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
DATED: July 29,
2009
Commission
File No. 001-33811
NAVIOS
MARITIME PARTNERS L.P.
85
AKTI MIAOULI STREET, PIRAEUS, GREECE 185 38
(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 ¨
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 ¨ 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 ¨ 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 ¨ No x
If
``Yes'' is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b):
N/A
NAVIOS
MARITIME PARTNERS L.P.
FORM
6-K
TABLE
OF CONTENTS
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Page
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Operating
and Financial Review and Prospects
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3
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Financial
Statements Index
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23
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The
information contained in this Report is hereby incorporated by reference into
the Registration Statement on Form F-3, File No. 333-157000.
Operating
and Financial Review and Prospects
The
following is a discussion of the financial condition and results of operations
for the three and six month periods ended June 30, 2009 and 2008 of Navios
Maritime Partners L.P. (referred to herein as “we”, “us” or “Navios Partners”).
All of these financial statements have been prepared in accordance with
generally accepted accounting principles in the United States of America (“US
GAAP”). You should read this section together with the consolidated financial
statements and the accompanying notes included in Navios Partners' 2008 Annual
Report filed on Form 20-F with the Securities Exchange Commission.
This
report contains forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. These
forward looking statements are based on Navios Partners' current expectations
and observations. Actual results may differ materially from those expressed or
implied by such forward-looking statements. Factors that could cause
actual results to differ materially include, but are not limited to changes in
the demand for dry bulk vessels, fluctuation of charter rates, competitive
factors in the market in which Navios Partners operates; risks associated with
operations outside the United States; and other factors listed from time to time
in the Navios Partners’ filings with the Securities and Exchange
Commission.
Overview
General
Navios
Partners is an international owner and operator of Capesize and Panamax dry bulk
carriers, formed in August 2007 by Navios Maritime Holdings Inc. (“Navios
Holdings”), a vertically integrated seaborne shipping and logistics company with
over 50 years of operating history in the dry bulk shipping industry. Navios
Partners completed its initial public offering (“IPO”) of 10,000,000 common
units and the concurrent sale of 500,000 common units to a corporation owned by
Angeliki Frangou, Navios Partners’ Chairman and Chief Executive Officer, on
November 16, 2007. Navios Partners used the proceeds of these sales
of approximately $193.3 million, plus $160.0 million funded from its revolving
credit facility to acquire its initial fleet of vessels. Two vessels were
acquired since the IPO and the fleet currently consists of nine modern Panamax
vessels and one modern Capesize vessel.
On
November 15, 2007, Navios Partners entered into a revolving credit facility
agreement with Commerzbank AG and DVB Bank AG maturing on November 15, 2017.
This credit facility provided Navios Partners with financing availability of up
to $260.0 million, of which $165.0 million was drawn on November 16, 2007. Of
the total drawn down amount, $160.0 million was paid to Navios Holdings as part
of the purchase price of the capital stock of Navios Holdings’ subsidiaries that
owned or had rights to the eight vessels of Navios Partners’ initial fleet.
The remaining $5.0 million balance of the drawn amount was used for working
capital purposes. On May 2, 2008, Navios Partners borrowed $35.0 million to
finance the acquisition of the vessel Navios Fantastiks. On June 25, 2008,
Navios Partners’ credit facility was amended, in part, to increase the available
borrowings by $35.0 million, in anticipation of purchasing the Navios Hope,
thereby increasing the total facility to $295.0 million. On July 1,
2008, Navios Partners borrowed an additional $35.0 million to finance the
acquisition of the vessel Navios Hope.
On July
1, 2008, 3,131,415 common units were issued to Navios Holdings for the
acquisition of Navios Hope, and 63,906 additional general partnership units were
issued to Navios Partners’ general partner.
In
January 2009, Navios Partners further amended the terms of its existing credit
facility. The amendment is effective until January 15, 2010 and provides for
(a) the repayment of $40.0 million which took place on February 9,
2009, (b) maintaining minimum cash reserves in a pledged account with the agent
bank as follows: $2.5 million as of January 31, 2009; $5.0 million as of March
31, 2009; $7.5 million as of June 30, 2009; $10.0 million as
of September 30, 2009; and $12.5 million as
of December 31, 2009 and (c) an increased margin on the loans of
2.25%. Further, the covenants were amended by (a) reducing the minimum net worth
covenant to $100.0 million from $135.0 million, (b) reducing the value
maintenance covenant ("VMC") to 100% using charter free vessel values, (c)
changing the calculation of the minimum leverage covenant to use charter
inclusive adjusted vessel values until December 31, 2009, and (d) adding a new
VMC based on charter inclusive valuations to be at 143%. Also, Navios
Partners pays a commitment fee of 0.35% for undrawn amounts under the
facility. As of June 30, 2009, Navios Partners was in compliance with the
financial covenants under the facility.
In
January 2009, Navios Partners and its counterparty to the Navios Hope charter
party mutually agreed for a lump sum amount of approximately $30.4 million, of
which Navios Partners received, net of expenses, $29.6 million in February
2009. Under a new charter agreement, the balance of the aggregate value of the
original contract will be allocated to the period until its original expiration.
On April
2, 2009, Navios Partners announced that it would not be exercising its option to
acquire Navios TBN II, a new building capesize vessel, from Navios Holdings for
$135.0 million. This decision was reached in light of the unfavorable conditions
in the capital markets. There were no fees or costs payable in connection with
the decision not to exercise the option, which expired on April 1,
2009.
On May 8,
2009, Navios Partners completed its public offering of 3,500,000 common units at
$10.32 per unit and raised gross proceeds of approximately $36.1 million to fund
its fleet expansion. The net proceeds of this offering, including discount and
excluding offering costs of $0.5 million, were approximately $34.3 million.
Pursuant to this offering, Navios Partners issued 71,429 additional general
partnership units to its General Partner. The net proceeds from the issuance of
the general partnership units were $0.7 million. The net proceeds of this
offering were used to acquire the rights to the Navios Sagittarius, a 2006
Japanese-built Panamax vessel with a capacity of 75,756 dwt, for a cash payment
of $34.6 million including a long-term charter-out agreement through November,
2018. The Navios Sagittarius is a chartered-in vessel, and Navios Partners has
an option to purchase the vessel, beginning December 2009, at a purchase price
that is initially 2.5 billion Japanese Yen ($26.2 million based on the exchange
rate at June 30, 2009), declining each year by 120.0 million Japanese Yen
($1.3 million based on the exchange rate at June 30, 2009).
On June
9, 2009, Navios Holdings relieved Navios Partners from its obligation to
purchase the Capesize vessel Navios Bonavis (ex TBN I) for $130.0 million and,
upon the delivery of the Navios Bonavis to Navios Holdings, Navios Partners was
granted a 12-month option to purchase the vessel for $125.0 million. In return,
Navios Partners issued 1,000,000 subordinated Series A units recognizing a
non-cash compensation expense amounting to $6.1 million. Subordinated
Series A units do not receive distributions and will not be eligible to receive
distributions until the third anniversary of their issuance, at which time
they will automatically convert into common units on a one-for-one basis.
Following conversion into common units, holders of the converted subordinated
Series A units will receive distributions in accordance with all other common
units. Pursuant to the issuance of the 1,000,000 subordinated Series A
units, Navios Partners issued 20,408 additional general partnership units to its
general partner. The net proceeds from the issuance of the general partnership
units were $0.2 million. In addition, Navios Holdings was released from the
Omnibus Agreement restrictions for two years in connection with acquiring
vessels from third parties (but not from the requirement to offer to Navios
Partners qualifying vessels in Navios Holdings’ existing fleet).
As of
June 30, 2009, there were outstanding: 17,131,415 common units, 7,621,843
subordinated units, 1,000,000 subordinated Series A units and 525,577 general
partnership units. Navios Holdings owns a 46.7% interest in Navios
Partners, including the 2% general partner interest.
Fleet
Our fleet
consists of nine modern active Panamax vessels and one modern Capesize
vessel.
All of
our current vessels operate under long-term time charters of three or more years
at inception with counterparties that we believe are creditworthy. Under certain
circumstances, we may operate vessels in the spot market until the vessels have
been fixed under appropriate long-term charters.
The
following table provides summary information about our fleet:
Owned Vessels
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Type
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Built
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Capacity
(DWT)
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Original Charter
Expiration Date/ New
Charter Expiration
Date (1)
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Original
Charter Out
Rate/ New
Charter Out
Rate per day
(2)
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Navios
Gemini S
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Panamax
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1994
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68,636
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February
2014
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$
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24,225
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Navios
Libra II
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Panamax
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1995
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70,136
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December
2010
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$
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23,513
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Navios
Felicity
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Panamax
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1997
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73,867
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June
2013
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$
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26,169
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Navios
Galaxy I
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Panamax
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2001
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74,195
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February
2018
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$
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21,937
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Navios
Alegria
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Panamax
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2004
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76,466
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December
2010
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$
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23,750
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Navios
Fantastiks
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Capesize
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2005
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180,265
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March
2011
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$
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32,279
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|
|
|
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February
2014
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$
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36,290
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Navios
Hope (3)
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Panamax
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2005
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75,397
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May
2010
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$
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10,643
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September
2013
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$
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16,841
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Long-term
Chartered-in Vessels
Navios
Prosperity (4)
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Panamax
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2007
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82,535
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July
2012
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$
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24,000
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|
Navios
Aldebaran (5)
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Panamax
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2008
|
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76,500
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March
2013
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$
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28,391
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Navios
Sagittarius (6)
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Panamax
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2006
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75,756
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November
2018
|
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$
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26,125
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|
(1)
Represents the initial expiration date of the time charter and, if applicable,
the new time charter expiration date for the vessels with new time
charters.
(2) Net
time charter-out rate per day (net of commissions). Represents the charter-out
rate during the time charter period prior to the time charter expiration date
and, if applicable, the charter-out rate under the new time
charter.
(3)
Navios Partners received a lump sum charter payment of approximately $29.6
million for the Navios Hope in the first quarter of 2009. This charter
payment was net of expenses and represents an acceleration of a significant
portion of the $56.2 million nominal charter amount. Navios Partners will
receive the entire amount of the original charter through the lump sum payment
and the new charter payments for the remainder of the term of the original
charter (ending in 2013). The rate for the period from April, 1 2009
to August 2013 is as presented in the table above. On February 9, 2009, the
Navios Aurora I was renamed the Navios Hope.
(4) The
Navios Prosperity is chartered-in for seven years starting from June 19, 2008
and Navios Partners has options to extend for two one-year periods. Navios
Partners has the option to purchase the vessel after June 2012 at a
purchase price that is initially 3.8 billion Yen ($39.8 million based upon the
exchange rate at June 30, 2009), declining each year by 145 million Yen ($1.5
million based upon the exchange rate at June 30, 2009).
(5) The
Navios Aldebaran was delivered on March 17, 2008. The Navios Aldebaran is
chartered-in for seven years and Navios Partners has options to extend
for two one-year periods. Navios Partners has the option to purchase the
vessel after March 2013 at a purchase price that is initially 3.6 billion Yen
($37.7 million based upon the exchange rate at June 30, 2009) declining each
year by 150 million Yen ($1.6 million based upon the exchange rate at June 30,
2009).
(6) On
June 10, 2009, Navios Partners purchased from Navios Holdings all of the rights
to the Navios Sagittarius, a 2006 Japanese-built Panamax vessel with a capacity
of 75,756 dwt, for a cash payment of $34.6 million. The Navios Sagittarius is a
chartered-in vessel, and Navios Partners has an option to purchase the vessel,
beginning December 2009, at a purchase price that is initially 2.5 billion
Japanese Yen ($26.2 million based on the exchange rate at June 30,
2009), declining each year by 120.0 million Japanese Yen ($1.3 million
based on the exchange rate at June 30, 2009).
Our
Charters
We
generate revenues by charging our customers for the use of our vessels to
transport their dry bulk commodities. All of the vessels in our fleet are
chartered-out under time charters, which range in length from three to five
years. We may in the future operate vessels in the spot market until the vessels
have been chartered under appropriate long-term charters.
For the
six month period ended June 30, 2009, Mitsui O.S.K. Lines Ltd, Cargill
International S.A., Sanko Steamship Co., and Daiichi Chuo Kisen Kaisha accounted
for approximately 33.89%, 20.71%, 13.79% and 10.18%, respectively, of total
revenues. For the year ended December 31, 2008, we had seven charter
counterparties and some other major ones were Mitsui O.S.K. Lines Ltd, Cargill
International S.A., Sanko Steamship Co., Daiichi Chuo Kisen Kaisha and Augustea
Imprese Maritime which accounted for approximately 28.2%, 22.2%, 15.6%, 11.9%
and 9.7%, respectively, of total revenues. We believe that the combination of
the long-term nature of our charters (which provide for the receipt of a fixed
daily charter rate for the life of the charter) and our management agreement
with Navios ShipManagement Inc. (“Navios ShipManagement Inc.”) (which provides
for a fixed management fee through November 16, 2009) will provide us with a
strong base of stable cash flows.
Our
revenues are driven by the number of vessels in the fleet, the number of days
during which the vessels operate and our charter hire rates, which, in turn, are
affected by a number of factors, including:
|
•
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the
duration of the charters;
|
|
•
|
the
level of spot and long-term market rates at the time of
charter;
|
|
•
|
decisions
relating to vessel acquisitions and
disposals;
|
|
•
|
the
amount of time spent positioning
vessels;
|
|
•
|
the
amount of time that vessels spend undergoing repairs and upgrades in dry
dock;
|
|
•
|
the
age, condition and specifications of the vessels;
and
|
|
•
|
the
aggregate level of supply and demand in the dry bulk shipping
industry.
|
Time
charters are available for varying periods, ranging from a single trip (spot
charter) to long-term which may be many years. In general, a long-term time
charter assures the vessel owner of a consistent stream of revenue. Operating
the vessel in the spot market affords the owner greater spot market opportunity,
which may result in high rates when vessels are in high demand or low rates when
vessel availability exceeds demand. We intend to operate our vessels in the
long-term charter market. Please read “Risk Factors” in our 2008 Annual Report
on Form 20-F for a discussion of certain risks inherent in our
business.
Trends
and Factors Affecting Our Future Results of Operations
We
believe the principal factors that will affect our future results of operations
are the economic, regulatory, political and governmental conditions that affect
the shipping industry generally and that affect conditions in countries and
markets in which our vessels engage in business. Please read “Risk Factors” in
our 2008 Annual Report on Form 20-F for a discussion of certain risks inherent
in our business.
Results of
Operations
Overview
The
financial condition and the results of operations presented of Navios
Partners for the six month periods ended June 30, 2008 and
2009 discussed below include the following entities and chartered-in
vessels:
|
|
|
|
|
|
Statement of income
|
|
Company name
|
|
Vessel name
|
|
Country of
incorporation
|
|
2008
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
Libra Shipping Enterprises Corporation
|
|
Navios Libra II
|
|
Marshall Is.
|
|
1/1 – 06/30
|
|
1/1 – 06/30
|
|
Alegria Shipping Corporation
|
|
Navios Alegria
|
|
Marshall Is.
|
|
1/1 – 06/30
|
|
1/1 – 06/30
|
|
Felicity Shipping Corporation
|
|
Navios Felicity
|
|
Marshall Is.
|
|
1/1 – 06/30
|
|
1/1 – 06/30
|
|
Gemini Shipping Corporation
|
|
Navios Gemini S
|
|
Marshall Is.
|
|
1/1 – 06/30
|
|
1/1 – 06/30
|
|
Galaxy Shipping Corporation
|
|
Navios Galaxy I
|
|
Marshall Is
|
|
1/1 – 06/30
|
|
1/1 – 06/30
|
|
Fantastiks Shipping Corporation (1)
|
|
Navios Fantastiks
|
|
Marshall Is.
|
|
1/1 – 06/30
|
|
1/1 – 06/30
|
|
Aurora Shipping Enterprises Ltd.
|
|
Navios Hope (2)
|
|
Marshall Is.
|
|
-
|
|
1/1 – 06/30
|
|
Chartered-in vessel
|
|
|
|
|
|
|
|
|
|
Prosperity Shipping Corporation (3)
|
|
Navios Prosperity
|
|
Marshall Is.
|
|
1/1 – 06/30
|
|
1/1 – 06/30
|
|
Chartered-in vessel
|
|
|
|
|
|
|
|
|
|
Aldebaran Shipping Corporation (3)
|
|
Navios Aldebaran
|
|
Marshall Is.
|
|
3/17 – 06/30
|
|
1/1 – 06/30
|
|
Chartered-in vessel
|
|
|
|
|
|
|
|
|
|
Sagittarius Shipping Corporation (3)
|
|
Navios Sagittarius
|
|
Marshall Is.
|
|
-
|
|
06/10 – 06/30
|
|
Navios Maritime Partners L.P
|
|
N/A
|
|
Marshall Is.
|
|
1/1 – 06/30
|
|
1/1 – 06/30
|
|
Navios Maritime Operating LLC
|
|
N/A
|
|
Marshall Is.
|
|
1/1 – 06/30
|
|
1/1 – 06/30
|
|
(1)
|
Fantastiks
Shipping Corporation took ownership of the vessel Fantastiks from
chartered-in vessel, which was renamed the Navios Fantastiks on May 2,
2008.
|
(2)
|
On
February 9, 2009, the Navios Aurora I was renamed the Navios
Hope.
|
(3)
|
Not
a vessel-owning subsidiary and only holds right to charter-in
contract.
|
The
accompanying interim condensed consolidated financial statements of Navios
Partners are unaudited, but, in the opinion of management, contain all
adjustments necessary to present fairly, in all material respects, Navios
Partners’ condensed consolidated financial position as of June 30, 2009 and the
condensed consolidated results of operations for the three and six months ended
June 30, 2009 and 2008. The footnotes are condensed as permitted by the
requirements for interim financial statements and accordingly, do not include
information and disclosures required under US GAAP for complete financial
statements. All such adjustments are deemed to be of a normal, recurring nature.
The results of operations for the interim periods are not necessarily indicative
of the results to be expected for the full year. These financial statements
should be read in conjunction with the consolidated financial statements and
related notes included in Navios Partners’ Annual Report on Form 20-F for the
year ended December 31, 2008.
FINANCIAL
HIGHLIGHTS
The
following table presents consolidated revenue and expense information for the
three and six month periods ended June 30, 2009 and 2008.
|
|
(unaudited)
Three Month
Period ended
June 30, 2009
($ ‘000)
|
|
|
(unaudited)
Three Month
Period ended
June 30, 2008
($ ‘000)
|
|
|
(unaudited)
Six Month
Period ended
June 30, 2009
($ ‘000)
|
|
|
(unaudited)
Six Month
Period ended
June 30, 2008
($ ‘000)
|
|
Time
charter and voyage revenues
|
|
$ |
22,154 |
|
|
$ |
17,939 |
|
|
$ |
43,311 |
|
|
$ |
32,259 |
|
Time
charter and voyage expenses
|
|
|
(3,351 |
) |
|
|
(3,183 |
) |
|
|
(6,359 |
) |
|
|
(6,004 |
) |
Direct
vessel expenses
|
|
|
(124 |
) |
|
|
(145 |
) |
|
|
(248 |
) |
|
|
(289 |
) |
Management
fees
|
|
|
(2,639 |
) |
|
|
(2,119 |
) |
|
|
(5,249 |
) |
|
|
(3,939 |
) |
General
and administrative expenses
|
|
|
(897 |
) |
|
|
(507 |
) |
|
|
(1,799 |
) |
|
|
(1,003 |
) |
Depreciation
and amortization
|
|
|
(3,501 |
) |
|
|
(2,547 |
) |
|
|
(6,778 |
) |
|
|
(5,311 |
) |
Interest
expense and finance cost, net
|
|
|
(1,922 |
) |
|
|
(2,339 |
) |
|
|
(4,347 |
) |
|
|
(4,812 |
) |
Interest
income
|
|
|
32 |
|
|
|
43 |
|
|
|
89 |
|
|
|
91 |
|
Compensation
expense
|
|
|
(6,082 |
) |
|
|
- |
|
|
|
(6,082 |
) |
|
|
- |
|
Other
income
|
|
|
- |
|
|
|
24 |
|
|
|
|
|
|
|
23 |
|
Other
expense
|
|
|
(78 |
) |
|
|
(11 |
) |
|
|
13 |
|
|
|
(14 |
) |
Net
income
|
|
$ |
3,592 |
|
|
$ |
7,155 |
|
|
$ |
12,551 |
|
|
|
11,001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$ |
15,189 |
|
|
$ |
12,142 |
|
|
$ |
29,917 |
|
|
|
21,322 |
|
Operating
Surplus
|
|
$ |
11,432 |
|
|
$ |
5,909 |
|
|
$ |
21,982 |
|
|
|
13,065 |
|
Period
over Period Comparisons
For the Three Month Period ended
June 30, 2009 compared to Three Month Period
ended June 30, 2008
Time charter and
voyage revenues: Time charter and voyage revenues for the three month
period ended June 30, 2009 increased by $4.3 million or 24.0% to $22.2 million
as compared to $17.9 million for the same period in 2008. The increase was
mainly attributable to the acquisition of the Navios Hope on July 1, 2008, which
was fully operating during the three month period ended June 30, 2009 and the
acquisition of the rights to the Navios Sagittarius on June 10,
2009.
Time charter and
voyage expenses: Time charter and voyage expenses increased by
$0.2 million or 6.3% to $3.4 for the three month period ended June 30, 2009 as
compared to $3.2 million for same period in 2008. The increase was mainly
attributable to the acquisition of the Navios Fantastiks from Navios Holdings
into the owned fleet, from chartered-in vessel on May 2, 2008, and to the
acquisition of all of the rights to the Navios Sagittarius on June 10,
2009.
Direct vessel
expenses: Direct vessel expenses, comprised of the
amortization of dry dock and special survey costs, decreased by $0.03 million or
20.0% to $0.12 million for the three month period ended June 30, 2009 as
compared to $0.15 million for the same period in 2008 due to the full
amortization of dry dock and special survey costs for one of the owned
vessels.
Management
fees: Management fees increased by $0.5 million to $2.6
million or 23.8% for the three month period ended June 30, 2009, as compared to
$2.1 million for the same period in 2008. The increase is mainly attributable to
the acquisition of the Navios Fantastiks from Navios Holdings into the
owned fleet, from chartered-in vessel on May 2, 2008 and to the acquisition of
the Navios Hope from Navios Holdings on July 1, 2008. Starting
on November 16, 2007, in connection with the management agreement entered into
by Navios Partners, Navios ShipManagement Inc. provides all of Navios Partners’
owned vessels with commercial and technical management services for a daily fee
of $4,000 per owned Panamax vessel and $5,000 per owned Capesize vessel until
November 16, 2009.
General and
administrative expenses: General and administrative expenses increased by
$0.4 million to $0.9 million or 80.0% for the three month period ended June 30,
2009, as compared to $0.5 million for the same period of 2008. The increase is
mainly attributable to (a) an increase in the number of owned and chartered-in
vessels and (b) an increase in professional, legal and audit fees incurred by
Navios Partners in connection with the amendment of the loan agreement and other
activities.
Pursuant
to the Administrative Services Agreement, Navios ShipManagement Inc. provides
administrative services and is reimbursed for reasonable costs and expenses
incurred in connection with the provision of these services. For the three month
periods ended June 30, 2009 and 2008, the expenses charged by Navios
ShipManagement Inc. for administrative fees were $0.6 million and $0.2 million,
respectively. The remaining balances of $0.3 million of general and
administrative expenses which is the same for the three month periods ended June
30, 2009 and 2008, relate to legal and professional fees, as well as audit
fees.
Depreciation and
amortization: Depreciation and amortization amounted to $3.5
million for the three month period ended June 30, 2009 compared to $2.5 million
for the three month period ended June 30, 2008. The main reason for this
increase of $1.0 million was: (a) the increase in depreciation expense of $1.2
million due to the acquisitions of the Navios Fantastiks on May 2, 2008 (which
until then was part of the chartered-in fleet of Navios Partners) and the Navios
Hope on July 1, 2008 and (b) the increase in amortization expense of $0.2
million due to the acquisition all of the rights to the Navios Sagittarius on
June 10, 2009. This increase was mitigated by an increase in amortization
income of $0.4 million related to favorable lease recognized on the acquisition
of the Navios Fantastiks as an owned vessel, which was fully amortized
within 2008. Depreciation of vessels is calculated using an estimated useful
life of 25 years from the date the vessel was originally delivered from the
shipyard. Intangible assets are amortized over the contract periods which range
from four to ten years.
Interest expense
and finance cost, net: Interest expense and finance cost, net for the
three month period ended June 30, 2009 decreased to $1.9 million as compared to
$2.3 million in the same period of 2008. The decrease is due to the lower
weighted average interest rate from 3.66% for the three month period ended June
30, 2009 compared to 4.66% for the same period in 2008, which was mitigated by
an increase in average outstanding loan balance from $189.0 million in the three
months ended June 30, 2008 to $195.0 million in the three months ended June 30,
2009. As of June 30, 2008, the outstanding loan balance under Navios
Partners’ credit facility was $200.0 million and $195.0 million as of June 30,
2009.
Interest
income: Interest income decreased by $0.01 million to $0.03
million for the three month period ended June 30, 2009 as compared to $0.04
million for the same period of 2008. Interest income is considered
immaterial.
Compensation
expense: On June 9, 2009, Navios Holdings relieved Navios Partners from
its obligation to purchase the Capesize vessel Navios Bonavis (ex TBN I) for
$130.0 million and Navios Partners was granted a 12-month option to purchase the
vessel for $125.0 million. In return, Navios Partners issued 1,000,000
subordinated Series A units to Navios Holdings and recognized a non-cash
compensation expense of $6.1 million.
Other income and
expenses, net: Other expenses, net increased by $0.1 million for the
three month period ended June 30, 2009 as compared to the respective period of
2008.
Net
income: Net income for the three months ended June 30, 2009 amounted to
$3.6 million compared to $7.2 million for the three months ended June 30, 2008.
The decrease in net income of $3.6 million is due to the factors discussed
above.
Operating
Surplus: Navios Partners
generated an Operating Surplus for the three month period ended June 30, 2009 of
$11.4 million in comparison to $5.9 million for the three month period ended
June 30, 2008. Operating Surplus is a non-GAAP financial measure used
by certain investors to measure the financial performance of Navios Partners and
other master limited partnerships (See “Reconciliation of Adjusted EBITDA
to Net Cash from Operating Activities, Operating Surplus and Available Cash for
Distribution” contained herein).
Seasonality: Since
Navios Partners’ vessels operate under long-term charters, the results of
operations are not generally subject to the effect of seasonal variations in
demand.
For the Six Month Period ended
June 30, 2009 compared to Six Month Period
ended June 30, 2008
Time charter and
voyage revenues: Time charter and voyage revenues for the six month
period ended June 30, 2009 increased by $11.0 million or 34.0% to $43.3 million
as compared to $32.3 million for the same period in 2008. The increase was
mainly attributable to the delivery of the Navios Aldebaran on March 17, 2008,
the acquisition of the Navios Hope on July 1, 2008, both of which were fully
operating during the six month period ended June 30, 2009 and the acquisition of
the rights to the Navios Sagittarius on June 10, 2009.
Time charter and
voyage expenses: Time charter and voyage expenses increased by
$0.4 million or 6.7% to $6.4 for the six month period ended June 30, 2009 as
compared to $6.0 million for same period in 2008. The increase was mainly
attributable to the delivery of the chartered-in vessel Navios Aldebaran on
March 17, 2008. This increase was mitigated by the acquisition of the Navios
Fantastiks from Navios Holdings into the owned fleet, from chartered-in vessel
on May 2, 2008 and the acquisition of the rights to the Navios Sagittarius
on June 10, 2009.
Direct vessel
expenses: Direct vessel expenses, comprised of the
amortization of dry dock and special survey costs, decreased by $0.1 million or
33.3% to $0.2 million for the six month period ended June 30, 2009 as compared
to $0.3 million for the same period in 2008 due to the full amortization of
dry dock and special survey costs for one of the owned
vessels.
Management
fees: Management fees increased by $1.3 million to $5.2
million or 33.3% for the six month period ended June 30, 2009, as compared to
$3.9 million for the same period in 2008. The increase is mainly attributable to
the acquisition of the Navios Fantastiks from Navios Holdings into the
owned fleet, from chartered-in vessel on May 2, 2008 and to the acquisition of
the Navios Hope from Navios Holdings on July 1, 2008. Starting on
November 16, 2007, in connection with the management agreement entered into by
Navios Partners, Navios ShipManagement Inc. provides all of Navios Partners’
owned vessels with commercial and technical management services for a daily fee
of $4,000 per owned Panamax vessel and $5,000 per owned Capesize vessel until
November 16, 2009.
General and
administrative expenses: General and administrative expenses increased by
$0.8 million to $1.8 million or 80.0% for the six month period ended June 30,
2009, as compared to $1.0 million for the same period of 2008. The increase is
mainly attributable to (a) an increase in the number of owned and chartered-in
vessels and (b) an increase in professional, legal and audit fees incurred by
Navios Partners in connection with the amendment of the loan agreement and other
activities.
Pursuant
to the Administrative Services Agreement, Navios ShipManagement Inc. provides
administrative services and is reimbursed for reasonable costs and expenses
incurred in connection with the provision of these services. For the six month
periods ended June 30, 2009 and 2008, the expenses charged by Navios
ShipManagement Inc. for administrative fees were $1.0 million and $0.5
million, respectively. The remaining balances of $0.8 million and $0.5 million
of general and administrative expenses for the six month periods ended June 30,
2009 and 2008, respectively, relate to legal and professional fees, as well as
audit fees.
Depreciation and
amortization: Depreciation and amortization amounted to $6.8
million for the six month period ended June 30, 2009 compared to $5.3 million
for the six month period ended June 30, 2008. The main reason for this increase
of $1.5 million was: (a) the increase in depreciation expense of $3.0 million
due to the acquisitions of the Navios Fantastiks on May 2, 2008 (which
until then was part of the chartered-in fleet of Navios Partners) and the Navios
Hope on July 1, 2008; and (b) the increase in amortization expense of $0.2
million due to the acquisition of the rights to the Navios Sagittarius on June
10, 2009. This increase was mitigated by a decrease in amortization expense of
$1.7 million related to favorable lease recognized on the acquisition of
the Navios Fantastiks as an owned vessel, which was fully amortized
within 2008. Depreciation of vessels is calculated using an estimated useful
life of 25 years from the date the vessel was originally delivered from the
shipyard. Intangible assets are amortized over the contract periods which range
from four to ten years.
Interest expense
and finance cost, net: Interest expense and finance cost, net for the six
month period ended June 30, 2009 decreased to $4.3 million as compared to $4.8
million in the same period of 2008. The slight decrease is due to the lower
weighted average interest rate from 3.98% for the six month period ended June
30, 2009 compared to 5.1% for the same period in 2008, which was mitigated by an
increase in average outstanding loan balance from $177.0 million in the six
months ended June 30, 2008 to $205.6 million in the six months ended June 30,
2009. As of June 30, 2008, the outstanding loan balance under our credit
facility was $200.0 million and $195.0 million as of June 30, 2009.
Interest
income: Interest income was $0.09 million for the six month
period ended June 30, 2009 and the same for the respective period of 2008.
Interest income is considered immaterial.
Compensation
expense: On June 9, 2009, Navios Holdings relieved Navios Partners from
its obligation to purchase the Capesize vessel Navios Bonavis (ex TBN I) for
$130.0 million and Navios Partners was granted a 12-month option to purchase the
vessel for $125.0 million. In return, Navios Partners issued 1,000,000
subordinated Series A units to Navios Holdings and recognized a non-cash
compensation expense of $6.1 million.
Net
income: Net income for the six months ended June 30, 2009 amounted to
$12.6 million compared to $11.0 million for the six months ended June 30, 2008.
The increase in net income of $1.6 million is due to the factors discussed
above.
Operating
Surplus: Navios Partners
generated an Operating Surplus for the period of $22.0 million in comparison to
$13.1 million for the six month period ended June 30, 2008. Operating
Surplus is a non-GAAP financial measure used by certain investors to measure the
financial performance of Navios Partners and other master limited
partnerships (See “Reconciliation of Adjusted EBITDA to Net Cash from
Operating Activities, Operating Surplus and Available Cash for Distribution”
contained herein).
Seasonality:
Because Navios Partners’ vessels operate under long-term charters, the results
of operations are not generally subject to the effect of seasonal variations in
demand.
Liquidity
and Capital Resources
Revolving
Credit Facility
Upon the
closing of the IPO, Navios Partners entered into a $260.0 million revolving
credit facility with DVB Bank AG and Commerzbank AG which was amended in June
2008, in part, to increase the available borrowings by $35.0 million, in
anticipation of purchasing the Navios Hope, thereby increasing the total
facility to $295.0 million. Currently, Navios Partners’ total borrowings under
its revolving credit facility are $195.0 million.
In
January 2009, Navios Partners further amended the terms of its existing credit
facility. The amendment is effective until January 15, 2010 and provides for
(a) the repayment of $40.0 million which took place on February 9,
2009, (b) maintaining minimum cash reserves in a pledged account with the agent
bank as follows: $2.5 million as of January 31, 2009; $5.0 million as of March
31, 2009; $7.5 million as of June 30, 2009, $10.0 million as
of September 30, 2009; and $12.5 million as
of December 31, 2009 and (c) an increased margin on the loans of
2.25%. Further, the covenants were amended by (a) reducing the minimum net worth
covenant to $100.0 million from $135.0 million, (b) reducing the value
maintenance covenant ("VMC") to 100% using charter free vessel values, (c)
changing the calculation of the minimum leverage covenant to use charter
inclusive adjusted vessel values until December 31, 2009, and (d) adding a new
VMC based on charter inclusive valuations to be at 143%. Also, Navios Partners
pays a commitment fee of 0.35% for undrawn amounts under the
facility.
As of
June 30, 2009, Navios Partners was in compliance with the financial covenants of
its revolving loan facility. The repayment of the credit facility starts no
earlier than February 2012 and is subject to changes in repayment amounts and
dates depending on various factors such as the future borrowings under the
credit facility agreement.
Liquidity and
Capital Resources
The
following table presents cash flow information derived from the unaudited
condensed consolidated statements of cash flows of Navios Partners for the six
month periods ended June 30, 2009 and 2008.
|
|
Six Month
Period Ended
June 30, 2009
($ ‘000)
|
|
|
Six Month
Period Ended
June 30, 2008
($ ‘000)
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
Net
cash provided by operating activities
|
|
$
|
56,964
|
|
|
$
|
13,901
|
|
Net
cash used in investing activities
|
|
|
(34,600)
|
|
|
|
(34,506)
|
|
Net
cash (used in)/provided by financing activities
|
|
|
(30,257)
|
|
|
|
25,292
|
|
Change
in cash and cash equivalents
|
|
$
|
(7,893)
|
|
|
$
|
4,687
|
|
Cash
provided by operating activities for the six month period ended June 30, 2009 as
compared to the cash provided for the six month period ended June
30, 2008:
Net cash
provided by operating activities increased by $43.1 million to $57.0 million for
the six month period ended June 30, 2009 as compared to $13.9 million for the
same period in 2008.
The
increase resulted from higher net income for the six month period ended June 30,
2009, of $12.6 million compared to $11.0 million for the six month period ended
June 30, 2008 and as a result of other factors, as discussed herein. In
determining net cash provided by operating activities, net income is adjusted
for the effects of certain non-cash items including depreciation and
amortization of $6.8 million, $0.1 million amortization and write-off of
deferred financing cost, $0.2 million amortization of deferred dry dock costs
and $6.1 million non-cash compensation expense for the issuance of the
1,000,000 subordinated Series A units to Navios Holdings for the six month
periods ended June 30, 2009. In determining net cash provided by operating
activities for the six month period ended June 30, 2008, net income is also
adjusted for the effects of certain non-cash items including depreciation and
amortization of $5.3 million, $0.1 million amortization and write-off of
deferred financing cost and $0.3 million amortization of deferred dry dock
costs.
Amounts
due to related parties increased by $4.9 million from $1.5 million at December
31, 2008 to $6.4 million at June 30, 2009. The main reason for such increase
was: (a) the increase in management fees by $4.3 million due to the acquisition
of both the Navios Hope on July 1, 2008 and the Navios Fantastiks on May 2,
2008, from a chartered-in vessel; (b) the increase in administrative fees of
$0.4 million; and (c) the increase in other expenses due to affiliated companies
of $0.2 million. During the corresponding period in 2008, amounts due to related
parties decreased by $3.7 million from $4.5 million at December 31, 2007 to $0.8
million at June 30, 2008. The main reason for this was the payment to Navios
Holdings of the deferred acquisition expenses related to Navios Partners’ IPO
amounting to $3.8 million.
Restricted
cash increased by $0.8 million from $0 at December 31, 2008 to $0.8 million at
June 30, 2009. This increase was due to a $0.8 million guarantee for a claim
related to an owned vessel. During the corresponding period in 2008,
restricted cash decreased to $0.6 million as at June 30, 2008 from $0.8 million
as at December 31, 2007. The reason for this was the decrease in interest rates
that led to lower amounts being held in Navios Partners’ retention account for
interest payments.
Accounts
receivable increased by $0.2 million from $0.3 million at at December 31, 2008
to $0.5 million at June 30, 2009. During the corresponding period of 2008,
accounts receivable increased by $0.3 million from $0.4 million at December 31,
2007 to $0.7 million at June 30, 2008. The main reason was the increase in
amounts receivable from the charterers.
Deferred
voyage revenue primarily reflects charter-out amounts collected on voyages that
have not been completed. Deferred voyage revenue, net of commissions increased
by $26.9 million from $2.6 million at December 31, 2008 to $29.5 million at June
30, 2009. Out of $29.5 million at June 30, 2009, the amount of $6.8 million and
$21.1 million represents the short and long term portion, respectively, of
unamortized deferred revenue received from the counterparty to the Navios Hope.
In January 2009, Navios Partners and its counterparty to the Navios Hope charter
mutually agreed for a lump sum amount of approximately $30.4 million or $29.6
million, net of expenses. Under a new charter agreement, the balance of the
aggregate value of the original contract will be allocated to the period until
its original expiration. The amount of $30.4 million has been recognized as
deferred revenue and amortized over the life of the vessel’s contract. During
the corresponding period of 2008, deferred voyage revenue, net of commissions
increased by $0.7 million from $0.2 million at December 31, 2007 to $0.9 million
at June 30, 2008.
Accounts
payable decreased by $0.01 million from December 31, 2008 to June 30, 2009. The
decrease is considered immaterial. During the corresponding period of 2008,
accounts payable increased by $0.4 million from $0.6 million at December 31,
2007 to $1.0 million at June 30, 2008. The primary reason was an increase in
suppliers and brokers’ payable of $0.4 million and $0.3 million, respectively,
mitigated by a decrease in professional fees payable by $0.3
million.
Prepaid
expenses and other current assets decreased by $0.2 million from $0.4 million at
December 31, 2008 to $0.2 million at June 30, 2009. This increase is considered
immaterial. During the corresponding period of 2008, prepaid expenses increased
by $0.1 million from $0.03 million at December 31, 2007 to $0.1 million at June
30, 2008.
Accrued
expenses increased by $0.2 million from $1.7 million at December 31, 2008
to $1.9 million at June 30, 2009. The primary reason for this increase was an
increase of $0.3 million in accrued expenses mainly due to the additional
accrued costs for the offering of 3,500,000 common units. This increase was
mitigated by a $0.1 million decrease in accrued loan interest. During the
corresponding period of 2008, accrued expenses decreased by $0.1 million from
$1.4 million at December 31, 2007 to $1.3 million at June 30, 2008. The primary
reason was a decrease in accrued loan interest by $0.2 million mitigated by an
increase in other accrued expenses by $0.1 million.
Cash
used in investing activities for the six month period ended June 30, 2009 as
compared to the six month period ended June 30, 2008:
Net cash
used in investing activities increased by $0.1 million to $34.6 million for the
six month period ended June 30, 2009 as compared to $34.5 million for the same
period in 2008.
Cash used
in investing activities of $34.6 million for the six month period ended June 30,
2009 was due to the acquisition of the rights to the Navios Sagittarius on June
10, 2009, from Navios Holdings for a cash payment of $34.6 million.
Net cash
used in investing activities was $34.5 million for the six month period ended
June 30, 2008. In May 2008, Navios Partners purchased the vessel Fantastiks,
renamed the Navios Fantastiks, for an amount of $34.2 million. The $0.3 million
balance is due to capitalized expenses incurred which are related to the
vessel’s acquisition.
Cash
(used in)/ provided by financing activities for the six month period ended June
30, 2009 as compared to the six month period ended June 30, 2008:
Net cash
(used in)/provided by financing activities decreased by $55.6 million to $30.3
million outflow for the six month period ended June 30, 2009 as compared to
$25.3 million inflow for the same period in 2008.
Cash used
in financing activities of $30.3 million outflow for the six month
period ended June 30, 2009 was due to: (a) repayment of $40.0 million which took
place in February 2009, according to the amendment dated January 30, 2009 to the
existing credit facility; (b) payment of $0.2 million restructuring fee relating
to such amendment; (c) payment of a total cash distribution of $17.4
million; and (d) maintenance of a minimum balance in Navios Partners’ retention
account of $7.5 million until June 30, 2009, in accordance with the Supplemental
Agreement dated January 30, 2009 to the Facility Agreement dated November 15,
2007. This overall decrease was mitigated by: (a) an increase of $33.9 million,
being the proceeds from the issuance of 3,500,000 common units, net of offering
costs; and (b) an increase of $0.9 million from the issuance of additional
general partnership units pursuant to the offering of 3,500,000 common units and
due to the fact that Navios Partners was relieved from the obligation to buy
the Navios Bonavis (ex TBN I). On June 9, 2009, Navios Holdings relieved
Navios Partners from its obligation to purchase the Capesize vessel Navios
Bonavis for $130.0 million and, with the delivery of the Navios Bonavis to
Navios Holdings, Navios Partners was granted a 12-month option to purchase the
vessel for $125.0 million. Consequently, Navios Partners recognized a non-cash
compensation expense amounting to $6.1 million. Following this transaction,
Navios Partners also issued 1,000,000 subordinated Series A units to Navios
Holdings. The newly issued units are not eligible to receive distributions until
the third anniversary of their issuance, at which point they will automatically
convert into common units and receive distributions in accordance with all other
common units. In addition, Navios Holdings will be released from the Omnibus
Agreement restrictions for two years in connection with acquiring vessels from
third parties (but not from the requirement to offer to sell to Navios Partners
qualifying vessels in Navios Holdings’ existing fleet). Pursuant to the issuance
of the 1,000,000 subordinated Series A units, Navios Partners issued 20,408
additional general partnership units to its general partner.
Cash
provided by financing activities was $25.3 million for the six month period
ended June 30, 2008. Navios Partners paid a cash distribution on each of
February 14, 2008 of $3.2 million and May 14, 2008 of $6.5 million for a total
cash consideration during the six month period ended June 30, 2008 of $9.7
million. Navios Partners borrowed an additional $35.0 million under its existing
credit facility in order to finance the acquisition of the vessel Navios
Fantastiks on May 2, 2008.
Reconciliation
of Adjusted EBITDA to Net Cash from Operating Activities, Operating Surplus and
Available Cash for Distribution
|
|
(unaudited)
Three Month
Period ended
June 30, 2009
($ ‘000)
|
|
|
(unaudited)
Three Month
Period ended
June 30, 2008
($ ‘000)
|
|
|
(unaudited)
Six Month
Period ended
June 30, 2009
($ ‘000)
|
|
|
(unaudited)
Six Month
Period ended
June 30, 2008
($ ‘000)
|
|
Net
Cash provided by operating activities
|
|
$ |
13,916 |
|
|
$ |
10,397 |
|
|
$ |
56,964 |
|
|
$ |
13,901 |
|
Net
increase/(decrease) in operating assets
|
|
|
(215 |
) |
|
|
(2,231 |
) |
|
|
810 |
|
|
|
262 |
|
Net
increase/(decrease) in operating liabilities
|
|
|
(337 |
) |
|
|
1,732 |
|
|
|
(31,988 |
) |
|
|
2,539 |
|
Net
interest cost
|
|
|
1,890 |
|
|
|
2,296 |
|
|
|
4,258 |
|
|
|
4,721 |
|
Deferred
finance charges
|
|
|
(65 |
) |
|
|
(52 |
) |
|
|
(127 |
) |
|
|
(101 |
) |
Adjusted
EBITDA
|
|
|
15,189 |
|
|
|
12,142 |
|
|
|
29,917 |
|
|
|
21,322 |
|
Cash
interest income
|
|
|
32 |
|
|
|
43 |
|
|
|
89 |
|
|
|
91 |
|
Cash
interest paid
|
|
|
(2,025 |
) |
|
|
(4,783 |
) |
|
|
(4,302 |
) |
|
|
(4,783 |
) |
Expansion
capital expenditures
|
|
|
(34,600 |
) |
|
|
(34,155 |
) |
|
|
(34,600 |
) |
|
|
(34,155 |
) |
Equity
Issuance
|
|
|
34,793 |
|
|
|
- |
|
|
|
34,793 |
|
|
|
- |
|
Borrowings
to fund expansion capital expenditures
|
|
|
- |
|
|
|
35,000 |
|
|
|
- |
|
|
|
35,000 |
|
Maintenance
and replacement capital expenditures
|
|
|
(1,957 |
) |
|
|
(2,338 |
) |
|
|
(3,915 |
) |
|
|
(4,410 |
) |
Operating
Surplus
|
|
|
11,432 |
|
|
|
5,909 |
|
|
|
21,982 |
|
|
|
13,065 |
|
Cash
distribution paid relating to the first quarter
|
|
|
- |
|
|
|
- |
|
|
|
(8,675 |
) |
|
|
(6,472 |
) |
Recommended
reserves accumulated as of beginning of January 1
|
|
|
2,127 |
|
|
|
18 |
|
|
|
2,127 |
|
|
|
18 |
|
Reserves
accumulated during the first quarter distributed in the second
quarter
|
|
|
1,875 |
|
|
|
684 |
|
|
|
- |
|
|
|
- |
|
Recommended
reserves held as of quarter end
|
|
|
(5,322 |
) |
|
|
(117 |
) |
|
|
(5,322 |
) |
|
|
(117 |
) |
Available
cash for distribution
|
|
$ |
10,112 |
|
|
$ |
6,494 |
|
|
$ |
10,112 |
|
|
$ |
6,494 |
|
Adjusted
EBITDA
Adjusted
EBITDA represents net income before interest, depreciation and amortization and
before non-cash compensation expense for the release of the obligation to
acquire the Navios Bonavis (ex TBN I). Navios Partners uses Adjusted EBITDA
because it believes that Adjusted EBITDA is a basis upon which liquidity can be
assessed and Adjusted EBITDA presents useful information to investors regarding
Navios Partners’ ability to service and/or incur indebtedness. Navios Partners
also uses Adjusted EBITDA: (i) in its credit agreement to measure compliance
with covenants such as interest coverage and debt incurrence; (ii) by
prospective and current lessors as well as potential lenders to evaluate
potential transactions; and (iii) to evaluate and price potential acquisition
candidates.
Adjusted
EBITDA has limitations as an analytical tool, and should not be considered in
isolation or as a substitute for analysis of Navios Parters’ results as reported
under US GAAP. Some of these limitations are: (i) Adjusted EBITDA does not
reflect changes in, or cash requirements for, working capital needs; and (ii)
although depreciation and amortization are non-cash charges, the assets being
depreciated and amortized may have to be replaced in the future, and Adjusted
EBITDA does not reflect any cash requirements for such capital expenditures. As
a result of these limitations, Adjusted EBITDA should not be considered as a
principal indicator of Navios Partners’ performance.
Adjusted
EBITDA increased by $8.6 million to $29.9 million for the six month period ended
June 30, 2009 as compared to $21.3 million for the same period of 2008. This
$8.6 million increase in Adjusted EBITDA was primarily due to (a) a $11.0
million increase in revenue as a result of the increased number of vessels in
Navios Partners’ fleet; and (b) a $0.1 million decrease in other expenses, net.
The above favorable variance of $11.1 million was mitigated by: (a) a $0.4
million increase in time charter and voyage expenses; (b) a $1.3 million
increase in management fees, due to the increase in the number of vessels; and
(c) a $0.8 million increase in general and administrative expenses due to the
increase in the number of owned and chartered-in vessels during the three month
period ended June 30, 2009, compared to the respective period in
2008.
Adjusted
EBITDA increased by $3.1 million to $15.2 million for the three month period
ended June 30, 2009 as compared to $12.1 million for the same period of 2008.
This $3.1 million increase in Adjusted EBITDA was primarily due to a $4.3
million increase in revenue as a result of the increased number of vessels in
Navios Partners’ fleet. The above favorable variance of $4.3 million was
mitigated by: (a) a $0.2 million increase in time charter and voyage
expenses; (b) a $0.5 million increase in management fees, due to the
increase in the number of vessels; (c) a $0.4 million increase in general and
administrative expenses due to the increase in the number of owned and
chartered-in vessels during the three month period ended June 30, 2009, compared
to the respective period in 2008; and (d) a $0.1 million increase in other
expenses, net.
Operating
Surplus
Operating
Surplus represents net income adjusted for depreciation and amortization
expense, non-cash interest expense and estimated maintenance and replacement
capital expenditures and expansion capital expenditures. Maintenance
and replacement capital expenditures are those capital expenditures required to
maintain over the long term the operating capacity of or the revenue generated
by Navios Partners’ capital assets. Expansion capital expenditures are those
capital expenditures that increase the operating capacity of or the revenue
generated by Navios Partners’ capital assets.
Operating
Surplus is a quantitative measure 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 US GAAP and
should not be considered as an alternative to net income or any other indicator
of Navios Partners’ performance required by accounting US GAAP.
Available
Cash
Available
Cash generally means, for each fiscal quarter, all cash on hand at the end of
the quarter:
• less
the amount of cash reserves established by the board of directors
to:
– provide
for the proper conduct of Navios Partners’ business (including reserve for
maintenance and replacement capital expenditures);
– comply
with applicable law, any of Navios Partners’ debt instruments, or other
agreements; or
– provide
funds for distributions to the unitholders and to the general partner for any
one or more of the next four quarters;
• plus
all cash on hand on the date of determination of available cash for the quarter
resulting from working capital borrowings made after the end of the quarter.
Working capital borrowings are generally borrowings that are made under any
revolving credit or similar agreement used solely for working capital purposes
or to pay distributions to partners.
Available
Cash is a quantitative measure used in the publicly traded partnership
investment community to assist in evaluating a partnership’s ability to make
quarterly cash distributions. Available cash is not required by US GAAP and
should not be considered as an alternative to net income or any other indicator
of Navios Partners’ performance required by US GAAP.
Borrowings
Navios
Partners’ long-term third party borrowings are reflected in its balance sheet as
“Long-term debt, net” and as current liabilities in “Current portion of
long-term debt.” As of June 30, 2009 and December 31, 2008, long-term debt
amounted to $195.0 million and $235.0 million, respectively, of which the
current portion of long-term debt amounted to $0 and $40.0 million for the
respective periods in 2009 and 2008, respectively.
Capital
Expenditures
During
the three and six months ended June 30, 2008, Navios Partners financed its
capital expenditures with cash flow from operations and through bank debt and
equity raising. Expansion capital expenditures for the three and six month
periods ended June 30, 2008 was $34.2 million, respectively, and for the
respective periods in 2009 was $34.6 million. The reserve for estimated
maintenance and replacement capital expenditures for both the three and six
month periods ended June 30, 2008 was $2.3 million and $4.4 million,
respectively, and for the three and six month periods ended June 30, 2009 was
$2.0 million and $3.9 million, respectively.
Maintenance
for vessels and expenses related to dry docking are included in the fee Navios
Partners pays Navios ShipManagement Inc. under its management agreement. Navios
Partners pays Navios ShipManagement Inc. a daily fee of $4,000 per owned Panamax
vessel and $5,000 per owned Capesize vessel which is fixed until November 16,
2009, to provide such commercial and technical services to the vessels in its
initial fleet. The fee Navios Partners pays to Navios ShipManagement Inc.
includes any costs associated with scheduled dry dockings during the term of the
management agreement.
Replacement
Reserve
Navios
Partners estimates that its annual replacement reserve for the year ending
December 31, 2009 will be approximately $7.8 million, for replacing its vessels
at the end of their useful lives. The amount for estimated maintenance and
replacement capital expenditures attributable to future vessel replacement is
based on the following assumptions: (i) current market price to purchase a five
year old vessel of similar size and specifications which Navios Partners
estimates to be $28.5 million for Panamax vessels and $45.3 million for Capesize
vessels; (ii) a 25-year useful life; and (iii) a 5.0% net investment rate.
Navios Partners’ board of directors, with the approval of the conflicts
committee, may determine that one or more of Navios Partners’ assumptions should
be revised, which could cause its board of directors to increase or decrease the
amount of estimated maintenance and replacement capital expenditures. Navios
Partners may elect to finance some or all of its maintenance and replacement
capital expenditures through the issuance of additional common units which could
be dilutive to existing unitholders.
Off-Balance
Sheet Arrangements
Navios
Partners has no off-balance sheet arrangements that have or are reasonably
likely to have, a current or future material effect on its financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources.
Contractual
Obligations and Contingencies
The
following table summarizes Navios Partners’ long-term contractual obligations as
of June 30, 2009:
Payments
due by period
($
‘000)
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
Thereafter
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan
obligations(1)
|
|
|
—
|
|
|
|
—
|
|
|
|
14,306
|
|
|
|
27,781
|
|
|
$
|
25,591
|
|
|
$
|
127,322
|
|
|
$
|
195,000
|
|
Operating
lease
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
obligations(2)
|
|
$
|
10,063
|
|
|
$
|
13,346
|
|
|
$
|
13,409
|
|
|
$
|
13,448
|
|
|
$
|
12,715
|
|
|
$
|
4,768
|
|
|
$
|
67,749
|
|
Total
contractual
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
obligations
|
|
$
|
10,063
|
|
|
$
|
13,346
|
|
|
$
|
27,715
|
|
|
$
|
41,229
|
|
|
$
|
38,306
|
|
|
$
|
132,090
|
|
|
$
|
262,749
|
|
(1)
|
Represents
amounts drawn under the June 2008 amended credit facility. This amended
credit facility provides borrowing for up to $295.0 million. Such facility
was further amended in January 2009 pursuant to which $40.0 million of the
outstanding loan amount was paid on February 9, 2009. Amounts do not
include interest costs associated with them, which are based on a margin
ranging from 1.25% to 2.25%, as amended. The amended facility also
requires a total of $12.5 million in cash reserve balance to be maintained
as of December 31, 2009.
|
(2)
|
These
amounts reflect future minimum commitments under charter-in contracts, net
of commissions.
|
As of
December 31, 2008, Navios Partners had entered into a charter-in agreement for
two of its vessels (the Navios Prosperity and the Navios Aldebaran). The Navios
Prosperity is a chartered-in vessel starting from June 19, 2007 for seven years
with options to extend for two one-year periods. Navios Partners has the option
to purchase the Navios Prosperity after June 2012 at a purchase price that is
initially 3.8 billion Japanese Yen ($39.8 million based on the exchange rate at
June 30, 2009), declining each year by 145 million Japanese Yen ($1.5 million
based on the exchange rate at June 30, 2009). Navios Aldebaran is a chartered-in
vessel for seven years starting from March 17, 2008 with options to extend for
two one-year periods. Navios Partners has the option to purchase The Navios
Aldebaran after March 2013 at a purchase price that is initially 3.6 billion
Japanese Yen ($37.7 million based on the exchange rate at June 30, 2009)
declining each year by 150 million Japanese Yen ($1.6 million based on the
exchange rate at June 30, 2009).
On June
10, 2009, Navios Partners purchased from Navios Holdings the rights to the
Navios Sagittarius, a 2006 Japanese-built Panamax vessel with a capacity of
75,756 dwt, for a cash payment of $34.6 million. The Navios Sagittarius is a
chartered-in-vessel. Navios Partners has the option to purchase the Navios
Sagittarius at the beginning of December 2009, at a purchase price that is
initially 2.5 billion Japanese Yen ($26.2 million based on the exchange rate at
June 30, 2009), declining each year by 120.0 million Japanese Yen ($1.3 million
based on the exchange rate at June 30, 2009).
Fleet
Employment Profile
The
following table reflects certain key indicators indicative of the performance of
Navios Partners and its core fleet performance for the three and six month
periods ended June 30, 2009 and 2008.
|
|
Three Month
Period ended
June 30,2009
|
|
|
Three Month
Period ended
June 30,2008
|
|
|
Six Month
Period ended
June 30, 2009
|
|
|
Six Month
Period ended
June 30, 2008
|
|
Available
Days (1)
|
|
|
840 |
|
|
|
728 |
|
|
|
1,650 |
|
|
|
1,363 |
|
Operating
Days (2)
|
|
|
840 |
|
|
|
722 |
|
|
|
1,649 |
|
|
|
1,356 |
|
Fleet
Utilization (3)
|
|
|
100 |
% |
|
|
99.2 |
% |
|
|
99.9 |
% |
|
|
99.6 |
% |
Time
Charter Equivalent (per day)
|
|
$ |
26,373 |
|
|
$ |
24,641 |
|
|
$ |
26,249 |
|
|
$ |
23,674 |
|
Vessels
operating at period end
|
|
|
10 |
|
|
|
8 |
|
|
|
10 |
|
|
|
8 |
|
(1)
|
Available
days for the fleet represent total calendar days the vessels were in
Navios Partners’ possession for the relevant period after subtracting
off-hire days associated with major repairs, dry dockings or special
surveys. The shipping industry uses available days to measure the number
of days in a relevant period during which a vessel is capable of
generating revenues.
|
(2)
|
Operating
days is the number of available days in the relevant period less the
aggregate number of days that the vessels are off-hire due to any reason,
including unforeseen circumstances. The shipping industry uses
operating days to measure the aggregate number of days in a relevant
period during which vessels actually generate
revenues.
|
(3)
|
Fleet
utilization is the percentage of time that Navios Partners’ vessels were
available for revenue generating available days, and is determined by
dividing the number of operating days during a relevant period by the
number of available days during that period. The shipping
industry uses fleet utilization to measure efficiency in finding
employment for vessels.
|
Cash
Distribution Policy
Rationale
for Our Cash Distribution Policy
Our cash
distribution policy reflects a basic judgment that our unitholders are better
served by distributing our cash available (after deducting expenses, including
estimated maintenance and replacement capital expenditures and reserves) rather
than retaining it. Because we believe we will generally finance any expansion
capital expenditures from external financing sources, we believe that our
investors are best served by our distributing all of our available cash. Our
cash distribution policy is consistent with the terms of our partnership
agreement, which requires that we distribute all of our available cash quarterly
(after deducting expenses, including estimated maintenance and replacement
capital expenditures and reserves).
Limitations
on Cash Distributions and Our Ability to Change Our Cash Distribution
Policy
There is
no guarantee that unitholders will receive quarterly distributions from us. Our
distribution policy is subject to certain restrictions and may be changed at any
time.
Our
ability to make distributions to our unitholders depends on the performance of
our subsidiaries and their ability to distribute funds to us. The ability of our
subsidiaries to make distributions to us may be restricted by, among other
things, the provisions of existing and future indebtedness, applicable
partnership and limited liability company laws and other laws and
regulations.
Minimum
Quarterly Distribution
We intend
to distribute to the holders of common units and subordinated units on a
quarterly basis at least the minimum quarterly distribution of $0.35 per unit,
or $1.40 per unit per year, to the extent we have sufficient cash on hand to pay
the distribution after we establish cash reserves and pay fees and expenses. The
amount of available cash from Operating Surplus needed to pay the minimum
quarterly distribution for four quarters on all units outstanding and the
related distribution on the 2.0% general partner interest is approximately $35.4
million. There is no guarantee that we will pay the minimum quarterly
distribution on the common units and subordinated units in any quarter. Even if
our cash distribution policy is not modified or revoked, the amount of
distributions paid under our policy and the decision to make any distribution is
determined by our board of directors, taking into consideration the terms of our
partnership agreement. We are prohibited from making any distributions to
unitholders if it would cause an event of default, or an event of default
exists, under our existing revolving credit agreement.
On
January 21, 2009, the Board of Directors of Navios Partners authorized its
quarterly cash distribution for the three month period ended December 31, 2008
of $0.40 per unit. The distribution was paid on February 12, 2009 to all holders
of record of common units as of February 9, 2009, and with respect to
subordinated and general partner units (excluding 3,131,415 common units issued
to Navios Holdings in connection with the sale of the vessel Navios
Hope).
On April
24, 2009, the Board of Directors of Navios Partners authorized its quarterly
cash distribution for the three month period ended March 31, 2009 of $0.40 per
unit. The distribution was paid on May 6, 2009 to all holders of record of
common, subordinated and general partner units as of May 1, 2009. The aggregate
amount of the declared distribution was $8.7 million.
On July
27, 2009, the Board of Directors of Navios Partners authorized its quarterly
cash distribution for the three month period ended June 30, 2009 of $0.40 per
unit. The distribution is payable on August 11, 2009 to all holders of record of
common, subordinated and general partner units (but not to holders of
subordinated Series A units) as of August 6, 2009. The aggregate amount of the
declared distribution is $10.1 million.
During
the six month period ended June 30, 2009 and 2008, the aggregate amount of cash
distribution paid was $17.4 million and $9.7 million,
respectively.
Subordination
period
During
the subordination period the common units have the right to receive
distributions of available cash from Operating Surplus in an amount equal to the
minimum quarterly distribution of $0.35 per unit, plus any arrearages in the
payment of the minimum quarterly distribution on the common units from prior
quarters, before any distributions of available cash from Operating Surplus may
be made on the subordinated units (other than the subordinated Series A units).
Distribution arrearages do not accrue on the subordinated units. The purpose of
the subordinated units is to increase the likelihood that during the
subordination period there will be available cash to be distributed on the
common units.
Incentive
Distribution Rights
Incentive
distribution rights represent the right to receive an increasing percentage of
quarterly distributions of available cash from Operating Surplus after the
minimum quarterly distribution and the target distribution levels have been
achieved. Our general partner currently holds the incentive distribution rights,
but may transfer these rights separately from its general partner interest,
subject to restrictions in the partnership agreement. Except for transfers of
incentive distribution rights to an affiliate or another entity as part of our
general partner’s merger or consolidation with or into, or sale of substantially
all of its assets to such entity, the approval of a majority of our common units
(excluding common units held by our general partner and its affiliates), voting
separately as a class, generally is required for a transfer of the incentive
distribution rights to a third party prior to December 31, 2017.
The
following table illustrates the percentage allocations of the additional
available cash from Operating Surplus among the unitholders and our general
partner up to the various target distribution levels. The amounts set forth
under ‘‘Marginal Percentage Interest in Distributions’’ are the percentage
interests of the unitholders and our general partner in any available cash from
Operating Surplus we distribute up to and including the corresponding amount in
the column ‘‘Total Quarterly Distribution Target Amount,’’ until available cash
from Operating Surplus we distribute reaches the next target distribution level,
if any. The percentage interests shown for the unitholders and our general
partner for the minimum quarterly distribution are also applicable to quarterly
distribution amounts that are less than the minimum quarterly distribution. The
percentage interests shown for our general partner assume that our general
partner maintains its 2.0% general partner interest and assume our general
partner has not transferred the incentive distribution rights.
|
|
|
|
|
Marginal Percentage Interest in Distributions
|
|
|
|
Total Quarterly Distribution
Target Amount
|
|
|
Common and
Subordinated
Unitholders
|
|
|
General Partner
|
|
Minimum
Quarterly Distribution
|
|
$0.35 |
|
|
|
98 |
% |
|
|
2
|
% |
First
Target Distribution
|
|
up
to $0.4025
|
|
|
|
98 |
% |
|
|
2
|
% |
Second
Target Distribution
|
|
above $0.4025 up to $0.4375
|
|
|
|
85 |
% |
|
|
15
|
% |
Third
Target Distribution
|
|
above
$0.4375 up to $0.525
|
|
|
|
75 |
% |
|
|
25
|
% |
Thereafter
|
|
above
$0.525
|
|
|
|
50 |
% |
|
|
50
|
% |
Related
Party Transactions
Management fees: Pursuant to
the management agreement dated November 16, 2007, Navios ShipManagement Inc., a
wholly owned subsidiary of Navios Holdings, provides commercial and technical
management services to Navios Partners’ vessels for a daily fee of $4,000 per
owned Panamax vessel and $5,000 per owned Capesize vessel. This daily
fee covers all of the vessels’ operating expenses, including the cost of dry
dock and special surveys. The daily rates are fixed for a period of two years
until November 16, 2009, whereas the initial term of the agreement is until
November 16, 2012. Total management fees for the three and six month period
ended June 30, 2009 amounted to $2.6 million and $5.2 million, respectively
($2.1 million and $3.9 million for the three and the six month periods ended
June 30, 2008, respectively).
General and administrative
expenses: Pursuant
to the administrative services agreement dated November 16, 2007, Navios
ShipManagement Inc. also provides administrative services to Navios Partners
which include: bookkeeping, audit and accounting services, legal and insurance
services, administrative and clerical services, banking and financial services,
advisory services, client and investor relations and other. Navios
ShipManagement Inc. is reimbursed for reasonable costs and expenses incurred in
connection with the provision of these services.
Total
general and administrative expenses for the three and six month periods ended
June 30, 2009 amounted to $0.9 million and $1.8 million, respectively ($0.5
million and $1.0 million for the three and six month period ended June 30, 2008,
respectively).
Balance due to related
parties: Included in the current liabilities, as of June 30, 2009 is an
amount of $6.4 million, which represents the current account payable to Navios
Holdings and its subsidiaries. The balance mainly consists of the management
fees amounting to $5.2 million, administrative service fees amounting to $1.0
million, and other expenses owed to affiliated companies amounting to $0.2
million. Total management fees and administrative fees charged to
Navios Partners for the three month periods ended June 30, 2009 amounted to $2.6
million and $0.6 million, respectively, while for the six month period ended
June 30, 2009 same fees amounted to $5.2 million and $1.0 million,
respectively.
Vessel
Acquisition: On July 1, 2008, Navios Partners acquired from
Navios Holdings, the vessel Navios Hope for a purchase price of $79.9 million,
consisting of $35.0 million cash and the issuance of 3,131,415 common units to
Navios Holdings. The per unit price at the day of the delivery was $14.35 (see
note 4 of the Condensed Notes to the Consolidated Financial Statements contained
herein).
On June
9, 2009, Navios Holdings relieved Navios Partners from its obligation to
purchase the Capesize vessel Navios Bonavis (ex TBN I) for $130.0 million and,
upon delivery of the Navios Bonavis to Navios Holdings, Navios Partners was
granted a 12-month option to purchase the vessel for $125.0 million. In return,
Navios Holdings received 1,000,000 of subordinated Series A units, which were
recognized as compensation expense in Navios Partners. The newly issued units
are not eligible to receive distributions until the third anniversary of their
issuance, at which point they will automatically convert into common units and
receive distributions in accordance with all other common units. In addition,
Navios Holdings will be released from the Omnibus Agreement restrictions for two
years in connection with acquiring vessels from third parties (but not from the
requirement to offer to sell to Navios Partners qualifying vessels in Navios
Holdings’ existing fleet).
On June
10, 2009, Navios Partners purchased from Navios Holdings the rights to the
Navios Sagittarius, a 2006 Japanese-built Panamax vessel with a capacity of
75,756 dwt, for a cash payment of $34.6 million. The Navios Sagittarius is a
chartered-in-vessel and Navios Partners has an option to purchase the vessel,
beginning December 2009, at a purchase price that is initially 2.5 billion
Japanese Yen ($26.2 million based on the exchange rate at June 30, 2009),
declining each year by 120 million Japanese Yen ($1.3 million based on the
exchange rate at June 30, 2009).
Quantitative
and Qualitative Disclosures about Market Risks
Foreign
Exchange Risk
Our
functional and reporting currency is the U.S. dollar. We engage in worldwide
commerce with a variety of entities. Although our operations may expose us to
certain levels of foreign currency risk, our transactions are predominantly U.S.
dollar denominated. Transactions in currencies other than U.S. dollars are
translated at the exchange rate in effect at the date of each transaction.
Differences in exchange rates during the period between the date a transaction
denominated in a foreign currency is consummated and the date on which it is
either settled or translated, are recognized.
Interest
Rate Risk
Borrowings
under our new credit facility bear interest at rate based on a premium over US$
LIBOR. Therefore, we are exposed to the risk that our interest expense may
increase if interest rates rise. For the six month period ended June 30, 2009,
we paid interest on our outstanding debt at a weighted average interest rate of
3.98%. A 1% increase in LIBOR would have increased our interest expense for the
six month period ended June 30, 2009 by $1.0 million. For the six month period
ended June 30, 2008, we paid interest on our outstanding debt at a weighted
average interest rate of 5.1%. A 1% increase in LIBOR would have increased our
interest expense for the six month period ended June 30, 2008 by $0.9
million.
Concentration
of Credit Risk
Financial
instruments, which potentially subject us to significant concentrations of
credit risk, consist principally of trade accounts receivable. We closely
monitor our exposure to customers for credit risk. We have policies in place to
ensure that we trade with customers with an appropriate credit history. For the
six month period ended June 30, 2009, Mitsui O.S.K. Lines Ltd, Cargill
International S.A., Sanko Steamship Co., and Daiichi Chuo Kisen Kaisha accounted
for approximately 33.89%, 20.71%, 13.79% and 10.18%, respectively, of total
revenues. For the year ended December 31, 2008, we had seven charter
counterparties and some other major ones were Mitsui O.S.K. Lines Ltd, Cargill
International S.A., Sanko Steamship Co., Daiichi Chuo Kisen Kaisha and Augustea
Imprese Maritime which accounted for approximately 28.2%, 22.2%, 15.6%, 11.9%
and 9.7%, respectively, of total revenues. As our counterparties obligations to
us are unsecured, we maintain counterparty insurance which we re-assess on a
quarterly basis to help reduce our credit risk.
It is our
policy not to trade any other financial instruments that would potentially
expose us to significant concentrations of credit risk.
Inflation
Inflation
has had a minimal impact on vessel operating expenses, dry docking expenses and
general and administrative expenses. Our management does not consider inflation
to be a significant risk to direct expenses in the current and foreseeable
economic environment.
Recent
Accounting Pronouncements
In
December 2007, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business
Combinations” (“FAS 141R”), which replaces SFAS No. 141. FAS 141R establishes
principles and requirements for how an acquirer recognizes and measures in its
financial statements the identifiable assets acquired, the liabilities assumed
any non-controlling interest in the acquiree and the goodwill acquired. FAS 141R
also establishes disclosure requirements which will enable users to evaluate the
nature and financial effects of the business combination. FAS 141R is effective
for Navios Partners for the fiscal year beginning on January 1, 2009. The
adoption of FAS 141R did not have a material impact on Navios Partners’
consolidated financial statements.
In
December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in
Consolidated Financial Statement—an amendment of ARB No. 51” (“FAS 160”). FAS
160 states that accounting and reporting for minority interests will be
recharacterized as non-controlling interests and classified as a component of
equity. FAS 160 also establishes reporting requirements that provide
sufficient disclosures that clearly identify and distinguish between the
interests of the parent and the interests of the non-controlling owners. FAS 160
applies to all entities that prepare consolidated financial statements, except
not-for-profit organizations, but will affect only those entities that have an
outstanding non-controlling interest in one or more subsidiaries or that
deconsolidate a subsidiary. FAS 160 was effective as of January 1, 2009. The
adoption of FAS 160 did not have a material impact on Navios Partners’
consolidated financial statements.
In
February 2008, the FASB issued FASB Staff Position (“FSP”) 157-2,
“Effective Date of FASB Statement No. 157” (“FSP 157-2”), which delays the
effective date of SFAS No.157, “Fair Value Measurement” (“FAS 157”), for
nonfinancial assets and nonfinancial liabilities, except for items that are
recognized or disclosed at fair value in the financial statements on a recurring
basis (at least annually). For purposes of applying FSP 157-2, nonfinancial
assets and nonfinancial liabilities would include all assets and liabilities
other that those meeting the definition of a financial asset or financial
liability as defined in paragraph 6 of SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities”. FSP 157-2 defers the effective date
of FAS 157 to fiscal years beginning after November 15, 2008, and the interim
periods within those fiscal years for items within the scope of this FSP 157-2.
The application of FAS 157 in future periods to those items covered by FSP 157-2
did not have a material effect on the consolidated financial statements of
Navios Partners.
In March
2008, the FASB issued its final consensus on “Issue 07-4 —Application of the
Two-Class Method under FASB Statement No. 128, “Earnings per
Share,” to
“Master
Limited Partnerships” (“Issue 07-4”). This
Issue may impact a publicly traded master limited partnership (MLP) that
distributes “available” cash to the limited partners (LPs), the general partner
(GP), and the holders of incentive distribution rights (IDRs). This Issue
addresses earnings-per-unit (EPU) computations for all MLPs with IDR interests.
MLPs will need to determine the amount of “available cash” at the end of a
reporting period when calculating the period’s EPU. The guidance in Issue 07-4
was effective for Navios Partners for the fiscal year beginning as of January 1,
2009. The adoption of Issue 07-4 under FASB Statement No. 128 did not have a
material impact on the consolidated financial statements of Navios
Partners.
In
April 2008, the FASB issued FSP 142-3, “Determination of the Useful Life of
Intangible Assets” (“FSP 142-3”). FSP 142-3 amends the factors that should
be considered in developing renewal or extension assumptions used to determine
the useful life of a recognized intangible asset under SFAS No. 142, “Goodwill
and Other Intangible Assets” (“FAS 142”). The intent of FSP 142-3 is to improve
the consistency between the useful life of a recognized intangible asset under
FAS 142 and the period of expected cash flows used to measure the fair value of
the asset under FAS 141R and other US GAAP. FSP 142-3 was effective for Navios
Partners for fiscal years beginning after December 15, 2008, and interim periods
within those fiscal years. Early adoption was not prohibited. The adoption of
FSP 142-3 did not have any material effect on the consolidated financial
statements of Navios Partners.
In
October 2008, the FASB issued FSP 157-3, “Determining the Fair Value of a
Financial Asset When the Market for that Asset is Not Active” (“FSP 157-3”),
which clarifies the application of FAS 157 in a market that is not active and
provides an example to illustrate key considerations in determining the fair
value of a financial asset when the market for that asset is not active. FSP
157-3 applies to financial assets within the scope of accounting pronouncements
that require or permit fair value measurements in accordance with FAS 157. FSP
157-3 was effective upon issuance, including prior periods for which financial
statements have not been issued. Revisions resulting from a change in the
valuation technique or its application shall be accounted for as a change in
accounting estimate (SFAS No. 154, “Accounting Changes and Error Corrections”
(“FAS 154”), paragraph 19). The disclosure provisions of FAS 154 for a change in
accounting estimate are not required for revisions resulting from a change in
valuation technique or its application. The application of FSP 157-3 did not
have a material effect on the consolidated financial statements of Navios
Partners.
In
January 2009, the FASB issued FSP EITF 99-20-1, “Amendments to the
Impairment Guidance to EITF Issue No. 99-20” (“FSP EITF 99-20-1”), which amends
the impairment guidance in EITF Issue No. 99-20, “Recognition of Interest Income
and Impairment on Purchased Beneficial Interests and Beneficial Interests That
Continue to Be Held by a Transferor in Securitized Financial Assets,” to achieve
more consistent determination of whether an other-than-temporary impairment has
occurred. FSP EITF 99-20-1 also retains and emphasizes the objective of an
other-than-temporary impairment assessment and the related disclosure
requirements in SFAS No. 115, “Accounting for Certain Investments in Debt and
Equity Securities”, and other related guidance. FSP EITF 99-20-1 is
effective for interim and annual reporting periods ending after December 15,
2008, and shall be applied prospectively. Retrospective application to a prior
interim or annual reporting period is not permitted. The adoption of FSP EITF
99-20-1 did not have any material effect on the consolidated financial
statements of Navios Partners.
In
April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, “Interim Disclosures
About Fair Value of Financial Instruments” (“FSP FAS 107-1 and APB 28-1”), which
amends SFAS No. 107, “Disclosures About Fair Value of Financial Instruments”, to
require disclosures about fair value of financial instruments for interim
reporting periods of publicly traded companies, as well as in annual financial
statements. This FSP also amends APB Opinion No. 28, “Interim Financial
Reporting”, to require those disclosures in summarized financial information at
interim reporting periods. An entity may early adopt this FSP only if it also
elects to early adopt FSP FAS 157-4, “Determining Fair Value When the Volume and
Level of Activity for the Asset or Liability Have Significantly Decreased and
Identifying Transactions That Are Not Orderly” (“FAS 157-4”), and FSP FAS 115-2
and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary
Impairments” (“FSP FAS 115-2 and FAS 124-2”). FSP FAS 107-1 and APB 28-1 does
not require disclosures for earlier periods presented for comparative purposes
at initial adoption. In periods after initial adoption, FSP FAS 107-1 and APB
28-1 requires comparative disclosures only for periods ending after initial
adoption. This FSP will be effective for interim reporting periods after June
15, 2009, with early adoption permitted for periods ending after March 15, 2009.
The adoption of FSP FAS 107-1 and APB 28-1 did not have any material effect on
the consolidated statements of Navios Partners.
In April
2009, the FASB issued FSP FAS 157-4, which amends FAS 157, when the volume
and level of activity for the asset or liability have significantly decreased.
This FSP also includes guidance on identifying circumstances that indicate
a transaction is not orderly. This FSP emphasizes that even if there has
been a significant decrease in the volume and level of activity for the
asset or liability and regardless of the valuation technique(s) used, the
objective of a fair value measurement remains the same. Fair value is the
price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction (that is, not a forced liquidation or
distressed sale) between market participants at the measurement date under
current market conditions. This FSP is effective for interim and annual
reporting periods ending after June 15, 2009, and has been applied
prospectively. Early adoption is permitted for periods ending after March
15, 2009. Earlier adoption for periods ending before March 15, 2009, is not
permitted. If a reporting entity elects to adopt early either FSP FAS 115-2 and
FAS 124-2, or FSP FAS 107-1 and APB 28-1, the reporting entity also is
required to adopt early this FSP. Additionally, if the reporting entity
elects to adopt early this FSP, FSP FAS 115-2 and FAS 124-2 also must be adopted
early. FSP FAS 157-4 does not require disclosures for earlier periods
presented for comparative purposes at initial adoption. In periods after
initial adoption, this FSP requires comparative disclosures only for
periods ending after initial adoption. The adoption of FSP FAS 157-4 did
not have any material effect on the consolidated statements of Navios
Partners.
In May
2009, the FASB issued SFAS
No.
165
“Subsequent Events” (“FAS 165”), which establishes principles and
requirements for subsequent events. In particular, FAS 165 sets forth: a)
the period after the balance sheet date during which management of a reporting
entity evaluates events or transactions that may occur for potential recognition
or disclosure in the financial statements; b) the circumstances under which an
entity recognizes events or transactions occurring after the balance sheet date
in its financial statements; and c) the disclosures that an entity makes about
events or transactions that occurred after the balance sheet date. FAS 165 has been applied
to the accounting for and disclosure of subsequent events not addressed in other
applicable generally accepted accounting principles (GAAP). An entity recognizes
in the financial statements the effects of all subsequent events that provide
additional evidence about conditions that existed at the date of the balance
sheet, including the estimates inherent in the process of preparing financial
statements. FAS 165 is effective for interim or annual financial periods
ending after June 15, 2009, and has been applied prospectively. The
adoption of FAS 165 did not have any material effect on the consolidated
statements of Navios Partners.
In June
2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No.
46(R)” (“FAS 167”), which amends certain requirements of FASB Interpretation No.
46 (revised December 2003), “Consolidation of Variable
Interest Entities” (“Interpretation
46(R)”), to
improve financial reporting by enterprises involved with variable interest
entities and to provide more relevant and reliable information to users of
financial statements. FAS 167 carries forward the scope of Interpretation 46(R),
with the addition of entities previously considered qualifying special-purpose
entities, as the concept of these entities was eliminated in SFAS No. 166,
“Accounting for Transfers of Financial Assets” (“FAS 166”). FAS 167 shall be
effective as of the beginning of each reporting entity’s first annual reporting
period that begins after November 15, 2009, for interim periods within that
first annual reporting period, and for interim and annual reporting periods
thereafter. Earlier application is prohibited. FAS 167 retains the scope
of Interpretation 46(R) with the addition of entities previously considered
qualifying special-purpose entities, as the concept of these entities was
eliminated in FAS 166. The adoption of FAS 167 is not expected to have any
material effect on the consolidated statements of Navios
Partners.
In June 2009, the FASB issued SFAS No.
168, “The
Hierarchy of Generally Accepted Accounting Principles” (“FAS 168”), which replaces SFAS No. 162 and establishes
the FASB
Accounting Standards CodificationTM (Codification) as the source of
authoritative accounting principles recognized by the
FASB to be applied by nongovernmental entities in the preparation of
financial statements in conformity with GAAP. Rules and interpretive releases of the Securities
and Exchange Commission (SEC) under authority of federal securities laws are also
sources of authoritative GAAP for SEC registrants. FAS 168 shall be effective
for financial statements issued for interim and annual periods ending after
September 15, 2009, except for nonpublic nongovernmental entities that have not
followed the guidance included in the AICPA Technical Inquiry Service (TIS)
Section 5100, “Revenue Recognition,” paragraphs 38–76. An entity shall follow
the disclosure requirements of FAS 154 and disclose the accounting principles
that were used before and after the application of the provisions of FAS 168 and
the reason that applying this Statement resulted in a change in accounting
principle or correction of an error. The adoption of FAS 168 is
not expected to have any material effect on the consolidated statements of
Navios Partners.
Critical
Accounting Policies
Our
financial statements have been prepared in accordance with US GAAP. The
preparation of these financial statements requires us to make estimates in the
application of our accounting policies based on the best assumptions, judgments
and opinions of management. Following is a discussion of the accounting policies
that involve a higher degree of judgment and the methods of their application
that affect the reported amount of assets and liabilities, revenues and expenses
and related disclosure of contingent assets and liabilities at the date of our
financial statements. Actual results may differ from these estimates under
different assumptions or conditions.
Critical
accounting policies are those that reflect significant judgments or
uncertainties, and potentially result in materially different results under
different assumptions and conditions. For a description of all of our
significant accounting policies, see Note 2 to the Notes to the consolidated
financial statements included in Navios Partners’ 2008 annual report filed on
Form 20-F with the Securities and Exchange Commission.
Impairment
of Long Lived Assets
Vessels,
other fixed assets and other long lived assets held and used by Navios Partners
are reviewed periodically for potential impairment whenever events or changes in
circumstances indicate that the carrying amount of a particular asset may not be
fully recoverable. In accordance with SFAS No. 144 “Accounting for the
Impairment or Disposal of Long-Lived Assets”, Navios Partners’ management
evaluates the carrying amounts and periods over which long-lived assets are
depreciated to determine if events or changes in circumstances have occurred
that would require modification to their carrying values or useful lives. In
evaluating useful lives and carrying values of long-lived assets, certain
indicators of potential impairment, are reviewed such as undiscounted projected
operating cash flows, vessel sales and purchases, business plans and overall
market conditions. Undiscounted projected net operating cash flows are
determined for each vessel and compared to the vessel carrying value. In the
event that impairment occurred, the fair value of the related asset is
determined and a charge is recorded to operations calculated by comparing the
asset’s carrying value to the estimated fair market value. Fair market value is
estimated primarily through the use of third-party valuations performed on an
individual vessel basis.
Vessels
Vessels
are stated at historical cost, which consists of the contract price and any
material expenses incurred upon acquisition (improvements and delivery
expenses). Subsequent expenditures for major improvements and upgrading are
capitalized, provided they appreciably extend the life, increase the earning
capacity or improve the efficiency or safety of the vessels. Expenditures for
routine maintenance and repairs are expensed as incurred.
Depreciation
is computed using the straight line method over the useful life of the vessels,
after considering the estimated residual value. Management estimates the useful
life of our vessels to be 25 years from the vessel’s original construction.
However, when regulations place limitations over the ability of a vessel to
trade on a worldwide basis, its useful life is re-estimated to end at the date
such regulations become effective.
Deferred
Dry Dock and Special Survey Costs
Our
vessels are subject to regularly scheduled dry docking and special surveys which
are carried out every 30 or 60 months to coincide with the renewal of the
related certificates issued by the classification societies, unless a further
extension is obtained in rare cases and under certain conditions. The costs of
dry docking and special surveys are deferred and amortized over the above
periods or to the next dry docking or special survey date if such has been
determined. Unamortized dry docking or special survey costs of vessels sold are
written off to income in the year the vessel is sold.
Revenue
Recognition
Revenue
is recorded when services are rendered, we have a signed charter agreement or
other evidence of an arrangement, the price is fixed or determinable, and
collection is reasonably assured. We generate revenue from transportation of
cargoes and time charter of vessels.
Voyage
revenues for the transportation of cargo are recognized ratably over the
estimated relative transit time of each voyage. A voyage is deemed to commence
when a vessel is available for loading and is deemed to end upon the completion
of the discharge of the current cargo. Estimated losses on voyages are provided
for in full at the time such losses become evident. Under a voyage charter, we
agree to provide a vessel for the transportation of specific goods between
specific ports in return for payment of an agreed upon freight rate per ton of
cargo.
Revenues
from time chartering of vessels are accounted for as operating leases and are
thus recognized on a straight-line basis, as the average revenue over the rental
periods of such charter agreements, as service is performed, except for loss
generating time charters, in which case the loss is recognized in the period
when such loss is determined. A time charter involves placing a vessel at the
charterer’s disposal for a period of time during which the charterer uses the
vessel in return for the payment of a specified daily hire rate. Short period
charters for less than three months are referred to as spot charters. Charters
extending three months to a year are generally referred to as medium term
charters. All other charters are considered long-term. Under time charters,
operating cost such as for crews, maintenance and insurance are typically paid
by the owner of the vessel.
Index
|
|
Page
|
|
NAVIOS
MARITIME PARTNERS L.P.
|
|
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS AT JUNE 30, 2009 AND DECEMBER 31,
2008
|
|
|
F-1
|
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND SIX MONTH
PERIODS ENDED JUNE 30, 2009 AND 2008
|
|
|
F-2
|
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTH PERIODS
ENDED JUNE 30, 2009 AND 2008
|
|
|
F-3
|
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN OWNERS’ NET INVESTMENT,
PARTNERS’ CAPITAL AND COMPREHENSIVE INCOME FOR THE SIX MONTH PERIODS ENDED
JUNE 30, 2009 AND 2008
|
|
|
F-4
|
|
CONDENSED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
|
|
|
F-5
|
|
NAVIOS
MARITIME PARTNERS L.P.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(Expressed
in thousands of U.S. dollars except unit prices and amounts)
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
Notes
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
|
3
|
|
|
$
|
20,481
|
|
|
$
|
28,374
|
|
Restricted
cash
|
|
|
|
|
|
|
8,321
|
|
|
|
-
|
|
Accounts
receivable, net
|
|
|
|
|
|
|
479
|
|
|
|
313
|
|
Prepaid
expenses and other current assets
|
|
|
|
|
|
|
194
|
|
|
|
371
|
|
Total
current assets
|
|
|
|
|
|
|
29,475
|
|
|
|
29,058
|
|
Vessels,
net
|
|
|
4
|
|
|
|
283,787
|
|
|
|
291,340
|
|
Deferred
financing costs, net
|
|
|
|
|
|
|
1,989
|
|
|
|
1,915
|
|
Deferred
dry dock and special survey costs, net
|
|
|
|
|
|
|
345
|
|
|
|
594
|
|
Intangible
assets other than goodwill
|
|
|
5
|
|
|
|
34,377
|
|
|
|
-
|
|
Total
non-current assets
|
|
|
|
|
|
|
320,498
|
|
|
|
293,849
|
|
Total
assets
|
|
|
|
|
|
$
|
349,973
|
|
|
$
|
322,907
|
|
LIABILITIES
AND PARTNERS’ CAPITAL
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
|
|
|
|
$
|
582
|
|
|
$
|
594
|
|
Accrued
expenses
|
|
|
|
|
|
|
1,936
|
|
|
|
1,662
|
|
Deferred
voyage revenue
|
|
|
6
|
|
|
|
8,369
|
|
|
|
2,606
|
|
Amounts
due to related parties
|
|
|
12
|
|
|
|
6,368
|
|
|
|
1,539
|
|
Current
portion of long-term debt
|
|
|
7
|
|
|
|
-
|
|
|
|
40,000
|
|
Total
current liabilities
|
|
|
|
|
|
|
17,255
|
|
|
|
46,401
|
|
Long-term
debt
|
|
|
7
|
|
|
|
195,000
|
|
|
|
195,000
|
|
Unfavorable
lease terms
|
|
|
5
|
|
|
|
3,661
|
|
|
|
4,659
|
|
Deferred
voyage revenue
|
|
|
6
|
|
|
|
21,134
|
|
|
|
-
|
|
Total
non-current liabilities
|
|
|
|
|
|
|
219,795
|
|
|
|
199,659
|
|
Total
liabilities
|
|
|
|
|
|
|
237,050
|
|
|
|
246,060
|
|
Commitments
and contingencies
|
|
|
11
|
|
|
|
-
|
|
|
|
-
|
|
Partners’
Capital:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Unitholders (13,631,415 and 17,131,415 units issued and outstanding
at December 31, 2008 and June 30, 2009, respectively)
|
|
|
|
|
|
|
275,715
|
|
|
|
243,639
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subordinated
Unitholders (7,621,843 units issued and outstanding at December 31,
2008 and June 30, 2009)
|
|
|
|
|
|
|
(163,052)
|
|
|
|
(160,092
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
Partner (433,740 and 525,577 units issued and outstanding at December
31, 2008 and June 30, 2009, respectively)
|
|
|
|
|
|
|
(5,822)
|
|
|
|
(6,700
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subordinated
Series A Unitholders (0 and 1,000,000 units issued and outstanding at
December 31, 2008 and June 30, 2009, respectively)
|
|
|
8
|
|
|
|
6,082
|
|
|
|
-
|
|
Total
partners’ capital
|
|
|
|
|
|
|
112,923
|
|
|
|
76,847
|
|
Total
liabilities and partners’ capital
|
|
|
|
|
|
$
|
349,973
|
|
|
$
|
322,907
|
|
See
unaudited condensed notes to consolidated financial statements
NAVIOS
MARITIME PARTNERS L.P.
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(Expressed
in thousands of U.S. dollars except unit prices and amounts)
|
|
Notes
|
|
|
Three Month
Period ended
June 30, 2009
(unaudited)
|
|
|
Three Month
Period ended
June 30, 2008
(unaudited)
|
|
|
Six Month
Period ended
June 30, 2009
(unaudited)
|
|
|
Six Month
Period ended
June 30, 2008
(unaudited)
|
|
Time
charter and voyage revenues
|
|
|
9
|
|
|
$ |
22,154 |
|
|
$ |
17,939 |
|
|
$ |
43,311 |
|
|
$ |
32,259 |
|
Time
charter and voyage expenses
|
|
|
|
|
|
|
(3,351 |
) |
|
|
(3,183 |
) |
|
|
(6,359 |
) |
|
|
(6,004 |
) |
Direct
vessel expenses
|
|
|
|
|
|
|
(124 |
) |
|
|
(145 |
) |
|
|
(248 |
) |
|
|
(289 |
) |
Management
fees
|
|
|
12
|
|
|
|
(2,639 |
) |
|
|
(2,119 |
) |
|
|
(5,249 |
) |
|
|
(3,939 |
) |
General
and administrative expenses
|
|
|
12
|
|
|
|
(897 |
) |
|
|
(507 |
) |
|
|
(1,799 |
) |
|
|
(1,003 |
) |
Depreciation
and amortization
|
|
|
4,5
|
|
|
|
(3,501 |
) |
|
|
(2,547 |
) |
|
|
(6,778 |
) |
|
|
(5,311 |
) |
Interest
expense and finance cost, net
|
|
|
7
|
|
|
|
(1,922 |
) |
|
|
(2,339 |
) |
|
|
(4,347 |
) |
|
|
(4,812 |
) |
Interest
income
|
|
|
|
|
|
|
32 |
|
|
|
43 |
|
|
|
89 |
|
|
|
91 |
|
Compensation
expense
|
|
|
8
|
|
|
|
(6,082 |
) |
|
|
- |
|
|
|
(6,082 |
) |
|
|
- |
|
Other
income
|
|
|
|
|
|
|
- |
|
|
|
24 |
|
|
|
13 |
|
|
|
23 |
|
Other
expense
|
|
|
|
|
|
|
(78 |
) |
|
|
(11 |
) |
|
|
- |
|
|
|
(14 |
) |
Net
income
|
|
|
|
|
|
$ |
3,592 |
|
|
$ |
7,155 |
|
|
$ |
12,551 |
|
|
|
11,001 |
|
Earnings
per unit (see note 13):
|
|
Three Month
Period ended
June 30, 2009
(unaudited)
|
|
|
Three Month
Period ended
June 30, 2008
(unaudited)
|
|
|
Six Month
Period ended
June 30, 2009
(unaudited)
|
|
|
Six Month
Period ended
June 30, 2008
(unaudited)
|
|
Net
income
|
|
$ |
3,592 |
|
|
$ |
7,155 |
|
|
$ |
12,551 |
|
|
$ |
11,001 |
|
Earnings
per unit (see note 13):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
unit (basic and diluted)
|
|
$ |
0.22 |
|
|
$ |
0.39 |
|
|
$ |
0.62 |
|
|
$ |
0.74 |
|
Subordinated
unit (basic and diluted)
|
|
$ |
- |
|
|
$ |
0.39 |
|
|
$ |
0.41 |
|
|
$ |
0.40 |
|
General
partner unit (basic and diluted)
|
|
$ |
0.15 |
|
|
$ |
0.39 |
|
|
$ |
0.62 |
|
|
$ |
0.60 |
|
Subordinated
Series A unit (basic and diluted)
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
See
unaudited condensed notes to consolidated financial statements
NAVIOS
MARITIME PARTNERS L.P.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed
in thousands of U.S. dollars except unit prices and amounts)
|
|
|
|
|
Six Month
|
|
|
Six Month
|
|
|
|
|
|
|
period Ended
|
|
|
period Ended
|
|
|
|
Note
|
|
|
June 30, 2009
|
|
|
June 30, 2008
|
|
|
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
|
|
$
|
12,551
|
|
|
$
|
11,001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
to reconcile net income to net cash
|
|
|
|
|
|
|
|
|
|
|
|
provided
by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
4,5
|
|
|
|
6,778
|
|
|
|
5,311
|
|
Amortization
and write-off of deferred financing cost
|
|
|
|
|
|
|
127
|
|
|
|
101
|
|
Amortization
of deferred dry dock costs
|
|
|
|
|
|
|
248
|
|
|
|
289
|
|
Compensation
expense
|
|
|
8
|
|
|
|
6,082
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
(Increase)/decrease
in restricted cash
|
|
|
|
|
|
|
(821)
|
|
|
|
151
|
|
Increase
in accounts receivable
|
|
|
|
|
|
|
(166)
|
|
|
|
(356)
|
|
(Increase)/
decrease in prepaid expenses and other current assets
|
|
|
|
|
|
|
177
|
|
|
|
(57)
|
|
Increase/(decrease)
in accounts payable
|
|
|
|
|
|
|
(12)
|
|
|
|
461
|
|
Increase/(decrease)
in accrued expenses
|
|
|
|
|
|
|
274
|
|
|
|
(123)
|
|
Increase
in deferred voyage revenue
|
|
|
|
|
|
|
26,897
|
|
|
|
777
|
|
Increase/
(decrease) in amounts due to related parties
|
|
|
|
|
|
|
4,829
|
|
|
|
(3,654)
|
|
Net
cash provided by operating activities
|
|
|
|
|
|
|
56,964
|
|
|
|
13,901
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING
ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition
of vessels
|
|
|
|
|
|
|
-
|
|
|
|
(34,460)
|
|
Acquisition
of contracts
|
|
|
|
|
|
|
(34,600)
|
|
|
|
-
|
|
Increase
in long term assets
|
|
|
|
|
|
|
-
|
|
|
|
(46)
|
|
Net
cash used in investing activities
|
|
|
|
|
|
|
(34,600)
|
|
|
|
(34,506)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING
ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
distribution paid
|
|
|
13
|
|
|
|
(17,350)
|
|
|
|
(9,708)
|
|
Proceeds
from issuance of general partner units
|
|
|
8
|
|
|
|
944
|
|
|
|
-
|
|
Proceeds
from issuance of common units
|
|
|
8
|
|
|
|
33,849
|
|
|
|
|
|
Proceeds
from long term loan
|
|
|
|
|
|
|
-
|
|
|
|
35,000
|
|
Increase
in restricted cash
|
|
|
|
|
|
|
(7,500)
|
|
|
|
-
|
|
Repayment
of long-term debt and payment of principal
|
|
|
|
|
|
|
(40,000)
|
|
|
|
-
|
|
Debt
issuance costs
|
|
|
|
|
|
|
(200)
|
|
|
|
-
|
|
Net
cash (used in)/provided by financing activities
|
|
|
|
|
|
|
(30,257)
|
|
|
|
25,292
|
|
Increase/
(decrease) in cash and cash equivalents
|
|
|
|
|
|
|
(7,893)
|
|
|
|
4,687
|
|
Cash
and cash equivalents, beginning of period
|
|
|
|
|
|
|
28,374
|
|
|
|
10,095
|
|
Cash
and cash equivalents, end of period
|
|
|
|
|
|
$
|
20,481
|
|
|
$
|
14,782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURES OF CASH
|
|
|
|
|
|
|
|
|
|
|
|
|
FLOW
INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
paid for interest
|
|
|
|
|
|
$
|
4,302
|
|
|
$
|
4,783
|
|
Non-cash
operating activities
See note
8 for issuance of units in connection with the non-cash compensation
expense
See
unaudited condensed notes to consolidated financial statements
NAVIOS
MARITIME PARTNERS L.P.
CONDENSED
CONSOLIDATED STATEMENTS OF CHANGES IN OWNERS’ NET
INVESTMENT
AND PARTNERS’ CAPITAL AND COMPREHENSIVE INCOME/(LOSS)
(Expressed
in thousands of U.S. dollars except unit prices and amounts)
|
|
|
|
|
Limited Partners
|
|
|
|
|
|
|
|
|
|
|
|
|
General Partner
|
|
|
Common
Unitholders
|
|
|
Subordinated
Unitholders
|
|
|
Subordinated Series A
Unitholders
|
|
|
Total
Partners’
Capital
|
|
|
Comprehensive
Income
|
|
|
|
Units
|
|
|
|
|
|
Units
|
|
|
|
|
|
Units
|
|
|
|
|
|
Units
|
|
|
|
|
|
|
|
|
|
|
Balance December
31, 2007
|
|
|
369,834 |
|
|
$ |
(7,720 |
) |
|
|
10,500,000 |
|
|
$ |
194,265 |
|
|
|
7,621,843 |
|
|
$ |
(159,759 |
) |
|
|
- |
|
|
$ |
- |
|
|
$ |
26,786 |
|
|
$ |
1,613 |
|
Cash
distribution paid
|
|
|
- |
|
|
|
(194 |
) |
|
|
- |
|
|
|
(5,513 |
) |
|
|
- |
|
|
|
(4,001 |
) |
|
|
- |
|
|
|
- |
|
|
|
(9,708 |
) |
|
|
- |
|
Net
income
|
|
|
- |
|
|
|
220 |
|
|
|
- |
|
|
|
7,738 |
|
|
|
- |
|
|
|
3,043 |
|
|
|
- |
|
|
|
- |
|
|
|
11,001 |
|
|
|
11,001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
June 30, 2008 (unaudited)
|
|
|
369,834 |
|
|
|
(7,694 |
) |
|
|
10,500,000 |
|
|
$ |
196,490 |
|
|
|
7,621,843 |
|
|
$ |
(160,717 |
) |
|
|
- |
|
|
$ |
- |
|
|
$ |
28,079 |
|
|
$ |
11,001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
December 31, 2008
|
|
|
433,740 |
|
|
$ |
(6,700 |
) |
|
|
13,631,415 |
|
|
$ |
243,639 |
|
|
|
7,621,843 |
|
|
$ |
(160,092 |
) |
|
|
- |
|
|
$ |
- |
|
|
$ |
76,847 |
|
|
$ |
28,758 |
|
Cash
distribution paid
|
|
|
- |
|
|
|
(347 |
) |
|
|
- |
|
|
|
(10,905 |
) |
|
|
- |
|
|
|
(6,098 |
) |
|
|
- |
|
|
|
- |
|
|
|
(17,350 |
) |
|
|
- |
|
Issuance
of subordinated Series A Units
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,000,000 |
|
|
|
6,082 |
|
|
|
6,082 |
|
|
|
- |
|
Proceeds
from issuance of common units, net of offering costs
|
|
|
- |
|
|
|
- |
|
|
|
3,500,000 |
|
|
|
33,849 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
33,849 |
|
|
|
- |
|
Proceeds
from issuance of general partners units (see note 8)
|
|
|
91,837 |
|
|
|
944 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
944 |
|
|
|
- |
|
Net
income
|
|
|
- |
|
|
|
281 |
|
|
|
- |
|
|
|
9,132 |
|
|
|
- |
|
|
|
3,138 |
|
|
|
|
|
|
|
|
|
|
|
12,551 |
|
|
|
12,551 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
June 30, 2009 (unaudited)
|
|
|
525,577 |
|
|
$ |
(5,822 |
) |
|
|
17,131,415 |
|
|
$ |
275,715 |
|
|
|
7,621,843 |
|
|
$ |
(163,052 |
) |
|
|
1,000,000 |
|
|
$ |
6,082 |
|
|
$ |
112,923 |
|
|
$ |
12,551 |
|
See
unaudited condensed notes to consolidated financial statements
NAVIOS
MARITIME PARTNERS L.P.
CONDENSED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed
in thousands of U.S. dollars except unit prices and amounts)
NOTE
1—DESCRIPTION OF BUSINESS
Navios
Maritime Partners L.P. (“Navios Partners”), is an international owner and
operator of Capesize and Panamax dry bulk carriers, formed on August 7,
2007 under the laws of Marshall Islands by Navios Maritime Holdings Inc (“Navios
Holdings”), a vertically integrated seaborne shipping and logistics company with
over 50 years of operating history in the dry bulk shipping industry.
Navios GP L.L.C. (the “General Partner”), a wholly owned subsidiary of
Navios Holdings, was also formed on that date to act as the general partner of
Navios Partners and received a 2% general partner interest.
In
connection with its initial public offering (“IPO”) on November 16, 2007,
Navios Partners acquired interests in five wholly owned subsidiaries of Navios
Holdings, each of which owned a Panamax dry bulk carrier (the “Initial Fleet”),
as well as interests in three wholly owned subsidiaries of Navios Holdings that
operated and had options to purchase, three additional vessels in exchange for
(a) all of the net proceeds from the sale of 10,000,000 common units in the IPO
and the sale of 500,000 common units in a concurrent private offering to a
corporation owned by Angeliki Frangou, Navios Partners’ Chairman and Chief
Executive Officer, for a total estimated amount of $193,300, plus (b) $160,000
of the $165,000 funded from its revolving credit facility to acquire its initial
fleet of vessels (see note 7), (c) 7,621,843 subordinated units issued to Navios
Holdings and (d) the issuance to the General Partner of the 2% general partner
interest and all incentive distribution rights in Navios Partners. Upon the
closing of the IPO, Navios Holdings owned a 43.2% interest in Navios Partners,
including the 2% general partner interest.
On July
1, 2008, 3,131,415 common units were issued to Navios Holdings for the
acquisition of the Navios Hope, and 63,906 additional general partnership units
were issued to the General Partner.
Pursuant
to the IPO, Navios Partners entered into the following agreements: (a) a share
purchase agreement pursuant to which Navios Partners had agreed to acquire the
capital stock of a subsidiary that will own the Capesize vessel Navios Bonavis
(ex TBN I) and related time charter, upon delivery of the vessel to Navios
Holdings which occurred in late June 2009. On June 9, 2009 Navios Holdings
relieved Navios Partners from its obligation to purchase the Capesize vessel
Navios Bonavis for $130,000 and, upon delivery of the Navios Bonavis to Navios
Holdings, Navios Partners was granted a 12-month option to purchase the vessel
for $125,000. In return, Navios Holdings received 1,000,000 of subordinated
Series A units, which were recognized as non-cash compensation expense in Navios
Partners’ statement of income. The newly issued units are not eligible to
receive distributions until the third anniversary of their issuance, at which
point they will automatically convert into common units and receive
distributions in accordance with all other common units. In addition, Navios
Holdings will be released from the Omnibus Agreement (as defined below)
restrictions for two years in connection with acquiring vessels from third
parties (but not from the requirement to offer to sell to Navios Partners
qualifying vessels in Navios Holdings’ existing fleet); (b) a share purchase
agreement pursuant to which Navios Partners had the option, exercisable at any
time between January 1, 2009 and April 1, 2009, to purchase the capital stock of
the subsidiary that will own the Capesize vessel Navios TBN II and related time
charter. On April 2, 2009, Navios Partners announced that it would not be
exercising this option given the then-prevailing unfavorable capital market
conditions; (c) a management agreement with Navios ShipManagement Inc. (the
“Manager”) pursuant to which the Manager provides Navios Partners commercial and
technical management services; (d) an administrative services agreement with the
Manager pursuant to which the Manager provides Navios Partners administrative
services; and (e) an omnibus agreement with Navios Holdings (“Omnibus
Agreement”), governing, among other things, when Navios Partners and Navios
Holdings may compete against each other as well as rights of first offer on
certain dry bulk carriers.
In
January 2009, Navios Partners amended the terms of its existing credit facility.
The amendment is effective until January 15, 2010 and provides for
(a) the repayment of $40,000 which took place on February 9, 2009,
(b) maintaining minimum cash reserves in a pledged account with the agent bank
as follows: $2,500 as of January 31, 2009; $5,000 as of March 31, 2009; $7,500
as of June 30, 2009, $10,000 as of September 30, 2009;
and $12,500 as of December 31, 2009 and (c) an increased
margin on the loans of 2.25%. Further, the covenants were amended by (a)
reducing the minimum net worth covenant to $100,000 from $135,000, (b) reducing
the value maintenance covenant ("VMC") to 100% using charter free vessel values,
(c) changing the calculation of the minimum leverage covenant to use charter
inclusive adjusted vessel values until December 31, 2009, and (d) adding a new
VMC based on charter inclusive valuations to be at 143%. Also, Navios
Partners pays a commitment fee of 0.35% for undrawn amounts under the
facility. As of June 30, 2009, Navios Partners was in compliance with the
financial covenants under the facility.
NAVIOS
MARITIME PARTNERS L.P.
CONDENSED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed
in thousands of U.S. dollars except unit prices and amounts)
On May 8,
2009, Navios Partners completed its public offering of 3,500,000 common units at
$10.32 per unit and raised gross proceeds of approximately $36,120 to fund its
fleet expansion. The net proceeds of this offering, including discount and
excluding offering costs of $465, were approximately $34,314. Pursuant to this
offering, Navios Partners issued 71,429 additional general partnership units to
the General Partner. The net proceeds from the issuance of the general
partnership units were $737. The net proceeds of this offering were used to
acquire the rights to the Navios Sagittarius, a 2006 Japanese-built Panamax
vessel with a capacity of 75,756 dwt, for a cash payment of $34,600 including a
long-term charter out agreement through November 2018. The Navios Sagittarius is
a chartered-in-vessel, and Navios Partners has an option to purchase the vessel,
beginning December 2009, at a purchase price that is initially 2.5 billion
Japanese Yen ($26,169 based on the exchange rate at June 30,
2009), declining each year by 120.0 million Japanese Yen ($1,256 based on
the exchange rate at June 30, 2009).
As of
June 30, 2009, there were outstanding: 17,131,415 common units, 7,621,843
subordinated units, 1,000,000 subordinated Series A units and 525,577 general
partnership units. Navios Holdings owns a 46.7% interest in Navios
Partners, including the 2% general partner interest.
Navios
Partners is engaged in the seaborne transportation services of a wide range of
dry bulk commodities including iron ore, coal, grain and fertilizer, chartering
its vessels under medium to long-term charters. The operations of Navios
Partners are managed by the Manager from its head offices in Piraeus,
Greece.
NOTE
2— BASIS OF PRESENTATION
The
accompanying interim consolidated financial statements are prepared in
accordance with accounting principles generally accepted in the United States of
America (US GAAP).
The
accompanying consolidated financial statements include the following entities
and chartered-in vessels:
Company name
|
|
Vessel name
|
|
Country of
incorporation
|
|
Statement of income
|
|
|
|
|
|
|
|
2008
|
|
2009
|
|
Libra
Shipping Enterprises Corporation
|
|
Navios
Libra II
|
|
Marshall
Is.
|
|
1/1
– 06/30
|
|
1/1
– 06/30
|
|
Alegria
Shipping Corporation
|
|
Navios
Alegria
|
|
Marshall
Is.
|
|
1/1
– 06/30
|
|
1/1
– 06/30
|
|
Felicity
Shipping Corporation
|
|
Navios
Felicity
|
|
Marshall
Is.
|
|
1/1
– 06/30
|
|
1/1
– 06/30
|
|
Gemini
Shipping Corporation
|
|
Navios
Gemini S
|
|
Marshall
Is.
|
|
1/1
– 06/30
|
|
1/1
– 06/30
|
|
Galaxy
Shipping Corporation
|
|
Navios
Galaxy I
|
|
Marshall
Is
|
|
1/1
– 06/30
|
|
1/1
– 06/30
|
|
Fantastiks
Shipping Corporation (*)
|
|
Navios
Fantastiks
|
|
Marshall
Is.
|
|
1/1
– 06/30
|
|
1/1
– 06/30
|
|
Aurora
Shipping Enterprises Ltd.
|
|
Navios
Hope(**)
|
|
Marshall
Is.
|
|
-
|
|
1/1
– 06/30
|
|
Chartered-in
vessel
|
|
|
|
|
|
|
|
|
|
Prosperity
Shipping Corporation (***)
|
|
Navios
Prosperity
|
|
Marshall
Is.
|
|
1/1
– 06/30
|
|
1/1
– 06/30
|
|
Aldebaran
Shipping Corporation (***)
|
|
Navios
Aldebaran
|
|
Marshall
Is.
|
|
3/17
– 06/30
|
|
1/1
– 06/30
|
|
Sagittarius
Shipping Corporation(***)
|
|
Navios
Sagittarius
|
|
Marshall
Is.
|
|
-
|
|
6/10-06/30
|
|
Navios
Maritime Partners L.P
|
|
N/A
|
|
Marshall
Is.
|
|
1/1
– 06/30
|
|
1/1
– 06/30
|
|
Navios
Maritime Operating LLC
|
|
N/A
|
|
Marshall
Is.
|
|
1/1
– 06/30
|
|
1/1
– 06/30
|
|
(*)
|
Fantastiks
Shipping Corporation took ownership of the vessel Fantastiks from
chartered-in vessel, which was renamed the Navios Fantastiks on May 2,
2008.
|
(**)
|
On
February 9, 2009, the Navios Aurora I was renamed the Navios
Hope.
|
(***)
|
Not
a vessel-owning subsidiary and only holds right to charter-in
contract.
|
NAVIOS
MARITIME PARTNERS L.P.
CONDENSED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed
in thousands of U.S. dollars except unit prices and amounts)
The
accompanying interim condensed consolidated financial statements of Navios
Partners are unaudited, but, in the opinion of management, contain all
adjustments necessary to present fairly, in all material respects, Navios
Partners’ condensed consolidated financial position as of June 30, 2009 and the
condensed consolidated results of operations for the six months ended June 30,
2008 and 2009. The footnotes are condensed as permitted by the requirements for
interim financial statements and accordingly, do not include information and
disclosures required under US GAAP for complete financial statements. All such
adjustments are deemed to be of a normal, recurring nature. The results of
operations for the interim periods are not necessarily indicative of the results
to be expected for the full year. These financial statements should be read in
conjunction with the audited consolidated financial statements and related notes
included in Navios Partners’ Annual Report on Form 20-F for the year ended
December 31, 2008.
NOTE
3 —CASH AND CASH EQUIVALENTS
Cash and
cash equivalents consist of the following:
|
|
June 30,
2009
|
|
|
December 31,
2008
|
|
Cash
on hand and at banks
|
|
$
|
11,019
|
|
|
$
|
13,870
|
|
Short
term deposits
|
|
|
9,462
|
|
|
|
14,504
|
|
Total
cash and cash equivalents
|
|
$
|
20,481
|
|
|
$
|
28,374
|
|
Short
term deposits relate to time deposit accounts held in bank for general financing
purposes. As of June 30, 2009, Navios Partners had time deposits of
$9,462 with a monthly duration.
NOTE
4 — VESSELS AND OTHER FIXED ASSETS
|
|
Cost
|
|
|
Accumulated
Depreciation
|
|
|
Net Book
Value
|
|
|
|
|
|
|
|
|
|
|
|
Vessels
|
|
|
|
|
|
|
|
|
|
Balance
December 31, 2007
|
|
$
|
151,432
|
|
|
$
|
(15,456)
|
|
|
$
|
135,976
|
|
Additions
|
|
|
167,463
|
|
|
$
|
(12,099)
|
|
|
$
|
155,364
|
|
Balance
December 31, 2008
|
|
$
|
318,895
|
|
|
$
|
(27,555)
|
|
|
$
|
291,340
|
|
Additions
|
|
|
-
|
|
|
$
|
(7,553)
|
|
|
$
|
(7,553)
|
|
Balance
June 30, 2009
|
|
$
|
318,895
|
|
|
$
|
(35,108
|
)
|
|
$
|
283,787
|
|
On May 2,
2008, Fantastiks Shipping Corporation, a wholly owned subsidiary of Navios
Partners (see note 2), purchased the vessel Fantastiks for an amount of $34,155
of cash consideration (of which $34,001 was included in vessel cost) pursuant to
the Memorandum of Agreement between Fantastiks Shipping Corporation and Kleimar
N.V. (“Kleimar”), a wholly owned subsidiary of Navios Holdings. The remaining
carrying amounts of the favorable lease and the favorable purchase option
of the vessel amounting to $53,022 were transferred to vessel cost and will be
depreciated over the remaining useful life of the vessel (see note 5).
Capitalized expenses related to vessel acquisition amounted to $458 and were
also included in vessel cost. The vessel was renamed to Navios Fantastiks upon
acquisition.
On July
1, 2008, Navios Partners acquired from Navios Holdings the vessel Navios
Hope for a purchase price of $79,936, consisting of $35,000 cash and the
issuance of 3,131,415 common units to Navios Holdings. The number of the common
units issued was calculated based on a price of $14.3705 per common unit, which
was the volume weighted average trading price of the common units for the 10
business days immediately prior to the acquisition. The per unit price at
the day of the delivery was $14.35. Capitalized expenses related to vessel
acquisition amounted to $46 and were also included in vessel
cost.
NAVIOS
MARITIME PARTNERS L.P.
CONDENSED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed
in thousands of U.S. dollars except unit prices and amounts)
NOTE 5 — INTANGIBLE
ASSETS
Intangible
assets as of December 31, 2008 and June 30, 2009 consist of the
following:
|
|
Cost
|
|
|
Accumulated
Amortization
|
|
|
Transfer to
vessel cost
|
|
|
Net Book Value
December 31,
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unfavorable
lease terms
|
|
$
|
(8,486
|
)
|
|
$
|
3,827
|
|
|
$
|
-
|
|
|
$
|
(4,659
|
)
|
Backlog
assets
|
|
|
52,874
|
|
|
|
(6,529
|
)
|
|
|
(46,345
|
)
|
|
|
-
|
|
Favorable
vessel purchase option
|
|
|
6,677
|
|
|
|
-
|
|
|
|
(6,677
|
)
|
|
|
-
|
|
Total
|
|
$
|
51,065
|
|
|
$
|
(2,702
|
)
|
|
$
|
(53,022
|
)
|
|
$
|
(4,659
|
)
|
|
|
Cost
|
|
|
Accumulated
Amortization
|
|
|
Transfer to
vessel cost
|
|
|
Net Book
Value June
30, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unfavorable
lease terms
|
|
$
|
(8,486)
|
|
|
$
|
4,825
|
|
|
$
|
-
|
|
|
$
|
(3,661)
|
|
Backlog
assets
|
|
|
27,390
|
|
|
|
(169)
|
|
|
|
-
|
|
|
|
27,221
|
|
Favorable
lease terms charter-in
|
|
|
3,543
|
|
|
|
(54)
|
|
|
|
-
|
|
|
|
3,489
|
|
Favorable
vessel purchase option
|
|
|
3,667
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,667
|
|
Total
|
|
$
|
26,114
|
|
|
$
|
4,602
|
|
|
$
|
-
|
|
|
$
|
30,716
|
|
Amortization
expense of unfavorable and favorable lease terms for the six month periods ended
June 30, 2008 and 2009 is presented in the following table:
|
|
Three Month Period Ended
|
|
|
Six Month Period Ended
|
|
|
|
June
30, 2009
|
|
|
June
30, 2008
|
|
|
June
30, 2009
|
|
|
June
30, 2008
|
|
Unfavorable
lease terms
|
|
$ |
499 |
|
|
$ |
499 |
|
|
$ |
998 |
|
|
$ |
998 |
|
Backlog
assets
|
|
|
(169 |
) |
|
|
- |
|
|
|
(169 |
) |
|
|
- |
|
Favorable
lease terms charter-in
|
|
|
(54 |
) |
|
|
(462 |
) |
|
|
(54 |
) |
|
|
(1,763 |
) |
Total
|
|
$ |
276 |
|
|
$ |
37 |
|
|
$ |
775 |
|
|
|
(765 |
) |
On June
10, 2009, Navios Partners purchased from Navios Holdings the rights to the
Navios Sagittarius, a 2006 Japanese-built Panamax vessel. Favorable purchase
option and lease terms were recognized as assets through this transaction
amounted to $34,600 in total and were related to the acquisition of the rights
on the time charter in contract, time charter out contract and purchase option
of the vessel (see also note 8).
Note
6 – DEFERRED VOYAGE REVENUE
Deferred
voyage revenue primarily reflects charter-out amounts collected on voyages that
have not been completed. In January 2009, Navios Partners and its counterparty
to the Navios Hope charter party mutually agreed for a lump sum amount of
approximately $30,443, of which Navios Partners received net of expenses in the
amount of $29,589 in February 2009. Under a new charter agreement, the
balance of the aggregate value of the original contract will be allocated to the
period until its original expiration. The amount of $30,443 has been recognized
as deferred revenue and amortized over the life of the vessel’s
contract.
NAVIOS
MARITIME PARTNERS L.P.
CONDENSED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed
in thousands of U.S. dollars except unit prices and amounts)
NOTE
7 — BORROWINGS
Borrowings
as of December 31, 2008 and June 30, 2009 consisted of the
following:
|
|
June 30,
2009
|
|
|
December 31,
2008
|
|
Credit
facility
|
|
$
|
195,000
|
|
|
$
|
235,000
|
|
Less
current portion
|
|
|
-
|
|
|
|
(40,000)
|
|
Total
long-term borrowings
|
|
$
|
195,000
|
|
|
$
|
195,000
|
|
Upon
the closing of the IPO, Navios Partners entered into a $260,000 revolving credit
facility with DVB Bank AG and Commerzbank AG which was amended in June 2008, in
part, to increase the available borrowings by $35,000, in anticipation of
purchasing the Navios Hope, thereby increasing the total facility to $295,000.
Currently, the total borrowings under the revolving credit facility are
$195,000.
In
January 2009, Navios Partners further amended the terms of its existing credit
facility. The amendment is effective until January 15, 2010 and provides for
(a) the repayment of $40,000 which took place on February 9, 2009,
(b) maintaining minimum cash reserves in a pledged account with the agent
bank as follows: $2,500 as of January 31, 2009; $5,000 as of March 31, 2009;
$7,500 as of June 30, 2009, $10,000 as of September 30,
2009; and $12,500 as of December 31, 2009 and (c) an
increased margin on the loans of 2.25%. Further, the covenants were amended by
(a) reducing the minimum net worth covenant to $100,000 from $135,000, (b)
reducing the value maintenance covenant ("VMC") to 100% using charter free
vessel values, (c) changing the calculation of the minimum leverage covenant to
use charter inclusive adjusted vessel values until December 31, 2009, and (d)
adding a new VMC based on charter inclusive valuations to be at 143%. Also,
Navios Partners pays a commitment fee of 0.35% for undrawn amounts under the
facility.
As
of June 30, 2009, Navios Partners was in compliance with the financial covenants
of its revolving loan facility. The repayment of the credit facility starts no
earlier than February 2012 and is subject to changes in repayment amounts and
dates depending on various factors such as the future borrowings under the
credit facility agreement.
The
maturity table below reflects the principal payments due under the credit
facility based on Navios Partners’ $195,000 outstanding balance as of June 30,
2009.
Year
|
|
Amount
|
|
2010
|
|
$
|
-
|
|
2011
|
|
$
|
-
|
|
2012
|
|
$
|
14,306
|
|
2013
|
|
$
|
27,781
|
|
2014
|
|
$
|
25,591
|
|
2015
and thereafter
|
|
$
|
127,322
|
|
|
|
$
|
195,000
|
|
NOTE 8— ISSUANCE OF UNITS
On May 8,
2009, Navios Partners completed its public offering of 3,500,000 common units at
$10.32 per unit and raised gross proceeds of approximately $36,120 to fund its
fleet expansion. The net proceeds of this offering, including discount and
excluding offering costs of $465, were approximately $34,314. Pursuant to this
offering, Navios Partners issued 71,429 additional general partnership units to
the General Partner. The net proceeds from the issuance of the general
partnership units were $737. The net proceeds of this offering were used to
acquire the rights of the Navios Sagittarius, a 2006 Japanese-built Panamax
vessel with a capacity of 75,756 dwt, for a cash payment of $34,600. The Navios
Sagittarius is a chartered-in-vessel, and Navios Partners has an option to
purchase the vessel, beginning December 2009, at a purchase price that is
initially 2.5 billion Japanese Yen ($26,169 based on the exchange rate at
June 30, 2009), declining each year by 120.0 million Japanese Yen ($1,256
based on the exchange rate at June 30, 2009).
.
NAVIOS MARITIME PARTNERS
L.P.
CONDENSED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed
in thousands of U.S. dollars except unit prices and amounts)
On June
9, 2009 Navios Holdings relieved Navios Partners from its obligation to purchase
the Capesize vessel Navios Bonavis (ex TBN I) for $130,000 and with the delivery
of the Navios Bonavis to Navios Holdings, Navios Partners was granted a 12-month
option to purchase the vessel for $125,000. In return, Navios Partners issued
1,000,000 of subordinated Series A units recognizing in the results a non-cash
compensation expense amounting to $6,082. The newly issued units are not
eligible to receive distributions until the third anniversary of their issuance,
at which point they will automatically convert into common units and receive
distributions in accordance with all other common units. In addition, Navios
Holdings will be released from the Omnibus Agreement restrictions for two years
in connection with acquiring vessels from third parties (but not from the
requirement to offer to sell to Navios Partners qualifying vessels in Navios
Holdings’ existing fleet). Pursuant to the issuance of 1,000,000 units, Navios
Partners issued 20,408 additional general partnership units to the General
Partner. The net proceeds from the issuance of the general partnership units
were $207.
NOTE 9— SEGMENT
INFORMATION
Navios
Partners reports financial information and evaluates its operations by charter
revenues. Navios Partners does not use discrete financial information to
evaluate operating results for each type of charter. As a result,
management reviews operating results solely by revenue per day and operating
results of the fleet and thus Navios Partners has determined that it operates
under one reportable segment.
The
following table sets out operating revenue by geographic region for Navios
Partners’ reportable segment. Revenue is allocated on the basis of
the geographic region in which the customer is located. Dry bulk
vessels operate worldwide. Revenues from specific geographic region
which contribute over 10% of total revenue are disclosed
separately.
Revenue
by Geographic Region
|
|
Three Month
Period ended
June 30, 2009
($ ‘000)
(unaudited)
|
|
|
Three Month
Period ended
June 30, 2008
($ ‘000)
(unaudited)
|
|
|
Six Month
Period ended
June 30, 2009
($ ‘000)
(unaudited)
|
|
|
Six Month
Period ended
June 30, 2008
($ ‘000)
(unaudited)
|
|
Europe
|
|
$ |
6,607 |
|
|
$ |
6,054 |
|
|
$ |
13,242 |
|
|
$ |
12,060 |
|
Asia
|
|
|
12,556 |
|
|
|
9,881 |
|
|
|
25,059 |
|
|
|
17,558 |
|
Australia
|
|
|
2,015 |
|
|
|
2,004 |
|
|
|
4,034 |
|
|
|
2,641 |
|
North
America
|
|
|
976 |
|
|
|
- |
|
|
|
976 |
|
|
|
- |
|
Total
|
|
$ |
22,154 |
|
|
$ |
17,939 |
|
|
$ |
43,311 |
|
|
$ |
32,259 |
|
Vessels
operate on a worldwide basis and are not restricted to specific
locations. Accordingly, it is not possible to allocate the assets of
these operations to specific countries.
NOTE 10 — INCOME TAXES
Marshall
Islands and Panama do not impose a tax on international shipping
income. Under the laws of Marshall Islands and Panama, the countries
of the vessel-owning subsidiaries’ incorporation and vessels’ registration, the
vessel-owning subsidiaries are subject to registration and tonnage taxes which
have been included in vessel operating expenses in the accompanying consolidated
statements of operations.
NAVIOS
MARITIME PARTNERS L.P.
CONDENSED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed
in thousands of U.S. dollars except unit prices and amounts)
Pursuant
to Section 883 of the Internal Revenue Code of the United States, U.S. source
income from the international operation of ships is generally exempt from U.S.
income tax if the company operating the ships meets certain incorporation and
ownership requirements. Among other things, in order to qualify for
this exemption, the company operating the ships must be incorporated in a
country which grants an equivalent exemption from income taxes to U.S.
corporations. All the vessel-owning subsidiaries satisfy these
initial criteria. In addition, these companies must meet an ownership test. The
management of the Company believes that this ownership test was satisfied prior
to the IPO by virtue of a special rule applicable to situations where the
ship operating companies are beneficially owned by a publicly traded company.
Although not free from doubt, management also believes that the ownership test
will be satisfied based on the trading volume and ownership of Navios
Partners’ units, but no assurance can be given that this will remain so in the
future.
NOTE
11 —COMMITMENTS AND CONTINGENCIES
Navios
Partners is involved in various disputes and arbitration proceedings arising in
the ordinary course of business. Provisions have been recognized in the
financial statements for all such proceedings where Navios Partners believes
that a liability may be probable, and for which the amounts are reasonably
estimable, based upon facts known at the date the financial statements were
prepared.
In the
opinion of management, the ultimate disposition of these matters is immaterial
and will not adversely affect Navios Partners’ financial position, results of
operations or liquidity.
In March
2008, Navios Partners took delivery of the Navios Aldebaran, a newbuilding
Panamax vessel of 76,500 dwt. The vessel came into the fleet under a long-term
charter-in agreement with a purchase option exercisable in 2013. Navios Partners
has chartered-out the vessel for a period of five years at a net daily
charter-out rate of approximately $28.
In May
2008, the chartered-in vessel Fantastiks was acquired by Fantastiks Shipping
Corporation and was renamed the Navios Fantastiks (see note
4).
On June
9, 2009, Navios Holdings relieved Navios Partners from its obligation to
purchase the Capesize vessel Navios Bonavis (ex TBN I) for $130,000 and, upon
delivery of the Navios Bonavis to Navios Holdings, Navios Partners was granted a
12-month option to purchase the vessel for $125,000. In return, Navios Holdings
received 1,000,000 of subordinated Series A units, which were recognized as
compensation expense in Navios Partners. The newly issued units are not eligible
to receive distributions until the third anniversary of their issuance, at which
point they will automatically convert into common units and receive
distributions in accordance with all other common units. In addition, Navios
Holdings will be released from the Omnibus Agreement restrictions for two years
in connection with acquiring vessels from third parties (but not from the
requirement to offer to sell to Navios Partners qualifying vessels in Navios
Holdings’ existing fleet).
On June
10, 2009, Navios Partners purchased from Navios Holdings the rights to the
Navios Sagittarius, a 2006 Japanese-built Panamax vessel with a capacity of
75,756 dwt, for a cash payment of $34,600. The Navios Sagittarius is a
chartered-in-vessel and Navios Partners has an option to purchase the vessel,
beginning December 2009, at a purchase price that is initially 2.5 billion
Japanese Yen ($26,169 based on the exchange rate at June 30, 2009),
declining each year by 120 million Japanese Yen ($1,256 based on the exchange
rate at June 30, 2009).
The
future minimum commitments by period of Navios Partners under its charter-in
contracts, net of commissions, are as follows:
|
|
Amount
|
|
|
|
|
|
2010
|
|
|
10,063
|
|
2011
|
|
|
13,346
|
|
2012
|
|
|
13,409
|
|
2013
|
|
|
13,448
|
|
2014
|
|
|
12,715
|
|
2015
|
|
|
4,768
|
|
|
|
$
|
67,749
|
|
NAVIOS
MARITIME PARTNERS L.P.
CONDENSED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed
in thousands of U.S. dollars except unit prices and amounts)
NOTE
12 —TRANSACTIONS WITH RELATED PARTIES AND AFFILIATES
In
addition to the related party transactions described in note 11 of the Condensed
Notes to the Consolidated Financial Statements contained herein, the following
are other related party transactions:
Management fees: Pursuant to
the management agreement dated November 16, 2007, the Manager, a wholly owned
subsidiary of Navios Holdings, provides commercial and technical management
services to Navios Partners’ vessels for a daily fee of $4 per owned Panamax
vessel and $5 per owned Capesize vessel. This daily fee covers all of
the vessels’ operating expenses, including the cost of drydock and special
surveys. The daily rates are fixed for a period of two years until November 16,
2009 whereas the initial term of the agreement is until November 16, 2012. Total
management fees for the three and the six month periods ended June 30, 2009
amounted to $2,639 and $5,249, respectively ($2,119 and $3,939 for the three and
the six month periods ended June 30, 2008, respectively).
General and administrative
expenses: Pursuant
to the administrative services agreement dated November 16, 2007, the Manager
also provides administrative services to Navios Partners, which include
bookkeeping, audit and accounting services, legal and insurance services,
administrative and clerical services, banking and financial services, advisory
services, client and investor relations and other. The Manager is reimbursed for
reasonable costs and expenses incurred in connection with the provision of these
services.
Total
general and administrative expenses for the three and six month periods ended
June 30, 2009 amounted to $897 and $1,799 respectively ($507 and $1,003 for the
three and six month period ended June 30, 2008).
Balance due to related
parties: Included in the current liabilities as at June 30, 2009 is an
amount of $6,368, which represents the current account payable to Navios
Holdings and its subsidiaries. The balance mainly consists of the management
fees amounting to $5,249, administrative service fees amounting to $955, and
other expenses owed to affiliated companies amounting to $164. Total
management fees and administrative fees charged to Navios Partners for the three
month periods ended June 30, 2009 amounted to $2,639 and $604 respectively while
for the six month periods ended June 30, 2009 same fees amounted to $5,249 and
$955 respectively.
Vessel
Acquisition: On July 1, 2008, Navios Partners acquired from
Navios Holdings the vessel Navios Hope for a purchase price of $79,936,
consisting of $35,000 cash and the issuance of 3,131,415 common units to Navios
Holdings. The per unit price at the day of the delivery was $14.35 (see note
4).
NOTE
13 — CASH DISTRIBUTIONS AND EARNINGS PER UNIT
The
partnership agreement of Navios Partners requires that all available cash is
distributed quarterly, after deducting expenses, including estimated maintenance
and replacement capital expenditures and reserves. Distributions may be
restricted by, among other things, the provisions of existing and future
indebtedness, applicable partnership and limited liability company laws and
other laws and regulations. The amount of the minimum quarterly distribution is
$0.35 per unit or $1.40 unit per year and is made in the following manner,
during the subordination period:
|
·
|
First,
98% to the holders of common units and 2% to the General Partner until
each common unit has received a minimum quarterly distribution of $0.35
plus any arrearages from previous
quarters;
|
|
·
|
Second,
98% to the holders of subordinated units (not including holders of
subordinated Series A units) and 2% to the General Partner until each
subordinated unit has received a minimum quarterly distribution of $0.35;
and
|
|
·
|
Third,
98% to all unitholders (not including holders of subordinated Series A
units), pro rata, and 2% to the General Partner, until each unit has
received an aggregate amount of
$0.4025.
|
NAVIOS
MARITIME PARTNERS L.P.
CONDENSED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed
in thousands of U.S. dollars except unit prices and amounts)
Thereafter
there are incentive distribution rights held by the General Partner, which are
analyzed as follows:
|
|
|
|
Marginal Percentage Interest in
Distributions
|
|
|
|
Total Quarterly Distribution
Target Amount
|
|
Common and
Subordinated
Unitholders
|
|
General Partner
|
|
Minimum
Quarterly Distribution
|
|
$0.35
|
|
98%
|
|
2%
|
|
First
Target Distribution
|
|
up
to $0.4025
|
|
98%
|
|
2%
|
|
Second
Target Distribution
|
|
above
$0.4025 up to $0.4375
|
|
85%
|
|
15%
|
|
Third
Target Distribution
|
|
above
$0.4375 up to $0.525
|
|
75%
|
|
25%
|
|
Thereafter
|
|
above
$0.525
|
|
50%
|
|
50%
|
|
On
January 21, 2009, the Board of Directors of Navios Partners authorized its
quarterly cash distribution for the three month period ended December 31, 2008
of $0.40 per unit. The distribution was paid on February 12, 2009 to all holders
of record of common as of February 9, 2009, subordinated general partner units
(excluding 3,131,415 common units issued to Navios Holdings in connection with
the sale of the vessel Navios Hope). The aggregate amount of the declared
distribution was $8,675.
On April
24, 2009, the Board of Directors of Navios Partners authorized its quarterly
cash distribution for the three month period ended March 31, 2009 of $0.40 per
unit. The distribution was paid on May 6, 2009 to all holders of record of
common, subordinated and general partner units as of May 1, 2009. The aggregate
amount of the declared distribution is $8,675.
On July
27, 2009, the Board of Directors of Navios Partners authorized its quarterly
cash distribution for the three month period ended June 30, 2009 of $0.40 per
unit. The distribution is payable on August 11, 2009 to all holders of record of
common, subordinated and general partner units (not including holders of
subordinated Series A units) on August 6, 2009. The aggregate amount of the
declared distribution is $10,112.
Basic net
income per unit is determined by dividing net income by the weighted average
number of units outstanding during the period. Diluted net income per unit is
calculated in the same manner as net income per unit, except that the weighted
average number of outstanding units is increased to include the dilutive effect
of outstanding unit options or phantom units. There were no options or phantom
units outstanding during the three and six month period ended June 30,
2009.
The
General Partner's interest in net income is calculated as if all net income for
the year was distributed according to the terms of Navios Partners partnership
agreement, regardless of whether those earnings would or could be distributed.
Navios Partners partnership agreement does not provide for the distribution of
net income; rather, it provides for the distribution of available cash, which is
a contractually defined term that generally means all cash on hand at the end of
each quarter less the amount of cash reserves established by Navios Partners’
board of directors to provide for the proper conduct of Navios Partners’
business including reserves for maintenance and replacement capital expenditure
and anticipated credit needs.
On June
9, 2009, Navios Partners issued 1,000,000 subordinated Series A units. The
subordinated Series A units have those rights and obligations as are
identified in the partnership agreement of Navios Partners. A
subordinated Series A unit does not receive distributions and will not be
eligible to receive distributions until the third anniversary of their issuance,
at which time they will automatically convert into common units on a
one-for-one basis. Following conversion into common units, holders of
the converted subordinated Series A units will receive distributions in
accordance with all other common units.
The
calculations of the basic and diluted earnings per unit are presented
below. For purposes of the earnings per unit (EPU) calculations, the
subordinated units and general partner units are assumed to be outstanding for
periods presented prior to IPO.
NAVIOS
MARITIME PARTNERS L.P.
CONDENSED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed
in thousands of U.S. dollars except unit prices and amounts)
|
|
Three Month Period Ended
|
|
|
Six Month Period Ended
|
|
|
|
June 30, 2009
|
|
|
June 30, 2008
|
|
|
June 30, 2009
|
|
|
June 30, 2008
|
|
Net
income
|
|
$ |
3,592 |
|
|
$ |
7,155 |
|
|
$ |
12,551 |
|
|
$ |
11,001 |
|
Earnings
attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
unit holders
|
|
|
3,520 |
|
|
|
4,063 |
|
|
|
9,132 |
|
|
|
7,730 |
|
Subordinated
unit holders
|
|
|
- |
|
|
|
2,949 |
|
|
|
3,138 |
|
|
|
3,038 |
|
General
partner unit holders
|
|
|
72 |
|
|
|
143 |
|
|
|
281 |
|
|
|
233 |
|
Subordinated
Series A unit holders
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average units outstanding (basic and diluted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
unit holders
|
|
|
15,708,338 |
|
|
|
10,500,000 |
|
|
|
14,675,614 |
|
|
|
10,500,000 |
|
Subordinated
unit holders
|
|
|
7,621,843 |
|
|
|
7,621,843 |
|
|
|
7,621,843 |
|
|
|
7,621,843 |
|
General
partner unit holders
|
|
|
476,575 |
|
|
|
369,834 |
|
|
|
455,276 |
|
|
|
369,834 |
|
Subordinated
Series A unit holders
|
|
|
1,000,000 |
|
|
|
- |
|
|
|
1,000,000 |
|
|
|
- |
|
Earnings
per unit (basic and diluted):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
unit holders
|
|
$ |
0.22 |
|
|
$ |
0.39 |
|
|
$ |
0.62 |
|
|
$ |
0.74 |
|
Subordinated
unit holders
|
|
$ |
- |
|
|
$ |
0.39 |
|
|
$ |
0.41 |
|
|
$ |
0.40 |
|
General
partner unit holders
|
|
$ |
0.15 |
|
|
$ |
0.39 |
|
|
$ |
0.62 |
|
|
$ |
0.60 |
|
Subordinated
Series A unit holders
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
-
- |
|
|
$ |
- |
|
NOTE
14— RECENT ACCOUNTING PRONOUNCEMENTS
In
December 2007, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business
Combinations” (“FAS 141R”), which replaces SFAS No. 141. FAS 141R establishes
principles and requirements for how an acquirer recognizes and measures in its
financial statements the identifiable assets acquired, the liabilities assumed
any non-controlling interest in the acquiree and the goodwill acquired. FAS 141R
also establishes disclosure requirements which will enable users to evaluate the
nature and financial effects of the business combination. FAS 141R is effective
for Navios Partners for the fiscal year beginning on January 1, 2009. The
adoption of FAS 141R did not have a material impact on Navios Partners’
consolidated financial statements.
In
December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in
Consolidated Financial Statement—an amendment of ARB No. 51” (“FAS 160”). FAS
160 states that accounting and reporting for minority interests will be
recharacterized as non-controlling interests and classified as a component of
equity. FAS 160 also establishes reporting requirements that provide sufficient
disclosures that clearly identify and distinguish between the interests of the
parent and the interests of the non-controlling owners. FAS 160 applies to all
entities that prepare consolidated financial statements, except not-for-profit
organizations, but will affect only those entities that have an outstanding
non-controlling interest in one or more subsidiaries or that deconsolidate a
subsidiary. FAS 160 was effective as of January 1, 2009. The adoption of FAS
160 did not have a material impact on Navios Partners’ consolidated
financial statements.
In
February 2008, the FASB issued FASB Staff Position (“FSP”) 157-2, “Effective
Date of FASB Statement No.157” (“FSP 157-2”), which delays the effective date of
SFAS No. 157, “Fair Value Measurement” (“FAS 157”), for nonfinancial assets and
nonfinancial liabilities, except for items that are recognized or disclosed at
fair value in the financial statements on a recurring basis (at least annually).
For purposes of applying FSP 157-2, nonfinancial assets and nonfinancial
liabilities would include all assets and liabilities other that those meeting
the definition of a financial asset or financial liability as defined in
paragraph 6 of SFAS No. 159, “The Fair Value Option for Financial Assets and
Financial Liabilities”. FSP 157-2 defers the effective date of FAS 157 to fiscal
years beginning after November 15, 2008, and the interim periods within those
fiscal years for items within the scope of FSP 157-2. The application of FAS 157
in future periods to those items covered by FSP 157-2 did not have a material
effect on the consolidated financial statements of Navios
Partners.
NAVIOS
MARITIME PARTNERS L.P.
CONDENSED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed
in thousands of U.S. dollars except unit prices and amounts)
In March
2008, the FASB issued its final consensus on “Issue 07-4 —Application of the
Two-Class Method under FASB Statement No. 128, “Earnings per Share”, to “Master Limited
Partnerships” (“Issue 07-1”). This Issue may
impact a publicly traded master limited partnership (MLP) that distributes
“available” cash to the limited partners (LPs), the general partner (GP), and
the holders of incentive distribution rights (IDRs). This Issue addresses
earnings-per-unit (EPU) computations for all MLPs with IDR interests. MLPs will
need to determine the amount of “available cash” at the end of a reporting
period when calculating the period’s EPU. This guidance in Issue 07-4 was
effective for Navios Partners for the fiscal year beginning as of January 1,
2009. The adoption of Issue 07-4 under SFAS No. 128 did not have a material
impact on the consolidated financial statements of Navios Partners.
In April
2008, the FASB issued FSP 142-3, “Determination of the Useful Life of Intangible
Assets” (“FSP 142-3”). FSP 142-3 amends the factors that should be considered in
developing renewal or extension assumptions used to determine the useful life of
a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible
Assets” (“FAS 142”). The intent of FSP 142-3 is to improve the consistency
between the useful life of a recognized intangible asset under FAS 142 and the
period of expected cash flows used to measure the fair value of the asset under
FAS 141R and other US GAAP. FSP 142-3 was effective for Navios Partners for
fiscal years beginning after December 15, 2008, and interim periods within those
fiscal years. Early adoption was not prohibited. The adoption of FSP 142-3 did
not have any material effect on the consolidated financial statements of Navios
Partners.
In
October 2008, the FASB issued FSP 157-3, “Determining the Fair Value of a
Financial Asset When the Market for that Asset is Not Active” (“FSP 157-3”),
which clarifies the application of FAS 157 in a market that is not active and
provides an example to illustrate key considerations in determining the fair
value of a financial asset when the market for that asset is not active. FSP
157-3 applies to financial assets within the scope of accounting pronouncements
that require or permit fair value measurements in accordance with FAS 157. FSP
157-3 was effective upon issuance, including prior periods for which financial
statements have not been issued. Revisions resulting from a change in the
valuation technique or its application shall be accounted for as a change in
accounting estimate (SFAS No. 154, “Accounting Changes and Error Corrections”
(“FAS 154”), paragraph 19). The disclosure provisions of FAS 154 for a change in
accounting estimate are not required for revisions resulting from a change in
valuation technique or its application. The application of FSP 157-3 did not
have a material effect on the consolidated financial statements of Navios
Partners.
In
January 2009, the FASB issued FSP EITF 99-20-1, “Amendments to the
Impairment Guidance to EITF Issue No. 99-20” (“FSP EITF 99-20-1”), which amends
the impairment guidance in EITF Issue No. 99-20, “Recognition of Interest Income
and Impairment on Purchased Beneficial Interests and Beneficial Interests That
Continue to Be Held by a Transferor in Securitized Financial Assets,” to achieve
more consistent determination of whether an other-than-temporary impairment has
occurred. FSP EITF 99-20-1 also retains and emphasizes the objective of an
other-than-temporary impairment assessment and the related disclosure
requirements in SFAS No. 115, “Accounting for Certain Investments in Debt and
Equity Securities”, and other related guidance. FSP EITF 99-20-1 is
effective for interim and annual reporting periods ending after December 15,
2008, and shall be applied prospectively. Retrospective application to a prior
interim or annual reporting period is not permitted. The adoption of FSP EITF
99-20-1 did not have any material effect on the consolidated financial
statements of Navios Partners.
In
April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, “Interim Disclosures
About Fair Value of Financial Instruments” (“FSP FAS 107-1 and APB 28-1”), which
amends SFAS No. 107, “Disclosures About Fair Value of Financial Instruments”, to
require disclosures about fair value of financial instruments for interim
reporting periods of publicly traded companies, as well as in annual financial
statements. This FSP also amends APB Opinion No. 28, “Interim Financial
Reporting”, to require those disclosures in summarized financial information at
interim reporting periods. An entity may early adopt this FSP only if it also
elects to early adopt FSP FAS 157-4, “Determining Fair Value When the Volume and
Level of Activity for the Asset or Liability Have Significantly Decreased and
Identifying Transactions That Are Not Orderly” (“FAS 157-4”), and FSP FAS 115-2
and FAS 124-2, “Recognition and
Presentation of Other-Than-Temporary Impairments” (“FSP FAS 115-2 and FAS
124-2”). FSP FAS 107-1 and APB 28-1 does not require disclosures for earlier
periods presented for comparative purposes at initial adoption. In periods after
initial adoption, FSP FAS 107-1 and APB 28-1 requires comparative disclosures
only for periods ending after initial adoption. This FSP will be effective for
interim reporting periods after June 15, 2009, with early adoption permitted for
periods ending after March 15, 2009. The adoption of FSP FAS 107-1 and APB 28-1
did not have any material effect on the consolidated statements of Navios
Partners.
NAVIOS
MARITIME PARTNERS L.P.
CONDENSED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed
in thousands of U.S. dollars except unit prices and amounts)
In April
2009, the FASB issued FSP FAS 157-4, which amends FAS 157, when the volume
and level of activity for the asset or liability have significantly decreased.
This FSP also includes guidance on identifying circumstances that indicate
a transaction is not orderly. This FSP emphasizes that even if there has
been a significant decrease in the volume and level of activity for the
asset or liability and regardless of the valuation technique(s) used, the
objective of a fair value measurement remains the same. Fair value is the
price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction (that is, not a forced liquidation or
distressed sale) between market participants at the measurement date under
current market conditions. This FSP is effective for interim and annual
reporting periods ending after June 15, 2009, and has been applied
prospectively. Early adoption is permitted for periods ending after March
15, 2009. Earlier adoption for periods ending before March 15, 2009, is not
permitted. If a reporting entity elects to adopt early either FSP FAS 115-2 and
FAS 124-2, or FSP FAS 107-1 and APB 28-1, the reporting entity also is
required to adopt early this FSP. Additionally, if the reporting entity
elects to adopt early this FSP, FSP FAS 115-2 and FAS 124-2 also must be adopted
early. FSP FAS 157-4 does not require disclosures for earlier periods
presented for comparative purposes at initial adoption. In periods after
initial adoption, this FSP requires comparative disclosures only for
periods ending after initial adoption. The adoption of FSP FAS 157-4 did
not have any material effect on the consolidated statements of Navios
Partners.
In May
2009, the FASB issued SFAS
No.
165,
“Subsequent Events” (“FAS 165”), which establishes principles and
requirements for subsequent events. In particular, FAS 165 sets forth: a) the
period after the balance sheet date during which management of a reporting
entity evaluates events or transactions that may occur for potential recognition
or disclosure in the financial statements; b) the circumstances under which an
entity recognizes events or transactions occurring after the balance sheet date
in its financial statements; and c) the disclosures that an entity makes about
events or transactions that occurred after the balance sheet date. FAS 165 has been applied
to the accounting for and disclosure of subsequent events not addressed in other
applicable generally accepted accounting principles (GAAP). An entity recognizes
in the financial statements the effects of all subsequent events that provide
additional evidence about conditions that existed at the date of the balance
sheet, including the estimates inherent in the process of preparing financial
statements. FAS 165 is effective for interim or annual financial periods
ending after June 15, 2009, and has been applied prospectively. The
adoption of FAS 165 did not have any material effect on the consolidated
statements of Navios Partners.
In June
2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)
(“FAS 167”), which amends certain requirements of FASB Interpretation No. 46
(revised December 2003), “Consolidation of Variable
Interest Entities” (“Interpretation
46(R)”), to
improve financial reporting by enterprises involved with variable interest
entities and to provide more relevant and reliable information to users of
financial statements. FAS 167 carries forward the scope of Interpretation 46(R),
with the addition of entities previously considered qualifying special-purpose
entities, as the concept of these entities was eliminated in SFAS No. 166,
“Accounting for Transfers of Financial Assets” (“FAS 166”). FAS 167 shall be
effective as of the beginning of each reporting entity’s first annual reporting
period that begins after November 15, 2009, for interim periods within that
first annual reporting period, and for interim and annual reporting periods
thereafter. Earlier application is prohibited. FAS 167 retains the scope
of Interpretation 46(R) with the addition of entities previously considered
qualifying special-purpose entities, as the concept of these entities was
eliminated in FAS 166. The adoption of FAS 167 is not expected to have any
material effect on the consolidated statements of Navios Partners.
In June 2009, the FASB issued SFAS No.
168, “The
Hierarchy of Generally Accepted Accounting Principles” (“FAS 168”), which replaces SFAS No. 162 and establishes
the FASB
Accounting Standards CodificationTM (Codification) as the source of
authoritative accounting principles recognized by the
FASB to be applied by nongovernmental entities in the preparation of
financial statements in conformity with GAAP. Rules and interpretive releases of the Securities
and Exchange Commission (SEC) under authority of federal securities laws are also
sources of authoritative GAAP for SEC registrants. FAS 168 shall be effective
for financial statements issued for interim and annual periods ending after
September 15, 2009, except for nonpublic nongovernmental entities that have not
followed the guidance included in the AICPA Technical Inquiry Service (TIS)
Section 5100, “Revenue Recognition,” paragraphs 38–76. An entity shall follow
the disclosure requirements of FAS 154 and disclose the accounting principles
that were used before and after the application of the provisions of FAS 168 and
the reason that applying this Statement resulted in a change in accounting
principle or correction of an error. The adoption of FAS 168 is
not expected to have any material effect on the consolidated statements of
Navios Partners.
NAVIOS
MARITIME PARTNERS L.P.
CONDENSED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed
in thousands of U.S. dollars except unit prices and amounts)
NOTE
15 — SUBSEQUENT EVENTS
On July
27, 2009, the Board of Directors of Navios Partners authorized its quarterly
cash distribution for the three month period ended June 30, 2009 of $0.40 per
unit. The distribution is payable on August 11, 2009 to all holders of record of
common, subordinated and general partner units (not including holders of
subordinated Series A units) on August 6, 2009. The aggregate amount of the
declared distribution is $10,112.
Navios
Partners has evaluated subsequent events, if any, that have occurred after the
balance sheet date but before the issuance of these financial
statements and performed, where it was necessary, the appropriate
disclosures for those events. The date of the evaluation of subsequent events is
the same as the date the financial statements are issued, July 29,
2009.
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.
|
NAVIOS
MARITIME PARTNERS L.P.
|
|
|
|
|
|
|
By:
|
/s/
Angeliki Frangou
|
|
|
|
Angeliki
Frangou
|
|
|
|
Chief
Executive Officer
|
|
|
|
Date:
July 29, 2009
|
|