UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

Pursuant to Rule 13a-16 or 15d-16

under the Securities Exchange Act of 1934

For the month of February 2020

COMMISSION FILE NUMBER: 001-33373

 

 

CAPITAL PRODUCT PARTNERS L.P.

(Translation of registrant’s name into English)

 

 

3 Iassonos Street

Piraeus, 18537 Greece

(Address of principal executive offices)

 

 

Indicate by check mark whether the Registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  ☒             Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

 

 

 


On February 5, 2020, Capital Product Partners L.P. issued a press release announcing the financial results for the fourth quarter ended December 31, 2019 and increased quarterly distribution guidance.

A copy of the press release is attached as Exhibit I hereto.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

    CAPITAL PRODUCT PARTNERS L.P.
Dated: February 7, 2020     By: Capital GP L.L.C., its general partner
     

/s/ Gerasimos (Jerry) Kalogiratos

      Name:   Gerasimos (Jerry) Kalogiratos
      Title:  

Chief Executive Officer

of Capital GP L.L.C.

Exhibit I

Exhibit I

 

LOGO

CAPITAL PRODUCT PARTNERS L.P. ANNOUNCES FOURTH QUARTER 2019 FINANCIAL RESULTS AND INCREASED QUARTERLY DISTRIBUTION GUIDANCE

ATHENS, Greece Feb. 5, 2020 (GLOBE NEWSWIRE) — Capital Product Partners L.P. (the “Partnership,” “CPLP” or “we” / “us”) (NASDAQ: CPLP), an international owner of ocean-going vessels, today released its financial results for the fourth quarter ended December 31, 2019.

Highlights

 

   

Quarterly Revenues, Expenses and Net Income from continuing operations of $27.7 million, $18.2 million and $5.8 million respectively for the fourth quarter of 2019.

 

   

Operating Surplus1 from continuing operations and Operating Surplus after the quarterly allocation to the capital reserve of $15.0 million and $7.3 million respectively.

 

   

Completed in January 2020 the acquisition of three 10,000 TEU containers with long term charters to Hapag-Lloyd.

 

   

Completed during the fourth quarter of 2019 exhaust gas cleaning systems (“scrubber”) installation on three additional 5,000 TEU container vessels.

 

   

Entered into a term sheet to partially refinance our 2017 credit facility expected to generate approximately $35.4 million of additional liquidity and decrease annual debt amortization.

 

   

Increased common unit distribution to $0.35 per quarter.

Management Commentary

Mr. Jerry Kalogiratos, Chief Executive Officer of our General Partner, commented:

“The fourth quarter of 2019 has been a pivotal quarter for the Partnership. We have announced and now completed an important acquisition of three 10,000 TEU container vessels, which is expected to substantially increase our distributable cash flow per unit, while maintaining cash flow visibility as the vessels’ charters run into 2024. At the same time, through this acquisition, we increased the size of our fleet by approximately 30%, further expanding into the attractive Neo-Panamax container segment and diversifying our customer base with the addition of Hapag-Lloyd.

 

1 

Operating surplus is a non-GAAP financial measure used by certain investors to measure the financial performance of the Partnership and other master limited partnerships. Please refer to Appendix A at the end of the press release for a reconciliation of this non-GAAP measure with net income.


Moreover, we are in the process of completing an important refinancing of three of our vessels, which is expected to lower the debt amortization schedule and the weighted average interest margin we currently have under our 2017 credit facility, while also generating additional liquidity for the Partnership to fuel further growth.

In addition, we have now successfully completed the scrubber retrofit on four of our vessels out of a total of seven vessels scheduled for scrubber retrofit and delivered them under their respective charters.

Last but not least, we have increased our fourth quarter 2019 common unit distribution by approximately 11% and set forth a new quarterly distribution guidance of $0.35 per common unit. The distribution increase in advance of the earnings impact of the three-vessel acquisition demonstrates the Partnership’s confidence in its ability going forward to continue to grow its asset base, combined with a substantial quarterly common unit distribution.”

Financial Summary

As previously announced, the share-for-share transaction with DSS Holdings L.P. (the “DSS Transaction”), involving an aggregate repayment of debt in a principal amount of $146.5 million, the full redemption and retirement of our Class B Convertible Preferred Units at par value and the spin-off of our 25 crude and product tankers (the “Tanker Business”), was completed on March 27, 2019. Accordingly, we present our financial results for the three months ended December 31, 2019, as well as comparative periods, on a continuing operations basis, except where reference is made to discontinued operations.

We currently own a fleet of 14 vessels, consisting of 13 Neo-Panamax container vessels and one drybulk vessel. For the fourth quarter 2018, our financial results from continuing operations include revenues, expenses and cash flows arising from, in addition to the 11 vessels remaining following the DSS Transaction, the M/T Amore Mio II, which we sold and delivered on October 15, 2018. This tanker was not part of the Tanker Business that we spun off in the DSS Transaction.

All per unit data in this release have been retrospectively adjusted to reflect the impact of the one-for-seven reverse unit split we effected on March 27, 2019.

 

2


Overview of Fourth Quarter 2019 Results

Net income from continuing operations for the quarter ended December 31, 2019 was $5.8 million, compared with net income from continuing operations of $6.9 million for the fourth quarter of 2018. After taking into account the interest attributable to the general partner, net income from continuing operations per common unit for the quarter ended December 31, 2019 was $0.31, compared to net income from continuing operations per common unit of $0.23 for the fourth quarter of 2018.

Total revenue was $27.7 million for the quarter ended December 31, 2019, compared to $27.6 million during the fourth quarter of 2018. The increase in revenue is attributable to the increase in the average charter rate earned by certain of our vessels including the M/V ‘Agamemnon’, following the commencement of its new charter with Mediterranean Shipping Company S.A., offset to a large extent by the off-hire period incurred by four of our vessels for the installation of scrubber systems and passing of their special survey during the fourth quarter of 2019.

Total expenses for the quarter ended December 31, 2019 were $18.2 million, compared to $16.1 million in the fourth quarter of 2018. Voyage expenses for the quarter ended December 31, 2019 increased to $1.1 million, compared to $0.8 million in the fourth quarter of 2018. Total vessel operating expenses during the fourth quarter of 2019 amounted to $7.7 million, compared to $6.9 million during the fourth quarter of 2018. The increase in operating expenses was mainly due to costs in connection with the passing of special survey of four of our ships during the fourth quarter of 2019. Total expenses for the fourth quarter of 2019 also include vessel depreciation and amortization of $7.5 million, compared to $7.2 million in the fourth quarter of 2018. The increase in depreciation and amortization during the fourth quarter of 2019 was mainly attributable to the completion of the special surveys and installation of scrubber systems on four of our vessels during the second half of 2019. General and administrative expenses for the fourth quarter of 2019 amounted to $2.0 million as compared to $1.2 million in the fourth quarter of 2018. The increase reflects mostly costs incurred relating to the acquisition of the three 10,000 TEU containers and higher non cash equity compensation expense.

Total other expense, net for the quarter ended December 31, 2019 was $3.7 million compared to $4.5 million for the fourth quarter of 2018. Total other expense, net includes interest expense and finance costs of $3.9 million for the fourth quarter of 2019, as compared to $4.7 million in the fourth quarter of 2018. The decrease in interest expense and finance costs was mainly attributable to the decrease in the average long-term debt outstanding during the period and the decrease in the LIBOR weighted average interest rate compared to the fourth quarter of 2018.

 

3


Capitalization of the Partnership

As of December 31, 2019, total cash, including $5.5 million of restricted cash under our 2017 credit facility, amounted to $63.5 million.

As of December 31, 2019, total partners’ capital amounted to $406.7 million, a decrease of $474.6 million compared to $881.3 million (including discontinued operations) as of December 31, 2018. The decrease was primarily due to the completion of the DSS Transaction, distributions declared and paid in the total amount of $28.8 million during 2019 and the total net loss of $122.5 million for the year (including an impairment charge of $149.6 million relating to the DSS Transaction).

As of December 31, 2019, the Partnership’s total debt was $262.4 million, reflecting a decrease of $183.5 million compared to $445.9 million (including discontinued operations) as of December 31, 2018. The decrease is attributable to the prepayment of our debt of $146.5 million in connection with the DSS Transaction and scheduled principal payments during the year.

Operating Surplus

Operating surplus from continuing operations for the quarter ended December 31, 2019 amounted to $15.0 million, compared to $12.7 million for the previous quarter ended September 30, 2019 and $15.9 million for the fourth quarter of 2018. For the fourth quarter of 2019, we allocated $7.7 million to the capital reserve in line with the previous quarter. Operating surplus after the quarterly allocation to the capital reserve was $7.3 million for the quarter ended December 31, 2019. Operating surplus is a non-GAAP financial measure used by certain investors to measure the financial performance of the Partnership and other master limited partnerships. Please refer to Appendix A at the end of the press release for a reconciliation of this non-GAAP measure with net income.

Acquisition of Three 10,000 TEU Container Vessels

On December 18, 2019, the Partnership announced that it agreed to acquire three 10,000 TEU sister container vessels for a total consideration of $162.6 million from Capital Maritime & Trading Corp. The vessels, the M/V ‘Athos’, the M/V ‘Aristomenis’ and the M/V ‘Athenian’ built in 2011 at Samsung Heavy Industries Co. Ltd S. Korea, are employed under long-term time charters with Hapag-Lloyd which will expire in April 2024. The gross charter rate for each vessel currently amounts to $27,000 per day, increasing to $28,000 per day for the M/V ‘Aristomenis’ from October 2020, and from July 2021 onwards for the M/V Athos and the M/V Athenian. The time charters include two one-year options at $32,500 and $33,500 gross per day, respectively.

 

4


The Partnership completed the acquisition of the M/V ‘Athenian’ on January 22, 2020. The acquisition cost of $54.2 million was funded with $38.5 million drawn under a term loan entered into with Hamburg Commercial Bank A.G. and $15.7 million of cash at hand.

The acquisition of M/V ‘Aristomenis’ and M/V ‘Athos’ was completed on January 23, 2020. The acquisition cost of $108.4 million in total was funded through a sale and lease back transaction entered into with CMB Financial Leasing Co., Ltd, for an amount of $77.0 million and $31.4 million cash at hand.

The average fleet age of the Partnership following the transaction is 7.8 years and the average remaining charter duration stands at 4.6 years.

Partial Refinancing of its 2017 Credit Facility

On December 18, 2019 the Partnership also announced that it has entered into a term sheet with ICBC Financial Leasing Co., Ltd. (“ICBCFL”) for the sale and lease back of three vessels currently mortgaged under our 2017 credit facility, namely the ‘CMA CGM Amazon’, the ‘CMA CGM Uruguay’ and the ‘CMA CGM Magdalena’, for a total amount of $155.4 million. The estimated repayment amount required to release these three vessels under the 2017 credit facility (based on the current principal amount outstanding under our 2017 credit facility and vessel charter free fair market values as of December 31, 2019) is $119.9 million. Principal repayments under the ICBCFL lease amount to $2.8 million per quarter. The lease has a duration of 7 years after drawdown and includes mandatory purchase obligations for the Partnership to repurchase the vessels on expiration at the predetermined price of $77.7 million in total. In addition, the Partnership has various purchase options commencing from the first year of the lease.

Total estimated debt amortization after the partial refinancing under the ICBCFL lease and the 2017 credit facility will amount to $27.4 million per year compared to $30.8 million annual debt amortization currently paid under the 2017 credit facility. Furthermore, the partial refinancing is expected to generate approximately $35.4 million of additional liquidity for the Partnership based on the principal amount currently outstanding under our 2017 credit facility and vessel charter free fair market values as of December 31, 2019.

The ICBCFL lease is subject to customary closing conditions and is expected to be completed in the first quarter of 2020.

 

5


Quarterly Common Unit Cash Distribution

On January 21, 2020, the Board of Directors of the Partnership (the “Board”) declared an increased cash distribution of $0.35 per common unit for the fourth quarter of 2019, representing an increase of $0.035 per common unit compared to the common unit distribution for the previous quarter, payable on February 11, 2020 to common unit holders of record on February 3, 2020.

Neo-Panamax Container Market

The Neo-Panamax container charter market for 8,000+ TEU vessels remained tight during the fourth quarter of 2019, as there was limited vessel availability despite the seasonally weaker demand.

Scrubber retrofits, including in many cases longer-than-expected scrubber installation periods, continued to restrict vessel supply thereby stabilizing the charter market during a year which has been characterized by weaker demand growth and an escalating trade war between the US and China.

Analysts estimate that the idle fleet at the end of 2019 stood at around 6.0% of the total worldwide container fleet, which includes approximately 3.3% of container capacity out of service for scrubber retrofits.

The container orderbook is estimated to be close to historic lows, and at the end of 2019 stood at 10.6% of the total worldwide container fleet, which is a slight increase from 9.8% at the end of September 2019.

Containership demolition for the full year 2019 is estimated at 178,588 TEU, compared to 119,094 TEU for the same period in 2018.

The full year 2019 demand growth estimate has been revised downwards to 1.8% with supply growth at 4.0%. For 2020, initial analyst forecasts expect improved demand growth at 2.8%, but still below vessel supply growth which is estimated at 3.1%. Both estimates however do not take into account vessels out of service for scrubber retrofits, which is expected to continue to materially restrict vessel supply into 2020.

Conference Call and Webcast

Today, February 5, 2020, the Partnership will host an interactive conference call at 9:00 am Eastern Time to discuss the financial results.

 

6


Conference Call Details

Participants should dial into the call 10 minutes before the scheduled time using the following numbers:1 (877) 553-9962 (U.S. Toll Free Dial In), 0(808) 238-0669 (UK Toll Free Dial In) or +44 (0) 2071 928592 (Standard International Dial In). Please quote “Capital Product Partners.”

A replay of the conference call will be available until February 12, 2020 by dialing 1(866) 331-1332 (U.S. Toll Free Dial In), 0(808) 238-0667 (UK Toll Free Dial In) or +44 (0) 3333 009785 (Standard International Dial In). Access Code: 69648481#.

Slides and Audio Webcast

There will also be a simultaneous live webcast over the Internet, through the Capital Product Partners website, www.capitalpplp.com. Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

About Capital Product Partners L.P.

Capital Product Partners L.P. (NASDAQ: CPLP), a Marshall Islands master limited partnership, is an international owner of ocean-going vessels. CPLP currently owns 14 vessels, including 13 Neo-Panamax container vessels and one capesize bulk carrier.

For more information about the Partnership, please visit: www.capitalpplp.com.

Forward-Looking Statements

The statements in this release that are not historical facts, including, among other things, statement relating to the expected financial performance of CPLP’s business, CPLP’s ability to pursue growth opportunities, CPLP’s expectations or objectives regarding liquidity, future distributions, and market and charter rate expectations are forward-looking statements (as such term is defined in Section 21E of the Securities Exchange Act of 1934, as amended). These forward-looking statements involve risks and uncertainties that could cause the stated or forecasted results to be materially different from those anticipated. For a discussion of factors that could materially affect the outcome of forward-looking statements and other risks and uncertainties, see “Risk Factors” in CPLP’s annual report filed with the SEC on Form 20-F. Unless required by law, CPLP expressly disclaims any obligation to update or revise any of these forward-looking statements, whether because of future events, new information, a change in its views or expectations, to conform them to actual results or otherwise. Forward-looking statements are not guarantees. Actual results could differ materially from those expressed or implied in forward-looking statements. You are cautioned not to place undue reliance on forward-looking statements.

 

7


CPLP-F

Contact Details:

Capital GP L.L.C.

Jerry Kalogiratos

CEO

Tel. +30 (210) 4584 950

E-mail: j.kalogiratos@capitalpplp.com

Capital GP L.L.C.

Nikos Kalapotharakos

CFO

Tel. +30 (210) 4584 950

E-mail: n.kalapotharakos@capitalmaritime.com

Investor Relations / Media

Nicolas Bornozis

Capital Link, Inc. (New York)

Tel. +1-212-661-7566

E-mail: cplp@capitallink.com

Source: Capital Product Partners L.P.

 

8


Capital Product Partners L.P.

Unaudited Condensed Consolidated Statements of Comprehensive Income

(In thousands of United States Dollars, except for number of units and earnings per unit)

 

    

For the three-month periods

ended December 31,

   

For the years

ended December 31,

 
     2019     2018     2019     2018  

Revenues

     27,701       27,577       108,374       116,894  

Revenues – related party

     —         —         —         701  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     27,701       27,577       108,374       117,595  
  

 

 

   

 

 

   

 

 

   

 

 

 

Expenses:

        

Voyage expenses

     1,078       822       2,930       9,113  

Vessel operating expenses

     6,703       5,892       26,632       26,427  

Vessel operating expenses - related parties

     995       992       3,917       4,221  

General and administrative expenses

     2,016       1,188       5,502       5,713  

Vessel depreciation and amortization

     7,450       7,235       29,261       32,813  

Impairment of vessel

     —         —         —         28,805  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     9,459       11,448       40,132       10,503  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other income / (expense), net:

        

Interest expense and finance cost

     (3,865     (4,660     (17,036     (18,964

Other income

     202       157       1,325       850  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other expense, net

     (3,663     (4,503     (15,711     (18,114
  

 

 

   

 

 

   

 

 

   

 

 

 

Partnership’s net income / (loss) from continuing operations

     5,796       6,945       24,421       (7,611
  

 

 

   

 

 

   

 

 

   

 

 

 

Preferred unit holders’ interest in Partnership’s net income from continuing operations

     —         2,775       8,996       11,101  

General Partner’s interest in Partnership’s net income / (loss) from continuing operations

     107       79       288       (352

Common unit holders’ interest in Partnership’s net income / (loss) from continuing operations

     5,689       4,091       15,137       (18,360
  

 

 

   

 

 

   

 

 

   

 

 

 

Partnership’s net (loss) / income from discontinued operations

     (172     6,293       (146,876     7,507  
  

 

 

   

 

 

   

 

 

   

 

 

 

Partnership’s net income / (loss)

     5,624       13,238       (122,455     (104
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income / (loss) from continuing operations per:

        

Common unit, basic and diluted

     0.31       0.23       0.83       (1.01

Weighted-average units outstanding:

        

Common units, basic and diluted

     18,178,274       18,101,088       18,178,144       18,100,455  

Net (loss) / income from discontinued operations per:

        

Common unit, basic and diluted

     (0,01     0.34       (7.93     0.41  

Weighted-average units outstanding:

        

Common units, basic and diluted

     18,178,274       18,101,088       18,178,144       18,100,455  

Net income / (loss) from operations per:

        

Common unit, basic and diluted

     0.30       0.57       (7.10     (0.60

Weighted-average units outstanding:

        

Common units, basic and diluted

     18,178,274       18,101,088       18,178,144       18,100,455  

 

9


Capital Product Partners L.P.

Unaudited Condensed Consolidated Balance Sheets

(In thousands of United States Dollars)

 

Assets    As of December 31,
2019
    

As of December 31,

2018

 

Current assets

     

Cash and cash equivalents

     57,964        21,203  

Trade accounts receivable, net

     2,690        16,126  

Prepayments and other assets

     2,736        2,017  

Inventories

     1,471        1,516  

Claims

     1,085        —    

Current assets from discontinued operations

     —          23,698  
  

 

 

    

 

 

 

Total current assets

     65,946        64,560  
  

 

 

    

 

 

 

Fixed assets

     

Vessels, net

     576,891        586,100  
  

 

 

    

 

 

 

Total fixed assets

     576,891        586,100  
  

 

 

    

 

 

 

Other non-current assets

     

Above market acquired charters

     46,275        60,655  

Deferred charges, net

     3,563        —    

Restricted cash

     5,500        16,996  

Prepayments and other assets

     5,287        2,466  

Non-current assets from discontinued operations

     —          654,468  
  

 

 

    

 

 

 

Total non-current assets

     637,516        1,320,685  
  

 

 

    

 

 

 

Total assets

     703,462        1,385,245  
  

 

 

    

 

 

 

Liabilities and Partners’ Capital

     

Current liabilities

     

Current portion of long-term debt, net

     26,997        37,479  

Trade accounts payable

     12,501        14,348  

Due to related parties

     5,256        17,742  

Accrued liabilities

     16,156        16,740  

Deferred revenue, current

     3,826        7,315  

Current liabilities from discontinued operations

     —          21,535  
  

 

 

    

 

 

 

Total current liabilities

     64,736        115,159  
  

 

 

    

 

 

 

Long-term liabilities

     

Long-term debt, net

     231,989        253,932  

Deferred revenue

     —          96  

Long-term liabilities from discontinued operations

     —          134,744  
  

 

 

    

 

 

 

Total long-term liabilities

     231,989        388,772  
  

 

 

    

 

 

 

Total liabilities

     296,725        503,931  
  

 

 

    

 

 

 

Commitments and contingencies

     
  

 

 

    

 

 

 

Total partner’s’ capital

     406,737        881,314  
  

 

 

    

 

 

 

Total liabilities and partners’ capital

     703,462        1,385,245  
  

 

 

    

 

 

 

 

10


Capital Product Partners L.P.

Unaudited Condensed Consolidated Statements of Cash Flows

(In thousands of United States Dollars)

 

     For the years ended December 31,  
     2019     2018  

Cash flows from operating activities of continuing operations:

    

Net income / (loss) from continuing operations

     24,421       (7,611

Adjustments to reconcile net income / (loss) to net cash provided by operating activities of continuing operations:

    

Vessel depreciation and amortization

     29,261       32,813  

Amortization of deferred financing costs

     1,096       1,359  

Amortization of above market acquired charters

     14,380       14,380  

Equity compensation expense

     907       613  

Impairment of vessel

     —         28,805  

Changes in operating assets and liabilities:

     —      

Trade accounts receivable, net

     13,436       (11,354

Prepayments and other assets

     (1,195     855  

Inventories

     45       1,147  

Claims

     (1,085     —    

Trade accounts payable

     (9,406     4,074  

Due to related parties

     (12,486     3,508  

Accrued liabilities

     (9,558     1,648  

Deferred revenue

     (3,585     (10,059

Dry docking costs paid

     (954     —    
  

 

 

   

 

 

 

Net cash provided by operating activities of continuing operations

     45,277       60,178  
  

 

 

   

 

 

 

Cash flows from investing activities of continuing operations:

    

Vessel improvements

     (6,519     (2,428

Proceeds from sale of vessel

     —         39,789  
  

 

 

   

 

 

 

Net cash (used in) / provided by investing activities of continuing operations

     (6,519     37,361  
  

 

 

   

 

 

 

Cash flows from financing activities of continuing operations:

    

Deferred financing costs paid

     (788     (72

Payments of long-term debt

     (32,733     (55,283

Redemption of Class B unit holders

     (116,850     —    

Dividends paid

     (28,771     (52,600
  

 

 

   

 

 

 

Net cash used in financing activities of continuing operations

     (179,142     (107,955
  

 

 

   

 

 

 

Net decrease in cash, cash equivalents and restricted cash from continuing operations

     (140,384     (10,416
  

 

 

   

 

 

 

Cash flows from discontinued operations

    

Operating activities

     8,905       37,712  

Investing activities

     (1,484     (41,837

Financing activities

     158,228       (18,557
  

 

 

   

 

 

 

Net increase / (decrease) in cash, cash equivalents and restricted cash from discontinued operations

     165,649       (22,682
  

 

 

   

 

 

 

Net increase / (decrease) in cash, cash equivalents and restricted cash

     25,265       (33,098
  

 

 

   

 

 

 

Cash, cash equivalents and restricted cash at beginning of period

     38,199       71,297  
  

 

 

   

 

 

 

Cash, cash equivalents and restricted cash at end of period

     63,464       38,199  
  

 

 

   

 

 

 

Supplemental cash flow information

    
  

 

 

   

 

 

 

Cash paid for interest

     20,138       24,952  

Non-Cash Investing and Financing Activities

    

Capital expenditures included in liabilities

     15,004       547  

Capitalized dry docking costs included in liabilities

     2,560       480  

Assumption of loan regarding the acquisition of the shares of the companies owning the M/T Aristaios and the M/T Anikitos included in discontinued operations

     —         43,958  

Reconciliation of cash, cash equivalents and restricted cash

    

Cash and cash equivalents

     57,964       21,203  

Restricted cash - Non-current assets

     5,500       16,996  
  

 

 

   

 

 

 

Total cash, cash equivalents and restricted cash shown in the statements of cash flows

     63,464       38,199  
  

 

 

   

 

 

 

 

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Appendix A – Reconciliation of Non-GAAP Financial Measure

(In thousands of U.S. dollars)

Description of Non-GAAP Financial Measure – Operating Surplus

Operating Surplus represents net income adjusted for depreciation and amortization expense, impairment of vessel, amortization of above market acquired charters and straight-line revenue adjustments.

Operating Surplus is a quantitative measure used in the publicly traded partnership investment community to assist in evaluating a partnership’s financial performance and ability to make quarterly cash distributions. Operating Surplus is not required by accounting principles generally accepted in the United States (“GAAP”) and should not be considered a substitute for net income, cash flow from operating activities and other operations or cash flow statement data prepared in accordance with GAAP or as a measure of profitability or liquidity. Our calculation of Operating Surplus may not be comparable to that reported by other companies. The table below reconciles Operating Surplus to net income for the following periods:

 

Reconciliation of Non-GAAP Financial

Measure – Operating Surplus

   For the three-month
period ended

December 31, 2019
    For the three-month
period ended

September 30, 2019
    For the three-month
period ended

December 31, 2018
 

Partnership’s net income from continuing operations

     5,796       3,360       6,945  
  

 

 

   

 

 

   

 

 

 

Adjustments to reconcile net income to operating surplus prior to Capital Reserve and Class B Preferred Units distribution

      

Depreciation and amortization1

     8,174       8,074       7,564  

Amortization of above market acquired charters and straight-line revenue adjustments

     1,047       1,270       1,408  
  

 

 

   

 

 

   

 

 

 

Operating Surplus from continuing operations

     15,017       12,704       15,917  
  

 

 

   

 

 

   

 

 

 

Add: Operating Surplus from discontinued operations

     172       34       17,462  
  

 

 

   

 

 

   

 

 

 

Total Operating Surplus from operations

     15,189       12,738       33,379  
  

 

 

   

 

 

   

 

 

 

Capital reserve

     (7,703     (7,703     (13,597
  

 

 

   

 

 

   

 

 

 

Class B preferred units distributions2

     —         —         (2,775
  

 

 

   

 

 

   

 

 

 

Operating Surplus after capital reserve and Class B Preferred Units distribution

     7,486       5,035       17,007  
  

 

 

   

 

 

   

 

 

 

(Increase)/decrease in recommended reserves

     (846     801       (11,171
  

 

 

   

 

 

   

 

 

 

Available Cash

     6,640       5,836       5,836  
  

 

 

   

 

 

   

 

 

 

 

1 

Depreciation and amortization line item includes the following components:

 

   

Vessel depreciation and amortization; and

 

   

Deferred financing costs and equity compensation plan amortization.

 

2 

All outstanding Class B Units were redeemed on March 27, 2019.

 

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