Navios Maritime
Annual Report 2014

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Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 20-F (Mark One)¨REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934OR xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2014OR ¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934OR ¨SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934Date of event requiring shell company report For the transition period from to Commission file number001-33311 Navios Maritime Holdings Inc.(Exact name of Registrant as specified in its charter) Not Applicable(Translation of Registrant’s Name into English)Republic of Marshall Islands(Jurisdiction of incorporation or organization)7 Avenue de Grande Bretagne, Office 11B2Monte Carlo, MC 98000 Monaco(Address of principal executive offices)Stuart GelfondFried, Frank, Harris, Shriver & Jacobson LLPOne New York PlazaNew York, New York 10004Tel: (212) 859-8000Fax: (212) 859-4000(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)Securities registered or to be registered pursuant to Section 12(b) of the Act: Title of each className of each exchange on which registeredCommon Stock, par value $.0001 per shareThe New York Stock Exchange8.75% Series G Cumulative Redeemable Perpetual Preferred Stock, par value $0.0001 pershare (“Series G Preferred Stock”)The New York Stock Exchange*American Depositary Shares, each representing 1/100th of a Share of Series G Preferred StockThe New York Stock Exchange8.625% Series H Cumulative Redeemable PerpetualPreferred Stock, par value $0.0001 per share (“Series H Preferred Stock”)The New York Stock Exchange*American Depositary Shares, each representing 1/100th of a Share of Series H Preferred StockThe New York Stock Exchange *Not for trading, but in connection with the registration of American Depositary Shares, pursuant to the requirements of the Securities and Exchange CommissionSecurities registered or to be registered pursuant to Section 12(g) of the Act. NoneSecurities 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:105,831,718 shares of common stock, 20,000 shares of Series G Preferred Stock and 48,000 shares of Series H Preferred Stock as of December 31, 2014Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No xIf 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 of1934. Yes ¨ No xIndicate 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 405of 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 x No ¨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 shorterperiod that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See the definition of “accelerated filer” and “large accelerated filer,” in Rule 12b-2 of theExchange Act. (Check one):Large accelerated filer ¨ Accelerated filer x Non-accelerated filer ¨Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: U.S. GAAP xInternational Financial Reporting Standards as issuedby the International Accounting Standards Board ¨Other ¨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 ¨ Item 18 ¨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 ¨ No x Table of Contents TABLE OF CONTENTS FORWARD-LOOKING STATEMENTS 1 Item 1. Identity of Directors, Senior Management and Advisers 1 Item 2. Offer Statistics and Expected Timetable 1 Item 3. Key Information 2 Item 4. Information on the Company 49 Item 4A. Unresolved Staff Comments 74 Item 5. Operating and Financial Review and Prospects 74 Item 6. Directors, Senior Management and Employees 116 Item 7. Major Shareholders and Related Party Transactions 123 Item 8. Financial Information 129 Item 9. The Offer and Listing 130 Item 10. Additional Information 131 Item 11. Quantitative and Qualitative Disclosures about Market Risk 141 Item 12. Description of Securities Other than Equity Securities 142 PART IIItem 13. Defaults, Dividend Arrearages and Delinquencies 142 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds 142 Item 15. Controls and Procedures 142 Item 16A. Audit Committee Financial Expert 143 Item 16B. Code of Ethics 143 Item 16C. Principal Accountant Fees and Services 143 Item 16D. Exemptions from the Listing Standards for Audit Committees 144 Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers 144 Item 16F. Changes in Registrant’s Certifying Accountant 144 Item 16G. Corporate Governance 144 Item 16H. Mine Safety Disclosures 145 PART IIIItem 17. Financial Statements 145 Item 18. Financial Statements 145 Item 19. Exhibits 145 EX-8.1EX-12.1EX-12.2EX-13.1EX-15.1EX-15.2EX-15.3 Table of ContentsPlease note in this Annual Report, “we”, “us”, “our”, the “Company” and “Navios Holdings” all refer to Navios Maritime Holdings Inc. and itsconsolidated subsidiaries, except as otherwise indicated or where the context otherwise requires.FORWARD-LOOKING STATEMENTSThis Annual Report should be read in conjunction with the consolidated financial statements and accompanying notes included in this report.Navios Maritime Holdings Inc. desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and isincluding this cautionary statement in connection with this safe harbor legislation. This document and any other written or oral statements made by us or onour behalf may include forward-looking statements, which reflect our current views with respect to future events and financial performance. The words “may,”“could,” “should,” “would,” “expect,” “plan,” “anticipate,” “intend,” “forecast,” “believe,” “estimate,” “predict,” “propose,” “potential,” “continue” andsimilar expressions identify forward-looking statements.The forward-looking statements in this document and in other written or oral statements we make from time to time are based upon currentassumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s examination of historical operatingtrends, data contained in our records, and other data available from third parties. Although we believe that these assumptions were reasonable when made,because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyondour control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.In addition to these important factors and matters discussed elsewhere herein, important factors that, in our view, could cause actual results to differmaterially from those discussed in the forward-looking statements include the strength of world economies, fluctuations in currencies and interest rates,general market conditions, including fluctuations in charter hire rates and vessel values, changes in demand in the dry cargo shipping industry, changes inthe Company’s operating expenses, including bunker prices, drydocking and insurance costs, changes in governmental rules and regulations or actions takenby regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption ofshipping routes due to accidents or political events, and other important factors described from time to time in the reports we file with the Securities andExchange Commission, or the SEC. See also “Risk Factors” below.We undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which suchstatement is made or to reflect the occurrence of unanticipated events, except as required by law. New factors emerge from time to time, and it is not possiblefor 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 combinationof factors, may cause actual results to be materially different from those contained in any forward-looking statement.PART IItem 1. Identity of Directors, Senior Management and AdvisersNot Applicable.Item 2. Offer Statistics and Expected TimetableNot Applicable. 1 Table of ContentsItem 3. Key InformationA. Selected Financial DataNavios Holdings’ selected historical financial information and operating results for the years ended December 31, 2014, 2013, 2012, 2011 and 2010are derived from the consolidated financial statements of Navios Holdings. The consolidated statement of comprehensive (loss)/income data for the yearsended December 31, 2014, 2013 and 2012 and the consolidated balance sheet data as of December 31, 2014 and 2013 have been derived from our auditedconsolidated financial statements included elsewhere in this Annual Report. The consolidated balance sheet data as of December 31, 2012, 2011 and 2010has been derived from our financial statements, which are not included in this document and are available at www.sec.gov. The selected consolidatedfinancial data should be read in conjunction with “Item 5. Operating and Financial Review and Prospects”, the consolidated financial statements, relatednotes and other financial information included elsewhere in this Annual Report. For revisions in selected historical financial information refer to footnote 2of the consolidated financial statements, “Basis of Presentation”. Year EndedDecember 31,2014 Year EndedDecember 31,2013 Year EndedDecember 31,2012 Year EndedDecember 31,2011 Year EndedDecember 31,2010 (Expressed in thousands of U.S. dollars — except share and per share data) Statement of Comprehensive (Loss)/Income Data Revenue $569,016 $512,279 $616,494 $689,355 $679,918 Administrative fee revenue from affiliates 14,300 7,868 5,994 4,973 3,130 Time charter, voyage and logistics business expenses (263,304) (244,412) (269,279) (273,312) (285,742) Direct vessel expenses (130,064) (114,074) (117,790) (117,269) (97,925) General and administrative expenses incurred onbehalf of affiliates (14,300) (7,868) (5,994) (4,973) (3,130) General and administrative expenses (45,590) (44,634) (51,331) (52,852) (58,604) Depreciation and amortization (104,690) (98,124) (108,206) (107,395) (101,793) Provision for losses on accounts receivable (792) (630) (17,136) (239) (4,660) Interest income 5,515 2,299 2,717 4,120 3,642 Interest expense and finance cost (113,660) (110,805) (106,196) (107,181) (106,022) (Loss)/gain on derivatives — (260) (196) (165) 4,064 Gain on sale of assets/partial sale of subsidiary — 18 323 38,822 55,432 (Loss)/gain on change in control — — — (35,325) 17,742 Loss on bond and debt extinguishment (27,281) (37,136) — (21,199) — Other income 15,639 17,031 189,239 1,660 10,349 Other expense (24,520) (10,447) (10,993) (12,990) (11,303) (Loss)/income before equity in net earnings ofaffiliated companies$(119,731)$(128,895)$127,646 $6,030 $105,098 Equity in net earnings of affiliated companies 57,751 19,344 48,228 35,246 40,585 (Loss)/income before taxes$(61,980)$(109,551)$175,874 $41,276 $145,683 Income tax (expense)/benefit (84) 4,260 (312) 56 (414) 2 Table of ContentsNet (loss)/income$(62,064)$(105,291)$175,562 $41,332 $145,269 Less: Net loss/(income) attributable to thenoncontrolling interest 5,861 (3,772) (77) (506) 488 Preferred stock dividends of subsidiary — — — (27) — Preferred stock dividends attributable to thenoncontrolling interest — — — 12 — Net (loss)/income attributable to NaviosHoldings common stockholders$(56,203)$(109,063)$175,485 $40,811 $145,757 (Loss)/income attributable to Navios Holdingscommon stockholders, basic (66,976) (110,990) 173,780 39,115 143,307 (Loss)/income attributable to Navios Holdingscommon stockholders, diluted$(66,976)$(110,990)$175,485 $40,811 $146,878 Weighted average number of shares, basic 103,476,614 101,854,415 101,232,720 100,926,448 100,518,880 Basic net (loss)/earnings per share attributableto Navios Holdings common stockholders$(0.65)$(1.09)$1.72 $0.39 $1.43 Weighted average number of shares, diluted 103,476,614 101,854,415 111,033,758 110,323,652 116,182,356 Diluted net (loss)/earnings per shareattributable to Navios Holdings commonstockholders$(0.65)$(1.09)$1.58 $0.37 $1.26 Balance Sheet Data (at period end)Current assets, including cash and restrictedcash$417,131 $339,986 $470,567 $370,974 $349,965 Total assets 3,159,389 2,919,613 2,941,462 2,913,824 3,676,767 Current liabilities, including current portion oflong-term debt 199,237 149,767 189,376 252,003 201,603 Total long-term debt, including current portion 1,644,582 1,511,249 1,358,212 1,453,557 2,075,910 Navios Holdings’ stockholders’ equity$1,152,963 $1,065,695 $1,206,376 $1,059,106 $1,059,583 3 Table of Contents Year EndedDecember 31,2014 Year EndedDecember 31,2013 Year EndedDecember 31,2012 Year EndedDecember 31,2011 Year EndedDecember 31,2010 (Expressed in thousands of U.S. dollars — except per share data) Other Financial Data Net cash provided by operating activities $56,323 $59,749 $228,644 $102,742 $188,641 Net cash (used in)/provided by investingactivities (244,888) (258,571) 12,453 (171,363) (135,920) Net cash provided by/(used in) financingactivities 248,290 128,785 (154,325) 32,307 (19,244) Book value per common share 10.89 10.22 11.68 10.34 10.43 Cash dividends per common share 0.24 0.24 0.30 0.25 0.24 Cash dividends per preferred share 99.9 200.0 201.1 200.0 345.52 Cash paid for common stock dividend declared 25,228 24,710 30,730 25,542 24,107 Cash paid for preferred stock dividend declared 7,502 1,695 1,705 1,696 2,930 Adjusted EBITDA(1) $176,698 $107,909 $399,483 $260,826 $356,126 (1)EBITDA represents net income/(loss) attributable to Navios Holdings common stockholders before interest and finance costs before depreciation andamortization and income taxes. Adjusted EBITDA in this document represents EBITDA before stock based compensation. Navios Holdings believesthat Adjusted EBITDA is a basis upon which liquidity can be assessed and represents useful information to investors regarding Navios Holdings’ability to service and/or incur indebtedness, pay capital expenditures, meet working capital requirements and pay dividends. Navios Holdings alsobelieves that Adjusted EBITDA is used (i) by prospective and current lessors as well as potential lenders to evaluate potential transactions; and (ii) toevaluate and price potential acquisition candidates.Adjusted EBITDA has limitations as an analytical tool, and therefore, should not be considered in isolation or as a substitute for the analysis of NaviosHoldings’ results as reported under U.S. GAAP. Some of these limitations are: (i) Adjusted EBITDA does not reflect changes in, or cash requirements for,working capital needs; and (ii) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to bereplaced in the future. Adjusted EBITDA does not reflect any cash requirements for such capital expenditures. Because of these limitations, among others,Adjusted EBITDA should not be considered as a principal indicator of Navios Holdings’ performance. Furthermore, our calculation of Adjusted EBITDA maynot be comparable to that reported by other companies due to differences in methods of calculation. 4 Table of ContentsThe following table reconciles net cash provided by operating activities, as reflected in the consolidated statements of cash flows, to AdjustedEBITDA:Adjusted EBITDA Reconciliation from Cash from Operations Year EndedDecember 31,2014 Year EndedDecember 31,2013 Year EndedDecember 31,2012 Year EndedDecember 31,2011 Year EndedDecember 31,2010 (Expressed in thousands of U.S. dollars — except per share data) Net cash provided by operating activities $56,323 $59,749 $228,644 $102,742 $188,641 Net increase/(decrease) in operating assets 18,025 (57,792) 50,687 77,023 (7,051) Net (increase)/decrease in operating liabilities (23,613) 27,087 18,016 (23,633) 20,578 Payments for drydock and special survey costs 10,970 12,119 14,461 12,769 9,337 Net interest cost 104,084 103,122 97,170 97,481 90,628 Provision for losses on accounts receivable (792) (630) (17,136) (239) (4,660) Gain on sale of assets/partial sale of subsidiary — 18 323 38,822 55,432 Unrealized (loss)/gain on FFA derivatives, warrants, interestrate swaps — (69) (124) 288 (12,882) Expenses related to loss on bond and debt extinguishment (4,786) (12,142) — (5,573) — (Losses)/earnings in affiliates and joint ventures, net ofdividends received 22,179 (19,781) 7,519 (3,008) (307) Reclassification to earnings of available-for-sale securities (11,553) — — — — (Loss)/gain on change in control — — — (35,325) 17,742 Repurchase of convertible bond — — — — 3,799 Transaction expenses — — — — (5,619) Noncontrolling interest 5,861 (3,772) (77) (521) 488 Adjusted EBITDA$176,698 $107,909 $399,483 $260,826 $356,126 B. Capitalization and IndebtednessNot applicable.C. Reasons for the Offer and Use of ProceedsNot applicable.D. Risk FactorsSome of the following risks relate principally to the industry in which we operate and our business in general. Other risks relate principally to thesecurities market and ownership of our common stock. You should carefully consider each of the following risks together with the other informationincorporated into this Annual Report when evaluating the Company’s business and its prospects. The risks and uncertainties described below are not the onlyones the Company faces. Additional risks and uncertainties not presently known to the Company or that the Company currently considers immaterial mayalso impair the Company’s business operations. If any of the following risks relating to our business and operations actually occur, our business, financialcondition and 5 Table of Contentsresults of operations could be materially and adversely affected and in that case, the trading price of our common stock could decline, and you could lose allor part of your investment.Risks Associated with the Shipping Industry and Our OperationsThe cyclical nature of the international dry cargo shipping industry may lead to decreases in charter rates and lower vessel values, which could adverselyaffect our results of operations and financial condition.The shipping business, including the dry cargo market, is cyclical in varying degrees, experiencing severe fluctuations in charter rates, profitabilityand, consequently, vessel values. For example, during the period from January 1, 2013 to December 31, 2014, the Baltic Exchange’s Panamax time charteraverage daily rates experienced a low of $3,362 and a high of $16,728. Additionally, during the period from January 1, 2013 to December 31, 2014, theBaltic Exchange’s Capesize time charter average daily rates experienced a low of $3,670 and a high of $42,211 and the Baltic Dry Index experienced a lowof 698 points and a high of 2,337 points. There can be no assurance that the drybulk charter market will increase further, and the market could decline. Weanticipate that the future demand for our dry bulk carriers and dry bulk charter rates will be dependent upon demand for imported commodities, economicgrowth in the emerging markets, including the Asia Pacific region, India, Brazil and Russia and the rest of the world, seasonal and regional changes indemand and changes to the capacity of the world fleet. Adverse economic, political, social or other developments can decrease demand and prospects forgrowth in the shipping industry and thereby could reduce revenue significantly. A decline in demand for commodities transported in drybulk carriers or anincrease in supply of dry bulk vessels could cause a further decline in charter rates, which could materially adversely affect our results of operations andfinancial condition. If we sell a vessel at a time when the market value of our vessels has fallen, the sale may be at less than the vessel’s carrying amount,resulting in a loss.Demand for container shipments declined significantly from 2008 to 2009 in the aftermath of the global financial crisis but has increased each yearfrom 2009 to 2014. In 2014, worldwide trade volumes increased led by increases in the Trans Pacific Eastbound and Far East to Europe trade lanes as the USand Europe experienced improved growth, but containership supply continued to exceed demand during the year as more large vessels were delivered. Theoversupply continued to prevent any significant rise in time charter rates for both short- and long-term periods. Additional orders for large and very largecontainerships were placed during 2014, both increasing the expected future supply of larger vessels and having a spillover effect on the market segment forsmaller vessels. The recent global economic slowdown and disruptions in the credit markets significantly reduced demand for products shipped in containersand, in turn, containership capacity.The demand for dry cargo vessels has generally been influenced by, among other factors: • global and regional economic conditions; • developments in international trade; • changes in seaborne and other transportation patterns, such as port congestion and canal closures or expansions; • supply and demand for energy resources, commodities, semi-finished and finished consumer and industrial products; • changes in the exploration or production of energy resources, commodities, semi-finished and finished consumer and industrial products; • supply and demand for products shipped in containers; • changes in global production of raw materials or products transported by containerships; • the distance dry bulk cargo or containers are to be moved by sea; • the globalization of manufacturing; 6 Table of Contents • carrier alliances, vessel sharing or container slot sharing that seek to allocate container ship capacity on routes; • weather and crop yields; • armed conflicts and terrorist activities, including piracy; • political, environmental and other regulatory developments; • embargoes and strikes; and • technical advances in ship design and construction.The supply of vessel capacity has generally been influenced by, among other factors: • the number of vessels that are in or out of service; • the scrapping rate of older vessels; • port and canal traffic and congestion; • the number of newbuilding deliveries; • vessel casualties; • the availability of shipyard capacity; and • the economics of slow steaming.Disruptions in world financial markets and the resulting governmental action in Europe, the Unites States and other parts of the world could have amaterial adverse impact on our ability to obtain financing required to acquire vessels or new businesses. Furthermore, such a disruption would adverselyaffect our results of operations, financial condition and cash flows and could cause the market price of our shares to decline.Global financial markets and economic conditions have been severely disrupted and volatile in recent years and remain subject to significantvulnerabilities, such as the deterioration of fiscal balances, the rapid accumulation of public debt, continued deleveraging in the banking sector and a limitedsupply of credit. The renewed crisis in Argentina, civil unrest in Ukraine and other parts of the world, and continuing concerns relating to the Europeansovereign debt crisis have led to increased volatility in global credit and equity markets. Several European countries including Greece have been affected byincreasing public debt burdens and weakening economic growth prospects. In recent years, Standard and Poor’s Rating Services (“Standard and Poor’s”) andMoody’s Investors Service (“Moody’s”) downgraded the long-term ratings of most European countries’ sovereign debt and issued negative outlooks. Suchdowngrades could negatively affect those countries’ ability to access the public debt markets at reasonable rates or at all, materially affecting the financialconditions of banks in those countries, including those with which we maintain cash deposits and equivalents, or on which we rely on to finance our vesseland new business acquisitions. Cash deposits and cash equivalents in excess of amounts covered by government-provided insurance are exposed to loss inthe event of non-performance by financial institutions. We maintain at banks cash deposits and equivalents in excess of government-provided insurancelimits, which may expose us to a loss of cash deposits or cash equivalents.In addition, as a result of the ongoing political and economic turmoil in Greece resulting from the sovereign debt crisis and the related austeritymeasures implemented by the Greek government, the operations of our managers located in Greece may be subjected to new regulations and potential shift ingovernment policies that may require us to incur new or additional compliance or other administrative costs and may require the payment of new taxes orother fees. We also face the risk that strikes, work stoppages, civil unrest and violence within Greece may disrupt the shoreside operations of our managerslocated in Greece.Recently, a number of financial institutions have experienced serious financial difficulties and, in some cases, have entered bankruptcy proceedings orare in regulatory enforcement actions. These difficulties resulted, 7 Table of Contentsin part, from declining markets for assets held by such institutions, particularly the reduction in the value of their mortgage and asset-backed securitiesportfolios. These difficulties were compounded by financial turmoil affecting the world’s debt, credit and capital markets, and the general decline in thewillingness by banks and other financial institutions to extend credit, particularly to the shipping industry due to the historically low vessel earnings andvalues, and, in part, due to changes in overall banking regulations (for example, Basel III). As a result, the ability of banks and credit institutions to financenew projects, including the acquisition of new vessels in the future, were for a time uncertain. Following the stress tests run by the European Central Bank(the “ECB”), revised capital ratios have been communicated to European banks. This has reduced the uncertainty following the difficulties of the past severalyears, but it has also led to changes in each bank’s lending policies and ability to provide financing or refinancing. A recurrence of global economicweakness may adversely affect the financial institutions that provide our credit facilities and may impair their ability to continue to perform under theirfinancing obligations to us, which could have an impact on our ability to fund current and future obligations.Furthermore, we may experience difficulties obtaining financing commitments in the future, including commitments to refinance our existing debt asballoon payments come due under our credit facilities, if lenders are unwilling to extend financing to us or are unable to meet their funding obligations dueto their own liquidity, capital or solvency issues. Due to the fact that we would possibly cover all or a portion of the cost of any new acquisition with debtfinancing, such uncertainty, combined with restrictions imposed by our current debt, could hamper our ability to finance vessels or other assets or newbusiness acquisitions.In addition, the economic uncertainty worldwide has markedly reduced demand for shipping services and has decreased charter rates, which mayadversely affect our results of operations and financial condition. Currently, the economies of China, Japan, other Asian Pacific countries and India are themain driving force behind the development in seaborne transportation. Reduced demand from such economies has driven decreased rates and vessel values.Our growth depends on continued growth in demand for dry bulk commodities and the shipping of dry bulk cargoes.Our growth strategy focuses on expansion in the dry bulk shipping sector. Accordingly, our growth depends on continued growth in worldwide andregional demand for dry bulk commodities and the shipping of dry bulk cargoes, which could be negatively affected by a number of factors, such as declinesin prices for dry bulk commodities, or general political and economic conditions.Reduced demand for dry bulk commodities and the shipping of dry bulk cargoes would have a material adverse effect on our future growth and couldharm our business, results of operations and financial condition. In particular, Asian Pacific economies and India have been the main driving force behind thecurrent increase in seaborne dry bulk trade and the demand for dry bulk carriers. A negative change in economic conditions in any Asian Pacific country, butparticularly in China, Japan or India, may have a material adverse effect on our business, financial condition and results of operations, as well as our futureprospects, by reducing demand and resultant charter rates.When our contracts expire, we may not be able to successfully replace them.The process for concluding contracts and longer term time charters generally involves a lengthy and intensive screening and vetting process and thesubmission of competitive bids. In addition to the quality and suitability of the vessel, medium and longer term shipping contracts tend to be awarded basedupon a variety of other factors relating to the vessel operator, including: • environmental, health and safety record; • compliance with regulatory industry standards; • reputation for customer service, technical and operating expertise; 8 Table of Contents • shipping experience and quality of ship operations, including cost-effectiveness; • quality, experience and technical capability of crews; • the ability to finance vessels at competitive rates and overall financial stability; • relationships with shipyards and the ability to obtain suitable berths; • construction management experience, including the ability to procure on-time delivery of new vessels according to customer specifications; • willingness to accept operational risks pursuant to the charter, such as allowing termination of the charter for force majeure events; and • competitiveness of the bid in terms of overall price.As a result of these factors, when our contracts including our long-term charters expire, we cannot assure you that we will be able to replace thempromptly or at all or at rates sufficient to allow us to operate our business profitably, to meet our obligations, including payment of debt service to ourlenders, or to pay dividends. Our ability to renew the charter contracts on our vessels on the expiration or termination of our current charters, or, on vesselsthat we may acquire in the future, the charter rates payable under any replacement charter contracts, will depend upon, among other things, economicconditions in the sectors in which our vessels operate at that time, changes in the supply and demand for vessel capacity and changes in the supply anddemand for the transportation of commodities.However, if we are successful in employing our vessels under longer-term time charters, our vessels will not be available for trading in the spot marketduring an upturn in the market cycle, when spot trading may be more profitable. If we cannot successfully employ our vessels in profitable charter contracts,our results of operations and operating cash flow could be materially adversely affected.We may employ vessels on the spot market and thus expose ourselves to risk of losses based on short-term decreases in shipping rates.We periodically employ some of our vessels on a spot basis. The spot charter market is highly competitive and freight rates within this market arehighly volatile, while longer-term charter contracts provide income at pre-determined rates over more extended periods of time. We cannot assure you that wewill be successful in keeping our vessels fully employed in these short-term markets, or that future spot rates will be sufficient to enable such vessels to beoperated profitably. A significant decrease in spot market rates or our inability to fully employ our vessels by taking advantage of the spot market wouldresult in a reduction of the incremental revenue received from spot chartering and adversely affect our results of operations, including our profitability andcash flows, with the result that our ability to pay debt service and dividends could be impaired.Additionally, if spot market rates or short-term time charter rates become significantly lower than the time charter equivalent rates that some of ourcharterers are obligated to pay us under our existing charters, the charterers may have incentive to default under that charter or attempt to renegotiate thecharter. If our charterers fail to pay their obligations, we would have to attempt to re-charter our vessels at lower charter rates, which would affect our ability tocomply with our loan covenants and operate our vessels profitably. If we are not able to comply with our loan covenants and our lenders choose to accelerateour indebtedness and foreclose their liens, we could be required to sell vessels in our fleet and our ability to continue to conduct our business would beimpaired. 9 Table of ContentsWe depend upon significant customers for part of our revenues. The loss of one or more of these customers or a decline in the financial capability of ourcustomers could materially adversely affect our financial performance.We have derived a significant part of our revenue from a small number of charterers. During the years ended December 31, 2014, 2013 and 2012, wederived approximately 28.6%, 22.9% and 24.6%, respectively, of our gross revenues from four customers. For the year ended December 31, 2014, onecustomer accounted for 11.9% of the Company’s revenue and for the years ended December 31, 2013 and 2012, none of the Company’s customers accountedfor more than 10% of the Company’s revenue.If one or more of our customers is unable to perform under one or more charters with us and we are not able to find a replacement charter, or if acharterer exercises certain rights to terminate the charter, or if a charterer is unable to make its charter payments in whole or in part, we could suffer a loss ofrevenues that could materially adversely affect our business, financial condition and results of operations.We could lose a customer or the benefits of a time charter if, among other things: • the customer fails to make charter payments because of its financial inability, disagreements with us or otherwise, which risk is increasing due tothe current economic environment; • the customer terminates the charter because we fail to deliver the vessel within a fixed period of time, the vessel is lost or damaged beyond repair,there are serious deficiencies in the vessel or prolonged periods of off-hire, default under the charter; or • the customer terminates the charter because the vessel has been subject to seizure for more than a specified number of days.Furthermore, a number of our charters are at above-market rates, such that any loss of such charter may require us to recharter the vessel at significantlylower rates. Additionally, our charterers from time to time have sought to renegotiate their charter rates with us. We no longer maintain insurance against therisk of default by our customers.We are subject to certain credit risks with respect to our counterparties on contracts, and the failure of such counterparties to meet their obligations couldcause us to suffer losses on such contracts and thereby decrease revenues.We charter-out our vessels to other parties who pay us a daily rate of hire. We also enter into contracts of affreightment (“COAs”) pursuant to which weagree to carry cargoes, typically for industrial customers, who export or import dry bulk cargoes. Additionally, we may enter into Forward Freight Agreements(“FFAs”), parts of which are traded over-the-counter. We also enter into spot market voyage contracts, where we are paid a rate per ton to carry a specifiedcargo on a specified route. The FFAs and these contracts and arrangements subject us to counterparty credit risks at various levels. If the counterparties fail tomeet their obligations, we could suffer losses on such contracts which could materially adversely affect our financial condition and results of operations. Inaddition, if a charterer defaults on a time charter, we may only be able to enter into new contracts at lower rates. It is also possible that we would be unable tosecure a charter at all. If we re-charter the vessel at lower rates or not at all, our financial condition and results of operations could be materially adverselyaffected.Trading and complementary hedging activities in freight, tonnage and FFAs subject us to trading risks, and we may suffer trading losses which couldadversely affect our financial condition and results of operations.Due to dry bulk shipping market volatility, success in this shipping industry requires constant adjustment of the balance between chartering-outvessels for long periods of time and trading them on a spot basis. A long-term contract to charter a vessel might lock us into a profitable or unprofitablesituation depending on the direction of freight rates over the term of the contract. We may seek to manage and mitigate that risk through trading and 10 Table of Contentscomplementary hedging activities in freight, tonnage and FFAs. We may be exposed to market risk in relation to our FFAs and could suffer substantial lossesfrom these activities in the event that our expectations are incorrect. We may trade FFAs with an objective of both economically hedging the risk on the fleet,specific vessels or freight commitments and taking advantage of short-term fluctuations in market prices. There can be no assurance that we will be able at alltimes to successfully protect ourselves from volatility in the shipping market. We may not successfully mitigate our risks, leaving us exposed to unprofitablecontracts, and may suffer trading losses resulting from these hedging activities.In our hedging and trading activities, we focus on short-term trading opportunities in which there is adequate liquidity in order to limit the risk we aretaking. There can be no assurance we will be successful in limiting our risk, that significant price spikes will not result in significant losses, even on shortterm trades, that liquidity will be available for our positions, or that all trades will be done within our risk management policies. Any such risk could besignificant. In addition, the performance of our trading activities can significantly increase the variability of our operating performance in any given periodand could materially adversely affect our financial condition. The FFA market has experienced significant volatility in the past few years and, accordingly,recognition of the changes in the fair value of FFAs could in the future cause significant volatility in earnings.We are subject to certain operating risks, including vessel breakdowns or accidents, that could result in a loss of revenue from the chartered-in vessels andwhich in turn could have an adverse effect on our results of operations or financial condition.Our exposure to operating risks of vessel breakdown and accidents mainly arises in the context of our owned vessels. The rest of our core fleet ischartered-in under time charters and, as a result, most operating risks relating to these time chartered vessels remain with their owners. If we pay hire on achartered-in vessel at a lower rate than the rate of hire it receives from a sub-charterer to whom we have chartered out the vessel, a breakdown or loss of thevessel due to an operating risk suffered by the owner will, in all likelihood, result in our loss of the positive spread between the two rates of hire. Although wemaintain insurance policies (subject to deductibles and exclusions) to cover us against the loss of such spread through the sinking or other loss of a chartered-in vessel, we cannot assure you that we will be covered under all circumstances or that such policies will be available in the future on commerciallyreasonable terms. Breakdowns or accidents involving our vessels and losses relating to chartered vessels which are not covered by insurance would result in aloss of revenue from the affected vessels adversely affecting our financial condition and results of operations.The operation of ocean-going vessels entails the possibility of marine disasters including damage or destruction of the vessel due to accident, the loss of avessel due to piracy or terrorism, damage or destruction of cargo and similar events that may cause a loss of revenue from affected vessels and damage ourbusiness reputation, which may in turn lead to loss of business.The operation of ocean-going vessels entails certain inherent risks that may materially adversely affect our business and reputation, including: • the damage or destruction of vessels due to marine disaster such as a collision; • the loss of a vessel due to piracy and terrorism; • cargo and property losses or damage as a result of the foregoing or drastic causes such as human error, mechanical failure and bad weather; • environmental accidents as a result of the foregoing; and • business interruptions and delivery delays caused by mechanical failure, human error, war, terrorism, political action in various countries, laborstrikes or adverse weather conditions. 11 Table of ContentsAny of these circumstances or events could substantially increase our costs. For example, the costs of replacing a vessel or cleaning up environmentaldamage could substantially lower our revenues by taking vessels out of operation permanently or for periods of time. Furthermore, the involvement of ourvessels in a disaster or delays in delivery, damage or the loss of cargo may harm our reputation as a safe and reliable vessel operator and cause us to losebusiness.The operation of vessels, such as dry bulk carriers, has certain unique risks. With a dry bulk carrier, the cargo itself and its interaction with the vesselcan be an operational risk. By their nature, dry bulk cargoes are often heavy, dense, easily shift, and react badly to water exposure. In addition, dry bulkcarriers are often subjected to battering treatment during unloading operations with grabs, jackhammers (to pry encrusted cargoes out of the hold) and smallbulldozers. This treatment may cause damage to the vessel. Vessels damaged due to treatment during unloading procedures may be more susceptible tobreach at sea. Hull breaches in dry bulk carriers may lead to the flooding of the vessels’ holds. If a dry bulk carrier suffers flooding in its forward holds, thebulk cargo may become so dense and waterlogged that its pressure may buckle the vessel’s bulkheads leading to the loss of a vessel.The total loss or damage of any of our vessels or cargoes could harm our reputation as a safe and reliable vessel owner and operator. If we are unable toadequately maintain or safeguard our vessels, we may be unable to prevent any such damage, costs, or loss that could negatively impact our business,financial condition, results of operations, cash flows and ability to pay dividends.Some of these inherent risks could result in significant damage, such as marine disaster or environmental incidents, and any resulting legal proceedingsmay be complex, lengthy, costly and, if decided against us, any of these proceedings or other proceedings involving similar claims or claims for substantialdamages may harm our reputation and have a material adverse effect on our business, results of operations, cash flow and financial position. In addition, thelegal systems and law enforcement mechanisms in certain countries in which we operate may expose us to risk and uncertainty. Further, we may be requiredto devote substantial time and cost defending these proceedings, which could divert the attention of management from our business.Any of these factors may have a material adverse effect on our business, financial conditions and results of operations.We are subject to various laws, regulations and conventions, including environmental and safety laws that could require significant expenditures both tomaintain compliance with such laws and to pay for any uninsured environmental liabilities including any resulting from a spill or other environmentalincident.The shipping business and vessel operation are materially affected by government regulation in the form of international conventions, national, stateand local laws, and regulations in force in the jurisdictions in which vessels operate, as well as in the country or countries of their registration. Governmentalregulations, safety or other equipment standards, as well as compliance with standards imposed by maritime self-regulatory organizations and customerrequirements or competition, may require us to make capital and other expenditures. Because such conventions, laws and regulations are often revised, wecannot predict the ultimate cost of complying with such conventions, laws and regulations, or the impact thereof on the fair market price or useful life of ourvessels. In order to satisfy any such requirements, we may be required to take any of our vessels out of service for extended periods of time, withcorresponding losses of revenues. In the future, market conditions may not justify these expenditures or enable us to operate our vessels, particularly oldervessels, profitably during the remainder of their economic lives. This could lead to significant asset write downs. In addition, violations of environmental andsafety regulations can result in substantial penalties and, in certain instances, seizure or detention of our vessels.Additional conventions, laws and regulations may be adopted that could limit our ability to do business, require capital expenditures or otherwiseincrease our cost of doing business, which may materially adversely 12 Table of Contentsaffect our operations, as well as the shipping industry generally. In various jurisdictions legislation has been enacted, or is under consideration, that wouldimpose more stringent requirements on air pollution and water discharges from our vessels. For example, the International Maritime Organization (“IMO”)periodically proposes and adopts amendments to revise the International Convention for the Prevention of Pollution from Ships (“MARPOL”), such as therevision to Annex VI which came into force on July 1, 2010. The revised Annex VI implements a phased reduction of the sulfur content of fuel and allows forstricter sulfur limits in designated emission control areas (“ECAs”). Thus far, ECAs have been formally adopted for the Baltic Sea area (limiting SOxemissions only); the North Sea area including the English Channel (limiting SOx emissions only) and the North American ECA (which came into effect onAugust 1, 2012 limiting SOx, NOx and particulate matter emissions). The United States Caribbean Sea ECA, which became effective on January 1, 2014,limits SOx, NOx and particulate matter emissions. California has adopted more stringent low sulfur fuel requirements within California regulated waters. Inaddition, the IMO, the U.S. and states within the U.S. have proposed or implemented requirements relating to the management of ballast water to prevent theharmful effects of foreign invasive species.The operation of vessels is also affected by the requirements set forth in the International Safety Management (“ISM”) Code. The ISM Code requiresshipowners and bareboat charterers to develop and maintain an extensive “Safety Management System” that includes the adoption of a safety andenvironmental protection policy setting forth instructions and procedures for safe vessel operation and describing procedures for dealing with emergencies.In addition, the IMO has introduced the first ever mandatory measures for an international greenhouse gas reduction regime for a global industry sector.These energy efficiency measures took effect on January 1, 2013 and apply to all ships of 400 gross tonnage and above. They include the development of aship energy efficiency management plan (“SEEMP”) which is akin to a safety management plan, with which the industry will have to comply. The failure of aship owner or bareboat charterer to comply with the ISM Code and IMO measures may subject such party to increased liability, may decrease availableinsurance coverage for the affected vessels, and may result in a denial of access to, or detention in, certain ports.For all vessels, including those operated under our fleet, international liability for oil pollution is governed by the International Convention on CivilLiability for Bunker Oil Pollution Damage (the “Bunker Convention”). In 2001, the IMO adopted the Bunker Convention, which imposes strict liability onshipowners for pollution damage and response costs incurred in contracting states caused by discharges, or threatened discharges, of bunker oil from allclasses of ships. The Bunker Convention also requires registered owners of ships over a certain size to maintain insurance to cover their liability for pollutiondamage in an amount equal to the limits of liability under the applicable national or international limitation regime, including liability limits calculated inaccordance with the Convention on Limitation of Liability for Maritime Claims 1976, as amended (the “1976 Convention”), discussed in more detail in thefollowing paragraph. The Bunker Convention became effective in contracting states on November 21, 2008 and as of March 10, 2014 was in effect in 78states comprising approximately 91.46% of the gross tonnage of the world’s merchant fleet. In non-contracting states, liability for such bunker oil pollutiontypically is determined by the national or other domestic laws in the jurisdiction where the spillage occurs.The right of vessel owners to limit liability incurred under the Bunker Convention depends on the applicable national or international regime. The1976 Convention is the most widely applicable international regime limiting maritime pollution liability. Rights to limit liability under the 1976Convention are forfeited where a spill is caused by a shipowner’s intentional or reckless conduct. Certain jurisdictions have ratified the IMO’s Protocol of1996 to the 1976 Convention, referred to herein as the “Protocol of 1996.” The Protocol of 1996 provides for substantially higher liability limits in thosejurisdictions than the limits set forth in the 1976 Convention. Finally, some jurisdictions, such as the United States, are not a party to either the 1976Convention or the Protocol of 1996, and, therefore, a shipowner’s rights to limit liability for maritime pollution in such jurisdictions may be uncertain.Environmental legislation in the United States merits particular mention as it is in many respects more onerous than international laws, representing ahigh-water mark of regulation with which ship owners and 13 Table of Contentsoperators must comply, and of liability likely to be incurred in the event of non-compliance or an incident causing pollution. In the United States, the OilPollution Act (“OPA”) establishes an extensive regulatory and liability regime for the protection and cleanup of the environment from cargo and bunker oilspills from vessels, including tankers. The OPA covers all owners and operators whose vessels trade in the United States, its territories and possessions orwhose vessels operate in United States waters, which includes the United States’ territorial sea and its 200 nautical mile exclusive economic zone. Under theOPA, vessel owners, operators and bareboat charterers are “responsible parties” and are jointly, severally and strictly liable (unless the spill results solely fromthe 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 orsubstantial threats of discharges, of oil from their vessels.In addition to potential liability under the federal OPA, vessel owners may in some instances incur liability on an even more stringent basis under statelaw in the particular state where the spillage occurred. For example, California regulations prohibit the discharge of oil, require an oil contingency plan befiled with the state, require that the ship owner contract with an oil response organization and require a valid certificate of financial responsibility, all prior tothe vessel entering state waters.In the last decade, the EU has become increasingly active in the field of regulation of maritime safety and protection of the environment. In some areasof regulation the EU has introduced new laws without attempting to procure a corresponding amendment to international law. Notably, the EU adopted in2005 a directive, as amended in 2009, on ship-source pollution, imposing criminal sanctions for pollution not only where pollution is caused by intent orrecklessness (which would be an offence under MARPOL), but also where it is caused by “serious negligence.” The concept of “serious negligence” may beinterpreted in practice to be little more than ordinary negligence. The directive could therefore result in criminal liability being incurred in circumstanceswhere it would not be incurred under international law.In response to the Deepwater Horizon incident, the European Union has issued Directive 2013/30/EU of the European Parliament and of the Council of12 June 2013 on safety of offshore oil and gas operations. The objective of this Directive is to reduce as much as possible the occurrence of major accidentsrelating to offshore oil and gas operations and to limit their consequences, thus increasing the protection of the marine environment and coastal economiesagainst pollution, establishing minimum conditions for safe offshore exploration and exploitation of oil and gas and limiting possible disruptions toEuropean Union indigenous energy production, and to improve the response mechanisms in case of an accident. The Directive has to be implemented byJuly 19, 2015. In the UK there will be the following new regulations: (i) the Offshore Petroleum Activities (Offshore Safety Directive) (EnvironmentalFunctions) Regulations 2015 (OSDEF), will amend the Merchant Shipping (Oil Pollution Preparedness, Response and Cooperation Convention) Regulations1998 (OPRC 1998) and implement other environmental Directive requirements, specifically the Environmental Management System and (ii) the OffshorePetroleum Licensing (Offshore Safety Directive) Regulations 2015 will implement the licensing Directive requirements. There will also be changes to the OilPollution Emergency Plans Regulations 1998.Criminal liability for a pollution incident could not only result in us incurring substantial penalties or fines, but may also, in some jurisdictions,facilitate civil liability claims for greater compensation than would otherwise have been payable.We maintain insurance coverage for each owned vessel in our fleet against pollution liability risks in the amount of $1.0 billion in the aggregate forany one event. The insured risks include penalties and fines as well as civil liabilities and expenses resulting from accidental pollution. However, thisinsurance coverage is subject to exclusions, deductibles and other terms and conditions. If any liabilities or expenses fall within an exclusion from coverage,or if damages from a catastrophic incident exceed the aggregate liability of $1.0 billion for any one event, our cash flow, profitability and financial positionwould be adversely impacted. 14 Table of ContentsClimate change and government laws and regulations related to climate change could negatively impact our financial condition.Regarding climate change in particular, we are and will be, directly and indirectly, subject to the effects of climate change and may, directly orindirectly, be affected by government laws and regulations related to climate change. A number of countries have adopted or are considering the adoption of,regulatory frameworks to reduce greenhouse gas emissions. In the U.S., the United States Environmental Protection Agency (U.S. EPA) has declaredgreenhouse gases to be dangerous pollutants and has issued greenhouse gas reporting requirements for emissions sources in certain industries (which does notinclude the shipping industry).In addition, while the emissions of greenhouse gases from international shipping are not subject to the Kyoto Protocol to the United NationsFramework Convention on Climate Change, which requires adopting countries to implement national programs to reduce greenhouse gas emissions, the IMOintends to develop limits on greenhouse gases from international shipping. In 2011, it responded to the global focus on climate change and greenhouse gasemissions by developing specific technical and operational efficiency measures and a work plan for market-based mechanisms. These include the mandatorymeasures of the SEEMP, outlined above, and an energy efficiency design index (“EEDI”) for new ships. Over the past few years, the IMO has considered itsposition on market-based measures. However, the international discussions have yet to bring agreement on global market-based measures or otherinstruments that would cut greenhouse gas emissions from the international maritime transport sector as a whole, including existing ships. A third IMO study(2014) on Greenhouse gases has been approved. Among the numerous proposals being considered by the working group are the following: a port state levybased on the amount of fuel consumed by the vessel on its voyage to the port in question; a global emissions trading scheme which would allocate emissionsallowances and set an emissions cap; and an international fund establishing a global reduction target for international shipping, to be set either by the UnitedNations Framework Covention on Climate Change (“UNFCCC”) or the IMO. At its 64th session in October 2012, the MEPC indicated that 2015 was thetarget year for Member States to identify market-based measures for international shipping. At its 66th session, held from March 31 to April 4, 2014, theMEPC continued its work on developing technical and operational measures relating to energy-efficiency measures for ships, following the mandatoryefficiency measures which became effective January 1, 2013. It adopted the 2014 Guidelines on the Method of Calculation of the Attained EEDI, applicableto new ships. It also established a working group with an instruction to consider development of a data collection system for fuel consumption of ships.Further, it adopted amendments to MARPOL Annex VI concerning the extension of the scope of application of the EEDI to LNG fuel carriers, ro-ro cargoships (vehicle carriers), ro-ro passenger ships and cruise passengers ships with nonconventional propulsion. At its 67th session held from October 13 to 17,2014, the MEPC adopted the 2014 Guidelines on survey and certification of the EEDI, updating the previous version to reference ships fitted with dual-fuelengines using LNG and liquid fuel oil. The MEPC also adopted amendments to the 2013 Interim Guidelines for determining minimum propulsion power tomaintain the manoeuvrability of ships in adverse conditions, to make the guidelines applicable to phase 1 (starting January 1, 2015) of the EEDIrequirements.In December 2011, UN climate change conference (the “Durban Conference”) took place in Durban and concluded with an agreement referred to as theDurban Platform for Enhanced Action. The Durban Conference did not result in any proposals specifically addressing the shipping industry’s role in climatechange but the progress that has been made by the IMO in this area was widely acknowledged throughout the negotiating bodies of the UNFCCC process.The European Union announced in April 2007 that it planned to expand the European Union emissions trading scheme by adding vessels, and aproposal from the European Commission was expected if no global regime for reduction of seaborne emissions had been agreed to by the end of 2011. As ofJanuary 31, 2013 the European Commission has stopped short of proposing that emissions from ships be included in the EU’s emissions-trading scheme(ETS). However on October 1, 2012 it announced that it would propose measures to monitor, verify and report on greenhouse-gas emissions from theshipping sector. On June 28, 2013, the 15 Table of ContentsEuropean Commission adopted a communication setting out a strategy for progressively including greenhouse gas emissions from maritime transport in theEU’s policy for reducing its overall greengouse emissions. The first step proposed by the Commission is an EU Regulation that would establish an EU-widesystem for the monitoring, reporting and verification of carbon dioxide emissions from large ships starting in 2018. The draft Regulation is currently workingits way through the various stages of the EU legislative process and obtained Council Agreement on December 17, 2014. European Parliament approval willbe required before the draft Regulation comes into force. This Regulation may be seen as indicative of an intention to maintain pressure on the internationalnegotiating process.We cannot predict with any degree of certainty what effect, if any possible climate change and government laws and regulations related to climatechange will have on our operations, whether directly or indirectly. While we believe that it is difficult to assess the timing and effect of climate change andpending legislation and regulation related to climate change on our business, we believe that climate change, including the possible increase in severeweather events resulting from climate change, and government laws and regulations related to climate change may affect, directly or indirectly, (i) the cost ofthe vessels we may acquire in the future, (ii) our ability to continue to operate as we have in the past, (iii) the cost of operating our vessels, and (iv) insurancepremiums, deductibles and the availability of coverage. As a result, our financial condition could be negatively impacted by significant climate change andrelated governmental regulation, and that impact could be material.We are subject to vessel security regulations and will incur costs to comply with recently adopted regulations and we may be subject to costs to complywith similar regulations that may be adopted in the future in response to terrorism.Since the terrorist attacks of September 11, 2001, there have been a variety of initiatives intended to enhance vessel security. On November 25, 2002,the Maritime Transportation Security Act of 2002, or MTSA, came into effect. To implement certain portions of the MTSA, in July 2003, the U.S. CoastGuard issued regulations requiring the implementation of certain security requirements aboard vessels operating in waters subject to the jurisdiction of theUnited States. Similarly, in December 2002, amendments to the International Convention for the Safety of Life at Sea, or SOLAS, created a new chapter of theconvention dealing specifically with maritime security. The new chapter went into effect in July 2004, and imposes various detailed security obligations onvessels and port authorities, most of which are contained in the newly created International Ship and Port Facilities Code, or ISPS Code. Among the variousrequirements are: • on-board installation of automatic information systems, or AIS, to enhance vessel-to-vessel and vessel-to-shore communications; • on-board installation of ship security alert systems; • the development of vessel security plans; and • compliance with flag state security certification requirements.Furthermore, additional security measures could be required in the future which could have a significant financial impact on us.The U.S. Coast Guard regulations, intended to be aligned with international maritime security standards, exempt non-U.S. vessels from MTSA vesselsecurity measures, provided such vessels have on board a valid International Ship Security Certificate, or ISSC, that attests to the vessel’s compliance withSOLAS security requirements and the ISPS Code. We will implement the various security measures addressed by the MTSA, SOLAS and the ISPS Code andtake measures for the vessels to attain compliance with all applicable security requirements within the prescribed time periods. Although management doesnot believe these additional requirements will have a material financial impact on our operations, there can be no assurance that there will not be aninterruption in operations to bring vessels into compliance with the applicable requirements and any such interruption could cause a decrease in charterrevenues. Furthermore, additional security measures could be required in the future which could have a significant financial impact on us. 16 Table of ContentsThe cost of vessel security measures has also been affected by the escalation in recent years in the frequency and seriousness of acts of piracy againstships, notably off the coast of Somalia, including the Gulf of Aden and Arabian Sea area. Attacks of this kind have commonly resulted in vessels and theircrews being detained for several months, and being released only on payment of large ransoms. Substantial loss of revenue and other costs may be incurred asa result of such detention. Although we insure against these losses to the extent practicable, the risk remains of uninsured losses which could significantlyaffect our business. Costs are incurred in taking additional security measures in accordance with Best Management Practices to Deter Piracy, notably thosecontained in the BMP3 industry standard. A number of flag states have signed the 2009 New York Declaration, which expresses commitment to BestManagement Practices in relation to piracy and calls for compliance with them as an essential part of compliance with the ISPS Code.Acts of piracy on ocean-going vessels have increased in frequency and magnitude, which could adversely affect our business.The shipping industry has historically been affected by acts of piracy in regions such as the South China Sea, the Indian Ocean, the Gulf of Aden offthe coast of Somalia and the Red Sea. Although the frequency of sea piracy worldwide decreased during 2013 to its lowest level since its increase in 2009,sea piracy incidents continue to occur, particularly in the Gulf of Aden and towards the Mozambique Channel in the North Indian Ocean and increasingly inthe Gulf of Guinea. A significant example of the heightened level of piracy came in February 2011 when the M/V Irene SL, a crude oil tanker which was notaffiliated with us, was captured by pirates in the Arabian Sea while carrying crude oil estimated to be worth approximately $200 million. In December 2009,the Navios Apollon, a vessel owned by our affiliate, Navios Maritime Partners L.P. (“Navios Partners”), was seized by pirates 800 miles off the coast ofSomalia while transporting fertilizer from Tampa, Florida to Rozi, India and was released on February 27, 2010. In January 2014, a vessel owned by ouraffiliate, Navios Maritime Acquisition Corporation (“Navios Acquisition”), the Nave Atropos, was attacked by a pirate action group in international watersoff the coast of Yemen. The crew and the on-board security team successfully implemented a counter piracy action plan and standard operating proceduresand deterred the attack with no consequences to the vessel or the crew. If these piracy attacks result in regions (in which our vessels are deployed) beingcharacterized by insurers as “war risk” zones or Joint War Committee (JWC) “war and strikes” listed areas, premiums payable for such insurance coveragecould increase significantly and such insurance coverage may be more difficult to obtain. Crew costs, including those due to employing onboard securityguards, could increase in such circumstances. While the use of security guards is intended to deter and prevent the hijacking of our vessels, it could alsoincrease our risk of liability for death or injury to persons or damage to personal property. In addition, while we believe the charterer remains liable for charterpayments when a vessel is seized by pirates, the charterer may dispute this and withhold charter hire until the vessel is released. A charterer may also claimthat a vessel seized by pirates was not “on-hire” for a certain number of days and it is therefore entitled to cancel the charter party, a claim that we woulddispute. We may not be adequately insured to cover losses from these incidents, which could have a material adverse effect on us. In addition, detentionhijacking as a result of an act of piracy against our vessels, or an increase in cost, or unavailability of insurance for our vessels, could have a material adverseimpact on our business, financial condition, results of operations and cash flows. Acts of piracy on ocean-going vessels could adversely affect our businessand operations.Political and government instability, terrorist attacks, increased hostilities or war could lead to further economic instability, increased costs anddisruption of our business.We are an international company and conduct our operations primarily outside the United States. Changing economic, political and governmentalconditions in the countries where we are engaged in business or where our vessels are registered will affect us. Terrorist attacks, such as the attacks in theUnited States on September 11, 2001, in Spain on March 11, 2004, in London on July 7, 2005 and in Paris on January 7, 2015, and the United States’continuing response to these attacks and other current and future conflicts, as well as the recent conflicts in Iraq, Afganistan, Syria, Ukraine, continue to causeuncertainty in the world financial markets, including the energy markets. Continuing hostilities in the Middle East may lead to additional armed conflicts or 17 Table of Contentsto further acts of terrorism and civil disturbance in the United States or elsewhere, which could result in increased volatility and turmoil in the financialmarkets and may contribute further to economic instability. Current and future conflicts and terrorist attacks may adversely affect our business, operatingresults, financial condition, ability to raise capital and future growth. Terrorist attacks on vessels, such as the October 2002 attack on the M/V Limburg, aVLCC not related to us, may in the future also negatively affect our operations and financial condition and directly impact our vessels or our customers.Furthermore, our operations may be adversely affected by changing or adverse political and governmental conditions in the countries where ourvessels are flagged or registered and in the regions where we otherwise engage in business. Any disruption caused by these factors may interfere with theoperation of our vessels, which could harm our business, financial condition and results of operations. Our operations may also be adversely affected byexpropriation of vessels, taxes, regulation, tariffs, trade embargoes, economic sanctions or a disruption of or limit to trading activities, or other adverse eventsor circumstances in or affecting the countries and regions where we operate or where we may operate in the future.Governments could requisition our vessels during a period of war or emergency, resulting in a loss of earningsA government could requisition title or seize our vessels. Requisition of title occurs when a government takes a vessel and becomes the owner. Agovernment could also requisition our vessels for hire, which would result in the government’s taking control of a vessel and effectively becoming thecharterer at a dictated charter rate. Generally, requisitions occur during periods of war or emergency, although governments may elect to requisition vessels inother circumstances. Requisition of one or more of our vessels would have a substantial negative effect on us as we would potentially lose all revenues andearnings from the requisitioned vessels and permanently lose the vessels. Such losses might be partially offset if the requisitioning government compensatedus for the requisition.A failure to pass inspection by classification societies could result in one or more vessels being unemployable unless and until they pass inspection,resulting in a loss of revenues from such vessels for that period and a corresponding decrease in operating cash flows.The hull and machinery of every commercial vessel must be classed by a classification society authorized by its country of registry. The classificationsociety certifies that a vessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and withSOLAS. Our owned fleet is currently enrolled with Nippon Kaiji Kiokai, Bureau Veritas, Lloyd’s Register and American Bureau of Shipping.A vessel must undergo an annual survey, an intermediate survey and a special survey. In lieu of a special survey, a vessel’s machinery may be on acontinuous survey cycle, under which the machinery would be surveyed periodically over a five-year period. Our vessels are on special survey cycles for hullinspection and continuous survey cycles for machinery inspection. Every vessel is also required to be drydocked every two to three years for inspection ofthe underwater parts of such vessel.If any vessel fails any annual survey, intermediate survey or special survey, the vessel may be unable to trade between ports and, therefore, would beunemployable, potentially causing a negative impact on our revenues due to the loss of revenues from such vessel until she is able to trade again.The shipping industry has inherent operational risks that may not be adequately covered by our insurance.The operation of ocean-going vessels in international trade is inherently risky. Although we carry insurance for our fleet covering risks commonlyinsured against by vessel owners and operators, such as hull and machinery insurance, war risks insurance and protection and indemnity insurance (whichinclude environmental 18 Table of Contentsdamage and pollution insurance), all risks may not be adequately insured against, and any particular claim may not be paid. We do not currently maintainoff-hire insurance, which would cover the loss of revenue during extended vessel off-hire periods, such as those that occur during an unscheduled drydockingdue to damage to the vessel from accidents except in cases of loss of hire up to a limited number of days due to war or a piracy event. Accordingly, anyextended period in which a vessel is off-hire, due to an accident or otherwise, could have a material adverse effect on our business. Any claims covered byinsurance would be subject to deductibles, and since it is possible that a large number of claims may be brought, the aggregate amount of these deductiblescould be material.We may be unable to procure adequate insurance coverage at commercially reasonable rates in the future. For example, more stringent environmentalregulations have led in the past to increased costs for, and in the future may result in the lack of availability of, insurance against risks of environmentaldamage or pollution. A catastrophic oil spill or marine disaster could exceed our insurance coverage, which could harm our business, financial condition andoperating results. Changes in the insurance markets attributable to terrorist attacks may also make certain types of insurance more difficult for us to obtain. Inaddition, the insurance that may be available to us in the future may be significantly more expensive than our existing coverage.Even if our insurance coverage is adequate to cover our losses, we may not be able to timely obtain a replacement vessel in the event of a loss.Furthermore, in the future, we may not be able to obtain adequate insurance coverage at reasonable rates for our fleet. Our insurance policies also containdeductibles, limitations and exclusions which can result in significant increased overall costs to us.Because we obtain some of our insurance through protection and indemnity associations, we may also be subject to calls, or premiums, in amounts basednot only on our own claim records, but also on the claim records of all other members of the protection and indemnity associations.We may be subject to calls, or premiums, in amounts based not only on our claim records but also on the claim records of all other members of theprotection and indemnity associations through which we receive insurance coverage for tort liability, including pollution-related liability. Our payment ofthese calls could result in significant expenses to us, which could have a material adverse effect on our business, results of operations and financial condition.Maritime claimants could arrest our vessels, which could interrupt our cash flow.Crew members, suppliers of goods and services to a vessel, shippers of cargo, and other parties may be entitled to a maritime lien against a vessel forunsatisfied debts, claims or damages against such vessel. In many jurisdictions, a maritime lien holder may enforce its lien by arresting a vessel throughforeclosure proceedings. The arrest or attachment of one or more of our vessels could interrupt our cash flow and require us to pay large sums of funds to havethe arrest lifted. We are not currently aware of the existence of any such maritime lien on our vessels.In addition, in some jurisdictions, such as South Africa, under the “sister ship” theory of liability, a claimant may arrest both the vessel which is subjectto 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 “sistership” liability against one vessel in our fleet for claims relating to another ship in the fleet.The risks and costs associated with vessels increase as the vessels age.The costs to operate and maintain a vessel in operation increase with the age of the vessel. The average age of the vessels in our fleet is 7.8 years, andmost dry bulk vessels have an expected life of approximately 25 years. In some instances, charterers prefer newer vessels that are more fuel efficient than oldervessels. Cargo insurance rates also increase with the age of a vessel, making older vessels less desirable to charterers as well. 19 Table of ContentsGovernmental regulations, safety or other equipment standards related to the age of the vessels may require expenditures for alterations or the addition of newequipment to our vessels and may restrict the type of activities in which these vessels may engage. We cannot assure you that, as our vessels age, marketconditions will justify those expenditures or enable us to operate our vessels profitably during the remainder of their useful lives. If we sell vessels, we mayhave to sell them at a loss, and if charterers no longer charter-out vessels due to their age, our earnings could be materially adversely affected.If we fail to manage our planned growth properly, we may not be able to expand our fleet successfully, which may adversely affect our overall financialposition.We have grown our fleet and business significantly. We intend to continue to expand our fleet in the future. Our growth will depend on: • locating and acquiring suitable vessels; • identifying reputable shipyards with available capacity and contracting with them for the construction of new vessels; • integrating any acquired vessels successfully with our existing operations; • enhancing our customer base; • managing our expansion; and • obtaining required financing, which could include debt, equity or combinations thereof.Additionally, the marine transportation and logistics industries are capital intensive, traditionally using substantial amounts of indebtedness to financevessel acquisitions, capital expenditures and working capital needs. If we finance the purchase of our vessels through the issuance of debt securities, it couldresult in: • default and foreclosure on our assets if our operating cash flow after a business combination or asset acquisition were insufficient to pay our debtobligations; • acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if the debt securitycontained covenants that required the maintenance of certain financial ratios or reserves and any such covenant was breached without a waiver orrenegotiation of that covenant; • our immediate payment of all principal and accrued interest, if any, if the debt security was payable on demand; and • our inability to obtain additional financing, if necessary, if the debt security contained covenants restricting our ability to obtain additionalfinancing while such security was outstanding.In addition, our business plan and strategy is predicated on buying vessels at what we believe is near the low end of the cycle in what has typicallybeen a cyclical industry. However, there is no assurance that shipping rates and vessels asset values will not sink lower, or that there will be an upswing inshipping costs or vessel asset values in the near-term or at all, in which case our business plan and strategy may not succeed in the near-term or at all. Growingany business by acquisition presents numerous risks such as undisclosed liabilities and obligations, difficulty experienced in obtaining additional qualifiedpersonnel and managing relationships with customers and suppliers and integrating newly acquired operations into existing infrastructures. We may not besuccessful in growing and may incur significant expenses and losses.If we purchase any newbuilding vessels, delays, cancellations or non-completion of deliveries of newbuilding vessels could harm our operating results.If we purchase any newbuilding vessels, the shipbuilder could fail to deliver the newbuilding vessel as agreed or their counterparty could cancel thepurchase contract if the shipbuilder fails to meet its obligations. In 20 Table of Contentsaddition, under charters we may enter into that are related to a newbuilding, if our delivery of the newbuilding to our customer is delayed, we may be requiredto pay liquidated damages during such delay. For prolonged delays, the customer may terminate the charter and, in addition to the resulting loss of revenues,we may be responsible for additional, substantial liquidated damages. We do not derive any revenue from a vessel until after its delivery and are required topay substantial sums as progress payments during construction of a newbuilding. While we expect to have refund guarantees from financial institutions withrespect to such progress payments in the event the vessel is not delivered by the shipyard or is otherwise not accepted by us, there is the potential that we maynot be able to collect all portions of such refund guarantees, in which case we would lose the amounts we have advanced to the shipyards for such progresspayments.The completion and delivery of newbuildings could be delayed, cancelled or otherwise not completed because of: • quality or engineering problems; • changes in governmental regulations or maritime self-regulatory organization standards; • work stoppages or other labor disturbances at the shipyard; • bankruptcy or other financial crisis of the shipbuilder; • a backlog of orders at the shipyard; • political or economic disturbances; • weather interference or catastrophic event, such as a major earthquake or fire; • requests for changes to the original vessel specifications; • shortages of or delays in the receipt of necessary construction materials, such as steel; • inability to finance the construction or conversion of the vessels; or • inability to obtain requisite permits or approvals.If delivery of a vessel is materially delayed, it could materially adversely affect our results of operations and financial condition and our ability tomake cash distributions.Although we have long-standing relationships with certain Japanese shipowners that provide us access to competitive contracts, we cannot assure you thatwe will always be able to maintain such relationships or that such contracts will continue to be available in the future.We have long-standing relationships with certain Japanese shipowners that give us access to time charters at favorable rates and that, in some cases,include options to purchase the vessels at favorable prices relative to the current market. We cannot assure you that we will have such relationshipsindefinitely. In addition, there is no assurance that Japanese shipowners will generally make contracts available on the same or substantially similar terms inthe future.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 andwhether with or without the knowledge of any of our crew, we may face governmental or other regulatory claims which could have an adverse effect on ourbusiness, results of operations, cash flows, financial condition and ability to pay dividends. 21 Table of ContentsOur vessels may be subject to unbudgeted periods of off-hire, which could materially adversely affect our business, financial condition and results ofoperations.Under the terms of the charter agreements under which our vessels operate, or are expected to operate in the case of a newbuilding, when a vessel is“off-hire,” or not available for service or otherwise deficient in its condition or performance, the charterer generally is not required to pay the hire rate, and wewill be responsible for all costs (including the cost of bunker fuel) unless the charterer is responsible for the circumstances giving rise to the lack ofavailability. A vessel generally will be deemed to be off-hire if there is an occurrence preventing the full working of the vessel due to, among other things: • operational deficiencies; • the removal of a vessel from the water for repairs, maintenance or inspection, which is referred to as drydocking; • equipment breakdowns; • delays due to accidents or deviations from course; • occurrence of hostilities in the vessel’s flag state or in the event of piracy; • crewing strikes, labor boycotts, certain vessel detentions or similar problems; or • our failure to maintain the vessel in compliance with its specifications, contractual standards and applicable country of registry and internationalregulations or to provide the required crew.Under some of our charters, the charterer is permitted to terminate the time charter if the vessel is off-hire for an extended period, which is generallydefined as a period of 90 or more consecutive off-hire days. Under some circumstances, an event of force majeure may also permit the charterer to terminatethe time charter or suspend payment of charter hire.As we do not maintain off-hire insurance except in cases of loss of hire up to a limited number of days due to war or piracy events any extended off-hireperiod could have a material adverse effect.Our international activities increase the compliance risks associated with economic and trade sanctions and anti-corruption laws imposed by the UnitedStates, the European Union and other jurisdictions.Our international operations could expose us to trade and economic sanctions or other restrictions imposed by the United States or other governmentsor organizations, including the United Nations, the European Union and its member countries. Under economic and trading sanctions laws, governments mayseek to impose modifications to business practices, and modifications to compliance programs, which may increase compliance costs, and may subject us tofines, penalties and other sanctions.IranDuring the last few years, the scope of sanctions imposed against the government of Iran and persons engaging in certain activities or doing certainbusiness with and relating to Iran has been expanded by a number of jurisdictions, including the United States, the European Union and Canada. In 2010, theU.S. enacted the Comprehensive Iran Sanctions Accountability and Divestment Act (“CISADA”), which expanded the scope of the former Iran Sanctions Act.The scope U.S. sanctions against Iran were expanded subsequent to CISADA by, among other U.S. laws, the National Defense Authorization Act of 2012 (the“2012 NDAA”), the Iran Threat Reduction and Syria Human Rights Act of 2012 (“ITRA”), Executive Order 13662, and the Iran Freedom and Counter-Proliferation Act of 2012 (“IFCA”). The foregoing laws, among other things, expand the application of regulations to non-U.S. companies, such as theCompany, and introduce limits on the ability of companies and persons to do business or trade with Iran when such activities relate to certain activities suchas investment in Iran, the supply or export of refined petroleum or refined petroleum products to Iran, the supply and delivery of 22 Table of Contentsgoods to Iran which could enhance Iran’s petroleum or energy sector, and the transportation of crude oil from Iran to countries which do not enjoy Iran crudeoil sanctions waivers. Tankers owned by an affiliate of ours called in Iran but did not engage in the prohibited activities specifically identified by thesesanctions. While certain of these restrictions have been suspended until June 2015 there are still limitations in place with which we need to comply. Inaddition to foregoing U.S. sanctions against Iran, we must also comply with any applicable prohibitions of the E.U. sanctions against Iran.Russia/UkraineAs a result of the crisis in Ukraine and the annexation of Crimea by Russia in 2014, both the U.S. and EU have implemented sanctions against certainpersons and entities. In addition, various restrictions on trade have been implemented which, amongst others, include a prohibition on the import into the EUof goods originating in Crimea or Sevastopol as well as restrictions on trade in certain dual-use and military items and restrictions in relation to various itemsof technology associated with the oil industry for use in deep water exploration and production, Arctic oil exploration and production, or shale oil projects inRussia.The U.S. has imposed sanctions against certain designated Russian entities and individuals (“U.S. Russian Sanctions Targets”). These sanctions blockthe property and all interests in property of the U.S. Russian Sanctions Targets. This effectively prohibits U.S. persons from engaging in any economic orcommercial transactions with the U.S. Russian Sanctions Targets unless they are authorized by the U.S. Treasury Department. While the sanctions are notdirectly applicable to us, we have compliance measures in place to guard against transactions with U.S. Russian Sanctions Targets.Other U.S. Economic Sanctions TargetsIn addition to Iran and certain Russian entities and individuals, as indicated above, the United States maintains economic sanctions against Syria,Sudan, Cuba, North Korea, and against entities and individuals whose names appear on the List of Specially Designated Nations and Blocked Personsmaintained by the U.S. Treasury Department (collectively, “Sanctions Targets”). We are subject to the prohibitions of these sanctions to the extent that anytransaction or activity we engage in involves Sanctions Targets and a U.S. person or otherwise has a nexus to the United States.ComplianceAlthough we believe that we are in compliance with all applicable sanctions and embargo laws and regulations, and intend to maintain suchcompliance, there can be no assurance that we will be in the future, particularly as the scope of certain laws may be unclear and may be subject to changinginterpretations. Moreover, despite relevant provisions in charter parties forbidding the use of our vessels in trade that would violate economic sanctions, ourcharterers may nevertheless violate applicable sanctions and embargo laws and regulations as a result of actions that do not involve us or our vessels, andthose violations could in turn negatively affect our reputation. In addition, given our relationship with Navios Acquisition, Navios Partners and NaviosMaritime Midstream Partners L.P. (“Navios Midstream”), we cannot give any assurance that an adverse finding against Navios Acquisition or Navios Partnersor Navios Midstream by a governmental or legal authority or others with respect to the matters discussed herein or any future matter related to regulatorycompliance by Navios Acquisition or Navios Partners or Navios Midstream will not have a material adverse impact on our business, reputation, financialcondition or results of operations.We are constantly monitoring developments in the United States, the European Union and other jurisdictions that maintain economic sanctions againstIran, other countries, and other sanctions targets, including developments in implementation and enforcement of such economic sanctions. Expansion of sucheconomic sanctions, embargoes and other restrictions in the future (including additional designations of countries subject to sanctions), or modifications inhow existing sanctions are interpreted or enforced, could prevent our vessels from 23 Table of Contentscalling in ports in sanctioned countries or could limit their cargoes. If any of the risks described above materialize, it could have a material adverse impact onour business and results of operations.To reduce the risk of violating economic sanctions, we have a policy of compliance with applicable economic sanctions laws and have implementedand continue to diligently follow procedures to avoid economic sanctions violations.We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, and anti-corruption laws in other applicablejurisdictions.As an international shipping company, we may operate in countries known to have a reputation for corruption. The U.S. Foreign Corrupt Practices Actof 1977 (the “FCPA”) and other anti-corruption laws and regulations in applicable jurisdictions generally prohibit companies registered with the SEC andtheir intermediaries from making improper payments to government officials for the purpose of obtaining or retaining business. Under the FCPA, U.S.companies may be held liable for some actions taken by strategic or local partners or representatives. Legislation in other countries includes the U.K. BriberyAct which is broader in scope than the FCPA because it does not contain an exception for facilitation payments. We and our customers may be subject tothese and similar anti-corruption laws in other applicable jurisdictions. Failure to comply with such legal requirements could expose us to civil and/orcriminal penalties, including fines, prosecution and significant reputational damage, all of which could materially and adversely affect our business andresults of operations, including our relationships with our customers, and our financial results. Compliance with the FCPA, the U.K. Bribery Act and otherapplicable anti-corruption laws and related regulations and policies imposes potentially significant costs and operational burdens. Moreover, the complianceand monitoring mechanisms that we have in place including our Code of Ethics and our anti-bribery and anti-corruption policy may not adequately preventor detect possible violations under applicable anti-bribery and anti-corruption legislation.Our Chairman and Chief Executive Officer holds approximately 26% of our common stock and will be able to exert considerable influence over ouractions; her failure to own a significant amount of our common stock or to be our Chief Executive Officer would constitute a default under our securedcredit facilities.Ms. Angeliki Frangou owns approximately 26% of the outstanding shares of our common stock, and has filed a Schedule 13D indicating that sheintends, subject to market conditions, to purchase in total $20.0 million of our common stock (as of April 28, 2014, she had purchased approximately $10.0million of the total $20.0 million in value of our common stock). As the Chairman, Chief Executive Officer and a significant stockholder, she has the powerto exert considerable influence over our actions and the outcome of matters on which our stockholders are entitled to vote including the election of directorsand other significant corporate actions. The interests of Ms. Frangou may be different from your interests. Furthermore, if Ms. Frangou ceases to hold aminimum of 20% of our common stock, does not remain actively involved in the business, or ceases to be our Chief Executive Officer, then we will be indefault under our secured credit facilities.The loss of key members of our senior management team could disrupt the management of our business.We believe that our success depends on the continued contributions of the members of our senior management team, including Ms. Angeliki Frangou,our Chairman, Chief Executive Officer and principal stockholder. The loss of the services of Ms. Frangou or one of our other executive officers or seniormanagement members could impair our ability to identify and secure new charter contracts, to maintain good customer relations and to otherwise manage ourbusiness, which could have a material adverse effect on our financial performance and our ability to compete.We may be unable to attract and retain qualified, skilled employees or crew necessary to operate our business or may have to pay substantially increasedcosts for our employees and crew.Our success will depend in part on our ability to attract, hire, train and retain highly skilled and qualified personnel. In crewing our vessels, we requiretechnically skilled employees with specialized training who can 24 Table of Contentsperform physically demanding work. Competition to attract, hire, train and retain qualified crew members is intense. In addition, recently, the limited supplyof, and increased demand for, well-qualified crew members, due to the increase in the size of global shipping fleet, has created upward pressure on crewingcosts, which we generally bear under our period, time and spot charters. If we are not able to increase our hire rates to compensate for any crew cost increases,our business, financial condition and results of operations may be adversely affected. Any inability we experience in the future to attract, hire, train and retaina sufficient number of qualified employees could impair our ability to manage, maintain and grow our business.Certain of our directors, officers, and principal stockholders are affiliated with entities engaged in business activities similar to those conducted by uswhich may compete directly with us, causing such persons to have conflicts of interest.Some of our directors, officers and principal stockholders have affiliations with entities that have similar business activities to those conducted by us.Certain of our directors are also directors of other shipping companies and they may enter similar businesses in the future. These other affiliations andbusiness activities may give rise to certain conflicts of interest in the course of such individuals’ affiliation with us. Although we do not prevent our directors,officers and principal stockholders from having such affiliations, we use our best efforts to cause such individuals to comply with all applicable laws andregulations in addressing such conflicts of interest. Our officers and employee directors devote their full time and attention to our ongoing operations, andour non-employee directors devote such time as is necessary and required to satisfy their duties as directors of a public company.Because we generate substantially all of our revenues in U.S. dollars but incur a portion of our expenses in other currencies, exchange rate fluctuationscould cause us to suffer exchange rate losses, thereby increasing expenses and reducing income.We engage in worldwide commerce with a variety of entities. Although our operations may expose us to certain levels of foreign currency risk, ourtransactions are predominantly U.S. dollar-denominated at the present. Additionally, our South American subsidiaries transact a nominal amount of theiroperations in Uruguayan pesos, Paraguayan Guaranies, Argentinean pesos and Brazilian Reales, whereas our wholly-owned vessel subsidiaries and the vesselmanagement subsidiaries transact a nominal amount of their operations in Euros; however, all of the subsidiaries’ primary cash flows are U.S. dollar-denominated. In 2014, approximately 32.9% of our expenses were incurred in currencies other than U.S. dollars. Transactions in currencies other than thefunctional currency are translated at the exchange rate in effect at the date of each transaction. Expenses incurred in foreign currencies against which the U.S.dollar falls in value can increase, thereby decreasing our income. A change in exchange rates between the U.S. dollar and each of the foreign currencies listedabove of 1.00% would change our net loss for the year ended December 31, 2014 by $1.4 million.For example, as of December 31, 2014, the value of the U.S. dollar as compared to the Euro increased by approximately 13.3% compared with therespective value as of December 31, 2013. A greater percentage of our transactions and expenses in the future may be denominated in currencies other thanU.S. dollar. As part of our overall risk management policy, we attempt to hedge these risks in exchange rate fluctuations from time to time. We may notalways be successful in such hedging activities and, as a result, our operating results could suffer as a result of non-hedged losses incurred as a result ofexchange rate fluctuations.We are incorporated in the Republic of the Marshall Islands, which does not have a well-developed body of corporate law.Our corporate affairs are governed by our amended and restated articles of incorporation and by-laws and by the Marshall Islands BusinessCorporations Act (“BCA”). The provisions of the BCA are intended to resemble provisions of the corporation laws of a number of states in the United States.However, there have been few judicial cases in the Republic of the Marshall Islands interpreting the BCA. The rights and fiduciary 25 Table of Contentsresponsibilities of directors under the law of the Republic of the Marshall Islands are not as clearly established as the rights and fiduciary responsibilities ofdirectors under statutes or judicial precedent in existence in certain U.S. jurisdictions. Stockholder rights may differ as well. The BCA does specificallyincorporate the non-statutory law, or judicial case law, of the State of Delaware and other states with substantially similar legislative provisions. Accordingly,you may have more difficulty protecting your interests in the face of actions by management, directors or controlling stockholders than you would in the caseof a corporation incorporated in the State of Delaware or other U.S. jurisdictions.We, and certain of our officers and directors, may be difficult to serve with process as we are incorporated in the Republic of the Marshall Islands and suchpersons may reside outside of the United States.We are a corporation organized under the laws of the Republic of the Marshall Islands, and all of our assets are located outside of the United States. Inaddition, several of our directors and officers are residents of Greece or other non-U.S. jurisdictions. Substantial portions of the assets of these persons arelocated in Greece or other non-U.S. jurisdictions. Thus, it may not be possible for investors to affect service of process upon us, or our non-U.S. directors orofficers, or to enforce any judgment obtained against these persons in U.S. courts. Also, it may not be possible to enforce U.S. securities laws or judgmentsobtained in U.S. courts against these persons in a non-U.S. jurisdiction.Because the Public Company Accounting Oversight Board is not currently permitted to inspect registered public accounting firms in Greece, including ourindependent registered public accounting firm, you may not benefit from such inspections.Auditors of U.S. public companies, including our independent registered public accounting firm, are required by the laws of the United States toundergo periodic Public Company Accounting Oversight Board (“PCAOB”) inspections to assess their compliance with U.S. law and professional standardsin connection with performance of audits of financial statements filed with the SEC. The laws of certain European Union countries, including Greece, do notcurrently permit the PCAOB to conduct inspections of accounting firms established and operating in such European Union countries. Accordingly, thePCAOB is currently prevented from fully evaluating the effectiveness of our independent registered public accounting firm’s audit procedures or qualitycontrol procedures. Unlike shareholders or potential shareholders of most U.S. public companies, our shareholders are deprived of the possible benefits ofsuch PCAOB inspections.Being a foreign private issuer exempts us from certain SEC and NYSE requirements.We are a foreign private issuer within the meaning of rules promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).As such, we are exempt from certain provisions applicable to United States public companies including: • the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K; • the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under theExchange Act; • the provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information; and • the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and establishing insiderliability for profits realized from any “short-swing” trading transaction (i.e., a purchase and sale, or sale and purchase, of the issuer’s equitysecurities within less than six months). • the obligation to obtain shareholder approval in connection with the approval of, and material revisions to, equity compensation plans. 26 Table of ContentsBecause of these exemptions, investors are not afforded the same protections or information generally available to investors holding shares in publiccompanies organized in the United States.Risks Relating to Our Common StockOur stock price may be volatile, and investors in our common stock could lose all or part of their investment.The following factors could cause the price of our common stock in the public market to fluctuate significantly: • variations in our quarterly operating results; • changes in market valuations of companies in our industry; • fluctuations in stock market prices and volumes; • issuance of common stock or other securities in the future; • the addition or departure of key personnel; • announcements by us or our competitors of new business or trade routes, acquisitions or joint ventures; and • the other factors discussed elsewhere in this Annual Report.Volatility in the market price of our common stock may prevent investors from being able to sell their common stock at or above the price an investorpays for our common stock in an offering. In the past, class action litigation has often been brought against companies following periods of volatility in themarket price of those companies’ common stock. We may become involved in this type of litigation in the future. Litigation is often expensive and divertsmanagement’s attention and company resources and could have a material effect on our business, financial condition and operating results.Risks Relating to Our Series G and Series H Preferred Stock and the Depositary SharesOur Series G Preferred Stock and Series H Preferred Stock are subordinated to our debt obligations, and a holder’s interests could be diluted by theissuance of additional shares, including additional Series G Preferred Stock, Series H Preferred Stock and by other transactions.Our 8.75% Series G Cumulative Redeemable Perpetual Preferred Stock, with a liquidation preference of $2,500.00 per share (the “Series G PreferredStock”) and our 8.625% Series H Cumulative Redeemable Perpetual Preferred Stock, with a liquidation preference of $2,500.00 per share (the “Series HPreferred Stock”) (the Series G Preferred Stock and the Series H Preferred Stock together referred to as the “Series G and H Preferred Stock”), both representedby American Depositary Shares (the “Depositary Shares”), are subordinated to all of our existing and future indebtedness. As of December 31, 2014, our totaldebt was $1,644.6 million. We may incur substantial additional debt from time to time in the future, and the terms of the Series G and H Preferred Stock donot limit the amount of indebtedness we may incur. The payment of principal and interest on our debt reduces cash available for distribution to us and on ourshares, including the Series G and H Preferred Stock and the Depositary Shares.The issuance of additional preferred stock on a parity with or senior to our Series G and H Preferred Stock would dilute the interests of the holders ofour Series G and H Preferred Stock, and any issuance of any preferred stock senior to or on parity with our Series G and H Preferred Stock or additionalindebtedness could affect our ability to pay dividends on, redeem or pay the liquidation preference on our Series G and H Preferred Stock. No provisionsrelating to our Series G and H Preferred Stock protect the holders of our Series G and H 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 Series Gand H Preferred Stock. 27 Table of ContentsOur Series G and H Preferred Stock will rank pari passu with any other class or series of our capital stock established after the original issue date of theSeries G and H Preferred Stock that is not expressly subordinated or senior to the Series G and H Preferred Stock (“Parity Securities”) as to the payment ofdividends and amounts payable upon liquidation or reorganization. If less than all dividends payable with respect to the Series G and H Preferred Stock andany Parity Securities are paid, any partial payment shall be made pro rata with respect to shares of Series G and H Preferred Stock and any Parity Securitiesentitled to a dividend payment at such time in proportion to the aggregate amounts remaining due in respect of such shares at such time.We may not have sufficient cash from our operations to enable us to pay dividends on or to redeem our Series G and H Preferred Stock, and accordinglythe Depositary Shares, as the case may be, following the payment of expenses and the establishment of any reserves.We will pay quarterly dividends on the Series G and H Preferred Stock, and accordingly the Depositary Shares, only from funds legally available forsuch purpose when, as and if declared by our board of directors. We may not have sufficient cash available each quarter to pay dividends. In addition, we mayhave insufficient cash available to redeem the Series G and H Preferred Stock, and accordingly the Depositary Shares. The amount of cash we can use to paydividends or redeem our Series G and H Preferred Stock and the Depositary Shares depends upon the amount of cash we generate from our operations, whichmay fluctuate significantly, and other factors, including the following: • changes in our operating cash flow, capital expenditure requirements, working capital requirements and other cash needs; • the amount of any cash reserves established by our board of directors; • restrictions under our credit facilities and other instruments and agreements governing our existing and future debt, including restrictions underour existing credit facilities and indentures governing our debt securities on our ability to pay dividends if an event of default has occurred andis continuing, or if the payment of the dividend would result in an event of default, and on our ability to redeem equity securities; • restrictions under Marshall Islands law as described below; and • our overall financial and operating performance, which, in turn, is subject to prevailing economic and competitive conditions and to the risksassociated with the shipping industry, our dry bulk operations and the other factors described herein, many of which are beyond our control.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 noncashitems, and our board of directors in its discretion may elect not to declare any dividends. We may incur other expenses or liabilities that could reduce oreliminate the cash available for distribution as dividends. As a result of these and the other factors mentioned above, we may pay dividends during periodswhen we record losses and may not pay dividends during periods when we record net income.Our ability to pay dividends on and to redeem our Series G and H Preferred Stock, and therefore holders’ ability to receive payments on the DepositaryShares, is limited by the requirements of Marshall Islands law.Marshall Islands law provides that we may pay dividends on and redeem the Series G and H Preferred Stock only to the extent that assets are legallyavailable for such purposes. Legally available assets generally are limited to our surplus, which essentially represents our retained earnings and the excess ofconsideration received by us for the sale of shares above the par value of the shares. In addition, under Marshall Islands law we may not pay dividends on orredeem Series G and H Preferred Stock if we are insolvent or would be rendered insolvent by the payment of such a dividend or the making of suchredemption. 28 Table of ContentsThe Series G and H Preferred Stock represent perpetual equity interests.The Series G and H Preferred Stock represent perpetual equity interests in us and, unlike our indebtedness, will not give rise to a claim for payment of aprincipal amount at a particular date. As a result, holders of the Series G and H Preferred Stock (and accordingly the Depositary Shares) may be required tobear the financial risks of an investment in the Series G and H Preferred Stock (and accordingly the Depositary Shares) for an indefinite period of time. Inaddition, the Series G and H Preferred Stock will rank junior to all our indebtedness and other liabilities, and any other senior securities we may issue in thefuture with respect to assets available to satisfy claims against us.Holders of Depositary Shares have extremely limited voting rights, will have even more limited rights than holders of the Series G and H Preferred Stockand may encounter difficulties in exercising some of such rights.Voting rights of holders of Depositary Shares will be extremely limited. Our common stock is the only class of stock carrying full voting rights. Holdersof the Series G and H Preferred Stock, and accordingly holders of the Depositary Shares, generally have no voting rights. However, (i) in the event that onequarterly dividend payable on the Series G Preferred Stock or the Series H Preferred Stock is in arrears (whether or not such dividend shall have been declaredand whether or not there are profits, surplus, or other funds legally available for the payment of dividends), we will use commercially reasonable efforts toobtain an amendment to our articles of incorporation to effectuate any and all such changes thereto as may be necessary to permit either the Series G PreferredShareholders or the Series H Preferred Shareholders, as the case may be, to exercise the voting rights described in the following clause (ii)(x), and (ii) if andwhen dividends payable on either the Series G Preferred Stock or the Series H Preferred Stock, as the case may be, are in arrears for six or more quarterlyperiods, whether or not consecutive (and whether or not such dividends shall have been declared and whether or not there are profits, surplus, or other fundslegally available for the payment of dividends), then (x) if our articles of incorporation have been amended as described in the preceding clause (i), theholders of Series G Preferred Stock or the holders of Series G Preferred Stock, as the case may be, will have the right (voting together as a class with all otherclasses or series of parity securities upon which like voting rights have been conferred and are exercisable), to elect one additional director to serve on ourboard 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 directorsalready has been increased by reason of the election of a director by holders of securities on parity with either the Series G Preferred Stock or Series HPreferred Stock, as the case may be, upon which like voting rights have been conferred and with which the Series G and H Preferred Stock voted as a class forthe election of such director), and (y) if our articles of incorporation have not been amended as described in the preceding clause (i), then, until suchamendment is fully approved and effective, the dividend rate on the Series G Preferred Stock or the Series H Preferred Stock, as the case may be, shall increaseby 25 basis points. There can be no assurance that any such amendment to our articles of incorporation will be approved by our common stockholders. Anysuch amendment to our articles of incorporation, if obtained, shall also provide that the right of such holders of Series G Preferred Stock or Series H PreferredStock, as the case may be, to elect members of our board of directors will continue until such time as all accumulated and unpaid dividends on the Series GPreferred Stock or Series H Preferred Stock, as the case may be, have been paid in full or sufficient funds for such payment have been declared and set apart forsuch purpose.Furthermore, holders of the Depositary Shares may encounter difficulties in exercising any voting rights acquired by the Series G Preferred Stock or theSeries H Preferred Stock for as long as they hold the Depositary Shares rather than the Series G Preferred Stock or the Series H Preferred Stock. For example,holders of the Depositary Shares will not be entitled to vote at meetings of holders of Series G Preferred Stock or of the Series H Preferred Stock, and they willonly be able to exercise their limited voting rights by giving timely instructions to The Bank of New York Mellon (the “Depositary”) in advance of anymeeting of holders of Series G Preferred Stock or the Series H Preferred Stock, as the case may be. The Depositary will be the holder of the Series G PreferredStock or the Series H Preferred Stock underlying the Depositary Shares and holders may exercise 29 Table of Contentsvoting rights with respect to the Series G Preferred Stock or the Series H Preferred Stock represented by the Depositary Shares only in accordance with thedeposit agreement (the “Deposit Agreement”) relating to the Depositary Shares. To the limited extent permitted by the Deposit Agreement, the holders of theDepositary Shares should be able to direct the Depositary to vote the underlying Series G Preferred Stock or the Series H Preferred Stock, as the case may be,in accordance with their individual instructions. Nevertheless, holders of Depositary Shares may not receive voting materials in time to instruct theDepositary to vote the Series G Preferred Stock or the Series H Preferred Stock, as the case may be, underlying their Depositary Shares. Also, the Depositaryand its agents are not responsible for failing to carry out voting instructions of the holders of Depositary Shares or for the manner of carrying out suchinstructions. Accordingly, holders of Depositary Shares may not be able to exercise voting rights, and they will have little, if any, recourse if the underlyingSeries G Preferred Stock or the Series H Preferred Stock, as the case may be, is not voted as requested.The Depositary Shares and the Series G and Series H Preferred Stock are relatively new issues of securities with no established trading markets. Variousfactors may adversely affect the price of the Depositary Shares.The Depositary Shares and the Series G and Series H Preferred Stock are relatively new issues of securities with no established trading markets. Eventhough the Depositary Shares are listed on the New York Stock Exchange (the “NYSE”), there may be little or no secondary market for the Depositary Shares,in which case the trading price of the Depositary Shares could be adversely affected and a holder’s ability to transfer its securities will be limited. If an activetrading market does develop on the NYSE, the Depositary Shares may trade at prices lower than the offering price and the secondary market may not providesufficient liquidity. In addition, since the Series G and Series H Preferred Stock do not have a stated maturity date, investors seeking liquidity in theDepositary Shares will be limited to selling their Depositary Shares in the secondary market absent redemption by us. We do not expect that there will be anyother trading market for the Series G and Series H Preferred Stock except as represented by the Depositary Shares.One of the factors that will influence the price of the Depositary Shares will be the dividend yield on the Depositary Shares (as a percentage of the priceof the Depositary Shares) relative to market interest rates. An increase in market interest rates, which are currently at low levels relative to historical rates, maylead prospective purchasers of the Depositary Shares to expect a higher dividend yield, and higher interest rates would likely increase our borrowing costsand potentially decrease funds available for distribution. Accordingly, higher market interest rates could cause the market price of the Depositary Shares todecrease.Other factors, some of which are beyond our control, will also influence the market prices of the Depositary Shares. Factors that might influence themarket prices of the Depositary Shares include: • whether we declare or fail to declare dividends on the Series G Preferred Stock from time to time; • the market for similar securities; • our issuance of debt or preferred equity securities; • our creditworthiness; • our financial condition, results of operations and prospects; and • economic, financial, geopolitical, regulatory or judicial events that affect us or the financial markets generally.Accordingly, the Depositary Shares that an investor purchases may trade at a discount to their purchase price.The Series G and H Preferred Stock represented by the Depositary Shares have not been rated, and ratings of any other of our securities may affect thetrading price of the Depositary Shares.We have not sought to obtain a rating for the Series G and H Preferred Stock, and both stocks may never be rated. It is possible, however, that one ormore rating agencies might independently determine to assign a rating 30 Table of Contentsto either the Series G Preferred Stock or the Series H Preferred Stock or that we may elect to obtain a rating of either our Series G Preferred Stock or the SeriesH Preferred Stock in the future. In addition, we have issued securities that are rated and may elect to issue other securities for which we may seek to obtain arating. Any ratings that are assigned to the Series G Preferred Stock or the Series H Preferred Stock in the future, that have been issued on our outstandingsecurities or that may be issued on our other securities, if they are lower than market expectations or are subsequently lowered or withdrawn, could imply alower relative value for the Series G Preferred Stock or the Series H Preferred Stock and could adversely affect the market for or the market value of theDepositary Shares of the Series G and H Preferred Shares repectively. Ratings only reflect the views of the issuing rating agency or agencies and such ratingscould at any time be revised downward or withdrawn entirely at the discretion of the issuing rating agency. A rating is not a recommendation to purchase, sellor hold any particular security, including the Series G and H Preferred Stock and the Depositary Shares. Ratings do not reflect market prices or suitability of asecurity for a particular investor and any future rating of the Series G and H Preferred Stock and the Depositary Shares may not reflect all risks related to usand our business, or the structure or market value of the Series G and H Preferred Stock and the Depositary Shares.The amount of the liquidation preference of our Series G and H Preferred Stock is fixed and holders will have no right to receive any greater paymentregardless of the circumstances.The payment due upon liquidation for both our Series G and H Preferred Stock is fixed at the liquidation preference of $2,500.00 per share (equivalentto $25.00 per Depositary Share) plus accumulated and unpaid dividends to the date of liquidation (whether or not declared). If in the case of our liquidation,there are remaining assets to be distributed after payment of this amount, holders will have no right to receive or to participate in these amounts. Furthermore,if the market price for the Series G Preferred Stock or the Series H Preferred Stock, as the case may be, is greater than the liquidation preference, holders willhave no right to receive the market price from us upon our liquidation.The Series G and H Preferred Stock are only redeemable at our option and investors should not expect us to redeem either the Series G Preferred Stock orthe Series H Preferred Stock on the dates they respectively become redeemable or on any particular date afterwards.We may redeem, at our option, all or from time to time part of the Series G Preferred Stock or the Series H Preferred Stock on or after January 28, 2019and July 8, 2019 respectively. If we redeem the Series G Preferred Stock, holders of the Series G Preferred Stock will be entitled to receive a redemption priceequal to $2,500.00 per share (equivalent to $25.00 per Depositary Share) plus accumulated and unpaid dividends to the date of redemption (whether or notdeclared). If we redeem the Series H Preferred Stock, holders of the Series H Preferred Stock will be entitled to receive a redemption price equal to $2,500.00per share (equivalent to $25.00 per Depositary Share) plus accumulated and unpaid dividends to the date of redemption (whether or not declared). Anydecision we may make at any time to propose redemption of either the Series G Preferred Stock or the Series H Preferred Stock will depend upon, among otherthings, our evaluation of our capital position, the composition of our shareholders’ equity and general market conditions at that time. In addition, investorsmight not be able to reinvest the money they receive upon redemption of the Series G Preferred Stock or the Series H Preferred Stock, as the case may be, in asimilar security or at similar rates. We may elect to exercise our partial redemption right on multiple occasions.Holders of Depositary Shares may be subject to additional risks related to holding Depositary Shares rather than shares.Because holders of Depositary Shares do not hold their shares directly, they are subject to the following additional risks, among others: • a holder of Depositary Shares will not be treated as one of our direct shareholders and may not be able to exercise shareholder rights; 31 Table of Contents • distributions on the Series G and H Preferred Stock represented by the Depositary Shares will be paid to the Depositary, and before the Depositarymakes a distribution to holder on behalf of the Depositary Shares, withholding taxes or other governmental charges, if any, that must be paid willbe deducted; • we and the Depositary may amend or terminate the Deposit Agreement without the consent of holders of the Depositary Shares in a manner thatcould prejudice holders of Depositary Shares or that could affect their ability to transfer Depositary Shares, among others; and • the Depositary may take other actions inconsistent with the best interests of holders of Depositary Shares.Risks Relating to Our DebtWe have substantial debt and may incur substantial additional debt, including secured debt, which could adversely affect our financial health and ourability to obtain financing in the future, react to changes in our business and make payments under the notes.As of December 31, 2014, we had $1,644.6 million in aggregate principal amount of debt outstanding of which $725.0 million was unsecured.Our substantial debt could have important consequences to holders of our common stock. Because of our substantial debt: • our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, vessel or other acquisitions orgeneral corporate purposes and our ability to satisfy our obligations with respect to our debt may be impaired in the future; • a substantial portion of our cash flow from operations must be dedicated to the payment of principal and interest on our indebtedness, therebyreducing the funds available to us for other purposes; • we will be exposed to the risk of increased interest rates because our borrowings under our senior secured credit facilities will be at variable ratesof interest; • it may be more difficult for us to satisfy our obligations to our lenders, resulting in possible defaults on and acceleration of such indebtedness; • we may be more vulnerable to general adverse economic and industry conditions; • we may be at a competitive disadvantage compared to our competitors with less debt or comparable debt at more favorable interest rates and, as aresult, we may not be better positioned to withstand economic downturns; • our ability to refinance indebtedness may be limited or the associated costs may increase; and • our flexibility to adjust to changing market conditions and ability to withstand competitive pressures could be limited, or we may be preventedfrom carrying out capital expenditures that are necessary or important to our growth strategy and efforts to improve operating margins or ourbusiness.We and our subsidiaries may be able to incur substantial additional indebtedness in the future as the terms of the indenture governing our 8.125%Senior Notes due 2019 (the “2019 Notes”) and the indenture governing our 7.375% First Priority Ship Mortgage Notes issued on November 29, 2013 (the“2022 Notes”) do not fully prohibit us or our subsidiaries from doing so. The terms of the indenture governing the 7.25% Senior Notes due 2022 (the “2022Logistics Senior Notes”) of Navios South American Logistics (“Navios Logistics”) and the agreements governing the terms of the other indebtedness ofNavios Logistics also permit Navios Logistics to incur substantial additional indebtedness in accordance with the terms of such agreements. If new debt isadded to our current debt levels, the related risks that we now face would increase and we may not be able to meet all of our debt obligations. 32 Table of ContentsThe agreements and instruments governing our debt contain restrictions and limitations that could significantly impact our ability to operate our business.Our secured credit facilities and our indentures impose certain operating and financial restrictions on us. These restrictions limit our ability to: • incur or guarantee additional indebtedness; • create liens on our assets; • make new investments; • engage in mergers and acquisitions; • pay dividends or redeem capital stock; • make capital expenditures; • engage in certain FFA trading activities; • change the flag, class or commercial and technical management of our vessels; • enter into long-term charter arrangements without the consent of the lender; and • sell any of our vessels.The agreements governing the terms of Navios Logistics’ indebtedness impose similar restrictions upon Navios Logistics.Therefore, we and Navios Logistics will need to seek permission from our respective lenders in order to engage in some corporate and commercialactions that believe would be in the best interest of our respective business, and a denial of permission may make it difficult for us or Navios Logistics tosuccessfully execute our business strategy or effectively compete with companies that are not similarly restricted. The interests of our and Navios Logistics’lenders may be different from our respective interests or those of our holders of common stock, and we cannot guarantee that we or Navios Logistics will beable to obtain the permission of lenders when needed. This may prevent us or Navios Logistics from taking actions that are in best interests of us, NaviosLogistics or our stockholders. Any future debt agreements may include similar or more restrictive restrictions.Our ability to generate the significant amount of cash needed to pay interest and principal and otherwise service our debt and our ability to refinance allor a portion of our indebtedness or obtain additional financing depend on multiple factors, many of which may be beyond our control.The ability of us and Navios Logistics to make scheduled payments on or to refinance our respective debt obligations will depend on our respectivefinancial and operating performance, which, in turn, will be subject to prevailing economic and competitive conditions and to the financial and businessfactors, many of which may be beyond the control of us and Navios Logistics.The principal and interest on such debt will be paid in cash. The payments under our and Navios Logistics’ debt will limit funds otherwise available forour respective working capital, capital expenditures, vessel acquisitions and other purposes. As a result of these obligations, the current liabilities us orNavios Logistics may exceed our respective current assets. We or Navios Logistics may need to take on additional debt as we expand our respective fleets orother operations, which could increase our respective ratio of debt to equity. The need to service our respective debt may limit funds available for otherpurposes, and our or Navios Logistics’ inability to service debt in the future could lead to acceleration of such debt, the foreclosure on assets such as ownedvessels or otherwise negatively affect us. 33 Table of ContentsWe may be unable to raise funds necessary to finance the change of control repurchase offer required by the indentures governing our outstanding notesand our secured credit facilities.The indenture governing the 2019 Notes, the indenture governing the 2022 Notes, the indentures governing the Logistics Senior Notes and our andNavios Logistics’ secured credit facilities contain certain change of control provisions. If we or Navios Logistics experience specified changes of controlunder our respective notes, we or Navios Logistics, as the case may be, will be required to make an offer to repurchase all of our respective outstanding notes(unless otherwise redeemed) at a price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the repurchase date. Theoccurrence of specified events that would constitute a change of control may constitute a default under our and Navios Logistics’ secured credit facilities. Inthe event of a change of control under these debt agreements, we cannot assure you that we would have sufficient assets to satisfy all of our obligations underthese debt agreements, including but not limited to, repaying all indebtedness outstanding under the applicable secured credit facilities or repurchasing theapplicable notes.If the recent volatility in the London InterBank Offered Rate, or LIBOR, continues, it could affect our profitability, earnings and cash flow.LIBOR has recently been volatile, with the spread between LIBOR and the prime lending rate widening significantly at times. These conditions are theresult of the recent disruptions in the international credit markets. Because the interest rates borne by our outstanding indebtedness fluctuate with changes inLIBOR, if this volatility were to continue, it would affect the amount of interest payable on our debt, which in turn, could have an adverse effect on ourprofitability, earnings and cash flow. See also “Item 11 Qualitative and Quantitative Disclosures about Market Risk.”Furthermore, interest in most loan agreements in our industry has been based on published LIBOR rates. Recently, however, lenders have insisted onprovisions that entitle the lenders, in their discretion, to replace published LIBOR as the base for the interest calculation with their cost-of-funds rate. Suchprovisions could significantly increase our lending costs, which would have an adverse effect on our profitability, earnings and cash flow.The market values of our vessels, which have declined from historically high levels, may fluctuate significantly, which could cause us to breach covenantsin our credit facilities and result in the foreclosure of our mortgaged vessels.Factors that influence vessel values include: • number of newbuilding deliveries; • number of vessels scrapped or otherwise removed from the total fleet; • changes in environmental and other regulations that may limit the useful life of vessels; • changes in global dry cargo commodity supply; • types and sizes of vessels; • development of and increase in use of other modes of transportation; • cost of vessel acquisitions; • cost of newbuilding vessels; • governmental or other regulations; • prevailing level of charter rates; • general economic and market conditions affecting the shipping industry; and • the cost of retrofitting or modifying existing ships to respond to technological advances in vessel design or equipment, changes in applicableenvironmental or other regulations or standards, or otherwise. 34 Table of ContentsIf the market values of our owned vessels decrease, we may breach covenants contained in our secured credit facilities. If we breach such covenants andare unable to remedy any relevant breach, our lenders could accelerate our debt and foreclose on the collateral, including our vessels. Any loss of vesselswould significantly decrease our ability to generate positive cash flow from operations and, therefore, service our debt. In addition, if the book value of avessel is impaired due to unfavorable market conditions, or a vessel is sold at a price below its book value, we would incur a loss. Navios Logistics may besubject to similar ramifications under its credit facilities if the market values of its owned vessels decrease.In addition, as vessels grow older, they generally decline in value. We will review our vessels for impairment whenever events or changes incircumstances indicate that the carrying amount of the assets may not be recoverable. We review certain indicators of potential impairment, such asundiscounted projected operating cash flows expected from the future operation of the vessels, which can be volatile for vessels employed on short-termcharters or in the spot market. Any impairment charges incurred as a result of declines in charter rates would negatively affect our financial condition andresults of operations. In addition, if we sell any vessel at a time when vessel prices have fallen and before we have recorded an impairment adjustment to ourfinancial statements, the sale may be at less than the vessel’s carrying amount on our financial statements, resulting in a loss and a reduction in earnings.We may require additional financing to acquire vessels or business or to exercise vessel purchase options, and such financing may not be available.In the future, we may be required to make substantial cash outlays to exercise options or to acquire vessels or business and will need additionalfinancing to cover all or a portion of the purchase prices. We intend to cover the cost of such items with new debt collateralized by the vessels to be acquired,if applicable, but there can be no assurance that we will generate sufficient cash or that debt financing will be available. Moreover, the covenants in oursenior secured credit facility, the indentures or other debt, may make it more difficult to obtain such financing by imposing restrictions on what we can offeras collateral.We have substantial equity investments in five companies, four of which are not consolidated in our financial results, and our investment in suchcompanies is subject to the risks related to their respective businesses.As of December 31, 2014, we had a 63.8% ownership interest in Navios Logistics, and, as a result, Navios Logistics is a consolidated subsidiary. Assuch, the income and losses relating to Navios Logistics and the indebtedness and other liabilities of Navios Logistics are shown in our consolidatedfinancial statements.We also have substantial equity investments in two public companies that are accounted for under the equity method — Navios Acquisition andNavios Partners. As of December 31, 2014, we held 43.1% of the voting stock and 46.2% of the economic interest of Navios Acquisition and 20.0% of theequity interest in Navios Partners (including a 2.0% general partner interest). As of such date, our investments in these two affiliated companies amounted to$339.0 million.In addition to the value of our investment, we receive dividend payments relating to our investments. As a result of our investments, in fiscal year2014, we received $14.6 million and $30.0 million in dividends from Navios Acquisition and Navios Partners, respectively. Furthermore, we receivemanagement and general and administrative fees from Navios Acquisition and Navios Partners, which amounted to $103.1 million and $56.4 million,respectively, in fiscal year 2014.On October 9, 2013, Navios Holdings, Navios Acquisition and Navios Partners established Navios Europe Inc. (“Navios Europe”) and had ownershipinterests of 47.5%, 47.5% and 5.0%, respectively. As of December 31, 2014, Navios Holdings portion of the investment in Navios Europe was $4.9 million.Effective November 2014, Navios Holdings, Navios Acquisition and Navios Partners have voting interest of 50%, 50% and 0%, respectively. 35 Table of ContentsDuring the year ended December 31, 2013, the Company received shares in relation to defaulted charter contracts of Korea Line Corporation (“KLC”),which were valued at fair value upon the day of issuance. As of December 31, 2014, the Company retained a total of 314,077 KLC shares, and their carryingamount was $6.7 million.Our ownership interest in Navios Logistics, Navios Acquisition, Navios Partners, Navios Europe and KLC, the reflection of such companies (or theinvestment relating thereto) on our balance sheets and any income generated from or related to such companies are subject to a variety of risks, includingrisks relating to the respective business of Navios Logistics, Navios Acquisition, Navios Partners and Navios Europe as disclosed in their respective publicfilings with the SEC or management reports. The occurrence of any such risks may negatively affect our financial condition.We evaluate our investments in Navios Acquisition, Navios Partners, Navios Europe and KLC for other-than-temporary impairment (“OTTI”) on aquarterly basis. Consideration is given to (i) the length of time and the extent to which the fair value has been less than the carrying value, (ii) their financialcondition and near term prospects, and (iii) the intent and ability of the Company to retain our investment in these companies, for a period of time sufficientto allow for any anticipated recovery in fair value.If the fair value of these investments declines below their carrying value and our OTTI analysis indicates such write down to be necessary, the potentialfuture impairment charges may have a material adverse impact on our results of operations in the period recognized.As of June 30, 2014, the Company considered the decline in fair value of the KLC shares as “other-than-temporary” and therefore recognized a loss of$11.5 million out of accumulated other comprehensive loss. The respective loss was included in other expense in the accompanying consolidated statementof comprehensive (loss)/income.There were no OTTI losses during the years ended December 31, 2013 and 2012.Risks Relating to Navios LogisticsNavios Logistics’ dry port business has seasonal components linked to the grain harvests in the region. At times throughout the year, the capacity of its dryport, including the loading and unloading operations, as well as the space in silos is exceeded, which could materially adversely affect its operations andrevenues.A significant portion of Navios Logistics’ dry port business is derived from handling and storage of soybeans and other agricultural products producedin the Hidrovia, mainly during the season between April and September. This seasonal effect could, in turn, increase the inflow and outflow of barges andvessels in its dry port and cause the space in its silos to be exceeded, which in turn would affect its timely operations or its ability to satisfy the increaseddemand. Inability to provide services in a timely manner may have a negative impact on its clients’ satisfaction and result in loss of existing contracts orinability to obtain new contracts.Navios Logistics depends on a few significant customers for a large part of its revenues and the loss of one or more of these customers could materially andadversely affect its revenues.In each of Navios Logistics’ businesses, a significant part of its revenues is derived from a small number of customers. For the year ended December 31,2014, its three largest customers, Vale, Cammessa and Axion Energy, accounted for 22.8%, 13.8% and 10.7% of its revenues, respectively, and its five largestcustomers accounted for approximately 60.3%. For the year ended December 31, 2013, Navios Logistics’ two largest customers, Vale and Petropar, accountedfor 18.5% and 10.7% of its revenues, respectively, and its five largest customers accounted for approximately 56.4%. For the year ended December 31, 2012,Navios Logistics’ three largest customers, Vale, YPF and Axion Energy, accounted for 18.5%, 11.5% and 11.5% of its revenues, respectively and its fivelargest customers accounted for approximately 56.4%. In addition, some of 36 Table of ContentsNavios Logistics’ customers, including many of its most significant customers, operate their own vessels and/or barges. These customers may decide to ceaseor reduce the use of its services for various reasons, including employment of their own vessels. The loss of any of its significant customers could materiallyadversely affect its results of operations.If one or more of Navios Logistics’ customers does not perform under one or more contracts with it and Navios Logistics is not able to find areplacement contract, or if a customer exercises certain rights to terminate the contract, Navios Logistics could suffer a loss of revenues that could materiallyadversely affect its business, financial condition and results of operations.Navios Logistics could lose a customer or the benefits of a contract if, among other things: • the customer fails to make payments because of its financial inability, the curtailment or cessation of its operations, disagreements with NaviosLogistics or otherwise; • the customer terminates the contract because Navios Logistics fails to meet their contracted storage needs; • the customer terminates the contract because Navios Logistics fails to deliver the vessel within a fixed period of time, the vessel is lost ordamaged beyond repair, there are serious deficiencies in the vessel or prolonged off-hire, or a default occurs under the contract; or • the customer terminates the contract because the vessel has been subject to seizure for more than a specified number of days.Navios Logistics’ business can be affected by adverse weather conditions, effects of climate change and other factors beyond its control, that can affectproduction of the goods it transports and stores as well as the navigability of the river system on which it operates.A significant portion of Navios Logistics’ business is derived from the transportation, handling and storage of soybeans and other agricultural productsproduced in the Hidrovia region. Any drought or other adverse weather conditions, such as floods, could result in a decline in production of these products,which would likely result in a reduction in demand for its services. This would, in turn, negatively impact its results of operations and financial condition.Furthermore, Navios Logistics’ fleet operates in the Parana and Paraguay Rivers, and any changes adversely affecting navigability of either of these rivers,such as changes in the depth of the water or the width of the navigable channel, could, in the short-term, reduce or limit its ability to effectively transportcargo on the rivers. For example, Navios Logistics was adversely affected by the decline in soybean production associated with the drought experiencedmainly in the first quarter of 2011 throughout the main soybean growing areas of the Hidrovia. Low water levels, which began during the fourth quarter of2011 and extended into 2012, also affected the volume carried. The possible effects of climate change, such as floods, droughts or increased storm activity,could similarly affect the demand for its services or its operations.A prolonged drought, the possible effects of climate change, or other turn of events that is perceived by the market to have an impact on the region, thenavigability of the Parana or Paraguay Rivers or Navios Logistics’ business in general may, in the short-term, result in a reduction in the market value of itsports, barges and pushboats that operate in the region. These barges and pushboats are designed to operate in wide and relatively calm rivers, of which thereare only a few in the world. If it becomes difficult or impossible to operate profitably Navios Logistics’ barges and pushboats in the Hidrovia and NaviosLogistics is forced to sell them to a third party located outside of the region, there is a limited market in which it would be able to sell these vessels, andaccordingly it may be forced to sell them at a substantial loss.Navios Logistics may be unable to obtain financing for its growth or to fund its future capital expenditures, which could materially adversely affect itsresults of operations and financial condition.Navios Logistics’ capital expenditures during 2012, 2013 and 2014 were $17.6 million, $61.5 million and $101.9 million, respectively, used toacquire and/or pay installments for among others one product tanker, a 37 Table of Contentsbunker vessel, six pushboats, 142 barges and to expand Navios Logistics’ port terminal operations through the construction of one drying and conditioningfacility, a new conveyor belt, new tanks and a silo. In order to follow its current strategy for growth, Navios Logistics will need to fund future asset or businessacquisitions, increase working capital levels and increase capital expenditures.In the future, Navios Logistics will also need to make capital expenditures required to maintain its current ports, fleet and infrastructure. Cashgenerated from its earnings may not be sufficient to fund all of these measures. Accordingly, Navios Logistics may need to raise capital through borrowingsor the sale of debt or equity securities. Navios Logistics’ ability to obtain bank financing or to access the capital markets for future offerings may be limitedby its financial condition at the time of any such financing or offering, as well as by adverse market conditions resulting from, among other things, generaleconomic conditions and contingencies and uncertainties that are beyond its control. If Navios Logistics fails to obtain the funds necessary for capitalexpenditures required to maintain its ports, fleet and/or infrastructure, Navios Logistics may be forced to take vessels out of service or curtail operations,which could materially harm its revenues and profitability. If Navios Logistics fails to obtain the funds that might be necessary to acquire new vessels,expand its existing infrastructure, or increase its working capital or capital expenditures, it might not be able to grow its business and its earnings couldsuffer. For example, Navios Logistics has signed an agreement with Vale International S.A. (“Vale International”) for the storing and transshipping of iron oreand other commodities. To serve this contract, Navios Logistics will need to expand its existing terminal structure at an investment cost estimated atapproximately $150.0 million which its plans to finance with a combination of cash on its balance sheet, operating cash flows and debt financing. As ofDecember 31, 2014, Navios Logistics has already invested in dredging, acquisition of rights to land adjacent to its existing dry port and other works andexpects to continue investing over the next two or more years. If Navios Logistics fails to obtain the funds necessary for such capital expenditure, it may notbe able to service its agreement with Vale International, materially affecting its future earnings. Furthermore, despite covenants under the indenturegoverning the Logistics Senior Notes and the agreements governing its other indebtedness, Navios Logistics will be permitted to incur additionalindebtedness which would limit cash available for working capital and to service its indebtedness.The failure of Petrobras to successfully implement its business plan for 2014-2018 could adversely affect Navios Logistics’ business.In February 2014, Petrobras announced its business plan for 2014-2018, which includes a projected capital expenditure budget of $220.6 billionbetween 2014 and 2018 and provides for an increase in drilling rigs, refining capacity and resultant fleet expenditures. However, in January 2015, Petrobrasannounced that it may decrease its five-year capital expenditure budget for 2015-2019. In May 2011, Navios Logistics signed 15-year charter contracts withPetrobras for six Panamax vessels, which are subject to Navios Logistics’ option to cancel the contracts if Navios Logistics is unable to secure acceptablefinancing for the construction of the vessels (to be completed by 2018). Navios Logistics has yet to make any capital expenditures related to the vessels,therefore the potential decrease in Petrobras’ capital expenditures will not expose it to any losses. Any failure to capitalize on Navios Logistics’ relationshipwith Petrobras could affect Navios Logistics’ future growth opportunities.Spare parts or other key equipment needed for the operation of Navios Logistics’ ports and fleet may not be available off-the-shelf and, as a result, it mayface substantial delays, which could result in loss of revenues while waiting for those spare parts to be produced and delivered to Navios Logistics.Navios Logistics’ ports and its fleet may need spare parts to be provided in order to replace old or damaged parts in the normal course of its operations.Given the increased activity in the maritime industry and the industry that supplies it, the manufacturers of key equipment for Navios Logistics’ vessels andits ports (such as engine makers, propulsion systems makers, control system makers and others) may not have the spare parts needed available immediately (oroff the shelf) and may have to produce them when required. If this was the case, Navios Logistics vessels and ports may be unable to operate while waiting forsuch spare parts to be produced, delivered, installed and tested, resulting in a substantial loss of revenues for Navios Logistics. 38 Table of ContentsNavios Logistics owns and operates an up-river port terminal in San Antonio, Paraguay that it believes is well-positioned to become a hub for industrialdevelopment based upon the depth of the river in the area and the convergence between land and river transportation. If the port does not become a hubfor industrial development, its future prospects could be materially and adversely affected.Navios Logistics owns and operates an up-river port terminal with tank storage for refined petroleum products, oil and gas in San Antonio, Paraguay.Navios Logistics believes that the port’s location south of the city of Asuncion, the depth of the river in the area and the convergence between land and rivertransportation make this port well-positioned to become a hub for industrial development. However, if the location is not deemed to be advantageous, or theuse of the river or its convergence with the land is not fully utilized for transportation, then the port would not become a hub for industrial development, andits future prospects could be materially and adversely affected.The risks and costs associated with ports as well as vessels increase as the operational port equipment and vessels age.The costs to operate and maintain a port or a vessel increase with the age of the port equipment or the vessel. Governmental regulations, safety or otherequipment standards related to the age of the operational port equipment or vessels may require expenditures for alterations or the addition of new equipmentto Navios Logistics’ port equipment or vessels and may restrict the type of activities in which these ports or vessels may engage. Given the increased activityin the maritime industry and the industry that supplies it, the manufacturers of key equipment for its vessels and ports (such as engine makers, propulsionsystems makers, control systems makers and others) may not have the spare parts needed available immediately (or off-the-shelf) and may have to producethem when required. If this was the case, Navios Logistics’ vessels and ports may be unable to operate while waiting for such spare parts to be produced,delivered, installed and tested, resulting in substantial loss of revenues for Navios Logistics. The average age of Navios Logistics’ seven double-hulledproduct tankers is six years. In some cases, charterers prefer newer vessels that are more fuel efficient than older vessels. Cargo insurance rates also increasewith the age of a vessel, making older vessels less desirable to charterers as well. Navios Logistics cannot assure you that, as its operational port equipmentand vessels age, market conditions will justify those expenditures or enable Navios Logistics to operate its ports and vessels profitably during the remainderof their useful lives. If Navios Logistics sells such assets, it may have to sell them at a loss, and if clients no longer use its ports or charter-out its vessels due totheir age, its results of operations could be materially adversely affected.As Navios Logistics expands its business, it may have difficulty managing its growth, including the need to improve its operations and financial systems,staff and crew or to receive required approvals to implement its expansion projects. If Navios Logistics cannot improve these systems, recruit suitableemployees or obtain required approvals, it may not be able to effectively control its operations.Navios Logistics intends to grow its port terminal, barge and cabotage businesses, either through land acquisition and expansion of its port facilities,through purchases of additional vessels, through chartered-in vessels or acquisitions of other logistics and related or complementary businesses. Theexpansion and acquisition of new land or addition of vessels to its fleet will impose significant additional responsibilities on its management and staff, andmay require Navios Logistics to increase the number of its personnel. Navios Logistics will also have to increase its customer base to provide continuedactivity for the new businesses.In addition, approval of governmental, regulatory and other authorities may be needed to implement any acquisitions or expansions. For example,Navios Logistics has available within the Nueva Palmira Free Zone in Uruguay as well as near the Free Zone where Navios Logistics plans to expand its portfacility and construct a port terminal for minerals and liquid cargo. In order to complete these projects, however, Navios Logistics needs to receive requiredauthorization from several authorities. If these authorities deny Navios Logistics request for authorization, it will not be able to proceed with these projects. 39 Table of ContentsGrowing any business by acquisition presents numerous risks. Acquisitions expose Navios Logistics to the risk of successor liability relating to actionsinvolving an acquired company, its management or contingent liabilities incurred before the acquisition. The due diligence Navios Logistics conducts inconnection with an acquisition, and any contractual guarantees or indemnities that it receives from the sellers of acquired companies or assets may not besufficient to protect it from, or compensate it for, actual liabilities. Any material liability associated with an acquisition could adversely affect its reputationand results of operations and reduce the benefits of the acquisition. Other risks presented include difficulty in obtaining additional qualified personnel,managing relationships with customers and suppliers and integrating newly acquired assets or operations into existing infrastructures.Management is unable to predict whether or when any prospective acquisition will occur, or the likelihood of a certain transaction being completed onfavorable terms and conditions. Navios Logistics’ ability to expand its business through acquisitions depends on many factors, including its ability toidentify acquisitions or access capital markets at an acceptable cost and negotiate favorable transaction terms. Navios Logistics cannot give any assurancethat it will be successful in executing its growth plans or that it will not incur significant expenses and losses in connection therewith or that its acquisitionswill perform as expected, which could materially adversely affect its results of operations and financial condition. Furthermore, because the volume of cargoNavios Logistics ships is at or near the capacity of its existing barges during the typical peak harvest season, its ability to increase volumes shipped is limitedby its ability to acquire or charter-in additional barges.With respect to Navios Logistics’ existing infrastructure, its initial operating and financial systems may not be adequate as Navios Logisticsimplements its plan to expand, and its attempts to improve these systems may be ineffective. If Navios Logistics is unable to operate its financial andoperations systems effectively or to recruit suitable employees as it expands its operations, it may be unable to effectively control and manage thesubstantially larger operation. Although it is impossible to predict what errors might occur as the result of inadequate controls, it is generally harder tomanage a larger operation than a smaller one and, accordingly, more likely that errors will occur as operations grow. Additional management infrastructureand systems will be required in connection with such growth to attempt to avoid such errors.Rising crew costs, fuel prices and other cost increases may adversely affect Navios Logistics’ profits.At December 31, 2014, Navios Logistics employed 370 land-based employees and approximately 679 seafarers as crew on its vessels. Crew costs are asignificant expense for Navios Logistics. Recently, the limited supply of and increased demand for well-qualified crew, due to the increase in the size of theglobal shipping fleet, has created upward pressure on crewing costs, which Navios Logistics generally bears under its time and spot contracts. Additionally,labor union activity in the Hidrovia may create pressure for Navios Logistics to pay higher crew salaries and wages. In addition, fuel is one of the largestoperating expenses in its barge and cabotage businesses, where the revenue is contracted mainly by ton per cargo shipped. The prices for and availability offuel may be subject to rapid change or curtailment, respectively, due to, among other things, new laws or regulations, interruptions in production bysuppliers, imposition of restrictions on energy supply by government, worldwide price levels and market conditions. Currently, most of Navios Logistics’contracts provide for the adjustment of freight rates based on changes in the fuel prices and crew costs. Navios Logistics may be unable to include similarprovisions in these contracts when they are renewed or in future contracts with new customers. To the extent its contracts do not pass-through changes in fuelprices to its clients, Navios Logistics will be forced to bear the cost of fuel price increases. Navios Logistics may hedge in the futures market all or part of itsexposure to fuel price variations. Navios Logistics cannot assure you that it will be successful in hedging its exposure. In the event of a default by itscontractual counterparties or other circumstance affecting their performance under a contract, Navios Logistics may be subject to exposure under, and mayincur losses in connection with, its hedging instruments, if any. In certain jurisdictions, the price of fuel is affected by high local taxes and may become moreexpensive than prevailing international prices. Navios Logistics may not be able to pass onto its customers the additional cost of such taxes and may sufferlosses as a consequence of such inability. Such increases in crew and fuel costs may materially adversely affect Navios Logistics’ results of operations. 40 Table of ContentsNavios Logistics’ industry is highly competitive, and it may not be able to compete successfully for services with new companies with greater resources.Navios Logistics provides services through its ports and employs its fleet in highly competitive markets. The river and sea coastal logistics market isinternational in scope and Navios Logistics competes with many different companies, including other port or vessel owners and major oil companies.With respect to loading, storage and ancillary services, the market is divided between transits and exports, depending on the cargo origin. In the case oftransits, there are other companies operating in the river system that are able to offer services similar to Navios Logistics. With respect to exports, itscompetitors are Montevideo Port in Montevideo and Ontur and TGU in Nueva Palmira. The main competitor of its liquid port terminal in Paraguay isPetropar, a Paraguayan state-owned entity. Other competitors include Copetrol and Petrobras, which are also customers of Navios Logistics’ port.Navios Logistics faces competition in its barge and cabotage businesses with transportation of oil and refined petroleum products from otherindependent ship owners and from vessel operators. The charter markets in which its vessels compete are highly competitive. Key competitors includeUltrapetrol Bahamas Ltd. and Fluviomar. In addition, some of its customers, including ADM, Cargill, Louis Dreyfus and Vale, have some of their owndedicated barge capacity, which they can use to transport cargo in lieu of hiring a third party. Navios Logistics also competes indirectly with other forms ofland-based transportation such as truck and rail. These companies and other smaller entities are regular competitors of Navios Logistics in its primary tankertrading areas. Competition is primarily based on prevailing market contract rates, vessel location and vessel manager know-how, reputation and credibility.Navios Logistics’ competitors may be able to offer their customers lower prices, higher quality service and greater name recognition than it does.Accordingly, it may be unable to retain its current customers or to attract new customers.If Navios Logistics fails to fulfill the oil majors’ vetting processes, it could materially adversely affect the employment of its tanker vessels in the spot andperiod markets, and consequently its results of operations.While numerous factors are considered and evaluated prior to a commercial decision, the oil majors, through their association, OCIMF, have developedand are implementing two basic tools: (a) the Ship Inspection Report Program (“SIRE”) and (b) the Tanker Management and Self-Assessment (“TMSA”)program. The former is a ship inspection based upon a thorough Vessel Inspection Questionnaire and performed by OCIMF-accredited inspectors, resulting ina report being logged on SIRE. The report is an important element of the ship evaluation undertaken by any oil major when a commercial need exists.Based upon commercial needs, there are three levels of assessment used by the oil majors: (a) terminal use, which will clear a vessel to call at one of theoil major’s terminals, (b) voyage charter, which will clear the vessel for a single voyage and (c) term charter, which will clear the vessel for use for an extendedperiod of time. While for terminal use and voyage charter relationships, a ship inspection and the operator’s TMSA will be sufficient for the evaluation to beundertaken, a term charter relationship also requires a thorough office audit. An operator’s request for such an audit is by no means a guarantee one will beperformed; it will take a long record of proven excellent safety and environmental protection on the operator’s part as well as high commercial interest on thepart of the oil major to have an office audit performed. If Navios Logistics fails to clear the vetting processes of the oil majors, it could have a material adverseeffect on the employment of its vessels, and, consequently, on its results of operations.Navios Logistics may employ its fleet on the spot market and thus expose itself to risk of losses based on short-term decreases in shipping rates.Navios Logistics periodically employs some of its fleet on a spot basis. As of December 31, 2014, 69% of its cabotage fleet and 62% of its barge fleeton a dwt tons basis was employed under time charter or COA 41 Table of Contentscontracts. The remaining percentage of its barge and cabotage fleet was employed in the spot market. The spot charter market can be competitive and freightrates within this market may be volatile with the timing and amount of fluctuations in spot rates being difficult to determine. Longer-term contracts provideincome at pre-determined rates over more extended periods of time. The cycles in its target markets have not yet been clearly determined but NaviosLogistics expects them to exhibit significant volatility as the South American markets mature. Navios Logistics cannot assure you that it will be successful inkeeping its fleet fully employed in these short-term markets, or that future spot rates will be sufficient to enable such fleet to be operated profitably. Asignificant decrease in spot market rates or its inability to fully employ its fleet by taking advantage of the spot market would result in a reduction of theincremental revenue received from spot chartering and could materially adversely affect its results of operations, and operating cash flow.Navios Logistics does not carry any strike insurance of its vessels. As a result, if Navios Logistics were to become subject to a labor strike, it may incuruninsured losses, which could have a material adverse effect on its results of operations.Navios Logistics does not currently maintain any strike insurance for its vessels. As a result, if the crew of its vessels were to initiate a labor strike,Navios Logistics could incur uninsured liabilities and losses as a result. There can be no guarantee that Navios Logistics will be able to obtain additionalinsurance coverage in the future, and even if Navios Logistics is able to obtain additional coverage, it may not carry sufficient insurance coverage to satisfypotential claims. Should uninsured losses occur, it could have a material adverse effect on its results of operations.Certain of Navios Logistics’ directors, officers, and principal stockholders are affiliated with entities engaged in business activities similar to thoseconducted by Navios Logistics which may compete directly with it, causing such persons to have conflicts of interest.Some of Navios Logistics’ directors, officers and principal stockholders have affiliations with entities that have similar business activities to thoseconducted by Navios Logistics. In addition, certain of Navios Logistics’ directors are also directors of shipping companies and they may enter similarbusinesses in the future. These other affiliations and business activities may give rise to certain conflicts of interest in the course of such individuals’affiliation with Navios Logistics. Although Navios Logistics does not prevent its directors, officers and principal stockholders from having such affiliations,Navios Logistics uses its best efforts to cause such individuals to comply with all applicable laws and regulations in addressing such conflicts of interest.Navios Logistics’ officers and employee directors devote their full time and attention to its ongoing operations, and its non-employee directors devote suchtime as is necessary and required to satisfy their duties as directors of a company.Navios Logistics’ success depends upon its management team and other employees, and if it is unable to attract and retain key management personnel andother employees, its results of operations may be negatively impacted.Navios Logistics’ success depends to a significant extent upon the abilities and efforts of its management team and its ability to retain them. Inparticular, many members of its senior management team, including its Chairman, its Chief Executive Officer, its Chief Financial Officer, its Chief OperatingOfficers and its Chief Commercial Officer, have extensive experience in the logistics and shipping industries. If Navios Logistics was to lose their services forany reason, it is not clear whether any available replacements would be able to manage its operations as effectively. The loss of any of the members of itsmanagement team could impair Navios Logistics’ ability to identify and secure vessel contracts, to maintain good customer relations and to otherwisemanage its business, which could have a material adverse effect on its financial performance and its ability to compete. Navios Logistics does not maintainkey man insurance on any of its officers. Further, the efficient and safe operation of its fleet and ports requires skilled and experienced crew members andemployees. Difficulty in hiring and retaining such crew members and employees could adversely affect its results of operations. 42 Table of ContentsRisks Relating to ArgentinaArgentine government actions concerning the economy, including decisions with respect to inflation, interest rates, price controls, foreign exchangecontrols, wages and taxes, restrictions on production, imports and exports, have had and could continue to have a material adverse effect on Navios Logistics.Navios Logistics cannot provide any assurance that future economic, social and political developments in Argentina, over which it has no control, will notimpair its business, financial condition or results of operations, the guarantors or the market price of the senior notes.The continuing rise in inflation and the Argentine government’s limited access to foreign financing may have material adverse effects on the Argentineeconomy.In the past, Argentina has experienced periods of high inflation. Inflation has increased since 2005 and remained relatively high ever since. Accordingto data published by the Instituto Nacional de Estadísticas y Censos, or INDEC, the year-on-year inflation rate (as measured by changes in the consumerprice index, or CPI), was 10.9%, 9.5%, 10.8%, 10.5% and 19.5% for 2010, 2011, 2012, 2013, and 2014, respectively. The reliability of INDEC’s statistics hasbeen widely questioned due to the substantial disparity between its inflation rate and the higher rates calculated by independent economists. In February2013, the IMF censured Argentina for its inaccurate financial statistics. In response, INDEC adopted an improved methodology for calculating the CPI in2014.A high inflation economy could undermine Argentina’s cost competitiveness abroad if not offset by a devaluation of the Argentine peso, which couldalso negatively affect economic activity and employment levels. While most of the client contracts of Navios Logistics’ Argentine subsidiaries aredenominated in U.S. dollars, freight under those contracts is collected in Argentine pesos at the prevailing exchange rate. These contracts also include crewcost adjustment terms. Uncertainty about future inflation may contribute to slowdown or contraction in economic growth. Argentine inflation rate volatilitymakes it impossible to estimate with reasonable certainty the extent to which activity levels and results of operations of Navios Logistics’ Argentinesubsidiaries could be affected by inflation and exchange rate volatility in the future.Additionally, Argentina has very limited access to foreign financing resulting from a default, several restructurings, and a series of paymentsuspensions over the past decade. Due to the lack of access to the international capital markets, the Argentine government continues to use the ArgentineCentral Bank’s foreign currency reserves for the payment of Argentina’s current debt, the reduction of which may weaken Argentina’s ability to overcomeeconomic deterioration in the future. Argentina’s foreign currency reserves have declined significantly since the end of 2012. Without access to internationalprivate financing, Argentina may not be able to finance its obligations, and financing from multilateral financial institutions may be limited or not available.This could also inhibit the ability of the Argentine Central Bank to adopt measures to curb inflation and could materially adversely affect Argentina’seconomic growth and public finances.The Argentine Central Bank has imposed restrictions on the transfer of funds outside of Argentina and other exchange controls in the past and may do soin the future, which could prevent Navios Logistics Argentine subsidiaries from transferring funds for the payment of the senior notes or the relatedguarantees.In 2001 and during the first half of 2002, Argentina experienced a massive withdrawal of deposits from the Argentine financial system in a short periodof time, as depositors lost confidence in the Argentine government’s ability to repay its foreign debt, its domestic debt and to maintain the convertibilityregime. This precipitated a liquidity crisis within the Argentine financial system, which prompted the Argentine government to impose exchange controlsand restrictions on the ability of depositors to withdraw their deposits.Furthermore, in 2001 and 2002 and until February 7, 2003, the Argentine Central Bank restricted Argentine individuals and corporations fromtransferring U.S. dollars abroad without its prior approval. In 2003 and 2004, 43 Table of Contentsthe government reduced some of these restrictions, including those requiring the Argentine Central Bank’s prior authorization for the transfer of funds abroadin order to pay principal and interest on debt obligations. Nevertheless, significant government controls and restrictions remain in place. Increasingly since2008 and 2009, the Argentine government has imposed new restrictions on foreign exchange outflows, including through certain transactions on securitiestraded locally. Additionally, the Argentine federal tax authority has recently imposed new restrictions and limitations on the purchase of foreign currency.The existing controls and restrictions, and any additional restrictions of this kind that may be imposed in the future, could impair Navios Logistics’ ability totransfer funds generated by its Argentine operations in U.S. dollars outside Argentina to Navios Logistics for the payment of Navios Logistics’ indebtedness.In addition, the above restrictions and requirements, and any other restrictions or requirements that may be imposed in the future, expose Navios Logistics tothe risk of losses arising from fluctuations in the exchange rate of the Argentine peso.The Argentine government has made certain changes to its tax rules that affect Navios Logistics’ operations in Argentina and could further increase thefiscal burden on its operations in Argentina in the future.Since 1992, the Argentine government has not permitted the application of an inflation adjustment on the value of fixed assets for tax purposes. Sincethe substantial devaluation of the Argentine peso in 2002, the amounts that the Argentine tax authorities permit Navios Logistics to deduct as depreciationfor its past investments in plant, property and equipment have been substantially reduced, resulting in a higher effective income tax charge. If the Argentinegovernment continues to increase the tax burden on Navios Logistics’ operations in Argentina, its results of operations and financial condition could bematerially and adversely affected.Future policies of the Argentine government may affect the economy as well as Navios Logistics’ operations.In recent years the Argentine government has taken several actions to re-nationalize concessions and public services companies that were privatized inthe 1990’s, such as Aguas Argentinas S.A. and Aerolíneas Argentinas S.A. On May 3, 2012, expropriation law 26,741 was passed by the Argentine Congress,providing for the expropriation of 51% of the share capital of YPF S.A., represented by an identical stake of Class D shares owned, directly or indirectly, byRepsol YPF and its controlled or controlling entities, which have been declared of public interest. The Argentine Government made an offer to compensateRepsol YPF for around US$5.0 billion, which was accepted by the Board of Directors and shareholders of Repsol YPF and confirmed by the ArgentineCongress. It is unclear whether such expropriation policies will continue and to what extent they will affect the Argentine economy, and thereby NaviosLogistics’ business, results of operations and financial condition.Risks Relating to Uruguayan Free Zone RegulationCertain of Navios Logistics’ subsidiaries in Uruguay are operating as direct free trade zone users under an agreement with the Free Zone Division of theUruguayan General Directorate of Commerce allowing them to operate in isolated public and private areas within national borders and to enjoy taxexemptions and other benefits, such as a generic exemption on present and future national taxes including the Corporate Income Tax, Value- Added Tax andWealth Tax. Other benefits that Navios Logistics’ subsidiaries enjoy are simplified corporate law provisions, the ability to negotiate preferential publicutility rates with government agencies and government guarantees of maintenance of such benefits and tax exemptions. Free trade zone users do not need topay import and export tariffs to introduce goods from abroad to the free trade zone, to transfer or send such goods to other free trade zones in Uruguay or sendthem abroad. However, Navios Logistics’ subsidiaries may lose all the tax benefits granted to them if they breach or fail to comply with the free trade zonecontracts or framework, including exceeding the 25% limit on non-Uruguayan employees or engaging in industrial, commercial or service activities outsideof a free trade zone in Uruguay. In this case, Navios Logistics’ subsidiaries may continue with their operations from the free zone, but under a different taxregime. 44 Table of ContentsOther Risks Relating to the Countries in which Navios Logistics’ OperatesNavios Logistics is an international company that is exposed to the risks of doing business in many different, and often less developed and emergingmarket countries.Navios Logistics is an international company and conducts all of its operations outside of the United States, and expects to continue doing so for theforeseeable future. These operations are performed in countries that are historically less developed and stable than the United States, such as Argentina,Brazil, Bolivia, Paraguay and Uruguay.Some of the other risks Navios Logistics is generally exposed to through its operations in emerging markets include among others: • political and economic instability, changing economic policies and conditions, and war and civil disturbances; • recessions in economies of countries in which Navios Logistics has business operations; • frequent government interventions into the country’s economy, including changes to monetary, fiscal and credit policy; • the imposition of additional withholding, income or other taxes, or tariffs or other restrictions on foreign trade or investment, including currencyexchange controls and currency repatriation limitations; • the modification of its status or the rules and regulations relating to the international tax-free trade zone in which Navios Logistics operates itsdry port; • the imposition of executive and judicial decisions upon Navios Logistics’ vessels by the different governmental authorities associated with someof these countries; • the imposition of or unexpected adverse changes in foreign laws or regulatory requirements; • longer payment cycles in foreign countries and difficulties in collecting accounts receivable; • difficulties and costs of staffing and managing its foreign operations; • compliance with anti-bribery laws; and • acts of terrorism.These risks may result in unforeseen harm to Navios Logistics’ business and financial condition. Also, some of its customers are headquartered in SouthAmerica, and a general decline in the economies of South America, or the instability of certain South American countries and economies, could materiallyadversely affect Navios Logistics.For example the Brazilian economy has experienced significant volatility in recent decades, characterized by periods of low or negative growth, highand variable levels of inflation and currency devaluation. Historically, Brazil’s political situation has influenced the performance of the Brazilian economy,and political crises have affected the confidence of investors and the general public. Future developments in policies of the Brazilian government and/or theuncertainty of whether and when such policies and regulations may be implemented, all of which are beyond our control, could have a material adverse effecton Navios Logistics. Additionally, the Brazilian government frequently implements changes to the Brazilian tax regime, including changes in prevailing taxrates and the imposition of temporary taxes, which may affect Navios Logistics.Navios Logistics’ business in emerging markets requires it to respond to rapid changes in market conditions in these countries. Navios Logistics’overall success in international markets depends, in part, upon its ability to succeed in different legal, regulatory, economic, social and political conditions.Navios Logistics may not continue to succeed in developing and implementing policies and strategies that will be effective in each location 45 Table of Contentswhere it does business. Furthermore, the occurrence of any of the foregoing factors may have a material adverse effect on its business and results ofoperations.The governments of Argentina, Bolivia, Brazil, Paraguay and Uruguay have entered into a treaty that commits each of them to participate in a regionalinitiative to integrate the region’s economies. There is no guarantee that such an initiative will be successful or that each of the governments involved inthe initiative will follow through on its intentions to participate and if such regional initiative is unsuccessful, it could have a material adverse impact onNavios Logistics’ results of operations.The governments of Argentina, Bolivia, Brazil, Paraguay and Uruguay have entered into a treaty that commits each of them to participate in a regionalinitiative to integrate the region’s economies, a central component of which is water transportation in the Hidrovia. Although Navios Logistics believes thatthis regional initiative of expanding navigation on the Hidrovia river system will result in significant economic benefits, there is no guarantee that such aninitiative will ultimately be successful, that each country will follow through on its intention to participate, or that the benefits of this initiative will match itsexpectations of continuing growth in the Hidrovia or reducing transportation costs. If the regional initiative is unsuccessful, its results of operations could bematerially and adversely affected.Changes in rules and regulations with respect to cabotage or their interpretation in the markets in which Navios Logistics operates could have a materialadverse effect on its results of operations.In the markets in which Navios Logistics currently operates, in cabotage or regional trades, it is subject to restrictive rules and regulations on a regionby region basis. Navios Logistics’ operations currently benefit from these rules and regulations or their interpretation. For instance, preferential treatment isextended in Argentine cabotage for Argentine flagged vessels or foreign flagged vessels operated by local established operators with sufficient Argentinetonnage under one to three years’ licenses, including Navios Logistics’ Argentine cabotage vessels. Changes in cabotage rules and regulations or in theirinterpretation may have an adverse effect on Navios Logistics’ current or future cabotage operations, either by becoming more restrictive (which could resultin limitations to the utilization of some of its vessels in those trades) or less restrictive (which could result in increased competition in these markets).Because Navios Logistics generates the majority of its revenues in U.S. dollars but incurs a significant portion of its expenses in other currencies, exchangerate fluctuations could cause Navios Logistics to suffer exchange rate losses, thereby increasing expenses and reducing income.Navios Logistics engages in regional commerce with a variety of entities. Although Navios Logistics’ operations expose it to certain levels of foreigncurrency risk, its revenues are predominantly U.S. dollar-denominated at the present. Additionally, Navios Logistics’ South American subsidiaries transactcertain operations in Uruguayan pesos, Paraguayan guaranies, Argentinean pesos and Brazilian reals; however, all of the subsidiaries’ primary cash flows areU.S. dollar-denominated. Currencies in Argentina and Brazil have fluctuated significantly against the U.S. dollar in the past. As of December 31, 2014, 2013and 2012, approximately 47.3%, 55.9% and 50.4%, respectively, of Navios Logistics’ expenses were incurred in currencies other than U.S. dollars.Transactions in currencies other than the functional currency are translated at the exchange rate in effect at the date of each transaction. Expenses incurred inforeign currencies against which the U.S. dollar falls in value can increase, thereby decreasing Navios Logistics’ income. A greater percentage of itstransactions and expenses in the future may be denominated in currencies other than U.S. dollars. As part of its overall risk management policy, NaviosLogistics may attempt to hedge these risks in exchange rate fluctuations from time to time but cannot guarantee it will be successful in these hedgingactivities. Future fluctuations in the value of local currencies relative to the U.S. dollar in the countries in which Navios Logistics operates may occur, and ifsuch fluctuations were to occur in one or a combination of the countries in which Navios Logistics operates, its results of operations or financial conditioncould be materially adversely affected. 46 Table of ContentsTax RisksWe may earn United States source income that is subject to tax, thereby adversely affecting our results of operations and cash flows.Under the Internal Revenue Code, or the Code, 50.0% of the gross shipping income of a vessel owning or chartering corporation that is attributable totransportation that either begins or ends, but that does not both begin and end, in the United States is characterized as U.S.-source shipping income. U.S.-source shipping income generally is subject to a 4.0% U.S. federal income tax without allowance for deduction or, if such U.S.-source shipping income iseffectively connected with the conduct of a trade or business in the United States, U.S. federal corporate income tax (the highest statutory rate presently is35.0%) as well as a branch profits tax (presently imposed at a 30.0% rate on effectively connected earnings), unless that corporation qualifies for exemptionfrom tax under Section 883 of the Code. We believe that we and each of our subsidiaries qualifies and will continue to qualify for the foreseeable future forthis statutory tax exemption under Section 883 with respect to our U.S.-source shipping income, provided that our common stock represents more than 50%of the total combined voting power of all classes of our stock entitled to vote and of the total value of our stock, and less than 50% of our common stock isowned, actually or constructively under specified stock attribution rules, on more than half the number of days in the relevant year by persons who each ownmore 5% or more of the vote and value of our common stock. Our ability to qualify for the exemption at any given time will depend upon circumstancesrelated to the ownership of our common stock at such time and thus are beyond our control. Furthermore, our board of directors could determine that it is inour best interests to take an action that would result in this tax exemption not applying to us in the future. Accordingly, we can give no assurance that wewould qualify for the exemption under Section 883 with respect to any such income we earn. If we were not entitled to the Section 883 exemption for anytaxable year, we generally would be subject to a 4.0% U.S. federal gross income tax with respect to our U.S.-source shipping income or, if such U.S. sourceshipping income were effectively connected with the conduct of a trade or business in the United States, U.S. federal corporate income tax as well as a branchprofits tax for those years. As a result, depending on the trading patterns of our vessels, we could become liable for tax, and our net income and cash flowcould be adversely affected. Please see the discussion under “Taxation — Material U.S. Federal Income Tax Considerations — U.S. Federal Income Taxationof the Company — Taxation of Our Shipping Income.”Navios Holdings may be taxed as a United States corporation.The purchase by International Shipping Enterprises Inc. (“ISE”), our predecessor, of all of the outstanding shares of common stock of Navios Holdings,and the subsequent downstream merger of ISE with and into Navios Holdings took place on August 25, 2005. Navios Holdings is incorporated under the lawsof the Republic of the Marshall Islands. ISE received an opinion from its counsel for the merger transaction that, while there is no direct authority thatgoverns the tax treatment of the transaction, it was more likely than not that Navios Holdings would be taxed by the United States as a foreign corporation.Accordingly, we take the position that Navios Holdings will be taxed as a foreign corporation by the United States. If Navios Holdings were to be taxed as aU.S. corporation, its taxes would be significantly higher than they are currently.A change in tax laws, treaties or regulations, or their interpretation, of any country in which we operate our business could result in a high tax rate on ourworldwide earnings, which could result in a significant negative impact on our earnings and cash flows from operations.We are an international company that conducts business throughout the world. Tax laws and regulations are highly complex and subject tointerpretation. Consequently, we are subject to changing tax laws, treaties and regulations in and between countries in which we operate. Our income taxexpense is based upon our interpretation of tax laws in effect in various countries at the time that the expense was incurred. A change in these tax laws,treaties or regulations, or in the interpretation thereof, or in the valuation of our deferred tax assets, could result in a materially higher tax expense or a highereffective tax rate on our worldwide earnings, and such change could be significant to our financial results. If any tax authority successfully challenges our 47 Table of Contentsoperational structure, intercompany pricing policies or the taxable presence of our key subsidiaries in certain countries, or if the terms of certain income taxtreaties are interpreted in a manner that is adverse to our structure, or if we lose a material tax dispute in any country, our effective tax rate on our worldwideearnings from our operations could increase substantially and our earnings and cash flows from these operations could be materially adversely affected. Forexample, in accordance with the currently applicable Greek law, foreign flagged vessels that are managed by Greek or foreign ship management companieshaving established an office in Greece are subject to duties towards the Greek state which are calculated on the basis of the relevant vessel’s tonnage. Thepayment of said duties exhausts the tax liability of the foreign ship owning company and the relevant manager against any tax, duty, charge or contributionpayable on income from the exploitation of the foreign flagged vessel.We and our subsidiaries may be subject to taxation in the jurisdictions in which we and our subsidiaries conduct business. Such taxation would resultin decreased earnings available to our stockholders.Investors are encouraged to consult their own tax advisors concerning the overall tax consequences of the ownership of our common stock arising in aninvestor’s particular situation under U.S. federal, state, local and foreign law.U.S. tax authorities could treat us as a “passive foreign investment company,” which could have adverse U.S. federal income tax consequences to U.S.holders.A foreign corporation will be treated as a “passive foreign investment company,” or PFIC, for U.S. federal income tax purposes if either (1) at least 75%of its gross income for any taxable year consists of certain types of “passive income” or (2) at least 50% of the quarterly average value of the corporation’sassets produce or are held for the production of those types of “passive income.” For purposes of these tests, “passive income” includes dividends, interest,capital gains and rents (other than rents derived other than in the active conduct of a rental or business). For purposes of these tests, income derived from theperformance of services does not constitute “passive income.” U.S. stockholders of a PFIC are subject to a disadvantageous U.S. federal income tax regimewith 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 dispositionof their shares in the PFIC and additional tax filing obligations.Based upon our actual and projected income, assets and activities, we believe that we should not be a PFIC for our taxable year ended December 31,2014 or for subsequent taxable years. Based upon our operations as described herein, our income from time charters should not be treated as passive incomefor purposes of determining whether we are a PFIC. Accordingly, our income from our time chartering activities should not constitute “passive income,” andthe assets that we own and operate in connection with the production of that income should not constitute passive assets.There is substantial legal authority supporting this position consisting of case law and U.S. Internal Revenue Service, or IRS, pronouncementsconcerning the characterization of income derived from time charters and voyage charters as services income for other tax purposes. However, it should benoted that there is also authority which characterizes time charter income as rental income rather than services income for other tax purposes. Accordingly, noassurance can be given that the IRS or a court of law will accept this position and there is a risk that the IRS or a court of law could determine that we are aPFIC. In addition, no assurance can be given as to our current and future PFIC status, because such status requires an annual factual determination based uponthe composition of our income and assets for the entire taxable year. The PFIC determination also depends on the application of complex U.S. federal incometax rules concerning the classification of our income and assets for this purpose, and there are legal uncertainties involved in determining whether the incomederived from our chartering activities and from our logistics activities constitutes rental income or income derived from the performance of services. We havenot sought, and we do not expect to seek, an IRS ruling on this issue. As a result, the IRS or a court could disagree with our position. In addition, although weintend to conduct our affairs 48 Table of Contentsin 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 ouroperations, or the nature or composition of our income or assets, will not change in the future, or that we can avoid PFIC status in the future.If the IRS were to find that we are or have been a PFIC for any taxable year, our U.S. stockholders would face adverse U.S. federal income taxconsequences and certain information reporting requirements. Under the PFIC rules, unless those stockholders make an election available under the Code(which election could itself have adverse consequences for such stockholders), such stockholders would be liable to pay U.S. federal income tax at the thenprevailing income tax rates on ordinary income plus interest upon excess distributions and upon any gain from the disposition of their shares of commonstock, as if the excess distribution or gain had been recognized ratably over the stockholder’s holding period of the common stock. In addition, for each yearduring which we are treated as a PFIC and you actually or constructively own our common stock you generally will be required to file IRS Form 8621 withyour U.S. federal income tax return to report certain information concerning your ownership of our common stock. Please see the discussion under “Taxation— Material U.S. Federal Income Tax Considerations — Taxation of U.S. Holders of our Common Stock — Passive Foreign Investment Company Status.”Item 4. Information on the CompanyA. History and Development of the CompanyThe legal and commercial name of the Company is Navios Maritime Holdings Inc. The Company’s office and principal place of business is located at 7Avenue de Grande Bretagne, Office 11B2, Monte Carlo, MC 98000 Monaco, and its telephone number is (011) + (377) 9798-2140. The Company is acorporation incorporated under the BCA and the laws of the Republic of the Marshall Islands. Trust Company of the Marshall Islands, Inc. serves as theCompany’s agent for service of process, and the Company’s registered address, as well as address of its agent for service of process, is Trust CompanyComplex, Ajeltake Island P.O. Box 1405, Majuro, Marshall Islands MH96960.On August 25, 2005, pursuant to a Stock Purchase Agreement dated February 28, 2005, as amended, by and among International Shipping EnterprisesInc. (“ISE”), Navios Holdings, and all the shareholders of Navios Holdings, ISE acquired Navios Holdings through the purchase of all of the outstandingshares of common stock of Navios Holdings. As a result of this acquisition, Navios Holdings became a wholly-owned subsidiary of ISE. In addition, onAugust 25, 2005, simultaneously with the acquisition of Navios Holdings, ISE effected a reincorporation from the State of Delaware to the Republic of theMarshall Islands through a downstream merger with and into its newly acquired wholly-owned subsidiary, whose name was and continued to be NaviosMaritime Holdings Inc.The Company operates a fleet of owned Capesize, Panamax, Ultra Handymax and Handysize vessels and a fleet of time chartered Capesize, Panamax,Ultra Handymax and Handysize vessels that are employed to provide worldwide transportation of bulk commodities. Navios Holdings is a global, verticallyintegrated seaborne shipping and logistics company focused on the transport and transshipment of dry bulk commodities including iron ore, coal and grain.For over 60 years, Navios Holdings has had in-house technical ship management expertise that has worked with producers of raw materials, agriculturaltraders and exporters, industrial end-users, ship owners and charterers.Navios LogisticsNavios Logistics is one of the largest logistics companies in the Hidrovia region of South America, focusing on the Hidrovia river system, the mainnavigable river system in the region, and on cabotage trades along the eastern coast of South America. Navios Logistics is focused on providing its customersintegrated transportation, storage and related services through its port facilities, its large, versatile fleet of dry and liquid cargo barges and 49 Table of Contentsits product tankers. Navios Logistics serves the needs of a number of growing South American industries, including mineral and grain commodity providersas well as users of refined petroleum products.On January 1, 2008, pursuant to a share purchase agreement, Navios Holdings contributed: (a) $112.2 million in cash; and (b) the authorized capitalstock of its wholly-owned subsidiary Corporacion Navios Sociedad Anonima (“CNSA”) in exchange for the issuance and delivery of 12,765 shares of NaviosLogistics, representing 63.8% of its outstanding stock. Navios Logistics acquired all ownership interests in the Horamar Group (“Horamar”) in exchange for:(a) $112.2 million in cash, and (b) the issuance of 7,235 shares of Navios Logistics representing 36.2% of Navios Logistics’ outstanding stock. As ofDecember 31, 2014, Navios Holdings owns 63.8% of Navios Logistics.Affiliates (not consolidated under Navios Holdings)Navios PartnersNavios Partners (NYSE:NMM) is an international owner and operator of dry cargo vessels and is engaged in the seaborne transportation services of awide range of dry cargo commodities including iron ore, coal, grain, fertilizer and also containers, chartering its vessels under medium to long-term charters.On August 7, 2007, Navios Holdings formed Navios Partners under the laws of Marshall Islands. Navios GP L.L.C., or the general partner, a wholly-owned subsidiary of Navios Holdings, was also formed on that date to act as the general partner of Navios Partners and received a 2.0% general partnerinterest in Navios Partners.On or prior to the closing of Navios Partners, initial public offerings, or IPO, in November 2007, Navios Holdings entered into certain agreements withNavios Partners: (a) a management agreement with Navios Partners pursuant to which Navios Shipmanagement Inc. (the “Manager”) , a wholly-ownedsubsidiary of Navios Holdings, provides Navios Partners with commercial and technical management services; (b) an administrative services agreement withthe Manager pursuant to which the Manager provides Navios Partners administrative services; and (c) an omnibus agreement with Navios Partners,governing, among other things, when Navios Partners and Navios Holdings may compete against each other as well as rights of first offer on certain dry bulkcarriers.Since the formation of Navios Partners, Navios Holdings sold in total ten vessels to Navios Partners (the Navios Hope, the Navios Apollon, the NaviosHyperion, the Navios Aurora II, the Navios Fulvia, the Navios Melodia, the Navios Pollux, the Navios Luz, the Navios Orbiter and the Navios Buena Ventura)and also sold the rights of Navios Sagittarius to Navios Partners. All vessels were sold in exchange of cash and 5,601,920 common units of Navios Partners intotal. As of December 31, 2014, Navios Holdings’ interest in Navios Partners was 20.0% (including 2.0% general partner interest). Following Navios Partners’offering in February 2015, Navios Holdings’ interest in Navios Partners increased to 20.1% (which includes a 2.0% general partner interest).Navios AcquisitionNavios Acquisition (NYSE:NNA) is an owner and operator of tanker vessels focusing in the transportation of petroleum products (clean and dirty) andbulk liquid chemicals.On July 1, 2008, Navios Acquisition completed its IPO. On May 28, 2010, Navios Acquisition consummated the vessel acquisition which constitutedits initial business combination. Following such transaction, Navios Acquisition commenced its operations as an operating company. On that date, NaviosHoldings acquired control over Navios Acquisition, and consequently concluded a business combination had occurred and consolidated the results ofNavios Acquisition from that date until March 30, 2011.On May 28, 2010, we entered into (a) a management agreement with Navios Acquisition pursuant to which Navios Tankers Management Inc. (the“Tankers Manager”) provides Navios Acquisition commercial and 50 Table of Contentstechnical management services; (b) an administrative services agreement with the Tankers Manager pursuant to which the Tankers Manager provides NaviosAcquisition administrative services and is in turn reimbursed for reasonable costs and expenses; and (c) an omnibus agreement with Navios Acquisition andNavios Partners (the “Acquisition Omnibus Agreement”) in connection with the closing of Navios Acquisition’s vessel acquisition, governing, among otherthings, competition and rights of first offer on certain types of vessels and businesses.On March 30, 2011, Navios Holdings exchanged 7,676,000 shares of Navios Acquisition common stock it held for 1,000 shares of non-voting Series CConvertible Preferred Stock of Navios Acquisition and had 45.0% of the voting power and 53.7% of the economic interest in Navios Acquisition, since thepreferred stock is considered, in substance, common stock for accounting purposes. From March 30, 2011, Navios Acquisition has been considered as anaffiliate entity of Navios Holdings and not as a controlled subsidiary of the Company.In February, May and September 2013, Navios Acquisition completed multiple offerings, including registered direct offerings and private placementsto Navios Holdings and certain members of the management of Navios Acquisition, Navios Partners and Navios Holdings. A total of 94,097,529 shares wereissued. As part of these offerings, Navios Holdings purchased in private placements an aggregate of 46,969,669 shares of Navios Acquisition common stockfor $160.0 million.In February 2014, Navios Acquisition completed a public offering of 14,950,000 shares of its common stock. In October 2014, 699,994 NaviosAcquisition’s restricted stock awards vested. Following those events and as of December 31, 2014, Navios Holdings’ ownership of the outstanding votingstock of Navios Acquisition was 43.1% and its economic interest in Navios Acquisition was 46.2%.Navios EuropeNavios Europe is engaged in the marine transportation industry through the ownership of five tanker and five container vessels.On October 9, 2013, Navios Holdings, Navios Acquisition and Navios Partners established Navios Europe under the laws of Marshall Islands and hadeconomic interests of 47.5%, 47.5% and 5.0%, respectively. On December 18, 2013, Navios Europe acquired ten vessels for aggregate considerationconsisting of (i) cash consideration of $127.8 million (which was funded with the proceeds of two senior loan facilities (the “Senior Loans”) totaling $117.8million and loans aggregating $10.0 million from Navios Holdings, Navios Acquisition and Navios Partners (in each case, in proportion to their ownershipinterests in Navios Europe) (collectively, the “Navios Term Loans”) and (ii) the assumption of a junior participating loan facility (the “Junior Loan”) with aface amount of $173.4 million and fair value of $71.9 million as of December 31, 2013. In addition to the Navios Term Loans, Navios Holdings, NaviosAcquisition and Navios Partners also made available to Navios Europe (in each case, in proportion to their ownership interests in Navios Europe) revolvingloans of up to $24.1 million to fund working capital requirements (collectively, the “Navios Revolving Loans”). Effective November 2014, Navios Holdings,Navios Acquisition and Navios Partners have voting interest of 50%, 50% and 0%, respectively.Navios MidstreamNavios Midstream (NYSE: NAP) is a publicly traded master limited partnership which owns and operates very large crude oil tankers under long-termemployment contracts.On October 13, 2014, Navios Acquisition formed Navios Midstream under the laws of the Marshall Islands. Navios Maritime Midstream Partners GPLLC, or the general partner, a wholly-owned subsidiary of Navios Acquisition, was also formed on that date to act as the general partner of Navios Midstreamand received a 2.0% general partner interest in Navios Midstream. 51 Table of ContentsFollowing the completion of the Navios Midstream’s IPO in November 2014 and as of December 31, 2014, Navios Acquisition had 57.5% interest andNavios Holdings had indirect economic interest of 26.6% (through its ownership in Navios Acquisition).On or prior to the closing of Navios Midstream’s IPO, Navios Holdings entered into certain agreements with Navios Midstream: (a) a managementagreement with Navios Midstream pursuant to which the Tankers Manager, a wholly-owned subsidiary of Navios Holdings, provides Navios Midstream withcommercial and technical management services; (b) an administrative services agreement with the Tankers Manager pursuant to which the Tankers Managerprovides Navios Midstream administrative services; and (c) an omnibus agreement with Navios Midstream, Navios Acquisition and Navios Partners,governing, among other things, when Navios Holdings, Navios Acquisition and Navios Partners may compete with Navios Midstream.At the same time, Navios Holdings entered into an option agreement with Navios Acquisition, which expires on November 18, 2024, under whichNavios Acquisition, which owns and controls Navios Maritime Midstream Partners GP LLC (“Midstream General Partner”), granted Navios Holdings theoption to acquire a minimum of 25% of the outstanding membership interests in Midstream General Partner, and the incentive distribution rights in NaviosMidstream at fair value. As of December 31, 2014, Navios Holdings had not exercised any part of that option and owns no direct equity interest in NaviosMidstream.B. Business overviewIntroductionNavios Holdings is a global, vertically integrated seaborne shipping and logistics company focused on the transport and transshipment of dry bulkcommodities including iron ore, coal and grain. For over 60 years, Navios Holdings has had an in-house ship management expertise that has worked withproducers of raw materials, agricultural traders and exporters, industrial end-users, ship owners, and charterers. Navios Holdings’ current core fleet (excludingthe Navios Logistics fleet), the average age of which is approximately 7.8 years, consists of a total of 66 vessels, aggregating approximately 6.6 million dwt.Navios Holdings owns 13 Capesize vessels (169,000-182,000 dwt), 14 modern Ultra Handymax vessels (50,000-59,000 dwt), 12 Panamax vessels (74,000-84,000 dwt) and one Handysize vessel. It also time charters-in and operates a fleet of six Ultra Handymax, one Handysize, 13 Panamax, and six Capesizevessels under long-term time charters, 20 of which are currently in operation, with the remaining six newbuilding charter-in vessels scheduled for delivery onvarious dates through 2016. Navios Holdings has options to acquire 18 of the 26 time chartered-in vessels (on one of which Navios Holdings holds an initial50% purchase option).Navios Holdings also offers commercial and technical management services to the fleets of Navios Partners, Navios Acquisition, Navios Midstream andNavios Europe. Navios Partners’ fleet is comprised of 12 Panamax vessels, eight Capesize vessels, three Ultra-Handymax vessels and eight container vessels.In each of October 2013, August 2014 and February 2015, the Company amended its existing management agreement with Navios Partners to fix the fees forship management services of its owned fleet at: (i) $4,000 daily rate per Ultra-Handymax vessel; (ii) $4,100 daily rate per Panamax vessel; (iii) $5,100 dailyrate per Capesize vessel; (iv) $6,500 daily rate per container vessel of TEU 6,800; (v) $7,200 daily rate per container vessel of more than TEU 8,000; and(vi) $8,500 daily rate per very large container vessel of more than TEU 13,000 through December 31, 2015. Drydocking expenses under this agreement willbe reimbursed by Navios Partners at cost at occurrence. Navios Acquisition’s fleet is comprised of 31 tankers and 8 VLCC vessels. In May 2014, theCompany extended the duration of its existing management agreement with Navios Acquisition until May 2020 and fixed the fees for ship managementservices of Navios Acquisition’s owned fleet for two additional years through May 2016 at: (i) $6,000 daily rate per owned MR2 product tanker and chemicaltanker vessel; (ii) $7,000 daily rate per owned LR1 product tanker vessel; and (iii) $9,500 daily rate per VLCC vessel. Drydocking expenses under thisagreement will be reimbursed by Navios Acquisition at cost at occurrence. Navios Midstream’s fleet is comprised of four VLCC vessels and Navios Holdingsreceives a daily 52 Table of Contentsmanagement fee of $9,500 per VLCC vessel. Drydocking expenses under this agreement will be reimbursed by Navios Midstream at cost at occurrence.Navios Europe’s fleet is comprised of five tankers and five container vessels and management fees and drydocking expenses under the managementagreement will be reimbursed at cost at occurrence.Navios Holdings’ strategy and business model focuses on: • Operation of a high quality, modern fleet. Navios Holdings owns and charters-in a modern, high quality fleet, having an average age ofapproximately 7.8 years that provides numerous operational advantages including more efficient cargo operations, lower insurance and vesselmaintenance costs, higher levels of fleet productivity, and an efficient operating cost structure. • Pursuing an appropriate balance between vessel ownership and a long-term chartered-in fleet. Navios Holdings controls, through acombination of vessel ownership and long-term time chartered vessels, approximately 6.6 million dwt in tonnage, making Navios Holdings oneof the largest independent dry bulk operators in the world. Navios Holdings’ ability, through its long-standing relationships with variousshipyards and trading houses, to charter-in vessels at favorable rates allows it to control additional shipping capacity without the capitalexpenditures required by new vessel acquisition. In addition, having purchase options on 18 of the 26 time chartered vessels (including those tobe delivered) permits Navios Holdings to determine when is the most commercially opportune time to own or charter-in vessels. Navios Holdingsintends to monitor developments in the sales and purchase market to maintain the appropriate balance between owned and long-term timechartered vessels. • Capitalize on Navios Holdings’ established reputation. Navios Holdings believes its reputation and commercial relationships enable it to obtainfavorable long-term time charters, enter into the freight market and increase its short-term tonnage capacity to complement the capacity of itscore fleet, as well as to obtain access to cargo freight opportunities through COA arrangements not readily available to other industryparticipants. This reputation has also enabled Navios Holdings to obtain favorable vessel acquisition terms as reflected in the purchase optionscontained in some of its long-term charters. • Utilize industry expertise to take advantage of market volatility. The dry bulk shipping market is cyclical and volatile. Navios Holdings uses itsexperience in the industry, sensitivity to trends, and knowledge and expertise as to risk management and FFAs to hedge against, and in somecases, to generate profit from, such volatility. • Maintain customer focus and reputation for service and safety. Navios Holdings is recognized by its customers for the high quality of its serviceand safety record. Navios Holdings’ high standards for performance, reliability, and safety provide Navios Holdings with an advantageouscompetitive profile. • Enhance vessel utilization and profitability through a mix of spot charters, time charters, and COAs and strategic backhaul and triangulationmethods. Specifically, this strategy is implemented as follows: • The operation of voyage charters or spot fixtures for the carriage of a single cargo from load port to discharge port; • The operation of time charters, whereby the vessel is hired out for a predetermined period but without any specification as to voyages tobe performed, with the ship owner being responsible for operating costs and the charterer for voyage costs; • The use of COAs, under which Navios Holdings contracts to carry a given quantity of cargo between certain load and discharge portswithin a stipulated time frame, but does not specify in advance which vessels will be used to perform the voyages; and • The shipping industry uses fleet utilization to measure a company’s efficiency in finding suitable employment for its vessels andminimizing the days its vessels are off-hire. At 99.8% as of December 31, 2014, Navios Holdings believes that it has one of the highestfleet utilization rates in the industry. 53 Table of ContentsIn addition, Navios Holdings attempts, through selecting COAs on what would normally be backhaul or ballast legs, to enhance vessel utilization and,hence, profitability. In such cases, the cargoes are used to position vessels at or near major loading areas (such as the Gulf of Mexico) where spot cargoes canreadily be obtained. This reduces ballast time as a percentage of the round voyage. This strategy is referred to as triangulation.Navios Holdings is one of relatively few major owners and operators of this type in the dry bulk market, and has vast experience in this area. In recentyears, it has further raised the commercial sophistication of its business model by using market intelligence derived from its risk management operations and,specifically, its freight derivatives hedging desk, to make more informed decisions regarding the management of its fleet.Competitive AdvantagesControlling approximately 6.6 million dwt (excluding Navios Logistics) in dry bulk tonnage, Navios Holdings is one of the largest independent drybulk operators in the world. Management believes that Navios Holdings occupies a competitive position within the industry in that its reputation in theglobal dry bulk markets permits it to enter into at any time, and take on spot, medium or long-term freight commitments, depending on its view of futuremarket trends. In addition, many of the long-term charter deals that form the core of Navios Holdings’ fleet were brought to the attention of Navios Holdingsprior to even being quoted in the open market. Even in the open market, Navios Holdings’ solid reputation allows it to take in large amounts of tonnage on ashort, medium, or long-term basis on very short notice. This ability is possessed by relatively few ship owners and operators, and is a direct consequence ofNavios Holdings’ market reputation for reliability in the performance of its obligations in each of its roles as a ship owner, COA operator, and charterer.Navios Holdings, therefore, has much greater flexibility than a traditional ship owner or charterer to quickly go “long” or “short” relative to the dry bulkmarkets.Navios Holdings’ long involvement and reputation for reliability in the Asian Pacific region have also allowed it to develop privileged relationshipswith many of the largest trading houses in Japan, such as Marubeni Corporation and Mitsui & Co. Through these institutional relationships, Navios Holdingshas obtained relatively low-cost, long-term charter-in deals, with options to extend time charters and options to purchase the majority of the vessels. Throughits established reputation and relationships, Navios Holdings has had access to opportunities not readily available to most other industry participants wholack Navios Holdings’ brand recognition, credibility, and track record.In addition to its long-standing reputation and flexible business model, management believes that Navios Holdings is well-positioned in the dry bulkmarket on the basis of the following factors: • A high-quality, modern fleet of vessels that provides a variety of operational advantages, such as lower insurance premiums, higher levels ofproductivity, and efficient operating cost structures, as well as a competitive advantage over owners of older fleets, especially in the time chartermarket, where age, fuel economy and quality of a vessel are of significant importance in competing for business; • A core fleet which has been chartered-in (some through 2026, assuming minimum available charter extension periods are exercised) on attractiveterms that allow Navios Holdings to charter-out the vessels at an attractive spread during strong markets and to weather down cycles in themarket while maintaining low costs; • Strong commercial relationships with both freight customers and Japanese trading houses and ship owners, providing Navios Holdings withaccess to future attractive long-term time charters on newbuildings with valuable purchase options; • Strong in-house technical management team who oversee every step of technical management, from the construction of the vessels to subsequentshipping operations throughout the life of a vessel, including the superintendence of maintenance, repairs and drydocking, providing efficiencyand transparency in Navios Holdings’ owned fleet operations; 54 Table of Contents • Visibility into worldwide commodity flows through its physical shipping operations and port terminal operations in South America; and • An experienced management team with a strong track record of operational experience and a strong brand having a well established reputationfor reliability and performance.Management intends to maintain and build on these qualitative advantages, while at the same time continuing to benefit from Navios Holdings’reputation.Shipping OperationsNavios Holdings’ Fleet. Navios Holdings controls a core fleet of 40 owned vessels and 26 chartered-in vessels (18 of which have purchase options).The average age of the operating fleet is 7.8 years.Owned Fleet. Navios Holdings owns and operates a fleet comprised of 14 modern Ultra Handymax vessels, 13 Capesize vessels, 12 Panamax vesselsand one Handysize vessel, including two newbuilding vessels, whose technical specifications and youth distinguish them in the market, where, as of thebeginning of March 2015, over 10% of the industry’s dry bulk vessels were 20 or more years old.Owned Vessels Vessel Name Vessel Type Year Built Deadweight(in metric tons) Navios Serenity Handysize 2011 34,690 Navios Ionian Ultra Handymax 2000 52,067 Navios Horizon Ultra Handymax 2001 50,346 Navios Herakles Ultra Handymax 2001 52,061 Navios Achilles Ultra Handymax 2001 52,063 Navios Vector Ultra Handymax 2002 50,296 Navios Meridian Ultra Handymax 2002 50,316 Navios Mercator Ultra Handymax 2002 53,553 Navios Arc Ultra Handymax 2003 53,514 Navios Hios Ultra Handymax 2003 55,180 Navios Kypros Ultra Handymax 2003 55,222 Navios Astra Ultra Handymax 2006 53,468 Navios Ulysses Ultra Handymax 2007 55,728 Navios Celestial Ultra Handymax 2009 58,063 Navios Vega Ultra Handymax 2009 58,792 Navios Magellan Panamax 2000 74,333 Navios Star Panamax 2002 76,662 Navios Northern Star Panamax 2005 75,395 Navios Amitie Panamax 2005 75,395 Navios Taurus Panamax 2005 76,596 Navios Asteriks Panamax 2005 76,801 Navios Galileo Panamax 2006 76,596 N Amalthia Panamax 2006 75,318 N Bonanza Panamax 2006 76,596 Navios Avior Panamax 2012 81,355 Navios Centaurus Panamax 2012 81,472 Navios Stellar Capesize 2009 169,001 Navios Bonavis Capesize 2009 180,022 Navios Happiness Capesize 2009 180,022 55 Table of ContentsNavios Phoenix Capesize 2009 180,242 Navios Lumen Capesize 2009 180,661 Navios Antares Capesize 2010 169,059 Navios Etoile Capesize 2010 179,234 Navios Bonheur Capesize 2010 179,259 Navios Altamira Capesize 2011 179,165 Navios Azimuth Capesize 2011 179,169 Navios Ray Capesize 2012 179,515 Navios Gem Capesize 2014 181,336 Owned Fleet to be Delivered Vessels Vessel Type Delivery Date Deadweight(in metric tons) Navios Sphera Panamax Q3 2015 84,000 Navios TBN Capesize Q4 2015 180,600 Long-Term Fleet. In addition to the 40 owned vessels, Navios Holdings controls a fleet of six Capesize, 13 Panamax, six Ultra Handymax, and oneHandysize vessels under long-term time charters, having an average age of approximately 6.6 years. Of the 26 chartered-in vessels, 20 are currently inoperation and six are scheduled for delivery at various times through 2016, as set forth in the following table:Long-term Chartered-in Fleet in Operation Vessel Name Vessel Type YearBuilt Deadweight(in metric tons) PurchaseOption(1) Navios Lyra Handysize 2012 34,718 Yes(2) Navios Apollon Ultra Handymax 2000 52,073 No Navios Primavera Ultra Handymax 2007 53,464 Yes Navios Armonia Ultra Handymax 2008 55,100 No Navios Oriana Ultra Handymax 2012 61,442 Yes Navios Mercury Ultra Handymax 2013 61,393 Yes Navios Venus Ultra Handymax 2015 61,000 Yes Navios Libra II Panamax 1995 70,136 No Navios Altair Panamax 2006 83,001 No Navios Esperanza Panamax 2007 75,356 No Navios Marco Polo Panamax 2011 80,647 Yes Navios Southern Star Panamax 2013 82,224 Yes Navios Prosperity(3) Panamax 2007 82,535 Yes Navios Aldebaran(3) Panamax 2008 76,500 Yes Golden Heiwa Panamax 2007 76,662 No Beaufiks Capesize 2004 180,310 Yes Rubena N Capesize 2006 203,233 No King Ore Capesize 2010 176,800 No Navios Koyo Capesize 2011 181,415 Yes Navios Obeliks Capesize 2012 181,415 Yes 56 Table of ContentsLong-term Chartered-in Fleet to be Delivered Vessels VesselType DeliveryDate Deadweight(in metric tons) PurchaseOption Navios Sky Panamax Q2 2015 82,000 Yes Navios Amber Panamax Q2 2015 80,000 Yes Navios TBN Panamax Q4 2016 81,000 Yes Navios TBN Panamax Q4 2016 81,000 Yes Navios TBN Panamax Q4 2016 84,000 Yes Navios Felix Capesize Q2 2016 180,000 Yes (1)Generally, Navios Holdings may exercise its purchase option after three to five years of service.(2)Navios Holdings holds the initial 50% purchase option on the vessel.(3)Navios Holdings and Navios Partners entered into novation agreements with the respective owners of Navios Aldebaran and Navios Prosperity wherebythe rights to the time charter contracts of the Navios Aldebaran and Navios Prosperity were transferred to Navios Holdings as of February 28, 2015 andMarch 5, 2015, respectively.Many of Navios Holdings’ current long-term chartered-in vessels are chartered from ship owners with whom Navios Holdings has long-standingrelationships. Navios Holdings pays these ship owners daily rates of hire for such vessels, and then charters out these vessels to other parties, who pay NaviosHoldings a daily rate of hire. Navios Holdings also enters into COAs pursuant to which Navios Holdings has agreed to carry cargoes, typically for industrialcustomers, who export or import dry bulk cargoes. Further, Navios Holdings enters into spot market voyage contracts, where Navios Holdings is paid a rateper ton to carry a specified cargo from point A to point B.Short-Term Fleet: Navios Holdings’ “short-term fleet” is comprised of Capesize, Panamax and Ultra Handymax vessels chartered-in for duration of lessthan 12 months. The number of short-term vessels varies from time to time.Exercise of Vessel Purchase OptionsNavios Holdings has executed several purchase options comprising of six Ultra Handymax, six Panamax and one Capesize vessels. The NaviosMeridian, Navios Mercator, Navios Arc, Navios Galaxy I, Navios Magellan, Navios Horizon, Navios Star, Navios Hyperion, Navios Orbiter, Navios Hope,Navios Fantastiks, Navios Vector and Navios Astra were delivered on various dates from November 30, 2005 until February 21, 2011. Navios Holdingscurrently has options to acquire 12 of the 20 chartered-in vessels currently in operation and all of the six long-term chartered-in vessels on order (on one ofthe 18 purchase options Navios Holdings holds a 50% initial purchase option).Commercial Ship Management: Commercial management of Navios Holdings’, Navios Partners, Navios Acquisition’s, Navios Midstream’s andNavios Europe’s fleet involves identifying and negotiating charter party employment for the vessels. In addition to its internal commercial ship managementcapabilities, Navios Holdings uses the services of a related party, Acropolis Chartering & Shipping Inc. (“Acropolis”), based in Piraeus, as well as numerousthird-party charter brokers, to solicit, research, and propose charters for its vessels. Charter brokers research and negotiate with different charterers, andpropose charters to Navios Holdings for cargoes suitable for carriage by Navios Holdings’, Navios Partners, Navios Acquisition’s, Navios Midstream’s andNavios Europe’ vessels. Navios Holdings then evaluates the employment opportunities available for each type of vessel and arranges cargo and countryexclusions, bunkers, loading and discharging conditions, and demurrage.Technical Ship Management: Navios Holdings provides, through its subsidiaries, Navios Shipmanagement Inc. and Navios Tankers Management Inc.,technical ship management and maintenance services to its owned vessels and has also provided such services to Navios Partners’, Navios Acquisition’s,Navios Midstream’s and Navios Europe’s vessels under the terms of the management agreements between the parties. Based in Piraeus, 57 Table of ContentsGreece, Monaco and Singapore, this operation is run by experienced professionals who oversee every step of technical management, from the construction ofthe vessels to subsequent shipping operations throughout the life of a vessel, including the superintendence of maintenance, repairs and drydocking.Operation of the Fleet: The operations departments supervise the post-fixture business of the vessels in Navios Holdings’, Navios Partners, NaviosAcquisition’s, Navios Midstream’s and Navios Europe’ fleet (i.e., once the vessel is chartered and being employed) by monitoring their daily positions toensure that the terms and conditions of the charters are being fulfilled.Financial Risk Management: Navios Holdings actively engages in assessing financial risks associated with fluctuating future freight rates, daily timecharter hire rates, fuel prices, credit risks, interest rates and foreign exchange rates. Financial risk management is carried out under policies approved andguidelines established by the Company’s executive management. • Freight Rate Risk. Navios Holdings may use FFAs to manage and mitigate its risk to its freight market exposures in shipping capacity and freightcommitments and respond to fluctuations in the dry bulk shipping market by augmenting its overall long or short position. These FFAs settlemonthly in cash on the basis of publicly quoted indices, not physical delivery. These instruments typically cover periods from one month to oneyear, and are based on time charter rates or freight rates on specific quoted routes. Navios Holdings may enter into these FFAs through over-the-counter transactions and over LCH, the London Clearing House. Navios Holdings’ FFA trading personnel work closely with the chartering groupto ensure that the most up-to-date information is incorporated into the Company’s commercial ship management strategy and policies. See “RiskFactors — Risks Associated with the Shipping Industry and Our Dry bulk Operations — Trading and complementary hedging activities infreight, tonnage and FFAs subject us to trading risks, and we may suffer trading losses which could adversely affect our financial condition andresults of operations” for additional detail on the financial implications, and risks of our use of FFAs. • Credit Risk. Navios Holdings closely monitors its credit exposure to charterers and FFAs counterparties. Navios Holdings has establishedpolicies to ensure that contracts are entered into with counterparties that have appropriate credit history. Counterparties and cash transactions arelimited to high quality credit collateralized corporations and financial institutions. Most importantly, Navios Holdings has strict guidelines andpolicies that are designed to limit the amount of credit exposure. • Interest Rate Risk. Navios Holdings may use from time to time interest rate swap agreements to reduce exposure to fluctuations in interest rates.These instruments allow Navios Holdings to raise long-term borrowings at floating rates and swap them into fixed rates. Although theseinstruments are intended to minimize the anticipated financing costs and maximize gains for Navios Holdings that may be set off against interestexpense, they may also result in losses, which would increase financing costs. Currently, Navios Holdings holds no interest rate swap contracts.See also item 11 “Quantitative and Qualitative Disclosures about Market Risks — Interest Rate Risk.” • Foreign Exchange Risk. Although Navios Holdings’ revenues are U.S. dollar-based, 20.8% of its expenses, related to its Navios Logisticssegment, are in Uruguayan pesos, Argentinean pesos, Paraguayan Guaranies and Brazilian Reales and 10.3% of its expenses related to operationof its Greek, Belgian and Monaco offices, are in Euros. Navios Holdings monitors its Euro, Argentinean Peso, Uruguayan Peso, ParaguayanGuarani and Brazilian Real exposure against long-term currency forecasts and enters into foreign currency contracts when consideredappropriate.CustomersDry bulk Vessel OperationsThe international dry bulk shipping industry is highly fragmented and, as a result, there are numerous charterers. Navios Holdings’ assessment of acharterer’s financial condition and reliability is an important factor 58 Table of Contentsin negotiating employment of its vessels. Navios Holdings generally charters its vessels to major trading houses (including commodities traders), majorproducers and government-owned entities. Navios Holdings’ customers under charter parties, COAs, and its counterparties under FFAs, include national,regional and international companies, such as Mitsui O.S.K. Lines Ltd., Cargill International S.A., GIIC, Louis Dreyfus Commodities, Oldendorff Carriers,Glencore Grain, Swiss Marine and Mansel Ltd. For the year ended December 31, 2014, one customer accounted for 11.9% of the Company’s revenue and forthe years ended December 31, 2013, and 2012, none of the Company’s customers accounted for more than 10% of the Company’s revenue.Logistics Business OperationsCustomers of Navios Logistics include affiliates of Archer Daniels Midland Company (“ADM”), Axion Energy, Bunge, Cargill, Glencore, LouisDreyfus, Petrobras, Petropar (the national oil company of Paraguay), Shell, Vale, Vitol and YPF. In its dry port facility in Uruguay, Navios Logistics has beenserving three of its key global customers, ADM, Cargill and Louis Dreyfus, for more than 16 years on average. In its liquid port facility, liquid bargetransportation and cabotage business, Navios Logistics has had long-term relationships with its global petroleum customers for more than 12 years onaverage (such as Axion Energy, Petrobras Group, YPF and Shell). In its dry barge business, Navios Logistics started its relationship with Vale in 2008 for ironore transportation and has signed new contracts since then. Navios Logistics is committed to providing quality logistics services for its customers and furtherdeveloping and maintaining its long-term relationships.Concentrations of credit risk with respect to accounts receivables are limited due to Navios Logistics’ large number of customers, who are establishedinternational operators and have an appropriate credit history. Due to these factors, management believes that no additional credit risk beyond amountsprovided for collection losses is inherent in our trade receivables. For the year ended December 31, 2014, Navios Logistics’ three largest customers, Vale,Cammessa and Axion Energy, accounted for 22.8%, 13.8% and 10.7% of its revenues, respectively, and Navios Logistics’ five largest customers accountedfor approximately 60.3% of its revenues. For the year ended December 31, 2013, Navios Logistics’ two largest customers, Vale and Petropar, accounted for18.5% and 10.7% of its revenues, respectively, and Navios Logistics’ five largest customers accounted for approximately 56.4% of its revenues. For the yearended December 31, 2012, Navios Logistics’ three largest customers, Vale, YPF and Axion Energy, accounted for 18.5%, 11.5% and 11.5% of its revenues,respectively and its five largest customers accounted for approximately 56.4% of its revenues.CompetitionThe dry bulk shipping markets are extensive, diversified, competitive and highly fragmented, divided among approximately 1,716 independent drybulk carrier owners. The world’s active dry bulk fleet consists of approximately 10,300 vessels, aggregating approximately 756 million dwt as ofDecember 31, 2014. As a general principle, the smaller the cargo carrying capacity of a dry bulk carrier, the more fragmented is its market, both with regard tocharterers and vessel owner/operators. Even among the larger dry bulk owners and operators, whose vessels are mainly in the larger sizes, only five companiesare known to have fleets of 100 vessels or more: the two largest Chinese shipping companies, China Ocean Shipping and China Shipping Group and the threelargest Japanese shipping companies, Mitsui O.S.K. Lines, Kawasaki Kisen and Nippon Yusen Kaisha. There are about 45 owners known to have fleets ofbetween 30 and 100 vessels. However, vessel ownership is not the only determinant of fleet control. Many owners of bulk carriers charter their vessels out forextended periods, not just to end users (owners of cargo), but also to other owner/operators and to tonnage pools. Such operators may, at any given time,control a fleet many times the size of their owned tonnage. Navios Holdings is one such operator; others include Cargill, Pacific Basin Shipping, Bocimar,Zodiac Maritime, Louis Dreyfus/Cetragpa, Cobelfret, Torvald Klaveness and Swiss Marine.It is likely that we will face substantial competition for long-term charter business from a number of experienced companies. Many of these competitorswill have significantly greater financial resources than we do. It is also likely that we will face increased numbers of competitors entering into ourtransportation sectors, 59 Table of Contentsincluding in the dry bulk sector. Many of these competitors have strong reputations and extensive resources and experience. Increased competition maycause greater price competition, especially for long-term charters.Navios LogisticsNavios Logistics is one of the largest logistics providers in the Hidrovia region of South America. Navios Logistics believes its ownership of riverports, including its port terminal in Uruguay that provides access to the ocean, allows it to offer a logistics solution superior to its competitors that alsooperate barges and pushboats. Navios Logistics also competes based on reliability, efficiency and price.With respect to loading, storage and ancillary services, the market is divided between transits and exports, depending on the cargo origin. In the case oftransits there are other companies operating in the river system that are able to offer services similar to Navios Logistics. However, most of these companiesare proprietary service providers that are focused on servicing their own cargo. Unlike these companies, Navios Logistics is an independent service providerin the market for transits. With respect to exports, its competitors are Montevideo Port in Montevideo and Ontur in Nueva Palmira, neither of which hasstorage, and TGU in Nueva Palmira. The main competitor of its liquid port terminal in Paraguay is Petropar, a Paraguayan state-owned entity. Othercompetitors include Copetrol and Petrobras, which are also customers of Navios Logistics’ port.Navios Logistics faces competition in its barge and cabotage businesses with transportation of oil and refined petroleum products from otherindependent ship owners and from vessel operators who primarily charter vessels to meet their cargo carrying needs. The charter markets in which NaviosLogistics’ vessels compete are highly competitive. Key competitors include Ultrapetrol Bahamas Ltd. and Fluviomar. In addition, some of Navios Logistics’customers, including ADM, Cargill, Louis Dreyfus and Vale, have some of their own dedicated barge capacity, which they can use to transport cargo in lieuof hiring a third party. Navios Logistics also competes indirectly with other forms of land-based transportation such as truck and rail. Competition isprimarily based on prevailing market contract rates, vessel location and vessel manager know-how, reputation and credibility. These companies and othersmaller entities are regular competitors of Navios Logistics in its primary tanker trading areas.Navios Logistics believes that its ability to combine its ports in Uruguay and Paraguay with its versatile fleet of barges, pushboats and tankers to offerintegrated, end-to-end logistics solutions for both its dry and liquid customers seeking to transport mineral and grain commodities and liquid cargoesthrough the Hidrovia region has allowed Navios Logistics to differentiate its business and offer superior services compared to its competitors.Intellectual PropertyWe consider NAVIOS to be our proprietary trademark, service mark and trade name. We hold several U.S. trademark registrations for our proprietarylogos and the domain name registration for our website.Governmental and Other RegulationsSources of Applicable Rules and Standards: Shipping is one of the world’s most heavily regulated industries, and, in addition, it is subject to manyindustry standards. Government regulation significantly affects the ownership and operation of vessels. These regulations consist mainly of rules andstandards established by international conventions, but they also include national, state, and local laws and regulations in force in jurisdictions where vesselsmay operate or are registered, and which are commonly more stringent than international rules and standards. This is the case particularly in the United Statesand, increasingly, in Europe.A variety of governmental and private entities subject vessels to both scheduled and unscheduled inspections. These entities include local portauthorities (the U.S. Coast Guard, harbor masters or equivalent entities), classification societies, flag state administration (country vessel of registry), andcharterers, particularly 60 Table of Contentsterminal operators. Certain of these entities require vessel owners to obtain permits, licenses, and certificates for the operation of their vessels. Failure tomaintain necessary permits or approvals could require a vessel owner to incur substantial costs or temporarily suspend operation of one or more of its vessels.Heightened levels of environmental and quality concerns among insurance underwriters, regulators, and charterers continue to lead to greaterinspection and safety requirements on all vessels and may accelerate the scrapping of older vessels throughout the industry. Increasing environmentalconcerns have created a demand for vessels that conform to stricter environmental standards. Vessel owners are required to maintain operating standards forall vessels that will emphasize operational safety, quality maintenance, continuous training of officers and crews and compliance with U.S. and internationalregulations.International Environmental Regulations: The International Maritime Organization (“IMO”) has adopted a number of international conventionsconcerned with ship safety and with preventing, reducing or controlling pollution from ships. These fall into two main categories, consisting firstly of thoseconcerned generally with ship safety standards, and secondly of those specifically concerned with measures to prevent pollution.Ship Safety Regulation: In the former category the primary international instrument is the Safety of Life at Sea Convention of 1974, as amended, orSOLAS, together with the regulations and codes of practice that form part of its regime. Much of SOLAS is not directly concerned with preventing pollution,but some of its safety provisions are intended to prevent pollution as well as promote safety of life and preservation of property. These regulations have beenand continue to be regularly amended as new and higher safety standards are introduced with which we are required to comply.An amendment of SOLAS introduced the International Safety Management (ISM) Code, which has been effective since July 1998. Under the ISM Codethe party with operational control of a vessel is required to develop an extensive safety management system that includes, among other things, the adoptionof a safety and environmental protection policy setting forth instructions and procedures for operating its vessels safely and describing procedures forresponding to emergencies. The ISM Code requires that vessel operators obtain a safety management certificate for each vessel they operate. This certificateevidences compliance by a vessel’s management with code requirements for a safety management system. No vessel can obtain a certificate unless itsmanager has been awarded a document of compliance, issued by the flag state for the vessel, under the ISM Code. Noncompliance with the ISM Code andother IMO regulations, such as the mandatory ship energy efficiency management plan (“SEEMP”) which is akin to a safety management plan and came intoeffect on January 1, 2013, may subject a ship owner to increased liability, may lead to decreases in available insurance coverage for affected vessels, and mayresult in the denial of access to, or detention in, some ports. For example, the United States Coast Guard and European Union authorities have indicated thatvessels not in compliance with the ISM Code will be prohibited from trading in ports in the United States and European Union.Another amendment of SOLAS, made after the terrorist attacks in the United States on September 11, 2001, introduced special measures to enhancemaritime security, including the International Ship and Port Facilities Security Code (ISPS Code).Our owned fleet maintains ISM and ISPS certifications for safety and security of operations. In addition, the Manager voluntarily implements andmaintains certifications pursuant to the International Organization for Standardization, or ISO, for its office and ships covering both quality of services andenvironmental protection (ISO 9001 and ISO 14001, respectively).International Regulations to Prevent Pollution from Ships: In the second main category of international regulation, the primary instrument is theInternational Convention for the Prevention of Pollution from Ships, or MARPOL, which imposes environmental standards on the shipping industry set outin Annexes I-VI of MARPOL. These contain regulations for the prevention of pollution by oil (Annex I), by noxious liquid substances in bulk (Annex II), byharmful substances in packaged forms within the scope of the International 61 Table of ContentsMaritime Dangerous Goods Code (Annex III), by sewage (Annex IV), by garbage (Annex V), and by air emissions (Annex VI).These regulations have been and continue to be regularly amended as new and higher standards of pollution prevention are introduced with which weare required to comply.For example, MARPOL Annex VI, together with the NOx Technical Code established thereunder, sets limits on sulphur oxide and nitrogen oxideemissions from ship exhausts and prohibits deliberate emissions of ozone depleting substances, such as chlorofluorocarbons. It also includes a global cap onthe sulphur content of fuel oil and allows for special areas to be established with more stringent controls on emissions. Originally adopted in September 1997,Annex VI came into force in May 2005 and was amended in October 2008 (as was the NOx Technical Code) to provide for progressively more stringent limitson such emissions from 2010 onwards. The revised Annex VI provides, in particular, for a reduction of the global sulfur cap, initially to 3.5% (from theprevious cap of 4.5%), which came into effect on January 1, 2012, then progressively reducing to 0.50% effective from January 1, 2020, subject to afeasibility review to be completed no later than 2018; and the establishment of new tiers of stringent nitrogen oxide emissions standards for marine engines,depending on their date of installation. We anticipate incurring costs in complying with these more stringent standards.The revised Annex VI further allows for designation, in response to proposals from member parties, of Emission Control Areas (ECAs) that imposeaccelerated and/or more stringent requirements for control of sulfur oxide, particulate matter, and nitrogen oxide emissions. Thus far, ECAs have beenformally adopted for the Baltic Sea area (limits SOx emissions only); the North Sea area including the English Channel (limiting SOx emissions only) and theNorth American ECA (which came into effect on August 1, 2012 limiting SOx, NOx and particulate matter emissions). The United States Caribbean Sea ECAentered into force on January 1, 2013 and has been effective since January 1, 2014, limiting SOx, NOx and particulate matter emissions. For the currently-designated ECAs, much lower sulfur limits on fuel oil content are being phased in (0.1% from January 1, 2015). At its 66th Session, the MEPC adoptedamendments (expected to enter into force in September 2015) to MARPOL Annex VI, regulation 13, regarding NOx and the date for the implementation ofthe “Tier III” standards within ECAs. These amendments provide, inter alia, that such standards, applicable on January 1, 2016, will be applied to marinediesel engines installed on ships which operate in the North American ECA or the U.S. Caribbean Sea ECA and to installed marine diesel engines whichoperate in other ECAs which might be designated in the future for Tier III NOx control. These more stringent fuel standards, when fully in effect, are expectedto require measures such as fuel switching, vessel modification adding distillate fuel storage capacity, or addition of exhaust gas cleaning scrubbers, toachieve compliance, and may require installation and operation of further control equipment at significant increased cost.Greenhouse Gas (“GHG”) Emissions: In February 2005, the Kyoto Protocol to the United Nations Framework Convention on Climate Changeentered into force. Pursuant to the Kyoto Protocol, adopting countries are required to implement national programs to reduce emissions of certain gases,generally referred to as greenhouse gases, which are suspected of contributing to global warming. Currently, the greenhouse gas emissions from internationalshipping do not come under the Kyoto Protocol.In December 2011, UN climate change talks took place in Durban and concluded with an agreement referred to as the Durban Platform for EnhancedAction. In preparation for the Durban Conference, the International Chamber of Shipping (“ICS”) produced a briefing document, confirming the shippingindustry’s commitment to cut shipping emissions by 20% by 2020, with significant further reductions thereafter. The ICS called on the participants in theDurban Conference to give the IMO a clear mandate to deliver emissions reductions through market-based measures, for example a shipping industryenvironmental compensation fund. Notwithstanding the ICS’ request for global regulation of the shipping industry, the Durban Conference did not result inany proposals specifically addressing the shipping industry’s role in climate change. The European Union announced in April 2007 that it planned to expandthe European Union emissions trading scheme by adding vessels, and a proposal from the European Commission was expected if no global regime forreduction of 62 Table of Contentsseaborne emissions had been agreed by the end of 2011. The Commission has, so far, stopped short of any such proposals to include emissions from ships inthe EU’s emissions trading scheme (ETS). However, on October 1, 2012, it announced that it would propose measures to monitor verify and report ongreenhouse-gas emissions from the shipping sector in early 2013. On June 28, 2013, the European Commission adopted a Communication setting out astrategy for progressively including greenhouse gas emissions from maritime transport in the EU’s policy for reducing its overall GHG emissions. The firststep proposed by the Commission is an EU Regulation “that would establish an EU-wide system for the monitoring, reporting and verification of carbondioxide emissions from large ships starting in 2018”. The draft Regulation is currently working its way through the various stages of the EU legislativeprocess and will require approval from both the European Council and European Parliament before entering into force. This Regulation may be seen asindicative of an intention to maintain pressure on the international negotiating process. Any passage of climate control legislation or other regulatoryinitiatives by the IMO, European Union, or individual countries where we operate, including the U.S. that restrict emissions of greenhouse gases from vesselscould require us to make significant financial expenditures we cannot predict with certainty at this time.Other International Regulations to Prevent Pollution: In addition to MARPOL, other more specialized international instruments have been adoptedto prevent different types of pollution or environmental harm from ships. In February 2004, the IMO adopted an International Convention for the Control andManagement of Ships’ Ballast Water and Sediments, or the BWM Convention. The BWM Convention’s implementing regulations call for a phasedintroduction 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 adopted by 30 member-states, the combined merchant fleets of whichrepresent not less than 35% of the gross tonnage of the world’s merchant shipping. To date, there has not been sufficient adoption of this standard bymember-states representing enough of the gross tonnage of the world’s fleet for it to take force. However, as of February 10, 2014, the Convention has beenratified by 38 member-states, representing 30.38% of the global merchant shipping fleet’s gross tonnage, and its entry-into-force with attendant compliancecosts may therefore be anticipated in the foreseeable future.European RegulationsEuropean regulations in the maritime sector are in general based on international law. However, since the Erika incident in 1999, the EuropeanCommunity has become increasingly active in the field of regulation of maritime safety and protection of the environment. It has been the driving forcebehind a number of amendments of MARPOL (including, for example, changes to accelerate the time-table for the phase-out of single hull tankers, and toprohibit the carriage in such tankers of heavy grades of oil), and if dissatisfied either with the extent of such amendments or with the time-table for theirintroduction it has been prepared to legislate on a unilateral basis. In some instances where it has done so, international regulations have subsequently beenamended to the same level of stringency as that introduced in Europe, but the risk is well established that EU regulations may from time to time imposeburdens and costs on ship owners and operators which are additional to those involved in complying with international rules and standards.In some areas of regulation the EU has introduced new laws without attempting to procure a corresponding amendment of international law. Notably, itadopted in 2005 a directive on ship-source pollution, imposing criminal sanctions for pollution not only where this is caused by intent or recklessness (whichwould be an offence under MARPOL), but also where it is caused by “serious negligence”. The directive could therefore result in criminal liability beingincurred in circumstances where it would not be incurred under international law. Experience has shown that in the emotive atmosphere often associated withpollution incidents, retributive attitudes towards ship interests have found expression in negligence being alleged by prosecutors and found by courts ongrounds which the international maritime community has found hard to understand. Moreover, there is skepticism that the notion of “serious negligence” islikely to prove any narrower in practice than ordinary 63 Table of Contentsnegligence. Criminal liability for a pollution incident could not only result in us incurring substantial penalties or fines but may also, in some jurisdictions,facilitate civil liability claims for greater compensation than would otherwise have been payable.United States Environmental Regulations and Laws Governing Civil Liability for Pollution: Environmental legislation in the United States meritsparticular mention as it is in many respects more onerous than international laws, representing a high-water mark of regulation with which ship owners andoperators must comply, and of liability likely to be incurred in the event of non-compliance or an incident causing pollution.U.S. federal legislation, including notably the Oil Pollution Act of 1990, or OPA, establishes an extensive regulatory and liability regime for theprotection and cleanup of the environment from oil spills, including bunker oil spills from dry bulk vessels as well as cargo or bunker oil spills from tankers.OPA affects all owners and operators whose vessels trade in the United States, its territories and possessions or whose vessels operate in United States waters,which includes the United States’ territorial sea and its 200 nautical mile exclusive economic zone. Under OPA, vessel owners, operators and bareboatcharterers are “responsible parties” and are jointly, severally and strictly liable (unless the spill results solely from the act or omission of a third party, an actof God or an act of war) for all containment and clean-up costs and other damages arising from discharges or substantial threats of discharges, of oil from theirvessels. In addition to potential liability under OPA as the relevant federal legislation, vessel owners may in some instances incur liability on an even morestringent basis under state law in the particular state where the spillage occurred.Title VII of the Coast Guard and Maritime Transportation Act of 2004, or the CGMTA, amended OPA to require the owner or operator of any non tankvessel of 400 gross tons or more, that carries oil of any kind as a fuel for main propulsion, including bunkers, to prepare and submit a response plan for eachvessel on or before August 8, 2005. The vessel response plans must include detailed information on actions to be taken by vessel personnel to prevent ormitigate any discharge or substantial threat of such a discharge of ore from the vessel due to operational activities or casualties. OPA currently limits liabilityof responsible parties to the greater of $1,000 per gross ton or $0.85 million per containership that is over 300 gross tons. These amounts are periodicallyadjusted for inflation.These limits of liability do not apply if an incident was directly caused by violation of applicable United States federal safety, construction oroperating 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 tocooperate and assist in connection with oil removal activities.In response to the Deepwater Horizon incident in the Gulf of Mexico, in 2010 the U.S. Congress has proposed, but has not formally adopted legislationthat would amend OPA to mandate stronger safety standards and increased liability and financial responsibility for offshore drilling operations, but the billdid not seek to change the OPA liability limits applicable to vessels. While Congressional activity on this topic is expected to continue to focus on offshorefacilities rather than on vessels generally, it cannot be known with certainty what form any such new legislative initiatives may take.Similarly, in response to the Deepwater Horizon incident, the European Union has issued Directive 2013/30/EU of the European Parliament and of theCouncil of June 12, 2013 on safety of offshore oil and gas operations. The objective of this Directive is to reduce, as much as possible, the occurrence ofmajor accidents relating to offshore oil and gas operations and to limit their consequences, thus increasing the protection of the marine environment andcoastal economies against pollution, establishing minimum conditions for safe offshore exploration and exploitation of oil and gas and limiting possibledisruptions to the European Union indigenous energy production, and to improve the response mechanisms in case of an accident. The Directive has to beimplemented by July 19, 2015. In the UK there will be new regulations: the Offshore Petroleum Activities (Offshore Safety Directive) (EnvironmentalFunctions) Regulations 2015 (OSDEF), will amend the Merchant Shipping (Oil Pollution Preparedness, Response and Cooperation Convention) Regulations1998 (OPRC 1998) 64 Table of Contentsand implement other environmental Directive requirements, specifically the Environmental Management System. The Offshore Petroleum Licensing(Offshore Safety Directive) Regulations 2015 will implement the licensing Directive requirements. There will also be changes to the Oil Pollution EmergencyPlans Regulations 1998.In addition, the Comprehensive Environmental Response, Compensation, and Liability Act, or CERCLA, which applies to the discharge of hazardoussubstances (other than oil) whether on land or at sea, contains a similar liability regime and provides for cleanup, removal and natural resource damages.Liability under CERCLA is limited to the greater of $300 per gross ton or $0.5 million for vessels not carrying hazardous substances as cargo or residue,unless the incident is caused by gross negligence, willful misconduct, or a violation of certain regulations, in which case liability is unlimited.We currently maintain, for each of our owned vessels, insurance coverage against pollution liability risks in the amount of $1.0 billion per incident.The insured risks include penalties and fines as well as civil liabilities and expenses resulting from accidental pollution. However, this insurance coverage issubject to exclusions, deductibles and other terms and conditions. If any liabilities or expenses fall within an exclusion from coverage, or if damages from acatastrophic incident exceed the $1.0 billion limitation of coverage per incident, our cash flow, profitability and financial position could be adverselyimpacted.OPA requires owners and operators of all vessels over 300 gross tons, even those that do not carry petroleum or hazardous substances as cargo, toestablish and maintain with the U.S. Coast Guard evidence of financial responsibility sufficient to meet their potential liabilities under OPA. The U.S. CoastGuard has implemented regulations requiring evidence of financial responsibility in the amount of $1,300 per gross ton, which includes the OPA limitationon liability of $1,000 per gross ton and the CERCLA liability limit of $300 per gross ton for vessels not carrying hazardous substances as cargo or residue.Under the regulations, vessel owners and operators may evidence their financial responsibility by showing proof of insurance, surety bond, self-insurance orguaranty. These limits are also periodically revised. We believe our insurance coverage as described above meets the requirements of OPA.Under OPA, an owner or operator of a fleet of vessels is required only to demonstrate evidence of financial responsibility in an amount sufficient tocover the vessel in the fleet having the greatest maximum liability under OPA. Under the self-insurance provisions, the ship owner or operator must have a networth and working capital, measured in assets located in the United States against liabilities located anywhere in the world, that exceeds the applicableamount of financial responsibility. We have complied with the U.S. Coast Guard regulations by providing a certificate of responsibility from third partyentities that are acceptable to the U.S. Coast Guard evidencing sufficient self-insurance.The U.S. Coast Guard’s regulations concerning certificates of financial responsibility provide, in accordance with OPA, that claimants may bring suitdirectly against an insurer or guarantor that furnishes certificates of financial responsibility. In the event that such insurer or guarantor is sued directly, it isprohibited from asserting any contractual defense that it may have had against the responsible party and is limited to asserting those defenses available to theresponsible party and the defense that the incident was caused by the willful misconduct of the responsible party. Certain organizations, which had typicallyprovided certificates of financial responsibility under pre-OPA laws, including the major protection and indemnity organizations have declined to furnishevidence of insurance for vessel owners and operators if they are subject to direct actions or required to waive insurance policy defenses. This requirementmay have the effect of limiting the availability of the type of coverage required by the Coast Guard and could increase our costs of obtaining this insuranceas well as the costs of our competitors that also require such coverage.OPA specifically permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring within theirboundaries, and some states’ environmental laws impose unlimited liability for oil spills. In some cases, states which have enacted such legislation have notyet issued implementing regulations defining vessels owners’ responsibilities under these laws. We intend to comply with all applicable state regulations inthe ports where our vessels call. 65 Table of ContentsThe United States Clean Water Act prohibits the discharge of oil or hazardous substances in U.S. navigable waters and imposes strict liability in theform of penalties for unauthorized discharges. The Clean Water Act also imposes substantial liability for the costs of removal, remediation and damages andcomplements the remedies available under CERCLA. The EPA regulates the discharge of ballast water and other substances incidental to the normaloperation of vessels in U.S. waters using a Vessel General Permit, or VGP, system pursuant to the CWA, in order to combat the risk of harmful organisms thatcan travel in ballast water carried from foreign ports. Compliance with the conditions of the VGP is required for commercial vessels 79 feet in length or longer(other than commercial fishing vessels). On March 28, 2013, the EPA adopted the 2013 VGP which took effect on December 19, 2013. The 2013 VGP is validfor five years.This 2013 VGP imposes a numeric standard to control the release of non-indigenous invasive species in ballast water discharges. In addition, throughthe CWA certification provisions that allow U.S. states to place additional conditions on the use of the VGP within state waters, a number of states haveproposed or implemented a variety of stricter ballast water requirements including, in some states, specific treatment standards. Compliance with new U.S.federal and state requirements could require the installation of equipment on our vessels to treat ballast water before it is discharged or the implementation ofother port facility disposal arrangements or procedures at potentially substantial cost, and/or otherwise restrict our vessels from entering U.S. waters.The Federal Clean Air Act (“CAA”) requires the EPA to promulgate standards applicable to emissions of volatile organic compounds and other aircontaminants. Our vessels are subject to CAA vapor control and recovery standards (“VCS”) for cleaning fuel tanks and conducting other operations inregulated port areas, and to CAA emissions standards for so-called “Category 3” marine diesel engines operating in U.S. waters. In April 2010, EPA adoptedregulations implementing the provision of MARPOL Annex VI regarding emissions from Category 3 marine diesel engines. Under these regulations, bothU.S. and foreign-flagged ships must comply with the applicable engine and fuel standards of MARPOL Annex VI, including the stricter North America ECAstandards which took effect in August 2012, when they enter U.S. ports or operate in most internal U.S. waters including the Great Lakes. MARPOL Annex VIrequirements are discussed in greater detail above under “International regulations to prevent pollution from ships.” We may incur costs to install controlequipment on our vessels to comply with the new standards.Also under the CAA, the U.S. Coast Guard has since 1990 regulated the safety of VCSs that are required under EPA and state rules. Our vesselsoperating in regulated port areas have installed VCSs that are compliant with EPA, state and U.S. Coast Guard requirements. On July 16, 2013, the U.S. CoastGuard adopted regulations that made its VCS requirements more compatible with new EPA and State regulations, reflected changes in VCS technology, andcodified existing U.S. Coast Guard guidelines. We intend to comply with all applicable state and U.S. federal regulations in the ports where our vessels call.Security RegulationsSince the terrorist attacks of September 11, 2001, there have been a variety of initiatives intended to enhance vessel security. On November 25, 2002,the Maritime Transportation Security Act of 2002, or MTSA, came into effect. To implement certain portions of the MTSA, in July 2003, the U.S. CoastGuard issued regulations requiring the implementation of certain security requirements aboard vessels operating in waters subject to the jurisdiction of theUnited States. Similarly, in December 2002, amendments to SOLAS created a new chapter of the convention dealing specifically with maritime security. Thenew chapter went into effect in July 2004, and imposes various detailed security obligations on vessels and port authorities, most of which are contained inthe newly created ISPS Code. Among the various requirements are: • on-board installation of automatic information systems, or AIS, to enhance vessel-to-vessel and vessel-to-shore communications; • on-board installation of ship security alert systems; 66 Table of Contents • the development of vessel security plans; and • compliance with flag state security certification requirements.Furthermore, additional security measures could be required in the future which could have a significant financial impact on us. The U.S. Coast Guardregulations, intended to be aligned with international maritime security standards, exempt non-U.S. vessels from MTSA vessel security measures, providedsuch vessels have on board a valid International Ship Security Certificate, or ISSC, that attests to the vessel’s compliance with SOLAS security requirementsand the ISPS Code. We will implement the various security measures addressed by the MTSA, SOLAS and the ISPS Code and take measures for the vessels toattain compliance with all applicable security requirements within the prescribed time periods. Although management does not believe these additionalrequirements will have a material financial impact on our operations, there can be no assurance that there will not be an interruption in operations to bringvessels into compliance with the applicable requirements and any such interruption could cause a decrease in charter revenues. Furthermore, additionalsecurity measures could be required in the future which could have a significant financial impact on us.International laws governing civil liability to pay compensation or damagesIn 2001, the IMO adopted the International Convention on Civil Liability for Bunker Oil Pollution Damage, or the Bunker Convention, which imposesstrict liability on ship owners for pollution damage in jurisdictional waters of ratifying states caused by discharges of “bunker oil.” The Bunker Conventiondefines “bunker oil” as “any hydrocarbon mineral oil, including lubricating oil, used or intended to be used for the operation or propulsion of the ship, andany residues of such oil.” The Bunker Convention also requires registered owners of ships over a certain size to maintain insurance for pollution damage inan amount equal to the limits of liability under the applicable national or international limitation regime (but not exceeding the amount calculated inaccordance with the Convention on Limitation of Liability for Maritime Claims of 1976, as amended, or the 1976 Convention). The Bunker Conventionentered into force on November 21, 2008, and as of February 28, 2014 had 74 contracting states comprising approximately 90.72% of the gross tonnage ofthe world’s merchant fleet. In other jurisdictions liability for spills or releases of oil from ships’ bunkers continues to be determined by the national or otherdomestic laws in the jurisdiction where the events or damages occur.Outside the United States, national laws generally provide for the owner to bear strict liability for pollution, subject to a right to limit liability underapplicable national or international regimes for limitation of liability. The most widely applicable international regime limiting maritime pollution liabilityis the 1976 Convention. Rights to limit liability under the 1976 Convention are forfeited where a spill is caused by a shipowners’ intentional or recklessconduct. Some states have ratified the 1996 LLMC Protocol to the 1976 Convention, which provides for liability limits substantially higher than those setforth in the 1976 Convention to apply in such states. Finally, some jurisdictions are not a party to either the 1976 Convention or the 1996 LLMC Protocol,and, therefore, shipowners’ rights to limit liability for maritime pollution in such jurisdictions may be uncertain.Inspection by Classification Societies: Every sea going vessel must be “classed” by a classification society. The classification society certifies that thevessel is “in class,” signifying that the vessel has been built and maintained in accordance with the rules of the classification society and complies withapplicable rules and regulations of the vessel’s country of registry and the international conventions of which that country is a member. In addition, wheresurveys are required by international conventions and corresponding laws and ordinances of a flag state, the classification society will undertake them onapplication 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 or to the regulations of the country concerned. For maintenance of the class, regularand extraordinary 67 Table of Contentssurveys of hull, 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, whereapplicable, for special equipment classed, at intervals of 12 months from the date of commencement of the class period indicated in thecertificate. • Intermediate Surveys: Extended annual surveys are referred to as intermediate surveys and typically are conducted two and a half years aftercommissioning 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 for the ship’s hull, machinery (including theelectrical plant), and for any special equipment classed, at the intervals indicated by the character of classification for the hull. At the specialsurvey, the vessel is thoroughly examined, including audio-gauging, to determine the thickness of its steel structure. Should the thickness befound to be less than class requirements, the classification society would prescribe steel renewals. The classification society may grant a one-yeargrace period for completion of the special survey. Substantial amounts of money may have to be spent for steel renewals to pass a special surveyif the vessel experiences excessive wear and tear. In lieu of the special survey every four or five years, depending on whether a grace period wasgranted, a ship owner has the option of arranging with the classification society for the vessel’s integrated hull or machinery to be on acontinuous survey cycle, in which every part of the vessel would be surveyed within a five-year cycle.Risk of Loss and Liability InsuranceGeneral: The operation of any cargo vessel includes risks such as mechanical failure, physical damage, collision, property loss, cargo loss or damage,business interruption due to political circumstances in foreign countries, hostilities, and labor strikes. In addition, there is always an inherent possibility ofmarine disaster, including oil spills and other environmental mishaps, and the liabilities arising from owning and operating vessels in international trade. TheOPA, which imposes virtually unlimited liability upon owners, operators and demise charterers of any vessel trading in the United States exclusive economiczone for certain oil pollution accidents in the United States, has made liability insurance more expensive for ship owners and operators trading in the U.S.market. While we believe that our present insurance coverage is adequate, not all risks can be insured, and there can be no guarantee that any specific claimwill be paid, or that we will always be able to obtain adequate insurance coverage at reasonable rates.Hull and Machinery and War Risk Insurance: We have marine hull and machinery and war risk insurance, which include coverage of the risk ofactual or constructive total loss, for all of our owned vessels. Each of the owned vessels is covered up to at least fair market value, with a deductible of $0.1million per Panamax, Handymax and Container vessel and $0.2 million per Capesize vessel for the hull and machinery insurance.We have also extended ourwar risk insurance to include war loss of hire for any loss of time to the vessel, including for physical repairs, caused by a warlike incident and piracy seizurefor up to 270 days of detention / loss of time. There are no deductibles for the war risk insurance or the war loss of hire cover.Protection and Indemnity Insurance: Protection and indemnity insurance is provided by mutual protection and indemnity associations, or P&IAssociations, who indemnify members in respect of discharging their tortious, contractual or statutory third-party legal liabilities arising from the operationof an entered ship. Such liabilities include but are not limited to third-party liability and other related expenses from injury or death of crew, passengers andother third parties, loss or damage to cargo, claims arising from collisions with other vessels, damage to other third-party property, pollution arising from oilor other substances, and salvage, towing and other related costs, including wreck removal. Protection and indemnity insurance is a form of mutual indemnityinsurance, extended by protection and indemnity mutual associations and always provided in accordance with the applicable associations’ rules andmembers’ agreed terms and conditions. 68 Table of ContentsOur fleet is currently entered for protection and indemnity insurance with International Group associations where, in line with all International GroupClubs, coverage for oil pollution is limited to $1.0 billion per event. The 13 P&I Associations that comprise the International Group insure approximately95% of the world’s commercial tonnage and have entered into a pooling agreement to collectively reinsure each association’s liabilities. Each vessel that weacquire will be entered with P&I Associations of the International Group. Under the International Group reinsurance program, each P&I club in theInternational Group is responsible for the first $9.0 million of every claim. In every claim the amount in excess of $9.0 million and up to $80.0 million isshared by the clubs under the pooling agreement. Any claim in excess of $80.0 million is reinsured by the International Group in the internationalreinsurance market under the General Excess of Loss Reinsurance Contract. This policy currently provides an additional $2.0 billion of coverage for non-oilpollution claims. Further to this, an additional reinsurance layer has been placed by the International Group for claims up to $1.0 billion in excess of $2.08billion, or $3.08 billion in total. For passengers and crew claims, the overall limit is $3.0 billion for any one event on any one vessel with a sub-limit of $2.0billion for passengers. With the exception of pollution, passenger or crew claims, should any other P&I claim exceed Group reinsurance limits, the provisionsof all International Group Club’s overspill claim rules will operate and members of any International Group Club will be liable for additional contributions inaccordance with such rules. To date, there has never been an overspill claim, or one even nearing this level.As a member of the P&I Associations that are members of the International Group, we will be subject to calls payable to the associations based on ourindividual fleet record, the associations’ overall its claim records as well as the claim records of all other members of the individual associations, andmembers of the pool of P&I Associations comprising the International Group. The P&I Associations’ policy year commences on February 20th. Calls arelevied by means of Estimated Total Premiums (“ETP”) and the amount of the final installment of the ETP varies according to the actual total premiumultimately required by the club for a particular policy year. Members have a liability to pay supplementary calls which might be levied by the board ofdirectors of the club if the ETP is insufficient to cover amounts paid out by the club.Uninsured Risks: Not all risks are insured and not all risks are insurable. The principal insurable risks which nonetheless remain uninsured across ourfleet are “loss of hire” and “strikes,” except in cases of loss of hire due to war or a piracy event. Specifically, Navios Holdings does not insure these risksbecause the costs are regarded as disproportionate. These insurances provide, subject to a deductible, a limited indemnity for hire that would not bereceivable by the shipowner for reasons set forth in the policy. Should a vessel on time charter, where the vessel is paid a fixed hire day by day, suffer aserious mechanical breakdown, the daily hire will no longer be payable by the charterer. The purpose of the loss of hire insurance is to secure the loss of hireduring such periods. In the case of strikes insurance, if a vessel is being paid a fixed sum to perform a voyage and the ship becomes strike bound at a loadingor discharging port, the insurance covers the loss of earnings during such periods. However, in some cases when a vessel is transiting high risk war and/orpiracy areas, Navios Holdings arranges war loss of hire insurance to cover up to 270 days of detention/loss of time. There are no deductibles for the war loss ofhire cover. We maintain strike insurance for our port terminal operations.Should a member leave or entry cease with any of the associations, at the Club’s Managers discretion, they may be also be liable to pay release calls orprovide adequate security for the same amount. Such calls are levied in respect of potential outstanding Club/Member liabilities on open policy years andinclude but are not limited to liabilities for Deferred Calls and Supplementary Calls.Credit Risk Insurance: With effect from March 25, 2014, the Company entered into an agreement to terminate the amended credit default insurancepolicy. In connection with the termination, Navios Holdings received compensation of $4.0 million in cash direct from the credit default insurer during thesecond quarter of 2014. The Company has no future requirement to repay any of the lump sum cash payment back to the insurance company or provide anyfurther services. 69 Table of ContentsRisk ManagementRisk management in the shipping industry involves balancing a number of factors in a cyclical and potentially volatile environment. Fundamentally,the challenge is to appropriately allocate capital to competing opportunities of owning or chartering vessels. In part, this requires a view of the overall healthof the market as well as an understanding of capital costs and returns. Thus, stated simply, one may charter-in part of a fleet as opposed to owning the entirefleet to maximize risk management and economic results. This is coupled with the challenge posed by the complex logistics of ensuring that the vesselscontrolled by Navios Holdings are fully employed.Navios Holdings seeks to manage risk through a number of strategies, including vessel control strategies (chartering and ownership), freight carriageand FFA trading. Navios Holdings’ vessel control strategies include seeking the appropriate mix of owned vessels, long- and short-term chartered-in vessels,coupled with purchase options, when available, and spot charters. Navios Holdings also enters into COAs, which gives Navios Holdings, subject to certainlimitations, the flexibility to determine the means of getting a particular cargo to its destination. Navios Holdings’ FFA trading strategies include takingeconomic hedges to manage and mitigate risk on vessels that are on-hire or coming off-hire to protect against the risk of movement in freight market rates.Legal ProceedingsNavios Holdings is not involved in any legal proceedings that it believes will have a material adverse effect on its business, financial position, resultsof operations and liquidity.In January 2011, KLC filed for receivership, which is reorganization under South Korean bankruptcy law. Navios Holdings has reviewed the matter, asfive vessels of its core fleet were chartered out to KLC. The contracts for these vessels have been terminated and the vessels have been rechartered to thirdparties for variable charter periods. The Company has filed claims for all unpaid amounts by KLC in respect of the employment of the five vessels in the KLCcorporate rehabilitation proceedings. Up to December 31, 2013 the Company had received payment in full for all its claims against KLC partly in cash andpartly in shares.From time to time, Navios Holdings may be subject to legal proceedings and claims in the ordinary course of business. It is expected that these claimswould be covered by insurance if they involved liabilities such as those that arise from a collision, other marine casualty, damage to cargoes, oil pollutionand death or personal injuries to crew, subject to customary deductibles. Those claims, even if lacking merit, could result in the expenditure of significantfinancial and managerial resources.Crewing and Shore EmployeesNavios Holdings crews its vessels primarily with Greek, Ukrainian, Georgian, Filipino, Polish, Romanian, Indian and Russian officers and Filipino,Georgian, Indian and Ukrainian seamen. Navios Holdings’ fleet manager is responsible for selecting its Greek officers. Other nationalities are referred toNavios Holdings’ fleet manager by local crewing agencies. Navios Holdings is also responsible for travel and payroll of the crew. The crewing agencieshandle each seaman’s training. Navios Holdings requires that all of its seamen have the qualifications and licenses required to comply with internationalregulations and shipping conventions. Navios Logistics crews its fleet with Argentinean, Brazilian and Paraguayan officers and seamen. Navios Logistics’fleet managers are responsible for selecting the crew.As of December 31, 2014, with respect to shore-side employees, Navios Holdings and its subsidiaries employed 167 employees in its Piraeus, Greeceoffice, 13 employees in its New York office, nine employees in its Antwerp, Belgium office, two employees in its Monaco office and one employee in itsSingapore office. Navios Logistics employs 41 employees in its Asuncion, Paraguay offices, 50 employees at the port facility in San Antonio, Paraguay, 134employees in the Buenos Aires, Argentina office, seven employees in its Montevideo, Uruguay office, with an additional 128 employees at the port facility inNueva Palmira, Uruguay, and 10 employees at Hidronave South American Logistics S.A.’s (“Hidronave”) Corumba, Brazil office. 70 Table of ContentsFacilitiesNavios Holdings and its affiliates currently lease the following properties: • Navios Shipmanagement Inc. and Navios Corporation lease approximately 3,882.3 square meters of space at 85 Akti Miaouli, Piraeus, Greece,pursuant to lease agreements that expire in 2017 and 2019. • On July 1, 2010, Kleimar N.V. signed a contract for the lease of approximately 632 square meters for its offices, pursuant to a lease that expires in2019. • Navios Corporation leases approximately 16,703 square feet of space at 825 Third Avenue, New York, New York, pursuant to a lease that expiresin 2019. Navios Holdings sublets a portion of the 34th floor in the building located at 825 Third Avenue, New York, New York, which premisescomprise a portion of the premises under the main lease, to a third party pursuant a sub-lease that expires in 2019. • Navios Tankers Management Inc. leases approximately 253.75 square meters of space at 85 Akti Miaouli, Piraeus, Greece, pursuant to a leaseagreement signed on October 29, 2010 and expiring in 2019. • Navios Shipmanagement Inc. leases office space in Monaco pursuant to a lease that expires in June 2015.Navios Logistics and its subsidiaries currently lease the following premises: • CNSA, as a free zone direct user at the Nueva Palmira Free Zone, holds the right to occupy the land on which it operate its port and transferfacility, located at Zona Franca, Nueva Palmira, Uruguay. CNSA was authorized to operate as a free zone user on November 29, 1955 by aresolution of the Executive, which on September 27, 1956 approved an agreement, as required by applicable law at the time. On December 4,1995, CNSA rights as a direct user were renewed in a single free zone user agreement, which was subsequently amended to incorporate new plotsof land — until its final version dated November 27, 2009. The agreement currently in force permits CNSA to install and operate a transferstation to handle and store goods, and to build and operate a plant to receive, prepare and dry grain on land in the Nueva Palmira Free Zone. Theagreement expires on December 31, 2025, with a 20-year extension at Navios Logistics’ option. Navios Logistics pays an annual fee ofapproximately $0.2 million, payable in eight consecutive months beginning in January of each year and increasing yearly in proportion to thevariation in the U.S. Consumer Price Index corresponding to the previous year. There is also a transhipment fee of $0.20 per ton transshipped.Navios Logistics has certain obligations with respect to improving the land subject to the agreement, and the agreement is terminable by the FreeZone Division if Navios Logistics breaches the terms of the agreement, or labor laws and social security contributions, and if Navios Logisticscommit illegal acts. In March 2013, CNSA acquired Energias Renovables del Sur S.A., a Nueva Palmira Free Zone direct user pursuant to anagreement with the Free Trade Zone Authority — General Trade Bureau of the Ministry of Economy and Finance. In December 2014, NaviosLogistics acquired Cartisur S.A. (“Cartisur”) and Edolmix S.A. (“Edolmix), both also Nueva Palmira Free Zone direct users. • CNSA also leases approximately 400 square meters of space at Paraguay 2141, Montevideo, Uruguay, pursuant to a lease that expires inNovember 2020. • Compania Naviera Horamar S.A. leases approximately 409 square meters at Cepeda 429 Street, San Nicolás, Buenos Aires, Argentina, pursuant toa lease agreement that expires in November 2017. • Petrolera San Antonio S.A. leases approximately 10,481 square meters of a land and a small warehouse next to the river Paraguay at San Migueldistrict of Asunción over the way to the Club Mbigua, pursuant to a lease agreement that expires in June 2018. • Compania Naviera Horamar S.A. leases a piece of land called “La Misteriosa” in an Island in the Province of Entre Rios, Argentina, Departmentof Islands of Ibicuy and Paranacito, pursuant to a lease agreement that expires in May 2018. 71 Table of Contents • Compania Naviera Horamar S.A. leases approximately 1,370 square meters of office space at Av. Juana Manso 205, Buenos Aires, Argentina,pursuant to a lease agreement that expires in June 2017. • Merco Par S.A.C.I. leases approximately 655 square meters of office space at Avenida Aviadores del Chaco No 1.669 corner San Martín,Asuncion, Paraguay, pursuant to a lease agreement that expires in November 2018.CNSA owns premises in Montevideo, Uruguay. This space is approximately 112 square meters and is located at Juan Carlos Gomez 1445, Oficina 701,Montevideo 1100, Uruguay.Petrolera San Antonio S.A. owns the premises from which it operates in Avenida San Antonio, Paraguay. This space is approximately 146,744 square metersand is located between Avenida San Antonio and Virgen de Caacupé, San Antonio, Paraguay.Compania Naviera Horamar S.A. owns two storehouses located at 880 Calle California, Ciudad Autonoma de Buenos Aires, Argentina and at 791/795 CalleGeneral Daniel Cerri, Ciudad Autonoma de Buenos Aires, Argentina of approximately 259 and 825 square meters, respectively. Compania Naviera HoramarS.A. also owns approximately 1,208 square meters of office space located in Buenos Aires, Argentina 846 Avenida Santa Fe, Ciudad Autonoma.Petrovia Internacional S.A. owns three plots of land in Nueva Palmira, Uruguay, two of approximately 29 acres each and one of 23 acres.C. Organizational structureNavios Holdings maintains offices in Piraeus, Greece, Antwerp, Belgium, New York, Monaco and Singapore. Navios Holdings’ corporate structure isfunctionally organized: commercial ship management and risk management are conducted through Navios Corporation and its wholly-owned subsidiaries,while the operation and technical management of Navios Holdings’ owned vessels are conducted through wholly-owned subsidiaries of Navios Holdings.Navios Logistics maintains offices in Buenos Aires, Argentina, Asuncion, Paraguay, Montevideo, Uruguay and Corumba, Brazil. Navios Logistics conductsthe commercial and technical management of its vessels, barges and pushboats through its wholly-owned subsidiaries. Navios Logistics also owns the NuevaPalmira port and transfer facility indirectly through its Uruguayan subsidiary, CNSA, and the San Antonio port facility through its Paraguayan subsidiary,Petrolera San Antonio S.A.As of December 31, 2014, all subsidiaries included in the consolidated financial statements are 100% owned, except for Navios Logistics and itssubsidiaries, which is 63.8% owned by Navios Holdings. 72 Table of ContentsThe table below sets forth Navios Holdings’ corporate structure as of December 31, 2014.Subsidiaries included in the consolidation: Company NameNatureOwnershipInterestCountry ofIncorporationStatement of Operations 2014 2013 2012 Navios Maritime Holdings Inc.Holding CompanyMarshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios CorporationSub-Holding Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios International Inc.Operating Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navimax CorporationOperating Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios Handybulk Inc.Operating Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Hestia Shipping Ltd.Operating Company100%Malta 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Anemos Maritime Holdings Inc.Sub-Holding Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios Shipmanagement Inc.Management Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 NAV Holdings LimitedSub-Holding Company100%Malta 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Kleimar N.V.Operating Company/Vessel Owning Company/Management Company100%Belgium 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Kleimar Ltd.Operating Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Bulkinvest S.A.Operating Company100%Luxembourg 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Primavera Shipping CorporationOperating Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Ginger Services Co.Operating Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Aquis Marine Corp.Sub-Holding Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios Tankers Management Inc.Management Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Astra Maritime CorporationVessel Owning Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Achilles Shipping CorporationOperating Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Apollon Shipping CorporationOperating Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Herakles Shipping CorporationOperating Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Hios Shipping CorporationOperating Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Ionian Shipping CorporationOperating Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Kypros Shipping CorporationOperating Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Meridian Shipping Enterprises Inc.Vessel Owning Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Mercator Shipping CorporationVessel Owning Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Arc Shipping CorporationVessel Owning Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Horizon Shipping Enterprises CorporationVessel Owning Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Magellan Shipping CorporationVessel Owning Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Aegean Shipping CorporationOperating Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Star Maritime Enterprises CorporationVessel Owning Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Corsair Shipping Ltd.Vessel Owning Company100%Marshall Is 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Rowboat Marine Inc.Operating Company100%Marshall Is 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Beaufiks Shipping CorporationOperating Company100%Marshall Is 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Nostos Shipmanagement Corp.Vessel Owning Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Portorosa Marine Corp.Operating Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Shikhar Ventures S.A.Vessel Owning Company100%Liberia 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Sizzling Ventures Inc.Operating Company100%Liberia 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Rheia Associates Co.Operating Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Taharqa Spirit Corp.Operating Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Rumer Holding Ltd.Vessel Owning Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Pharos Navigation S.A.Vessel Owning Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Pueblo Holdings Ltd.Vessel Owning Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Quena Shipmanagement Inc.Operating Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Aramis Navigation Inc.Vessel Owning Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 White Narcissus Marine S.A.Vessel Owning Company100%Panama 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 73 Table of ContentsNavios GP L.L.C.Operating Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Floral Marine Ltd.Vessel Owning Company100%Marshall Is. — — 1/1 - 6/14 Red Rose Shipping Corp.Vessel Owning Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Highbird Management Inc.Vessel Owning Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Ducale Marine Inc.Vessel Owning Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Vector Shipping CorporationVessel Owning Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Faith Marine Ltd.Vessel Owning Company100%Liberia 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios Maritime Finance (US) Inc.Operating Company100%Delaware 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios Maritime Finance II (US) Inc.Operating Company100%Delaware 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Tulsi Shipmanagement Co.Operating Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Cinthara Shipping Ltd.Operating Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Rawlin Services CompanyOperating Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Mauve International S.A.Operating Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Serenity Shipping Enterprises Inc.Vessel Owning Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 3/26 - 12/31 Mandora Shipping LtdVessel Owning Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 3/30 - 12/31 Solange Shipping Ltd.Vessel Owning Company100%Marshall Is. 1/1 - 12/31 1/1 - 12/31 5/14 - 12/31 Diesis Ship Management Ltd.Operating Company100%Marshall Is. 1/1 - 12/31 5/14 - 12/31 — Navios Holdings Europe Finance Inc.Sub-Holding Company100%Marshall Is. 1/1 - 12/31 6/4 - 12/31 — Navios Asia LLCSub-Holding Company100%Marshall Is. 5/19 - 12/31 — — Iris Shipping CorporationVessel Owning Company100%Marshall Is. 5/19 - 12/31 — — Jasmine Shipping CorporationVessel Owning Company100%Marshall Is. 5/19 - 12/31 — — Emery Shipping CorporationVessel Owning Company100%Marshall Is. 6/4 - 12/31 — — Lavender Shipping CorporationVessel Owning Company100%Marshall Is. 11/24 - 12/31 — — Esmeralda Shipping CorporationVessel Owning Company100%Marshall Is. — — — Triangle Shipping CorporationVessel Owning Company100%Marshall Is. — — — Affiliates included in the financial statements accounted for under the equity method:In the consolidated financial statements of Navios Holdings, the following entities are included as affiliates and are accounted for under the equitymethod for such periods: (i) Navios Partners and its subsidiaries (ownership interest as of December 31, 2013 was 20.0%, which includes a 2.0% generalpartner interest); (ii) Navios Acquisition and its subsidiaries (economic interest as of December 31, 2014 was 46.2%,); (iii) Acropolis (economic interest as ofDecember 31, 2014 was 35.0%); and (iv) Navios Europe and its subsidiaries (economic interest as of December 31, 2014 was 47.5%).D. Property, plants and equipmentOur only material property is the owned vessels, tanker vessels, barges and pushboats and the port terminal facilities in Paraguay and Uruguay. See“Item 4.B Business Overview” above.Item 4A. Unresolved Staff CommentsNone.Item 5. Operating and Financial Review and ProspectsThe following is a discussion of Navios Holdings’ financial condition and results of operations for each of the fiscal years ended December 31, 2014,2013 and 2012. Navios Holdings’ financial statements have been prepared in accordance with Generally Accepted Accounting Principles in the United Statesof America (U.S. GAAP). You should read this section together with the consolidated financial statements and the accompanying notes to those financialstatements, which are included in this document. Where necessary, comparative figures have been reclassified to conform to changes in presentation in thecurrent year. 74 Table of ContentsThis report contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Reform Act of 1995. Theseforward-looking statements are based on Navios Holdings’ current expectations and observations. Included among the factors that, in our view, could causeactual results to differ materially from the forward-looking statements contained in this report are those discussed under “Risk Factors” and “Forward-Looking Statements”.OverviewNavios Holdings is a global, vertically integrated seaborne shipping and logistics company focused on the transport and transshipment of dry bulkcommodities, including iron ore, coal and grain. Navios Holdings technically and commercially manage its owned fleet, Navios Acquisition’s fleet, NaviosPartners’ fleet, Navios Midstream’s fleet and Navios Europe’s fleet, and commercially manages its chartered-in fleet.On February 2, 2007, Navios Holdings acquired all of the outstanding share capital of Kleimar N.V. (“Kleimar”). Kleimar is a Belgian maritimetransportation company established in 1993. Kleimar is the owner and operator of Capesize, Panamax and Handymax vessels used in the transportation ofcargoes and has an extensive COA business.Navios Logistics, a consolidated subsidiary of Navios Holdings, is one of the largest logistics companies in the Hidrovia region river system, the mainnavigable river system in the region, and on the cabotage trades along the eastern coast of South America, serving its customers in the Hidrovia regionthrough two port storage and transfer facilities, one for agricultural, forest and mineral-related exports and the other for refined petroleum products. NaviosLogistics complements its two port terminals with a diverse fleet of 360 barges and pushboats (including three pushboats to be delivered) and two smallinland oil tankers that operate in its barge business and nine vessels, including six ocean-going tankers, two self-propelled barges and one bunker vessel,which operate in its cabotage business. Navios Holdings currently owns 63.8% of Navios Logistics.On August 7, 2007, Navios Holdings formed Navios Partners under the laws of Marshall Islands. Navios G.P. L.L.C. (“General Partner”), a wholly-owned subsidiary of Navios Holdings, was also formed on that date to act as the general partner of Navios Partners and received a 2.0% general partnerinterest in Navios Partners. Navios Partners is an affiliate and not consolidated under Navios Holdings.On May 28, 2010, Navios Holdings acquired control over Navios Acquisition. As a result, Navios Holdings concluded a business combination hadoccurred and consolidated the results of Navios Acquisition from that date until March 30, 2011. From March 30, 2011, Navios Acquisition has beenconsidered as an affiliate entity of Navios Holdings. As of December 31, 2014, Navios Holdings’ ownership of the outstanding voting stock of NaviosAcquisition was 43.1% and its economic interest in Navios Acquisition was 46.2%.In May 2013, Navios Holdings formed Navios Asia in partnership with a third party and owned 51.0% of Navios Asia and its wholly ownedsubsidiaries. In May 2014, Navios Holdings became the sole shareholder of Navios Asia by acquiring the remaining 49.0% for a total cash consideration of$10.9 million.On October 9, 2013, Navios Holdings, Navios Acquisition and Navios Partners established Navios Europe and have economic interests of 47.5%,47.5% and 5.0%, respectively. Navios Europe is engaged in the marine transportation industry through the ownership of five tankers and five containervessels. Effective November 2014, Navios Holdings, Navios Acquisition and Navios Partners have voting interest of 50%, 50% and 0%, respectively.On October 13, 2014, Navios Acquisition formed Navios Midstream under the laws of the Marshall Islands. Navios Maritime Midstream Partners GPLLC, or the general partner, a wholly-owned subsidiary of Navios Acquisition, was also formed on that date to act as the general partner of Navios Midstreamand received a 2.0% general partner interest in Navios Midstream. Following the completion of the Navios Midstream’s IPO in 75 Table of ContentsNovember 2014 and as of December 31, 2014, Navios Acquisition had 57.5% interest and Navios Holdings had indirect economic interest of 26.6% (throughits ownership in Navios Acquisition) and no direct economic interest.Charter Policy and Industry OutlookNavios Holdings’ policy has been to take a portfolio approach to managing operating risks. This policy led Navios Holdings to time charter-out manyof the vessels that it is presently operating (i.e., vessels owned by Navios Holdings or which Navios Holdings has taken into its fleet under charters having aduration of more than 12 months) for periods up to 10 years at inception to various shipping industry counterparties considered by Navios Holdings to haveappropriate credit profiles. By doing this, Navios Holdings aims to lock in, subject to credit and operating risks, favorable forward revenue and cash flowswhich it believes will cushion it against unfavorable market conditions. In addition, Navios Holdings trades additional vessels taken in on shorter termcharters of less than 12 months duration as well as voyage charters or COAs and FFAs.In 2014, 2013 and 2012, this chartering policy had the effect of generating Time Charter Equivalents (“TCE”) that were higher than spot employment.The average daily charter-in vessel cost for the Navios Holdings long-term charter-in fleet (excluding vessels, which are utilized to serve voyage charters orCOAs) was $13,397 per day for the year ended December 31, 2014. The average long-term charter-in hire rate per vessel was included in the amount of long-term hire included elsewhere in this document and was computed by (a) multiplying (i) the daily charter-in rate for each vessel by (ii) the number of days eachvessel is in operation for the year; (b) summing those individual multiplications; and (c) dividing such total by the total number of charter-in vessel days forthe year. These rates exclude gains and losses from FFAs. Furthermore, Navios Holdings has the ability to increase its owned fleet through purchase optionsexercisable in the future at favorable prices relative to the then-current market.Navios Holdings believes that a decrease in global commodity demand from its current level, and the delivery of dry bulk carrier new buildings intothe world fleet, could have an adverse impact on future revenue and profitability. However, Navios Holdings believes that the operating cost advantage of itsowned vessels and long-term chartered fleet, which overall is chartered-in at favorable long-term rates, will continue to help mitigate the impact of thedeclines in freight rates. A reduced freight rate environment may also have an adverse impact on the value of Navios Holdings’ owned fleet. In reaction to adecline in freight rates, available ship financing can also be negatively impacted.Navios Logistics owns and operates vessels, barges and pushboats located mainly in Argentina, the largest independent bulk transfer and storage portfacility in Uruguay, and an upriver liquid port facility located in Paraguay. Operating results for Navios Logistics are highly correlated to: (i) South Americangrain production and export, in particular Argentinean, Brazilian, Paraguayan, Uruguayan and Bolivian production and export; (ii) South American iron oreproduction and export, mainly from Brazil; and (iii) sales (and logistic services) of petroleum products in the Argentine and Paraguayan markets. NaviosHoldings believes that the continuing development of these businesses will foster throughput growth and therefore increase revenues at Navios Logistics.Should this development be delayed, grain harvests be reduced, or the market experience an overall decrease in the demand for grain or iron ore, theoperations in Navios Logistics could be adversely affected.FleetThe following is the current “core fleet” employment profile (excluding Navios Logistics), including the newbuilds to be delivered. The current “corefleet” consists of 66 vessels totaling 6.6 million deadweight tons. The employment profile of the fleet as of April 1, 2015 is reflected in the tables below. The58 vessels in current operation aggregate approximately 5.7 million deadweight tons and have an average age of 7.8 years. Navios Holdings has currentlyfixed 54.9% and 3.9% including index-linked charters of available days for 2015 and 2016, respectively, of its fleet (excluding vessels which are utilized tofulfill COAs), representing contracted fees 76 Table of Contents(net of commissions), based on contracted charter rates from our current charter agreements of $70.7 million and $11.9 million, respectively. Although thesefees are based on contractual charter rates, any contract is subject to performance by the counterparties and us. Additionally, the level of these fees woulddecrease depending on the vessels’ off-hire days to perform periodic maintenance. The average contractual daily charter-out rate for the core fleet (excludingvessels which are utilized to fulfill COAs) is $9,679 and $26,007 for 2015 and 2016, respectively. The average daily charter-in rate for the active long-termcharter-in vessels (excluding vessels which are utilized to fulfil COAs) for 2015 is $13,394.Owned Vessels Vessels Type Built DWT Charter-outRate(1) Profit Share ExpirationDate(2) Navios Serenity Handysize 2011 34,690 6,650 No 04/30/2015 Navios Ionian Ultra Handymax 2000 52,067 4,988 No 04/22/2015 Navios Celestial Ultra Handymax 2009 58,063 7,981— 70% in excess of $8,000basis Supramax IndexRoutes +8% 04/11/201507/16/2015 Navios Vector Ultra Handymax 2002 50,296 8,550 No 04/30/2015 Navios Horizon Ultra Handymax 2001 50,346 4,275 No 04/09/2015 Navios Herakles Ultra Handymax 2001 52,061 9,025 No 04/19/2015 Navios Achilles Ultra Handymax 2001 52,063 4,750 No 05/12/2015 Navios Meridian Ultra Handymax 2002 50,316 5,700 No 04/05/2015 Navios Mercator Ultra Handymax 2002 53,553 9,215 No 05/15/2015 Navios Arc Ultra Handymax 2003 53,514 5,938 No 03/31/2015 Navios Hios Ultra Handymax 2003 55,180 8,246— 100% in excess of$8,500 basis SupramaxIndex Routes 04/14/201508/07/2015 Navios Kypros Ultra Handymax 2003 55,222 6,171— 98% of averageSupramax IndexRoutes 04/14/201502/27/2016 Navios Ulysses Ultra Handymax 2007 55,728 5,470— Average SupramaxIndex Routes 04/10/201502/23/2016 Navios Vega Ultra Handymax 2009 58,792 9,119— 100% in excess of$9,500 basisSupramax IndexRoutes +5% 04/09/201504/16/2015 Navios Astra Ultra Handymax 2006 53,468 7,695 No 07/19/2015 Navios Magellan Panamax 2000 74,333 4,617— Weighted average basisPanamax Index 4TCRoutes +4% 04/11/201501/10/2016 Navios Star Panamax 2002 76,662 6,650 No 08/14/2015 Navios Asteriks Panamax 2005 76,801 5,225 No 06/05/2015 Navios Centaurus Panamax 2012 81,472 8,313 No 04/20/2015 Navios Avior Panamax 2012 81,355 5,950— Weighted average basisPanamax Index Routes+14% 04/06/201504/25/2015 Navios Galileo Panamax 2006 76,596 8,663 No 06/02/2015 Navios Northern Star Panamax 2005 75,395 6,698 No 08/22/2015 Navios Amitie Panamax 2005 75,395 7,695 No 07/10/2015 Navios Taurus Panamax 2005 76,596 5,681— Weighted average basisPanamax Index Routes+7% 04/03/201505/22/2015 77 Table of ContentsN Amalthia Panamax 2006 75,318 6,978 No 08/29/2015 N Bonanza Panamax 2006 76,596 5,795 No 05/08/2015 Navios Bonavis Capesize 2009 180,022 13,300— 105% inexcess of$14,000basisBalticCapesizeIndex4TCIndexRoutes 04/14/201506/10/2015 Navios Happiness Capesize 2009 180,022 14,488 No 11/03/2015 Navios Lumen Capesize 2009 180,661 6,695— (5) $5,000+50%weightedaverageBalticCapesizeIndex5TCIndexRoutes 04/10/201504/28/2016 Navios Stellar Capesize 2009 169,001 7,800 No 03/31/2015 Navios Phoenix Capesize 2009 180,242 10,441— $8,000+50%weightedaverageBalticCapesizeIndex5TCIndexRoutes 04/03/201512/21/2015 (6)Navios Antares Capesize 2010 169,059 7,143— $5,200+47.5%weightedaverageBalticCapesizeIndexaverage4TCIndexRoutes 04/03/201502/17/2016 Navios Etoile Capesize 2010 179,234 29,356 50% inexcess of$38,500 12/02/2020 Navios Bonheur Capesize 2010 179,259 8,745— $6,300+50%weightedaverageBalticCapesizeIndex5TCIndexRoutes 04/12/201501/26/2016 Navios Altamira Capesize 2011 179,165 22,325 No 01/16/2016 Navios Azimuth Capesize 2011 179,169 4,87110,450 No 04/03/201503/15/2016 Navios Gem Capesize 2014 181,336 10,354— $7,750+55%weightedaverageBalticCapesizeIndex5TCIndexRoutes 04/04/201502/04/2016 Navios Ray Capesize 2012 179,515 8,636— $6,300+50%weightedaverageBalticCapesizeIndex5TCIndexRoutes 04/12/201501/28/2016 Owned Fleet to be Delivered Vessels Vessel Type Delivery Date Deadweight(in metric tons) Navios Sphera Panamax Q3 2015 84,000 Navios TBN Capesize Q4 2015 180,600 78 Table of ContentsLong-term Chartered-in Vessels Vessels Type Built DWT PurchaseOption(3) Charter-outRate(1) ExpirationDate(2) Navios Lyra Handysize 2012 34,718 Yes(4) 5,510 04/15/2015 Navios Primavera Ultra Handymax 2007 53,464 Yes 7,600 05/01/2015 Navios Armonia Ultra Handymax 2008 55,100 No 9,263 04/22/2015 Navios Apollon Ultra Handymax 2000 52,073 No 9,168 05/13/2015 Navios Oriana Ultra Handymax 2012 61,442 Yes 7,980 05/03/2015 Navios Mercury Ultra Handymax 2013 61,393 Yes 7,313— (7) (7) 04/16/201507/20/2015 Navios Libra II Panamax 1995 70,136 No 9,025 05/18/2015 Navios Altair Panamax 2006 83,001 No 4,618— (8) (8) 04/13/201506/24/2015 Navios Esperanza Panamax 2007 75,356 No 6,793 09/10/2015 Navios Marco Polo Panamax 2011 80,647 Yes 5,785— (9) (9) 04/11/201506/14/2015 Navios Southern Star Panamax 2013 82,224 Yes 6,111— (10) (10) 04/14/201504/17/2015 Navios Prosperity Panamax 2007 82,535 Yes 4,744— (11) (11) 04/15/201506/19/2015 Navios Aldebaran Panamax 2008 76,500 Yes 4,303— (12) (12) 04/05/201504/17/2015 Navios Koyo Capesize 2011 181,415 Yes 14,250— (13) (13) 04/03/201505/19/2015 Navios Venus Ultra Handymax 2015 61,000 Yes 6,888 05/01/2015 Golden Heiwa Panamax 2007 76,662 No — Beaufiks Capesize 2004 180,310 Yes — Rubena N Capesize 2006 203,233 No — King Ore Capesize 2010 176,800 No — Navios Obeliks Capesize 2012 181,415 Yes — Long-term Chartered-in Fleet to be Delivered Vessels Type DeliveryDate PurchaseOption DWT Navios Sky Panamax 04/2015 Yes 82,000 Navios Amber Panamax 05/2015 Yes 80,000 Navios TBN Panamax 11/2016 Yes 84,000 Navios TBN Panamax 11/2016 Yes 81,000 Navios TBN Panamax 11/2016 Yes 81,000 Navios Felix Capesize 04/2016 Yes 180,000 (1)Daily rate net of commissions. These rates do not include insurance proceeds received upfront in November 2012 and March 2014.(2)Expected redelivery basis midpoint of full redelivery period.(3)Generally, Navios Holdings may exercise its purchase option after three to five years of service.(4)Navios Holdings holds the initial 50% purchase option on the vessel.(5)Amount represents daily rate of mitigation proceeds following the restructuring of the original charter.(6)Subject to COA of $34,013 per day for the remaining period until fourth quarter of 2016.(7)Based on weighted average Supramax Index Routes +12%.(8)Based on weighted average Panamax Index 4TC Routes +5%. 79 Table of Contents(9)Based on average Panamax Index 4TC Routes +15%.(10)Based on weighted average Panamax Index routes +17%.(11)Based on weighted average Panamax Index Routes +10%.(12)Based on average Panamax Index 4TC Routes +6%.(13)110% in excess of $15,000 basis Baltic Capesize Index 4TC.Dividend PolicyOn February 16, 2015, the Board of Directors declared a quarterly cash dividend for the fourth quarter of 2014 of $0.06 per share of common stock.This dividend was paid on March 27, 2015 to stockholders of record on March 20, 2015. On March 27, 2015, the Board of Directors declared a quarterlydividend for the period from January 15, 2015 to April 14, 2015 of $0.546875 per American Depository Share on its Series G Preferred Stock and $0.5390625per American Depository Share on its Series H Preferred Stock. These dividends will be paid on April 15, 2015 to holders of record as of April 8, 2015. Thedeclaration and payment of any further dividend remains subject to the discretion of the Board and will depend on, among other things, Navios Holdings’cash requirements after taking into account market opportunities, restrictions under its credit agreements, indentures and other debt obligations and suchother factors as the Board may deem advisable.Navios LogisticsOn December 15, 2014, Navios Logistics acquired Cartisur and Eldomix for a total consideration of $17.0 million. These companies, as free zone directusers, hold the right to occupy approximately 53 acres of undeveloped riverfront land located in the Nueva Palmira free zone in Uruguay, adjacent to NaviosLogistics’ existing port. The acquisitions were accounted for as asset acquisitions. During the year ended December 31, 2014, Navios Logistics paid $10.2million of the purchase price and the remaining balance will be paid in full during the third quarter of 2015.Navios PartnersIn February 2015, Navios Partners completed its public offering of 4,600,000 common units, at $13.09 per unit, raising gross proceeds of $60.2 million.In addition, Navios Partners completed a private placement of 1,120,547 common units and 22,868 general partner units at $13.09 per unit to NaviosHoldings, raising additional gross proceeds of $15.0 million. Following the public offering and the private placement, Navios Holdings’ owns a 20.1%interest in Navios Partners, which includes the 2.0% general partner interest.On February 13, 2015, Navios Holdings received $8.1 million from Navios Partners representing the cash distribution for the fourth quarter of 2014.Navios AcquisitionOn January 6, 2015, Navios Holdings received $3.6 million from Navios Acquisition representing the cash dividend for the third quarter of 2014.A. Operating ResultsFactors Affecting Navios Holdings’ Results of Operations:Navios Holdings actively manages the risk in its operations by: (i) operating the vessels in its fleet in accordance with all applicable internationalstandards of safety and technical ship management; (ii) enhancing vessel utilization and profitability through an appropriate mix of long-term charterscomplemented by spot charters (time charters for short-term employment) and COAs; (iii) monitoring the financial impact of corporate exposure from bothphysical and FFAs transactions; (iv) monitoring market and counterparty credit risk limits; (v) adhering to risk management and operation policies andprocedures; and (vi) requiring counterparty credit approvals. 80 Table of ContentsNavios Holdings believes that the important measures for analyzing trends in its results of operations include the following: • Market Exposure: Navios Holdings manages the size and composition of its fleet by seeking a mix between chartering and owning vessels inorder to adjust to anticipated changes in market rates. Navios Holdings aims to achieve an appropriate balance between owned vessels and longand short-term chartered-in vessels and controls approximately 6.6 million dwt in dry bulk tonnage. Navios Holdings’ options to extend thecharter duration of vessels it has under long-term time charter (durations of over 12 months) and its purchase options on chartered vessels permitNavios Holdings to adjust the cost and the fleet size to correspond to market conditions. • Available days: Available days are the total number of days a vessel is controlled by a company less the aggregate number of days that the vesselis off-hire due to scheduled repairs or repairs under guarantee, vessel upgrades or special surveys. The shipping industry uses available days tomeasure the number of days in a period during which vessels should be capable of generating revenues. • Operating days: Operating days are the number of available days in a period less the aggregate number of days that the vessels are off-hire due toany reason, including lack of demand or unforeseen circumstances. The shipping industry uses operating days to measure the aggregate numberof days in a period during which vessels actually generate revenues. • Fleet utilization: Fleet utilization is obtained by dividing the number of operating days during a period by the number of available days duringthe period. The shipping industry uses fleet utilization to measure a company’s efficiency in finding suitable employment for its vessels andminimizing the amount of days that its vessels are off-hire for reasons other than scheduled repairs or repairs under guarantee, vessel upgrades,special surveys or vessel positioning. • TCE rates: TCE rates are defined as voyage and time charter revenues less voyage expenses during a period divided by the number of availabledays during the period. The TCE rate is a standard shipping industry performance measure used primarily to compare daily earnings generated byvessels on time charters with daily earnings generated by vessels on voyage charters, because charter hire rates for vessels on voyage charters aregenerally not expressed in per day amounts, while charter hire rates for vessels on time charters generally are expressed in such amounts. • Equivalent vessels: Equivalent vessels are defined as the available days of the fleet divided by the number of the calendar days in the period.Voyage and Time CharterRevenues are driven primarily by the number and type of vessels in the fleet, the number of days during which such vessels operate and the amount ofdaily charter hire rates that the vessels earn under charters, which, in turn, are affected by a number of factors, including: • the duration of the charters; • the level of spot market rates at the time of charters; • decisions relating to vessel acquisitions and disposals; • the amount of time spent positioning vessels; • the amount of time that vessels spend in drydock undergoing repairs and upgrades; • the age, condition and specifications of the vessels; and • the aggregate level of supply and demand in the dry bulk shipping industry.Time charters are available for varying periods, ranging from a single trip (spot charter) to a long-term period which may be many years. Under a timecharter, owners assume no risk for finding business and obtaining 81 Table of Contentsand paying for fuel or other expenses related to the voyage, such as port entry fees. In general, a long-term time charter assures the vessel owner of aconsistent stream of revenue. Operating the vessel in the spot market affords the owner greater spot market opportunity, which may result in high rates whenvessels are in high demand or low rates when vessel availability exceeds demand. Vessel charter rates are affected by world economics, international events,weather conditions, labor strikes, governmental policies, supply and demand, and many other factors that might be beyond the control of management.Consistent with industry practice, Navios Holdings uses TCE rates, as a method of analyzing fluctuations between financial periods and as a method ofequating revenue generated from a voyage charter to time charter revenue.TCE rate also serves as an industry standard for measuring revenue and comparing results between geographical regions and among competitors.The cost to maintain and operate a vessel increases with the age of the vessel. Older vessels are less fuel efficient, cost more to insure and requireupgrades from time to time to comply with new regulations. The average age of Navios Holdings’ owned core fleet is 8.3 years. However, as such fleet ages orif Navios Holdings expands its fleet by acquiring previously owned and older vessels, the cost per vessel would be expected to rise and, assuming all else,including rates, remains constant, vessel profitability would be expected to decrease.Spot Charters, COAs and FFAsNavios Holdings enhances vessel utilization and profitability through a mix of voyage charters, short-term charter-out contracts, COAs and strategiccargo contracts.Navios Holdings may enter into dry bulk shipping FFAs as economic hedges relating to identifiable ship and/or cargo positions and as economichedges of transactions the Company expects to carry out in the normal course of its shipping business. By utilizing certain derivative instruments, includingdry bulk shipping FFAs, the Company manages the financial risk associated with fluctuating market conditions. In entering into these contracts, theCompany has assumed the risks relating to the possible inability of counterparties to meet the terms of their contracts.FFAs cover periods generally ranging from one month to one year and are based on time charter rates or freight rates on specific quoted routes. FFAs areexecuted either over-the-counter, between two parties, or through LCH, the London clearing house. FFAs are settled in cash monthly based on publiclyquoted indices. No over-the-counter trades have been executed since 2012. LCH calls for both base and margin collaterals, which are funded by NaviosHoldings, and which in turn substantially eliminates counterparty risk. Certain portions of these collateral funds may be restricted at any given time asdetermined by LCH. At the end of each calendar quarter, the fair value of dry bulk shipping FFAs traded over-the-counter are determined from an indexpublished in London, United Kingdom and the fair value of those FFAs traded with LCH are determined from the LCH valuations accordingly. NaviosHoldings has implemented specific procedures designed to respond to credit risk associated with over-the-counter trades, including the establishment of a listof approved counterparties and a credit committee which meets regularly.Statement of Operations Breakdown by SegmentNavios Holdings reports financial information and evaluates its operations by charter revenues and not by vessel type, length of ship employment,customers or type of charter. Navios Holdings does not use discrete financial information to evaluate the operating results for each such type of charter.Although revenue can be identified for each type of charters, management does not identify expenses, profitability or other financial information on acharter-by-charter or type of charter basis. The reportable segments reflect the internal organization of the Company and are strategic businesses that offerdifferent products and services. The 82 Table of ContentsCompany currently has two reportable segments: the Dry bulk Vessel Operations and the Logistics Business. The Dry bulk Vessel Operations segmentconsists of the transportation and handling of bulk cargoes through the ownership, operation, and trading of vessels, freight, and FFAs. The LogisticsBusiness segment consists of port terminal business, barge business and cabotage business in the Hidrovia region of South America. Navios Holdingsmeasures segment performance based on net income attributable to Navios Holdings’ common stockholders.For further segment information, please see Note 18 to the Consolidated Financial Statements included elsewhere in this Annual Report.Period over Period ComparisonsFor the year ended December 31, 2014 compared to the year ended December 31, 2013The following table presents consolidated revenue and expense information for each of the years ended December 31, 2014 and 2013, respectively.This information was derived from the audited consolidated revenue and expense accounts of Navios Holdings for each of the years ended December 31,2014 and 2013. (In thousands of U.S. dollars) Year EndedDecember 31,2014 Year EndedDecember 31,2013 Revenue $569,016 $512,279 Administrative fee revenue from affiliates 14,300 7,868 Time charter, voyage and logistics business expenses (263,304) (244,412) Direct vessel expenses (130,064) (114,074) General and administrative expenses incurred on behalf of affiliates (14,300) (7,868) General and administrative expenses (45,590) (44,634) Depreciation and amortization (104,690) (98,124) Provision for losses on accounts receivable (792) (630) Interest income 5,515 2,299 Interest expense and finance cost (113,660) (110,805) Loss on derivatives — (260) Gain on sale of assets — 18 Loss on bond and debt extinguishment (27,281) (37,136)Other income 15,639 17,031 Other expense (24,520) (10,447) Loss before equity in net earnings of affiliated companies$(119,731)$(128,895)Equity in net earnings of affiliated companies 57,751 19,344 Loss before taxes$(61,980)$(109,551)Income tax (expense)/benefit (84) 4,260 Net loss$(62,064)$(105,291)Less: Net loss/(income) attributable to the noncontrolling interest 5,861 (3,772) Net loss attributable to Navios Holdings common stockholders$(56,203)$(109,063) 83 Table of ContentsSet forth below are selected historical and statistical data for the dry bulk vessel operations segment for each of the years ended December 31, 2014 and2013 that the Company believes may be useful in better understanding the Company’s financial position and results of operations. Year EndedDecember 31, 2014 2013 FLEET DATA Available days 21,465 19,364 Operating days 21,422 19,062 Fleet utilization 99.8% 98.4%Equivalent vessels 59 53 AVERAGE DAILY RESULTS TCE $11,830 $12,029 During the year ended December 31, 2014, there were 2,101 more available days as compared to 2013, due to (i) an increase in available days forowned vessels by 1,861 days, mainly due to the delivery of the Navios Taurus, Navios Galileo, Navios Amitie, Navios Northern Star and N Amalthia in thesecond half of 2013 and the N Bonanza, Navios Gem and Navios Ray in 2014; and (ii) an increase in charter-in fleet available days by 240 days. NaviosHoldings can increase or decrease its fleet’s size by chartering-in vessels for long or short-term periods (less than one year).The average TCE rate for the year ended December 31, 2014 was $11,830 per day, $199 per day lower than the rate achieved in 2013. This was dueprimarily to the decline in the freight market during 2014 as compared to 2013.Revenue: Revenue from dry bulk vessel operations for the year ended December 31, 2014 was $300.2 million as compared to $275.2 million for thesame period during 2013. The increase of $25.0 million in dry bulk revenue was mainly attributable to an increase in available days as described above. Thisincrease was partially mitigated by a decrease in TCE per day by 1.7% to $11,830 per day in the year ended December 31, 2014, as compared to $12,029 perday in the same period of 2013.Revenue from the logistics business was $268.8 million for the year ended December 31, 2014 as compared to $237.1 million for the year endedDecember 31, 2013. The increase of $31.7 million was mainly attributable to (i) a $14.4 million increase in the port terminal business mainly attributable toan increase in the Paraguayan liquid port’s volume of products sold; (ii) a $11.9 million increase in the barge business mainly attributable to thecommencement of operations of three new dry cargo convoys under long-term time charter contracts during the second quarter of 2014; and (iii) a $5.4million increase in the cabotage business mainly attributable to an increase in the cabotage fleet’s operating days and the higher time-charter rates achieved.Administrative fee revenue from affiliates: Administrative fee revenue from affiliates increased by $6.4 million, or 81.7%, to $14.3 million for the yearended December 31, 2014, as compared to $7.9 million for the year ended December 31, 2013. See general and administrative expenses discussion below.Time Charter, Voyage and Logistics Business Expenses: Time charter, voyage and logistics business expenses increased by $18.9 million or 7.7% to$263.3 million for the year ended December 31, 2014, as compared to $244.4 million for the year ended December 31, 2013.Time charter and voyage expenses from dry bulk operations decreased by $1.6 million, or 1.0%, to $157.6 million for the year ended December 31,2014, as compared to $159.2 million for the year ended December 31, 2013. This was primarily attributable to lower short-term and long-term charter-in dailyrates in the year ended December 31, 2014 compared to 2013. 84 Table of ContentsOf the total expenses for the years ended December 31, 2014 and 2013, $105.7 million and $85.2 million, respectively, were related to NaviosLogistics. The increase of $20.5 million in time charter, voyage and logistics business was mainly due to (i) a $15.7 million increase in the port terminalbusiness mainly attributable to the volume of products sold in the liquid port in Paraguay; and (ii) a $4.8 million increase in the barge business mainlyattributable to higher fuel expenses due to an increase in the number of voyages under COA contracts and an increase in time charter expense due to the shortterm charter-in of 36 barges delivered during the second and third quarter of 2014.Direct Vessel Expenses: Direct vessel expenses increased by $16.0 million, or 14.0%, to $130.1 million for the year ended December 31, 2014, ascompared to $114.1 million for the year ended December 31, 2013. Direct vessel expenses include crew costs, provisions, deck and engine stores, lubricatingoils, insurance premiums and costs for maintenance and repairs.Direct vessel expenses from dry bulk operations increased by $14.1 million, or 37.1%, to $52.1 million for the year ended December 31, 2014, ascompared to $38.0 million for the year ended December 31, 2013. This increase was mainly attributable to the increased number of vessels in NaviosHoldings’ fleet since the third quarter of 2013.Of the total amounts of direct vessel expenses for the years ended December 31, 2014 and 2013, $78.0 million and $76.1 million, respectively, relatedto Navios Logistics. The increase of $1.9 million in direct vessel expenses was mainly due to (i) a $2.4 million increase in the amortization of deferreddrydock and special survey costs; and (ii) a $1.3 million increase in direct vessel expenses of the barge business mainly attributable to the commencement ofoperations of three new drycargo convoys under long-term time charter contracts during the second quarter of 2014. This increase was partially mitigated bya $1.8 million decrease in direct vessel expenses of the cabotage business mainly attributable to lower crew and repairs and maintenance costs.General and administrative expenses incurred on behalf of affiliates: General and administrative expenses incurred on behalf of affiliates increased by$6.4 million, or 81.7%, to $14.3 million for the year ended December 31, 2014, as compared to $7.9 million for the year ended December 31, 2013. Seegeneral and administrative expenses discussion below.General and Administrative Expenses: General and administrative expenses of Navios Holdings are composed of the following: (in thousands of U.S. dollars) Year EndedDecember 31,2014 Year EndedDecember 31,2013 Administrative fee revenue from affiliates $(14,300) $(7,868)General and administrative expenses incurred on behalf of affiliates 14,300 7,868 General and administrative expenses 45,590 44,634 (in thousands of U.S. dollars) Year EndedDecember 31,2014 Year EndedDecember 31,2013 Dry bulk Vessel Operations $29,951 $28,875 Logistics Business 14,764 14,617 Sub-total 44,715 43,492 Credit risk insurance 875 1,142 General and administrative expenses$45,590 $44,634 The increase in general and administrative expenses by $1.0 million, or 2.1%, to $45.6 million for the year ended December 31, 2014, as compared to$44.6 million for the year ended December 31, 2013, was mainly 85 Table of Contentsattributable to (i) a $2.1 million increase in payroll and other related costs; and (ii) a $0.2 million increase attributable to the logistics business. The overallincrease was partially offset by (i) a $0.6 million decrease in professional, legal and audit fees; (ii) a $0.4 million decrease in other administrative expenses;and (iii) a $0.3 million decrease in credit risk insurance fees following the termination of the credit default insurance policy on March 25, 2014.Depreciation and Amortization: For the year ended December 31, 2014, depreciation and amortization increased by $6.6 million to $104.7 million, ascompared to $98.1 million for the year ended December 31, 2013. The increase was primarily due to an increase in (i) depreciation and amortization of drybulk vessels by $4.9 million mainly attributable to the new vessel deliveries during the second half of 2013 and the first half of 2014; and (ii) depreciationand amortization of the logistics business by $1.7 million, mainly due to delivery of three new convoys in the first half of 2014 and the construction of thenew conveyor belt completed in the fourth quarter of 2013.Provision for Losses on Accounts Receivable: For the year ended December 31, 2014, provision for losses on accounts receivable increased by$0.2 million to $0.8 million, as compared to $0.6 million for the year ended December 31, 2013. The increase was mainly due to a slight increase in bad debtprovisions in the dry bulk operations in the year ended December 31, 2014.Interest income: Interest income increased by $3.2 million to $5.5 million for the year ended December 31, 2014, as compared to $2.3 million for thesame period in 2013. This increase was mainly attributable to the arrangement fee earned pursuant to the Navios Acquisition’s short-term credit facilityentered into November 2014, which was partially mitigated by a decrease in interest income from time deposits.Interest Expense and Finance Cost: Interest expense and finance cost for the year ended December 31, 2014 increased by $2.9 million, or 2.6%, to$113.7 million, as compared to $110.8 million in the same period of 2013. This increase was mainly due to (i) a $2.7 million increase in interest expense andfinance cost of the logistics business, mainly attributable to (a) the additional interest expense generated by the Additional 2019 Logistics Senior Notes (asdefined herein) issued in March 2013; and (b) the additional interest expense generated by the 2022 Logistics Senior Notes issued in April 2014; and (ii) a$0.2 million increase in interest expense and finance cost of dry bulk vessel operations.Loss on Derivatives: The loss on derivatives decreased by $0.3 million for the year ended December 31, 2014 as compared to $0.3 million for the sameperiod in 2013. The Company entered into no FFA contracts during 2014.Loss on Bond and Debt Extinguishment: Loss on bond and debt extinguishment was $27.3 million for the year ended December 31, 2014, ascompared to $37.1 million for the year ended December 31, 2013.On April 22, 2014, Navios Logistics completed the sale of $375.0 million in aggregate principal amount of 7.25% senior notes due on May 1, 2022(the “2022 Logistics Senior Notes”). From the net proceeds of the offering, Navios Logistics repaid in full the $290.0 million of the 2019 Logistics SeniorNotes (as defined herein). The effect of this early repayment resulted in the recognition of a $27.3 million loss in the statement of comprehensive(loss)/income, which comprises a $7.9 million loss relating to the accelerated amortization of unamortized deferred finance costs, a $3.1 million gain relatingto the accelerated amortization of unamortized 2019 Logistics Senior Notes premium and a $22.5 million loss relating to cash payments for tender premiumfees and expenses.On November 29, 2013, Navios Holdings completed the sale of $650.0 million of its 2022 Notes. From the net proceeds of the offering NaviosHoldings repaid in full the $488.0 million of the 2017 Notes (as defined herein) and $123.3 million of senior secured debt . The effect of this early repaymentwas the recognition of a 86 Table of Contents$37.1 million loss in the statement of comprehensive (loss)/income, which comprises a $12.1 million loss relating to the accelerated amortization ofunamortized deferred finance costs and a $25.0 million loss relating to cash payments for transaction fees and expenses in connection with the 2017 Notes (asdefined herein) extinguishment.Other Income: Other income decreased by $1.4 million to $15.6 million for the year ended December 31, 2014, as compared to $17.0 million for theyear ended December 31, 2013. This decrease was due to a $3.5 million decrease in other income of dry bulk vessels operations partially mitigated by a $2.1million increase in other income of the logistics business.The decrease in other income of dry bulk vessels operations is mainly due to the $15.0 million of income recorded from the full settlement of KLC’sclaims during 2013 (see “B. Business Overview — Legal Proceedings”). This overall decrease was partially mitigated by increases of (i) $7.2 million ofincome relating to the sale of a defaulted counterparty claim to an unrelated third party; (ii) $3.6 million of income from the termination of the credit defaultinsurance policy on March 25, 2014; and (iii) a $0.7 million increase in other income mainly attributable to foreign exchange differences.The increase in other income of the logistics business was mainly due to settlement of claims during 2014 and the increased gain from foreignexchange differences as a result of a favorable fluctuation of the U.S. dollar exchange rate against the local currencies in the countries where Navios Logisticsconducts its operations.Other Expense: Other expense increased by $14.0 million to $24.5 million for the year ended December 31, 2014, as compared to $10.5 million for theyear ended December 31, 2013. This increase was due to a $12.1 million increase in other expense of dry bulk vessels operations and a $1.9 million increasein other expense of the logistics business.The increase in other expense of dry bulk vessels operations is mainly due to (i) a $11.5 million expense relating to the reclassification to earnings ofavailable-for-sale securities for an other-than-temporary impairment; and (ii) a $0.6 million increase in miscellaneous other expenses. The increase in otherexpense of the logistics business was mainly due to an increase in taxes other-than-income taxes.Equity in Net Earnings of Affiliated Companies: Equity in net earnings of affiliated companies increased by $38.5 million, or 198.5%, to$57.8 million for the year ended December 31, 2014, as compared to $19.3 million for the same period in 2013. This increase was mainly due to a $40.1million increase in investment income which was partially offset by a $1.6 million decrease in amortization of deferred gain from the sale of vessels to NaviosPartners (as more fully described below). The $40.1 million increase in investment income consisted of (i) $40.4 million relating to Navios Acquisition($10.9 million of gains as a result of the issuance of shares following Navios Acquisition’s offering in February 2014 and the vesting of restricted stockawards in October 2014, and a $29.5 million increase in equity income); and (ii) a $0.9 million increase in investment income from Navios Europe andAcropolis. Total increase was partially mitigated by a $1.2 million decrease in investment income from Navios Partners ($4.8 million decrease in gains as aresult of the issuance of shares following Navios Partners’ offering in February 2014, and a $3.6 million increase in equity income).Navios Holdings’ ownership in both Navios Partners and Navios Acquisition decreased following Navios Partners’ offering in February 2014 andNavios Acquisition’s (i) offering in February 2014; and (ii) vesting of restricted stock awards in October 2014. The Company determined that the issuance ofshares and the vesting of restricted stock awards qualified as a sale of shares by the equity method investee.The Company recognizes the gain from the sale of vessels to Navios Partners immediately in earnings only to the extent of the interest in NaviosPartners owned by third parties and defers recognition of the gain to the extent of its own ownership interest in Navios Partners (see also “Item 7.B. RelatedParty Transactions). 87 Table of ContentsIncome Tax (Expense)/ Benefit: Income tax expense increased by $4.4 million to $0.1 million for the year ended December 31, 2014, as compared to a$4.3 million benefit for the year ended December 31, 2013. The total change in income taxes was mainly due to Navios Logistics’ merging of certainsubsidiaries in Paraguay in the first quarter of 2013.Net Loss/(Income) Attributable to the Noncontrolling Interest: Net loss attributable to the noncontrolling interest increased by $9.7 million to$5.9 million loss for the year ended December 31, 2014, as compared to $3.8 million income for the same period in 2013. This increase was mainlyattributable to logistics business net loss for the year ended December 31, 2014 compared to net income for the same period in 2013.For the year ended December 31, 2013 compared to the year ended December 31, 2012The following table presents consolidated revenue and expense information for each of the years ended December 31, 2013 and 2012, respectively.This information derived from the audited consolidated revenue and expense accounts of Navios Holdings for each of the years ended December 31, 2013and 2012. (In thousands of U.S. dollars) Year EndedDecember 31,2013 Year EndedDecember 31,2012 Revenue $512,279 $616,494 Administrative fee revenue from affiliates 7,868 5,994 Time charter, voyage and logistics business expenses (244,412) (269,279) Direct vessel expenses (114,074) (117,790) General and administrative expenses incurred on behalf of affiliates (7,868) (5,994) General and administrative expenses (44,634) (51,331) Depreciation and amortization (98,124) (108,206) Provision for losses on accounts receivable (630) (17,136) Interest income 2,299 2,717 Interest expense and finance cost (110,805) (106,196) Loss on derivatives (260) (196) Gain on sale of assets 18 323 Loss on bond and debt extinguishment (37,136) — Other income 17,031 189,239 Other expense (10,447) (10,993) (Loss)/income before equity in net earnings of affiliated companies$(128,895)$127,646 Equity in net earnings of affiliated companies 19,344 48,228 (Loss)/income before taxes$(109,551)$175,874 Income tax benefit/(expense) 4,260 (312) Net (loss)/income$(105,291)$175,562 Less: Net income attributable to the noncontrolling interest (3,772) (77) Net (loss)/income attributable to Navios Holdings common stockholders$(109,063)$175,485 88 Table of ContentsSet forth below are selected historical and statistical data for the dry bulk vessel operations segment for each of the years ended December 31, 2013 and2012 that the Company believes may be useful in better understanding the Company’s financial position and results of operations. Year EndedDecember 31, 2013 2012 FLEET DATA Available days 19,364 17,589 Operating days 19,062 17,273 Fleet utilization 98.4% 98.2%Equivalent vessels 53 48 AVERAGE DAILY RESULTS TCE $12,029 $18,167 During the year ended December 31, 2013, there were 1,775 more available days as compared to 2012, due to (i) an increase in available days forowned vessels of 669 days, mainly due to the delivery of the Navios Taurus, Navios Galileo, Navios Amitie, Navios Northern Star and N Amalthia in thesecond half of 2013; and (ii) an increase in short-term charter-in fleet available days of 1,415 days. This increase was partially offset by a decrease in the long-term charter-in fleet available days of 309 days. Navios Holdings can increase or decrease its fleet’s size by chartering-in vessels for long or short-term periods(less than one year).The average TCE rate for the year ended December 31, 2013 was $12,029 per day, which was $6,138 per day lower than the rate achieved in 2012. Thiswas due primarily to (i) the decline in the freight market during 2013 as compared to the same period in 2012 and (ii) the impact of the accounting treatmentof the one-time upfront cash payment received in connection with the credit default insurance restructuring, whereby revenues attributable to defaultedcharterers that would have been previously recognized over the life of those charters, were recorded immediately within “Other income”.Revenue: Revenue from dry bulk vessel operations for the year ended December 31, 2013 was $275.2 million as compared to $369.5 million for thesame period during 2012. The decrease in dry bulk revenue was mainly attributable to a decrease in the TCE per day by 33.8% to $12,029 per day in the yearended December 31, 2013, as compared to $18,167 per day in the same period of 2012. This decrease was partially offset by an increase in available days of1,775.Revenue from the logistics business was $237.1 million for the year ended December 31, 2013 as compared to $247.0 million for the year endedDecember 31, 2012. This decrease was mainly attributable to a decrease in the Paraguayan liquid port’s volume of products sold. This decrease was partiallyoffset by an increase in (i) rates, storage and other fees in the dry port terminal; and (ii) rates in the cabotage fleet.Administrative service fee from affiliates: Administrative fee revenue from affiliates increased by $1.9 million, or 31.3%, to $7.9 million for the yearended December 31, 2013 as compared to $6.0 million for the year ended December 31, 2012. See general and administrative expenses discussion below.Time Charter, Voyage and Logistics Business Expenses: Time charter, voyage and logistics business expenses decreased by $24.9 million, or 9.2%, to$244.4 million for the year ended December 31, 2013, as compared to $269.3 million for the year ended December 31, 2012.Time charter and voyage expenses from dry bulk operations decreased by $3.3 million, or 2.0%, to $159.2 million for the year ended December 31,2013, as compared to $162.5 million for the year ended December 31, 2012. This was primarily due to a decrease in voyage expenses mainly relating tobunker expenses, partially mitigated by an overall increase in charter-in fleet available days (as discussed above). 89 Table of ContentsOf the total amounts for the years ended December 31, 2013 and 2012, $85.2 million and $106.8 million, respectively, were related to NaviosLogistics. The decrease was mainly due to (i) decrease in the volume of products sold in the liquid port in Paraguay; and (ii) decrease of charter-in expensesdue to the acquisition, in the third quarter of 2012, of one pushboat and six tank barges, which were previously chartered-in. This overall decrease waspartially mitigated by (i) an increase in expenses attributable to the port operation as a result of the increased operations in the dry port; and (ii) an increase inthe expenses under spot trips for the cabotage vessels.Direct Vessel Expenses: Direct vessel expenses decreased by $3.7 million, or 3.2%, to $114.1 million for the year ended December 31, 2013, ascompared to $117.8 million for the year ended December 31, 2012. Direct vessel expenses include crew costs, provisions, deck and engine stores, lubricatingoils, insurance premiums and costs for maintenance and repairs.Direct vessel expenses from dry bulk operations decreased by $9.0 million, or 19.2%, to $38.0 million for the year ended December 31, 2013, ascompared to $47.0 million for the year ended December 31, 2012. This decrease was mainly attributable to a decrease in spares, repairs and maintenance.Of the total amounts of direct vessel expenses for the years ended December 31, 2013 and 2012, $76.1 million and $70.8 million, respectively, relatedto Navios Logistics. The increase was mainly due to an increase in the expenses of the barge business mainly attributable to higher repair and maintenanceand crew costs.General and administrative expenses incurred on behalf of affiliates: General and administrative expenses incurred on behalf of affiliates increased by$1.9 million, or 31.3%, to $7.9 million for the year ended December 31, 2013 as compared to $6.0 million for the year ended December 31, 2012. See generaland administrative expenses discussion below.General and Administrative Expenses: General and administrative expenses of Navios Holdings are composed of the following: (in thousands of U.S. dollars) Year EndedDecember 31,2013 Year EndedDecember 31,2012 Administrative fee revenue from affiliates $(7,868) $(5,994)General and administrative expenses incurred on behalf of affiliates 7,868 5,994 General and administrative expenses 44,634 51,331 (in thousands of U.S. dollars) Year EndedDecember 31,2013 Year EndedDecember 31,2012 Dry bulk Vessel Operations $28,875 $30,643 Logistics Business 14,617 14,844 Sub-total 43,492 45,487 Credit risk insurance 1,142 5,844 General and administrative expenses$44,634 $51,331 The decrease in general and administrative expenses by $6.7 million, or 13.1%, to $44.6 million for the year ended December 31, 2013, as compared to$51.3 million for the year ended December 31, 2012, was mainly attributable to (i) $4.7 million decrease in credit risk insurance fees following therestructuring of the credit default insurance in 2012; (ii) $1.9 million decrease in professional, legal audit fees and other; and (iii) $0.2 million decrease ingeneral and administrative expenses attributable to the logistics business. The overall decrease was partially offset by a $0.1 million increase payroll andother related costs. 90 Table of ContentsDepreciation and Amortization: For the year ended December 31, 2013, depreciation and amortization decreased by $10.1 million to $98.1 million, ascompared to $108.2 million for the year ended December 31, 2012. The decrease was primarily due to a decrease in (i) depreciation and amortization in thelogistics business by $3.6 million mainly due to the decrease of the amortization of intangible assets allocated to the barge business which were fullyamortized in 2012; and (ii) depreciation and amortization of dry bulk vessels by $6.5 million mainly due to (a) a $0.3 million decrease in depreciationfollowing the change in scrap rates (See also “F. Contractual Obligations as at December 31, 2014 — Critical Accounting Policies” section) partiallymitigated by an increase in depreciation and amortization following the new deliveries in the second half of 2013, and (b) a $6.2 million decrease inamortization of favorable/unfavorable leases mainly resulting from the redelivery of charter-in vessels in the fourth quarter of 2012.Provision for Losses on Accounts Receivable: For the year ended December 31, 2013, provision for losses on accounts receivable decreased by$16.5 million to $0.6 million, as compared to $17.1 million for the year ended December 31, 2012. The decrease is mainly due to dry bulk operations and is aresult of provisions for defaulted charterers including the effect of the credit default insurance restructuring in 2012. For the years ended December 31, 2013and 2012, the provision for losses on accounts receivable related to the logistics business was $0.6 million and $0.8 million, respectively.Interest income: Interest income decreased by $0.4 million to $2.3 million for the year ended December 31, 2013, as compared to $2.7 million for thesame period in 2012. This decrease was attributable to (i) a $0.2 million decrease in interest income of dry bulk vessel operations; and (ii) a $0.2 milliondecrease in interest income of the logistics business.This decrease was mainly attributable to the decrease in cash balances.Interest Expense and Finance Cost: Interest expense and finance cost for the year ended December 31, 2013 increased by $4.6 million, or 4.3%, to$110.8 million, as compared to $106.2 million in the same period of 2012. This increase was due to a $5.1 million increase in interest expense and financecost of the logistics business mainly due to the issuance of $90.0 million Additional 2019 Logistics Senior Notes (as defined below) in March 2013. Thisincrease was partially offset by a $0.5 million decrease in interest expense and finance cost of dry bulk vessel operations.Loss on Derivatives: The loss on derivatives increased by $0.1 million to $0.3 million for the year ended December 31, 2013, as compared to $0.2million for the same period in 2012. Navios Holdings records the change in the fair value of derivatives at each balance sheet date. The extent of the impacton earnings is dependent on two factors: market conditions and Navios Holdings’ net position in the market. Market conditions were volatile in both periods.Gain on Sale of Assets: The gain on sale of assets for the year ended December 31, 2013 was $0, as compared to $0.3 million for the same period in2012, which resulted from the sale of the Navios Buena Ventura to Navios Partners on June 15, 2012.Loss on Bond and Debt Extinguishment: On November 29, 2013, Navios Holdings completed the sale of $650.0 million of its 2022 Notes. From thenet proceeds of the offering Navios Holdings repaid in full the $488.0 million of the 2017 Notes (as defined herein) and $123.3 million of senior secured debt. The effect of this early repayment was the recognition of a $37.1 million loss in the statement of income, which comprises a $12.1 million loss relating tothe accelerated amortization of unamortized deferred finance costs and a $25.0 million loss relating to cash payments for transaction fees and expenses inconnection with the 2017 Notes (as defined herein) extinguishment.Other Income: Other income decreased by $172.2 million to $17.0 million for the year ended December 31, 2013, as compared to $189.2 million forthe year ended December 31, 2012. This decrease was mainly due to a $186.3 million decrease of other income of dry bulk vessel operations as a result of thecredit default insurance restructuring (see Note 23 to the audited consolidated financial statements of Navios Holdings for the year ended 91 Table of ContentsDecember 31, 2012, included elsewhere in this document) and (b) a $1.3 million decrease in other income of Navios Logistics. This decrease was partiallyoffset by a $15.3 million increase in miscellaneous income, of which $15.0 million is attributable to income recorded from the full settlement of KLC’sclaims. See “B. Business Overview — Legal Proceedings” for more information on KLC.Other Expense: Other expense decreased by $0.5 million to $10.5 million for the year ended December 31, 2013, as compared to $11.0 million for theyear ended December 31, 2012. This decrease was mainly attributable to a $1.2 million decrease in other expenses of the logistics business mainly due tolower other-than-income taxes and decreased expenses from foreign exchange differences as a result of a favorable fluctuation of the U.S. dollar exchange rateagainst the local currencies in the countries where Navios Logistics conducts its barge and cabotage business operations. This decrease was partially offset bya $0.7 million increase in other expenses of dry bulk operations mainly due to increase in miscellaneous expenses relating to voyages.Equity in Net Earnings of Affiliated Companies: Equity in net earnings of affiliated companies decreased by $28.9 million, or 60.0%, to $19.3 millionfor the year ended December 31, 2013, as compared to $48.2 million for the same period in 2012. This decrease was mainly due to a $23.1 million decrease ininvestment income, and a $5.8 million decrease in amortization of deferred gain from the sale of vessels to Navios Partners. The $23.1 million decrease ininvestment income was mainly due to (a) a $19.7 million negative contribution relating to Navios Acquisition ($6.2 million of losses as a result of theissuance of shares following Navios Acquisition’s offerings during 2013, and a $13.5 million decrease in equity in losses); and (b) a $3.4 million decrease ininvestment income from Navios Partners, mainly due to a $9.9 million decrease in equity in earnings from Navios Partners, partially offset by $6.5 million ofgains as a result of the issuance of shares following Navios Partners’ offerings during 2013.Navios Holdings’ ownership in Navios Partners and Navios Acquisition decreased following Navios Partners’ offerings in February and September of2013 and Navios Acquisition’s offerings in February, May and September of 2013. The Company determined that the issuance of shares qualified as a sale ofshares by the equity method investee.The Company recognizes the gain from the sale of vessels to Navios Partners immediately in earnings only to the extent of the interest in NaviosPartners owned by third parties and defers recognition of the gain to the extent of its own ownership interest in Navios Partners (see also “Item 7.B. RelatedParty Transactions”).Income Tax Benefit/(Expense): Income tax benefit increased by $4.6 million to a $4.3 million benefit for the year ended December 31, 2013, ascompared to a $0.3 million expense for the year ended December 31, 2012. The total change in income taxes was mainly attributable to the logistics businessdue to the merging of certain subsidiaries in Paraguay affecting the port terminal business and the barge business in 2013. This change was partially offset byan increase in income taxes of the cabotage business.Net Income Attributable to the Noncontrolling Interest: Net income attributable to the noncontrolling interest increased by $3.7 million to$3.8 million for the year ended December 31, 2013, as compared to $0.1 million for the same period in 2012. This increase was mainly attributable tologistics business higher net income for the year ended December 31, 2013 compared to the same period in 2012.Non-Guarantor SubsidiariesOur non-guarantor subsidiaries accounted for approximately $268.8 million, or 47.2%, of our revenue, $7.0 million, or 12.5%, of our total net loss andapproximately $51.2 million, or 29.0%, of Adjusted EBITDA, in each case, for the year ended December 31, 2014. Our non-guarantor subsidiaries accountedfor approximately $237.1 million, or 46.3%, of our revenue, $9.3 million, or 8.5%, of our total net loss and approximately $56.4 million, or 52.2%, ofAdjusted EBITDA, in each case, for the year ended December 31, 2013. Our non-guarantor subsidiaries accounted for approximately $252.1 million, or40.9%, of our revenue, $3.9 million, or 2.2%, of our total net income and approximately $53.7 million, or 13.4%, of Adjusted EBITDA, in each case, for theyear ended December 31, 2012. 92 Table of ContentsB. Liquidity and Capital ResourcesNavios Holdings has historically financed its capital requirements with cash flows from operations, equity contributions from stockholders, issuance ofdebt and borrowings under bank credit facilities. Main uses of funds have been capital expenditures for the acquisition of new vessels, new construction andupgrades at the port terminals, expenditures incurred in connection with ensuring that the owned vessels comply with international and regulatory standards,repayments of debt and payments of dividends. Navios Holdings anticipates that cash on hand and internally generated cash flows will be sufficient to fundthe operations of the dry bulk vessel operations and the logistics businesses, including our present working capital requirements. See “Item 4.B BusinessOverview — Exercise of Vessel Purchase Options”, “Working Capital Position” and “Long-Term Debt Obligations and Credit Arrangements” for furtherdiscussion of Navios Holdings’ working capital position.The following table presents cash flow information for each of the years ended December 31, 2014, 2013 and 2012. (in thousands of U.S. dollars) Year EndedDecember 31,2014 Year EndedDecember 31,2013 Year EndedDecember 31,2012 Net cash provided by operating activities $56,323 $59,749 $228,644 Net cash (used in)/provided by investing activities (244,888) (258,571) 12,453 Net cash provided by/(used in) financing activities 248,290 128,785 (154,325) Increase/(decrease) in cash and cash equivalents 59,725 (70,037) 86,772 Cash and cash equivalents, beginning of year 187,831 257,868 171,096 Cash and cash equivalents, end of year$247,556 $187,831 $257,868 Cash provided by operating activities for the year ended December 31, 2014 as compared to the year ended December 31, 2013:Net cash provided by operating activities decreased by $3.4 million to $56.3 million for the year ended December 31, 2014, as compared to$59.7 million for the year ended December 31, 2013. In determining net cash provided by operating activities, net loss is adjusted for the gain on sale ofassets and effects of certain non-cash items including depreciation and amortization, deferred taxes and unrealized gains and losses on derivatives which maybe analyzed in detail as follows: (in thousands of U.S. dollars) Year EndedDecember 31,2014 Year EndedDecember 31,2013 Net loss $(62,064) $(105,291)Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 104,690 98,124 Amortization and write-off of deferred financing costs 4,061 5,384 Amortization of deferred drydock and special survey costs 12,263 9,581 Provision for losses on accounts receivable 792 630 Unrealized loss on FFA derivatives — 69 Share based compensation 7,719 5,021 Gain on sale of assets — (18)Loss on bond and debt extinguishment 4,786 12,142 Income tax expense/(benefit) 84 (4,260)Realized holding loss on investments in-available-for-sale-securities 11,553 — Equity in affiliates, net of dividends received (22,179) 19,781 Net loss adjusted for non-cash items$61,705 $41,163 93 Table of ContentsAccounts receivable, net, decreased by $0.6 million, from $86.2 million at December 31, 2013 to $85.6 million at December 31, 2014. The decreasewas primarily due to (i) a $7.5 million decrease in accounts receivable from charterers and other receivables; and (ii) a $0.9 million decrease in accruedvoyage income in dry bulk operations business. This decrease was partially offset by a $7.8 million increase in accounts receivable of Navios Logisticsmainly attributable to higher sales of products close to year end.Amounts due from affiliate companies, including current and non-current portion, increased by $24.0 million from $13.5 million for the year endedDecember 31, 2013 to $37.5 million for the year ended December 31, 2014. This increase was due to (i) a $20.1 million increase in management andadministrative fees, other expenses and reimbursement for drydocking costs receivable from Navios Acquisition; (ii) a $1.1 million increase in managementand administrative fees, other expenses and reimbursement for drydocking costs receivable from Navios Partners; (iii) a $2.7 million increase in managementfees, loans interest and other expenses receivable from Navios Europe; and (iv) a $0.1 million increase in accounts receivable from Navios Midstream.Inventories increased by $5.9 million, from $26.6 million at December 31, 2013 to $32.5 million at December 31, 2014. The increase was primarily dueto (i) a $3.5 million increase in inventories of Navios Logistics mainly attributable to an increase in petroleum products inventories in the liquid port; and(ii) a $2.4 million increase in inventories on board of our dry bulk vessels.Prepaid expenses and other current assets decreased by $7.3 million, from $29.0 million at December 31, 2013 to $21.7 million at December 31, 2014.The decrease was primarily due to (i) a $5.5 million decrease in accounts receivable claims; (ii) a $2.8 million decrease in prepaid voyage and operatingcosts; and (iii) a $0.9 million decrease in prepaid taxes and advances to agents. This decrease was partially offset by (i) a $0.1 million increase in other assets;and (ii) a $1.8 million increase in prepaid expenses and other current assets of Navios Logistics mainly attributable to an increase in accounts receivableclaims.Other long-term assets increased by $1.5 million, from $5.5 million at December 31, 2013 to $7.0 million at December 31, 2014. The increase wasprimarily due to a $2.7 million increase in long-term receivables from charterers, which was partially offset by a $1.2 million decrease in other long-termassets of Navios Logistics.Accounts payable increased by $2.1 million, from $51.7 million at December 31, 2013 to $53.8 million at December 31, 2014. The increase wasprimarily due to (i) a $11.2 million increase in accounts payable of Navios Logistics; (ii) a $2.5 million increase in accounts payable to bunkers andlubricants suppliers; (iii) a $0.9 million increase in accounts payable relating to utilities and other service providers, repairers and legal, audit and consultingservices; and (iv) a $0.9 million increase in accounts payable relating to brokers and other accounts payable. This increase was partially offset by (i) a $3.3million decrease in accounts payable to headowners; (ii) a $2.9 million decrease in accounts payable to suppliers; and (iii) a $7.2 million decrease inaccounts payable to insurers.Accrued expenses and other liabilities increased by $43.1 million to $107.3 million at December 31, 2014 from $64.2 million at December 31, 2013.The increase was primarily due to (i) a $17.8 million increase in accrued interest; (ii) a $9.7 million increase in accrued running costs; (iii) a $3.1 millionincrease in accrued dividends; (iv) a $1.6 million increase in accrued voyage expenses; (v) a $1.1 million increase in accrued estimated losses onuncompleted voyages; (vi) a $1.7 million increase in accrued payroll; (vii) a $1.6 million increase in other accrued expenses and other liabilities; and (viii) a$6.5 million increase in accrued expenses of Navios Logistics.Deferred income and cash received in advance decreased by $0.8 million to $12.4 million at December 31, 2014 from $13.2 million at December 31,2013. Deferred income primarily reflects freight and charter-out amounts collected on voyages that have not been completed and the current portion of thedeferred gain from the sale of various vessels to Navios Partners to be amortized over the next year. The decrease was primarily due to 94 Table of Contents(i) a $1.4 million decrease in the current portion of deferred gain from the sale of assets to Navios Partners; and (ii) a $4.7 million decrease in deferred freight.This decrease was partially offset by a $5.3 million increase in deferred income of Navios Logistics.Other long-term liabilities and deferred income decreased by $7.7 million to $17.5 million at December 31, 2014 from $25.2 million at December 31,2013. The decrease was primarily due to (i) a $3.9 million decrease in the non-current portion of deferred gain from the sale of vessels to Navios Partners; and(ii) a $4.0 million decrease in other long-term liabilities of Navios Logistics mainly due to the repayment of installments for the acquisition of the chartered-in fleet. This decrease was partially offset by a $0.2 million increase in other long term payables.Cash used in investing activities for the year ended December 31, 2014 as compared to the year ended December 31, 2013:Cash used in investing activities was $244.9 million for the year ended December 31, 2014, as compared to $258.6 million for the same period of 2013.Cash used in investing activities for the year ended December 31, 2014 was the result of (i) $2.2 million used to purchase general partner units inNavios G.P. LLC, the general partner of Navios Partners (“General Partner”) following Navios Partners’ common equity offering in February 2014; (ii) $22.1million in payments relating to deposits for the acquisition of two bulk carrier vessels scheduled for delivery in the third and fourth quarter of 2015; (iii) $5.1million ouflow relating to Navios Acquisition’s long term receivable; (iv) a $4.5 million loan to Navios Europe; (v) $123.5 million in payments for theacquisition of the N Bonanza, the Navios Gem and the Navios Ray in January, June and November 2014, respectively; (vi) $10.2 million relating to theacquisition of Edolmix and Cartisur (both acquisitions of intangible assets) by Navios Logistics; (vii) $0.2 million of payments in other fixed assets; and(viii) $91.7 million of payments in fixed assets by Navios Logistics as follows: (a) $6.9 million for the construction of three new pushboats, expected to bedelivered in the third quarter of 2015; (b) $3.7 million for the acquisition and transport of three pushboats delivered in the first quarter of 2014; (c) $52.7million for the construction and transport of new dry barges; (d) $16.3 million for dredging works related to the expansion of the dry port in Uruguay; (e) $5.5million in payments for the acquisition of a second-hand bunker vessel, including relocation costs; (f) $0.7 million in payments for the construction of a newconveyor belt in Nueva Palmira; and (g) $5.9 million for the purchase of other fixed assets. The above were partially offset by $14.6 million in dividendsreceived from Navios Acquisition.Cash used in investing activities for the year ended December 31, 2013 was the result of (i) $167.9 million in payments relating to (a) $3.2 million usedto purchase general partner units following a Navios Partners’ common equity offerings; (b) $160.0 million relating to the acquisition of Navios Acquisitionshares as part of its February, May and September 2013 equity offerings; and (c) $4.7 million investment in Navios Europe; (ii) $2.1 million relating to theacquisition of port terminal operating rights; (iii) $85.7 million in payments relating to the acquisition of four Panamax vessels (Navios Galileo, NaviosTaurus, Navios Amitie and Navios Northern Star) during the third quarter of 2013, and the acquisition of N Amalthia in October 2013; (iv) $60.2 million ofpayments in other fixed assets mainly relating to amounts paid by Navios Logistics (a) for the construction of a new conveyor belt in Nueva Palmira; (b) theconstruction of two new tank barges; and (c) the purchase of other fixed assets; and (v) $2.7 million loan to Navios Europe. The above was partially offset by(i) a $35.0 million loan repayment from Navios Acquisition; (ii) a $14.9 million inflow relating to Navios Acquisition’s long-term receivable; and (iii) $10.1million in dividends received from Navios Acquisition.Cash provided by financing activities for the year ended December 31, 2014 as compared to the year ended December 31, 2013:Cash provided by financing activities was $248.3 million for the year ended December 31, 2014, as compared to $128.8 million for the same period of2013. 95 Table of ContentsCash provided by financing activities for the year ended December 31, 2014 was the result of (i) $163.6 million net proceeds following the sale of theSeries G Preferred Stock on January 28, 2014 and Series H Preferred Stock on July 8, 2014; (ii) $3.5 million contribution of noncontrolling shareholders forthe acquisition of the N Bonanza; (iii) $0.6 million in proceeds from the exercise of options to purchase common stock; (iv) $71.0 million of loan proceeds(net of $1.2 million finance fees) for financing the acquisition of the N Bonanza, the Navios Gem and the Navios Ray; and (v) $365.7 million of proceedsfrom the issuance of the 2022 Logistics Senior Notes in April 2014 (net of $9.3 million finance fees). This was partially offset by: (i) $20.8 million ofinstallments paid in connection with the Company’s outstanding indebtedness; (ii) $290.0 million repayment of the 2019 Logistics Senior Notes (as definedherein); (iii) $32.7 million of dividends paid to the Company’s stockholders; (iv) $10.9 million relating to payments for the acquisition of the noncontrollinginterest in Navios Asia; (v) $1.4 million relating to payments for capital lease obligations; and (vi) $0.3 million increase in restricted cash relating to loanrepayments.Cash provided by financing activities for the year ended December 31, 2013 was the result of (i) $90.2 million of proceeds (net of $3.2 million financefees) from the Additional 2019 Logistics Senior Notes (as defined herein) issued in March 2013; (ii) $635.3 million of proceeds (net of $14.7 million financefees) from the 2022 Notes issued in November 2013; (iii) a $22.2 million movement in restricted cash relating to loan repayments; (iv) $50.4 million of loanproceeds (net of $0.9 million finance fees) for financing the acquisition of five Panamax vessels (Navios Galileo, Navios Taurus, Navios Amitie, NaviosNorthern Star and N Amalthia); (v) $0.6 million of proceeds from the exercise of options to purchase common stock; and (vi) $3.9 million contribution ofnoncontrolling shareholders for the acquisition of N Amalthia. This was partially offset by (i) $157.2 million of installments paid in connection with theCompany’s outstanding indebtedness; (ii) $488.0 million full repayment of the 2017 Notes (as defined herein); (iii) $1.4 million relating to payments forcapital lease obligations; (iv) $0.8 million for acquisition of noncontrolling interest relating to Navios Logistics; and (v) $26.4 million of dividends paid tothe Company’s stockholders.Cash provided by operating activities for the year ended December 31, 2013 as compared to the year ended December 31, 2012:Net cash provided by operating activities decreased by $168.9 million to $59.7 million for the year ended December 31, 2013, as compared to$228.6 million for the year ended December 31, 2012. In determining net cash provided by operating activities, net (loss)/income is adjusted for the gain onsale of assets and effects of certain non-cash items including depreciation and amortization, deferred taxes and unrealized gains and losses on derivativeswhich may be analyzed in detail as follows: (in thousands of U.S. dollars) Year EndedDecember 31,2013 Year EndedDecember 31,2012 Net (loss)/income $(105,291) $175,562 Adjustments to reconcile net (loss)/income to net cash provided by operating activities: Depreciation and amortization 98,124 108,206 Amortization and write-off of deferred financing costs 5,384 6,309 Amortization of deferred drydock and special survey costs 9,581 7,289 Provision for losses on accounts receivable 630 17,136 Unrealized loss on FFA derivatives 69 124 Share based compensation 5,021 4,712 Gain on sale of assets (18) (323) Loss on bond and debt extinguishment 12,142 — Income tax (benefit)/expense (4,260) 312 Equity in affiliates, net of dividends received 19,781 (7,519) Net (loss)/income adjusted for non-cash items$41,163 $311,808 96 Table of ContentsAccounts receivable, net, increased by $0.5 million from $85.7 million at December 31, 2012 to $86.2 million at December 31, 2013. The increase wasprimarily due to a $13.9 million increase in accounts receivable from charterers and other receivables. This increase was partially offset by: (i) a $7.6 milliondecrease in accounts receivable of Navios Logistics mainly due to timely collection of outstanding invoices; and (ii) a $5.8 million increase in accountsreceivable reserves.Amounts due from affiliate companies, including current and non-current portion, decreased by $95.0 million from $108.5 million for the year endedDecember 31, 2012 to $13.5 million for the year ended December 31, 2013. This decrease was due to (i) a $21.3 million receipt of management andadministrative fees and other expenses from Navios Partners; and (ii) a $75.1 million receipt of management and administrative fees, other expenses andreimbursement for drydocking costs from Navios Acquisition. This decrease was partially offset by a $1.4 million increase in accounts receivable from NaviosEurope.Inventories decreased by $5.0 million from $31.6 million at December 31, 2012 to $26.6 million at December 31, 2013. The decrease was primarilydue to a $5.6 million decrease in inventories of Navios Logistics mainly attributable to a decrease in petroleum products inventories in the liquid port. Thisdecrease was partially offset by a $0.6 million increase in inventories on board of our dry bulk vessels.Prepaid expenses and other current assets increased by $9.1 million from $19.9 million at December 31, 2012 to $29.0 million at December 31, 2013.The main reason for the increase was: (i) a $5.3 million increase in accounts receivable claims; (ii) a $7.4 million increase in prepaid voyage and operatingcosts; and (iii) a $0.7 million increase in prepaid taxes and advances to agents. This increase was partially offset by (i) a $2.8 million decrease in other assets;(ii) a $1.3 million decrease in short-term derivative assets; and (iii) a $0.2 million decrease in prepaid expenses and other currents assets of Navios Logisticsmainly due to decrease in claims and other current assets.Other long term assets decreased by $4.0 million from $9.5 million at December 31, 2012 to $5.5 million at December 31, 2013. The main reason forthe decrease was: (i) a $4.9 million decrease in long-term receivables from charterers; and (ii) a $0.3 million decrease in long-term prepaid hire. This decreasewas partially offset by a $1.2 million increase in other long-term assets of Navios Logistics.Accounts payable decreased by $12.2 million from $63.9 million at December 31, 2012 to $51.7 million at December 31, 2013. The primary reasonsfor the decrease were (i) a $14.8 million decrease in accounts payable of Navios Logistics; (ii) a $2.9 million decrease in accounts payable to bunkers andlubricants suppliers; and (iii) a $7.6 million decrease in accounts payable relating to utilities and other service providers, repairers and legal, audit andconsulting services. This decrease was mitigated by (i) a $4.7 million increase in accounts payable to headowners; (ii) a $3.5 million increase in accountspayable to suppliers; (iii) a $3.3 million increase in accounts payable to insurers; and (iv) a $1.6 million increase in accounts payable relating to brokers andother accounts payable.Accrued expenses and other liabilities decreased by $11.5 million to $64.2 million at December 31, 2013 from $75.7 million at December 31, 2012.The primary reasons for the decrease were (i) a $3.4 million decrease in accrued interest; (ii) a $8.0 million decrease in accrued voyage expenses; (iii) a $4.2million decrease in accrued estimated losses on uncompleted voyages; (iv) a $0.6 million decrease in accrued expenses relating to payroll; and (v) $0.1million decrease in accrued professional fees. This decrease was partially offset by (i) a $2.4 million increase in accrued running costs; (ii) a $0.5 millionincrease in accrued audit fees and related services; (iii) a $0.6 million increase in other accrued expenses and other liabilities; and (iv) a $1.3 million increasein accrued expenses of Navios Logistics.Deferred income and cash received in advance decreased by $2.1 million to $13.2 million at December 31, 2013 from $15.3 million at December 31,2012. Deferred income primarily reflects freight and charter-out amounts collected on voyages that have not been completed and the current portion of thedeferred gain from the 97 Table of Contentssale of various vessels to Navios Partners to be amortized over the next year. The primary reasons for the decrease of the deferred income and cash received inadvance were: (i) $2.1 million decrease in deferred income of Navios Logistics; and (ii) a $6.1 million decrease in deferred gain from the sale of assets. Thisdecrease was partially offset by a $6.1 million increase in deferred freight.Other long term liabilities and deferred income decreased by $4.4 million to $25.2 million at December 31, 2013 from $29.6 million at December 31,2012. The primary reasons for the decrease were: (i) a $0.8 million decrease in the non-current portion of deferred gain from the sale of vessels to NaviosPartners; and (ii) a $3.6 million decrease in other long-term liabilities of Navios Logistics mainly due to the repayment of installments for the acquisition ofthe chartered-in fleet.Cash used in investing activities for the year ended December 31, 2013 as compared to cash provided by investing activities for the year endedDecember 31, 2012:Cash used in investing activities was $258.6 million for the year ended December 31, 2013, as compared to cash provided by investing activities of$12.5 million for the same period of 2012.Cash used in investing activities for the year ended December 31, 2013 was the result of (i) $167.9 million in payments relating to (a) $3.2 million usedto purchase general partner units following Navios Partners’ common equity offerings; (b) $160.0 million relating to the acquisition of Navios Acquisitionshares as part of its February, May and September 2013 equity offerings; and (c) $4.7 million investment in Navios Europe; (ii) $2.1 million relating to theacquisition of port terminal operating rights; (iii) $85.7 million in payments relating to the acquisition of four Panamax vessels (Navios Galileo, NaviosTaurus, Navios Amitie and Navios Northern Star) during the third quarter of 2013, and the acquisition of N Amalthia in October 2013; (iv) $60.2 million ofpayments in other fixed assets mainly relating to amounts paid by Navios Logistics (a) for the construction of a new conveyor belt in Nueva Palmira; (b) theconstruction of two new tank barges; and (c) the purchase of other fixed assets; and (v) $2.7 million loan to Navios Europe. The above was partially offset by(i) a $35.0 million loan repayment from Navios Acquisition; (ii) a $14.9 million inflow relating to Navios Acquisition’s long-term receivable; and (iii) $10.1million in dividends received from Navios Acquisition.Cash provided by investing activities for the year ended December 31, 2012 was the result of (i) $67.5 million of proceeds from the sale of the NaviosBuena Ventura to Navios Partners on June 15, 2012; (ii) $10.0 million of loan repayments received from Navios Acquisition; and (iii) $5.2 million individends from Navios Acquisition. The above was partially offset by: (i) $5.0 million due to additional drawdowns during 2011 from Navios Acquisitionunder its loan facility with the Company and $6.1 million of expenses paid by the Company for Navios Acquisition vessels under construction;(ii) $1.5 million in payments relating to the acquisition of General Partner units following offerings by Navios Partners; (iii) $26.0 million paid for theacquisition of the vessel Navios Serenity and $12.3 million paid for the delivery of the Navios Centaurus and Navios Avior in the first and second quarter of2012, respectively; and (iv) $1.7 million paid for the purchase of other fixed assets by the Company and $17.6 million relating to amounts paid by NaviosLogistics for (a) the construction of a new silo in Nueva Palmira, Uruguay; (b) the construction of a new conveyor belt in the dry port in Uruguay; (c) theconstruction of four tank barges; (d) the construction of additional tanks in the liquid port; (e) the acquisition of one pushboat and six tank barges in 2012that were previously chartered-in by Navios Logistics; and (f) improvements in the pushboat fleet.Cash provided by financing activities for the year ended December 31, 2013 as compared to cash used in financing activities for the year endedDecember 31, 2012:Cash provided by financing activities was $128.8 million for the year ended December 31, 2013, as compared to cash used in financing activities of$154.3 million for the same period of 2012.Cash provided by financing activities for the year ended December 31, 2013 was the result of (i) $90.2 million of proceeds (net of $3.2 million financefees) from the Additional 2019 Logistics Senior Notes 98 Table of Contents(as defined herein) issued in March 2013; (ii) $635.3 million of proceeds (net of $14.7 million finance fees) from the 2022 Notes issued in November 2013;(iii) a $22.2 million movement in restricted cash relating to loan repayments; (iv) $50.4 million of loan proceeds (net of $0.9 million finance fees) forfinancing the acquisition of five Panamax vessels (Navios Galileo, Navios Taurus, Navios Amitie, Navios Northern Star and N Amalthia); (v) $0.6 million ofproceeds from the exercise of options to purchase common stock; and (vi) $3.9 million contribution of noncontrolling shareholders for the acquisition of NAmalthia. This was partially offset by (i) $157.2 million of installments paid in connection with the Company’s outstanding indebtedness; (ii) $488.0 millionfull repayment of the 2017 Notes (as defined herein); (iii) $1.4 million relating to payments for capital lease obligations; (iv) $0.8 million for acquisition ofnoncontrolling interest relating to Navios Logistics; and (v) $26.4 million of dividends paid to the Company’s stockholders.Cash used in financing activities for the year ended December 31, 2012 was the result of (i) $236.2 million of debt repayments made in connectionwith Navios Holdings’ outstanding indebtedness (including Navios Logistics); (ii) $1.5 million relating to payments for capital lease obligations; (iii) a$19.6 million increase in restricted cash related to loan repayments; and (iv) $32.4 million of dividends paid to the Company’s shareholders. This waspartially offset by: (i) $52.2 million of gross loan proceeds in connection with (a) $40.9 million of gross loan proceeds for financing the acquisition of theNavios Serenity and refinancing the debt of the Navios Astra; and (b) $11.3 million of loan proceeds for financing the construction of the Navios Centaurus,less $1.9 million of debt issuance costs; (ii) $85.0 million of net proceeds from the sale of 2022 Notes; and (iii) $0.1 million of proceeds from the exercise ofoptions to purchase common stock.Adjusted EBITDA: EBITDA represents net income/(loss) attributable to Navios Holdings common stockholders before interest and finance costsbefore depreciation and amortization and income taxes. Adjusted EBITDA in this document represents EBITDA before stock-based compensation. NaviosHoldings believes that Adjusted EBITDA is a basis upon which liquidity can be assessed and represents useful information to investors regarding NaviosHoldings’ ability to service and/or incur indebtedness, pay capital expenditures, meet working capital requirements and pay dividends. Navios Holdings alsobelieves that Adjusted EBITDA is used (i) by prospective and current lessors as well as potential lenders to evaluate potential transactions; and (ii) toevaluate and price potential acquisition candidates.Adjusted EBITDA has limitations as an analytical tool, and therefore, should not be considered in isolation or as a substitute for the analysis of NaviosHoldings’ results as reported under U.S. GAAP. Some of these limitations are: (i) Adjusted EBITDA does not reflect changes in, or cash requirements for,working capital needs; and (ii) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to bereplaced in the future. Adjusted EBITDA does not reflect any cash requirements for such capital expenditures. Because of these limitations, among others,Adjusted EBITDA should not be considered as a principal indicator of Navios Holdings’ performance. Furthermore, our calculation of Adjusted EBITDA maynot be comparable to that reported by other companies due to differences in methods of calculation.For a reconciliation of cash flows from operating activities to Adjusted EBITDA refer to “Item 3. Key Information — A. Selected Financial Data.”Adjusted EBITDA for the years ended December 31, 2014 and 2013 was $176.7 million and $107.9 million, respectively. The $68.8 million increasein Adjusted EBITDA was primarily due to (i) a $56.7 million increase in revenue; (ii) a $38.5 million increase in equity in net earnings from affiliatedcompanies; (iii) a $9.7 million increase in loss attributable to the noncontrolling interest; (iv) a $9.8 million decrease in loss on bond and debtextinguishment; (v) a $1.7 million decrease in general and administrative expenses (excluding share-based compensation expenses); and (vi) a $0.3 milliondecrease in losses on derivatives. This overall increase of $116.7 million was partially mitigated by (i) a $13.3 million increase in direct vessel expenses(excluding the amortization of deferred drydock and special survey costs); (ii) a $18.9 million increase in time charter, voyage and logistics businessexpenses; (iii) a $14.1 million increase in other expenses; (iv) a $1.4 million decrease in other income; and (v) a $0.2 million increase in provision for losseson accounts receivable. 99 Table of ContentsAdjusted EBITDA for the years ended December 31, 2013 and 2012 was $107.9 million and $399.5 million, respectively. The $291.6 million decreasein Adjusted EBITDA was primarily due to (i) a decrease of $104.2 million in revenue; (ii) a $172.2 million decrease in other income; (iii) a $0.3 milliondecrease in gain on sale of assets; (iv) a $37.1 million loss on bond and debt extinguishment; (v) a $3.7 million increase in income attributable to thenoncontrolling interest; (vi) a $28.9 million decrease in equity in net earnings from affiliated companies; and (vii) a $0.1 million increase in losses onderivatives. The overall variance of $346.5 million was partially offset by: (i) a $0.5 million decrease in other expense; (ii) a $24.9 million decrease in timecharter, voyage and logistic business expenses; (iii) a $6.0 million decrease in direct vessel expenses (excluding the amortization of deferred drydock andspecial survey costs); (iv) a $7.0 million decrease in general and administrative expenses (excluding share based compensation expenses); and (v) a $16.5million decrease in provision for losses on accounts receivable.Long-Term Debt Obligations and Credit Arrangements:Navios Holdings loansSenior NotesOn January 28, 2011, the Company and its wholly owned subsidiary, Navios Maritime Finance II (US) Inc. (together with the Company, the “2019 Co-Issuers”) completed the sale of $350.0 million of 8.125% Senior Notes due 2019 (the “2019 Notes”). The net proceeds from the sale of the 2019 Notes wereused to redeem any and all of Navios Holdings’ then-outstanding 9.5% Senior Notes due 2014 and pay related transaction fees and expenses and for generalcorporate purposes.The 2019 Notes are fully and unconditionally guaranteed, jointly and severally and on an unsecured senior basis, by all of the Company’s subsidiaries,other than Navios Maritime Finance II (US) Inc., Navios Maritime Finance (US) Inc., Navios Logistics and its subsidiaries and Navios GP LLC. The subsidiaryguarantees are “full and unconditional”, except that the indenture provides for an individual subsidiary’s guarantee to be automatically released in certaincustomary circumstances, such as when a subsidiary is sold or all of the assets of the subsidiary are sold, the capital stock is sold, when the subsidiary isdesignated as an “unrestricted subsidiary” for purposes of the indenture, upon liquidation or dissolution of the subsidiary or upon legal or covenantdefeasance or satisfaction and discharge of the 2019 Notes. The 2019 Co-Issuers have the option to redeem the 2019 Notes in whole or in part, at any time onor after February 15, 2015, at a fixed price of 104.063% of the principal amount, which price declines ratably until it reaches par in 2017, plus accrued andunpaid interest, if any. In addition, upon the occurrence of certain change of control events, the holders of the 2019 Notes will have the right to require the2019 Co-Issuers to repurchase some or all of the 2019 Notes at 101% of their face amount, plus accrued and unpaid interest to the repurchase date.The 2019 Notes contain covenants which, among other things, limit the incurrence of additional indebtedness, issuance of certain preferred stock, thepayment of dividends, redemption or repurchase of capital stock or making restricted payments and investments, creation of certain liens, transfer or sale ofassets, entering in transactions with affiliates, merging or consolidating or selling all or substantially all of the 2019 Co-Issuers’ properties and assets andcreation or designation of restricted subsidiaries. The 2019 Co-Issuers were in compliance with the covenants as of December 31, 2014.Ship Mortgage NotesIn November 2009, the Company and its wholly-owned subsidiary, Navios Maritime Finance (US) Inc. (together, the “Mortgage Notes Co-Issuers”)issued $400.0 million of first priority ship mortgage notes due on November 1, 2017 at a fixed rate of 8.875% (the “2017 Notes”). In July 2012, the MortgageNotes Co-Issuers issued an additional $88.0 million of the 2017 Notes at par value. On November 29, 2013, Navios Holdings completed the sale of $650.0million of its 7.375% First Priority Ship Mortgage Notes due 2022. The net proceeds of the offering of the 2022 Notes have been used: (i) to repay, in full, the2017 Notes; and (ii) to repay 100 Table of Contentsin full indebtedness of $123.3 million relating to six vessels added as collateral under the 2022 Notes. The remainder has been used for general corporatepurposes. The effect of this transaction was the recognition of a $37.1 million loss in the consolidated comprehensive statement of (loss)/income under “Losson bond and debt extinguishment”.The 2022 Notes are senior obligations of Navios Holdings and Navios Maritime Finance II (US) Inc. (the “2022 Co-Issuers”) and are secured by firstpriority ship mortgages on 23 dry bulk vessels owned by certain subsidiary guarantors and certain other associated property and contract rights. The 2022Notes are unregistered and fully and unconditionally guaranteed, jointly and severally by all of the Company’s direct and indirect subsidiaries that guaranteethe 2019 Notes and Navios Maritime Finance II (US) Inc. The guarantees of the Company’s subsidiaries that own mortgaged vessels are senior securedguarantees and the guarantees of the Company’s subsidiaries that do not own mortgaged vessels are senior unsecured guarantees. In addition, the 2022 Co-Issuers have the option to redeem the 2022 Notes in whole or in part, at any time (i) before January 15, 2017, at a redemption price equal to 100% of theprincipal amount plus a make whole price which is based on a formula calculated using a discount rate of treasury bonds plus 50 basis points, and (ii) on orafter January 15, 2017, at a fixed price of 105.531%, which price declines ratably until it reaches par in 2020.Furthermore, upon occurrence of certain change of control events, the holders of the 2022 Notes may require the 2022 Co- Issuers to repurchase someor all of the notes at 101% of their face amount. The 2022 Notes contain covenants, which among other things, limit the incurrence of additionalindebtedness, issuance of certain preferred stock, the payment of dividends, redemption or repurchase of capital stock or making restricted payments andinvestments, creation of certain liens, transfer or sale of assets, entering into certain transactions with affiliates, merging or consolidating or selling all orsubstantially all of the 2022 Co-Issuers’ properties and assets and creation or designation of restricted subsidiaries. The 2022 Co-Issuers were in compliancewith the covenants as of December 31, 2014.Secured Credit FacilitiesThe majority of the Company’s senior secured credit facilities include maintenance covenants, including (i) loan-to-value ratio covenants, based oneither charter-adjusted valuations, or charter-free valuations, (ii) minimum liquidity and (iii) total liabilities divided by total assets. As of December 31, 2014,the Company and its subsidiaries were in compliance with all of the covenants under each of its credit facilities outlined below.HSH/Commerzbank Facility: In February 2007, Navios Holdings entered into a secured loan facility with HSH Nordbank and Commerzbank AG. Thefacility was initially composed of a $280.0 million term loan facility and a $120.0 million reducing revolving facility and it has been amended and repaid ascertain vessels have been sold.The interest rate of the loan facility was based on a margin ranging from 115 basis points to 175 basis points depending on the specified security value.On November 29, 2013, the Company repaid the loan and revolving credit facility in full using a portion of the proceeds of the 2022 Notes issued inNovember 2013.Credit Agricole (formerly Emporiki) Facilities: In December 2012, the Emporiki Bank of Greece’s facilities were transferred to Credit AgricoleCorporate and Investment Bank.In December 2007, Navios Holdings entered into a facility agreement with Emporiki Bank of Greece for an amount of up to $154.0 million in order topartially finance the construction of two Capesize bulk carriers. The interest rate of the amended facility was based on a margin of 175 basis points. OnNovember 29, 2013, the Company repaid in full the loan using a portion of the proceeds of the 2022 Notes. 101 Table of ContentsIn August 2009, Navios Holdings entered into a facility agreement with Emporiki Bank of Greece for an amount of up to $75.0 million to partiallyfinance the acquisition costs of two Capesize vessels. The loan bears interest at a rate of LIBOR plus 175 basis points. On November 29, 2013, the Companyrepaid the loan in full using a portion of the proceeds of the 2022 Notes.In September 2010, Navios Holdings entered into a facility agreement with Emporiki Bank of Greece for an amount of up to $40.0 million in order topartially finance the construction of one Capesize bulk carrier. As of December 31, 2014, the outstanding amount under the loan facility was repayable in 13semi-annual equal installments of $1.2 million with a final balloon payment of $8.0 million on the last payment date. The loan bears interest at a rate ofLIBOR plus 275 basis points. The loan facility requires compliance with certain financial covenants. As of December 31, 2014, the outstanding amountunder this facility was $23.7 million.In August 2011, Navios Holdings entered into a facility agreement with Emporiki Bank of Greece for an amount of up to $23.0 million in order topartially finance the construction of one newbuilding bulk carrier. As of December 31, 2014, the facility is repayable in 15 semi-annual equal installments of$0.7 million, with a final balloon payment of $7.3 million on the last payment date. The loan bears interest at a rate of LIBOR plus 275 basis points. The loanfacility requires compliance with certain covenants. As of December 31, 2014, the outstanding amount under this facility was $17.5 million.In December 2011, Navios Holdings entered into a facility agreement with Emporiki Bank of Greece for an amount of up to $23.0 million in order topartially finance the construction of one newbuilding bulk carrier. As of December 31, 2014, the outstanding amount under the loan facility was repayable in15 semi-annual equal installments of $0.7 million after the drawdown date, with a final balloon payment of $7.5 million on the last payment date. The loanbears interest at a rate of LIBOR plus 325 basis points. The loan facility requires compliance with certain covenants. As of December 31, 2014, theoutstanding amount under this facility was $18.0 million.On December 20, 2013, Navios Asia entered into a facility with Credit Agricole Corporate and Investment Bank for an amount of up to $22.5 millionin two equal tranches, in order to finance the acquisition of the N Amalthia, which was delivered in October 2013, and the N Bonanza, which was delivered inJanuary 2014. The two tranches bear interest at a rate of LIBOR plus 300 basis points. As of December 31, 2014, Navios Asia had drawn the whole availableamount. Each tranche is repayable in ten equal semi-annual installments of $0.6 million, with a final balloon payment of $5.6 million on the last repaymentdate. The loan facility requires compliance with certain financial covenants. As of December 31, 2014, the outstanding amount of the loan was $20.8 million.DNB Facilities: In August 2010, Navios Holdings entered into a facility agreement with DNB NOR BANK ASA for an amount of up to $40.0 million inorder to partially finance the construction of one Capesize bulk carrier. The loan bears interest at a rate of LIBOR plus 275 basis points. On November 29,2013, the Company repaid the loan in full using a portion of the proceeds of the 2022 Notes.Commerzbank Facility: In June 2009, Navios Holdings entered into a facility agreement for an amount of up to $240.0 million (divided into fourtranches of $60.0 million) with Commerzbank AG in order to partially finance the acquisition of a Capesize vessel and the construction of three Capesizevessels. Following the delivery of two Capesize vessels, Navios Holdings cancelled two of the four tranches and in October 2010 fully repaid theiroutstanding loan balances of $53.6 million and $54.5 million, respectively. As of December 31, 2014, the third tranche of the facility is repayable in 18quarterly installments of $0.9 million, with a final balloon payment of $13.8 million on the last payment date; and the fourth tranche of the facility isrepayable in 24 quarterly installments of $0.8 million, with a final balloon payment of $9.5 million on the last payment date. The loan bears interest at a ratebased on a margin of 225 basis points. The loan facility requires compliance with certain covenants. As of December 31, 2014, the outstanding amount was$59.2 million. 102 Table of ContentsDVB Bank SE Facilities: On March 23, 2012, Navios Holdings entered into a facility agreement with a syndicate of banks led by DVB Bank SE for anamount of up to $42.0 million in two tranches: (i) the first tranche is for an amount of up to $26.0 million in order to finance the acquisition of a handysizevessel; and (ii) the second tranche is for an amount of up to $16.0 million to refinance the Navios Astra loan facility with Cyprus Popular Bank Public Co.Ltd. The two tranches bear interest at a rate of LIBOR plus 285 basis points and 360 basis points, respectively. On June 27, 2014, Navios Holdings refinancedthe existing facility, entering into a new tranche for an amount of $30.0 million in order to finance the acquisition of the Navios Gem, which was delivered inJune 2014. The new tranche bears interest at a rate of LIBOR plus 275 basis points. As of December 31, 2014, Navios Holdings had drawn $26.0 million,$15.0 million and $30.0 million under each tranche. As of December 31, 2014, the first tranche is repayable in 21 quarterly installments of $0.4 million, witha final balloon payment of $14.4 million on the last repayment date, the second tranche is repayable in 22 quarterly installments of $0.3 million, with a finalballoon payment of $6.3 million on the last repayment date and the third tranche is repayable in 22 quarterly installments of $0.5 million, with a finalballoon payment of $18.8 million on the last repayment date. The loan facility requires compliance with certain financial covenants. As of December 31,2014, the total outstanding amount was $63.3 million.In September 2013, Navios Holdings entered into a facility agreement with DVB Bank SE for an amount of up to $40.0 million in order to finance theacquisition of four Panamax vessels, delivered in August and September 2013. The facility bears interest at a rate of LIBOR plus 325 basis points. As ofDecember 31, 2014, Navios Holdings had drawn the entire available amount under the facility. As of December 31, 2014, the facility is repayable in threequarterly installments of $0.9 million, followed by 12 quarterly installments of $1.0 million, with a final balloon payment of $21.0 million payable on thelast repayment date. The loan facility requires compliance with certain financial covenants. As of December 31, 2014, the outstanding amount was $35.6million.Alpha Bank A.E.: On November 6, 2014, Navios Holdings entered into a facility agreement with Alpha Bank A.E. for an amount of $31.0 million inorder to finance part of the acquisition of a 2012-built 179,515 dwt Capesize vessel. The loan bears interest at a rate of LIBOR plus 300 basis points. As ofDecember 31, 2014, Navios Holdings had drawn the entire available amount under the facility. As of December 31, 2014, the facility is repayable in 32quarterly installments of $0.4 million, with a final balloon payment of $16.6 million on the last repayment date and the outstanding amount was $31.0million. The loan facility requires compliance with certain financial covenants.The facilities are secured by first priority mortgages on certain of Navios Holdings’ vessels and other collateral.The credit facilities contain a number of restrictive covenants that limit Navios Holdings and/or its subsidiaries from, among other things: incurring orguaranteeing indebtedness; entering into affiliate transactions; charging, pledging or encumbering the vessels securing such facilities; changing the flag,class, management or ownership of certain Navios Holdings’ vessels; changing the commercial and technical management of certain Navios Holdings’vessels; selling or changing the ownership of certain Navios Holdings’ vessels; and subordinating the obligations under the credit facilities to any generaland administrative costs relating to the vessels. The credit facilities also require the vessels to comply with the ISM Code and ISPS Code and to maintainvalid safety management certificates and documents of compliance at all times. Additionally, the credit facilities require compliance with the covenantscontained in the indentures governing the 2019 Notes and the 2022 Notes. Among other events, it will be an event of default under the credit facilities if thefinancial covenants are not complied with or if Angeliki Frangou and her affiliates, together, own less than 20% of the outstanding share capital of NaviosHoldings.Navios Logistics loans2019 Logistics Senior NotesOn April 12, 2011, Navios Logistics and its wholly-owned subsidiary Navios Logistics Finance (US) Inc. (“Logistics Finance” and, together, the“Logistics Co-Issuers”) issued $200.0 million in aggregate principal 103 Table of Contentsamount of senior notes due on April 15, 2019 at a fixed rate of 9.25% (the “Existing 2019 Logistics Senior Notes”). On March 12, 2013, the Logistics Co-Issuers issued $90.0 million in aggregate principal amount of 9.25% Logistics Senior Notes due 2019 (the “Additional 2019 Logistics Senior Notes”, andtogether with the Existing 2019 Logistics Senior Notes, the “2019 Logistics Senior Notes”) at a premium, with a price of 103.750%.On May 5, 2014, the Logistics Co-Issuers completed a tender offer (the “Tender Offer”) and related solicitation of consents for certain proposedamendments to the indenture governing the 2019 Logistics Senior Notes, for any and all of their outstanding 2019 Logistics Senior Notes. After the purchaseby the Logistics Co-Issuers of all of the 2019 Logistics Senior Notes validly tendered and not validly withdrawn prior to the consent payment deadline, theLogistics Co-Issuers redeemed for cash all the 2019 Logistics Senior Notes that remained outstanding after the completion of the Tender Offer, plus accruedand unpaid interest to, but not including, the redemption date. The effect of this transaction was the recognition of a $27.3 million loss in the consolidatedstatement of comprehensive loss under “Loss on bond and debt extinguishment”.2022 Logistics Senior NotesOn April 22, 2014, the Logistics Co-Issuers completed the sale of $375.0 million in aggregate principal amount of the 2022 Logistics Senior Notes at afixed rate of 7.25%. The 2022 Logistics Senior Notes are unregistered and fully and unconditionally guaranteed, jointly and severally, by all of NaviosLogistics’ direct and indirect subsidiaries except for Horamar do Brasil Navegação Ltda (“Horamar do Brasil”) and Naviera Alto Parana S.A. (“Naviera AltoParana”), which are deemed to be immaterial, and Logistics Finance, which is the co-issuer of the 2022 Logistics Senior Notes. The subsidiary guarantees are“full and unconditional”, except that the indenture provides for an individual subsidiary’s guarantee to be automatically released in certain customarycircumstances, such as in connection with a sale or other disposition of all or substantially all of the assets of the subsidiary, in connection with the sale of amajority of the capital stock of the subsidiary, if the subsidiary is designated as an “unrestricted subsidiary” in accordance with the indenture, uponliquidation or dissolution of the subsidiary or upon legal or covenant defeasance or satisfaction and discharge of the 2022 Logistics Senior Notes.The Logistics Co-Issuers have the option to redeem the 2022 Logistics Senior Notes in whole or in part, at their option, at any time (i) before May 1,2017, at a redemption price equal to 100% of the principal amount plus the applicable make-whole premium plus accrued and unpaid interest, if any, to theredemption date and (ii) on or after May 1, 2017, at a fixed price of 105.438%, which price declines ratably until it reaches par in 2020. At any time beforeMay 1, 2017, the Logistics Co-Issuers may redeem up to 35% of the aggregate principal amount of the 2022 Logistics Senior Notes with the net proceeds ofan equity offering at 107.250% of the principal amount of the 2022 Logistics Senior Notes, plus accrued and unpaid interest, if any, to the redemption date solong as at least 65% of the originally issued aggregate principal amount of the 2022 Logistics Senior Notes remains outstanding after such redemption. Inaddition, upon the occurrence of certain change of control events, the holders of the 2022 Logistics Senior Notes will have the right to require the LogisticsCo-Issuers to repurchase some or all of the 2022 Logistics Senior Notes at 101% of their face amount, plus accrued and unpaid interest to the repurchase date.The indenture governing the 2022 Logistics Senior Notes contains covenants which, among other things, limit the incurrence of additionalindebtedness, issuance of certain preferred stock, the payment of dividends in excess of 6% per annum of the net proceeds received by or contributed toNavios Logistics in or from any public offering, redemption or repurchase of capital stock or making restricted payments and investments, creation of certainliens, transfer or sale of assets, entering into transactions with affiliates, merging or consolidating or selling all or substantially all of Navios Logisticsproperties and assets and creation or designation of restricted subsidiaries.The 2022 Logistics Senior Notes include customary events of default, including failure to pay principal and interest on the 2022 Logistics SeniorNotes, a failure to comply with covenants, a failure by Navios Logistics or 104 Table of Contentsany significant subsidiary or any group of its restricted subsidiaries that, taken together, would constitute a significant subsidiary to pay material judgmentsor indebtedness and bankruptcy and insolvency events with respect to Navios Logistics or any significant subsidiary or any group of its restrictedsubsidiaries that, taken together, would constitute a significant subsidiary.The Logistics Co-Issuers were in compliance with the covenants of the indenture as of December 31, 2014.Other indebtednessIn connection with the acquisition of Hidronave on October 29, 2009, Navios Logistics assumed a $0.8 million loan facility that was entered in 2001in order to finance the construction of a pushboat (Nazira). As of December 31, 2014, the outstanding loan balance was $0.5 million. The loan facility bearsinterest at a fixed rate of 600 basis points. The loan is repayable in monthly installments of $5,740 each and the final repayment must occur prior toAugust 10, 2021. The loan also requires compliance with certain covenants.The annual weighted average interest rates of the Company’s total borrowings were 7.18%, 7.75% and 7.32% for the year ended December 31, 2014,2013 and 2012, respectively.The maturity table below reflects the principal payments for the next five years and thereafter of all borrowings of Navios Holdings (including NaviosLogistics) outstanding as of December 31, 2014, based on the repayment schedules of the respective loan facilities and the outstanding amount due under thedebt securities. Year Amount inmillions ofU.S. dollars 2015 $24.2(1) 2016 24.6(2) 2017 24.6 2018 50.2 2019 386.5 2020 and thereafter 1,134.5 Total$1,644.6 (1) Amounts paid during the first quarter of 2015. (2) $6.9 million paid during the first quarter of 2015.Working Capital Position: On December 31, 2014, Navios Holdings’ current assets totaled $417.1 million, while current liabilities totaled $199.2million, resulting in a positive working capital position of $217.9 million. Navios Holdings’ cash forecast indicates that it will generate sufficient cashduring 2015 to make the required principal and interest payments on its indebtedness, provide for the normal working capital requirements of the businessand remain in a positive cash position during 2015.While projections indicate that existing cash balances and operating cash flows will be sufficient to service the existing indebtedness, Navios Holdingscontinues to review its cash flows with a view toward increasing working capital.Capital Expenditures: On January 26, 2014, Navios Holdings entered into agreements to purchase two bulk carrier vessels, one 84,000 dwt Panamaxvessel and one 180,600 dwt Capesize vessel, to be built in Japan. The vessels’ acquisition prices are $31.8 million and $52.0 million, respectively, and arescheduled for delivery in the third and fourth quarter of 2015, respectively. During the year ended December 31, 2014, Navios Holdings paid deposits forboth vessels totaling $22.1 million.On January 27, 2014, Navios Asia took delivery of the N Bonanza, a 2006-built 76,596 dwt bulk carrier vessel for a purchase price of $17.6 million, ofwhich $2.9 million was paid from the Company’s cash, $3.5 million from the noncontrolling shareholders’ cash and $11.3 million was financed through aloan. 105 Table of ContentsOn June 4, 2014, Navios Holdings took delivery of the Navios Gem, a 2014-built 181,336 dwt Capesize vessel for a purchase price of $54.4 million, ofwhich $24.4 million was paid in cash and $30.0 million was financed through a loan.On November 24, 2014, Navios Holdings took delivery of the Navios Ray, a 2012-built 179,515 dwt Capesize vessel for a purchase price of $51.5million, of which $20.5 million was paid in cash and $31.0 million was financed through a loan.Navios LogisticsDuring the second quarter of 2012, Navios Logistics began the construction of a new conveyor belt in its dry port facility in Nueva Palmira, whichbecame operational in October 2013. As of December 31, 2014, Navios Logistics had paid $22.5 million and the construction of the new conveyor belt hadbeen completed.On June 26, 2013, Navios Logistics acquired three pushboats for a total purchase price of $20.3 million. These pushboats were delivered in the firstquarter of 2014.On August 5, 2013, Navios Logistics entered into an agreement for the construction of 36 dry barges for a total purchase price of $19.1 million. Thesebarges were delivered in the second quarter of 2014. On October 8, 2013, Navios Logistics exercised the option for the construction of additional 36 drybarges based on the same terms of the initial agreement. These barges were delivered in the third quarter of 2014. As of December 31, 2014, Navios Logisticshad paid $64.3 million for both sets of barges, representing the purchase price and other acquisition costs, including transportation.On February 11, 2014, Navios Logistics entered into an agreement for the construction of three new pushboats with a purchase price of $7.6 million foreach pushboat. During the year ended December 31, 2014, Navios Logistics paid $6.9 million for the construction of the new pushboats, which are expectedto be delivered in the third quarter of 2015.During the year ended December 31, 2014, Navios Logistics paid $16.3 million for dredging works related to the expansion of its dry port in Uruguay,which is currently an asset under construction.On August 22, 2014, Navios Logistics entered into an agreement for the acquisition of a second-hand bunker vessel, which was delivered to its corefleet in September 2014. As of December 31, 2014, Navios Logistics had paid $5.5 million, representing the purchase price and other costs, includingrelocation expenses.Refer also to “Item 5F. Contractual Obligations as at December 31, 2014”.Concentration of Credit Risk:Accounts receivableConcentrations of credit risk with respect to accounts receivables are limited due to Navios Holdings’ large number of customers, who areinternationally dispersed and have a variety of end markets in which they sell. Due to these factors, management believes that no additional credit riskbeyond amounts provided for collection losses is inherent in Navios Holdings’ trade receivables. For the year ended December 31, 2014, one customeraccounted for 11.9% of the Company’s revenue and for the years ended December 31, 2013 and 2012, none of the Company’s customers accounted for morethan 10% of the Company’s revenue.Cash deposits with financial institutionsCash deposits in excess of amounts covered by government-provided insurance are exposed to loss in the event of non-performance by financialinstitutions. Navios Holdings does maintain cash deposits in excess of 106 Table of Contentsgovernment-provided insurance limits. Navios Holdings also minimizes exposure to credit risk by dealing with a diversified group of major financialinstitutions.Effects of Inflation:Navios Holdings does not consider inflation to be a significant risk to the cost of doing business in the foreseeable future. Inflation has a moderateimpact on operating expenses, drydocking expenses and corporate overhead.C. Research and development, patents and licenses, etc.Not applicable.D. Trend informationOur results of operations depend primarily on the charter hire rates that we are able to realize for our vessels, which depend on the demand and supplydynamics characterizing the dry bulk market at any given time. For other trends affecting our business, please see other discussions in Item 5. “Operating andFinancial Review and Prospects”.E. Off-Balance Sheet ArrangementsCharter hire payments to third parties for chartered-in vessels are treated as operating leases for accounting purposes. Navios Holdings is alsocommitted to making rental payments under operating leases for its office premises. Future minimum rental payments under Navios Holdings’ non-cancelableoperating leases are included in the contractual obligations schedule below. As of December 31, 2014, Navios Holdings was contingently liable for letters ofguarantee and letters of credit amounting to $0.6 million issued by various banks in favor of various organizations and the total amount was collateralized bycash deposits, which were included as a component of restricted cash.In November 2012 (as amended in March 2014), the Company entered into an agreement with Navios Partners (the “Navios Partners Guarantee”) toprovide Navios Partners with guarantees against counterparty default on certain existing charters, which had previously been covered by the charterinsurance for the same vessels, same periods and same amounts. The Navios Partners Guarantee provides for a maximum possible payout of $20.0 million bythe Company to Navios Partners. Premiums that are calculated on the same basis as the restructured charter insurance are included in the management fee thatis paid by Navios Partners to Navios Holdings pursuant to the management agreement. As of December 31, 2014, no claims had been submitted to NaviosHoldings.The Company is involved in various disputes and arbitration proceedings arising in the ordinary course of business. Provisions have been recognizedin the financial statements for all such proceedings where the Company believes that a liability may be probable, and for which the amounts can bereasonably estimated, based upon facts known on the date the financial statements were prepared. Although the Company cannot predict with certainty theultimate resolutions of these matters, in the opinion of management, the ultimate disposition of these matters is not expected to have a material adverse effecton the Company’s financial position, results of operations or liquidity.As of December 31, 2014, Navios Logistics’ subsidiaries in South America were contingently liable for various claims and penalties towards the localtax authorities amounting to a total of approximately $0.1 million. According to the agreement governing the Horamar acquisition, if such cases are broughtagainst us, the amounts involved will be reimbursed by the previous shareholders. As a result, Navios Logistics has recognized a receivable against suchliability. The contingencies are expected to be resolved by 2021. In the opinion of 107 Table of Contentsmanagement, the ultimate disposition of these matters is immaterial and will not adversely affect Navios Logistics’ financial position, results of operations orliquidity.Navios Logistics has issued a guarantee and indemnity letter that guarantees the performance by Petrolera San Antonio S.A. of all its obligations toVitol S.A. up to $12.0 million. This guarantee expires on March 1, 2016.Refer also to “Item 5F. Contractual Obligation as at December 31, 2014” below.F. Contractual Obligations as at December 31, 2014:Payment due by period ($ in millions) Contractual Obligations Total Less than1 year 1-3 years 3-5 years More than5 years Long-term debt(1) $1,644.6 $24.2 $49.2 $436.7 $1,134.5 Operating Lease Obligations (Time Charters) for vessels in operation(5) 335.9 67.2 110.0 92.3 66.4 Operating Lease Obligations (Time Charters) for vessels to be delivered 341.9 11.9 63.9 79.8 186.3 Operating Lease Obligations Push Boats and Barges 0.2 0.2 — — — Capital Lease Obligations 22.3 1.4 20.9 — — Dry vessel deposits(3) 62.9 62.9 — — — Navios Logistics contractual payments(4) 30.3 28.4 1.9 — — Rent Obligations(2) 12.1 3.3 5.9 2.8 0.1 Total$2,450.2 $199.5 $251.8 $611.6 $1,387.3 (1)The amount identified does not include interest costs associated with the outstanding credit facilities, which are based on LIBOR rates, plus the costsof complying with any applicable regulatory requirements and a margin ranging from 2.25% to 3.60% per annum. The amount does not includeinterest costs for the 2019 Notes, the 2022 Notes, and the 2022 Logistics Senior Notes.(2)The table above incorporates the lease obligations of the offices of Navios Holdings and of Navios Logistics. See also Item 4.B. “Business Overview —Facilities.”(3)Future remaining contractual deposits are for two newbuilding owned vessels, which are expected to be delivered in the third and fourth quarter of2015 and are expected to be financed through cash on balance or debt financing.(4)Navios Logistics’ future remaining contractual payments for the acquisition of three new pushboats, the payment of the deferred considerations for theacquisition of Edolmix and Cartisur and the remaining installments for the acquisition of a chartered-in fleet consisting of one push boat and threeliquid barges of $16.0 million, $6.8 million and $7.5 million, respectively.(5)Approximately 38% of the time charter payments included above is estimated to relate to operational costs for these vessels.Navios Holdings, Navios Acquisition and Navios Partners will make available to Navios Europe (in each case, in proportion to their ownershipinterests in Navios Europe) revolving loans of up to $24.1 million to fund working capital requirements (collectively, the “Navios Revolving Loans”). As ofDecember 31, 2014, Navios Holding’s portion of the undrawn amount relating to the Navios Revolving Loans was $4.3 million.Critical Accounting PoliciesThe Navios Holdings’ consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of these financialstatements requires Navios Holdings to make estimates in the application of its 108 Table of Contentsaccounting policies based on the best assumptions, judgments and opinions of management. Following is a discussion of the accounting policies thatinvolve a higher degree of judgment and the methods of their application that affect the reported amount of assets and liabilities, revenues and expenses andrelated disclosure of contingent assets and liabilities at the date of its financial statements. Actual results may differ from these estimates under differentassumptions or conditions.Critical accounting policies are those that reflect significant judgments or uncertainties, and potentially result in materially different results underdifferent assumptions and conditions. Navios Holdings has described below what it believes are its most critical accounting policies that involve a highdegree of judgment and the methods of their application. For a description of all of Navios Holdings’ significant accounting policies, see Note 2 to theConsolidated Financial Statements, included herein.Use of Estimates: The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the dates of the financialstatements and the reported amounts of revenues and expenses during the reporting periods. On an on-going basis, management evaluates the estimates andjudgments, including those related to uncompleted voyages, future drydock dates, the carrying value of investments in affiliates, the selection of useful livesfor tangible assets, expected future cash flows from long-lived assets to support impairment tests, impairment test for goodwill, provisions necessary foraccounts receivables and demurrages, provisions for legal disputes, pension benefits, and contingencies. Management bases its estimates and judgments onhistorical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for makingjudgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimatesunder different assumptions and/or conditions.Stock-based Compensation: In December 2014, 2013 and 2012, the Company authorized the issuance of shares of restricted common stock, restrictedstock units and stock options in accordance with the Company’s stock option plan for its employees, officers and directors. These awards of restrictedcommon stock, restricted stock units and stock options are based on service conditions only and vest over three years. In December 2013 and 2014, theCompany also authorized the issuance of shares of restricted common stock, restricted stock units and stock options for its employees, officers and directorsthat vest on April 30, 2015 and June 2, 2016, respectively, upon achievement of certain internal performance criteria including certain targets on operationalperformance and cost efficiency. See Note 12 to the Consolidated Financial Statements, included herein.The fair value of stock option grants is determined with reference to option pricing model and principally adjusted Black-Scholes models. The fairvalue of restricted stock and restricted stock units is determined by reference to the quoted stock price on the date of grant. Compensation expense, net ofestimated forfeitures, is recognized based on a graded expense model over the vesting period. Compensation expense for the awards that vest uponachievement of the performance criteria is recognized when it is probable that the performance criteria will be met and are being accounted for as equity.Impairment of Long lived Assets: Vessels, other fixed assets and other long-lived assets held and used by Navios Holdings are reviewed periodicallyfor potential impairment whenever events or changes in circumstances indicate that the carrying amount of a particular asset may not be fully recoverable.Navios Holdings’ management evaluates the carrying amounts and periods over which long-lived assets are depreciated to determine if events or changes incircumstances have occurred that would require modification to their carrying values or useful lives. In evaluating useful lives and carrying values of long-lived assets, certain indicators of potential impairment are reviewed, such as undiscounted projected operating cash flows, vessel sales and purchases,business plans and overall market conditions.Undiscounted projected net operating cash flows are determined for each asset group and compared to the carrying value of the vessel, the unamortizedportion of deferred drydock and special survey costs related to the 109 Table of Contentsvessel and the related carrying value of the intangible assets with respect to the time charter agreement attached to that vessel or the carrying value ofdeposits for newbuildings. Within the shipping industry, vessels are customarily bought and sold with a charter attached. The value of the charter may befavorable or unfavorable when comparing the charter rate to then-current market rates. The loss recognized either on impairment (or on disposition) willreflect the excess of carrying value over fair value (selling price) for the vessel asset group.During the fourth quarter of fiscal year 2014, management concluded that events occurred and circumstances had changed, which indicated thatpotential impairment of Navios Holdings’ long-lived assets might exist. These indicators included continued deterioration in the spot market, and the relatedimpact of the current dry bulk sector has on management’s expectation for future revenues. As a result, an impairment assessment of long-lived assets (stepone) was performed.The Company determined undiscounted projected net operating cash flows for each vessel and compared it to the vessel’s carrying value together withthe carrying value of deferred drydock and special survey costs related to the vessel and the carrying value of the related intangible assets. The significantfactors and assumptions used in the undiscounted projected net operating cash flow analysis included: determining the projected net operating cash flows byconsidering the charter revenues from existing time charters for the fixed fleet days (the Company’s remaining charter agreement rates) and an estimated dailytime charter equivalent for the unfixed days (based on the 10-year average historical one-year time charter rates adjusted for outliers) over the remainingeconomic life of each vessel, net of brokerage and address commissions, excluding days of scheduled off-hires, running cost based on current year actual,assuming an annual increase of 3.0% after 2016 and a utilization rate of 99.8% based on the fleet’s historical performance.For the deposits for new building vessels, the net cash flows also included the future cash out flows to make vessels ready for use, all remainingprogress payments to shipyards and other pre-delivery expenses (e.g. capitalized interest).The assessment concluded that step two of the impairment analysis was not required and no impairment of vessels, deposits for vessel acquisitions andthe related intangible assets existed as of December 31, 2014 and 2013, as the undiscounted projected net operating cash flows exceeded the carrying value.In the event that impairment would occur, the fair value of the related asset would be determined and an impairment charge would be recorded tooperations calculated by comparing the asset’s carrying value to its fair value. Fair value is typically estimated primarily through the use of third-partyvaluations performed on an individual vessel basis.Although management believes the underlying assumptions supporting this assessment are reasonable, if the charter rate trends and the length of thecurrent market downturn vary significantly from our forecasts, Navios Holdings may be exposed to material impairment charges in the future.No impairment loss was recognized for any of the periods presented.In connection with its impairment testing on its vessels as of December 31, 2014, the Company performs a sensitivity analysis on the most sensitiveand/or subjective assumptions that have the potential to affect the outcome of the test, principally the projected charter rate used to forecast future cash flowsfor unfixed days. In that regard, there would continue to be no impairment required to be recognized on any of the Company’s vessels when assuming adecline in the 10-year average (of the one-year charter rate for similar vessels), which is the rate that the Company uses to forecast future cash flows forunfixed days, ranging from 17.0% to 81.3% (depending on the vessel).As of December 31, 2014, the 10-year historical average rates for the Company’s vessels (which naturally varies by type of vessel) used in determiningfuture cash flows for purposes of its impairment analysis were 118.6% higher than the daily time charter equivalent rate of the owned fleet achieved in thefiscal year 2014 of $11,830 per day. 110 Table of ContentsIn addition, the Company compared the 10-year historical average (of the one-year charter rate for similar vessels) with the five-year, three-year andone-year historical averages (of the one-year charter rate for similar vessels). A comparison of the 10-year historical average (of the one-year charter rate) andthe five-year, three-year and one-year historical averages (of the one-year charter rate for similar vessels) is as follows (as of December 31, 2014): Historical Average of One-year Charter Rates(over Various Periods) vs. the 10-year Historical Average(of the One-Year Charter Rate) 5-Year Average 3-Year Average 1-Year Average (% below the 10-year average) Handysize (25.9%) (40.6%) (36.4%) Ultra-Handymax (33.5%) (47.7%) (43.0%) Panamax (36.6%) (53.3%) (46.1%) Capesize (49.5%) (57.6%) (45.4%) If testing for impairment using the five-year, three-year and one-year historical averages (of the one-year charter rate for similar vessels) in lieu of the10-year historical average (of the one-year charter rate for similar vessels), the Company estimates that three, 16 and 9 of its vessels, respectively, would havecarrying values in excess of their projected undiscounted future cash flows.As of December 31, 2014 and 2013, the Company owns and operates a fleet of 38 (not including two under construction vessels) and 35 vessels,respectively, with an aggregate carrying value of $1,473.9 million and $1,417.8 million, respectively, including the carrying value of existing time charterson its fleet of vessels. On a vessel-by-vessel basis, as of December 31, 2014 and 2013, the carrying value of 35 and 27 of the Company’s vessels, respectively,(including the carrying value of the time charter, if any, on the specified vessel) exceeds the estimated fair value of those same vessels (including theestimated fair value of the time charter, if any, on the specified vessel) by approximately $533.2 million and $455.2 million, respectively, in the aggregate(the unrealized loss).A vessel-by-vessel summary as of December 31, 2014 and 2013 follows (with an * indicating those individual vessels whose carrying value exceeds itsestimated fair value, including the related time charter): Vessel YearBuilt Purchase Price(in millions)(1) Carrying Value(as of December 31, 2014)(in millions)(1) Carrying Value(as of December 31, 2013)(in millions)(1) Navios Serenity 2011 $26.1 $23.5* $24.4* Navios Ionian 2000 31.2 17.6* 19.1* Navios Celestial 2009 34.8 28.2* 28.8* Navios Vector 2002 32.4 24.1* 26.0* Navios Horizon 2001 23.2 13.9* 15.1* Navios Herakles 2001 32.6 18.7* 20.2* Navios Achilles 2001 33.1 19.3* 20.9* Navios Meridian 2002 26.6 16.4* 17.7* Navios Mercator 2002 25.9 16.0* 17.2* Navios Arc 2003 26.6 16.8* 18.1* Navios Hios 2003 36.0 22.2* 23.9* Navios Kypros 2003 36.0 22.2* 23.8* Navios Ulysses 2007 79.8 58.8* 62.3* Navios Vega 2009 72.9 56.4* 58.6* Navios Astra 2006 23.1 19.0* 20.1 Navios Magellan 2000 30.1 17.0* 18.5* Navios Star 2002 30.1 19.1* 20.7* 111 Table of ContentsNavios Asteriks 2005 53.4 36.7* 38.9* Navios Centaurus 2012 37.1 33.5* 34.8* Navios Avior 2012 39.1 35.5* 36.8* Navios Bonavis 2009 121.6 96.7* 100.4* Navios Happiness 2009 122.2 97.3* 101.1* Navios Lumen 2009 113.8 92.4* 95.5* Navios Stellar 2009 94.9 77.5* 80.9* Navios Phoenix 2009 105.9 86.1* 90.0* Navios Antares 2010 115.8 94.6* 98.8* Navios Etoile 2010 66.2 56.7 59.0 Navios Bonheur 2010 68.9 59.1* 61.5* Navios Altamira 2011 55.4 48.0 49.9 Navios Azimuth 2011 55.7 48.3* 50.2* Navios Galileo 2006 17.7 16.6* 17.4 Navios Northern Star 2005 16.7 15.7* 16.5 Navios Amitie 2005 16.7 15.7* 16.5 Navios Taurus 2005 16.7 15.7* 16.4 N Amalthia 2006 17.9 17.0* 17.9 N Bonanza 2006 17.6 16.9* — Navios Gem 2014 54.4 53.3 — Navios Ray 2012 51.5 51.4* — $1,859.7 $1,473.9 $1,417.8 (1)All amounts include related time charter, if any.Although the aforementioned excess of carrying value over fair value represents an estimate of the loss that the Company would sustain on ahypothetical disposition of those vessels as of December 31, 2014 and 2013, the recognition of the unrealized loss absent a disposition (i.e. as an impairment)would require, among other things, that a triggering event had occurred and that the undiscounted cash flows attributable to the vessel are also less than thecarrying value of the vessel (including the carrying value of the time charter, if any, on the specified vessel).Vessels, Port Terminals, Tanker Vessels, Barges, Pushboats and Other Fixed Assets, net: Vessels, port terminals, tanker vessels, barges, pushboats andother fixed assets acquired as parts of business combinations are recorded at fair value on the date of acquisition, and if acquired as an asset acquisition, arerecorded at cost (including transaction costs). Vessels constructed by the company would be stated at historical cost, which consists of the contract price,capitalized interest and any material expenses incurred upon acquisition (improvements and delivery expenses). Subsequent expenditures for majorimprovements and upgrades are capitalized, provided they appreciably extend the life, increase the earnings capability or improve the efficiency or safety ofthe vessels. The cost and related accumulated depreciation of assets retired or sold are removed from the accounts at the time of sale or retirement and anygain or loss is included in the accompanying consolidated statements of comprehensive (loss)/income.Expenditures for routine maintenance and repairs are expensed as incurred.Depreciation is computed using the straight line method over the useful life of the vessels, port terminal, tanker vessels, barges, push boats and otherfixed assets, after considering the estimated residual value. 112 Table of ContentsAnnual depreciation rates used, which approximate the useful life of the assets are: Vessels25 yearsPort terminals5 to 40 yearsTanker vessels, barges and push boats15 to 45 yearsFurniture, fixtures and equipment3 to 10 yearsComputer equipment and software5 yearsLeasehold improvementsshorter of lease term or 6 yearsManagement estimates the residual values of our dry bulk vessels based on a scrap value cost of steel times the weight of the ship noted in lightweighttons (“LWT”). Residual values are periodically reviewed and revised to recognize changes in conditions, new regulations or other reasons. Revisions ofresidual values affect the depreciable amount of the vessels and the depreciation expense in the period of the revision and future periods. Until December 31,2012, management estimated the residual values of the Company’s vessels based on a scrap rate of $285 per LWT. Effective January 1, 2013, followingmanagement’s reassessment after considering current market trends for scrap rates and ten-year average historical scrap rates of the residual values of theCompany’s vessels, the estimated scrap value per LWT was increased to $340.Management estimates the useful life of its vessels to be 25 years from the vessel’s original construction. However, when regulations place limitationson the ability of a vessel to trade on a worldwide basis, its useful life is re-estimated to end at the date such regulations become effective. An increase in theuseful life of a vessel or in its residual value would have the effect of decreasing the annual depreciation charge and extending it into later periods. Adecrease in the useful life of a vessel or in its residual value would have the effect of increasing the annual depreciation charge.Deferred Drydock and Special Survey Costs: The Company’s vessels, barges and push boats are subject to regularly scheduled drydocking and specialsurveys which are carried out every 30 and 60 months, respectively, for ocean-going vessels, and every 84 months for push boats and barges, to coincide withthe renewal of the related certificates issued by the classification societies, unless a further extension is obtained in rare cases and under certain conditions.The costs of drydocking and special surveys are deferred and amortized over the above periods or to the next drydocking or special survey date if such hasbeen determined. Unamortized drydocking or special survey costs of vessels, barges and push boats sold are written-off to income in the year the vessel, bargeor pushboat is sold.Costs capitalized as part of the drydocking or special survey consist principally of the actual costs incurred at the yard, and expenses relating to spareparts, paints, lubricants and services incurred solely during the drydocking or special survey period.Goodwill and Other Intangibles:(i) Goodwill: Goodwill is tested for impairment at the reporting unit level at least annually.The Company evaluates impairment of goodwill using a two-step process. First, the aggregate fair value of the reporting unit is compared to itscarrying amount, including goodwill (step one). The Company determines the fair value of the reporting unit based on discounted cash flow analysis andbelieves that the discounted cash flow analysis is the best indicator of fair value for its individual reporting units.The fair value for goodwill impairment testing was estimated using the expected present value of future cash flows, using judgments and assumptionsthat management believes were appropriate in the circumstances. The significant factors and assumptions the Company used in its discounted cash flowanalysis included: EBITDA, the discount rate used to calculate the present value of future cash flows and future capital expenditures. EBITDA assumptionsincluded revenue assumptions, general and administrative expense growth assumptions, 113 Table of Contentsand direct vessel expense growth assumptions. The future cash flows from shipping operations were determined by considering the charter revenues fromexisting time charters for the fixed fleet days (the Company’s remaining charter agreement rates) and an estimated daily time charter equivalent for the non-fixed days (based on a combination of one-year average historical charter rates and the 10-year average historical charter rates adjusted for outliers, asavailable for each type of vessel), which the Company believes is an objective approach for forecasting charter rates over an extended time period for longlived assets. The future cash flows from logistics operations were determined principally by combining revenues from existing contracts and estimatedrevenues based on the historical performance of the segment, including utilization rates and actual storage capacity.If the fair value of a reporting unit exceeds the carrying amount, no impairment exists. If the carrying amount of the reporting unit exceeds the fairvalue, then the Company must perform the second step to determine the implied fair value of the reporting unit’s goodwill and compare it with its carryingamount. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit to all the assets and liabilities of that reportingunit, as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price. If the carryingamount of the goodwill exceeds the implied fair value, then goodwill impairment is recognized by writing the goodwill down to its implied fair value.No impairment loss was recognized for any of the periods presented.(ii) Intangibles Other Than Goodwill: Navios Holdings’ intangible assets and liabilities consist of favorable lease terms, unfavorable lease terms,customer relationships, trade name and port terminal operating rights. The fair value of the trade name was determined based on the “relief from royalty”method which values the trade name based on the estimated amount that a company would have to pay in an arm’s length transaction to use that trade name.The asset is being amortized under the straight line method over 32 years. Navios Logistics’ trade name is being amortized under the straight line methodover 10 years.The fair value of customer relationships was determined based on the “excess earnings” method, which relies upon the future cash flow generatingability of the asset. The asset is amortized under the straight line method.Other intangibles that are being amortized, such as customer relationships and port terminal operating rights, would be considered impaired if theircarrying value could not be recovered from the future undiscounted cash flows associated with the asset.When intangible assets or liabilities associated with the acquisition of a vessel are identified, they are recorded at fair value. Fair value is determinedby reference to market data and the discounted amount of expected future cash flows. Where charter rates are higher than market charter rates, an asset isrecorded, being the difference between the acquired charter rate and the market charter rate for an equivalent vessel. Where charter rates are less than marketcharter rates, a liability is recorded, being the difference between the assumed charter rate and the market charter rate for an equivalent vessel. Thedetermination of the fair value of acquired assets and assumed liabilities requires the Company to make significant assumptions and estimates of manyvariables including market charter rates, expected future charter rates, the level of utilization of the Company’s vessels and the Company’s weighted averagecost of capital. The use of different assumptions could result in a material change in the fair value of these items, which could have a material impact on theCompany’s financial position and results of operations.The amortizable value of favorable and unfavorable leases is amortized over the remaining life of the lease term and the amortization expense isincluded in the consolidated statements of comprehensive (loss)/income in the “Depreciation and Amortization” line item.The amortizable value of favorable leases would be considered impaired if its fair market value could not be recovered from the future undiscountedcash flows associated with the asset. Vessel purchase options that have 114 Table of Contentsnot been exercised, which are included in favorable lease terms, are not amortized and would be considered impaired if the carrying value of an option, whenadded to the option price of the vessel, exceeded the fair value of the vessel. As of December 31, 2014, there was no impairment of intangible assets.Vessel purchase options that are included in favorable leases are not amortized and when the purchase option is exercised, the asset is capitalized aspart of the cost of the vessel and depreciated over the remaining useful life of the vessel and if not exercised, the intangible asset is written off. Vesselpurchase options that are included in unfavorable lease terms are not amortized and when the purchase option is exercised by the charterer and theunderlying vessel is sold, it will be recorded as part of gain/loss on sale of the assets. If the option is not exercised at the expiration date it is written-off in theconsolidated statements of comprehensive (loss)/income.The weighted average amortization periods for intangible assets/liabilities are: Intangible Assets/Liabilities Years Trade name 21.0 Favorable lease terms 11.1 Unfavorable lease terms 9.4 Port terminal operating rights 32.5 Customer relationships 20.0-45.0 Investments in Equity Securities: Navios Holdings evaluates its investments in Navios Acquisition, Navios Partners, Navios Europe and KLC for otherthan temporary impairment (“OTTI”) on a quarterly basis. Consideration is given to (i) the length of time and the extent to which the fair value has been lessthan the carrying value, (ii) their financial condition and near-term prospects, and (iii) the intent and ability of the Company to retain its investment in thesecompanies for a period of time sufficient to allow for any anticipated recovery in fair value. If the fair value of our equity method investments continues toremain below their carrying value and our OTTI analysis indicates such write down to be necessary, the potential future impairment charges may have amaterial adverse impact on our results of operations in the period recognized.As of June 30, 2014, the Company considered the decline in fair value of the KLC shares as “other-than-temporary” and therefore recognized a loss of$11.5 million out of accumulated other comprehensive loss. The respective loss was included in other expense in the accompanying consolidated statementof comprehensive loss. There were no OTTI losses during the years ended December 31, 2013 and 2012.Recent Accounting PronouncementsIn April 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-08, “Presentation of Financial Statements and Property, Plantand Equipment”, changing the presentation of discontinued operations on the statements of income and other requirements for reporting discontinuedoperations. Under the new standard, a disposal of a component or a group of components of an entity is required to be reported in discontinued operations ifthe disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the component meets thecriteria to be classified as held-for-sale or is disposed. The amendments in this update also require additional disclosures about discontinued operations anddisposal of an individually significant component of an entity that does not qualify for discontinued operations. The new accounting guidance is effectivefor interim and annual periods beginning after December 15, 2014. The adoption of the new standard is not expected to have a material impact on NaviosHoldings’ results of operations, financial position or cash flows.In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”, changing the method used to determine the timing andrequirements for revenue recognition on the statements of comprehensive income. Under the new standard, an entity must identify the performanceobligations in a contract, the transaction price and allocate the price to specific performance obligations to recognize revenue 115 Table of Contentswhen the obligation is completed. The amendments in this update also require disclosure of sufficient information to allow users to understand the nature,amount, timing and uncertainty of revenue and cash flow arising from contracts. The new accounting guidance is effective for interim and annual periodsbeginning after December 15, 2016. Early adoption is not permitted. The Company is currently reviewing the effect of ASU No. 2014-09 on its revenuerecognition.In January 2015, the FASB issued ASU No. 2015-01, “Income Statement-Extraordinary and Unusual Items”. This standard eliminates the concept ofextraordinary and unusual items from U.S. GAAP. The new standard is effective for annual and interim periods after December 15, 2015. Early adoption ispermitted. We plan to adopt this standard effective January 1, 2016. The adoption of this ASU is not expected to have a material impact on the Company’sresults of operations, financial position or cash flows.In February 2015, the FASB issued ASU No. 2015-02, “Consolidation (Topic 810)—Amendments to the Consolidation Analysis”, which amends thecriteria for determining which entities are considered VIEs, amends the criteria for determining if a service provider possesses a variable interest in a VIE andends the deferral granted to investment companies for application of the VIE consolidation model. The ASU is effective for interim and annual periodsbeginning after December 15, 2015. Early application is permitted. We do not expect the adoption of this ASU to have a material impact on the Company’sresults of operations, financial position or cash flows, except if Navios Holdings was to enter into new arrangements in 2015 that fall into the scope prior toadoption of this standard.G. Safe HarborApplicable to the extent the disclosures in Item 5.E and 5.F above are eligible for the statutory safe harbor protections provided to forward-lookingstatements.Item 6. Directors, Senior Management and EmployeesA. Directors and Senior ManagementThe current board of directors, executive officers and significant employees are as follows: Name Age PositionAngeliki Frangou 50 Chairman of the Board and Chief Executive OfficerGeorge Achniotis 50 Chief Financial OfficerTed C. Petrone* 59 Vice Chairman of Navios CorporationVasiliki Papaefthymiou 46 Executive Vice President — Legal and DirectorAnna Kalathakis 45 Chief Legal Risk OfficerShunji Sasada 57 President of Navios Corporation and DirectorLeonidas Korres 39 Senior Vice President — Business DevelopmentEfstratios Desypris 42 Chief Financial ControllerIoannis Karyotis 39 Senior Vice President — Strategic PlanningErifili Tsironi 41 Senior Vice President — Credit ManagementSpyridon Magoulas 61 DirectorJohn Stratakis 50 DirectorEfstathios Loizos 53 DirectorGeorge Malanga 57 Director *Significant employeeAngeliki Frangou has been our Chairman and CEO since August 25, 2005. In addition, Ms. Frangou has been the Chairman and Chief ExecutiveOfficer of Navios Maritime Partners L.P. (NYSE: NMM), an affiliated 116 Table of Contentslimited partnership, since August 2007, the Chairman and Chief Executive Officer of Navios Maritime Acquisition Corporation (NYSE: NNA), an affiliatedcorporation, since March, 2008 and the Chairman and Chief Executive Officer of Navios Maritime Midstream Partners L.P. (NYSE: NAP), an affiliated limitedpartnership since October 2014. Ms. Frangou has been the Chairman of the Board of Directors of Navios Logistics since its inception in December 2007.Previously, Ms. Frangou served as Chairman, Chief Executive Officer and President of International Shipping Enterprises Inc., which acquired NaviosHoldings. From 1990 until August 2005, Ms. Frangou was the Chief Executive Officer of Maritime Enterprises Management S.A. and its predecessorcompany, which specialized in the management of dry cargo vessels. Ms. Frangou is the Chairman of IRF European Finance Investments Ltd., listed on theSFM of the London Stock Exchange. Ms. Frangou is member of the Board of the United Kingdom Mutual Steam Ship Assurance Association (Bermuda)Limited, Vice Chairman of China Classification Society Mediterranean Committee, a member of the International General Committee and of the Hellenic andBlack Sea Committee of Bureau Veritas, as well as a member of Greek Committee of Nippon Kaiji Kyokai. Since February 2015, Ms. Frangou is a Member ofthe Board of the Union of Greek Shipowners. Since July 2013, Ms. Frangou has been a Member of the Board of Visitors of the Columbia University School ofEngineering and Applied Science. Ms. Frangou received a bachelor’s degree in mechanical engineering, summa cum laude , from Fairleigh DickinsonUniversity and a master’s degree in mechanical engineering from Columbia University.George Achniotis has been Navios Holdings’ Chief Financial Officer since April 12, 2007. Prior to being appointed Chief Financial Officer of NaviosHoldings, Mr. Achniotis served as Senior Vice President-Business Development of Navios Holdings from August 2006 to April 2007. Before joining NaviosHoldings, Mr. Achniotis was a partner at PricewaterhouseCoopers in Greece, heading the Piraeus office and the firm’s shipping practice. He became a partnerat PwC in 1999 when he set up and headed the firm’s internal audit services department from which all SOX implementation and consultation projects wereperformed. Mr. Achniotis is currently a Director and Executive Vice President-Business Development of Navios Partners; a New York Stock Exchange tradedlimited partnership, which is an affiliate of Navios Holdings. He has more than 19 years’ experience in the accounting profession with work experience inEngland, Cyprus and Greece. Mr. Achniotis qualified as a Chartered Accountant in England and Wales in 1991, and holds a Bachelor’s degree in CivilEngineering from the University of Manchester.Ted C. Petrone became Vice Chairman of Navios Corporation in January 2015 having previously served as a director of Navios Holdings fromMay 2007 to January 2015 and President of Navios Corporation from September 2006 to January 2015. Mr. Petrone has served in the maritime industry for36 years, of which 33 have been with Navios Holdings. After joining Navios Holdings as an assistant vessel operator, Mr. Petrone worked in variousoperational and commercial positions. For the last fifteen years, Mr. Petrone has been responsible for all aspects of the daily commercial Panamax activity,encompassing the trading of tonnage, derivative hedge positions and cargoes. Mr. Petrone is currently also a director and Vice Chairman of NaviosAcquisition, a New York Stock Exchange listed company, and an affiliate of the Company; and has served in such capacity since June 2008. Mr. Petronegraduated from New York Maritime College at Fort Schuyler with a B.S. in Maritime Transportation. He has served aboard U.S. Navy (Military SealiftCommand) tankers.Vasiliki Papaefthymiou has been Executive Vice President — Legal and a member of Navios Holdings’ board of directors since its inception, andprior to that was a member of the board of directors of ISE. Ms. Papaefthymiou has served as general counsel for Maritime Enterprises Management S.A. sinceOctober 2001, where she has advised the Company on shipping, corporate and finance legal matters. Ms. Papaefthymiou provided similar services as generalcounsel to Franser Shipping from October 1991 to September 2001. Ms. Papaefthymiou received her undergraduate degree from the Law School of theUniversity of Athens and a master degree in Maritime Law from Southampton University in the United Kingdom. Ms. Papaefthymiou is admitted to practicelaw before the Bar in Piraeus, Greece.Anna Kalathakis has been Chief Legal Risk Officer since November 2012, and Senior Vice President — Legal Risk Management of Navios MaritimeHoldings Inc. from December 2005 until October 2012. Before 117 Table of Contentsjoining Navios Holdings, Ms. Kalathakis was the General Manager of the Greek office of A. Bilbrough & Co. Ltd. and an Associate Director of the Company(Managers of the London Steam-Ship Owners’ Mutual Insurance Association Limited). She has previously worked for a U.S. maritime law firm in NewOrleans, was admitted to practice law in the state of Louisiana in 1995, and has also worked in a similar capacity at a London maritime law firm. She qualifiedas a solicitor in England and Wales in 1999 and was admitted to the Piraeus BAR, Greece in 2003. She has studied International Relations at GeorgetownUniversity, Washington D.C. (1991). She holds an MBA from European University at Brussels (1992) and a J.D. from Tulane Law School (1995).Shunji Sasada became a director of Navios Holdings and Presideent of Navios Corporation in January 2015. Mr. Sasada has also served as a director inNavios Maritime Partners L.P. since August 2007 and as a director in Navios Maritime Midstream Partners L.P. since October 2014. Previously, as ChiefOperating Officer of Navios Corporation and Senior Vice President of Fleet Development, he headed Navios Holdings’ program for the growth anddevelopment of the Company’s long-term chartered-in and owned tonnage. Mr. Sasada is also President of Navimax Corporation, the Ultra Handymaxoperating subsidiary of the group. Mr. Sasada started his shipping career in 1981 in Japan with Mitsui O.S.K. Lines, Ltd. (“MOSK”). Mr. Sasada’s firstposition with MOSK was in steel products in the Tokyo branch as a salesman for exporting steel products to worldwide destinations. Two years later,Mr. Sasada moved to the tramp section in Mitsui’s bulk carrier division and was in charge of operations and then of chartering 20-40 smaller Handysizevessels between 21,000 dwt and 35,000 dwt. In 1991, Mr. Sasada moved to Norway to join Trinity Bulk Carriers as its chartering manager as well assubsidiary board member, representing MOSK as one of the shareholders. After an assignment in Norway, Mr. Sasada moved to London and started MOSK’sown Ultra Handymax operation as its General Manager. Mr. Sasada joined Navios Holdings in May 1997. Mr. Sasada is the member of the North AmericanCommittee of Nippon Kaiji Kyokai. He is a graduate of Keio University, Tokyo, with a B.A. degree in Business and he is a member of the Board of Trustees ofKeio Academy of New York.Leonidas Korres has been our Senior Vice President — Business Development since January 2010. Mr. Korres is also the Chief Financial Officer ofNavios Maritime Acquisition Corporation since April 2010. Mr. Korres served as the Special Secretary for Public Private Partnerships in the Ministry ofEconomy and Finance of the Hellenic Republic from October 2005 until November 2009. Prior to that, from April 2004 to October 2005, Mr. Korres served asSpecial Financial Advisor to the Minister of Economy and Finance of the Hellenic Republic and as liquidator of the Organizational Committee for theOlympic Games Athens 2004 S.A. From 2001 to 2004, Mr. Korres worked as a Senior Financial Advisor for KPMG Corporate Finance. From October 2007until January 2010, Mr. Korres was a member of the board of directors of Navios Partners. From May 2003 to December 2006, Mr. Korres was Chairman of theCenter for Employment and Entrepreneurship, a Non-Profit Company. From June 2008 until February 2009, Mr. Korres served as a board member and auditcommittee member of Hellenic Telecommunications Organization S.A. (trading on the Athens and New York Stock Exchanges). From June 2004 untilNovember 2009, Mr. Korres served on the board of Hellenic Olympic Properties S.A., which was responsible for exploiting the Olympic venues. Mr. Korresearned his Bachelor’s degree in Economics from the Athens University of Economics and Business and his master’s degree in Finance from the University ofLondon.Efstratios Desypris has been our Chief Financial Controller since February 2011. Mr. Desypris has previously served as Financial Controller sinceMay 2006. Mr. Desypris is also a director and Senior Vice President of Navios Maritime Midstream Partners L.P. since October 2014. In addition,Mr. Desypris is the Chief Financial Officer of Navios Maritime Partners since January 2010. He also serves as Senior Vice President — Strategic Planning andDirector of Navios Logistics, and as director in Navios Europe Inc. Before joining Navios Group, Mr. Desypris worked for 9 years in the accountingprofession, most recently as manager of the audit department at Ernst & Young in Greece. Mr. Desypris started his career as an auditor with Arthur Andersen &Co. in 1997. He holds a Bachelor of Science degree in Economics from the University of Piraeus.Ioannis Karyotis has been our Senior Vice President — Strategic Planning since February 2011. Mr. Karyotis is also Chief Financial Officer of NaviosLogistics since March 2011. Prior to joining the Company, 118 Table of Contentsfrom 2006 until 2011, Mr. Karyotis was Consultant and later Project Leader at The Boston Consulting Group (BCG), an international management consultingfirm. From 2003 until 2005, Mr. Karyotis was Senior Equity Analyst at Eurocorp Securities, a Greek brokerage house, and in 2003, he was Senior Analyst inthe Corporate Finance Department at HSBC Pantelakis Securities, a subsidiary of HSBC Bank. Mr. Karyotis began his career in 2002 with Marfin HellenicSecurities as Equity Analyst. He received his bachelor’s degree in Economics from the Athens University of Economics and Business (1998). He holds amaster’s of Science in Finance and Economics from the London School of Economics (1999) and an MBA from INSEAD (2006).Erifili Tsironi has been our Senior Vice President — Credit Management since October 2014. Ms. Tsironi is also Chief Financial Officer of NaviosMaritime Midstream Partners LP. Ms. Tsironi has over 17 years of experience in ship finance. Before joining us, she was the Senior Vice President — GlobalDry Bulk Sector Coordinator of DVB Bank SE. Ms. Tsironi joined DVB Bank SE in 2000 serving as Assistant Local Manager and Senior RelationshipManager. Previously, she served as account manager in ANZ Investment Bank / ANZ Grindlays Bank Ltd from May 1997 until December 1999. Ms. Tsironiholds a BSc. in Economics, awarded with Honours, from the London School of Economics and Political Science and a MSc in Shipping, Trade and Finance,awarded with Distinction, from Cass Business School of City University in London.Spyridon Magoulas has been a member of Navios Holdings’ Board of Directors since its inception, and prior to that was a member of the board ofdirectors of ISE. Mr. Magoulas is the co-founder and director of Doric Shipbrokers S.A., a chartering firm based in Athens, Greece, and has served as themanaging director of Doric Shipbrokers S.A. since its formation in 1994. From 1982 to 1993, Mr. Magoulas was chartering director and shipbroker forNicholas G. Moundreas Shipping S.A., a company located in Piraeus, Greece, and from 1980 to 1982, Mr. Magoulas served at Orion and Global CharteringInc. in New York. Mr. Magoulas received a bachelor’s degree in Economics (honors) from the City University of New York, New York, a master’s degree inTransportation Management from the Maritime College in New York and a master degree in Political Economy from the New School for Social Research inNew York. In addition to his role on the Board of Directors, Mr. Magoulas also serves as a member of the Audit Committee, the Compensation Committee andthe Nominating and Governance Committee. Mr. Magoulas is an independent director.John Stratakis has been a member of Navios Holdings’ Board of Directors since its inception, and prior to that was a member of the board of directorsof ISE. Since 1994, Mr. Stratakis has been a partner with the law firm of Poles, Tublin, Stratakis & Gonzalez, LLP, in New York, New York, where hespecializes in all aspects of marine finance and admiralty law, real estate, trusts and estates and general corporate law. From 1992 to 1993, Mr. Stratakis wasan associate attorney with Wilson, Elser, Moskowitz Edelman & Dicker, in New York, New York. Mr. Stratakis also has been a director and the President ofthe Hellenic-American Chamber of Commerce in New York. He serves on the board of New York Maritime Inc., an association that promotes the New Yorkregion as a maritime business center. Mr. Stratakis received a Bachelor of Arts (cum laude) from Trinity College and a Juris Doctor degree from WashingtonCollege of Law at American University. Mr. Stratakis is admitted to practice law in the State of New York and in the courts of the Southern and EasternDistricts of New York. In addition to his role on the Board of Directors, Mr. Stratakis also serves as chairman of the Nominating and Governance Committeeand a member of the Compensation Committee. Mr. Stratakis is an independent director.Efstathios Loizos was appointed to our Board of Directors in July 2010. Mr. Loizos was also director of Navios Partners from October 2007 untilJune 2010. In October 2008, Mr. Loizos joined the Managing Team of ION S.A., a leading Greek chocolate and cocoa group of companies, with theresponsibility of supervising MABEL S.A., one of the affiliated companies of the group. In June 2010, Mr. Loizos was appointed to the Board of Directors ofION S.A. and assumed enlarged executive responsibilities within the group. Since March 2014, Mr. Loizos serves as the CEO of the affiliated companyINTERION S.A., which operates in Bulgaria. In May 2010, Mr. Loizos was elected as a member of the Board of Directors of IOBE (Foundation of Economicand Industrial Research). Between 2001 and 2008, Mr. Loizos served as the General Manager and a member of the Board of Directors of ELSA S.A., a Greeksteel packaging company, and also as the Vice Chairman of the Board 119 Table of Contentsof Directors of its affiliated company ATLAS S.A. From 2005 to 2007, Mr. Loizos served as the President of the International Packaging Association and asthe Vice President of the Greek Association of Steel Packaging Manufacturers. He is one of the founders/owners of Facility Plus which is engaged in the fieldof property & facility management. Mr. Loizos received a Maitrise en Sciences Economiques from the University of Strasbourg and an M.B.A. in Financefrom New York University. Mr. Loizos also serves as Chairman of the Audit Committee and chairman of the Compensation Committee. Mr. Loizos is anindependent director.George Malanga has been a member of our Board of Directors since April 2010. He is currently serving as the Chief Credit Officer of BNY Mellon.Mr. Malanga has held a variety of positions during his 28 year tenure with the bank. He began his banking career in various relationship management rolesbefore moving to risk management in 2000. Mr. Malanga has served in roles with increased responsibility in credit risk management over the past 12 years.His credit risk experience includes head of asset recovery, head of domestic corporate credit and currently as Chief Credit Officer of BNY Mellon.Mr. Malanga is a member of BNY Mellon’s Operating Committee and holds a Bachelor’s Degree in Business Administration from Rutgers College and anM.B.A. in Finance from New York University. Mr. Malanga also serves as a member of the Audit Committee and the Nominating and Governance Committee.Mr. Malanga is an independent director.There are no family relationships between any of our directors, executive officers or significant employees.B. CompensationThe aggregate annual compensation (salaries and bonus) paid to our current executive officers was approximately $7.8 million for the year endedDecember 31, 2014. We also made contributions for our executive officers to a 401(k) in an aggregate amount of approximately $0.1 million. InDecember 2006, our shareholders approved the adoption of the Navios Maritime Holdings Inc. 2006 Employee, Directors and Consultants Stock Plan (the“2006 Plan”). The 2006 Plan authorizes the issuance of stock grants to our officers, employees, directors and consultants in such amounts and pursuant tosuch terms as may be determined by the Board of Directors at the time of the grant. In February 2015, the Board of Directors approved the adoption of theNavios Holdings 2015 Equity Incentive Plan (the “2015 Equity Incentive Plan”). The 2015 Equity Incentive Plan authorizes the issuance of stock grants toour officers, employees, directors and consultants in such amounts and pursuant to such terms as may be determined by the Board of Directors at the time ofthe grant.On October 18, 2007 and December 16, 2008, the Compensation Committee of the Board of Directors authorized the issuance of restricted commonstock, restricted stock units and stock options in accordance with the Company’s stock option plan for its employees, officers and directors. The Companyawarded shares of restricted common stock and restricted stock units to its employees, officers and directors and stock options to its officers and directors,based on service conditions only, which vest over two years and three years, respectively. On December 17, 2009, December 16, 2010, and December 5, 2011,the Company authorized the issuance of shares of restricted common stock, restricted stock units and stock options in accordance with the Company’s stockoption plan for its employees, officers and directors. These awards of restricted common stock and restricted stock units to its employees, officers anddirectors, vest over three years.On December 20, 2012, December 11, 2013 and December 15, 2014, the Company authorized: (i) the issuance of shares of restricted common stock,restricted stock units and stock options in accordance with the Company’s stock option plan for its employees, officers and directors, which vest over threeyears; and (ii) the issuance of shares of restricted common stock, restricted stock units and stock options in accordance with the Company’s stock option planfor its employees, officers and directors, which have vested or will vest upon achievement of internal performance criteria and completion of a service periodon April 30, 2014 (criteria met), April 30, 2015 and June 2, 2016, respectively. This restriction lapses in two or three equal tranches, respectively, over therequisite service periods, of one, two and three years from the grant date.Details of options grantedAs of the filing of this Annual Report on Form 20-F, 6,705,995 stock options to purchase the Company’s common stock have been granted of which4,003,067 have vested, 314,250 have expired, 1,801,527 remain 120 Table of Contentsunvested and 587,151 have been exercised in total, of which 411,438 at an exercise price of $3.18 per share, 30,595 at an exercise price of $5.87 per share,63,172 at an exercise price of $5.15 per share, 59,546 at an exercise price of $3.81 per share, and 22,400 at an exercise price of $3.44 per share.Out of the 6,705,995 stock options granted, 288,000 options were granted at an exercise price of $16.75 per share; 571,266 options were granted at anexercise price of $3.18 per share; 405,365 options were granted at an exercise price of $5.87 per share; 954,842 options were granted at an exercise price of$5.15 per share; 1,344,353 options were granted at an exercise price of $3.81 per share; 1,344,357 options were granted at an exercise price of $3.44 pershare; 674,809 at an exercise price of $8.63 per share; and 1,123,003 options were granted at an exercise price of $3.64 per share.Details of restricted stock and restricted stock units issuedAs of the filing of this Annual Report on Form 20-F, 5,120,330 shares of restricted stock and restricted stock units have been issued of which 3,052,218have vested and in the aggregate 70,769 were forfeited during the years from 2007 until 2014. See Note 12 to the Consolidated Financial Statements,included herein.Non-employee directors receive annual fees, effective January 1, 2014, in the amount of $80,000 each plus reimbursement of their out-of-pocketexpenses. In addition, the non-executive serving as chairman of the Audit Committee receives an annual fee of $20,000, the chairman of the Nominating andGovernance Committee receives an annual fee of $17,000, and the chairman of the Compensation Committee receives an annual fee of $20,000, plusreimbursement of their out-of-pocket expenses.C. Board PracticesThe board of directors of Navios Holdings is divided into three classes with only one class of directors being elected in each year and each classserving a three-year term. In January 2015, Navios Holdings, following the resignation of Ted Petrone, appointed Shunji Sasada to its Board of Directors. Theterm of office of the first class of directors, consisting of Efstathios Loizos, George Malanga and John Stratakis will expire in 2015. The term of office of thesecond class of directors, consisting of Shunji Sasada and Spyridon Magoulas will expire in 2016. The term of office of the third class of directors, consistingof Angeliki Frangou and Vasiliki Papaefthymiou, will expire in 2017. No directors are entitled to any benefits upon termination of their term.The board of directors has established an audit committee of three independent directors. The audit committee is governed by a written charter, whichwas approved by the board of directors. One of the members of the audit committee is an “audit committee financial expert” for purposes of SEC rules andregulations. The audit committee, among other things, reviews our external financial reporting, engages our external auditors, approves all fees paid toauditors and oversees our internal audit activities and procedures and the adequacy of our internal accounting controls. Our audit committee is comprised ofMessrs. George Malanga, Efstathios Loizos and Spyridon Magoulas, and our audit committee financial expert is Mr. Efstathios Loizos.The board of directors has established a nominating and governance committee of three independent directors, Messrs. John Stratakis, who serves as aChairman, Spyridon Magoulas and George Malanga. This committee is governed by a written charter, which was approved by the board of directors. Thenominating and governance committee is responsible for providing assistance to the board of directors in fulfilling its responsibility to the Company’sstockholders relating to the Company’s nominating procedures and practices for appointing officers and directors as well as the Company’s oversight,analysis and recommendations with respect to corporate governance and best practices, and the Company’s process for monitoring compliance with laws andregulations.The board of directors has established a compensation committee of three independent directors, Messrs. Efstahios Loizos, who serves as a Chairman,Spyridon Magoulas and John Stratakis. The compensation 121 Table of Contentscommittee is governed by a written charter, which was approved by the board of directors. The compensation committee is responsible for reviewing andapproving the compensation of the Company’s executive officers, for establishing, reviewing and evaluating, in consultation with senior management, thelong-term strategy of employee compensation and approving any material change to existing compensation plans.D. EmployeesNavios Holdings crews its vessels primarily with Greek, Ukrainian, Georgian, Filipino, Polish, Romanian and Russian officers and Filipino, Georgian,Indian and Ukrainian seamen. Navios Holdings’ fleet manager is responsible for selecting its Greek officers. Other nationalities are referred to NaviosHoldings’ fleet manager by local crewing agencies. Navios Holdings is also responsible for travel and payroll of the crew. The crewing agencies handle eachseaman’s training. Navios Holdings requires that all of its seamen have the qualifications and licenses required to comply with international regulations andshipping conventions.Navios Logistics crews its fleet with Argentine, Brazilian and Paraguayan officers and seamen. Navios Logistics’ fleet managers are responsible forselecting the crew.With respect to shore-side employees, as of December 31, 2014, Navios Holdings and its subsidiaries employed 167 employees in its Piraeus, Greeceoffice, 13 employees in its New York office, nine employees in its Antwerp, Belgium office, two employees in its Monaco office and one employee in itsSingapore office. Navios Logistics employed 41 employees in its Asuncion, Paraguay offices, 50 employees at the port facility in San Antonio, Paraguay, 134office employees in the Buenos Aires, Argentina office, seven employees in its Montevideo, Uruguay office, with an additional 128 employees at the portfacility in Nueva Palmira, Uruguay and 10 employees in its office in Hidronave’s Corumba, Brazil office.E. Share OwnershipThe following table sets forth information regarding the beneficial ownership of the common stock of Navios Holdings as of April 3, 2015, based on107,072,770 shares of common stock outstanding as of such day, by each of Navios Holdings’ executive officers and directors.Unless otherwise indicated based upon Schedules 13D filed with the SEC and the Company’s knowledge, Navios Holdings believes that all persons named inthe table have sole voting and investment power with respect to all shares of common stock beneficially owned by them. Name and Address of Beneficial Owner(1) Amount and Natureof BeneficialOwnership Percentage ofOutstandingCommon Stock Angeliki Frangou(2)(3) 29,044,799 26.3%George Achniotis * * Ted C. Petrone * * Vasiliki Papaefthymiou * * Anna Kalathakis * * Shunji Sasada * * Leonidas Korres * * Efstratios Desypris * * Ioannis Karyotis * * Erifili Tsironi * * Spyridon Magoulas * * John Stratakis * * Efstathios Loizos * * George Malanga * * *Less than one percent 122 Table of Contents(1)The business address of each of the individuals is c/o Navios Maritime Holdings Inc., 7 Avenue de Grande Bretagne, Office 11B2, Monte Carlo, MC98000 Monaco.(2)Angeliki Frangou has filed a Schedule 13D amendment indicating that she intends, subject to market conditions, to purchase up to $20.0 million ofcommon stock and as of April 28, 2014, she had purchased approximately $10.0 million in value of common stock.(3)The amount and nature of beneficial ownership and the percentage of outstanding common stock includes 3,083,684 options, each for one share,vested but not yet exercised and 207,754 unvested options, each for one share, which will vest within 60 days of the date thereof.On December 20, 2012, 435,283 options were granted at an exercise price of $3.44, on December 11, 2013 424,136 options were granted at an exerciseprice of $8.63, and on December 15, 2014 580,337 options were granted at an exercise price of $3.64, all based on service conditions. On December 20, 2012,December 31, 2013 and on December 15, 2014, 909,074, 250,673 and 542,666 options were granted at an exercise price of $3.44, $8.63 and $3.64,respectively, based on performance and service conditions.On January 11, 2012 and February 27, 2012, 10,969 and 18,282 shares, respectively, were issued following the exercise of the options for cash at anexercise price of $3.18 per share.During 2013, 106,032, 29,243, 10,969 and 7,312 shares, respectively, were issued following the exercise of the options for cash at an exercise price of$3.18, $3.81, $5.87 and $5.15 per share, respectively.During 2014, 15,000, 19,626, 55,860, 30,303 and 22,400 shares, respectively, were issued following the exercise of the options for cash at an exerciseprice of $3.18, $5.87, $5.15, $3.81 and $3.44 per share, respectively.Item 7. Major Shareholders and Related Party TransactionsA. Major ShareholdersThe following table sets forth information regarding the beneficial ownership of the common stock of Navios Holdings as of April 3, 2015 based onshares of common stock outstanding as of such date of each person known by Navios Holdings to be the beneficial owner of more than 5% of its outstandingshares of common stock based upon the amounts and percentages as are contained in the public filings of such persons. All such stockholders have the samevoting rights with respect to their shares of common stock.Unless otherwise indicated, based upon Schedules 13D filed with the SEC and the Company’s knowledge, Navios Holdings believes that all personsnamed in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them. Name Amount andNature ofBeneficialOwnership Percentage ofOutstandingCommon Stock Angeliki Frangou(1) 29,044,799 26.3% (1)The amount and nature of beneficial ownership and the percentage of outstanding common stock includes 3,083,684 options, each for one share,vested but not yet exercised and 207,754 unvested options, each for one share, which will vest within 60 days of the date thereof. 123 Table of ContentsB. Related Party TransactionsOffice Rent: The Company has entered into lease agreements with Goldland Ktimatiki-Ikodomiki-Touristiki Xenodohiaki Anonimos Eteria andEmerald Ktimatiki-Ikodomiki Touristiki Xenodohiaki Anonimos Eteria, both of which are Greek corporations that are currently majority-owned by AngelikiFrangou, Navios Holdings’ Chairman and Chief Executive Officer. The lease agreements provide for the leasing of facilities located in Piraeus, Greece tohouse the operations of most of the Company’s subsidiaries. The total annual lease payments are in aggregate € 0.9 million (approximately $1.3 million) andthe lease agreements expire in 2017 and 2019. These payments are subject to annual adjustments, which are based on the inflation rate prevailing in Greeceas reported by the Greek State at the end of each year.Purchase of Services: The Company utilizes its affiliate company, Acropolis, as a broker. Navios Holdings has a 50% interest in Acropolis. AlthoughNavios Holdings owns 50% of Acropolis’ stock, Navios Holdings agreed with the other shareholder that the earnings and amounts declared by way ofdividends will be allocated 35% to the Company with the balance to the other shareholder. As of December 31, 2014 and 2013, the carrying amount of theinvestment was $0.5 million and $0.4 million, respectively. Dividends received for each of the years ended December 31, 2014, 2013 and 2012 were $0.3million, $0.4 million and $0.1 million, respectively. Commissions charged from Acropolis for each of the years ended December 31, 2014, 2013 and 2012were less than $0.1 million, respectively. Included in the trade accounts payable at both December 31, 2014 and 2013 was an amount due to Acropolis of$0.1 million.Vessels Charter Hire: In February 2012, the Company chartered-in from Navios Partners the Navios Apollon, a 2000-built Ultra-Handymax vessel.The term of this charter was approximately two years at a net daily rate of $12,500 for the first year and $13,500 for the second year, plus 50/50 profit sharingbased on actual earnings. In January 2014, the Company extended this charter for approximately six months at a net daily rate of $13,500 plus 50/50 profitsharing based on actual earnings and in October 2014, the Company further extended this charter for approximately one year at a net daily rate of $12,500plus 50/50 profit sharing based on actual earnings.In May 2012, the Company chartered-in from Navios Partners the Navios Prosperity, a 2007-built Panamax vessel. The term of this charter wasapproximately one year with two six-month extension options granted to the Company at a net daily rate of $12,000 plus profit sharing. In April 2014, theCompany extended this charter for approximately one year and the owners will receive 100% of the first $1,500 in profits above the base rate, and thereafterall profits will be split 50/50 to each party. Effective March 5, 2015, Navios Holdings and Navios Partners entered into a novation agreement with therespective owners of Navios Prosperity whereby the rights to the time charter contracts of the Navios Prosperity were transferred to Navios Holdings.In September 2012, the Company chartered-in from Navios Partners the Navios Libra, a 1995-built Panamax vessel. The term of this charter isapproximately three years at a net daily rate of $12,000 plus 50/50 profit sharing based on actual earnings.In May 2013, the Company chartered-in from Navios Partners the Navios Felicity, a 1997-built Panamax vessel. The term of this charter isapproximately one year, at a net daily rate of $12,000 plus profit sharing, with two six-month extension options granted to the Company. The owners willreceive 100% of the first $1,500 in profits above the base rate, and thereafter all profits will be split 50/50 to each party. In February 2014, the Companyexercised its first option to extend this charter, and in August 2014, the Company exercised its second option.In May 2013, the Company chartered-in from Navios Partners the Navios Aldebaran, a 2008-built Panamax vessel, for six months, at a net daily rate of$11,000 plus profit sharing, with a six-month extension option. In December 2013, the Company exercised its option to extend this charter. The owners willreceive 100% of the first $2,500 in profits above the base rate, and thereafter all profits will be split 50/50 to each party. In July 2014, 124 Table of Contentsthe Company further extended this charter for approximately six to nine months. Effective February 28, 2015, Navios Holdings and Navios Partners enteredinto a novation agreement with the respective owners of Navios Aldebaran whereby the rights to the time charter contracts of the Navios Aldebaran weretransferred to Navios Holdings.In July 2013, the Company chartered-in from Navios Partners the Navios Hope, a 2005-built Panamax vessel. The term of this charter is approximatelyone year at a net daily rate of $10,000. In December 2013, the Company extended this charter for approximately another six months at a net daily rate of$10,000 plus 50/50 profit sharing based on actual earnings.In July 2013, the Company chartered-in from Navios Partners the Navios Melodia, a 2010-built Capesize vessel for a net daily rate of $15,000. Thecontract was completed in October 2013.In July 2013, the Company chartered-in from Navios Partners the Navios Pollux, a 2009-built Capesize vessel, under a voyage charter which wascompleted in August 2013. In August 2014, the Company chartered-in the Navios Pollux, for approximately three months at a net daily rate of $21,300. Thecontract was completed in November 2014.Total charter hire expense for all vessels for the years ended December 31, 2014, 2013 and 2012 was $28.2 million, $22.4 million and $7.5 million,respectively, and was included in the consolidated statements of comprehensive (loss)/income under “Time charter, voyage and logistics business expenses”.Management Fees: Navios Holdings provides commercial and technical management services to Navios Partners’ vessels for a daily fixed fee. Thedaily fees were $4,650 per owned Ultra Handymax vessel, $4,550 per owned Panamax vessel and $5,650 per owned Capesize vessel until December 31, 2013.This daily fee covered all of the vessels’operating expenses, including the cost of drydock and special surveys. In each of October 2013, August 2014 andFebruary 2015, the Company amended its existing management agreement with Navios Partners to fix the fees for ship management services of its ownedfleet at : (i) $4,000 daily rate per Ultra-Handymax vessel; (ii) $4,100 daily rate per Panamax vessel; (iii) $5,100 daily rate per Capesize vessel; (iv) $6,500daily rate per container vessel of TEU 6,800; (v) $7,200 daily rate per container vessel of more than TEU 8,000; and (vi) $8,500 daily rate per very largecontainer vessel of more than TEU 13,000 through December 31, 2015. Drydocking expenses under this agreement will be reimbursed by Navios Partners atcost at occurrence. Total management fees for the years ended December 31, 2014, 2013 and 2012, amounted to $50.4 million, $36.2 million and $31.7million, respectively, and are presented net under the caption “Direct vessel expenses”.Navios Holdings provides commercial and technical management services to Navios Acquisition’s vessels for a daily fee that was fixed until May2014, of $6,000 per owned MR2 product tanker and chemical tanker vessel, $7,000 per owned LR1 product tanker vessel and $10,000 per owned VLCCvessel. This daily fee covers all of the vessels’ operating expenses, other than certain fees and costs. Actual operating costs and expenses will be determinedin a manner consistent with how the initial fixed fees were determined. Drydocking expenses until May 2014 were fixed under this agreement for up to $0.3million per LR1 and MR2 product tanker vessel and will be reimbursed at cost for VLCC vessels. In May 2014, Navios Holdings extended the duration of itsexisting management agreement with Navios Acquisition until May 2020 and fixed the fees for ship management services of Navios Acquisition owned fleetfor two additional years through May 2016 at the same rates for product tanker and chemical tanker vessels, and reduced the daily rate to $9,500 per VLCCvessel. Drydocking expenses under this agreement will be reimbursed at cost at occurrence for all vessels.Effective March 30, 2012, Navios Acquisition can, upon request to Navios Holdings, partially or fully defer the reimbursement of drydocking andother extraordinary fees and expenses under the management agreement to a later date, but not later than January 5, 2016, and if reimbursed on a later date,such amounts will bear interest at a rate of 1% per annum over LIBOR. Commencing September 28, 2012, Navios Acquisition can, upon request, 125 Table of Contentsreimburse Navios Holdings partially or fully for any fixed management fees outstanding for a period of not more than nine months under the managementagreement at a later date, but not later than January 5, 2016, and if reimbursed on a later date, such amounts will bear interest at a rate of 1% per annum overLIBOR. Total management fees for the years ended December 31, 2014, 2013 and 2012 amounted to $95.8 million, $71.4 million and $47.0 million,respectively, and are presented net under the caption “Direct vessel expenses”.Pursuant to a management agreement dated December 13, 2013, Navios Holdings provides commercial and technical management services to NaviosEurope’s tanker and container vessels. The term of this agreement is for a period of six years. Management fees under this agreement will be reimbursed atcost at occurrence. Total management fees for the years ended December 31, 2014, 2013 and 2012 amounted to $20.1 million, $0.7 million and $0,respectively, and are presented net under the caption “Direct vessel expenses”.Pursuant to a management agreement dated November 18, 2014, Navios Holdings provides commercial and technical management services to NaviosNavios Midstream’s vessels for a daily fixed fee of $9,500 per owned VLCC vessel effective through November 18, 2016. Drydocking expenses under thisagreement will be reimbursed at cost at occurrence for all vessels. The term of this agreement is for a period of five years. Total management fees for the yearsended December 31, 2014, 2013 and 2012 amounted to $1.7 million, $0 and $0, respectively, and are presented net under the caption “Direct vesselexpenses”.Navios Partners Guarantee: In November 2012 (as amended to update for charters in March 2014), the Company entered into an agreement withNavios Partners (the “Navios Partners Guarantee”) to provide Navios Partners with guarantees against counterparty default on certain existing charters, whichhad previously been covered by the charter insurance for the same vessels, same periods and same amounts. The Navios Partners Guarantee provides for amaximum possible payout of $20.0 million by the Company to Navios Partners. Premiums that are calculated on the same basis as the restructured charterinsurance are included in the management fee that is paid by Navios Partners to Navios Holdings pursuant to the management agreement. As of December 31,2014, no claims had been submitted to Navios Holdings.General and Administrative Expenses incurred on behalf of affiliates/Administrative fee revenue from affiliates: Navios Holdings providesadministrative services to Navios Partners. Such services include: bookkeeping, audit and accounting services, legal and insurance services, administrativeand clerical services, banking and financial services, advisory services, client and investor relations and other general and administrative services. NaviosHoldings is reimbursed for reasonable costs and expenses incurred in connection with the provision of these services. Total general and administrative feesfor years ended December 31, 2014, 2013 and 2012 amounted to $6.1 million, $4.4 million and $3.9 million, respectively.On May 28, 2010, Navios Holdings entered into an administrative services agreement with Navios Acquisition, pursuant to which Navios Holdingsprovides office space and certain administrative management services to Navios Acquisition which include: bookkeeping, audit and accounting services,legal and insurance services, administrative and clerical services, banking and financial services, advisory services, client and investor relations and othergeneral and administrative services. In May 2014, Navios Holdings extended the duration of its existing administrative services agreement with NaviosAcquisition until May 2020 pursuant to its existing terms. Navios Holdings is reimbursed for reasonable costs and expenses incurred in connection with theprovision of these services. Total general and administrative fees for the years ended December 31, 2014, 2013 and 2012 amounted to $7.3 million, $3.5million and $2.1 million, respectively.On April 12, 2011, Navios Holdings entered into an administrative services agreement with Navios Logistics for a term of five years, pursuant to whichNavios Holdings will provide certain administrative management services to Navios Logistics. Such services include bookkeeping, audit and accountingservices, legal and insurance services, administrative and clerical services, banking and financial services, advisory services, client and investor relations andother services. Navios Holdings is reimbursed for reasonable costs and expenses incurred in connection with the provision of these services. Total general andadministrative fees for all 126 Table of Contentsthe years ended December 31, 2014, 2013 and 2012 amounted to $0.8 million, $0.7 million and $0.6 million, respectively. The general and administrativefees have been eliminated upon consolidation.Pursuant to an administrative services agreement dated December 13, 2013, Navios Holdings provides administrative services to Navios Europe’stanker and container vessels. Such services include: bookkeeping, audit and accounting services, legal and insurance services, administrative and clericalservices, banking and financial services, advisory services, client and investor relations and other services. The term of this agreement is for a period of sixyears. Navios Holdings is reimbursed for reasonable costs and expenses incurred in connection with the provision of these services. Total general andadministrative fees for the years ended December 31, 2014, 2013 and 2012 amounted to $0.8 million, less than $0.1 million and $0, respectively.Pursuant to an administrative services agreement dated November 18, 2014, Navios Holdings provides administrative services to Navios Midstream.Such services include: bookkeeping, audit and accounting services, legal and insurance services, administrative and clerical services, banking and financialservices, advisory services, client and investor relations and other services. The term of this agreement is for a period of five years. Navios Holdings isreimbursed for reasonable costs and expenses incurred in connection with the provision of these services. Total general and administrative fees for the yearsended December 31, 2014, 2013 and 2012 amounted to $0.1 million, $0 and $0, respectively.Balance Due from Affiliates (excluding Navios Europe): Balance due from affiliates as of December 31, 2014 amounted to $33.4 million (December31, 2013: $12.1 million) which included the current amounts due from Navios Partners, Navios Acquisition and Navios Midstream, which were $1.6 million(December 31, 2013: $0.4 million), and $22.1 million (December 31, 2013: $6.5 million) and $0.1 million (December 31, 2013: $0), respectively, and thenon-current amount of $9.6 million (December 31, 2013: $5.1 million) due from Navios Acquisition. The balances mainly consisted of management fees,administrative fees, drydocking and other expenses and amounts payable.Omnibus Agreements: Navios Holdings has entered into an omnibus agreement with Navios Partners (the “Partners Omnibus Agreement”) inconnection with the closing of Navios Partners’ IPO governing, among other things, when Navios Holdings and Navios Partners may compete against eachother as well as rights of first offer on certain dry bulk carriers. Pursuant to the Partners Omnibus Agreement, Navios Partners generally agreed not to acquireor own Panamax or Capesize dry bulk carriers under time charters of three or more years without the consent of an independent committee of Navios Partners.In addition, Navios Holdings has agreed to offer to Navios Partners the opportunity to purchase vessels from Navios Holdings when such vessels are fixedunder time charters of three or more years.Navios Holdings entered into an omnibus agreement with Navios Acquisition and Navios Partners (the “Acquisition Omnibus Agreement”) inconnection with the closing of Navios Acquisition’s initial vessel acquisition, pursuant to which, among other things, Navios Holdings and Navios Partnersagreed not to acquire, charter-in or own liquid shipment vessels, except for container vessels and vessels that are primarily employed in operations in SouthAmerica, without the consent of an independent committee of Navios Acquisition. In addition, Navios Acquisition, under the Acquisition OmnibusAgreement, agreed to cause its subsidiaries not to acquire, own, operate or charter dry bulk carriers subject to specific exceptions. Under the AcquisitionOmnibus Agreement, Navios Acquisition and its subsidiaries granted to Navios Holdings and Navios Partners, a right of first offer on any proposed sale,transfer or other disposition of any of its dry bulk carriers and related charters owned or acquired by Navios Acquisition. Likewise, Navios Holdings andNavios Partners agreed to grant a similar right of first offer to Navios Acquisition for any liquid shipment vessels it might own. These rights of first offer willnot apply to a (i) sale, transfer or other disposition of vessels between any affiliated subsidiaries, or pursuant to the terms of any charter or other agreementwith a counterparty, or (ii) merger with or into, or sale of substantially all of the assets to, an unaffiliated third party. 127 Table of ContentsNavios Holdings entered into an omnibus agreement with Navios Midstream, Navios Acquisition and Navios Partners in connection with the NaviosMidstream IPO, pursuant to which Navios Acquisition, Navios Holdings, Navios Partners and their controlled affiliates generally have agreed not to acquireor own any VLCCs, crude oil tankers, refined petroleum product tankers, LPG tankers or chemical tankers under time charters of five or more years withoutthe consent of Navios Midstream. The omnibus agreement contains significant exceptions that will allow Navios Acquisition, Navios Holdings, NaviosPartners or any of their controlled affiliates to compete with Navios Midstream under specified circumstances.Midstream General Partner Option Agreement: Navios Holdings entered into an option agreement, with Navios Acquisition under which NaviosAcquisition, which owns and controls Midstream General Partner, granted Navios Holdings the option to acquire a minimum of 25% of the outstandingmembership interests in Midstream General Partner and the incentive distribution rights in Navios Midstream representing the right to receive an increasingpercentage of the quarterly distributions when certain conditions are met. The option shall expire on November 18, 2024. The purchase price for theacquisition for all or part of the option interest shall be an amount equal to its fair market value. As of December 31, 2014, Navios Holdings had not exercisedany part of that option.Sale of Vessels and Sale of Rights to Navios Partners: Upon the sale of vessels to Navios Partners, Navios Holdings recognizes the gain immediatelyin earnings only to the extent of the interest in Navios Partners owned by third parties and defers recognition of the gain to the extent of its own ownershipinterest in Navios Partners (the “deferred gain”). Subsequently, the deferred gain is amortized to income over the remaining useful life of the vessel. Therecognition of the deferred gain is accelerated in the event that (i) the vessel is subsequently sold or otherwise disposed of by Navios Partners or (ii) theCompany’s ownership interest in Navios Partners is reduced. In connection with the public offerings of common units by Navios Partners, a pro rata portionof the deferred gain is released to income upon dilution of the Company’s ownership interest in Navios Partners. As of December 31, 2014 and 2013, theunamortized deferred gain for all vessels and rights sold totaled $16.3 million and $21.6 million, respectively. For the years ended December 31, 2014, 2013and 2012, Navios Holdings recognized $5.3 million, $6.9 million and $12.7 million of the deferred gain, respectively, in “Equity in net earnings of affiliatedcompanies”.Participation in Offerings of Affiliates: Refer to “Item 4.—Information on the Company” and “Item 5.—Operating and Financial Review andProspects” for Navios Holdings’ participation in Navios Acquisition’s and Navios Partners’ offerings. On February 4, 2015, Navios Holdings entered into ashare purchase agreement with Navios Partners pursuant to which Navios Holdings made an investment in Navios Partners by purchasing common units, andgeneral partnership interests, in order to maintain its 20% partnership interest in Navios Partners following its equity offering in February 2015. In connectionwith this agreement, Navios Holdings entered into a registration rights agreement with Navios Partners pursuant to which Navios Partners provided NaviosHoldings with certain rights relating to the registration of the common units.Conversion of Navios Partners Units: On January 1, 2012, all of Navios Partners’ outstanding subordinated units owned by Navios Holdingsconverted into 7,621,843 common units of Navios Partners (excluding the Series A Subordinated Units, which are a separate class of subordinated units) (the“Conversion”). The Company concluded that the Conversion resulted in a change in the form of its investment in Navios Partners that was a reconsiderationevent pursuant to ASC 323-10-15-16a. In connection with that reconsideration, the Company concluded that the common units of Navios Partners, whichprior to January 1, 2012 did not meet the definition of common stock or “in-substance common stock,” met the definition of “in-substance common stock”starting January 1, 2012. Although the common units continued to enjoy certain preferences by comparison to the Series A Subordinated Units, the Series ASubordinated Units constituted such a small portion of the capital structure of Navios Partners and, as such, the liquidation preference was not considered tobe substantive under ASC 323-10-15-13a. In addition, at the time of the reconsideration, it was known that the Series A Subordinated Units would themselvesautomatically convert to common units of Navios Partners on June 29, 2012. Accordingly, the Company concluded that the risk and reward profile of thecommon units and Series A Subordinated Units were substantially the same in accordance with ASC 323-10-15-13b. As a 128 Table of Contentsresult, the Company’s entire investment in Navios Partners (a portion of which was previously accounted for as available-for-sale securities) is accounted forby the equity method from January 1, 2012. As a result, the carrying value of the available-for sale securities of $82.6 million plus the amount reflected inother comprehensive losses of $6.2 million (in each case, as of December 31, 2011) was reclassified to “Investments in Affiliates”. On June 29, 2012, theoutstanding Series A Subordinated Units converted into 1,000,000 shares of common units which have the same distribution rights as all other common unitsholders.The Navios Holdings Credit Facilities: Navios Acquisition entered into a $40.0 million credit facility with Navios Holdings in 2010, which wasamended in 2010, 2011 and 2014, and matures in December 2015. The facility is available for multiple drawings up to a limit of $40.0 million and has amargin of LIBOR plus 300 basis points. As of December 31, 2014 and 2013, there was no outstanding amount under this facility.On November 11, 2014, Navios Acquisition entered into a short-term credit facility with Navios Holdings pursuant to which Navios Acquisition couldborrow up to $200.0 million for general corporate purposes. The facility provides for an arrangement fee of $4.0 million, bared a fixed interest of 600 bps andmatured on December 29, 2014. As of December 31, 2014, the facility was fully repaid.Balance due from Navios Europe: Balance due from Navios Europe as of December 31, 2014 amounted to $4.1 million (December 31, 2013: $1.4million), which included mainly the current amounts of $3.4 million (December 31, 2013: $1.4 million) mainly consisting of management fees, accruedinterest income earned under the Navios Revolving Loans and other expenses and the non-current amount of $0.7 million (December 31, 2013: $0) related tothe accrued interest income earned under the Navios Term Loans.The Navios Revolving Loans and the Navios Term Loans earn interest and an annual preferred return, respectively, at 1,270 basis points per annum, ona quarterly compounding basis and are repaid from free cash flow (as defined in the loan agreement) to the fullest extent possible at the end of each quarter.There are no covenant requirements or stated maturity dates.As of December 31, 2014, the outstanding amount relating to the Navios Revolving Loans is $7.1 million (December 31, 2013: $2.7 million), underthe caption “Loan receivable from affiliate companies”. As of December 31, 2014, the amount undrawn under the Revolving Loans was $9.1 million, ofwhich Navios Holdings is committed to fund $4.3 million.C. Interests of experts and counsel.Not applicable.Item 8. Financial InformationA. Consolidated Statements and Other Financial InformationConsolidated Financial Statements: See Item 18.Legal Proceedings: Navios Holdings is not involved in any legal proceedings that it believes will have a significant effect on its business, financialposition, results of operations or liquidity.From time to time, Navios Holdings may be subject to legal proceedings and claims in the ordinary course of business. It is expected that these claimswould be covered by insurance if they involve liabilities such as arise from a collision, other marine casualty, damage to cargoes, oil pollution, death orpersonal injuries to crew, subject to customary deductibles. Those claims, even if lacking merit, could result in the expenditure of significant financial andmanagerial resources.Dividend Policy: Currently, Navios Holdings intends to retain most of its available earnings generated by operations for the development and growthof its business. The declaration and payment of any dividend remains 129 Table of Contentssubject to the discretion of the Board of Directors, and will depend on, among other things, Navios Holdings’ cash requirements after taking into accountmarket opportunities, debt obligations, and restrictions contained in its credit agreements and indentures and market conditions. In addition, the terms andprovisions of our current secured credit facilities and indentures limit our ability to pay dividends in excess of certain amounts or if certain covenants are notmet. (See also Item 5.B. “Long-term Debt Obligations and Credit Arrangements.”)During 2013, the Board of Directors declared cash dividends to its common stockholders of approximately $24.7 million.On February 17, 2014, the Board of Directors declared a quarterly cash dividend of approximately $6.3 million for the fourth quarter of 2013 of $0.06per share of common stock, paid on March 27, 2014 to stockholders of record as of March 20, 2014.On May 15, 2014, the Board of Directors declared a quarterly cash dividend of approximately $6.3 million for the first quarter of 2014 of $0.06 pershare of common stock, paid on June 26, 2014 to stockholders of record as of June 18, 2014.On August 14, 2014, the Board of Directors declared a quarterly cash dividend of approximately $6.3 million for the second quarter of 2014 of $0.06per share of common stock, paid on September 26, 2014 to stockholders of record as of September 18, 2014.On November 19, 2014, the Board of Directors declared a dividend of approximately $6.3 million for the third quarter of 2014 of $0.06 per share ofcommon stock, paid on December 18, 2014 to stockholders of record as of December 11, 2014.On February 16, 2015, the Board of Directors declared a quarterly cash dividend of approximately $6.3 million for the fourth quarter of 2014 of $0.06per share of common stock, paid on March 27, 2015 to stockholders of record as of March 20, 2015.B. Significant ChangesNot applicable.Item 9. Listing DetailsAs of February 22, 2007, the Company’s common stock and warrants were no longer trading as a unit, and as of such date, the principal trading marketfor our securities has been the New York Stock Exchange (“NYSE”) under the symbols “NM” for our common stock and “NMWS” for our warrants. OnDecember 9, 2008, our publicly traded warrants expired and ceased to be publicly traded. For the period from November 3, 2005 to February 22, 2007 ourcommon stock, warrants and units were trading on the Nasdaq National Market (“NASDAQ”) under the symbols “BULK”, “BULKW” and “BULKU”,respectively. Prior to November 3, 2005, the principal trading market of our securities was the Over-The-Counter Bulletin Board (“OTCBB”). Our Series Gand Series H Preferred Stock issued in January and July 2014, respectively, are trading on the NYSE under the symbols “NMPrG.” and “NMPrH.”The following table sets forth, for the periods indicated, the reported high and low market prices of our common and preferred stock (Series G andSeries H) on the NYSE. 130 Table of ContentsOn April 2, 2015, the closing price of our common stock was $4.11. The quotations listed below reflect high and low market prices, without retailmarkup, markdown or commission, and may not necessarily represent actual transactions:(a) For the five most recent full financial years: the annual high and low market prices: Common Stock Series G Series H Year Ended High Low High Low High Low December 31, 2014 $12.12 $3.50 $26.49 $16.47 $25.05 $16.55 December 31, 2013 $11.73 $3.40 $— $— $— $— December 31, 2012 $4.49 $3.08 $— $— $— $— December 31, 2011 $5.99 $2.88 $— $— $— $— December 31, 2010 $7.55 $4.38 $— $— $— $— (b) For the two most recent full financial years and any subsequent period: the high and low closing prices for each financial quarter: Common Stock Series G Series H Quarter Ended High Low High Low High Low March 31, 2015 $4.68 $3.55 $26.50 $18.99 $22.42 $19.70 December 31, 2014 $6.34 $3.50 $25.51 $16.47 $24.58 $16.55 September 30, 2014 $10.27 $5.76 $26.00 $25.01 $25.05 $23.95 June 30, 2014 $10.58 $7.52 $26.49 $24.42 $— $— March 31, 2014 $12.12 $8.53 $25.20 $23.82 $— $— December 31, 2013 $11.73 $6.78 $— $— $— $— September 30, 2013 $7.67 $5.26 $— $— $— $— June 30, 2013 $5.70 $3.80 $— $— $— $— (c) For the most recent six months: the high and low closing prices for each month: Common Stock Series G Series H Month Ended High Low High Low High Low March 2015 $4.62 $3.87 $26.50 $21.00 $22.42 $18.22 February 2015 $4.68 $3.61 $22.96 $21.20 $21.94 $19.97 January 2015 $4.45 $3.55 $23.50 $18.99 $21.05 $18.22 December 2014 $4.84 $3.50 $22.21 $16.47 $21.75 $16.55 November 2014 $6.21 $4.82 $24.97 $21.35 $24.19 $21.14 October 2014 $6.34 $4.20 $25.51 $19.60 $24.58 $18.01 Item 10. Additional InformationA. Share CapitalNot applicable.B. Memorandum of articles of associationPlease refer to Exhibit 3.1 of Form F-1, filed with the Securities and Exchange Commission (“SEC”) on November 2, 2005 with file number 333-129382; Exhibit 99.1 of Form 6-K, filed on January 17, 2007 with file number 000-51047, which the Company hereby incorporates by reference and thefollowing filings on Form 6-K or Form 8-A, as applicable, (file number 001-33311) filed with the SEC : Exhibit 99.2 of Form 6-K filed on October 6, 2008;Exhibit 3.1 of Form 6-K filed on July 7, 2009; Exhibit 3.1 of Form 6-K filed on September 22, 131 Table of Contents2009; Exhibit 3.1 of Form 6-K filed on September 24, 2009; Exhibit 3.1 of Form 6-K filed on February 4, 2010; Exhibit 1.1 of Form 6-K filed onNovember 15, 2010; Exhibit 1.1 of Form 6-K filed on December 22, 2010; Exhibit 3.3 of Form 8-A filed on January 24, 2014 and Exhibit 3.3 of Form 8-Afiled on July 7, 2014, each of which the Company hereby incorporates by reference.C. Material ContractsRefer to “Item 4. — Information on the Company” for a discussion of various agreements relating to our business and certain vessel transactions,including Item 4.B. for a discussion of our option agreements to purchase 16 chartered-in vessels , and to Item 5. — Operating and Financial Review andProspects” for a discussion of our long-term debt, including Item 5.F for a discussion of the long-term debt, the operating lease obligations and the rentobligations. Other than these agreements, there are no material contracts, other than the contracts entered into in the ordinary course of business, to which theCompany or any of its subsidiaries is a party.D. Exchange controlsUnder the laws of the Marshall Islands, Uruguay, Liberia, Panama, Belgium, Luxembourg, Malta, Brazil, Paraguay, Cayman Islands, Hong Kong andthe British Virgin Islands, the countries of incorporation of the Company and its subsidiaries, there are currently no restrictions on the export or import ofcapital, including foreign exchange controls, or restrictions that affect the remittance of dividends, interest or other payments to non-resident holders of ourcommon stock.In the case of Argentina, however, it should be noted that since the year 2001, local authorities have established certain foreign exchange restrictionsthat affect the export or import of capital. Such restrictions have been progressively eased since 2003 but have not been eliminated. Additionally, there canbe no assurance that local authorities in Argentina will not modify such regulations.E. TaxationMarshall Islands Tax ConsiderationsNavios Holdings is incorporated in the Marshall Islands. Under current Marshall Islands law, Navios Holdings will not be subject to tax on income orcapital gains, and no Marshall Islands withholding tax will be imposed upon payments.Other Tax JurisdictionsCertain of Navios Holdings’ subsidiaries are incorporated in countries which impose taxes, such as Malta and Belgium, however such taxes areimmaterial to Navios Holdings’ operations.Certain of the Company’s subsidiaries are registered as Law 89 companies in Greece. These Law 89 companies are exempt from Greek income tax ontheir income derived from certain activities related to shipping. Since all the Law 89 companies conduct only business activities that qualify for theexemption of Greek income tax, no provision has been made for Greek income tax with respect to income derived by these Law 89 companies from theirbusiness operations in Greece.In accordance with the currently applicable Greek law, foreign flagged vessels that are managed by Greek or foreign ship management companieshaving established an office in Greece are subject to duties towards the Greek state which are calculated on the basis of the relevant vessel’s tonnage. Thepayment of said duties exhausts the tax liability of the foreign ship owning company and the relevant manager against any tax, duty, charge or contributionpayable on income from the exploitation of the foreign flagged vessel. 132 Table of ContentsAdditionally, under a new tax bill ratified on January 14, 2013, an annual contribution, applying only to fiscal years 2012-2015, was imposed onoffices or branches of foreign enterprises that have been established in Greece and are engaged in the exploitation, chartering, insurance, average (damage)settlements, purchase, chartering or shipbuilding brokerage, or chartering or insurance of ships under Greek or foreign flag, as well as the representation ofship-owner companies or undertakings, whose object is identical to the abovementioned activities. This contribution is imposed on the total amount ofimported foreign exchange, calculated on a minimum $50,000. The impact of this new tax bill is not expected to be material to Navios Holdings’ operations.Navios Logistics subsidiaries are incorporated in countries which impose taxes, such as Argentina, Uruguay, Brazil and Paraguay. Income tax liabilitiesof the Argentinean subsidiaries for the current and prior periods are measured at the amount expected to be paid to the taxation authorities using a tax rate of35% on the taxable net income. Tax rates and tax laws used to assess the income tax liability are those that are effective on the close of the fiscal period.Additionally, at the end of the fiscal year local companies in Argentina have to calculate an assets tax (“Impuesto a la Ganancia Mínima Presunta” orAlternative Minimum Income Tax). This tax is supplementary to income tax and is calculated by applying the effective tax rate of 1% over the gross value ofthe corporate assets (based on tax law criteria). The subsidiaries’ tax liabilities will be the higher of income tax or Alternative Minimum Tax. However, if theAlternative Minimum Tax exceeds income tax during any fiscal year, such excess may be computed as a prepayment of any income tax excess over theAlternative Minimum Tax that may arise in the next ten fiscal years. Relating to the Paraguayan subsidiaries there are two possible options to determine theincome tax liability. Under the first option income tax liabilities for the current and prior periods are measured at the amount expected to be paid to thetaxation authorities, by applying the tax rate of 10% on the fiscal profit and loss. 50% of revenues derived from international freights are consideredParaguayan sourced (and therefore taxed) if carried between Paraguay and Argentina, Bolivia, Brazil or Uruguay. In any other case, only 30% of revenuesderived from international freights are considered Paraguayan sourced. Companies whose operations are considered international freights can choose to payincome taxes on their revenues at an effective tax rate of 1% on such revenues, without considering any other kind of adjustments. Fiscal losses, if any, areneither deducted nor carried forward.Material U.S. Federal Income Tax ConsiderationsThe following discussion addresses certain U.S. federal income tax considerations applicable to us and to the purchase, ownership and disposition ofour common stock. The discussion is based on the U.S. Internal Revenue Code of 1986, as amended (the “Code”), judicial decisions, administrativepronouncements, and existing and proposed regulations issued by the U.S. Treasury (the “Treasury Regulations”), all of which are subject to change, possiblywith retroactive effect. Changes in these authorities may cause the tax consequences to vary substantially from the consequences described below. No partyhas sought or will seek any rulings from the U.S. Internal Revenue Service (the “IRS”) with respect to the U.S. federal income tax consequences discussedbelow. The discussion below is not in any way binding on the IRS or the courts or in any way an assurance that the U.S. federal income tax consequencesdiscussed herein will be accepted by the IRS or the courts.The U.S. federal income tax consequences to a beneficial owner of our common stock may vary depending on such beneficial owner’s particularsituation or status. This discussion is limited to beneficial owners of our common stock who hold our common stock as capital assets, and it does not addressaspects of U.S. federal income taxation that may be relevant to persons who are subject to special treatment under U.S. federal income tax laws, including butnot limited to: dealers in securities; banks and other financial institutions; insurance companies; tax-exempt entities, plans or accounts; persons holding ourcommon stock as part of a “hedge,” “straddle” or other risk reduction transaction; partnerships or other pass-through entities (or investors in such entities);U.S. persons whose functional currency is not the U.S. dollar; persons that actually or constructively own 10% or more (by voting power or value) of ouroutstanding stock; U.S. expatriates; and persons subject to alternative minimum tax. The following discussion is for general information purposes only anddoes not address any U.S. state or local tax matters, any non-U.S. tax matters, or any U.S. federal taxes other than income taxes (such as estate and gift taxes orthe Medicare tax on certain investment income). 133 Table of ContentsYou are encouraged to consult your own tax advisor regarding the particular U.S. federal, state and local and non-U.S. income and other taxconsequences applicable to us and to the purchase, ownership and disposition of our common stock that may be applicable to you.U.S. Federal Income Taxation of the CompanyTaxation of Our Shipping IncomeNavios Holdings is incorporated under the laws of the Marshall Islands. Accordingly, we take the position that Navios Holdings is taxed as a foreigncorporation by the United States, and the remainder of this discussion assumes the correctness of this position. If Navios Holdings were taxed as a UnitedStates corporation, it could be subject to substantially greater United States federal income tax than contemplated below. See “Risk Factors — Tax Risks —Navios Maritime Holdings Inc. may be taxed as a United States corporation.”Subject to the discussion of “effectively connected” income below, unless exempt from U.S. federal income tax under the rules contained inSection 883 of the Code and the Treasury Regulations promulgated thereunder, a non-U.S. corporation is subject to a 4% U.S. federal income tax in respect ofits U.S.-source gross shipping income (without allowance for deductions). For this purpose, U.S.-source gross shipping income includes 50% of the shippingincome that is attributable to transportation that begins or ends (but that does not both begin and end) in the United States. Shipping income attributable totransportation that both begins and ends in the United States is considered to be 100% U.S.-source. Shipping income attributable to transportationexclusively between non-U.S. destinations is considered to be 100% non-U.S. source and generally is not subject to U.S. federal income tax. “Shippingincome” means income that is derived from the use of vessels, the hiring or leasing of vessels for use on a time, voyage or bareboat charter basis, theparticipation in a pool, partnership, strategic alliance, joint operating agreement, code sharing agreement or other joint venture it directly or indirectly ownsor participates in that generates such income, or the performance of services directly related to these 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 incometax on its U.S.-source shipping income if the following three requirements are satisfied: • It is organized in a jurisdiction outside the United States that grants an “equivalent exemption” from tax to corporations organized in the UnitedStates with respect to the types of U.S.-source shipping income that we earn; • Either (i) its stock is “primarily traded” and “regularly traded” on an “established securities market” in the United States, in its country oforganization, or in another country that grants an “equivalent exemption” to U.S. corporations or (ii) more than 50% of the value of its stock isowned, directly or indirectly, by (a) individuals who are “residents” of foreign countries that grants an “equivalent exemption,” (b) non-U.S.corporations organized in foreign countries that grant an “equivalent exemption” and that meet the test described in (i), and/or (c) certain otherqualified shareholders described in the Treasury Regulations promulgated under Section 883; and • It meets certain substantiation and reporting requirements.We believe that we and each of our subsidiaries qualifies and will continue to qualify for the foreseeable future for this statutory tax exemption underSection 883 with respect to our U.S.-source shipping income, provided that our common stock represents more than 50% of the total combined voting powerof all classes of our stock entitled to vote and of the total value of our stock, and less than 50% of our common stock is owned, actually or constructivelyunder specified stock attribution rules, on more than half the number of days in the relevant year by persons who each own more 5% or more of the vote andvalue of our common stock. However, no assurance can be given that we will continue to qualify for this exemption 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 thoseyears to the 4% U.S. federal income tax on our gross U.S.-source 134 Table of Contentsshipping income described above, subject to the discussion of “effectively connected” income below. We expect that no more than a small portion of ourgross shipping income would be treated as U.S.-source and we expect that the effective rate of U.S. federal income tax on our gross shipping income would besignificantly below 1%.To the extent exemption under Section 883 is unavailable, our U.S.-source gross shipping income that is considered to be “effectively connected” withthe conduct of a U.S. trade or business (net of applicable deductions) would be subject to the U.S. federal corporate income tax currently imposed at rates ofup to 35%, but would not be subject to the 4% tax discussed above. In addition, we may be subject to the 30% U.S. “branch profits” tax on any earnings andprofits effectively connected with the conduct of such trade or business, as determined after allowance for certain adjustments, and on certain interest paid ordeemed paid that is attributable to the conduct of such U.S. trade or business.Our U.S.-source shipping income attributable to time or voyage charters (which currently represent, and are expected to continue to represent,substantially all of our shipping income) would be considered “effectively connected” with the conduct of a U.S. trade or business only if: • we had, or were considered to have, a fixed place of business in the United States involved in the earning of such shipping income; and • Substantially all of our U.S.-source shipping were attributable to regularly scheduled transportation.We do not have, or intend to have or permit circumstances that would result in us having, such a fixed place of business in the United States or anyvessel sailing to or from the United States on a regularly scheduled basis. Based on the foregoing and on the expected mode of our shipping operations andactivities, we believe that none of our U.S.-source shipping income will be “effectively connected” with the conduct of a U.S. trade or business.In addition, income attributable to transportation that both begins and ends in the United States is not subject to the tax rules described above. Suchincome is subject to either a 30% gross-basis tax or to U.S. federal corporate income tax on net income at rates of up to 35% (and the branch profits taxdiscussed above). Although there can be no assurance, we do not expect to engage in transportation that produces shipping income of this type.Taxation of Gain on Our Sale of VesselsOn the sale of a vessel that has produced “effectively connected” income (as discussed above), we could be subject to net basis U.S. federal corporateincome tax as well as branch profits tax with respect to the gain recognized up to the amount of certain prior deductions for depreciation that reducedeffectively connected income. Otherwise, we should not be subject to U.S. federal income tax with respect to gain realized on the sale of a vessel, providedthe sale is considered to occur outside of the United States (as determined under U.S. tax principles) and the gain is not attributable to an office or other fixedplace of business maintained by us in the United States under U.S. federal income tax principles.Taxation of U.S. Holders of our Common StockThe following discussion is limited to persons that are “U.S. holders” of our common stock. For purposes of this discussion, a “U.S. holder” is abeneficial owner of our common stock that is: • an individual U.S. citizen or resident (as determined for U.S. federal income tax purposes); • a corporation (or other entity that is classified as a corporation for U.S. federal income tax purposes) organized under the laws of the United Statesor any of its political subdivisions; • an estate the income of which is subject to U.S. federal income taxation regardless of its source; or 135 Table of Contents • a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United Statespersons (as determined for U.S. federal income tax purposes) have the authority to control all substantial decisions of that trust, or if the trust hasvalidly elected to be treated as a U.S. trust.If an entity treated for U.S. federal income tax purposes as a partnership holds our common stock, the tax treatment of a partner will generally dependupon the status of the partner, upon the activities of the partnership and certain determinations made at the partner level. If you are a partner in a partnershipconsidering an investment in ourcommon stock, you should consult your tax advisor.Distributions on Our Common StockSubject to the discussion of “passive foreign investment companies” below, any distributions that you receive with respect to our common stockgenerally will constitute dividends, which may be taxable as ordinary income or “qualified dividend income” as described below, to the extent of our currentor accumulated earnings and profits (as determined under U.S. federal income tax principles). Distributions in excess of our earnings and profits will betreated first as a non-taxable return of capital to the extent of your tax basis in our common stock and thereafter as gain from the sale of such stock. We do notmaintain calculations of earnings and profits under U.S. federal income tax principles. Therefore, you should expect that a distribution with respect to yourcommon stock generally will be treated as dividend income, even if that distribution might otherwise be treated as a non-taxable return of capital or as capitalgain under the rules described above.Because we are not a U.S. corporation, if you are a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes), you willnot be entitled to claim a dividends-received deduction with respect to any distributions you receive from us. Dividends paid with respect to our commonstock 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: (i) our commonstock is readily tradable on an established securities market in the United States (such as the New York Stock Exchange), which we expect to be the case;(ii) we are not a “passive foreign investment company” for the taxable year during which the dividend is paid or the immediately preceding taxable year (seethe discussion below under “—Passive Foreign Investment Company Status”); (iii) you have owned our common stock for more than 60 days in the 121-dayperiod beginning 60 days before the date on which the common stock become ex-dividend (and have not entered into certain risk limiting transactions withrespect to such common stock); (iv) you are not under an obligation to make related payments with respect to positions in substantially similar or relatedproperty; and (v) you do not treat the dividends as “investment income” for purposes of the investment interest deduction.Qualified dividend income is taxed at the preferential rates applicable to long-term capital gain, depending on the income level of the taxpayer.Dividends you receive from us that are not eligible for the preferential rates will be taxed at the ordinary income rates.Special rules may apply to any amounts received in respect of our common stock that are treated as “extraordinary dividends.” Generally, anextraordinary dividend is a dividend with respect to a share of our common stock 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 such share of common stock. In addition, extraordinary dividends include dividends received within a one-year period that, in the aggregate, equal or exceed 20% of your adjusted tax basis (or fair market value in certain circumstances). If we pay an extraordinarydividend on any shares of our common stock that is treated as “qualified dividend income,” and you are an individual, estate or trust, then any loss youderive from a subsequent sale or exchange of such shares of our common stock will be treated as long-term capital loss to the extent of such dividend. 136 Table of ContentsSale, Exchange or Other Disposition of Common StockProvided that we are not a passive foreign investment company for any taxable year during which you hold our common stock, you generally willrecognize capital gain or loss upon a sale, exchange or other disposition of our common stock in an amount equal to the difference, if any, between theamount realized by you from such sale, exchange or other disposition and your tax basis in such common stock. Any 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. Any such capital gain or losswill generally be treated as U.S. source income or loss, as applicable, for U.S. foreign tax credit purposes. If you are an individual, trust or estate, your long-term capital gains are currently subject to tax at preferential rates. Your ability to deduct capital losses against ordinary income is subject to limitationsPassive Foreign Investment Company StatusSpecial U.S. federal income tax rules apply to you if you hold stock in a non-U.S. corporation that is classified as a “passive foreign investmentcompany” (a “PFIC”) for U.S. federal income tax purposes. In general, we will be a PFIC for any taxable year in which, after applying certain look-throughrules, either: • at least 75% of our gross income for such taxable year consists of “passive income” (e.g., dividends, interest, capital gains and rents derived otherthan in the active conduct of a rental business); or • at least 50% of the quarterly average value of our assets during such taxable year consists of “passive assets” (i.e., assets that produce, or are heldfor the production of, passive income).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 earn, 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 (unlesswe are treated under certain special rules as deriving our rental income in the active conduct of a trade or business).Based upon our actual and projected income, assets and activities, we believe that we should not be a PFIC for our taxable year ended December 31,2014 or for subsequent taxable years. However, no assurance can be given as to our current and future PFIC status, because such status requires an annualfactual determination based upon the composition of our income and assets for the entire taxable year. The PFIC determination also depends on theapplication of complex U.S. federal income tax rules concerning the classification of our income and assets for this purpose, and there are legal uncertaintiesinvolved in determining whether the income derived from our chartering activities and from our logistics activities constitutes rental income or incomederived 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 fromcertain time chartering activities should be treated as rental income rather than services income for purposes of a foreign sales corporation provision of theCode. The IRS has announced, in an Action on Decision (AOD 2010-001), its nonacquiescence with the court’s holding in the Tidewater case and, at thesame time, announced the position of the IRS that the vessel time charter agreements at issue in that case should be treated as service contracts. The IRS’AOD, however, is an administrative action that cannot be relied upon or otherwise cited as precedent by taxpayers. We have not sought, and we do not expectto seek, an IRS ruling on this issue. As a result, the IRS or a court could disagree with our position. In addition, although we intend to conduct our affairs in amanner 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, orthe nature or composition of our income or assets, will not change in the future, or that we can avoid PFIC status in the future.As discussed below, if we are a PFIC for a taxable year during which you actually or constructively own our common stock, you generally would besubject to one of three different U.S. federal income tax regimes, depending on whether or not you make certain elections. Additionally, for each year duringwhich we are treated 137 Table of Contentsas a PFIC and you actually or constructively own common stock you generally will be required to file IRS Form 8621 with your U.S. federal income taxreturn to report certain information concerning your ownership of our common stock. In the event that a person that is required to file IRS Form 8621 doesnot file such form, the statute of limitations on the assessment and collection of U.S. federal income taxes of such person for the related tax year may not closeuntil three years after the date that the required information is filed.The PFIC rules are complex, and you are encouraged to consult your own tax advisor regarding the PFIC rules, including the annual PFIC reportingrequirement.Taxation of U.S. Holders That Make a Timely QEF ElectionIf we were treated as a PFIC for any taxable year during which you actually or constructively own our common stock, and if you make a timely electionto 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 ourordinary earnings (as ordinary income) and our net capital gain (as long-term capital gain), if any, for our taxable year that ends with or within your taxableyear, regardless of whether we make any distributions to you. Such income inclusions would not be eligible for the preferential tax rates applicable toqualified dividend income. Your adjusted tax basis in our common 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 commonstock and would not be taxed again once distributed. You would generally recognize capital gain or loss on the sale, exchange or other disposition of ourcommon 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 commonstock 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 subsidiarywould be required.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 ismade in accordance with the relevant instructions. If we were to become aware that we were a PFIC for any taxable year, we would notify all U.S. holders ofsuch treatment and would provide all necessary information to any U.S. holder who requests such information in order to make the QEF Election describedabove with respect to us and the relevant subsidiaries.A QEF Election generally will not have any effect with respect to any taxable year for which we are not a PFIC, but will remain in effect with respect toany subsequent taxable year for which we are a PFIC. It should be noted that the beneficial effect of a QEF Election may be substantially diminished if suchelection is not made in the first year of your holding period in which we are a PFIC. If some instances, you may be permitted to make a QEF election that isretroactive to the beginning of your holding period if we unexpectedly are treated as a PFIC.Taxation of U.S. Holders That Make a Timely “Mark-to-Market” ElectionAlternatively, if we were to be treated as a PFIC for any taxable year during which you actually or constructively own our common stock and, as webelieve, our common stock is treated as “marketable stock,” you would be allowed to make a “mark-to-market” election with respect to our common 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 therelevant 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 valueof our common stock at the end of the taxable year over your adjusted tax basis in our common stock. You also would be permitted an ordinary loss in respectof the excess, if any, of your adjusted tax basis in our common stock over the fair market value of such common stock at the end of the taxable year (but onlyto the extent of the net amount of gain previously included in income as a result of the mark-to-market election). Your tax basis in our common stock wouldbe adjusted to reflect any such income or loss amount. Gain realized on the sale, exchange or other disposition of 138 Table of Contentsour common stock would be treated as ordinary income, and any loss realized on the sale, exchange or other disposition of the common stock would betreated as ordinary loss to the extent that such loss does not exceed the net mark-to-market gains you previously included. However, to the extent any of oursubsidiaries is a PFIC, your “mark-to-market” election with respect to our common stock would not apply to your deemed ownership of the stock of suchsubsidiary. This may significantly limit the beneficial effect of making a mark-to-market election.It should be noted that the beneficial effect of a “mark-to-market” election may be substantially diminished if such election is not made in the first yearof your holding period in which we are a PFIC.Taxation of U.S. Holders That Make No ElectionFinally, if we were treated as a PFIC for any taxable year during which you actually or constructively own our common stock, and you do not makeeither 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, theportion of any distributions you receive on our common stock in a taxable year in excess of 125% of the average annual distributions you received in thethree preceding taxable years, or, if shorter, your holding period for our common stock) and (b) any gain realized on the sale, exchange or other disposition ofour common stock. Under these special rules: (i) the excess distribution or gain would be allocated ratably over your aggregate holding period for ourcommon 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 othertaxable 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 deemeddeferral 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, your successor generally would not receive a step-up in tax basis with respect to such shares for U.S. taxpurposes.If we are treated as a PFIC during any taxable year during your holding period, unless you make a timely QEF Election, or a timely “mark-to-market”election, for the first taxable year in which you hold our common stock, we will continue to be treated as a PFIC for all succeeding years during which you aretreated as a direct or indirect U.S. holder, even if we are not a PFIC for such years. You are encouraged to consult your own tax advisor with respect to anyavailable elections that may be applicable in such a situation, as well as the IRS information and filing obligations that may arise as a result of the ownershipof shares in a PFIC.Taxation of Non-U.S. HoldersYou are a “non-U.S. holder” if you are a beneficial owner of our common stock (other than a partnership for U.S. federal income tax purposes) and youare not a U.S. holder.Distributions on Our Common StockYou generally will not be subject to U.S. federal income or withholding taxes on a distribution with respect to our common stock, unless the incomearising 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 anapplicable income tax treaty with respect to that income, such income generally is taxable in the United States only if it is attributable to a permanentestablishment maintained by you in the United States.Sale, Exchange or Other Disposition of Our Common StockYou 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 ourcommon stock, unless: • the gain is effectively connected with your conduct of a trade or business in the United States (and, if you are entitled to the benefits of anapplicable income tax treaty with respect to that gain, that gain is attributable to a permanent establishment maintained by you in the UnitedStates); or 139 Table of Contents • 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 conditionsare met.Gain that is effectively connected with your conduct of a trade or business in the United States (or so treated) generally will be subject to U.S. federalincome 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 areattributable 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% (orsuch lower rate as may be specified by an applicable income tax treaty).Gain described in clause the second bullet point above (net of certain U.S.-source losses) will be taxed at a flat rate of 30% (or such lower rate as may bespecified by an applicable tax treaty).U.S. Backup Withholding and Information ReportingIn general, if you are a non-corporate U.S. holder, distributions and proceeds from the disposition of our common stock may be subject to informationreporting requirements. These payments to a non-corporate U.S. holder may also be subject to backup withholding tax if the non-corporate U.S. holder:(i) fails to provide an accurate taxpayer identification number; (ii) is notified by the IRS that it has become subject to backup withholding due to a priorfailure to report all interest or distributions required to be shown on its federal income tax returns; or (iii) fails to comply with applicable certificationrequirements.If you are a non-U.S. holder, you may be required to establish your exemption from information reporting and backup withholding by certifying yournon-U.S. status on IRS Form W-8BEN, W-8BEN-E, W-8ECI or W-8IMY, as applicable.Backup withholding tax is not an additional tax. Rather, you generally may obtain a refund of any amounts withheld under backup withholding rulesthat exceed your income tax liability by accurately completing and timely filing a refund claim with the IRS.Tax Return Disclosure RequirementsIndividual U.S. holders (and to the extent specified in applicable Treasury Regulations, certain individual non-U.S. holders and certain U.S. holdersthat are entities) that hold certain specified foreign assets with values in excess of certain dollar thresholds are required to report such assets on IRS Form8938 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 is a specified foreign asset for this purpose. Substantial penalties apply forfailure to properly complete and file Form 8938. You are encouraged to consult your own tax advisor regarding the filing of this form. Additionally, in theevent that an individual U.S. holder (and to the extent specified in applicable Treasury Regulations, an individual non-U.S. holder or a U.S. entity) that isrequired to file IRS Form 8938 does not file such form, the statute of limitations on the assessment and collection of U.S. federal income taxes of such personfor the related tax year may not close until three years after the date that the required information is filed. U.S. holders (including U.S. entities) and non-U.S.holders should consult their own tax advisors regarding their reporting obligations with respect to specified foreign assets.F. Dividends and paying agentsNot applicable.G. Statement by expertsNot applicable. 140 Table of ContentsH. Documents on displayWe file reports and other information with the Securities and Exchange Commission (“SEC”). These materials, including this annual report and theaccompanying exhibits, may be inspected and copied at the public facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549, or fromthe SEC’s website www.sec.gov. You may obtain information on the operation of the public reference room by calling 1-(800)-SEC-0330 and you may obtaincopies at prescribed rates.I. Subsidiary informationNot applicable.Item 11. Quantitative and Qualitative Disclosures about Market RisksNavios Holdings is exposed to certain risks related to interest rate, foreign currency and charter rate risks. To manage these risks, Navios Holdings mayuse interest rate swaps (for interest rate risk) and FFAs (for charter rate risk).Interest Rate Risk:Debt Instruments — On December 31, 2014 and 2013, Navios Holdings had a total of $1,644.6 million and $1,508.1 million, respectively, of long-termindebtedness (excluding the premium related to the 2019 Logistics Senior Notes). The debt is U.S. dollar-denominated and bears interest at a floating rate,except for the 2019 Notes, the 2022 Notes and the 2022 Logistics Senior Notes and one Navios Logistics’ loan discussed in “Item 5.B Liquidity and CapitalResources” that bear interest at a fixed rate.The interest on the loan facilities is at a floating rate and, therefore, changes in interest rates would affect their interest rate and related interest expense.As of December 31, 2014, the outstanding amount of the Company’s floating rate loan facilities was $269.1 million. The interest rate on the 2019 Notes, the2022 Notes, the 2022 Logistics Senior Notes and the Navios Logistics loan is fixed and, therefore, changes in interest rates affect their fair value, which as ofDecember 31, 2014 was $1,300.5 million, but do not affect their related interest expense. A change in the LIBOR rate of 100 basis points would increaseinterest expense for the years ended December 31, 2014, 2013 and 2012 by $2.4 million, $2.9 million and $4.1 million, respectively.For a detailed discussion on Navios Holdings’ debt instruments refer to section “Long-Term Debt Obligations and Credit Arrangements” included inItem 5.B. of this Annual Report.Interest Rate Swaps — Navios Holdings enters from time to time into interest rate swap contracts to hedge its exposure to variability in its floating ratelong-term debt. Under the terms of interest rate swaps, Navios Holdings and the banks agree to exchange, at specified intervals, the difference between apaying fixed rate and floating rate interest amount calculated by reference to the agreed principal amounts and maturities. The interest rate swaps allowNavios Holdings to convert long-term borrowings issued at floating rates into equivalent fixed rates.There are no swap agreements as of December 31, 2014 and 2013, as all swap agreements expired during 2010.FFAs Derivative Risk:FFAs — Navios Holdings may enter into dry bulk shipping FFAs as economic hedges relating to identifiable ship and/or cargo positions and aseconomic hedges of transactions that Navios Holdings expects to carry out in the normal course of its shipping business. By using FFAs, Navios Holdingsmanages the financial risk associated with fluctuating market conditions. In entering into these contracts, the Company has assumed the risk that might arisefrom the possible inability of counterparties to perform in accordance with the terms of their contracts. The Company records all of its derivative financialinstruments and hedges as economic hedges. 141 Table of ContentsNavios Holdings is exposed to market risk in relation to its FFAs and could suffer substantial losses from these activities in the event expectations areincorrect. Navios Holdings trades FFAs with an objective of both economically hedging the risk on the fleet, specific vessels or freight commitments andtaking advantage of short-term fluctuations in market prices. As there were no positions deemed to be open as of December 31, 2014, a change in underlyingfreight market indices would not have any effect on our net income/(loss).InflationInflation has had a minimal impact on vessel operating expenses and general and administrative expenses. Our management does not consider inflationto be a significant risk to direct expenses in the current and foreseeable economic environment.Item 12. Description of Securities Other than Equity SecuritiesNot applicable.PART IIItem 13. Defaults, Dividend Arrearages and DelinquenciesNone.Item 14. Material Modifications to the Rights of Security Holders and Use of ProceedsNone.Item 15. Controls and ProceduresA. Disclosure Controls and ProceduresThe Company’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, conducted an evaluation, pursuant toRule 13a-15 (e) promulgated under the Exchange Act, of the effectiveness of our disclosure controls and procedures as of December 31, 2014. Based on thisevaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of December 31,2014.Disclosure controls and procedures means controls and other procedures that are designed to ensure that information required to be disclosed by us inthe reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’srules and forms and that such information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated andcommunicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriateto allow timely decisions regarding required disclosures.B. Management’s Annual Report on Internal Control over Financial ReportingThe management of Navios Holdings is responsible for establishing and maintaining adequate internal control over financial reporting as defined inRule 13a-15(f) and 15d-15(f) of the Exchange Act. Navios Holdings’ internal control system was designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accountingprinciples in the United States (“GAAP”). 142 Table of ContentsBecause of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degreeof compliance with the policies or procedures may deteriorate.Navios Holdings’ management assessed the effectiveness of Navios Holdings’ internal control over financial reporting as of December 31, 2014. Inmaking this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control— Integrated Framework (2013). Based on its assessment, management concluded that, as of December 31, 2014, Navios Holdings’ internal control overfinancial reporting is effective based on those criteria.Navios Holdings’ independent registered public accounting firm has issued an attestation report on Navios Holdings’ internal control over financialreporting.C. Attestation Report of the Registered Public Accounting FirmNavios Holdings’ independent registered public accounting firm has issued an audit report on Navios Holdings’ internal control over financialreporting. This report appears on Page F-2 of the consolidated financial statements.D. Changes in Internal Control over Financial ReportingThere have been no changes in internal controls over financial reporting (identified in connection with management’s evaluation of such internalcontrols over financial reporting) that occurred during the year covered by this Annual Report that have materially affected, or are reasonably likely tomaterially affect, Navios Holdings’ internal controls over financial reporting.Item 16. [Reserved] Item 16A.Audit Committee financial expertNavios Holdings’ Audit Committee consists of three independent directors, Spyridon Magoulas, Efstathios Loizos and George Malanga. The Board ofDirectors has determined that Efstathios Loizos qualifies as “an audit committee financial expert” as defined in the instructions of Item 16A of Form 20-F.Mr. Loizos is independent under applicable NYSE and SEC standards. Item 16B.Code of EthicsNavios Holdings has adopted a code of ethics, the Navios Code of Corporate Conduct and Ethics, applicable to officers, directors and employees ofNavios Holdings that complies with applicable guidelines issued by the SEC. The Navios Code of Corporate Conduct and Ethics is available for review onNavios Holdings’ website at www.navios.com.Item 16C. Principal Accountant Fees and ServicesAudit FeesOur principal accountants for fiscal years 2014 and 2013 were PricewaterhouseCoopers S.A. The audit fees for the audit of each of the years endedDecember 31, 2014 and 2013 were $1.7 million and $1.8 million, respectively.The Audit Committee is responsible for the appointment, replacement, compensation, evaluation and oversight of the work of the independentauditors. As part of this responsibility, the audit committee pre- 143 Table of Contentsapproves the audit and non-audit services performed by the independent auditors in order to assure that they do not impair the auditors’ independence fromthe Company. The Audit Committee may delegate, to one or more of its designated members, the authority to grant such pre-approvals. The decision of anymember to whom such authority is delegated is be presented to the full Committee at each of its scheduled meetings.All audit services and other services provided by PricewaterhouseCoopers S.A., after the formation of our Audit Committee in October 2005 were pre-approved by the Audit Committee.Audit-Related FeesThere were no audit-related fees billed in 2014 and 2013.Tax FeesThere were no tax fees billed in 2014 and 2013.All Other FeesThere were no other fees billed in 2014 and 2013.Item 16D. Exemptions from the Listing Standards for Audit CommitteesNot applicable.Item 16E. Purchases of Equity Securities by the Issuer and Affiliated PurchasersIn February 2008, the Board of Directors approved a share repurchase program for up to $50.0 million of Navios Holdings’ common stock. OnOctober 20, 2008, Navios Holdings concluded this share repurchase program. As of October 20, 2008, 6,959,290 shares were repurchased under this program,for a total consideration of $50.0 million.In November 2008, the Board of Directors approved a share repurchase program for up to $25.0 million of Navios Holdings’ common stock. Sharerepurchases are made pursuant to a program adopted under Rule 10b5-1 under the Exchange Act. The program does not require any minimum purchase orany specific number or amount of shares and may be suspended or reinstated at any time in Navios Holdings’ discretion and without notice. Repurchases aresubject to restrictions under the terms of the Company’s credit facilities and indenture. As of December 31, 2011, the maximum approximate dollar value ofshares that may be purchased under the November 2008 Program currently in effect is $23.1 million. In October 2011, Navios Holdings repurchased 73,651shares for a total cost of $0.2 million. There were no shares repurchased since 2011.Item 16F. Changes in Registrant’s Certifying AccountantNot applicable.Item 16G. Corporate GovernancePursuant to an exception for foreign private issuers, we are not required to comply with the corporate governance practices followed by U.S. companiesunder the NYSE listing standards. However, we have voluntarily adopted all of the NYSE required practices, except that, as permitted under Marshall Islandslaw, we do not need prior shareholder’s approval to adopt or re-use equity compensation plans, including our 2015 Equity Incentive Plan. 144 Table of ContentsItem 16H. Mine Safety disclosuresNot applicable.PART IIIItem 17. Financial StatementsSee Item 18.Item 18. Financial StatementsThe financial information required by this Item is set forth on pages F-1 to F-74 and are filed as part of this annual report.Separate consolidated financial statements and notes thereto for Navios Partners for each of the years ended December 31, 2014, 2013 and 2012 arebeing provided as a result of Navios Partners meeting a significance test pursuant to Rule 3-09 of Regulation S-X for the year ended December 31, 2014 and,accordingly, the financial statements of Navios Partners for the year ended December 31, 2014 are required to be filed as part of this Annual Report on Form20-F. See Exhibit 15.3 to this Annual Report on Form 20-F.Item 19. Exhibits 1.1Amended and Restated Articles of Incorporation of Navios Maritime Holdings Inc. (Incorporated by reference to Exhibit 1.1 to the Registrant’sRegistration Statement on Form F-1 (File No. 333-129382)). 1.2Bylaws of Navios Maritime Holdings Inc. (Incorporated by reference to Exhibit 1.2 to the Registrant’s Registration Statement on Form F-1 (FileNo. 333-129382)). 1.3Articles of Amendment of Articles of Incorporation of Navios Maritime Holdings Inc. (Incorporated by reference to Exhibit 99.1 to theRegistrant’s Form 6-K, filed on January 17, 2007). 2.1Specimen Unit Certificate (Incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form F-1 (File No. 333-129382)). 2.2Specimen Common Stock Certificate. (Incorporated by reference to Exhibit 4.2 to the Registrant’s Registration Statement on Form F-1 (FileNo. 333-129382)). 2.3Stockholders Rights Agreement, dated as of October 6, 2008, between Navios Maritime Holdings Inc. and Continental Stock Transfer and TrustCompany (Incorporated by reference to Exhibit 99.1 to the Registrant’s Form 6-K, filed on October 6, 2008). 2.4Certificate of Designations of Rights, Preferences and Privileges of Preferred Stock of Navios Maritime Holdings Inc. (Incorporated by referenceto Exhibit 99.2 to the Registrant’s Form 6-K, filed on October 6, 2008). 2.5Certificate of Designation, Preferences and Rights of Series A Convertible Preferred Stock of Navios Maritime Holdings Inc. (Incorporated byreference to Exhibit 3.1 to the Registrant’s Form 6-K, filed on July 7, 2009). 2.6Form of $20.0 million 6% Bond Due 2012 (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on August 5, 2009). 2.7Certificate of Designation, Preferences and Rights of Series B Convertible Preferred Stock of Navios Maritime Holdings Inc. (Incorporated byreference to Exhibit 3.1 to the Registrant’s Form 6-K, filed on September 22, 2009). 145 Table of Contents 2.8Certificate of Designation, Preferences and Rights of Series C Convertible Preferred Stock of Navios Maritime Holdings Inc. (Incorporated byreference to Exhibit 3.1 to the Registrant’s Form 6-K, filed on September 24, 2009). 2.9Certificate of Designation, Preferences and Rights of Series D Convertible Preferred Stock of Navios Maritime Holdings Inc. (Incorporated byreference to Exhibit 3.1 to the Registrant’s Form 6-K, filed on February 4, 2010). 2.10Certificate of Designation, Preferences and Rights of Series E Convertible Preferred Stock of Navios Maritime Holdings Inc. (Incorporated byreference to Exhibit 1.1 to the Registrant’s Form 6-K, filed on November 15, 2010). 2.11Certificate of Designation, Preferences and Rights of Series F Convertible Preferred Stock of Navios Maritime Holdings Inc. (Incorporated byreference to Exhibit 1.1 to the Registrant’s Form 6-K, filed on December 22, 2010). 2.12Indenture relating to the 8 1/8% Senior Notes due 2019, dated as of January 28, 2011, among Navios Maritime Holdings Inc., Navios MaritimeFinance II (US) Inc., the Guarantors party thereto and Wells Fargo Bank, National Association, as trustee (Incorporated by reference toExhibit 4.1 to the Registrant’s Form 6-K, filed on February 1, 2011). 2.12.1First Supplemental Indenture relating to the 81/8% Senior Notes due 2019, dated as of June 24, 2011 (Incorporated by reference to Exhibit10.1 to the Registrant’s Form 6-K, filed on July 22, 2011). 2.12.2Second Supplemental Indenture relating to the 8 1/8% Senior Notes due 2019, dated as of December 29, 2011 (Incorporated by reference toExhibit 10.2 to the Registrant’s Form 6-K, filed on January 26, 2012). 2.12.3Third Supplemental Indenture relating to the 81/8% Senior Notes due 2019, dated April 18, 2012 (Incorporated by reference to Exhibit 10.1 tothe Registrant’s Form 6-K, filed on May 21, 2012). 2.12.4Fourth Supplemental Indenture relating to the 8 1/8% Senior Notes due 2019, dated as of December 13, 2013 (Incorporated by reference toExhibit 99.5 to the Registrant’s Form 6-K, filed on December 13, 2013). 2.12.5Fifth Supplemental Indenture relating to the 81/8% Senior Notes due 2019, dated as of February 20, 2014 (Incorporated by reference toExhibit 10.4 to the Registrant’s Form 6-K, filed on March 3, 2014). 2.12.6Sixth Supplemental Indenture relating to the 8 1/8% Senior Notes due 2019, dated as of June 24, 2014 (Incorporated by reference to Exhibit10.3 to the Registrant’s Form 6-K, filed on July 23, 2014). 2.12.7Seventh Supplemental Indenture relating to the 81/8% Senior Notes due 2019, dated as of October 24, 2014 (Incorporated by reference toExhibit 10.3 to the Registrant’s Form 6-K, filed on December 8, 2014). 2.13Indenture relating to the 9 1/4% Senior Notes due 2019, dated April 12, 2011, among Navios South American Logistics Inc., Navios LogisticsFinance (US) Inc., the Guarantors named thereto, and Wells Fargo Bank, National Association, as trustee (Incorporated by reference to Exhibit4.1 to the Registrant’s Form 6-K, filed on May 25, 2011). 2.13.1First Supplemental Indenture relating to the 9 1/4% Senior Notes due 2019, dated as of April 28, 2011 (Incorporated by reference to Exhibit2.3 to Navios South American Logistics Inc.’s Form 20-F, filed on April 5, 2012). 2.13.2Second Supplemental Indenture relating to the 9 1/4% Senior Notes due 2019, dated as of July 26, 2011 (Incorporated by reference to Exhibit10.1 to the Registrant’s Form 6-K, filed on August 5, 2011). 2.14Registration Rights Agreement, dated April 12, 2011, among Navios South American Logistics Inc., Navios Logistics Finance (US) Inc.,Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities LLC, Citigroup Global Markets Inc., Credit Suisse Securities (USA)LLC and S. Goldman Advisors LLC (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on May 25, 2011). 146 Table of Contents 2.15Registration Rights Agreement, dated as of July 10, 2012, among Navios Maritime Holdings Inc., Navios Maritime Finance (US) Inc. andMorgan Stanley & Co. LLC, J.P. Morgan Securities LLC, S. Goldman Capital LLC, Commerz Markets LLC, DVB Capital Markets LLC, DNBMarkets, Inc. and ABN AMRO Securities (USA) LLC (Incorporated by reference to Exhibit 99.3 to the Registrant’s Form 6-K, filed on July 18,2012). 2.16Indenture relating to the 7.375% First Priority Ship Mortgage Notes due 2022, dated as of November 29, 2013, among Navios MaritimeHoldings Inc., Navios Logistics Finance II (US) Inc., the guarantors party thereto, and Wells Fargo Bank, National Association, as trustee andcollateral trustee (Incorporated by reference to Exhibit 99.2 to the Registrant’s Form 6-K, filed on December 13, 2013). 2.17.1First Supplemental Indenture relating to the 7.375% First Priority Ship Mortgage Notes due 2022, dated as of February 20, 2014 (Incorporatedby reference to Exhibit 10.3 to the Registrant’s Form 6-K, filed on March 3, 2014). 2.17.2Second Supplemental Indenture relating to the 7.375% First Priority Ship Mortgage Notes due 2022, dated as of June 24, 2014 (Incorporatedby reference to Exhibit 10.2 to the Registrant’s Form 6-K, filed on July 23, 2014). 2.17.3Third Supplemental Indenture relating to the 7.375% First Priority Ship Mortgage Notes due 2022, dated as of October 24, 2014 (Incorporatedby reference to Exhibit 10.2 to the Registrant’s Form 6-K, filed on December 8, 2014). 2.18Deposit Agreement, dated as of January 21, 2014, by and among Navios Maritime Holdings Inc., The Bank of New York Mellon, and theholders from time to time of the American depositary receipts described therein (incorporated by reference to Exhibit 4.1 to the Registrant’sRegistration Statement on Form 8-A (File No. 001-33311), filed on January 24, 2014). 2.19Certificate of Designation of 8.75% Series G Cumulative Redeemable Perpetual Preferred Stock of Navios Maritime Holdings Inc.(Incorporated by reference to Exhibit 3.3 to the Registrant’s Registration Statement on Form 8-A (File No. 001-33311), filed on January 24,2014). 2.20Form of American Depositary Receipt representing the American Depositary Shares (Incorporated by reference to Exhibit A to Exhibit 4.1 tothe Registrant’s Registration Statement on Form 8-A (File No. 001-33311), filed on January 24, 2014). 2.21Form of Certificate representing the 8.75% Series G Cumulative Redeemable Perpetual Preferred Stock (Incorporated by reference to Exhibit4.3 to the Registrant’s Registration Statement on Form 8-A (File No. 001-33311), filed on January 24, 2014). 2.22Certificate of Designation of 8.625% Series H Cumulative Redeemable Perpetual Preferred Stock of Navios Maritime Holdings Inc.(Incorporated by reference to Exhibit 3.3 to the Registrant’s Registration Statement on Form 8-A (File No. 001-33311), filed on July 7, 2014). 2.23Form of Certificate representing the 8.625% Series H Cumulative Redeemable Perpetual Preferred Stock (Incorporated by reference to Exhibit4.3 to the Registrant’s Registration Statement on Form 8-A (File No. 001-33311), filed on July 7, 2014). 4.12006 Employee, Director and Consultant Stock Plan (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on May 16,2007). 4.2Financial Agreement relating to a loan facility of up to $70.0 million, dated as of March 31, 2008, between Nauticler S.A. and Marfin EgnatiaBank, S.A. (Incorporated by reference to Exhibit 99.3 to the Registrant’s Form 6-K, filed on June 13, 2008). 4.3Facility Agreement for a loan amount up to $133.0 million, dated as of June 24, 2008, by and between Shikhar Ventures S.A., SizzlingVentures Inc. and DnB NOR Bank ASA (Incorporated by reference to Exhibit 99.1 to the Registrant’s Form 6-K, filed on July 14, 2008). 147 Table of Contents 4.4Facility Agreement for a revolving credit facility of up to $90.0 million, dated as of November 10, 2008, between Corsair Shipping Ltd., AstraMaritime Corporation, Primavera Shipping Corporation, Beaufiks Shipping Corporation, Quena Shipmanagement Inc. and Marfin EgnatiaBank S.A. (Incorporated by reference to Exhibit 99.2 to the Registrant’s Form 6-K, filed on December 10, 2008). 4.5Loan Agreement relating to a term loan facility of up to $110.0 million, dated March 26, 2009, among Surf Maritime Co., Pueblo HoldingsLtd., Ginger Services Co. and Marfin Egnatia Bank S.A. (Incorporated by reference to Exhibit 99.2 to the Registrant’s Form 6-K, filed onMay 18, 2009). 4.6Financial Agreement relating to a loan facility of up to $70.0 million, dated March 20, 2009, between Nauticler S.A. and Marfin Popular BankPublic Co., Ltd. (Incorporated by reference to Exhibit 99.3 to the Registrant’s Form 6-K, filed on May 18, 2009). 4.7Third Supplemental Agreement in relation to the Facility Agreement dated February 1, 2007for a loan facility of up to $280.0 million and arevolving credit facility of up to $120.0 million, dated March 23, 2009, between Navios Maritime Holdings Inc., Commerzbank AG and HSHNordbank AG (Incorporated by reference to Exhibit 99.4 to the Registrant’s Form 6-K, filed on May 18, 2009). 4.8Amendment to Share Purchase Agreement, dated June 29, 2009, by and between Anemos Maritime Holdings Inc. and Navios Maritime PartnersL.P. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on July 7, 2009). 4.9Amendment to Omnibus Agreement, dated June 29, 2009, by and among Navios Maritime Holdings Inc., Navios GP L.L.C., Navios MaritimeOperating L.L.C. and Navios Maritime Partners L.P. (Incorporated by reference to Exhibit 10.2 to the Registrant’s Form 6-K, filed on July 7,2009). 4.10Facility Agreement for a $240.0 million term loan facility, dated June 24, 2009, by and between Floral Marine Ltd., Nostos ShipmanagementCorp., Pandora Marine Inc., Red Rose Shipping Corp. and Commerzbank AG (Incorporated by reference to Exhibit 10.3 to the Registrant’sForm 6-K, filed on July 7, 2009). 4.11Supplemental Agreement in relation to the Facility Agreement dated December 11, 2007 for a loan facility of up to $154.0 million, datedJuly 10, 2009, among Chilali Corp., Rumer Holding Ltd. and Credit Agricole Corporate and Investment Bank (formerly Emporiki Bank ofGreece S.A.) (Incorporated by reference to Exhibit 99.3 to the Registrant’s Form 6-K, filed on August 5, 2009). 4.12Amended and Restated Loan Agreement in respect of a loan facility of up to $120.0 million, dated May 25, 2009, between Portorosa MarineCorp., Surf Maritime Co., the banks and financial institutions listed therein and Dekabank Deutsche Girozentrale (Incorporated by reference toExhibit 99.2 to the Registrant’s Form 6-K, filed on October 8, 2009). 4.13Supplemental Agreement in relation to the Amended and Restated Loan Agreement dated May 25, 2009 in respect of a loan facility of up to$120.0 million, dated July 16, 2009, between Portorosa Marine Corp., Surf Maritime Co., the banks and financial institutions listed therein andDekabank Deutsche Girozentrale (Incorporated by reference to Exhibit 99.1 to the Registrant’s Form 6-K, filed on October 8, 2009). 4.14Second Supplemental Agreement in relation to the Facility Agreement dated December 11, 2007 for a loan facility of up to $130.0 million,dated August 28, 2009, between Chilali Corp, Rumer Holding Ltd. and Credit Agricole Corporate and Investment Bank (formerly EmporikiBank of Greece S.A.) (Incorporated by reference to Exhibit 99.3 to the Registrant’s Form 6-K, filed on October 8, 2009). 4.15Facility Agreement in respect of a term loan facility of $66.5 million, dated August 28, 2009, by and between Shikhar Ventures S.A. and DnBNOR Bank ASA (Incorporated by reference to Exhibit 99.4 to the Registrant’s Form 6-K, filed on October 8, 2009). 148 Table of Contents 4.16Facility Agreement in respect of a loan of up to $75.0 million, dated August 28, 2009, between Kohylia Shipmanagement S.A., Ducale MarineInc. and Credit Agricole Corporate and Investment Bank (formerly Emporiki Bank of Greece S.A.) (Incorporated by reference to Exhibit 99.5 tothe Registrant’s Form 6-K, filed on October 8, 2009). 4.17Loan Agreement relating to a revolving credit facility of up to $110.0 million, dated October 23, 2009, between Navios Shipmanagement Inc.and Marfin Egnatia Bank S.A. (Incorporated by reference to Exhibit 99.1 to the Registrant’s Form 6-K, filed on November 10, 2009). 4.18Facility Agreement for a $150.0 million term loan facility, dated as of April 7, 2010, by and between Amorgos Shipping Corporation, AndrosShipping Corporation, Antiparos Shipping Corporation, Ikaria Shipping Corporation, Kos Shipping Corporation, Mytilene ShippingCorporation, Deutsche Schiffsbank AG, Alpha Bank AE and Credit Agricole Corporate and Investment Bank (Incorporated by reference toExhibit 10.1 to the Registrant’s Form 6-K, filed on April 8, 2010). 4.19Facility Agreement for a $75.0 million term loan facility, dated as of April 8, 2010, by and between Sifnos Corporation, Skiathos ShippingCorporation, Syros Shipping Corporation, Fortis Bank and DVB Bank SE (Incorporated by reference to Exhibit 10.2 to the Registrant’s Form 6-K, filed on April 8, 2010). 4.20Fourth Supplemental Facility Agreement in relation to a term loan of $280.0 million and a reducing revolving credit facility of up to $120.0million, dated as of January 8, 2010, by and between Navios Maritime Holdings Inc., Commerzbank AG and HSH Nordbank AG (Incorporatedby reference to Exhibit 10.2 to the Registrant’s Form 6-K, filed on May 18, 2010). 4.21Fifth Supplemental Agreement in relation to a Facility Agreement dated February 1, 2007 (as amended) for a term loan facility of up to $280.0million and a reducing revolving credit facility of up to $120.0 million, dated as of April 28, 2010, by and between Navios Maritime HoldingsInc., Commerzbank AG and HSH Nordbank AG (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on May 18,2010). 4.22Facility Agreement for a $40.0 million term loan facility, dated as of August 20, 2010, by and between Faith Marine Ltd. and DnB NOR BankASA (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on September 1, 2010). 4.23Loan Agreement for a loan up to$40.0 million, dated as of September 7, 2010, by and between Navios Maritime Acquisition Corporation andNavios Maritime Holdings Inc. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on October 14, 2010). 4.24Letter Amendment in respect of a loan facility of up to $66.5 million, dated as of September 24, 2010, by and between DnB NOR Bank ASA,Shikhar Ventures S.A. and Navios Maritime Holdings Inc. (Incorporated by reference to Exhibit 10.2 to the Registrant’s Form 6-K, filed onOctober 14, 2010). 4.25Facility Agreement in respect of a loan of up to $40.0 million, dated as of September 30, 2010, between Aramis Navigation Inc. and CreditAgricole Corporate and Investment Bank (formerly Emporiki Bank of Greece S.A.) (Incorporated by reference to Exhibit 10.3 to theRegistrant’s Form 6-K, filed on October 14, 2010). 4.26Amended and Restated Loan Agreement relating to a facility of up to $120.0 million, by and between Portorosa Marine Corp., Floral MaritimeLtd., the banks and financial institutions listed therein and Dekabank Deutsche Girozentrale (Incorporated by reference to Exhibit 10.1 to theRegistrant’s Form 6-K, filed on November 15, 2010). 4.27Supplemental Agreement relating to the Facility Agreement dated as of June 24, 2009 for a term loan facility of up to $240.0 million, datedJanuary 28, 2011, between Nostos Shipmanagement Corp, Red Rose Shipping Corp. and Commerzbank AG (Incorporated by reference toExhibit 10.1 to the Registrant’s Form 6-K, filed on February 4, 2011). 149 Table of Contents 4.28Supplemental Agreement relating to the Facility Agreement dated as of September 30, 2010 for a term loan facility of up to $40.0 million,dated January 28, 2011, between Aramis Navigation Inc. and Credit Agricole Corporate and Investment Bank (formerly Emporiki Bank ofGreece S.A.) (Incorporated by reference to Exhibit 10.2 to the Registrant’s Form 6-K, filed on February 4, 2011). 4.29Supplemental Agreement relating to the Facility Agreement dated as of December 11, 2007 (as amended) for a term loan facility of up to$154.0 million, dated January 28, 2011, between Rumer Holding Ld. and Credit Agricole Corporate and Investment Bank (formerly EmporikiBank of Greece S.A.) (Incorporated by reference to Exhibit 10.3 to the Registrant’s Form 6-K, filed on February 4, 2011). 4.30Supplemental Agreement relating to the Facility Agreement dated as of August 28, 2009 (as amended) for a term loan facility of up to $75.0million, dated January 28, 2011, between Kohylia Shipmanagement S.A., Ducale Marine Inc. and Credit Agricole Corporate and InvestmentBank (formerly Emporiki Bank of Greece S.A.) (Incorporated by reference to Exhibit 10.4 to the Registrant’s Form 6-K, filed on February 4,2011). 4.31Supplemental Agreement relating to the Amended and Restated Loan Agreement dated as of October 27, 2010 in respect of a loan facility of upto $120.0 million, dated January 28, 2011, between Portorosa Marine Corp., Floral Marine Ltd., the banks and financial institutions listedthereto and Dekabank Deutsche Girozentrale (Incorporated by reference to Exhibit 10.5 to the Registrant’s Form 6-K, filed on February 4,2011). 4.32Supplemental Agreement in relation to the Loan Agreement dated as of October 23, 2009 (as amended) for a revolving credit facility of up to$110.0 million, dated January 28, 2011, between Navios Shipmanagement Inc. and Marfin Egnatia Bank S.A. (Incorporated by reference toExhibit 10.6 to the Registrant’s Form 6-K, filed on February 4, 2011). 4.33Sixth Supplemental Agreement in relation to the Facility Agreement dated February 1, 2007 (as amended) for a term loan facility of up to$280.0 million and a reducing revolving credit facility of up to $120.0 million, dated January 28, 2011, between Navios Maritime HoldingsInc., Commerzbank AG and HSH Nordbank AG (Incorporated by reference to Exhibit 10.7 to the Registrant’s Form 6-K, filed on February 4,2011). 4.34Supplemental Agreement in relation to the Facility Agreement dated as of August 20, 2010 for a term loan facility of up to $40.0 million, datedJanuary 28, 2011, between Faith Marine Ltd. and DnB NOR Bank ASA (Incorporated by reference to Exhibit 10.8 to the Registrant’s Form 6-K,filed on February 4, 2011). 4.35Supplemental Agreement relating to the Facility Agreement dated as of August 28, 2009 (as amended) for a term loan facility of up to$66.5 million, dated January 28, 2011, between Shikhar Ventures S.A. and DnB NOR Bank ASA (Incorporated by reference to Exhibit 10.9 tothe Registrant’s Form 6-K, filed on February 4, 2011). 4.36Supplemental Agreement No. 2 relating to a Loan Agreement dated October 23, 2009 (as amended) in respect of a revolving credit facility ofup to $110.0 million, dated May 6, 2011, between Marfin Popular Bank Public Co Ltd, Navios Shipmanagement Inc., Navios MaritimeHoldings Inc. and Astra Maritime Corporation (Incorporated by reference to Exhibit 10.2 to the Registrant’s Form 6-K, filed on May 25, 2011). 4.37Administrative Services Agreement, dated April 12, 2011, between Navios South American Logistics Inc. and Navios Maritime Holdings Inc.(Incorporated by reference to Exhibit 10.3 to the Registrant’s Form 6-K, filed on May 25, 2011). 4.38Letter of Amendment No. 1 to the Loan Agreement dated September 7, 2010, dated October 21, 2010, between Navios Maritime AcquisitionCorporation and Navios Maritime Holdings Inc. (Incorporated by reference to Exhibit 10.4 to the Registrant’s Form 6-K, filed on May 25,2011). 150 Table of Contents 4.39Facility Agreement No. 242 in respect of a loan up to $23.0 million, dated August 19, 2011, between Solange Shipping Ltd. and CreditAgricole Corporate and Investment Bank (formerly Emporiki Bank of Greece S.A.) (Incorporated by reference to Exhibit 10.1 to theRegistrant’s Form 6-K, filed on August 25, 2011). 4.40Letter Agreement No. 2 to the Loan Agreement dated September 7, 2010, dated November 8, 2011, between Navios Maritime AcquisitionCorporation and Navios Maritime Holdings Inc. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on November 28,2011). 4.41Facility agreement in respect of a loan of up to $23.0 million, dated December 29, 2011, between Mandora Shipping Ltd. and Credit AgricoleCorporate and Investment Bank (formerly Emporiki Bank of Greece S.A.) (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on January 26, 2012). 4.42Shareholders’ Agreement, dated as of June 17, 2010, between Navios South American Logistics Inc., Navios Corporation and GrandallInvestment S.A (Incorporated by reference to Exhibit 4.1 to Navios South American Logistics Inc.’s Registration Statement on Form F-4(Registration No. 333-179250), filed on January 31, 2012). 4.43Facility agreement for a $42.0 million term loan facility, dated March 23, 2012, by and between Astra Maritime Corporation, SerenityShipping Enterprises Inc., DVB Bank SE, Credit Agricole Corporate and Investment Bank (formerly Emporiki Bank of Greece S.A.) andNorddeutsche Landesbank Girozentrale (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on April 6, 2012). 4.44Fifth Supplemental Agreement relating to the Loan Agreement dated December 11, 2007 (as amended) for a term loan facility of up to $154.0million, dated March 28, 2012, between Rumer Holding Ltd. and Credit Agricole Corporate and Investment Bank (formerly Emporiki Bank ofGreece S.A.) (Incorporated by reference to Exhibit 10.2 to the Registrant’s Form 6-K, filed on April 6, 2012). 4.45Second Supplemental Agreement relating to the Facility Agreement dated June 24, 2009 (as amended) for a term loan facility of up to $240.0million, dated March 30, 2012, between Notros Shipmanagement Corp., Red Rose Shipping Corp. and Commerzbank AG (Incorporated byreference to Exhibit 10.3 to the Registrant’s Form 6-K, filed on April 6, 2012). 4.46Facility Agreement for a $40.0 million term loan facility, dated September 19, 2013, between Kleimar NV and DVB Bank SE (Incorporated byreference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on October 8, 2013). 4.47Facility Agreement for a $22.5 million term loan facility, dated December 20, 2013, between Iris Shipping Corporation, Jasmine ShippingCorporation and Credit Agricole Corporate and Investment Bank (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filedon March 3, 2014). 4.48Loan Agreement, dated December 13, 2013, between Navios Europe Inc., Navios Partners Europe Finance Inc., Navios Acquisition EuropeFinance Inc. and Navios Holdings Europe Finance Inc. (Incorporated by reference to Exhibit 10.2 to the Registrant’s Form 6-K, filed on March3, 2014). 4.49Facility Agreement for a $65.5 million term loan facility, dated June 27, 2014, between Astra Maritime Corporation, Emery ShippingCorporation, Serenity Shipping Enterprises Inc., DVB Bank SE, Credit Agricole Corporate and Investment Bank and NorddeutscheLandesbank Girozentrale (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on July 23, 2014). 4.50Loan Agreement in respect of a loan of up to $31.0 million, dated November 6, 2014, between Lavender Shipping Corporation and AlphaBank A.E. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on December 8, 2014). 8.1List of subsidiaries. 12.1Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act. 151 Table of Contents 12.2Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act. 13.1Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act. 15.1Consent of PricewaterhouseCoopers S.A. 15.2Consent of PricewaterhouseCoopers S.A. 15.3Financial Statements of Navios Maritime Partners L.P. for the year ended December 31, 2014.101The following materials from the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2014, formatted ineXtensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets at December 31, 2014 and 2013; (ii) ConsolidatedStatements of Comprehensive (Loss)/Income for each of the years ended December 31, 2014, 2013 and 2012; (iii) Consolidated Statements ofCash Flows for each of the years ended December 31, 2014, 2013 and 2012; (iv) Consolidated Statements of Changes in Equity for each of theyears ended December 31, 2014, 2013 and 2012; and (v) the Notes to Consolidated Financial Statements. 152 Table of ContentsSIGNATURENavios Maritime Holdings Inc. hereby certifies that it meets all of the requirements for filing its Annual Report on Form 20-F and that it has dulycaused and authorized the undersigned to sign this Annual Report on its behalf. Navios Maritime Holdings Inc.By:/s/ Angeliki FrangouName: Angeliki FrangouTitle:Chairman and Chief Executive OfficerDate: April 3, 2015 153 Table of ContentsINDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page NAVIOS MARITIME HOLDINGS INC. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F-2 CONSOLIDATED BALANCE SHEETS AT DECEMBER 31, 2014 AND 2013 F-3 CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME FOR EACH OF THE YEARS ENDED DECEMBER 31, 2014, 2013AND 2012 F-4 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR EACH OF THE YEARS ENDED DECEMBER 31, 2014, 2013 AND 2012 F-5 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR EACH OF THE YEARS ENDED DECEMBER 31, 2014, 2013 AND 2012 F-7 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS F-8 F-1 Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Shareholders and the Board of Directors ofNavios Maritime Holdings Inc.:In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of comprehensive income, changes in equityand cash flows present fairly, in all material respects, the financial position of Navios Maritime Holdings Inc. and its subsidiaries (the “Company”) atDecember 31, 2014 and 2013, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2014 inconformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all materialrespects, effective internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control — Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for thesefinancial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control overfinancial reporting, included in “Management’s annual report on internal control over financial reporting”, appearing in Item 15(b) of the Company’s 2014Annual Report on Form 20-F. Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financialreporting based on our integrated 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 audits to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financialstatements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accountingprinciples used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control overfinancial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, andtesting and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such otherprocedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’sinternal 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 asnecessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of thecompany are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assuranceregarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on thefinancial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degreeof compliance with the policies or procedures may deteriorate./s/ PricewaterhouseCoopers S.A.Athens, GreeceApril 3, 2015 F-2 Table of ContentsNAVIOS MARITIME HOLDINGS INC.CONSOLIDATED BALANCE SHEETS(Expressed in thousands of U.S. dollars — except share data) Notes December 31,2014 December 31,2013 ASSETS Current assets Cash and cash equivalents 3, 11 $247,556 $187,831 Restricted cash 10, 11 2,564 2,041 Accounts receivable, net 4 85,581 86,219 Due from affiliate companies 15 27,196 8,328 Inventories 32,521 26,588 Prepaid expenses and other current assets 5 21,713 28,979 Total current assets 417,131 339,986 Deposits for vessels, port terminals and other fixed assets 6 45,365 31,426 Vessels, port terminals and other fixed assets, net 6 1,911,143 1,777,457 Deferred financing costs, net 31,692 33,160 Deferred dry dock and special survey costs, net 28,630 29,354 Loan receivable from affiliate companies 11, 15 7,791 2,660 Long-term receivable from affiliate companies 11, 15 9,625 5,144 Investments in affiliates 8 344,453 335,303 Investments in available-for-sale securities 11, 22 6,701 7,660 Other long-term assets 7,030 5,463 Intangibles other than goodwill 7 189,492 191,664 Goodwill 18 160,336 160,336 Total non-current assets 2,742,258 2,579,627 Total assets$3,159,389 $2,919,613 LIABILITIES AND STOCKHOLDERS’ EQUITYCurrent liabilitiesAccounts payable$53,837 $51,692 Accrued expenses and other liabilities 7, 9 107,320 64,199 Deferred income and cash received in advance 15 12,445 13,215 Current portion of capital lease obligations 6, 11 1,449 1,400 Current portion of long-term debt 10, 11 24,186 19,261 Total current liabilities 199,237 149,767 Senior and ship mortgage notes, including premium 10. 11 1,375,000 1,293,156 Long-term debt, net of current portion 10, 11 245,396 198,832 Capital lease obligations, net of current portion 6, 11 20,911 22,359 Unfavorable lease terms 7 22,141 27,074 Other long-term liabilities and deferred income 15 17,459 25,221 Deferred tax liability 20 12,735 13,869 Total non-current liabilities 1,693,642 1,580,511 Total liabilities 1,892,879 1,730,278 Commitments and contingencies 13 — — Stockholders’ equityPreferred Stock — $0.0001 par value, authorized 1,000,000 shares, 75,069 and 8,479 issued and outstanding as ofDecember 31, 2014 and 2013, respectively. 16 — — Common stock — $0.0001 par value, authorized 250,000,000 shares, 105,831,718 and 104,261,029 issued and outstanding,as of December 31, 2014 and 2013, respectively. 16 11 10 Additional paid-in capital 721,465 552,778 Accumulated other comprehensive loss (578) (11,172)Retained earnings 432,065 524,079 Total Navios Holdings stockholders’ equity 1,152,963 1,065,695 Noncontrolling interest 21 113,547 123,640 Total stockholders’ equity 1,266,510 1,189,335 Total liabilities and stockholders’ equity$3,159,389 $2,919,613 See notes to consolidated financial statements. F-3 Table of ContentsNAVIOS MARITIME HOLDINGS INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME(Expressed in thousands of U.S. dollars — except share and per share data) Note Year EndedDecember 31,2014 Year EndedDecember 31,2013 Year EndedDecember 31,2012 Revenue 18 $569,016 $512,279 $616,494 Administrative fee revenue from affiliates 15 14,300 7,868 5,994 Time charter, voyage and logistics business expenses (263,304) (244,412) (269,279)Direct vessel expenses 15 (130,064) (114,074) (117,790)General and administrative expenses incurred on behalf of affiliates 15 (14,300) (7,868) (5,994) General and administrative expenses (45,590) (44,634) (51,331)Depreciation and amortization 6, 7 (104,690) (98,124) (108,206)Provision for losses on accounts receivable 4 (792) (630) (17,136)Interest income 15 5,515 2,299 2,717 Interest expense and finance cost 17 (113,660) (110,805) (106,196)Loss on derivatives 11 — (260) (196)Gain on sale of assets — 18 323 Loss on bond and debt extinguishment 10 (27,281) (37,136) — Other income 23 15,639 17,031 189,239 Other expense 22 (24,520) (10,447) (10,993)(Loss)/income before equity in net earnings of affiliated companies$(119,731) $(128,895)$127,646 Equity in net earnings of affiliated companies 8, 15, 18 57,751 19,344 48,228 (Loss)/income before taxes$(61,980) $(109,551)$175,874 Income tax (expense)/benefit 20 (84) 4,260 (312)Net (loss)/income$(62,064) $(105,291)$175,562 Less: Net loss/(income) attributable to the noncontrolling interest 21 5,861 (3,772) (77)Net (loss)/income attributable to Navios Holdings common stockholders$(56,203) $(109,063)$175,485 (Loss)/income attributable to Navios Holdings common stockholders, basic 19 $(66,976) $(110,990)$173,780 (Loss)/income attributable to Navios Holdings common stockholders, diluted 19 $(66,976) $(110,990)$175,485 Basic net (loss)/earnings per share attributable to Navios Holdings commonstockholders$(0.65) $(1.09)$1.72 Weighted average number of shares, basic 19 103,476,614 101,854,415 101,232,720 Diluted net (loss)/earnings per share attributable to Navios Holdings commonstockholders$(0.65) $(1.09)$1.58 Weighted average number of shares, diluted 19 103,476,614 101,854,415 111,033,758 Other comprehensive income/(loss)Unrealized holding loss on investments in-available-for-sale securities 22 (959) (10,614) (566)Reclassification to earnings 22 11,553 — — Reclassification to investments in affiliates 8 — — (6,158)Total other comprehensive income/(loss)$10,594 $(10,614)$(6,724)Total comprehensive (loss)/income (51,470) (115,905) 168,838 Comprehensive loss/(income) attributable to noncontrolling interest$5,861 $(3,772)$(77)Total comprehensive (loss)/income attributable to Navios Holdings commonstockholders$(45,609) $(119,677)$168,761 See notes to consolidated financial statements. F-4 Table of ContentsNAVIOS MARITIME HOLDINGS INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(Expressed in thousands of U.S. dollars) Note Year EndedDecember 31,2014 Year EndedDecember 31,2013 Year EndedDecember 31,2012 OPERATING ACTIVITIES: Net (loss)/income $(62,064) $(105,291) $175,562 Adjustments to reconcile net (loss)/income to net cash provided by operating activities: Depreciation and amortization 6, 7 104,690 98,124 108,206 Amortization and write-off of deferred financing costs 17 4,061 5,384 6,309 Amortization of deferred drydock and special survey costs 12,263 9,581 7,289 Provision for losses on accounts receivable 4 792 630 17,136 Unrealized loss on FFA derivatives 11 — 69 124 Share based compensation 12 7,719 5,021 4,712 Gain on sale of assets — (18) (323)Loss on bond and debt extinguishment 10 4,786 12,142 — Income tax expense/(benefit) 20 84 (4,260) 312 Realized holding loss on investments in-available-for-sale-securities 22 11,553 — — Equity in affiliates, net of dividends received 8, 15 (22,179) 19,781 (7,519)Changes in operating assets and liabilities: (Increase)/decrease in restricted cash (168) 430 1,317 Increase in accounts receivable (107) (1,110) (1,434)(Increase)/decrease in inventories (5,933) 4,966 (9,820)Decrease/(increase) in prepaid expenses and other assets 6,446 (26,653) 18,384 (Increase)/decrease in due from affiliate companies (18,263) 80,159 (59,134)Increase/(decrease) in accounts payable 1,738 (12,916) 6,701 Increase/(decrease) in accrued expenses and other liabilities 31,154 (12,156) 9,483 Decrease in deferred income and cash received in advance (770) (2,112) (13,340)Decrease in other long-term liabilities and deferred income (8,509) (1,109) (20,739)Increase/(decrease) in derivative assets and liabilities — 1,206 (121)Payments for drydock and special survey costs (10,970) (12,119) (14,461)Net cash provided by operating activities$56,323 $59,749 $228,644 INVESTING ACTIVITIES:Cash acquired through asset acquisition — — 33 Acquisition of intangible assets 7 (10,200) (2,092) — Proceeds from sale of assets 6 — — 67,500 Loan to affiliate company 15 (4,465) (2,660) — Loan repayment from affiliate company 15 — 35,000 10,000 (Increase)/decrease in long-term receivable from affiliate companies 15 (5,087) 14,908 (11,120)Dividends from affiliate companies 8 14,595 10,126 5,202 Deposits for vessels, port terminals and other fixed assets 6 (45,337) (31,398) (8,534)Acquisition of investments in affiliates 8 (2,233) (167,919) (1,472)Acquisition of vessels 6 (123,541) (85,699) (38,357)Purchase of property, equipment and other fixed assets 6 (68,620) (28,837) (10,799)Net cash (used in)/provided by investing activities$(244,888) $(258,571)$12,453 F-5 Table of ContentsNAVIOS MARITIME HOLDINGS INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(Expressed in thousands of U.S. dollars) Note Year EndedDecember 31,2014 Year EndedDecember 31,2013 Year EndedDecember 31,2012 FINANCING ACTIVITIES: Proceeds from long-term loans 10 $72,250 $51,250 $52,230 Proceeds from issuance of senior and ship mortgage notes including premium, net of debtissuance costs 10 365,668 725,486 84,965 Repayment of long-term debt and payment of principal 10 (20,761) (157,228) (236,178)Repayment of senior and ship mortgage notes 10 (290,000) (488,000) — Payments of obligations under capital leases 6 (1,399) (1,353) (1,519)Debt issuance costs (1,223) (905) (1,858)Net proceeds from issuance of preferred stock 16 163,602 — — (Increase/decrease in restricted cash (355) 22,234 (19,623)Acquisition of noncontrolling interest 21 (10,889) (750) — Contribution from noncontrolling shareholders 6, 21 3,484 3,905 — Issuance of common stock 16 643 551 93 Dividends paid (32,730) (26,405) (32,435)Net cash provided by/(used in) financing activities$248,290 128,785 (154,325)Increase/(decrease) in cash and cash equivalents 59,725 (70,037) 86,772 Cash and cash equivalents, beginning of year 187,831 257,868 171,096 Cash and cash equivalents, end of year$247,556 $187,831 $257,868 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATIONCash paid for interest, net of capitalized interest$92,776 $147,405 $102,119 Cash paid for income taxes$694 $586 $864 Non-cash investing and financing activitiesCapitalized deferred financing costs into vessel cost$— $— $135 Reclassification of investments in available-for-sale securities to investments in affiliates 8 $— $— $82,572 Reclassification of accumulated other comprehensive income to investments in affiliates 8 $— $— $6,158 Purchase of property, equipment and other fixed assets 6 $(624) $— $(15,413)Acquisition of intangible assets 7 $(6,800) $— $— Debt issuance costs$(225) $— $— Working capital acquired$— $— $597 Revaluation of vessels due to restructuring of capital lease obligations 6 $— $— $4,590 Decrease in capital lease obligations due to restructuring$— $— $(4,590)Dividends payable$3,081 $— $— Investments in available-for-sale securities 22 $— $17,715 $810 Accrued interest on loan receivable from affiliate company 15 $645 $— $— See notes to consolidated financial statements. F-6 Table of ContentsNAVIOS MARITIME HOLDINGS INC.CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY(Expressed in thousands of U.S. dollars — except share data) Number ofPreferredShares PreferredStock Number ofCommonShares CommonStock AdditionalPaid-inCapital RetainedEarnings AccumulatedOtherComprehensiveIncome/(Loss) TotalNavios Holdings’Stockholders’Equity NoncontrollingInterest TotalStockholders’Equity Balance December 31, 2011 8,479 $— 102,409,364 $10 $542,582 $510,348 $6,166 $1,059,106 $116,586 $1,175,692 Net income — — — — — 175,485 — 175,485 77 175,562 Total other comprehensive loss — — — — — — (6,724) (6,724) — (6,724) Stock-based compensation expenses — — 852,247 — 4,795 — — 4,795 — 4,795 Cancellation of shares — — (6,202) — — — — — — — Dividends declared/ paid — — — — — (26,286) — (26,286) — (26,286)Balance December 31, 2012 8,479 $— 103,255,409 $10 $547,377 $659,547 $(558) $1,206,376 $116,663 $1,323,039 Net (loss)/income — — — — — (109,063) — (109,063) 3,772 (105,291) Total other comprehensive loss — — — — — — (10,614) (10,614) — (10,614) Navios Logistics acquisition of noncontrollinginterest (Note 21) — — — — (50) — — (50) (700) (750) Contribution from noncontrolling shareholders(Note 6 and 21) — — — — — — — — 3,905 3,905 Stock-based compensation expenses (Note 16) — — 1,031,456 — 5,451 — — 5,451 — 5,451 Cancellation of shares (Note 16) — — (25,836) — — — — — — — Dividends declared/ paid — — — — — (26,405) — (26,405) — (26,405)Balance December 31, 2013 8,479 $— 104,261,029 $10 $552,778 $524,079 $(11,172) $1,065,695 $123,640 $1,189,335 Net loss — — — — — (56,203) — (56,203) (5,861) (62,064) Total other comprehensive income — — — — — — 10,594 10,594 — 10,594 Issuance of preferred stock, net of expenses (Note16) 68,000 — — — 163,602 — — 163,602 — 163,602 Conversion of preferred stock to common stock(Note 16) (1,410) — 1,410,000 1 — — — 1 — 1 Contribution from noncotrolling shareholders(Note 6 and 21) — — — — — — — — 3,484 3,484 Acquisition of noncontrolling interest (Note 21) — — — — (3,173) — — (3,173) (7,716) (10,889) Stock-based compensation expenses (Note 16) — — 184,937 — 8,258 — — 8,258 — 8,258 Cancellation of shares (Note 16) — — (24,248) — — — — — — — Dividends declared/ paid — — — — — (35,811) — (35,811) — (35,811) Balance December 31, 2014 75,069 $— 105,831,718 $11 $721,465 $432,065 $(578) $1,152,963 $113,547 $1,266,510 See notes to consolidated financial statements. F-7 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data)NOTE 1: DESCRIPTION OF BUSINESSNavios Maritime Holdings Inc. (“Navios Holdings” or the “Company”) (NYSE:NM) is a global, vertically integrated seaborne shipping and logisticscompany focused on the transport and transshipment of dry bulk commodities, including iron ore, coal and grain.Navios LogisticsNavios South American Logistics Inc. (“Navios Logistics”), a consolidated subsidiary of the Company, is one of the largest logistics companies in theHidrovia region of South America, focusing on the Hidrovia river system, the main navigable river system in the region, and on cabotage trades along theeastern coast of South America. Navios Logistics is focused on providing its customers integrated transportation, storage and related services through its portfacilities, its large, versatile fleet of dry and liquid cargo barges and its product tankers. Navios Logistics serves the needs of a number of growing SouthAmerican industries, including mineral and grain commodity providers as well as users of refined petroleum products. As of December 31, 2014, NaviosHoldings owns 63.8% of Navios Logistics.Navios PartnersNavios Maritime Partners L.P. (“Navios Partners”) (NYSE:NMM) is an international owner and operator of dry cargo vessels and is engaged in seabornetransportation services of a wide range of dry cargo commodities including iron ore, coal, grain, fertilizer and also containers, chartering its vessels undermedium to long-term charters.As of December 31, 2014, Navios Holdings owned a 20.0% interest in Navios Partners, including a 2.0% general partner interest.Navios AcquisitionNavios Maritime Acquisition Corporation (“Navios Acquisition”) (NYSE: NNA), an affiliate of the Company, is an owner and operator of tankervessels focusing in the transportation of petroleum products (clean and dirty) and bulk liquid chemicals.As of December 31, 2014, Navios Holdings’ ownership of the outstanding voting stock of Navios Acquisition was 43.1% and its economic interest was46.2%.Navios MidstreamNavios Maritime Midstream Partners L.P. (“Navios Midstream”) (NYSE: NAP) is a publicly traded master limited partnership which owns and operatescrude oil tankers under long-term employment contracts.As of December 31, 2014, Navios Holdings owns no direct equity interest in Navios Midstream.Navios EuropeOn October 9, 2013, Navios Holdings, Navios Acquisition and Navios Partners established Navios Europe Inc. (“Navios Europe”) and had economicinterest of 47.5%, 47.5% and 5.0%, respectively. Effective November 2014, Navios Holdings, Navios Acquisition and Navios Partners have voting interest of50%, 50% and 0%, respectively. F-8 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a)Basis of presentation: The accompanying consolidated financial statements are prepared in accordance with accounting principles generally acceptedin the United States of America (U.S. GAAP). Where necessary, comparative figures have been reclassified to conform to changes in presentation in thecurrent year.The company has revised its classification of administrative fee revenue from affiliates to appropriately record such amounts as revenues in thestatement of comprehensive (loss)/income. The impact of the revision, which management determined was not material to the financial statements, wasto separately present administrative fee revenue from affiliates of $7,868 and $5,994 in the year ended December 31, 2013 and 2012, respectively, andto separately present an equal amount related to general and administrative expenses incurred on behalf of affiliates. (b)Principles of consolidation: The accompanying consolidated financial statements include the accounts of Navios Holdings, a Marshall Islandscorporation, and both its majority and wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in theconsolidated statements.The Company also consolidates entities that are determined to be variable interest entities (“VIE”) as defined in the accounting guidance, if theCompany determines that it is the primary beneficiary. A VIE is defined as a legal entity where either (i) equity interest holders as a group lack thecharacteristics of a controlling financial interest, including decision making ability and an interest in the entity’s residual risks and rewards, or (ii) theequity interest holders have not provided sufficient equity investment to permit the entity to finance its activities without additional subordinatedfinancial support, or (iii) the voting rights of some investors are not proportional to their obligations to absorb the expected losses of the entity, theirrights to receive the expected residual returns of the entity, or both and substantially all of the entity’s activities either involve or are conducted onbehalf of an investor that has disproportionately few voting rights.Subsidiaries: Subsidiaries are those entities in which the Company has an interest of more than one half of the voting rights or otherwise has power togovern the financial and operating policies of the entity. The acquisition method of accounting is used to account for the acquisition of subsidiaries.The cost of an acquisition is measured as the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition. Theexcess of the cost of acquisition over the fair value of the net assets acquired and liabilities assumed is recorded as goodwill. All subsidiaries includedin the consolidated financial statements are 100% owned, except for Navios Logistics, which is 63.8% owned by Navios Holdings and Navios AsiaLLC (“Navios Asia”) and its wholly-owned subsidiaries, which were 51.0% owned by Navios Holdings, until May 2014, when Navios Holdingsbecame the sole shareholder.Investments in Affiliates: Affiliates are entities over which the Company generally has between 20% and 50% of the voting rights, or over which theCompany has significant influence, but it does not exercise control. Investments in these entities are accounted for under the equity method ofaccounting. Under this method, the Company records an investment in the stock of an affiliate at cost, and adjusts the carrying amount for its share ofthe earnings or losses of the affiliate subsequent to the date of investment and reports the recognized earnings or losses in income. Dividends receivedfrom an affiliate reduce the carrying amount of the investment. The Company recognizes gains and losses in earnings for the issuance of shares by itsaffiliates, provided that the issuance of shares qualifies as a sale of shares. When the Company’s share of losses in an affiliate equals or exceeds itsinterest in the affiliate, the Company does not recognize further losses, unless the Company has incurred obligations or made payments on behalf of theaffiliate. F-9 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Affiliates included in the financial statements accounted for under the equity methodIn the consolidated financial statements of Navios Holdings, the following entities are included as affiliates and are accounted for under the equitymethod for such periods: (i) Navios Partners and its subsidiaries (ownership interest as of December 31, 2014 was 20.0%, which includes a 2.0% generalpartner interest); (ii) Navios Acquisition and its subsidiaries (economic interest as of December 31, 2014 was 46.2%); (iii) Acropolis Chartering andShipping Inc. (“Acropolis”) (economic interest as of December 31, 2014 was 35.0%); and (iv) Navios Europe and its subsidiaries (economic interest asof December 31, 2014 was 47.5%).Subsidiaries Included in the Consolidation: Nature OwnershipInterest Country ofIncorporation Statement of Operations Company Name 2014 2013 2012 Navios Maritime Holdings Inc. Holding Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios Corporation Sub-Holding Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios International Inc. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navimax Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios Handybulk Inc. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Hestia Shipping Ltd. Operating Company 100% Malta 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Anemos Maritime Holdings Inc. Sub-Holding Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios Shipmanagement Inc. Management Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 NAV Holdings Limited Sub-Holding Company 100% Malta 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Kleimar N.V. Operating Company/Vessel Owning Company/Management Company 100% Belgium 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Kleimar Ltd. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Bulkinvest S.A. Operating Company 100% Luxembourg 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Primavera Shipping Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Ginger Services Co. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Aquis Marine Corp. Sub-Holding Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios Tankers Management Inc. Management Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Astra Maritime Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Achilles Shipping Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Apollon Shipping Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Herakles Shipping Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Hios Shipping Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 -12/31 Ionian Shipping Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Kypros Shipping Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Meridian Shipping Enterprises Inc. Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Mercator Shipping Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Arc Shipping Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Horizon Shipping Enterprises Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Magellan Shipping Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 F-10 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Nature OwnershipInterest Country ofIncorporation Statement of Operations Company Name 2014 2013 2012 Aegean Shipping Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Star Maritime Enterprises Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Corsair Shipping Ltd. Vessel Owning Company 100% Marshall Is 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Rowboat Marine Inc. Operating Company 100% Marshall Is 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Beaufiks Shipping Corporation Operating Company 100% Marshall Is 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Nostos Shipmanagement Corp. Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Portorosa Marine Corp. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Shikhar Ventures S.A. Vessel Owning Company 100% Liberia 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Sizzling Ventures Inc. Operating Company 100% Liberia 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Rheia Associates Co. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Taharqa Spirit Corp. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Rumer Holding Ltd. Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Pharos Navigation S.A. Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Pueblo Holdings Ltd. Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Quena Shipmanagement Inc. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Aramis Navigation Inc. Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 White Narcissus Marine S.A. Vessel Owning Company 100% Panama 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios GP L.L.C. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Floral Marine Ltd. Vessel Owning Company 100% Marshall Is. — — 1/1 - 6/14 Red Rose Shipping Corp. Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Highbird Management Inc. Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Ducale Marine Inc. Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Vector Shipping Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Faith Marine Ltd. Vessel Owning Company 100% Liberia 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios Maritime Finance (US) Inc. Operating Company 100% Delaware 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios Maritime Finance II (US) Inc. Operating Company 100% Delaware 1/1 -12/31 1/1 -12/31 1/1 -12/31 Tulsi Shipmanagement Co. Operating Company 100% Marshall Is. 1/1 -12/31 1/1 -12/31 1/1 -12/31 Cinthara Shipping Ltd. Operating Company 100% Marshall Is. 1/1 -12/31 1/1 -12/31 1/1 -12/31 Rawlin Services Company Operating Company 100% Marshall Is. 1/1 -12/31 1/1 -12/31 1/1 -12/31 Mauve International S.A. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Serenity Shipping Enterprises Inc. Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 3/26 - 12/31 Mandora Shipping Ltd Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 3/30 - 12/31 Solange Shipping Ltd. Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 5/14 -12/31 Diesis Ship Management Ltd. Operating Company 100% Marshall Is. 1/1 - 12/31 5/14 - 12/31 — Navios Holdings Europe Finance Inc. Sub-Holding Company 100% Marshall Is. 1/1 - 12/31 6/4 - 12/31 — Navios Asia LLC Sub-Holding Company 100% Marshall Is. 5/19 - 12/31 — — Iris Shipping Corporation Vessel Owning Company 100% Marshall Is. 5/19 - 12/31 — — Jasmine Shipping Corporation Vessel Owning Company 100% Marshall Is. 5/19 - 12/31 — — Emery Shipping Corporation Vessel Owning Company 100% Marshall Is. 6/4 - 12/31 — — Lavender Shipping Corporation Vessel Owning Company 100% Marshall Is. 11/24 -12/31 — — Esmeralda Shipping Corporation Vessel Owning Company 100% Marshall Is. — — — Triangle Shipping Corporation Vessel Owning Company 100% Marshall Is. — — — F-11 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) (c)Use of Estimates: The preparation of consolidated financial statements in conformity with U.S.GAAP requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the dates of the financialstatements and the reported amounts of revenues and expenses during the reporting periods. On an on-going basis, management evaluates the estimatesand judgments, including those related to uncompleted voyages, future drydock dates, the carrying value of investments in affiliates, the selection ofuseful lives for tangible assets, expected future cash flows from long-lived assets to support impairment tests, impairment test for goodwill, provisionsnecessary for accounts receivables and demurrages, provisions for legal disputes, pension benefits, and contingencies. Management bases its estimatesand judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of whichform the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual resultscould differ from those estimates under different assumptions and/or conditions. (d)Cash and Cash Equivalents: Cash and cash equivalents consist of cash on hand, deposits held on call with banks, and other short-term liquidinvestments with original maturities of three months or less. (e)Restricted Cash: As of December 31, 2014 and 2013, restricted cash included $1,974 and $1,451, respectively, which related to amounts held in aretention account in order to service debt and interest payments. Also included in restricted cash as of December 31, 2014 and 2013 are amounts heldas security in the form of letters of guarantee or letters of credit totaling $590 for both reporting periods. (f)Insurance Claims: Insurance claims at each balance sheet date consist of claims submitted and/or claims in the process of compilation or submission(claims pending). They are recorded on an accrual basis and represent the claimable expenses, net of applicable deductibles, incurred throughDecember 31 of each reporting period, which are probable to be recovered from insurance companies. Any remaining costs to complete the claims areincluded in accrued liabilities. The classification of insurance claims into current and non-current assets is based on management’s expectations as totheir collection dates. (g)Inventories: Inventories, which are comprised of lubricants, bunkers (when applicable) and stock provisions on board of the vessels, as well aspetroleum products held by Navios Logistics, are valued at cost as determined on the first-in, first-out basis. (h)Vessels, Port Terminals, Tanker Vessels, Barges, Pushboats and Other Fixed Assets, net: Vessels, port terminals, tanker vessels, barges, pushboats andother fixed assets acquired as parts of business combinations are recorded at fair value on the date of acquisition, and if acquired as an asset acquisition,are recorded at cost (including transaction costs). Vessels constructed by the company would be stated at historical cost, which consists of the contractprice, capitalized interest and any material expenses incurred upon acquisition (improvements and delivery expenses). Subsequent expenditures formajor improvements and upgrades are capitalized, provided they appreciably extend the life, increase the earnings capability or improve the efficiencyor safety of the vessels. The cost and related accumulated depreciation of assets retired or sold are removed from the accounts at the time of sale orretirement and any gain or loss is included in the accompanying consolidated statements of comprehensive (loss)/income.Expenditures for routine maintenance and repairs are expensed as incurred.Depreciation is computed using the straight line method over the useful life of the vessels, port terminals, tanker vessels, barges, push boats and otherfixed assets, after considering the estimated residual value. F-12 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Annual depreciation rates used, which approximate the useful life of the assets are: Vessels25 yearsPort terminals5 to 40 yearsTanker vessels, barges and push boats15 to 45 yearsFurniture, fixtures and equipment3 to 10 yearsComputer equipment and software5 yearsLeasehold improvementsshorter of lease term or 6 yearsManagement estimates the residual values of the Company’s dry bulk vessels based on a scrap value cost of steel times the weight of the ship noted inlightweight tons (“LWT”). Residual values are periodically reviewed and revised to recognize changes in conditions, new regulations or other reasons.Revisions of residual values affect the depreciable amount of the vessels and the depreciation expense in the period of the revision and future periods.Until December 31, 2012, management estimated the residual values of the Company’s vessels based on a scrap rate of $285 per LWT. EffectiveJanuary 1, 2013, following management’s reassessment after considering current market trends for scrap rates and ten-year average historical scrap ratesof the residual values of the Company’s vessels, the estimated scrap value per LWT was increased to $340.Management estimates the useful life of its vessels to be 25 years from the vessel’s original construction. However, when regulations place limitationson the ability of a vessel to trade on a worldwide basis, its useful life is re-estimated to end at the date such regulations become effective. An increase inthe useful life of a vessel or in its residual value would have the effect of decreasing the annual depreciation charge and extending it into later periods.A decrease in the useful life of a vessel or in its residual value would have the effect of increasing the annual depreciation charge. (i)Deposits for Vessels, Port Terminals and Other Fixed Assets: This represents amounts paid by the Company in accordance with the terms of thepurchase agreements for the construction of vessels, port terminals and other long-lived fixed assets. Deposits for vessels, port terminals and other fixedassets also include pre-delivery expenses. Pre-delivery expenses represent any direct costs to bring the asset to the location and condition necessary forit to be capable of operating in the manner intended by management. Interest costs incurred during the construction (until the asset is substantiallycomplete and ready for its intended use) are capitalized. Capitalized interest for the years ended December 31, 2014, 2013 and 2012 amounted to$2,334, $1,831 and $1,453, respectively. (j)Assets Held for Sale: It is the Company’s policy to dispose of vessels and other fixed assets when suitable opportunities occur and not necessarily tokeep them until the end of their useful life. The Company classifies assets and disposal groups as being held for sale when the following criteria aremet: management has committed to a plan to sell the asset (disposal group); the asset (disposal group) is available for immediate sale in its presentcondition; an active program to locate a buyer and other actions required to complete the plan to sell the asset (disposal group) have been initiated; thesale of the asset (disposal group) is probable, and transfer of the asset (disposal group) is expected to qualify for recognition as a completed sale withinone year; the asset (disposal group) is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and actionsrequired 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 or disposal groups classified as held for sale are measured at the lower of their carrying amount or fair value less cost to sell. These assetsare not depreciated once they meet the criteria to be held for sale. No assets were classified as held for sale in any of the periods presented. F-13 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) (k)Impairment of Long Lived Assets: Vessels, other fixed assets and other long-lived assets held and used by Navios Holdings are reviewed periodicallyfor potential impairment whenever events or changes in circumstances indicate that the carrying amount of a particular asset may not be fullyrecoverable. Navios Holdings’ management evaluates the carrying amounts and periods over which long-lived assets are depreciated to determine ifevents or changes in circumstances have occurred that would require modification to their carrying values or useful lives. In evaluating useful lives andcarrying values of long-lived assets, certain indicators of potential impairment are reviewed, such as undiscounted projected operating cash flows,vessel sales and purchases, business plans and overall market conditions.Undiscounted projected net operating cash flows are determined for each asset group and compared to the carrying value of the vessel, the unamortizedportion of deferred drydock and special survey costs related to the vessel and the related carrying value of the intangible assets with respect to the timecharter agreement attached to that vessel or the carrying value of deposits for newbuildings. Within the shipping industry, vessels are customarilybought and sold with a charter attached. The value of the charter may be favorable or unfavorable when comparing the charter rate to then-currentmarket rates. The loss recognized either on impairment (or on disposition) will reflect the excess of carrying value over fair value (selling price) for thevessel asset group.During the fourth quarter of fiscal year 2014, management concluded that events occurred and circumstances had changed, which indicated thatpotential impairment of Navios Holdings’ long-lived assets might exist. These indicators included continued deterioration in the spot market, and therelated impact of the current dry bulk sector has on management’s expectation for future revenues. As a result, an impairment assessment of long-livedassets (step one) was performed.The Company determined undiscounted projected net operating cash flows for each vessel and compared it to the vessel’s carrying value together withthe carrying value of deferred drydock and special survey costs related to the vessel and the carrying value of the related intangible assets. Thesignificant factors and assumptions used in the undiscounted projected net operating cash flow analysis included: determining the projected netoperating cash flows by considering the charter revenues from existing time charters for the fixed fleet days (the Company’s remaining charteragreement rates) and an estimated daily time charter equivalent for the unfixed days (based on the 10-year average historical one-year time charter ratesadjusted for outliers) over the remaining economic life of each vessel, net of brokerage and address commissions excluding days of scheduled off-hires,running cost based on current year actual, assuming an annual increase of 3.0% after 2016 and a utilization rate of 99.8% based on the fleet’s historicalperformance.For the deposits for new building vessels, the net cash flows also included the future cash out flows to make vessels ready for use, all remainingprogress payments to shipyards and other pre-delivery expenses (e.g. capitalized interest).The assessment concluded that step two of the impairment analysis was not required and no impairment of vessels, deposits for vessel acquisitions andthe related intangible assets existed as of December 31, 2014 and 2013, as the undiscounted projected net operating cash flows exceeded the carryingvalue.In the event that impairment would occur, the fair value of the related asset would be determined and an impairment charge would be recorded tooperations calculated by comparing the asset’s carrying value to its fair value. Fair value is typically estimated primarily through the use of third-partyvaluations performed on an individual vessel basis. F-14 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Although management believes the underlying assumptions supporting this assessment are reasonable, if the charter rate trends and the length of themarket downturn vary significantly from our forecasts, Navios Holdings may be exposed to material impairment charges in the future.No impairment loss was recognized for any of the periods presented. (l)Deferred Drydock and Special Survey Costs: The Company’s vessels, barges and push boats are subject to regularly scheduled drydocking and specialsurveys which are carried out every 30 and 60 months, respectively, for ocean-going vessels, and every 84 months for push boats and barges, tocoincide with the renewal of the related certificates issued by the classification societies, unless a further extension is obtained in rare cases and undercertain conditions. The costs of drydocking and special surveys are deferred and amortized over the above periods or to the next drydocking or specialsurvey date if such date has been determined. Unamortized drydocking or special survey costs of vessels, barges and push boats sold are written-off toincome in the year the vessel, barge or push boat is sold.Costs capitalized as part of the drydocking or special survey consist principally of the actual costs incurred at the yard, and expenses relating to spareparts, paints, lubricants and services incurred solely during the drydocking or special survey period. For each of the years ended December 31, 2014,2013 and 2012, the amortization of deferred drydock and special survey costs was $12,263, $9,581, and $7,289, respectively. (m)Deferred Financing Costs: Deferred financing costs include fees, commissions and legal expenses associated with obtaining or modifying loanfacilities. These costs are amortized over the life of the related debt using the effective interest rate method, and are included in interest expense.Amortization and write-off of deferred financing costs for each of the years ended December 31, 2014, 2013 and 2012 were $4,061, $5,384 and $6,309,respectively. See Note 17. (n)Goodwill and Other Intangibles(i) Goodwill: Goodwill is tested for impairment at the reporting unit level at least annually.The Company evaluates impairment of goodwill using a two-step process. First, the aggregate fair value of the reporting unit is compared to itscarrying amount, including goodwill (step one). The Company determines the fair value of the reporting unit based on discounted cash flow analysisand believes that the discounted cash flow analysis is the best indicator of fair value for its individual reporting units.The fair value for goodwill impairment testing was estimated using the expected present value of future cash flows, using judgments and assumptionsthat management believes were appropriate in the circumstances. The significant factors and assumptions the Company used in its discounted cashflow analysis included: EBITDA, the discount rate used to calculate the present value of future cash flows and future capital expenditures. EBITDAassumptions included revenue assumptions, general and administrative expense growth assumptions, and direct vessel expense growth assumptions.The future cash flows from shipping operations were determined by considering the charter revenues from existing time charters for the fixed fleet days(the Company’s remaining charter agreement rates) and an estimated daily time charter equivalent for the non-fixed days (based on a combination ofone-year average historical charter rates and the 10-year average historical charter rates adjusted for outliers, as available for each type of vessel), whichthe Company believes is an objective approach for forecasting charter rates over an extended time period for long lived assets. The future cash flowsfrom logistics operations were determined principally by combining revenues from existing contracts and estimated revenues based on the historicalperformance of the segment, including utilization rates and actual storage capacity. F-15 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) If the fair value of a reporting unit exceeds the carrying amount, no impairment exists. If the carrying amount of the reporting unit exceeds the fairvalue, then the Company must perform the second step to determine the implied fair value of the reporting unit’s goodwill and compare it with itscarrying amount. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit to all the assets and liabilities ofthat reporting unit, as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price.If the carrying amount of the goodwill exceeds the implied fair value, then goodwill impairment is recognized by writing the goodwill down to itsimplied fair value.No impairment loss was recognized for any of the periods presented.(ii) Intangibles Other Than Goodwill: Navios Holdings’ intangible assets and liabilities consist of favorable lease terms, unfavorable lease terms,customer relationships, trade name and port terminal operating rights. The fair value of the trade name was determined based on the “relief fromroyalty” method which values the trade name based on the estimated amount that a company would have to pay in an arm’s length transaction to usethat trade name. The asset is being amortized under the straight line method over 32 years. Navios Logistics’ trade name is being amortized under thestraight line method over 10 years.The fair value of customer relationships was determined based on the “excess earnings” method, which relies upon the future cash flow generatingability of the asset. The asset is amortized under the straight line method.Other intangibles that are being amortized, such as customer relationships and port terminal operating rights, would be considered impaired if theircarrying value could not be recovered from the future undiscounted cash flows associated with the asset.When intangible assets or liabilities associated with the acquisition of a vessel are identified, they are recorded at fair value. Fair value is determinedby reference to market data and the discounted amount of expected future cash flows. Where charter rates are higher than market charter rates, an assetis recorded, being the difference between the acquired charter rate and the market charter rate for an equivalent vessel. Where charter rates are less thanmarket charter rates, a liability is recorded, being the difference between the assumed charter rate and the market charter rate for an equivalent vessel.The determination of the fair value of acquired assets and assumed liabilities requires the Company to make significant assumptions and estimates ofmany variables including market charter rates, expected future charter rates, the level of utilization of the Company’s vessels and the Company’sweighted average cost of capital. The use of different assumptions could result in a material change in the fair value of these items, which could have amaterial impact on the Company’s financial position and results of operations.The amortizable value of favorable and unfavorable leases is amortized over the remaining life of the lease term and the amortization expense isincluded in the consolidated statements of comprehensive (loss)/income in the “Depreciation and amortization” line item.The amortizable value of favorable leases would be considered impaired if its fair market value could not be recovered from the future undiscountedcash flows associated with the asset. Vessel purchase options that have not been exercised, which are included in favorable lease terms, are notamortized and would be considered impaired if the carrying value of an option, when added to the option price of the vessel, exceeded the fair value ofthe vessel. No impairment loss was recognized for any the periods presented. F-16 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Vessel purchase options that are included in favorable leases are not amortized and when the purchase option is exercised, the asset is capitalized aspart of the cost of the vessel and depreciated over the remaining useful life of the vessel and if not exercised, the intangible asset is written off. Vesselpurchase options that are included in unfavorable lease terms are not amortized and when the purchase option is exercised by the charterer and theunderlying vessel is sold, it will be recorded as part of gain/loss on sale of the assets. If the option is not exercised at the expiration date it is written-offin the consolidated statements of comprehensive (loss)/income.The weighted average amortization periods for intangibles are: Intangible assets/liabilities Years Trade name 21.0 Favorable lease terms 11.1 Unfavorable lease terms 9.4 Port terminal operating rights 32.5 Customer relationships 20.0-45.0 See also Note 7. (o)Foreign Currency Translation: The Company’s functional and reporting currency is the U.S. dollar. The Company engages in worldwide commercewith a variety of entities. Although its operations may expose it to certain levels of foreign currency risk, its transactions are predominantly U.S. dollardenominated. The Company’s subsidiaries in Uruguay, Argentina, Brazil and Paraguay transact a nominal amount of their operations in Uruguayanpesos, Argentinean pesos, Brazilian reales and Paraguayan guaranies, whereas the Company’s wholly-owned vessel subsidiaries and the vesselmanagement subsidiaries transact a nominal amount of their operations in Euros; however, all of the subsidiaries’ primary cash flows are U.S. dollardenominated. The financial statements of the foreign operations are translated using the exchange rate at the balance sheet date except for property andequipment and equity, which are translated at historical rates. Transactions in currencies other than the functional currency are translated at theexchange rate in effect at the date of each transaction. Differences in exchange rates during the period between the date a transaction denominated in aforeign currency is consummated and the date on which it is either settled or translated, are recognized in the statements of comprehensive(loss)/income. The foreign currency gains/(losses) recognized under the caption “Other income” and “Other expense”, respectively, in the consolidatedstatements of comprehensive (loss)/income for each of the years ended December 31, 2014, 2013 and 2012, were $1,945, $184 and ($217),respectively. (p)Provisions: The Company, in the ordinary course of business, is subject to various claims, suits and complaints. Management, in consultation withinternal and external advisers, will provide for a contingent loss in the financial statements if the contingency had occurred at the date of the financialstatements and the likelihood of loss was probable and the amount can be reasonably estimated. If the Company has determined that the reasonableestimate of the loss is a range and there is no best estimate within the range, the Company will provide for the lower amount within the range. See Note13, “Commitments and Contingencies” for further discussion.The Company participates in Protection and Indemnity (P&I) insurance plans provided by mutual insurance associations known as P&I clubs. Underthe terms of these plans, participants may be required to pay additional premiums (supplementary calls) to fund operating deficits incurred by the clubs(“back calls”). Obligations for back calls are accrued annually based on information provided by the P&I clubs. F-17 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Provisions for estimated losses on uncompleted voyages and vessels under time charter are provided for in the period in which such losses aredetermined. As of December 31, 2014 and 2013, the balance for provision for loss making voyages in progress was $1,893 and $801, respectively. (q)Segment Reporting: Operating segments, as defined, are components of an enterprise about which separate financial information is available that isevaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Based on theCompany’s methods of internal reporting and management structure, the Company currently has two reportable segments: the Dry Bulk VesselOperations segment and the Logistics Business segment. (r)Revenue and Expense Recognition:Revenue Recognition: Revenue is recorded when services are rendered, the Company has a signed charter agreement or other evidence of anarrangement, the price is fixed or determinable, and collection is reasonably assured. The Company generates revenue from transportation of cargo,time charter of vessels, port terminal operations, bareboat charters, contracts of affreightment/voyage contracts, demurrages and contracts covering dryor liquid port terminal operations.Voyage revenues for the transportation of cargo are recognized ratably over the estimated relative transit time of each voyage. A voyage is deemed tocommence when a vessel is available for loading and is deemed to end upon the completion of the discharge of the current cargo. Estimated losses onvoyages are provided for in full at the time such losses become evident. Under a voyage charter, the Company agrees to provide a vessel for thetransportation of specific goods between specific ports in return for payment of an agreed upon freight rate per ton of cargo.Revenues are recorded net of address commissions. Address commissions represent a discount provided directly to the charterers based on a fixedpercentage of the agreed upon charter rate. Since address commissions represent a discount (sales incentive) on services rendered by the Company andno identifiable benefit is received in exchange for the consideration provided to the charterer, these commissions are presented as a reduction ofrevenue.Revenue from time chartering and bareboat chartering is earned and recognized on a daily basis as the service is delivered. Revenue from contracts ofaffreightment (“COA”)/voyage contracts relating to our barges is recognized based upon the percentage of voyage completion. A voyage is deemed tocommence upon the departure of the barge after discharge under the previous voyage and is deemed to end upon the completion of discharge under thecurrent voyage. The percentage of voyage completion is based on the days traveled as of the balance sheet date divided by the total days expected forthe voyage. The position of the barge at the balance sheet date is determined by the days traveled as of the balance sheet date over the total voyage ofthe pushboat having the barge in tow. Revenue arising from contracts that provide our customers with continuous access to convoy capacity isrecognized ratably over the period of the contracts.Demurrage income represents payments made by the charterer to the vessel owner when loading or discharging time exceeds the stipulated time in thevoyage charter and is recognized as it is earned.Revenues arising from contracts that provide our customers with continuous access to convoy capacity are recognized ratably over the period of thecontracts.Profit-sharing revenues are calculated at an agreed percentage of the excess of the charterer’s average daily income (calculated on a quarterly or half-yearly basis) over an agreed amount and accounted for on an F-18 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) accrual basis based on provisional amounts and for those contracts that provisional accruals cannot be made due to the nature of the profit sharingelements, these are accounted for on the actual cash settlement.Revenues from time chartering of vessels are accounted for as operating leases and are thus recognized on a straight line basis as the average revenueover the rental periods of such charter agreements as service is performed, except for loss generating time charters, in which case the loss is recognizedin the period when such loss is determined. A time charter involves placing a vessel at the charterer’s disposal for a period of time during which thecharterer uses the vessel in return for the payment of a specified daily hire rate. Short period charters for less than three months are referred to as spot-charters. Charters extending three months to a year are generally referred to as medium-term charters. All other charters are considered long-term. Undertime charters, operating costs such as for crews, maintenance and insurance are typically paid by the owner of the vessel.Revenues from port terminal operations consist of an agreed flat fee per ton and cover the services performed to unload barges (or trucks), transfer theproduct into silos for temporary storage and then loading the ocean-going vessels. Revenues are recognized upon completion of loading the ocean-going vessels. Additionally, fees are charged for vessel dockage and for storage time in excess of contractually specified terms. Dockage revenues arerecognized ratably up to completion of loading. Storage fees are assessed and recognized when the product remains in the silo storage beyond thecontractually agreed time allowed. Storage fee revenue is recognized ratably over the storage period and ends when the product is loaded onto theocean-going vessel.Revenues from liquid port terminal operations consist mainly of sales of petroleum products in the Paraguayan market. Additionally, revenues consistof an agreed flat fee per cubic meter to cover the services performed to unload barges, transfer the products into the tanks for temporary storage andthen loading the trucks. Revenues are recognized upon completion of loading the trucks. Additionally, fees are charged for storage time in excess ofcontractually specified terms. Storage fee revenue is recognized ratably over the storage period and ends when the product is loaded onto the trucks.Recovery of lost revenue under credit default insurance for charterers is accounted for as gain contingency and is recognized when all contingenciesare resolved. The amount of recovery of lost revenue is recorded within the caption “Revenue” and any amount recovered in excess of the lost revenueis recorded within the caption “Other income”.Expenses related to our revenue-generating contracts are recognized as incurred.Administrative fee revenue from affiliates: Administrative fee revenue from affiliates consists of fees earned on the provision of administrativeservices pursuant to administrative services agreements with our affiliates (Refer to Note 15). Administrative services include: bookkeeping, audit andaccounting services, legal and insurance services, administrative and clerical services, banking and financial services, advisory services, client andinvestor relations and other general and administrative services. These revenues are recognized as the services are provided to affiliates.The general and administrative expenses incurred on behalf of affiliates are determined based on a combination of actual expenses incurred of behalf ofthe affiliates as well as a reasonable allocation of expenses that are not affiliate specific but incurred on behalf of all affiliates.Forward Freight Agreements (“FFAs”): Realized gains or losses from FFAs are recognized monthly concurrent with cash settlements. In addition,FFAs are “marked to market” quarterly to determine the fair F-19 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) values which generate unrealized gains or losses. Trading of FFAs could lead to material fluctuations in the Company’s reported results fromoperations on a period to period basis. See Note 11.Deferred Income and Cash Received In Advance: Deferred voyage revenue primarily relates to cash received from charterers prior to it being earned.These amounts are recognized as revenue over the voyage or charter period.Time Charter, Voyage and Logistics Business Expenses: Time charter, voyage and logistics business expenses comprise all expenses related to eachparticular voyage, including time charter hire paid and voyage freight paid, bunkers, port charges, canal tolls, cargo handling, agency fees andbrokerage commissions. Also included in time charter, voyage and logistics business expenses are charterers’ liability insurances, provision for losseson time charters and voyages in progress at year-end, direct port terminal expenses and other miscellaneous expenses.Direct Vessel Expenses: Direct vessel expenses consist of all expenses relating to the operation of vessels, including crewing, repairs and maintenance,insurance, stores and lubricants and miscellaneous expenses such as communications and amortization of drydocking and special survey costs net ofrelated party management fees.Prepaid Voyage Costs: Prepaid voyage costs relate to cash paid in advance for expenses associated with voyages. These amounts are recognized asexpenses over the voyage or charter period. (s)Employee benefits:Pension and Retirement Obligations-Crew: The Company’s ship-owning subsidiaries employ the crew on board under short-term contracts (usuallyup to nine months) and, accordingly, they are not liable for any pension or post-retirement benefits.Provision for Employees’ Severance and Retirement Compensation: The employees in the Company’s office in Greece are protected by Greek laborlaw. According to the law, the Company is required to pay retirement indemnities to employees upon dismissal or upon leaving with an entitlement toa full security retirement pension. The amount of compensation is based on the number of years of service and the amount of remuneration at the dateof dismissal or retirement up to a maximum of two years’ salary. If the employees remain in the employment of the Company until normal retirementage, they are entitled to retirement compensation which is equal to 40% of the compensation amount that would be payable if they were dismissed atthat time. The number of employees that will remain with the Company until retirement age is not known. The Company considers this plan equivalentto a lump sum defined benefit pension plan and accounts for it under relevant guidance on employer’s accounting for pensions. The Company isrequired to annually value the statutory terminations indemnities liability. Management obtains a valuation from independent actuaries to assist in thecalculation of the benefits. The Company provides, in full, for the employees’ termination indemnities liability. This liability amounted to $819 and$660 at December 31, 2014 and 2013, respectively.U.S. Retirement Savings Plan: The Company sponsors a 401(k) retirement savings plan, which is categorized as a defined contribution plan. The planis available to full time employees who meet the plan’s eligibility requirements. The plan permits employees to make contributions up to 15% of theirannual salary with the Company matching up to the first 6%. The Company makes monthly contributions (matching contributions) to the plan basedon amounts contributed by employees. Subsequent to making the matching F-20 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) contributions, the Company has no further obligations. The Company may make an additional discretionary contribution annually if such acontribution is authorized by the Board of Directors. The plan is administered by an independent professional firm that specializes in providing suchservices. See Note 12.Other Post-Retirement Obligations: The Company has a legacy pension arrangement for certain Bahamian, Uruguayan and former NaviosCorporation employees. The entitlement to these benefits is only to these former employees. The expected costs of these benefits are accrued each year,using an accounting methodology similar to that for defined benefit pension plans. These obligations are valued annually by independent actuaries.Stock-Based Compensation: In December 2014, 2013 and 2012, the Company authorized the issuance of shares of restricted common stock, restrictedstock units and stock options in accordance with the Company’s stock option plan for its employees, officers and directors. These awards of restrictedcommon stock, restricted stock units and stock options are based on service conditions only and vest over three years. In December 2013 and 2014, theCompany also authorized the issuance of shares of restricted common stock, restricted stock units and stock options for its employees, officers anddirectors that vest on April 30, 2015 and June 2, 2016, respectively, upon achievement of certain internal performance criteria including certain targetson operational performance and cost efficiency. See Note 12.The fair value of stock option grants is determined with reference to option pricing model and principally adjusted Black-Scholes models. The fairvalue of restricted stock and restricted stock units is determined by reference to the quoted stock price on the date of grant. Compensation expense, netof estimated forfeitures, is recognized based on a graded expense model over the vesting period. Compensation expense for the awards that vest uponachievement of the performance criteria is recognized when it is probable that the performance criteria will be met and are being accounted for asequity. (t)Financial Instruments: Financial instruments carried on the balance sheet include cash and cash equivalents, restricted cash, trade receivables andpayables, other receivables and other liabilities, long-term debt, capital leases and available-for-sale securities. The particular recognition methodsapplicable to each class of financial instrument are disclosed in the applicable significant policy description of each item, or included below asapplicable.Financial Risk Management: The Company’s activities expose it to a variety of financial risks including fluctuations in future freight rates, timecharter hire rates, fuel prices and credit and interest rates risk. Risk management is carried out under policies approved by executive management.Guidelines are established for overall risk management, as well as specific areas of operations.Credit Risk: The Company closely monitors its credit exposure to customers and counterparties for credit risk. The Company has policies in place toensure that it trades with customers and counterparties with an appropriate credit history. Derivative counterparties and cash transactions are limited tohigh quality credit financial institutions.Interest Rate Risk: Any differential to be paid or received on an interest rate swap agreement is recognized as a component of gain/loss on derivativesover the period of the agreement. Gains and losses on early termination of interest rate swaps are reflected in the consolidated statements ofcomprehensive (loss)/income. The effective portion of changes in the fair value of interest rate swap agreements that are designated and qualify as cashflow hedges are recognized in equity. F-21 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Liquidity Risk: Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding throughan adequate amount of committed credit facilities and the ability to close out market positions. The Company monitors cash balances appropriately tomeet working capital needs.Foreign Exchange Risk: Foreign currency transactions are translated into the measurement currency at rates prevailing on the dates of the relevanttransactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets andliabilities denominated in foreign currencies are recognized in the consolidated statements of comprehensive (loss)/income.Accounting for Derivative Financial Instruments and Hedging Activities: The Company may enter into dry bulk shipping FFAs as economic hedgesrelating to identifiable ship and/or cargo positions and as economic hedges of transactions the Company expects to carry out in the normal course of itsshipping business. By utilizing certain derivative instruments, including dry bulk shipping FFAs, the Company manages the financial risk associatedwith fluctuating market conditions. In entering into these contracts, the Company has assumed the risks that might arise from the possible inability ofcounterparties to perform in accordance with the terms of their contracts.The Company also trades dry bulk shipping FFAs which are cleared through LCH, the London clearing house. LCH calls for both base and margincollateral, which are funded by Navios Holdings, and which in turn substantially eliminate counterparty risk. Certain portions of these collateral fundsmay be restricted at any given time as determined by LCH.At the end of each calendar quarter, the fair value of dry bulk shipping FFAs traded over-the-counter are determined from an index published inLondon, United Kingdom and the fair value of those FFAs traded with LCH is determined from the LCH valuations.The Company records all of its derivative financial instruments and hedges as economic hedges.The Company classifies cash flows related to derivative financial instruments within cash provided by operating activities in the consolidatedstatements of cash flows. (u)(Loss)/Earnings Per Share: Basic (losses)/earnings per share are computed by dividing net (loss)/income attributable to Navios Holdings commonstockholders by the weighted average number of shares of common stock outstanding during the periods presented. Diluted earnings per share reflectthe potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted. Dilution has been computedby the treasury stock method whereby all of the Company’s dilutive securities (stock options and warrants) are assumed to be exercised and theproceeds are used to repurchase common shares at the weighted average market price of the Company’s common stock during the relevant periods. Theincremental shares (the difference between the number of shares assumed issued and the number of shares assumed purchased) are included in thedenominator of the diluted earnings per share computation. Restricted stock and restricted stock units (vested and unvested) are included in thecalculation of the diluted earnings per share, based on the weighted average number of restricted stock and restricted stock units assumed to beoutstanding during the period. Convertible shares are included in the calculation of the diluted earnings per share, based on the weighted averagenumber of convertible shares assumed to be outstanding during the period. See also Note 19. F-22 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) (v)Income Taxes: The Company is a Marshall Islands Corporation. Pursuant to various treaties and the United States Internal Revenue Code, theCompany believes that substantially all its operations are exempt from income taxes in the Marshall Islands and the United States of America. The taxexpense reflected in the Company’s consolidated financial statements for the years ended December 31, 2014, 2013 and 2012 was mainly attributableto its subsidiaries in South America, which are subject to the Argentinean and Paraguayan income tax regimes.The asset and liability method is used to account for future income taxes. Under this method, future income tax assets and liabilities are recognized forthe estimated future tax consequences attributable to differences between the financial statement carrying amounts and the tax bases of assets andliabilities. Future income tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences areexpected to be recovered or settled. The effect on future income tax assets and liabilities of a change in tax rates is recognized in income in the periodthat includes the enactment date. A deferred tax asset is recognized for temporary differences that will result in deductible amounts in future years. Avaluation allowance is recognized if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred taxasset will not be realized. (w)Dividends: Dividends are recorded in the Company’s financial statements in the period in which they are declared. Navios Holdings paid $25,228,$24,710 and $30,730 to its common stockholders during the years ended December 31, 2014, 2013 and 2012, respectively, and $7,502, $1,695 and$1,705 to its preferred stockholders during the years ended December 31, 2014, 2013 and 2012, respectively. (x)Guarantees: A liability for the fair value of the obligation undertaken in issuing the guarantee is recognized. The recognition of fair value is notrequired for certain guarantees such as the parent’s guarantee of a subsidiary’s debt to a third party or guarantees on product warranties. For thoseguarantees excluded from the above guidance requiring the fair value recognition provision of the liability, financial statement disclosures of theirterms are made.On November 15, 2012, the Company agreed to provide Navios Partners with guarantees against counterparty default on certain existing charters (seealso Notes 15 and 23). (y)Leases: Vessel leases where Navios Holdings is regarded as the lessor are classified as either finance leases or operating leases based on an assessmentof the terms of the lease.For charters classified as finance leases the minimum lease payments are recorded as the gross investment in the lease. The difference between the grossinvestment in the lease and the sum of the present values of the two components of the gross investment is recorded as unearned income which isamortized to income over the lease term as finance lease interest income to produce a constant periodic rate of return on the net investment in the lease.For charters classified as operating leases where Navios Holdings is regarded as the lessor, refer to Note 2(r) “Revenue and Expense Recognition”.For charters classified as operating leases where Navios Holdings is regarded as the lessee, the expense is recognized on a straight line basis over therental periods of such charter agreements. The expense is included under the line item “Time charter, voyage and logistics business expenses”. (z)Treasury Stock: Treasury stock is accounted for using the cost method. Excess of the purchase price of the treasury stock acquired, plus directacquisition costs over its par value is recorded in additional paid-in capital. F-23 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) (aa)Trade Accounts Receivable: The amount shown as accounts receivable, trade, at each balance sheet date, includes receivables from charterers for hire,freight and demurrage billings and FFA counterparties, net of a provision for doubtful accounts. At each balance sheet date, all potentiallyuncollectible accounts are assessed individually for purposes of determining the appropriate provision for doubtful accounts. (ab)Convertible Preferred Stock: The Company’s 2% Mandatorily Convertible Preferred Stock (“Preferred Stock”) is recorded at fair market value on thedate of issuance. The fair market value is determined using a binomial valuation model. The model which is used takes into account the credit spreadof the Company, the volatility of its stock, as well as the price of its stock at the issuance date. Each preferred share has a par value of $0.0001. Eachholder of Preferred Stock is entitled to receive an annual dividend equal to 2.0% on the nominal value of the Preferred Stock, payable quarterly, untilsuch time as the Preferred Stock converts into common stock. Five years after the issuance date, 30.0% of the then-outstanding shares of Preferred Stockshall automatically convert into shares of common stock at a conversion price equal to $10.00 per share of common stock with the remaining balanceof the then-outstanding shares of Preferred Stock being converted into shares of common stock under the same terms 10 years after their issuance date.At any time following the third anniversary from their issuance date, if the closing price of the common stock has been at least $20.00 per share, for 10consecutive business days, the remaining balance of the then-outstanding preferred shares shall automatically convert at a conversion price equal to$14.00 per share of common stock. The holders of Preferred Stock are entitled, at their option, at any time following their issuance date and prior totheir final conversion date, to convert all or any such then-outstanding preferred shares into common stock at a conversion price equal to $14.00 percommon stock. (ac)Cumulative Redeemable Perpetual Preferred Stock: The Company’s 2,000,000 American Depositary Shares, Series G Cumulative RedeemablePerpetual Preferred Stock (the “Series G”) and the 4,800,000 American Depositary Shares, Series H Cumulative Redeemable Perpetual Preferred Stock(the “Series H”) are recorded at fair market value on issuance. Each of the shares represents 1/100th of a share of the Series G, with a liquidationpreference of $2,500.00 per share ($25.00 per American Depositary Share). Dividends are payable quarterly in arrears on the Series G at a rate of8.75% per annum and on the Series H at a rate of 8.625% per annum of the stated liquidation preference. At any time on or after January 28, 2019, theSeries G may be redeemed at the Company’s option and at any time on or after July 8, 2019, the Series H may be redeemed at the Company’s option(and the American Depositary Shares can be caused to be redeemed), in whole or in part, out of amounts legally available therefore, at a redemptionprice of $2,500.00 per share (equivalent to $25.00 per American Depositary Share) plus an amount equal to all accumulated and unpaid dividendsthereon to the date of redemption, whether or not declared. The Company has accounted for these shares as equity. (ad)Investment in Available-for-Sale Securities: The Company classifies its existing marketable equity securities as available-for-sale. These securities arecarried at fair value, with unrealized gains and losses excluded from earnings and reported directly in stockholders’ equity as a component of othercomprehensive (loss)/income unless an unrealized loss is considered “other-than-temporary,” in which case it is transferred to the consolidatedstatements of comprehensive (loss)/income. Management evaluates securities for other than temporary impairment (“OTTI”) on a quarterly basis.Consideration is given to (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-termprospects of the investee, and (iii) the intent and ability of the Company to retain its investment in the investee for a period of time sufficient to allowfor any anticipated recovery in fair value.Investment in Equity Securities: Navios Holdings evaluates its investments in Navios Acquisition, Navios Partners and Navios Europe for OTTI on aquarterly basis. Consideration is given to (i) the length of time F-24 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) and the extent to which the fair value has been less than the carrying value, (ii) the financial condition and near-term prospects of Navios Partners,Navios Acquisition and Navios Europe, and (iii) the intent and ability of the Company to retain its investment in Navios Acquisition, Navios Partnersand Navios Europe for a period of time sufficient to allow for any anticipated recovery in fair value. (ae)Financial Instruments and Fair Value: Guidance on Fair Value Measurements provides a fair value hierarchy that prioritizes the inputs to valuationtechniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets orliabilities (Level I measurements) and the lowest priority to unobservable inputs (Level III measurements).A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.In determining the appropriate levels, the Company performs a detailed analysis of the assets and liabilities that are subject to guidance on Fair ValueMeasurements. (af)Recent Accounting Pronouncements:In April 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-08, “Presentation of Financial Statements and Property, Plantand Equipment”, changing the presentation of discontinued operations on the statements of income and other requirements for reporting discontinuedoperations. Under the new standard, a disposal of a component or a group of components of an entity is required to be reported in discontinuedoperations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when thecomponent meets the criteria to be classified as held-for-sale or is disposed. The amendments in this update also require additional disclosures aboutdiscontinued operations and disposal of an individually significant component of an entity that does not qualify for discontinued operations. The newaccounting guidance is effective for interim and annual periods beginning after December 15, 2014. The adoption of the new standard is not expectedto have a material impact on Navios Holdings’ results of operations, financial position or cash flows.In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”, changing the method used to determine the timing andrequirements for revenue recognition on the statements of comprehensive income. Under the new standard, an entity must identify the performanceobligations in a contract, the transaction price and allocate the price to specific performance obligations to recognize revenue when the obligation iscompleted. The amendments in this update also require disclosure of sufficient information to allow users to understand the nature, amount, timing anduncertainty of revenue and cash flow arising from contracts. The new accounting guidance is effective for interim and annual periods beginning afterDecember 15, 2016. Early adoption is not permitted. The Company is currently reviewing the effect of ASU No. 2014-09 on its revenue recognition.In January 2015, the FASB issued ASU No. 2015-01, “Income Statement-Extraordinary and Unusual Items”. This standard eliminates the concept ofextraordinary and unusual items from U.S. GAAP. The new standard is effective for annual and interim periods after December 15, 2015. Early adoptionis permitted. We plan to adopt this standard effective January 1, 2016. The adoption of this ASU is not expected to have a material impact on theCompany’s results of operations, financial position or cash flows.In February 2015, the FASB issued ASU No. 2015-02, “Consolidation (Topic 810)—Amendments to the Consolidation Analysis”, which amends thecriteria for determining which entities are considered VIEs, amends the criteria for determining if a service provider possesses a variable interest in aVIE and ends the deferral granted to investment companies for application of the VIE consolidation model. The ASU is F-25 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) effective for interim and annual periods beginning after December 15, 2015. Early application is permitted. We do not expect the adoption of this ASUto have a material impact on the Company’s results of operations, financial position or cash flows, except if Navios Holdings was to enter into newarrangements in 2015 that fall into the scope prior to adoption of this standard.NOTE 3: CASH AND CASH EQUIVALENTSCash and cash equivalents consisted of the following: December 31,2014 December 31,2013 Cash on hand and at banks $157,975 $158,037 Short-term deposits and highly liquid funds 89,581 29,794 Cash and cash equivalents$247,556 $187,831 Short-term deposits and highly liquid funds relate to amounts held in banks for general financing purposes and represent deposits with an originalmaturity of less than three months.Cash deposits and cash equivalents in excess of amounts covered by government-provided insurance are exposed to loss in the event of non-performance by financial institutions. Navios Holdings does maintain cash deposits and equivalents in excess of government provided insurance limits.Navios Holdings reduces exposure to credit risk by dealing with a diversified group of major financial institutions.NOTE 4: ACCOUNTS RECEIVABLE, NETAccounts receivable consisted of the following: December 31,2014 December 31,2013 Accounts receivable $104,045 $112,676 Less: provision for doubtful receivables (18,464) (26,457)Accounts receivable, net$85,581 $86,219 Changes to the provisions for doubtful accounts are summarized as follows: Allowance for doubtful receivables Balance atBeginning ofPeriod Charges toCosts andexpenses AmountUtilized BalanceatEnd ofPeriod Year ended December 31, 2012 $(8,874) $(17,136) $74 $(25,936)Year ended December 31, 2013 $(25,936) $(630) $109 $(26,457)Year ended December 31, 2014 $(26,457) $(792) $8,785 $(18,464) During the year ended December 31, 2012, the increase in the Company’s provision for losses on accounts receivable (which resulted from therecognition of $17,136 of bad debt expense during the period) relates mainly to (i) $4,593 of receivable balances from various defaulted charterers that are nolonger covered by the Company’s Charter Insurance following the Insurance Restructuring (each as defined in Note 23); and (ii) $12,543 of receivablebalances from charterers whose financial condition and creditworthiness deteriorated during the period causing the Company to determine that thesereceivables may no longer be recoverable. F-26 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Concentration of credit risk with respect to accounts receivable are limited due to the Company’s large number of customers, who are internationallydispersed and have a variety of end markets in which they sell. Due to these factors, management believes that no additional credit risk beyond amountsprovided for collection losses is inherent in the Company’s trade receivables. For the year ended December 31, 2014, one customer accounted for 11.9% ofthe Company’s revenue and for the years ended December 31, 2013 and 2012, none of the Company’s customers accounted for more than 10% of theCompany’s revenue.NOTE 5: PREPAID EXPENSES AND OTHER CURRENT ASSETSPrepaid expenses and other current assets consisted of the following: December 31,2014 December 31,2013 Prepaid voyage and operating costs $8,996 $12,621 Claims receivable 5,186 8,658 Advances to agents 22 795 Prepaid other taxes 5,090 4,750 Other 2,419 2,155 Total prepaid expenses and other current assets$21,713 $28,979 Claims receivable mainly represents claims against vessels’ insurance underwriters in respect of damages arising from accidents or other insured risks,as well as claims under charter contracts including off-hires. While it is anticipated that claims receivable will be recovered within one year, such claims maynot all be recovered within one year due to the attendant process of settlement. Nonetheless, amounts are classified as current as they represent amountscurrently due to the Company. All amounts are shown net of applicable deductibles.NOTE 6: VESSELS, PORT TERMINALS AND OTHER FIXED ASSETS, NET Vessels Cost AccumulatedDepreciation Net BookValue Balance December 31, 2011 $1,600,803 $(185,578) $1,415,225 Additions 102,306 (63,737) 38,569 Disposals (71,209) 4,141 (67,068)Balance December 31, 2012 1,631,900 (245,174) 1,386,726 Additions 85,699 (63,287) 22,412 Balance December 31, 2013 1,717,599 (308,461) 1,409,138 Additions 123,541 (68,333) 55,208 Balance December 31, 2014$1,841,140 $(376,794) $1,464,346 F-27 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Port Terminals (Navios Logistics) Cost AccumulatedDepreciation Net BookValue Balance December 31, 2011 $74,336 $(11,466) $62,870 Additions 4,153 (2,785) 1,368 Balance December 31, 2012 78,489 (14,251) 64,238 Additions 24,563 (2,853) 21,710 Write-off (22) 22 — Balance December 31, 2013 103,030 (17,082) 85,948 Additions 3,369 (3,385) (16) Balance December 31, 2014$106,399 $(20,467) $85,932 Tanker vessels, barges and push boats (Navios Logistics) Cost AccumulatedDepreciation Net BookValue Balance December 31, 2011 $340,990 $(58,015) $282,975 Additions 19,225 (19,383) (158) Restructure of capital lease (4,590) — (4,590) Balance December 31, 2012 355,625 (77,398) 278,227 Additions 9,971 (16,384) (6,413) Transfers 3,030 — 3,030 Balance December 31, 2013 368,626 (93,782) 274,844 Additions 96,387 (17,355) 79,032 Write-off (47) — (47)Balance December 31, 2014$464,966 $(111,137) $353,829 Other fixed assets Cost AccumulatedDepreciation Net BookValue Balance December 31, 2011 $10,098 $(3,222) $6,876 Additions 2,832 (903) 1,929 Disposals (37) — (37) Balance December 31, 2012 12,893 (4,125) 8,768 Additions 2,837 (1,048) 1,789 Transfers (3,030) — (3,030)Balance December 31, 2013 12,700 (5,173) 7,527 Additions 887 (1,378) (491) Write-off (161) 161 — Balance December 31, 2014$13,426 $(6,390) $7,036 F-28 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Total Cost AccumulatedDepreciation Net BookValue Balance December 31, 2011 $2,026,227 $(258,281) $1,767,946 Additions 128,516 (86,808) 41,708 Disposals (71,246) 4,141 (67,105)Restructure of capital lease (4,590) — (4,590)Balance December 31, 2012 2,078,907 (340,948) 1,737,959 Additions 123,070 (83,572) 39,498 Write-off (22) 22 — Balance December 31, 2013 2,201,955 (424,498) 1,777,457 Additions 224,184 (90,451) 133,733 Write-off (208) 161 (47)Balance December 31, 2014$2,425,931 $(514,788) $1,911,143 Deposits for Vessels and Port Terminals AcquisitionsOn January 26, 2014, Navios Holdings entered into agreements to purchase two bulk carrier vessels, one 84,000 deadweight tons (“dwt”) Panamaxvessel and one 180,600 dwt Capesize vessel, to be built in Japan. The vessels’ acquisition prices are $31,800 and $52,000, respectively, and are scheduled fordelivery in the third and fourth quarter of 2015, respectively. During the year ended December 31, 2014, Navios Holdings paid deposits for both vesselstotaling $22,112.On February 11, 2014, Navios Logistics entered into an agreement for the construction of three new pushboats with a purchase price of $7,552 for eachpushboat. During the year ended December 31, 2014, Navios Logistics paid $6,920 for the construction of the new pushboats, which are expected to bedelivered in the third quarter of 2015.During the year ended December 31, 2014, Navios Logistics paid $16,305 for dredging works related to the expansion of its dry port in Uruguay,which is currently an asset under construction.Capitalized interest included in deposits for vessels, port terminals and other fixed assets amounted to $1,851 for the year ended December 31, 2014.Sale of VesselsOn June 15, 2012, Navios Holdings sold the Navios Buena Ventura, a 2010-built Capesize vessel to Navios Partners for a cash consideration of$67,500 (see Note 15).Vessel AcquisitionsOn March 26, 2012, Navios Holdings took delivery of the Navios Serenity, a 2011-built 34,690 dwt Handysize vessel and former long-term chartered-in vessel in operation, for a purchase price of $26,117, of which $26,000 was funded through a loan and the remaining amount was paid from existing cash.On March 30, 2012, Navios Holdings took delivery of the Navios Centaurus, a new, 2012-built 81,472 dwt Panamax vessel from a South Koreanshipyard for a purchase price of $37,095, of which $15,645 was paid from existing cash and $21,450 was financed through a loan. F-29 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) On May 14, 2012, Navios Holdings took delivery of the Navios Avior, a new, 2012-built 81,355 dwt Panamax vessel, from a South Korean shipyard fora purchase price of $39,094, of which $18,210 was paid from existing cash and $20,884 was financed through a loan.On August 26, 2013, September 10, 2013, September 17, 2013 and September 19, 2013, Navios Holdings took delivery of the Navios Galileo (2006-built 76,596 dwt), the Navios Amitie (2005-built 75,395 dwt), the Navios Taurus (2005-built 76,596 dwt) and the Northern Star (2005-built 75,395 dwt)Panamax vessels. The total purchase price for the four vessels was $67,795, of which $27,795 was paid from existing cash and $40,000 was financed througha loan.On October 25, 2013, Navios Asia took delivery of the N Amalthia, a 2006-built 75,318 dwt Panamax vessel for a purchase price of $17,904, of which$2,750 was paid from the Company’s cash, $3,905 from the noncontrolling shareholders’ cash and $11,250 was financed through a loan.On January 27, 2014, Navios Asia took delivery of the N Bonanza, a 2006-built 76,596 dwt Panamax vessel for a purchase price of $17,634, of which$2,900 was paid from the Company’s cash, $3,484 from the noncontrolling shareholders’ cash and $11,250 was financed through a loan.On June 4, 2014, Navios Holdings took delivery of the Navios Gem, a 2014-built 181,336 dwt Capesize vessel for a purchase price of $54,368, ofwhich $24,368 was paid in cash and $30,000 was financed through a loan.On November 24, 2014, Navios Holdings took delivery of the Navios Ray, a 2012-built 179,515 dwt Capesize vessel for a purchase price of $51,539,of which $20,539 was paid in cash and $31,000 was financed through a loan.Navios LogisticsOn May 9, 2012, Navios Logistics entered into an agreement for the restructuring of its capital leases for the San San H and the Ferni H, by extendingtheir duration until June 2016 and amending the purchase price obligations to $9,850 and $9,800, respectively, each at the end of the extended period. As ofDecember 31, 2014, the obligations for these vessels were accounted for as capital leases and the lease payments during each of the years ended December 31,2014, 2013 and 2012 for both vessels were $1,399, $1,353 and $1,519, respectively.During the second quarter of 2012, Navios Logistics began the construction of a new conveyor belt in its dry port facility in Nueva Palmira, whichbecame operational in October 2013. As of December 31, 2014, Navios Logistics had paid $22,516 ($743 of which was paid during the year endedDecember 31, 2014) and the construction of the new conveyor belt had been completed.Navios Logistics constructed four new tank barges. Two barges were delivered in October and December 2012 and two were delivered in April andJune 2013, with a cost of $1,900 each.On June 26, 2013, Navios Logistics acquired three pushboats for a total purchase price of $20,250. These pushboats were delivered in the first quarterof 2014. During the year ended December 31, 2013, Navios Logistics had paid $19,766 and the respective amount was presented under deposits for vessels,port terminals and other fixed assets in the accompanying consolidated balance sheets. During the year ended December 31, 2014, Navios Logistics paid$3,710, representing the balance of the purchase price and other acquisition costs, including transportation. F-30 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) On August 5, 2013, Navios Logistics entered into an agreement for the construction of 36 dry barges for a total purchase price of $19,080. These bargeswere delivered in the second quarter of 2014. During the year ended December 31, 2013, Navios Logistics had paid $11,632 and the respective amount waspresented under deposits for vessels, port terminals and other fixed assets in the accompanying consolidated balance sheets. On October 8, 2013, NaviosLogistics exercised the option for the construction of additional 36 dry barges based on the same terms of the initial agreement. These barges were deliveredin the third quarter of 2014. During the year ended December 31, 2014, Navios Logistics paid $52,672 for both sets of barges, representing the balance of thepurchase price and other acquisition costs, including transportation.On August 22, 2014, Navios Logistics entered into an agreement for the acquisition of a second-hand bunker vessel, which was delivered to its corefleet in September 2014. As of December 31, 2014, Navios Logistics had paid $5,504, representing full purchase price and other costs, including relocationexpenses.NOTE 7: INTANGIBLE ASSETS/LIABILITIES OTHER THAN GOODWILLNet Book Value of Intangible Assets/Liabilities other than Goodwill as at December 31, 2014 AcquisitionCost AccumulatedAmortization Additions/Write off Net Book ValueDecember 31,2014 Trade name $100,420 $(33,591) $— $66,829 Port terminal operating rights(****) 36,152 (8,450) 17,000 44,702 Customer relationships 35,490 (12,421) — 23,069 Favorable lease terms(*) (***) 207,055 (103,287) (48,876) 54,892 Total Intangible assets 379,117 (157,749) (31,876) 189,492 Unfavorable lease terms(**) (121,028) 98,887 — (22,141) Total$258,089 $(58,862) $(31,876) $167,351 Net Book Value of Intangible Assets/Liabilities other than Goodwill as at December 31, 2013 AcquisitionCost AccumulatedAmortization Additions /Write off Net Book ValueDecember 31,2013 Trade name $100,420 $(29,738) $— $70,682 Port terminal operating rights(****) 34,060 (7,444) 2,092 28,708 Customer relationships 35,490 (10,647) — 24,843 Favorable lease terms(*) (***) 210,835 (139,624) (3,780) 67,431 Total Intangible assets 380,805 (187,453) (1,688) 191,664 Unfavorable lease terms(**) (121,028) 93,954 — (27,074)Total$259,777 $(93,499)$(1,688) $164,590 (*)As of December 31, 2014 and 2013, intangible assets associated with the favorable lease terms included an amount of $21,782 related to purchaseoptions for the vessels (see Note 2(n)).(**)As of December 31, 2014 and 2013, the intangible liability associated with the unfavorable lease terms includes an amount of $9,405 related topurchase options held by third parties (see Note 2(n)). As of December 31, 2014 and 2013, no purchase options held by third parties have beenexercised. F-31 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) (***)During the years ended December 31, 2014 and 2013, acquisition costs and accumulated amortization of $48,876 and $3,780, respectively, of fullyamortized favorable lease terms were written off.(****)On March 19, 2013, Navios Logistics acquired Energias Renovables del Sur S.A (“Enresur”), a Uruguayan company, for a total consideration of$2,092. Enersur, as a free zone direct user, holds the right to occupy approximately 29 acres of undeveloped land located in the Nueva Palmira freezone in Uruguay, near to Navios Logistics’ existing port. Navios Logistics accounted for this transaction as an asset acquisition. On December 15, 2014, Navios Logistics acquired two companies for a total consideration of $17,000. These companies, as free zone direct users,hold the right to occupy approximately 53 acres of undeveloped riverfront land located in the Nueva Palmira free zone in Uruguay, adjacent toNavios Logistics’ existing port. The acquisitions were accounted for as asset acquisitions. During the year ended December 31, 2014, NaviosLogistics paid $10,200 of the purchase price and the remaining balance of $6,800 will be paid in full during the third quarter of 2015 and ispresented in the consolidated balance sheet within the caption “Accrued expenses and other liabilities”. AmortizationExpense andWrite OffsYear EndedDecember 31,2014 AmortizationExpense andWrite OffsYear EndedDecember 31,2013 AmortizationExpense andWrite OffsYear EndedDecember 31,2012 Trade name $3,853 $3,853 $3,860 Port terminal operating rights 1,006 983 930 Customer relationships 1,774 1,774 1,775 Favorable lease terms 12,539 12,876 27,652 Unfavorable lease terms (4,933) (4,933) (12,819)Total$14,239 $14,553 $21,398 The remaining aggregate amortization of acquired intangibles as of December 31, 2014 was as follows: Description Within oneyear Year Two Year Three Year Four Year Five Thereafter Total Trade name $3,853 $3,860 $3,853 $2,811 $2,811 $49,641 $66,829 Favorable lease terms 11,398 11,324 7,022 641 641 2,084 33,110 Unfavorable lease terms (3,545) (2,129) (1,273) (1,102) (1,102) (3,585) (12,736) Port terminal operating rights 1,389 1,389 1,389 1,389 1,389 37,757 44,702 Customer relationships 1,775 1,775 1,775 1,775 1,775 14,194 23,069 Total amortization$14,870 $16,219 $12,766 $5,514 $5,514 $100,091 $154,974 NOTE 8: INVESTMENTS IN AFFILIATESNavios PartnersOn August 7, 2007, Navios Holdings formed Navios Partners under the laws of Marshall Islands. Navios GP L.L.C. (the “General Partner”), a whollyowned subsidiary of Navios Holdings, was also formed on that date to act as the general partner of Navios Partners and received a 2.0% general partnerinterest. F-32 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) On January 1, 2012, all of Navios Partners’ outstanding subordinated units owned by Navios Holdings converted into 7,621,843 common units ofNavios Partners (excluding the Series A Subordinated Units, which are a separate class of subordinated units) (“the Conversion”). The Company concludedthat the Conversion resulted in a change in the form of its investment in Navios Partners that was a reconsideration event pursuant to ASC 323-10-15-16a. Inconnection with that reconsideration, the Company concluded that the common units of Navios Partners, which prior to January 1, 2012 did not meet thedefinition of common stock or “in-substance common stock,” met the definition of “in-substance common stock” starting January 1, 2012. Although thecommon units continued to enjoy certain preferences by comparison to the Series A Subordinated Units, the Series A Subordinated Units constituted such asmall portion of the capital structure of Navios Partners and, as such, the liquidation preference was not considered to be substantive under ASC 323-10-15-13a. In addition, at the time of the reconsideration, it was known that the Series A Subordinated Units would themselves automatically convert to commonunits of Navios Partners on June 29, 2012. Accordingly, the Company concluded that the risk and reward profile of the common units and Series ASubordinated Units were substantially the same in accordance with ASC 323-10-15-13b. As a result, the Company’s entire investment in Navios Partners (aportion of which was previously accounted for as available-for-sale securities) is accounted for by the equity method from January 1, 2012. As a result, thecarrying value of the available-for sale securities of $82,572 plus the amount reflected in other comprehensive losses of $6,158 (in each case, as ofDecember 31, 2011) was reclassified to “Investments in Affiliates.”On June 29, 2012, the outstanding subordinated Series A units converted into 1,000,000 shares of common units which have the same distributionrights as all other common unit holders.In May 2012, Navios Partners completed its public offering of 4,600,000 common units. Navios Holdings paid $1,472 in order to retain its 2.0%general partner interest. Following this offering Navios Holdings’ interest in Navios Partners decreased. The Company deemed that the issuance of sharesqualified as a sale of shares by the equity method investee. As a result, a gain of $9,497 was recognized in “Equity in net earnings of affiliated companies” forthe year ended December 31, 2012.In February and September 2013, Navios Partners completed two public offerings in an aggregate amount of 10,925,000 common units. NaviosHoldings paid $3,168 in order to retain its 2.0% general partner interest. Following these offerings Navios Holdings’ interest in Navios Partners decreased.The Company determined that the issuance of shares qualified as sales of shares by the equity method investee. As a result, gains of $15,991 were recognizedin “Equity in net earnings of affiliated companies” for the year ended December 31, 2013.In February 2014, Navios Partners completed a public offering of 6,325,000 common units. Navios Holdings paid $2,233 in order to retain its 2.0%general partner interest. The Company determined, under the equity method, that the issuance of shares qualified as sales of shares by the investee. As aresult, a gain of $11,230 was recognized in “Equity in net earnings of affiliated companies” for the year ended December 31, 2014.As of December 31, 2014, Navios Holdings holds a total of 14,223,763 common units and 1,578,763 general partners units, representing a 20.0%interest in Navios Partners, including the 2.0% general partner interest, and the entire investment in Navios Partners is accounted for under the equity method.As of December 31, 2014 and 2013, the unamortized difference between the carrying amount of the investment in Navios Partners and the amount ofthe Company’s underlying equity in net assets of Navios Partners was $35,745 and $42,412, respectively. This difference is amortized through “Equity in netearnings of affiliated companies” over the remaining life of Navios Partners tangible and intangible assets. F-33 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Total equity method income and amortization of deferred gain of $36,959, $39,738 and $48,946 were recognized in “Equity in net earnings ofaffiliated companies” for the years ended December 31, 2014, 2013 and 2012, respectively.As of December 31, 2014 and 2013, the carrying amount of the investment in Navios Partners was $114,387 and $110,516, respectively.Dividends received during the year ended December 31, 2014, 2013 and 2012 were $30,043, $29,461 and $27,916, respectively.As of December 31, 2014, the market value of the investment in Navios Partners was $155,181.AcropolisNavios Holdings has a 50% interest in Acropolis, a brokerage firm for freight and shipping charters. Although Navios Holdings owns 50% ofAcropolis’ stock, Navios Holdings agreed with the other shareholder that the earnings and amounts declared by way of dividends will be allocated 35% tothe Company with the balance to the other shareholder. As of December 31, 2014 and 2013, the carrying amount of the investment was $525 and $350,respectively. Dividends received for each of the years ended December 31, 2014, 2013 and 2012 were $271, $433 and $140, respectively.Navios AcquisitionIn February, May and September 2013, Navios Acquisition completed multiple offerings, including registered direct offerings and private placementsto Navios Holdings and certain members of the management of Navios Acquisition, Navios Partners and Navios Holdings. A total of 94,097,529 shares wereissued. As part of these offerings, Navios Holdings purchased in private placements an aggregate of 46,969,669 shares of Navios Acquisition common stockfor $160,001. The Company determined that the issuance of shares qualified as sales of shares by the equity method investee. As a result, losses of $6,171were recognized in “Equity in net earnings of affiliated companies” for the year ended December 31, 2013.In February 2014, Navios Acquisition completed a public offering of 14,950,000 shares of its common stock. In October 2014, 699,994 NaviosAcquisition’s restricted stock awards vested. Following those events and as of December 31, 2014, Navios Holdings had a 43.1% voting and a 46.2%economic interest in Navios Acquisition. The Company determined, under the equity method, that the issuance of shares and the vesting of restricted stockawards qualified as a sale of shares by the investee. As a result, an income of $4,675 was recognized in “Equity in net earnings of affiliated companies” for theyear ended December 31, 2014.As of December 31, 2014 and 2013, the unamortized difference between the carrying amount of the investment in Navios Acquisition and the amountof the Company’s underlying equity in net assets of Navios Acquisition was $1,293 and $12,052, respectively. This difference is amortized through “Equityin net earnings of affiliated companies” over the remaining life of Navios Acquisition tangible and intangible assets.Total equity method income of $19,513 and losses of $20,759 and $1,070 were recognized in “Equity in net earnings of affiliated companies” for theyears ended December 31, 2014, 2013 and 2012, respectively.As of December 31, 2014 and 2013, the carrying amount of the investment in Navios Acquisition was $224,582 and $219,664, respectively. F-34 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Dividends received for each of the years ended December 31, 2014, 2013 and 2012 were $14,595, $10,126 and $5,202, respectively.As of December 31, 2014, the market value of the investment in Navios Acquisition was $261,258.Navios EuropeOn December 18, 2013, Navios Europe acquired ten vessels for aggregate consideration consisting of (i) cash consideration of $127,753 (which wasfunded with the proceeds of $117,753 from two senior loan facilities (the “Senior Loans”) and loans aggregating to $10,000 from Navios Holdings, NaviosAcquisition and Navios Partners (in each case, in proportion to their ownership interests in Navios Europe) (collectively, the “Navios Term Loans”) and(ii) the assumption of a junior participating loan facility (the “Junior Loan”) with a face amount of $173,367 and fair value of $71,929 as of December 31,2013. In addition to the Navios Term Loans, Navios Holdings, Navios Acquisition and Navios Partners will also make available to Navios Europe (in eachcase, in proportion to their ownership interests in Navios Europe) revolving loans up to $24,100 to fund working capital requirements (collectively, the“Navios Revolving Loans”).On an ongoing basis, Navios Europe is required to distribute cash flows (after payment of operating expenses and amounts due pursuant to the terms ofthe Senior Loans) according to a defined waterfall calculation.The Navios Term Loans will be repaid from the future sale of vessels owned by Navios Europe and is deemed to be the initial investment by NaviosHoldings. Navios Holdings evaluated its investment in Navios Europe under ASC 810 and concluded that Navios Europe is a VIE and that they are not theparty most closely associated with Navios Europe and, accordingly, is not the primary beneficiary of Navios Europe.Navios Holdings further evaluated its investment in the common stock of Navios Europe under ASC 323 and concluded that it has the ability toexercise significant influence over the operating and financial policies of Navios Europe and, therefore, its investment in Navios Europe is accounted forunder the equity method.As of December 31, 2014, the estimated maximum potential loss by Navios Holdings in Navios Europe would have been $13,415 which represents theCompany’s carrying value of its investment of $5,602, including accrued interest, plus the Company’s balance of the Navios Revolving Loans of $7,813,including accrued interest, and does not include the undrawn portion of the Navios Revolving Loans.Income of $831 was recognized in “Equity in net earnings of affiliated companies” for the year ended December 31, 2014 whilst for the year endedDecember 31, 2013, Navios Europe had minimal operations and therefore, the Company did not record any equity method investee income/(loss).As of December 31, 2014 and 2013, the carrying amount of the investment in Navios Europe was $4,936 and $4,750, respectively. F-35 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Summarized financial information of the affiliated companies is presented below: December 31, 2014 December 31, 2013 Balance SheetNaviosPartners NaviosAcquisition Acropolis NaviosEurope NaviosPartners NaviosAcquisition Acropolis NaviosEurope Current assets$115,197 $89,528 $2,126 $13,764 $54,484 $120,801 $1,524 $8,224 Non-current assets 1,230,817 1,626,274 21 190,913 1,195,595 1,535,860 22 199,761 Current liabilities 32,275 73,147 450 16,257 15,606 65,400 370 14,792 Non-current liabilities 564,641 1,143,404 — 191,411 527,966 1,128,439 — 194,288 Year December 31, 2014 Year December 31, 2013 Year December 31, 2012 Income StatementNaviosPartners NaviosAcquisition Acropolis NaviosEurope NaviosPartners NaviosAcquisition Acropolis NaviosEurope NaviosPartners NaviosAcquisition Acropolis NaviosEurope Revenue $227,356 $264,877 $2,825 $35,119 $198,159 $202,397 $2,230 $1,152 $205,435 $151,097 $2,262 $— Net Income/(loss) 74,853 11,371 1,298 (1,896) 59,006 (55,690) 775 (1,096) 95,898 (3,284) 1,237 — NOTE 9: ACCRUED EXPENSES AND OTHER LIABILITIESAccrued expenses and other liabilities as of December 31, 2014 and 2013 consisted of the following: December 31,2014 December 31,2013 Payroll $12,175 $9,954 Accrued interest 37,846 21,081 Accrued voyage expenses 10,289 8,717 Accrued running costs 23,022 13,270 Provision for losses on voyages in progress 1,893 801 Audit fees and related services 458 1,066 Accrued taxes 4,792 5,175 Professional fees 1,087 934 Dividends 3,081 — Other accrued expenses 5,877 3,201 Other liability 6,800 — Total accrued expenses$107,320 $64,199 NOTE 10: BORROWINGSBorrowings as of December 31, 2014 and 2013 consisted of the following: Navios Holdings borrowings December 31,2014 December 31,2013 Commerzbank A.G. ($240,000) $59,216 $66,086 Loan Facility Credit Agricole ($40,000) 23,702 26,112 Loan Facility Credit Agricole ($23,000) 17,479 18,841 Loan Facility Credit Agricole ($23,000) 17,950 19,350 Loan Facility DVB Bank SE ($72,000) 63,339 36,801 Loan Facility Credit Agricole ($22,500) 20,812 11,250 Loan Facility DVB ($40,000) 35,625 39,125 Alpha Bank ($31,000) 31,000 — 2019 Notes 350,000 350,000 2022 Notes 650,000 650,000 Total Navios Holdings borrowings$1,269,123 $1,217,565 F-36 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Navios Logistics borrowings December 31,2014 December 31,2013 2019 Logistics Senior Notes $— $290,000 2022 Logistics Senior Notes 375,000 — Other long-term loans 459 528 Total Navios Logistics borrowings$375,459 $290,528 Total December 31,2014 December 31,2013 Total borrowings $1,644,582 $1,508,093 Plus: unamortized premium — 3,156 Less: current portion (24,186) (19,261)Total long-term borrowings$1,620,396 $1,491,988 Navios Holdings loansSenior NotesOn January 28, 2011, the Company and its wholly owned subsidiary, Navios Maritime Finance II (US) Inc. (together with the Company, the “2019 Co-Issuers”) completed the sale of $350,000 of 8.125% Senior Notes due 2019 (the “2019 Notes”). The net proceeds from the sale of the 2019 Notes were used toredeem any and all of Navios Holdings’ then-outstanding 9.5% Senior Notes due 2014 and pay related transaction fees and expenses and for generalcorporate purposes.The 2019 Notes are fully and unconditionally guaranteed, jointly and severally and on an unsecured senior basis, by all of the Company’s subsidiaries,other than Navios Maritime Finance II (US) Inc., Navios Maritime Finance (US) Inc., Navios Logistics and its subsidiaries and Navios GP L.L.C. Thesubsidiary guarantees are “full and unconditional”, except that the indenture provides for an individual subsidiary’s guarantee to be automatically releasedin certain customary circumstances, such as when a subsidiary is sold or all of the assets of the subsidiary are sold, the capital stock is sold, when thesubsidiary is designated as an “unrestricted subsidiary” for purposes of the indenture, upon liquidation or dissolution of the subsidiary or upon legal orcovenant defeasance or satisfaction and discharge of the 2019 Notes. The 2019 Co-Issuers have the option to redeem the 2019 Notes in whole or in part, atany time on or after February 15, 2015, at a fixed price of 104.063% of the principal amount, which price declines ratably until it reaches par in 2017, plusaccrued and unpaid interest, if any. In addition, upon the occurrence of certain change of control events, the holders of the 2019 Notes will have the right torequire the 2019 Co-Issuers to repurchase some or all of the 2019 Notes at 101% of their face amount, plus accrued and unpaid interest to the repurchase date.The 2019 Notes contain covenants which, among other things, limit the incurrence of additional indebtedness, issuance of certain preferred stock, thepayment of dividends, redemption or repurchase of capital stock or making restricted payments and investments, creation of certain liens, transfer or sale ofassets, entering in transactions with affiliates, merging or consolidating or selling all or substantially all of the 2019 Co-Issuers’ properties and assets andcreation or designation of restricted subsidiaries. The 2019 Co-Issuers were in compliance with the covenants as of December 31, 2014.Ship Mortgage NotesIn November 2009, the Company and its wholly-owned subsidiary, Navios Maritime Finance (US) Inc. (together, the “Mortgage Notes Co-Issuers”)issued $400,000 of first priority ship mortgage notes due on F-37 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) November 1, 2017 at a fixed rate of 8.875% (the “2017 Notes”). In July 2012, the Mortgage Notes Co-Issuers issued an additional $88,000 of the 2017 Notesat par value. On November 29, 2013, Navios Holdings completed the sale of $650,000 of its 7.375% First Priority Ship Mortgage Notes due 2022 (the “2022Notes”). The net proceeds of the offering of the 2022 Notes have been used: (i) to repay, in full, the 2017 Notes; and (ii) to repay in full indebtedness of$123,257 relating to six vessels added as collateral under the 2022 Notes. The remainder has been used for general corporate purposes. The effect of thistransaction was the recognition of a $37,136 loss in the consolidated statement of comprehensive (loss)/income under “Loss on bond and debtextinguishment”, which comprises a $12,142 loss relating to the accelerated amortization of unamortized deferred finance costs and a $24,994 loss relatingto cash payments for transaction fees and expenses in connection with the 2017 Notes extinguishment.The 2022 Notes are senior obligations of Navios Holdings and Navios Maritime Finance II (US) Inc. (the “2022 Co- Issuers”) and are secured by firstpriority ship mortgages on 23 dry bulk vessels owned by certain subsidiary guarantors and certain other associated property and contract rights. The 2022Notes are unregistered and fully and unconditionally guaranteed, jointly and severally by all of the Company’s direct and indirect subsidiaries that guaranteethe 2019 Notes and Navios Maritime Finance II (US) Inc. The guarantees of the Company’s subsidiaries that own mortgaged vessels are senior securedguarantees and the guarantees of the Company’s subsidiaries that do not own mortgaged vessels are senior unsecured guarantees. In addition, the 2022 Co-Issuers have the option to redeem the 2022 Notes in whole or in part, at any time (i) before January 15, 2017, at a redemption price equal to 100% of theprincipal amount plus a make whole price which is based on a formula calculated using a discount rate of treasury bonds plus 50 basis points, and (ii) on orafter January 15, 2017, at a fixed price of 105.531%, which price declines ratably until it reaches par in 2020.Furthermore, upon occurrence of certain change of control events, the holders of the 2022 Notes may require the 2022 Co-Issuers to repurchase some orall of the notes at 101% of their face amount. The 2022 Notes contain covenants, which among other things, limit the incurrence of additional indebtedness,issuance of certain preferred stock, the payment of dividends, redemption or repurchase of capital stock or making restricted payments and investments,creation of certain liens, transfer or sale of assets, entering into certain transactions with affiliates, merging or consolidating or selling all or substantially allof the 2022 Co-Issuers’ properties and assets and creation or designation of restricted subsidiaries. The 2022 Co-Issuers were in compliance with thecovenants as of December 31, 2014.Secured credit facilitiesThe majority of the Company’s senior secured credit facilities include maintenance covenants, including (i) loan-to-value ratio covenants, based oneither charter-adjusted valuations, or charter-free valuations, (ii) minimum liquidity and (iii) total liabilities divided by total assets. As of December 31, 2014,the Company and its subsidiaries were in compliance with all of the covenants under each of its credit facilities outlined below.HSH/Commerzbank Facility: In February 2007, Navios Holdings entered into a secured loan facility with HSH Nordbank and Commerzbank AG. Thefacility was initially composed of a $280,000 term loan facility and a $120,000 reducing revolving facility and it has been amended and repaid as certainvessels have been sold.The interest rate of the loan facility was based on a margin ranging from 115 basis points to 175 basis points depending on the specified security value.On November 29, 2013, the Company repaid the loan and revolving credit facility in full using a portion of the proceeds of the 2022 Notes issued inNovember 2013. F-38 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Credit Agricole (formerly Emporiki) Facilities: In December 2012, the Emporiki Bank of Greece’s facilities were transferred to Credit AgricoleCorporate and Investment Bank.In December 2007, Navios Holdings entered into a facility agreement with Emporiki Bank of Greece for an amount of up to $154,000 in order topartially finance the construction of two Capesize bulk carriers. The interest rate of the amended facility was based on a margin of 175 basis points. OnNovember 29, 2013, the Company repaid in full the loan using a portion of the proceeds of the 2022 Notes.In August 2009, Navios Holdings entered into a facility agreement with Emporiki Bank of Greece for an amount of up to $75,000 to partially financethe acquisition costs of two Capesize vessels. The loan bears interest at a rate of LIBOR plus 175 basis points. On November 29, 2013, the Company repaidthe loan in full using a portion of the proceeds of the 2022 Notes.In September 2010, Navios Holdings entered into a facility agreement with Emporiki Bank of Greece for an amount of up to $40,000 in order topartially finance the construction of one Capesize bulk carrier. As of December 31, 2014, the outstanding amount under the loan facility was repayable in 13semi-annual equal installments of $1,206 with a final balloon payment of $8,022 on the last payment date. The loan bears interest at a rate of LIBOR plus275 basis points. The loan facility requires compliance with certain financial covenants. As of December 31, 2014, the outstanding amount under this facilitywas $23,702.In August 2011, Navios Holdings entered into a facility agreement with Emporiki Bank of Greece for an amount of up to $23,000 in order to partiallyfinance the construction of one newbuilding bulk carrier. As of December 31, 2014, the facility is repayable in 15 semi-annual equal installments of $681,with a final balloon payment of $7,264 on the last payment date. The loan bears interest at a rate of LIBOR plus 275 basis points. The loan facility requirescompliance with certain covenants. As of December 31, 2014, the outstanding amount under this facility was $17,479.In December 2011, Navios Holdings entered into a facility agreement with Emporiki Bank of Greece for an amount of up to $23,000 in order topartially finance the construction of one newbuilding bulk carrier. As of December 31, 2014, the outstanding amount under the loan facility was repayable in15 semi-annual equal installments of $700 after the drawdown date, with a final balloon payment of $7,450 on the last payment date. The loan bears interestat a rate of LIBOR plus 325 basis points. The loan facility requires compliance with certain covenants. As of December 31, 2014, the outstanding amountunder this facility was $17,950.On December 20, 2013, Navios Asia entered into a facility with Credit Agricole Corporate and Investment Bank for an amount of up to $22,500 in twoequal tranches, in order to finance the acquisition of the N Amalthia, which was delivered in October 2013, and the N Bonanza, which was delivered inJanuary 2014. The two tranches bear interest at a rate of LIBOR plus 300 basis points. As of December 31, 2014, Navios Asia had drawn the whole availableamount. Each tranche is repayable in ten equal semi-annual installments of $563, with a final balloon payment of $5,625 on the last repayment date. Theloan facility requires compliance with certain financial covenants. As of December 31, 2014, the outstanding amount of the loan was $20,812.DNB Facilities: In August 2010, Navios Holdings entered into a facility agreement with DNB NOR BANK ASA for an amount of up to $40,000 inorder to partially finance the construction of one Capesize bulk carrier. The loan bears interest at a rate of LIBOR plus 275 basis points. On November 29,2013, the Company repaid the loan in full using a portion of the proceeds of the 2022 Notes.Commerzbank Facility: In June 2009, Navios Holdings entered into a facility agreement for an amount of up to $240,000 (divided into four tranches of$60,000) with Commerzbank AG in order to partially finance the F-39 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) acquisition of a Capesize vessel and the construction of three Capesize vessels. Following the delivery of two Capesize vessels, Navios Holdings cancelledtwo of the four tranches and in October 2010 fully repaid their outstanding loan balances of $53,600 and $54,500, respectively. As of December 31, 2014, thethird tranche of the facility is repayable in 18 quarterly installments of $882, with a final balloon payment of $13,814 on the last payment date; and thefourth tranche of the facility is repayable in 24 quarterly installments of $835, with a final balloon payment of $9,488 on the last payment date. The loanbears interest at a rate based on a margin of 225 basis points. The loan facility requires compliance with certain covenants. As of December 31, 2014, theoutstanding amount was $59,216.DVB Bank SE Facilities: On March 23, 2012, Navios Holdings entered into a facility agreement with a syndicate of banks led by DVB Bank SE for anamount of up to $42,000 in two tranches: (i) the first tranche is for an amount of up to $26,000 in order to finance the acquisition of a handysize vessel; and(ii) the second tranche is for an amount of up to $16,000 to refinance the Navios Astra loan facility with Cyprus Popular Bank Public Co. Ltd. The twotranches bear interest at a rate of LIBOR plus 285 basis points and 360 basis points, respectively. On June 27, 2014, Navios Holdings refinanced the existingfacility, entering into a new tranche for an amount of $30,000 in order to finance the acquisition of the Navios Gem, which was delivered in June 2014. Thenew tranche bears interest at a rate of LIBOR plus 275 basis points. As of December 31, 2014, Navios Holdings had drawn $26,000, $14,950 and $30,000under each tranche. As of December 31, 2014, the first tranche is repayable in 21 quarterly installments of $362, with a final balloon payment of $14,412 onthe last repayment date, the second tranche is repayable in 22 quarterly installments of $269, with a final balloon payment of $6,344 on the last repaymentdate and the third tranche is repayable in 22 quarterly installments of $469, with a final balloon payment of $18,750 on the last repayment date. The loanfacility requires compliance with certain financial covenants. As of December 31, 2014, the total outstanding amount was $63,339.In September 2013, Navios Holdings entered into a facility agreement with DVB Bank SE for an amount of up to $40,000 in order to finance theacquisition of four Panamax vessels, delivered in August and September 2013. The facility bears interest at a rate of LIBOR plus 325 basis points. As ofDecember 31, 2014, Navios Holdings had drawn the entire available amount under the facility. As of December 31, 2014, the facility is repayable in threequarterly installments of $875, followed by 12 quarterly installments of $1,000, with a final balloon payment of $21,000 payable on the last repayment date.The loan facility requires compliance with certain financial covenants. As of December 31, 2014, the outstanding amount was $35,625.Alpha Bank A.E.: On November 6, 2014, Navios Holdings entered into a facility agreement with Alpha Bank A.E. for an amount of $31,000 in order tofinance part of the acquisition of a 2012-built 179,515 dwt Capesize vessel. The loan bears interest at a rate of LIBOR plus 300 basis points. As ofDecember 31, 2014, Navios Holdings had drawn the entire available amount under the facility. As of December 31, 2014, the facility is repayable in 32quarterly installments of $450, with a final balloon payment of $16,600 on the last repayment date and the outstanding amount was $31,000. The loanfacility requires compliance with certain financial covenants.The facilities are secured by first priority mortgages on certain of Navios Holdings’ vessels and other collateral.The credit facilities contain a number of restrictive covenants that limit Navios Holdings and/or certain of its subsidiaries from, among other things:incurring or guaranteeing indebtedness; entering into affiliate transactions; charging, pledging or encumbering the vessels securing such facilities; changingthe flag, class, management or ownership of certain Navios Holdings’ vessels; changing the commercial and technical management of certain NaviosHoldings’ vessels; selling or changing the ownership of certain Navios Holdings’ F-40 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) vessels; and subordinating the obligations under the credit facilities to any general and administrative costs relating to the vessels. The credit facilities alsorequire the vessels to comply with the ISM Code and ISPS Code and to maintain valid safety management certificates and documents of compliance at alltimes. Additionally, the credit facilities require compliance with the covenants contained in the indentures governing the 2019 Notes and the 2022 Notes.Among other events, it will be an event of default under the credit facilities if the financial covenants are not complied with or if Angeliki Frangou and heraffiliates, together, own less than 20% of the outstanding share capital of Navios Holdings.Navios Logistics loans2019 Logistics Senior NotesOn April 12, 2011, Navios Logistics and its wholly-owned subsidiary Navios Logistics Finance (US) Inc. (“Logistics Finance” and, together, the“Logistics Co-Issuers”) issued $200,000 in aggregate principal amount of senior notes due on April 15, 2019 at a fixed rate of 9.25% (the “Existing 2019Logistics Senior Notes”). On March 12, 2013, the Logistics Co-Issuers issued $90,000 in aggregate principal amount of 9.25% Logistics Senior Notes due2019 (the “Additional 2019 Logistics Senior Notes”, and together with the Existing 2019 Logistics Senior Notes, the “2019 Logistics Senior Notes”) at apremium, with a price of 103.750%.On May 5, 2014, the Logistics Co-Issuers completed a cash tender offer (the “Tender Offer”) and related solicitation of consents for certain proposedamendments to the indenture governing the 2019 Logistics Senior Notes, for any and all of their outstanding 2019 Logistics Senior Notes. After the purchaseby the Logistics Co-Issuers of all of the 2019 Logistics Senior Notes validly tendered and not validly withdrawn prior to the consent payment deadline, theLogistics Co-Issuers redeemed for cash all the 2019 Logistics Senior Notes that remained outstanding after the completion of the Tender Offer, plus accruedand unpaid interest to, but not including, the redemption date. The effect of this transaction was the recognition of a $27,281 loss in the consolidatedstatement of comprehensive loss under “Loss on bond and debt extinguishment”, consisting of a $7,881 loss relating to the accelerated amortization of theunamortized deferred finance costs, a $3,095 gain relating to the accelerated amortization of unamortized Additional 2019 Logistics Senior Notes premiumand a $22,495 loss relating to tender premium fees and expenses.2022 Logistics Senior NotesOn April 22, 2014, the Logistics Co-Issuers completed the sale of $375,000 in aggregate principal amount of senior notes due on May 1, 2022 at afixed rate of 7.25% (the “2022 Logistics Senior Notes”). The 2022 Logistics Senior Notes are unregistered and fully and unconditionally guaranteed, jointlyand severally, by all of Navios Logistics’ direct and indirect subsidiaries except for Horamar do Brasil Navegação Ltda (“Horamar do Brasil”) and NavieraAlto Parana S.A. (“Naviera Alto Parana”), which are deemed to be immaterial, and Logistics Finance, which is the co-issuer of the 2022 Logistics SeniorNotes. The subsidiary guarantees are “full and unconditional”, except that the indenture provides for an individual subsidiary’s guarantee to beautomatically released in certain customary circumstances, such as in connection with a sale or other disposition of all or substantially all of the assets of thesubsidiary, in connection with the sale of a majority of the capital stock of the subsidiary, if the subsidiary is designated as an “unrestricted subsidiary” inaccordance with the indenture, upon liquidation or dissolution of the subsidiary or upon legal or covenant defeasance or satisfaction and discharge of the2022 Logistics Senior Notes.The Logistics Co-Issuers have the option to redeem the 2022 Logistics Senior Notes in whole or in part, at their option, at any time (i) before May 1,2017, at a redemption price equal to 100% of the principal amount plus F-41 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) the applicable make-whole premium plus accrued and unpaid interest, if any, to the redemption date and (ii) on or after May 1, 2017, at a fixed price of105.438%, which price declines ratably until it reaches par in 2020. At any time before May 1, 2017, the Logistics Co-Issuers may redeem up to 35% of theaggregate principal amount of the 2022 Logistics Senior Notes with the net proceeds of an equity offering at 107.250% of the principal amount of the 2022Logistics Senior Notes, plus accrued and unpaid interest, if any, to the redemption date so long as at least 65% of the originally issued aggregate principalamount of the 2022 Logistics Senior Notes remains outstanding after such redemption. In addition, upon the occurrence of certain change of control events,the holders of the 2022 Logistics Senior Notes will have the right to require the Logistics Co-Issuers to repurchase some or all of the 2022 Logistics SeniorNotes at 101% of their face amount, plus accrued and unpaid interest to the repurchase date.The indenture governing the 2022 Logistics Senior Notes contains covenants which, among other things, limit the incurrence of additionalindebtedness, issuance of certain preferred stock, the payment of dividends in excess of 6% per annum of the net proceeds received by or contributed toNavios Logistics in or from any public offering, redemption or repurchase of capital stock or making restricted payments and investments, creation of certainliens, transfer or sale of assets, entering into transactions with affiliates, merging or consolidating or selling all or substantially all of Navios Logisticsproperties and assets and creation or designation of restricted subsidiaries.The Logistics Co-Issuers were in compliance with the covenants as of December 31, 2014.Other indebtednessIn connection with the acquisition of Hidronave South American Logistics S.A. (“Hidronave”) on October 29, 2009, Navios Logistics assumed a $817loan facility that was in 2001 in order to finance the construction of a pushboat (Nazira). As of December 31, 2014, the outstanding loan balance was $459.The loan facility bears interest at a fixed rate of 600 basis points. The loan is repayable in monthly installments of $6 each and the final repayment mustoccur prior to August 10, 2021. The loan also requires compliance with certain covenants.During the year ended December 31, 2014, the Company paid $20,761 relating to scheduled repayment installments.The annual weighted average interest rates of the Company’s total borrowings were 7.18%, 7.75% and 7.32% for the year ended December 31, 2014,2013 and 2012, respectively.The maturity table below reflects the principal payments for the next five years and thereafter of all borrowings of Navios Holdings (including NaviosLogistics) outstanding as of December 31, 2014, based on the repayment schedules of the respective loan facilities and the outstanding amount due under thedebt securities. Year 2015 $24,186 2016 24,561 2017 24,561 2018 50,187 2019 386,540 2020 and thereafter 1,134,547 Total$1,644,582 F-42 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) NOTE 11: FAIR VALUE OF FINANCIAL INSTRUMENTSForward Freight Agreements (FFAs)Dry bulk shipping FFAs generally have the following characteristics: they cover periods from one month to one year; they can be based on time charterrates or freight rates on specific quoted routes; they are executed between two parties and give rise to a certain degree of credit risk depending on thecounterparties involved and they are settled monthly based on publicly quoted indices.At December 31, 2014 and 2013, none of the “mark-to-market” positions of the open dry bulk FFA contracts, qualified for hedge accounting treatment.Dry bulk FFAs traded by the Company that do not qualify for hedge accounting are shown at fair value through the consolidated statements ofcomprehensive (loss)/income.The net losses from FFAs recorded in the consolidated statements of comprehensive (loss)/income amounted to $0, $260 and $196, for the years endedDecember 31, 2014, 2013 and 2012, respectively.During each of the years ended December 31, 2014, 2013 and 2012, the changes in net unrealized losses on FFAs amounted to $0, $(69) and $(124),respectively.Fair value of financial instrumentsThe following methods and assumptions were used to estimate the fair value of each class of financial instrument:Cash and cash equivalents: The carrying amounts reported in the consolidated balance sheets for interest bearing deposits and money market fundsapproximate their fair value because of the short maturity of these investments.Restricted cash: The carrying amounts reported in the consolidated balance sheets for interest bearing deposits approximate their fair value because ofthe short maturity of these investments.Borrowings: The carrying amount of the floating rate loans approximates their fair value. The 2019 Notes, the 2022 Notes, the 2019 and 2022Logistics Senior Notes and the Navios Logistics loan are fixed rate borrowings and their fair value was determined based on quoted market prices.Capital leases: The capital leases are fixed rate obligations and their carrying amounts approximate their fair value.Loan receivable from affiliate companies: The carrying amount of the fixed rate loan approximates its fair value.Long-term receivable from affiliate companies: The carrying amount of the floating rate receivable approximates its fair value.Investments in available-for-sale securities: The carrying amount of the investments in available-for-sale securities reported in the consolidatedbalance sheets represents unrealized gains and losses on these securities, which are reflected directly in equity unless an unrealized loss is considered “other-than-temporary”, in which case it is transferred to the consolidated statements of comprehensive income/(loss). F-43 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) The estimated fair values of the Company’s financial instruments were as follows: December 31, 2014 December 31, 2013 Book Value Fair Value Book Value Fair Value Cash and cash equivalents $247,556 $247,556 $187,831 $187,831 Restricted cash $2,564 $2,564 $2,041 $2,041 Investments in available-for-sale-securities $6,701 $6,701 $7,660 $7,660 Loan receivable from affiliate companies $7,791 $7,791 $2,660 $2,660 Long-term receivable from affiliate companies $9,625 $9,625 $5,144 $5,144 Capital lease obligations, including current portion $(22,360) $(22,360) $(23,759) $(23,759) Senior and ship mortgage notes, including premium $(1,375,000) $(1,300,021) $(1,293,156) $(1,326,897) Long-term debt, including current portion $(269,582) $(269,582) $(218,093) $(218,093) The following tables set forth our assets that are measured at fair value on a recurring basis categorized by fair value hierarchy level. As required by thefair value guidance, assets are categorized in their entirety based on the lowest level of input that is significant to the fair value measurement. Fair Value Measurements as of December 31, 2014 Assets Total Quoted Prices inActive Markets forIdentical Assets(Level I) Significant OtherObservableInputs(Level II) SignificantUnobservableInputs(Level III) Investments in available-for-sale securities $6,701 $6,701 $— $— Total$6,701 $6,701 $— $— Fair Value Measurements as of December 31, 2013 Assets Total Quoted Prices inActive Markets forIdentical Assets(Level I) Significant OtherObservableInputs(Level II) SignificantUnobservableInputs(Level III) Investments in available-for-sale securities $7,660 $7,660 $— $— Total$7,660 $7,660 $— $— Fair Value MeasurementsThe estimated fair value of our financial instruments that are not measured at fair value on a recurring basis, categorized based upon the fair valuehierarchy, are as follows:Level I: Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets that we have the ability to access. Valuation of theseitems does not entail a significant amount of judgment.Level II: Inputs other than quoted prices included in Level I that are observable for the asset or liability through corroboration with market data at themeasurement date. F-44 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Level III: Inputs that are unobservable. Fair Value Measurements at December 31, 2014 Total (Level I) (Level II) (Level III) Cash and cash equivalents $247,556 $247,556 $— $— Restricted cash $2,564 $2,564 $— $— Senior and ship mortgage notes $(1,300,021) $(1,300,021) $— $— Capital lease obligations, including current portion(1) $(22,360) $— $(22,360) $— Long-term debt, including current portion(1) $(269,582) $— $(269,582) $— Loan receivable from affiliate companies(2) $7,791 $— $7,791 $— Long-term receivable from affiliate companies(2) $9,625 $— $9,625 $— Fair Value Measurements at December 31, 2013 Total (Level I) (Level II) (Level III) Cash and cash equivalents $187,831 $187,831 $— $— Restricted cash $2,041 $2,041 $— $— Senior and ship mortgage notes, including premium $(1,326,897) $(1,326,897) $— $— Capital lease obligations, including current portion(1) $(23,759) $— $(23,759) $— Long-term debt, including current portion(1) $(218,093) $— $(218,093) $— Loan receivable from affiliate companies(2) $2,660 $— $2,660 $— Long-term receivable from affiliate companies(2) $5,144 $— $5,144 $— (1)The fair value of the Company’s long-term debt is estimated based on currently available debt with similar contract terms, interest rates and remainingmaturities, published quoted market prices as well as taking into account the Company’s creditworthiness.(2)The fair value of the Company’s loan receivable from affiliate companies and long-term receivable from affiliate companies is estimated based oncurrently available debt with similar contract terms, interest rate and remaining maturities as well as taking into account the counterparty’screditworthiness.NOTE 12: EMPLOYEE BENEFIT PLANSRetirement Saving PlanThe Company sponsors an employee saving plan covering all of its employees in the United States. The Company’s contributions to the employeesaving plan during the years ended December 31, 2014, 2013 and 2012, were approximately $101, $97 and $119, respectively, which included adiscretionary contribution of $17, $14, and $15, respectively.Defined Benefit Pension PlanThe Company sponsors a legacy unfunded defined benefit pension plan that covers certain Bahamian and Uruguayan nationals and former NaviosCorporation employees. The liability related to the plan is recognized based on actuarial valuations. The current portion of the liability is included inaccrued expenses and the non-current portion of the liability is included in other long-term liabilities. There are no pension plan assets. F-45 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) The Greek office employees are protected by the Greek Labor Law. According to the law, the Company is required to pay retirement indemnities toemployees on dismissal, or on leaving with an entitlement to a full security retirement pension. Please refer to Note 2(s).Stock PlanThe Company has awarded shares of restricted stock and restricted stock units to its employees, officers and directors. The restriction lapses in two orthree equal tranches, over the requisite service periods, of one, two and three years from the grant date. The Company has also awarded stock options to itsofficers and directors only, based on service conditions, which vest in three equal tranches over the requisite service periods of one, two and three years fromthe grant date. Each option expires seven years after its grant date.On December 11, 2013, the Company awarded shares of restricted stock and restricted stock units to its employees, officers and directors and stockoptions to its officers and directors, which vest all at once upon achievement of the internal performance criteria and completion of a service period onApril 30, 2015. As of December 31, 2014, the Company determined that it is probable that the performance criteria of these awards would be met andrecognized a compensation expense of $3,753.On December 15, 2014, the Company awarded shares of restricted stock and restricted stock units to its employees, officers and directors and stockoptions to its officers and directors, which vest all at once upon achievement of the internal performance criteria and completion of a service period onJune 2, 2016.The fair value of all stock option awards has been calculated based on the modified Black-Scholes method. A description of the significantassumptions used to estimate the fair value of the stock option awards is set out below: • Expected term: The Company began granting stock options in October 2007. The first stock option exercise was in 2010 and the number ofoptions exercised during each of the years ended December 31, 2014 (143,189), 2013 (153,556), 2012 (29,251), 2011 (130,578) and 2010(130,577) was small in relation to the total number of options granted. Therefore, due to limited historical share option exercise experience toprovide for a reasonable basis upon which to estimate expected term, the Company opted to apply the simplified method.The “simplified method” used includes taking the average of the weighted average time to vesting and the contractual term of the option award. Theservice conditions option awards vest over three years at 33.3%, 33.3% and 33.4% respectively, resulting in a weighted average time to vest of approximately2 years. The contractual term of the award is 7 years. Utilizing the simplified approach formula, the derived expected term estimate for the Company’s serviceconditions option award is 4.5 years. • Expected volatility: The historical volatility of Navios Holdings’ shares was used in order to estimate the volatility of the stock option awards.The final expected volatility estimate, which equals the historical estimate, for the service conditions option awards is 47.06%, 42.62% and43.87% for 2014, 2013 and 2012, respectively, and for the performance conditions option awards is 58.78% and 41.48% for 2014 and 2013,respectively. • Expected dividends: The expected dividend is based on the current dividend, our historical pattern of dividend increases and the market price ofour stock. • Risk-free rate: Navios Holdings has selected to employ the risk-free yield-to-maturity rate to match the expected term estimated under the“simplified method”. For the service conditions option awards, the F-46 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) 4.5 year yield-to-maturity rate as of the grant date is 1.44%, 1.28% and 0.68% for 2014, 2013 and 2012, respectively. For the performanceconditions option awards, the one year yield-to-maturity rate as of the grant date is 0.22% and 0.13% for 2014 and 2013, respectively.The fair value of restricted stock and restricted stock unit grants excludes dividends to which holders of restricted stock and restricted stock units arenot entitled. The expected dividend assumption used in the valuation of restricted stock and restricted stock units grant is $0.06 for 2014, 2013 and 2012.The weighted average grant date fair value of stock options, restricted stock and restricted stock units granted during the year ended December 31,2014 was $1.14, $3.64 and $3.64, respectively.The weighted average grant date fair value of stock options, restricted stock and restricted stock units granted during the year ended December 31,2013 was $2.11, $8.63 and $8.63, respectively.The weighted average grant date fair value of stock options, restricted stock and restricted stock units granted during the year ended December 31,2012 was $0.84, $3.44 and $3.44, respectively.The effect of compensation expense arising from the stock-based arrangements described above amounted to $7,719, $5,021 and $4,712 for the yearsended December 31, 2014, 2013 and 2012, respectively and it was reflected in general and administrative expenses on the consolidated statements ofcomprehensive (loss)/income. The recognized compensation expense for the year is presented as adjustment to reconcile net income to net cash provided byoperating activities on the consolidated statements of cash flows.The summary of stock-based awards is summarized as follows (in thousands except share and per share data): Shares Weightedaverageexerciseprice Weightedaverageremainingterm Aggregatefair value Options Outstanding as of December 31, 2011 3,302,671 $5.52 5.77 $7,317 Vested at December 31, 2011 643,824 — — — Exercisable at December 31, 2011 522,934 — — — Exercised (29,251) — — (36) Granted 1,344,357 3.44 — 700 Outstanding as of December 31, 2012 4,617,777 4.93 5.42 7,981 Vested at December 31, 2012 901,520 — — — Exercisable at December 31, 2012 841,644 — — — Exercised (153,556) — — (216)Granted 674,809 8.63 — 1,444 Outstanding as of December 31, 2013 5,139,030 5.50 4.81 9,209 Vested at December 31, 2013 911,493 — — — Exercisable at December 31, 2013 753,562 — — — Exercised (143,189) — — (273)Forfeited or expired (314,250) — — (1,610) Granted 1,123,003 3.64 — 1,084 F-47 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Shares Weightedaverageexerciseprice Weightedaverageremainingterm Aggregatefair value Outstanding as of December 31, 2014 5,804,594 4.57 4.64 8,410 Vested at December 31, 2014 1,643,665 — — — Exercisable at December 31, 2014 1,500,476 — — — Restricted stock and restricted stock units Non Vested as of December 31, 2011 1,287,176 — 2.49 5,653 Granted 832,028 — — 2,862 Vested (553,846) — — (2,565) Forfeited or expired (9,166) — — (42) Non Vested as of December 31, 2012 1,556,192 — 1.81 5,908 Granted 886,437 — — 7,650 Vested (546,194) — — (2,287)Forfeited or expired (12,452) — — (51) Non Vested as of December 31, 2013 1,883,983 — 1.40 11,220 Granted 1,175,353 — — 4,278 Vested (1,058,903) — — (4,580)Forfeited or expired (3,089) — — (19)Non Vested as of December 31, 2014 1,997,344 $— 2.00 $10,899 The estimated compensation cost relating to service conditions of non-vested (i) stock options and (ii) restricted stock and restricted stock unit awards,not yet recognized was $1,019 and $3,697, respectively, as of December 31, 2014 and is expected to be recognized over the weighted average period of 4.56years.The estimated compensation cost relating to performance conditions of non-vested (i) stock options and (ii) restricted stock and restricted stock unitawards, not yet recognized was $422 and $2,212, respectively, as of December 31, 2014 and is expected to be recognized when it is probable that theperformance criteria will be met.NOTE 13: COMMITMENTS AND CONTINGENCIESAs of December 31, 2014, the Company was contingently liable for letters of guarantee and letters of credit amounting to $590 (December 31, 2013:$590) issued by various banks in favor of various organizations and the total amount was collateralized by cash deposits, which were included as acomponent of restricted cash.In connection with the acquisition of Horamar on January 1, 2008, Navios Logistics recorded liabilities for certain pre-acquisition contingencies thatwere included in the allocation of the purchase price based on their respective fair values. As it relates to these contingencies, the prior owners of Horamaragreed to indemnify Navios Logistics in the event that any of the above contingencies materialize before agreed-upon dates, extending to various dates by2021. As of December 31, 2014, the remaining liability related to these pre-acquisition contingencies amounted to $81 (December 31, 2013: $829) and wasentirely offset by an indemnification asset for the same amount, which was reflected in other long-term assets.Navios Logistics has issued a guarantee and indemnity letter that guarantees the performance by Petrolera San Antonio S.A. of all its obligations toVitol S.A. up to $12,000. This guarantee expires on March 1, 2016.The Company is involved in various disputes and arbitration proceedings arising in the ordinary course of business. Provisions have been recognizedin the financial statements for all such proceedings where the F-48 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Company believes that a liability may be probable, and for which the amounts can be reasonably estimated, based upon facts known on the date the financialstatements were prepared. Although the Company cannot predict with certainty the ultimate resolutions of these matters, in the opinion of management, theultimate disposition of these matters is not expected to have a material adverse effect on the Company’s financial position, results of operations or liquidity.The Company, in the normal course of business, entered into contracts to time charter-in vessels for various periods through April 2026.As of December 31, 2014, the Company had future remaining contractual deposits for two newbuilding owned vessels, which are expected to bedelivered in the third and fourth quarter of 2015. Navios Logistics had obligations related to the acquisition of three new pushboats, the payment of thedeferred considerations for the acquisition of two companies, who hold the right to occupy approximately 53 acres of land located in the Nueva Palmira freezone in Uruguay and the remaining installments for the acquisition of the chartered-in fleet consisting of one pushboat and three liquid barges of $15,996,$6,800 and $7,510, respectively. The table below reflects the remaining future payments of these commitments. Dry bulkVessels NaviosLogistics 2015 $62,850 $28,380 2016 — 1,926 Total$62,850 $30,306 NOTE 14: LEASESChartered-in vessels, barges, pushboats and office space:As of December 31, 2014, the Company’s future minimum commitments, net of commissions under chartered-in vessels, barges, pushboats and officespace were as follows: Charter-invesselsin operation Charter-invesselsto be delivered Officespace 2015 $67,450 $11,909 $3,275 2016 58,136 24,185 3,083 2017 51,877 39,756 2,821 2018 49,904 39,876 1,832 2019 42,395 39,876 958 2020 and thereafter 66,403 186,330 98 Total$336,165 $341,932 $12,067 Charter hire expense for Navios Holdings chartered-in vessels amounted to $111,337, $116,962 and $112,536, for each of the years endedDecember 31, 2014, 2013 and 2012, respectively. Charter hire expense for logistics business chartered-in vessels amounted to $2,468, $1,286 and $3,587, foreach of the years ended December 31, 2014, 2013 and 2012, respectively.Rent expense for office space amounted to $2,804, $2,899, and $2,267 for each of the years ended December 31, 2014, 2013 and 2012, respectively.The Company leases approximately 16,703 square feet of F-49 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) space at 825 3rd Avenue, New York, New York, pursuant to a lease that expires in April 2019. The Company also leases approximately 4,136 square meters ofspace at 85 Akti Miaouli, Piraeus, Greece, pursuant to lease agreements that expire in 2017 and 2019. The Company also leases office space in Monacopursuant to a lease that expires on June 2015. The Company also leases approximately 632 square meters of office space in Antwerp, Belgium pursuant to alease that expires in 2019.Navios Logistics’ subsidiaries lease various premises in Argentina and Paraguay that expire on various dates through 2025. The above tableincorporates the lease commitments on all offices as disclosed above.Chartered-out vessels, barges and pushboats:The future minimum revenue, net of commissions, (i) for dry bulk vessels, expected to be earned on non-cancelable time charters and (ii) for theCompany’s logistics business, expected to be earned on non-cancelable time charters, COA’s with minimum guaranteed volumes and contracts withminimum guaranteed throughput in Navios Logistics’ ports, are as follows: Dry bulkvessels Logisticsbusiness 2015 $40,693 $166,311 2016 11,124 107,440 2017 10,715 43,392 2018 10,715 23,354 2019 10,715 22,515 2020 and thereafter 9,893 11,087 Total minimum revenue, net of commissions$93,855 $374,099 Revenues from time charters are not generally received when a vessel is off-hire, which includes time required for scheduled maintenance of the vessel.NOTE 15: TRANSACTIONS WITH RELATED PARTIESOffice rent: The Company has entered into lease agreements with Goldland Ktimatiki-Ikodomiki-Touristiki Xenodohiaki Anonimos Eteria andEmerald Ktimatiki-Ikodomiki Touristiki Xenodohiaki Anonimos Eteria, both of which are Greek corporations that are currently majority-owned by AngelikiFrangou, Navios Holdings’ Chairman and Chief Executive Officer. The lease agreements provide for the leasing of facilities located in Piraeus, Greece tohouse the operations of most of the Company’s subsidiaries. The total annual lease payments are in aggregate €943 (approximately $1,253) and the leaseagreements expire in 2017 and 2019. These payments are subject to annual adjustments, which are based on the inflation rate prevailing in Greece as reportedby the Greek State at the end of each year.Purchase of services: The Company utilizes its affiliate company, Acropolis, as a broker. Commissions charged from Acropolis for each of the yearsended December 31, 2014, 2013 and 2012 were $2, $41 and $45, respectively. Included in the trade accounts payable at December 31, 2014 and 2013 was anamount due to Acropolis of $78 and $76, respectively.Vessels charter hire: In February 2012, the Company chartered-in from Navios Partners the Navios Apollon, a 2000-built Ultra-Handymax vessel. Theterm of this charter was approximately two years at a net daily rate of $12.5 for the first year and $13.5 for the second year, plus 50/50 profit sharing based onactual F-50 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) earnings. In January 2014, the Company extended this charter for approximately six months at a net daily rate of $13.5 plus 50/50 profit sharing based onactual earnings and in October 2014, the Company further extended this charter for approximately one year at a net daily rate of $12.5 plus 50/50 profitsharing based on actual earnings.In May 2012, the Company chartered-in from Navios Partners the Navios Prosperity, a 2007-built Panamax vessel. The term of this charter wasapproximately one year with two six-month extension options granted to the Company at a net daily rate of $12.0 plus profit sharing. In April 2014, theCompany extended this charter for approximately one year and the owners will receive 100% of the first $1.5 in profits above the base rate, and thereafter allprofits will be split 50/50 to each party. Effective from March 5, 2015, Navios Holdings and Navios Partners entered into a novation agreement with therespective owners of Navios Prosperity whereby the rights to the time charter contracts of the Navios Prosperity were transferred to Navios Holdings.In September 2012, the Company chartered-in from Navios Partners the Navios Libra, a 1995-built Panamax vessel. The term of this charter isapproximately three years at a net daily rate of $12.0 plus 50/50 profit sharing based on actual earnings.In May 2013, the Company chartered-in from Navios Partners the Navios Felicity, a 1997-built Panamax vessel. The term of this charter isapproximately one year, at a net daily rate of $12.0 plus profit sharing, with two six-month extension options granted to the Company. The owners willreceive 100% of the first $1.5 in profits above the base rate, and thereafter all profits will be split 50/50 to each party. In February 2014, the Companyexercised its first option to extend this charter, and in August 2014, the Company exercised its second option.In May 2013, the Company chartered-in from Navios Partners the Navios Aldebaran, a 2008-built Panamax vessel, at a net daily rate of $11.0 plusprofit sharing, for six months with a six-month extension option. In December 2013, the Company exercised its option to extend this charter. The owners willreceive 100% of the first $2.5 in profits above the base rate, and thereafter all profits will be split 50/50 to each party. In July 2014, the Company furtherextended this charter for approximately six to nine months. Effective from February 28, 2015, Navios Holdings and Navios Partners entered into a novationagreement with the respective owners of Navios Aldebaran whereby the rights to the time charter contracts of the Navios Aldebaran were transferred to NaviosHoldings.In July 2013, the Company chartered-in from Navios Partners the Navios Hope, a 2005-built Panamax vessel. The term of this charter is approximatelyone year at a net daily rate of $10.0. In December 2013, the Company extended this charter for approximately another six months at a net daily rate of $10.0plus 50/50 profit sharing based on actual earnings.In July 2013, the Company chartered-in from Navios Partners the Navios Melodia, a 2010-built Capesize vessel for a net daily rate of $15.0. Thecontract was completed in October 2013.In July 2013, the Company chartered-in from Navios Partners the Navios Pollux, a 2009-built Capesize vessel, under a voyage charter which wascompleted in August 2013. In August 2014, the Company chartered-in the Navios Pollux, for approximately three months at a net daily rate of $21.3. Thecontract was completed in November 2014.Total charter hire expense for all vessels for the years ended December 31, 2014, 2013 and 2012 was $28,162, $22,386 and $7,484, respectively, andwas included in the consolidated statements of comprehensive (loss)/income under “Time charter, voyage and logistics business expenses”. F-51 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Management fees: Navios Holdings provides commercial and technical management services to Navios Partners’ vessels for a daily fixed fee. Thedaily fees were $4.7 per owned Ultra Handymax vessel, $4.6 per owned Panamax vessel and $5.7 per owned Capesize vessel until December 31, 2013. Thisdaily fee covered all of the vessels’ operating expenses, including the cost of drydock and special surveys. In each of October 2013, August 2014 andFebruary 2015, the Company amended its existing management agreement with Navios Partners to fix the fees for ship management services of its ownedfleet at: (i) $4.0 daily rate per Ultra-Handymax vessel; (ii) $4.1 daily rate per Panamax vessel; (iii) $5.1 daily rate per Capesize vessel; (iv) $6.5 daily rate percontainer vessel of TEU 6,800; (v) $7.2 daily rate per container vessel of more than TEU 8,000; and (vi) $8.5 daily rate per very large container vessel of morethan TEU 13,000 through December 31, 2015. Drydocking expenses under this agreement will be reimbursed by Navios Partners at cost at occurrence. Totalmanagement fees for the years ended December 31, 2014, 2013 and 2012 amounted to $50,359, $36,173 and $31,689, respectively, and are presented netunder the caption “Direct vessel expenses”.Navios Holdings provides commercial and technical management services to Navios Acquisition’s vessels for a daily fee that was fixed until May2014, of $6.0 per owned MR2 product tanker and chemical tanker vessel, $7.0 per owned LR1 product tanker vessel and $10.0 per owned VLCC vessel. Thisdaily fee covers all of the vessels’ operating expenses, other than certain fees and costs. Actual operating costs and expenses will be determined in a mannerconsistent with how the initial fixed fees were determined. Drydocking expenses until May 2014 were fixed under this agreement for up to $300 per LR1 andMR2 product tanker vessel and will be reimbursed at cost for VLCC vessels. In May 2014, Navios Holdings extended the duration of its existingmanagement agreement with Navios Acquisition until May 2020 and fixed the fees for ship management services of Navios Acquisition owned fleet for twoadditional years through May 2016 at the same rates for product tanker and chemical tanker vessels, and reduced the daily rate to $9.5 per VLCCvessel. Drydocking expenses under this agreement will be reimbursed at cost at occurrence for all vessels.Effective March 30, 2012, Navios Acquisition can, upon request to Navios Holdings, partially or fully defer the reimbursement of drydocking andother extraordinary fees and expenses under the management agreement to a later date, but not later than January 5, 2016, and if reimbursed on a later date,such amounts will bear interest at a rate of 1% per annum over LIBOR. Commencing September 28, 2012, Navios Acquisition can, upon request, reimburseNavios Holdings partially or fully for any fixed management fees outstanding for a period of not more than nine months under the management agreement ata later date, but not later than January 5, 2016, and if reimbursed on a later date, such amounts will bear interest at a rate of 1% per annum over LIBOR. Totalmanagement fees for the years ended December 31, 2014, 2013 and 2012 amounted to $95,827, $71,392 and $47,043, respectively, and are presented netunder the caption “Direct vessel expenses”.Pursuant to a management agreement dated December 13, 2013, Navios Holdings provides commercial and technical management services to NaviosEurope’s tanker and container vessels. The term of this agreement is for a period of six years. Management fees under this agreement will be reimbursed atcost at occurrence. Total management fees for the years ended December 31, 2014, 2013 and 2012 amounted to $20,098, $645 and $0, respectively, and arepresented net under the caption “Direct vessel expenses”.Pursuant to a management agreement dated November 18, 2014, Navios Holdings provides commercial and technical management services to NaviosMidstream’s vessels for a daily fixed fee of $9.5 per owned VLCC vessel effective through November 18, 2016. Drydocking expenses under this agreementwill be reimbursed at cost at occurrence for all vessels. The term of this agreement is for a period of five years. Total management fees for the year endedDecember 31, 2014, 2013 and 2012 amounted to $1,672, $0 and $0, respectively, and are presented net under the caption “Direct vessel expenses”. F-52 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Navios Partners Guarantee: Contemporaneously with the Insurance Restructuring (as defined in Note 23), in November 2012 (as amended in March2014), the Company entered into an agreement with Navios Partners (the “Navios Partners Guarantee”) to provide Navios Partners with guarantees againstcounterparty default on certain existing charters, which had previously been covered by the charter insurance for the same vessels, same periods and sameamounts. The Navios Partners Guarantee provides for a maximum possible payout of $20,000 by the Company to Navios Partners. Premiums that arecalculated on the same basis as the restructured charter insurance are included in the management fee that is paid by Navios Partners to Navios Holdingspursuant to the management agreement. As of December 31, 2014, no claims had been submitted to Navios Holdings.General and administrative expenses incurred on behalf of affiliates/Administrative fee revenue from affiliates: Navios Holdings providesadministrative services to Navios Partners. Navios Holdings is reimbursed for reasonable costs and expenses incurred in connection with the provision ofthese services. Total general and administrative fees for the years ended December 31, 2014, 2013 and 2012 amounted to $6,090, $4,366 and $3,883,respectively.On May 28, 2010, Navios Holdings entered into an administrative services agreement with Navios Acquisition, pursuant to which Navios Holdingsprovides office space and certain administrative management services to Navios Acquisition. In May 2014, Navios Holdings extended the duration of itsexisting administrative services agreement with Navios Acquisition until May 2020 pursuant to its existing terms. Navios Holdings is reimbursed forreasonable costs and expenses incurred in connection with the provision of these services. Total general and administrative fees for the years endedDecember 31, 2014, 2013 and 2012 amounted to $7,314, $3,477 and $2,111, respectively.On April 12, 2011, Navios Holdings entered into an administrative services agreement with Navios Logistics for a term of five years, pursuant to whichNavios Holdings will provide certain administrative management services to Navios Logistics. Navios Holdings is reimbursed for reasonable costs andexpenses incurred in connection with the provision of these services. Total general and administrative fees for the years ended December 31, 2014, 2013 and2012 amounted to $760, $740 and $600, respectively. The general and administrative fees have been eliminated upon consolidation.Pursuant to an administrative services agreement dated December 13, 2013, Navios Holdings provides administrative services to Navios Europe’stanker and container vessels. The term of this agreement is for a period of six years. Navios Holdings is reimbursed for reasonable costs and expenses incurredin connection with the provision of these services. Total general and administrative fees for years ended December 31, 2014, 2013 and 2012 amounted to$800, $25 and $0, respectively.Pursuant to an administrative services agreement dated November 18, 2014, Navios Holdings provides administrative services to Navios Midstream.The term of this agreement is for a period of five years. Navios Holdings is reimbursed for reasonable costs and expenses incurred in connection with theprovision of these services. Total general and administrative fees for years ended December 31, 2014, 2013 and 2012 amounted to $96, $0 and $0,respectively.Balance due from affiliates (excluding Navios Europe): Balance due from affiliates as of December 31, 2014 amounted to $33,400 (December 31,2013: $12,064) which included the current amounts due from Navios Partners, Navios Acquisition and Navios Midstream, which were $1,575 (December 31,2013: $390), $22,138 (December 31, 2013: $6,530) and $62 (December 31, 2013: $0), respectively, and the non-current amount of $9,625 (December 31,2013: $5,144) due from Navios Acquisition. The balances mainly consisted of management fees, administrative fees, drydocking and other expenses andamounts payable. F-53 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Omnibus agreements: Navios Holdings has entered into an omnibus agreement with Navios Partners (the “Partners Omnibus Agreement”) inconnection with the closing of Navios Partners’ IPO governing, among other things, when Navios Holdings and Navios Partners may compete against eachother as well as rights of first offer on certain dry bulk carriers. Pursuant to the Partners Omnibus Agreement, Navios Partners generally agreed not to acquireor own Panamax or Capesize dry bulk carriers under time charters of three or more years without the consent of an independent committee of Navios Partners.In addition, Navios Holdings has agreed to offer to Navios Partners the opportunity to purchase vessels from Navios Holdings when such vessels are fixedunder time charters of three or more years.Navios Holdings entered into an omnibus agreement with Navios Acquisition and Navios Partners (the “Acquisition Omnibus Agreement”) inconnection with the closing of Navios Acquisition’s initial vessel acquisition, pursuant to which, among other things, Navios Holdings and Navios Partnersagreed not to acquire, charter-in or own liquid shipment vessels, except for container vessels and vessels that are primarily employed in operations in SouthAmerica, without the consent of an independent committee of Navios Acquisition. In addition, Navios Acquisition, under the Acquisition OmnibusAgreement, agreed to cause its subsidiaries not to acquire, own, operate or charter dry bulk carriers subject to specific exceptions. Under the AcquisitionOmnibus Agreement, Navios Acquisition and its subsidiaries granted to Navios Holdings and Navios Partners, a right of first offer on any proposed sale,transfer or other disposition of any of its dry bulk carriers and related charters owned or acquired by Navios Acquisition. Likewise, Navios Holdings andNavios Partners agreed to grant a similar right of first offer to Navios Acquisition for any liquid shipment vessels it might own. These rights of first offer willnot apply to a (i) sale, transfer or other disposition of vessels between any affiliated subsidiaries, or pursuant to the terms of any charter or other agreementwith a counterparty, or (ii) merger with or into, or sale of substantially all of the assets to, an unaffiliated third party.Navios Holdings entered into an omnibus agreement with Navios Midstream, Navios Acquisition and Navios Partners in connection with the NaviosMidstream IPO, pursuant to which Navios Acquisition, Navios Holdings, Navios Partners and their controlled affiliates generally have agreed not to acquireor own any VLCCs, crude oil tankers, refined petroleum product tankers, LPG tankers or chemical tankers under time charters of five or more years withoutthe consent of Navios Midstream. The omnibus agreement contains significant exceptions that will allow Navios Acquisition, Navios Holdings, NaviosPartners or any of their controlled affiliates to compete with Navios Midstream under specified circumstances.Midstream General Partner Option Agreement: Navios Holdings entered into an option agreement, with Navios Acquisition under which NaviosAcquisition, which owns and controls Navios Maritime Midstream Partners GP LLC (“Midstream General Partner”), granted Navios Holdings the option toacquire a minimum of 25% of the outstanding membership interests in Midstream General Partner and the incentive distribution rights in Navios Midstreamrepresenting the right to receive an increasing percentage of the quarterly distributions when certain conditions are met. The option shall expire onNovember 18, 2024. The purchase price for the acquisition for all or part of the option interest shall be an amount equal to its fair market value. As ofDecember 31, 2014, Navios Holdings had not exercised any part of that option.Sale of vessels and sale of rights to Navios Partners: Upon the sale of vessels to Navios Partners, Navios Holdings recognizes the gain immediately inearnings only to the extent of the interest in Navios Partners owned by third parties and defers recognition of the gain to the extent of its own ownershipinterest in Navios Partners (the “deferred gain”). Subsequently, the deferred gain is amortized to income over the remaining useful life of the vessel. Therecognition of the deferred gain is accelerated in the event that (i) the vessel is subsequently sold or otherwise disposed of by Navios Partners or (ii) theCompany’s ownership interest in Navios Partners is reduced. In connection with the public offerings of common units by Navios Partners, a pro rata portionof the F-54 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) deferred gain is released to income upon dilution of the Company’s ownership interest in Navios Partners. As of December 31, 2014 and 2013, theunamortized deferred gain for all vessels and rights sold totaled $16,301 and $21,578, respectively. For the years ended December 31, 2014, 2013 and 2012,Navios Holdings recognized $5,278, $6,881 and $12,652 of the deferred gain, respectively, in “Equity in net earnings of affiliated companies”.Participation in offerings of affiliates: Refer to Note 8 and Note 25 for Navios Holdings’ participation in Navios Acquisition’s and Navios Partners’offerings. On February 4, 2015, Navios Holdings entered into a share purchase agreement with Navios Partners pursuant to which Navios Holdings made aninvestment in Navios Partners by purchasing common units, and general partnership interests, in order to maintain its 20% partnership interest in NaviosPartners following its equity offering in February 2015. In connection with this agreement, Navios Holdings entered into a registration rights agreement withNavios Partners pursuant to which Navios Partners provided Navios Holdings with certain rights relating to the registration of the common units.The Navios Holdings Credit Facilities: Navios Acquisition entered into a $40,000 credit facility with Navios Holdings in 2010, which was amendedin 2010, 2011 and 2014, and matures in December 2015. The facility is available for multiple drawings up to a limit of $40,000 and has a margin of LIBORplus 300 basis points. As of December 31, 2014 and 2013, there was no outstanding amount under this facility.On November 11, 2014, Navios Acquisition entered into a short-term credit facility with Navios Holdings pursuant to which Navios Acquisition couldborrow up to $200,000 for general corporate purposes. The facility provided for an arrangement fee of $4,000, bared a fixed interest of 600 bps and maturedon December 29, 2014. As of December 31, 2014, the facility was fully repaid.Balance due from Navios Europe: Balance due from Navios Europe as of December 31, 2014 amounted to $4,087 (December 31, 2013: $1,407)which included the current amounts of $3,421 (December 31, 2013: $1,407) mainly consisting of management fees, accrued interest income earned under theNavios Revolving Loans (as defined in Note 8) and other expenses and the non-current amount of $666 (December 31, 2013: $0) related to the accruedinterest income earned under the Navios Term Loans (as defined in Note 8).The Navios Revolving Loans and the Navios Term Loans earn interest and an annual preferred return, respectively, at 1,270 basis points per annum, ona quarterly compounding basis and are repaid from free cash flow (as defined in the loan agreement) to the fullest extent possible at the end of each quarter.There are no covenant requirements or stated maturity dates.As of December 31, 2014, the outstanding amount relating to the Navios Revolving Loans is $7,125 (December 31, 2013: $2,660), under the caption“Loan receivable from affiliate companies”. As of December 31, 2014, the amount undrawn under the Revolving Loans was $9,100, of which NaviosHoldings is committed to fund $4,323.NOTE 16: PREFERRED AND COMMON STOCKIssuances to Employees and Exercise of OptionsDuring 2014, pursuant to the stock plan approved by the Board of Directors, 15,000, 30,303, 19,626, 55,860 and 22,400 shares were issued followingthe exercise of options for cash at an exercise price of $3.18, $3.81, $5.87, $5.15 and $3.44 per share, respectively, for a total of $643. F-55 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) On December 15, 2014, pursuant to the stock plan approved by the Board of Directors, Navios Holdings granted to its employees 1,151,052 shares ofrestricted common stock, 24,301 restricted stock units and 1,123,003 stock options.During 2013, pursuant to the stock plan approved by the Board of Directors, 106,032, 29,243, 10,969 and 7,312 shares were issued following theexercise of options for cash at an exercise price of $3.18, $3.81, $5.87 and $5.15 per share, respectively, for a total of $551.On December 11, 2013, pursuant to the stock plan approved by the Board of Directors, Navios Holdings issued to its employees 856,437 shares ofrestricted common stock, 30,000 restricted stock units and 674,809 stock options.Vested, Surrendered and ForfeitedDuring 2014, 41,748 restricted stock units, issued to the Company’s employees in 2013, 2012 and 2011, vested.During 2013, 21,463 restricted stock units, issued to the Company’s employees in 2012, 2011 and 2010, vested.During the year ended December 31, 2014 and 2013, 24,248 and 25,836 restricted shares of common stock, respectively, were forfeited upontermination of employment.As of December 31, 2014, 314,250 stock options expired.Issuance of Cumulative Perpetual Preferred StockOn January 28, 2014, the Company completed the sale of the Series G raising net proceeds of $47,846 (after deducting underwriting discounts andoffering expenses).On July 8, 2014, the Company completed the sale of the Series H raising net proceeds of $115,756 (after deducting underwriting discounts and offeringexpenses).Conversion of Preferred StockDuring the year ended December 31, 2014, 1,410 shares of convertible preferred stock were automatically converted into 1,410,000 shares of commonstock. The shares of convertible preferred stock were converted pursuant to their original terms.Navios Holdings had outstanding as of December 31, 2014 and 2013, 105,831,718 and 104,261,029 shares of common stock, respectively, and 75,069(20,000 Series G, 48,000 Series H and 7,069 shares of convertible preferred stock) and 8,479 shares of convertible preferred stock, respectively. F-56 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) NOTE 17: INTEREST EXPENSE AND FINANCE COSTInterest expense and finance cost consisted of the following: For the YearEndedDecember 31,2014 For the YearEndedDecember 31,2013 For the YearEndedDecember 31,2012 Interest expense $109,550 $105,421 $99,887 Amortization and write-off of deferred financing costs 4,061 5,384 6,309 Other 49 — — Interest expense and finance cost$113,660 $110,805 $106,196 NOTE 18: SEGMENT INFORMATIONThe Company currently has two reportable segments from which it derives its revenues: Dry bulk Vessel Operations and Logistics Business. Thereportable segments reflect the internal organization of the Company and are strategic businesses that offer different products and services. The Dry bulkVessel Operations business consists of the transportation and handling of bulk cargoes through the ownership, operation, and trading of vessels, freight, andFFAs. The Logistics Business consists of operating ports and transfer station terminals, handling of vessels, barges and push boats as well as upriver transportfacilities in the Hidrovia region.The Company measures segment performance based on net income/(loss) attributable to Navios Holdings common stockholders. Inter-segment salesand transfers are not significant and have been eliminated and are not included in the following tables. Summarized financial information concerning each ofthe Company’s reportable segments is as follows: Dry Bulk VesselOperationsfor theYear EndedDecember 31,2014 Logistics Businessfor theYear EndedDecember 31,2014 Totalfor theYear EndedDecember 31,2014 Revenue $300,242 $268,774 $569,016 Administrative fee revenue from affiliates 14,300 — 14,300 Interest income 5,224 291 5,515 Interest expense and finance cost (85,823) (27,837) (113,660) Depreciation and amortization (79,603) (25,087) (104,690) Equity in net earnings of affiliated companies 57,751 — 57,751 Net loss attributable to Navios Holdings commonstockholders (45,541) (10,662) (56,203) Total assets 2,550,317 609,072 3,159,389 Goodwill 56,240 104,096 160,336 Capital expenditures (145,840) (91,658) (237,498) Investment in affiliates 344,453 — 344,453 Cash and cash equivalents 175,625 71,931 247,556 Restricted cash 2,564 — 2,564 Long-term debt (including current and noncurrentportion) $1,269,123 $375,459 $1,644,582 F-57 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Dry Bulk VesselOperationsfor theYear EndedDecember 31,2013 Logistics Businessfor theYear EndedDecember 31,2013 Totalfor theYear EndedDecember 31,2013 Revenue $275,195 $237,084 $512,279 Administrative fee revenue from affiliates 7,868 — 7,868 Interest income 2,080 219 2,299 Interest expense and finance cost (85,657) (25,148) (110,805)Depreciation and amortization (74,770) (23,354) (98,124)Equity in net earnings of affiliated companies 19,344 — 19,344 Net (loss)/income attributable to Navios Holdingscommon stockholders (115,264) 6,201 (109,063)Total assets 2,393,364 526,249 2,919,613 Goodwill 56,240 104,096 160,336 Capital expenditures (86,538) (59,396) (145,934)Investment in affiliates 335,303 — 335,303 Cash and cash equivalents 101,263 86,568 187,831 Restricted cash 2,041 — 2,041 Long-term debt (including current and noncurrentportion) $1,217,565 $293,684 $1,511,249 Dry Bulk VesselOperationsfor theYear EndedDecember 31,2012 Logistics Businessfor theYear EndedDecember 31,2012 Totalfor theYear EndedDecember 31,2012 Revenue $369,461 $247,033 $616,494 Administrative fee revenue from affiliates 5,994 — 5,994 Interest income 2,329 388 2,717 Interest expense and finance cost (86,139) (20,057) (106,196)Depreciation and amortization (81,267) (26,939) (108,206)Equity in net earnings of affiliated companies 48,228 — 48,228 Net income attributable to Navios Holdings commonstockholders 175,388 97 175,485 Total assets 2,490,929 450,533 2,941,462 Goodwill 56,240 104,096 160,336 Capital expenditures (40,024) (17,666) (57,690)Investment in affiliates 197,291 — 197,291 Cash and cash equivalents 212,330 45,538 257,868 Restricted cash 24,704 — 24,704 Long-term debt (including current and noncurrentportion) $1,157,614 $200,598 $1,358,212 F-58 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) The following table sets out the Company’s revenue by geographic region. Dry bulk Vessel Operations (excluding administrative fee revenue fromaffiliates) and Logistics Business revenue are allocated on the basis of the geographic region in which the customer is located. Dry bulk vessels operateworldwide. Logistics business operates different types of tanker vessels, pushboats, and wet and dry barges for delivering a wide range of products betweenports in the Paraná, Paraguay and Uruguay River systems in South America (commonly known as the “Hidrovia” or the “waterway”).Revenues from specific geographic regions which contribute over 10% of revenue are disclosed separately.Revenue by Geographic Region Year endedDecember 31,2014 Year endedDecember 31,2013 Year endedDecember 31,2012 North America $30,299 $17,487 $14,622 Europe 173,100 141,464 127,521 Asia 84,766 99,636 225,366 South America 275,327 241,852 247,033 Other 5,524 11,840 1,952 Total$569,016 $512,279 $616,494 Vessels operate on a worldwide basis and are not restricted to specific locations. Accordingly, it is not possible to allocate the assets of these operationsto specific countries. The total net book value of long-lived assets for dry bulk vessels amounted to $1,486,486 and $1,409,166 at December 31, 2014 and2013, respectively. For Logistics Business, all long-lived assets are located in South America. The total net book value of long-lived assets for the Logisticsbusiness amounted to $462,986 and $392,190 at December 31, 2014 and 2013, respectively.NOTE 19: (LOSS)/EARNINGS PER COMMON SHARE(Loss)/earnings per share are calculated by dividing net (loss)/income by the weighted average number of shares of Navios Holdings outstandingduring the period.For the year ended December 31, 2014, 3,437,148 potential common shares and 7,950,425 potential shares of convertible preferred stock have an anti-dilutive effect (i.e. those that increase income per share or decrease loss per share) and are therefore excluded from the calculation of diluted net loss per share. F-59 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) For the year ended December 31, 2013, 2,649,796 potential common shares and 8,479,000 potential shares of convertible preferred stock have an anti-dilutive effect (i.e. those that increase income per share or decrease loss per share), and are therefore excluded from the calculation of diluted net loss pershare. Year endedDecember 31,2014 Year endedDecember 31,2013 Year endedDecember 31,2012 Numerator: Net (loss)/income attributable to Navios Holdingscommon stockholders $(56,203) $(109,063) $175,485 Less: Dividend on Preferred Stock and on unvestedrestricted shares (10,773) (1,927) (1,705)(Loss)/income available to Navios Holdingscommon stockholders, basic$(66,976) $(110,990)$173,780 Plus:Dividend on Preferred Stock and on unvestedrestricted shares — — 1,705 (Loss)/income available to Navios Holdingscommon stockholders, diluted$(66,976) $(110,990)$175,485 Denominator:Denominator for basic net (loss)/income per shareattributable to Navios Holdings stockholders —weighted average shares 103,476,614 101,854,415 101,232,720 Dilutive potential common shares — weighted averagerestricted stock and restricted units — — 1,322,038 Convertible preferred stock and convertible debt — — 8,479,000 Dilutive effect of securities — — 9,801,038 Denominator for diluted net (loss)/income per shareattributable to Navios Holdings stockholders —adjusted weighted shares and assumed conversions 103,476,614 101,854,415 111,033,758 Basic net (loss)/earnings per share attributable toNavios Holdings stockholders$(0.65) $(1.09)$1.72 Diluted net (loss)/earnings per share attributable toNavios Holdings stockholders$(0.65) $(1.09)$1.58 F-60 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) NOTE 20: INCOME TAXESMarshall Islands, Greece, Liberia, Panama and Malta do not impose a tax on international shipping income. Under the laws of Marshall Islands, Greece,Malta, Liberia and Panama, the countries of incorporation of the Company and its subsidiaries and the vessels’ registration, the companies are subject toregistration and tonnage taxes which have been included in direct vessel expenses in the accompanying consolidated statements of comprehensive(loss)/income.Certain of the Company’s subsidiaries are registered as Law 89 companies in Greece. These Law 89 companies are exempt from Greek income tax ontheir income derived from certain activities related to shipping. Since all the Law 89 companies conduct only business activities that qualify for theexemption of Greek income tax, no provision has been made for Greek income tax with respect to income derived by these Law 89 companies from theirbusiness operations in Greece.In accordance with the currently applicable Greek law, foreign flagged vessels that are managed by Greek or foreign ship management companieshaving established an office in Greece are subject to duties towards the Greek state which are calculated on the basis of the relevant vessel’s tonnage. Thepayment of said duties exhausts the tax liability of the foreign ship owning company and the relevant manager against any tax, duty, charge or contributionpayable on income from the exploitation of the foreign flagged vessel. Additionally, under a new tax bill ratified on January 14, 2013, an annualcontribution, applying only to fiscal years 2012-2015, was imposed on offices or branches of foreign enterprises that have been established in Greece and areengaged in the exploitation, chartering, insurance, average (damage) settlements, purchase, chartering or shipbuilding brokerage, or chartering or insuranceof ships under Greek or foreign flag, as well as the representation of ship-owner companies or undertakings, whose object is identical to the abovementionedactivities. This contribution is imposed on the total amount of imported foreign exchange, calculated on a minimum $50.In Belgium, profit from ocean shipping is taxable based on the tonnage of the sea-going vessels from which the profit is obtained (“tonnage tax”).Pursuant to Section 883 of the Internal Revenue Code of the United States (the “Code”), U.S. source income from the international operation of ships isgenerally exempt from U.S. income tax if the company that is treated for U.S. federal income tax purposes as earning such income meets certain requirementsset forth in Section 883 of the Code and the U.S. Treasury regulations thereunder. Among other things, in order to qualify for this exemption, each relevantcompany must be incorporated in a country which grants an “equivalent exemption” from income taxes to U.S. corporations. In addition, either (i) the stockof each relevant company must be treated under Section 883 of the Code and the U.S. Treasury regulations thereunder as “primarily traded” and “regularlytraded” on an “established securities market” in the United States or in another country that grants an “equivalent exemption” or (ii) more than 50% of thevalue of the stock of each relevant company must be owned, directly or indirectly, by (a) individuals who are residents in countries that grant an “equivalentexemption,” (b) foreign corporations organized in countries that grant an “equivalent exemption” and that meet the test described in (i) and/or (c) certainother shareholders described in Section 883 of the Code and the U.S. Treasury regulations thereunder. The management of the Company believes that theCompany and each of its relevant subsidiaries qualifies for the tax exemption under Section 883 of the Code, provided that the Company’s common stockrepresents more than 50% of the total combined voting power of classes of the Company’s stock entitled to vote and of the total value of the Company’sstock, and less than 50% of the Company’s common stock is owned, actually or constructively under specified stock attribution rules, on more than half thenumber of days in the relevant year by persons who each own more 5% or more of the vote and value of the Company’s common stock, but no assurance canbe given that this will remain so in the future. F-61 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) The tax expense reflected in the Company’s consolidated financial statements for the years ended December 31, 2014, 2013 and 2012 is mainlyattributable to Navios Holdings’ subsidiaries in South America, which are subject to the Argentinean, Brazilian and Paraguayan income tax regime.CNSA is located in a tax free zone and is not liable to income or other tax. Navios Logistics’ operations in Uruguay are exempted from income taxes.Income tax liabilities of the Argentinean companies for the current and prior periods are measured at the amount expected to be paid to the taxationauthorities, using a tax rate of 35% on the taxable net income. Tax rates and tax laws used to assess the income tax liability are those that are effective on theclose of the fiscal period. Additionally, at the end of the fiscal year, local companies in Argentina have to calculate an assets tax (“Impuesto a la GananciaMinima Presunta” or Alternative Minimum Tax). This tax is supplementary to income tax and is calculated by applying the effective tax rate of 1% over thegross value of the corporate assets (based on tax law criteria). The subsidiaries’ tax liabilities will be the higher of income tax or Alternative Minimum Tax.However, if the Alternative Minimum Tax exceeds income tax during any fiscal year, such excess may be computed as a prepayment of any income taxexcess over the Alternative Minimum Tax that may arise in the next ten fiscal years.Under the tax laws of Argentina, the subsidiaries of the Company in that country are subject to taxes levied on gross revenues. Rates differ dependingon the jurisdiction where revenues are earned for tax purposes. Average rates were approximately 5.0% for the year ended December 31, 2014 (4.9% and 4.7%for 2013 and 2012, respectively).There are two possible options to determine the income tax liability of Paraguayan companies. Under the first option income tax liabilities for thecurrent and prior periods are measured at the amount expected to be paid to the taxation authorities, by applying the tax rate of 10% on the fiscal profit andloss. 50% of revenues derived from international freights are considered Paraguayan sourced (and therefore taxed) if carried between Paraguay and Argentina,Bolivia, Brazil or Uruguay. Alternatively, only 30% of revenues derived from international freights are considered Paraguayan sourced. Companies whoseoperations are considered international freights can choose to pay income taxes on their revenues at an effective tax rate of 1% on such revenues, withoutconsidering any other kind of adjustments. Fiscal losses, if any, are neither deducted nor carried forward.The corporate income tax rate in Brazil and Paraguay is 34% and 10%, respectively, for the year ended December 31, 2014.During the year ended December 31, 2013, Navios Logistics decided to merge certain subsidiaries in Paraguay. As a result of the merger, NaviosLogistics distributed specifically identified earnings, which were offset by retained net losses of $43,475. Navios Logistics’ decision to merge thesubsidiaries resulted in a one-off income tax benefit in deferred income tax of $4,333 in 2013.The Company’s deferred taxes as of December 31, 2014 and 2013, relate primarily to deferred tax liabilities on acquired intangible assets recognized inconnection with the Horamar acquisition.As of January 1, 2007, the Company adopted the provisions of FASB for Accounting for Uncertainty in Income Taxes. This guidance requiresapplication of a more likely than not threshold to the recognition and derecognition of uncertain tax positions. This guidance permits the Company torecognize the amount of tax benefit that has a greater that 50% likelihood of being ultimately realized upon settlement. It further requires that a change injudgment related to the expected ultimate resolution of uncertain tax positions be recognized in F-62 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) earnings in the quarter of such change. Kleimar’s open tax years are 2007 and onwards. Argentinean companies have open tax years ranging from 2007 andonwards and Paraguayan and Brazilian companies have open tax years ranging from 2008 and onwards. In relation to these open tax years, the Companybelieves that there are no material uncertain tax positions.NOTE 21: NONCONTROLLING INTERESTNavios LogisticsOn July 10, 2013, Navios Logistics became the sole shareholder of Hidronave by acquiring the remaining 49.0% noncontrolling interest for a totalcash consideration of $750. The transaction was considered a step acquisition (with control maintained by Navios Logistics) and was accounted for as anequity transaction.Navios AsiaOn May 14, 2013, Navios Holdings formed Navios Asia. As of December 31, 2013, Navios Asia was owned 51.0% by Diesis Shipmanagement Ltd., awholly owned subsidiary of Navios Holdings. During the years ended December 31, 2013 and 2014, the Company recorded income of $145 and $182,respectively, in the statement of comprehensive (loss)/income within the caption “Net loss/(income) attributable to the noncontrolling interest”. Thenoncontrolling shareholders’ contribution for the acquisition of the N Amalthia, including working capital needs, and N Bonanza in December 2013 andJanuary 2014 was $3,905 and 3,484, respectively. In May 2014, Navios Holdings became the sole shareholder of Navios Asia by acquiring the remaining49.0% for a total cash consideration of $10,889.NOTE 22: INVESTMENTS IN AVAILABLE-FOR-SALE SECURITIESOn January 1, 2012, all of Navios Partners’ outstanding subordinated units owned by Navios Holdings converted into 7,621,843 common units ofNavios Partners (excluding the Series A subordinated units, which are a separate class of subordinated units). As a result, the Company’s entire investment inNavios Partners (a portion of which was previously accounted for as available-for-sale securities) is accounted for by the equity method from January 1, 2012.During the years ended December 31, 2013 and 2012, the Company received shares of Korea Line Corporation (“KLC”) as partial compensation for theclaims filed under the Korean court for all unpaid amounts by KLC in respect of the employment of the vessels. The shares were valued at fair value upon theday of issuance. As of both December 31, 2014 and 2013, the Company retained a total of 314,077 KLC shares.The shares received from KLC were accounted for under the guidance for available-for-sale securities (the “AFS Securities”). The Company has noother types of available-for-sale securities.As of December 31, 2014 and 2013, the carrying amount of the available-for-sale securities related to KLC was $6,701 and $7,660, respectively. Theunrealized holding losses related to these AFS Securities included in “Accumulated other comprehensive loss” were $578, $11,172 and $558 as ofDecember 31, 2014, 2013 and 2012, respectively. As of June 30, 2014, the Company considered the decline in fair value of the KLC shares as “other-than-temporary” and therefore, recognized a loss out of accumulated other comprehensive (loss)/income of $11,553. The respective loss was included within thecaption “Other expense” in the accompanying consolidated statement of comprehensive (loss)/income. There were no OTTI losses during the years endedDecember 31, 2013 and 2012. F-63 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) NOTE 23: OTHER INCOME – OTHER EXPENSEOn November 15, 2012, Navios Holdings agreed with its credit default insurer to restructure its existing insurance policy (the “Charter Insurance”) withrespect to counterparty defaults pursuant to certain charter agreements (the “Insurance Restructuring”). In connection with the Insurance Restructuring,Navios Holdings received a one-time upfront cash payment equal to $175,433 and agreed to maintain certain long-term charters under the Charter Insurance.Contemporaneously, the Company entered into an agreement with Navios Partners that provided Navios Partners with guarantees against counterpartydefault (up to $20,000) on certain existing charters (the “Navios Partners Guarantee”) (see also Note 15). The one-time upfront cash payment was accountedfor as follows: • $168,013 of the proceeds, which represented the irrevocable/non-refundable portion of the total proceeds, were recorded immediately in thestatements of comprehensive (loss)/income within the caption “Other income”; and • $7,420 of the proceeds, which represents reimbursements for insurance claims submitted for the period prior to the date of the restructuring, wererecorded immediately in the statements of comprehensive (loss)/income within the caption “Revenue.”Following consummation of the Insurance Restructuring, the Company also reversed to income (“Other income” within the statements ofcomprehensive (loss)/income) an amount equal to $21,592 recorded on the Company’s balance sheet as a liability (“cash received in advance”) related to anon-going claim. In connection with the Insurance Restructuring, these amounts also became irrevocable/non-refundable.During the year ended December 31, 2013, the Company received shares of KLC as discussed in Note 22 above, which were valued at fair value uponthe day of issuance. As a result of the valuation of the KLC shares and settlement in full of KLC’s claims, the Company also recorded income of $14,995 inthe statement of comprehensive (loss)/income within the caption “Other income”.As of March 25, 2014, the Company terminated the amended credit default insurance policy. In connection with the termination, Navios Holdingsreceived compensation of $4,044. From the total compensation, $3,551 was recorded immediately in the statement of other comprehensive (loss)/incomewithin the caption “Other income” and the remaining amount within the caption “Revenue”, representing reimbursements for insurance claims submitted forthe period prior to the date of the termination of the credit default insurance policy. The Company has no future requirement to repay any of the lump sumcash payment back to the insurance company or provide any further services.In May 2014, Navios Holdings received cash compensation of $7,203 from the sale of a defaulted counterparty claim to an unrelated third party.Navios Holdings has no continuing obligation to provide any further services to the counterparty or any further recourse or obligation to the third party towhich it sold the claim and has therefore recognized the entire compensation received immediately in the statement of comprehensive (loss)/income withinthe caption of “Other income”.During the years ended December 31, 2014, 2013 and 2012, taxes other than income taxes of Navios Logistics amounted to $9,275, $7,912 and$8,212, respectively, and were included in the statements of comprehensive (loss)/income within the caption “Other expense”. F-64 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) NOTE 24: OTHER FINANCIAL INFORMATIONThe Company’s 2019 Notes, issued on January 28, 2011, are fully and unconditionally guaranteed on a joint and several basis by all of the Company’ssubsidiaries with the exception of Navios Maritime Finance II (US) Inc., Navios Maritime Finance (US) Inc., Navios Logistics and its subsidiaries and NaviosGP L.L.C. The subsidiary guarantees are “full and unconditional”, except that the indenture provides for an individual subsidiary’s guarantee to beautomatically released in certain customary circumstances, such as when a subsidiary is sold or all of the assets of the subsidiary are sold, the capital stock issold, when the subsidiary is designated as an “unrestricted subsidiary” for purposes of the indenture, upon liquidation or dissolution of the subsidiary orupon legal or covenant defeasance or satisfaction and discharge of the 2019 Notes. All subsidiaries, except for the non-guarantor Navios Logistics and itssubsidiaries, are 100% owned.In May 2014, Navios Holdings became the sole shareholder of Navios Asia by acquiring the remaining 49.0% noncontrolling interest. From that pointonwards, Navios Asia and its subsidiaries became guarantors under the 2019 Notes and the following footnote has been adjusted to reflect Navios Asia and itssubsidiaries as guarantors.The Company revised the classification of certain amounts in its consolidated statements of comprehensive (loss)/income. See Note 2(a) “Basis ofPresentation” for amounts reclassified. F-65 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) These condensed consolidated statements of Navios Holdings, the guarantor subsidiaries and the non-guarantor subsidiaries have been prepared inaccordance on an equity basis as permitted by U.S. GAAP. NaviosMaritimeHoldings Inc.Issuer GuarantorSubsidiaries NonGuarantorSubsidiaries Eliminations Total Statement of comprehensive loss for the year endedDecember 31, 2014 Revenue $— $300,242 $268,774 $— $569,016 Administrative fee revenue from affiliates — 14,300 — — 14,300 Time charter, voyage and logistics business expenses — (157,640) (105,664) — (263,304) Direct vessel expenses — (52,039) (78,025) — (130,064) General and administrative expenses incurred on behalf of affiliates — (14,300) — — (14,300) General and administrative expenses (10,343) (20,483) (14,764) — (45,590) Depreciation and amortization (2,811) (76,792) (25,087) — (104,690) Interest expense and finance cost, net (73,272) (7,327) (27,546) — (108,145) Loss on bond extinguishment — — (27,281) — (27,281) Other income/(expense), net 72 (2,357) (7,388) — (9,673) Loss before equity in net earnings of affiliated companies (86,354) (16,396) (16,981) — (119,731) Loss from subsidiaries (17,418) (10,662) — 28,080 — Equity in net earnings of affiliated companies 47,569 6,555 3,627 — 57,751 Loss before taxes (56,203) (20,503) (13,354) 28,080 (61,980) Income tax (expense)/benefit — (360) 276 — (84) Net loss (56,203) (20,863) (13,078) 28,080 (62,064) Less: Net (income)/loss attributable to the noncontrolling interest — (182) 6,043 — 5,861 Net loss attributable to Navios Holdings common stockholders$(56,203) $(21,045) $(7,035) $28,080 $(56,203) Other Comprehensive incomeUnrealized holding loss on investments in available-for-salesecurities$(959) $(959) $— $959 $(959) Reclassification to earnings 11,553 11,553 — (11,553) 11,553 Total other comprehensive income$10,594 $10,594 $— $(10,594) $10,594 Total comprehensive loss$(45,609) $(10,269) $(13,078) $17,486 $(51,470) Comprehensive (income)/loss attributable to noncontrollinginterest — (182) 6,043 — 5,861 Total comprehensive loss attributable to Navios Holdingscommon stockholders$(45,609) $(10,451) $(7,035) $17,486 $(45,609) F-66 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) NaviosMaritimeHoldings Inc.Issuer GuarantorSubsidiaries NonGuarantorSubsidiaries Eliminations Total Statement of comprehensive (loss)/income for the year endedDecember 31, 2013 Revenue $— $275,195 $237,084 $— $512,279 Administrative fee revenue from affiliates — 7,868 — — 7,868 Time charter, voyage and logistics business expenses — (159,225) (85,187) — (244,412)Direct vessel expenses — (37,969) (76,105) — (114,074)General and administrative expenses incurred on behalf of affiliates — (7,868) — — (7,868) General and administrative expenses (8,261) (21,756) (14,617) — (44,634)Depreciation and amortization (2,811) (71,959) (23,354) — (98,124)Interest expense and finance cost, net (76,227) (7,350) (24,929) — (108,506)Loss on bond and debt extinguishment (37,136) — — — (37,136) Loss on derivatives — (260) — — (260) Gain on sale of assets — — 18 — 18 Other income/(expense), net 10 13,578 (7,634) — 5,954 (Loss)/income before equity in net earnings of affiliated companies (124,425) (9,746) 5,276 — (128,895)Income from subsidiaries 6,320 6,202 — (12,522) — Equity in net earnings of affiliated companies 9,042 7,245 3,057 — 19,344 (Loss)/income before taxes (109,063) 3,701 8,333 (12,522) (109,551)Income tax (expense)/benefit — (294) 4,554 — 4,260 Net (loss)/income (109,063) 3,407 12,887 (12,522) (105,291)Less: Net income attributable to the noncontrolling interest — (145) (3,627) — (3,772)Net (loss)/income attributable to Navios Holdings commonstockholders$(109,063)$3,262 $9,260 $(12,522)$(109,063)Other Comprehensive lossUnrealized holding loss on investments in available-for-sale securities$(10,614)$(10,614)$— $10,614 $(10,614)Total other comprehensive loss$(10,614)$(10,614)$— $10,614 $(10,614)Total comprehensive (loss)/income$(119,677)$(7,207)$12,887 $(1,908)$(115,905)Comprehensive income attributable to noncontrolling interest — (145) (3,627) — (3,772)Total comprehensive (loss)/income attributable to Navios Holdingscommon stockholders$(119,677)$(7,352)$9,260 $(1,908)$(119,677) F-67 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) NaviosMaritimeHoldings Inc.Issuer GuarantorSubsidiaries NonGuarantorSubsidiaries Eliminations Total Statement of comprehensive income for the year ended December 31,2012 Revenue $— $364,364 $252,130 $— $616,494 Administrative fee revenue from affiliates — 5,994 — — 5,994 Time charter, voyage and logistics business expenses — (162,273) (107,006) — (269,279)Direct vessel expenses — (45,484) (72,306) — (117,790)General and administrative expenses incurred on behalf of affiliates — (5,994) — — (5,994) General and administrative expenses (12,391) (24,003) (14,937) — (51,331)Depreciation and amortization (2,818) (77,281) (28,107) — (108,206)Interest expense and finance cost, net (70,757) (12,357) (20,365) — (103,479)Loss on derivatives — (196) — — (196) Gain on sale of assets — 323 — — 323 Other (expense)/income, net (276) 169,138 (7,752) — 161,110 (Loss)/income before equity in net earnings of affiliated companies (86,242) 212,231 1,657 — 127,646 Income from subsidiaries 228,833 1,547 — (230,380) — Equity in net earnings of affiliated companies 32,894 13,002 2,332 — 48,228 Income before taxes 175,485 226,780 3,989 (230,380) 175,874 Income tax expense — (277) (35) — (312)Net income 175,485 226,503 3,954 (230,380) 175,562 Less: Net income attributable to the noncontrolling interest — — (77) — (77)Net income attributable to Navios Holdings common stockholders$175,485 $226,503 $3,877 $(230,380)$175,485 Other Comprehensive lossUnrealized holding loss on investments in available-for-sale securities$(566)$(566)$— $566 $(566)Reclassification to investments in affiliates (6,158) — — — (6,158) Total other comprehensive loss$(6,724)$(566)$— $566 $(6,724)Total comprehensive income$168,761 $225,937 $3,954 $(229,814)$168,838 Comprehensive income attributable to noncontrolling interest — — (77) — (77)Total comprehensive income attributable to Navios Holdings commonstockholders$168,761 $225,937 $3,877 $(229,814)$168,761 F-68 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Balance Sheet as of December 31, 2014 NaviosMaritimeHoldings Inc.Issuer GuarantorSubsidiaries Non GuarantorSubsidiaries Eliminations Total Current assets Cash and cash equivalents $98,539 $77,085 $71,932 $— $247,556 Restricted cash — 2,564 — — 2,564 Accounts receivable, net — 56,265 29,316 — 85,581 Intercompany receivables 23,567 — 71,442 (95,009) — Due from affiliate companies 4,638 22,558 — — 27,196 Prepaid expenses and other current assets 2 31,179 23,053 — 54,234 Total current assets 126,746 189,651 195,743 (95,009) 417,131 Deposits for vessels, port terminals and other fixed assets — 22,140 23,225 — 45,365 Vessels, port terminals and other fixed assets, net — 1,467,518 443,625 — 1,911,143 Investments in subsidiaries 1,622,239 271,532 — (1,893,771) — Investments in available-for-sale securities — 6,701 — — 6,701 Investments in affiliates 331,130 548 12,775 — 344,453 Long-term receivable from affiliate companies — 9,625 — — 9,625 Loan receivable from affiliate companies — 7,791 — — 7,791 Other long-term assets 16,976 21,636 28,740 — 67,352 Goodwill and other intangibles 89,562 85,273 174,993 — 349,828 Total non-current assets 2,059,907 1,892,764 683,358 (1,893,771) 2,742,258 Total assets$2,186,653 $2,082,415 $879,101 $(1,988,780) $3,159,389 LIABILITIES AND STOCKHOLDERS’ EQUITYCurrent liabilitiesAccounts payable$591 $18,399 $34,847 $— $53,837 Accrued expenses and other liabilities 33,099 49,363 24,858 — 107,320 Deferred income and cash received in advance — 6,263 6,182 — 12,445 Intercompany payables — 93,226 1,783 (95,009) — Current portion of capital lease obligations — — 1,449 — 1,449 Current portion of long-term debt — 24,117 69 — 24,186 Total current liabilities 33,690 191,368 69,188 (95,009) 199,237 Long-term debt, net of current portion 1,000,000 245,006 375,390 — 1,620,396 Capital lease obligations, net of current portion — — 20,911 — 20,911 Unfavorable lease terms — 22,141 — — 22,141 Other long-term liabilities and deferred income — 14,574 2,885 — 17,459 Deferred tax liability — — 12,735 — 12,735 Total non-current liabilities 1,000,000 281,721 411,921 — 1,693,642 Total liabilities 1,033,690 473,089 481,109 (95,009) 1,892,879 Noncontrolling interest — — 113,547 — 113,547 Total Navios Holdings stockholders’ equity 1,152,963 1,609,326 284,445 (1,893,771) 1,152,963 Total liabilities and stockholders’ equity$2,186,653 $2,082,415 $879,101 $(1,988,780) $3,159,389 F-69 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Balance Sheet as of December 31, 2013 NaviosMaritimeHoldings Inc.Issuer GuarantorSubsidiaries Non GuarantorSubsidiaries Eliminations Total Current assets Cash and cash equivalents $33,769 $67,492 $86,570 $— $187,831 Restricted cash — 2,041 — — 2,041 Accounts receivable, net — 64,716 21,503 — 86,219 Intercompany receivables — 48,395 71,305 (119,700) — Due from affiliate companies 4,861 3,467 — — 8,328 Prepaid expenses and other current assets — 37,874 17,693 — 55,567 Total current assets 38,630 223,985 197,071 (119,700) 339,986 Deposits for vessels, port terminals and other fixed assets — 28 31,398 — 31,426 Vessels, port terminals and other fixed assets, net — 1,412,976 364,481 — 1,777,457 Investments in subsidiaries 1,632,901 282,197 — (1,915,098) — Investments in available-for-sale securities — 7,660 — — 7,660 Investments in affiliates 318,399 5,122 11,782 — 335,303 Long-term receivable from affiliate companies — 5,144 — — 5,144 Loan receivable from affiliate companies — 2,660 — — 2,660 Other long-term assets 19,079 20,296 28,602 — 67,977 Goodwill and other intangibles 92,372 97,813 161,815 — 352,000 Total non-current assets 2,062,751 1,833,896 598,078 (1,915,098) 2,579,627 Total assets$2,101,381 $2,057,881 $795,149 $(2,034,798) $2,919,613 LIABILITIES AND STOCKHOLDERS’ EQUITYCurrent liabilitiesAccounts payable$267 $27,765 $23,660 $— $51,692 Accrued expenses and other liabilities 16,307 29,582 18,310 — 64,199 Deferred income and cash received in advance — 12,331 884 — 13,215 Intercompany payables 19,112 97,546 3,042 (119,700) — Current portion of capital lease obligations — — 1,400 — 1,400 Current portion of long-term debt — 19,192 69 — 19,261 Total current liabilities 35,686 186,416 47,365 (119,700) 149,767 Long-term debt, net of current portion 1,000,000 198,373 293,615 — 1,491,988 Capital lease obligations, net of current portion — — 22,359 — 22,359 Unfavorable lease terms — 27,074 — — 27,074 Other long-term liabilities and deferred income — 18,352 6,869 — 25,221 Deferred tax liability — — 13,869 — 13,869 Total non-current liabilities 1,000,000 243,799 336,712 — 1,580,511 Total liabilities 1,035,686 430,215 384,077 (119,700) 1,730,278 Noncontrolling interest — 4,050 119,590 — 123,640 Total Navios Holdings stockholders’ equity 1,065,695 1,623,616 291,482 (1,915,098) 1,065,695 Total liabilities and stockholders’ equity$2,101,381 $2,057,881 $795,149 $(2,034,798) $2,919,613 F-70 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Cash flow statement for the year endedDecember 31, 2014 NaviosMaritimeHoldings Inc.Issuer GuarantorSubsidiaries NonGuarantorSubsidiaries Eliminations Total Net cash (used in)/provided by operating activities $(9,357) $52,664 $13,016 $— $56,323 Cash flows from investing activitiesAcquisition of investments in affiliates — — (2,233) — (2,233) Loan to affiliate company — (4,465) — — (4,465) Increase in long-term receivable from affiliate companies — (5,087) — — (5,087) Dividends from affiliate companies 14,595 — — — 14,595 Deposits for vessels, port terminals and other fixed assets — (22,112) (23,225) — (45,337) Acquisition of intangible assets — — (10,200) — (10,200) Acquisition of vessels — (123,541) — — (123,541) Purchase of property, equipment and other fixed assets (15) (172) (68,433) — (68,620) Net cash provided by/(used in) in investing activities 14,580 (155,377) (104,091) — (244,888) Cash flows from financing activitiesTransfer (to)/from other group subsidiaries (71,968) 69,731 2,237 — — Issuance of common stock 643 — — — 643 Net proceeds from issuance of preferred stock 163,602 — — — 163,602 Proceeds from long-term loans, net of debt issuance costs — 71,027 — — 71,027 Proceeds from issuance of senior notes, net of debt issuance costs — — 365,668 — 365,668 Repayment of long-term debt and payment of principal — (20,692) (69) — (20,761) Repayment of senior notes — — (290,000) — (290,000) Contribution from noncontrolling shareholders — 3,484 — — 3,484 Dividends paid (32,730) — — — (32,730) Increase in restricted cash — (355) — — (355) Acquisition of noncontrolling interest — (10,889) — — (10,889) Payments of obligations under capital leases — — (1,399) — (1,399) Net cash provided by financing activities 59,547 112,306 76,437 — 248,290 Increase/(decrease) in cash and cash equivalents 64,770 9,593 (14,638) — 59,725 Cash and cash equivalents, beginning of year 33,769 67,492 86,570 — 187,831 Cash and cash equivalents, end of year$98,539 $77,085 $71,932 $— $247,556 F-71 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Cash flow statement for the year endedDecember 31, 2013 NaviosMaritimeHoldings Inc.Issuer GuarantorSubsidiaries NonGuarantorSubsidiaries Eliminations Total Net cash (used in)/provided by operating activities $(58,695) $105,317 $13,127 $— $59,749 Cash flows from investing activitiesAcquisition of investments in affiliates (160,001) (4,750) (3,168) — (167,919) Acquisition of intangible assets — — (2,092) — (2,092)(Increase)/decrease in long-term receivable from affiliate companies (4,065) 18,973 — — 14,908 Loan to affiliate company — (2,660) — — (2,660)Loan repayment from affiliate company 35,000 — — — 35,000 Dividends from affiliate companies 10,126 — — — 10,126 Deposits for vessels, port terminals and other fixed assets — — (31,398) — (31,398) Acquisition of vessels — (85,699) — — (85,699) Purchase of property, equipment and other fixed assets — (839) (27,998) — (28,837)Net cash used in investing activities (118,940) (74,975) (64,656) — (258,571)Cash flows from financing activitiesTransfer from/(to) other group subsidiaries 42,562 (47,099) 4,537 — — Issuance of common stock 551 — — — 551 Proceeds from issuance of ship mortgage and senior notes includingpremium, net of debt issuance costs 635,291 — 90,195 — 725,486 Proceeds from long-term loans, net of debt issuance costs — 50,345 — — 50,345 Repayment of long-term debt and payment of principal (46,086) (111,073) (69) — (157,228)Repayment of ship mortgage notes (488,000) — — — (488,000) Contribution from noncontrolling shareholders — 3,905 — — 3,905 Acquisition of noncontrolling interest — — (750) — (750) Decrease in restricted cash 14,278 7,956 — — 22,234 Payments of obligations under capital leases — — (1,353) — (1,353)Dividends paid (26,405) — — — (26,405)Net cash provided by/(used in) financing activities 132,191 (95,966) 92,560 — 128,785 (Decrease)/increase in cash and cash equivalents (45,444) (65,624) 41,031 — (70,037)Cash and cash equivalents, beginning of year 79,213 133,116 45,539 — 257,868 Cash and cash equivalents, end of year$33,769 $67,492 $86,570 $— $187,831 F-72 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Cash flow statement for the year endedDecember 31, 2012 NaviosMaritimeHoldings Inc.Issuer GuarantorSubsidiaries NonGuarantorSubsidiaries Eliminations Total Net cash provided by operating activities $23,001 $177,162 $28,481 $— $228,644 Cash flows from investing activitiesCash acquired through asset acquisition — — 33 — 33 Acquisition of investments in affiliates — — (1,472) — (1,472) Proceeds from sale of assets — 67,500 — 67,500 Increase in long-term receivable from affiliate companies (5,000) (6,120) — — (11,120) Loan repayment from affiliate company 10,000 — — — 10,000 Dividends from affiliate companies 5,202 — — — 5,202 Deposits for vessels, port terminals and other fixed assets — — (8,534) — (8,534) Acquisition of vessels — (38,357) — — (38,357) Purchase of property, equipment and other fixed assets — (1,667) (9,132) — (10,799)Net cash provided by/(used in) investing activities 10,202 21,356 (19,105) — 12,453 Cash flows from financing activitiesTransfer (to)/from other group subsidiaries (45,687) 17,465 28,222 — — Issuance of common stock 93 — — — 93 Proceeds from issuance of ship mortgage notes, net of debt issuancecosts 84,965 — — — 84,965 Proceeds from long-term loans, net of debt issuance costs — 50,372 — — 50,372 Repayment of long-term debt and payment of principal (23,405) (181,703) (31,070) — (236,178)Increase in restricted cash (11,681) (7,942) — — (19,623) Payments of obligations under capital leases — — (1,519) — (1,519)Dividends paid (32,435) — — — (32,435)Net cash used in financing activities (28,150) (121,808) (4,367) — (154,325)Increase in cash and cash equivalents 5,053 76,710 5,009 — 86,772 Cash and cash equivalents, beginning of year 74,160 56,406 40,530 — 171,096 Cash and cash equivalents, end of year$79,213 $133,116 $45,539 $— $257,868 NOTE 25: SUBSEQUENT EVENTS a)On January 6, 2015, Navios Holdings received a dividend of $3,649 from Navios Acquisition for the third quarter of 2014. b)On January 15, 2015, Navios Holdings paid a dividend of $1,094 and $2,588 to its Series G and Series H preferred stockholders, respectively. c)On February 11, 2015, Navios Partners completed a public offering of 4,600,000 common units, at $13.09 per unit, raising gross proceeds of$60,214. In addition, Navios Partners completed a private F-73 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) placement of 1,120,547 common units and 22,868 general partner units at $13.09 per unit to Navios Holdings raising additional gross proceedsof $14,967. Following the public offering and the private placement, Navios Holdings’ owns a 20.1% interest in Navios Partners, which includesthe 2.0% general partner interest. d)On February 13, 2015, Navios Holdings received a dividend of $8,124 from Navios Partners for the fourth quarter of 2014. e)On February 16, 2015, the Board of Directors of Navios Holdings declared a dividend of $0.06 per share of common stock, which was paid onMarch 27, 2015 to stockholders of record on March 20, 2015. f)On March 27, 2015, the Board of Directors declared a quarterly dividend for the period from January 15, 2015 to April 14, 2015 of $0.546875per American Depository Share on its Series G and $0.5390625 per American Depository Share on its Series H. This dividend will be paid onApril 15, 2015 to holders of record as of April 8, 2015. g)During the first quarter of 2015, the Company, in relation to its secured credit facilities, paid $24,135, representing its 2015 principal payments,and $6,870, representing a portion of its 2016 principal payments. F-74 Exhibit 8.1List of Subsidiaries Navios Maritime Holdings Inc.Subsidiaries included in the consolidation: Company Name Nature OwnershipInterest Country ofIncorporationNavios Maritime Holdings Inc. Holding Company Marshall Is.Navios Corporation Sub-Holding Company 100% Marshall Is.Navios International Inc. Operating Company 100% Marshall Is.Navimax Corporation Operating Company 100% Marshall Is.Navios Handybulk Inc. Operating Company 100% Marshall Is.Hestia Shipping Ltd. Operating Company 100% MaltaAnemos Maritime Holdings Inc. Sub-Holding Company 100% Marshall Is.Navios ShipManagement Inc. Management Company 100% Marshall Is.NAV Holdings Limited Sub-Holding Company 100% MaltaKleimar N.V. Operating Company/Vessel Owning Company/Management Company 100% BelgiumKleimar Ltd. Operating Company 100% Marshall Is.Bulkinvest S.A. Operating Company 100% LuxembourgPrimavera Shipping Corporation Operating Company 100% Marshall Is.Ginger Services Co. Operating Company 100% Marshall Is.Aquis Marine Corp. Sub-Holding Company 100% Marshall Is.Navios Tankers Management Inc. Management Company 100% Marshall Is.Astra Maritime Corporation Vessel Owning Company 100% Marshall Is.Achilles Shipping Corporation Operating Company 100% Marshall Is.Apollon Shipping Corporation Operating Company 100% Marshall Is.Herakles Shipping Corporation Operating Company 100% Marshall Is.Hios Shipping Corporation Operating Company 100% Marshall Is. Ionian Shipping CorporationOperating Company100%Marshall Is.Kypros Shipping CorporationOperating Company100%Marshall Is.Meridian Shipping Enterprises Inc.Vessel Owning Company100%Marshall Is.Mercator Shipping CorporationVessel Owning Company100%Marshall Is.Arc Shipping CorporationVessel Owning Company100%Marshall Is.Horizon Shipping EnterprisesCorporationVessel Owning Company100%Marshall Is.Magellan Shipping CorporationVessel Owning Company100%Marshall Is.Aegean Shipping CorporationOperating Company100%Marshall Is.Star Maritime Enterprises CorporationVessel Owning Company100%Marshall Is.Corsair Shipping Ltd.Vessel Owning Company100%Marshall IsRowboat Marine Inc.Operating Company100%Marshall IsBeaufiks Shipping CorporationOperating Company100%Marshall IsNostos Shipmanagement Corp.Vessel Owning Company100%Marshall Is.Portorosa Marine Corp.Operating Company100%Marshall Is.Shikhar Ventures S.A.Vessel Owning Company100%LiberiaSizzling Ventures Inc.Operating Company100%LiberiaRheia Associates Co.Operating Company100%Marshall Is.Taharqa Spirit Corp.Operating Company100%Marshall Is.Rumer Holding Ltd.Vessel Owning Company100%Marshall Is.Pharos Navigation S.A.Vessel Owning Company100%Marshall Is.Pueblo Holdings Ltd.Vessel Owning Company100%Marshall Is.Quena Shipmanagement Inc.Operating Company100%Marshall Is.Aramis Navigation Inc.Vessel Owning Company100%Marshall Is.White Narcissus Marine S.A.Vessel Owning Company100%PanamaNavios GP L.L.C.Operating Company100%Marshall Is. Red Rose Shipping Corp.Vessel Owning Company100%Marshall Is.Highbird Management Inc.Vessel Owning Company100%Marshall Is.Ducale Marine Inc.Vessel Owning Company100%Marshall Is.Vector Shipping CorporationVessel Owning Company100%Marshall Is.Faith Marine Ltd.Vessel Owning Company100%LiberiaNavios Maritime Finance (US) Inc.Operating Company100%DelawareNavios Maritime Finance II (US) Inc.Operating Company100%DelawareTulsi Shipmanagement Co.Operating Company100%Marshall Is.Cinthara Shipping Ltd.Operating Company100%Marshall Is.Rawlin Services Co.Operating Company100%Marshall Is.Mauve International S.A.Operating Company100%Marshall Is.Serenity Shipping Enterprises Inc.Vessel Owning Company100%Marshall Is.Mandora Shipping LtdVessel Owning Company100%Marshall Is.Solange Shipping Ltd.Vessel Owning Company100%Marshall Is.Diesis Ship Management Ltd.Operating Company100%Marshall Is.Navios Holdings Europe Finance Inc.Sub-Holding Company100%Marshall Is.Navios Asia LLCSub-Holding Company100%Marshall Is.Iris Shipping CorporationVessel Owning Company100%Marshall Is.Jasmine Shipping CorporationVessel Owning Company100%Marshall Is.Emery Shipping CorporationVessel Owning Company100%Marshall Is.Lavender Shipping CorporationVessel Owning Company100%Marshall Is.Esmeralda Shipping CorporationVessel Owning Company100%Marshall Is.Triangle Shipping CorporationVessel Owning Company100%Marshall Is.All subsidiaries included in the consolidated financial statements are 100% owned, except for Navios Logistics and its subsidiaries, which is 63.8%owned.Affiliates included in the financial statements accounted for under the equity methodIn the consolidated financial statements of Navios Holdings, the following entities are included as affiliates and are accounted for under the equitymethod for such periods: (i) Navios Partners and its subsidiaries (ownership interest as of December 31, 2014 was 20.0%, which includes a 2.0% generalpartner interest); (ii) Navios Acquisition and its subsidiaries (economic interest as of December 31, 2014 was 46.2%); (iii) Acropolis Chartering andShipping Inc. (“Acropolis”) (economic interest as of December 31, 2014 was 35.0%); and (iv) Navios Europe and its subsidiaries (economic interest asof December 31, 2014 was 47.5%). Exhibit 12.1CERTIFICATION OF CHIEF EXECUTIVE OFFICERPURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, Angeliki Frangou, certify that:1. I have reviewed this annual report on Form 20-F of Navios Maritime Holdings Inc.;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularlyduring the period in which this report is being prepared;b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles;c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report on such evaluation; andd) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by the annualreport that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; andb) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting.Date: April 3, 2015 /s/ Angeliki FrangouAngeliki FrangouChief Executive Officer(Principal Executive Officer) Exhibit 12.2CERTIFICATION OF CHIEF FINANCIAL OFFICERPURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, George Achniotis, certify that:1. I have reviewed this annual report on Form 20-F of Navios Maritime Holdings Inc.;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularlyduring the period in which this report is being prepared;b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles;c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report on such evaluation; andd) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by the annualreport that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; andb) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting.Date: April 3, 2015 /s/ George AchniotisGeorge AchniotisChief Financial Officer(Principal Financial Officer) Exhibit 13.1CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICERPURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each ofthe undersigned officers of Navios Maritime Holdings Inc. (the “Company”) does hereby certify, to such officers’ knowledge, that:(i) the Annual Report on Form 20-F for the year ended December 31, 2014 (the “Report”) of the Company fully complies with the requirements ofSection 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: April 3, 2015/s/ Angeliki FrangouAngeliki FrangouChief Executive OfficerDate: April 3, 2015/s/ George AchniotisGeorge AchniotisChief Financial Officer Exhibit 15.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe hereby consent to the incorporation by reference in the Registration Statements on Form F-3 (No. 333-189231) and S-8 (Nos. 333-147186 and 333-202141) of Navios Maritime Holdings Inc. of our report dated April 3, 2015 relating to the financial statements and the effectiveness of internal control overfinancial reporting, which appears in this Form 20-F./s/ PricewaterhouseCoopers S.A.Athens, GreeceApril 3, 2015 Exhibit 15.2CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe hereby consent to the incorporation by reference in the Registration Statements on Form F-3 (No. 333-189231) and S-8 (Nos. 333-147186 and 333-202141) of Navios Maritime Holdings Inc. of our report dated March 13, 2015 related to the financial statements of Navios Maritime Partners L.P., whichappears in this Form 20-F./s/ PricewaterhouseCoopers S.A.Athens, GreeceApril 3, 2015 Exhibit 15.3INDEX Page NAVIOS MARITIME PARTNERS L.P. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F-2 CONSOLIDATED BALANCE SHEETS AT DECEMBER 31, 2014 AND DECEMBER 31, 2013 F-3 CONSOLIDATED STATEMENTS OF INCOME FOR EACH OF THE YEARS ENDED DECEMBER 31, 2014, 2013 AND 2012 F-4 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR EACH OF THE YEARS ENDED DECEMBER 31, 2014, 2013 AND 2012 F-5 CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL FOR EACH OF THE YEARS ENDED DECEMBER 31, 2014, 2013AND 2012 F-6 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS F-7 F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Board of Directors and Partners of Navios Maritime Partners L.P.:In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, changes in partners’ capital and cash flowspresent fairly, in all material respects, the financial position of Navios Maritime Partners L.P. and its subsidiaries at December 31, 2014 and 2013, and theresults of their operations and their cash flows for each of the three years in the period ended December 31, 2014 in conformity with accounting principlesgenerally accepted in United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is toexpress an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of thePublic Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overallfinancial statement presentation. We believe that our audits provide a reasonable basis for our opinion./s/ PricewaterhouseCoopers S.A.Athens, GreeceMarch 13, 2015 F-2 NAVIOS MARITIME PARTNERS L.P.CONSOLIDATED BALANCE SHEETS(Expressed in thousands of U.S. Dollars except unit data) Notes December 31,2014 December 31,2013 ASSETS Current assets Cash and cash equivalents 3 $99,495 $35,346 Restricted cash 3 954 1,177 Accounts receivable, net 4 13,278 16,298 Prepaid expenses and other current assets 5 1,470 1,663 Total current assets 115,197 54,484 Vessels, net 6 1,139,426 1,026,153 Deposits for vessels acquisitions 6 10 7,271 Deferred financing costs, net 7,305 8,463 Deferred drydock and special survey costs, net and other long-term assets 8,750 94 Investment in affiliates 18 521 500 Loans receivable from affiliates 17 750 280 Intangible assets 7 74,055 119,405 Restricted cash — 33,429 Total non-current assets 1,230,817 1,195,595 Total assets$1,346,014 $1,250,079 LIABILITIES AND PARTNERS’ CAPITALCurrent liabilitiesAccounts payable 8 $3,824 $3,171 Accrued expenses 9 3,623 3,876 Deferred voyage revenue 4,310 2,997 Current portion of long-term debt 10 18,638 5,358 Amounts due to related parties 17 1,880 204 Total current liabilities 32,275 15,606 Long-term debt, net of current portion and discount 10 564,641 527,966 Total non-current liabilities 564,641 527,966 Total liabilities 596,916 543,572 Commitments and contingencies 15 — — Partners’ capital:Common Unitholders (77,359,163 and 71,034,163 units issued and outstanding at December 31, 2014 andDecember 31, 2013, respectively) 12 744,075 702,478 General Partner (1,578,763 and 1,449,681 units issued and outstanding at December 31, 2014 andDecember 31, 2013, respectively) 12 5,023 4,029 Total partners’ capital 749,098 706,507 Total liabilities and partners’ capital$1,346,014 $1,250,079 See notes to consolidated financial statements F-3 NAVIOS MARITIME PARTNERS L.P.CONSOLIDATED STATEMENTS OF INCOME(Expressed in thousands of U.S. Dollars except unit and per unit data) Notes Year EndedDecember 31,2014 Year EndedDecember 31,2013 Year EndedDecember 31,2012 Time charter and voyage revenues (includes related party revenue of $27,444, $23,738 and$7,357 for the years ended December 31, 2014, 2013 and 2012, respectively) 13,17 $227,356 $198,159 $205,435 Time charter and voyage expenses (15,390) (14,943) (12,937) Direct vessel expenses (761) — (25) Management fees (entirely through related parties transactions) 17 (50,359) (36,173) (31,689) General and administrative expenses 17 (7,839) (6,305) (5,555) Depreciation and amortization 6,7 (95,822) (77,505) (71,622) Interest expense and finance cost, net 10 (28,761) (16,910) (10,127) Interest income 243 50 229 Other income 20 47,935 13,730 22,598 Other expense (1,749) (1,097) (409) Net income$74,853 $59,006 $95,898 Earnings per unit (see note 19): Year EndedDecember 31,2014 Year EndedDecember 31,2013 Year EndedDecember 31,2012 Weighted average units outstanding (basic and diluted) Common unit holders 76,587,656 66,317,588 58,008,617 Earnings per unit (see Note 19): Common unit (basic and diluted) $0.93 $0.84 $1.61 See notes to consolidated financial statements F-4 NAVIOS MARITIME PARTNERS L.P.CONSOLIDATED STATEMENTS OF CASH FLOWS(Expressed in thousands of U.S. Dollars) Notes Year EndedDecember 31,2014 Year EndedDecember 31,2013 Year EndedDecember 31,2012 OPERATING ACTIVITIES Net income $74,853 $59,006 $95,898 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 6,7 95,822 77,505 71,622 Amortization and write-off of deferred financing cost and discount 3,091 4,035 787 Amortization of deferred drydock and special survey costs 761 — 25 Changes in operating assets and liabilities: Net decrease/(increase) in restricted cash 223 (2) (3) Decrease/(increase) in accounts receivable 3,020 (8,520) (2,943) Decrease/(increase) in prepaid expenses and other current assets 193 (1,069) 1,583 (Increase)/decrease in other long-term assets and investment in affiliates (9) 188 (202)Increase in accounts payable 653 1,081 68 (Decrease)/increase in accrued expenses (253) 277 613 Increase/(decrease) in deferred voyage revenue 1,313 (6,115) (6,038) Increase/(decrease) in amounts due to related parties 1,423 (21,544) 17,671 Payments for dry dock and special survey costs (9,429) — — Net cash provided by operating activities 171,661 104,842 179,081 INVESTING ACTIVITIES: Acquisition of vessels 6 (156,221) (341,193) (46,307)Acquisition of vessels from related parties — — (42,198) Deposits for acquisition of vessels, net of transfers to vessel acquisitions (10) (7,271) — Acquisition of intangibles from related parties — — (21,193) Investment in affiliates — (500) — Loans receivable from affiliates (470) (280) — Increase in restricted cash — (98,179) — Release of restricted cash for vessel acquisitions 33,429 64,750 — Net cash used in investing activities (123,272) (382,673) (109,698) FINANCING ACTIVITIES: Cash distributions paid 19 (138,994) (122,382) (106,878) Net proceeds from issuance of general partner units 12 2,233 3,167 1,472 Proceeds from issuance of common units, net of offering costs 12 104,499 148,022 68,563 Proceeds from long-term debt 10 56,000 434,500 44,000 Net decrease/(increase) in restricted cash 10 — 28,354 (21,058) Repayment of long-term debt and payment of principal 10 (7,060) (201,412) (70,340) Debt issuance costs (918) (9,204) (1,088) Net cash provided by/(used in) financing activities 15,760 281,045 (85,329) Increase/(decrease) in cash and cash equivalents 64,149 3,214 (15,946) Cash and cash equivalents, beginning of period 35,346 32,132 48,078 Cash and cash equivalents, end of period $99,495 $35,346 $32,132 Year EndedDecember 31,2014 Year EndedDecember 31,2013 Year EndedDecember 31,2012 Supplemental disclosures of cash flow information Cash interest paid $25,870 $13,324 $9,957 Non-cash financing activities Due to related parties $253 $— $— Acquisition of vessels $(253) $— $— F-5 NAVIOS MARITIME PARTNERS L.P.CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL(Expressed in thousands of U.S. Dollars except unit data) Limited Partners SubordinatedSeries A TotalPartners’Capital General Partner Common Unitholders SubordinatedUnitholders Unitholders Units Units Units Units Balance December 31, 2011 1,132,843 $1,976 46,887,320 $729,550 7,621,843 $(177,969) 1,000,000 $6,082 $559,639 Cash distribution paid — (3,690) — (103,188) — — — — (106,878) Conversion of subordinated units into common units — — 7,621,843 (177,969) (7,621,843) 177,969 — — — Conversion of subordinated Series A units into common units — — 1,000,000 6,082 — — (1,000,000) (6,082) — Proceeds from issuance of common units, net of offeringcosts — — 4,600,000 68,563 — — — — 68,563 Proceeds from issuance of general partners units 93,878 1,472 — — — — — — 1,472 Net income — 2,332 — 93,566 — — — — 95,898 Balance December 31, 2012 1,226,721 $2,090 60,109,163 $616,604 — $— — $— $618,694 Cash distribution paid — (4,285) — (118,097) — — — — (122,382) Proceeds from issuance of common units, net of offeringcosts (see note 12) — — 10,925,000 148,022 — — — — 148,022 Proceeds from issuance of general partners units (see note 12) 222,960 3,167 — — — — — — 3,167 Net income — 3,057 — 55,949 — — — — 59,006 Balance December 31, 2013 1,449,681 $4,029 71,034,163 $702,478 — $— — $— $706,507 Cash distribution paid — (4,867) — (134,127) — — — — (138,994) Proceeds from issuance of common units, net of offeringcosts (see note 12) — — 6,325,000 104,499 — — — — 104,499 Proceeds from issuance of general partner units (see note 12) 129,082 2,233 — — — — — — 2,233 Net income — 3,628 — 71,225 — — — — 74,853 Balance December 31, 2014 1,578,763 $5,023 77,359,163 $744,075 — $— — $— $749,098 F-6 NAVIOS MARITIME PARTNERS L.P.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except unit and per unit data)NOTE 1 – DESCRIPTION OF BUSINESSNavios Maritime Partners L.P. (“Navios Partners”), is an international owner and operator of dry cargo and container vessels, formed on August 7, 2007 underthe laws of the Republic of the Marshall Islands. Navios GP L.L.C. (the “General Partner”), a wholly owned subsidiary of Navios Maritime Holdings Inc.(“Navios Holdings”), was also formed on that date to act as the general partner of Navios Partners and received a 2.0% general partner interest in NaviosPartners.Navios Partners is engaged in the seaborne transportation services of a wide range of dry cargo commodities including iron ore, coal, grain, fertilizer and alsocontainers, chartering its vessels under medium to long-term charters. The operations of Navios Partners are managed by Navios ShipManagement Inc., asubsidiary of Navios Holdings (the “Manager”), from its offices in Piraeus, Greece, Singapore and Monaco.Pursuant to the initial public offering (“IPO”) on November 16, 2007, Navios Partners entered into the following agreements:(a) a management agreement with the Manager (the “Management Agreement”), pursuant to which the Manager provides Navios Partners commercial andtechnical management services;(b) an administrative services agreement with the Manager (the “Administrative Services Agreement”), pursuant to which the Manager provides NaviosPartners administrative services; and(c) an omnibus agreement with Navios Holdings (the “Omnibus Agreement”), governing, among other things, when Navios Partners and Navios Holdingsmay compete against each other as well as rights of first offer on certain drybulk carriers.As of December 31, 2014, there were outstanding: 77,359,163 common units and 1,578,763 general partnership units. As of December 31, 2014, NaviosHoldings owned a 20.0% interest in Navios Partners, which includes a 2.0% general partner interest.NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a)Basis of presentation: The accompanying consolidated financial statements are prepared in accordance with accounting principles generally acceptedin the United States of America (GAAP). (b)Principles of consolidation: The accompanying consolidated financial statements include Navios Partners’ wholly owned subsidiaries incorporatedunder the laws of Marshall Islands, Malta, and Liberia from their dates of incorporation or, for chartered-in vessels, from the dates charter-in agreementswere in effect. All significant inter-company balances and transactions have been eliminated in Navios Partners’ consolidated financial statements.Navios Partners also consolidates entities that are determined to be variable interest entities as defined in the accounting guidance, if it determines that it isthe primary beneficiary. A variable interest entity is defined as a legal entity where either (a) equity interest holders as a group lack the characteristics of acontrolling financial interest, including decision making ability and an interest in the entity’s residual risks and rewards, (b) the equity holders have notprovided sufficient equity investment to permit the entity to finance its activities without additional subordinated financial support, or (c) the voting rightsof some investors are not proportional to their obligations to absorb the expected losses of the entity, their rights to receive the expected residual returns ofthe entity, or both and substantially all of the entity’s activities either involve or are conducted on behalf of an investor that has disproportionately fewvoting rights. F-7 NAVIOS MARITIME PARTNERS L.P.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except unit and per unit data) Subsidiaries: Subsidiaries are those entities in which Navios Partners has an interest of more than one half of the voting rights or otherwise has power togovern the financial and operating policies of each subsidiary.The accompanying consolidated financial statements include the following entities and chartered-in vessels: Country of Statements of income Company name Vessel name incorporation 2014 2013 2012 Libra Shipping Enterprises Corporation Navios Libra II Marshall Is. 1/01 – 12/31 1/01 – 12/31 1/01 – 12/31 Alegria Shipping Corporation Navios Alegria Marshall Is. 1/01 – 12/31 1/01 – 12/31 1/01 – 12/31 Felicity Shipping Corporation Navios Felicity Marshall Is. 1/01 – 12/31 1/01 – 12/31 1/01 – 12/31 Gemini Shipping Corporation Navios Gemini S Marshall Is. 1/01 – 12/31 1/01 – 12/31 1/01 – 12/31 Galaxy Shipping Corporation Navios Galaxy I Marshall Is. 1/01 – 12/31 1/01 – 12/31 1/01 – 12/31 Aurora Shipping Enterprises Ltd. Navios Hope Marshall Is. 1/01 – 12/31 1/01 – 12/31 1/01 – 12/31 Palermo Shipping S.A. Navios Apollon Marshall Is. 1/01 – 12/31 1/01 – 12/31 1/01 – 12/31 Fantastiks Shipping Corporation Navios Fantastiks Marshall Is. 1/01 – 12/31 1/01 – 12/31 1/01 – 12/31 Sagittarius Shipping Corporation Navios Sagittarius Marshall Is. 1/01 – 12/31 1/01 – 12/31 1/01 – 12/31 Hyperion Enterprises Inc. Navios Hyperion Marshall Is. 1/01 – 12/31 1/01 – 12/31 1/01 – 12/31 Chilali Corp. Navios Aurora II Marshall Is. 1/01 – 12/31 1/01 – 12/31 1/01 – 12/31 Surf Maritime Co. Navios Pollux Marshall Is. 1/01 – 12/31 1/01 – 12/31 1/01 – 12/31 Pandora Marine Inc. Navios Melodia Marshall Is. 1/01 – 12/31 1/01 – 12/31 1/01 – 12/31 Customized Development S.A. Navios Fulvia Liberia 1/01 – 12/31 1/01 – 12/31 1/01 – 12/31 Kohylia Shipmanagement S.A. Navios Luz Marshall Is. 1/01 – 12/31 1/01 – 12/31 1/01 – 12/31 Orbiter Shipping Corp. Navios Orbiter Marshall Is. 1/01 – 12/31 1/01 – 12/31 1/01 – 12/31 Floral Marine Ltd. Navios BuenaVentura Marshall Is. 1/01 – 12/31 1/01 – 12/31 6/15 – 12/31 Golem Navigation Limited Navios Soleil Marshall Is. 1/01 – 12/31 1/01 – 12/31 7/24 – 12/31 Kymata Shipping Co. Navios Helios Marshall Is. 1/01 – 12/31 1/01 – 12/31 7/27 – 12/31 Joy Shipping Corporation Navios Joy Marshall Is. 1/01 – 12/31 9/11 – 12/31 — Micaela Shipping Corporation Navios Harmony Marshall Is. 1/01 – 12/31 10/11 – 12/31 — Pearl Shipping Corporation Navios Sun Marshall Is. 1/18 – 12/31 — — Velvet Shipping Corporation Navios La Paix Marshall Is. 1/07 – 12/31 — — Rubina Shipping Corporation Hyundai Hongkong Marshall Is. 1/01 – 12/31 12/4 – 12/31 — Topaz Shipping Corporation Hyundai Singapore Marshall Is. 1/01 – 12/31 12/4 – 12/31 — Beryl Shipping Corporation Hyundai Tokyo Marshall Is. 1/01 – 12/31 12/10 – 12/31 — Cheryl Shipping Corporation Hyundai Shanghai Marshall Is. 1/01 – 12/31 12/13 – 12/31 — Christal Shipping Corporation Hyundai Busan Marshall Is. 1/01 – 12/31 12/16 – 12/31 — Fairy Shipping Corporation YM Utmost Marshall Is. 8/29 – 12/31 — — Limestone Shipping Corporation YM Unity Marshall Is. 10/28 – 12/31 — — Dune Shipping Corp. MSC Cristina Marshall Is. — — — F-8 NAVIOS MARITIME PARTNERS L.P.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except unit and per unit data) Country of Statements of income Company name Vessel name incorporation 2014 2013 2012 Chartered-in vessels Prosperity Shipping Corporation Navios Prosperity Marshall Is. 1/01 – 12/31 1/01 – 12/31 1/01 – 12/31 Aldebaran Shipping Corporation Navios Aldebaran Marshall Is. 1/01 – 12/31 1/01 – 12/31 1/01 – 12/31 Other JTC Shipping and Trading Ltd (*) Holding Company Malta 1/01 – 12/31 1/01 – 12/31 1/01 – 12/31 Navios Maritime Partners L.P. N/A Marshall Is. 1/01 – 12/31 1/01 – 12/31 1/01 – 12/31 Navios Maritime Operating LLC N/A Marshall Is. 1/01 – 12/31 1/01 – 12/31 1/01 – 12/31 Navios Partners Finance (US) Inc. Co-Borrower Delaware 1/01 – 12/31 6/19 – 12/31 — Navios Partners Europe Finance Inc. Sub-HoldingCompany Marshall Is. 1/01 – 12/31 6/04 – 12/31 — (*)Not a vessel-owning subsidiary and only holds right to a charter-in contract. (c)Equity method investments: Affiliates are entities over which the Company generally has between 20% and 50% of the voting rights, or over whichthe Company has significant influence, but it does not exercise control. Investments in these entities are accounted for under the equity method ofaccounting. Under this method, the Company records an investment in the stock of an affiliate at cost, and adjusts the carrying amount for its share ofthe earnings or losses of the affiliate subsequent to the date of investment and reports the recognized earnings or losses in income. Dividends receivedfrom an affiliate reduce the carrying amount of the investment. The Company recognizes gains and losses in earnings for the issuance of shares by itsaffiliates, provided that the issuance of such shares qualifies as a sale of such shares. When the Company’s share of losses in an affiliate equals orexceeds its interest in the affiliate, the Company does not recognize further losses, unless the Company has incurred obligations or made payments onbehalf of the affiliate.Navios Partners evaluates its investments with equity method, for other than temporary impairment, on a quarterly basis. Consideration is given to (1) thelength of time and the extent to which the fair value has been less than the carrying value, (2) the financial condition and near-term prospects and (3) theintent and ability of the Company to retain its investments for a period of time sufficient to allow for any anticipated recovery in fair value. (d)Use of Estimates: The preparation of consolidated financial statements in conformity with the accounting principles generally accepted in the UnitedStates of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities as of the dates of the financial statements and the reported amounts of revenues and expenses during the reportingperiods. On an on-going basis, management evaluates the estimates and judgments, including those related to future drydock dates, the selection ofuseful lives for tangible assets, expected future cash flows from long-lived assets to support impairment tests, provisions necessary for accountsreceivables, provisions for legal disputes, and contingencies. Management bases its estimates and judgments on historical experience and on variousother factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carryingvalues of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates under differentassumptions and/or conditions. (e)Cash and Cash equivalents: Cash and cash equivalents consist of cash on hand, deposits held on call with banks, and other short-term liquidinvestments with original maturities of three months or less. (f)Restricted Cash: Restricted cash includes an amount of $954 held in retention and pledged accounts as required by Navios Partners’ credit facilities. In2014, a guarantee claim of $831 related to an owned vessel F-9 NAVIOS MARITIME PARTNERS L.P.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except unit and per unit data) was released. As of December 31, 2014 and 2013, the restricted cash held in retention accounts was $954 and $1,177, respectively. Long-term restrictedcash as of December 31, 2013 was $33,429 and related to amounts held in escrow, to partially finance a portion of the acquisition of vessels. (g)Accounts Receivable, net: The amount shown as accounts receivable, net at each balance sheet date includes receivables from charterers for hire,freight and demurrage billings, net of a provision for doubtful accounts. At each balance sheet date, all potentially uncollectible accounts are assessedindividually for purposes of determining the appropriate provision for doubtful accounts. The allowance for doubtful accounts as of December 31,2014 and 2013 was $49 and $613, respectively. (h)Vessels, net: Vessels are stated at historical cost, which consists of the contract price and any material expenses incurred upon acquisition(improvements and delivery expenses). Vessels acquired in an asset acquisition or in a business combination are recorded at fair value. Subsequentexpenditures for major improvements and upgrading are capitalized, provided they appreciably extend the life, increase the earning capacity orimprove the efficiency or safety of the vessels. Expenditures for routine maintenance and repairs are expensed as incurred.Depreciation is computed using the straight line method over the useful life of the vessels, after considering the estimated residual value. Managementestimates the residual values of our drybulk vessels based on a scrap value cost of steel times the weight of the ship noted in lightweight ton (LWT). Residualvalues are periodically reviewed and revised to recognize changes in conditions, new regulations or other reasons. Revisions of residual values affect thedepreciable amount of the vessels and affects depreciation expense in the period of the revision and future periods. Prior to December 31, 2012, managementestimated the residual values of its vessels based on a scrap rate of $285 per LWT. Effective January 1, 2013, following management’s reassessment afterconsidering current market trends for scrap rates and ten-year average historical scrap rates of the residual values of the Company’s vessels, the estimatedscrap value per LWT was increased to $340. This change in accounting estimate of scrap value did not materially affect the statement of income and theearnings per unit of the Company for the year ended December 31, 2013.Management estimates the useful life of drybulk and container vessels to be 25 and 30 years, respectively, from the vessel’s original construction. However,when regulations place limitations over the ability of a vessel to trade on a worldwide basis, its useful life is re-estimated to end at the date such regulationsbecome effective. (i)Deferred Drydock and Special Survey costs: Navios Partners’ vessels are subject to regularly scheduled drydocking and special surveys which aregenerally carried out every 30 or 60 months to coincide with the renewal of the related certificates issued by the classification societies, unless a furtherextension is obtained in rare cases and under certain conditions. The cost of drydocking and special surveys are deferred and amortized over the aboveperiods or to the next drydocking or special survey date if such date has been determined.Costs capitalized as part of the drydocking or special survey consist principally of the actual costs incurred at the yard and expenses relating to spare parts,paints, lubricants and services incurred solely during the drydocking or special survey period. For the years ended December 31, 2014, 2013 and 2012, theamortization expense was $761, $0 and $25, respectively.The costs of drydocking and special surveys was included in the daily management fee of $4.65 per owned Ultra-Handymax vessel, $4.55 per ownedPanamax vessel and $5.65 per owned Capesize vessel through December 31, 2013. In each of October 2013, August 2014 and February 2015, Navios Partnersamended its existing Management Agreement with the Manager, a subsidiary of Navios Holdings, to fix the fees for ship management services of its ownedfleet at: (a) $4.00 daily rate per Ultra-Handymax vessel; (b) $4.10 daily rate per Panamax vessel; (c) $5.10 daily rate per Capesize vessel; (d) $6.50 daily rateper Container vessel of TEU 6,800; (e) $7.20 F-10 NAVIOS MARITIME PARTNERS L.P.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except unit and per unit data) daily rate per Container vessel of more than TEU 8,000; and (f) $8.50 daily rate per very large Container vessel of more than TEU 13,000 throughDecember 31, 2015. Drydocking expenses under this agreement are reimbursed by Navios Partners at cost at occurrence. (j)Impairment of long lived assets: Vessels, other fixed assets and other long lived assets held and used by Navios Partners are reviewed periodically forpotential impairment whenever events or changes in circumstances indicate that the carrying amount of a particular asset may not be fully recoverable.In accordance with accounting for the “impairment or disposal of long-lived assets”, Navios Partners’ management evaluates the carrying amounts andperiods over which long-lived assets are depreciated to determine if events or changes in circumstances have occurred that would require modificationto their carrying values or useful lives. In evaluating useful lives and carrying values of long-lived assets, certain indicators of potential impairment,are reviewed such as undiscounted projected operating cash flows, vessel sales and purchases, business plans and overall market conditions.Undiscounted projected net operating cash flows are determined for each vessel and compared to the vessel carrying value of the vessel and related carryingvalue of the intangible with respect to the time charter agreement attached to that vessel. Within the shipping industry, vessels are customarily bought andsold with a charter attached. The value of the charter may be favorable or unfavorable when comparing the charter rate to then current market rates. The lossrecognized either on impairment (or on disposition) will reflect the excess of carrying value over fair value (selling price) for the vessel asset group.During the fourth quarter of fiscal 2014, management concluded that events occurred and circumstances had changed, which indicated that potentialimpairment of Navios Partners’ long-lived assets may exist. These indicators included continued deterioration in the spot market, and the related impact ofthe current drybulk and container sector has on management’s expectation for future revenues. As a result, an impairment assessment of long-lived assets wasperformed.Navios Partners determined undiscounted projected net operating cash flows for each vessel and compared it to the vessel’s carrying value together with thecarrying value of the related intangible. The significant factors and assumptions used in the undiscounted projected net operating cash flow analysisincluded: determining the projected net operating cash flows by considering the charter revenues from existing time charters for the fixed fleet days (NaviosPartners’ remaining charter agreement rates) and an estimated daily time charter equivalent for the unfixed days (based on a combination of the NaviosPartners’ remaining charter agreement rates and the 10-year average historical one year time charter rates adjusted for outliers) over the remaining economiclife of each vessel, net of brokerage and address commissions and excluding days of scheduled off-hires, management fees fixed until December 2015 andthereafter assuming an annual increase of 3.0% and utilization rate of 98.6% based on the fleet’s historical performance. The assessment concluded that steptwo of the impairment analysis was not required and no impairment of vessels and the intangible assets existed as of December 31, 2014, as the undiscountedprojected net operating cash flows exceeded the carrying value.In the event that impairment would occur, the fair value of the related asset would be determined and an impairment charge would be recorded to operationscalculated by comparing the asset’s carrying value to its fair value. Fair value is estimated primarily through the use of third-party valuations performed on anindividual vessel basis.Although management believes the underlying assumptions supporting this assessment are reasonable, if charter rate trends and the length of the currentmarket downturn, vary significantly from our forecasts, management may be required to perform step two of the impairment analysis in the future that couldexpose Navios Partners to material impairment charges in the future. F-11 NAVIOS MARITIME PARTNERS L.P.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except unit and per unit data) No impairment loss was recognized for any of the periods presented. (k)Deferred Financing Cost: Deferred financing costs include fees, commissions and legal expenses associated with obtaining credit facilities. Thesecosts are amortized over the life of the related facility using the effective interest rate method, and are included in interest expense. Amortizationexpense and write-offs of deferred financing cost, including amortization of debt discount, for each of the years ended December 31, 2014, 2013 and2012 were $3,091, $4,035 and $787, respectively. (l)Intangible assets and liabilities: Navios Partners’ intangible assets and liabilities consist of favorable lease terms and unfavorable lease terms. Whenintangible assets or liabilities associated with the acquisition of a vessel are identified, they are recorded at fair value. Fair value is determined byreference to market data and the discounted amount of expected future cash flows. Where charter rates are higher than market charter rates, an asset isrecorded, being the difference between the acquired charter rate and the market charter rate for an equivalent vessel. Where charter rates are less thanmarket charter rates, a liability is recorded, being the difference between the assumed charter rate and the market charter rate for an equivalent vessel.The determination of the fair value of acquired assets and assumed liabilities requires Navios Partners to make significant assumptions and estimates ofmany variables including market charter rates, expected future charter rates, the level of utilization of its vessels and its weighted average cost ofcapital. The use of different assumptions could result in a material change in the fair value of these items, which could have a material impact onNavios Partners’ financial position and results of operations.The amortizable value of favorable and unfavorable leases is amortized over the remaining life of the lease term and the amortization expense is included inthe statement of income in the depreciation and amortization line item. The amortizable value of favorable leases would be considered impaired if their fairmarket values could not be recovered from the future undiscounted cash flows associated with the asset. Management, after considering various indicators,performed on impairment test which included intangible assets as described in paragraph (j) above. As of December 31, 2014, there was no impairment ofintangible assets. (m)Foreign currency translation: Navios Partners’ functional and reporting currency is the U.S. Dollar. Navios Partners engages in worldwide commercewith a variety of entities. Although, its operations may expose it to certain levels of foreign currency risk, its transactions are predominantly U.S. dollardenominated. Additionally, Navios Partners’ wholly-owned vessel subsidiaries transacted a nominal amount of their operations in Euros; however, allof the subsidiaries’ primary cash flows are U.S. dollar denominated. Transactions in currencies other than the functional currency are translated at theexchange rate in effect at the date of each transaction. Differences in exchange rates during the period between the date a transaction denominated in aforeign currency is consummated and the date on which it is either settled or translated, are recognized in the statement of operations. The foreigncurrency losses recognized in the accompanying consolidated statements of income, in other income or expense, for each of the years endedDecember 31, 2014, 2013 and 2012 were $13, $13 and $1, respectively. (n)Provisions: Navios Partners, in the ordinary course of its business, is subject to various claims, suits and complaints. Management, in consultation withinternal and external advisors, will provide for a contingent loss in the financial statements if the contingency had been incurred and the likelihood ofloss is deemed to be probable at the date of the financial statements and the amount of the loss can be reasonably estimated. In accordance with theaccounting for contingencies, if Navios Partners has determined that the reasonable estimate of the loss is a range and there is no best estimate withinthe range, Navios Partners will accrue the lower amount of the range. Navios Partners, through the management agreement, participates in Protectionand Indemnity (P&I) insurance coverage plans provided by mutual insurance societies known as P&I clubs. Under the terms of these plans, participantsmay be required to pay additional premiums to fund operating F-12 NAVIOS MARITIME PARTNERS L.P.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except unit and per unit data) deficits incurred by the clubs (“additional calls”). Obligations for additional calls are accrued annually based on announcements made by the board ofDirectors of each Club at the end of each policy year pertaining to collection of any additional calls for the ‘closed’ policy year/s. (o)Segment Reporting: Navios Partners reports financial information and evaluates its operations by charter revenues and not by the length of shipemployment for its customers. Navios Partners does not use discrete financial information to evaluate operating results for each type of charter.Management does not identify expenses, profitability or other financial information by charter type. As a result, management reviews operating resultssolely by revenue per day and operating results of the fleet and thus Navios Partners has determined that it operates under one reportable segment. (p)Revenue and Expense Recognition:Revenue Recognition: Revenue is recorded when services are rendered, under a signed charter agreement or other evidence of an arrangement, the price isfixed or determinable, and collection is reasonably assured. Revenue is generated from time charter of vessels.Voyage revenues for the transportation of cargo are recognized ratably over the estimated relative transit time of each voyage. Voyage expenses arerecognized as incurred. A voyage is deemed to commence when a vessel is available for loading and is deemed to end upon the completion of the dischargeof the current cargo. Estimated losses on voyages are provided for in full at the time such losses become evident. Under a voyage charter, a vessel is providedfor the transportation of specific goods between specific ports in return for payment of an agreed upon freight per ton of cargo.Revenues from time chartering of vessels are accounted for as operating leases and are thus recognized on a straight line basis as the average minimum leaserevenue over the rental periods of such charter agreements, as service is performed. A time charter involves placing a vessel at the charterers’ disposal for aperiod of time during which the charterer uses the vessel in return for the payment of a specified daily hire rate. Under time charters, operating costs such asfor crews, maintenance and insurance are typically paid by the owner of the vessel.Revenues from profit-sharing are calculated at an agreed percentage of the excess of the charterer’s average daily income over an agreed amount andaccounted for on an accrual basis based on provisional amounts.Revenues are recorded net of address commissions. Address commissions represent a discount provided directly to the charterers based on a fixed percentageof the agreed upon charter rate. Since address commissions represent a discount (sales incentive) on services rendered by Navios Partners and no identifiablebenefit is received in exchange for the consideration provided to the charterer, these commissions are presented as a reduction of revenue.Time Charter and Voyage Expenses: Time charter and voyage expenses comprise all expenses related to each particular voyage, including time charter hirepaid and bunkers, port charges, canal tolls, cargo handling, agency fees and brokerage commissions. Time charter expenses are expensed over the period ofthe time charter and voyage expenses are recognized as incurred.Management fees: Pursuant to the Management Agreement, as amended in each of October 2013, August 2014 and February 2015, the Manager, a whollyowned subsidiary of Navios Holdings, provides commercial and technical management services to Navios Partners’ vessels for a daily fee of: (a) $4.00 dailyrate per Ultra-Handymax vessel; (b) $4.10 daily rate per Panamax vessel; (c) $5.10 daily rate per Capesize vessel; (d) $6.50 daily rate per Container vessel ofTEU 6,800; (e) $7.20 daily rate per Container vessel of more than TEU 8,000; F-13 NAVIOS MARITIME PARTNERS L.P.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except unit and per unit data) and (f) $8.50 daily rate per very large Container vessel of more than TEU 13,000 through December 31, 2015. Drydocking expenses under this agreement arereimbursed by Navios Partners at cost at occurrence.General and administrative expenses: Pursuant to the Administrative Services Agreement dated November 16, 2007, the Manager also providesadministrative services to Navios Partners, which include bookkeeping, audit and accounting services, legal and insurance services, administrative andclerical services, banking and financial services, advisory services, client and investor relations and other. The Manager is reimbursed for reasonable costsand expenses incurred in connection with the provision of these services. Navios Partners extended the duration of its existing Administrative ServicesAgreement with the Manager pursuant to the same terms, until December 31, 2017.Deferred Voyage Revenue: Deferred voyage revenue primarily relates to cash received from charterers prior to it being earned. These amounts are recognizedas revenue over the voyage or charter period.Prepaid Voyage Costs: Prepaid voyage costs relate to cash paid in advance for expenses associated with voyages. These amounts are recognized as expenseover the charter period.Inventory: Inventories, which are comprised of bunkers due to freight voyages, are valued at cost as determined on the first-in, first-out basis. (q)Financial Instruments: Financial instruments carried on the balance sheet include cash and cash equivalents, restricted cash, accounts receivables andaccounts payables, other receivables and other liabilities and long-term debt. The particular recognition methods applicable to each class of financialinstrument are disclosed in the applicable significant policy description of each item, or included below as applicable.Financial risk management: Navios Partners’ activities expose it to a variety of financial risks including fluctuations in future freight rates, time charter hirerates, and fuel prices, credit and interest rates risk. Risk management is carried out under policies approved by executive management. Guidelines areestablished for overall risk management, as well as specific areas of operations.Credit risk: Navios Partners closely monitors its exposure to customers and counter-parties for credit risk. Navios Partners has entered into the managementagreement with the Manager, pursuant to which the Manager agreed to provide commercial and technical management services to Navios Partners. Whennegotiating on behalf of Navios Partners’ various vessel employment contracts, the Manager has policies in place to ensure that it trades with customers andcounterparties with an appropriate credit history.Financial instruments that potentially subject Navios Partners to concentrations of credit risk are accounts receivable and cash and cash equivalents. NaviosPartners does not believe its exposure to credit risk is likely to have a material adverse effect on its financial position, results of operations or cash flows.For the year ended December 31, 2014, Navios Partners’ customers representing 10% or more of total revenues were Hyundai Merchant Marine Co., Ltd andNavios Corporation, which accounted for 24.4% and 11.0%, respectively of total revenues. For the year ended December 31, 2013, Navios Partners’customers representing 10% or more of total revenues were Cosco Bulk Carrier Co. Ltd., Hanjin Shipping Co. Ltd, Navios Corporation and Samsun Logix,which accounted for 23.4%, 11.3%, 10.4% and 10.2%, respectively of total revenues. For the year ended December 31, 2012, Navios Partners’ customersrepresenting 10% or more of total revenues were Cosco Bulk Carrier Co. Ltd., Mitsui O.S.K. Lines, Ltd. and Samsun Logix, which accounted for 22.8%,16.0% and 13.0%, respectively of total revenues. No other customers accounted for 10% or more of total revenues for any of the years presented. F-14 NAVIOS MARITIME PARTNERS L.P.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except unit and per unit data) Foreign exchange risk: Foreign currency transactions are translated into the measurement currency rates prevailing at the dates of transactions. Foreignexchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated inforeign currencies are recognized in the consolidated statements of income. (r)Cash Distribution: As per the Partnership Agreement, within 45 days following the end of each quarter, an amount equal to 100% of Available Cashwith respect to such quarter shall be distributed to the partners as of the record date selected by the Board of Directors.Available Cash: Generally means, for each fiscal quarter, all cash on hand at the end of the quarter: • less the amount of cash reserves established by the board of directors to: • provide for the proper conduct of the business (including reserve for Maintenance and Replacement Capital Expenditures) • comply with applicable law, any of Navios Partners’ debt instruments, or other agreements; or • provide funds for distributions to the unitholders and to the general partner for any one or more of the next four quarters; • plus all cash on hand on the date of determination of Available Cash for the quarter resulting from working capital borrowings made after the endof the quarter. Working capital borrowings are generally borrowings that are made under any revolving credit or similar agreement used solelyfor working capital purposes or to pay distributions to partners.Available Cash is a quantitative measure used in the publicly traded partnership investment community to assist in evaluating a partnership’s ability to makequarterly cash distributions. Available Cash is not required by US GAAP and should not be considered as an alternative to net income or any other indicatorof Navios Partners’ performance required by US GAAP.Maintenance and Replacement Capital Expenditures: Maintenance and Replacement capital expenditures are those capital expenditures required tomaintain over the long-term the operating capacity of or the revenue generated by Navios Partners’ capital assets, and expansion capital expenditures arethose capital expenditures that increase the operating capacity of or the revenue generated by the capital assets. To the extent, however, that capitalexpenditures associated with acquiring a new vessel increase the revenues or the operating capacity of our fleet, those capital expenditures would beclassified as expansion capital expenditures. As at December 31, 2014, 2013 and 2012, Maintenance and Replacement capital expenditures reserve approvedby the Board of Directors was $24,047, $14,593 and $18,869, respectively.Recent Accounting PronouncementsIn February 2015, the FASB issued the ASU 2015-02, “Consolidation (Topic 810)—Amendments to the Consolidation Analysis”, which amends the criteriafor determining which entities are considered VIEs, amends the criteria for determining if a service provider possesses a variable interest in a VIE and ends thedeferral granted to investment companies for application of the VIE consolidation model. The ASU is effective for interim and annual periods beginning afterDecember 15, 2015. Early application is permitted. We do not expect the adoption of this ASU to have a material impact on the Company’s results ofoperations, financial position or cash flows, except if Navios Partners were to enter into new arrangements in 2015 that fall into the scope prior to adoption ofthis standard. F-15 NAVIOS MARITIME PARTNERS L.P.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except unit and per unit data) In January 2015, the FASB issued ASU 2015-01, Income Statement Extraordinary and Unusual Items. This standard eliminates the concept of extraordinaryand unusual items from U.S. GAAP. The new standard is effective for annual and interim periods after December 15, 2015. Early adoption is permitted. NaviosPartners plans to adopt this standard effective January 1, 2016. The adoption of the new standard is not expected to have a material impact on NaviosPartners’ results of operations, financial position or cash flows.In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of UncertaintiesAbout an Entity’s Ability to Continue as a Going Concern. This standard requires management to assess an entity’s ability to continue as a going concern,and to provide related footnote disclosures in certain circumstances. Before this new standard, no accounting guidance existed for management on when andhow to assess or disclose going concern uncertainties. The amendments are effective for annual periods ending after December 15, 2016, and interim periodswithin annual periods beginning after December 15, 2016. Early application is permitted. We plan to adopt this standard effective January 1, 2017. Theadoption of the new standard is not expected to have a material impact on Navios Partners’ results of operations, financial position or cash flows.In May 2014, The FASB issued ASU 2014-09, Revenue from Contracts with Customers, clarifying the method used to determine the timing and requirementsfor revenue recognition on the statements of income. Under the new standard, an entity must identify the performance obligations in a contract, thetransaction price and allocate the price to specific performance obligations to recognize the revenue when the obligation is completed. The amendments inthis update also require disclosure of sufficient information to allow users to understand the nature, amount, timing and uncertainty of revenue and cash flowarising from contracts. The new accounting guidance is effective for interim and annual periods beginning after December 15, 2016. Early adoption is notpermitted. We are currently reviewing the effect of ASU No. 2014-09 on our revenue recognition.In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statements and Property, Plant and Equipment changing the presentation ofdiscontinued operations on the statements of income and other requirements for reporting discontinued operations. Under the new standard, a disposal of acomponent or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (orwill have) a major effect on an entity’s operations and financial results when the component meets the criteria to be classified as held-for-sale or is disposed.The amendments in this update also require additional disclosures about discontinued operations and disposal of an individually significant component ofan entity that does not qualify for discontinued operations. The new accounting guidance is effective for interim and annual periods beginning afterDecember 15, 2014. The adoption of the new standard is not expected to have a material impact on Navios Partners’ results of operations, financial positionor cash flows.NOTE 3 – CASH AND CASH EQUIVALENTSCash and cash equivalents consist of the following: December 31,2014 December 31,2013 Cash on hand and at banks $79,103 $35,079 Short term deposits and highly liquid funds 20,392 267 Total cash and cash equivalents$99,495 $35,346 Short term deposits and highly liquid funds relate to amounts held in banks for general financing purposes. As of December 31, 2014, Navios Partners heldtime deposits of $19,000 and money market funds of $1,392 with F-16 NAVIOS MARITIME PARTNERS L.P.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except unit and per unit data) duration of less than three months. As of December 31, 2013, Navios Partners held no time deposits and money market funds of $267 with duration of lessthan three months. Cash deposits and cash equivalents in excess of amounts covered by government-provided insurance are exposed to loss in the event ofnon-performance by financial institutions. Navios Partners does maintain cash deposits and equivalents in excess of government-provided insurance limits.Navios Partners also reduces exposure to credit risk by dealing with a diversified group of major financial institution.Restricted cash, as of December 31, 2013, included an amount held as security in the form of a letter of guarantee related to an owned vessel in the amount of$831, which was released in 2014. In addition, at each of December 31, 2014 and December 31, 2013, restricted cash included $954 and $346, respectively,which related to amounts held in retention accounts as required by certain of Navios Partners’ credit facilities. As of December 31, 2014 and December 31,2013, the short-term restricted cash held in retention accounts was $954 and $1,177, respectively. Long-term restricted cash as of December 31, 2014 andDecember 31, 2013, was $0 and $33,429, respectively, which related to amounts held in escrow, to partially finance a portion of the purchase price of vesselswhich were delivered during 2014.NOTE 4 – ACCOUNTS RECEIVABLE, NETAccounts receivable consist of the following: December 31,2014 December 31,2013 Accounts receivable $13,327 $16,911 Less: Provision for doubtful receivables (49) (613) Accounts receivable, net$13,278 $16,298 Charges to provisions for doubtful accounts are summarized as follows: Allowance for doubtful receivables Balanceatbeginningof period Chargesto costsandexpenses Amountutilized Balanceat endofperiod Year ended December 31, 2014 $(613) $— $564 $(49) Year ended December 31, 2013 $(458) $(155) $— $(613) Year ended December 31, 2012 $(49) $(409) $— $(458) NOTE 5 – PREPAID EXPENSES AND OTHER CURRENT ASSETSPrepaid expenses and other current assets consist of the following: December 31,2014 December 31,2013 Prepaid voyage costs $634 $431 Inventory 826 1,166 Other 10 66 Total prepaid expenses and other current assets$1,470 $1,663 Inventories, which are comprised of bunkers due to freight voyages, are valued at cost as determined on the first-in, first-out basis. F-17 NAVIOS MARITIME PARTNERS L.P.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except unit and per unit data) NOTE 6 – VESSELS, NET Vessels Cost AccumulatedDepreciation Net BookValue Balance December 31, 2012 $853,410 $(132,019) $721,391 Additions 341,193 (36,431) 304,762 Balance December 31, 2013$1,194,603 $(168,450)$1,026,153 Additions 163,745 (50,472) 113,273 Balance December 31, 2014$1,358,348 $(218,922) $1,139,426 To date, for each of the vessels purchased from Navios Holdings, the vessel acquisition was effected through the acquisition of all of the capital stock of thevessel-owning companies, which held the ownership and other contractual rights and obligations related to each of the acquired vessels, including the vesseland a charter-out contract. Management accounted for each acquisition as an asset acquisition. At the transaction date, the purchase price approximated thefair value of the assets acquired, which was determined based on a combination of methodologies including discounted cash flow analyses and independentvaluation analyses. The consideration paid, for each of these transactions, was allocated between the intangible assets (favorable lease term) and the vesselvalue.Deposits for vessel acquisitions represent deposits for vessels to be delivered in the future. As of December 31, 2014 and December 31, 2013, Navios Partnersvessel deposits amounted to $10 and $7,271, respectively.In December 2014, Navios Partners agreed to acquire from an unrelated third party the MSC Cristina, a 2011 South Korean-built Container vessel of 13,100TEU, for a purchase price of $147,750 estimated to be delivered at the end of the first quarter of 2015. Navios Partners is expected to finance the acquisitionwith cash on its balance sheet and bank debt on terms consistent with its credit facilities.On October 28, 2014, Navios Partners acquired from an unrelated third party the YM Unity, a 2006-built Container vessel of 8,204 TEU, for an acquisitioncost of $59,095.On August 29, 2014, Navios Partners acquired from an unrelated third party the YM Utmost, a 2006-built Container vessel of 8,204 TEU, for an acquisitioncost of $59,092.On January 18, 2014, Navios Partners acquired from an unrelated third party the Navios Sun, a 2005-built Panamax vessel of 76,619 dwt, for an acquisitioncost of $16,176, of which $1,583 was transferred from vessel deposits.On January 7, 2014, Navios Partners acquired from an unrelated third party the Navios La Paix, a 2014-built Ultra-Handymax vessel of 61,485 dwt, for anacquisition cost of $28,478, of which $5,688 was transferred from vessel deposits.In December 2013, Navios Partners acquired from an unrelated third party five 2006 South Korean-built Container vessels of 6,800 TEU each, consisting ofthe Hyundai Hongkong, the Hyundai Singapore, the Hyundai Tokyo, the Hyundai Shanghai and the Hyundai Busan for an acquisition cost of $276,478.Navios Partners allocated the total consideration to the fair value of the vessels, as these were the only assets acquired. There was no existing debt, charters ortechnical and commercial management agreements assumed, therefore, Navios Partners concluded that the acquisition of the Container vessels was an assetacquisition under ASC 805. F-18 NAVIOS MARITIME PARTNERS L.P.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except unit and per unit data) On October 11, 2013, Navios Partners acquired from an unrelated third party the Navios Harmony, an 82,790 dwt 2006 Japanese-built Panamax vessel, for anacquisition cost of $17,955.On September 11, 2013, Navios Partners acquired from an unrelated third party the Navios Joy, an 181,389 dwt 2013 Japanese-built Capesize vessel, for anacquisition cost of $47,467.NOTE 7 – INTANGIBLE ASSETSIntangible assets as of December 31, 2014 and 2013 consisted of the following: Cost AccumulatedAmortization Net Book Value Favorable lease terms December 31, 2012 $248,528 $(88,049) $160,479 Additions — (37,869) (37,869) Accelerated amortization — (3,205) (3,205) Favorable lease terms December 31, 2013$248,528 $(129,123)$119,405 Additions — (23,287) (23,287) Accelerated amortization (89,541) 67,478 (22,063) Favorable lease terms December 31, 2014$158,987 $(84,932)$74,055 Amortization expense of favorable lease terms for the years ended December 31, 2014, 2013 and 2012 is presented in the following table: Year Ended December 31,2014 December 31,2013 December 31,2012 Favorable lease terms $(23,287) $(37,869) $(37,295)Acceleration of favorable lease terms (22,063) (3,205) — Total$(45,350) $(41,074)$(37,295)The aggregate amortization of the intangibles as of December 31 is estimated to be as follows: Year Amount 2015 $17,032 2016 13,098 2017 13,389 2018 13,073 2019 10,052 2020 and thereafter 7,411 $74,055 During the year ended December 31, 2014, Navios Partners’ accelerated $22,010 of amortization of the Navios Pollux favorable lease intangible due to achange in its useful life following the termination of the credit default insurance policy (Refer to Note 20 “Other Income” for further details). The additionalamount of $53 of accelerated amortization incurred in year ended December 31, 2014, relates to the expiration of the intangible assets associated with twovessels of our fleet. F-19 NAVIOS MARITIME PARTNERS L.P.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except unit and per unit data) In relation to Navios Partners’ new suspension agreement, entered into in June 2013, the amount of $3,205 of the Navios Melodia favorable lease term thatcorresponded to the suspension period until April 2016 was written-off in the statement of income under the caption of “Depreciation and amortization”.Intangible assets subject to amortization are amortized using straight line method over their estimated useful lives to their estimated residual value of zero.The weighted average useful lives are 8.7 years for favorable lease terms charter out.NOTE 8 – ACCOUNTS PAYABLEAccounts payable as of December 31, 2014 and 2013 consist of the following: December 31,2014 December 31,2013 Creditors $1,571 $1,194 Brokers 1,935 1,681 Insurances 151 171 Professional and legal fees 167 125 Total accounts payable$3,824 $3,171 NOTE 9 – ACCRUED EXPENSESAccrued expenses as of December 31, 2014 and 2013 consisted of the following: December 31,2014 December 31,2013 Accrued voyage expenses $2,620 $1,979 Accrued loan interest 380 579 Accrued legal and professional fees 623 1,318 Total accrued expenses$3,623 $3,876 NOTE 10 – BORROWINGSBorrowings as of December 31, 2014 and 2013 consisted of the following: December 31,2014 December 31,2013 Term Loan B facility $433,389 $437,778 Credit facilities 153,349 100,020 Total borrowings$586,738 $537,798 Less: Unamortized discount (3,459) (4,474) Less: current portion, net of unamortized discount (18,638) (5,358) Total long-term borrowings, net of unamortized discount$564,641 $527,966 F-20 NAVIOS MARITIME PARTNERS L.P.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except unit and per unit data) In June 2013, Navios Partners completed the issuance of the $250,000 Term Loan B facility. The Term Loan B facility bears an interest rate of LIBOR plus425 basis points (“bps”) and has a five-year term with 1.0% amortization profile and was issued at 98.0% (at a discount of $5,000). Navios Partners used thenet proceeds of the Term Loan B facility to: (i) prepay $101,614 of the July 2012 Credit Facility; (ii) fully repay the outstanding balance of $41,225 of theAugust 2012 Credit Facility; (iii) deposit $98,179 to be held in escrow, to partially finance part of the acquisition of four new vessels, of which $47,000 wasreleased in September 2013 for the acquisition of the Navios Joy and $17,750 was released in October 2013 for the acquisition of the Navios Harmony; and(iv) cover fees and expenses. The refinancing of the August 2012 Credit Facility was accounted for as a debt extinguishment in accordance with ASC470Debt and the remaining unamortized balance of $707 was written-off from the deferred financing fees.On November 1, 2013, Navios Partners completed the issuance of a $189,500 add-on to its existing Term Loan B facility. The add-on to the Term Loan Bfacility bears the same terms as Term Loan B facility and was issued at 100%. Navios Partners used the net proceeds to partially finance the acquisition of fiveContainer vessels.The Term Loan B facility is secured by first priority mortgages covering certain vessels owned by subsidiaries of Navios Partners, in addition to othercollateral and is guaranteed by each subsidiary of Navios Partners. The Term Loan B Agreement requires maintenance of a loan to value ratio of 0.8 to 1.0,and other restrictive covenants customary for facilities of this type (subject to negotiated exceptions and baskets), including restrictions on indebtedness,liens, acquisitions and investments, restricted payments and dispositions. The Term Loan B Agreement also provides for customary events of default.As of December 31, 2014, the outstanding balance of the Term Loan B facility including the add-on was $429,930, net of discount of $3,459, and it isrepayable in 14 quarterly installments of $1,097, beginning in March 2015, with a final payment of $418,028, in June 2018.The above mentioned prepayment of the July 2012 Credit Facility was applied in partial settlement of the next 16 installments. As of December 31, 2014, theoutstanding balance was $98,036 and is repayable in 12 installments, plus a final payment, in various amounts during the term of the July 2012 CreditFacility consisting of $496 (one quarterly installment), $3,456 (nine quarterly installments), $2,346 (one quarterly installment) and $5,867 (one quarterlyinstallment) with a final payment of $58,223. The July 2012 Credit Facility bears interest at rates ranging from 180 to 205 bps per annum (depending on theloan amount compared to the security value) plus, depending on the length of the interest period, either LIBOR or the actual cost of funds. The refinancing ofthis facility was accounted for as a debt modification in accordance with ASC470 Debt and an amount of $1,319 was written-off from the deferred financingfees in June 2013.On September 22, 2014, Navios Partners entered into the September 2014 Credit Facility of up to $56,000 (divided into two tranches) with ABN AMROBank N.V. in order to finance a portion of the purchase price payable in connection with the acquisition of the YM Utmost and the YM Unity. Each trancheof the September 2014 Credit Facility is repayable in 20 equal quarterly installments of approximately $688, with a final balloon payment of $14,250 on thelast repayment date. The maturity date of each tranche is five years after the drawdown date of such tranche. The tranches of the September 2014 CreditFacility bear interest at LIBOR plus 300 bps per annum. As of December 31, 2014, the outstanding balance on this facility was $55,313.As of December 31, 2014, the total borrowings under the Navios Partners’ credit facilities were $583,279, net of original issue discount.Amounts drawn under the July 2012 Credit Facility are secured by first preferred mortgages on certain Navios Partners’ vessels and other collateral and areguaranteed by the respective vessel-owning subsidiary. Amounts F-21 NAVIOS MARITIME PARTNERS L.P.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except unit and per unit data) drawn under the September 2014 Credit Facility are secured by first preferred mortgages on certain Navios Partners’ vessels and other collateral and areguaranteed by Navios Partners. The July 2012 Credit Facility and the September 2014 Credit Facility contain a number of restrictive covenants that prohibitor limit Navios Partners from, among other things: incurring or guaranteeing indebtedness; entering into affiliate transactions; charging, pledging orencumbering the vessels; changing the flag, class, management or ownership of Navios Partners’ vessels; changing the commercial and technicalmanagement of Navios Partners’ vessels; selling or changing the beneficial ownership or control of Navios Partners’ vessels; and subordinating theobligations under the credit facilities to any general and administrative costs relating to the vessels, including the fixed daily fee payable under themanagement agreement. The July 2012 Credit Facility and the September 2014 Credit Facility also require compliance with a number of financial covenants,including: (i) maintain a required security amount of over 140%; (ii) minimum free consolidated liquidity of at least the higher of $25,000 and the aggregateof interest and principal falling due during the previous six months; (iii) maintain a ratio of EBITDA to interest expense of at least 5.00 : 1.00; (iv) maintain aratio of total liabilities to total assets (as defined in our credit facilities) of less than 0.65 : 1.00; and (v) maintain a minimum net worth to $250,000. It is anevent of default under the loan facilities if such covenants are not complied with.As of December 31, 2014, Navios Partners was in compliance with the financial covenants of all of its credit facilities.The maturity table below reflects the principal payments due under its credit facilities for the 12-month periods ended December 31: Year Amount 2015 $19,642 2016 26,124 2017 81,936 2018 425,723 2019 33,313 $586,738 NOTE 11 – FAIR VALUE OF FINANCIAL INSTRUMENTSThe carrying value amounts of many of Navios Partners’ financial instruments, including cash and cash equivalents, restricted cash, accounts receivable andaccounts payable and amounts due to related parties approximate their fair value due primarily to the short-term maturity of the related instruments.The following methods and assumptions were used to estimate the fair value of each class of financial instrument:Cash and cash equivalents: The carrying amounts reported in the consolidated balance sheets for interest bearing deposits and money market fundsapproximate their fair value because of the short maturity of these investments.Other long-term debt: The carrying amount of the floating rate loans approximates its fair value.Term Loan B facility: The fair value of the Company’s debt is estimated based on currently available debt with similar contract terms, interest rate andremaining maturities, as well as taking into account our creditworthiness. F-22 NAVIOS MARITIME PARTNERS L.P.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except unit and per unit data) The estimated fair values of the Navios Partners’ financial instruments were as follows: December 31, 2014 December 31, 2013 Book Value Fair Value Book Value Fair Value Cash and cash equivalents $99,495 $99,495 $35,346 $35,346 Restricted cash $954 $954 $34,606 $34,606 Accounts receivable, net $13,278 $13,278 $16,298 $16,298 Loans receivable from affiliates $750 $750 $280 $280 Accounts payable $(3,824) $(3,824) $(3,171) $(3,171) Amounts due to related parties $(1,880) $(1,880) $(204) $(204) Term Loan B facility, net of unamortized discount $(429,930) $(431,764) $(433,304) $(440,514) Other long-term debt $(153,349) $(153,349) $(100,020) $(100,020) Fair Value MeasurementsThe estimated fair value of our financial instruments that are not measured at fair value on a recurring basis, categorized based upon the fair value hierarchy,are as follows:Level I: Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets that we have the ability to access. Valuation of these itemsdoes not entail a significant amount of judgment.Level II: Inputs other than quoted prices included in Level I that are observable for the asset or liability through corroboration with market data at themeasurement date.Level III: Inputs that are unobservable. The Company did not use any Level 3 inputs as of December 31, 2014. Fair Value Measurements at December 31, 2014 Total Level I Level II Level III Cash and cash equivalents $99,495 $99,495 $— $— Restricted cash $954 $954 $— $— Loans receivable from affiliates $750 $— $750 $— Term Loan B facility, net of unamortized discount(1) $(431,764) $— $(431,764) $— Other long-term debt(1) $(153,349) $— $(153,349) $— Fair Value Measurements at December 31, 2013 Total Level I Level II Level III Cash and cash equivalents $35,346 $35,346 $— $— Restricted cash $34,606 $34,606 $— $— Loans receivable from affiliates $280 $— $280 $— Term Loan B facility, net of unamortized discount(1) $(440,514) $— $(440,514) $— Other long-term debt(1) $(100,020) $— $(100,020) $— (1)The fair value of the Company’s debt is estimated based on currently available debt with similar contract terms, interest rate and remaining maturitiesas well as taking into account our creditworthiness. F-23 NAVIOS MARITIME PARTNERS L.P.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except unit and per unit data) NOTE 12 – ISSUANCE OF UNITSOn February 14, 2014, Navios Partners completed its public offering of 5,500,000 common units at $17.30 per unit and raised gross proceeds ofapproximately $95,150 to fund its fleet expansion. The net proceeds of this offering, including the underwriting discount and excluding offering costs of$306 were approximately $91,135. Pursuant to this offering, Navios Partners issued 112,245 general partnership units to its general partner. The net proceedsfrom the issuance of the general partnership units were $1,942. On February 18, 2014, Navios Partners completed the exercise of the option previouslygranted to the underwriters in connection with the offering and issued 825,000 additional common units at the public offering price less the underwritingdiscount. As a result of the exercise of the option, Navios Partners raised additional gross proceeds of $14,273 and net proceeds, including the underwritingdiscount, of approximately $13,670 and issued 16,837 additional general partnership units to its general partner. The net proceeds from the issuance of thegeneral partnership units were $291.On September 25, 2013, Navios Partners completed its public offering of 5,000,000 common units at $14.26 per unit and raised gross proceeds ofapproximately $71,300 to fund its fleet expansion. The net proceeds of this offering, including the underwriting discount and excluding offering costs of$179 were approximately $68,200. Pursuant to this offering, Navios Partners issued 102,041 general partnership units to its general partner. The net proceedsfrom the issuance of the general partnership units were $1,455. On the same date, Navios Partners completed the exercise of the option previously granted tothe underwriters in connection with the offering and issued 750,000 additional common units at the public offering price less the underwriting discount. As aresult of the exercise of the option, Navios Partners raised additional gross proceeds of $10,695. The net proceeds, including the underwriting discount, wereapproximately $10,230 and issued 15,306 additional general partnership units to its general partner. The net proceeds from the issuance of the generalpartnership units were $218.On February 6, 2013, Navios Partners completed its public offering of 4,500,000 common units at $14.15 per unit and raised gross proceeds of approximately$63,675 to fund its fleet expansion. The net proceeds of this offering, including the underwriting discount and excluding offering costs of $195 wereapproximately $60,840. Pursuant to this offering, Navios Partners issued 91,837 general partnership units to its general partner. The net proceeds from theissuance of the general partnership units were $1,299. On the same date, Navios Partners completed the exercise of the option previously granted to theunderwriters in connection with the offering and issued 675,000 additional common units at the public offering price less the underwriting discount. As aresult of the exercise of the option, Navios Partners raised additional gross proceeds of $9,551. The net proceeds, including the underwriting discount, wereapproximately $9,126 and issued 13,776 additional general partnership units to its general partner. The net proceeds from the issuance of the generalpartnership units were $195.NOTE 13 – SEGMENT INFORMATIONNavios Partners reports financial information and evaluates its operations by charter revenues. Navios Partners does not use discrete financial information toevaluate operating results for each type of charter or by sector. As a result, management reviews operating results solely by revenue per day and operatingresults of the fleet and thus Navios Partners has determined that it operates under one reportable segment.The following table sets out operating revenue by geographic region for Navios Partners’ reportable segment. Revenue is allocated on the basis of thegeographic region in which the customer is located. Drybulk and container vessels operate worldwide. Revenues from specific geographic region whichcontribute over 10% of total revenue are disclosed separately. F-24 NAVIOS MARITIME PARTNERS L.P.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except unit and per unit data) Revenue by Geographic RegionVessels operate on a worldwide basis and are not restricted to specific locations. Accordingly, it is not possible to allocate the assets of these operations tospecific countries. Year EndedDecember 31,2014 Year EndedDecember 31,2013 Year EndedDecember 31,2012 Asia $125,572 $119,776 $151,608 Europe 64,858 48,906 29,658 North America 19,943 21,334 15,968 Australia 16,983 8,143 8,201 Total$227,356 $198,159 $205,435 NOTE 14 – INCOME TAXESMarshall Islands, Malta and Liberia do not impose a tax on international shipping income. Under the laws of Marshall Islands, Malta and Liberia, thecountries of the vessel-owning subsidiaries’ incorporation and vessels’ registration, the vessel-owning subsidiaries are subject to registration and tonnagetaxes which have been included in vessel operating expenses in the accompanying consolidated statements of income.In accordance with the currently applicable Greek law, foreign flagged vessels that are managed by Greek or foreign ship management companies havingestablished an office in Greece are subject to duties towards the Greek state which are calculated on the basis of the relevant vessel’s tonnage. The payment ofsaid duties exhausts the tax liability of the foreign ship owning company and the relevant manager against any tax, duty, charge or contribution payable onincome from the exploitation of the foreign flagged vessel.Pursuant to Section 883 of the Internal Revenue Code of the United States, U.S. source income from the international operation of ships is generally exemptfrom U.S. income tax if the company operating the ships meets certain incorporation and ownership requirements. Among other things, in order to qualify forthis exemption, the company operating the ships must be incorporated in a country which grants an equivalent exemption from income taxes toU.S. corporations. All the vessel-owning subsidiaries satisfy these initial criteria. In addition, these companies must meet an ownership test. The managementof Navios Partners believes that this ownership test was satisfied prior to the IPO by virtue of a special rule applicable to situations where the ship operatingcompanies are beneficially owned by a publicly traded company. Although not free from doubt, management also believes that the ownership test will besatisfied based on the trading volume and ownership of Navios Partners’ units, but no assurance can be given that this will remain so in the future.NOTE 15 – COMMITMENTS AND CONTINGENCIESNavios Partners is involved in various disputes and arbitration proceedings arising in the ordinary course of business. Provisions have been recognized in thefinancial statements for all such proceedings where Navios Partners believes that a liability may be probable, and for which the amounts are reasonablyestimable, based upon facts known at the date the financial statements were prepared. Management believes, the ultimate disposition of these matters will beimmaterial individually and in the aggregate to Navios Partners’ financial position, results of operations or liquidity.In January 2011, Korea Line Corporation (“KLC”) which is the charterer of the Navios Melodia filed for receivership. The charter contract was affirmed andwill be performed by KLC on its original terms, following an interim suspension period until April 2016 during which Navios Partners trades the vesseldirectly. F-25 NAVIOS MARITIME PARTNERS L.P.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except unit and per unit data) In December 2014, Navios Partners agreed to acquire from an unrelated third party the MSC Cristina, a 2011 South Korean-built Container vessel for apurchase price of $147,750 (Refer to Note 21“Subsequent Events”).The future minimum commitments for the 12-month periods ended December 31, of Navios Partners under its charter-in contracts, net of commissions and forvessel deliveries are as follows: Amount 2015 $153,546 2016 3,834 2017 3,823 2018 786 $161,989 NOTE 16 – LEASESThe future minimum contractual lease income (charter-out rates are presented net of commissions and assume no off –hires days) as of December 31, 2014, isas follows: Amount 2015 $209,885 2016 170,306 2017 166,753 2018 151,952 2019 122,667 2020 and thereafter 421,251 $1,242,814 NOTE 17 – TRANSACTIONS WITH RELATED PARTIES AND AFFILIATESManagement fees: Pursuant to the amended Management Agreement , in each of October 2013, August 2014 and February 2015, the Manager, a whollyowned subsidiary of Navios Holdings, provides commercial and technical management services to Navios Partners’ vessels for a daily fee of: (a) $4.00 dailyrate per Ultra-Handymax vessel; (b) $4.10 daily rate per Panamax vessel; (c) $5.10 daily rate per Capesize vessel; (d) $6.50 daily rate per Container vessel ofTEU 6,800; (e) $7.20 daily rate per Container vessel of TEU 8,000; and (f) $8.50 daily rate per very large Container vessel of more than TEU 13,000 throughDecember 31, 2015 (see also Note 21). Drydocking expenses under this agreement are reimbursed by Navios Partners at cost at occurrence.Total management fees for the year ended December 31, 2014, 2013 and 2012 amounted to $50,359, $36,173 and $31,689, respectively.General and administrative expenses: Pursuant to the Administrative Services Agreement, the Manager also provides administrative services to NaviosPartners, which include bookkeeping, audit and accounting services, legal and insurance services, administrative and clerical services, banking and financialservices, advisory services, client and investor relations and other. The Manager is reimbursed for reasonable costs and expenses incurred in connection withthe provision of these services. Navios Partners extended the duration of its existing Administrative Services Agreement with the Manager pursuant to thesame terms, until December 31, 2017. F-26 NAVIOS MARITIME PARTNERS L.P.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except unit and per unit data) Total general and administrative expenses charged by Navios Holdings for the year ended December 31, 2014, 2013 and 2012 amounted to $6,089, $4,366and $3,883, respectively.Balance due to related parties: Included in the current liabilities as of December 31, 2014 was an amount of $1,880, which represented the current accountpayable to Navios Holdings and its subsidiaries. The balance mainly consisted of other payables for drydock and special survey expenses of $2,155mitigated by other receivables of $275. Amounts due to related parties as of December 31, 2013 was $204 mainly relating to other payables.Vessel Chartering: In February 2012, Navios Partners entered into a charter with a subsidiary of Navios Holdings for the Navios Apollon, a 2000-built Ultra-Handymax vessel. The term of this charter was approximately two years, at a net daily rate of $12.5 for the first year and $13.5 for the second year, plus 50/50profit sharing based on actual earnings. In January 2014, this charter was extended for approximately six months at a net daily rate of $13.5 plus 50/50 profitsharing based on actual earnings and in October 2014, this charter was further extended for approximately one year at a net daily rate of $12.5 plus 50/50profit sharing based on actual earnings. For this charter, for the years ended December 31, 2014, 2013 and 2012, the total revenue of Navios Partners fromNavios Holdings amounted to $4,768, $4,625 and $4,091, respectively.In May 2012, Navios Partners entered into a charter with a subsidiary of Navios Holdings for the Navios Prosperity, a 2007-built Panamax vessel. The term ofthis charter was approximately one year with two six-month extension options granted to Navios Holdings, at a net daily rate of $12.0 plus profit sharing. InApril 2014, this charter was extended for approximately one year and the owners will receive 100% of the first $1.5 in profits above the base rate, andthereafter all profits will be split 50/50 to each party. For this charter, for the years ended December 31, 2014, 2013 and 2012, the total revenue of NaviosPartners from Navios Holdings amounted to $4,317, $4,401 and $2,364, respectively.In September 2012, Navios Partners entered into a charter with a subsidiary of Navios Holdings for the Navios Libra, a 1995-built Panamax vessel. The termof this charter is approximately three years commencing in October 2012, at a net daily rate of $12.0 plus 50/50 profit sharing based on actual earnings. Forthis charter, for the years ended December 31, 2014, 2013 and 2012 the total revenue of Navios Partners from Navios Holdings amounted to $4,034, $4,471and $902, respectively.In May 2013, Navios Partners entered into a charter with a subsidiary of Navios Holdings for the Navios Felicity, a 1997-built Panamax vessel. The term ofthis charter is approximately one year with two six-month extension options, at a net daily rate of $12.0 plus profit sharing. The owners will receive 100% ofthe first $1.5 in profits above the base rate, and thereafter all profits will be split 50/50 to each party. In February 2014, Navios Holdings exercised its firstoption to extend this charter, and in August 2014, Navios Holdings exercised its second option. For this charter, for the years ended December 31, 2014, 2013and 2012, the total revenue of Navios Partners from Navios Holdings amounted to $4,383, $2,848 and $0, respectively.In May 2013, Navios Partners entered into a charter with a subsidiary of Navios Holdings for the Navios Aldebaran, a 2008-built Panamax vessel. The term ofthis charter is approximately six months commencing in June 2013, at a net daily rate of $11.0 plus profit sharing, with a six-month extension option. InDecember 2013, Navios Holdings exercised its option to extend this charter, at a net daily rate of $11.0 plus profit sharing. The owners will receive 100% ofthe first $2.5 in profits above the base rate, and thereafter all profits will be split 50/50 to each party. In July 2014, the Company further extended this charterfor approximately six to nine months. For this charter, for the years ended December 31, 2014, 2013 and 2012, the total revenue of Navios Partners fromNavios Holdings amounted to $4,036, $2,293 and $0, respectively. F-27 NAVIOS MARITIME PARTNERS L.P.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except unit and per unit data) In July 2013, Navios Partners entered into a charter with a subsidiary of Navios Holdings for the Navios Hope, a 2005-built Panamax vessel. The term of thischarter is approximately one year, at a net daily rate of $10.0. In December 2013, Navios Holdings extended this charter for approximately six months at a netdaily rate of $10.0 plus 50/50 profit sharing based on actual earnings. For this charter, for the years ended December 31, 2014, 2013 and 2012, the totalrevenue of Navios Partners from Navios Holdings amounted to $3,395, $1,874 and $0, respectively.In July 2013, Navios Partners entered into a charter with a subsidiary of Navios Holdings for the Navios Melodia, a 2010-built Capesize vessel. The term ofthis charter was approximately four months which commenced in July 2013, at a net daily rate of $15.0. The charter contract was completed in October 2013.For this charter, for the years ended December 31, 2014, 2013 and 2012, the total revenue of Navios Partners from the subsidiary of Navios Holdingsamounted to $12, $1,717 and $0, respectively.In July 2013, Navios Partners entered into a charter with a subsidiary of Navios Holdings for the Navios Pollux, a 2009-built Capesize vessel, which wascompleted in August 2013. In August 2014, Navios Partners entered into another charter with a subsidiary of Navios Holdings for the Navios Pollux. Theterm of this charter was approximately three months which commenced in August 2014, at a daily rate of $21.3 net per day. The charter contract wascompleted in November 2014. For the years ended December 31, 2014, 2013 and 2012, the total revenue of Navios Partners from the subsidiary of NaviosHoldings amounted to $2,496, $1,509 and $0, respectively.Share Purchase Agreements: On June 14, 2012, Navios Partners entered into a share purchase agreement with a wholly owned subsidiary of NaviosHoldings pursuant to which Navios Partners agreed to acquire the capital stock of the subsidiary that owns the vessel the Navios Buena Ventura, for apurchase price of $67,500.On February 4, 2015, Navios Partners entered into a share purchase agreement with Navios Holdings pursuant to which Navios Holdings made an investmentin the Company by purchasing common units, and general partnership interests, in order to maintain at least a 20% partnership interest in the Company.Registration Rights Agreement: On February 4, 2015, in connection with the share purchase agreement as discussed above, Navios Partners entered into aregistration rights agreement with Navios Holdings pursuant to which Navios Partners provide Navios Holdings with certain rights relating to the registrationof the common units.Revolving Loans to Navios Europe: Navios Holdings, Navios Maritime Acquisition Corporation (“Navios Acquisition”) and Navios Partners will makeavailable to Navios Europe Inc. (“Navios Europe”) (in each case, in proportion to their ownership interests in Navios Europe) revolving loans up to $24,100to fund working capital requirements (collectively, the “Navios Revolving Loans”). See Note 18 for the Investment in Navios Europe and respectiveownership interests.The Navios Revolving Loans earn a 12.7% preferred distribution and are repaid from Free Cash Flow (as defined in the loan agreement) to the fullest extentpossible at the end of each quarter. There are no covenant requirements or stated maturity dates.As of December 31, 2014, Navios Partners’ portion of the outstanding amount relating to portion of the investment in Navios Europe (5.0% of the $10,000)was $500, under the caption “Investment in affiliates” and the outstanding amount relating to the Navios Revolving Loans capital is $750, under the caption“Loans receivable from affiliates.” As of December 31, 2014 and December 31, 2013, the amounts undrawn from the Navios Revolving Loans was $9,100 and$18,500, respectively, of which Navios Partners was committed to fund $455 and $925, respectively. F-28 NAVIOS MARITIME PARTNERS L.P.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except unit and per unit data) Others: Navios Partners has entered into an omnibus agreement with Navios Holdings (the “Partners Omnibus Agreement”) in connection with the closing ofNavios Partners’ IPO governing, among other things, when Navios Holdings and Navios Partners may compete against each other as well as rights of first offeron certain drybulk carriers. Pursuant to the Partners Omnibus Agreement, Navios Partners generally agreed not to acquire or own Panamax or Capesizedrybulk carriers under time charters of three or more years without the consent of an independent committee of Navios Partners. In addition, Navios Holdingshas agreed to offer to Navios Partners the opportunity to purchase vessels from Navios Holdings when such vessels are fixed under time charters of three ormore years.Navios Partners entered into an omnibus agreement with Navios Acquisition and Navios Holdings (the “Acquisition Omnibus Agreement”) in connectionwith the closing of Navios Acquisition’s initial vessel acquisition, pursuant to which, among other things, Navios Holdings and Navios Partners agreed not toacquire, charter-in or own liquid shipment vessels, except for container vessels and vessels that are primarily employed in operations in South America,without the consent of an independent committee of Navios Acquisition. In addition, Navios Acquisition, under the Acquisition Omnibus Agreement, agreedto cause its subsidiaries not to acquire, own, operate or charter drybulk carriers subject to specific exceptions. Under the Acquisition Omnibus Agreement,Navios Acquisition and its subsidiaries granted to Navios Holdings and Navios Partners, a right of first offer on any proposed sale, transfer or otherdisposition of any of its drybulk carriers and related charters owned or acquired by Navios Acquisition. Likewise, Navios Holdings and Navios Partnersagreed to grant a similar right of first offer to Navios Acquisition for any liquid shipment vessels it might own. These rights of first offer will not apply to a(i) sale, transfer or other disposition of vessels between any affiliated subsidiaries, or pursuant to the terms of any charter or other agreement with acounterparty, or (ii) merger with or into, or sale of substantially all of the assets to, an unaffiliated third party.In connection with the Navios Maritime Midstream Partners L.P (“Navios Midstream”) initial public offering and effective November 18, 2014, NaviosPartners entered into an omnibus agreement with Navios Midstream, Navios Acquisition and Navios Holdings pursuant to which Navios Acquisition, NaviosHoldings and Navios Partners have agreed not to acquire or own any VLCCs, crude oil tankers, refined petroleum product tankers, LPG tankers or chemicaltankers under time charters of five or more years and also providing rights of first offer on certain tanker vessels.As of December 31, 2014, Navios Holdings held a total of 14,223,763 common units, representing a 18.0% common unit interest in Navios Partners andgeneral partner interest of 2.0%.On November 15, 2012 (as amended in March 2014), Navios Holdings and Navios Partners entered into an agreement by which Navios Holdings will providesupplemental credit default insurance with a maximum cash payment of $20,000. As of December 31, 2014, the Company had not put forth any claims toNavios Holdings in connection with this supplemental insurance.NOTE 18 – INVESTMENT IN NAVIOS EUROPE INC.On October 9, 2013, Navios Holdings, Navios Acquisition and Navios Partners established Navios Europe and have ownership interests of 47.5%, 47.5% and5.0%, respectively. On December 18, 2013, Navios Europe acquired ten vessels for aggregate consideration consisting of (i) cash consideration of $127,753(which was funded with the proceeds of a $117,753 senior loan facilities (the “Senior Loans”) and loans aggregating $10,000 from Navios Holdings, NaviosAcquisition and Navios Partners (in each case, in proportion to their ownership interests in Navios Europe) (collectively, the “Navios Term Loans”) and(ii) the assumption of a junior participating loan facility (the “Junior Loan”) with a face amount of $173,367 and fair value of $71,929 as of F-29 NAVIOS MARITIME PARTNERS L.P.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except unit and per unit data) December 31, 2013. In addition to the Navios Term Loans, Navios Holdings, Navios Acquisition and Navios Partners will also make available to NaviosEurope (in each case, in proportion to their ownership interests in Navios Europe) revolving loans up to $24,100 to fund working capital requirements(collectively, the “Navios Revolving Loans”).On an ongoing basis, Navios Europe is required to distribute cash flows (after payment of operating expenses, amounts due pursuant to the terms of the SeniorLoan and repayments of the Navios Revolving Loans) according to a defined waterfall calculation. Navios Partners evaluated its investment in NaviosEurope under ASC 810 and concluded that Navios Europe is a variable interest entity (“VIE”) and that they are not the party most closely associated withNavios Europe and, accordingly, is not the primary beneficiary of Navios Europe. Navios Partners further evaluated its investment in the common stock ofNavios Europe under ASC 323 and concluded that it has the ability to exercise significant influence over the operating and financial policies of NaviosEurope and, therefore, its investment in Navios Europe is accounted for under the equity method.As of December 31, 2014, the estimated maximum potential loss by Navios Partners in Navios Europe would have been $1,271, which represents theCompany’s carrying value of the investment of $521 plus the Company’s balance of the Navios Revolving Loans of $750 and does not include the undrawnportion of the Navios Revolving Loans.As of December 31, 2014, the Navios Partners’ portion of the Navios Revolving Loan outstanding was $750. Investment income of $88 was recognized in thestatement of income under the caption of “Other income” for the year ended December 31, 2014, whilst for the year ended December 31, 2013, Navios Europehad minimal operations and therefore, the Company did not record any equity method investee income/(loss).NOTE 19 – CASH DISTRIBUTIONS AND EARNINGS PER UNITThe partnership agreement of Navios Partners requires that all available cash is distributed quarterly, after deducting expenses, including estimatedmaintenance and replacement capital expenditures and reserves. Distributions may be restricted by, among other things, the provisions of existing and futureindebtedness, applicable partnership and limited liability company laws and other laws and regulations. The amount of the minimum quarterly distribution is$0.35 per unit or $1.40 per unit per year and is made in the following manner: • First, 98% to all unitholders;Thereafter there is incentive distribution rights held by the General Partner, which are analyzed as follows: Marginal PercentageInterest in Distributions Total Quarterly DistributionTarget Amount CommonUnitholders GeneralPartner Minimum Quarterly Distribution $0.35 98% 2% First Target Distribution up to $0.4025 98% 2% Second Target Distribution above $0.4025 up to $0.4375 85% 15% Third Target Distribution above $0.4375 up to $0.525 75% 25% Thereafter above $0.525 50% 50% On January 24, 2012, the Board of Directors of Navios Partners authorized its quarterly cash distribution for the three month period ended December 31, 2011of $0.44 per unit. The distribution was paid on February 14, 2012 to all holders of record of common and general partner units (not including holders ofsubordinated Series A units) on February 9, 2012. The aggregate amount of the declared distribution was $24,829. F-30 NAVIOS MARITIME PARTNERS L.P.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except unit and per unit data) On April 25, 2012, the Board of Directors of Navios Partners authorized its quarterly cash distribution for the three month period ended March 31, 2012 of$0.44 per unit. The distribution was paid on May 14, 2012 to all holders of record of common and general partner units (not including holders ofsubordinated Series A units) on May 10, 2012. The aggregate amount of the declared distribution was $26,923.On July 23, 2012, the Board of Directors of Navios Partners authorized its quarterly cash distribution for the three month period ended June 30, 2012 of$0.4425 per unit. The distribution was paid on August 13, 2012 to all holders of record of common and general partner units on August 8, 2012. Theaggregate amount of the declared distribution was $27,563.On October 18, 2012, the Board of Directors of Navios Partners authorized its quarterly cash distribution for the three month period ended September 30,2012 of $0.4425 per unit. The distribution was paid on November 13, 2012 to all holders of record of common and general partner units on November 8,2012. The aggregate amount of the declared distribution was $27,563.On January 21, 2013, the Board of Directors of Navios Partners authorized its quarterly cash distribution for the three month period ended December 31, 2012of $0.4425 per unit. The distribution was paid on February 14, 2013 to all holders of record of common and general partner units on February 8, 2013, whichincluded the unitholders from the common unit offering in February 2013. The aggregate amount of the declared distribution was $29,936.On April 22, 2013, the Board of Directors of Navios Partners authorized its quarterly cash distribution for the three month period ended March 31, 2013 of$0.4425 per unit. The distribution was paid on May 14, 2013 to all holders of record of common and general partner units on May 10, 2013. The aggregateamount of the declared distribution was $29,936.On July 22, 2013, the Board of Directors of Navios Partners authorized its quarterly cash distribution for the three month period ended June 30, 2013 of$0.4425 per unit. The distribution was paid on August 13, 2013 to all holders of record of common and general partner units on August 8, 2013. Theaggregate amount of the declared distribution was $29,936.On October 25, 2013, the Board of Directors of Navios Partners authorized its quarterly cash distribution for the three month period ended September 30,2013 of $0.4425 per unit. The distribution was paid on November 13, 2013 to all holders of record of common and general partner units on November 8,2013. The aggregate amount of the declared distribution was $32,573.On January 24, 2014, the Board of Directors of Navios Partners authorized its quarterly cash distribution for the three month period ended December 31, 2013of $0.4425 per unit. The distribution was paid on February 14, 2014 to all holders of record of common and general partner units on February 10, 2014. Theaggregate amount of the declared distribution was $32,573.On April 25, 2014, the Board of Directors of Navios Partners authorized its quarterly cash distribution for the three month period ended March 31, 2014 of$0.4425 per unit. The distribution was paid on May 13, 2014 to all holders of record of common and general partner units on May 9, 2014. The aggregateamount of the declared distribution was $35,474. F-31 NAVIOS MARITIME PARTNERS L.P.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except unit and per unit data) On July 24, 2014, the Board of Directors of Navios Partners authorized its quarterly cash distribution for the three month period ended June 30, 2014 of$0.4425 per unit. The distribution was paid on August 13, 2014 to all holders of record of common and general partner units on August 8, 2014. Theaggregate amount of the declared distribution was $35,474.On October 23, 2014, the Board of Directors of Navios Partners authorized its quarterly cash distribution for the three month period ended September 30,2014 of $0.4425 per unit. The distribution was paid on November 10, 2014 to all holders of record of common and general partner units on November 7,2014. The aggregate amount of the declared distribution was $35,474.Navios Partners calculates earnings per unit by allocating reported net income for each period to each class of units based on the distribution waterfall foravailable cash specified in Navios Partners’ partnership agreement, net of the unallocated earnings (or losses). Basic earnings net income per unit isdetermined by dividing net income by the weighted average number of units outstanding during the period. Diluted earnings per unit is calculated in thesame manner as net income per unit, except that the weighted average number of outstanding units increased to include the dilutive effect of outstanding unitoptions or phantom units. Net loss per unit undistributed is determined by taking the distributions in excess of net income and allocating between commonunits and general partner units on a 98%-2% basis. There were no options or phantom units outstanding during the years ended December 31, 2014, 2013 and2012.The calculations of the basic and diluted earnings per unit are presented below. Year EndedDecember 31,2014 Year EndedDecember 31,2013 Year EndedDecember 31,2012 Net income $74,853 $59,006 $95,898 Earnings attributable to: Common unit holders 71,225 55,949 93,566 Weighted average units outstanding (basic and diluted) Common unit holders 76,587,656 66,317,588 58,008,617 Earnings per unit (basic and diluted): Common unit holders $0.93 $0.84 $1.61 Earnings per unit — distributed (basic and diluted): Common unit holders $1.79 $1.82 $1.79 Loss per unit — undistributed (basic and diluted): Common unit holders $(0.86) $(0.98) $(0.18) NOTE 20 – OTHER INCOMEDuring the year ended December 31, 2014, Navios Partners received cash compensation of $17,779 from the sale of a defaulted counterparty claim to anunrelated third party. Navios Partners has no continuing obligation to provide any further services to the counterparty or any further resource or obligation tothe third party to which it sold the claim and has therefore recognized the entire compensation received immediately in the Statement of Income within thecaption of “Other income”. F-32 NAVIOS MARITIME PARTNERS L.P.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except unit and per unit data) As of March 25, 2014, the Company terminated the amended credit default insurance policy. In connection with the termination, Navios Partners receivedcompensation of $30,956 (which was received in April 2014). From the total compensation, $1,170 was recorded immediately in the statement of incomewithin the caption of “Revenue”, which represents reimbursements for insurance claims submitted for the period prior to the date of the termination and theremaining amount of $29,786 was recorded immediately in the statement of income within the caption of “Other income”. The Company has no futurerequirement to repay any of the lump sum cash payment back to the insurance company or provide any further services.As part of a new suspension agreement entered into in June 2013, Navios Partners agreed to receive an upfront payment of $10,000 covering hire revenues forthe suspension period until April 2016. The amount of $10,000 was recognized immediately in the statement of income under the caption of “Other income”since the Company has no future requirements to refund the payment.On November 15, 2012, the Company agreed to restructure its credit default insurance. In connection with this restructuring, Navios Partners recognized inother income an amount of $22,453 net of related expenses received from its credit default insurer. The amount was considered “Other income” since theCompany has no future requirement to repay any of the lump sum cash payment back to the insurance company. As of December 31, 2012, the other incomealso included an amount of $145 related to other income.NOTE 21 – SUBSEQUENT EVENTS a)On January 26, 2015, the Board of Directors of Navios Partners authorized its quarterly cash distribution for the three month period endedDecember 31, 2014 of $0.4425 per unit. The distribution was paid on February 13, 2015 to all holders of record of common and general partnerunits on February 11, 2015. The aggregate amount of the declared distribution was $38,097. b)On February 10, 2015, Navios Partners amended its existing Management Agreement with the Manager, a subsidiary of Navios Holdings, to fixthe fees for ship management services of its owned fleet at a daily rate of $8.50 per very large Container vessel of more than TEU 13,000effective from the date of delivery of such vessel to Navios Partners’ fleet through December 31, 2015. Drydocking expenses under thisagreement will be reimbursed at cost upon occurrence for each Vessel. c)On February 11, 2015, Navios Partners completed its public offering of 4,000,000 common units at $13.09 per unit and raised gross proceeds ofapproximately $52,360 to fund its fleet expansion. The net proceeds of this offering, including the underwriting discount and excluding offeringcosts estimated at $320 were approximately $50,120. Pursuant to this offering, Navios Partners issued 81,633 general partnership units to itsgeneral partner. The net proceeds from the issuance of the general partnership units were $1,069. On the same date, Navios Partners completedthe exercise of the option previously granted to the underwriters in connection with the offering and issued 600,000 additional common units atthe public offering price less the underwriting discount. As a result of the exercise of the option, Navios Partners raised additional gross proceedsof $7,854 and net proceeds, including the underwriting discount, of approximately $7,518 and issued 12,245 additional general partnershipunits to its general partner. The net proceeds from the issuance of the general partnership units were $160. In addition, Navios Partners completeda private placement of 1,120,547 common units and 22,868 general partner units at $13.09 per unit to Navios Holdings, raising additional grossproceeds of $14,967. Following the public offering and the private placement, Navios Holdings currently owns a 20.1% interest in NaviosPartners, which includes the 2.0% interest through Navios Partners’ general partner which Navios Holdings owns and controls. F-33

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