UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
6-K
REPORT
OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR
15d-16
OF THE SECURITIES EXCHANGE ACT OF 1934
For
the month of January, 2010
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 x Form
40-F o
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):
Yes o No x
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):
Yes o No x
Indicate
by check mark whether the registrant by furnishing the information contained in
this Form is also thereby furnishing the information to the Commission pursuant
to Rule
12g3-2(b) under the Securities Exchange Act of 1934.
Yes o No x
If “yes”
is marked, indicate below this file number assigned to the registrant in
connection with Rule 12g3-2(b): N/A
Item
1 – Information Contained in this Form 6-K Report
Attached
as Exhibit I is a press release of Capital Product Partners L.P., dated
January 29, 2010.
This
report on Form 6-K is hereby incorporated by reference into the registrant's
registration statement, registration number 333-153274, dated October 1,
2008.
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.,
|
|
|
By
|
Capital
GP L.L.C., its general partner
|
| /s/ Ioannis E. Lazaridis | |
|
Name:
Ioannis E.
Lazaridis
|
|
|
of
Capital GP L.L.C.
|
|
Dated:
January 29, 2010
Exhibit I
CAPITAL
PRODUCT PARTNERS L.P. ANNOUNCES FOURTH QUARTER 2009 DISTRIBUTION AND FINANCIAL
RESULTS, NEW CHARTER CONTRACTS AND PROVIDES GUIDANCE FOR THE 2010
DISTRIBUTION
ATHENS,
Greece, Jan 29, 2010 – Capital Product Partners L.P. (the “Partnership”), (Nasdaq:CPLP),
an international owner of modern double-hull tankers, today released its
financial results for the fourth quarter ended December 31, 2009 and declared
the fourth quarter 2009 distribution of $0.41 per unit.
The
Partnership’s
net income for the quarter ended December 31, 2009 was $5.3 million, or $0.21
per limited partnership unit, which is $0.07 lower than the $0.28 per unit from
the previous quarter ended September 30, 2009, and $0.15 higher than the $0.06
per unit from the fourth quarter of 2008 as adjusted by the provisions of the
Application of the Two Class Method (see Note 4).
Operating
surplus for the quarter ended December 31, 2009 was $10.2 million, $0.5 million
lower than the $10.7 million from the third quarter of 2009 and $7.2 million
lower than the $17.4 million from the fourth quarter of 2008. 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 see Appendix A for a reconciliation of this non-GAAP measure to net
income.)
Revenues
for the fourth quarter of 2009 were $29.4 million compared to $37.4 million in
the fourth quarter of 2008. The lower revenues for the fourth quarter of 2009
are mainly due to the absence of profit share revenues, as the product tanker
spot market remained at historically depressed levels.
Total
operating expenses for the fourth quarter of 2009 were $16.1 million, including
$8.2 million in fees for the commercial and technical management of the fleet
paid to a subsidiary of Capital Maritime & Trading Corp. (“Capital
Maritime”), the Partnership's sponsor, $7.0 million in depreciation and $0.6
million in general and administrative expenses compared to $15.9 million for the
fourth quarter of 2008. The increase in operating expenses is largely related to
the repairs of the M/T Attikos as well as to expenses related to the remaining
vessels of our fleet attributable to extraordinary items in accordance with the
terms of our management agreement.
Net
interest expense and finance cost for the quarter amounted to $8.0 million
compared to $6.8 million for the fourth quarter of 2008. The increase in net
interest expense and finance cost is primarily due to the higher interest margin
applicable to our loan facilities since June 30, 2009, as well as an additional
cost of $0.4 million, which is due to the increased funding costs of the banks,
incurred in accordance with the terms of our loan agreements.
Overall,
the tanker spot market saw signs of recovery throughout the fourth quarter of
2009. The product tanker market experienced improved activity in the
Transatlantic market as a result of the seasonal recovery and the cold spell in
most of the Northern hemisphere. In addition, the increased regional products
trade in the East pushed spot rates higher and as a result average spot earnings
for product tankers increased considerably compared to the third quarter of
2009, but remain at low levels compared to historical averages. These signs of
improvement in the spot market were met with increased activity in the period
market. A sustained rally in the spot market may underpin the product tanker
period market in the short to medium run. However, the global oil product trade
and refinery utilization remain at subdued levels and the product tanker fleet
continues to grow, all important factors in determining the future trends in
product tanker shipping.
The
Suezmax market improved during the fourth quarter of 2009 with earnings
improving to levels not seen since the beginning of 2009, as global oil supply
rose on the back of increased demand in the East, delays in the Turkish Straits
and large draws on OECD industry stocks due to the increased seasonal demand.
The Suezmax market has sustained its upward trend into 2010 so far.
The
Partnership agreed to recharter two of its tanker vessels, whose existing
charters expire in the coming weeks, the M/T Axios (2007 Huyndai Mipo 47,000dwt
ICE Class 1A) and the M/T Agisilaos (2006 Huyndai 37,000dwt ICE Class 1A) with
subsidiaries of Capital Maritime, its Sponsor at rates higher than we could have
achieved in the market at that time. The M/T Axios was fixed at $12,750 pd gross
($12,591 net) for 12 months (+/- 30 days) commencing in February 2010 and the
M/T Agisilaos was fixed at $12,000 pd gross ($11,850 net) for 12 months (+/- 30
days) from its expected redelivery date of March 2010. Both charters also
contain 50/50 profit share for breaking IWL and are guaranteed by Capital
Maritime. Both vessels will continue under their existing charters with BP
Shipping Plc until their redelivery to Capital Maritime under the new charters.
The net daily charter rate under their existing charters is $20,500 for the M/T
Axios and $19,750 for the M/T Agisilaos.
Mr
Lazaridis commented: “We are pleased to announce the new charters both for Axios
and Agisilaos with Capital Maritime. Our Sponsor offered better charter terms
compared to other proposals as not only are the charter rates for both vessels
higher than those available from other parties but our charters also contain
profit sharing arrangements when the vessels trade on certain routes. In
addition, the relative short duration of the charters allow us to capitalize
from a potential upturn in the market in early 2011. The Partnerships’s fleet
charter coverage for 2010 and 2011 following the two new charter announcements
stands at approximately 75% and 41%, respectively, based on available revenue
days”.
As of
December 31, 2009, the Partnership's long-term debt remained unchanged compared
to December 31, 2008 at $474.0 million and partners' capital declined to $157.1
million following the payment of $70.5 million of distributions to our
unitholders during 2009. Current undrawn debt facilities amount to $246.0
million subject to the terms of our loans.
The
Conflicts Committee of the Board of Directors of the Partnership conducted its
annual review of the Partnership's replacement capital expenditure reserve in
accordance with the partnership agreement. The Committee agreed with
management that considering the substantial reduction in tanker vessel values
over the last several years, effective from the fourth quarter of 2009, the
annual capital expenditure reserve for the current fleet should be lowered to
$9.8 million from $15.2 million.
2
On
January 29, 2010, the Board of Directors of the Partnership declared a cash
distribution for the fourth quarter of 2009 of $0.41. The fourth quarter
distribution will be paid on February 17, 2010 to unit holders of record on
February 8, 2010.
Mr.
Lazaridis remarked: “Even though 2009 was a challenging year for the tanker
industry worldwide, we maintained our distribution at $1.64, we have
proactively amended a number of the terms in our loan facilities and exchanged
two vessels with expiring charters with vessels offering better charter rates
and longer charter expiry.
The
tanker industry continues to face a challenging trade environment as well as a
tight credit market. The effects of these conditions can be seen in the new
charter rates achieved for the M/T Axios and the M/T Agisilaos, which, although
higher than recent fixtures in the market for similar vessels with similar
duration, are at levels substantially lower than rates entered prior to their
new charters with Capital Maritime.
The
Partnership agreed that based on the challenging economic environment and
specifically the much lower charter rates in the market, the Partnership
should reduce its targeted future annual distribution level below its current
distribution. In particular, the management noted the direct impact
that the low charter rate environment will have on the Partnership as eight of
our vessels are coming off charter in 2010 and an additional three vessels in
2011. As a result, the Board of Directors agreed with management’s guidance that
a target annual distribution level of $0.90 per unit paid equally over four
quarters is more prudent for the Partnership under current conditions. The
Partnership believes that this distribution is sustainable over the medium to
longer term even if the charter rate environment remains at its current
depressed levels. The new annual distribution level will provide the Partnership
with a number of advantages: a) greater financial flexibility and liquidity b)
assist in pursuing its long-term business strategy of accretive acquisitions and
c) ability to take advantage of growth opportunities. The tanker shipping market
is cyclical and we would be looking at factors, such as improved oil product
demand, the expected implementation of the single-hull tanker phase out, the
availability of shipping finance and further delays and cancellations that are
likely to reduce the number of new tanker vessel deliveries, in order to assess
a potential market recovery in 2010/2011. We will monitor these factors closely
and if they improve we will consider revisiting our distribution
guidance.”
Capital
Product Partners will host a conference call to discuss its results today at
10:00 a.m. Eastern Time (U.S.). The public is invited to listen to the
conference call by dialing +1 888 935 4575 (U.S. toll free),
or +1 718 354
1387 (international); reference number 4690241#.
Participants should dial in 10 minutes prior to the start of the call. The slide
presentation accompanying the conference call will be available on the
Partnership's website at www.capitalpplp.com.
An audio webcast of the conference call will also be accessible through the
website. The relevant links will be found in the Investor Relations section of
the website.
About
Capital Product Partners L.P.
Capital
Product Partners L.P. (Nasdaq:CPLP), a Marshall Islands master limited
partnership, is an international owner of modern double-hull tankers. Capital
Product Partners L.P. owns 18 modern vessels, comprising 15 MR tankers, two
small product tankers and one Suezmax crude oil tanker. Most of our vessels are
under medium to long-term charters to BP Shipping Limited, Morgan Stanley
Capital Group Inc., Overseas Shipholding Group and Shell International Trading
& Shipping Company Ltd.
3
For more
information about the Partnership and to access or request a copy of its Annual
Report, please visit our website: www.capitalpplp.com
Forward
Looking Statement:
The
statements in this press release that are not historical facts, including our
expectations regarding developments in the markets and their effects, the
effects on our financial condition and results our expectations regarding oil
demand, our expected charter coverage rates for 2010, our future commitments and
the effect of the amendments to our credit facilities and the distribution
guidance and factors which may contribute to a market recovery may be
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. Unless required by
law, we expressly disclaim any obligation to update or revise any of these
forward-looking statements, whether because of future events, new information, a
change in our views or expectations, to conform them to actual results or
otherwise. We assume no responsibility for the accuracy and completeness of the
forward-looking statements. We make no prediction or statement about the
performance of our common units.
CPLP-F
4
Capital
Product Partners L.P.
Unaudited
Condensed Consolidated and Combined Statements of Income
(Notes
1-4)
(In
thousands of United States dollars, except number of units and earnings per
unit)
|
For
the three-month period ended December 31,
|
For
the year ended
December
31,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
Revenues
|
29,404 | 37,383 | 123,477 | 132,675 | ||||||||||||
|
Expenses:
|
||||||||||||||||
|
Voyage
expenses
|
243 | 297 | 1,059 | 1,123 | ||||||||||||
|
Vessel
operating expenses - related party
|
8,218 | 7,590 | 30,095 | 25,653 | ||||||||||||
|
Vessel
operating expenses
|
- | 242 | 499 | 3,803 | ||||||||||||
|
General
and administrative expenses
|
632 | 744 | 2,876 | 2,817 | ||||||||||||
|
Depreciation
|
6,990 | 6,977 | 28,264 | 25,185 | ||||||||||||
|
Operating
income
|
13,321 | 21,533 | 60,684 | 74,094 | ||||||||||||
|
Other
income (expense), net:
|
||||||||||||||||
|
Interest
expense and finance cost
|
(8,315 | ) | (7,308 | ) | (32,115 | ) | (25,602 | ) | ||||||||
|
Interest
income
|
277 | 498 | 1,478 | 1,283 | ||||||||||||
|
Foreign
currency (loss), net
|
(7 | ) | (7 | ) | (12 | ) | (56 | ) | ||||||||
|
Total
other (expense), net
|
(8,045 | ) | (6,817 | ) | (30,649 | ) | (24,375 | ) | ||||||||
|
Net
income
|
5,276 | 14,716 | 30,035 | 49,719 | ||||||||||||
|
Less:
|
||||||||||||||||
|
Net
(loss) / income attributable to CMTC operations
|
- | 456 | 810 | (1,048 | ) | |||||||||||
|
Partnership’s
net income
|
5,276 | 14,260 | 29,225 | 50,767 | ||||||||||||
|
General
Partner’s interest in Partnership’s net income
|
$ | 106 | $ | 12,755 | $ | 584 | $ | 13,485 | ||||||||
|
Limited
Partners’ interest in Partnership’s net income
|
5,170 | 1,505 | 28,641 | 37,282 | ||||||||||||
|
Net
income per:
|
||||||||||||||||
|
● Common
units (basic and diluted)
|
0.21 | 0.06 | 1.15 | 1.56 | ||||||||||||
|
●
Subordinated units (basic and diluted)
|
- | 0.06 | 1.17 | 1.50 | ||||||||||||
|
●
Total units (basic and diluted) (Note 4)
|
0.21 | 0.06 | 1.15 | 1.54 | ||||||||||||
|
Weighted-average
units outstanding:
|
||||||||||||||||
|
●
Common units (basic and diluted)
|
24,817,151 | 16,011,629 | 23,755,663 | 15,379,212 | ||||||||||||
|
●
Subordinated units (basic and diluted)
|
- | 8,805,522 | 1,061,488 | 8,805,522 | ||||||||||||
|
●
Total units (basic and diluted)
|
24,817,151 | 24,817,151 | 24,817,151 | 24,184,734 | ||||||||||||
5
Capital
Product Partners L.P.
Unaudited Condensed Consolidated
and Combined Balance Sheets
(Notes
2-4)
(In
thousands of United States dollars, except number of shares)
|
December
31,
2009 |
December
31,
2008 |
|||||||
|
Assets
|
||||||||
|
Current
assets
|
||||||||
|
Cash
and cash equivalents
|
$ | 3,552 | $ | 43,149 | ||||
|
Short
term investments
|
30,390 | 1,080 | ||||||
|
Trade
accounts receivable
|
213 | 6,421 | ||||||
|
Prepayments
and other assets
|
522 | 602 | ||||||
|
Inventory
|
111 | 94 | ||||||
|
Total
current assets
|
34,788 | 51,346 | ||||||
|
Fixed
assets
|
||||||||
|
Vessels,
net
|
638,723 | 718,153 | ||||||
|
Total
fixed assets
|
638,723 | 718,153 | ||||||
|
Other
non-current assets
|
||||||||
|
Deferred
charges, net
|
3,076 | 2,884 | ||||||
|
Restricted
cash
|
4,500 | 4,500 | ||||||
|
Total
non-current assets
|
646,299 | 725,537 | ||||||
|
Total
assets
|
$ | 681,087 | $ | 776,883 | ||||
|
Liabilities
and Partners’ Capital / Stockholders' Equity
|
||||||||
|
Current
liabilities
|
||||||||
|
Current
portion of long-term debt
|
$ | - | $ | - | ||||
|
Current
portion of related-party long-term debt
|
- | 24,538 | ||||||
|
Trade
accounts payable
|
296 | 475 | ||||||
|
Due
to related parties
|
4,939 | 2,256 | ||||||
|
Accrued
liabilities
|
2,273 | 1,149 | ||||||
|
Deferred
revenue – current
|
3,458 | 3,795 | ||||||
|
Total
current liabilities
|
10,966 | 32,213 | ||||||
|
Long-term
liabilities
|
||||||||
|
Long-term
debt
|
474,000 | 474,000 | ||||||
|
Long-term
related-party debt
|
- | 27,762 | ||||||
|
Deferred
revenue – long term
|
2,062 | 1,568 | ||||||
|
Derivative
instruments
|
36,931 | 47,414 | ||||||
|
Total
long-term liabilities
|
512,993 | 550,744 | ||||||
|
Total
liabilities
|
523,959 | 582,957 | ||||||
|
Commitments
and contingencies
|
||||||||
|
Total
partners’ capital / stockholders’ equity
|
157,128 | 193,926 | ||||||
|
Total
liabilities and partners’ capital / stockholders’ equity
|
$ | 681,087 | $ | 776,883 | ||||
6
Capital
Product Partners L.P.
Unaudited
Condensed Consolidated and Combined Statements of Cash Flows
(Notes
1-4)
(In
thousands of United States dollars)
|
For
the year ended December 31,
|
||||||||
|
2009
|
2008
|
|||||||
|
Cash
flows from operating activities:
|
||||||||
|
Net
income
|
$ | 30,035 | $ | 49,719 | ||||
|
Adjustments to reconcile net
income to net cash provided by operating
activities:
|
||||||||
|
Vessel
depreciation
|
28,264 | 25,185 | ||||||
|
Amortization
of deferred charges
|
442 | 395 | ||||||
|
Changes
in operating assets and liabilities:
|
||||||||
|
Trade
accounts receivable
|
6,095 | (4,858 | ) | |||||
|
Due
from related parties
|
(11 | ) | (235 | ) | ||||
|
Prepayments
and other assets
|
11 | (545 | ) | |||||
|
Inventories
|
(289 | ) | 83 | |||||
|
Trade
accounts payable
|
494 | 1,068 | ||||||
|
Due
to related parties
|
4,460 | 2,584 | ||||||
|
Accrued
liabilities
|
420 | 799 | ||||||
|
Deferred
revenue
|
157 | 1,200 | ||||||
|
Dry
docking expenses paid
|
- | (251 | ) | |||||
|
Net
cash provided by operating activities
|
70,078 | 75,144 | ||||||
|
Cash
flows from investing activities:
|
||||||||
|
Vessel
acquisitions and new building advances
|
(26,460 | ) | (267,673 | ) | ||||
|
Additions
to restricted cash
|
- | (1,250 | ) | |||||
|
Purchase
of short term investments
|
(29,310 | ) | (1,080 | ) | ||||
|
Net
cash (used in) investing activities
|
(55,770 | ) | (270,003 | ) | ||||
|
Cash
flows from financing activities:
|
||||||||
|
Proceeds
from issuance of long-term debt
|
- | 199,500 | ||||||
|
Proceeds
from related party-debt/financing
|
- | 112,843 | ||||||
|
Payments
of long-term debt
|
- | (8,080 | ) | |||||
|
Payments
of related-party debt/financing
|
(23,309 | ) | (52,463 | ) | ||||
|
Loan
issuance costs
|
(703 | ) | (1,950 | ) | ||||
|
Payment
of offering expenses
|
- | (249 | ) | |||||
|
Excess
of purchase price over book value of vessels acquired from entity under
common control
|
- | (3,755 | ) | |||||
|
Dividends
paid
|
(70,463 | ) | (39,890 | ) | ||||
|
Cash
balance that was distributed to the previous owner
|
- | (2 | ) | |||||
|
Capital
contributions by CMTC
|
40,570 | 12,135 | ||||||
|
Net
cash (used in) / provided by financing activities
|
(53,905 | ) | 218,089 | |||||
|
Net
(decrease) / increase in cash and cash equivalents
|
(39,597 | ) | 23,230 | |||||
|
Cash
and cash equivalents at beginning of period
|
43,149 | 19,919 | ||||||
|
Cash
and cash equivalents at end of period
|
3,552 | 43,149 | ||||||
|
Supplemental
Cash Flow Information
|
||||||||
|
Cash
paid for interest
|
$ | 30,929 | $ | 24,264 | ||||
|
Non-Cash
Investing and Financing Activities
|
||||||||
|
Net
book value of vessels transferred-in, M/T Agamemnon II and M/T Ayrton II
net of cash paid.
|
$ | 68,054 | ||||||
|
Net
book value of vessels transferred-out, M/T Assos and M/T
Atrotos
|
$ | (70,496 | ) | |||||
|
Net
liabilities assumed by CMTC upon vessel contribution to the
Partnership.
|
$ | 31,073 | $ | 74,239 | ||||
|
Units
issued to acquire vessel-owning company of M/T Amore Mio
II.
|
- | $ | 37,739 | |||||
|
Units
issued to acquire vessel-owning company of M/T
Aristofanis.
|
- | $ | 10,066 | |||||
|
Change
in accrued capitalized costs
|
$ | 870 |
Notes
(1) The unaudited condensed
consolidated and combined statements of income and cash flows for the three and
twelve month period ended December 31, 2009 include the results of operations
of:
|
|
(a)
|
M/T
Agamemnon II and M/T Ayrton II (a 51,238dwt sister MR product tankers
which were delivered to Capital Maritime from shipyards on November 24,
2008 and April 10, 2009 respectively) were acquired from Capital Maritime,
an entity under common control, on April 7 and April 13, 2009
respectively, as though the transfers had occurred at the beginning of the
earliest period presented (January 1, 2009), or since the date it was
acquired by Capital Maritime from the unrelated third parties (shipyards),
whichever is later; and
|
|
|
(b)
|
M/T
Assos and M/T Atrotos up to April 6, 2009 and April 12, 2009 dates in
which they were exchanged with M/T Agamemnon II and M/T Ayrton II,
respectively.
|
The
unaudited condensed consolidated and combined statements of income and cash
flows for the three and twelve month period ended December 31, 2008 include the
results of operations of M/T Amore
Mio II, M/T Aristofanis and M/T Agamemnon II which were acquired from Capital
Maritime, an entity under common control, on March 27, 2008, April 30, 2008, and
April 7, 2009 respectively, as though the transfers had occurred at the
beginning of the earliest period presented (January
1, 2008), or in the case of the M/T Agamemnon II since November 24, 2008 date it
was delivered to Capital Maritime from an unrelated third party
(shipyard).
7
(2) On April 7, and April 13,
2009 the Partnership acquired from Capital Maritime the shares of the vessel
owning companies of the M/T Agamemnon II and M/T Ayrton II. In exchange Capital
Maritime received all the shares of the vessel owning companies of the M/T Assos
and M/T Atrotos, which were part of the Partnership’s fleet, and an additional
cash consideration of $8.0 million. The amount of $15.7
million which represents the difference of the historic cost between the
exchanged vessels net of cash consideration of $8.0 million is recorded as an
increase in the partners’ capital for the year ended December 31, 2009. In
addition, the amount of $8.0 million is included in vessels acquisitions and new
building advances under investing activities in the statements of cash flows for
the year ended December 31, 2009. The Partnership accounted for the acquisition
of the vessel owning companies of the M/T Agamemnon II and M/T Ayrton II as a
transfer of equity interests between entities under common control at Capital
Maritime's carrying amounts (historical cost) of the net assets contributed. In
addition, transfers of equity interests between entities under common control
are accounted for as if the transfer occurred at the beginning of the earliest
period presented, and prior years financial statements are retroactively
adjusted to furnish comparative information similar to the pooling-of-interest
method of accounting.
All
assets and liabilities of the vessel owning companies of the M/T Agamemnon II
and M/T Ayrton II, except the vessel, the time charter agreements and necessary
permits were retained by Capital Maritime.
All
assets and liabilities of the vessel owning companies of the M/T Assos and M/T
Atrotos, except the vessel and necessary permits were retained by the
Partnership.
(3) Short term investments
consist of cash time deposits with original maturities of more than three months
with de minimis breakage costs.
(4) The Partnership adopted on
January 1, 2009 the provisions of ASC 260-10-05 “Application of the Two-Class
Method”. ASC 260-10-05 considers whether the incentive distributions of a master
limited partnership represent a participating security when considered in the
calculation of earnings per unit under the two-class method. ASC 260-10-05 also
considers whether the partnership agreement contains any contractual limitations
concerning distributions to the incentive distribution rights that would impact
the amount of earnings to allocate to the incentive distribution rights for each
reporting period. The Partnership retrospectively applied the provisions of the
ASC 260-10-05 to the three and twelve month period ended December 31, 2008.
Following the application of the above standard the Partnership’s earnings per
unit for the three and twelve month period ended December 31, 2008 decreased
from $0.54 and $2.00 per unit to
$0.06 and $1.54 per unit respectively. This decrease is directly attributable to
the exercise of the incentive distribution rights of the Partnership’s General
Partner, in accordance with the terms of the partnership agreement, following
the exceptional cash distribution of $1.05 per unit for the fourth quarter of
2008.
8
Capital
Product Partners L.P.
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 non cash items such as depreciation
and amortization expense, unearned revenue and unrealized gain and losses.
Replacement capital expenditures represent those capital expenditures required
to maintain over the long term the operating capacity of, or the revenue
generated by, the Partnership's capital assets. Operating Surplus is a
quantitative standard used in the publicly-traded partnership investment
community to assist in evaluating a partnership's ability to make quarterly cash
distributions. Operating Surplus is not required by accounting principles
generally accepted in the United States and should not be considered as an
alternative to net income or any other indicator of the Partnership's
performance required by accounting principles generally accepted in the United
States. The tables below reconcile Operating Surplus to net income for the three
month period ended December 31, 2009.
|
Reconciliation
of Non-GAAP Financial Measure –
Operating Surplus
|
For
the three-month
period ended December
31, 2009
|
|||
|
|
||||
|
Net
income
|
$ | 5,276 | ||
|
Adjustments
to reconcile net income to net cash
provided
by operating activities
|
||||
|
Depreciation
and amortization
|
7,127 | |||
|
Deferred
revenue
|
215 | |||
|
NET
CASH PROVIDED BY OPERATING
ACTIVITIES
|
12,618 | |||
|
Replacement
Capital Expenditures
|
2,454 | |||
|
OPERATING
SURPLUS
|
10,164 | |||
|
Reduction
on recommended reserves from previous
quarters
|
219 | |||
|
AVAILABLE
CASH
|
10,383 | |||
9