Costamare : Reports Results for the Third Quarter Ended September 30, 2014

Athens, Greece, October 31, 2014 - Costamare Inc. ("Costamare" or the "Company") (NYSE: CMRE) today reported unaudited financial results for the third quarter and nine-months ended September 30, 2014.

• Voyage revenues of $124.7 million and $363.1 million for the three and the nine-months ended September 30, 2014, respectively.
• Voyage revenues adjusted on a cash basis of $125.8 million and $369.3 million for the three and nine-months ended September 30, 2014, respectively.
• Adjusted EBITDA of $87.0 million and $260.5million for the three and nine-months ended September 30, 2014, respectively.
• Net income of $37.1 million and $84.3 million for the three and nine-months ended September 30, 2014, respectively.
• Net income available to common stockholders of $34.0 million or $0.45 per share and $75.5 million or $1.01 per share for the three and nine-months ended September 30, 2014, respectively.
• Adjusted Net income available to common stockholders of $28.1 million or $0.38 per share and $92.1 million or $1.23 per share for the three and nine-months ended September 30, 2014, respectively.

See "Financial Summary" and "Non-GAAP Measures" below for additional detail.

New Business Developments

• The Company sold the 1987-built, 3,152TEU containership Akritas for demolition, for a sale price of $7.3 million. The vessel was delivered to her buyers in September, 2014.  The company recorded an accounting gain of approximately $1.8 million from the sale.

• Pursuant to the Framework Agreement with York Capital Management ("York"), a jointly-owned vessel owning entity acquired the 1999-built, 2,526TEU containership Elafonisos for a price of approximately $7.7 millionThe vessel was paid for with equity. The Company holds a 49% equity percentage in the vessel owning entity. The vessel has been chartered to A.P.Møller-Mærsk A/S ("Maersk") for a period starting from October 26, 2014 and ending between January 10, 2015 at the earliest and April 30, 2015 at the latest, in Charterers option, at a daily rate of $6,250.

• In August 2014, the vessel owning entities formed pursuant to the Framework Agreement with York which own the vessels Ensenada Express, Xpress Padma and Petalidi, entered into a loan agreement with Eurobank Ergasias S.A., for a facility of $17.0 million for working capital purposes. The facility is payable in 16 quarterly installments and bears interest at LIBOR plus a margin.

• In October 2014, Costamare Partners LP (the "MLP"), a Marshall Islands limited partnership and a wholly owned subsidiary of the Company, filed a Registration Statement on Form F-1 with the U.S. Securities and Exchange Commission for the initial public offering of common units representing limited partnership interests in the MLP.

• The Company entered into the following charter arrangements:

o    Agreed to charter the 1991-built, 3,351TEU containership Karmen to Evergreen for a period of minimum one and maximum three months, starting from August 21, 2014, at a daily rate of $7,500. Subsequently, we agreed to extend the charter for a period of minimum six and maximum ten months, starting from November 21, 2014, at a daily rate of $7,500.

o    Charterers declared their option and extended the charter of the 1997-built, 2,458 TEU containership Messini for an additional period of six months starting from October 1, 2014, at a daily rate of $7,500.

o    Agreed to charter the 2000-built, 2,474TEU containership Areopolis to Evergreen for a period of minimum three and maximum six months, starting from September 21, 2014, at a daily rate of $7,200.

o    Agreed to charter the 1996-built, 1,504TEU containership Prosper to Evergreen for a period of minimum five and maximum nine months, starting from August 24, 2014, at a daily rate of $7,350.

o    Agreed to extend the charter of the 2000-built, 1,645TEU containership Neapolis with Yang Ming for an additional period of minimum three and maximum six months, starting from November 9, 2014, at a daily rate of $8,000.

o    Agreed to extend the charter of the 2001-built, 1,078TEU containership Stadt Luebeck with CMA CGM for an additional period of minimum nine and maximum 12 months, starting from September 22, 2014, at a daily rate of $6,400.

Dividend Announcements

• On October 3, 2014, we declared a dividend of $0.476563 per share on our Series B Preferred Stock and a dividend of $0.531250 per share on our Series C Preferred Stock, both paid on October 15, 2014, to holders of record on October 14, 2014.

• On October 7, 2014, we declared a dividend for the third quarter ended September 30, 2014, of $0.28 per share on our common stock, payable on November 5, 2014, to stockholders of record on October 22, 2014. This will be the Company's sixteenth consecutive quarterly dividend since it commenced trading on the New York Stock Exchange.

A registration statement relating to the initial public offering of the MLP's securities has been filed with the Securities and Exchange Commission but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective.

This press release does not constitute an offer to sell or the solicitation of an offer to buy securities, and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of that jurisdiction.

Mr. Gregory Zikos, Chief Financial Officer of Costamare Inc., commented:

"During the third quarter of the year, the Company continued to deliver positive results.

Recently we acquired, together with our partner York Capital, a 1999-built 2,526 TEU container vessel for a purchase price of $7.7 million. The vessel was bought with equity and after delivery she commenced her charter employment with Maersk.

During the quarter the Company sold for demolition the 1987-built 3,152 TEU containership vessel Akritas for a price of $7.3 million. The disposal resulted in an accounting gain of $1.8 million

In August we entered into a $17.0 million loan agreement in relation to the three second hand vessels Ensenada Express, Petalidi and X-press Padma, which were originally bought with equity under our JV agreement with York.

Regarding our chartering arrangements, we have no ships laid up and essentially no ships coming out of charter before year end. Our re-chartering risk is minimized.

On October 3, we declared a dividend on our Series B and Series C Preferred Stock. On October 7, we declared a dividend of $0.28 per share of our common stock, payable on November 5.

We continue to execute successfully on our growth strategy. We feel we are well positioned to continue to grow selectively and on healthy grounds."

Financial Summary

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

(2) Voyage revenue adjusted on a cash basis represents Voyage revenue after adjusting for non-cash "Accrued charter revenue" recorded under charters with escalating charter rates. However, Voyage revenue adjusted on a cash basis is not a recognized measurement under U.S. generally accepted accounting principles ("GAAP"). We believe that the presentation of Voyage revenue adjusted on a cash basis is useful to investors because it presents the charter revenue for the relevant period based on the then current daily charter rates.  The increases or decreases in daily charter rates under our charter party agreements are described in the notes to the "Fleet List" below.  

(3) Adjusted net income available to common stockholders, adjusted earnings per share, EBITDA and adjusted EBITDA are non-GAAP measures. Refer to the reconciliation of net income to adjusted net income and net income available to common stockholders to EBITDA and adjusted EBITDA below.

Non-GAAP Measures

The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that certain non-GAAP financial measures used in managing the business may provide users of these financial measures additional meaningful comparisons between current results and results in prior operating periods. Management believes that these non-GAAP financial measures can provide additional meaningful reflection of underlying trends of the business because they provide a comparison of historical information that excludes certain items that impact the overall comparability. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company's performance. The tables below set out supplemental financial data and corresponding reconciliations to GAAP financial measures for the three-month and nine-month periods ended September 30, 2014 and September 30, 2013. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, voyage revenue or net income as determined in accordance with GAAP. Non-GAAP financial measures include (i) Voyage revenue adjusted on a cash basis (reconciled above), (ii) Adjusted Net Income available to common stockholders, (iii) Adjusted Earnings per share, (iv) EBITDA and (v) Adjusted EBITDA.

Reconciliation of Net Income to Adjusted Net Income available to common stockholders and Adjusted Earnings per Share

Adjusted Net Income available to common stockholders and Adjusted Earnings per Share represent net income before non-cash "Accrued charter revenue" recorded under charters with escalating charter rates, gain / (loss) on sale / disposals of vessels, realized (gain) /loss on Euro/USD forward contracts, swaps breakage costs, unrealized loss from a swap option agreement held by a jointly owned company with York, which is included in equity loss on investments, amortization of prepaid lease rentals and non-cash changes in fair value of currency forwards and derivatives.   "Accrued charter revenue" is attributed to the timing difference between the revenue recognition and the cash collection. However, Adjusted Net Income available to common stockholders and Adjusted Earnings per Share are not recognized measurements under U.S. GAAP. We believe that the presentation of Adjusted Net Income available to common stockholders and Adjusted Earnings per Share are useful to investors because they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. We also believe that Adjusted Net Income available to common stockholders and Adjusted Earnings per Share are useful in evaluating our ability to service additional debt and make capital expenditures. In addition, we believe that Adjusted Net Income available to common stockholders and Adjusted Earnings per Share are useful in evaluating our operating performance and liquidity position compared to that of other companies in our industry because the calculation of Adjusted Net Income available to common stockholders and Adjusted Earnings per Share generally eliminates the effects of the accounting effects of capital expenditures and acquisitions, certain hedging instruments and other accounting treatments, items which may vary for different companies for reasons unrelated to overall operating performance and liquidity. In evaluating Adjusted Net Income available to common stockholders and Adjusted Earnings per Share, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted Net Income available to common stockholders and Adjusted Earnings per Share should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

EBITDA represents net income before interest and finance costs, interest income, amortization of prepaid lease rentals, depreciation and amortization of deferred dry-docking and special survey costs.  Adjusted EBITDA represents net income before interest and finance costs, interest income, amortization of prepaid lease rentals, depreciation, amortization of deferred dry-docking and special survey costs, non-cash "Accrued charter revenue" recorded under charters with escalating charter rates, gain/ (loss) on sale / disposals of vessels, realized gain / (loss) on Euro / USD forward contracts, swaps breakage costs, unrealized loss from swap option agreement held by a jointly owned company with York, which is  included in equity loss on investments, and non-cash changes in fair value of currency forwards and derivatives. "Accrued charter revenue" is attributed to the time difference between the revenue recognition and the cash collection. However, EBITDA and Adjusted EBITDA are not recognized measurements under U.S. GAAP. We believe that the presentation of EBITDA and Adjusted EBITDA are useful to investors because they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. We also believe that EBITDA and Adjusted EBITDA are useful in evaluating our ability to service additional debt and make capital expenditures. In addition, we believe that EBITDA and Adjusted EBITDA are useful in evaluating our operating performance and liquidity position compared to that of other companies in our industry because the calculation of EBITDA and Adjusted EBITDA generally eliminates the effects of financings, income taxes and the accounting effects of capital expenditures and acquisitions, items which may vary for different companies for reasons unrelated to overall operating performance and liquidity. In evaluating EBITDA and Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of EBITDA and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

(1) Items to consider for comparability include gains and charges. Gains positively impacting net income are reflected as deductions to net income. Charges negatively impacting net income are reflected as increases to net income.

Results of Operations

Three-month period ended September 30, 2014, compared to the three-month period ended September 30, 2013

During the three-month periods ended September 30, 2014 and 2013, we had an average of 55.0 and 51.0 vessels, respectively, in our fleet. In the three-month period ended September 30, 2014, we sold the vessels MSC Kyoto and Akritas with an aggregate TEU capacity of 7,028. Furthermore, pursuant to the Framework Agreement with York, a jointly-owned vessel entity accepted delivery of the secondhand vessel Elafonisos with a TEU capacity of 2,526 TEU. In the three-month period ended September 30, 2013, we accepted delivery of the newbuild vessels Valiant and Valence with an aggregate TEU capacity of 17,654 and the secondhand vessel X-Press Padma with a TEU capacity of 1,645, which was acquired pursuant to the Framework Agreement with York and we sold the vessel MSC Antwerp with a TEU capacity of 3,883. In the three-month periods ended September 30, 2014 and 2013, our fleet ownership days totaled 5,058 and 4,696 days, respectively. Ownership days, in combination with the level of daily charter hire that our vessels earn under time charters, are the primary drivers of voyage revenue and vessels' operating expenses and represent the aggregate number of days in a period during which each vessel in our fleet is owned.

Voyage Revenue

Voyage revenue increased by 13.3%, or $14.6 million, to $124.7 million during the three-month period ended September 30, 2014, from $110.1 million during the three-month period ended September 30, 2013. This increase was mainly due to: (i) revenue earned by the three and three newbuild vessels delivered to us during the six-month period ended December 31, 2013 and the six-month period ended June 30, 2014, respectively; partly offset by (ii) decreased charter rates in certain of our vessels during the three-month period ended September 30, 2014, compared to the three-month period ended September 30, 2013, and (iii) revenues not earned by one and three vessels sold for scrap during the six-month period ended December 31, 2013 and the nine-month period ended September 30, 2014, respectively.

Voyage revenue adjusted on a cash basis (which eliminates non-cash "Accrued charter revenue"), increased by 10.3%, or $11.7 million, to $125.8 million during the three-month period ended September 30, 2014, from $114.1 million during the three-month period ended September 30, 2013. This increase was mainly due to: (i) revenue earned by the three and three newbuild vessels delivered to us during the six-month period ended December 31, 2013 and the six-month period ended June 30, 2014, respectively; partly offset by (ii) decreased charter rates in certain of our vessels during the three-month period ended September 30, 2014, compared to the three-month period ended September 30, 2013, and (iii) revenues not earned by one and three vessels sold for scrap during the six-month period ended December 31, 2013 and the nine-month period ended September 30, 2014, respectively.

Voyage Expenses

Voyage expenses increased by 33.3%, or $0.2 million to $0.8 million, during the three-month period ended September 30, 2014, from $0.6 million during the three-month period ended September 30, 2013. Voyage expenses mainly include (i) off-hire expenses of our vessels, mainly related to fuel consumption and (ii) third party commissions.

Voyage Expenses - related parties

Voyage expenses - related parties in the amount of $0.9 million during the three-month period ended September 30, 2014 and in the amount of $0.8 million during the three-month period ended September 30, 2013, represent fees of 0.75% on voyage revenues charged to us by Costamare Shipping Company S.A. as provided under our group management agreement.

Vessels' Operating Expenses

Vessels' operating expenses, which also includes the realized gain / (loss) under derivative contracts entered into in relation to foreign currency exposure, increased by 3.0%, or $0.9 million, to $30.5 million during the three-month period ended September 30, 2014, from $29.6 million during the three-month period ended September 30, 2013. The increase was mainly attributable to the increased ownership days of our vessels during the three-month period ended September 30, 2014, compared to the three-month period ended September 30, 2013.

General and Administrative Expenses

General and administrative expenses increased by 100.0%, or $1.0 million, to $2.0 million during the three-month period ended September 30, 2014, from $1.0 million during the three-month period ended September 30, 2013.  General and administrative expenses for the three-month periods ended September 30, 2014 and 2013, included $0.25 million in each period for the services of the Company's officers in aggregate charged to us by Costamare Shipping Company S.A. as provided under our group management agreement.      

Management Fees - related parties

Management fees paid to our managers increased by 14.0%, or $0.6 million, to $4.9 million during the three-month period ended September 30, 2014, from $4.3 million during the three-month period ended September 30, 2013. The increase was primarily attributable to: (i) the upward adjustment by 4% of the management fee for each vessel (effective January 1, 2014), as provided under our group management agreement, and (ii) the increased average number of vessels during the three-month period ended September 30, 2014, compared to the three-month period ended September 30, 2013.

Amortization of Dry-docking and Special Survey Costs

Amortization of deferred dry-docking and special survey costs was $1.8 million for the three-month period ended September 30, 2014, and $2.1 million for the three-month period ended September 30, 2013. During the three-month period ended September 30, 2014, two vessels underwent their special survey and their respective works were in progress. During the three-month period ended September 30, 2013, three vessels (one of which was in progress as at June 30, 2013) completed their respective works.

Depreciation

Depreciation expense increased by 13.9%, or $3.3 million, to $27.0 million during the three-month period ended September 30, 2014, from $23.7 million during the three-month period ended September 30, 2013. The increase was mainly attributable to the depreciation expense charged for the three newbuild vessels delivered to us during the six-month period ended December 31, 2013 and for the three newbuild vessels delivered to us during the six-month period ended June 30, 2014, partly offset by the depreciation expense not charged for the one and three vessels sold for scrap during the six-month period ended December 31, 2013 and the nine-month period ended September 30, 2014, respectively.

Amortization of Prepaid lease rentals

The amount of $1.2 million relates to the amortization of the prepaid lease rentals during the three-month period ended September 30, 2014.

Gain / (Loss) on Sale/Disposals of Vessels

During the three-month period ended September 30, 2014, we recorded a gain of $5.4        million from the sale of two vessels. During the three-month period ended September 30, 2013, we recorded a loss of $5.9 million from the sale of one vessel.

Interest Income

Interest income for the three-month period ended September 30, 2014 and 2013, amounted to $0.2 million and nil, respectively.

Interest and Finance Costs

Interest and finance costs increased by 19.3%, or $4.4 million, to $27.2 million during the three-month period ended September 30, 2014, from $22.8 million during the three-month period ended September 30, 2013. The increase was mainly attributable to the increased interest expense charged to the consolidated statement of income in relation with the loan facilities of the three and three newbuild vessels which were delivered to us during the six-month period ended December 31, 2013 and the six-month period ended June 30, 2014, respectively; partly offset by the decreased loan commitment fees charged to us during the three-month period ended September 30, 2014, compared to the three-month period ended September 30, 2013.

Equity Gain/ (Loss) on Investments

The equity gain / (loss) on investments represents our share of the net earnings of fourteen jointly owned companies pursuant to the Framework Agreement with York. We hold a range of 25% to 49% of the capital stock of these companies. The net equity gain/(loss) on investments was nil for the three-month period ended September 30, 2014.

Gain on Derivative Instruments

The fair value of our 22 interest rate derivative instruments which were outstanding as of September 30, 2014, equates to the amount that would be paid by us or to us should those instruments be terminated. As of September 30, 2014, the fair value of these 22 interest rate derivative instruments in aggregate amounted to a liability of $69.9 million. The effective portion of the change in the fair value of the interest rate derivative instruments that qualified for hedge accounting is recorded in "Other Comprehensive Income" ("OCI") while the ineffective portion is recorded in the consolidated statements of income. The change in the fair value of the interest rate derivative instruments that did not qualify for hedge accounting is recorded in the consolidated statement of income.  For the three-month period ended September 30, 2014, a net gain of $15.1 million has been included in OCI and a net gain of $3.6 million has been included in Gain on derivative instruments in the consolidated statement of income, resulting from the fair market value change of the interest rate derivative instruments during the three-month period ended September 30, 2014.

Cash Flows

Three-month periods ended September 30, 2014 and 2013

Net Cash Provided by Operating Activities

Net cash flows provided by operating activities for the three-month period ended September 30, 2014, increased by $15.0 million to $65.8 million, compared to $50.8 million for the three-month period ended September 30, 2013.  The increase was primarily attributable to: (a) increased cash from operations of $11.7 million due to cash generated from the employment of the three and three newbuild vessels delivered to us during the six-month period ended December 31, 2013 and the six-month period ended June 30, 2014, respectively, (b) decreased payments for dry-dockings during the period of $0.2 million and (c) the favorable change in the working capital position, excluding the current portion of long-term debt and the accrued charter revenue (representing the difference between cash received in that period and revenue recognized on a straight-line basis) of $8.3 million; partly offset by the increased payments for interest (including swap payments) during the period of $3.3 million.

Net Cash Provided By / (Used in) Investing Activities

Net cash provided by investing activities was $13.9 million in the three-month period ended September 30, 2014, which mainly consisted of: (a) $0.8 million payments (net of $3.7 million we received as a dividend distribution) associated with the equity investments pursuant to the Framework Agreement with York, which range from 25% to 49% in jointly-owned companies, and (b) a $15.3 million payment we received from the sale for scrap of MSC Kyoto and Akritas.

Net cash used in investing activities was $148.2 million in the three-month period ended September 30, 2013, which consisted of: (a) $158.4 million advance payments for the construction and purchase of three newbuild vessels, (b) $4.3 million in payments for the acquisition of one secondhand vessel, (c) $8.8 million in payments, pursuant to the Framework Agreement with York, to hold a 49% equity interest in jointly-owned companies, (d) $7.2 million proceeds we received from the sale for scrap of MSC Antwerp and (e) $16.0 million we received, pursuant to the Framework Agreement with York, for York's 51% equity interest in the ship-owning companies which own the vessels Petalidi,  Ensenada Express and  X-Press Padma and for initial working capital for such ship-owning companies.

Net Cash Provided By / (Used in) Financing Activities

Net cash used in financing activities was $88.9 million in the three-month period ended September 30, 2014, which mainly consisted of: (a) $56.0 million of indebtedness that we repaid, (b) $3.2 million we repaid relating to our sale and leaseback agreements, (c) $20.9 million we paid for dividends to holders of our common stock for the second quarter of 2014, and (d) $1.0 million we paid for dividends  to holders of our 7.625% Series B Cumulative Redeemable Perpetual Preferred Stock (the "Series B Preferred Stock") and $2.1 million we paid for dividends to holders of our 8.500% Series C Cumulative Redeemable Perpetual Preferred Stock (the "Series C Preferred Stock"), in both cases for the period from April 15, 2014 to July 14, 2014.

Net cash provided by financing activities was $105.4 million in the three-month period ended September 30, 2013, which mainly consisted of: (a) $46.3 million of indebtedness that we repaid, (b) $126.0 million we drew down from three of our credit facilities and (c) $20.2 million we paid for dividends to our holders of our common stock for the second quarter of 2013 and (d) $48.0 million net proceeds we received from our public offering in August 2013, of 2.0 million shares of our  Series B Preferred Stock, net of underwriting discounts and expenses incurred in the offering.

Results of Operations

Nine-month period ended September 30, 2014, compared to the nine-month period ended September 30, 2013

During the nine-month period ended September 30, 2014 and 2013, we had an average of 54.6 and 49.0 vessels, respectively, in our fleet. In the nine-month period ended September 30, 2014, we accepted delivery of the newbuild vessels MSC Azov, MSC Ajaccio and MSC Amalfi with an aggregate TEU capacity of 28,209 TEU and the secondhand vessels Neapolis and Areopolis with an aggregate TEU capacity of 4,119 and we sold the vessels Konstantina, MSC Kyoto and Akritas with an aggregate TEU capacity of 10,379.  Furthermore, pursuant to the Framework Agreement with York, a jointly-owned vessel entity accepted delivery of the secondhand vessel Elafonisos with a TEU capacity of 2,526 TEU. In the nine-month period ended September 30, 2013, we accepted delivery of the newbuild vessels MSC Athens, MSC Athos, Valor, Value, Valiant and Valence with an aggregate TEU capacity of 52,962, the secondhand vessel Venetiko with a TEU capacity of 5,928, and the vessels Petalidi, Ensenada Express and X-Press Padma with an aggregate TEU capacity of 8,383 (these three secondhand vessels were acquired pursuant to the Framework Agreement with York), and we sold the vessels MSC Washington, MSC Austria and MSC Antwerp with an aggregate TEU capacity of 11,343. In the nine-month period ended September 30, 2014 and 2013, our fleet ownership days totaled 14,903 and 13,373 days, respectively. Ownership days, in combination with the level of daily charter hire that our vessels earn under time charters, are the primary drivers of voyage revenue and vessels' operating expenses and represent the aggregate number of days in a period during which each vessel in our fleet is owned.

Voyage Revenue

Voyage revenue increased by 20.4%, or $61.4 million, to $363.1 million during the nine-month period ended September 30, 2014, from $301.7 million during the nine-month period ended September 30, 2013. This increase was mainly attributable to: (i) revenue earned by the seven and three newbuild vessels delivered to us during the year ended December 31, 2013 and the six-month period ended June 30, 2014, respectively; partly offset by (ii) decreased charter rates in certain of our vessels during the nine-month period ended September 30, 2014, compared to the nine-month period ended September 30, 2013, and (iii) revenues not earned by vessels which were sold for scrap during the nine-month period ended December 31, 2013 and the nine-month period ended September 30, 2014.

Voyage revenue adjusted on a cash basis (which eliminates non-cash "Accrued charter revenue"), increased by 18.2%, or $56.9 million, to $369.3 million during the nine-month period ended September 30, 2014, from $312.4 million during the nine-month period ended September 30, 2013. This increase was mainly attributable to: (i) revenue earned by the seven and three newbuild vessels delivered to us during the year ended December 31, 2013 and the six-month period ended June 30, 2014, respectively; partly offset by (ii) decreased charter rates in certain of our vessels during the nine-month period ended September 30, 2014, compared to the nine-month period ended September 30, 2013, and (iii) revenues not earned by vessels which were sold for scrap during the nine-month period ended December 31, 2013 and the nine-month period ended September 30, 2014.

Voyage Expenses

Voyage expenses increased by 4.0%, or $0.1 million, to $2.6 million during the nine-month period ended September 30, 2014, from $2.5 million during the nine-month period ended September 30, 2013. Voyage expenses mainly include: (i) off-hire expenses of our vessels, mainly related to fuel consumption and (ii) third party commissions.

Voyage Expenses - related parties

Voyage expenses - related parties increased by 17.4%, or $0.4 million to $2.7 million during the nine-month period ended September 30, 2014, from $2.3 million during the nine-month period ended September 30, 2013, and represent fees of 0.75% on voyage revenues charged to us by Costamare Shipping Company S.A. as provided under our group management agreement.

Vessels' Operating Expenses

Vessels' operating expenses, which also includes the realized gain / (loss) under derivative contracts entered into in relation to foreign currency exposure, increased by 5.2% or $4.5 million to $90.4 million during the nine-month period ended September 30, 2014, from $85.9 million during the nine-month period ended September 30, 2013. The increase was mainly attributable to the increased ownership days of our fleet during the nine-month period ended September 30, 2014, compared to the nine-month period ended September 30, 2013.

General and Administrative Expenses

General and administrative expenses increased by 36.4% or $1.2 million, to $4.5 million during the nine-month period ended September 30, 2014, from $3.3 million during the nine-month period ended September 30, 2013. General and administrative expenses for the nine-month period ended September 30, 2014 and September 30, 2013, include $0.75 million in each period for the services of the Company's officers in aggregate charged to us by Costamare Shipping Company S.A. as provided under our group management agreement.     

Management Fees - related parties

Management fees paid to our managers increased by 15.4%, or $1.9 million, to $14.2 million during the nine-month period ended September 30, 2014, from $12.3 million during the nine-month period ended September 30, 2013. The increase was primarily attributable to: (i) the upward adjustment by 4% of the management fee for each vessel (effective January 1, 2014), as provided under our group management agreement, and (ii) the increased average number of vessels during the nine-month period ended September 30, 2014, compared to the nine-month period ended September 30, 2013.

Amortization of Dry-docking and Special Survey Costs

Amortization of deferred dry-docking and special survey costs for the nine-month period ended September 30, 2014 and 2013 was $5.6 million and $6.1 million, respectively. During the nine-month period ended September 30, 2014 and 2013, five and seven vessels, respectively, underwent their special survey. During the nine-month period ended September 30, 2014, three vessels completed their respective works, while two were in progress. During the nine-month period ended September 30, 2013, seven vessels completed their respective works.

Depreciation

Depreciation expense increased by 20.9%, or $13.6 million, to $78.8 million during the nine-month period ended September 30, 2014, from $65.2 million during the nine-month period ended September 30, 2013. The increase was mainly attributable to the depreciation expense charged for the seven newbuild vessels delivered to us during the year ended December 31, 2013 and for the three newbuild vessels delivered to us during the six-month period ended June 30, 2014, partly offset by the depreciation expense not charged for the six vessels sold for scrap during the nine-month period ended December 31, 2013 and the nine-month period ended September 30, 2014.

Amortization of Prepaid lease rentals

The amount of $2.8 million relates to the amortization of the prepaid lease rentals during the nine-month period ended September 30, 2014.

Gain on Sale/Disposal of Vessels

During the nine-month period ended September 30, 2014, we recorded a net gain of $2.5million from the sale of three vessels. During the nine-month period ended September 30, 2013, we recorded a net gain of $0.5 million from the sale of three vessels.

Interest Income

During the nine-month period ended September 30, 2014 and 2013, interest income was $0.5million and $0.4 million, respectively.

Interest and Finance Costs

Interest and finance costs increased by 32.9%, or $18.7 million, to $75.6 million during the nine-month period ended September 30, 2014, from $56.9 million during the nine-month period ended September 30, 2013. The increase was mainly attributable to the increased interest expense charged to the consolidated statement of income in relation with the loan facilities of the seven and three newbuild vessels which were delivered to us during the year ended December 31, 2013 and the six-month period ended June 30, 2014, respectively and the write-off of deferred finance costs due to the refinancing of one of our bank loans; partly offset by the decreased loan commitment fees charged to us during the nine-month period ended September 30, 2014, compared to the nine-month period ended September 30, 2013.

Equity gain / (loss) on Investments

The equity loss on investments of $2.2 million represents our share of the net losses of fourteen jointly owned companies formed pursuant to the Framework Agreement with York. We hold a range of 25% to 49% of the capital stock of each company. The net loss of $2.2 million includes an unrealized loss of $4.9 million deriving from a swap option agreement entered into by a jointly owned company.

Gain on Derivative Instruments

The fair value of our 22 interest rate derivative instruments which were outstanding as of September 30, 2014, equates to the amount that would be paid by us or to us should those instruments be terminated. As of September 30, 2014, the fair value of these 22 interest rate derivative instruments in aggregate amounted to a liability of $69.9 million. The effective portion of the change in the fair value of the interest rate derivative instruments that qualified for hedge accounting is recorded in "Other Comprehensive Income" ("OCI") while the ineffective portion is recorded in the consolidated statement of income. The change in the fair value of the interest rate derivative instruments that did not qualify for hedge accounting is recorded in the consolidated statement of income. For the nine-month period ended September 30, 2014, a gain of $27.7 million has been included in OCI and a net gain of $5.6 million has been included in Gain on derivative instruments in the consolidated statement of income, resulting from the fair market value change of the interest rate derivative instruments during the nine-month period ended September 30, 2014.

Cash Flows

Nine-month periods ended September 30, 2014 and 2013

Net Cash Provided by Operating Activities

Net cash flows provided by operating activities increased by $51.8 million to $180.7 million for the nine-month period ended September 30, 2014, compared to $128.9 million for the nine-month period ended September 30, 2013. The increase was primarily attributable to: (a) increased cash from operations of $57.0 million due to cash generated from the charters of the seven and three newbuild vessels delivered to us during the year ended December 31, 2013 and the six-month period ended June 30, 2014, respectively, (b) a favorable change in working capital position, excluding the current portion of long-term debt and the accrued charter revenue (representing the difference between cash received in that period and revenue recognized on a straight-line basis) of $22.5 million and (c) decreased dry-docking payments of $1.8 million; partly offset by increased payments for interest (including swap payments) of $13.1 million.

Net Cash Used in Investing Activities

Net cash used in investing activities was $109.1 million in the nine-month period ended September 30, 2014, which consisted of: (a) $59.1 million for capitalized costs and advance payments for the construction and delivery of three newbuild vessels, (b) $20.5 million in payments primarily for the acquisition of two secondhand vessels, (c) $51.6 million (net of $5.5 million we received as a dividend distribution) in payments, pursuant to the Framework Agreement with York, to hold an equity interest ranging from 25% to 49% in jointly-owned companies and (d) $22.1 million we received from the sale for scrap of Konstantina, MSC Kyoto and Akritas..

Net cash used in investing activities was $513.1 million in the nine-month period ended September 30, 2013, which mainly consisted of: (a) $482.4 million advance payments for the construction and purchase of ten newbuild vessels, (b) $51.9 million in payments for the acquisition of four secondhand vessels, (c) $8.8 million in payments, pursuant to the Framework Agreement with York, to hold a 49% equity interest in jointly-owned companies, (d) $13.9 million net proceeds we received from the sale for scrap of MSC Antwerp and MSC Austria (including $0.6 million in payments for expenses related to the sale of MSC Washington) and (e) $16.0 million we received , pursuant to the Framework Agreement with York, for York's 51% equity interest in the ship-owning companies of the vessels Petalidi, Ensenada Express and X-Press Padma and for initial working capital for such ship-owning companies.

Net Cash Provided By / (Used in) Financing Activities

Net cash used in financing activities was $26.4 million in the nine-month period ended September 30, 2014, which mainly consisted of: (a) $309.8 million of indebtedness that we repaid, (b) $9.0 million we drew down from one of our credit facilities, (c) $256.7 million we received regarding the sale and leaseback transaction concluded for the three newbuild vessels, (d) $6.3 million we repaid regarding our sale and leaseback agreements, (e) $62.1 million we paid for dividends to holders of our common stock for the fourth quarter of 2013, the first quarter of 2014 and the second quarter of 2014, (f) $2.9 million we paid for dividends  to holders of our Series B Preferred Stock for the period from October 15, 2013 to July 14, 2014, and $4.1 million we paid for dividends to holders of our Series C Preferred Stock for the period from the original issuance of the Series C preferred Stock on January 21, 2014 to July 14, 2014, and (g) $96.5 million net proceeds we received from our public offering in January 2014 of 4.0 million shares of our Series C Preferred Stock, net of underwriting discounts and expenses incurred in the offering.

Net cash provided by financing activities was $237.3 million in the nine-month period ended September 30, 2013, which mainly consisted of: (a) $120.5 million of indebtedness that we repaid, (b) $377.8 million we drew down from four of our credit facilities, (c) $60.6 million we paid for dividends to our stockholders for the fourth quarter of the year ended December 31, 2012, the first quarter and second quarters of 2013 and (d) $48.0 million net proceeds we received from our public offering in August 2013 of 2.0 million shares of our 7.625% Series B Cumulative Redeemable Perpetual Preferred Shares, net of underwriting discounts and expenses incurred in the offering.

Liquidity and Capital Expenditures

Cash and cash equivalents

As of September 30, 2014, we had a total cash liquidity of $198.9 million, consisting of cash, cash equivalents and restricted cash.

Debt-free vessels

As of October 30, 2014, the following vessels were free of debt.

Unencumbered Vessels in the water(*)

(refer to fleet list for full charter details)

(*) Does not include one secondhand vessel acquired and nine newbuild vessels ordered pursuant to the Framework Agreement with York, which are also free of debt.   

Capital commitments

As of October 30, 2014, we had outstanding commitments relating to our nine contracted newbuilds aggregating approximately $299.5 million payable in installments until the vessels are delivered, which amount represents our interest in the relevant jointly-owned entities with York.

Conference Call details:

On Monday, November 3, 2014, at 8:30 a.m. ET, Costamare's management team will hold a conference call to discuss the financial results.

Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1-866-524-3160 (from the US), 0808 238 9064 (from the UK) or +1-412-317-6760 (from outside the US). Please quote "Costamare".

A replay of the conference call will be available until November 29, 2014. The United States replay number is +1-877-344-7529; the standard international replay number is +1-412-317-0088, and the access code required for the replay is: 10055513.

Live webcast:

About Costamare Inc.

Costamare Inc. is one of the world's leading owners and providers of containerships for charter. The Company has 40 years of history in the international shipping industry and a fleet of 67 containerships, with a total capacity of approximately 445,000 TEU, including nine newbuild containerships on order. Thirteen of our containerships, including nine newbuilds, have been acquired pursuant to the Framework Agreement with York Capital Management by vessel-owning joint venture entities in which we hold a minority equity interest. The Company's common stock, Series B Preferred Stock and Series C Preferred Stock trade on the New York Stock Exchange under the symbols "CMRE", "CMRE PR B" and "CMRE PR C", respectively.

Forward-Looking Statements

This earnings release contains "forward-looking statements". In some cases, you can identify these statements by forward-looking words such as "believe", "intend", "anticipate", "estimate", "project", "forecast", "plan", "potential", "may", "should", "could" and "expect" and similar expressions. These statements are not historical facts but instead represent only Costamare's belief regarding future results, many of which, by their nature, are inherently uncertain and outside of Costamare's control. It is possible that actual results may differ, possibly materially, from those anticipated in these forward-looking statements. For a discussion of some of the risks and important factors that could affect future results, see the discussion in Costamare Inc.'s Annual Report on Form 20-F (File No. 001-34934) under the caption "Risk Factors".

Contacts:

Investor Relations Advisor/ Media Contact:
Gus Okwu

Allison+Partners, New York

Telephone: (+1) 646-428-0638

Fleet List

The tables below provide additional information, as of October 30, 2014, about our fleet of containerships, including our newbuilds on order and the vessels acquired pursuant to the Framework Agreement with York. Each vessel is a cellular containership, meaning it is a dedicated container vessel.

Newbuilds

Our newbuilds on order have an aggregate capacity in excess of 115,000 TEU.

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

(2)       This average rate is calculated based on contracted charter rates for the days remaining between October 30, 2014 and the earliest expiration of each charter. Certain of our charter rates change until their earliest expiration dates, as indicated in the footnotes below.

(3)       This charter rate changes on December 4, 2014 to $26,100 per day until the earliest redelivery date.

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

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

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

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

(8)       As from December 1, 2012 until redelivery, the charter rate is to be a minimum of $13,500 per day plus 50% of the difference between the market rate and the charter rate of $13,500. The market rate is to be determined annually based on the Hamburg ConTex type 3500 TEU index published on October 1 of each year until redelivery.

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

(ii)       The charterer has a unilateral option to extend the charter of the vessel for two periods of 30 months each +/-90 days on the final period performed, at a rate of $41,700 per day.

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

 (*)    Denotes vessels acquired pursuant to the Framework Agreement with York. The Company holds an equity interest ranging between 25% and 49% in each of the vessel-owning entities.

COSTAMARE INC.

Consolidated Statements of Income

COSTAMARE INC.

Consolidated Balance Sheets