News Column

Costamare Inc. Reports Results for the Second Quarter Ended June 30, 2014

July 25, 2014



ENP Newswire - 25 July 2014

Release date- 24072014 - Athens, Greece - Costamare Inc. (NYSE: CMRE) today reported unaudited financial results for the second quarter and six months ended June 30, 2014.

Voyage revenues of $123.5 million and $238.4 million for the three and the six months ended June 30, 2014, respectively.

Voyage revenues adjusted on a cash basis of $126.0 million and $243.5 million for the three and six months ended June 30, 2014, respectively.

Adjusted EBITDA of $91.4 million and $173.4 million for the three and six months ended June 30, 2014, respectively.

Net income of $27.4 million and $47.2 million for the three and six months ended June 30, 2014, respectively.

Net income available to common stockholders of $24.3 million or $0.32 per share and $41.5 million or $0.55 per share for the three and six months ended June 30, 2014, respectively.

Adjusted Net income available to common stockholders of $36.2 million or $0.48 per share and $62.5 million or $0.84 per share for the three and six months ended June 30, 2014, respectively

New Business Developments

The Company purchased the 2000-built, 2,474 TEU containership Areopolis for a purchase price of $9.5 million. The vessel has been chartered to Cosco for a period of minimum 3 and maximum 5 months starting from June 15, 2014, at a daily rate of $7,000.

The Company sold the 1992-built, 3,351 TEU containership Konstantina for demolition, for a sale price of $7.5 million. The vessel was delivered to her buyers on May 29, 2014. On July 8, 2014 the Company agreed to sell for demolition the 1981-built, 3,876 TEU containership MSC Kyoto for a sale price of $9.5 million. The vessel was delivered to her buyers on July 17, 2014. The Company expects to record a net gain from the two transactions of approximately $0.8 million

The Company entered into the following charter arrangements:

Agreed to substitute the 1998-built, 3,842 TEU containership MSC Koroni (ex. Koroni) into the charter of the MSC Kyoto which was sold for demolition.

Agreed to charter the 1998-built, 3,842 TEU containership MSC Itea (ex. Kyparissia) with MSC for a period of approximately 1 year starting from July 7, 2014 at a daily rate of $7,300.

Agreed to extend the charter of the 1994-built, 1,162TEU containership Petalidi with CMA CGM for a period of minimum 12 and maximum 14 months starting from August 3, 2014 at a daily rate of $6,800.

Agreed to extend the charter of the 1992-built, 3,351TEU containership Marina with Evergreen for a period of minimum 8 and maximum 12 months starting from August 12, 2014 at a daily rate of $7,000.

Agreed to charter the 1991-built, 3,351 TEU containership Karmen with Wan Hai Lines for a period of minimum 15 and maximum 25 days at a daily rate of $7,500 starting from July 7, 2014.

Exercised our option to extend the charters of the MSC Namibia II, MSC Sierra II and MSC Reunion with MSC for a period of approximately two years starting from August 2, July 1 and August 27, 2014 respectively. The daily rate for the first year of the extension has been set at $7,600.

Dividend Announcements

On July 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 July 15, 2014, to holders of record on July 14, 2014.

On July 8, 2014, we declared a dividend for the second quarter ended June 30, 2014, of $0.28 per share on our common stock, payable on August 6, 2014, to stockholders of record on July 23, 2014. This will be the Company's fifteenth consecutive quarterly dividend since it commenced trading on the New York Stock Exchange.

Mr. Gregory Zikos, Chief Financial Officer of Costamare Inc., commented: 'During the second quarter of the year, the Company continued to deliver positive results.

Recently we acquired a 2000-built 2,474 TEU container vessel for a purchase price of $ 9.5 million. The vessel was bought with equity and after delivery she commenced her charter employment with Cosco.

Regarding our chartering arrangements, we have no ships laid up. Our re-chartering risk is minimized. The charters for the vessels opening in 2014 account for less than 3% of our 2014 contracted revenues.

Finally, on July 3, we declared a dividend on our Series B and Series C Preferred Stock. On July 8, we declared a dividend of $ 0.28 per share of our common stock, payable on August 6. We continue to execute successfully on our growth strategy. We feel we are well positioned to continue to grow selectively and on healthy grounds.'

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.

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.

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, 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. generally accepted accounting principles, or '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.

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. generally accepted accounting principles, or '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.

Note: 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 June 30, 2014, compared to the three-month period ended June 30, 2013

During the three-month periods ended June 30, 2014 and 2013, we had an average of 55.7 and 49.0 vessels, respectively, in our fleet. In the three-month period ended June 30, 2014, we accepted delivery of the newbuild vessel MSC Amalfi with a TEU capacity of 9,403 and the secondhand vessels Neapolis and Areopolis with an aggregate TEU capacity of 4,119, and we sold the vessel Konstantina with TEU capacity of 3,351.

In the three-month period ended June 30, 2013, we accepted delivery of the newbuild vessels MSC Athos, Valor and Value with an aggregate TEU capacity of 26,481 and the secondhand vessels Petalidi and Ensenada Express with an aggregate TEU capacity of 6,738, which were acquired pursuant to the Framework Agreement with York and we sold the vessel MSC Austria with a TEU capacity of 3,584.

In the three-month periods ended June 30, 2014 and 2013, our fleet ownership days totaled 5,070 and 4,456 days, respectively. Ownership days are the primary driver of voyage revenue and vessels' operating expenses and represent the aggregate number of days in a period during which each vessel in our fleet is owned.

Voyage Revenue

Voyage revenue increased by 23.5%, or $23.5 million, to $123.5 million during the three-month period ended June 30, 2014, from $100.0 million during the three-month period ended June 30, 2013.

This increase was mainly due to (i) revenue earned by the six and three newbuild vessels delivered to us during the nine-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 June 30, 2014, compared to the three-month period ended June 30, 2013, and (iii) revenues not earned by two and one vessels sold for scrap during the nine-month period ended December 31, 2013 and the six-month period ended June 30, 2014, respectively.

Voyage revenue adjusted on a cash basis (which eliminates non-cash 'Accrued charter revenue'), increased by 22.0%, or $22.7 million, to $126.0 million during the three-month period ended June 30, 2014, from $103.3 million during the three-month period ended June 30, 2013.

This increase was mainly due to (i) revenue earned by the six and three newbuild vessels delivered to us during the nine-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 June 30, 2014, compared to the three-month period ended June 30, 2013, and (iii) revenues not earned by two and one vessels sold for scrap during the nine-month period ended December 31, 2013 and the six-month period ended June 30, 2014, respectively.

Voyage Expenses

Voyage expenses decreased by 8.3% or $0.1 million to $1.1 million, during the three-month period ended June 30, 2014, from $1.2 million during the three-month period ended June 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 June 30, 2014 and in the amount of $0.8 million during the three-month period ended June 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, increased by 7.0%, or $2.0 million, to $30.5 million during the three-month period ended June 30, 2014, from $28.5 million during the three-month period ended June 30, 2013. The increase was mainly attributable to the increased ownership days of our vessels during the three-month period ended June 30, 2014, compared to the three-month period ended June 30, 2013.

General and Administrative Expenses

General and administrative expenses increased by 7.7%, or $0.1 million, to $1.4 million during the three-month period ended June 30, 2014, from $1.3 million during the three-month period ended June 30, 2013. General and administrative expenses for the three-month periods ended June 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 17.1%, or $0.7 million, to $4.8 million during the three-month period ended June 30, 2014, from $4.1 million during the three-month period ended June 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 June 30, 2014, compared to the three-month period ended June 30, 2013.

Amortization of Dry-docking and Special Survey Costs

Amortization of deferred dry-docking and special survey costs was $1.9 million for the three-month period ended June 30, 2014, and $2.0 million for the three-month period ended June 30, 2013. During the three-month period ended June 30, 2014, one vessel underwent and completed her special survey. During the three-month period ended June 30, 2013, two vessels underwent and completed their special surveys while one vessel was in process.

Depreciation

Depreciation expense increased by 23.1%, or $5.0 million, to $26.6 million during the three-month period ended June 30, 2014, from $21.6 million during the three-month period ended June 30, 2013.

The increase was mainly attributable to the depreciation expense charged for the six newbuild vessels delivered to us during the nine-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 two and one vessels sold for scrap during the nine-month period ended December 31, 2013 and the six-month period ended June 30, 2014, respectively.

Amortization of Prepaid lease rentals

The amount of $1.1 million relates to the amortization of the prepaid lease rentals during the three-month period ended June 30, 2014.

Gain / (Loss) on Sale/Disposals of Vessels

During the three-month period ended June 30, 2014, we recorded a loss of $2.9 million from the sale of one vessel. During the three-month period ended June 30, 2013, we recorded a gain of $3.6 million from the sale of one vessel.

Interest Income

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

Interest and Finance Costs

Interest and finance costs increased by 37.8%, or $6.2 million, to $22.6 million during the three-month period ended June 30, 2014, from $16.4 million during the three-month period ended June 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 six and three newbuild vessels which were delivered to us during the nine-month period 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 three-month period ended June 30, 2014, compared to the three-month period ended June 30, 2013.

Equity Gain/ (Loss) on Investments

The equity gain / (loss) on investments represents our share of the net earnings of thirteen 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 June 30, 2014 and includes an unrealized loss of $2.2 million deriving from a swap option agreement entered into by a jointly owned company.

Gain / (Loss) on Derivative Instruments

The fair value of our 22 interest rate derivative instruments which were outstanding as of June 30, 2014, equates to the amount that would be paid by us or to us should those instruments be terminated. As of June 30, 2014, the fair value of these 22 interest rate derivative instruments in aggregate amounted to a liability of $88.6 million. Twenty-one of the 22 interest rate derivative instruments that were outstanding as at June 30, 2014, qualified for hedge accounting and the effective portion of the change in their fair value is recorded in 'Other Comprehensive Income' ('OCI').

For the three-month period ended June 30, 2014, a net gain of $1.2 million has been included in OCI and a net loss of $0.9 million has been included in Gain / (Loss) on derivative instruments in the consolidated statement of income, resulting from the fair market value change of the interest rate derivative instruments during the three-month period ended June 30, 2014. Furthermore, during the three-month period ended June 30, 2014, we terminated one interest rate derivative instrument that qualified for hedge accounting and we paid the counterparty breakage costs of $3.5 million, in aggregate.

Cash Flows

Net Cash Provided by Operating Activities

Net cash flows provided by operating activities for the three-month period ended June 30, 2014, increased by $17.9 million to $61.1 million, compared to $43.2 million for the three-month period ended June 30, 2013.

The increase was primarily attributable to (a) increased cash from operations of $22.7 million due to cash generated from the employment of the six and three newbuild vessels delivered to us during the nine-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 $1.8 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 $2.7 million; partly offset by the increased payments for interest (including swap payments) during the period of $2.4 million.

Net Cash Used in Investing Activities

Net cash used in investing activities was $57.9 million in the three-month period ended June 30, 2014, which consisted of (a) $18.4 million for capitalized costs and advance payments for the construction and delivery of one newbuild vessel (b) $19.8 million in payments for the acquisition of two secondhand vessels, (c) $26.4 million payments (net of $1.8 million we received as a dividend distribution) associated to the equity investments pursuant to the Framework Agreement with York, which range from 25% to 49% in jointly-owned companies, and (d) a $6.7 million payment we received from the sale for scrap of one vessel.

Net cash used in investing activities was $215.4 million in the three-month period ended June 30, 2013, which consisted of (a) $194.8 million advance payments for the construction and purchase of five newbuild vessels, (b) $24.9 million in payments for the acquisition of two secondhand vessels, (c) a $0.5 million advance payment we made for the acquisition of one secondhand vessel which was delivered to us on July 3, 2013, and (d) a $4.8 million balance payment we received from sale for scrap of one vessel, as part of the payment we received during the three-month period ended March 31, 2013.

Net Cash Provided By / (Used in) Financing Activities

Net cash used in financing activities was $39.0 million in the three-month period ended June 30, 2014, which mainly consisted of (a) $106.3 million of indebtedness that we repaid, (b) $9.0 million we drew down from one of our credit facilities, (c) $85.6 million we received regarding the sale and leaseback transaction concluded for one newbuild, (d) $2.5 million we repaid relating to our sale and leaseback agreements, (e) $20.9 million we paid for dividends to holders of our common stock for the first quarter of 2014, and (f) $0.9 million we paid for dividends to holders of our 7.625% Series B Cumulative Redeemable Perpetual Preferred Stock (the 'Series B Preferred Stock') for the period from January 15, 2014 to April 14, 2014, and $2.0 million we paid for dividends to holders of our 8.500% Series C Cumulative Redeemable Perpetual Preferred Stock (the 'Series C Preferred Stock') for the period from the original issuance of the Series C Preferred Stock on January 21, 2014 to April 14, 2014.

Net cash provided by financing activities was $101.7 million in the three-month period ended June 30, 2013, which mainly consisted of (a) $37.9 million of indebtedness that we repaid, (b) $164.0 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 first quarter of the year 2013.

Results of Operations

Six-month period ended June 30, 2014, compared to the six-month period ended June 30, 2013

During the six-month period ended June 30, 2014 and 2013, we had an average of 54.4 and 47.9 vessels, respectively in our fleet. In the six-month period ended June 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 vessel Konstantina with a TEU capacity of 3,351.

In the six-month period ended June 30, 2013, we accepted delivery of the newbuild vessels MSC Athens, MSC Athos, Valor and Value with an aggregate TEU capacity of 35,308, the secondhand vessel Venetikowith a TEU capacity of 5,928, and the vessels Petalidi and Ensenada Express with an aggregate TEU capacity of 6,738 and we sold the vessels MSC Washington andMSC Austria with an aggregate TEU capacity of 7,460. In the six-month period ended June 30, 2014 and 2013, our fleet ownership days totaled 9,845 and 8,677 days, respectively.

Ownership days are the primary driver of voyage revenue and vessels operating expenses and represent the aggregate number of days in a period during which each vessel in our fleet is owned.

Voyage Revenue

Voyage revenue increased by 24.4%, or $46.8 million, to $238.4 million during the six-month period ended June 30, 2014, from $191.6 million during the six-month period ended June 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 six-month period ended June 30, 2014, compared to the six-month period ended June 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 six-month period ended June 30, 2014.

Voyage revenue adjusted on a cash basis (which eliminates non-cash 'Accrued charter revenue'), increased by 22.9%, or $45.3 million, to $243.5 million during the six-month period ended June 30, 2014, from $198.2 million during the six-month period ended June 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 six-month period ended June 30, 2014, compared to the six-month period ended June 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 six-month period ended June 30, 2014.

Voyage Expenses

Voyage expenses decreased by 5.3%, or $0.1 million, to $1.8 million during the six-month period ended June 30, 2014, from $1.9 million during the six-month period ended June 30, 2013. The decrease was primarily attributable to the decreased off-hire expenses of our fleet, mainly bunkers consumption and by the decreased third party commissions charged to us during the six-month period ended June 30, 2014, compared to the six-month period ended June 30, 2013.

Voyage Expenses - related parties

Voyage expenses - related parties increased by 28.6% or $0.4 million to $1.8 million during the six-month period ended June 30, 2014, from $1.4 million during the six-month period ended June 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 6.2% or $3.5 million to $59.9 million during the six-month period ended June 30, 2014, from $56.4 million during the six-month period ended June 30, 2013. The increase was mainly attributable to the increased ownership days of our fleet during the six-month period ended June 30, 2014, compared to the six-month period ended June 30, 2013.

General and Administrative Expenses

General and administrative expenses increased by 13.6% or $0.3 million, to $2.5 million during the six-month period ended June 30, 2014, from $2.2 million during the six-month period ended June 30, 2013. Furthermore, General and administrative expenses for the six-month period ended June 30, 2014 and June 30, 2013, include $0.5 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 16.3%, or $1.3 million, to $9.3 million during the six-month period ended June 30, 2014, from $8.0 million during the six-month period ended June 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 six-month period ended June 30, 2014, compared to the six-month period ended June 30, 2013.

Amortization of Dry-docking and Special Survey Costs

Amortization of deferred dry-docking and special survey costs for the six-month period ended June 30, 2014 and 2013, was $3.8 million and $4.0 million, respectively. During the six-month period ended June 30, 2014 and 2013, three and five vessels, respectively, underwent their special survey.

Depreciation

Depreciation expense increased by 24.8%, or $10.3 million, to $51.8 million during the six-month period ended June 30, 2014, from $41.5 million during the six-month period ended June 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 vessels sold for scrap during the nine-month period ended December 31, 2013 and the six-month period ended June 30, 2014.

Amortization of Prepaid lease rentals

The amount of $1.5 million relates to the amortization of the prepaid lease rentals during the six-month period ended June 30, 2014.

Gain / (Loss) on Sale/Disposal of Vessels

During the six-month period ended June 30, 2014, we recorded a loss of $2.9 million from the sale of one vessel. During the six-month period ended June 30, 2013, we recorded a gain of $6.4 million from the sale of two vessels.

Interest Income

During the six-month period ended June 30, 2014 and 2013, interest income was $0.4 million and $0.4 million, respectively.

Interest and Finance Costs

Interest and finance costs increased by 41.9%, or $14.3 million, to $48.4 million during the six-month period ended June 30, 2014, from $34.1 million during the six-month period ended June 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 six-month period ended June 30, 2014, compared to the six-month period ended June 30, 2013.

Equity loss on Investments

The equity loss on investments of $2.3 million represents our share of the net losses of thirteen 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 $2.3 includes an unrealized loss of $4.7 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 June 30, 2014, equates to the amount that would be paid by us or to us should those instruments be terminated. As of June 30, 2014, the fair value of these 22 interest rate derivative instruments in aggregate amounted to a liability of $88.6 million.

Twenty-one of the 22 interest rate derivative instruments that were outstanding as at June 30, 2014, qualified for hedge accounting and the effective portion of the change in their fair value is recorded in OCI. For the six-month period ended June 30, 2014, a gain of $12.6 million has been included in OCI and a net gain of $1.9 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 six-month period ended June 30, 2014.

Cash Flows

Net Cash Provided by Operating Activities

Net cash flows provided by operating activities increased by $36.9 million to $115.0 million for the six-month period ended June 30, 2014, compared to $78.1 for the six-month period ended June 30, 2013.

The increase was primarily attributable to (a) increased cash from operations of $45.3 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 $14.2 million and (c) decreased dry-docking payments of $1.6 million; partly offset by increased payments for interest (including swap payments) of $9.8 million.

Net Cash Used in Investing Activities

Net cash used in investing activities was $123.0 million in the six-month period ended June 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) $19.8 million in payments for the acquisition of two secondhand vessels, (c) $50.8 million (net of $1.8 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) $6.7 million we received from the sale for scrap of one vessel.

Net cash used in investing activities was $364.9 million in the six-month period ended June 30, 2013, which mainly consisted of (a) $324.0 million advance payments for the construction and purchase of eight newbuild vessels, (b) $47.1 million in payments for the acquisition of three secondhand vessels, (c) $0.5 million advance payment we paid for the acquisition of one secondhand vessel delivered to us on July 3, 2013, (d) $0.6 million in payments for expenses related to the sale of the MSC Washington and, (e) $7.2 million we received from the sale of one vessel.

Net Cash Provided By Financing Activities

Net cash provided by financing activities was $62.5 million in the six-month period ended June 30, 2014, which mainly consisted of (a) $253.8 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) $3.1 million we repaid regarding our sale and leaseback agreements, (e) $41.1 million we paid for dividends to holders of our common stock for the fourth quarter of 2013 and the first quarter of 2014, (f) $1.9 million we paid for dividends to holders of our Series B Preferred Stock for the period from October 15, 2013 to January 14, 2014 and January 15, 2014 to April 14, 2014, and $2.0 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 April 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 $131.9 million in the six month period ended June 30, 2013, which mainly consisted of (a) $74.1 million of indebtedness that we repaid, (b) $251.9 million we drew down from four of our credit facilities and, (c) $40.4 million we paid for dividends to our stockholders for the fourth quarter of the year ended December 31, 2012 and first quarter of the year 2013.

Liquidity and Capital Expenditures

Cash and cash equivalents

As of June 30, 2014, we had a total cash liquidity of $202.4 million, consisting of cash, cash equivalents and restricted cash.

Debt-free vessels

As of July 23, 2014, the following vessels were free of debt.

Capital commitments

As of July 23, 2014, we had outstanding commitments relating to our nine contracted newbuilds, aggregating approximately $ 312.4 million payable in installments until the vessels are delivered, which amount represents our interest in the relevant jointly-owned entities with York.

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.

Twelve 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.

Contact:

Gregory Zikos

Chief Financial Officer

Costamare Inc.

Tel: (+30) 210-949-0050

Email: ir@costamare.com


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Source: ENP Newswire


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