cash flows.

Crew members, suppliers of goods and services to a vessel, shippers or receivers of cargo and

other parties may be entitled to a maritime lien against a vessel for unsatisfied debts, claims or
damages, including, in some jurisdictions, for debts incurred by previous owners. In many
jurisdictions, a maritime lien-holder may enforce its lien by arresting a vessel. The arrest or
attachment of one or more of our vessels, if such arrest or attachment is not timely discharged,
could cause us to default on a charter or breach covenants in certain of our credit facilities, could
interrupt our cash flows and could require us to pay large sums of money to have the arrest or
attachment lifted. Any of these occurrences could have a material adverse effect on our business,
results of operations and financial condition and our ability to pay dividends to our stockholders.

In addition, in some jurisdictions, such as South Africa, under the “sister ship” theory of

liability, a claimant may arrest both the vessel that is subject to the claimant’s maritime lien and any
“associated” vessel, which is any vessel owned or controlled by the same owner. Claimants could try
to assert “sister ship” liability against one containership in our fleet for claims relating to another of
our containerships.

Compliance with safety and other requirements imposed by classification societies may be very
costly and may adversely affect our business.

The hull and machinery of every commercial vessel must be classed by a classification society.
The classification society certifies that the vessel has been built and maintained in accordance with
the applicable rules and regulations of the classification society. Moreover, every vessel must comply
with all applicable international conventions and the regulations of the vessel’s flag state as verified
by a classification society. Finally, each vessel must successfully undergo periodic surveys, including
annual, intermediate and special surveys.

If any vessel does not maintain its class, it will lose its insurance coverage and be unable to

trade, and the vessel’s owner will be in breach of relevant covenants under its financing
arrangements. Failure to maintain the class of one or more of our containerships could have a
material adverse effect on our financial condition and results of operations, as well as our cash
flows, including cash available to pay dividends to stockholders.

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Our business depends upon certain members of our senior management who may not necessarily
continue to work for us.

Our future success depends to a significant extent upon our chairman and chief executive
officer, Konstantinos Konstantakopoulos, certain members of our senior management and our
managers. Mr. Konstantakopoulos has substantial experience in the container shipping industry and
has worked with us and our managers for many years. He, our managers and certain of our senior
management team are crucial to the execution of our business strategies and to the growth and
development of our business. If these individuals were no longer to be affiliated with us or our
managers, or if we were to otherwise cease to receive services from them, we may be unable to
recruit other employees with equivalent talent and experience, which could have a material adverse
effect on our financial condition and results of operations.

Our arrangements with our chief executive officer restrict his ability to compete with us, and such
restrictive covenants generally may be unenforceable.

Konstantinos Konstantakopoulos, our chairman and chief executive officer, has entered into a

restrictive covenant agreement with us on November 3, 2010, under which, except for in certain
limited circumstances, he is precluded during the term of his service and for six months thereafter
from owning containerships and from acquiring or investing in a business that owns such vessels
without first offering the same to us. It also requires him to offer certain charters to our vessels
where the charter is suitable for both our vessel and a vessel he owns outside of Costamare. In
addition, the restrictive covenant agreement is governed by English Law, and English law generally
does not favor the enforcement of such restrictions which are considered contrary to public policy
and facially are void for being in restraint of trade. Our ability to enforce these restrictions, should
it ever become necessary, will depend upon us establishing that there is a legitimate proprietary
interest that is appropriate to protect, and that the protection sought is no more than is reasonable,
having regard to the interests of the parties and the public interest. We cannot give any assurance
that a court would enforce the restrictions as written by way of an injunction or that we could
necessarily establish a case for damages as a result of a violation of the restrictive covenants
agreement.

We depend on our managers to operate our business, and if our managers fail to satisfactorily
perform their management services, our results of operations, financial condition and ability to pay
dividends may be harmed.

Pursuant to the group management agreement between Costamare Shipping Company S.A.
(“Costamare Shipping”) and us (the “Group Management Agreement”) and the individual ship-
management agreements pertaining to each vessel, our managers provide us with, among other
things, certain commercial, technical and administrative services and may provide us with certain of
our officers. See “Item 4. Information on the Company—B. Business Overview—Management of
Our Fleet” and “Item 7. Major Shareholders and Related Party Transactions—B. Related Party
Transactions—Management Agreement”. Our operational success and ability to execute our growth
strategy depends significantly upon our managers’ satisfactory performance of these services. Our
business will be harmed if such entities fail to perform these services satisfactorily or if they stop
providing these services. Costamare Shipping, one of our managers, also owns the Costamare
trademarks, which consist of the name “COSTAMARE” and the Costamare logo, and has agreed to
license each trademark to us on a royalty free basis for the life of the Group Management
Agreement. If the Group Management Agreement were to be terminated or if its terms were to be
altered, our business could be adversely affected, as we may not be able to immediately replace such
services, and even if replacement services were immediately available, the terms offered could be
less favorable than the ones offered by our managers.

Our ability to compete for and enter into new time charters and to expand our relationships

with our existing charterers depends largely on our relationship with our managers and their
reputation and relationships in the shipping industry. If our managers suffer material damage to their
reputation or relationships, it may harm our ability to:

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• renew existing time charters upon their expiration;
• obtain new time charters;
• successfully interact with shipyards;
• obtain financing and other contractual arrangements with third parties on commercially
acceptable terms (therefore potentially increasing operating expenditure for the fleet);

• maintain satisfactory relationships with our charterers and suppliers;
• operate our fleet efficiently; or
• successfully execute our business strategies.
If our ability to do any of the things described above is impaired, it could have a material

adverse effect on our financial condition and results of operations, as well as our cash flows.

We may not realize expected benefits from the Co-operation Agreement with V.Ships Greece, which
may negatively impact our business.

On January 7, 2013, Costamare Shipping entered into a Co-operation Agreement (the “Co-

operation Agreement”) with V.Ships Greece Ltd. (“V.Ships Greece”), a member of V.Group,
pursuant to which the two companies established a ship-management cell (the “Cell”) under V.Ships
Greece to serve as sub-manager of certain of our vessels. See “Item 4. Information on the
Company—B. Business Overview—Management of Our Fleet”. Costamare Shipping passes to us the
net profit, if any, it receives from V.Ships Greece pursuant to the Co-operation Agreement as a
refund or reduction of the management fees payable by us to Costamare Shipping. We may not
realize the anticipated benefits of the arrangement with V.Ships Greece, which include the Cell’s
effective management of certain of our vessels, the generation of net profit by the Cell, a portion of
which is passed on to us, and the reduction of our ship-management expenditures. Also, Costamare
Shipping or V.Ships Greece may terminate the Co-operation Agreement upon six months’ notice.

Our managers are privately held companies and there is little or no publicly available information
about them.

The ability of our managers to continue providing services for our benefit will depend in part

on their own financial strength. Circumstances beyond our control could impair our managers’
financial strength, and because they are privately held companies, information about their financial
strength is not publicly available. As a result, an investor in our stock might have little advance
warning of problems affecting any of our managers, even though these problems could have a
material adverse effect on us. As part of our reporting obligations as a public company, we will
disclose information regarding our managers that has a material impact on us to the extent that we
become aware of such information.

Our chairman and chief executive officer has affiliations with our managers and others that could
create conflicts of interest between us and our managers or other entities in which he has an
interest.

The Group Management Agreement is between us and Costamare Shipping, which is controlled
by our chairman and chief executive officer, Konstantinos Konstantakopoulos. While we believe that
the terms of the Group Management Agreement are consistent with normal commercial practice of
the industry, the agreement was not negotiated at arms’ length by non-related parties. Accordingly,
the terms may be less favorable to the Company than if such terms were obtained from a non-
related third party. Additionally, Konstantinos Konstantakopoulos directly or indirectly controls our
managers and is our chairman and chief executive officer and the owner of approximately 21.59% of
our common stock, and this relationship could create conflicts of interest between us, on the one
hand, and our managers, on the other hand. These conflicts, which are addressed in the Group
Management Agreement and the restrictive covenant agreement between us and our chairman and
chief executive officer, may arise in connection with the chartering, purchase, sale and operation of
the vessels in our fleet versus vessels owned or chartered-in by other companies affiliated with our

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managers or our chairman and chief executive officer. These conflicts of interest may have an
adverse effect on our results of operations. See “Item 4. Information on the Company—B. Business
Overview—Management of Our Fleet” and “Item 7. Major Shareholders and Related Party
Transactions—B. Related Party Transactions—Restrictive Covenant Agreements”.

Additionally, Konstantinos Konstantakopoulos holds a passive minority interest in certain
companies controlled by the family of Dimitrios Lemonidis that own five containerships comparable
to 15 of our vessels and may acquire additional vessels. These vessels may compete with the
Company’s vessels for chartering opportunities. These investments were entered into following the
review and approval of our Audit Committee and Board of Directors.

Certain of our managers are permitted to provide management services to vessels owned by third
parties that compete with us, which could result in conflicts of interest or otherwise adversely affect
our business.

Shanghai Costamare is not prohibited from providing management services to vessels owned by

third parties, including related parties, that may compete with us for charter opportunities. In
addition, the Cell under V.Ships Greece actively seeks to provide management services to vessels
owned by third parties that may compete with us. We have also consented to Costamare Shipping
providing management services in respect of the Joint Venture vessels that are similar to and
compete with our vessels. Our managers’ provision of management services to third parties,
including related parties, that may compete with our vessels could give rise to conflicts of interest or
adversely affect the ability of these managers to provide the level of service that we require.
Conflicts of interest with respect to certain services, including sale and purchase and chartering
activities, among others, may have an adverse effect on our results of operations. Shanghai
Costamare has only provided management services to third parties in a limited number of cases in
the past and currently does not provide any such services to third parties.

Our vessels may call on ports located in countries that are subject to restrictions imposed by the
United States government, the European Union, the United Nations and other governments, which
could negatively affect the trading price of our shares of common stock.

The United States, the European Union, the United Nations and other governments and their

agencies impose sanctions and embargoes on certain countries and maintain lists of countries,
individuals or entities they consider to be state sponsors of terrorism. From time to time on
charterers’ instructions, our vessels have called and may again call on ports located in countries
subject to sanctions and embargoes imposed by the United States government and countries
identified by the United States government as state sponsors of terrorism. The U.S. sanctions and
embargo laws and regulations vary in their application, as they do not all apply to the same covered
persons or proscribe the same activities, and such sanctions and embargo laws and regulations may
be amended or strengthened over time.

For example, in 2010, the U.S. enacted the Comprehensive Iran Sanctions Accountability and

Divestment Act (“CISADA”), which expanded the scope of the former Iran Sanctions Act. Among
other things, CISADA expands the application of the prohibitions to non-U.S. companies, such as
the Company, and introduces limits on the ability of companies and persons to do business or trade
with Iran when such activities relate to the investment, supply or export of refined petroleum or
petroleum products. In 2012, President Obama signed Executive Order 13608, which prohibits
foreign persons from violating or attempting to violate, or causing a violation of any sanctions in
effect against Iran or facilitating any deceptive transactions for or on behalf of any person subject to
U.S. sanctions. The Secretary of the Treasury may prohibit any transactions or dealings, including
any U.S. capital markets financing, involving any person found to be in violation of Executive Order
13608. Also in 2012, the U.S. enacted the Iran Threat Reduction and Syria Human Rights Act of
2012 (the “ITRA”), which created new sanctions and strengthened existing sanctions. Among other
things, the ITRA intensifies existing sanctions regarding the provision of goods, services,
infrastructure or technology to Iran’s petroleum or petrochemical sector. The ITRA also includes a
provision requiring the President of the United States to impose five or more sanctions from Section

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6(a) of the Iran Sanctions Act, as amended, on a person the President determines is a controlling
beneficial owner of, or otherwise owns, operates, or controls or insures a vessel that was used to
transport crude oil from Iran to another country and (1) if the person is a controlling beneficial
owner of the vessel, the person had actual knowledge the vessel was so used or (2) if the person
otherwise owns, operates, or controls, or insures the vessel, the person knew or should have known
the vessel was so used. Such a person could be subject to a variety of sanctions, including exclusion
from U.S. capital markets, exclusion from financial transactions subject to U.S. jurisdiction, and
exclusion of that person’s vessels from U.S. ports for up to two years. The ITRA also includes a
requirement that issuers of securities must disclose to the SEC in their annual and quarterly reports
if the issuer or “any affiliate” has “knowingly” engaged in certain sanctioned activities involving Iran
during the timeframe covered by the report. Finally, in January 2013, the U.S. enacted the Iran
Freedom and Counter-Proliferation Act of 2012 (the “IFCPA”), which expanded the scope of U.S.
sanctions on any person that is part of Iran’s energy, shipping or shipbuilding sector and operators
of ports in Iran, and imposes penalties on any person who facilitates or otherwise knowingly
provides significant financial, material or other support to these entities.

From January 2010 through December 2014, vessels in our fleet made a total of 157 calls to
ports in Iran, Syria, Sudan and Cuba, representing approximately 0.83% of our approximately 18,904
calls on worldwide ports. Although we believe that we are in compliance with all applicable
sanctions and embargo laws and regulations, and intend to maintain such compliance, there can be
no assurance that we will be in compliance in the future, particularly as the scope of certain laws
may be unclear and may be subject to changing interpretations. Any such violation could result in
fines or other penalties and could result in some investors deciding, or being required, to divest their
interest, or not to invest, in the Company. Additionally, some investors may decide to divest their
interest, or not to invest, in the Company simply because we do business with companies that do
business in sanctioned countries. Moreover, our charterers may violate applicable sanctions and
embargo laws and regulations as a result of actions that may involve our vessels, and those
violations could in turn negatively affect our reputation. Investor perception of the value of our
common stock may also be adversely affected by the consequences of war, the effects of terrorism,
civil unrest and governmental actions in these and surrounding countries.

Because the Public Company Accounting Oversight Board is not currently permitted to inspect our
independent accounting firm, you may not benefit from such inspections.

Auditors of U.S. public companies are required by law to undergo periodic Public Company
Accounting Oversight Board (“PCAOB”) inspections that assess their compliance with U.S. law and
professional standards in connection with performance of audits of financial statements filed with the
SEC. Certain European Union countries, including Greece, do not currently permit the PCAOB to
conduct inspections of accounting firms established and operating in such European Union countries,
even if they are part of major international firms. Accordingly, unlike for most U.S. public
companies, the PCAOB is prevented from evaluating our auditor’s performance of audits and its
quality control procedures, and, unlike stockholders of most U.S. public companies, we and our
stockholders are deprived of the possible benefits of such inspections.

We are a Marshall Islands corporation, and the Marshall Islands does not have a well developed
body of corporate law or a bankruptcy act, and, as a result, stockholders may have fewer rights and
protections under Marshall Islands law than under the laws of a jurisdiction in the United States.

Our corporate affairs are governed by our articles of incorporation and bylaws and by the
Marshall Islands Business Corporations Act (the “BCA”). The provisions of the BCA are similar to
provisions of the corporation laws of a number of states in the United States. However, there have
been few judicial cases in the Marshall Islands interpreting the BCA. The rights and fiduciary
responsibilities of directors under the laws of the Marshall Islands are not as clearly established as
the rights and fiduciary responsibilities of directors under statutes or judicial precedent in existence
in certain U.S. jurisdictions. Stockholder rights may differ as well. While the BCA does specifically
incorporate the non-statutory law, or judicial case law, of the State of Delaware and other states

96034

with substantially similar legislative provisions, our public stockholders may have more difficulty in
protecting their interests in the face of actions by the management, directors or controlling
stockholders than would stockholders of a corporation incorporated in a U.S. jurisdiction.

The Marshall Islands has no established bankruptcy act, and as a result, any bankruptcy action

involving our company would have to be initiated outside the Marshall Islands, and our public
stockholders may find it difficult or impossible to pursue their claims in such other jurisdictions.

It may be difficult or impossible to enforce service of process and enforcement of judgments against
us and our officers and directors.

We are a Marshall Islands corporation and all of our subsidiaries are, and will likely be,

incorporated in jurisdictions outside the United States. In addition, our executive offices are located
outside of the United States in Athens, Greece. All of our directors and officers reside outside of
the United States, and all or a substantial portion of our assets and the assets of most of our officers
and directors are, and will likely be, located outside of the United States. As a result, it may be
difficult or impossible for U.S. investors to serve legal process within the United States upon us or
any of these persons or to enforce a judgment against us for civil liabilities in U.S. courts. In
addition, you should not assume that courts in the countries in which we or our subsidiaries are
incorporated or where our or our subsidiaries’ assets are located (1) would enforce judgments of
U.S. courts obtained in actions against us or our subsidiaries based upon the civil liability provisions
of applicable U.S. Federal and state securities laws or (2) would enforce, in original actions,
liabilities against us or our subsidiaries based on those laws.

There is also substantial doubt that the courts of the Marshall Islands or Greece would enter
judgments in original actions brought in those courts predicated on U.S. Federal or state securities
laws.

The formation of Costamare Partners LP, a master limited partnership, or the “MLP”, for purposes
of the proposed initial public offering may involve issuance of interests to third parties representing
a substantial portion of our assets.

On October 2, 2014, we filed a registration statement on Form F-1 with the SEC (which
registration statement was subsequently amended and re-filed on October 23, 2014, November 12,
2014 and January 30, 2015) for an initial public offering of common units representing limited
liability partner interests in Costamare Partners LP, a master limited partnership formed to own,
operate and acquire containerships under long-term, fixed-rate charters. The registration statement
has not yet been declared effective by the SEC. If we complete the proposed MLP initial public
offering, we would contribute 100% interests in certain entities which own a 100% interest in four
of our vessels to the MLP on terms with which you may not agree or may believe are not in the
best interests of the holders of our common stock. The MLP would issue equity securities to public
or private investors and apply part of the proceeds to reduce ship-related indebtedness. While any
such transaction would reduce our overall indebtedness, it would also reduce our rights to cash flows
related to the transferred vessels. There is no assurance that the proposed MLP initial public
offering will be consummated. See “Item 4. Information on the Company—B. Business Overview—
Our Fleet, Acquisitions and Newbuild Vessels”.

Risks Relating to our Securities

The price of our common stock may be volatile.

The price of our common stock may be volatile and may fluctuate due to various factors

including:

• actual or anticipated fluctuations in quarterly and annual results;
• fluctuations in the seaborne transportation industry, including fluctuations in the containership

market;

• mergers and strategic alliances in the shipping industry;

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• market conditions in the shipping industry;
• changes in governmental regulations or maritime self-regulatory organization standards;
• shortfalls in our operating results from levels forecasted by securities analysts;
• our payment of dividends;
• announcements concerning us or our competitors;
• general economic conditions;
• terrorist acts;
• future sales of our stock or other securities;
• investors’ perception of us and the containership transportation industry;
• the general state of the securities market; and
• other developments affecting us, our industry or our competitors.
The containership sector of the shipping industry has been highly unpredictable and volatile.
Securities markets worldwide are experiencing significant price and volume fluctuations. The market
price for our common stock may also be volatile. This market volatility, as well as general economic,
market or political conditions, could reduce the market price of our common stock in spite of our
operating performance. Consequently, you may not be able to sell our common stock at prices equal
to or greater than those at which you pay or paid.

Our management is required to devote substantial time to complying with public company
regulations.

As a public company, we incur significant legal, accounting and other expenses. In addition, the

Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) as well as rules subsequently adopted by the SEC
and the New York Stock Exchange (“NYSE”), including the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010, have imposed various requirements on public companies,
including changes in corporate governance practices. Our directors, management and other personnel
will need to devote a substantial amount of time to comply with these requirements. Moreover,
these rules and regulations relating to public companies will increase our legal and financial
compliance costs and will make some activities more time-consuming and costly.

Sarbanes-Oxley requires, among other things, that we maintain and periodically evaluate our
internal control over financial reporting and disclosure controls and procedures. In particular, under
Section 404 of Sarbanes-Oxley, we are required to include in each of our annual reports on Form
20-F a report containing our management’s assessment of the effectiveness of our internal control
over financial reporting and a related attestation of our independent auditors. We have undertaken
the required review to comply with Section 404, including the documentation, testing and review of
our internal controls under the direction of our management. While we did not identify any material
weaknesses or significant deficiencies in our internal controls under the current assessment, we
cannot be certain at this time that all our controls will be considered effective in future assessments.
Therefore, we can give no assurances that our internal control over financial reporting will satisfy
the new regulatory requirements in the future.

We are a “foreign private issuer” and “controlled company” under the NYSE rules, and as such we
are entitled to exemption from certain NYSE corporate governance standards, and you may not
have the same protections afforded to stockholders of companies that are subject to all of the NYSE
corporate governance requirements.

We are a “foreign private issuer” under the securities laws of the United States and the rules of

07764

NYSE. In addition, members of the Konstantakopoulos family continue to own, in the aggregate, a
majority of our outstanding common stock. As a result, we are a “controlled company” within the
meaning of the NYSE corporate governance standards. Under the NYSE rules, a company of which
more than 50% of the voting power is held by another company or group is a “controlled company”
and may elect not to comply with certain NYSE corporate governance requirements, including (1)
the requirement that a majority of the board of directors consist of independent directors, (2) the
requirement that the nominating committee be composed entirely of independent directors and have
a written charter addressing the committee’s purpose and responsibilities, (3) the requirement that
the compensation committee be composed entirely of independent directors and have a written
charter addressing the committee’s purpose and responsibilities and (4) the requirement of an annual
performance evaluation of the nominating and corporate governance and compensation committees.
As permitted by these exemptions, as well as by our bylaws and the laws of the Marshall Islands, we
currently have a board of directors with a majority of non-independent directors, an audit committee
comprised solely of two independent directors and a combined corporate governance, nominating
and compensation committee with one non-independent director serving as a committee chairman.
As a result, non-independent directors, including members of our management who also serve on
our board of directors, may, among other things, fix the compensation of our management, make
stock and option awards and resolve governance issues regarding our company. Accordingly, in the
future you may not have the same protections afforded to stockholders of companies that are
subject to all of the NYSE corporate governance requirements.

Future sales of our common stock could cause the market price of our common stock to decline.

Sales of a substantial number of shares of our common stock in the public market, or the
perception that these sales could occur, may depress the market price for our common stock. These
sales could also impair our ability to raise additional capital through the sale of our equity securities
in the future.

Subject to the rules of the NYSE, in the future, we may issue additional shares of common
stock, and other equity securities of equal or senior rank, without stockholder approval, in a number
of circumstances.

The issuance by us of additional shares of common stock or other equity securities of equal or

senior rank would have the following effects:

• our existing stockholders’ proportionate ownership interest in us will decrease;
• the dividend amount payable per share on our common stock may be lower;
• the relative voting strength of each previously outstanding share may be diminished; and
• the market price of our common stock may decline.
Our stockholders also may elect to sell large numbers of shares held by them from time to

time. The number of shares of common stock and Preferred Stock available for sale in the public
market will be limited by restrictions applicable under securities laws, and agreements that we and
our executive officers, directors and existing stockholders may enter into with the underwriters at the
time of an offering. Subject to certain exceptions, these agreements generally restrict us and our
executive officers, directors and existing stockholders from directly or indirectly offering, selling,
pledging, hedging or otherwise disposing of our equity securities or any security that is convertible
into or exercisable or exchangeable for our equity securities and from engaging in certain other
transactions relating to such securities for an agreed period after the date of an offering prospectus
without the prior written consent of the underwriter(s).

Our Series B Preferred Stock and Series C Preferred Stock are subordinated to our debt obligations
and pari passu with each other, and your interests could be diluted by the issuance of additional
shares of preferred stock, including additional Series B and Series C Preferred Stock, and by other
transactions.

Our Preferred Stock is subordinated to all of our existing and future indebtedness. As of
December 31, 2014, we had outstanding indebtedness of approximately $1.77 billion, including the

92919

obligations under our finance leases. Our existing indebtedness restricts, and our future indebtedness
may include restrictions on, our ability to pay dividends to preferred stockholders. Our charter
currently authorizes the issuance of up to 100 million shares of preferred stock in one or more
classes or series. Of this preferred stock, 84 million shares remain available for issuance after giving
effect to the designation of 10 million shares as Series A Participating Preferred Stock in connection
with our adoption of a stockholder rights plan, the issuance of two million shares as Series B
Preferred Stock and the issuance of four million shares as Series C Preferred Stock. The issuance of
additional preferred stock on a parity with or senior to our Preferred Stock would dilute the
interests of the holders of our Preferred Stock, and any issuance of preferred stock senior to or on a
parity with our Preferred Stock or of additional indebtedness could affect our ability to pay
dividends on, redeem or pay the liquidation preference on our common stock and our Preferred
Stock. No provisions relating to our Preferred Stock protect the holders of our Preferred Stock in
the event of a highly leveraged or other transaction, including a merger or the sale, lease or
conveyance of all or substantially all our assets or business, which might adversely affect the holders
of our Preferred Stock.

Holders of Preferred Stock have extremely limited voting rights.

Our common stock is the only class of our stock carrying full voting rights. Holders of the
Preferred Stock generally have no voting rights except (1) in respect of amendments to the Articles
of Incorporation which would adversely alter the preferences, powers or rights of the Preferred
Stock or (2) in the event that the Company proposes to issue any parity stock if the cumulative
dividends payable on outstanding Preferred Stock are in arrears or any senior stock. However, if and
whenever dividends payable on the Preferred Stock are in arrears for six or more quarterly periods,
whether or not consecutive, holders of Preferred Stock (for this purpose the Series B and Series C
Preferred Stock will vote together as a single class with all other classes or series of parity stock
upon which like voting rights have been conferred and are exercisable) will be entitled to elect one
additional director to serve on our board of directors, and the size of our board of directors will be
increased as needed to accommodate such change (unless the size of our board of directors already
has been increased by reason of the election of a director by holders of parity stock upon which like
voting rights have been conferred and with which the Preferred Stock voted as a class for the
election of such director). The right of such holders of Preferred Stock to elect a member of our
board of directors will continue until such time as all accumulated and unpaid dividends on the
Preferred Stock have been paid in full.

The Preferred Stock represents perpetual equity interests and you will have no right to receive any
greater payment than the liquidation preference regardless of the circumstances.

The Preferred Stock represents perpetual equity interests in us and, unlike our indebtedness,

will not give rise to a claim for payment of a principal amount at a particular date. As a result,
holders of the Preferred Stock may be required to bear the financial risks of an investment in the
Preferred Stock for an indefinite period of time.

The payment due upon a liquidation is fixed at the redemption preference of $25.00 per share
plus accumulated and unpaid dividends to the date of liquidation. If, in the case of our liquidation,
there are remaining assets to be distributed after payment of this amount, you will have no right to
receive or to participate in these amounts. Furthermore, if the market price for your Preferred Stock
is greater than the liquidation preference, you will have no right to receive the market price from us
upon our liquidation.

Members of the Konstantakopoulos family are our principal existing stockholders and will control
the outcome of matters on which our stockholders are entitled to vote; their interests may be
different from yours.

Members of the Konstantakopoulos family own, directly or indirectly, approximately 64.8% of

our outstanding common stock, in the aggregate. These stockholders will be able to control the
outcome of matters on which our stockholders are entitled to vote, including the election of our

11724

entire board of directors and other significant corporate actions. The interests of each of these
stockholders may be different from yours.

Anti-takeover provisions in our organizational documents could make it difficult for our
stockholders to replace or remove our current board of directors or could have the effect of
discouraging, delaying or preventing a merger or acquisition, which could adversely affect the
market price of the shares of our common stock.

Several provisions of our articles of incorporation and bylaws could make it difficult for our
stockholders to change the composition of our board of directors in any one year, preventing them
from changing the composition of our management. In addition, the same provisions may discourage,
delay or prevent a merger or acquisition that stockholders may consider favorable.

These provisions:
• authorize our board of directors to issue “blank check” preferred stock without stockholder

approval;

• provide for a classified board of directors with staggered, three-year terms;
• prohibit cumulative voting in the election of directors;
• authorize the removal of directors only for cause and only upon the affirmative vote of the

holders of a majority of the outstanding stock entitled to vote for those directors;

• prohibit stockholder action by written consent unless the written consent is signed by all

stockholders entitled to vote on the action; and

• establish advance notice requirements for nominations for election to our board of directors

or for proposing matters that can be acted on by stockholders at stockholder meetings.

We have adopted a stockholder rights plan pursuant to which our board of directors may cause

the substantial dilution of the holdings of any person that attempts to acquire us without the
approval of our board of directors.

These anti-takeover provisions, including the provisions of our stockholder rights plan, could
substantially impede the ability of public stockholders to benefit from a change in control and, as a
result, may adversely affect the market price of our common stock and your ability to realize any
potential change of control premium.

Tax Risks

In addition to the following risk factors, you should read “Item 10. Additional Information—E.

Tax Considerations—Marshall Islands Tax Considerations”, “Item 10. Additional Information—E.
Tax Considerations—Liberian Tax Considerations” and “Item 10. Additional Information—E. Tax
Considerations—United States Federal Income Tax Considerations” for a more complete discussion
of the material Marshall Islands, Liberian and U.S. Federal income tax consequences of owning and
disposing of our common stock and Preferred Stock.

We may have to pay tax on U.S.-source income, which would reduce our earnings.

Under the United States Internal Revenue Code of 1986, as amended (the “Code”), the U.S.

source gross transportation income of a ship-owning or chartering corporation, such as ourselves, is
subject to a 4% U.S. Federal income tax without allowance for deduction, unless that corporation
qualifies for exemption from tax under Section 883 of the Code and the Treasury Regulations
promulgated thereunder. U.S. source gross transportation income consists of 50% of the gross
shipping income that is attributable to transportation that begins or ends, but that does not both
begin and end, in the United States.

41863

our U.S. source gross transportation income. The imposition of this taxation could have a negative
effect on our business and would result in decreased earnings available for distribution to our
stockholders. Some of our time charters contain provisions pursuant to which charterers undertake
to reimburse us for the 4% gross basis tax on our U.S. source gross transportation income. For a
more detailed discussion, see “Item 10. Additional Information—E. Tax Considerations—United
States Federal Income Tax Considerations—Taxation of Our Shipping Income”.

If we were treated as a “passive foreign investment company”, certain adverse U.S. Federal income
tax consequences could result to U.S. stockholders.

A foreign corporation will be treated as a “passive foreign investment company” (“PFIC”), for

U.S. Federal income tax purposes if at least 75% of its gross income for any taxable year consists of
certain types of “passive income”, or at least 50% of the average value of the corporation’s assets
produce or are held for the production of those types of “passive income”. For purposes of these
tests, “passive income” includes dividends, interest, and gains from the sale or exchange of
investment property and rents and royalties other than rents and royalties that are received from
unrelated parties in connection with the active conduct of a trade or business. For purposes of these
tests, income derived from the performance of services does not constitute “passive income”. U.S.
stockholders of a PFIC are subject to a disadvantageous U.S. Federal income tax regime with
respect to the income derived by the PFIC, the distributions they receive from the PFIC, and the
gain, if any, they derive from the sale or other disposition of their shares in the PFIC. If we are
treated as a PFIC for any taxable year, we will provide information to U.S. stockholders who
request such information to enable them to make certain elections to alleviate certain of the adverse
U.S. Federal income tax consequences that would arise as a result of holding an interest in a PFIC.

Based on our proposed method of operation, we do not believe that we will be a PFIC with
respect to any taxable year. In this regard, we intend to treat the gross income we derive or are
deemed to derive from our time chartering activities as services income, rather than rental income.
Accordingly, we believe that our income from our time chartering activities does not constitute
“passive income”, and the assets that we own and operate in connection with the production of that
income do not constitute passive assets. Our counsel, Cravath, Swaine & Moore LLP, is of the
opinion that we should not be a PFIC based on certain assumptions made by them as well as certain
representations we made to them regarding the composition of our assets, the source of our income,
and the nature of our operations.

There is, however, no legal authority under the PFIC rules addressing our proposed method of

operation. Accordingly, no assurance can be given that the U.S. Internal Revenue Service (the
“IRS”) or a court of law will accept our position, and there is a risk that the IRS or a court of law
could determine that we are a PFIC. Moreover, no assurance can be given that we would not
constitute a PFIC for any future taxable year if there were to be changes in the nature and extent
of our operations.

If the IRS were to find that we are or have been a PFIC for any taxable year, U.S.

stockholders would face adverse tax consequences. Under the PFIC rules, unless those stockholders
make certain elections available under the Code, such stockholders would be liable to pay U.S.
Federal income tax at the then prevailing income tax rates on ordinary income plus interest upon
excess distributions and upon any gain from the disposition of our common stock or Preferred Stock,
as if the excess distribution or gain had been recognized ratably over the stockholder’s holding
period. Please read “Item 10. Additional Information—E. Tax Considerations—United States
Federal Income Tax Considerations—Taxation of United States Holders—PFIC Status” for a more
detailed discussion of the U.S. Federal income tax consequences to U.S. stockholders if we are
treated as a PFIC.

The enactment of proposed legislation could affect whether dividends paid by us constitute
“qualified dividend income” eligible for the preferential rates.

Legislation has been proposed in the United States Senate that would deny the preferential
rates of U.S. Federal income tax currently imposed on “qualified dividend income” with respect to

81219

dividends received from a non-U.S. corporation, unless the non-U.S. corporation either is eligible for
benefits of a comprehensive income tax treaty with the United States or is created or organized
under the laws of a foreign country which has a comprehensive income tax system. Because the
Marshall Islands has not entered into a comprehensive income tax treaty with the United States and
imposes only limited taxes on corporations organized under its laws, it is unlikely that we could
satisfy either of these requirements. Consequently, if this legislation were enacted in its current form
the preferential rates of U.S. Federal income tax discussed in “Item 10. Additional Information—E.
Tax Considerations—United States Federal Income Tax Considerations—Taxation of United States
Holders—Distributions on Our Common Stock and Preferred Stock” may no longer be applicable to
dividends received from us. As of the date of this annual report, it is not possible to predict with
certainty whether or in what form the proposed legislation will be enacted.

46001

ITEM 4. INFORMATION ON THE COMPANY

A. History and Development of the Company

Costamare Inc. was incorporated in the Republic of The Marshall Islands on April 21, 2008

under the Marshall Islands Business Corporations Act, for the purpose of completing a
reorganization of 53 ship-owning companies then owned by our chief executive officer and other
members of the Konstantakopoulos family under a single corporate holding company. We are
controlled by members of the Konstantakopoulos family, which has a long history of operating and
investing in the international shipping industry, including a long history of vessel ownership. Captain
Vasileios Konstantakopoulos, the father of our chairman and chief executive officer, Konstantinos
Konstantakopoulos, founded Costamare Shipping in 1974. We initially owned and operated drybulk
carrier vessels, but in 1984 we became the first Greek-owned company to enter the containership
market and, since 1992, we have focused exclusively on containerships. After assuming management
of our company in 1998, Konstantinos Konstantakopoulos has concentrated on building a large,
modern and reliable containership fleet run and supported by highly skilled, experienced and loyal
personnel. He founded the management company Shanghai Costamare in 2005, and he founded the
manning agency C-Man Maritime Inc. (“C-Man Maritime”) in 2006. Under Konstantinos
Konstantakopoulos’s leadership, we have continued to foster a company culture focusing on
excellent customer service, industry leadership and innovation.

In November 2010, we completed an initial public offering of our common stock in the

United States and our common stock began trading on the New York Stock Exchange on
November 4, 2010 under the ticker symbol “CMRE”. On March 27, 2012 and October 19, 2012, we
completed two follow-on public offerings of our common stock, on August 7, 2013, we completed a
public offering of our Series B Preferred Stock and on January 21, 2014, we completed a public
offering of our Series C Preferred Stock.

In May 2013, we entered into the Framework Agreement with York to jointly invest in newbuild

and secondhand container vessels through jointly held companies in which we hold a minority stake,
thereby increasing our ability to expand our operations while diversifying our risk. The joint venture
established by the Framework Agreement is expected to be each party’s exclusive joint venture for the
acquisition of vessels in the containership industry during the commitment period ending May 15,
2015, unless terminated earlier in certain circumstances (although we may acquire vessels outside the
joint venture where York rejects a vessel acquisition opportunity). If York decides to participate in a
new vessel acquisition, we will hold a 25% to 49% equity interest in such vessel. As of February 27,
2015, the joint venture had executed transactions with capital expenditure commitments of
approximately $979.8 million. As of the same date, Costamare and York had made equity payments of
$231.3 million, which was subsequently decreased to $154.9 million, based on debt financing
arrangements. As part of the Framework Agreement, we hold a minority stake in the existing Joint
Venture vessels and expect to hold a stake of 25% to 49% in future Joint Venture vessels. An
Amended and Restated Framework Agreement was executed by the parties thereto on October 1,
2014, which would extend the committment period to May 15, 2020 and increase the range of our
equity interest in each Joint Venture vessel to a range of 25% to 75%. Such Amended and Restated
Framework Agreement will only become effective upon the closing of the MLP initial public offering.
There is no assurance that the proposed MLP initial public offering will be consummated.

We maintain our principal executive offices at 60 Zephyrou Street & Syngrou Avenue,
17564 Athens, Greece. Our telephone number at that address is +30-210-949-0050. Our registered
address in the Marshall Islands is Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro,
Marshall Islands MH96960. The name of our registered agent at such address is The Trust Company
of the Marshall Islands, Inc.

67436

B. Business Overview

General

We are an international owner of containerships, chartering our vessels to many of the world’s

largest liner companies. As of February 27, 2015, we had a fleet of 68 containerships with a total
capacity in excess of 447,000 TEU, including nine newbuilds on order, making us one of the largest
public containership companies in the world, based on total TEU capacity. At that date, our fleet
consisted of (i) 59 vessels in the water, aggregating approximately 331,000 TEU and (ii) nine
newbuild vessels aggregating approximately 116,000 TEU that are scheduled to be delivered to us
through the third quarter of 2016, based on the current shipyard schedule. As of December 31, 2014,
13 of our containerships, including nine newbuilds, had been acquired pursuant to the Framework
Agreement with York by vessel-owning joint venture entities in which we hold a minority equity
interest. See “—Our Fleet, Acquisitions and Newbuild Vessels”.

Our strategy is to time-charter our containerships to a geographically diverse, financially strong

and loyal group of leading liner companies. Our containerships operate primarily under long-term,
fixed-rate time charters and therefore are not subject to the effect of seasonal variations in demand.
Our containerships have a record of low unscheduled off-hire days, with fleet utilization levels,
excluding scheduled dry dockings, of 99.9%, 99.9% and 99.8% in 2012, 2013 and 2014, respectively.
Over the last three years our largest customers by revenue were A.P. Moller-Maersk, MSC,
Evergreen, Hapag-Lloyd and COSCO. As of February 27, 2015, the average (weighted by TEU
capacity) remaining time-charter duration for our fleet of 68 containerships was approximately
4.5 years, based on the remaining fixed terms and assuming the exercise of any owner’s options and
the non-exercise of any charterer’s options under our containerships’ charters. As of February 27,
2015, our fixed-term charters represented an aggregate of approximately $2.0 billion of contracted
revenue, assuming the earliest redelivery dates possible and 365 revenue days per annum per
containership (which amount includes our ownership percentage of contracted revenue for the Joint
Venture vessels (currently $166.8 million)). Ten of these charters include an option exercisable by
either party to extend the term: five wholly-owned vessels for two one-year periods at the same
charter rate, which represents an additional $152.2 million of potential contracted revenue, and five
Joint Venture vessels for a two-year period and a subsequent three-year period at the same charter
rate, which represents an additional $170.5 million of potential contracted revenue that is
attributable to our share of the relevant vessel-owning entities.

Our vessels are managed by our “affiliated managers” which are controlled by our chairman

and chief executive officer, Costamare Shipping and Shanghai Costamare (which acts as a sub-
manager), except in certain cases where, subject to our consent, a third party has been contracted to
provide sub-management services. As described below, in April 2013, the Cell under V.Ships Greece
replaced CIEL, another entity controlled by our chairman and chief executive officer, as the sub-
manager of certain of our vessels. Costamare Shipping is the head manager of our vessels, while the
Cell is the exclusive third-party sub-manager of Costamare Shipping (except for a limited number of
vessels that may be managed by other third-party sub-managers). We believe that having several
management companies, both affiliate and third party, provides us with a deep pool of operational
management in multiple locations with market-specific experience and relationships, as well as the
geographic flexibility needed to manage and crew our large and diverse fleet so as to provide a high
level of service, while remaining cost-effective.

Our Fleet, Acquisitions and Newbuild Vessels

Our Fleet

The tables below provide additional information, as of February 27, 2015, about our fleet of 68

containerships, including nine newbuilds on order.

61086

Average Daily
Charter Rate
Until Earliest
Expiry of
Charter
(U.S. dollars)(2)

36,400

37,519

43,000

42,000

41,700

37,000

29,000

26,100

28,474

28,982

29,194

12,250

19,000

28,000

13,696

13,296

30,500

20,000

16,500

13,500

7,300

7,500

7,000

10,000

8,600

Expiration of
Charter(1)

December 2017

January 2018

February 2018

April 2018

May 2018

November 2023

February 2024

March 2024

January 2023

February 2023
April 2020(i)
April 2020(i)
June 2020(i)
July 2020(i)
September 2020(i)

September 2015

December 2017

February 2018

September 2021

March 2018

May 2018

June 2018

August 2018

36,400

37,519

43,000

42,000

41,700

37,000

29,000

26,100

26,100
October 2018
38,865(3) November 2019
38,461(4)
38,418(5)

February 2020

April 2020

12,250

19,000

March 2015

May 2015

28,000
November 2016
13,464(6) September 2015(6)
13,464(6) September 2015(6)
13,064(6) September 2015(6)

30,500

20,000

September 2016

October 2016

July 2016

August 2017

September 2017

16,500
13,500(7)

March 2017

September 2018

7,300

7,500

7,000

10,000

8,600

June 2015

May 2015

April 2015

July 2015

February 2017

Vessel Name

Charterer

Year
Built

Capacity
(TEU)

Time
Charter
Term(1)

Current Daily
Charter Rate
(U.S. dollars)

1 COSCO GUANGZHOU

COSCO

2006

9,469

12 years

2 COSCO NINGBO

3 COSCO YANTIAN

4 COSCO BEIJING

5 COSCO HELLAS

6 MSC AZOV

7 MSC AJACCIO

8 MSC AMALFI

9 MSC ATHENS

10 MSC ATHOS

11 VALOR

12 VALUE

13 VALIANT

14 VALENCE

15 VANTAGE

16 NAVARINO
17 MAERSK KAWASAKI(ii)
18 MAERSK KURE(ii)
19 MAERSK KOKURA(ii)

COSCO

MSC

Evergreen

MSC

2006

9,469

12 years

2006

9,469

12 years

2006

9,469

12 years

2006

9,469

12 years

2014

9,403

10 years

2014

9,403

10 years

2014

9,403

10 years

2013

8,827

10 years

2013

8,827

2013

8,827

2013

8,827

2013

8,827

2013

8,827

2013

8,827

10 years
7.0 years(i)
7.0 years(i)
7.0 years(i)
7.0 years(i)
7.0 years(i)

2010

8,531

1.5 years

A.P. Moller-Maersk 1997

7,403

10 years

A.P. Moller-Maersk 1996

7,403

10 years

A.P. Moller-Maersk 1997

7,403

10 years

20 MSC METHONI

MSC

2003

6,724

10 years

21 SEALAND NEW YORK

A.P. Moller-Maersk 2000

6,648

11 years

22 MAERSK KOBE

A.P. Moller-Maersk 2000

6,648

11 years

23 SEALAND WASHINGTON A.P. Moller-Maersk 2000

6,648

11 years

24 SEALAND MICHIGAN

A.P. Moller-Maersk 2000

6,648

11 years

25 SEALAND ILLINOIS

A.P. Moller-Maersk 2000

6,648

11 years

26 MAERSK KOLKATA

A.P. Moller-Maersk 2003

6,644

11 years

27 MAERSK KINGSTON

A.P. Moller-Maersk 2003

6,644

11 years

28 MAERSK KALAMATA

A.P. Moller-Maersk 2003

6,644

11 years

29 VENETIKO

PIL

2003

5,928

2.0 years

30 ENSENADA EXPRESS(*) Hapag Lloyd

2001

5,576

2.0 years

31 MSC ROMANOS

32 ZIM NEW YORK

33 ZIM SHANGHAI

34 ZIM PIRAEUS

MSC

ZIM

2003

5,050

5.3 years

2002

4,992

13 years

2002

4,992

13 years

2004

4,992

10 years

35 OAKLAND EXPRESS

Hapag Lloyd

2000

4,890

8.0 years

36 HALIFAX EXPRESS

Hapag Lloyd

2000

4,890

8.0 years

37 SINGAPORE EXPRESS

Hapag Lloyd

2000

4,890

8.0 years

38 MSC MANDRAKI

39 MSC MYKONOS

40 MSC ULSAN

41 MSC KORONI

42 MSC ITEA

43 KARMEN

44 MARINA

MSC

Evergreen

45 MSC CHALLENGER

MSC

1988

4,828

7.8 years

1988

4,828

8.2 years

2002

4,132

5.3 years

1998

3,842

9.5 years

1998

3,842

1.0 years

1991

3,351

0.8 years

1992

3,351

2.5 years

1986

2,633

4.8 years

46 LAKONIA

Evergreen

2004

2,586

2.0 years

36503

Vessel Name

Charterer

Year
Built

Capacity
(TEU)

Time
Charter
Term(1)

Current Daily
Charter Rate
(U.S. dollars)

47 ELAFONISOS(*)

A.P. Moller-Maersk 1999

2,526

0.3 years

48 AREOPOLIS

49 MESSINI

50 MSC REUNION

51 MSC NAMIBIA II

52 MSC SIERRA II

53 MSC PYLOS

Evergreen

MSC

2000

2,474

0.3 years

1997

2,458

2.5 years

1992

2,024

8.0 years

1991

2,023

8.8 years

1991

2,023

7.7 years

1991

2,020

5.0 years

54 X-PRESS PADMA(*)

Sea Consortium

1998

1,645

2.0 years

55 NEAPOLIS

56 PROSPER

57 ZAGORA

58 PETALIDI(*)

59 STADT LUEBECK

Yang Ming

2000

1,645

0.4 years

Sea Consortium

1996

1,504

0.4 years

MSC

CMA CGM

1995

1,162

3.7 years

1994

1,162

2.0 years

2001

1.078

2.7 years

6,250

7,200

7,500

7,600

8,225

8,000

7,350

6,200

6,800

6,400

Expiration of
Charter(1)

March 2015(iii)

March 2015

July 2016

June 2016

January 2016

June 2015

March 2015

April 2015

August 2015

June 2015

Average Daily
Charter Rate
Until Earliest
Expiry of
Charter
(U.S. dollars)(2)

6,250

7,200

7,500

7,600

8,225

8,000

7,350

6,200

6,800

6,400

Vessel Name

NCP0113(*)

NCP0114(*)

NCP0115(*)

NCP0116(*)

S2121(*)

S2122(*)

S2123(*)

S2124(*)

S2125(*)

Newbuilds

Shipyard

Hanjin Subic Bay

Samsung Heavy

Charterer

Evergreen

Expected Delivery
(based on latest
shipyard schedule)

4th Quarter 2015

1st Quarter 2016

2nd Quarter 2016

3rd Quarter 2016

Our newbuilds on order have an aggregate capacity of approximately 116,000 TEU.

(1) Charter terms and expiration dates are based on the earliest date charters could expire. Amounts set out for current daily

charter rate are the amounts contained in the charter contracts.

(2) This average rate is calculated based on contracted charter rates for the days remaining between February 27, 2015 and

the earliest expiration of each charter. Certain of our charter rates change until their earliest expiration dates, as indicated
in the footnotes below.

(3) This charter rate changes on January 13, 2016 to $26,100 per day until the earliest redelivery date.

(4) This charter rate changes on April 28, 2016 to $26,100 per day until the earliest redelivery date.

(5) This charter rate changes on June 11, 2016 to $26,100 per day until the earliest redelivery date.

(6) On July 16, 2014, ZIM entered into a comprehensive financial restructuring plan (the “ZIM restructuring”) with its

shareholders and its creditors, including vessel and container lenders, shipowners, shipyards, unsecured lenders and bond
holders. The amounts in the table reflect the current charter terms, giving effect to our agreement with ZIM under the
ZIM restructuring. Based on this agreement, we have been granted charter extensions and have been issued equity
securities representing 1.2% of ZIM’s equity and approximately $8.2 million in interest bearing notes maturing in 2023.
The Company will have the option to extend the charters for two of the three vessels chartered to ZIM for successive one
year periods at market rate plus $1,100 per day per vessel while the notes remain outstanding.

(7) As from December 1, 2012 until redelivery, the charter rate is to be a minimum of $13,500 per day plus 50% of the

difference between the market rate and the charter rate of $13,500. The market rate is to be determined annually based on
the Hamburg ConTex type 3500 TEU index published on October 1 of each year until redelivery.

15233

(i) Assumes exercise of owner’s unilateral options to extend the charter of these vessels for two one year periods at the same
charter rate. The charterer also has corresponding options to unilaterally extend the charter for the same periods at the
same charter rate.

(ii) The charterer has a unilateral option to extend the charter of the vessel for two periods of 30 months each +/-90 days on

the final period performed, at a rate of $41,700 per day.

(iii) The charterer has a unilateral option to extend the charter of the vessel for a period of 6 months at a rate of $7,000 per

day.

(*) Denotes vessels acquired pursuant to the Framework Agreement with York. The Company holds an equity interest

ranging between 25% and 49% in each of the vessel-owning entities.

Framework Agreement

On May 15, 2013, the Company, along with its wholly-owned subsidiary, Costamare Ventures,
entered into the Framework Agreement with York to invest jointly in the acquisition of container
vessels. The decisions regarding vessel acquisitions will be made jointly between us and York, and
the Framework Agreement is expected to be each party’s exclusive joint venture for the acquisition
of vessels in the containership industry during the commitment period ending May 15, 2015 (unless
terminated earlier in certain circumstances). We reserve the right to acquire any vessels outside the
Framework Agreement that York decides not to pursue and therefore are not acquired by the
jointly-owned entities under the Framework Agreement.

Under the terms of the Framework Agreement, York has agreed to invest up to $250 million in
mutually agreed vessel acquisitions and we have agreed to invest a minimum of $75 million with an
option to invest up to $240 million in these transactions. As of February 27, 2015, York has invested
$88.4 million and we have invested $66.5 million for the acquisition of four secondhand vessels and
entering into contracts for nine newbuild vessels. Depending on the amount the Company elects to
invest in any acquisition, we expect to hold between 25% and 49% of the equity in the relevant
vessel-owning entity formed under the Framework Agreement and York will hold the balance.
Costamare Shipping will provide ship-management services to the Joint Venture vessels, with the
right either to subcontract to V.Ships Greece and/or Shanghai Costamare or to direct a vessel-
owning entity to contract directly for certain ship-management services with V.Ships Greece. The
Framework Agreement will terminate on its sixth anniversary or upon the occurrence of certain
extraordinary events. At that time, Costamare Ventures can elect to divide the vessels owned by all
such vessel-owning entities between itself and York to reflect their cumulative participation in all
such entities. We expect to account for the entities formed under the Framework Agreement as
equity investments.

An Amended and Restated Framework Agreement was executed by the parties thereto on
October 1, 2014, which would extend the committment period to May 15, 2020 and increase the
range of our equity interest in each Joint Venture vessel to a range of 25% to 75%. Such Amended
and Restated Framework Agreement will only become effective upon the closing of an initial public
offering by Costamare Partners LP, our wholly-owned subsidiary, of common units representing
limited partnership interests. There is no assurance that the proposed MLP initial public offering will
be consummated.

Four vessels, totaling approximately 10,900 TEU, have been acquired under the Framework

Agreement with York to date. In addition, pursuant to the Framework Agreement, jointly-owned
entities have entered into shipbuilding contracts for the construction of nine container vessels of
approximately 116,000 TEU capacity, to be delivered by the third quarter of 2016, for a total
purchase price of approximately $942.4 million. The Company holds an equity interest ranging
between 25% and 49% in each of the Joint Venture entities.

Proposed Master Limited Partnership Offering

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operate and acquire containerships under long-term, fixed-rate charters. If we complete the proposed
MLP initial public offering, we would contribute 100% interests in certain entities which own a
100% interest in four of our vessels to the MLP on terms with which you may not agree or may
believe are not in the best interests of the holders of our common stock. The proceeds of the
proposed MLP initial public offering will principally be used to reduce indebtedness. Completion of
the proposed MLP initial public offering is subject to further board authorization as well as
completion of the SEC review process. There is no assurance that the proposed MLP initial public
offering will be consummated.

Chartering of Our Fleet

We deploy our containership fleet principally under long-term, fixed-rate time charters with
leading liner companies that operate on regularly scheduled routes between large commercial ports.
As of February 27, 2015, the average (weighted by TEU capacity) remaining time-charter duration
for our fleet of 68 containerships, including our contracted newbuild vessels and the existing vessels
and newbuild vessels acquired pursuant to the Framework Agreement, was approximately 4.5 years,
based on the remaining fixed terms and assuming the exercise of any owner’s options and the non-
exercise of any charterer’s options under our containerships’ charters.

A time charter is a contract to charter a vessel for a fixed period of time at a set daily rate and

can last from a few days up to several years. Under our time charters the charterer pays for most
voyage expenses, which generally include, among other things, fuel costs, port and canal charges,
pilotages, towages, agencies, commissions, extra war risks insurance and any other expenses related
to the cargoes, and we pay for vessel operating expenses, which generally include, among other
costs, costs for crewing, provisions, stores, lubricants, insurance, maintenance and repairs, dry-
docking and intermediate and special surveys.

Our Customers

Since 2006, our customers have included many of the leading international liner companies,

including A.P. Moller-Maersk, COSCO, Evergreen, Hapag Lloyd, Hyundai Merchant Marine Co.,
Ltd., MSC, CMA CGM S.A. (“CMA CGM”), China Shipping Container Lines Co., Ltd. (“CSCL”)
and ZIM. A.P. Moller-Maersk, MSC, Evergreen, Hapag Lloyd and COSCO together represented
91%, 93% and 94% of our revenue in 2012, 2013 and 2014, respectively.

Management of Our Fleet

Costamare Shipping provides us with general administrative services, certain commercial
services, director and officer (“D&O”) related insurance services and the services of our executive
officers pursuant to the Group Management Agreement between Costamare Shipping and us.
Costamare Shipping, itself or through Shanghai Costamare, and, in certain cases, subject to our
consent, a third-party sub-manager, currently provides our fleet with technical, crewing, commercial,
provisioning, bunkering, sale and purchase, chartering, accounting, insurance and administrative
services pursuant to the Group Management Agreement and separate ship-management agreements
between each of our containership-owning subsidiaries and Costamare Shipping. As described below,
the Cell under V.Ships Greece replaced CIEL as sub-manager of certain of our vessels in 2013 and
is the exclusive third-party sub-manager of Costamare Shipping (except for a limited number of
vessels that may be managed by other third-party sub-managers). In return for these services, we
pay the management fees described below in this section and elsewhere in this annual report. Our
affiliated managers, Costamare Shipping and Shanghai Costamare, control the selection and
employment of seafarers for our containerships, directly through their crewing offices in Athens,
Greece and Shanghai, China, and indirectly through our related crewing agent in the Philippines,
C-Man Maritime, and independent manning agents in Romania and Bulgaria. The seafarers for our
containerships managed by V.Ships Greece are arranged in part through C-Man Maritime and in
part through V.Ships Greece (which utilizes the global V.Group network) under the Co-operation
Agreement. Under the Group Management Agreement, Costamare Shipping is the head manager of
our containerships and may subcontract certain of its obligations to a related sub-manager (such as

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Shanghai Costamare) or, subject to our consent, to a third-party (such as V.Ships Greece), or direct
that such related or third-party sub-manager enter into a direct ship-management contract with the
relevant containership-owning subsidiary. As discussed below, these arrangements will not result in
any increase in the aggregate amount of management fees we pay. We believe that having multiple
management companies provides us with a deep pool of operational management in multiple
locations with market-specific experience and relationships, as well as the geographic flexibility
needed to manage and crew our large and diverse fleet so as to provide a high level of service,
while remaining cost-effective. For example, Shanghai Costamare employs Chinese nationals with the
language skills and local knowledge we believe are necessary to grow and establish meaningful
relationships with Chinese shipyards, charterers, ship-owners, financial institutions and containership
service providers. The Cell under V.Ships Greece provides added operational flexibility and
economies of scale while maintaining a high level of management services.

Costamare Shipping and Shanghai Costamare are controlled by our chairman and chief

executive officer. Our chairman and chief executive officer and our chief financial officer supervise,
in conjunction with our board of directors, the services provided by our managers. Costamare
Shipping reports to our board of directors through our chairman and chief executive officer and our
chief financial officer, each of whom is appointed by our board of directors. Under the Group
Management Agreement, our executive officers are provided to us by Costamare Shipping and their
compensation is set and paid by Costamare Shipping. We could request that Costamare Shipping
provide the services of additional officers or employees pursuant to the Group Management
Agreement, in which case the management fee payable to Costamare Shipping under the Group
Management Agreement may be increased.

Costamare Shipping is a ship management company which was established in 1974 by the late

Vasileios Konstantakopoulos and is controlled by our chairman and chief executive officer.
Costamare Shipping has over 30 years of experience in managing containerships of all sizes,
developing specifications for newbuild vessels and supervising the construction of such newbuild
vessels in reputable shipyards in the Far East. Costamare Shipping has long established relationships
with major liner companies, financial institutions and suppliers and we believe is recognized in the
containership shipping industry as a leading containership manager. Costamare Shipping provides
commercial services and insurance services to all our containerships. Costamare Shipping also
provides, either directly or through another manager, as applicable, technical, crewing, provisioning,
bunkering, sale and purchase and accounting services to our containerships. All of these services are
provided by Costamare Shipping pursuant to separate ship-management agreements between
Costamare Shipping and each of our containership-owning subsidiaries.

Shanghai Costamare, which was established in February 2005, is owned (indirectly) 70% by our

chairman and chief executive officer, and (indirectly) 30% by Shen Xiao Dong, a Chinese national
who is Shanghai Costamare’s general manager. Shanghai Costamare was established to service the
needs of our fleet of containerships when operating in the Far East and South East Asia regions in
an efficient and cost-effective manner by providing dedicated on-shore support and manning services
in China, and a valuable interface with Chinese shipyards, charterers, ship-owners, financial
institutions and containership service providers. As of February 27, 2015, Shanghai Costamare
provided technical, crewing, provisioning, bunkering, sale and purchase and accounting services, as
well as certain commercial services, to 11 of our containerships and to two Joint Venture vessels.
These containerships are exclusively manned by Chinese crews, which means that the Chinese on-
shore personnel of Shanghai Costamare can communicate and provide integrated services and
support to these containerships in the most efficient manner. Shanghai Costamare provides these
services for a fixed daily fee, pursuant to separate ship-management agreements between Costamare
Shipping and Shanghai Costamare.

On January 7, 2013, Costamare Shipping entered into a Co-operation Agreement with V.Ships

Greece, a member of V.Group, pursuant to which the two companies established the Cell within
V.Ships Greece to provide management services to certain of our containerships. The Cell also
offers ship-management services to third-party owners, including two Joint Venture vessels in our
fleet. The net profit from the operation of the Cell relating to the Company’s containerships is
passed on to Costamare Shipping to the extent it exceeds $20,000 per vessel while the net profit

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from the operation of the Cell related to third-party owners is split equally between V.Ships Greece
and Costamare Shipping. Costamare Shipping has agreed to pass to us the net profit, if any, it
receives pursuant to the Co-operation Agreement as a refund or reduction of the management fees
payable by us to Costamare Shipping under the Group Management Agreement. Costamare
Shipping’s share of the Cell’s net profit was $391,560 and $0 for the years ended December 31, 2014
and December 31, 2013, respectively. We expect Costamare Shipping to pay to us its $391,560 share
of the Cell’s net profit by the end of the first quarter of 2015. Costamare Shipping has certain
control rights regarding the employment and dismissal of the Cell’s personnel, the appointment of
the Cell’s senior managers and the management of vessels owned by third parties. Costamare
Shipping or V.Ships Greece may terminate the Co-operation Agreement upon six months’ notice.

Although the Cell will be operated pursuant to the Co-operation Agreement between

Costamare Shipping and V.Ships Greece, it is not controlled by Costamare Shipping and we do not
consider it to be an affiliated manager.

We believe that our affiliated managers, Costamare Shipping and Shanghai Costamare, are well

regarded in the industry and have used innovative practices and technological advancement to
maximize efficiency in the operation of our fleet of containerships. V.Ships Greece is a member of
V.Group, one of the largest providers of ship-management services worldwide. ISM certification is in
place for our fleet of containerships and our affiliated managers, with Costamare Shipping, our head
manager under the Group Management Agreement, having obtained such certification in 1998, three
years ahead of the deadline set by the IMO. Costamare Shipping, Shanghai Costamare and V.Ships
Greece, as well as our fleet of containerships are also certified in accordance with ISO 9001-2008
and ISO 14001-2004 relating to quality management and environmental standards. In 2013, the
Company received the Lloyd’s List Greek shipping award for Dry Cargo Company of the Year.
Costamare Shipping received that same award in 2004. Additionally, in 2014, the Company received
the Lloyd’s List Company of the Year award. As of February 27, 2015, our affiliated managers did
not manage containerships other than those owned by us and vessel-owning entities formed under
the Framework Agreement.

As of February 27, 2015,
• Costamare Shipping provided commercial and insurance services to all of our containerships,

as well as technical, crewing, provisioning, bunkering, sale and purchase and accounting
services to 24 of our containerships;

• Shanghai Costamare provided technical, crewing, provisioning, bunkering, sale and purchase

and accounting services to 11 of our containerships and two Joint Venture vessels;

• V.Ships Greece provided technical, crewing, provisioning, bunkering, sale and purchase and
accounting services, as well as certain commercial services, to 19 of our containerships and
two Joint Venture vessels; and

• a third-party sub-manager provided technical, crewing, provisioning, bunkering, sale and

purchase and accounting services to one of our containerships.

Costamare Shipping has agreed that, during the term of the Group Management Agreement, it

will not provide any management services to any other entity (other than the MLP and its
subsidiaries) without our prior written approval. We have consented to Costamare Shipping
providing management services to the Joint Venture vessels. The Group Management Agreement
does not prohibit Shanghai Costamare from providing services to third parties. In the past, Shanghai
Costamare has only provided services to third parties on a limited basis and there is no current plan
to change that practice. Shanghai Costamare currently provides services to two Joint Venture vessels.
The Co-operation Agreement anticipates that the Cell will continue to actively seek to provide ship-
management services to third-party owners in order to capitalize on the ship-management expertise
of the Cell and the economies of scale brought by the affiliation with V.Group. However, as noted
above, Costamare Shipping has agreed to pass to us the net profit, if any, it receives from the Cell.

Under the restrictive covenant agreement between the Company and Konstantinos

Konstantakopoulos, during the period of his employment or service with the Company and for six
months thereafter, he has agreed to restrictions on his ownership of any containerships or the

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acquisition, investment in or control of any business involved in the ownership or operation of
containerships, subject to certain exceptions. Konstantinos Konstantakopoulos has also agreed that if
one of our containerships and a containership owned by him are both available and meet the criteria
for an available charter, our containerships will receive such charter. See “Item 7. Major
Shareholders and Related Party Transactions—B. Related Party Transactions—Restrictive Covenant
Agreements”.

Costamare Shipping is providing us with general administrative services, certain commercial

services, D&O related insurance services and the services of our officers as well as technical,
commercial, insurance, accounting, provisioning, chartering, sale and purchase, crewing, bunkering
and administrative services in respect of our containerships. In the event that Costamare Shipping
decides to delegate certain or all of the services it has agreed to perform, either through
subcontracting to affiliated sub-managers (such as Shanghai Costamare) or, subject to our consent, a
third-party sub-manager (such as V.Ships Greece) or by directing such sub-manager to enter into a
direct ship-management agreement with the relevant containership-owning subsidiary, then, in the
case of subcontracting, Costamare Shipping will be responsible for paying the management fee
charged by the relevant sub-manager for providing such services and, in the case of a direct ship-
management agreement, the fee received by Costamare Shipping will be reduced by the fee payable
to the sub-manager under the relevant direct ship-management agreement. As a result, these
arrangements will not result in any increase in the aggregate management fees we pay. Moreover, in
the case of the Co-operation Agreement, the management fees we pay are reduced by any net profit
received by Costamare Shipping from the Cell’s operation. In addition to management fees, we pay
for any capital expenditures, financial costs, operating expenses and any general and administrative
expenses, including payments to third parties, including specialist providers, in accordance with the
Group Management Agreement and the relevant separate ship-management agreements or
supervision agreements. Costamare Shipping receives a fee in 2015 of $956 per day or, in the case of
a containership subject to a bareboat charter, $478 per day, for each containership, pro rated for the
calendar days we own each containership. In 2014, such amounts were $919 and $460, respectively.
We also pay to Costamare Shipping a flat fee of $787,405 per newbuild vessel for the supervision of
the construction of any newbuild vessel for which we may contract. The flat fee for the supervision
of newbuild vessels will be annually adjusted to reflect any strengthening of the Euro against the
U.S. dollar and/or material unforeseen cost increases. Costamare Shipping also receives a fee of
0.75% on all gross freight, demurrage, charter hire and ballast bonus or other income earned with
respect to each containership in our fleet. Additionally, beginning in the first quarter of 2015,
Costamare Shipping receives an annual fee payable quarterly in arrears of (i) $2.5 million and
(ii) 598,400 shares (which is equal to 0.8% of the issued and outstanding Costamare common stock
as of January 1, 2015), which fee includes payment for the services of our executive officers (prior to
2015, we paid Costamare Shipping $1.0 million annually for such services). We have reserved
3 million shares of common stock to cover fees to be paid to Costamare Shipping through
December 31, 2019.

The initial term of the Group Management Agreement expires on December 31, 2015. The
Group Management Agreement automatically renews for 10 consecutive one-year periods until
December 31, 2025, at which point the Group Management Agreement will expire. The daily
management fee for each containership will be annually adjusted to reflect any strengthening of the
Euro against the U.S. dollar and/or material unforeseen cost increases. After the initial term expires
on December 31, 2015, we will be able to terminate the Group Management Agreement, subject to
a termination fee, by providing written notice to Costamare Shipping at least 12 months before the
end of the subsequent one-year term. The termination fee is equal to (a) the lesser of (i) 10 and
(ii) the number of full years remaining prior to December 31, 2025, times (b) the aggregate fees due
and payable to Costamare Shipping during the 12-month period ending on the date of termination
(without taking into account any reduction in fees to reflect that certain obligations have been
delegated to a sub-manager); provided that the termination fee will always be at least two times the
aggregate fees over the 12-month period described above. Information about other termination
events under the Group Management Agreement is set forth in “Item 7. Major Shareholders and

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Related Party Transactions—B. Related Party Transactions—Management Agreement—Term and
Termination Rights”.

Pursuant to the terms of our Group Management Agreement and separate ship-management
agreements and supervision agreements, liability of our managers to us is limited to instances of
gross negligence or willful misconduct on the part of the managers. Further, we are required to
indemnify the managers for liabilities incurred by the managers in performance of the Group
Management Agreement and separate ship-management agreements and supervision agreements,
except in instances of gross negligence or willful misconduct on the part of the managers.

We have consented to Costamare Shipping providing management services to the Joint Venture

vessels and Costamare Shipping has entered into separate ship-management agreements with each
vessel-owning entity formed under the Framework Agreement pursuant to which Costamare
Shipping provides technical, crew, crew insurance, commercial, general and administrative and
insurance services directly or through Shanghai Costamare or V.Ships Greece as sub-managers,
provided that V.Ships Greece may be directed to enter into a direct management agreement with
each vessel-owning entity and, in respect of the newbuild vessels under construction, into a
supervision agreement with the respective vessel-owning entity. During the year ended December 31,
2014, Costamare Shipping charged in aggregate to the companies established pursuant to the
Framework Agreement the amount of $1.57 million for services provided in accordance with the
respective management agreements.

Competition

We operate in markets that are highly competitive and based primarily on supply and demand.

Generally, we compete for charters based upon charter rate, customer relationships, operating
expertise, professional reputation and containership specifications, size, age and condition.
Competition for providing containership services comes from a number of experienced shipping
companies, including state-sponsored entities. In addition, in recent years, there have been other
entrants in the market, such as leasing companies and private equity firms who have significant
capital to invest in vessel ownership, which has provided for additional competition in the sector.

Participants in the container shipping industry include “liner” shipping companies, who operate

container shipping services and own containerships, containership owners, often known as “charter
owners”, who own containerships and charter them out to liner companies, and shippers who require
the seaborne movement of containerized goods. Historically, a significant share of the world’s
containership capacity has been owned by the liner companies, but since the 1990s there has been
an increasing trend for the liner companies to charter-in a larger proportion of the capacity that they
operate as a way of retaining some degree of flexibility with regard to capital spending levels over
time given the significant costs associated with purchasing vessels.

We believe that the containership sector of the international shipping industry is characterized

by the significant time required to develop the operating expertise and professional reputation
necessary to obtain and retain customers. We believe that our development of a large fleet of
containerships with varying TEU capacities has enhanced our relationship with our principal
charterers by enabling them to serve the East-West, North-South and Intra-regional trade routes
efficiently, while enabling us to operate in the different rate environments prevailing for those
routes. We also believe that our focus on customer service and reliability enhances our relationships
with our charterers. In the past decade, we have had successful chartering relationships with the
majority of the top 20 liner companies by TEU capacity.

In the past, we have been able to address the periodic scarcity of secondhand containerships
available for acquisition in the open market though the acquisition of containerships mainly from
our liner company customers in privately negotiated sales. In connection with these acquisitions, we
then typically charter back the vessels to these customers. We believe we have been able to pursue
these privately negotiated acquisitions because of our long-standing customer relations, which we do
not believe new entrants have. We also believe that our focus on customer service and reliability
will enhance our relationships with charterers.

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Crewing and Shore Employees

We have four shore-based officers, our chairman and chief executive officer, our chief financial
officer, our general counsel and secretary, and our chief operating officer. In each case their services
are provided under the Group Management Agreement with Costamare Shipping. As of
December 31, 2014, approximately 2,000 people served in a pool of personnel who rotate their
service onboard the containerships in our fleet. Costamare Shipping and Shanghai Costamare each
employed approximately 100 and 30 people, respectively, all of whom were shore-based. In addition,
our affiliated managers are responsible for recruiting, either directly or through a crewing agent, the
senior officers and all other crew members for our containerships that they manage. Recruiting is
arranged directly through our managers’ crewing offices in Athens, Greece and Shanghai, China, and
indirectly through our related crewing agent, C-Man Maritime, in the Philippines, and independent
manning agents in Romania and Bulgaria. The senior officers and other crew members for our
containerships managed by V.Ships Greece are arranged in part through C-Man Maritime and in
part through V.Ships Greece (which utilizes the global V.Group network) under the Co-operation
Agreement. We believe the streamlining of crewing arrangements through our managers ensures that
all of our vessels will be crewed with experienced crews that have the qualifications and licenses
required by international regulations and shipping conventions. We have not experienced any
material work stoppages due to labor disagreements during the past three years.

Permits and Authorizations

We are required by various governmental and other agencies to obtain certain permits, licenses,

certificates and financial assurances with respect to each of our vessels. The kinds of permits,
licenses, certificates and financial assurances required by governmental and other agencies depend
upon several factors, including the commodity being transported, the waters in which the vessel
operates, the nationality of the vessel’s crew and the type and age of the vessel. All permits,
licenses, certificates and financial assurances currently required to operate our vessels have been
obtained (exclusive of cargo-specific documentation, for which charterers or shippers are
responsible). Additional laws and regulations, environmental or otherwise, may be adopted which
could limit our ability to do business or increase the cost of doing business.

Risk of Loss and Liability Insurance

General

The operation of any vessel includes risks such as mechanical failure, collision, property loss or

damage, cargo loss or damage and business interruption due to a number of reasons, including
political circumstances in foreign countries, hostilities and labor strikes. In addition, there is always
an inherent possibility of marine disaster, including oil spills and other environmental mishaps, as
well as other liabilities arising from owning and operating vessels in international trade. The U.S. Oil
Pollution Act of 1990 (“OPA 90”), which imposes under certain circumstances, unlimited liability
upon owners, operators and demise charterers of vessels trading in the United States exclusive
economic zone for certain oil pollution accidents in the United States, has made liability insurance
more expensive for ship-owners and operators trading in the United States market.

We maintain hull and machinery marine risks insurance and hull and machinery war risks
insurance for our fleet of containerships to cover normal risks in our operations and in amounts that
we believe to be prudent to cover such risks. In addition, we maintain protection and indemnity
insurance up to the maximum insurable limit available at any given time. While we believe that our
insurance coverage will be adequate, not all risks can be insured, and there can be no guarantee that
we will always be able to obtain adequate insurance coverage at reasonable rates or at all, or that
any specific claim we may make under our insurance coverage will be paid.

00900

Hull & Machinery Marine Risks Insurance, Hull & Machinery War Risks Insurance and Loss of
Hire Insurance

We maintain hull and machinery marine risks insurance and hull and machinery war risks
insurance, which cover the risk of particular average, general average, 4/4ths collision liability,
contact with fixed and floating objects and actual or constructive total loss in accordance with the
Nordic Marine Insurance Plan. Each of our containerships is insured up to what we believe to be at
least its fair market value, after meeting certain deductibles.

We do not and will not obtain loss of hire insurance (or any other kind of business interruption

insurance) covering the loss of revenue during off-hire periods for any of our vessels because we
believe that this type of coverage is not economical and is of limited value to us, in part because
historically our vessels have had a very limited number of off-hire days.

Protection and Indemnity Insurance—Pollution Coverage

Protection and indemnity insurance is usually provided by a protection and indemnity
association (a “P&I association”) and covers third-party liability, crew liability and other related
expenses resulting from the injury or death of crew, passengers and other third parties, the loss or
damage to cargo, third-party claims arising from collisions with other vessels (to the extent not
recovered by the hull and machinery policies), damage to other third-party property, pollution
arising from oil or other substances and salvage, towing and other related costs, including wreck
removal.

Our protection and indemnity insurance is provided by a P&I association which is a member of

the International Group of P&I Clubs (“International Group”). The 13 P&I associations that
comprise the International Group insure approximately 90% of the world’s commercial blue-water
tonnage and have entered into a pooling agreement to reinsure each association’s liabilities.
Insurance provided by a P&I association is a form of mutual indemnity insurance.

Our protection and indemnity insurance coverage is currently subject to a limit of about

$5 billion per vessel per incident except that for pollution the limit is set at $1 billion per vessel per
incident, and for war risks the limit is set at $500 million per vessel per incident.

As a member of a P&I association, which is a member of the International Group, we will be
subject to calls payable to the P&I association based on the International Group’s claim records as
well as the claim records of all other members of the P&I association of which we are a member.

On October 5, 2011, our vessel Rena ran aground on the Astrolabe Reef off New Zealand and
sustained significant damage. The vessel was determined to be a constructive total loss for insurance
purposes. On October 1, 2012, we announced that Daina Shipping Co., our subsidiary that owned
the Rena, entered into a settlement agreement with the New Zealand government in respect of
certain matters arising from the Rena’s grounding. On October 26, 2012, Daina Shipping Co. pleaded
guilty in a New Zealand court to a strict liability criminal charge of discharging harmful substances
and was fined NZ$300,050. While we anticipate that our insurance policies will cover most costs and
losses associated with the incident, such insurance may not be sufficient to cover all risks.

Inspection by Classification Societies

Every seagoing vessel must be “classed” by a classification society. The classification society

certifies that the vessel is “in class”, signifying that the vessel has been built and maintained in
accordance with the rules of the classification society and complies with applicable rules and
regulations of the vessel’s country of registry and the international conventions of which that country
is a member. In addition, where surveys are required by international conventions and corresponding
laws and ordinances of a flag state, the classification society will undertake them on application or
by official order, acting on behalf of the authorities concerned.

The classification society also undertakes on request other surveys and checks that are required
by regulations and requirements of the flag state. These surveys are subject to agreements made in
each individual case and/or to the regulations of the country concerned.

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For maintenance of the class, regular and extraordinary surveys of hull and machinery, including

the electrical plant and any special equipment classed, are required to be performed as follows:

Annual Surveys. For seagoing ships, annual surveys are conducted for the hull and the
machinery, including the electrical plant, and where applicable, on special equipment classed at
intervals of 12 months from the date of commencement of the class period indicated in the
certificate.

Intermediate Surveys. Extended annual surveys are referred to as intermediate surveys and

typically are conducted two and one-half years after commissioning and each class renewal.
Intermediate surveys may be carried out on the occasion of the second or third annual survey.

Class Renewal Surveys. Class renewal surveys, also known as special surveys, are carried out on
the ship’s hull and machinery, including the electrical plant, and on any special equipment classed at
the intervals indicated by the character of classification for the hull. During the special survey, the
vessel is thoroughly examined, including audio-gauging to determine the thickness of the steel
structures. Should the thickness be found to be less than class requirements, the classification society
would prescribe steel renewals. The classification society may grant a one-year grace period for
completion of the special survey. Substantial amounts of funds may have to be spent for steel
renewals to pass a special survey if the vessel experiences excessive wear and tear. In lieu of the
special survey every four or five years, depending on whether a grace period is granted, a ship-
owner has the option of arranging with the classification society for the vessel’s hull or machinery to
be on a continuous survey cycle, in which every part of the vessel would be surveyed within a five-
year cycle. At a ship-owner’s application, the surveys required for class renewal may be split
according to an agreed schedule to extend over the entire period of class. This process is referred to
as continuous class renewal. All areas subject to surveys as defined by the classification society are
required to be surveyed at least once per class period, unless shorter intervals between surveys are
otherwise prescribed. The period between two consecutive surveys of each area must not exceed five
years.

All vessels are also dry-docked at least once every five years for inspection of their underwater
parts and for repairs related to such inspections. If any defects are found, the classification surveyor
will issue a “recommendation” which must be rectified by the ship-owner within prescribed time
limits.

Insurance underwriters make it a condition for insurance coverage that a vessel be certified as

“in class” by a classification society which is a member of the International Association of
Classification Societies (“IACS”). All of our vessels are certified as being “in class” by members of
IACS.

The following table lists the dates by which we expect to carry out the next dry-dockings and

special surveys for the vessels in our current vessel fleet:

Number of vessels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Dry-docking Schedule(1)

2015

2016

2017

2018

2019

(1) Excludes the nine newbuild vessels that we have agreed to acquire pursuant to the Framework Agreement with York.

Environmental and Other Regulations

Government regulation affects the ownership and operation of our vessels in a significant

manner. We are subject to international conventions and national, port state and local laws and
regulations applicable to international waters and/or territorial waters of the countries in which our
vessels may operate or are registered, including those governing the management and disposal of
hazardous substances and wastes, the cleanup of oil spills and the management of other
contamination, air emissions, and grey water and ballast water discharges. These laws and
regulations include OPA 90, the U.S. Comprehensive Environmental Response, Compensation, and

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Liability Act (“CERCLA”), the U.S. Clean Water Act (“CWA”), the U.S. Clean Air Act (“CAA”)
and regulations adopted by the International Maritime Organization (“IMO”), including the
International Convention for Prevention of Pollution from Ships (“MARPOL”) and the International
Convention for Safety of Life at Sea (“SOLAS”), as well as regulations enacted by the European
Union and other international, national and local regulatory bodies. Compliance with these laws,
regulations and other requirements entails significant expense, including vessel modifications and
implementation of certain operating procedures.

A variety of governmental and private entities subject our vessels to both scheduled and

unscheduled inspections. These entities include the local port authorities Port State Control (such as
the U.S. Coast Guard, harbor master or equivalent), classification societies, flag state administration
(country of registry) and charterers. Certain of these entities require us to obtain permits, licenses,
financial assurances and certificates for the operation of our vessels. Failure to maintain necessary
permits or approvals could require us to incur substantial costs or result in the temporary suspension
of operation of one or more of our vessels in one or more ports.

We believe that the heightened level of environmental and quality concerns among insurance
underwriters, regulators and charterers is leading to greater inspection and safety requirements for
all vessels and may accelerate the scrapping of older vessels throughout the container shipping
industry. Increasing environmental concerns have created a demand for vessels that conform to the
strictest environmental standards. We will be required to maintain operating standards for all of our
vessels that emphasize operational safety, quality maintenance, continuous training of our officers
and crews and compliance with U.S. and international regulations. Our affiliated managers and
V.Ships Greece are certified in accordance with ISO 9001-2008 and ISO 14001-2004 (relating to
quality management and environmental standards, respectively). We believe that operation of our
vessels are in substantial compliance with applicable environmental laws and regulations and that our
vessels have all material permits, licenses, certificates and other authorizations necessary for their
operation.

Our containerships are subject to standards imposed by the IMO, the United Nations agency for
maritime safety and the prevention of pollution by ships. The IMO has adopted regulations that are
designed to reduce pollution in international waters, both from accidents and from routine
operations, and has negotiated international conventions that impose liability for oil pollution in
international waters and a signatory’s territorial waters. For example, Annex VI to MARPOL, which
became effective on May 19, 2005, sets limits on sulfur oxide and nitrogen oxide emissions from
vessel exhausts and prohibits deliberate emissions of ozone depleting substances, such as
chlorofluorocarbons. Annex VI also includes a global cap on the sulfur content of fuel oil. In
addition, amendments to Annex VI that entered into force in July 2010 seek to reduce air pollution
from vessels by, among other things, establishing a series of progressive requirements to further limit
the sulfur content of fuel oil that will be phased in through 2020 and by establishing new tiers of
nitrogen oxide emission standards for new marine diesel engines, depending on their date of
installation. Annex VI also provides for the establishment of special areas, known as Emission
Control Areas, where more stringent controls on sulphur and other emissions apply. Currently, the
Baltic Sea, the North Sea, certain coastal areas of North America and the U.S. Caribbean Sea are
within designated Emission Control Areas, and additional Emission Control Areas could be
established in the future. All our existing containerships are generally compliant with current Annex
VI requirements. However, if new Emission Control Areas are approved by the IMO or other new
or more stringent air emission requirements are adopted by the IMO or the states where we expect
to operate, compliance with these requirements could entail significant additional capital
expenditures, operational changes or otherwise increase the costs of our operations.

The International Convention on Civil Liability for Bunker Oil Pollution Damage (the “Bunker
Convention”), which became effective in November 2008, imposes strict liability on vessel owners for
pollution damage in jurisdictional waters of ratifying states caused by discharges of bunker fuel. The
Bunker Convention also requires registered owners of vessels over 1,000 gross tons to maintain
insurance in specified amounts to cover liability for bunker fuel pollution damage. Each of our
containerships has been issued a certificate attesting that insurance is in force in accordance with the
Bunker Convention. In 2004, the IMO also adopted the International Convention for the Control

40459

and Management of Ships’ Ballast Water and Sediments (the “BWM Convention”). The BWM
Convention’s implementing regulations call for a phased introduction of mandatory ballast water
exchange requirements, to be replaced in time with mandatory concentration limits. The BWM
Convention will not enter into force until 12 months after it has been ratified by 30 states, the
combined merchant fleets of which represent not less than 35% of the gross tonnage of the world’s
merchant shipping. To date, the BWM Convention has not yet entered into force because it has not
been ratified by a sufficient number of countries to meet this threshold.

The operation of our vessels is based on the requirements set forth in the ISM Code. The ISM

Code requires vessel managers to develop and maintain an extensive SMS that includes the adoption
of a safety and environmental protection policy, sets forth instructions and procedures for safe vessel
operation and describes procedures for dealing with emergencies. The ISM Code requires that vessel
operators obtain a SMC for each vessel they operate from the government of the vessel’s flag state.
The certificate verifies that the vessel operates in compliance with its approved SMS. No vessel can
obtain a certificate unless the flag state has issued a document of compliance with the ISM Code to
the vessel’s manager. Failure to comply with the ISM Code may lead to withdrawal of the permit to
manage or operate the vessels, subject such party to increased liability, decrease or suspend available
insurance coverage for the affected vessels, or result in a denial of access to, or detention in, certain
ports. Each of the container ships in our fleet and each of our affiliated managers and third-party
managers are ISM Code-certified.

United States Requirements

OPA 90 established an extensive regulatory and liability regime for the protection of the

environment from oil spills and cleanup of oil spills. OPA 90 applies to discharges of any oil from a
vessel, including discharges of fuel and lubricants. OPA 90 affects all owners and operators whose
vessels trade in the United States, its territories and possessions or whose vessels operate in U.S.
waters, which include the United States’ territorial sea and its two hundred nautical mile exclusive
economic zone. While we do not carry oil as cargo, we do carry fuel in our containerships, making
them subject to the requirements of OPA 90.

Under OPA 90, vessel owners, operators and bareboat charterers are “responsible parties” and
are jointly, severally and strictly liable (unless the discharge of pollutants results solely from the act
or omission of a third party, an act of God or an act of war) for all containment and clean-up costs
and other damages arising from discharges or threatened discharges, of pollutants from their vessels,
including bunkers. OPA 90 defines these other damages broadly to include:
• natural resource damages and the costs of assessment thereof;
• real and personal property damage;
• net loss of taxes, royalties, rents, fees and other lost revenues;
• lost profits or impairment of earning capacity due to property or natural resource damages;

and

• net cost of public services necessitated by a spill response, such as protection from fire, safety

or health hazards, and loss of subsistence use of natural resources.

OPA 90 preserves the right to recover damages under other existing laws, including maritime

tort law.

U.S. Coast Guard regulations limit OPA 90 liability to the greater of $1,000 per gross ton or

$854,400 per incident for non-tank vessels, subject to periodic adjustments of such limits. These
limits of liability do not apply if an incident was directly caused by violation of applicable U.S.
safety, construction or operating regulations or by a responsible party’s gross negligence or willful
misconduct, or if the responsible party fails or refuses to report the incident or to cooperate and
assist in connection with oil removal activities.

CERCLA applies to spills or releases of hazardous substances other than petroleum or

petroleum products whether on land or at sea. CERCLA imposes joint and several liability, without
regard to fault, on the owner or operator of a vessel, vehicle or facility from which there has been a

04089

release, along with other specified parties. Costs recoverable under CERCLA include cleanup and
removal costs, natural resource damages and governmental oversight costs. Liability under CERCLA
is generally limited to the greater of $300 per gross ton or $5.0 million for vessels carrying any
hazardous substances, such as cargo or residue, or $0.5 million for any other vessel, per release of or
incident involving hazardous substances. These limits of liability do not apply if the incident is
caused by gross negligence, willful misconduct or a violation of certain regulations, in which case
liability is unlimited.

All owners and operators of vessels over 300 gross tons are required to establish and maintain

with the U.S. Coast Guard evidence of financial responsibility sufficient to meet their potential
liabilities under OPA 90 and CERCLA. Under the U.S. Coast Guard regulations, vessel owners and
operators may evidence their financial responsibility by providing proof of insurance, surety bond,
guarantee, letter of credit or self-insurance. An owner or operator of a fleet of vessels is required
only to demonstrate evidence of financial responsibility in an amount sufficient to cover the vessel in
the fleet having the greatest maximum liability under OPA 90 and CERCLA. Under the self-
insurance provisions, the vessel owner or operator must have a net worth and working capital,
measured in assets located in the United States against liabilities located anywhere in the world, that
exceeds the applicable amount of financial responsibility.

The U.S. Coast Guard’s regulations concerning certificates of financial responsibility provide, in
accordance with OPA 90, that claimants may bring suit directly against an insurer or guarantor that
furnishes certificates of financial responsibility. In the event that such insurer or guarantor is sued
directly, it is prohibited from asserting any contractual defense that it may have had against the
responsible party and is limited to asserting those defenses available to the responsible party and the
defense that the incident was caused by the willful misconduct of the responsible party. Certain
organizations, which had typically provided certificates of financial responsibility under pre-OPA
90 laws, including the major P&I associations, have declined to furnish evidence of insurance for
vessel owners and operators if they are subject to direct actions or required to waive insurance
policy defenses. This requirement may have the effect of limiting the availability of the type of
vessel coverage required by the U.S. Coast Guard and could increase our costs of obtaining this
insurance for our fleet, as well as the costs of our competitors that also require such coverage.

OPA 90 specifically permits individual states to impose their own liability regimes with regard

to oil pollution incidents occurring within their boundaries, and some states have enacted legislation
providing for unlimited liability for oil spills. In some cases, states which have enacted such
legislation have not yet issued implementing regulations defining vessels owners’ responsibilities
under these laws. We intend to comply with all applicable state regulations in the ports where our
vessels call.

We will maintain, for each of our containerships, oil pollution liability coverage insurance in the

amount of $1.0 billion per vessel per incident. In addition, we carry hull and machinery and
protection and indemnity insurance to cover the risks of fire and explosion. Although our
containerships will only carry bunker fuel, a spill of oil from one of our vessels could be catastrophic
under certain circumstances. Losses as a result of fire or explosion could also be catastrophic under
some conditions. While we believe that our present insurance coverage is adequate, not all risks can
be insured, and if the damages from a catastrophic spill exceeded our insurance coverage, the
payment of those damages could have an adverse effect on our business or the results of our
operations.

Title VII of the Coast Guard and Maritime Transportation Act of 2004 (the “CGMTA”)

amended OPA 90 to require the owner or operator of any non-tank vessel of 400 gross tons or
more that carries oil of any kind as a fuel for main propulsion, including bunker fuel, to prepare
and submit a response plan for each vessel. These vessel response plans include detailed information
on actions to be taken by vessel personnel to prevent or mitigate any discharge or substantial threat
of such a discharge of oil from the vessel due to operational activities or casualties. Where required,
each of our containerships has an approved response plan.

The CWA prohibits the discharge of oil or hazardous substances in navigable waters and

imposes liability in the form of penalties for any unauthorized discharges. It also imposes substantial

11264

liability for the costs of removal, remediation and damages and complements the remedies available
under the more recently enacted OPA 90 and CERCLA, discussed above. The U.S. Environmental
Protection Agency (the “EPA”) regulates the discharge of ballast water and other substances under
the CWA. EPA regulations require vessels 79 feet in length or longer (other than commercial
fishing vessels) to obtain coverage under a Vessel General Permit (“VGP”) authorizing discharges of
ballast waters and other wastewaters incidental to the operation of vessels when operating within the
three-mile territorial waters or inland waters of the United States. The VGP requires vessel owners
and operators to comply with a range of best management practices and reporting and other
requirements for a number of incidental discharge types. The EPA issued a new VGP, which
became effective in December 2013, that contains more stringent requirements, including numeric
ballast water discharge limits (that generally align with the most recent U.S. Coast Guard standards
issued in 2012), requirements to ensure that the ballast water treatment systems are functioning
correctly, and more stringent effluent limits for oil to sea interfaces and exhaust gas scrubber
wastewater. We have obtained coverage under the current version of the VGP for all of our
containerships that operate in U.S. waters. We do not believe that any material costs associated with
meeting the requirements under the VGP will be material.

U.S. Coast Guard regulations adopted under the 1996 U.S. National Invasive Species Act
(“NISA”) also impose mandatory ballast water management practices for all vessels equipped with
ballast water tanks entering or operating in U.S. waters. Amendments to these regulations that
became effective in June 2012 established maximum acceptable discharge limits for various invasive
species and/or requirements for active treatment of ballast water. The U.S. Coast Guard ballast
water standards are consistent with requirements under the BWM Convention. Several states,
including Michigan and California, have adopted legislation or regulations relating to the permitting
and management of ballast water discharges. California has extended its ballast water management
program to the regulation of “hull fouling” organisms attached to vessels and adopted regulations
limiting the number of organisms in ballast water discharges. Other states could adopt similar
requirements that could increase the costs of operation in state waters.

The EPA has adopted standards under the CAA that pertain to emissions from vessel vapor
control and recovery and other operations in regulated port areas and emissions from model year
2004 and later large marine diesel engines. Several states also regulate emissions from vapor control
and recovery under authority of State Implementation Plans adopted under the CAA. On April 30,
2010, the EPA promulgated regulations that impose more stringent standards for emissions of
particulate matter, sulfur oxides and nitrogen oxides from new Category 3 marine diesel engines on
vessels constructed on or after January 1, 2016 and registered or flagged in the U.S. and implement
the new MARPOL Annex VI requirements for U.S. and foreign flagged ships entering U.S. ports or
operating in U.S. internal waters. The EPA is also considering a petition from a number of
environmental groups that requests the EPA to impose more stringent emissions limits on foreign-
flagged vessels operating in U.S. waters. California has adopted emission limits for auxiliary diesel
engines of ocean-going vessels operating within 24 miles of the California coast and requires
operators to use low sulfur content fuel. If new or more stringent regulations relating to emissions
from marine diesel engines or port operations by ocean-going vessels are adopted by the EPA or
states, these requirements could require significant capital expenditures or otherwise increase the
costs of our operations.

European Union Requirements

The European Union has also adopted legislation that (1) requires member states to refuse
access to their ports to certain sub-standard vessels, according to vessel type, flag and number of
previous detentions, (2) obliges member states to inspect at least 25% of foreign vessels using their
ports annually and provides for increased surveillance of vessels posing a high risk to maritime
safety or the marine environment, (3) provides the European Union with greater authority and
control over classification societies, including the ability to seek to suspend or revoke the authority
of negligent societies, and (4) requires member states to impose criminal sanctions for certain
pollution events, such as the unauthorized discharge of tank washings.

67992

Other Regional Requirements

The environmental protection regimes in certain other countries, such as Canada, resemble those

of the United States. To the extent we operate in the territorial waters of such countries or enter their
ports, our containerships would typically be subject to the requirements and liabilities imposed in such
countries. Other regions of the world also have the ability to adopt requirements or regulations that
may impose additional obligations on our containerships and may entail significant expenditures on
our part and may increase the costs of our operations. These requirements, however, would apply to
the industry operating in those regions as a whole and would also affect our competitors.

Greenhouse Gas Regulations

Currently, emissions of greenhouse gases from international shipping are not subject to the
Kyoto Protocol to the United Nations Framework Convention on Climate Change, which entered
into force in 2005 and required adopting countries to implement national programs to reduce
greenhouse gas emissions. The Kyoto Protocol was extended to 2020 at the 2012 United Nations
Climate Change Conference, with the hope that a new climate change treaty would be adopted by
2015 and enter into force by 2020.

International or multinational bodies or individual countries may adopt climate change
initiatives. For example, the Marine Environment Protection Committee (“MEPC”) of the IMO
adopted two new sets of mandatory requirements to address greenhouse gas emissions from ships at
its July 2011 meeting. The Energy Efficiency Design Index requires a minimum energy efficiency
level per capacity mile and is applicable to new vessels, and the Ship Energy Efficiency Management
Plan is applicable to currently operating vessels. The requirements entered into force in
January 2013 and could cause us to incur additional compliance costs. The IMO is also considering
the development of a market-based mechanism for greenhouse gas emissions from ships, but it is
difficult to accurately predict the likelihood that such a standard might be adopted or its potential
impact on our operations at this time.

In June 2013, the European Commission developed a strategy to integrate maritime emissions into
the overall European Union Strategy to reduce greenhouse gas emissions. If the strategy is adopted by
the European Parliament and Council, large vessels entering European Union ports would be required
to monitor, report and verify their carbon dioxide emissions beginning in January 2018. In December
2013, the European Union environmental ministers discussed draft rules to implement monitoring and
reporting of carbon dioxide emissions from ships. In the United States, the EPA has issued a finding
that greenhouse gases endanger the public health and safety and has adopted regulations under the
CAA to limit greenhouse gas emissions from certain mobile sources and proposed regulations to limit
greenhouse gas emissions from large stationary sources. Although the mobile source emissions do not
apply to greenhouse gas emissions from ships, the EPA may, in the future, decide to regulate
greenhouse gas emissions from ocean-going vessels. Any passage of climate control legislation or other
regulatory initiatives by the IMO, the European Union, the United States or other countries where we
operate, or any treaty adopted at the international level to succeed the Kyoto Protocol, that restrict
emissions of greenhouse gases could require us to make significant financial expenditures that we
cannot predict with certainty at this time. Even in the absence of climate control legislation and
regulations, our business and operations may be materially affected to the extent that climate change
results in sea level changes or more intense weather events.

The State of California has mandated that ships, instead of relying on their shipboard power,

must use shore power while breathed through a process known as Cold Ironing or Alternative
Maritime Power. The regulation was phased in starting in 2014. Our vessels, which are affected by
the State of California regulations, have or will have the necessary installation. It is expected that
the cost of modifications needed for older vessels will be borne in part by the charterers of each
vessel, but it is difficult to predict the exact impact on our operations.

17860

Vessel Security Regulations

A number of initiatives have been introduced in recent years intended to enhance vessel
security. On November 25, 2002, the Maritime Transportation Security Act of 2002 (the “MTSA”)
was signed into law. To implement certain portions of the MTSA, the U.S. Coast Guard issued
regulations in July 2003 requiring the implementation of certain security requirements aboard vessels
operating in waters subject to the jurisdiction of the United States. Similarly, in December 2002,
amendments to SOLAS created a new chapter of the convention dealing specifically with maritime
security. This new chapter came into effect in July 2004 and imposes various detailed security
obligations on vessels and port authorities, most of which are contained in the newly created ISPS
Code. Among the various requirements are:

• on-board installation of automatic information systems to enhance vessel-to-vessel and vessel-

to-shore communications;

• on-board installation of ship security alert systems;
• the development of ship security plans; and
• compliance with flag state security certification requirements.
The U.S. Coast Guard regulations, intended to align with international maritime security

standards, exempt non-U.S. vessels from MTSA vessel security measures; provided such vessels have
on board a valid “International Ship Security Certificate” that attests to the vessel’s compliance with
SOLAS security requirements and the ISPS Code. We have implemented the various security
measures required by the IMO, SOLAS and the ISPS Code and have approved ISPS certificates and
plans certified by the applicable flag state on board all our containerships.

C. Organizational Structure

Costamare Inc. is a holding company incorporated in the Republic of The Marshall Islands
which, as of February 27, 2015, has 92 subsidiaries, 87 of which are incorporated in Liberia and
5 which are incorporated in the Republic of The Marshall Islands. Of our Liberian subsidiaries,
55 either own vessels in our fleet or are parties to contracts to obtain newbuild vessels and the
remaining subsidiaries are dormant. Our subsidiaries are wholly-owned by us. A list of our
subsidiaries as of February 27, 2015 is set forth in Exhibit 8.1 to this annual report.

D. Property, Plant and Equipment

We have no freehold or material leasehold interest in any real property. We occupy office space

at 60 Zephyrou Street & Syngrou Avenue, 17564 Athens, Greece, that is provided to us as part of
the services we receive under the Group Management Agreement. Other than our vessels, we do
not have any material property. Our vessels are subject to priority mortgages, which secure our
obligations under our various credit facilities. For further details regarding our credit facilities, refer
to “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—
Credit Facilities”.

ITEM 4.A. UNRESOLVED STAFF COMMENTS

None.

43310

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion of our financial condition and results of operations should be read in
conjunction with the financial statements and the notes to those statements included elsewhere in this
annual report. This discussion includes forward-looking statements that involve risks and uncertainties.
As a result of many factors, such as those set forth under “Item 3. Key Information—D. Risk Factors”
and elsewhere in this annual report, our actual results may differ materially from those anticipated in
these forward-looking statements. Please see the section “Forward-Looking Statements” at the
beginning of this annual report.

Overview

We are an international owner of containerships, chartering our vessels to many of the world’s
largest liner companies. As of February 27, 2015, we had a fleet of 68 containerships aggregating in
excess of 447,000 TEU, including nine newbuilds on order, making us one of the largest public
containership companies in the world, based on total TEU capacity. At that date, our fleet consisted
of (i) 59 vessels in the water, aggregating approximately 331,000 TEU and (ii) 9 newbuild vessels
aggregating approximately 116,000 TEU that are scheduled to be delivered to us through the third
quarter of 2016, based on the current shipyard schedule. As of December 31, 2014, 13 of our
containerships, including nine newbuilds, had been acquired pursuant to the Framework Agreement
with York by vessel-owning joint venture entities in which we hold a minority equity interest. See
“Item 4. Information on the Company—B. Business Overview—Our Fleet, Acquisitions and
Newbuild Vessels”.

We principally deploy our containerships on long-term, fixed-rate time charters to take

advantage of the stable cash flows and high utilization rates typically associated with long-term time
charters. Time-chartered containerships are generally employed on long-term charters to liner
companies that charter-in vessels on a long-term basis as part of their business strategies.

As of February 27, 2015, the average (weighted by TEU capacity) remaining time-charter

duration for our fleet of 68 containerships was approximately 4.5 years, based on the remaining fixed
terms and assuming the exercise of any owner’s options and the non-exercise of any charterer’s
options under our containerships’ charters. As of December 31, 2014, our fixed-term charters
represented an aggregate of $2.0 billion of contracted revenue, assuming the earliest redelivery dates
possible and 365 revenue days per annum per containership (which amount includes our ownership
percentage of contracted revenue for the existing Joint Venture vessels). See the table entitled
“Contracted Revenue and Days From Time Charters as of December 31, 2014” in “Item 5.
Operating and Financial Review and Prospects—A. Operating Results—Factors Affecting Our
Results of Operations—Voyage Revenue”. As of February 27, 2015, our fixed-term charters
represented an aggregate of $2.0 billion of contracted revenue, assuming the earliest redelivery dates
possible and 365 revenue days per annum per containership (which amount includes our ownership
percentage of contracted revenue for the existing Joint Venture vessels). Ten of these charters
include an option exercisable by either party to extend the term: five vessels for two one-year
periods at the same charter rate, which represents an additional $152.2 million of potential
contracted revenue, and five Joint Venture vessels for a two-year period and a subsequent three-year
period at the same charter rate, which represents an additional $170.5 million of potential contracted
revenue that is attributable to our share of the relevant vessel-owning entities.

The table below provides additional information about the charter coverage for our fleet of
containerships as of December 31, 2014. Except as indicated in the footnotes, it does not reflect
events occurring after that date, including any charter contract we entered into after that date. It
excludes all days attributable to the operation of the vessels purchased pursuant to the Framework
Agreement, which includes four vessels in the water and nine newbuilds on order. The table assumes
the earliest redelivery dates possible under our containerships’ charters. See “Item 4. Information on
the Company—B. Business Overview—Our Fleet, Acquisitions and Newbuild Vessels”.

66414

No. of Vessels whose

Charters Expire(1) . . .

TEU of Expiring

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

—

Charters . . . . . . . . . . . . 55,519

27,820

38,063

126,496

6,644

13,288

Contracted Days . . . . . . 16,160

13,068

10,637

5,568

3,238

2,358

6,724

2,084

— 27,057

18,806

1,825

1,150

108

Available Days. . . . . . . . 3,915

6,696

9,073

13,412

15,742

16,104

15,436

14,965

15,640

16,728

Contracted/Total

Days(2) . . . . . . . . . . . . . .

80.5% 66.1% 54.0% 29.3% 17.1% 12.8% 11.9% 10.9% 6.8% 0.6%

(1) This excludes all vessels purchased pursuant to the Framework Agreement.

(2) Total days are calculated on the assumption that the vessels will continue trading until the age of 30 years old, unless the

vessel will exceed 30 years of age at the expiry of its current time charter, in which case we assume that the vessel
continues trading until that expiry date.

Our containership fleet is currently under time charters with nine different charterers. For the
three years ended December 31, 2014, our largest customers by revenue were A.P. Moller-Maersk,
MSC, Evergreen, Hapag Lloyd and COSCO; together these five customers represented 91%, 93%
and 94% of our revenue in 2012, 2013 and 2014, respectively.

We dry-dock our vessels when the next survey (dry-dock survey or special survey) is scheduled

to become due, ranging from 30 to 60 months. We have dry-docked 28 vessels over the past 3 years,
and we plan to dry-dock nine vessels in 2015 and 11 vessels in 2016. Information about our fleet
dry-docking schedule through 2016 is set forth in a table in “Item 4. Information on the Company—
B. Business Overview—Risk of Loss and Liability Insurance—Inspection by Classification Societies”.

Our Manager

The operations of our fleet of containerships are managed by Costamare Shipping and its sub-
managers under the supervision of our chairman and chief executive officer and our chief financial
officer, in conjunction with our board of directors. Costamare Shipping is providing us with general
administrative services, certain commercial services, D&O related insurance services and the services
of our officers as well as technical, commercial, insurance, accounting, provisioning, sale and
purchase, chartering, crewing, bunkering and administrative services in respect of our containerships.
In the event that Costamare Shipping decides to delegate certain or all of the services it has agreed
to perform to affiliated sub-managers (such as Shanghai Costamare) or, subject to our consent, a
third-party sub-manager (such as V.Ships Greece), either through subcontracting or by directing the
sub-manager to enter into a direct ship-management agreement with the relevant containership-
owning subsidiary, then, in the case of subcontracting, Costamare Shipping will be responsible for
paying the management fee charged by the relevant sub-manager for providing such services and, in
the case of a direct ship-management agreement, the fee received by Costamare Shipping will be
reduced by the fee payable to the sub-manager under the relevant direct ship-management
agreement. As a result, these arrangements will not result in any increase in the aggregate
management fees we pay. Moreover, in the case of the Co-operation Agreement, the management
fees we pay are reduced by any net profit received by Costamare Shipping from the Cell’s
operation. In addition to management fees, we pay for any capital expenditures, financial costs,
operating expenses and any general and administrative expenses, including payments to third parties
in accordance with the Group Management Agreement and the relevant separate ship-management
agreements or supervision agreements. Costamare Shipping receives a fee in 2015 of $956 per day
or, in the case of a containership subject to a bareboat charter, $478 per day, for each containership,
pro rated for the calendar days we own each containership. In 2014, such amounts were $919 and
$460, respectively. We also pay to Costamare Shipping a flat fee of $787,405 per newbuild vessel for
the supervision of the construction of any newbuild vessel that we may contract. The flat fee for the
supervision of newbuild vessels will be annually adjusted to reflect any strengthening of the Euro
against the U.S. dollar and/or material unforeseen cost increases. Costamare Shipping also receives a
fee of 0.75% on all gross freight, demurrage, charter hire and ballast bonus or other income earned

45604

with respect to each containership in our fleet. Additionally, beginning in the first quarter of 2015,
Costamare Shipping receives an annual fee payable quarterly in arrears of (i) $2.5 million and (ii)
598,400 shares (which is equal to 0.8% of the issued and outstanding Costamare common stock as of
January 1, 2015), which fee includes payment for the services of our executive officers (prior to
2015, we paid Costamare Shipping $1.0 million annually for such services). We have reserved
3 million shares of common stock to cover fees to be paid to Costamare Shipping through
December 31, 2019. We paid to Costamare Shipping aggregate fees of approximately $23.9 million
under the Group Management Agreement for the year ended December 31, 2014. The aggregate
fees for the year ending December 31, 2015 will be higher than the fees paid in 2014 due to the fee
increases described above.

The initial term of the Group Management Agreement with Costamare Shipping expires on
December 31, 2015. The Group Management Agreement automatically renews for 10 consecutive
one-year periods until December 31, 2025, at which point the Group Management Agreement will
expire. The daily management fee for each containership is fixed until December 31, 2015, and will
hereafter be annually adjusted to reflect any strengthening of the Euro against the U.S. dollar and/or
material unforeseen cost increases. After the initial term expires on December 31, 2015, we will be
able to terminate the Group Management Agreement, subject to a termination fee, by providing
written notice to Costamare Shipping at least 12 months before the end of the subsequent one-year
term. The termination fee is equal to (a) the lesser of (i) 10 and (ii) the number of full years
remaining prior to December 31, 2025, times (b) the aggregate fees due and payable to Costamare
Shipping during the 12-month period ending on the date of termination (without taking into account
any reduction in fees to reflect that certain obligations have been delegated to a sub-manager);
provided that the termination fee will always be at least two times the aggregate fees over the
12-month period described above. Information about other termination events under the Group
Management Agreement is set forth in “Item 7. Major Shareholders and Related Party
Transactions—B. Related Party Transactions—Management Agreement—Term and Termination
Rights”.

We have consented to Costamare Shipping providing management services to the Joint Venture
vessels and Costamare Shipping has entered into separate management agreements with each vessel-
owning entity formed under the Framework Agreement pursuant to which Costamare Shipping
provides technical, crew, crew insurance, commercial, general and administrative and insurance
services directly or through Shanghai Costamare or V.Ships Greece as sub-managers, provided that
V.Ships Greece may be directed to enter into a direct management agreement with each vessel-
owning entity and, in respect of the newbuild vessels under construction, into a supervision
agreement with the respective vessel-owning entity. During the year ended December 31, 2014,
Costamare Shipping charged in aggregate to the companies established pursuant to the Framework
Agreement the amount of $1.57 million for services provided in accordance with the respective
management agreements.

A. Operating Results

Factors Affecting Our Results of Operations

Our financial results are largely driven by the following factors:
• Number of Vessels in Our Fleet. The number of vessels in our fleet is a key factor in

determining the level of our revenues. Aggregate expenses also increase as the size of our
fleet increases. Vessel acquisitions and dispositions give rise to gains and losses and other
onetime items. During 2007 and 2008, we increased the number of vessels in our fleet so that

52700

on October 31, 2008 our fleet consisted of 53 containerships. Thereafter, from 2009 through
the first half of 2010, in response to the global economic recession, we reduced our fleet
through dispositions to 41 vessels. Beginning in the second half of 2010, when the market
started to recover and vessel prices were at an attractive point, we have substantially grown
our fleet to a total of 68 vessels as of February 27, 2015, including nine newbuild vessels on
order. Thirteen of our containerships, including our nine newbuilds, have been acquired
pursuant to the Framework Agreement with York by vessel-owning joint venture entities in
which we hold a minority equity interest.

• Charter Rates. The charter rates we obtain for our vessels also drive our revenues. Charter
rates are based primarily on demand and supply of containership capacity at the time we
enter into the charters for our vessels. Demand and supply can fluctuate significantly over
time as a result of changing economic conditions affecting trade flow between ports served by
liner companies and the industries which use liner shipping services. Although our long-term
charters make us less susceptible to cyclical containership charter rates than vessels operated
on shorter-term charters, such as spot charters, we are exposed to varying charter rate
environments when our chartering arrangements expire and we seek to deploy our
containerships under new charters. As illustrated in the table above under “—Overview”, the
staggered maturities of our containership charters reduce our exposure to any one particular
rate environment and point in the shipping cycle. See “—Voyage Revenue”.

• Utilization of Our Fleet. Due to the long-term time charters under which they generally operate,
our containerships have consistently been deployed at high utilization. Nevertheless, the amount
of time our vessels spend dry-docked undergoing repairs, maintenance or upgrade work affects
our results of operations. Historically, our fleet has had a limited number of unscheduled off-
hire days. In 2012, 2013 and 2014 our fleet utilization based on unscheduled off-hire days as a
percentage of total operating days for each year was 99.9%, 99.9% and 99.8%, respectively.
However, an increase in annual off-hire days could reduce our utilization. The efficiency with
which suitable employment is secured, the ability to minimize off-hire days and the amount of
time spent positioning vessels also affects our results of operations. If the utilization pattern of
our containership fleet changes, our financial results would be affected.

• Expenses and Other Costs. Our ability to control our fixed and variable expenses is critical to

our ability to maintain acceptable profit margins. These expenses include commission expenses,
crew wages and related costs, the cost of insurance, expenses for repairs and maintenance, the
cost of spares and consumable stores, lubricating oil costs, tonnage taxes and other
miscellaneous expenses. In addition, factors beyond our control, such as developments relating
to market premiums for insurance and the value of the U.S. dollar compared to currencies in
which certain of our expenses, primarily crew wages, are paid, can cause our vessel operating
expenses to increase. We proactively manage our foreign currency exposure by entering into
Euro/dollar forward contracts covering our Euro-denominated operating expenses.

Voyage Revenue

Our operating revenues are driven primarily by the number of vessels in our fleet, the amount

of daily charter hire that our vessels earn under time charters and the number of operating days
during which our vessels generate revenues. These factors are, in turn, affected by our decisions
relating to vessel acquisitions and dispositions, the amount of time that we spend positioning our
vessels, the amount of time that our vessels spend dry-docked undergoing repairs, maintenance and
upgrade work, the age, condition and specifications of our vessels and the levels of supply and
demand in the containership charter market.

Charter revenues are generated from fixed-rate time charters and are recorded on a straight-line

basis over the term of each time charter (excluding the effect of any options to extend the term).
Revenues do not include any revenues for the existing Joint Venture vessels. Revenues derived from
time charters with escalating rates are accounted for as operating leases and thus are recognized on
a straight-line basis as the average revenue over the rental periods of such agreements, as service is
performed, by dividing (i) the aggregate contracted revenues until the earliest expiration date of the

75112

time charter by (ii) the total contracted days until the earliest expiration date of the time charter.
Some of our charters provide that the charter rate will be adjusted to a market rate for the final
months of their respective terms. For purposes of determining the straight-line revenue amount, we
exclude these periods and treat the charter as expiring at the end of the last fixed rate period. Our
revenues will be affected by the acquisition of any additional vessels in the future subject to time
charters, as well as by the disposition of any existing vessel in our fleet. Our revenues will also be
affected if any of our charterers cancel a time charter or if we agree to renegotiate charter terms
during the term of a charter resulting in aggregate revenue reduction. Our time charter
arrangements have been contracted in varying rate environments and expire at different times.
Generally, we do not employ our vessels under voyage charters under which a ship-owner, in return
for a fixed sum, agrees to transport cargo from one or more loading ports to one or more
destinations and assumes all vessel operating costs and voyage expenses.

According to Clarkson Research, the first half of 2007 saw the containership charter market

recover to rate levels similar to those seen in late 2005 and early 2006. However, the onset of the
global economic downturn and the resulting slowdown in container trade growth created a relative
oversupply of capacity, leading to a rapid decrease in containership earnings in the latter half of
2008, which continued in the first half of 2009, with earnings remaining depressed during the rest of
the year. In 2010, containership charter rates registered and upward trend over the years as a whole
and made further gains in early 2011 before decreasing sharply in the second half of 2011. The time
charter rates and charter free vessel values remained at low levels through 2014 and current charter
rates remain near historically low levels compared to the ten-year historical average. While charter
rates and the level of demand for containerships are historically volatile, and there can be no
assurance that either will improve, we believe that any continued improvement in the global
economy and demand for containerships will lead to an improvement in charter rates over time.

The table below provides additional information about our expected revenues based on contracted

charter rates as of December 31, 2014. Although these expected revenues are based on contracted
charter rates, any contract is subject to various risks, including performance by the counterparties or
an early termination of the contract pursuant to its terms. If the charterers are unable to make charter
payments to us, if we agree to renegotiate charter terms at the request of a charterer or if contracts
are prematurely terminated for any reason, our results of operations and financial condition may be
materially adversely affected. Historically, we have had no defaults or early terminations by charterers,
although in certain cases we have agreed to changes in charter terms.

Contracted Revenue and Days From Time Charters as of December 31, 2014*

Contracted Revenues(1)(2) . . . . . . . . .
Fleet Contracted Days(2). . . . . . . . . .
Percentage of fleet contracted

days/Total days(2). . . . . . . . . . . . . . .

On and After January 1,

2015

2016

2017

2018

2019
and
thereafter

Total

(Expressed in thousands of U.S. dollars, except days and percentages)

$453,416
16,160

$417,343
13,068

$371,709
10,637

$198,759
5,568

$433,158
10,763

$1,874,385
56,196

80.5%

66.1%

54.0%

29.3%

11.4%

30.6%

(1) Annual revenue calculations are based on: (a) an assumed 365 revenue days per vessel per annum, (b) the earliest

redelivery dates possible under our containerships’ charters and (c) non-exercise of the owner’s options to extend the terms
of those charters.

(2) Some of our charters provide that the charter rate will be adjusted to a market rate for the final months of their

respective terms. For purposes of determining contracted revenues and the number of days, we exclude these periods and
treat the charter as expiring at the end of the last fixed rate period. Total days are calculated on the assumption that the
vessels will continue trading until the age of 30 years old, unless the vessel will exceed 30 years of age at the expiry of its
current time charter, in which case we assume that the vessel continues trading until that expiry date.

* The revenues and days in the above table exclude the revenues and contracted days of any of the vessels purchased

pursuant to the Framework Agreement.

76824

Voyage Expenses

Voyage expenses include port and canal charges, bunker (fuel) expenses, address commissions

and brokerage commissions. Under our time charter arrangements, charterers bear the voyage
expenses other than address and brokerage commissions. As such, voyage expenses represent a
relatively small portion of our vessels’ overall expenses. During 2013 and 2014, brokerage and
address commissions represented 35% and 33% of voyage expenses respectively.

These commissions do not include the fees we pay to our manager, which are described below

under “Item 7. Major Shareholders and Related Party Transactions—B. Related Party
Transactions—Management Agreement”.

Vessels’ Operating Expenses

Vessels’ operating expenses include crew wages and related costs, the cost of insurance,
expenses for repairs and maintenance, the cost of spares and consumable stores, lubricant costs,
statutory and classification expenses and other miscellaneous expenses. Aggregate expenses increase
as the size of our fleet increases. We expect that insurance costs, dry-docking and maintenance costs
will increase as our vessels age. Factors beyond our control, some of which may affect the shipping
industry in general—for instance, developments relating to market premiums for insurance and
changes in the market price of lubricants due to increases in oil prices—may also cause vessel
operating expenses to increase. In addition, a substantial portion of our vessel operating expenses,
primarily crew wages, are in currencies other than the U.S. dollar (mainly in Euro), and any gain or
loss we incur as a result of the U.S. dollar fluctuating in value against these currencies is included in
vessel operating expenses. As of December 31, 2014, approximately 29% of our outstanding accounts
payable were denominated in currencies other than the U.S. dollar (mainly in Euro). We fund our
managers with the amounts they will need to pay our fleet’s vessel operating expenses. Under our
time charter arrangements, we generally pay for vessel operating expenses.

General and Administrative Expenses

General and administrative expenses mainly include legal, accounting and advisory fees. We also

incur additional general and administrative expenses as a public company. The primary components
of general and administrative expenses consist of the expenses associated with being a public
company, which include the preparation of disclosure documents, legal and accounting costs, investor
relation costs, incremental director and officer liability insurance costs, director and executive
compensation and costs related to compliance with the Sarbanes-Oxley Act of 2002 and Dodd-Frank
Act.

Management Fees

With effect from the consummation of our initial public offering on November 4, 2010 until

December 31, 2012, we paid to our managers a daily management fee of $850 per vessel for their
services. Such fee increased to $884 per day per vessel beginning January 1, 2013, further increased
to $919 per day per vessel beginning January 1, 2014, and further increased to $956 per day per
vessel beginning January 1, 2015. The total management fees paid by us to our managers during the
years ended December 31, 2012, 2013 and 2014 amounted to $15.2 million, $16.6 million and
$18.5 million, respectively. Our current Group Management Agreement, as described in “Item 7.
Major Shareholders and Related Party Transactions—B. Related Party Transactions—Management
Agreement”, went into effect upon the consummation of our initial public offering and has been
subsequently amended from time to time.

Amortization of Dry-docking and Special Survey Costs

All vessels are dry-docked at least once every five years for inspection of their underwater parts

and for repairs related to such inspections. We follow the deferral method of accounting for special
survey and dry-docking costs whereby actual costs incurred (mainly shipyard costs, paints and class
renewal expenses) are deferred and amortized on a straight-line basis over the period through the

73642

date the next survey is scheduled to become due. If a survey is performed prior to the scheduled
date, the remaining unamortized balances are immediately written off. Unamortized balances of
vessels that are sold are written off and included in the calculation of the resulting gain or loss in
the period of the vessel’s sale.

Depreciation

We depreciate our containerships on a straight-line basis over their estimated remaining useful

economic lives. For years prior to January 1, 2007, we estimated this to be 25 years. As of
January 1, 2007, we determined the estimated useful lives of our containerships to be 30 years from
their initial delivery from the shipyard. This change was made to reflect our experience, market
conditions and the current practice in the containership industry. Depreciation is based on cost, less
the estimated scrap value of the vessels.

Gain / (Loss) on Sale/Disposal of Vessels

The gain or loss on the sale of a vessel is presented in a separate line item in our consolidated

statements of income. In 2012, 2013 and 2014, we sold four, three and three vessels, respectively.

Foreign Exchange Gains / (Losses)

Our functional currency is the U.S. dollar because our vessels operate in international shipping

markets, and therefore transact business mainly in U.S. dollars. Our books of accounts are
maintained in U.S. dollars. Transactions involving other currencies are converted into U.S. dollars
using the exchange rates in effect at the time of the transactions. The gain or loss derives from the
different foreign currency exchange rates between the time that a cost is recorded in our books and
the time that the cost is paid. At the balance sheet dates, monetary assets and liabilities, which are
denominated in other currencies, are translated into U.S. dollars at the year-end exchange rates.
Resulting gains or losses are reflected as foreign exchange gains / (losses) in our consolidated
statement of income.

Other, Net

Other expenses represent primarily non-recurring items that are not classified under the other

categories of our consolidated income statement. Such expenses may, for instance, result from
various potential claims against our Company, or from payments we are effecting on behalf of
charterers that cannot meet their obligations.

Interest Income, Interest and Finance Costs

We incur interest expense on outstanding indebtedness under our existing credit facilities which

we include in interest expense. Finance costs also include financing and legal costs in connection
with establishing and amending those facilities, which are deferred and amortized to interest and
finance costs during the life of the related debt using the effective interest method. Unamortized
fees relating to loans repaid or refinanced, meeting the criteria of debt extinguishment, are expensed
in the period the repayment or refinancing is made. Further, we earn interest on cash deposits in
interest-bearing accounts and on interest-bearing securities, which we include in interest income. We
will incur additional interest expense in the future on our outstanding borrowings and under future
borrowings. For a description of our existing credit facilities and our new committed term loan
please read “—B. Liquidity and Capital Resources—Credit Facilities”.

Equity in Net Earnings of Investments

Based on the Framework Agreement we currently hold a minority interest in the equity of

certain ship-owning companies. We account for these entities as equity investments. Equity in net
earnings of investments represents our share of the earnings or losses of these entities for the
reported period. For a description of the Framework Agreement please see “Item 4. Information on

52382

the Company—B. Business Overview—Our Fleet, Acquisitions and Newbuild Vessels—Framework
Agreement”.

Gain / (Loss) on Derivative Instruments

We enter into interest rate swap contracts to manage our exposure to fluctuations of interest

rate risks associated with specific borrowings. All derivatives are recognized in the consolidated
financial statements at their fair value. On the inception date of the derivative contract, we
designate the derivative as a hedge of a forecasted transaction or the variability of cash flow to be
paid (“cash flow” hedge). Changes in the fair value of a derivative that is qualified, designated and
highly effective as a cash flow hedge are recorded in Other comprehensive income until earnings are
affected by the forecasted transaction or the variability of cash flow and are then reported in
earnings. Changes in the fair value of undesignated derivative instruments and the ineffective portion
of designated derivative instruments are reported in earnings in the period in which those fair value
changes have occurred. For a description of our existing interest rate swaps, please read “Item 11.
Quantitative and Qualitative Disclosures About Market Risk—A. Quantitative Information About
Market Risk—Interest Rate Risk”.

Results of Operations

Year Ended December 31, 2014 Compared to Year Ended December 31, 2013

During the year ended December 31, 2014 and 2013, we had an average of 54.5 and 49.6
vessels, respectively, in our fleet. In the year ended December 31, 2014, we accepted delivery of the
newbuild vessels MSC Azov, MSC Ajaccio and MSC Amalfi with an aggregate TEU capacity of
28,209 and the secondhand vessels Neapolis, Areopolis and Lakonia with an aggregate TEU capacity
of 6,705 and we sold the vessels Konstantina, MSC Kyoto and Akritas with an aggregate TEU
capacity of 10,379. Furthermore, pursuant to the Framework Agreement with York, a jointly-owned
vessel entity accepted delivery of the secondhand vessel Elafonisos with a TEU capacity of 2,526. In
the year ended December 31, 2013 we accepted delivery of the newbuild vessels MSC Athens, MSC
Athos, Valor, Value, Valiant, Valence and Vantage with an aggregate TEU capacity of 61,789 and the
secondhand vessel Venetiko with a TEU capacity of 5,928 and we sold three vessels, the MSC
Washington, MSC Austria and MSC Antwerp with an aggregate TEU capacity of 11,343. In the years
ended December 31, 2014 and 2013, our fleet ownership days totaled 19,885 and 18,119 days,
respectively. Ownership days, in combination with the level of daily charter hire that our vessels
earn under time charters, are the primary drivers of voyage revenue and vessels’ operating expenses
and represent the aggregate number of days in a period during which each vessel in our fleet is
owned.

Voyage revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Voyage expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Voyage expenses—related parties . . . . . . . . . . . . .
Vessels operating expenses . . . . . . . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . .
Management fees—related parties. . . . . . . . . . . . .
Amortization of dry-docking and special

survey costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of prepaid lease rentals . . . . . . . . .
Gain on sale of vessels . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest and finance costs . . . . . . . . . . . . . . . . . . . . .
Equity gain / (loss) on investments. . . . . . . . . . . .
Swaps breakage cost . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on derivative instruments. . . . . . . . . . . . . . . .
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

62295

Year ended December 31,

2014

Change

Percentage
2013
Change
(Expressed in millions of U.S. dollars, except percentages)
$ 414.2
(3.5)
(3.1)
(116.0)
(8.5)
(16.6)

$ 484.0
(3.6)
(3.6)
(120.8)
(7.7)
(18.5)

$69.8
0.1
0.5
4.8
(0.8)
1.9

16.9%
2.9%
16.1%
4.1%
(9.4%)
11.4%

(8.1)
(89.9)
—
0.5
0.6
(74.5)
0.7
—
0.8
6.5
$ 103.1

(7.8)
(105.8)
(4.0)
2.5
0.8
(95.6)
(3.4)
(10.2)
3.3
5.5
$ 115.1

Year ended December 31,

(0.3)
15.9
4.0
2.0
0.2
21.1
(4.1)
10.2
2.5
$ (1.0)

(3.7%)
17.7%
100.0%
400.0%
33.3%
28.3%
(585.7%)
100.0%
312.5%
(15.4%)

Percentage
Change

9.9%
9.7%

Fleet operational data
Average number of vessels . . . . . . . . . . . . . . . . . . . .
Ownership days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of vessels underwent dry-docking . . . .

2013

49.6
18,119
8

2014

54.5
19,885
11

Change

4.9
1,766
3

The Company reports its financial results in accordance with U.S. GAAP. However,

management believes that certain non-GAAP financial measures used in managing the business may
provide users of these financial measures additional meaningful comparisons between current results
and results in prior operating periods. Management believes that these non-GAAP financial
measures can provide additional meaningful reflection of underlying trends of the business because
they provide a comparison of historical information that excludes certain items that impact the
overall comparability. Management also uses these non-GAAP financial measures in making
financial, operating and planning decisions and in evaluating the Company’s performance. The table
below sets out our Voyage revenue adjusted on a cash basis and the corresponding reconciliation to
Voyage revenue for the twelve-month periods ended December 31, 2014 and December 31, 2013.
Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the
Company’s reported results prepared in accordance with GAAP.

Voyage revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued charter revenue(1) . . . . . . . . . . . . . . . . . . . .
Voyage revenue adjusted on a cash basis(2). . . .

Year ended December 31,

2014

Percentage
Change
2013
(Expressed in millions of U.S. dollars, except percentages)
$414.2
15.0
$429.2

$484.0
7.0
$491.0

$69.8
(8.0)
$61.8

16.9%
(53.3%)
14.4%

Change

(1) Accrued charter revenue represents the difference between cash received during the period and revenue recognized on a
straight-line basis. In the early years of a charter with escalating charter rates, voyage revenue will exceed cash received
during the period.

(2) Voyage revenue adjusted on a cash basis represents Voyage revenue after adjusting for non-cash “Accrued charter
revenue” recorded under charters with escalating charter rates. Voyage revenue adjusted on a cash basis is not a
recognized measurement under U.S. GAAP. We believe that the presentation of Voyage revenue adjusted on a cash basis
is useful to investors because it presents the charter revenue for the relevant period based on the then-current daily
charter rates. The increases or decreases in daily charter rates under our charter party agreements are described in the
notes to the table in “Item 4. Information On The Company—Business Overview—Our Fleet, Acquisitions and Newbuild
Vessels”.

42436

Voyage Revenue

Voyage revenue increased by 16.9%, or $69.8 million, to $484.0 million during the year ended

December 31, 2014, from $414.2 million during the year ended December 31, 2013. This increase
was mainly attributable to: (i) revenue earned by the seven and three newbuild vessels delivered to
us during the year ended December 31, 2013 and the six-month period ended June 30, 2014,
respectively; partly offset by (ii) decreased charter rates in certain of our vessels during the year
ended December 31, 2014, compared to the year ended December 31, 2013, and (iii) revenues not
earned by vessels which were sold for scrap during the year ended December 31, 2013 and the year
ended December 31, 2014.

Voyage revenue adjusted on a cash basis (which eliminates non-cash “Accrued charter

revenue”), increased by 14.4%, or $61.8 million, to $491.0 million during the year ended
December 31, 2014, from $429.2 million during the year ended December 31, 2013. This increase
was mainly attributable to: (i) revenue earned by the seven and three newbuild vessels delivered to
us during the year ended December 31, 2013 and the six-month period ended June 30, 2014,
respectively; partly offset by (ii) decreased charter rates in certain of our vessels during the year
ended December 31, 2014, compared to the year ended December 31, 2013, and (iii) revenues not
earned by vessels which were sold for scrap during the year ended December 31, 2013 and the year
ended December 31, 2014.

Voyage Expenses

Voyage expenses increased by 2.9%, or $0.1 million, to $3.6 million during the year ended
December 31, 2014, from $3.5 million during the year ended December 31, 2013. Voyage expenses
mainly include: (i) off-hire expenses of our vessels, mainly related to fuel consumption and (ii) third
party commissions.

Voyage Expenses—Related Parties

Voyage expenses—related parties increased by 16.1%, or $0.5 million to $3.6 million during the

year ended December 31, 2014, from $3.1 million during the year ended December 31, 2013, and
represent fees of 0.75% on voyage revenues charged to us by Costamare Shipping Company S.A. as
provided under our group management agreement.

Vessels’ Operating Expenses

Vessels’ operating expenses, which also includes the realized gain / (loss) under derivative
contracts entered into in relation to foreign currency exposure, increased by 4.1% or $4.8 million to
$120.8 million during the year ended December 31, 2014, from $116.0 million during the year ended
December 31, 2013. The increase was mainly attributable to the increased ownership days of our
fleet during the year ended December 31, 2014, compared to the year ended December 31, 2013.

General and Administrative Expenses

General and administrative expenses decreased by 9.4% or $0.8 million, to $7.7 million during the

year ended December 31, 2014, from $8.5 million during the year ended December 31, 2013. General
and administrative expenses for the years ended December 31, 2014 and December 31, 2013, include
$1.0 million in each period for the services of the Company’s officers in aggregate charged to us by
Costamare Shipping Company S.A. as provided under our group management agreement.

Management Fees—Related Parties

Management fees paid to our managers increased by 11.4%, or $1.9 million, to $18.5 million

during the year ended December 31, 2014, from $16.6 million during the year ended December 31,
2013. The increase was primarily attributable to: (i) the annual upward adjustment by 4% of the
management fee for each vessel (effective January 1, 2014), as then provided under our group

89827

management agreement, and (ii) the increased average number of vessels during the year ended
December 31, 2014, compared to the year ended December 31, 2013.

Amortization of Dry-docking and Special Survey Costs

Amortization of deferred dry-docking and special survey costs for the year ended December 31,
2014 and 2013 was $7.8 million and $8.1 million, respectively. During the year ended December 31,
2014 and 2013, eleven and eight vessels, respectively, underwent and completed their special survey.

Depreciation

Depreciation expense increased by 17.7%, or $15.9 million, to $105.8 million during the year

ended December 31, 2014, from $89.9 million during the year ended December 31, 2013. The
increase was mainly attributable to the depreciation expense charged for the seven newbuild vessels
delivered to us during the year ended December 31, 2013 and for the three newbuild vessels
delivered to us during the six-month period ended June 30, 2014, partly offset by the depreciation
expense not charged for the three and three vessels sold for scrap during the year ended
December 31, 2013 and 2014, respectively.

Amortization of Prepaid lease rentals

The amount of $4.0 million relates to the amortization of the prepaid lease rentals during the

year ended December 31, 2014.

Gain on Sale of Vessels

During the year ended December 31, 2014, we recorded a net gain of $2.5 million from the sale

of three vessels. During the year ended December 31, 2013, we recorded a net gain of $0.5 million
from the sale of three vessels.

Interest Income

During the year ended December 31, 2014 and 2013, interest income was $0.8 million and

$0.6 million, respectively.

Interest and Finance Costs

Interest and finance costs increased by 28.3%, or $21.1 million, to $95.6 million during the year

ended December 31, 2014, from $74.5 million during the year ended December 31, 2013. The
increase was mainly attributable to the increased interest expense charged to the consolidated
statement of income in relation with the loan facilities of the seven and three newbuild vessels
which were delivered to us during the year ended December 31, 2013 and the six-month period
ended June 30, 2014, respectively and the write-off of deferred finance costs due to the refinancing
of one of our bank loans; partly offset by the decreased loan commitment fees charged to us during
the year ended December 31, 2014, compared to the year ended December 31, 2013.

Equity Gain / (Loss) on Investments

The equity gain / (loss) on investments represents our share of the net results of fourteen

jointly-owned companies pursuant to the Framework Agreement with York. We hold a range of
25% to 49% of the capital stock of each company. The equity gain / (loss) on investments was
$3.4 million (loss) and $0.7 million (gain) for the years ended December 31, 2014 and 2013,
respectively. The difference is mainly attributable to our share of $6.1 million in an unrealized loss
deriving from a swap option agreement entered into by a jointly-owned company.

01556

Gain on Derivative Instruments

The fair value of our 22 interest rate derivative instruments which were outstanding as of

December 31, 2014, equates to the amount that would be paid by us or to us should those
instruments be terminated. As of December 31, 2014, the fair value of these 22 interest rate
derivative instruments in aggregate amounted to a liability of $73.9 million. The effective portion of
the change in the fair value of the interest rate derivative instruments that qualified for hedge
accounting is recorded in “Other Comprehensive Income” (“OCI”) while the ineffective portion is
recorded in the consolidated statement of income. The change in the fair value of the interest rate
derivative instruments that did not qualify for hedge accounting is recorded in the consolidated
statement of income. For the year ended December 31, 2014, a net gain of $22.6 million has been
included in OCI and a net gain of $6.7 million has been included in Gain on derivative instruments
in the consolidated statement of income, resulting from the fair market value change of the interest
rate derivative instruments during the year ended December 31, 2014.

Year Ended December 31, 2013 Compared to Year Ended December 31, 2012

During the year ended December 31, 2013 and 2012, we had an average of 49.6 and 46.8
vessels, respectively, in our fleet. In the year ended December 31, 2013, we accepted delivery of
seven newbuild vessels (MSC Athens, MSC Athos, Valor, Value, Valiant, Valence and Vantage) with
an aggregate TEU capacity of 61,789 and one secondhand vessel (Venetiko) with a TEU capacity of
5,928, and we sold three vessels (MSC Washington, MSC Austria and MSC Antwerp) with an
aggregate TEU capacity of 11,343. In the year ended December 31, 2012, we accepted delivery of
five secondhand vessels (MSC Ulsan, MSC Koroni (ex. Koroni), MSC Itea (ex. Kyparissia), Stadt
Luebeck and Messini) with an aggregate TEU capacity of 15,352 and we sold four vessels (Gather,
Gifted, Genius I and Horizon) with an aggregate TEU capacity of 9,834. In the years ended
December 31, 2013 and 2012, our fleet ownership days totaled 18,119 and 17,113 days, respectively.
Ownership days are the primary driver of voyage revenue and vessels operating expenses and
represent the aggregate number of days in a period during which each vessel in our fleet is owned.

survey costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain / (Loss) on sale/disposal of vessels . . . . . .
Foreign exchange gains / (losses). . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest and finance costs . . . . . . . . . . . . . . . . . . . . .
Equity in net earnings of investments . . . . . . . . .
Other, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain / (Loss) on derivative instruments . . . . . . .
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year ended December 31,

2013

Change

Percentage
2012
Change
(Expressed in millions of U.S. dollars, except percentages)
$ 386.2
(5.5)
(2.9)
(112.5)
(4.0)
(15.2)

$ 414.2
(3.5)
(3.1)
(116.0)
(8.5)
(16.6)

$28.0
(2.0)
0.2
3.5
4.5
1.4

7.3%
(36.4%)
6.9%
3.1%
112.5%
9.2%

(8.2)
(80.3)
(2.8)
0.1
1.5
(74.7)
—
(0.1)
(0.5)
$ 81.1

(8.1)
(89.9)
0.5
—
0.6
(74.5)
0.7
0.8
6.5
$ 103.1

(0.1)
9.6
3.3
(0.1)
(0.9)
(0.2)
0.7
0.9
$ 7.0

Change

2.8
1,006
(1)

(1.2%)
12.0%
117.9%
(100.0%)
(60.0%)
(0.3%)
100.0%
900.0%
1,400.0%

Percentage
Change

6.0%
5.9%

Fleet operational data
Average number of vessels. . . . . . . . . . . . . . . . . . . .
Ownership days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of vessels underwent dry-docking . . . .

2012

46.8
17,113
9

2013

49.6
18,119
8

Year ended December 31,

The Company reports its financial results in accordance with U.S. GAAP. However,

management believes that certain non-GAAP financial measures used in managing the business may

07738

provide users of these financial measures additional meaningful comparisons between current results
and results in prior operating periods. Management believes that these non-GAAP financial
measures can provide additional meaningful reflection of underlying trends of the business because
they provide a comparison of historical information that excludes certain items that impact the
overall comparability. Management also uses these non-GAAP financial measures in making
financial, operating and planning decisions and in evaluating the Company’s performance. The table
below sets out our Voyage revenue adjusted on a cash basis and the corresponding reconciliation to
Voyage revenue for the twelve-month periods ended December 31, 2013 and December 31, 2012.
Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the
Company’s reported results prepared in accordance with GAAP.

Voyage revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued charter revenue(1) . . . . . . . . . . . . . . . . . . . .
Voyage revenue adjusted on a cash basis(2) . . .

Year ended December 31,

2013

Percentage
2012
Change
(Expressed in millions of U.S. dollars, except percentages)
$386.2
6.2
$392.4

7.3%
141.9%
9.4%

$414.2
15.0
$429.2

$28.0
8.8
$36.8

Change

Voyage Revenue

Voyage revenue increased by 7.3%, or $28.0 million, to $414.2 million during the year ended
December 31, 2013, from $386.2 million during the year ended December 31, 2012. This increase
was mainly attributable to (i) revenue earned by the newbuild vessels delivered to us during the
year ended December 31, 2013; partly offset by (ii) decreased charter rates in certain of our vessels
during the year ended December 31, 2013, compared to the year ended December 31, 2012, and (iii)
revenues not earned by vessels that were sold for scrap during the years ended December 31, 2013
and 2012.

Voyage revenue adjusted on a cash basis (which eliminates non-cash “Accrued charter

revenue”) increased by 9.4%, or $36.8 million, to $429.2 million during the year ended
December 31, 2013, from $392.4 million during the year ended December 31, 2012. This increase
was mainly attributable to (i) revenue earned by the newbuild vessels delivered to us during the
year ended December 31, 2013; partly offset by (ii) decreased charter rates in certain of our vessels
during the year ended December 31, 2013, compared to the year ended December 31, 2012, and (iii)
revenues not earned by vessels which were sold for scrap during the years ended December 31, 2013
and 2012.

Voyage Expenses

Voyage expenses decreased by 36.4%, or $2.0 million, to $3.5 million during the year ended
December 31, 2013, from $5.5 million during the year ended December 31, 2012. The decrease was
primarily attributable to the decreased off-hire expenses of our fleet, mainly bunkers consumption,
and by the decreased third party commissions charged to us during the year ended December 31,
2013, compared to the year ended December 31, 2012.

98413

Voyage Expenses—Related Parties

Voyage expenses—related parties increased by 6.9%, or $0.2 million, to $3.1 million during the

year ended December 31, 2013, from $2.9 million during the year ended December 31, 2012, and
represent fees of 0.75% on voyage revenues charged to us by Costamare Shipping as provided under
our Group Management Agreement.

Vessels’ Operating Expenses

Vessels’ operating expenses, which also includes the realized gain /(loss) under derivative

contracts entered into in relation to foreign currency exposure, increased by 3.1%, or $3.5 million, to
$116.0 million during the year ended December 31, 2013, from $112.5 million during the year ended
December 31, 2012. The increase was mainly attributable to the increased ownership days of our
fleet during the year ended December 31, 2013, compared to the year ended December 31, 2012.

General and Administrative Expenses

General and administrative expenses increased by $4.5 million, to $8.5 million during the year

ended December 31, 2013, from $4.0 million during the year ended December 31, 2012.
Furthermore, General and administrative expenses for the years ended December 31, 2013 and
December 31, 2012, include $1.0 million in each period for the services of the Company’s officers in
aggregate charged to us by Costamare Shipping as provided under our Group Management
Agreement. In addition, General and administrative expenses for the year ended December 31, 2013
include an allowance for doubtful amounts of $3.7 million relating to our charter party
arrangements.

Management Fees—Related Parties

Management fees paid to our managers increased by 9.2%, or $1.4 million, to $16.6 million
during the year ended December 31, 2013, from $15.2 million during the year ended December 31,
2012. The increase was primarily attributable to (i) the inflation related upward adjustment by 4%
of the management fee for each vessel (effective January 1, 2013), as provided under our Group
Management Agreement and (ii) the increased average number of vessels during the year ended
December 31, 2013, compared to the year ended December 31, 2012.

Amortization of Dry-docking and Special Survey Costs

Amortization of deferred dry-docking and special survey costs for the years ended

December 31, 2013 and 2012, was $8.1 million and $8.2 million, respectively. During the years ended
December 31, 2013 and 2012, eight vessels and nine vessels, respectively, underwent their special
survey.

Depreciation

Depreciation expense increased by 12.0%, or $9.6 million, to $89.9 million during the year

ended December 31, 2013, from $80.3 million during the year ended December 31, 2012. The
increase was primarily attributable to the depreciation expense charged for the seven newbuild
vessels delivered to us during the year ended December 31, 2013.

Gain / (Loss) on Sale/Disposal of Vessels

During the year ended December 31, 2013, we recorded a net gain of $0.5 million from the sale

of three vessels. During the year ended December 31, 2012, we recorded a net loss of $2.8 million
mainly from the sale of four vessels (including the effect of the partial reversal of a provision
recorded in 2011 for costs associated with the grounding of the vessel Rena).

55854

Foreign Exchange Gains

Foreign exchange gains amounted to nil and $0.1 million during the years ended December 31,

2013 and 2012, respectively.

Interest Income

During the year ended December 31, 2013, interest income decreased by 60.0%, or $0.9 million,

to $0.6 million from $1.5 million during the year ended December 31, 2012.

Interest and Finance Costs

Interest and finance costs decreased by 0.3%, or $0.2 million, to $74.5 million during the year

ended December 31, 2013, from $74.7 million during the year ended December 31, 2012. The
decrease was mainly attributable to (i) the capitalized interest in relation with our newbuilding
program, (ii) the decreased commitment fees charged to us; partly offset by the increased interest
expense charged to our consolidated income statement in relation with the loan facilities of the
seven newbuild vessels that were delivered to us during the year ended December 31, 2013.

Equity in Net Earnings of Investments

Equity in net earnings of investments of $0.7 million represents our share of the net earnings of
eight jointly-owned companies formed pursuant to the Framework Agreement with York. We hold a
range of 25% to 49% of the capital stock of each company.

Gain / (Loss) on Derivative Instruments

The fair value of our 27 interest rate derivative instruments that were outstanding as of

December 31, 2013, equates to the amount that would be paid by us or to us should those
instruments be terminated. As of December 31, 2013, the fair value of these 27 interest rate
derivative instruments in aggregate amounted to a liability of $103.2 million. The effective portion of
the change in the fair value of the interest rate derivative instruments that qualified for hedge
accounting is recorded in OCI while the ineffective portion is recorded in the consolidated statement
of income. The change in fair value of the interest rate derivative instrument that did not qualify for
hedge accounting is recorded in the consolidated statement of income. For the year ended
December 31, 2013, a gain of $71.1 million has been included in OCI and a net gain of $6.5 million
has been included in Gain / (Loss) on derivative instruments in the consolidated statement of
income, resulting from the fair market value change of the interest rate derivative instruments
during the year ended December 31, 2013.

B. Liquidity and Capital Resources

In the past, our principal sources of funds have been operating cash flows and long-term bank

borrowings. Our principal uses of funds have been capital expenditures to establish, grow and
maintain our fleet, comply with international shipping standards, environmental laws and regulations,
fund working capital requirements and pay dividends. In monitoring our working capital needs, we
project our charter hire income and vessels’ maintenance and running expenses, as well as debt
service obligations, and seek to maintain adequate cash reserves in order to address any budget
overruns.

Our primary short-term liquidity need is to fund our vessel operating expenses and payment of
quarterly dividends on our outstanding preferred and common stock. Our long-term liquidity needs
primarily relate to additional vessel acquisitions in the containership sectors and debt repayment. We
anticipate that our primary sources of funds will be cash from operations and undrawn borrowing
capacity under our committed credit facilities, along with borrowings under new credit facilities that
we intend to obtain from time to time in connection with vessel acquisitions. We believe that these
sources of funds will be sufficient to meet our short-term and long-term liquidity needs, including

45983

our agreements, subject to certain conditions, to acquire newbuild vessels, although there can be no
assurance that we will be able to obtain future debt financing on terms acceptable to us.

In addition, since our initial public offering in 2010, we have completed several equity offerings.

On March 27, 2012, the Company completed a follow-on public equity offering in which we issued
7,500,000 shares of common stock at a public offering price of $14.10 per share. The net proceeds of
this offering were $100.6 million. On October 19, 2012, the Company completed a second follow-on
public equity offering in which we issued 7,000,000 shares of common stock at a public offering price
of $14.00 per share. The net proceeds of this offering were $93.5 million. On August 7, 2013, the
Company completed a public equity offering of 2,000,000 shares of Series B Preferred Stock at a
public offering price of $25.00 per share. The net proceeds of this offering were $48.0 million. On
January 21, 2014, the Company completed a public equity offering of 4,000,000 shares of Series C
Preferred Stock at a public offering price of $25.00 per share. The net proceeds of this offering were
$96.5 million. As of February 27, 2015, we had available $200 million under a Form F-3 shelf
registration statement for future issuances of securities in the public market.

As at December 31, 2014, we had total cash liquidity of $177.2 million, consisting of cash, cash

equivalents and restricted cash.

As at February 27, 2015, we had two series of preferred stock outstanding, $50 million
aggregate liquidation preference of the Series B Preferred Stock and $100 million aggregate
liquidation preference of the Series C Preferred Stock. The Series B Preferred Stock carry an annual
dividend rate of 7.625% per $25.00 of liquidation preference per share and are redeemable by us at
any time on or after August 6, 2018. The Series C Preferred Stock carry an annual dividend rate of
8.50% per $25.00 of liquidation preference per share and are redeemable by us at any time on or
after January 21, 2019.

As at December 31, 2014, we had an aggregate of $1.77 billion of indebtedness outstanding

under various credit agreements, including the obligations under our lease agreements. As of
February 27, 2015, we had outstanding commitments relating to our nine contracted newbuilds
aggregating approximately $286.5 million payable in installments until the vessels are delivered
through the third quarter of 2016, out of which $189.8 million will be funded through the CLC Sale
and Leaseback. These amounts represent our interest in the relevant Joint Venture entities with
York. Furthermore, as of February 27, 2015, the vessels shown in the table below were free of debt.

Unencumbered Vessels in the water as of February 27, 2015(*)

Vessel Name

Navarino. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Venetiko. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lakonia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Areopolis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Messini . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Neapolis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year
Built

2010
2003
2004
2000
1997
2000

TEU
Capacity

8,531
5,928
2,586
2,474
2,458
1,645

(*) Does not include one secondhand vessels and four newbuilds on order acquired under the Framework Agreement, which

are also free of debt.

Our common stock dividend policy impacts our future liquidity needs. See “Item 8. Financial

Information—A. Consolidated Statements and Other Financial Information—Dividend Policy”. We
paid our first cash dividend since becoming a public company in November 2010 on February 4,
2011 in an amount of $0.25 per share of common stock. We have subsequently paid dividends to
holders of our common stock of $0.25 per share on May 12, 2011 and August 9, 2011, and $0.27 per
share on November 7, 2011, February 8, 2012, May 9, 2012, August 7, 2012, November 6, 2012,
February 13, 2013, May 8, 2013, August 7, 2013, November 6, 2013 and February 4, 2014, and
$0.28 per share on May 13, 2014, August 6, 2014, November 5, 2014 and February 4, 2015.

Our preferred stock dividend payment obligations also impact our future liquidity needs. See

“Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—
Preferred Stock Dividend Requirements”. We paid dividends to holders of our Series B Preferred

34878

Stock of $0.3654 per share on October 15, 2013 and $0.476563 per share on January 15, 2014,
April 15, 2014, July 15, 2014, October 15, 2014 and January 15, 2015. We paid dividends to holders
of our Series C Preferred Stock of $0.495833 per share on April 15, 2014 and $0.531250 per share on
July 15, 2014, October 15, 2014 and January 15, 2015.

In 2010, we did not declare any dividends. In 2009, we declared dividends from our retained
earnings to our existing stockholders of $40.2 million, of which $30.2 million were paid in 2009 and
$10.0 million were paid on January 14, 2010.

The dividends and distributions paid during the years ended December 31, 2010, 2011, 2012,

2013 and 2014, were funded in part by borrowings and in part by cash from operations. On a
cumulative basis for the entire period, cash flow from operating activities exceeded the aggregate
amount of dividends and distributions.

Working Capital Position

We have historically financed our capital requirements with cash flow from operations, equity

contributions from stockholders and long-term bank debt. Our main uses of funds have been capital
expenditures for the acquisition of new vessels, expenditures incurred in connection with ensuring
that our vessels comply with international and regulatory standards, repayments of bank loans and
payments of dividends. We will require capital to fund ongoing operations, the construction of our
new vessels, the acquisition cost of any secondhand vessels we agree to acquire in the future and
debt service. Working capital, which is current assets minus current liabilities, including the current
portion of long-term debt, was negative $132.4 million at December 31, 2014 and negative
$158.4 million at December 31, 2013.

We anticipate that internally generated cash flow will be sufficient to fund the operations of our

fleet, including our working capital requirements. See “—Credit Facilities”.

Cash Flows

Years ended December 31, 2012, 2013 and 2014

2012

Year ended December 31,
2013
(Expressed in millions of U.S.
dollars)

2014

Condensed cash flows
Net Cash Provided by Operating Activities. . . . . . . . . . . . . . . . . . . . . . . . .
Net Cash Used in Investing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Cash Provided by/(Used in) Financing Activities. . . . . . . . . . . . . . .

$ 168.1
(236.5)
237.7

$ 186.7
(621.1)
260.4

$ 243.3
(119.3)
(104.3)

Net Cash Provided by Operating Activities

Net cash flows provided by operating activities increased by $56.6 million to $243.3 million for

the year ended December 31, 2014, compared to $186.7 million for the year ended December 31,
2013. The increase was primarily attributable to: (a) increased cash from operations of $61.8 million
due to cash generated from the charters of the seven and three newbuild vessels delivered to us
during the year ended December 31, 2013 and the six-month period ended June 30, 2014,
respectively and (b) a favorable change in working capital position, excluding the current portion of
long-term debt and the accrued charter revenue (representing the difference between cash received
in that period and revenue recognized on a straight-line basis) of $29.3 million; partly offset by
increased dry-docking payments of $4.0 million and increased payments for interest (including swap
payments) of $12.9 million.

Net cash provided by operating activities for the year ended December 31, 2013, increased by
$18.6 million to $186.7 million, compared to $168.1 million for the year ended December 31, 2012.
The increase was primarily attributable to increased cash from operations of $36.8 million due to
cash generated from the charters of the seven newbuild vessels delivered to us during the year
ended December 31, 2013 and to decreased dry-docking payments of $5.0 million, partly offset by

57229

unfavorable change in working capital position, excluding the current portion of long-term debt and
the accrued charter revenue (representing the difference between cash received in that period and
revenue recognized on a straight-line basis) of $20.1 million and increased payments for interest
(including swap payments) of $2.7 million.

Net Cash Used in Investing Activities

Net cash used in investing activities was $119.3 million in the year ended December 31, 2014,

which consisted of: (a) $59.1 million for capitalized costs and advance payments for the construction
and delivery of three newbuild vessels, (b) $29.0 million in payments primarily for the acquisition of
three secondhand vessels, (c) $53.3 million (net of $31.8 million we received as dividend
distributions) in payments, pursuant to the Framework Agreement with York, to hold an equity
interest ranging from 25% to 49% in jointly-owned companies and (d) $22.1 million we received
from the sale for scrap of Konstantina, MSC Kyoto and Akritas.

Net cash used in investing activities was $621.1 million in the year ended December 31, 2013,

which consisted primarily of (a) $590.4 million advance payments for the construction and purchase
of 10 newbuild vessels, (b) $51.9 million in payments for the acquisition of four secondhand vessels,
(c) $8.7 million in payments, pursuant to the Framework Agreement with York, to hold a minority
equity interest in jointly-owned companies, (d) $13.9 million net proceeds we received from the sale
for scrap of MSC Antwerp and MSC Austria (including $0.6 million in payments for expenses related
to the sale of MSC Washington) and (e) $16.0 million we received, pursuant to the Framework
Agreement with York, for York’s 51% equity interest in the ship-owning companies of the vessels
Petalidi, Ensenada Express and X-Press Padma and for initial working capital for such ship-owning
companies.

Net cash used in investing activities was $236.5 million in the year ended December 31, 2012,

which consisted of (a) $191.2 million advance payments for the construction and purchase of 10
newbuild vessels, (b) $74.1 million in payments for the acquisition of five secondhand vessels and (c)
$28.7 million we received from the sale of four vessels including the advance payment we received
from the sale of one vessel for scrap which was delivered to her scrap buyers in January 2013.

Net Cash Provided by/(Used in) Financing Activities

Net cash used in financing activities was $104.3 million in the year ended December 31, 2014,

which mainly consisted of: (a) $356.6 million of indebtedness that we repaid, (b) $9.0 million we
drew down from one of our credit facilities, (c) $256.7 million we received from the CLC Sale and
Leaseback, (d) $9.6 million we repaid from the CLC Sale and Leaseback, (e) $83.0 million we paid
for dividends to holders of our common stock for the fourth quarter of 2013, the first quarter of
2014, the second quarter of 2014 and the third quarter of 2014, (f) $3.8 million we paid for
dividends to holders of our Series B Preferred Stock for the period from October 15, 2013 to
October 14, 2014, and $6.2 million we paid for dividends to holders of our Series C Preferred Stock
for the period from the original issuance of the Series C preferred Stock on January 21, 2014 to
October 14, 2014, and (g) $96.5 million net proceeds we received from our public offering in
January 2014 of 4.0 million shares of our Series C Preferred Stock, net of underwriting discounts
and expenses incurred in the offering.

Net cash provided by financing activities was $260.4 million in the year ended December 31,
2013, which mainly consisted of (a) $163.7 million of indebtedness that we repaid, (b) $469.4 million
we drew down from four of our credit facilities, (c) $80.8 million we paid for dividends to our
stockholders for the fourth quarter of the year ended December 31, 2012, and the first, second and
third quarters of 2013, (d) $48.0 million net proceeds we received from our public offering in
August 2013 of 2.0 million shares of our 7.625% Series B Cumulative Redeemable Perpetual
Preferred Shares, net of underwriting discounts and expenses incurred in the offering and (e)
$0.7 million we paid for dividends to holders of our 7.625% Series B Cumulative Redeemable
Perpetual Preferred Shares for the period from August 6, 2013 to October 14, 2013.

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Net cash provided by financing activities was $237.7 million in the year ended December 31,
2012, which mainly consisted of (a) $170.2 million of indebtedness that we repaid, (b) $288.6 million
we drew down from six of our credit facilities, (c) $73.1 million we paid for dividends to our
stockholders for the fourth quarter of the year ended December 31, 2011, first quarter of the year
2012, the second quarter of the year 2012 and the third quarter of the year 2012 and
(d) $194.1 million net proceeds we received from our two follow-on offerings in March 2012 and
October 2012, net of underwriting discounts and expenses incurred in the offerings.

Credit Facilities and Capital Leases

We operate in a capital-intensive industry, which requires significant amounts of investment, and
we fund a portion of this investment through long-term bank debt. We, either as guarantor or direct
borrower, and certain of our subsidiaries as borrowers or guarantors, have entered into a number of
credit facilities and capital leases in order to finance the acquisition of the vessels owned by our
subsidiaries and for general corporate purposes. The obligations under our credit facilities and
capital leases are secured by, among other things, first priority mortgages over the vessels owned by
the respective borrower subsidiaries, charter assignments, first priority assignments of all insurances
and earnings of the mortgaged vessels and guarantees by Costamare Inc.

The following summarizes certain terms of our existing credit facilities and capital leases

discussed below as at December 31, 2014:

Lender

CLC Sale & Leaseback

Outstanding
Principal
Amount
(Expressed in thousands
of U.S. dollars)
247,133

Interest Rate(1)

Maturity

Repayment profile

Fixed Rate

2024 Bareboat structure–fixed daily

DnB—ING. . . . . . . . . . . . .

208,826

LIBOR + Margin(2)

2020

DnB—MEGA. . . . . . . . . .

137,793

LIBOR + Margin(2)

2020

ING. . . . . . . . . . . . . . . . . . . .

120,330

LIBOR + Margin(2)

2021

charter with balloon

Straight-line amortization with
balloon

RBS. . . . . . . . . . . . . . . . . . . .

73,414

LIBOR + Margin(2)

2020(3) Straight-line amortization with

balloon

Bank Syndicate(4). . . . . . .

585,883

LIBOR + Margin(2)

2018

Credit Agricole(5). . . . . . .

Unicredit. . . . . . . . . . . . . . .

HSBC . . . . . . . . . . . . . . . . . .

Credit Agricole . . . . . . . .

91,500

87,820

38,875

50,000

LIBOR + Margin(2)

2018

Straight-line amortization with
balloon

LIBOR + Margin(2)
LIBOR + Margin(2)
LIBOR + Margin(2)

2018 Variable installments with balloon

2018

Straight-line amortization with
balloon

RBS. . . . . . . . . . . . . . . . . . . .

47,500

LIBOR + Margin(2)

2018

Straight-line amortization with
balloon

Alpha . . . . . . . . . . . . . . . . . .

78,000

LIBOR + Margin(2)

2017 Variable installments with balloon

(1) The interest rates of long-term debt at December 31, 2014 ranged from 1.026% to 6.75%, and the weighted average

interest rate as at December 31, 2014 was 4.18%.

(2) The interest rate margin at December 31, 2014 ranged from 0.7% to 2.9%, and the weighted average interest rate margin

as at December 31, 2014, was 1.6%.

(3) The year 2020 represents the latest possible maturity under the facility, under the MSC Ulsan tranche.

(4) Bank Syndicate: Commerzbank AG, Unicredit Bank AG, Credit Suisse, HSH Nordbank AG and BNP—Paribas S.A. (ex.

Fortis Bank S.A./N.V.).

(5) On December 12, 2012, the loan agreement with Emporiki Bank was transferred and assigned to Credit Agricole

Corporate and Investment Bank (ex. Calyon) (“Credit Agricole”).

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The principal financial and other covenants and events of default under each credit facility are

also discussed below.

CLC Sale and Leaseback

In January, March and April 2014, our subsidiaries, Adele Shipping Co., Bastian Shipping Co.

and Cadence Shipping Co. entered into novation agreements with CLC, whereby they novated to
CLC the shipbuilding contracts for the construction of Hulls H1068A, H1069A and H1070A, and
entered into bareboat charter agreements (collectively, the “CLC Sale and Leaseback”), whereby our
subsidiaries agreed to bareboat charter in the vessels upon delivery for a period of 10 years. Our
subsidiaries used a portion of the proceeds from the CLC Sale and Leaseback to prepay the balance
of the CEXIM—Adele credit facility (described below) which had been used to finance the
predelivery price of the respective hulls.

Under the terms of the CLC Sale and Leaseback, the vessels were each sold for an amount of
$85.6 million and our subsidiaries must each pay a fixed daily charter rate on a quarterly basis for
10 years and a final installment of $25.7 million.

The obligations under the CLC Sale and Leaseback are guaranteed by Costamare Inc. and are
secured by a first priority mortgage over the vessels, charter assignments, account assignments and
general assignments of earnings, insurances and requisition compensation.

As of February 27, 2015, there was $246.0 million outstanding under the CLC Sale and

Leaseback, and, as of the same date there was no undrawn available credit.

DnB—Quentin

On August 16, 2011, our subsidiaries, Quentin Shipping Co., Undine Shipping Co., and Sander

Shipping Co., as borrowers, entered into a seven-year loan for up to $229.2 million, with DnB NOR
Bank ASA, ING Bank, ABN Amro Bank and Bank of America N.A., which we refer to in this
section as the “DnB—Quentin credit facility”. The purpose of this facility was to finance part of the
acquisition and construction cost of Hulls S4020, S4022 and S4024, and the facility is divided into
three tranches, one for each newbuild vessel. On July 3, 2013, we entered into the first supplemental
agreement with the lenders which amended the repayment schedule and added V.Ships Greece as an
approved manager. On September 13, 2013, we entered into the second supplemental agreement
with the lenders which further amended the repayment schedule (as reflected below).

The interest rate under the DnB—Quentin credit facility is LIBOR plus an agreed margin. The
credit facility provides that the borrowers must repay the loan by twenty-eight consecutive quarterly
installments, the first twenty-seven (1-27) in the amount of $1.3 million per tranche each,
commencing at the time of delivery of Hulls S4020, S4022 and S4024, and the amount of the twenty-
eighth installment shall be $42.0 million per tranche.

The obligations under the DnB—Quentin credit facility are guaranteed by Costamare Inc. and
are secured by assignment of refund guarantees and shipbuilding contracts, a first priority mortgage
over the vessels upon delivery, charter assignments, account assignments, master agreement
assignment and general assignments of earnings, insurances and requisition compensation.

As of February 27, 2015, there was $206.3 million outstanding under the DnB—Quentin credit

facility, and, as of the same date there was no undrawn available credit.

DnB—Raymond

On October 12, 2011, our subsidiaries, Raymond Shipping Co. and Terance Shipping Co., as
borrowers, entered into a seven-year loan for up to $152.8 million, with DnB NOR Bank ASA,
Mega International Commercial Bank Co., Ltd., Cathay United Bank, Chinatrust Commercial Bank,
Hua Nan Commercial Bank, Ltd. and Land Bank of Taiwan, which we refer to in this section as the
“DnB—Raymond credit facility”. The purpose of this facility was to finance part of the acquisition
and construction cost of Hulls S4021 and S4023, and the facility is divided into two tranches, one for
each newbuild vessel.

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The interest rate under the DnB—Raymond credit facility is LIBOR plus an agreed margin.

The credit facility provides that the borrowers must repay the loan by twenty-eight consecutive
quarterly installments, the first twenty-seven (1-27) in the amount of $1.4 million per tranche each,
commencing at the time of delivery of Hulls S4021 and S4023, and the amount of the twenty-eighth
installment shall be $39.6 million per tranche.

The obligations under the DnB—Raymond credit facility are guaranteed by Costamare Inc. and
are secured by assignment of refund guarantees and shipbuilding contracts, a first priority mortgage
over the vessels upon delivery, charter assignments, account assignments, master agreement
assignment and general assignments of earnings, insurances and requisition compensation.

As of February 27, 2015, there was $136.4 million outstanding under the DnB-Raymond credit

facility, and, as of the same date there was no undrawn available credit.

ING

On April 7, 2011, Costamare Inc., as borrower, entered into an eight-year loan, for up to
$140.0 million, with ING Bank N.V., London Branch, which we refer to in this section as the “ING
credit facility”. The purpose of this facility was to finance part of the acquisition and construction
cost of Hulls S4010 and S4011, and the facility is divided into two tranches, one for each newbuild
vessel. On April 8, 2013, we executed a supplemental agreement that amended the repayment
schedule of the loan.

The interest rate under the ING credit facility is LIBOR plus an agreed margin. The credit

facility provides that the borrower must repay the loan by 16 consecutive semiannual installments,
the first fifteen (1-15) in the amount of 1/30 of the loan outstanding, commencing at the time of
delivery of Hulls S4010 and S4011, and the amount of the sixteenth and final installment shall be
equal to 15/30 of the loan outstanding at the time of delivery of Hulls S4010 and S4011.

The obligations under the ING credit facility are guaranteed by Jodie Shipping Co. and Kayley

Shipping Co. Our obligations under the ING credit facility are secured by assignment of refund
guarantees and shipbuilding contracts, a first priority mortgage over the vessels upon delivery,
charter assignments, account assignments, master agreement assignment and general assignments of
earnings, insurances and requisition compensation.

On February 27, 2015, there was $115.9 million outstanding under the ING credit facility, and,

as of same date, there was no undrawn available credit.

RBS

On November 19, 2010, Costamare Inc., as borrower, entered into a $120.0 million term loan
facility with The Royal Bank of Scotland plc (the “RBS credit facility”), which was available for
drawing for up to 18 months. The loan tranches have maturities ranging from three to seven years.

We have used the RBS credit facility to finance part of the acquisition cost of five secondhand

vessels, the MSC Methoni, the MSC Romanos, the MSC Ulsan, the MSC Koroni (ex. Koroni) and
the MSC Itea (ex. Kyparissia).

The interest rate under the RBS facility is LIBOR plus an agreed margin. The RBS facility

provides for different repayment of each of the five tranches.

The MSC Methoni tranche will be repaid by thirty-two consecutive quarterly payments, the first

thirty-one (1-31) in the amount of $1.05 million and a final installment in the amount of
$1.05 million, together with a balloon payment in the amount of $8.4 million.

The MSC Romanos tranche will be repaid by thirty-two consecutive quarterly payments, the
first thirty-one (1-31) in the amount of $0.96 million and a final installment in the amount of $0.96
million, together with a balloon payment in the amount of $7.7 million.

The MSC Ulsan tranche will be repaid by thirty-two consecutive quarterly payments, the first

thirty-one (1-31) in the amount of $0.53 million and a final installment in the amount of $0.53
million, together with a balloon payment in the amount of $4.2 million.

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The MSC Koroni (ex. Koroni) and MSC Itea (ex. Kyparissia) tranches will each be repaid by

twelve consecutive quarterly payments, the first eleven (1-11) in the amount of $0.47 million per
trance and a final installment in the amount of $0.47 million, together with a balloon payment in the
amount of $1.9 million per tranche. In May 2015, the company repaid the outstanding amount at the
time under the MSC Koroni (ex. Koroni) tranche, repaying $4.2 million.

The obligations under the RBS credit facility are guaranteed by the various owners of the
mortgaged vessels. Our obligations under the RBS credit facility is secured by mortgages over each
financed vessel, account charges, charter assignments, swap assignment and general assignments of
earnings, insurances and requisition compensation.

As of February 27, 2015, there was $70.4 million outstanding under the RBS credit facility, and,

as of the same date there was no undrawn available credit.

Costamare

On July 22, 2008, Costamare Inc., as borrower, entered into a ten-year, $1.0 billion credit
facility comprised of a $700.0 million term loan facility and a $300.0 million revolving credit facility,
which we refer to in this section as the “Costamare credit facility”. The purpose of the revolving
credit facility was to finance part of the acquisition costs of vessels to be acquired or part of the
market value of vessels owned by our subsidiaries. The purpose of the term loan facility was to
finance general corporate and working capital purposes. On April 23, 2010, we entered into the first
supplemental agreement with the lenders which released two of our subsidiary guarantors and the
mortgages over their vessels, and replaced them with mortgages over one other vessel. On June 22,
2010, we entered into the second supplemental agreement with the lenders, which modified certain
covenants (as detailed below). On September 6, 2011, we entered into a third supplemental
agreement documenting the amalgamation of the Costamare credit facility’s compounds and the
fixing of the remaining installment payments. On December 17, 2012, we entered into a fourth
supplemental agreement which released two of our subsidiary guarantors and the mortgages over
their vessels, and replaced them with mortgages over two other vessels. On May 28, 2013, we
entered into a fifth supplemental agreement under which the lenders agreed to the change of flags
of five of the Company’s vessels and to the transfer of the technical management of two of the
Company’s vessels to V.Ships Greece. On August 30, 2013, we entered into a sixth supplemental
agreement which released one of the Company’s subsidiary guarantors and the mortgage over its
vessel, and replaced it with mortgages over two other vessels. On July 2, 2014, we entered into a
seventh supplemental agreement in connection with the ZIM restructuring.

The interest rate under the Costamare credit facility is LIBOR plus an agreed margin. The
Costamare credit facility provides for repayment by forty consecutive quarterly installments, the first
four (1-4) in the amount of $6.5 million and the next eight (5-12) in the amount of $9.0 million. The
final twenty-eight (13-40) installments, and the balloon installment repayable together with the
fortieth (40th) installment, are to be calculated by using a formula that takes into account the then
outstanding amount of this facility and the TEU weighted age of the mortgaged vessels. Following
the date of payment of the twelfth installment on June 30, 2011, the term loan facility and the
revolving credit facility were combined, the final twenty-eight (13-40) installments were fixed in the
amount of $22.5 million each, and the balloon installment was fixed in the amount of $271.3 million.

The obligations under the Costamare credit facility are guaranteed by the various owners of the

mortgaged vessels. Our obligations under this credit facility are secured by mortgages over the
vessels owned by our subsidiaries, who are the guarantors, and general assignments of earnings,
insurances and requisition compensation, account pledges, charter assignments and a master
agreement assignment.

As of February 27, 2015, there was $585.9 million outstanding under the Costamare credit

facility, and, as of same date, there was no undrawn available credit.

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Credit Agricole—Costis (ex. Emporiki-Costis)

On May 12, 2008, our subsidiaries, Christos Maritime Corporation and Costis Maritime
Corporation, as joint and several borrowers, entered into a ten-year, $150.0 million credit facility
with Emporiki Bank of Greece S.A., which we refer to in this section as the “Credit Agricole—
Costis credit facility”. The loan is divided into two tranches: a Tranche A loan in the amount of
$75.0 million to Christos Maritime Corporation, and a Tranche B loan in the amount of
$75.0 million to Costis Maritime Corporation. The purpose of this facility was to finance part of the
market value of two vessels, the Sealand Washington and the Sealand New York. On January 28,
2009, we entered into a first supplemental agreement to temporarily increase the margin and on
November 19, 2012, we entered into a second supplemental agreement to change the applicable law.
On August 9, 2013, we entered into a third supplemental agreement in order to reflag the two
vessels and change their management to V.Ships Greece.

The interest rate under the Credit Agricole—Costis credit facility is LIBOR plus an agreed

margin. The Credit Agricole—Costis credit facility provides that our subsidiaries, jointly and
severally, repay the loan by twenty consecutive semi-annual payments, the first nineteen (1-19) in
the amount of $2.25 million for each tranche, and a final twentieth installment in the amount of
$2.25 million, together with a balloon payment in the amount of $30.0 million for each tranche.

The obligations under the Credit Agricole—Costis credit facility are guaranteed by Costamare

Inc. and are secured by first priority mortgages over the vessels Sealand Washington and Sealand
New York, account pledges, general assignments of earnings, insurances and requisition
compensation, and charter assignments.

On December 12, 2012, the loan agreement was assigned and transferred from Emporiki Bank

of Greece S.A. to Credit Agricole.

As of February 27, 2015, there was $91.5 million outstanding under the Credit Agricole—Costis

credit facility, and, as of same date, there was no undrawn available credit.

Unicredit

On October 6, 2011, Costamare Inc., as borrower, entered into a $120.0 million loan facility

with Unicredit Bank AG, which we refer to in this section as the Unicredit credit facility. The
purpose of the facility is to partly finance the aggregate market values of eleven of our existing
containerships. Furthermore, on June 29, 2012, the Company entered into a supplemental agreement
for a further amount of $11.3 million to finance the acquisition of the vessel the Stadt Luebeck. On
April 8, 2013, we entered into a second supplemental agreement to substitute one of the vessels
financed under the facility with another vessel, and on August 29, 2013, we entered into a third
supplemental agreement to substitute two of the vessels financed under the facility with two other
vessels. On April 11, 2014, we entered into a fourth supplemental agreement to obtain an additional
advance for the acquisition of a secondhand vessel and on May 28, 2014, we entered into a fifth
supplemental agreement to substitute one of the vessels financed under the facility with a different
vessel.

The interest rate under the Unicredit credit facility is LIBOR plus an agreed margin. After the

prepayments with the proceeds of the disposals of the Konstantina and the Akritas, the repayment
schedule was changed so that starting from September 23, 2014 the loan will be repaid by nineteen
consecutive quarterly payments, the first five (1-5) in the amount of $4.3 million, the next thirteen
(6-18) in the amount of $2.7 million, and a final installment in the amount of $2.7 million, together
with a balloon payment in the amount of $39.5 million.

Our obligations under the Unicredit credit facility are secured by guarantees of the various
owners of the mortgaged vessels, mortgages over each financed vessel, account charges, charter
assignments, swap assignment and general assignments of earnings, insurances and requisition
compensation.

As of February 27, 2015, there was $87.8 million outstanding under the Unicredit credit facility,

and, as of the same date there was no undrawn available credit.

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HSBC—Mas

On January 30, 2008, our subsidiary, Mas Shipping Co., as borrower, entered into a ten-year,
$75.0 million credit facility with HSBC Bank, which we refer to in this section as the “HSBC—Mas
credit facility”. The purpose of this facility was to finance part of the purchase price of a vessel, the
Maersk Kokura.

The interest rate under the HSBC—Mas credit facility is LIBOR plus an agreed margin. The

repayment terms provide for Mas Shipping Co. to pay HSBC by twenty consecutive semi-annual
installments, the first two (1-2) in the amount of $1.0 million, the following two (3-4) in the amount
of $1.5 million, the following two (5-6) each in the amount of $2.0 million, the following four (7-10)
in the amount of $3.75 million, the following two (11-12) in the amount of $4.0 million, and the
following eight (13-20) in the amount of $4.13 million, plus a balloon payment payable together with
the twentieth installment in the amount of $10.0 million.

The obligations under the HSBC—Mas credit facility are guaranteed by Costamare Inc. and are

secured by a first priority mortgage over the vessel, Maersk Kokura, an account pledge, a general
assignment of earnings, insurances, requisition compensation and charter rights.

As of February 27, 2015, there was $34.8 million outstanding under the HSBC—Mas credit

facility, and, as of same date, there was no undrawn available credit.

Credit Agricole—Capetanissa

On June 29, 2006, our subsidiary, Capetanissa Maritime Corporation, as borrower, entered into
a twelve-year, $90.0 million credit facility with Credit Agricole, which we refer to in this section as
the “Credit Agricole-Capetanissa credit facility”. The purpose of this facility was to finance part of
the acquisition and collateral cost of a vessel, the Cosco Beijing.

The interest rate under the Credit Agricole—Capetanissa credit facility is LIBOR plus an
agreed margin. The Credit Agricole—Capetanissa credit facility provides that Capetanissa Maritime
Corporation must repay the loan by twenty-four consecutive semi-annual installments in the amount
of $2.5 million, plus a balloon payment payable together with the twenty-fourth installment in the
amount of $30.0 million.

The obligations under the Credit Agricole—Capetanissa credit facility are guaranteed by
Costamare Inc. and are secured by a first priority mortgage over the vessel, Cosco Beijing, an
account pledge, and a general assignment of earnings, insurances, requisition compensation and
charter rights.

As of February 27, 2015, there was $47.5 million outstanding under the Credit Agricole—

Capetanissa credit facility, and, as of same date, there was no undrawn available credit.

RBS—Rena

On February 17, 2006, our subsidiary, Rena Maritime Corporation, as borrower, entered into a
twelve-year, $90.0 million credit facility with The Royal Bank of Scotland plc, which we refer to in
this section as the “RBS-Rena credit facility”. The purpose of this facility was to finance part of the
purchase price of a vessel, the Cosco Guangzhou, at a contract price of $90.8 million.

The interest rate under the RBS-Rena credit facility is LIBOR plus an agreed margin. The

RBS-Rena credit facility provides for twenty-four semi-annual installments in the amount of
$2.5 million each, plus a balloon payment of $30.0 million together with the twenty-fourth
installment.

The obligations under the RBS-Rena credit facility are guaranteed by Costamare Inc. and are

secured by a first priority mortgage over the vessel Cosco Guangzhou, an account charge and a
general assignment of our earnings, insurances and requisition compensation of the vessel.

As of February 27, 2015, there was $45.0 million outstanding under the RBS-Rena credit

facility, and, as of same date, there was no undrawn available credit.

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Alpha—Montes

On December 7, 2007, our subsidiaries, Montes Shipping Co. and Kelsen Shipping Co., as joint
and several borrowers, entered into a ten-year, $150.0 million credit facility with Alpha Bank A.E.,
which we refer to in this section as the “Alpha—Montes credit facility”. The lender assigned its
obligations under the Alpha—Montes credit facility to Alpha Shipping Finance Limited in 2014. The
loan is divided into two tranches: Tranche A in the amount of $75.0 million to Montes Shipping Co.
and Tranche B in the amount of $75.0 million to Kelsen Shipping Co. The purpose of this facility
was to finance part of the acquisition costs of two vessels, the Maersk Kawasaki and the Maersk
Kure.

The interest rate under the Alpha—Montes credit facility is LIBOR plus an agreed margin. The

Alpha—Montes credit facility provides that our subsidiaries must repay the loan, jointly and
severally, by twenty consecutive semi-annual payments, the first six (1-6) in the amount of
$4.0 million each, the next fourteen (7-20) in the amount of $6.0 million each, plus a balloon
payment payable together with the twentieth installment in the amount of $42.0 million.

The obligations under the Alpha—Montes credit facility are guaranteed by Costamare Inc. and
are secured by first priority mortgages over the vessels, the Maersk Kawasaki and the Maersk Kure,
general assignments of earnings, insurances, requisition compensation and charter assignments.

As of February 27, 2015, there was $78.0 million outstanding under Tranche A and Tranche B

in aggregate, of the Alpha—Montes credit facility, and, as of same date, there was no undrawn
available credit.

CEXIM—Adele

On January 14, 2011, our subsidiaries, Adele Shipping Co., Bastian Shipping Co. and Cadence
Shipping Co., as borrowers, entered into a ten-year loan, which also provides for a Lenders’ early
repayment option in year seven, for up to $203.3 million, with The Export-Import Bank of China,
DnB NOR Bank ASA, and China Everbright Bank, which we refer to in this section as the
“CEXIM—Adele credit facility”. The purpose of this facility was to finance part of the acquisition
and construction cost of Hulls H1068A, H1069A, and H1070A, and the facility is divided into three
tranches, one for each newbuild vessel. In January, March and April 2014, concurrently with the
delivery of each vessel, the subsidiaries used a portion of the proceeds from the CLC Sale and
Leaseback to prepay the balance of the CEXIM—Adele credit facility which had been used to
finance the predelivery price of the respective hulls.

Covenants and Events of Default

The credit facilities impose certain operating and financial restrictions on us. These restrictions
in our existing credit facilities generally limit Costamare Inc. and our subsidiaries’ ability to, among
other things:

• pay dividends if an event of default has occurred and is continuing or would occur as a result

of the payment of such dividends;

• purchase or otherwise acquire for value any shares of the subsidiaries’ capital;
• make or repay loans or advances, other than repayment of the credit facilities;
• make investments in other persons;
• sell or transfer significant assets, including any vessel or vessels mortgaged under the credit

facilities, to any person, including Costamare Inc. and our subsidiaries;

• create liens on assets; or
• allow the Konstantakopoulos family’s direct or indirect holding in Costamare Inc. to fall

below 40% of the total issued share capital.

Our existing credit facilities also require Costamare Inc. and certain of our subsidiaries to
maintain the aggregate of (a) the market value, primarily on an inclusive charter basis, of the
mortgaged vessel or vessels and (b) the market value of any additional security provided to the

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lenders, above a percentage ranging between 100% to 125% of the then outstanding amount of the
credit facility and any related swap exposure.

The minimum value covenant must be determined at the expense of the borrower at any such

time as the lenders may request.

• the ratio of EBITDA over net interest expense must be equal to or higher than 2.5:1;
• the aggregate amount of all cash and cash equivalents may not be less than the greater of (i)

• the market value adjusted net worth must at all times exceed $500 million; and
• the ratio of net funded debt to total net assets must be less than 80% on a charter inclusive

valuation basis.

Our credit facilities contain customary events of default, including nonpayment of principal or

interest, breach of covenants or material inaccuracy of representations, default under other
indebtedness in excess of a threshold and bankruptcy.

The Company is not in default under any of its credit facilities.

Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

The shipping industry is a capital intensive industry, requiring significant amounts of investment.

Much of this investment is provided in the form of long-term debt. Our debt usually contains
interest rates that fluctuate with the financial markets. Increasing interest rates could adversely
impact future earnings.

Our interest expense is affected by changes in the general level of interest rates, particularly
LIBOR. As an indication of the extent of our sensitivity to interest rate changes, an increase of
100 basis points would have decreased our net income and cash flows during the year ended
December 31, 2014 by approximately $2.8 million based upon our debt level during 2014.

For more information on our interest rate risk see “Item 11. Quantitative and Qualitative
Disclosures About Market Risk—A. Quantitative Information About Market Risk—Interest Rate
Risk”.

Interest Rate Swaps

We have entered into interest rate swap agreements converting floating interest rate exposure

into fixed interest rates in order to economically hedge our exposure to fluctuations in prevailing
market interest rates. For more information on our interest rate swap agreements, refer to Notes 2,
19 and 20 to our financial statements included at the end of this annual report.

Foreign Currency Exchange Risk

We generate all of our revenue in U.S. dollars, but a substantial portion of our vessel operating
expenses, primarily crew wages, are in currencies other than U.S. dollars (mainly in Euro), and any
gain or loss we incur as a result of the U.S. dollar fluctuating in value against those currencies is
included in vessel operating expenses. As of December 31, 2014, approximately 29% of our
outstanding accounts payable were denominated in currencies other than the U.S. dollar (mainly in
Euro). We hold cash and cash equivalents mainly in U.S. dollars.

28601

As of December 31, 2014, the Company was engaged in nine Euro/U.S. dollar contracts totaling

$22.5 million at an average forward rate of Euro/U.S. dollar 1.273, expiring in monthly intervals up
to September 2015.

As of December 31, 2013, the Company was not engaged in any Euro/U.S. dollar foreign

currency agreements.

As of December 31, 2012, the Company was engaged in 2 Euro/U.S. dollar contracts totaling
$5.0 million at an average forward rate of Euro/U.S. dollar 1.280, expiring in monthly intervals up to
February 2013.

We recognize these financial instruments on our balance sheet at their fair value. These foreign
currency forward contracts do not qualify as hedging instruments, and thus we recognize changes in
their fair value in our earnings.

Capital Expenditures

On September 21, 2010, we contracted for the construction and purchase of three newbuild
vessels, which were delivered in January, March and April 2014. On January 28, 2011, we contracted
for two additional newbuild vessels, which were delivered in March 2013. On April 20, 2011, we
contracted for the construction and purchase of five additional newbuild vessels, which were
delivered between June and November 2013. In 2013, pursuant to the Framework Agreement with
York, jointly-owned entities entered into shipbuilding contracts for the construction of nine container
vessels to be delivered by third quarter 2016. The Company agreed to participate in each of the
newbuilding contracts by investing between 25% and 49% of the share capital in the jointly-owned
entities. The total aggregate price for the nine newbuild vessels on order, of approximately 116,000
TEU capacity in aggregate, is $942 million, payable in installments until delivery.

As of February 27, 2015, our share of the outstanding commitments relating to the nine
contracted newbuilds aggregating approximately $286.5 million payable in installments until the
vessels are delivered through the third quarter of 2016, out of which $189.8 million will be funded
through the CLC Sale and Leaseback. These amounts represent our interest in the relevant jointly-
owned entities with York. In addition, dry-docking expenses totaled approximately $10.1 million in
2014, excluding off-hire costs.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations is based upon
our consolidated financial statements, which have been prepared in accordance with U.S. GAAP.
The preparation of those financial statements requires us to make estimates and judgments that
affect the reported amounts of assets and liabilities, revenues and expenses and related disclosure at
the date of our financial statements. Actual results may differ from these estimates under different
assumptions and conditions. Critical accounting policies are those that reflect significant judgments of
uncertainties and potentially result in materially different results under different assumptions and
conditions. We describe below what we believe are our most critical accounting policies, because
they generally involve a comparatively higher degree of judgment in their application. For a
description of all our significant accounting policies, see Note 2 to our consolidated financial
statements included elsewhere in this annual report.

Vessel Impairment

We evaluate the carrying amounts of our vessels to determine if events have occurred that
would require modification to their carrying values or useful lives. In evaluating useful lives and
carrying values of long-lived assets, we review certain indicators of potential impairment, such as
undiscounted projected operating cash flows, vessel sales and purchases, business plans and overall
market conditions.

The economic and market conditions as at December 31, 2013 and 2014, including the significant
disruptions in the global credit markets in the prior years, had broad effects on participants in a wide

51535

variety of industries. Time charter rates and charter free vessel values continued to decline during
2013 and 2014 as reduced demand for transportation services occurred during a time of increased
supply of vessels, conditions that we consider to be indicators of possible impairment.

In developing estimates of future undiscounted cash flows, we make assumptions and estimates
about the vessels’ future performance, with the significant assumptions being related to time charter
rates, vessels’ operating expenses, vessels’ capital expenditures, vessels’ residual value, fleet
utilization and the estimated remaining useful life of each vessel. The assumptions used to develop
estimates of future undiscounted cash flows are based on historical trends as well as future
expectations and taking into consideration growth rates.

We determine undiscounted projected net operating cash flows for each vessel and compare it

to the vessel’s carrying value. Consistent with prior years and to the extent impairment indicators
were present, the projected net operating cash flows are determined by considering the charter
revenues from existing time charters for the fixed fleet days and an estimated daily time charter rate
for the unfixed days (based on the most recent 10 year historical average rates, inflated annually by
a 3.42% growth rate being the historical and forecasted average world GDP nominal growth rate)
over the remaining estimated life of the vessel assumed to be 30 years from the delivery of the
vessel from the shipyard, expected outflows for vessels’ operating expenses assuming an annual
inflation rate of 2.97% (in line with the average world Consumer Price Index forecasted), planned
dry-docking and special survey expenditures, management fees expenditures which are adjusted every
year, after December 31, 2012 as provided under the then-current Group Management Agreement,
by an inflation rate of 4.0% and fleet utilization of 99.2% (excluding the scheduled off-hire days for
planned dry-dockings and special surveys which are determined separately ranging from 16 to 30
days depending on size and age of each vessel) based on historical experience. The salvage value
used in the impairment test is estimated to be approximately $250 per light weight ton in accordance
with our vessels’ depreciation policy.

Based on our analysis, the undiscounted projected net operating cash flows for each vessel were
in excess compared to each vessel’s carrying value, and accordingly, no impairment of vessels existed
as of December 31, 2013 and 2014.

As noted above, we determine projected cash flows for unfixed days using an estimated daily time

charter rate based on the most recent 10 year historical average rates, inflated annually by a 3.42%
growth rate. We consider this approach to be reasonable and appropriate. However, charter rates are
subject to change based on a variety of factors that we cannot control and we note that charter rates
over the last few years have been, on average, below their historical 10 year average. If as at December
31, 2013 and 2014, we were to utilize an estimated daily time charter equivalent for our vessels’ unfixed
days based on the most recent five year, three year or one year historical average rates without
adjusting for inflation (or another growth assumption), the results would be the following:

December 31, 2013

December 31, 2014

No. of
Vessels (*)

Amount
($ US Million) (**)

No. of
Vessels (*)

Amount
($ US Million) (**)

5-year historical average rate. . . . . . . . . . . . . .
3-year historical average rate. . . . . . . . . . . . . .
1-year historical average rate. . . . . . . . . . . . . .

5
3
7

$39
33
73

5
9
17

$ 30
72
131

(*) Number of vessels the carrying value of which would not have been recovered.

(**) Aggregate carrying value that would not have been recovered.

An internal analysis, which used a discounted cash flow model utilizing inputs and assumptions

based on market observations as of December 31, 2014, suggests that 17 of our 55 vessels in the
water may have current market values below their carrying values (22 of our 52 vessels in the water
as at December 31, 2013). However, we believe that, with respect to these 17 vessels, all of which
are currently under time charters, we will recover their carrying values through the end of their
useful lives, based on their undiscounted cash flows. We currently do not expect to sell any of these
vessels, or otherwise dispose of them, significantly before the end of their estimated useful life.

39086

Although we believe that the assumptions used to evaluate potential impairment are reasonable

and appropriate, such assumptions are highly subjective. There can be no assurance as to how long
charter rates and vessel values will remain at their current low levels or whether they will improve
by any significant degree. Charter rates may remain at depressed levels for some time which could
adversely affect our revenue and profitability, and future assessments of vessel impairment.

While the Company intends to continue to hold and operate its vessels, the following table
presents information with respect to the carrying amount of the Company’s vessels and indicates
whether their estimated market values based on an internal discounted cash flow analysis are below
their carrying values as of December 31, 2014 and 2013. The carrying value of each of the
Company’s vessels does not necessarily represent its fair market value or the amount that could be
obtained if the vessel were sold. The Company’s estimates of market values assume that the vessels
are all in good and seaworthy condition without need for repair and, if inspected, would be certified
as being in class without recommendations of any kind. In addition, because vessel values are highly
volatile, these estimates may not be indicative of either the current or future prices that the
Company could achieve if it were to sell any of the vessels. The Company would not record an
impairment for any of the vessels for which the fair market value is below its carrying value unless
and until the Company either determines to sell the vessel for a loss or determines that the vessel’s
carrying amount is not recoverable. The Company believes that the undiscounted projected net
operating cash flows over the estimated remaining useful lives for those vessels that have
experienced declines in estimated market values below their carrying values exceed such vessels’
carrying values as of December 31, 2014, and accordingly has not recorded an impairment charge.

Vessel

Cosco Hellas

Cosco Guangzhou

Cosco Beijing

Cosco Yantian

Cosco Ningbo

MSC Azov

MSC Ajaccio

MSC Amalfi

MSC Athens

MSC Athos

Valor

Value

Valiant

Valence

Vantage

Navarino*,**

Maersk Kure*,**

Maersk Kokura*,**

Maersk Kawasaki*,**
MSC Methoni

Sealand Michigan

Sealand Illinois

Sealand NY

Sealand Washington

Maersk Kobe

Maersk Kalamata

Maersk Kingston

Maersk Kolkata

19
20

Capacity
(TEU)

9,469

9,403

8,827

8,531

7,403

7,403
6,724

6,648

6,644

Built

2006

2014

2013

2010

1996

1997

1997
2003

2000

2003

Acquisition Date

July 2006

February 2006

June 2006

April 2006

March 2006

January 2014

March 2014

April 2014

March 2013

April 2013

June 2013

August 2013

September 2013

November 2013

May 2010

December 2007

February 2008

December 2007
October 2011

October 2000

December 2000

May 2000

August 2000

June 2000

June 2003

April 2003

January 2003

Carrying Value
December 31, 2013
($ US Million)(1)

Carrying Value
December 31, 2014
($ US Million)(1)

73.6

72.4

73.2

73.0

72.5

—

96.2

95.9

96.6

97.5

98.0

97.9

70.5

69.3

70.2

70.0

69.5

83.1

83.6

83.9

93.3

92.9

93.6

94.6

95.0

94.9

108.4

105.3

70.4

72.2

72.1
55.5

37.4

37.5

36.2

37.1

36.6

46.8

46.7

46.3

65.2

67.9

68.1
53.0

35.2

36.5

34.0

35.7

34.4

44.6

44.4

44.0

Vessel

Venetiko*

MSC Romanos*,**

Zim Shanghai*

Zim New York*

Zim Pireaus*,**

Halifax Express

Oakland Express

Singapore Express**

MSC Mykonos

MSC Mandraki

MSC Ulsan*,**

MSC Kyoto

MSC Koroni*

MSC Itea*,**

Karmen*,**

Marina*,**

Konstantina*

Akritas

MSC Challenger

Lakonia

Areopolis**

Messini**

MSC Reunion*

MSC Namibia II*

MSC Sierra II*

MSC Pylos*

Neapolis**

Prosper*,**

Zagora*,**

Stadt Luebeck*,**

Capacity
(TEU)

5,928

5,050

4,992

4,890

4,828

4,132

3,876

3,842

3,351

3,152

2,633

2,586

2,474

2,458

2,024

2,023

2,020

1,645

1,504

1,162

1,078

Built

2003

2002

2004

2000

1988

2002

1981

1998

1991

1992

1987

1986

2004

2000

1997

1992

1991

2000

1996

1995

2001

Acquisition Date

January 2013

August 2011

October 2002

September 2002

May 2004

November 2000

October 2000

August 2000

January 2005

October 2004

February 2012

May 2003

May 2012

November 2010

February 2011

March 2011

November 1997

May 1998

December 2014

May 2014

August 2012

March 2011

January 2011

April 2014

March 2011

January 2011

August 2012

TOTAL

27686

Carrying Value
December 31, 2013
($ US Million)(1)

Carrying Value
December 31, 2014
($ US Million)(1)

21.5

50.5

33.7

33.6

33.1

30.0

29.5

29.4

19.3

19.7

28.6

5.1

12.1

12.0

10.4

9.4

9.9

5.5

3.8

—

6.8

8.0

7.9

6.4

—

8.9

6.9

10.9

2,207.4

20.8

48.1

32.0

31.8

32.4

28.4

29.7

27.8

16.1

16.6

27.1

—

11.4

9.4

8.7

—

3.1

8.2

9.3

6.4

8.1

7.8

8.0

5.9

10.4

8.2

6.4

10.3

2,370.1

(1) For impairment test calculation, Carrying Value includes the unamortized balance of dry-docking cost as at December 31,

2013 and 2014.

* Indicates container vessels which we believe, as of December 31, 2013, may have market values below their carrying

values. As of December 31, 2013, we believe that the aggregate carrying value of these 22 vessels was $116.9 million more
than their market value.

** Indicates container vessels which we believe, as of December 31, 2014, may have market values below their carrying

values. As of December 31, 2014, we believe that the aggregate carrying value of these 17 vessels was $147.7 million more
than their market value.

Vessels are stated at cost, which consists of the contract price and any material expenses
incurred upon acquisition (initial repairs, improvements and delivery expenses, interest and on-site
supervision costs incurred during the construction periods). Subsequent expenditures for conversions
and major improvements are also capitalized when they appreciably extend the life, increase the
earning capacity or improve the efficiency or safety of the vessels.

We depreciate our vessels based on a straight-line basis over the expected useful life of each

59151

product of vessels’ lightweight tonnage and estimated scrap rate (approximately $250 per lightweight
ton). Secondhand vessels are depreciated from the date of their acquisition through their remaining
estimated useful lives.

We review for impairment long-lived assets held and used whenever events or changes in

circumstances indicate that the carrying amount of the assets may not be recoverable. In this respect,
we review our fleet for impairment on a vessel by vessel basis. When the estimate of undiscounted
projected net operating cash flows, excluding interest charges, expected to be generated by the use
of the vessel is less than its carrying amount, we evaluate the vessel for impairment loss. The
impairment loss is determined by the difference between the carrying amount of the vessel and the
fair value of the vessel. If our estimate of undiscounted projected net operating cash flows for any
vessel is lower than the vessel’s carrying value, the carrying value is written down, by recording an
impairment loss to operations, to the vessel’s fair market value if the fair market value is lower than
the vessel’s carrying value.

Vessel Lives and Depreciation

We depreciate our vessels based on a straight-line basis over the expected useful life of each

vessel, which is 30 years from the date of their initial delivery from the shipyard, which we believe
is within industry standards and represents the most reasonable useful life for each of our vessels.
Depreciation is based on the cost of the vessel less its estimated residual value which is equal to the
product of vessels’ lightweight tonnage and estimated scrap rate (approximately $250 per lightweight
ton). Secondhand vessels are depreciated from the date of their acquisition through their remaining
estimated useful lives. A decrease in the useful life of a vessel or in its residual value would have
the effect of increasing the annual depreciation charge. When regulations place limitations over the
ability of a vessel to trade on a worldwide basis, its useful life is adjusted to end at the date such
regulations become effective.

Special Survey and Dry-docking Costs

Within the shipping industry, there are two methods that are used to account for special survey

and dry-docking costs: (1) capitalize special survey and dry-docking costs as incurred (deferral
method) and amortize such costs over the period to the next scheduled survey, and (2) expense
special survey and dry-docking costs as incurred. Since special survey and dry-docking cycles
typically extend over a period of 30 to 60 months, management believes that the deferral method
provides a better matching of revenues and expenses than the expense-as-incurred method. Costs
deferred are limited to actual costs incurred at the shipyard and parts used in the dry-docking or
special survey. If a survey is performed prior to the scheduled date, the remaining unamortized
balances are immediately written off. Unamortized balances of vessels that are sold are written off
and included in the calculation of the resulting gain or loss in the period of the vessel’s sale.
Furthermore, unamortized dry-docking and special survey balances of vessels that are classified as
assets held for sale and are not recoverable as of the date of such classification are immediately
written off to the income statement.

Vessel, Cost

Voyage Revenue Recognition

Revenues are generated from time charters and are usually paid 15 days in advance. Time
charters with the same charterer are accounted for as separate agreements according to the terms

83036

and conditions of each agreement. Time charter revenues over the term of the time charter are
recorded as service is provided, when they become fixed and determinable. Revenues from time
charters providing for varying annual rates are accounted for as operating leases and thus recognized
on a straight-line basis as the average revenue over the rental periods of such agreements, as service
is performed. Some of our time charters provide that the charter rate will be adjusted to a market
rate for the final months of their respective terms. For purposes of determining the straight-line
revenue amount, we exclude these periods and treat the charter as expiring at the end of the last
fixed rate period. A voyage is deemed to commence upon the completion of discharge of the
vessel’s previous cargo and is deemed to end upon the completion of discharge of the current cargo,
provided an agreed non-cancelable time charter between the Company and the charterer is in
existence, the charter rate is fixed or determinable and collectability is reasonably assured. Unearned
revenue includes cash received prior to the balance sheet date for which all criteria to recognize as
revenue have not been met, including any unearned revenue resulting from time charters providing
for varying annual rates, which are accounted for on a straight-line basis. Unearned revenue also
includes the unamortized balance of the liability associated with the acquisition of secondhand
vessels with time charters attached that were acquired at values below fair market value at the date
the acquisition agreement is consummated.

Accrued / Unearned Charter Revenue

We record identified assets or liabilities associated with the acquisition of a vessel at fair value,
determined by reference to market data. The Company values any asset or liability arising from the
market value of the time charters assumed when a vessel is acquired from entities that are not
under common control. This policy does not apply when a vessel is acquired from entities that are
under common control. The amount to be recorded as an asset or liability at the date of vessel
delivery is based on the difference between the current fair market value of the charter and the net
present value of future contractual cash flows. When the present value of the contractual cash flows
of the time charter assumed is greater than its current fair value, the difference is recorded as
accrued prepaid charter revenue. When the opposite situation occurs, any difference, capped to the
vessel’s fair value on a charter free basis, is recorded as deferred revenue. Such assets and liabilities,
respectively, are amortized as a reduction of, or an increase in, revenue over the period of the time
charter assumed. In developing estimates of the net present value of contractual cash flows of the
time charters assumed, we must make assumptions about the discount rate that reflect the risks
associated with the assumed time charter and the fair value of the assumed time charter at the time
the vessel is acquired. Although management believes that the assumptions used to evaluate present
and fair values discussed above will be reasonable and appropriate, such assumptions are highly
subjective.

Receivables

Revenue is based on contracted time charters and although our business is with customers who

are believed to be of the highest standard, there is always the possibility of dispute. In such
circumstances, we will assess the recoverability of amounts outstanding and a provision will be
estimated if there is a possibility of non-recoverability. Although we may believe that our provisions
are based on fair judgment at the time of their creation, it is possible that an amount under dispute
will not be recovered and the estimated provision of doubtful accounts would be inadequate. If any
of our revenues become uncollectible, these amounts would be written-off at that time.

Derivative Financial Instruments

We enter into interest rate swap contracts to manage our exposure to fluctuations of interest
rate risks associated with specific borrowings. Interest rate differentials paid or received under these
swap agreements are recognized as part of interest expense related to the hedged debt. All
derivatives are recognized in the consolidated financial statements at their fair value. On the
inception date of the derivative contract, we designate the derivative as a hedge of a forecasted
transaction or the variability of cash flow to be paid (“cash flow” hedge). Changes in the fair value

14772

of a derivative that is qualified, designated and highly effective as a cash flow hedge are recorded in
other comprehensive income until earnings are affected by the forecasted transaction or the
variability of cash flow and are then reported in earnings. Changes in the fair value of undesignated
derivative instruments and the ineffective portion of designated derivative instruments are reported
in earnings in the period in which those fair value changes have occurred. Realized gains or losses
on early termination of the derivative instruments are also classified in earnings in the period of
termination of the respective derivative instrument. We may redesignate an undesignated hedge after
its inception as a hedge but then will consider its non-zero value at redesignation in its assessment
of effectiveness of the cash flow hedge.

We formally document all relationships between hedging instruments and hedged terms, as well

as the risk-management objective and strategy for undertaking various hedge transactions. This
process includes linking all derivatives that are designated as cash flow hedges to specific forecasted
transactions or variability of cash flow.

We also formally assess, both at the hedge’s inception and on an ongoing basis, whether the
derivatives that are used in hedging transactions are highly effective in offsetting changes in cash
flow of hedged items. We consider a hedge to be highly effective if the change in fair value of the
derivative hedging instrument is within 80% to 125% of the opposite change in the fair value of the
hedged item attributable to the hedged risk. When it is determined that a derivative is not highly
effective as a hedge or that it has ceased to be a highly effective hedge, we discontinue hedge
accounting prospectively, in accordance with ASC 815 “Derivatives and Hedging”.

We also enter forward exchange rate contracts to manage our exposure to currency exchange

risk on certain foreign currency liabilities. We have not designated these forward exchange rate
contracts for hedge accounting.

C. Research and Development, Patents and Licenses, etc.

We incur from time to time expenditures relating to inspections for acquiring new vessels. Such

expenditures are insignificant and are expensed as they are incurred.

D. Trend Information

Our results of operations depend primarily on the charter hire rates that we are able to realize.
In turn, charter hire rates are determined by the growth in demand for containership transportation
services and the corresponding growth in the supply of containerships. Demand for containership
transportation services is influenced by global economic and financial conditions, as well as the
movement of manufacturing locations further away from consumption locations.

During 2008 and 2009, the rapid contraction in the world economy and the expectation of
declining growth across the world reduced demand for containership transportation services, while
the industry was confronted with record supply growth. 2010, however, was a positive year for the
containership industry, with charter rates and asset values recovering on solid transportation demand.
2011 saw increasing charter rates and asset prices during the first 6 months of the year, along with
further growth in vessel supply, followed by steep declines during the latter half, due to reduced
transportation demand triggered by the unfolding sovereign debt crisis and overall volatile financial
conditions.

In 2012, the impact of the continuing European sovereign debt crisis and global economic
slowdown, as well as uncertainty regarding the resolution of the budget ceiling and budgetary cuts in
the United States continued to negatively impact international trade which, combined with an
increased supply of vessels, caused time charter rates and charter free values to continue their
decline.

In 2013, the supply of containerships continued to be at historically high levels and was only
moderated by increased scrapping of older, smaller vessels. Demand continued to be sluggish in the
beginning of 2013, but began to accelerate in the third quarter as companies in the EU and
United States started to re-stock as the demand for goods stabilized.

33795

In 2014, demand continued to increase, particularly in the European Union, reaching the highest

level of the last three years and matching 2010 levels. On the supply side, new vessel ordering
remains at reasonable levels and is focused on the “very large” segment of the containership market.
Towards the end of 2014, demand was stimulated by the impact of low oil prices and continued
monetary stimulus, while demand was negatively impacted by slowing economic growth in emerging
markets, particularly China and Brazil, and the reemergence of the European Union sovereign debt
crisis.

Sustained low transportation demand growth especially in the western world combined with
increasing containership capacity (both current and expected) is likely to result in reductions in
charter hire rates and, as a consequence, adversely affect our operating results.

E. Off-Balance Sheet Arrangements

As of December 31, 2014, we did not have any off-balance sheet arrangements.

F. Tabular Disclosure of Capital Obligations

Our contractual obligations as of December 31, 2014 were:

Payments Due by Period(5)

Long-term debt obligations(1) . . . . . . . . . . . . . . . .
Interest on long-term debt obligations(2) . . . . .
Payments to our manager(3). . . . . . . . . . . . . . . . . .
Payments to shipyards(4) . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total

$1,767,074
341,786
214,686
96,774

Less than
1 year

3-5 years
1-3 years
(Expressed in thousands of U.S. dollars)
$652,933
$442,605
73,540
139,639
43,689
48,594
—
62,207

$206,459
82,904
25,088
34,567

More than
5 years

$465,077
45,703
97,315
—

$2,420,320

$349,018

$693,045

$770,162

$608,095

(1) Includes obligations under finance leases.

(2) We expect to be obligated to make the interest payments set forth in the above table with respect to our long-term debt

obligations and finance leases. The interest payments are based on annual assumed all-in rates calculated for the unhedged
portion of our debt obligations based on the forward yield curve and on the average yearly debt outstanding. With respect
to interest payments under our lease obligations, these have been based on the repayment schedules agreed with the
financing institution upon the commencement of the bareboat charters.

(3) This amount assumes that we will cease paying our managers any fees in connection with the management of a vessel once
the vessel exceeds 30 years of age, unless the vessel will exceed 30 years of age at the expiry of its current time charter, in
which case we assume that we will pay the manager a fee for the management of that vessel until its charter expires.
Payments to our manager include (a) a daily management fee of $956 per day per vessel, (b) a 0.75% chartering fee on
charter revenues earned and (c) beginning in the first quarter of 2015, an annual fee of $2.5 million. Prior to 2015, we paid
our manager an annual payment of $1.0 million for the services of our executive officers. Payments to our manager
exclude the value of the shares of our common stock issued to the manager in exchange for its services. See “Item 7.
Major Shareholders and Related Party Transactions—B. Related Party Transactions—Management Agreement”.

(4) This amount represents our share of the remaining capital commitments with regards to the newbuild vessels on order.

(5) These amounts exclude the following preferred stock dividend payment obligations (assumes that dividends are paid until

earliest date for company to redeem shares):

Total

$50,423

Less than
1 year

1-3 years

(Expressed in thousands of U.S. dollars)

$12,313

$24,626

3-5 years

$13,484

89607

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Senior Management

The following table sets forth information regarding our directors and executive officers. The
business address of each of our executive officers and directors listed below is 60 Zephyrou Street &
Syngrou Avenue, 17564 Athens, Greece. Our telephone number at that address is +30-210-949-0050.
Our board of directors will be elected annually on a staggered basis, and each elected director will
hold office for a three-year term. The following directors or nominees for director have been
determined by our board of directors to be independent under the standards of the New York Stock
Exchange and the rules and regulations of the U.S. Securities and Exchange Commission: Vagn
Lehd Møller and Charlotte Stratos. Officers are elected from time to time by vote of our board of
directors and hold office until a successor is elected and qualified.

Name

Age

Position

Konstantinos Konstantakopoulos . . . . .

45 Chief Executive Officer, Chairman of the Board and

Class III Director

Gregory Zikos . . . . . . . . . . . . . . . . . . . . . . .
Vagn Lehd Møller . . . . . . . . . . . . . . . . . . .
Charlotte Stratos . . . . . . . . . . . . . . . . . . . . .
Konstantinos Zacharatos . . . . . . . . . . . . .
Anastassios Gabrielides . . . . . . . . . . . . . .

46 Chief Financial Officer and Class II Director
68 Class II Director
60 Class III Director
42 Class I Director
50 General Counsel and Secretary

The term of our Class I director expires in 2017, the term of our Class II directors expires in

2015 and the term of our Class III directors expires in 2016.

Konstantinos Konstantakopoulos is our Chief Executive Officer and Chairman of our board of

directors. Mr. Konstantakopoulos also serves as President and Chief Executive Officer of Costamare
Shipping, one of our managers, which he wholly owns and joined in 1992 (and where he worked
part-time beforehand). In 2001, Mr. Konstantakopoulos founded CIEL, which served as a sub-
manager of certain of our vessels until April 2013 when it was replaced by V.Ships Greece. He has
also served as the Chief Executive Officer and Chairman of the board of directors of Costamare
Partners GP, the general partner of the MLP, since August 2014. In 2005, Mr. Konstantakopoulos
founded another of our managers, Shanghai Costamare, of which he is the controlling stockholder.
Mr. Konstantakopoulos also owns, indirectly, 25% of C-Man Maritime, a vessel manning agency
which he founded in 2006. Mr. Konstantakopoulos has served on the board of directors of the Union
of Greek Ship-owners since 2006. Mr. Konstantakopoulos studied engineering at Universite´ Paul
Sabatier in France.

Gregory Zikos is our Chief Financial Officer and a member of our board of directors.
Mr. Zikos has also served as the Chief Financial Officer of Costamare Partners GP, the general
partner of the MLP, since August 2014. Prior to joining us in 2007, Mr. Zikos was employed at
DryShips, Inc., a public shipping company, as the Chief Financial Officer from 2006 to 2007. From
2004 to 2006, Mr. Zikos was employed with J&P Avax S.A., a real estate investment and
construction company, where he was responsible for project and structured finance debt transactions.
From 2000 to 2004, Mr. Zikos was employed at Citigroup (London), global corporate and investment
banking group, where he was involved in numerous European leveraged and acquisition debt
financing transactions. Mr. Zikos practiced law from 1994 to 1998, during which time he advised
financial institutions and shipping companies in debt and acquisition transactions. Mr. Zikos holds an
M.B.A. in finance from Cornell University, an L.L.M. from the University of London King’s
College, and a bachelor of laws, with merits, from the University of Athens.

Vagn Lehd Møller is a member of our board of directors. From 1963 to 2007, Mr. Møller
worked with A.P. Møller-Maersk A/S where he eventually served as Executive Vice President and
Chief Operations Officer of the world’s largest liner company, Maersk Line. Mr. Møller was
instrumental in the purchase and integration of Sea-land Services by A.P. Møller-Maersk A/S in
2000 and of P&O Nedlloyd in 2005. Since July 2012 and March 2012, respectively, Mr. Møller has
served as chairman of the boards of DBB Jack-up Services A/S and Jack-up Invest Co2 A/S, both
Danish companies investing in jack-up vessels chartered to off-shore windmill companies. Since

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March 2010, Mr. Møller has served on the boards of directors for Scan Global Logistics A/S and
Scan Global Holdings S/A, both Danish based internal logistics companies, and he was elected
chairman of the boards of directors of both companies in January 2011. From 1992 to July 2010, Mr.
Møller served as a board member for Norfolk Line Holdings, a Netherlands based sea ferry
company. From 2000 to April 2010, Mr. Møller served as a board member for Svitzer A/S, a
Denmark based salvage and towing company.

Charlotte Stratos is a member of our board of directors. Since 2008, Ms. Stratos has served as a
Senior Advisor to Morgan Stanley’s Investment Banking Division-Global Transportation team. From
1987 to 2007, Ms. Stratos served as Managing Director and Head of Global Greek Shipping for
Calyon Corporate and Investment Bank of the Credit Agricole Group. From 1976 to 1987, Ms.
Stratos served in various roles with Bankers Trust Company, including Advisor to the Shipping
Department and Vice President of Greek shipping finance. Ms. Stratos currently serves as an
independent director for Hellenic Carriers Ltd. and Gyroscopic Fund, a hedge fund company.

Konstantinos Zacharatos is a member of our board of directors. Mr. Zacharatos served as our

General Counsel and Secretary until April 2013. Mr. Zacharatos has also served as the Vice
Chairman of Shanghai Costamare since its incorporation in 2005. Mr. Zacharatos joined Costamare
Shipping in 2000, became a member of the board of directors of Costamare Shipping in June 2010
and has also been responsible for the legal affairs of CIEL, Shanghai Costamare and C-Man
Maritime. Mr. Zacharatos has been the legal adviser of Costaterra S.A., a Greek property company,
since 2000. Prior to joining Costamare Shipping and Costaterra S.A., Mr. Zacharatos was employed
with Pagoropoulos & Associates, a law firm. Mr. Zacharatos holds an L.L.M. and an L.L.B. from
the London School of Economics and Political Science.

Anastassios Gabrielides is our General Counsel and Secretary. Mr. Gabrielides has also served

as a member of the board of directors of Costamare Partners GP since its inception. Prior to joining
us in 2013, Mr. Gabrielides worked for Allseas Marine SA, a ship management company. From 2004
to 2011, Mr. Gabrielides served at the Hellenic Capital Markets Commission, the Greek securities
regulator, first as Vice Chairman (2004 to 2009) and then as Chairman (2009 to 2011). Mr.
Gabrielides practiced law in Athens from 1999 to 2004, specializing in securities, banking and
finance and corporate law. Mr. Gabrielides also worked for the Alexander S. Onassis Foundation
from 1991 to 1999 in various posts and was a member of the Executive Committee. Mr. Gabrielides
has been a member of the board of supervisors of the European Securities and Markets Authority
and has been a member of the Greek FIY. Mr. Gabrielides holds L.L.M. degrees from Harvard Law
School and the London School of Economics, a law degree from Athens University Law School, and
a B.A. in economics from the American College of Greece, Deree College.

B. Compensation of Directors and Senior Management

Non-executive directors receive annual fees in the amount of $65,000, plus reimbursement for

their out-of-pocket expenses. Our officers who serve as our directors will not receive additional
compensation for their service as directors.

We have not paid any compensation to our chief executive officer, our chief financial officer or
our general counsel. Under the Group Management Agreement, our executive officers are provided
to us by Costamare Shipping and their compensation is set and paid by Costamare Shipping. For the
year ended December 31, 2014, we paid Costamare Shipping $1.0 million for the services of our
executive officers. Beginning January 1, 2015, payment for these services will be included in the
management fees paid by us to Costamare Shipping pursuant to the Group Management Agreement.
See “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—
Management Agreement”. We do not have any service contracts with our non-executive directors
that provide for benefits upon termination of their services.

C. Board Practices

We have five members on our board of directors. The board of directors may change the
number of directors to not less than three, nor more than 15, by a vote of a majority of the entire

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board. Each director shall be elected to serve until the third succeeding annual meeting of
stockholders and until his or her successor shall have been duly elected and qualified, except in the
event of death, resignation or removal. A vacancy on the board created by death, resignation,
removal (which may only be for cause), or failure of the stockholders to elect the entire class of
directors to be elected at any election of directors or for any other reason, may be filled only by an
affirmative vote of a majority of the remaining directors then in office, even if less than a quorum,
at any special meeting called for that purpose or at any regular meeting of the board of directors.

We are a “foreign private issuer” under the securities laws of the United States and the rules of

the NYSE. Under the securities laws of the United States, “foreign private issuers” are subject to
different disclosure requirements than U.S. domiciled registrants, as well as different financial
reporting requirements. Under the NYSE rules, a “foreign private issuer” is subject to less stringent
corporate governance requirements. Subject to certain exceptions, the rules of the NYSE permit a
“foreign private issuer” to follow its home country practice in lieu of the listing requirements of the
NYSE. In addition, members of the Konstantakopoulos family own, in the aggregate, a majority of
our outstanding common stock. As a result, we are a “controlled company” within the meaning of
the NYSE corporate governance standards. Under the NYSE rules, a company of which more than
50% of the voting power is held by another company or group is a “controlled company” and may
elect not to comply with certain NYSE corporate governance requirements, including (1) the
requirement that a majority of the board of directors consist of independent directors, (2) the
requirement that the nominating committee be composed entirely of independent directors and have
a written charter addressing the committee’s purpose and responsibilities, (3) the requirement that
the compensation committee be composed entirely of independent directors and have a written
charter addressing the committee’s purpose and responsibilities and (4) the requirement of an annual
performance evaluation of the nominating and corporate governance and compensation committees.
As permitted by these exemptions, as well as by our bylaws and the laws of the Marshall Islands, we
currently have a board of directors with a majority of non-independent directors and a combined
corporate governance, nominating and compensation committee with one non-independent director
serving as a committee member. As a result, non-independent directors, including members of our
management who also serve on our board of directors, may, among other things, fix the
compensation of our management, make stock and option awards and resolve governance issues
regarding our company. In addition, we currently have an audit committee composed solely of two
independent committee members, whereas a domestic public company would be required to have
three such independent members. Accordingly, in the future you may not have the same protections
afforded to stockholders of companies that are subject to all of the NYSE corporate governance
requirements.

Corporate Governance

The board of directors and our Company’s management engage in an ongoing review of our
corporate governance practices in order to oversee our compliance with the applicable corporate
governance rules of the New York Stock Exchange and the SEC.

We have adopted a number of key documents that are the foundation of the Company’s

corporate governance, including:

• a Code of Business Conduct and Ethics for all officers and employees, which incorporates a

Code of Ethics for directors and a Code of Conduct for corporate officers;

• a Corporate Governance, Nominating and Compensation Committee Charter; and
• an Audit Committee Charter.
These documents and other important information on our governance are posted on our website

and may be viewed at http://www.costamare.com. We will also provide a paper copy of any of these
documents upon the written request of a stockholder. Stockholders may direct their requests to the
attention of our Secretary, Anastassios Gabrielides, 60 Zephyrou Street & Syngrou Avenue, 17564
Athens, Greece.

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Committees of the Board of Directors

Audit Committee

Our audit committee consists of Vagn Lehd Møller and Charlotte Stratos. Ms. Stratos is the

chairman of the committee. The audit committee is responsible for:

• the appointment, compensation, retention and oversight of independent auditors and

approving any non-audit services performed by such auditors;

• assisting the board in monitoring the integrity of our financial statements, the independent
auditors’ qualifications and independence, the performance of the independent accountants
and our internal audit function and our compliance with legal and regulatory requirements;

• annually reviewing an independent auditors’ report describing the auditing firm’s internal

quality-control procedures, and any material issues raised by the most recent internal quality
control review, or peer review, of the auditing firm;

• discussing the annual audited financial and quarterly statements with management and the

independent auditors;

• discussing earnings press releases, as well as financial information and earnings guidance

provided to analysts and rating agencies;

• discussing policies with respect to risk assessment and risk management;
• meeting separately, and periodically, with management, internal auditors and the independent

auditors;

• reviewing with the independent auditors any audit problems or difficulties and management’s

responses;

• setting clear hiring policies for employees or former employees of the independent auditors;
• annually reviewing the adequacy of the audit committee’s written charter, the scope of the

annual internal audit plan and the results of internal audits;

• establishing procedures for the consideration of all related-party transactions, including
matters involving potential conflicts of interest or potential usurpations of corporate
opportunities;

• reporting regularly to the full board of directors; and
• handling such other matters that are specifically delegated to the audit committee by the

board of directors from time to time.

Corporate Governance, Nominating and Compensation Committee

Our corporate governance, nominating and compensation committee consists of Konstantinos

Konstantakopoulos, Vagn Lehd Møller and Charlotte Stratos. Mr. Konstantakopoulos is the
chairman of the committee. The corporate governance, nominating and compensation committee is
responsible for:

• nominating candidates, consistent with criteria approved by the full board of directors, for the
approval of the full board of directors to fill board vacancies as and when they arise, as well
as putting in place plans for succession, in particular, of the chairman of the board of
directors and executive officers;

• selecting, or recommending that the full board of directors select, the director nominees for

the next annual meeting of stockholders;

• developing and recommending to the full board of directors corporate governance guidelines

applicable to us and keeping such guidelines under review;
• overseeing the evaluation of the board and management; and
• handling such other matters that are specifically delegated to the corporate governance,
nominating and compensation committee by the board of directors from time to time.

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D. Employees

Costamare Shipping provides us with our executive officers, our chairman and chief executive

officer, our chief financial officer, our general counsel and secretary, and our chief operating officer.

E. Share Ownership

The common stock beneficially owned by our directors and executive officers and/or entities

affiliated with these individuals is disclosed in “Item 7. Major Shareholders and Related Party
Transactions—A. Major Shareholders” below.

Equity Compensation Plans

We have not adopted any equity compensation plans.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. Major Shareholders

The following table and the footnotes below set forth certain information regarding the

beneficial ownership of our outstanding common stock and Preferred Stock as of February 27, 2015
held by:

• each person or entity that we know beneficially owns 5% or more of our common stock;
• each of our officers and directors; and
• all our directors and officers as a group.
Beneficial ownership is determined in accordance with the rules of the SEC. In general, a

person who has voting power or investment power with respect to securities is treated as a beneficial
owner of those securities.

Beneficial ownership does not necessarily imply that the named person has the economic or
other benefits of ownership. For purposes of this table, shares subject to options, warrants or rights
or shares exercisable within 60 days of February 27, 2015 are considered as beneficially owned by
the person holding those options, warrants or rights. Each stockholder is entitled to one vote for
each share held. The applicable percentage of ownership of each stockholder is based on 74,800,000
shares of common stock, 2,000,000 shares of Series B Preferred Stock and 4,000,000 Series C
Preferred Stock outstanding as of February 27, 2015. Information for certain holders is based on
their latest filings with the SEC or information delivered to us. Except as noted below, the address
of all stockholders, officers and directors identified in the table and the accompanying footnotes
below is in care of our principal executive offices.

Identity of Person or Group
Officers and Directors
Konstantinos Konstantakopoulos(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gregory Zikos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Konstantinos Zacharatos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vagn Lehd Møller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Charlotte Stratos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Anastassios Gabrielides(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All officers and directors as a group (five persons)
5% Beneficial Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Christos Konstantakopoulos(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Achillefs Konstantakopoulos(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
First Trust Portfolios L.P.(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Morgan Stanley(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Shares of Common Stock
Beneficially Held

Number
of Shares

Percentage

16,149,999
—
—

—
—

16,149,999
16,150,000
16,150,001
4,283,423
4,671,981

21.59%
—
—

—
—

21.59%
21.59%
21.59%
5.73%
6.25%

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(1) Konstantinos Konstantakopoulos, our chairman and chief executive officer, owns 9,074,916 shares of common stock directly
and 7,075,083 shares of common stock indirectly through Kent Maritime Investments S.A., a Marshall Islands corporation.
The address of Kent Maritime Investments S.A. is c/o Costamare Shipping Company S.A., 60 Zephyrou Street & Syngrou
Avenue, 17564 Athens, Greece.

(2) Anastassios Gabrielides, our General Counsel and Secretary, holds less than 1% of our issued and outstanding Series C

Preferred Stock.

(3) Christos Konstantakopoulos, the brother of our chairman and chief executive officer, owns 9,074,917 shares of common
stock directly and 7,075,083 shares of common stock indirectly through Vasska Maritime Investments S.A., a Marshall
Islands corporation. The address of Vasska Maritime Investments S.A. is c/o Costamare Shipping Company S.A., 60
Zephyrou Street & Syngrou Avenue, 17564 Athens, Greece.

(4) Achillefs Konstantakopoulos, the brother of our chairman and chief executive officer, owns 9,074,917 shares of common

stock directly and 7,075,084 shares of common stock indirectly through Yaco Maritime Investments S.A., a Marshall Islands
corporation. Mr. Konstantakopoulos also holds 15,073 shares of Series B Preferred Stock and 70,000 shares of Series C
Preferred Stock directly, or 0.75% and 1.75% of the issued and outstanding shares of Series B Preferred Stock and Series
C Preferred Stock, respectively. His immediate family also holds 23,578 shares of Series B Preferred Stock, or 1.18% of
the issued and outstanding shares of Series B Preferred Stock. The address of Yaco Maritime S.A. is c/o Costamare
Shipping Company S.A., 60 Zephyrou Street & Syngrou Avenue, 17564 Athens, Greece.

(5) As of December 31, 2014, based on a Schedule 13G filed with the SEC on January 16, 2015. The report was filed jointly
by (1) First Trust Portfolios L.P., a broker dealer registered under section 15 of the Exchange Act and sponsor of certain
unit investment trusts (the “trusts”) which hold shares of the issuer, (2) First Trust Advisors L.P., portfolio supervisor of
the trusts, and (3) The Charger Corporation, the general partner of First Trust Portfolios L.P. and First Trust Advisors
L.P. The filers have shared power to dispose or to direct the disposition of all 4,283,423 shares, and do not have the power
to vote the shares of the issuer held by the trusts. Such shares are voted by the trustee of the trusts. The filers disclaim
beneficial ownership of the shares.

(6) As of December 31, 2014, based on a Schedule 13G filed with the SEC on February 14, 2013, as amended by Amendment

No. 1 filed with the SEC on February 10, 2014 and Amendment No. 2 filed with the SEC on February 17, 2015. The
report indicated sole voting power as to 3,664,373 of such shares, shared voting power as to 731,405 of such shares, and
shared dispositive power as to 3,940,577 shares, by Morgan Stanley, a parent holding company. The report also indicated
sole voting power as to 3,616,948 of such shares, shared voting power as to 731,405 of such shares, and shared dispositive
power as to 3,893,152 of such shares, by Morgan Stanley Smith Barney LLC, a broker dealer registered under section 15
of the Securities Exchange Act of 1934, as amended.

* Owns less than 1% of our issued and outstanding shares.

In November 2010, we completed a registered public offering of our shares of common stock
and our common stock began trading on the New York Stock Exchange. Our major stockholders
have the same voting rights as our other stockholders. As of February 26, 2015, we had
approximately 18,373 stockholders of record.

Holders of our Preferred Stock generally have no voting rights except (1) in respect of

B. Related Party Transactions

Management Affiliations

Each of our containerships is currently managed by one or more of our affiliated managers,

Costamare Shipping or Shanghai Costamare, and, in certain cases, subject to our consent, a third-
party sub-manager, pursuant to the Group Management Agreement and one or more ship-
management agreements between the relevant vessel owning entity and the relevant manager. Our
two affiliated managers are controlled by our chairman and chief executive officer.

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Management Agreement

On March 3, 2015, we amended and restated our Group Management Agreement with

Costamare Shipping which we have filed as an exhibit to this annual report.

With respect to each of our vessels, Costamare Shipping provides us with general administrative

services, certain commercial services, D&O related insurance services and the services of our
executive officers pursuant to the Group Management Agreement between Costamare Shipping and
us. The Group Management Agreement permits Costamare Shipping to subcontract certain of its
obligations. Costamare Shipping, itself or through Shanghai Costamare, or, in certain cases, subject
to our consent, a third-party sub-manager, provides our current fleet of containerships with technical,
crewing, commercial, provisioning, bunkering, sale and purchase, chartering, accounting, insurance
and administrative services pursuant to the Group Management Agreement and separate ship-
management agreements between each of our containership-owning subsidiaries and Costamare
Shipping or, in certain cases, V.Ships Greece. In return for these services, we pay the management
fees described below in this section and elsewhere in this annual report. Costamare Shipping, itself
or through a sub-manager, controls the selection and employment of seafarers for our containerships,
directly through their crewing offices in Athens, Greece and Shanghai, China, and indirectly through
our related crewing agent in the Philippines, C-Man Maritime, and independent manning agents in
Romania and Bulgaria. The seafarers for our containerships managed by V.Ships Greece are
arranged in part through C-Man Maritime and in part through V.Ships Greece (which utilizes the
global V.Group network) under the Co-operation Agreement.

Reporting Structure

Our chairman and chief executive officer and our chief financial officer supervise, in conjunction
with our board of directors, the management of our operations by Costamare Shipping and Shanghai
Costamare, as well as any third-party managers, including V.Ships Greece. Costamare Shipping
reports to us and our board of directors through our chairman and chief executive officer and chief
financial officer, each of which is appointed by our board of directors.

Under our Group Management Agreement, our executive officers may unilaterally direct
Costamare Shipping to remove and replace any individual serving as an officer or any senior
manager serving as head of a business unit of Costamare Inc. or any of its subsidiaries from such
position. Costamare Shipping, on the other hand, may not remove any person serving as an officer
or senior manager of Costamare Inc. or any of its subsidiaries without the prior written consent of
our chief executive officer and chief financial officer.

Compensation of Our Manager

Costamare Shipping is providing us with general administrative services, certain commercial

services, D&O related insurance services and the services of our officers as well as technical,
commercial, insurance, accounting, provisioning, sale and purchase, chartering, crewing, bunkering
and administrative services in respect of our containerships. In the event that Costamare Shipping
decides to delegate certain or all of the services it has agreed to perform to affiliated sub-managers
(such as Shanghai Costamare) or, subject to our consent, a third-party sub-manager (such as V.Ships
Greece), either through subcontracting or by directing the sub-manager to enter into a direct ship-
management agreement with the relevant containership-owning subsidiary, then, in the case of
subcontracting, Costamare Shipping will be responsible for paying the management fee charged by
the relevant sub-manager for providing such services and, in the case of a direct ship-management
agreement, the fee received by Costamare Shipping will be reduced by the fee payable to the sub-
manager under the relevant direct ship-management agreement. As a result, these arrangements will
not result in any increase in the aggregate management fees we pay. Moreover, in the case of the
Co-operation Agreement, the management fees we pay are reduced by any net profit received by
Costamare Shipping from the Cell’s operation. In addition to management fees, we pay for any
capital expenditures, financial costs, operating expenses and any general and administrative expenses,
including payments to third parties in accordance with the Group Management Agreement and the
relevant separate ship-management agreements or supervision agreements. Costamare Shipping

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receives a fee in 2015 of $956 per day or, in the case of a containership subject to a bareboat
charter, $478 per day, for each containership, pro rated for the calendar days we own each
containership. In 2014, such amounts were $919 and $460, respectively. We also pay to Costamare
Shipping a flat fee of $787,405 per newbuild vessel for the supervision of the construction of any
newbuild vessel that we may contract. The flat fee for the supervision of newbuild vessels will be
annually adjusted to reflect any strengthening of the Euro against the U.S. dollar and/or material
unforeseen cost increases. Prior to the 2015, the supervision fee was annually adjusted upward by
4%. Costamare Shipping also receives a fee of 0.75% on all gross freight, demurrage, charter hire
and ballast bonus or other income earned with respect to each containership in our fleet.
Additionally, beginning in the first quarter of 2015, Costamare Shipping receives an annual fee
payable quarterly in arrears of (i) $2.5 million and (ii) 598,400 shares (which is equal to 0.8% of the
issued and outstanding Costamare common stock as of January 1, 2015), which fee includes payment
for the services of our executive officers (prior to 2015, we paid Costamare Shipping $1.0 million
annually for such services). We have reserved 3 million shares of common stock to cover fees to be
paid to Costamare Shipping through December 31, 2019.

Term and Termination Rights

Subject to the termination rights described below, the initial term of the Group Management

Agreement expires on December 31, 2015. The Group Management Agreement automatically
renews for 10 consecutive one-year periods until December 31, 2025, at which point the agreement
will expire. In addition to the termination provisions outlined below, after the initial term expiring
on December 31, 2015, we will be able to terminate the Group Management Agreement, subject to
a termination fee, by providing 12 months’ written notice to Costamare Shipping that we wish to
terminate the Group Management Agreement at the end of the then-current term.

Our Manager’s Termination Rights. Costamare Shipping may terminate the Group Management

Agreement prior to the end of its term if:

• any moneys payable by us under the Group Management Agreement have not been paid
when due or if on demand within 20 business days of payment having been demanded;
• if we materially breach the agreement and we have failed to cure such breach within 20

business days after we are given written notice from Costamare Shipping; or

• there is a change of control of our Company.
Our Termination Rights. We may terminate the Group Management Agreement prior to the

end of its term in the following circumstances:

• any moneys payable by Costamare Shipping under or pursuant to the Group Management
Agreement are not paid or accounted for within 10 business days after receiving written
notice from us;

• Costamare Shipping materially breaches the agreement and has failed to cure such breach

within 20 business days after receiving written notice from us;

• there is a change of control of Costamare Shipping; or
• Costamare Shipping is convicted of, enters a plea of guilty or nolo contendere with respect to,
or enters into a plea bargain or settlement admitting guilt for a crime (including fraud), which
conviction, plea bargain or settlement is demonstrably and materially injurious to our

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company, if such crime is not a misdemeanor and such crime has been committed solely and
directly by an officer or director of Costamare Shipping acting within the terms of its
employment or office.

Mutual Termination Rights. Either we or Costamare Shipping may terminate the Group

Management Agreement if:

• the other party ceases to conduct business, or all or substantially all of the equity interests,
properties or assets of the other party are sold, seized or appropriated which, in the case of
seizure or appropriation, is not discharged within 20 business days;

• the other party files a petition under any bankruptcy law, makes an assignment for the benefit
of its creditors, seeks relief under any law for the protection of debtors or adopts a plan of
liquidation, or if a petition is filed against such party seeking to have it declared insolvent or
bankrupt and such petition is not dismissed or stayed within 90 business days of its filing, or
such party admits in writing its insolvency or its inability to pay its debts as they mature, or if
an order is made for the appointment of a liquidator, manager, receiver or trustee of such
party of all or a substantial part of its assets, or if an encumbrancer takes possession of or a
receiver or trustee is appointed over the whole or any part of such party’s undertaking,
property or assets or if an order is made or a resolution is passed for Costamare Shipping’s or
our winding up;

• the other party is prevented from performing any obligations under the Group Management
Agreement by any cause whatsoever of any nature or kind beyond the reasonable control of
such party respectively for a period of two consecutive months or more (“Force Majeure”); or
• all supervision agreements and all ship-management agreements are terminated in accordance

with their respective terms.

If Costamare Shipping terminates the Group Management Agreement for any reason other than

Force Majeure, or if we terminate the Group Management Agreement pursuant to our ability to
terminate with 12 months’ written notice, we will be obliged to pay to Costamare Shipping a lump
sum termination fee which will be determined by reference to the period between the date of
termination and December 31, 2020. The termination fee is equal to (a) the lesser of (i) 10 and (ii)
the number of full years remaining prior to December 31, 2025, times (b) the aggregate fees due
and payable to Costamare Shipping during the 12-month period ending on the date of termination
(without taking into account any reduction in fees to reflect that certain obligations have been
delegated to a sub-manager), provided that the termination fee will always be at least two times the
aggregate fees over the 12-month period described above. In addition, the individual ship-
management agreements to which our vessels are subject may be terminated by either us or the
applicable manager if the vessel is sold, becomes a total loss or is requisitioned.

Non-competition

Costamare Shipping has agreed that, during the term of the Group Management Agreement, it

will not provide any management services to any other entity (other than the MLP and its
subsidiaries) without obtaining our prior written approval. We believe we will derive significant
benefits from our exclusive relationship with Costamare Shipping. With due regard to the Company’s
interest in the efficient management of the Joint Venture vessels, we have consented to Costamare
Shipping providing management services to the vessel-owning entities under the Framework
Agreement. The Group Management Agreement does not prohibit Shanghai Costamare from
providing commercial or technical management services to third parties. In the past, Shanghai
Costamare has only provided services to third parties on a limited basis and there is no current plan
to change that practice. The Co-operation Agreement anticipates that the Cell will actively seek to
provide ship-management services to third-party owners in order to capitalize on the ship-
management expertise of the Cell and the economies of scale brought by the affiliation with
V.Group. However, as noted above, Costamare Shipping has agreed to pass to us the net profit, if
any, it receives from the Cell.

20707

Restrictive Covenant Agreements

Under the restrictive covenant agreements entered into with us, during the period of

Konstantinos Konstantakopoulos’s and Konstantinos Zacharatos’s employment or service with us and
for six months thereafter, each has agreed to restrictions on his ownership of any containerships and
on the acquisition of any shareholding in a business involved in the ownership of containerships
(such activities are referred to here as “the restricted activities”), subject to the exceptions described
below.

Each of Konstantinos Konstantakopoulos and Konstantinos Zacharatos are permitted to engage
in the restricted activities in the following circumstances: (a) pursuant to his involvement with us, (b)
with respect to certain permitted acquisitions (as described below) and (c) pursuant to his passive
ownership of up to, in the case of Konstantinos Konstantakopoulos, 19.99% of the outstanding
voting securities of any publicly traded company, and in the case of Konstantinos Zacharatos, 20%
of the outstanding voting securities of any publicly traded or private company, in each case that is
engaged in the containership business.

As noted above, Konstantinos Konstantakopoulos and Konstantinos Zacharatos are permitted to

engage in restricted activities with respect to two types of permitted acquisitions, including: (1) the
acquisition of a containership or an acquisition or investment in a containership business, on terms
and conditions that are not materially more favorable, than those first offered to us and refused by
an independent conflicts committee of our directors, and/or (2) the acquisition of a business that
includes containerships. Under this second type of permitted acquisition, we must be given the
opportunity to buy the containerships or containership businesses included in the acquisition, in each
case for its fair market value plus certain break-up costs.

Each of Konstantinos Konstantakopoulos and Konstantinos Zacharatos has also agreed that if
one of our containerships and a containership majority-owned by him are both available and meet
the criteria for an available charter, our containership will be offered such charter.

Registration Rights Agreement

We entered into a registration rights agreement with the stockholders named therein (the

“Registration Rights Holders”) on November 3, 2010, pursuant to which we granted the Registration
Rights Holders and their transferees the right, under certain circumstances and subject to certain
restrictions to require us to register under the Securities Act shares of our common stock held by
those persons. Under the registration rights agreement, the Registration Rights Holders and their
transferees have the right to request us to register the sale of shares held by them on their behalf
and may require us to make available shelf registration statements permitting sales of shares into the
market from time to time over an extended period. In addition, those persons have the ability to
exercise certain piggyback registration rights in connection with registered offerings initiated by us.
The Registration Rights Holders own a total of 47,000,000 shares entitled to these registration rights.

Trademark License Agreement

Under the trademark license agreement entered into with us, during the term of the Group
Management Agreement, Costamare Shipping, one of our managers, has agreed to grant us a non-
transferable, royalty free license and right to use the Costamare Inc. trademarks, which consist of
the name “COSTAMARE” and the Costamare logo in connection with the operation of our
containership business. We will pay no additional consideration for this license and right. Costamare
Shipping retains the right to use the trademarks in its own business or to maintain existing, or grant
new, licenses or rights permitting any other person to use the trademarks, provided that in all such
cases the use, maintenance or grant must be consistent with the license and right granted to us
under the licensing agreement.

Grant of Rights and Issuance of Common Stock

On July 14, 2010, the Company offered all stockholders of record as of the close of business on

July 14, 2010 (the “Record Date”), the right (collectively, the “Rights”) to subscribe for and

86486

purchase up to 32 shares of common stock, par value $0.0001 per share, for each share held by such
stockholder as of the Record Date. The subscription price for each share purchased pursuant to the
exercise of Rights was $0.10 per share.

On March 27, 2012, the Company completed a follow-on public equity offering in which we
issued 7,500,000 shares at a public offering price of $14.10 per share. The net proceeds of the follow-
on offering were $100.6 million. Members of the Konstantakopoulos family purchased 750,000 shares
in the offering.

On October 19, 2012, the Company completed a second follow-on public equity offering in
which we issued 7,000,000 shares at a public offering price of $14.00 per share. The net proceeds of
the follow-on offering were $93.5 million. Members of the Konstantakopoulos family purchased
700,000 shares in the offering.

Other Transactions

Konstantinos Konstantakopoulos holds a passive minority interest in certain companies
controlled by the family of Dimitrios Lemonidis that own five containerships comparable to 15 of
our vessels and may acquire additional vessels. Konstantinos Zacharatos holds a passive minority
interest in certain companies controlled by the family of Mr. Lemonidis that own three
containerships comparable to three of our vessels and may acquire additional vessels. These vessels
may compete with the Company’s vessels for chartering opportunities. These investments were
entered into in accordance with the terms of the restrictive covenant agreements referenced above
following the review and approval of our Audit Committee and Board of Directors.

On January 7, 2013, Costamare Shipping entered into the Co-operation Agreement with V.Ships

Greece, pursuant to which the two companies will establish the Cell under V.Ships Greece. See
“Item 4. Information on the Company—B. Business Overview—Management of Our Fleet”. The Co-
operation Agreement anticipates that the Cell will actively seek to provide ship-management services
to third-party owners in order to capitalize on the ship-management expertise of the Cell and the
economies of scale brought by the affiliation with V.Group. However, as noted above, Costamare
Shipping has agreed to pass to us the net profit, if any, it receives from the Cell.

On May 15, 2013, the Company, along with its wholly-owned subsidiary, Costamare Ventures,
entered into the Framework Agreement with York to invest jointly in the acquisition of container
vessels mutually agreed between us and York. The joint venture established by the Framework
Agreement is expected to be each party’s exclusive joint venture for the acquisition of vessels in the
containership industry during the commitment period ending May 15, 2015, unless terminated earlier
in certain circumstances (although we may acquire vessels outside the joint venture where York
rejects a vessel acquisition opportunity). If York decides to participate in a new vessel acquisition,
we will hold a 25% to 49% equity interest in such vessel. As of the same date, Costamare and York
had made equity payments of $231.3 million, which was subsequently decreased to $154.9 million
based on debt financing arrangements. As part of the Framework Agreement, we hold a minority
stake in the existing Joint Venture vessels and expect to hold a stake of 25% to 49% in future Joint
Venture vessels. Thirteen of our containerships, including nine newbuilds and four existing Joint
Venture vessels, have been acquired pursuant to the Framework Agreement. Each vessel is a
cellular containership, meaning it is a dedicated container vessel. As of February 27, 2015, the joint
venture had executed transactions with capital expenditure commitments of approximately $979.8
million. An Amended and Restated Framework Agreement was executed by the parties thereto on
October 1, 2014, which would extend the committment period to May 15, 2020 and increase the
range of our equity interest in each Joint Venture vessel to a range of 25% to 75%. Such Amended
and Restated Framework Agreement will only become effective upon the closing of an initial public
offering by Costamare Partners LP, our wholly-owned subsidiary, of common units representing
limited partnership interests. There is no assurance that the proposed MLP initial public offering will
be consummated. See “Item 4. Information on the Company—B. Business Overview—Our Fleet,
Acquisitions and Newbuild Vessels”.

We have consented to Costamare Shipping providing management services to the Joint Venture
vessels and Costamare Shipping has entered into separate management agreements with each vessel-

69959

owning entity formed under the Framework Agreement pursuant to which Costamare Shipping
provides technical, crew, crew insurance, commercial, general and administrative and insurance
services directly or through Shanghai Costamare or V.Ships Greece as sub-managers, provided that
V.Ships Greece may be directed to enter into a direct management agreement with each vessel-
owning entity and, in respect of the newbuild vessels under construction, into a supervision
agreement with the respective vessel-owning entity. During the year ended December 31, 2014,
Costamare Shipping charged in aggregate to the companies established pursuant to the Framework
Agreement the amount of $1.57 million for services provided in accordance with the respective
management agreements.

For a description of additional related party transactions, see Note 3 to our consolidated

financial statements included elsewhere in this Form 20-F.

Procedures for Review and Approval of Related Party Transactions

Related party transactions, which means transactions in which the Company or one of its
subsidiaries is a participant and any of the Company’s directors, nominees for director, executive
officers, employees, significant stockholders or members of their immediate families (other than
immediate family members of employees who are not executive officers) have a direct or indirect
interest, will be subject to review and approval or ratification by the board of directors and the
audit committee, and will be evaluated pursuant to procedures established by the board of directors.

Where appropriate, such transactions will be subject to the approval of our independent

directors, including appropriate matters arising under our Group Management Agreement including
the amendment and restatement of such agreement and any other agreements with entities
controlled by our chairman and chief executive officer.

C. Interests of Experts and Counsel

Not applicable.

ITEM 8. FINANCIAL INFORMATION

A. Consolidated Statements and Other Financial Information

See “Item 18. Financial Statements” below.

Legal Proceedings

We have not been involved in any legal proceedings that we believe may have a significant
effect on our business, financial position, results of operations or liquidity, and we are not aware of
any proceedings that are pending or threatened that may have a material effect on our business,
financial position, results of operations or liquidity. From time to time, we may be subject to legal
proceedings and claims in the ordinary course of business, principally property damage and personal
injury claims. We expect that these claims would be covered by insurance, subject to customary
deductibles. However, those claims, even if lacking merit, could result in the expenditure of
significant financial and managerial resources.

Preferred Stock Dividend Requirements

Dividends on Preferred Stock are payable quarterly on each of January 15, April 15, July 15

and October 15, as and if declared by our board of directors out of legally available funds for such
purpose. The dividend rate for the Series B Preferred Stock is 7.625% per annum per $25.00 of
liquidation preference per share (equal to $1.90625 per annum per share). The dividend rate for the
Series C Preferred Stock is 8.50% per annum per $25.00 of liquidation preference per share (equal
to $2.125 per annum per share). The dividend rates are not subject to adjustment. We paid
dividends to holders of our Series B Preferred Stock of $0.3654 per share on October 15, 2013 and
$0.476563 per share on January 15, 2014, April 15, 2014, July 15, 2014, October 15, 2014 and

05748

January 15, 2015. We paid dividends to holders of our Series C Preferred Stock of $0.495833 per
share on April 15, 2014 and $0.531250 per share on July 15, 2014, October 15, 2014 and January 15,
2015.

Common Stock Dividend Policy

We paid our first cash dividend since becoming a public company in November 2010 on
February 4, 2011 in an amount of $0.25 per share of common stock. We have subsequently paid
dividends to holders of our common stock of $0.25 per share on May 12, 2011 and August 9, 2011,
and $0.27 per share on November 7, 2011, February 8, 2012, May 9, 2012, August 7, 2012,
November 6, 2012, February 13, 2013, May 8, 2013, August 7, 2013, November 6, 2013 and February
4, 2014, and $0.28 per share on May 13, 2014, August 6, 2014, November 5, 2014 and February 4,
2015. There can be no assurance, however, that we will pay regular quarterly dividends in the future.

We currently intend to pay dividends in amounts that will allow us to retain a portion of our
cash flows to fund vessel, fleet or company acquisitions that we expect to be accretive to earnings,
and cash flows and for debt repayment and dry-docking costs, as determined by management and
our board of directors. Declaration and payment of any dividend is subject to the discretion of our
board of directors and the requirements of Marshall Islands law. The timing and amount of dividend
payments will be dependent upon our earnings, financial condition, cash requirements and
availability, fleet renewal and expansion, restrictions in our credit facilities, the provisions of
Marshall Islands law affecting the payment of distributions to stockholders and other factors. We
cannot assure you that we will be able to pay regular quarterly dividends in the amounts stated
above or elsewhere in this annual report, and dividends may be discontinued at any time at the
discretion of our board of directors. Our ability to pay dividends may be limited by the amount of
cash we can generate from operations following the payment of fees and expenses and the
establishment of any reserves, as well as additional factors unrelated to our profitability. We are a
holding company, and we depend on the ability of our subsidiaries to distribute funds to us in order
to satisfy our financial obligations and to make dividend payments.

Set out below is a table showing the dividends and distributions paid in 2010, 2011, 2012, 2013

and 2014.

Year ended December 31,

2010

2011

2012

2013

2014

Total

Common Stock dividends paid . . . . . . . . . . . . . . . . . . . . . . . .
Preferred Stock dividends paid . . . . . . . . . . . . . . . . . . . . . . . .
Distributions paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$10.0
—
—
$10.0

(Expressed in millions of U.S. dollars)
$61.5
—
—
$61.5

$83.0
10.1
—
$93.1

$80.8
0.7
—
$81.5

$73.1
—
—
$73.1

$308.4
10.8
—
$319.2

B. Significant Changes

See “Item 18. Financial Statements—Note 22. Subsequent Events” below.

ITEM 9. THE OFFER AND LISTING

Trading on the New York Stock Exchange

Our common stock has been trading on the New York Stock Exchange under the symbol
“CMRE” since November 4, 2010. The following table shows the high and low closing sales prices
for our common stock during the indicated periods.

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2010 (November 4, 2010–December 31, 2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
First Quarter 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Quarter 2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
First Quarter 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Quarter 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
August 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
September 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
October 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
November 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
January 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
February 2015 (February 1, 2015 to February 27, 2015) . . . . . . . . . . . . . . . . . . . .

Price Range

High

Low

$14.46
18.11
16.05
18.92
24.36
16.54
17.49
18.46
18.92
21.50
23.50
24.36
21.77
23.65
23.79
21.77
20.87
19.55
17.61
19.60

$10.75
11.39
12.35
14.44
17.61
14.44
15.37
16.73
16.29
17.80
20.60
21.96
17.61
22.42
21.96
17.96
19.85
17.61
16.00
17.22

Our Series B Preferred Stock has been trading on the New York Stock Exchange under the
symbol “CMRE PRB” since August 7, 2013. The following table shows the high and low closing
sales prices for our Series B Preferred Stock during the indicated periods.

2013 (August 7, 2013 to December 31, 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter 2013 (August 7, 2013 to September 30, 2013) . . . . . . . . . . . . . . .
Fourth Quarter 2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
First Quarter 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Quarter 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
August 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
September 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
October 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
November 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
January 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
February 2015 (February 1, 2015 to February 27, 2015) . . . . . . . . . . . . . . . . . . . .

Price Range

High

Low

$24.90
25.93
24.90
24.05
24.43
25.18
25.93
25.69
25.81
25.93
25.69
25.15
25.01
24.93
26.20

$22.20
22.80
23.26
22.20
22.80
24.05
24.88
24.00
25.22
25.24
24.18
24.00
24.00
23.70
24.35

Our Series C Preferred Stock has trading on the New York Stock Exchange under the symbol

“CMRE PRC” since January 22, 2014. The following table shows the high and low closing sales
prices for our Series C Preferred Stock during the indicated periods.

100

37705

2014 (January 22, 2014 to January 31, 2014). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
First Quarter 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Quarter 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
August 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
September 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
October 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
November 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
January 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
February 2015 (February 1, 2015 to February 27, 2015) . . . . . . . . . . . . . . . . . . . .

Price Range

High

Low

$26.59
25.12
26.27
26.59
26.30
26.56
26.26
26.30
26.05
25.66
26.29
27.00

$24.55
24.55
25.11
25.85
24.85
25.96
25.85
24.85
25.25
25.05
25.24
25.95

ITEM 10. ADDITIONAL INFORMATION

A. Share Capital

Under our articles of incorporation, our authorized capital stock consists of 1,000,000,000 shares
of common stock, par value $0.0001 per share, of which, as of December 31, 2014, 74,800,000 shares
were issued and outstanding, and 100,000,000 shares of preferred stock, par value $0.0001 per share,
issuable in series of which, as of December 31, 2014: no shares of Series A Preferred Stock were
issued and outstanding, although 10,000,000 shares have been designated Series A Participating
Preferred Stock in connection with our adoption of a stockholder rights plan as described below
under “—Stockholder Rights Plan”; 2,000,000 shares of Series B Preferred Stock were issued and
outstanding; and 4,000,000 shares of Series C Preferred Stock were issued and outstanding. All of
our shares of stock are in registered form.

Please see Note 15 to our financial statements included at the end of this annual report for a

discussion of the history of our share capital.

B. Memorandum and Articles of Association

Our purpose, as stated in our articles of incorporation, is to engage in any lawful act or activity

for which corporations may now or hereafter be organized under the BCA. Our articles of
incorporation and bylaws do not impose any limitations on the ownership rights of our stockholders.

Under our bylaws, annual stockholder meetings will be held at a time and place selected by our

board of directors. The meetings may be held inside or outside of the Marshall Islands. Special
meetings may be called by the chairman of the board of directors, the chief executive officer or a
majority of the board of directors. Our board of directors may set a record date between 15 and 60
days before the date of any meeting to determine the stockholders that will be eligible to receive
notice and vote at the meeting. Our bylaws permit stockholder action by unanimous written consent.

We are registered in the Republic of the Marshall Islands at The Trust Company of the
Marshall Islands, Inc., Registrar of Corporation for non-resident corporations, under registration
number 29593.

Directors

Under our bylaws, our directors are elected by a plurality of the votes cast at each annual

meeting of the stockholders by the holders of shares entitled to vote in the election. There is no
provision for cumulative voting.

Pursuant to the provisions of our bylaws, the board of directors may change the number of
directors to not less than three, nor more than 15, by a vote of a majority of the entire board. Each
director shall be elected to serve until the third succeeding annual meeting of stockholders and until
his or her successor shall have been duly elected and qualified, except in the event of death,

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resignation or removal. A vacancy on the board created by death, resignation, removal (which may
only be for cause), or failure of the stockholders to elect the entire class of directors to be elected
at any election of directors or for any other reason may be filled only by an affirmative vote of a
majority of the remaining directors then in office, even if less than a quorum, at any special meeting
called for that purpose or at any regular meeting of the board of directors. The board of directors
has the authority to fix the amounts which shall be payable to the non-employee members of our
board of directors for attendance at any meeting or for services rendered to us.

Common Stock

Each outstanding share of common stock entitles the holder to one vote on all matters

submitted to a vote of stockholders. Subject to preferences that may be applicable to any
outstanding shares of preferred stock, holders of shares of common stock are entitled to receive
ratably all dividends, if any, declared by our board of directors out of funds legally available for
dividends. Upon our dissolution or liquidation or the sale of all or substantially all of our assets,
after payment in full of all amounts required to be paid to creditors and to the holders of preferred
stock having liquidation preferences, if any, the holders of our common stock will be entitled to
receive pro rata our remaining assets available for distribution. Holders of common stock do not
have conversion, redemption or preemptive rights to subscribe to any of our securities. All
outstanding shares of common stock are fully paid and non-assessable. The rights, preferences and
privileges of holders of common stock are subject to the rights of the holders of any shares of
preferred stock which we may issue in the future. Our common stock is not subject to any sinking
fund provisions and no holder of any shares will be required to make additional contributions of
capital with respect to our shares in the future. There are no provisions in our articles of
incorporation or bylaws discriminating against a stockholder because of his or her ownership of a
particular number of shares.

We are not aware of any limitations on the rights to own our common stock, including rights of
non-resident or foreign stockholders to hold or exercise voting rights on our common stock, imposed
by foreign law or by our articles of incorporation or bylaws.

Preferred Stock

Our articles of incorporation authorize our board of directors, without any further vote or
action by our stockholders, to issue up to 100,000,000 shares of blank check preferred stock, of
which 10,000,000 shares have been designated Series A Participating Preferred Stock in connection
with our adoption of a stockholder rights plan as described below under “—Stockholder Rights
Plan”, 2,000,000 shares have been designated Series B Cumulative Redeemable Perpetual Preferred
Stock and 4,000,000 shares have been designated Series C Cumulative Redeemable Perpetual
Preferred Stock, and to determine, with respect to any series of preferred stock established by our
board of directors, the terms and rights of that series, including:

• the designation of the series;
• the number of shares of the series;
• the preferences and relative, participating, option or other special rights, if any, and any

qualifications, limitations or restrictions of such series; and

• the voting rights, if any, of the holders of the series.

Stockholder Rights Plan

Each share of our common stock includes a right that entitles the holder to purchase from us a

unit consisting of one-thousandth of a share of our Series A participating preferred stock at a
purchase price of $25.00 per unit, subject to specified adjustments. The rights are issued pursuant to
a stockholder rights agreement between us and American Stock Transfer & Trust Company, as
rights agent. Until a right is exercised, the holder of a right will have no rights to vote or receive
dividends or any other stockholder rights.

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The rights may have anti-takeover effects. The rights will cause substantial dilution to any
person or group that attempts to acquire us without the approval of our board of directors. As a
result, the overall effect of the rights may be to render more difficult or discourage any attempt to
acquire us. Because our board of directors can approve a redemption of the rights for a permitted
offer, the rights should not interfere with a merger or other business combination approved by our
board of directors. The adoption of the rights agreement was approved by our existing stockholders
prior to our initial public offering in November 2010.

We have summarized the material terms and conditions of the rights agreement and the rights

below. For a complete description of the rights, we encourage you to read the stockholder rights
agreement, which we have filed as an exhibit to this annual report.

Detachment of rights

The rights are attached to all certificates representing our outstanding common stock and will
attach to all common stock certificates we issue prior to the rights distribution date that we describe
below. The rights are not exercisable until after the rights distribution date and will expire at the
close of business on the tenth anniversary date of the adoption of the rights plan, unless we redeem
or exchange them earlier as described below. The rights will separate from the common stock and a
rights distribution date will occur, subject to specified exceptions, on the earlier of the following two
dates:

• 10 days following the first public announcement that a person or group of affiliated or

associated persons or an “acquiring person” has acquired or obtained the right to acquire
beneficial ownership of 15% or more of our outstanding common stock; or

• 10 business days following the start of a tender or exchange offer that would result, if closed,

in a person becoming an “acquiring person”.

Our controlling stockholders are excluded from the definition of “acquiring person” for

purposes of the rights, and therefore their ownership or future share acquisitions cannot trigger the
rights. Specified “inadvertent” owners that would otherwise become an acquiring person, including
those who would have this designation as a result of repurchases of common stock by us, will not
become acquiring persons as a result of those transactions.

Our board of directors may defer the rights distribution date in some circumstances, and some

inadvertent acquisitions will not result in a person becoming an acquiring person if the person
promptly divests itself of a sufficient number of shares of common stock.

Until the rights distribution date:
• our common stock certificates will evidence the rights, and the rights will be transferable only

with those certificates; and

• any new shares of common stock will be issued with rights, and new certificates will contain a

notation incorporating the rights agreement by reference.

As soon as practicable after the rights distribution date, the rights agent will mail certificates

representing the rights to holders of record of common stock at the close of business on that date.
As of the rights distribution date, only separate rights certificates will represent the rights.

We will not issue rights with any shares of common stock we issue after the rights distribution

date, except as our board of directors may otherwise determine.

Flip-in event

A “flip-in event” will occur under the rights agreement when a person becomes an acquiring
person. If a flip-in event occurs and we do not redeem the rights as described under the heading
“—Redemption of rights” below, each right, other than any right that has become void, as described
below, will become exercisable at the time it is no longer redeemable for the number of shares of
common stock, or, in some cases, cash, property or other of our securities, having a current market
price equal to two times the exercise price of such right.

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If a flip-in event occurs, all rights that then are, or in some circumstances that were, beneficially

owned by or transferred to an acquiring person or specified related parties will become void in the
circumstances which the rights agreement specifies.

Flip-over event

A “flip-over event” will occur under the rights agreement when, at any time after a person has

become an acquiring person:

• we are acquired in a merger or other business combination transaction; or
• 50% or more of our assets, cash flows or earning power is sold or transferred.
If a flip-over event occurs, each holder of a right, other than any right that has become void as
we describe under the heading “—Flip-in event” above, will have the right to receive the number of
shares of common stock of the acquiring company having a current market price equal to two times
the exercise price of such right.

Antidilution

The number of outstanding rights associated with our common stock is subject to adjustment for

any stock split, stock dividend or subdivision, combination or reclassification of our common stock
occurring prior to the rights distribution date. With some exceptions, the rights agreement does not
require us to adjust the exercise price of the rights until cumulative adjustments amount to at least
1% of the exercise price. It also does not require us to issue fractional shares of our preferred stock
that are not integral multiples of one one-hundredth of a share, and, instead, we may make a cash
adjustment based on the market price of the common stock on the last trading date prior to the
date of exercise. The rights agreement reserves us the right to require, prior to the occurrence of
any flip-in event or flip-over event that, on any exercise of rights, a number of rights must be
exercised so that we will issue only whole shares of stock.

Redemption of rights

At any time until 10 days after the date on which the occurrence of a flip-in event is first
publicly announced, we may redeem the rights in whole, but not in part, at a redemption price of
$0.01 per right. The redemption price is subject to adjustment for any stock split, stock dividend or
similar transaction occurring before the date of redemption. At our option, we may pay that
redemption price in cash, shares of common stock or any other consideration our board of directors
may select. The rights are not exercisable after a flip-in event until they are no longer redeemable.
If our board of directors timely orders the redemption of the rights, the rights will terminate on the
effectiveness of that action.

Exchange of rights

We may, at our option, exchange the rights (other than rights owned by an acquiring person or

an affiliate or an associate of an acquiring person, which have become void), in whole or in part.
The exchange must be at an exchange ratio of one share of common stock per right, subject to
specified adjustments at any time after the occurrence of a flip-in event and prior to:

• any person other than our existing stockholder becoming the beneficial owner of common
stock with voting power equal to 50% or more of the total voting power of all shares of
common stock entitled to vote in the election of directors; or

• the occurrence of a flip-over event.

Amendment of terms of rights

While the rights are outstanding, we may amend the provisions of the rights agreement only as

follows:

• to cure any ambiguity, omission, defect or inconsistency;

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• to make changes that do not adversely affect the interests of holders of rights, excluding the

interests of any acquiring person; or

• to shorten or lengthen any time period under the rights agreement, except that we cannot
change the time period when rights may be redeemed or lengthen any time period, unless
such lengthening protects, enhances or clarifies the benefits of holders of rights other than an
acquiring person.

At any time when no rights are outstanding, we may amend any of the provisions of the rights

agreement, other than decreasing the redemption price.

Dissenters’ Rights of Appraisal and Payment

Under the BCA, our stockholders have the right to dissent from various corporate actions,
including any merger or sale of all, or substantially all, of our assets not made in the usual course of
our business, and receive payment of the fair value of their shares. In the event of any amendment
of our articles of incorporation, a stockholder also has the right to dissent and receive payment for
his or her shares if the amendment alters certain rights in respect of those shares. The dissenting
stockholder must follow the procedures set forth in the BCA to receive payment. In the event that
we and any dissenting stockholder fail to agree on a price for the shares, the BCA procedures
involve, among other things, the institution of proceedings in the high court of the Republic of the
Marshall Islands or in any appropriate court in any jurisdiction in which our shares are primarily
traded on a local or national securities exchange. The value of the shares of the dissenting
stockholder is fixed by the court after reference, if the court so elects, to the recommendations of a
court-appointed appraiser.

Stockholders’ Derivative Actions

Under the BCA, any of our stockholders may bring an action in our name to procure a

judgment in our favor, also known as a derivative action, provided that the stockholder bringing the
action is a holder of common stock both at the time the derivative action is commenced and at the
time of the transaction to which the action relates.

Limitations on Liability and Indemnification of Officers and Directors

The BCA authorizes corporations to limit or eliminate the personal liability of directors and

officers to corporations and their stockholders for monetary damages for breaches of directors’
fiduciary duties. Our articles of incorporation include a provision that eliminates the personal
liability of directors for monetary damages for actions taken as a director to the fullest extent
permitted by law.

Our bylaws provide that we must indemnify our directors and officers to the fullest extent

authorized by law. We are also expressly authorized to advance certain expenses (including
attorneys’ fees and disbursements and court costs) to our directors and officers and carry directors’
and officers’ insurance providing indemnification for our directors, officers and certain employees for
some liabilities. We believe that these indemnification provisions and insurance are useful to attract
and retain qualified directors and executive officers.

The limitation of liability and indemnification provisions in our articles of incorporation and
bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their
fiduciary duty. These provisions may also have the effect of reducing the likelihood of derivative
litigation against directors and officers, even though such an action, if successful, might otherwise
benefit us and our stockholders. In addition, stockholders’ investments may be adversely affected to
the extent we pay the costs of settlement and damage awards against directors and officers pursuant
to these indemnification provisions.

There is currently no pending material litigation or proceeding involving any of our directors,

officers or employees for which indemnification is sought.

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Anti-Takeover Effect of Certain Provisions of Our Articles of Incorporation and Bylaws

Several provisions of our articles of incorporation and bylaws, which are summarized in the
following paragraphs, may have anti-takeover effects. These provisions are intended to avoid costly
takeover battles, lessen our vulnerability to a hostile change of control and enhance the ability of
our board of directors to maximize stockholder value in connection with any unsolicited offer to
acquire us. However, these anti-takeover provisions could also delay, defer or prevent (a) the merger
or acquisition of our company by means of a tender offer, a proxy contest or otherwise that a
stockholder might consider in its best interest, including attempts that may result in a premium over
the market price for the shares held by the stockholders, and (b) the removal of incumbent officers
and directors.

Blank check preferred stock

Under the terms of our articles of incorporation, our board of directors has authority, without

any further vote or action by our stockholders, to issue up to 100,000,000 shares of blank check
preferred stock, of which 10,000,000 shares have been designated Series A Participating Preferred
Stock, in connection with our adoption of a stockholder rights plan as described above under
“—Stockholder Rights Plan”, 2,000,000 shares have been designated Series B Cumulative
Redeemable Perpetual Preferred Stock and 4,000,000 shares have been designated Series C
Cumulative Redeemable Perpetual Preferred Stock. Our board of directors may issue shares of
preferred stock on terms calculated to discourage, delay or prevent a change of control of our
company or the removal of our management.

Classified board of directors

Our articles of incorporation provide for a board of directors serving staggered, three-year
terms. Approximately one-third of our board of directors will be elected each year. This classified
board provision could discourage a third party from making a tender offer for our shares or
attempting to obtain control of our company. It could also delay stockholders who do not agree with
the policies of the board of directors from removing a majority of the board of directors for two
years.

Election and removal of directors

Our articles of incorporation prohibit cumulative voting in the election of directors. Our bylaws

require parties other than the board of directors to give advance written notice of nominations for
the election of directors. Our articles of incorporation and bylaws also provide that our directors
may be removed only for cause. These provisions may discourage, delay or prevent the removal of
incumbent officers and directors.

Holders of the Preferred Stock generally have no voting rights except (1) in respect of

amendments to the Articles of Incorporation which would adversely alter the preferences, powers or
rights of the Preferred Stock or (2) in the event that the Company proposes to issue any parity
stock if the cumulative dividends payable on outstanding Preferred Stock are in arrears or any
senior stock. However, if and whenever dividends payable on the Preferred Stock are in arrears for
six or more quarterly periods, whether or not consecutive, holders of Preferred Stock (for this
purpose the Series B and Series C Preferred Stock will vote together as a single class with all other
classes or series of parity stock upon which like voting rights have been conferred and are
exercisable) will be entitled to elect one additional director to serve on our board of directors, and
the size of our board of directors will be increased as needed to accommodate such change (unless
the size of our board of directors already has been increased by reason of the election of a director
by holders of parity stock upon which like voting rights have been conferred and with which the
Preferred Stock voted as a class for the election of such director). The right of such holders of
Preferred Stock to elect a member of our board of directors will continue until such time as all
accumulated and unpaid dividends on the Preferred Stock have been paid in full.

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Calling of special meeting of stockholders

Our articles of incorporation and bylaws provide that special meetings of our stockholders may
only be called by our chairman of the board of directors, chief executive officer or by either, at the
request of a majority of our board of directors.

Advance notice requirements for stockholder proposals and director nominations

Our bylaws provide that stockholders seeking to nominate candidates for election as directors or

to bring business before an annual meeting of stockholders must provide timely notice of their
proposal in writing to the corporate secretary.

Generally, to be timely, a stockholder’s notice must be received at our offices not less than 90

days nor more than 120 days prior to the first anniversary date of the previous year’s annual
meeting. Our bylaws also specify requirements as to the form and content of a stockholder’s notice.
These provisions may impede stockholders’ ability to bring matters before an annual meeting of
stockholders or to make nominations for directors at an annual meeting of stockholders.

C. Material Contracts

The following is a summary of each material contract that we have entered into outside the

ordinary course of business during the two-year period immediately preceding the date of this
annual report. Such summaries are not intended to be complete and reference is made to the
contracts themselves, which are exhibits to this annual report.

(a) Form of Ship Management Agreement between Costamare Shipping Company S.A. and

Shanghai Costamare Ship Management Co., Ltd., please see “Item 7. Major Shareholders
and Related Party Transactions—B. Related Party Transactions—Management Agreement”.

(b) Restrictive Covenant Agreement, dated November 3, 2010, between Costamare Inc. and
Konstantinos Konstantakopoulos, please see “Item 7. Major Shareholders and Related
Party Transactions—Related Party Transactions—Restrictive Covenant Agreements”.

American Stock Transfer & Trust Company, LLC, as Rights Agent. For a description of
the Stockholder Rights Agreement, please see “Item 10. Additional Information—B.
Memorandum and Articles of Association—Stockholder Rights Plan”.

(d) Registration Rights Agreement, dated November 3, 2010, between Costamare Inc. and the

Stockholders named therein. For a description of the Registration Rights Agreement, please
see “Item 7. Major Shareholders and Related Party Transactions—B. Related Party
Transactions—Registration Rights Agreement”.

(e) Facility Agreement, dated July 22, 2008 (the “Facility Agreement”) relating to a loan

facility of US$1,000,000,000 comprising (i) a term loan facility of up to US$700,000,000 and
(ii) a revolving credit facility of up to US$300,000,000 among the lenders and financial
institutions set out on Schedule I thereto, Commerzbank AG as successor to Deutsche
Schiffsbank Aktiengessellschaft, as joint arranger, agent, swap bank and security agent,
Bayerische Hypo-Und Vereinsbank Aktiengessellschaft, as joint arranger, swap bank and
account bank, HSH Nordbank AG, as swap bank, and Costamare Inc., as borrower, please
see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital
Resources—Credit Facilities”.

(f) First Supplemental Agreement, dated April 23, 2010 in relation to the Facility Agreement,
please see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and
Capital Resources—Credit Facilities”.

(g) Second Supplemental Agreement, dated June 22, 2010 in relation to the Facility

Agreement, please see “Item 5. Operating and Financial Review and Prospects—B.
Liquidity and Capital Resources—Credit Facilities”.

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(h) Third Supplemental Agreement, dated September 6, 2011 in relation to the Facility
Agreement, please see “Item 5. Operating and Financial Review and Prospects—B.
Liquidity and Capital Resources—Credit Facilities”.

(i) Trademark License Agreement, between the Company and Costamare Shipping Company
S.A., please see “Item 7. Major Shareholders and Related Party Transactions—B. Related
Party Transactions—Trademark License Agreement”.

(j) Restrictive Covenant Agreement, dated July 24, 2012, between Costamare Inc. and

Konstantinos Zacharatos, please see “Item 7. Major Shareholders and Related Party
Transactions—B. Related Party Transactions—Restrictive Covenant Agreements”.

(k) Fourth Supplemental Agreement, dated December 17, 2012 in relation to the Facility
Agreement, please see “Item 5. Operating and Financial Review and Prospects—B.
Liquidity and Capital Resources—Credit Facilities”.

(l) Form of Ship Management Agreement between Costamare Shipping Company S.A. and
V.Ships Greece Ltd., please see “Item 4. Information on the Company—B. Business
Overview—Management of Our Fleet”.

(m) Agreement Relating to Group Management Agreement and Ship Management Agreements

between Costamare Shipping Company S.A. and Costamare Inc., dated January 22, 2013,
please see “Item 4. Information on the Company—B. Business Overview—Management of
Our Fleet”.

(n) Framework Deed, dated May 15, 2013, among Sparrow Holdings, L.P., York Capital

Management Global Advisors LLC, Costamare Inc. and Costamare Ventures Inc., please
see “Item 4. Information on the Company—B. Business Overview—Our Fleet, Acquisitions
and Newbuild Vessels—Framework Agreement”.

(o) Fifth Supplemental Agreement dated May 28, 2013 in relation to the Facility Agreement,
please see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and
Capital Resources—Credit Facilities”.

(p) Sixth Supplemental Agreement dated August 30, 2013 in relation to the Facility

Agreement, please see “Item 5. Operating and Financial Review and Prospects—B.
Liquidity and Capital Resources—Credit Facilities”.

(q) Seventh Supplemental Agreement dated July 2, 2014 in relation to the Facility Agreement,
please see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and
Capital Resources—Credit Facilities”.

(r) Amended and Restated Management Agreement, dated March 3, 2015, between Costamare
Shipping Company S.A. and Costamare Inc. For a description of the Group Management
Agreement, please see “Item 7. Major Shareholders and Related Party Transactions—B.
Related Party Transactions—Management Agreement”.

D. Exchange Controls and Other Limitations Affecting Security Holders

Under Marshall Islands law, there are currently no restrictions on the export or import of
capital, including foreign exchange controls or restrictions that affect the remittance of dividends,
interest or other payments to non-resident holders of our common stock.

E. Tax Considerations

Marshall Islands Tax Considerations

We are a non-resident domestic Marshall Islands corporation. Because we do not, and we do

not expect that we will, conduct business or operations in the Marshall Islands, under current
Marshall Islands law we are not subject to tax on income or capital gains and our stockholders (so
long as they are not citizens or residents of the Marshall Islands) will not be subject to Marshall
Islands taxation or withholding on dividends and other distributions (including upon a return of
capital) we make to our stockholders. In addition, so long as our stockholders are not citizens or

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residents of the Marshall Islands, our stockholders will not be subject to Marshall Islands stamp,
capital gains or other taxes on the purchase, holding or disposition of our common stock or
Preferred Stock, and our stockholders will not be required by the Republic of the Marshall Islands
to file a tax return relating to our common stock or Preferred Stock.

Each stockholder is urged to consult their tax counselor or other advisor with regard to the
legal and tax consequences, under the laws of pertinent jurisdictions, including the Marshall Islands,
of their investment in us. Further, it is the responsibility of each stockholder to file all state, local
and non-U.S., as well as U.S. Federal tax returns that may be required of them.

Liberian Tax Considerations

The Republic of Liberia enacted a new income tax act effective as of January 1, 2001 (the
“New Act”). In contrast to the income tax law previously in effect since 1977, the New Act does not
distinguish between the taxation of “non-resident” Liberian corporations, such as our Liberian
subsidiaries, which conduct no business in Liberia and were wholly exempt from taxation under the
prior law, and “resident” Liberian corporations, which conduct business in Liberia and are (and were
under the prior law) subject to taxation.

The New Act was amended by the Consolidated Tax Amendments Act of 2011, which was
published and became effective on November 1, 2011 (the “Amended Act”). The Amended Act
specifically exempts from taxation non-resident Liberian corporations such as our Liberian
subsidiaries that engage in international shipping (and are not engaged in shipping exclusively within
Liberia) and that do not engage in other business or activities in Liberia other than those specifically
enumerated in the Amended Act. In addition, the Amended Act made such exemption from
taxation retroactive to the effective date of the New Act.

If, however, our Liberian subsidiaries were subject to Liberian income tax under the Amended

Act, they would be subject to tax at a rate of 35% on their worldwide income. As a result, their,
and subsequently our, net income and cash flow would be materially reduced. In addition, as the
ultimate stockholder of the Liberian subsidiaries, we would be subject to Liberian withholding tax
on dividends paid by our Liberian subsidiaries at rates ranging from 15% to 20%.

United States Federal Income Tax Considerations

The following discussion of U.S. Federal income tax matters is based on the Code, judicial
decisions, administrative pronouncements, and existing and proposed regulations issued by the U.S.
Department of the Treasury, all of which are subject to change, possibly with retroactive effect. This
discussion does not address any U.S. state or local tax matters. You are encouraged to consult your
own tax advisor regarding the particular United States Federal, state and local and foreign income
and other tax consequences of acquiring, owning and disposing of our common stock or Preferred
Stock that may be applicable to you.

Taxation of Our Shipping Income

Subject to the discussion of “effectively connected” income below, unless exempt from U.S.

Federal income tax under the rules contained in Section 883 of the Code and the Treasury
Regulations promulgated thereunder, a non-U.S. corporation is, under the rules of Section 887 of the
Code, subject to a 4% U.S. Federal income tax in respect of its U.S. source gross transportation
income (without the allowance for deductions).

For this purpose, U.S. source gross transportation income includes 50% of the shipping income
that is attributable to transportation that begins or ends (but that does not both begin and end) in
the United States. Shipping income attributable to transportation exclusively between non-U.S. ports
is generally not subject to any U.S. Federal income tax.

“Shipping income” means income that is derived from:

(a) the use of vessels;

(b) the hiring or leasing of vessels for use on a time, operating or bareboat charter basis;

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(c) the participation in a pool, partnership, strategic alliance, joint operating agreement or other
joint venture it directly or indirectly owns or participates in that generates such income; or

(d) the performance of services directly related to those uses.

Under Section 883 of the Code and the Treasury Regulations promulgated thereunder, a non-

U.S. corporation will be exempt from U.S. Federal income tax on its U.S. source gross
transportation income if:

(a) it is organized in a foreign country (or the “country of organization”) that grants an

“equivalent exemption” to U.S. corporations; and

(b) either

(i) more than 50% of the value of its stock is owned, directly or indirectly, by individuals
who are “residents” of our country of organization or of another foreign country that
grants an “equivalent exemption” to U.S. corporations; or

(ii) its stock is “primarily and regularly traded on an established securities market” in its
country of organization, in another country that grants an “equivalent exemption” to
U.S. corporations, or in the United States.

We believe that we have qualified and currently intend to continue to qualify for this statutory
tax exemption for the foreseeable future. However, no assurance can be given that this will be the
case in the future. If we or our subsidiaries are not entitled to this exemption under Section 883 for
any taxable year, we or our subsidiaries would be subject for those years to a 4% U.S. Federal
income tax on our U.S. source gross transportation income, subject to the discussion of “effectively
connected” income below. Since we expect that no more than 50% of our gross shipping income
would be treated as U.S. source gross transportation income, we expect that the effective rate of
U.S. Federal income tax on our gross transportation income would not exceed 2%. Many of our
time charters contain provisions pursuant to which charterers undertake to reimburse us for the 4%
gross basis tax on our U.S. source gross transportation income.

To the extent exemption under Section 883 is unavailable, our U.S. source gross transportation
income that is considered to be “effectively connected” with the conduct of a U.S. trade or business
would be subject to the U.S. corporate income tax currently imposed at rates of up to 35% (net of
applicable deductions). In addition, we may be subject to the 30% U.S. “branch profits” tax on
earnings effectively connected with the conduct of such trade or business, as determined after
allowance for certain adjustments, and on certain interest paid or deemed paid attributable to the
conduct of our U.S. trade or business.

Our U.S. source gross transportation income would be considered “effectively connected” with

the conduct of a U.S. trade or business only if:

(a) we had, or were considered to have, a fixed place of business in the United States involved

in the earning of U.S. source gross transportation income; and

(b) substantially all of our U.S. source gross transportation income was attributable to regularly

scheduled transportation, such as the operation of a vessel that followed a published
schedule with repeated sailings at regular intervals between the same points for voyages that
begin or end in the United States.

We believe that we will not meet these conditions because we will not have, or permit

circumstances that would result in us having, such a fixed place of business in the United States or
any vessel sailing to or from the United States on a regularly scheduled basis.

In addition, income attributable to transportation that both begins and ends in the United States

is not subject to the tax rules described above. Such income is subject to either a 30% gross-basis
tax or to U.S. corporate income tax on net income at rates of up to 35% (and the branch profits tax
discussed above). Although there can be no assurance, we do not expect to engage in transportation
that produces shipping income of this type.

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Taxation of Gain on Sale of Assets

Regardless of whether we qualify for the exemption under Section 883 of the Code, we will not

be subject to U.S. Federal income taxation with respect to gain realized on a sale of a vessel,
provided the sale is considered to occur outside of the United States (as determined under U.S. tax
principles). In general, a sale of a vessel will be considered to occur outside of the United States for
this purpose if title to the vessel (and risk of loss with respect to the vessel) passes to the buyer
outside of the United States. We expect that any sale of a vessel will be so structured that it will be
considered to occur outside of the United States.

Taxation of United States Holders

You are a “U.S. holder” if you are a beneficial owner of our common stock or our Preferred
Stock and you are a U.S. citizen or resident, a U.S. corporation (or other U.S. entity taxable as a
corporation), an estate the income of which is subject to U.S. Federal income taxation regardless of
its source, or a trust if a court within the United States is able to exercise primary jurisdiction over
the administration of the trust and one or more U.S. persons have the authority to control all
substantial decisions of that trust.

If a partnership holds our common stock or Preferred Stock, the tax treatment of a partner will

generally depend upon the status of the partner and upon the activities of the partnership. If you
are a partner in a partnership holding our common stock, you should consult your tax advisor.

Distributions on Our Common Stock and Preferred Stock

Subject to the discussion of PFICs below, any distributions with respect to our common stock or

Preferred Stock that you receive from us will generally constitute dividends, which may be taxable
as ordinary income or “qualified dividend income” as described below, to the extent of our current
or accumulated earnings and profits (as determined under U.S. tax principles). Distributions in
excess of our earnings and profits will be treated first as a nontaxable return of capital to the extent
of your tax basis in our common stock or Preferred Stock (on a dollar-for-dollar basis) and
thereafter as capital gain.

Because we are not a U.S. corporation, if you are a U.S. corporation (or a U.S. entity taxable
as a corporation), you will not be entitled to claim a dividends-received deduction with respect to
any distributions you receive from us.

Dividends paid with respect to our common stock or Preferred Stock will generally be treated

as “passive category income” for purposes of computing allowable foreign tax credits for U.S.
foreign tax credit purposes.

If you are an individual, trust or estate, dividends you receive from us should be treated as

“qualified dividend income”, provided that:

(a) the common stock or Preferred Stock is readily tradable on an established securities market

in the United States (such as the New York Stock Exchange);

(b) we are not a PFIC for the taxable year during which the dividend is paid or the

immediately preceding taxable year (see the discussion below under “—PFIC Status”);

(c) you own our common stock or our Preferred Stock for more than 60 days in the 121-day
period beginning 60 days before the date on which the common stock or Preferred Stock
becomes ex-dividend;

(d) you are not under an obligation to make related payments with respect to positions in

substantially similar or related property; and

(e) certain other conditions are met.

Qualified dividend income is taxed at a preferential maximum rate of 15% or 20%, depending

on the income level of the taxpayer.

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Special rules may apply to any “extraordinary dividend”. Generally, an extraordinary dividend is

a dividend in an amount that is equal to (or in excess of) 10% of your adjusted tax basis (or fair
market value in certain circumstances) in a share of our common stock (5% in the case of Preferred
Stock). If we pay an extraordinary dividend on our common stock or Preferred Stock that is treated
as qualified dividend income and if you are an individual, estate or trust, then any loss derived by
you from a subsequent sale or exchange of such common stock or Preferred Stock will be treated as
long-term capital loss to the extent of such dividend.

There is no assurance that dividends you receive from us will be eligible for the preferential
rates applicable to qualified dividend income. Dividends you receive from us that are not eligible for
the preferential rates will be taxed at the ordinary income rates.

In addition, even if we are not a PFIC, under proposed legislation, dividends of a corporation
incorporated in a country without a “comprehensive income tax system” paid to U.S. holders who
are individuals, estates or trusts would not be eligible for the preferential tax rates. Although the
term “comprehensive income tax system” is not defined in the proposed legislation, we believe this
rule would apply to us because we are incorporated in the Marshall Islands. As of the date hereof,
it is not possible to predict with certainty whether or in what form this proposed legislation will be
enacted.

Sale, Exchange or Other Disposition of Common Stock and Preferred Stock

Provided that we are not a PFIC for any taxable year, you generally will recognize taxable gain

or loss upon a sale, exchange or other disposition of our common stock or Preferred Stock in an
amount equal to the difference between the amount realized by you from such sale, exchange or
other disposition and your tax basis in such stock. Such gain or loss will be treated as long-term
capital gain or loss if your holding period is greater than one year at the time of the sale, exchange
or other disposition. Such capital gain or loss will generally be treated as U.S. source income or loss,
as applicable, for U.S. foreign tax credit purposes. Your ability to deduct capital losses against
ordinary income is subject to limitations.

Unearned Income Medicare Contribution Tax

Each U.S. holder who is an individual, estate or trust will generally be subject to a 3.8%

Medicare tax on the lesser of (i) such U.S. holder’s “net investment income” for the relevant taxable
year, and (ii) the excess of such U.S. holder’s modified adjusted gross income for the taxable year
over a certain threshold (which in the case of individuals will be between $125,000 and $250,000,
depending on the individual’s circumstances). For this purpose, net investment income generally
includes dividends on and capital gains from the sale, exchange or other disposition of our common
stock or Preferred Stock, subject to certain exceptions. You are encouraged to consult your own tax
advisor regarding the applicability of the Medicare tax to your income and gains from your
ownership of our common stock or Preferred Stock.

PFIC Status

Special U.S. Federal income tax rules apply to you if you hold stock in a non-U.S. corporation

that is classified as a PFIC for U.S. Federal income tax purposes. In general, we will be treated as a
PFIC in any taxable year in which, after applying certain look-through rules, either:

(a) at least 75% of our gross income for such taxable year consists of “passive income” (e.g.,
dividends, interest, capital gains and rents derived other than in the active conduct of a
rental business); or

(b) at least 50% of the average value of our assets during such taxable year consists of “passive

assets” (i.e., assets that produce, or are held for the production of, passive income).

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For purposes of determining whether we are a PFIC, we will be treated as earning and owning
our proportionate share of the income and assets, respectively, of any of our subsidiary corporations
in which we own at least 25% of the value of the subsidiary’s stock. Income we earned, or are
deemed to earn, in connection with the performance of services will not constitute passive income.
By contrast, rental income will generally constitute passive income (unless we are treated under
certain special rules as deriving our rental income in the active conduct of a trade or business).

There are legal uncertainties involved in determining whether the income derived from time
chartering activities constitutes rental income or income derived from the performance of services. In
Tidewater Inc. v. United States, 565 F.2d 299 (5th Cir. 2009), the Fifth Circuit held that income
derived from certain time chartering activities should be treated as rental income rather than
services income for purposes of a foreign sales corporation provision of the Code. In a recent
published guidance, however, the IRS states that it disagrees with the holding in Tidewater, and
specifies that time charters should be treated as service contracts. Since we have chartered all our
vessels to unrelated charterers on the basis of time charters and since we expect to continue to do
so, we believe that we are not now and have never been a PFIC. Our counsel, Cravath, Swaine &
Moore LLP, has provided us with an opinion that we should not be a PFIC based on certain
representations we made to them, including the representation that Costamare Shipping, which
manages the Company’s vessels, is not related to any charterer of the vessels, and of certain
assumptions made by them, including the assumption that time charters of the Company will be
arranged in a manner substantially similar to the terms of its existing time charters. However, we
have not sought, and we do not expect to seek, an IRS ruling on this matter. As a result, the IRS
or a court could disagree with our position. No assurance can be given that this result will not occur.
In addition, although we intend to conduct our affairs in a manner to avoid, to the extent possible,
being classified as a PFIC with respect to any taxable year, we cannot assure you that the nature of
our operations will not change in the future, or that we can avoid PFIC status in the future.

As discussed below, if we were to be treated as a PFIC for any taxable year, you generally
would be subject to one of three different U.S. Federal income tax regimes, depending on whether
or not you make certain elections. Additionally, starting in 2013, for each year during which you
own our common stock, we are a PFIC and the total value of all PFIC stock that you directly or
indirectly own exceeds certain thresholds, you will be required to file IRS Form 8621 with your U.S.
Federal income tax return to report your ownership of our common stock.

The PFIC rules are complex, and you are encouraged to consult your own tax advisor regarding

the PFIC rules, including the annual PFIC reporting requirement.

Taxation of U.S. Holders That Make a Timely QEF Election

If we were a PFIC and if you make a timely election to treat us as a “Qualifying Electing
Fund” for U.S. tax purposes (a “QEF Election”), you would be required to report each year your
pro rata share of our ordinary earnings and our net capital gain for our taxable year that ends with
or within your taxable year, regardless of whether we make any distributions to you. Such income
inclusions would not be eligible for the preferential tax rates applicable to qualified dividend income.
Your adjusted tax basis in our common stock or Preferred Stock would be increased to reflect such
taxed but undistributed earnings and profits. Distributions of earnings and profits that had previously
been taxed would result in a corresponding reduction in your adjusted tax basis in our common
stock or Preferred Stock and would not be taxed again once distributed. You would generally
recognize capital gain or loss on the sale, exchange or other disposition of our common stock or
Preferred Stock. Even if you make a QEF Election for one of our taxable years, if we were a PFIC
for a prior taxable year during which you held our common stock or Preferred Stock and for which
you did not make a timely QEF Election, you would also be subject to the more adverse rules
described below under “Taxation of U.S. Holders That Make No Election”. Additionally, to the
extent any of our subsidiaries is a PFIC, your election to treat us as a “Qualifying Electing Fund”
would not be effective with respect to your deemed ownership of the stock of such subsidiary and a
separate QEF Election with respect to such subsidiary is required.

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You would make a QEF Election by completing and filing IRS Form 8621 with your U.S.

Federal income tax return for the year for which the election is made in accordance with the
relevant instructions. If we were to become aware that we were to be treated as a PFIC for any
taxable year, we would notify all U.S. holders of such treatment and would provide all necessary
information to any U.S. holder who requests such information in order to make the QEF Election
described above with respect to us and the relevant subsidiaries.

Taxation of U.S. Holders That Make a Timely “Mark-to-Market” Election

Alternatively, if we were to be treated as a PFIC for any taxable year and, as we believe, our

common stock or Preferred Stock is treated as “marketable stock”, you would be allowed to make a
“mark-to-market” election with respect to our common stock or Preferred Stock, provided you
complete and file IRS Form 8621 with your U.S. Federal income tax return for the year for which
the election is made in accordance with the relevant instructions. If that election is made, you
generally would include as ordinary income in each taxable year the excess, if any, of the fair
market value of our common stock or Preferred Stock at the end of the taxable year over your
adjusted tax basis in our common stock or Preferred Stock. You also would be permitted an
ordinary loss in respect of the excess, if any, of your adjusted tax basis in our common stock or
Preferred Stock over its fair market value at the end of the taxable year (but only to the extent of
the net amount previously included in income as a result of the mark-to-market election). Your tax
basis in our common stock or Preferred Stock would be adjusted to reflect any such income or loss
amount. Gain realized on the sale, exchange or other disposition of our common stock or Preferred
Stock would be treated as ordinary income, and any loss realized on the sale, exchange or other
disposition of the common stock or Preferred Stock would be treated as ordinary loss to the extent
that such loss does not exceed the net mark-to-market gains previously included by you. However,
to the extent any of our subsidiaries is a PFIC, your “mark-to-market” election with respect to our
common stock or Preferred Stock would not apply to your deemed ownership of the stock of such
subsidiary.

Taxation of U.S. Holders That Make No Election

Finally, if we were treated as a PFIC for any taxable year and if you did not make either a

QEF Election or a “mark-to-market” election for that year, you would be subject to special rules
with respect to (a) any excess distribution (that is, the portion of any distributions received by you
on our common stock or Preferred Stock in a taxable year in excess of 125% of the average annual
distributions received by you in the three preceding taxable years, or, if shorter, your holding period
for our common stock or Preferred Stock) and (b) any gain realized on the sale, exchange or other
disposition of our common stock or Preferred Stock. Under these special rules:

(i) the excess distribution or gain would be allocated ratably over your aggregate holding

period for our common stock or Preferred Stock;

(ii) the amount allocated to the current taxable year would be taxed as ordinary income; and

(iii) the amount allocated to each of the other taxable years would be subject to tax at the

highest rate of tax in effect for the applicable class of taxpayer for that year, and an
interest charge for the deemed deferral benefit would be imposed with respect to the
resulting tax attributable to each such other taxable year.

If you died while owning our common stock or Preferred Stock, your successor generally would

not receive a step-up in tax basis with respect to such stock for U.S. tax purposes.

United States Federal Income Taxation of Non-U.S. Holders

You are a “non-U.S. holder” if you are a beneficial owner of our common stock (other than a

partnership for U.S. tax purposes) and you are not a U.S. holder.

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Distributions on Our Common Stock and Preferred Stock

You generally will not be subject to U.S. Federal income or withholding taxes on a distribution

received from us with respect to our common stock or Preferred Stock, unless the income arising
from such distribution is effectively connected with your conduct of a trade or business in the
United States. If you are entitled to the benefits of an applicable income tax treaty with respect to
that income, such income generally is taxable in the United States only if it is attributable to a
permanent establishment maintained by you in the United States.

Sale, Exchange or Other Disposition of Our Common Stock and Preferred Stock

You generally will not be subject to U.S. Federal income tax or withholding tax on any gain

realized upon the sale, exchange or other disposition of our common stock or Preferred Stock,
unless:

(a) the gain is effectively connected with your conduct of a trade or business in the United

States. If you are entitled to the benefits of an applicable income tax treaty with respect to
that gain, that gain generally is taxable in the United States only if it is attributable to a
permanent establishment maintained by you in the United States; or

(b) you are an individual who is present in the United States for 183 days or more during the

taxable year of disposition and certain other conditions are met.

Gain that is effectively connected with the conduct of a trade or business in the United States

(or so treated) generally will be subject to U.S. Federal income tax, net of certain deductions, at
regular U.S. Federal income tax rates. If you are a corporate non-U.S. holder, your earnings and
profits that are attributable to the effectively connected income (subject to certain adjustments) may
be subject to an additional U.S. branch profits tax at a rate of 30% (or such lower rate as may be
specified by an applicable tax treaty).

United States Backup Withholding and Information Reporting

In general, if you are a non-corporate U.S. holder, dividend payments (or other taxable
distributions) made within the United States will be subject to information reporting requirements
and backup withholding tax if you:

(1) fail to provide us with an accurate taxpayer identification number;

(2) are notified by the IRS that you have failed to report all interest or dividends required to

be shown on your Federal income tax returns; or

(3) in certain circumstances, fail to comply with applicable certification requirements.

If you are a non-U.S. holder, you may be required to establish your exemption from

information reporting and backup withholding by certifying your status on IRS Form W-8BEN, W-
8BEN-E, W-8ECI or W-8IMY, as applicable.

If you sell our common stock or Preferred Stock to or through a U.S. office or broker, the
payment of the sales proceeds is subject to both U.S. backup withholding and information reporting
unless you certify that you are a non-U.S. person, under penalties of perjury, or you otherwise
establish an exemption. If you sell our common stock or Preferred Stock through a non-U.S. office
of a non-U.S. broker and the sales proceeds are paid to you outside the United States, then
information reporting and backup withholding generally will not apply to that payment.

However, U.S. information reporting requirements (but not backup withholding) will apply to a

payment of sales proceeds, even if that payment is made outside the United States, if you sell our
common stock or Preferred Stock through a non-U.S. office of a broker that is a U.S. person or has
certain other connections with the United States. Backup withholding tax is not an additional tax.
Rather, you generally may obtain a refund of any amounts withheld under backup withholding rules

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that exceed your income tax liability by accurately completing and timely filing a refund claim with
the IRS.

U.S. individuals who hold certain specified foreign assets with values in excess of certain dollar
thresholds are required to report such assets on IRS Form 8938 with their U.S. Federal income tax
return, subject to certain exceptions (including an exception for foreign assets held in accounts
maintained by U.S. financial institutions). Stock in a foreign corporation, including our common
stock or Preferred Stock, is a specified foreign asset for this purpose. Penalties apply for failure to
properly complete and file Form 8938. You are encouraged to consult with your tax advisor
regarding the filing of this form.

F. Dividends and Paying Agents

Not applicable.

G. Statement by Experts

Not applicable.

H. Documents on Display

We are subject to the informational requirements of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). In accordance with these requirements, we file reports and other
information as a foreign private issuer with the SEC. You may inspect and copy our public filings
without charge at the public reference facilities maintained by the SEC at 100 F Street, N.E.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information about the
public reference room. You may obtain copies of all or any part of such materials from the SEC
upon payment of prescribed fees. You may also inspect reports and other information regarding
registrants, such as us, that file electronically with the SEC without charge at a website maintained
by the SEC at http://www.sec.gov.

I. Subsidiary Information

Not applicable.

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ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

A. Quantitative Information About Market Risk

Interest Rate Risk

The shipping industry is a capital intensive industry, requiring significant amounts of investment.

Our interest expense is affected by changes in the general level of interest rates, particularly
LIBOR. As an indication of the extent of our sensitivity to interest rate changes, an increase of 100
basis points would have decreased our net income and cash flows during the year ended
December 31, 2014 by approximately $2.8 million based upon our debt level during 2014.

The following table sets forth the sensitivity of our long-term debt, including the effect on our

consolidated statement of income of our derivative contracts to a 100 basis points increase in
LIBOR during the next five years on the same basis.

Net Difference in Earnings and Cash Flows (in millions of U.S. dollars):

Year

2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Amount

2.4
1.9
1.9
1.0
0.2

Interest Rate Swaps

According to our long-term strategic plan to maintain stability in our interest rate exposure, we
have decided to minimize our exposure to floating interest rates by entering into interest rate swap
agreements. To this effect, we have entered into interest rate swap transactions with varying start
and maturity dates, in order to proactively and efficiently manage our floating rate exposure. We
have not held or issued derivative financial instruments for trading or other speculative purposes.

ASC 815, “Derivatives and Hedging”, established accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in other contracts and for
hedging activities. All derivatives are recognized in the consolidated financial statements at their fair
value. On the inception date of the derivative contract, and an ongoing basis, and after putting in
place the formal documentation required by ASC 815 in order to designate these derivatives as
hedging instruments, we designate the derivative as a hedge of a forecasted transaction or the
variability of cash flow to be paid (“cash flow hedge”). Changes in the fair value of a derivative that
is qualified, designated and highly effective as a cash flow hedge is recorded in other comprehensive
income until earnings are affected by the forecasted transaction or the variability of cash flow and
are then reported in earnings. Changes in the fair value of undesignated derivative instruments and
the ineffective portion of designated derivative instruments are reported in earnings in the period in
which those fair value changes have occurred.

(a) Interest rate swaps that meet the criteria for hedge accounting: These interest rate swaps are
designed to hedge the variability of interest cash flows arising from floating rate debt, attributable to
movements in three-month or six-month LIBOR. According to our Risk Management Accounting
Policy, after putting in place the formal documentation required by ASC 815 in order to designate
these swaps as hedging instruments as from their inception, these interest rate swaps qualified for
hedge accounting. Accordingly, only hedge ineffectiveness amounts arising from the differences in
the change in fair value of the hedging instrument and the hedged item are recognized in earnings.
Assessment and measurement of the effectiveness of these interest rate swaps are performed at each
reporting period. For qualifying cash flow hedges, the fair value gain or loss associated with the
effective portion of the cash flow hedge is recognized initially in “Other comprehensive income”

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within stockholders’ equity and recognized in the consolidated statement of income in the periods
when the hedged item affects profit or loss. Any ineffective portion of the gain or loss on the
hedging instrument is recognized in the consolidated statement of income immediately.

At December 31, 2013 and 2014, we had interest rate swap agreements with an outstanding

notional amount of $1,588 million and $1,031 million, respectively. The fair value of these interest
rate swaps outstanding at December 31, 2013 and 2014, amounted to a liability of $87.8 million and
a liability of $55.4 million, respectively and these are included in the related consolidated balance
sheets. The maturity of these interest rate swaps range between June 2015 and August 2020.

(b) Interest rate swaps that do not meet the criteria for hedge accounting: As of December 31,

2013 and 2014, we had interest rate swap agreements with an outstanding notional amount of
$100 million and $218 million, respectively for the purpose of managing risks associated with the
variability of changing LIBOR-related interest rates. Such agreements did not meet hedge
accounting criteria and, therefore, changes in their fair value are reflected in earnings. The fair value
of these interest rate swaps at December 31, 2013 and 2014, was a liability of $15.4 million and a
liability of $18.5 million, respectively and these are included in the related consolidated balance
sheets. The maturity of these interest rate swaps range between February 2017 and August 2020.

Foreign Currency Exchange Risk

As of December 31, 2014, the Company was engaged in nine Euro/U.S. dollar contracts totaling

$22.5 million at an average forward rate of Euro/U.S. dollar 1.273 expiring in monthly intervals up
to September 2015.

As of December 31, 2013, the Company had no outstanding Euro/U.S. dollar foreign currency

agreements.

As of December 31, 2012, the Company was engaged in 2 forward Euro/U.S. dollar contracts

totaling $5.0 million at an average forward rate of Euro/U.S. dollar 1.280 expiring in monthly
intervals in 2013.

Inflation

We do not consider inflation to be a significant risk to our business in the current environment

and foreseeable future.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

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PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Please see “Item 5—Operating and Financial Review and Prospects—B. Liquidity and Capital

Resources”.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND

USE OF PROCEEDS

A. Material Modifications to the Rights of Security Holders

We adopted a stockholder rights plan on October 19, 2010 that authorizes the issuance to our
existing stockholders of preferred share rights and additional shares of common stock if any third
party seeks to acquire control of a substantial block of our common stock. See “Item 10. Additional
Information—B. Memorandum and Articles of Association—Stockholder Rights Plan” included in
this annual report for a description of the stockholder rights plan.

ITEM 15. CONTROLS AND PROCEDURES

A. Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer,

has evaluated the effectiveness of the design and operation of our disclosure controls and
procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of December
31, 2014. Based on our evaluation, the chief executive officer and the chief financial officer have
concluded that our disclosure controls and procedures were effective as of December 31, 2014.

B. Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over
financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act and for the
assessment of the effectiveness of internal control over financial reporting. Our internal control over
financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance
with U.S. GAAP.

A company’s internal control over financial reporting includes those policies and procedures that

(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that
transactions are recorded as necessary to permit the preparation of financial statements in
accordance with U.S. GAAP, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (iii)
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the company’s assets that could have a material effect on the financial
statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or

detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.

In making its assessment of our internal control over financial reporting as of December 31,
2014, management, including the chief executive officer and chief financial officer, used the criteria
set forth in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) (“COSO”).

Management concluded that, as of December 31, 2014, our internal control over financial

reporting was effective. Ernst & Young (Hellas) Certified Auditors Accountants S.A., our
independent registered public accounting firm, has audited the financial statements included herein

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and our internal control over financial reporting and has issued an attestation report on the
effectiveness of our internal control over financial reporting as of December 31, 2014, which is
incorporated by reference into Item 15.C below.

C. Attestation Report of the Registered Public Accounting Firm

The attestation report on the Company’s internal control over financial reporting issued by the
registered public accounting firm that audited the consolidated financial statements, Ernst & Young
(Hellas) Certified Auditors Accountants S.A., appears under Item 18 and such report is incorporated
herein by reference.

D. Changes in Internal Control Over Financial Reporting

During the period covered by this annual report, we have made no changes to our internal
control over financial reporting that have materially affected or are reasonably likely to materially
affect our internal control over financial reporting.

ITEM 16.A. AUDIT COMMITTEE FINANCIAL EXPERT

Our Audit Committee consists of two independent directors, Vagn Lehd Møller and Charlotte
Stratos, who is the chairman of the committee. Our board of directors has determined that Charlotte
Stratos, whose biographical details are included in “Item 6. Directors, Senior Management and
Employees—A. Directors and Senior Management”, qualifies as an audit committee financial expert
as defined under current SEC regulations.

ITEM 16.B. CODE OF ETHICS

We have adopted a Code of Business Conduct and Ethics for all officers and employees of our

Company, a copy of which is posted on our website, and may be viewed at
http://costamare.irwebpage.com/ethics.html.

We will also provide a paper copy of this document free of charge upon written request by our

stockholders. Stockholders may direct their requests to the attention of Anastassios Gabrielides,
Secretary, Costamare Inc., 60 Zephyrou Street & Syngrou Avenue, 17564 Athens, Greece. No
waivers of the Code of Business Conduct and Ethics have been granted to any person during the
fiscal year ended December 31, 2014.

ITEM 16.C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Ernst & Young (Hellas) Certified Auditors Accountants S.A., an independent registered public

accounting firm, has audited our annual financial statements acting as our independent auditor for
the fiscal years ended December 31, 2013 and 2014.

The chart below sets forth the total amount billed and accrued for Ernst & Young (Hellas)
Certified Auditors Accountants S.A. services performed in 2013 and 2014 and breaks down these
amounts by the category of service.

Audit fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2014
€782,250
€9,700
€791,950

2013
€566,250
€11,500
€577,750

Audit Fees

Audit fees represent compensation for professional services rendered for the audit of the
consolidated financial statements of the Company, for the audit of internal control over financial
reporting as of December 31, 2014 and for the review of the quarterly financial information, as well
as in connection with the review of the registration statements and related consents and comfort
letters and any other audit services required for SEC or other regulatory filings. Audit fees in
connection with the registration statement on Form F-3 filed with the SEC in October 2013, as

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amended in November 2013, and with our Series B Preferred Stock offering completed in August
2013, amounted to €41,250 and are included in the 2013 total fees in the aforementioned table.
Audit fees in connection with our Series C Preferred Stock offering completed in January 2014
amounted to €20,000 and are included in the 2014 total fees in the aforementioned table. Audit fees
in connection with Costamare Partners LP’s registration statement on Form F-1 filed with the SEC
in October 2014, as amended in October 2014 and November 2014, amounted to €225,000 and are
included in the 2014 total fees in the aforementioned table.

Tax fees

The full amount of tax fees in 2013 and 2014 relates to tax compliance assurance services in
respect of the U.S. tax earnings and profits computation for the years ended December 31, 2013 and
December 31, 2014.

Audit-related fees

No audit-related fees were billed in 2013 and 2014.

Pre-approval Policies and Procedures

The audit committee charter sets forth our policy regarding retention of the independent

auditors, giving the audit committee responsibility for the appointment, compensation, retention and
oversight of the work of the independent auditors. The audit committee charter provides that the
committee is responsible for reviewing and approving in advance the retention of the independent
auditors for the performance of all audit and lawfully permitted non-audit services. The chairman of
the audit committee or, in the absence of the chairman, any member of the audit committee
designated by the chairman, has authority to approve in advance any lawfully permitted non-audit
services and fees. The audit committee is authorized to establish other policies and procedures for
the pre-approval of such services and fees. Where non-audit services and fees are approved under
delegated authority, the action must be reported to the full audit committee at its next regularly
scheduled meeting.

ITEM 16.D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

None.

ITEM 16.E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED

PURCHASERS

Not Applicable.

ITEM 16.F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

Not Applicable.

ITEM 16.G. CORPORATE GOVERNANCE

Statement of Significant Differences Between our Corporate Governance Practices and the New
York Stock Exchange Corporate Governance Standards for U.S. Non-Controlled Issuers

Overview

Pursuant to certain exceptions for foreign private issuers and controlled companies, we are not

required to comply with certain of the corporate governance practices followed by U.S. and non-
controlled companies under the New York Stock Exchange listing standards. However, pursuant to
Section 303A.11 of the New York Stock Exchange Listed Company Manual and the requirements of
Form 20-F, we are required to state any significant differences between our corporate governance
practices and the practices required by the New York Stock Exchange. We believe that our

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established practices in the area of corporate governance are in line with the spirit of the New York
Stock Exchange standards and provide adequate protection to our stockholders. The significant
differences between our corporate governance practices and the New York Stock Exchange
standards applicable to listed U.S. companies are set forth below.

Independent Directors

Pursuant to NYSE Rule 303A.01, the New York Stock Exchange requires that listed companies
have a majority of independent directors. As permitted under Marshall Islands law and our bylaws,
our board of directors consists of a majority of non-independent directors.

Corporate Governance, Nominating and Compensation Committee

Pursuant to NYSE Rules 303A.04 and 303A.05, the New York Stock Exchange requires that a

listed U.S. company have a nominating/corporate governance committee and a compensation
committee, each composed entirely of independent directors. As permitted under Marshall Islands
law, we have a combined corporate governance, nominating and compensation committee, which at
present is composed wholly of two independent directors and one non-independent director.

Amended NYSE Rules 303A.02 and 303A.05, which became operative in July 2013, contain new

independence requirements for compensation committee directors and compensation committee
advisers for U.S. listed companies, as required by the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010. Marshall Islands law does not have similar requirements,
therefore we may not adhere to these new requirements.

Audit Committee

Pursuant to NYSE Rule 303A.07, the New York Stock Exchange requires that the audit
committee of a listed U.S. company have a minimum of three members. As permitted under
Marshall Islands law, our audit committee consists of two members.

ITEM 16.H. MINE SAFETY DISCLOSURE

Not Applicable.

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PART III

ITEM 17. FINANCIAL STATEMENTS

Not Applicable.

ITEM 18. FINANCIAL STATEMENTS

Reference is made to pages F-1 through F-40 included herein by reference.

ITEM 19. EXHIBITS

Exhibit No.

Description

1.1
1.2
4.1

4.2

4.3

4.4

4.5

4.6

4.7

4.8

4.9

4.10

4.11

4.12

4.13

4.14

4.15

4.16

Second Amended and Restated Articles of Incorporation(1)
First Amended and Restated Bylaws(1)
Form of Ship Management Agreement between Costamare Shipping Company S.A. and
Shanghai Costamare Ship Management Co., Ltd.(2)
Form of Restrictive Covenant Agreement between the Company and Konstantinos
Konstantakopoulos(2)
Form of Stockholders Rights Agreement between the Company and American Stock
Transfer & Trust Company, LLC(2)
Form of Registration Rights Agreement between the Company and the Stockholders
Named Therein(2)
Form of Trademark License Agreement between the Company and Costamare Shipping
Company S.A.(2)
Facility Agreement dated July 22, 2008 (the “Facility Agreement”) relating to a loan
facility of US$1,000,000,000 comprising (i) a term loan facility of up to US$700,000,000
and (ii) a revolving credit facility of up to US$300,000,000 among the lenders and
financial institutions set out on Schedule I thereto, Commerzbank AG as successor to
Deutsche Schiffsbank Aktiengessellschaft, as joint arranger, agent, swap bank and
security agent, Bayerische Hypo-Und Vereinsbank Aktiengessellschaft, as joint arranger,
swap bank and account bank, HSH Nordbank AG, as swap bank, and the Company, as
borrower(2)
First Supplemental Agreement dated April 23, 2010 in relation to the Facility
Agreement(2)
Second Supplemental Agreement dated June 22, 2010 in relation to the Facility
Agreement(2)
Third Supplemental Agreement dated September 6, 2011 in relation to the Facility
Agreement(3)
Form of Restrictive Covenant Agreement between the Company and Konstantinos
Zacharatos(1)
Fourth Supplemental Agreement dated December 17, 2012 in relation to the Facility
Agreement(1)
Form of Ship Management Agreement between Costamare Shipping Company S.A. and
V.Ships Greece Ltd.(1)
Agreement Relating to Group Management Agreement and Ship-management
Agreements between Costamare Shipping Company S.A. and Costamare Inc., dated
January 22, 2013(1)
Framework Deed, dated May 15, 2013, among Sparrow Holdings, L.P., York Capital
Management Global Advisors LLC, Costamare Inc. and Costamare Ventures Inc.(4)
Fifth Supplemental Agreement dated May 28, 2013 in relation to the Facility
Agreement(5)
Sixth Supplemental Agreement dated August 30, 2013 in relation to the Facility
Agreement(5)

123

Exhibit No.

Description

62874

4.17

4.18

8.1
12.1
12.2
13.1

Seventh Supplemental Agreement dated July 2, 2014 in relation to the Facility
Agreement
Amended and Restated Management Agreement between the Company and Costamare
Shipping Company S.A., dated March 3, 2015
List of Subsidiaries of Costamare Inc.
Rule 13a-14(a)/15d-14(a) Certification of Costamare Inc.’s Chief Executive Officer
Rule 13a-14(a)/15d-14(a) Certification of Costamare Inc.’s Chief Financial Officer
Costamare Inc. Certification of Konstantinos Konstantakopoulos, Chief Executive
Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
U.S. Sarbanes-Oxley Act of 2002
Costamare Inc. Certification of Gregory Zikos, Chief Financial Officer, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the U.S. Sarbanes-Oxley Act
of 2002
Consent of Independent Registered Public Accounting Firm
15.1
101.INS
XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema
101.CAL XBRL Taxonomy Extension Calculation Linkbase
101.DEF XBRL Taxonomy Extension Definition Linkbase
101.LAB XBRL Taxonomy Extension Label Linkbase
101.PRE XBRL Taxonomy Extension Presentation Linkbase

13.2

(1) Previously filed as an exhibit to Costamare Inc.’s Annual Report on Form 20-F for the fiscal year ended December 31,

2012, filed with the SEC on March 1, 2013 and hereby incorporated by reference to such Annual Report.

(2) Previously filed as an exhibit to Costamare Inc.’s Registration Statement on Form F-1 (File No. 333-170033), declared
effective by the SEC on November 3, 2010, and hereby incorporated by reference to such Registration Statement.

(3) Previously filed as an exhibit to Costamare Inc.’s Annual Report on Form 20-F for the fiscal year ended December 31,

2011, filed with the SEC on February 29, 2012 and hereby incorporated by reference to such Annual Report.

(4) Previously filed as an exhibit to Costamare Inc.’s Report on Form 6-K for the month of May 2013, filed with the SEC on

May 29, 2013 and hereby incorporated by reference to such Report.

(5) Previously filed as an exhibit to Costamare Inc.’s Annual Report on Form 20-F for the fiscal year ended December 31,

2013, filed with the SEC on February 21, 2014 and hereby incorporated by reference to such Annual Report.

The registrant hereby agrees to furnish to the SEC upon request a copy of any instrument
relating to long-term debt that does not exceed 10% of the total assets of the Company and its
subsidiaries.

124

68997

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that
it has duly caused and authorized the undersigned to sign this annual report on its behalf.

SIGNATURE

COSTAMARE INC.,

By /s/ Konstantinos Konstantakopoulos

Name: Konstantinos Konstantakopoulos
Title: Chief Executive Officer

Dated: March 5, 2015

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[This Page Intentionally Left Blank]

02546

COSTAMARE INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page

Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-2

Report of Independent Registered Public Accounting Firm on Internal Control Over Financial
Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Balance Sheets as of December 31, 2013 and 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statements of Income for the years ended December 31, 2012, 2013 and 2014. . . .

F-3

F-4

F-5

Consolidated Statements of Comprehensive Income for the years ended December 31, 2012,

2013 and 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-6

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2012, 2013
and 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2013 and

2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-7

F-8

F-9

F-1

10538

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of COSTAMARE INC.

We have audited the accompanying consolidated balance sheets of COSTAMARE INC. as of
December 31, 2013 and 2014, and the related consolidated statements of income, comprehensive
income, stockholders’ equity and cash flows for each of the three years in the period ended
December 31, 2014. These financial statements are the responsibility of the Company’s management.
Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the
consolidated financial position of COSTAMARE INC. at December 31, 2013 and 2014, and the
consolidated results of its operations and its cash flows for each of the three years in the period
ended December 31, 2014, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), COSTAMARE INC.’s internal control over financial reporting as
of December 31, 2014, based on criteria established in Internal Control-Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and
our report dated March 5, 2015, expressed an unqualified opinion thereon.

/s/ Ernst & Young (Hellas) Certified Auditors Accountants S.A.
Athens, Greece
March 5, 2015

F-2

12121

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON INTERNAL CONTROL OVER FINANCIAL REPORTING

To the Board of Directors and Stockholders of COSTAMARE INC.

We have audited COSTAMARE INC.’s internal control over financial reporting as of December 31,
2014, based on criteria established in Internal Control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO
criteria). COSTAMARE INC.’s management is responsible for maintaining effective internal control
over financial reporting, and for its assessment of the effectiveness of internal control over financial
reporting included in the accompanying Management’s Report on Internal Control over Financial
Reporting. Our responsibility is to express an opinion on the company’s internal control over
financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that
our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles. A company’s
internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3)
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the company’s assets that could have a material effect on the financial
statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.

In our opinion, COSTAMARE INC. maintained, in all material respects, effective internal control
over financial reporting as of December 31, 2014, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated balance sheets of COSTAMARE INC. as of
December 31, 2013 and 2014, and the related consolidated statements of income, comprehensive
income, stockholders’ equity and cash flows for each of the three years in the period ended
December 31, 2014, of COSTAMARE INC. and our report dated March 5, 2015, expressed an
unqualified opinion thereon.

/s/ Ernst & Young (Hellas) Certified Auditors Accountants S.A.
Athens, Greece
March 5, 2015

F-3

16875

COSTAMARE INC.
CONSOLIDATED BALANCE SHEETS

A S S E T S
CURRENT ASSETS:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories (Note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due from related parties (Notes 3 and 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Insurance claims receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid lease rentals (Notes 2 and 12). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued charter revenue (Note 13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepayments and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FIXED ASSETS, NET:
Advances for vessel acquisitions (Note 6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital leased assets (Notes 2 and 12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vessels, net (Note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total fixed assets, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NON-CURRENT ASSETS:
Investment in affiliates (Note 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid lease rentals, non-current (Notes 2 and 12) . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable, non-current, net (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred charges, net (Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued charter revenue, non-current (Note 13). . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current assets (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

L I A B I L I T I E S A N D S T O C K H O L D E R S ’ E Q U I T Y
CURRENT LIABILITIES:
Current portion of long-term debt (Note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital lease obligations (Notes 2 and 12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unearned revenue (Note 13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of derivatives (Notes 19 and 20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NON-CURRENT LIABILITIES:
Long-term debt, net of current portion (Note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital lease obligations, net of current portion (Notes 2 and 12) . . . . . . . . . . .
Fair value of derivatives, net of current portion (Notes 19 and 20) . . . . . . . . . .
Unearned revenue, net of current portion (Note 13). . . . . . . . . . . . . . . . . . . . . . . . .
Total non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
COMMITMENTS AND CONTINGENCIES (Note 14)
STOCKHOLDERS’ EQUITY:
Preferred stock (Note 15). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock (Note 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital (Note 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings / (Accumulated deficit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss (Notes 19 and 21) . . . . . . . . . . . . . . . . . . .
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

As of December 31,
2013
2014

(Expressed in thousands of
U.S. dollars)

93,379
9,067
16,145
11,005
2,679
1,429
—
409
2,450
136,563

$ 113,089
14,264
2,365
11,565
4,447
1,759
4,982
511
4,993
157,975

240,871
—
2,187,388
2,428,259

—
250,547
2,098,820
2,349,367

23,732
—
7,334
29,864
49,826
10,264
—
$2,685,842

73,579
40,811
1,425
28,675
49,818
1,025
12,065
$2,714,740

$ 206,717
5,814
—
14,386
9,601
55,322
3,140
294,980

1,660,859
—
47,890
25,164
1,733,913

$ 192,951
6,296
13,508
19,119
12,929
43,287
2,286
290,376

1,326,990
233,625
31,653
29,454
1,621,722

—
8
762,142
(20,047)
(85,154)
656,949
$2,685,842

—
8
858,665
103
(56,134)
802,642
$2,714,740

The accompanying notes are an integral part of these consolidated financial statements.

F-4

77973

COSTAMARE INC.
CONSOLIDATED STATEMENTS OF INCOME

2012

For the years ended December 31,
2013
(Expressed in thousands of U.S.
dollars, except share and per share data)

2014

REVENUES:
Voyage revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
EXPENSES:
Voyage expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Voyage expenses—related parties (Note 3) . . . . . . . . . . . . . . . . . . .
Vessels’ operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative expenses—related parties

(Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management fees—related parties (Note 3). . . . . . . . . . . . . . . . . . .
Amortization of dry-docking and special survey costs

(Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation (Notes 7, 12 and 21) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of prepaid lease rentals (Notes 2 and 12) . . . . . .
Gain / (Loss) on sale / disposal of vessels, net (Note 7) . . . . . .
Foreign exchange gains, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OTHER INCOME / (EXPENSES):
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest and finance costs (Note 17) . . . . . . . . . . . . . . . . . . . . . . . . . .
Swaps breakage costs (Note 19) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity gain / (Loss) on investments (Note 10). . . . . . . . . . . . . . . .
Other, net (Note 10). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain / (loss) on derivative instruments, net (Note 19) . . . . . . . .
Total other income / (expenses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

386,155

414,249

483,995

(5,533)
(2,873)
(112,462)
(3,045)

(3,484)
(3,139)
(115,998)
(7,517)

(1,000)
(15,171)

(8,179)
(80,333)
—
(2,796)
110
154,873

1,495
(74,734)
—
—
(43)
(462)

(73,744)

(1,000)
(16,580)

(8,084)
(89,958)
—
518
8
169,015

543
(74,533)
—
692
822
6,548

(65,928)

(3,608)
(3,629)
(120,815)
(6,708)

(1,000)
(18,469)

(7,814)
(105,787)
(4,024)
2,543
7
214,691

815
(95,562)
(10,192)
(3,428)
3,294
5,469

(99,604)

81,129

103,087

115,087

Earnings allocated to Preferred Stock (Note 16). . . . . . . . . . . . . .
Net income available to Common Stockholders. . . . . . . . . . . . . . .

—

(1,536)

81,129

101,551

(11,909)

103,178

Earnings per common share, basic and diluted (Note 16). . . . . $

1.20

1.36 $

1.38

Weighted average number of shares, basic and diluted . . . . . . .

67,612,842

74,800,000

The accompanying notes are an integral part of these consolidated financial statements.

F-5

53090

COSTAMARE INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Net income for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income / (loss)
Unrealized gain / (loss) on cash flow hedges, net (Notes 19 and

21) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net settlements on interest rate swaps qualifying for cash flow

hedge (Notes 11 and 21) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amounts reclassified from Net settlements on interest rate swaps
qualifying for hedge accounting to Depreciation (Note 21). . . . . .
Amounts reclassified from Net settlements on interest rate swaps

qualifying for hedge accounting to Prepaid lease rentals
(Notes 2 and 12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income / (loss) for the year . . . . . . . . . . . . . . . . .
Total comprehensive income for the year . . . . . . . . . . . . . . . . . . . . . . . . .

For the years ended December 31,
2012
2014
2013
(Expressed in thousands of U.S. dollars)
$115,087
$103,087
$ 81,129

(8,509)

70,886

22,802

(3,196)

(3,253)

(489)

—

103

—
$(11,705)

—
$ 67,688

6,604
$ 29,020

$ 69,424

$170,775

$144,107

The accompanying notes are an integral part of these consolidated financial statements.

F-6

24073

Total

$329,986
81,129
(73,089)
(11,705)
194,802
(671)

COSTAMARE INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY
For the years ended December 31, 2012, 2013 and 2014

Preferred
Stock
(Series C)
# of
Par
value
shares

Preferred
Stock
(Series B)
# of
Par
value
shares

Common
Stock

# of
shares

Par
value

Additional
Paid-in
Capital

Accumulated
Other
Comprehensive
Loss

Retained
Earnings /
(Accumulated
Deficit)

(Expressed in thousands of U.S. dollars, except share and per share data)

— $—
— —
— —
— —
— —
— —

— $—

BALANCE, January 1, 2012 . . . . . . . . .
- Net income . . . . . . . . . . . . . . . . . . . . . . . . .
- Dividends - Common stock . . . . . . . . .
- Other comprehensive loss . . . . . . . . . . .
- Follow-on offering proceeds, net . . . .
- Follow-on offering expenses. . . . . . . . .

BALANCE, December 31, 2012 . . . . . .

- Net income . . . . . . . . . . . . . . . . . . . . . . . . .
- Preferred stock Series B issuance . . .
- Preferred stock Series B expenses. . .
- Dividends - Common stock . . . . . . . . .
- Dividends–Preferred stock . . . . . . . . . .
- Other comprehensive income . . . . . . .

— $— 60,300,000 $ 6
— —
— —
— —
— —
— —
— —
2
— — 14,500,000
— —
— —

$519,971
—
—
—
194,800
(671)

$(141,137)
—
—
(11,705)
—
—

$ (48,854)
81,129
(73,089)
—
—
—

— $— 74,800,000 $ 8

$714,100

$(152,842)

$ (40,814)

$520,452

— —
— —
— — 2,000,000 —
— —
— —
— —
— —
— —
— —
— —
— —

— —
— —
— —
— —
— —
— —

—
48,425
(383)
—
—
—

—
—
—
—
—
67,688

103,087
—
—
(80,784)
(1,536)
—

103,087
48,425
(383)
(80,784)
(1,536)
67,688

BALANCE, December 31, 2013 . . . . . .

— $— 2,000,000 $— 74,800,000 $ 8

$762,142

$ (85,154)

$ (20,047)

$656,949

- Net income . . . . . . . . . . . . . . . . . . . . . . . . .
— —
- Preferred stock Series C issuance . . . 4,000,000 —
— —
- Preferred stock Series C expenses. . .
— —
- Dividends -Common stock . . . . . . . . . .
— —
- Dividends -Preferred stock . . . . . . . . . .
— —
- Other comprehensive income . . . . . . .

— —
— —
— —
— —
— —
— —

—
96,850
(327)
—
—
—

—
—
—
—
—
29,020

115,087
—
—
(83,028)
(11,909)
—

115,087
96,850
(327)
(83,028)
(11,909)
29,020

BALANCE, December 31, 2014 . . . . . . 4,000,000 $— 2,000,000 $— 74,800,000 $ 8

$858,665

$ (56,134)

103

$802,642

The accompanying notes are an integral part of these consolidated financial statements.

F-7

15849

COSTAMARE INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

Cash Flows From Operating Activities:
Net income: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to net cash provided by

operating activities:

Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for doubtful amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of prepaid lease rentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization and write-off of financing costs . . . . . . . . . . . . . . . . . . . . .
Amortization of deferred dry-docking and special survey . . . . . . . . .
Amortization of unearned revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net settlements on interest rate swaps qualifying for cash flow

hedge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss / (Gain) on derivative instruments, net . . . . . . . . . . . . . . . . . . . . . .
Loss / (Gain) on sale / disposal of vessels, net . . . . . . . . . . . . . . . . . . . .
Equity (gain) / loss on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in operating assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due from related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Insurance claims receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepayments and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unearned revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dry-dockings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued charter revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Cash provided by Operating Activities . . . . . . . . . . . . . . . . . . . . . . .
Cash Flows From Investing Activities:
Investment in affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from the sale of subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividend from affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advances for vessel acquisitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vessels acquisitions / Additions to vessel cost . . . . . . . . . . . . . . . . . . . . .
Proceeds from the sale of vessels, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Cash used in Investing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash Flows From Financing Activities:
Capital lease proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital lease repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Offering proceeds, net of related expenses . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayment of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of financing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase in restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Cash provided by / (Used in) Financing Activities . . . . . . . . . . . .
Net increase / (decrease) in cash and cash equivalents . . . . . . . . . . . .
Cash and cash equivalents at beginning of the year . . . . . . . . . . . . . . .
Cash and cash equivalents at end of the year . . . . . . . . . . . . . . . . . . . . .

Supplemental Cash Information:
Cash paid during the year for interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

For the years ended December 31,
2012
2014
2013
(Expressed in thousands of U.S. dollars)

$ 81,129

$ 103,087

$ 115,087

80,333
—
—
1,157
8,179
(431)

(3,196)
462
2,796
—

(87)
969
(63)
1,622
48
1,825
(1,162)
(901)
344
(11,171)
6,261
168,114

89,958
3,703
—
1,569
8,084
—

(3,253)
(6,548)
(518)
(692)

(22,737)
(63)
(1,607)
25
(854)
(68)
4,337
3,194
277
(6,189)
14,976
186,681

105,787
2,888
4,024
4,107
7,814
—

(489)
(5,469)
(2,543)
3,428

13,705
(1,768)
(560)
(330)
(2,543)
482
2,731
900
(854)
(10,150)
7,023
243,270

—
—
—
(191,179)
(74,053)
28,723
(236,509)

(8,707)
16,044
—
(590,431)
(51,853)
13,891
(621,056)

(85,103)
—
31,828
(59,058)
(28,984)
22,054
(119,263)

—
—
194,131
288,639
(170,170)
(547)
(73,089)
(1,244)
237,720
169,325
97,996
$ 267,321

—
—
48,042
469,356
(163,669)
(210)
(81,515)
(11,571)
260,433
(173,942)
267,321
$ 93,379

256,716
(9,583)
96,523
9,000
(356,635)
(2,055)
(93,074)
(5,189)
(104,297)
19,710
93,379
$ 113,089

$ 28,269

$ 31,215

$ 46,043

The accompanying notes are an integral part of these consolidated financial statements.

F-8

13015

COSTAMARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2012, 2013 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)

1. Basis of Presentation and General Information:

The accompanying consolidated financial statements include the accounts of Costamare Inc.
(“Costamare”) and its wholly-owned subsidiaries (collectively, the “Company”). Costamare was
formed on April 21, 2008, under the laws of the Republic of the Marshall Islands.

Costamare was incorporated as part of a reorganization to acquire the ownership interest in 53

ship-owning companies owned by the Konstantakopoulos family (Vasileios Konstantakopoulos and
his three sons Messrs. Konstantinos Konstantakopoulos, Achillefs Konstantakopoulos and Christos
Konstantakopoulos, together the “Family”). The reorganization was completed in November 2008.
On November 4, 2010, Costamare completed its initial public offering (“Initial Public Offering”) in
the United States under the United States Securities Act of 1933, as amended (the “Securities Act”).
On March 27, 2012 and on October 19, 2012, the Company completed two follow-on public offerings
in the United States under the Securities Act and issued 7,500,000 shares and 7,000,000 shares,
respectively, par value $0.0001, at a public offering price of $14.10 per share and $14.00 per share,
respectively, increasing the issued share capital to 74,800,000 shares. At December 31, 2014,
members of the Family owned, directly or indirectly, approximately 64.8% of the outstanding
common shares, in the aggregate. Furthermore, on August 7, 2013, the Company completed a public
offering of 2,000,000 shares of its 7.625% Series B Cumulative Redeemable Perpetual Preferred
Stock (the “Series B Preferred Stock”), par value $0.0001, at a public offering price of $25.00 per
share and on January 21, 2014, the Company completed a public offering of 4,000,000 shares of its
8.50% Series C Cumulative Redeemable Perpetual Preferred Stock (the “Series C Preferred Stock”),
par value $0.0001, at a public offering price of $25.00 per share.

As of December 31, 2013 and 2014, the Company owned and/or operated a fleet of 52 and
55 container vessels, respectively, with a total carrying capacity of approximately 295,872 TEU and
320,407 TEU, respectively, through wholly-owned subsidiaries incorporated in the Republic of
Liberia. The Company provides worldwide marine transportation services by chartering its container
vessels to some of the world’s leading liner operators under long, medium and short-term time
charters.

At December 31, 2014, Costamare had 92 wholly-owned subsidiaries, all incorporated in the
Republic of Liberia, except for five incorporated in the Republic of the Marshall Islands, out of
which 55 operate vessels, 31 have sold or disposed their vessels and are dormant, one was
established to be used for future vessel acquisitions, one was established to participate in investments
(Note 10) and four to participate in future investments.

On October 2, 2014, Costamare Partners LP (the “MLP”), a Marshall Islands limited
partnership and a wholly owned subsidiary of the Company, filed a Registration Statement on
Form F-1 with the SEC (which registration statement was subsequently amended and re-filed on
October 23, 2014, November 12, 2014 and January 30, 2015) for the initial public offering of
common units representing limited partnership interests (the “common units”) in the MLP. The
number of common units to be offered and the price range for the offering have not yet been finally
determined. The proceeds from the offering are expected to be used principally to reduce
indebtedness and for general partnership purposes, with the remainder to be distributed to the
Company. If the offering is completed, the Company expects to contribute to the MLP a 100%
interest in the entities which own four of the Company’s existing container vessels. Following the
offering, the MLP will remain a consolidated subsidiary of the Company as the Company will retain
a majority of the MLP’s total equity interests and, through a subsidiary, act as its general partner.
Completion of the initial public offering is subject to further authorization of the board of directors
of the Company, as well as completion of the SEC review process.

F-9

13649

COSTAMARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2012, 2013 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)

2. Significant Accounting Policies and Recent Accounting Pronouncements:

(a) Principles of Consolidation: The accompanying consolidated financial statements have been

prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The
consolidated financial statements include the accounts of Costamare and its wholly-owned
subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation.

Costamare as the holding company determines whether it has a controlling financial interest in

an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity.
Under Accounting Standards Codification (“ASC”) 810 “Consolidation,” (formerly Accounting
Research Bulletin (“ARB”) No. 51) a voting interest entity is an entity in which the total equity
investment at risk is sufficient to enable the entity to finance itself independently and provides the
equity holders with the obligation to absorb losses, the right to receive residual returns and the right
to make financial and operating decisions. Costamare consolidates voting interest entities in which it
owns all, or at least a majority (generally, greater than 50%), of the voting interest. Variable interest
entities (“VIE”) are entities as defined under ASC 810-10, that in general either do not have equity
investors with voting rights or that have equity investors that do not provide sufficient financial
resources for the entity to support its activities. A controlling financial interest in a VIE is present
when a company absorbs a majority of an entity’s expected losses, receives a majority of an entity’s
expected residual returns, or both. The company with a controlling financial interest, known as the
primary beneficiary, is required to consolidate the VIE. The Company evaluates all arrangements
that may include a variable interest in an entity to determine if it may be the primary beneficiary,
and would be required to include assets, liabilities and operations of a VIE in its consolidated
financial statements. As of December 31, 2013 and 2014 no such interest existed.

(b) Use of Estimates: The preparation of consolidated financial statements in conformity with

U.S. GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
consolidated financial statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

presents the change in equity (net assets) during a period from transactions and other events and
circumstances from non-owner sources. It includes all changes in equity during a period except those
resulting from investments by shareholders and distributions to shareholders. The Company follows
the provisions of ASC 220 “Comprehensive Income”, and presents items of net income, items of
other comprehensive income (“OCI”) and total comprehensive income in two separate but
consecutive statements. Reclassification adjustments between OCI and net income are required to be
presented separately on the statement of comprehensive income.

(d) Foreign Currency Translation: The functional currency of the Company is the U.S. dollar
because the Company’s vessels operate in international shipping markets and, therefore, primarily
transact business in U.S. dollars. The Company’s books of accounts are maintained in U.S. dollars.
Transactions involving other currencies during the year are converted into U.S. dollars using the
exchange rates in effect at the time of the transactions. At the balance sheet dates, monetary assets
and liabilities, which are denominated in other currencies, are translated into U.S. dollars at the
year-end exchange rates. Resulting gains or losses are reflected separately in the accompanying
consolidated statements of income.

(e) Cash and Cash Equivalents: The Company considers highly liquid investments such as time

deposits and certificates of deposit with an original maturity of three months or less to be cash
equivalents.

(f) Restricted Cash: Restricted cash is additional minimum cash deposits required to be

maintained with certain banks under the Company’s borrowing arrangements. Restricted cash

F-10

63627

COSTAMARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2012, 2013 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)

includes bank deposits and deposits in so-called “retention accounts” that are required under the
Company’s borrowing arrangements which are used to fund the loan installments coming due. The
funds can only be used for the purposes of loan repayment.

(g) Accounts Receivable, net: The amount shown as receivables, at each balance sheet date,
mainly includes receivables from charterers for hire, net of any provision for doubtful accounts. At
each balance sheet date, all potentially uncollectible accounts are assessed individually for purposes
of determining the appropriate provision for doubtful accounts. The provision established for
doubtful accounts as of December 31, 2013 and 2014, is $1,495 and nil, respectively.

(h) Inventories: Inventories consist of bunkers, lubricants and spare parts which are stated at the

lower of cost or market on a consistent basis. Cost incurred to bring inventories to their present
location and condition is determined by the first in, first out method.

(i) Insurance Claims Receivable: The Company records insurance claim recoveries for insured

losses incurred on damage to fixed assets and for insured crew medical expenses. Insurance claim
recoveries are recorded, net of any deductible amounts, at the time the Company’s fixed assets
suffer insured damages or when crew medical expenses are incurred, recovery is probable under the
related insurance policies and the claim is not subject to litigation.

(j) Vessels, Net: Vessels are stated at cost, which consists of the contract price and any material
expenses incurred upon acquisition (initial repairs, improvements and delivery expenses, interest and
on-site supervision costs incurred during the construction periods). Subsequent expenditures for
conversions and major improvements are also capitalized when they appreciably extend the life,
increase the earning capacity or improve the efficiency or safety of the vessels; otherwise these
amounts are charged to expense as incurred.

The cost of each of the Company’s vessels is depreciated from the date of acquisition on a

straight-line basis over the vessel’s remaining estimated economic useful life, after considering the
estimated residual value which is equal to the product of vessels’ lightweight tonnage and estimated
scrap rate (approximately $0.250 per light weight ton). Management estimates the useful life of the
Company’s vessels to be 30 years from the date of initial delivery from the shipyard. Secondhand
vessels are depreciated from the date of their acquisition through their remaining estimated useful
life. When regulations place limitations over the ability of a vessel to trade on a worldwide basis, its
remaining useful life is adjusted at the date such regulations are adopted.

(k) Accrued Charter Revenue/Unearned Revenue: The Company records identified assets or
liabilities associated with the acquisition of a vessel at fair value, determined by reference to market
data. The Company values any asset or liability arising from the market value of the time charters
assumed when a vessel is acquired from entities that are not under common control. This policy
does not apply when a vessel is acquired from entities that are under common control. The amount
to be recorded as an asset or liability at the date of vessel delivery is based on the difference
between the current fair market value of the charter and the net present value of future contractual
cash flows. When the present value of the contractual cash flows of the time charter assumed is
greater than its current fair value, the difference is recorded as accrued charter revenue. When the
opposite situation occurs, any difference, capped to the vessel’s fair value on a charter free basis, is
recorded as unearned revenue. Such assets and liabilities, respectively, are amortized as a reduction
of, or an increase in, revenue over the period of the time charter assumed.

(l) Impairment of Long-Lived Assets: The Company uses ASC 360 “Property plant and
equipment”, which addresses financial accounting and reporting for the impairment or disposal of
long-lived assets. The standard requires that long-lived assets and certain identifiable intangibles held
and used by an entity be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of the assets may not be recoverable.

F-11

91728

COSTAMARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2012, 2013 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)

As of December 31, 2013 and 2014, the Company concluded that, as conditions in the
worldwide shipping industry remain depressed, indicators existed which triggered the existence of
potential impairment of its long-lived assets. As a result, the Company performed an impairment
assessment of the Company’s long-lived assets by comparing the undiscounted projected net
operating cash flows for each vessel to its respective carrying value. The Company’s strategy is
mainly to charter its vessels under long-term, fixed or variable rate time charters, providing the
Company with contracted future cash flows.

In developing estimates of future undiscounted cash flows, the Company makes assumptions and

estimates about the vessels’ future performance, with the significant assumptions being related to
time charter rates, vessels’ operating expenses, vessels’ capital expenditures, vessels’ residual value,
fleet utilization and the estimated remaining useful life of each vessel. The assumptions used to
develop estimates of future undiscounted cash flows are based on historical trends as well as future
expectations and taking into consideration growth rates.

The Company determines undiscounted projected net operating cash flows for each vessel and

compares it to the vessel’s carrying value. To the extent impairment indicators are present, the
projected net operating cash flows are determined by considering the charter revenues from existing
time charters for the fixed fleet days and an estimated daily time charter rate for the unfixed days
(based on the most recent ten year historical average rates, inflated annually by a 3.42% growth rate
being the historical and forecasted average world GDP nominal growth rate) over the remaining
estimated life of the vessel assumed to be 30 years from the delivery of the vessel from the
shipyard, expected outflows for vessels’ operating expenses assuming an annual inflation rate of
2.97% (in line with the average world Consumer Price Index forecasted), planned dry-docking and
special survey expenditures, management fees expenditures which are adjusted every year, after
December 31, 2012, as provided under the Company’s management agreements, by an inflation rate
of 4.0% and fleet utilization of 99.2% (excluding the scheduled off-hire days for planned dry-
dockings and special surveys which are determined separately ranging from 16 to 30 days depending
on the size and age of each vessel) based on historical experience. The salvage value used in the
impairment test is estimated at approximately $0.250 per light weight ton in accordance with the
vessels’ depreciation policy.

The Company’s assessment concluded that no impairment of vessels existed as of December 31,

2013 and 2014, as the undiscounted projected net operating cash flows per vessel exceeded the
carrying value of each vessel. No impairment loss was recorded in 2012, 2013 or 2014.

(m) Assets held-for-sale: Assets are classified as held for sale when all of the following criteria

are met: Management, having the authority to approve the action, commits to a plan to sell the
asset (disposal group), the asset (disposal group) is available for immediate sale in its present
condition subject only to terms that are usual and customary for sales of such assets (disposal
groups), an active program to locate a buyer and other actions required to complete the plan to sell
the asset (disposal group) have been initiated, the sale of the asset (disposal group) is probable, and
transfer of the asset (disposal group) is expected to qualify for recognition as a completed sale
within 1 year. The term probable refers to a future sale that is likely to occur, the asset (disposal
group) is being actively marketed for sale at a price that is reasonable in relation to its current fair
value and actions required to complete the plan indicate that it is unlikely that significant changes to
the plan will be made or that the plan will be withdrawn. Long-lived assets classified as held for sale
are measured at the lower of their carrying amount or fair value less cost to sell. These assets are
not depreciated once they meet the criteria to be held for sale. At December 31, 2013 and 2014, no
vessels were classified as held-for-sale.

(n) Accounting for Special Survey and Dry-docking Costs: The Company follows the deferral

method of accounting for special survey and dry-docking costs whereby actual costs incurred are
deferred and are amortized on a straight-line basis over the period through the date the next survey

F-12

85751

COSTAMARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2012, 2013 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)

is scheduled to become due. Costs deferred are limited to actual costs incurred at the yard and parts
used in the dry-docking or special survey. If a survey is performed prior to the scheduled date, the
remaining unamortized balances are immediately written off. Unamortized balances of vessels that
are sold are written-off and included in the calculation of the resulting gain or loss in the period of
the vessel’s sale. Furthermore, unamortized dry-docking and special survey balances of vessels that
are classified as Assets held for sale and are not recoverable as of the date of such classification are
immediately written-off to the consolidated statement of income.

(o) Financing Costs: Costs associated with new loans or refinancing of existing loans, including
fees paid to lenders or required to be paid to third parties on the lender’s behalf for obtaining new
loans or refinancing existing loans, are recorded as deferred charges. Such fees are deferred and
amortized to interest and finance costs during the life of the related debt using the effective interest
method. Unamortized fees relating to loans repaid or refinanced, meeting the criteria of debt
extinguishment, are expensed in the period the repayment or refinancing is made.

(p) Concentration of Credit Risk: Financial instruments, which potentially subject the Company
to significant concentrations of credit risk, consist principally of cash and cash equivalents, accounts
receivable (included in current and non-current assets), investments in affiliates, equity securities,
debt securities and derivative contracts (interest rate swaps and foreign currency contracts). The
Company places its cash and cash equivalents, consisting mostly of deposits, with high credit rated
financial institutions. The Company performs periodic evaluations of the relative credit standing of
those financial institutions. The Company is exposed to credit risk in the event of non-performance
by counterparties to derivative instruments; however, the Company limits its exposure by diversifying
among counterparties with high credit ratings. The Company limits its credit risk with accounts
receivable, investments in affiliates and equity and debt securities by performing ongoing credit
evaluations of its customers’, affiliates’ and investees’ financial condition and generally does not
require collateral for its accounts receivable.

(q) Voyage Revenues: Voyage revenues are generated from time charter agreements and are
usually paid 15 days in advance. Time charter agreements with the same charterer are accounted for
as separate agreements according to the terms and conditions of each agreement. Time charter
revenues over the term of the charter are recorded as service is provided, when they become fixed
and determinable.

Revenues from time charter agreements providing for varying annual rates are accounted for as

operating leases and thus recognized on a straight-line basis as the average revenue over the rental
periods of such agreements, as service is performed. A voyage is deemed to commence upon the
completion of discharge of the vessel’s previous cargo and the sea passage for the next fixed cargo
and is deemed to end upon the completion of discharge of the current cargo, provided an agreed
non-cancelable charter agreement between the Company and the charterer is in existence, the
charter rate is fixed or determinable and collectability is reasonably assured. Unearned revenue
includes cash received prior to the balance sheet date for which all criteria to recognize as revenue
have not been met, including any unearned revenue resulting from charter agreements providing for
varying annual rates, which are accounted for on a straight-line basis. Unearned revenue also
includes the unamortized balance of the liability associated with the acquisition of second-hand
vessels with time charters attached which were acquired at values below fair market value at the
date the acquisition agreement is consummated, as well as revenue recognized based on the average
hire rate as derived from the entire duration of the charter party, rather than being recognized on
the per year hire rates provided in the charter party when the daily hire rate decreases over time.

F-13

94435

COSTAMARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2012, 2013 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)

Revenues for 2012, 2013 and 2014, derived from significant charterers individually accounting

for 10% or more of revenues (in percentages of total revenues) were as follows:

A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2012

2013

2014

24% 24% 29%
33% 31% 26%
17% 16% 14%
10% 9% 7%
7% 13% 18%
91% 93% 94%

(r) Voyage Expenses: Voyage expenses primarily consist of port, canal and bunker expenses that
are unique to a particular charter and are paid for by the charterer under time charter arrangements
or by the Company under voyage charter arrangements and commissions and fees, which are always
paid for by the Company, regardless of the charter type. All voyage and vessel operating expenses
are expensed as incurred, except for commissions. Commissions are deferred over the related voyage
charter period to the extent revenue has been deferred since commissions are earned as the
Company’s revenues are earned.

(s) Repairs and Maintenance: All repair and maintenance expenses, including underwater
inspection expenses, are expensed in the year incurred. Such costs are included in vessel operating
expenses in the accompanying consolidated statements of income.

(t) Derivative Financial Instruments: The Company enters into interest rate swap contracts to

manage its exposure to fluctuations of interest rate risks associated with specific borrowings. Interest
rate differentials paid or received under these swap agreements are recognized as part of the interest
expense related to the hedged debt. All derivatives are recognized in the consolidated financial
statements at their fair value. On the inception date of the derivative contract, the Company
designates the derivative as a hedge of a forecasted transaction or the variability of cash flow to be
paid (“cash flow” hedge). Changes in the fair value of a derivative that is qualified, designated and
highly effective as a cash flow hedge are recorded in the consolidated statement of comprehensive
income until earnings are affected by the forecasted transaction or the variability of cash flow and
are then reported in earnings. Changes in the fair value of undesignated derivative instruments and
the ineffective portion of designated derivative instruments are reported in earnings in the period in
which those fair value changes have occurred. Realized gains or losses on early termination of the
derivative instruments are also classified in earnings in the period of termination of the respective
derivative instrument. The Company may re-designate an undesignated hedge after its inception as a
hedge but then will consider its non zero value at re-designation in its assessment of effectiveness of
the cash flow hedge.

The Company formally documents all relationships between hedging instruments and hedged

items, as well as the risk-management objective and strategy for undertaking various hedge
transactions.

This process includes linking all derivatives that are designated as cash flow hedges to specific

forecasted transactions or variability of cash flow.

The Company also formally assesses, both at the hedge’s inception and, on an ongoing basis,

whether the derivatives that are used in hedging transactions are highly effective in offsetting
changes in cash flow of hedged items. The Company considers a hedge to be highly effective if the
change in fair value of the derivative hedging instrument is within 80% to 125% of the opposite
change in the fair value of the hedged item attributable to the hedged risk. When it is determined
that a derivative is not highly effective as a hedge or that it has ceased to be a highly effective

F-14

61875

COSTAMARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2012, 2013 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)

hedge, the Company discontinues hedge accounting prospectively, in accordance with ASC 815
“Derivatives and Hedging”.

The Company also enters forward exchange rate contracts to manage its exposure to currency

exchange risk on certain foreign currency liabilities. The Company has not designated these forward
exchange rate contracts for hedge accounting.

(u) Earnings per Share: Basic earnings per share are computed by dividing net income

attributable to common equity holders by the weighted average number of shares of common stock
outstanding during the year. Diluted earnings per share reflects the potential dilution that could
occur if securities or other contracts to issue common stock were exercised. The Company had no
dilutive securities outstanding during the three-year period ended December 31, 2014. Earnings per
share attributable to common equity holders are adjusted by the contractual amount of dividends
related to the preferred stock holders that accrue for the period.

(v) Fair Value Measurements: The Company adopted, as of January 1, 2008, ASC 820 “Fair
Value Measurements and Disclosures”, which defines and provides guidance as to the measurement
of fair value. This standard creates a hierarchy of measurement and indicates that, when possible,
fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants. The fair value hierarchy gives the highest priority
(Level 1) to quoted prices in active markets and the lowest priority (Level 3) to unobservable data,
for example, the reporting entity’s own data. Under the standard, fair value measurements are
separately disclosed by level within the fair value hierarchy. The standard applies when assets or
liabilities in the financial statements are to be measured at fair value, but does not require
additional use of fair value beyond the requirements in other accounting principles (Notes 19
and 20).

ASC 825 “Financial Instruments”, permits companies to report certain financial assets and
financial liabilities at fair value. ASC 825 was effective for the Company as of January 1, 2008, at
which time the Company could elect to apply the standard prospectively and measure certain
financial instruments at fair value. The Company has evaluated the guidance contained in ASC 825,
and has elected not to report any existing financial assets or liabilities at fair value that are not
already so reported; therefore, the adoption of the statement had no impact on its financial position
and results of operations. The Company retains the ability to elect the fair value option for certain
future assets and liabilities acquired under this standard.

(w) Segment Reporting: The Company reports financial information and evaluates its operations

by charter revenues and not by the length of ship employment for its customers, i.e., spot or time
charters. The Company does not use discrete financial information to evaluate the operating results
for each such type of charter. Although revenue can be identified for these types of charters,
management cannot and does not identify expenses, profitability or other financial information for
these charters. Furthermore, when the Company charters a vessel to a charterer, the charterer is free
to trade the vessel worldwide (subject to certain agreed exclusions) and, as a result, the disclosure of
geographic information is impracticable. As a result, management, including the chief operating
decision maker, reviews operating results solely by revenue per day and operating results of the fleet
and thus the Company has determined that it operates under one reportable segment.

(x) Investments in Affiliate: Investments in the common stock of entities, in which the

Company has significant influence over operating and financial policies, are accounted for using the
equity method. Under this method, the investment in the affiliate is initially recorded at cost and is
adjusted to recognize the Company’s share of the earnings or losses of the investee after the
acquisition date and is adjusted for impairment whenever facts and circumstances indicate that a
decline in fair value below the cost basis is other than temporary. The amount of the adjustment is
included in the determination of net income / (loss). Dividends received from an affiliate reduce the

F-15

52951

COSTAMARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2012, 2013 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)

carrying amount of the investment. When the Company’s share of losses in an affiliate equals or
exceeds its interest in the affiliate, the Company does not recognize further losses unless the
Company has incurred obligations or made payments on behalf of the affiliate.

(y) Capital leases: Financial Accounting Standards Board (“FASB”) ASC 840 classifies leases as

capital or operating. Capital leases are accounted for as the acquisition of an asset and the
incurrence of an obligation by the lessee and as a sale or financing by the lessor. All other leases
are accounted for as operating leases. The determination of whether an arrangement is (or contains)
a capital lease is based on the substance of the arrangement at the inception date and is assessed in
accordance with the criteria set in ASC 840-10-25-1.

Capital leases are capitalized at the commencement of the lease at the lower between the fair

value of the leased asset and the present value of the minimum lease payments. Lease payments are
apportioned between finance charges and reduction of the lease liability. Finance charges are
recognized in finance costs in the consolidated statement of income. The lease payments are
allocated between liability and finance costs to achieve a constant rate on the capital balance
outstanding. If the lease agreement transfers the ownership of the leased asset to the lessee, then the
asset is depreciated over its useful economic life (estimated at 30 years), otherwise it is depreciated
over the lease term.

For sale and lease back transactions, when the fair value of the asset sold is more than its

carrying amount, any indicated loss on the sale is in substance a prepayment of rent and thus, in
accordance with ASC 840-40-35-4, the Company defers this prepaid rental and amortizes it over the
lease term. In case the fair value of the asset sold is less than its carrying amount, any indicated loss
on the sale is recognized in the consolidated statement of income as incurred.

Operating lease payments are recognized as an operating expense in the consolidated statement

of income on a straight-line basis over the lease term.

(z) Investments in Equity and Debt Securities: The Company classifies debt securities and
equity securities pursuant to the provisions of ASC 320-10-25-1 “Investments–Debt and Equity
Securities”, into one of the following three categories:

a. Trading securities: If the Company acquires a security with the intent of selling it in the near

term, the security is classified as trading,

b. Available-for-sale securities: Investments in debt securities and equity securities that have

readily determinable fair values not classified as trading securities or as held-to-maturity securities
are classified as available-for-sale securities and,

c. Held-to-maturity securities: Investments in debt securities are classified as held-to-maturity

only if the Company has the positive intent and ability to hold these securities to maturity.

In order to determine the applicable category, the Company considers the following: (i) if the
Company intends to sell the security, (ii) whether it is more likely than not that the Company will
be required to sell the security before the recovery of its (entire) cost, and (iii) whether the security
has a readily determinable fair value or not.

Debt and equity securities which are decided on inception to be accounted for as trading

securities or available-for-sale securities are initially recognized at cost and subsequently are
measured at fair value. Declines in the fair value of trading securities are recognized in earnings,
while declines in the fair value of available-for-sale securities are recorded in Other Comprehensive
Income and affect earnings when the securities are disposed. Held-to-maturity debt securities are
initially recognized at cost and subsequently are measured at amortized cost, less impairment. The
amortized cost is adjusted for amortization of premiums and accretion of discounts to maturity.
Management evaluates debt securities held-to-maturity for other than temporary impairment at each
reporting date. In evaluating whether a decline in value is other than temporary, the Company

F-16

53205

COSTAMARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2012, 2013 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)

considers several factors including, but not limited, to the following: (i) the extent of the duration of
the decline; (ii) the reasons for the decline in value and (iii) the financial condition of and near-term
prospects of the issuer. An investment in debt or equity securities is considered impaired if the fair
value of the investment is less than its carrying value, in which case, the Company recognizes in
earnings an impairment loss equal to the difference between their carrying value and their fair value.

Equity securities with no readily determinable fair value, which relate to an entity in which the

Company does not have the ability to exercise significant influence, are accounted for pursuant to
the provisions of ASC 325-20 “Investments - Other–Cost Method Investments”. The Company
initially recognizes such equity securities at cost. Subsequently, any dividends distributed by the
investee to the Company are recognized as income when received, but only to the extent they
represent net accumulated earnings of the investee since the Company’s initial recognition of the
investment. Net accumulated earnings are recognized as income by the Company only if they are
distributed to the investor as dividends. Any dividends received in excess of net accumulated
earnings are recognized as a reduction in the carrying amount of the investment. Management
evaluates the equity securities for other-than-temporary-impairment at each reporting date. An
investment in cost method equity securities is considered impaired if the fair value of the investment
is less than its carrying value, in which case the Company recognizes in earnings an impairment loss
equal to the difference between their carrying value and their fair value. Consideration is given to
significant deterioration in the earnings performance, or business prospects of the investee,
significant adverse change in the regulatory, economic, or technological environment of the investee,
significant adverse change in the general market condition in which the investee operates, as well as
factors that raise significant concerns about the investee’s ability to continue as a going concern.

New accounting pronouncements

Revenue from Contracts with Customers: The FASB and the International Accounting
Standards Board (“IASB”) (collectively, the Boards) jointly issued a standard that will supersede
virtually all of the existing revenue recognition guidance in U.S. GAAP and International Financial
Reporting Standards and is effective for annual periods beginning on or after January 1, 2017. The
standard establishes a five-step model that will apply to revenue earned from a contract with a
customer (with limited exceptions), regardless of the type of revenue transaction or the industry. The
standard’s requirements will also apply to the recognition and measurement of gains and losses on
the sale of some non-financial assets that are not an output of the entity’s ordinary activities (e.g.,
sales of property, plant and equipment or intangibles). Extensive disclosures will be required,
including disaggregation of total revenue; information about performance obligations; changes in
contract asset and liability account balances between periods and key judgments and estimates.
Management is in the process of assessing the impact of the new standard on the Company’s
financial position and performance.

Going Concern: In August 2014, the FASB issued Accounting Standards Update (“ASU”) No.

2014-15–Presentation of Financial Statements - Going Concern. ASU 2014-15 provides guidance
about management’s responsibility to evaluate whether there is substantial doubt about an entity’s
ability to continue as a going concern and to provide related footnote disclosures. ASU 2014-15
requires an entity’s management to evaluate at each reporting period based on the relevant
conditions and events that are known at the date the financial statements are issued, whether there
are conditions or events that raise substantial doubt about the entity’s ability to continue as a going
concern within one year after the date that the financial statements are issued and to disclose the
necessary information. ASU 2014-15 is effective for the annual period ending after December 15,
2016, and for annual periods and interim periods thereafter. Early application is permitted.

F-17

19841

COSTAMARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2012, 2013 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)

3. Transactions with Related Parties:

(a) Costamare Shipping Company S.A. (the “Manager” or “Costamare Shipping”): Costamare
Shipping is a ship management company wholly-owned by Mr. Konstantinos Konstantakopoulos, the
Company’s Chief Executive Officer and, as such, is not part of the consolidated group of the
Company, but is a related party. Costamare Shipping provides the Company with general
administrative services, certain commercial services, director and officer related insurance services
and the services of the Company’s officers.

Costamare Shipping, itself or through Shanghai Costamare Ship Management Co., Ltd.

(“Shanghai Costamare”), which is also controlled by Mr. Konstantakopoulos, or through or together
with a third party sub-manager, provides technical, crewing, commercial, provisioning, bunkering,
sale and purchase, chartering, accounting, insurance and administrative services in exchange for a
daily fee for each containership. Up to April 2013, Costamare Shipping also provided such services
through Ciel Shipmanagement S.A. (“CIEL”), another company controlled by
Mr. Konstantakopoulos. We refer to Costamare Shipping and Shanghai Costamare and, up to April
2013, CIEL as the Company’s “affiliated managers”.

Pursuant to the management agreement, in 2014 Costamare Shipping received a daily fee for

each containership as follows: (i) for each containership (subject to any charter other than a
bareboat charter) it received a daily fee of $0.919 since January 1, 2014 ($0.884 for 2013 and $0.850
for 2012), prorated for the calendar days the Company owned each containership and for the three-
month period following the date of the sale of a vessel and (ii) for each containership subject to a
bareboat charter it received a daily fee of $0.460 since January 1, 2014 ($0.442 for 2013 and $0.425
for 2012), prorated for the calendar days the Company owned each containership and for the three-
month period following the date of the sale of a vessel.

The Company also paid to Costamare Shipping (i) a flat fee of $700 for the supervision of the

construction of any newbuild vessel contracted by the Company, which flat fee may be annually
adjusted upwards to reflect any strengthening of the Euro against the U.S. dollar and/or material
unforeseen cost increases, and (ii) a fee of 0.75% on all gross freight, demurrage, charter hire,
ballast bonus or other income earned with respect to each containership in the Company’s fleet.

The initial term of the management agreement expires on December 31, 2015 (Note 22(c)) and
will be automatically extended in additional one-year increments until December 31, 2020, at which
point it will expire. The daily management fee for each containership was fixed until December 31,
2012 and was thereafter annually adjusted upwards through 2014 by 4%, with further annual
increases permitted to reflect the strengthening of the Euro against the U.S. dollar and/or material
unforeseen cost increases. After the initial term which expires on December 31, 2015, the Company
will be able to terminate the management agreement, subject to a termination fee, by providing
written notice to Costamare Shipping at least 12 months before the end of the subsequent one-year
term. The termination fee is equal to (a) the lesser of (i) five and (ii) the number of full years
remaining prior to December 31, 2020, times (b) the aggregate fees due and payable to Costamare
Shipping during the 12-month period ending on the date of termination; provided that the
termination fee will always be at least two times the aggregate fees over the 12-month period
described above.

On January 7, 2013, Costamare Shipping entered into a co-operation agreement (the “Co-

operation Agreement”) with third-party ship managers V.Ships Greece Ltd. (“V.Ships Greece”),
pursuant to which the two companies established a ship management cell (the “Cell”) under V.Ships
Greece. Since April 2013, the Cell provides technical, crewing, provisioning, bunkering, sale and
purchase and accounting services, as well as certain commercial and insurance services to certain of
the Company’s container vessels (including all container vessels previously managed by CIEL),
pursuant to separate management agreements entered into between V.Ships Greece and the ship-

F-18

08165

COSTAMARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2012, 2013 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)

owning company of the respective container vessel, for a daily management fee. Costamare Shipping
remains the head manager for all vessels owned by the Company.

The Cell also offers ship management services to third-party owners. Costamare Shipping passes

to the Company the net profit, if any, it receives pursuant to the Co-operation Agreement as a
refund or reduction of the management fees payable by the Company to Costamare Shipping under
the Group Management Agreement. The net profits earned during the year ended December 31,
2014, amounted to $392 and is included as a reduction in management fees–related parties in the
accompanying 2014 consolidated statement of income. As at December 31, 2014, the Cell provided
technical, crewing, provisioning, bunkering, sale and purchase and accounting services, as well as
certain commercial management services to 19 of Costamare’s vessels.

Management fees charged by the Manager in the years ended December 31, 2012, 2013 and
2014, amounted to $12,208, $15,570 and $18,642, respectively and are included in Management fees-
related parties in the accompanying consolidated statements of income. In addition, the Manager
charged (i) $3,629 for the year ended December 31, 2014 ($3,139 for the year ended December 31,
2013 and $2,873 for the year ended December 31, 2012), representing a fee of 0.75% on all gross
revenues, as provided in the management agreements with each subsidiary, which is separately
reflected as Voyage expenses-related parties in the accompanying consolidated statements of income
for the years ended December 31, 2012, 2013 and 2014, respectively, (ii) $1,000 for the services of
the Company’s officers in aggregate, which is included in General and administrative expenses in the
accompanying consolidated statements of income for the year ended December 31, 2014 ($1,000 for
the year ended December 31, 2013 and $1,000 for the year ended December 31, 2012) and (iii)
$1,050 supervision fees for three newbuild vessels, which were delivered during the year ended
December 31, 2014 ($2,450 for seven newbuild vessels which were delivered during the year ended
December 31, 2013). Furthermore, in accordance with the management agreement with V.Ships
Greece, V.Ships Greece has been provided with the amount of $1,425 ($75 per vessel) as working
capital security, which is included in Accounts receivable, non-current, in the accompanying 2014
consolidated balance sheet ($1,350 for the year ended December 31, 2013).

During the years ended December 31, 2014 and 2013, the Manager charged in aggregate to the

companies established pursuant to the Framework Agreement (Notes 9 and 10) the amount of
$1,572 and $1,070, respectively, for services provided in accordance with the respective management
agreements.

The balance due from the Manager at December 31, 2013 and 2014 amounted to $2,076 and
$576, which are included in Due from related parties in the accompanying 2013 consolidated balance
sheet and Due to related parties in the accompanying 2014 consolidated balance sheet, respectively.

(b) Ciel Shipmanagement S.A.: CIEL, a company incorporated in the Republic of Liberia, is
wholly-owned, effective November 30, 2012, by Mr. Konstantinos Konstantakopoulos, the Company’s
Chairman and Chief Executive Officer (prior to November 30, 2012, Mr. Konstantinos
Konstantakopoulos owned 50.2% and Mr. Dimitrios Lemonidis owned 49.8% of CIEL). CIEL was
not part of the consolidated group of the Company but was an affiliated manager up to April 2013.
CIEL, up to April 2013, provided the Company’s vessels certain ship management services such as
technical support and maintenance, financial and accounting services, under separate management
agreements signed between CIEL and each ship-owning company, in exchange for a daily fixed fee
of $0.600 per vessel. CIEL specialized, although not exclusively, in managing containerships of up to
3,500 TEU. For the period from April 28, 2013 to December 31, 2013 and for the year ended
December 31, 2014, CIEL did not provide technical, crewing, provisioning, bunkering, sale and
purchase and accounting services, or other commercial services, to any of the Company’s
containerships. CIEL is currently providing services in respect of the Rena. Management fees
charged by CIEL in the years ended December 31, 2012, 2013 and 2014, amounted to $2,963, $1,010
and $219, respectively and are included in Management fees-related parties in the accompanying

F-19

97972

COSTAMARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2012, 2013 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)

consolidated statements of income. The balance due from CIEL at December 31, 2013 and 2014,
amounted to $603 and $593, respectively and is included in Due from related parties in the
accompanying consolidated balance sheets.

70% by the Company’s Chairman and Chief Executive Officer and 30% (indirectly) by Shanghai
Costamare’s General Manager, Mr. Shen Xiao Dong. Shanghai Costamare is a company
incorporated in the Peoples’ Republic of China in September 2004 and is not part of the
consolidated group of the Company but is an affiliated manager. The technical, crewing,
provisioning, bunkering, sale and purchase and accounting services, as well as certain commercial
services of certain of the Company’s vessels have been subcontracted from the Manager to Shanghai
Costamare. As of December 31, 2014, Shanghai Costamare provided such services to eleven (nine as
of December 31, 2013) of the Company’s containerships. There was no balance due from/to
Shanghai Costamare at both December 31, 2013 and 2014.

4. Other non-current assets:

As of July 16, 2014, Zim Integrated Services (“Zim”) and its creditors including vessel and
container lenders, ship-owners, shipyards, unsecured lenders and bond holders, entered into definitive
documentation to restructure its debt. Based on this agreement, the Company received equity
securities representing 1.2% of Zim’s equity and $8,229 aggregate principal amount of unsecured
interest bearing Zim notes maturing in 2023 consisting of $1,452 of 3.0% Series 1 Notes due 2023
amortizing subject to available cash flow in accordance with a corporate mechanism and $6,777 of
5.0% Series 2 Notes due 2023 non-amortizing (of the 5% interest, 3% is payable quarterly in cash
and 2% interest is accrued quarterly with deferred cash payment on maturity) in exchange for
amounts owed by Zim to the Company under their charter agreements. The Company calculated the
fair value of the instruments received by Zim based on the agreement discussed above, available
information on Zim, other similar contracts with similar terms, maturities and interest rates, and
recorded at fair value $676 in relation to the Series 1 Notes, $3,567 in relation to the Series 2 Notes
and $7,802 in relation to its equity participation in Zim. The difference between the aggregate fair
value of the debt and equity securities received from Zim and the then net carrying value of the
amounts due from Zim of $2,888 was written-off and is included in General and administrative
expenses in the accompanying 2014 consolidated statement of income.

On a quarterly basis, the Company will account for the fair value unwinding of the Series 1 and

Series 2 Notes, until the book value of the instruments equals their face value on maturity. The
Company recorded $20 in relation to their fair value unwinding, which is included in “Interest
income” in the consolidated statement of income for the year ended December 31, 2014. The
Company has classified such debt and equity securities under other non-current assets, since it has
no intention to sell the securities in the near term. The Series 1 and Series 2 Zim Notes are carried
at amortized cost in the accompanying consolidated balance sheet as at December 31, 2014, which
approximates their fair value as of such date. These financial instruments are not measured at fair
value on a recurring basis. As of December 31, 2014, the Company has assessed for other than
temporary impairment of its investment in Zim and has concluded that no impairment existed.

F-20

69178

COSTAMARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2012, 2013 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)

5. Inventories:

The amounts in the accompanying consolidated balance sheets are analyzed as follows:

December 31,
2013

December 31,
2014

Bunkers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lubricants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Spare parts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

303
9,044
1,658

11,005

—
9,971
1,594

11,565

6. Advances for Vessels Acquisitions:

On September 21, 2010, the Company through its three wholly-owned subsidiaries, Adele
Shipping Co., Bastian Shipping Co. and Cadence Shipping Co., contracted with a shipyard for the
construction and purchase of three newbuild vessels (Hulls H1068A, H1069A and H1070A), each of
approximately 9,403 TEU capacity at a contract price per newbuild vessel of $95,080. The newbuilds
MSC Azov (Hull H1068A), MSC Ajaccio (Hull H1069A) and MSC Amalfi (Hull H1070A) were
delivered to the Company on January 14, 2014, March 14, 2014 and April 28, 2014, respectively. The
Company agreed with a financial institution to refinance the then outstanding balance of the loan
relating to MSC Azov, MSC Ajaccio and MSC Amalfi under a ten-year sale and leaseback
transaction. Under the sale and leaseback transaction, the vessels were chartered back to the
Company on a bareboat basis and remained on time charter with its initial time charterer (Note 12).

On January 28, 2011, the Company, through its two wholly-owned subsidiaries Jodie Shipping
Co. and Kayley Shipping Co., contracted with a shipyard for the construction and purchase of two
newbuild vessels (Hulls S4010 and S4011), each of approximately 8,827 TEU capacity. The Company
entered into ten-year charter party agreements from their delivery from the shipyard. The newbuild
vessels MSC Athens (Hull S4010) and MSC Athos (Hull S4011) were delivered to the Company on
March 14, 2013 and April 8, 2013, respectively, and the amount of $196,675, in aggregate, which
included the contract price, capitalized interest and financing costs and other capitalized costs, was
transferred to Vessels, net.

On April 20, 2011, the Company, through its five wholly-owned subsidiaries Quentin Shipping
Co., Raymond Shipping Co., Sander Shipping Co., Terance Shipping Co. and Undine Shipping Co.,
contracted with a shipyard for the construction and purchase of five newbuild vessels (Hulls S4020,
S4021, S4022, S4023 and S4024), each of approximately 8,827 TEU capacity. The newbuild vessels
Valor (Hull S4020), Value (Hull S4021), Valiant (Hull S4022), Valence (Hull S4023) and Vantage
(Hull S4024) were delivered to the Company on June 3, 2013, June 25, 2013, August 5, 2013,
September 2, 2013 and November 8, 2013, respectively and the amount of $492,437, in aggregate,
which included the contract price, capitalized interest and financing costs and other capitalized costs,
was transferred to Vessels, net.

The total aggregate price for all ten newbuild vessels amounted to $953,873, payable in
installments until their deliveries, which was fully paid through December 31, 2014 ($57,408 paid
during the year ended December 31, 2014, $572,496 paid during the year ended December 31, 2013,
$181,198 paid during the year ended December 31, 2012 and $143,131 paid during the year ended
December 31, 2011).

F-21

30549

COSTAMARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2012, 2013 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)

During the years ended December 31, 2013 and 2014 the costs incurred associated with the

construction of the above mentioned vessels are presented in the table below:

Balance, December 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pre-delivery installments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capitalized interest and finance costs . . . . . . . . . . . . . . . . . . . . . . .
Other capitalized costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transferred to vessels, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance, December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pre-delivery installments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capitalized interest and finance costs . . . . . . . . . . . . . . . . . . . . . . .
Other capitalized costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sale and leaseback (Note 12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance, December 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

339,552
572,496
7,845
10,090
(689,112)

240,871
57,048
1,306
704
(299,929)

—

7. Vessels, Net:

The amounts in the accompanying consolidated balance sheets are analyzed as follows:

Balance, January 1, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfer to assets held for sale. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vessel acquisitions and other vessels’ costs. . . . . . . . . . . . . . . . . . . . .
Disposals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance, December 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vessel acquisitions and other vessels’ costs. . . . . . . . . . . . . . . . . . . . .
Transfer from advances for vessel acquisitions . . . . . . . . . . . . . . . . .
Derecognition of vessels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance, December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vessel acquisitions and other vessels’ costs. . . . . . . . . . . . . . . . . . . . .
Disposals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance, December 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Vessel Cost

2,298,108
—
(25,000)
74,053
(43,125)

2,304,036
—
51,853
689,112
(29,659)
(54,343)

2,960,999
—
28,984
(36,543)

Accumulated
Depreciation

Net Book
Value

(679,221)
(80,333)
20,697
—
17,166

(721,691)
(89,903)
—
—
53
37,930

(773,611)
(99,515)
—
18,506

1,618,887
(80,333)
(4,303)
74,053
(25,959)

1,582,345
(89,903)
51,853
689,112
(29,606)
(16,413)

2,187,388
(99,515)
28,984
(18,037)

2,953,440

(854,620)

2,098,820

During the year ended December 31, 2012, the Company acquired five secondhand

containerships, MSC Ulsan, MSC Koroni (ex. Koroni), MSC Itea (ex. Kyparissia), Stadt Luebeck and
Messini at an aggregate price of $73,000.

During the year ended December 31, 2012, the Company sold for scrap the container vessels

Gather, Gifted, Genius I and Horizon at an aggregate price of $22,110 and recognized a net loss of
$2,796 (including the effect of the partial reversal of a provision recorded in 2011 for costs
associated with the grounding of Rena), which is separately reflected in Gain / (Loss) on sale /
disposal of vessels, net in the accompanying 2012 statement of income.

During the year ended December 31, 2013, the Company took delivery from the shipyard of the

seven newbuild container vessels MSC Athens, MSC Athos, Valor, Value, Valiant, Valence and
Vantage at an aggregate cost of $689,112 (Note 6). Furthermore, during the year ended December

F-22

72713

COSTAMARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2012, 2013 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)

31, 2013, the Company acquired the four secondhand container vessels Venetiko, Petalidi, Ensenada
Express and X-Press Padma at an aggregate price of $51,853. On July 12, 2013, pursuant to the
Framework Agreement (Notes 9 and 10), York (as defined below) participated with a 51% interest
in the share capital of the ship-owning companies of the vessels Petalidi, Ensenada Express and X-
Press Padma (Note 10).

During the year ended December 31, 2013, the Company sold for scrap the container vessels
MSC Washington, MSC Austria and MSC Antwerp at an aggregate price of $23,809 and recognized a
net gain of $518, which is separately reflected in Gain / (Loss) on sale / disposal of vessels, net in
the accompanying 2013 consolidated statement of income.

During the year ended December 31, 2014, the Company acquired the three secondhand vessels

Neapolis, Areopolis and Lakonia at an aggregate price of $27,740.

During the year ended December 31, 2014, the Company sold for scrap the container vessels

Konstantina, MSC Kyoto and Akritas at an aggregate price of $24,329 and recognized a net gain of
$2,543, which is separately reflected in Gain / (Loss) on sale / disposal of vessels, net in the
accompanying 2014 consolidated statement of income.

Forty-six of the Company’s vessels, with a total carrying value of $1,939,812 as of December 31,

2014, have been provided as collateral to secure the long-term debt discussed in Note 11.

8. Deferred Charges:

The amounts in the accompanying consolidated balance sheets are analyzed as follows:

Financing
Costs

Dry-docking
and Special
Survey Costs

Balance, January 1, 2012. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Write-off. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfer to asset held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance, December 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derecognition of deferred charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Write-off. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance, December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Write-off. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance, December 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11,923
547
(1,143)
(14)
—

11,313
210
(1,569)
—
—

9,954
2,055
(2,084)
(2,023)

7,902

20,718
11,171
(8,179)
(786)
(138)

22,786
6,189
(8,084)
(553)
(428)

19,910
10,150
(7,814)
(1,473)

20,773

Total

32,641
11,718
(9,322)
(800)
(138)

34,099
6,399
(9,653)
(553)
(428)

29,864
12,205
(9,898)
(3,496)

28,675

Financing costs represent fees paid to the lenders for the conclusion of the Company’s

financing. The amortization and write off of loan financing costs is included in interest and finance
costs in the accompanying consolidated statements of income (Note 17).

During the years ended December 31, 2012, 2013 and 2014, nine, eight and eleven vessels,
respectively underwent their special surveys. The amortization of the dry-docking and special survey
costs is separately reflected in the accompanying consolidated statements of income.

F-23

94441

COSTAMARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2012, 2013 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)

9. Costamare Ventures Inc.:

On May 15, 2013, the Company, along with its wholly-owned subsidiary, Costamare Ventures

Inc. (“Costamare Ventures”), entered into a Framework Deed (the “Framework Agreement”) with
York Capital Management Global Advisors LLC and its affiliate Sparrow Holdings, L.P.
(collectively, “York”) to invest jointly in the acquisition and construction of container vessels. Under
the Framework Agreement the decisions regarding vessel acquisitions will be made jointly by
Costamare Ventures and York and the Company reserves the right to acquire any vessels that York
decides not to pursue.

Under the terms of the Framework Agreement, York agreed to invest up to $250 million in
mutually agreed vessel acquisitions and Costamare Ventures agreed to invest a minimum of $75
million with an option to invest up to $240 million in these transactions. Depending on the amount
Costamare Ventures elects to invest, it is expected that it will hold between 25% and 49% of the
equity in the entities that will be formed under the Framework Agreement (the “affiliate ship-
owning companies”) and York will hold the balance. Costamare Shipping provides shipmanagement
and administrative services to the vessels acquired under the Framework Agreement, with the right
to subcontract to V.Ships Greece and/or Shanghai Costamare. The Framework Agreement will
terminate on its sixth anniversary or upon the occurrence of certain extraordinary events as
described therein. At that time, Costamare Ventures may elect to divide the vessels owned by all
such vessel-owning entities between itself and York to reflect their cumulative participation in all
such entities. The Company accounts for the entities formed under the Framework Agreement as
equity investments. As at December 31, 2014, the Company holds a range of 25% to 49% of the
capital stock of fourteen jointly-owned companies formed pursuant to the Framework Agreement
with York (Note 10).

10. Investment in Affiliates:

The affiliate companies, all of which are incorporated in the Marshall Islands and are accounted

for under the equity method, are as follows:

Entity

Vessel/Hull

Participation %
December 31, 2014

Date Established/
Acquired

Steadman Maritime Co. . . . . . . . .
Marchant Maritime Co.. . . . . . . . .
Horton Maritime Co. . . . . . . . . . . .
Smales Maritime Co. . . . . . . . . . . .
Kemp Maritime Co. . . . . . . . . . . . .
Hyde Maritime Co. . . . . . . . . . . . . .
Ainsley Maritime Co.. . . . . . . . . . .
Ambrose Maritime Co. . . . . . . . . .
Benedict Maritime Co. . . . . . . . . .
Bertrand Maritime Co. . . . . . . . . .
Beardmore Maritime Co. . . . . . . .
Schofield Maritime Co. . . . . . . . . .
Fairbank Maritime Co. . . . . . . . . .
Connell Maritime Co. . . . . . . . . . .

Ensenada Express
X-Press Padma
Petalidi
Elafonisos
Hull NCP0113
Hull NCP0114
Hull NCP0115
Hull NCP0116
Hull HN2121
Hull HN2122
Hull HN2123
Hull HN2124
Hull HN2125
n/a

49%
49%
49%
49%
49%
49%
25%
25%
40%
40%
40%
40%
40%
40%

July 1, 2013
July 8, 2013
June 26, 2013
June 6, 2013
June 6, 2013
June 6, 2013
June 25, 2013
June 25, 2013
October 16, 2013
October 16, 2013
December 23, 2013
December 23, 2013
December 23, 2013
December 18, 2013

On July 12, 2013, in accordance with the Framework Agreement, York contributed $16,044, in

the aggregate, in order to acquire a 51% equity interest in the affiliate ship-owning companies
Steadman Maritime Co., Marchant Maritime Co. and Horton Maritime Co., and for initial working

F-24

41923

COSTAMARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2012, 2013 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)

capital of such affiliate ship-owning companies. There was no difference between: (a) the aggregate
of the fair value of the consideration received and the fair value of the retained investment, as
compared with (b) the carrying amount of the former subsidiaries assets and liabilities, in each case
at the date the subsidiaries were deconsolidated.

Furthermore, in July 2013, Costamare Ventures participated with 49% in the equity of Kemp

Maritime Co. and Hyde Maritime Co. who entered into ship-building contracts for the construction
of two 9,000 TEU container vessels, subject to upgrade, by contributing $8,707, in the aggregate up
to December 31, 2013 and $34,709, in the aggregate during the year ended December 31, 2014.

During the year ended December 31, 2014, Costamare Ventures participated with 25% in the
equity of Ainsley Maritime Co. and Ambrose Maritime Co., who entered into ship-building contracts
for the construction of two 11,000 TEU container vessels, by contributing $8,767, in the aggregate.
Furthermore, Costamare Ventures participated with 40% in the equity of Benedict Maritime Co.,
Bertrand Maritime Co., Beardmore Maritime Co., Schofield Maritime Co. and Fairbank Maritime
Co., who entered into ship-building contracts for the construction of five 14,000 TEU container
vessels, by contributing $30,305, in the aggregate. In December 2014, these five companies sold their
ship-building contracts to a financial institution and agreed to lease back the vessels upon their
delivery from the shipyard for a period of 12 years.

During the year ended December 31, 2014, pursuant to the Framework Agreement, Costamare
Ventures participated with 40% in the equity of Connell Maritime Co. by contributing the amount
of $6,669 and with 49% in the equity of Smales Maritime Co. by contributing the amount of $4,654
for the acquisition of the secondhand vessel Elafonisos.

For year ended December 31, 2013, the Company recorded a net gain of $692, which is
separately reflected as Equity gain / (loss) on investments in the accompanying 2013 consolidated
statement of income. For the year ended December 31, 2014, the Company recorded a net loss of
$3,428, which is separately reflected as Equity gain / (loss) on investments in the accompanying 2014
consolidated statement of income.

Furthermore, during the year ended December 31, 2014, eight affiliate ship-owning companies
declared dividends to their shareholders and Costamare Ventures received the amount of $31,828,
which is included in Investments in affiliates in the accompanying 2014 consolidated balance sheet.

In addition, Costamare Ventures has provided Marchant Maritime Co., Horton Maritime Co.
and Steadman Maritime Co. with certain cash advances. As of December 31, 2014, the aggregate
balance due from the three companies amounted to $3,278 and is included in Due from related
parties in the 2014 consolidated balance sheet.

In addition, the Company received the amount of $1,813, for services rendered, from an affiliate
ship-owning company, which is included in Other, net in the 2014 consolidated statement of income.

The summarized combined financial information of the affiliates is as follows:

Non-current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

49,072
3,184

177,220
13,267

52,256

190,487

Current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,196

6,283

December 31,
2014

2013

F-25

96238

COSTAMARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2012, 2013 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)

Voyage revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income / (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year ended
December 31,
2013
2014

5,580

1,410

12,449

(6,360)

11. Long-Term Debt:

The amounts shown in the accompanying consolidated balance sheets consist of the following:

Borrow-
er(s)

1.
2.

Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Term Loans:
1.

Costis Maritime Corporation and Christos Maritime
Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. Mas Shipping Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3. Montes Shipping Co. and Kelsen Shipping Co. . . . . . . . . . . . . . . . .
Capetanissa Maritime Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.
Rena Maritime Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.
Costamare Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.
Adele Shipping Co., Bastian Shipping Co. and Cadence
7.
Shipping Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Costamare Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Undine Shipping Co., Quentin Shipping Co. and Sander
Shipping Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10. Raymond Shipping Co. and Terance Shipping Co. . . . . . . . . . . . . .
11. Costamare Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8.
9.

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less-current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

December 31,
2013

December 31,
2014

675,774

585,883

100,500
47,000
90,000
55,000
52,500
90,100

146,295
129,243

224,107
148,707
108,350

91,500
38,875
78,000
50,000
47,500
73,414

—
120,330

208,826
137,793
87,820

1,191,802
1,867,576
(206,717)

934,058
1,519,941
(192,951)

1,660,859

1,326,990

1. Credit Facility:

On July 22, 2008, the Company signed a loan agreement with a consortium of banks, for a
$1,000,000 Credit Facility (the “Facility”) for general corporate and working capital purposes. The
Company used $631,340 of the proceeds from the Facility to repay the then existing indebtedness.
The Facility bears interest at the 3, 6, 9 or 12 months (at the Company’s option) LIBOR plus
margin. Following the sale of MSC Antwerp (ex. Sophia Britannia) the Company, on September 30,
2013, repaid $1,500 of the Facility.

The outstanding balance of the Facility as of December 31, 2014, is repayable in 14 equal,
consecutive quarterly installments, of $22,473 each plus a balloon payment of $271,261 payable
together with the last installment. The quarterly installments were calculated using a formula
specified in the agreement, following the amalgamation of the Facility’s compounds on June 30,
2011, as documented in the third supplemental agreement to the Facility that the Company entered
into on September 6, 2011.

On December 17, 2012, the Company entered into a fourth supplemental agreement which
released two of the Company’s subsidiaries guarantors and the mortgages over their vessels and

F-26

45293

COSTAMARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2012, 2013 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)

replaced them with mortgages over two other vessels. On May 28, 2013, the Company entered into a
fifth supplemental agreement under which the bank agreed to the change of flags of five of the
Company’s vessels and to the transfer of the technical management of two of the Company’s vessels
to V.Ships Greece. On August 30, 2013, the Company entered into a sixth supplemental agreement
which released one of the Company’s subsidiary guarantor and the mortgage over its vessel and
replaced it with mortgages over two other vessels. On July 2, 2014 contemporaneously with the
restructuring with a major charterer discussed above (Note 4), the Company entered into a seventh
supplemental agreement which amends the calculation method of the security value maintenance of
the original agreement for two of the vessels financed by the Credit Facility which are chartered
with the specific charterer.

The Facility, as of December 31, 2014, was secured with, among others, first priority mortgages

over 18 of the Company’s vessels, first priority assignment of vessels’ insurances and earnings,
charter party assignments, first priority pledges over the operating accounts and corporate guarantees
of 18 ship-owning companies.

The Facility and certain of the term loans described under Note 11.2 below include among
others, financial covenants requiring: (i) the ratio of Total Liabilities (after deducting cash and cash
equivalents) to Market Value Adjusted Total Assets (after deducting cash and cash equivalents) not
to exceed 0.75 to 1.00, (ii) minimum liquidity of the greater of $30,000 or 3% of the total debt of
the Company, (iii) the ratio of EBITDA to net interest expense not to be less than 2.50 to 1.00, (iv)
Market Value Adjusted Net Worth, defined as the amount by which the Market Value Adjusted
Total Assets exceed the Total Liabilities, to exceed $500,000. The Company’s other term loans
described under Note 11.2 below also contain financial covenants requiring the ratio of net funded
debt to total net assets ratio not to exceed 80% on a charter inclusive valuation basis as well as
financial covenants that are either equal to or less stringent than the foregoing financial covenants.

2. Term loans:

1. In May 2008, Costis Maritime Corporation and Christos Maritime Corporation entered into a

loan agreement with a bank for an amount of up to $150,000 in the aggregate ($75,000 each) on a
joint and several basis in order to partly finance the acquisition cost of the vessels Sealand New
York and Sealand Washington. As at December 31, 2014, the outstanding balance of the loan of
$91,500 is repayable in 7 equal semi-annual installments of $4,500, each from May 2015 to May 2018
and a balloon payment of $60,000 payable together with the last installment.

2. In January 2008, Mas Shipping Co. entered into a loan agreement with a bank for an amount

of up to $75,000 in order to partly finance the acquisition cost of vessel Maersk Kokura. As at
December 31, 2014, the outstanding balance of the loan of $38,875 is repayable in 7 variable semi-
annual installments from February 2015 to February 2018 and a balloon payment of $10,000 payable
together with the last installment.

3. In December 2007, Montes Shipping Co. and Kelsen Shipping Co. entered into a loan
agreement with a bank for an amount of up to $150,000 in the aggregate ($75,000 each) on a joint
and several basis in order to partly finance the acquisition cost of the vessels Maersk Kawasaki and
Maersk Kure. As at December 31, 2014, the outstanding balance of the loan of $78,000 is repayable
in 6 equal semi-annual installments of $6,000 each from June 2015 to December 2017 and a balloon
payment of $42,000 payable together with the last installment.

4. In June 2006, Capetanissa Maritime Corporation entered into a loan agreement with a bank

for an amount of up to $90,000, in order to partly finance the acquisition cost of the vessel Cosco
Beijing. As at December 31, 2014, the outstanding balance of the loan of $50,000 is repayable in 8
equal semi-annual installments of $2,500 each from February 2015 to August 2018 and a balloon
payment of $30,000 payable together with the last installment.

F-27

72038

COSTAMARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2012, 2013 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)

5. In February 2006, Rena Maritime Corporation entered into a loan agreement with a bank for

an amount of up to $90,000 in order to partly finance the acquisition cost of the vessel Cosco
Guangzhou. As at December 31, 2014, the outstanding balance of the loan of $47,500 is repayable in
7 equal semi-annual installments of $2,500 each from February 2015 to February 2018 and a balloon
payment of $30,000 payable together with the last installment.

6. On November 19, 2010, Costamare entered into a term loan agreement with a consortium of

banks for an amount of up to $120,000, which was available for drawing for a period up to 18
months. As of December 31, 2014, the Company had drawn the amount of $38,500 (tranche a), the
amount of $42,000 (tranche b), the amount of $21,000 (tranche c), the amount of $7,470 (tranche d)
and the amount of $7,470 (tranche e) under this term loan agreement in order to finance part of the
acquisition cost of MSC Romanos, MSC Methoni, MSC Ulsan, MSC Koroni (ex. Koroni) and MSC
Itea (ex. Kyparissia), respectively. As at December 31, 2014, the outstanding balance of the tranche
(a) of the loan of $25,988 is repayable in 19 equal quarterly installments of $962.5 from February
2015 to August 2019 and a balloon payment of $7,700 payable together with the last installment. As
at December 31, 2014, the outstanding balance of the tranche (b) of the loan of $29,400 is repayable
in 20 equal quarterly installments of $1,050 from January 2015 to October 2019 and a balloon
payment of $8,400 payable together with the last installment. As at December 31, 2014, the
outstanding balance of the tranche (c) of the loan of $15,225 is repayable in 21 equal quarterly
installments of $525 from February 2015 to February 2020 and a balloon payment of $4,200 payable
together with the last installment. On May 21, 2014, the then outstanding balance of $4,202 of the
tranche (d) of the loan was fully repaid. As at December 31, 2014, the outstanding balance of the
tranche (e) of the loan of $2,801 is repayable in 2 equal quarterly installments of $466.9 from
February 2015 to May 2015 and a balloon payment of $1,867.3 payable together with the last
installment.

7. On January 14, 2011, Adele Shipping Co., Bastian Shipping Co. and Cadence Shipping Co.,
wholly-owned subsidiaries of Costamare, concluded a credit facility with a consortium of banks, as
joint-and-several borrowers, for an amount of up to $203,343 to finance part of the acquisition and
construction cost of Hulls H1068A, H1069A and H1070A (Note 6). The drawdown of the facility
was made in three tranches, one for each hull. The credit facility was repayable in forty consecutive
quarterly installments, the first thirty-nine (1-39) in the amount of $1,412 per tranche each, and a
final (fortieth) installment of $12,713 per tranche. As of December 31, 2013, the Company had
drawn the amount of $48,765 (tranche (a) - H1068A), $48,765 (tranche (b) - H1069A) and $48,765
(tranche (c) - H1070A), in order to partly finance the second installment and fully finance the third
and fourth pre-delivery installment of hulls H1068A, H1069A and H1070A. MSC Azov (Hull
H1068A), MSC Ajaccio (Hull H1069A) and MSC Amalfi (Hull H1070A) were delivered to the
Company, on January 14, 2014, March 14, 2014 and April 28, 2014, respectively and at the same
time the Company agreed the sale and leaseback of such vessels and repaid the then outstanding
balance of the three tranches (Note 12).

8. On April 7, 2011, Costamare, as borrower, concluded a credit facility with a bank, for an
amount up to the lesser of $140,000 and 70% of the contract price of the vessels, to finance part of
the acquisition and construction cost of Hulls S4010 and S4011 (Note 6). In April 2011, the
Company drew down the amount of $26,740 in order to partly refinance the first pre-delivery
installment of Hulls S4010 and S4011. During the year ended December 31, 2012, the Company
drew down the amount of $26,740, in aggregate, in order to partly finance the second and third pre-
delivery installments of Hulls S4010 and S4011. Furthermore, during the year ended December 31,
2013, the Company drew down in aggregate the amount of $80,220, in order to partly finance the
final installments of Hulls S4010 (MSC Athens), which was delivered to the Company on March 14,
2013 and S4011 (MSC Athos), which was delivered to the Company on April 8, 2013. As at
December 31, 2014, the outstanding balance of the loan of $120,330 is repayable in 13 equal semi-

F-28

39349

COSTAMARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2012, 2013 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)

annual installments of $4,456.7 from January 2015 until January 2021 and a balloon payment of
$62,392.7 payable together with the last installment.

9. On August 16, 2011, Undine Shipping Co., Quentin Shipping Co. and Sander Shipping Co.,
wholly-owned subsidiaries of Costamare concluded a credit facility with a consortium of banks, as
joint-and-several borrowers, for an amount of up to $229,200 to finance part of the acquisition and
construction cost of Hulls S4020, S4022 and S4024 (Note 6). The drawdown of the facility was made
in three tranches. On August 26, 2011, the Company drew down an amount of $22,920 in order to
partly refinance the first pre-delivery installment of Hulls S4020, S4022 and S4024. During the year
ended December 31, 2012, the Company drew down in aggregate the amount of $38,200 in order to
partly finance the second and the third pre-delivery installments of Hulls S4020, S4022 and S4024.
Furthermore, during the year ended December 31, 2013, the Company drew down in aggregate the
amount of $168,080 in order to partly finance the third pre-delivery and the delivery final
installments of Hulls S4020 (Valor), S4022 (Valiant) and S4024 (Vantage), which were delivered to
the Company on June 3, 2013, August 5, 2013 and November 8, 2013, respectively. As at
December 31, 2014, the outstanding balance of the tranche (a) of $68,760 relating to Hull S4020
(Valor), is repayable in 22 equal quarterly installments of $1,273.4 from January 2015 to April 2020
and a balloon payment of $40,744.8 payable together with the last installment. As at December 31,
2014, the outstanding balance of the tranche (b) of $68,760 relating to Hull S4022 (Valiant), is
repayable in 22 equal quarterly installments of $1,273.4 from March 2015 to June 2020 and a balloon
payment of $40,744.8 payable together with the last installment. As at December 31, 2014, the
outstanding balance of the tranche (c) of $71,306 relating to Hull S4024 (Vantage) is repayable in 24
equal quarterly installments of $1,273.4 and a balloon payment payable together with the last
installment of $40,744.8 from February 2015 to November 2020.

10. On October 12, 2011, Raymond Shipping Co. and Terance Shipping Co. wholly-owned
subsidiaries of the Company concluded a credit facility with a bank, as joint and several borrowers,
for an amount of up to $152,800 to finance part of the construction and acquisition cost of Hulls
S4021 and S4023 (Note 6). On October 25, 2011, the Company drew down an amount of $15,280 in
order to partly refinance the first pre-delivery installment of Hulls S4021 and S4023. During the year
ended December 31, 2012, the Company drew down in aggregate the amount of $30,560 in order to
partly finance the second and third pre-delivery installments of Hulls S4021 and S4023. Furthermore,
during the year ended December 31, 2013 the Company drew down in the aggregate the amount
$106,960 in order to partly finance the final installments of Hulls S4021 (Value) and S4023 (Valence),
which vessels were delivered to the Company on June 25, 2013, and September 2, 2013, respectively.
As at December 31, 2014, the outstanding balance of the tranche (a) of $68,214 relating to Hull
S4021 (Value), is repayable in 22 equal quarterly installments of $1,364.3 from March 2015 to June
2020 and a balloon payment of $38,199.6 payable together with the last installment. As at December
31, 2014, the outstanding balance of tranche (b) of the loan of $69,579 relating to Hull S4023
(Valence) is repayable in 23 equal quarterly installments of $1,364.3 from February 2015 to
August 2020 and a balloon payment of $38,199.6 payable together with the last installment.

11. On October 6, 2011, the Company concluded a loan facility with a bank for an amount of
up to $120,000, in order to partly finance the aggregate market value of eleven vessels in its fleet. In
March 2012, the Company drew the amount of $113,700. Furthermore, on June 29, 2012, the
Company entered into a supplemental agreement for a further amount of $11,300 to finance the
acquisition of the vessel Stadt Luebeck, which was drawn down in August 2012 upon the delivery of
the vessel. In April 11, 2014, the Company entered into another supplemental agreement, for a
further amount of $9,000 to partly finance the acquisition of the vessel Neapolis, which was drawn
down in April 2014 upon the delivery of the vessel. In May 2014, the Company repaid the amount
of $6,495 due to the sale of Konstantina (Note 7). Furthermore in September 2014 the Company
repaid the amount of $6,000 due to the sale of Akritas (Note 7). As at December 31, 2014, the

F-29

88171

COSTAMARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2012, 2013 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)

outstanding balance of $87,820 is repayable in 16 quarterly variable consecutive installments from
March 2015 to December 2018 and a balloon payment of $39,490 payable together with the last
installment.

The term loans discussed above bear interest at LIBOR plus a spread and are secured by, inter

alia, (a) first priority mortgages over the financed vessels, (b) first priority assignments of all
insurances and earnings of the mortgaged vessels and (c) corporate guarantees of Costamare or its
subsidiaries, as the case may be. The loan agreements contain usual ship finance covenants, including
restrictions as to changes in management and ownership of the vessels, additional indebtedness,
mortgaging of vessels, as well as minimum requirements regarding hull Value Maintenance Clauses
(“VMC”) in the range of 100% to 125% and restrictions in dividend payments if an event of default
has occurred and is continuing or would occur as a result of the payment of such dividend.

The annual principal payments required to be made after December 31, 2014, are as follows:

Year ending December 31,

2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 and thereafter . . . . . . . . . . . . . . . . .

Amount

192,951
185,259
227,259
557,946
60,396
296,130

1,519,941

The interest rates of Costamare’s long-term debt at December 31, 2012, 2013 and 2014, were in

the range of 2.71%-6.75%, 1.25%-6.75% and 1.03%-6.75%, respectively. The weighted average
interest rate as at December 31, 2012, 2013 and 2014, was 4.4%, 4.3% and 4.2%, respectively.

Total interest expense incurred on long-term debt (including the effect of the interest rate swaps

discussed in Note 19) for the years ended December 31, 2012, 2013 and 2014, amounted to $76,831,
$81,471 and $77,655, respectively and is included in Interest and finance costs in the accompanying
consolidated statements of income. Of the above amount incurred in 2012, $8,476 was capitalized
and is included (a) in Advances for vessel acquisitions ($5,280) and (b) in the statement of
comprehensive income / (loss) ($3,196), representing net settlements on interest rate swaps qualifying
for cash flow hedge. Of the above amount incurred in 2013, $11,098 was capitalized and is included
(a) in Advances for vessel acquisitions ($7,845) in the accompanying 2013 consolidated balance sheet
and (b) in the statement of comprehensive income / (loss) ($3,253), representing net settlements on
interest rate swaps qualifying for cash flow hedge. Of the above amount incurred in 2014, $1,795 was
capitalized and is included (a) in Advances for vessel acquisitions ($1,306) (Note 6) and (b) in the
statement of comprehensive income / (loss) ($489), representing net settlements on interest rate
swaps qualifying for cash flow hedge.

3. New Credit Facility:

On September 26, 2014, in connection with the contemplated initial public offering (Note 1),
Costamare Partners LP a Marshall Islands limited partnership and a wholly-owned subsidiary of the
Company, as guarantor, and each of the vessel owning companies, Capetanissa Maritime
Corporation, Jodie Shipping Co., Kayley Shipping Co. and Raymond Shipping Co., as joint and
several borrowers, entered into a new credit facility with certain banks for up to $180,000. The
credit facility consists of:

i. A term loan, in order to refinance the loans discussed in Notes 11.2.4, 11.2.8 and 11.2.10, in
an amount equal to the lesser of (i) $126,600 and (ii) an amount which when aggregated with the
amount drawn under the revolving credit facility as of the drawdown date of the term loan facility,

F-30

21964

COSTAMARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2012, 2013 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)

does not exceed 50% of the market value of the relevant vessels securing the facility. The term loan
is available for a single drawdown through March 31, 2015 and is repayable in 20 equal consecutive
quarterly installments in the amount of approximately $2,221 plus a balloon payment at the final
maturity date, which will be the earlier of the fifth anniversary of the drawdown date or November
19, 2019 (the “Final Maturity Date”).

ii. A revolving credit facility, for general corporate purposes, in an amount equal to the lesser

of (i) $53,400 and (ii) an amount which when aggregated with the amount actually drawn under the
term loan facility, does not exceed 50% of the market value of the relevant vessels securing the
facility. The commitment under the revolving credit facility will be reduced in 20 quarterly amounts
of $937 starting three months after the first drawdown date under the New Credit Facility and the
last such reduction in the amount outstanding as of the Final Maturity Date.

The New Credit Facility will bear interest at LIBOR plus a spread and will be secured among
others by a first priority mortgage over the vessels the COSCO Beijing, the MSC Athens, the MSC
Athos and the Value.

12. Capital Leased Assets and Capital Lease Obligations:

The newbuild vessels MSC Azov, MSC Ajaccio and MSC Amalfi were delivered to the
Company on January 14, 2014, March 14, 2014 and April 28, 2014, respectively (Note 6). At the
same time, the Company agreed with a financial institution to refinance the then outstanding
balance of the loans relating to MSC Azov, MSC Ajaccio and MSC Amalfi, by entering into a ten-
year sale and leaseback transaction for each vessel upon their respective deliveries. These vessels
were sold for an amount of $85,572 each and leased back for a period of ten years.

The sale and leaseback transactions were classified as capital leases. Furthermore, as the fair

value of each vessel sold was in excess of its carrying amount, the difference between the sale
proceeds and the carrying amount was considered as prepaid lease rentals. In this respect, an
aggregate amount of $49,817 (including the net settlements on interest rate swaps qualifying for
hedge accounting of $6,604) was transferred to prepaid lease rentals.

The total value of the three vessels at the inception of the capital lease transactions amounted

to $256,716. The depreciation charged during the year ended December 31, 2014, amounted to
$6,169 and is included in Depreciation in the accompanying 2014 consolidated statement of income.
As of December 31, 2014, the net book value of the three vessels amounted to $250,547 and is
separately reflected as Capital leased assets, in the accompanying 2014 consolidated balance sheet.

The balance of prepaid lease rentals, as of December 31, 2014, is analyzed as follows:

December 31, 2014

Initial recognition of prepaid lease

rentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

49,817

Less: Amortization of prepaid lease

rentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid lease rentals . . . . . . . . . . . . . . . . . . . .
Less: current portion . . . . . . . . . . . . . . . . . . . .
Non-current portion . . . . . . . . . . . . . . . . . . . . .

(4,024)

45,793
(4,982)

40,811

The capital lease obligations amounting to $247,133 as at December 31, 2014 are scheduled to

expire through 2024 and include a bargain purchase option to repurchase the vessels at any time
during the charter period. Total interest expense incurred on capital leases for the year ended
December 31, 2014 amounted to $14,793 and is included in Interest and finance costs in the
accompanying 2014 consolidated statement of income.

F-31

77644

COSTAMARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2012, 2013 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)

The annual lease payments in aggregate required under the capital leases after December 31,

2014 are as follows:

Year ending December 31,

2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 and thereafter . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Amount of interest. . . . . . . . . . . . .
Total lease payments. . . . . . . . . . . . . . . . .

Amount

30,699
30,783
30,698
30,698
30,699
207,553

361,130
(113,997)

247,133

The total capital lease obligations are presented in the accompanying December 31, 2014

consolidated balance sheet as follows:

Capital lease obligation–current . . . . . . .
Capital lease obligation–non current . .

13,508
233,625

247,133

13. Accrued Charter Revenue, Current and Non-Current and Unearned Revenue, Current and Non-
Current:

(a) Accrued charter revenue, Current and Non-Current: The amounts presented as current and

non-current accrued charter revenue in the accompanying consolidated balance sheets as of
December 31, 2013 and 2014, reflect revenue earned, but not collected, resulting from charter
agreements providing for varying annual charter rates over their term, which were accounted for on
a straight-line basis at their average rates. As at December 31, 2013, the net accrued charter
revenue, reduced by the allowance for doubtful amounts of $2,208, totaling to ($16,896), comprises
$409 separately reflected in Current assets, $10,264 separately reflected in Non-current assets and
$27,569 (discussed in (b) below) included in Unearned revenue in current and non-current liabilities
in the accompanying 2013 consolidated balance sheet. As at December 31, 2014, the net accrued
charter revenue, totaling to ($32,751) comprises $511 separately reflected in Current assets, $1,025
separately reflected in Non-current assets, and $34,287 (discussed in (b) below) included in
Unearned revenue in current and non-current liabilities in the accompanying 2014 consolidated
balance sheet. The maturities of the net accrued charter revenue as of December 31 of each year
presented below are as follows:

Year ending December 31,

2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Amount

(4,323)
(9,430)
(11,336)
(7,662)

(32,751)

(b) Unearned Revenue, Current and Non-Current: The amounts presented as current and non-

current unearned revenue in the accompanying consolidated balance sheets as of December 31, 2013
and 2014, reflect: (a) cash received prior to the balance sheet date for which all criteria to recognize
as revenue have not been met and (b) any unearned revenue resulting from charter agreements

F-32

94397

COSTAMARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2012, 2013 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)

providing for varying annual charter rates over their term, which were accounted for on a straight-
line basis at their average rate.

Hires collected in advance . . . . . . . . . . . . . . . . .
Charter revenue resulting from varying

charter rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less current portion . . . . . . . . . . . . . . . . . . . . . . .
Non-current portion . . . . . . . . . . . . . . . . . . . . . . .

December 31,
2013

December 31,
2014

7,196

8,096

27,569

34,765
(9,601)

25,164

34,287

42,383
(12,929)

29,454

14. Commitments and Contingencies:

(a) Long-term time charters: As at December 31, 2014, the Company has entered into time

charter arrangements on all of its vessels in operation with international liner operators. These
arrangements as at December 31, 2014, have remaining terms of up to 111 months. As of the same
date, future minimum contractual charter revenues assuming 365 revenue days per annum per vessel
and the earliest redelivery dates possible, based on vessels’ committed, non-cancelable, long-term
time charter contracts, are as follows:

Year ending December 31,

Amount

453,416
417,343
371,709
198,759
122,306
310,852

1,874,385

(b) Pursuant to the Framework Agreement the Company has a contractual commitment of
approximately $96,774 representing 49% of the remaining construction cost of two vessels under
construction, 40% of the remaining construction cost of five vessels under construction and 25% of
the construction cost of two vessels under construction (Note 10).

regulations and product liability, arise in the ordinary course of the shipping business. In addition,
losses may arise from disputes with charterers, agents, insurance and other claims with suppliers
relating to the operations of the Company’s vessels. Currently, management is not aware of any such
claims not covered by insurance or contingent liabilities, which should be disclosed, or for which a
provision has not been established in the accompanying consolidated financial statements.

The Company accrues for the cost of environmental liabilities when management becomes

aware that a liability is probable and is able to reasonably estimate the probable exposure.
Currently, management is not aware of any other claims or contingent liabilities which should be
disclosed or for which a provision should be established in the accompanying consolidated financial
statements.

The Company is covered for liabilities associated with the individual vessels’ actions to the
maximum limits as provided by Protection and Indemnity (P&I) Clubs, members of the International
Group of P&I Clubs.

F-33

80806

COSTAMARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2012, 2013 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)

15. Common Stock, Preferred Stock and Additional Paid-In Capital:

(a) Common Stock: From inception through July 11, 2010, the authorized common stock of

Costamare consisted of 2,000,000 shares with a par value of $0.0001 per share out of which
1,000,000 shares were issued to the Family. On July 12, 2010, the Company’s articles of
incorporation were amended. Under the amended articles of incorporation, the Company’s
authorized capital stock consists of 1,000,000,000 shares of common stock, par value $0.0001 per
share and 100,000,000 preferred shares, par value $0.0001 per share of which no shares were issued.
Of these preferred shares, 10,000,000 shares have been designated Series A Participating Preferred
Stock in connection with the adoption of a stockholder rights plan. All shares of stock are in
registered form.

On July 20, 2010, pursuant to a rights offering authorized by the Board of Directors on July 14,

2010, the Company issued 24,000,000 shares of common stock in exchange of $2,400, increasing the
issued share capital of the Company to 25,000,000 shares of common stock.

On October 19, 2010, within the context of the Initial Public Offering completed in

November 2010, the Company effected a dividend of 0.88 shares for each share of common stock
outstanding on the record date of August 27, 2010 (the “Stock Split”). As a result of this dividend,
the Company issued 22,000,000 additional shares in respect of its 25,000,000 shares of the then
outstanding common stock.

On November 4, 2010, the Company completed its Initial Public Offering in the United States

under the Securities Act. In this respect 13,300,000 common shares at par value $0.0001 were issued
at a public offering price of $12.00 per share, increasing the issued share capital to 60,300,000 shares.
The net proceeds of the Initial Public Offering were $145,543.

On March 27, 2012, the Company completed a follow-on public equity offering in the

United States under the Securities Act. In this respect 7,500,000 shares at par value $0.0001 were
issued at a public offering price of $14.10 per share, increasing the issued share capital to 67,800,000
shares. The net proceeds of the follow-on offering were $100,584.

On October 19, 2012, the Company completed a follow-on public equity offering in the
United States under the Securities Act. In this respect 7,000,000 shares at par value $0.0001 were
issued at a public offering price of $14.00 per share, increasing the issued share capital to 74,800,000
shares. The net proceeds of the follow-on offering were $93,547.

(b) Preferred Stock: On August 7, 2013, the Company issued 2,000,000, Series B Cumulative
Redeemable Perpetual Preferred Stock (the “Series B Preferred Stock”) in the United States under
the Securities Act, which pay dividends of 7.625% per annum in arrears on a quarterly basis (equal
to $1.90625 per annum per share) at $25 per share. At any time after August 6, 2018, the Series B
Preferred Stock may be redeemed, at the Company’s election at a price of $25 of liquidation
preference per share. The net proceeds from the offering were $48,042.

On January 22, 2014, the Company issued 4,000,000, Series C Cumulative Redeemable Perpetual

Preferred Stock (the “Series C Preferred Stock”) in the United States under the Securities Act,
which pay dividends of 8.50% per annum in arrears on a quarterly basis (equal to $2.125 per annum
per share) at $25 per share. At any time after January 21, 2019, the Series C Preferred Stock may
be redeemed, at the Company’s election at a price of $25 of liquidation preference per share. The
net proceeds from the offering were $96,523.

(c) Additional Paid-in Capital: The amounts shown in the accompanying consolidated balance
sheets, as additional paid-in capital, include: (i) payments made by the stockholders at various dates
to finance vessel acquisitions in excess of the amounts of bank loans obtained, (ii) advances for
working capital purposes and (iii) the difference between the par value of the shares issued in the

F-34

35476

COSTAMARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2012, 2013 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)

Initial Public Offering in November 2010 and the offerings in March 2012, October 2012,
August 2013 and January 2014 and the net proceeds received from the issuance of such shares.

(d) Dividends declared and / or paid: During the year ended December 31, 2013, the Company
declared and paid to its common stockholders (i) $20,196 or $0.27 per common share for the fourth
quarter of 2012, (ii) $20,196 or $0.27 per common share for the first quarter of 2013, (iii) $20,196 or
$0.27 per common share for the second quarter of 2013 and (iv) $20,196 or $0.27 per common share
for the third quarter of 2013. During the year ended December 31, 2014, the Company declared and
paid to its common stockholders (i) $20,196 or $0.27 per common share for the fourth quarter of
2013, (ii) $20,944 or $0.28 per common share for the first quarter of 2014, (iii) $20,944 or $0.28 per
common share for the second quarter of 2014 and (iv) $20,944 or $0.28 per common share for the
third quarter of 2014. During the year ended December 31, 2013, the Company declared and paid to
its holders of Series B Preferred Stock $731 or $0.3654 per share for the period from August 6, 2013
to October 14, 2013. During the year ended December 31, 2014, the Company declared and paid to
its holders of Series B Preferred Stock (i) $953 or $0.476563 per share for the period from October
14, 2013 to January 14, 2014, (ii) $953 or $0.476563 per share for the period from January 15, 2014
to April 14, 2014, (iii) $953 or $0.476563 per share for the period from April 15, 2014 to July 14,
2014 and (iv) $953 or $0.476563 per share for the period from July 15, 2014 to October 14, 2014.
During year ended December 31, 2014, the Company declared and paid to its holders of Series C
Preferred Stock (i) $1,984 or $0.495833 per share for the period from January 22, 2014 to April 14,
2014, (ii) $2,125 or $0.531250 per share for the period from April 15, 2014 to July 14, 2014 and
(iii) $2,125 or $0.531250 per share for the period from July 15, 2014 to October 14, 2014.

16. Earnings per share (EPS)

All common shares issued are Costamare common stock and have equal rights to vote and
participate in dividends. In August 2013, the Company issued Series B Preferred Stock, receiving an
annual dividend of 7.625% in arrears on the 15th day of January, April, July and October of each
year. Furthermore, in January 2014 the Company issued Series C Preferred Stock, receiving an
annual dividend of 8.50% in arrears on the 15th day of January, April, July and October of each
year. Profit or loss attributable to common equity holders is adjusted by the contractual amount of
dividends on Series B Preferred Stock and Series C Preferred Stock that should be paid for the
period. Dividends paid or accrued on Series B Preferred Stock and Series C Preferred Stock during
the years ended December 31, 2012, 2013 and 2014, amounted to $nil, $1,536 and $11,909,
respectively.

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: paid and accrued earnings

allocated to Preferred Stock. . . . . . . . .

Net income available to common

stockholders . . . . . . . . . . . . . . . . . . . . . . . . .

Weighted average number of common
shares, basic and diluted . . . . . . . . . . . .

Earnings per common share, basic and
diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2012
Basic EPS

2013
Basic EPS

2014
Basic EPS

81,129

103,087

115,087

—

(1,536)

(11,909)

81,129

101,551

103,178

67,612,842

74,800,000

1.20

1.36

1.38

F-35

49596

COSTAMARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2012, 2013 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)

17. Interest and Finance Costs:

The amounts in the accompanying consolidated statements of income are analyzed as follows:

Interest expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest capitalized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Swap effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization and write-off of financing costs . . . . . . . .
Commitment fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bank charges and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2012

2013

2014

28,485
(8,476)
48,346
1,157
4,921
301
74,734

33,018
(11,098)
48,453
1,569
2,283
308
74,533

46,345
(1,795)
46,103
4,107
506
296
95,562

18. Taxes:

Under the laws of the countries of the companies’ incorporation and/or vessels’ registration, the

companies are not subject to tax on international shipping income; however, they are subject to
registration and tonnage taxes, which are included in Vessel operating expenses in the accompanying
consolidated statements of income.

The vessel owning companies with vessels that have called on the United States during the
relevant year of operation are obliged to file tax returns with the Internal Revenue Service. The
applicable tax is 50% of 4% of U.S. related gross transportation income unless an exemption
applies. Management believes that based on current legislation the relevant vessel owning companies
are entitled to an exemption because they satisfy the relevant requirements, namely that (i) the
related vessel owning companies are incorporated in a jurisdiction granting an equivalent exemption
to U.S. corporations and (ii) over 50% of the ultimate stockholders of the vessel owning companies
are residents of a country granting an equivalent exemption to U.S. persons.

19. Derivatives:

(a) Interest rate swaps that meet the criteria for hedge accounting: The Company, according to

its long-term strategic plan to maintain stability in its interest rate exposure, has decided to minimize
its exposure to floating interest rates by entering into interest rate swap agreements. To this effect,
the Company has entered into interest rate swap transactions with varying start and maturity dates,
in order to proactively and efficiently manage its floating rate exposure.

These interest rate swaps are designed to hedge the variability of interest cash flows arising

from floating rate debt, attributable to movements in three-month or six-month USD LIBOR.
According to the Company’s Risk Management Accounting Policy, after putting in place the formal
documentation required by ASC 815 in order to designate these swaps as hedging instruments as
from their inception, these interest rate swaps qualified for hedge accounting. Accordingly, only
hedge ineffectiveness amounts arising from the differences in the change in fair value of the hedging
instrument and the hedged item are recognized in the Company’s earnings. Assessment and
measurement of the effectiveness of these interest rate swaps are performed at each reporting
period. For qualifying cash flow hedges, the fair value gain or loss associated with the effective
portion of the cash flow hedge is recognized initially in “Other comprehensive income” and
recognized to the consolidated statement of income in the periods when the hedged item affects
profit or loss. Any ineffective portion of the gain or loss on the hedging instrument is recognized in
the consolidated statement of income immediately.

At December 31, 2013 and 2014, the Company had interest rate swap agreements with an
outstanding notional amount of $1,588,491 and $1,030,642, respectively. The fair value of these
interest rate swaps outstanding at December 31, 2013 and 2014, amounted to a liability of $87,806

F-36

55105

COSTAMARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2012, 2013 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)

and a liability of $55,422, respectively and these are included in the accompanying consolidated
balance sheets. The maturity of these interest rate swaps range between June 2015 and August 2020.

During the years ended December 31, 2012, 2013 and 2014, the realized ineffectiveness on the

interest rate swaps discussed under (a) above was nil, a gain of $254 and a net gain of $645,
respectively and are included in Gain / (Loss) on derivative instruments, net in the accompanying
consolidated statements of income.

During the year ended December 31, 2014, the Company terminated three interest rate
derivative instruments and paid the counterparty breakage costs of $10,192 in aggregate and is
reflected in the Swaps breakage costs in the accompanying 2014 consolidated statement of income.

(b) Interest rate swaps that do not meet the criteria for hedge accounting: As of December 31,

2013 and 2014, the Company had interest rate swap agreements with an outstanding notional amount
of $100,000 and $217,533, respectively for the purpose of managing risks associated with the
variability of changing LIBOR-related interest rates. Such agreements did not meet hedge
accounting criteria and, therefore, changes in its fair value are reflected in earnings. The fair value
of these interest rate swaps at December 31, 2013 and 2014, was a liability of $15,406 and a liability
of $18,509, respectively and these are included in Fair value of derivatives in the accompanying
consolidated balance sheets. The maturity of these interest rate swaps range between February 2017
and August 2020.

Euro/U.S. dollar forward agreements totaling $22,500 at an average forward rate of Euro/U.S. dollar
1.273 expiring in monthly intervals up to September 2015.

As of December 31, 2013, the Company had no outstanding Euro/USD foreign currency

agreements.

As of December 31, 2012, the Company was engaged in two Euro/U.S. dollar forward

agreements totaling $5,000 at an average forward rate of Euro/U.S. dollar 1.280 expiring in monthly
intervals up to February 2013.

The total change of forward contracts fair value for the year ended December 31, 2014, was a

loss of $1,009, for the year ended December 31, 2013, was a loss of $165 and for the year ended
December 31, 2012 was a gain of $1,149 and are included in Gain / (Loss) on derivative instruments,
net in the accompanying consolidated statements of income.

The Effect of Derivative Instruments for the years ended
December 31, 2012, 2013 and 2014
Derivatives in ASC 815 Cash Flow Hedging Relationships

Amount of Gain / (Loss)
Recognized in Accumulated
OCI on Derivative
(Effective Portion)
2013

2012

2014

Location of
Gain / (Loss)
Recognized in
Income on
Derivative
(Ineffective Portion)

Amount of Gain /
(Loss)
Recognized in
Income on
Derivative
(Ineffective
Portion)
2013

2012

2014

Interest rate swaps

(51,386) 27,964

(12,988) Gain / (Loss) on

derivative instruments,
net

— 254

645

Reclassification to

Interest and finance
costs

Total

42,877

42,922

(8,509) 70,886

35,790

22,802

—

— —

— 254

645

F-37

26780

COSTAMARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2012, 2013 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)

Derivatives Not Designated as Hedging Instruments and Ineffectiveness of Hedging Instruments
under ASC 815

Location of Gain / (Loss)
Recognized on
Derivative

Amount of Gain / (Loss)
Recognized in Income
on Derivative
2013

2012

2014

Non-hedging interest

rate swaps

Ineffective portion of
hedging interest
rate swaps

Forward contracts

Total

20. Financial Instruments:

Gain / (Loss) on derivative instruments, net

(1,611)

6,459

5,833

Gain / (Loss) on derivative instruments, net
Gain / (Loss) on derivative instruments, net

—
1,149

254
(165)

(462)

6,548

645
(1,009)

5,469

(a) Interest rate risk: The Company’s interest rates and loan repayment terms are described in

Note 11.

(b) Concentration of credit risk: Financial instruments which potentially subject the Company to

significant concentrations of credit risk, consist principally of cash and cash equivalents, accounts
receivable (included in current and non-current assets), investments in affiliates, equity securities,
debt securities and derivative contracts (interest rate swaps and foreign currency contracts). The
Company places its cash and cash equivalents, consisting mostly of deposits, with high credit rated
financial institutions. The Company performs periodic evaluations of the relative credit standing of
those financial institutions. The Company is exposed to credit risk in the event of non-performance
by counterparties to derivative instruments; however, the Company limits its exposure by diversifying
among counterparties with high credit ratings. The Company limits its credit risk with accounts
receivable, investments in affiliates and equity and debt securities by performing ongoing credit
evaluations of its customers’, affiliates’ and investees’ financial condition and generally does not
require collateral for its accounts receivable.

of financial assets and accounts payable approximate their respective fair values due to the short
maturity of these instruments. The fair value of long-term bank loans with variable interest rates
approximate the recorded values, generally due to their variable interest rates. The fair value of the
interest rate swap agreements and the foreign currency agreements discussed in Note 19 above are
determined through Level 2 of the fair value hierarchy as defined in FASB guidance for Fair Value
Measurements and are derived principally from or corroborated by observable market data, interest
rates, yield curves and other items that allow value to be determined.

The fair value of the interest rate swap agreements discussed in Note 19(a) and (b) equates to

the amount that would be paid by the Company to cancel the agreements. As at December 31, 2013
and 2014, the fair value of these interest rate swaps in aggregate amounted to a liability of $103,212
and $73,931, respectively.

The fair market value of the forward contracts discussed in note 19(c) determined through

Level 2 of the fair value hierarchy as at December 31, 2013 and 2014, amounted to nil and a
liability of $1,009, respectively.

The following tables summarize the hierarchy for determining and disclosing the fair value of

assets and liabilities by valuation technique on a recurring basis as of the valuation date.

F-38

19762

COSTAMARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2012, 2013 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)

Recurring measurements:
Interest rate swaps—liability position . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

December 31,
2013

(103,212)

Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

—

December 31,
2014

Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

Recurring measurements:
Forward contracts—liability position . . . . . . . . .
Interest rate swaps—liability position . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1,009)
(73,931)

(74,940)

—

Significant
Other
Observable
Inputs
(Level 2)

(103,212)

Significant
Other
Observable
Inputs
(Level 2)

(1,009)
(73,931)

(74,940)

Unobservable
Inputs
(Level 3)

—

Unobservable
Inputs
(Level 3)

—

21. Comprehensive Income / (Loss):

During the year ended December 31, 2012, Other comprehensive income decreased with net
losses of $11,705 relating to: (i) the change of the fair value of derivatives that qualify for hedge
accounting (loss of $51,386), net of the settlements to net income of derivatives that qualify for
hedge accounting (gain of $42,877), (ii) the Net settlements on interest rate swaps qualifying for cash
flow hedge ($3,196). During the year ended December 31, 2013, Other comprehensive income
increased with net gains of $67,688 relating to (i) the change of the fair value of derivatives that
qualify for hedge accounting (gain of $27,964), net of the settlements to net income of derivatives
that qualify for hedge accounting (gain of $42,922), (ii) the net settlements of interest rate swaps
qualifying for cash flow hedge associated with vessels under construction ($3,253) and (iii) the
amounts reclassified from Net settlements on interest rate swaps qualifying for hedge accounting to
depreciation ($55). During the year ended December 31, 2014, Other comprehensive income
increased with net gains of $29,020 relating to (i) the change of the fair value of derivatives that
qualify for hedge accounting (loss of $12,988), net of the settlements to net income of derivatives
that qualify for hedge accounting (gain of $35,790), (ii) the net settlements of interest rate swaps
qualifying for cash flow hedge associated with vessels under construction ($489), (iii) the amounts
reclassified from Net settlements on interest rate swaps qualifying for hedge accounting to
depreciation ($103) and (iv) the amounts reclassified from Net settlements on interest rate swaps
qualifying for hedge accounting to Prepaid lease rentals ($6,604). For the years ended December 31,
2012, 2013 and 2014, total Comprehensive income amounted to $69,424, $170,775 and $144,107,
respectively. The estimated net amount that is expected to be reclassified within the next 12 months
from Accumulated Other Comprehensive Loss to earnings in respect of net settlements on interest
rate swaps amounts to $30,393.

22. Subsequent Events:

(a) Declaration and payment of Dividends (preferred stock Series B and preferred stock Series

C): On January 5, 2015, the Company declared a dividend of $953 or $0.476563 per share on its
7.625% Series B Preferred Stock and a dividend of $2,125 or $0.531250 per share on its 8.50%
Series C Preferred Stock, for the period from October 15, 2014 to January 14, 2015, both paid on
January 15, 2015.

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89637

COSTAMARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2012, 2013 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)

(b) Declaration and payment of Dividends (common stock): On January 6, 2015, the Company
declared a dividend of $0.28 per share for the fourth quarter ended December 31, 2014, which was
paid on February 4, 2015, to stockholders of record at the close of trading of the Company’s
common stock on the New York Stock Exchange on January 21, 2015.

(c) Amendment and restatement of Group Management Agreement: On March 3, 2015, the
Company entered into an amended and restated management agreement with Costamare Shipping
(Note 3(a)) which, among other things, (i) increases the flat fee for the supervision of newbuild
vessels to $787.4 per vessel (from $700.0) and removes the annual 4% increase in such fee, (ii)
beginning in the first quarter of 2015, provides for an annual fee payable to Costamare Shipping
quarterly in arrears of (x) $2,500.0 and (y) 598,400 shares (which is equal to 0.8% of the issued and
outstanding Company common stock as of January 1, 2015), which fee includes payment for the
services of our executive officers (prior to 2015, the Company paid Costamare Shipping $1,000.0
annually for such services) and (iii) changes the term of the agreement such that it automatically
renews for 10 consecutive one-year periods until December 31, 2025 (rather than five consecutive
periods until December 31, 2020).

F-40