(Expressed in thousands of U.S. Dollars except share data)
UNAUDITED CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except share and per share data)
NOTE 1: DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Navios Maritime Acquisition Corporation (Navios Acquisition or the Company) (NYSE: NNA) owns a large fleet of modern crude oil, refined
petroleum product and chemical tankers providing worldwide marine transportation services. The Companys strategy is to charter its vessels to international oil companies, refiners and large vessel operators under long, medium and short-term
charters. The Company is committed to providing quality transportation services and developing and maintaining long-term relationships with its customers. The operations of Navios Acquisition are managed by a subsidiary of Navios Maritime Holdings
Inc. (Navios Holdings).
Navios Acquisition was incorporated in the Republic of Marshall Islands on March 14, 2008. On July 1, 2008,
Navios Acquisition completed its initial public offering, or its IPO. On May 28, 2010, Navios Acquisition consummated the vessel acquisitions which constituted its initial business combination. Following such transaction, Navios
Acquisition commenced its operations as an operating company.
On January 6, 2016, Navios Acquisition redeemed, through the holders put option,
100,000 shares of the puttable common stock and paid cash of $1,000 to the holder upon redemption.
On March 11, 2016, 1,200,000 shares of common stock
were issued as a result of the conversion of 3,000 shares of Series A Convertible Preferred Stock.
On April 1, 2016, Navios Acquisition redeemed, through
the holders put option, 100,000 shares of the puttable common stock and paid cash of $1,000 to the holder upon redemption.
On July 1, 2016,
Navios Acquisition redeemed, through the holders put option, 100,000 shares of the puttable common stock and paid cash of $1,000 to the holder upon redemption.
As of September 30, 2016, Navios Holdings had 43.3% of the voting power and 46.3% of the economic interest in Navios Acquisition.
As of September 30, 2016, Navios Acquisition had outstanding: 150,682,990 shares of common stock and 1,000 shares of Series C Convertible Preferred Stock
held by Navios Holdings.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a)
Basis of presentation:
The accompanying interim condensed consolidated financial statements are
unaudited, but, in the opinion of management, reflect all adjustments for a fair statement of Navios Acquisitions consolidated balance sheets, statement of changes in equity, statements of income and cash flows for the periods presented. The
results of operations for the interim periods are not necessarily indicative of results for the full year. The footnotes are condensed as permitted by the requirements for interim financial statements and accordingly, do not include information and
disclosures required under accounting principles generally accepted in the United States of America (U.S. GAAP) for complete financial statements. All such adjustments are deemed to be of a normal recurring nature. These interim
financial statements should be read in conjunction with the Companys consolidated financial statements and notes included in Navios Acquisitions 2015 Annual Report filed on Form 20-F with the Securities and Exchange Commission
(SEC).
Revision of prior period financial statements
The Company has historically accounted for its investment in the common units of Navios Maritime Midstream Partners L.P. (Navios Midstream) as
available for sale securities, with the change in the market value of those securities recorded in other comprehensive income. The Company has reevaluated its accounting for those interests and concluded that they should be accounted for under the
equity method of accounting. Management evaluated the materiality of the error, quantitatively and qualitatively, and determined it was not material to any of our previously issued financial statements. Accordingly, the Company has revised its
previously reported results and related disclosures as of and for the three and nine month period ended September 30, 2015 to correct its accounting. The schedule below provides a summary of the impact of the adjustment on the Companys
consolidated financial statements as of and for the nine month period ended September 30, 2015 (amounts in thousands).
F-6
NAVIOS MARITIME ACQUISITION CORPORATION
UNAUDITED CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2015
|
|
|
|
As previously
reported
|
|
|
Correction
Adjustment
|
|
|
As Revised
|
|
Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in affiliates
|
|
|
185,470
|
|
|
|
18,641
|
|
|
|
204,111
|
|
Investment in available-for-sale securities
|
|
|
15,534
|
|
|
|
(15,534
|
)
|
|
|
|
|
Total non-current assets
|
|
|
1,544,319
|
|
|
|
3,107
|
|
|
|
1,547,426
|
|
Total assets
|
|
|
1,672,914
|
|
|
|
3,107
|
|
|
|
1,676,021
|
|
Other comprehensive (loss)
|
|
|
(3,107
|
)
|
|
|
3,107
|
|
|
|
|
|
Total stockholders equity
|
|
|
529,489
|
|
|
|
3,107
|
|
|
|
532,596
|
|
Total liabilities and stockholders equity
|
|
|
1,672,914
|
|
|
|
3,107
|
|
|
|
1,676,021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statements of Operations/ Statement of Comprehensive Income/ (loss)
(1)
For the Three
Months
Ended
September 30, 2015
(unaudited)
|
|
Unrealized holding (loss) on investments in available-for-sale-securities
|
|
|
(3,740
|
)
|
|
|
3,740
|
|
|
|
|
|
Other comprehensive (loss)
|
|
|
(3,740
|
)
|
|
|
3,740
|
|
|
|
|
|
Total comprehensive income
(1)
|
|
|
19,476
|
|
|
|
(19,476
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statements of Operations/ Statement of Comprehensive
Income
(1)
For the Nine
Months
Ended
September 30, 2015
(unaudited)
|
|
Unrealized holding income on investments in available-for-sale-securities
|
|
|
435
|
|
|
|
(435
|
)
|
|
|
|
|
Other comprehensive income
|
|
|
435
|
|
|
|
(435
|
)
|
|
|
|
|
Total comprehensive income
(1)
|
|
|
70,047
|
|
|
|
(70,047
|
)
|
|
|
|
|
(1)
|
The Company no longer presents Total Comprehensive Income consistent with ASC 220-10-15-3(a) because following the correction, it has no other comprehensive income to report.
|
The revision had an immaterial impact on previously reported amounts of operating, investing or financing cash flows, and had no impact on previously reported
amounts of basic or diluted earnings per share. No corrections have been made to previously reported net income or net income attributable to common stockholders because the impacts on these line items were determined to be inconsequential.
F-7
NAVIOS MARITIME ACQUISITION CORPORATION
UNAUDITED CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except share and per share data)
(b) Principles of consolidation:
The accompanying consolidated financial
statements include the accounts of Navios Acquisition, a Marshall Islands corporation, and its majority owned subsidiaries. All significant intercompany balances and transactions have been eliminated in the consolidated statements.
The Company also consolidates entities that are determined to be variable interest entities (VIEs) as defined in the accounting guidance, if it
determines that it is the primary beneficiary. A variable interest entity is defined as a legal entity where either (a) equity interest holders as a group lack the characteristics of a controlling financial interest, including decision making
ability and an interest in the entitys residual risks and rewards, or (b) the equity holders have not provided sufficient equity investment to permit the entity to finance its activities without additional subordinated financial support, or
(c) the voting rights of some investors are not proportional to their obligations to absorb the expected losses of the entity, their rights to receive the expected residual returns of the entity, or both and substantially all of the entitys
activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights.
(c) Equity method investments:
Affiliates are entities over which the Company generally has between 20% and 50% of the voting rights, or over which the Company has significant influence, but it does not exercise control. Investments in these entities are accounted for
under the equity method of accounting. Under this method, the Company records an investment in the stock of an affiliate at cost, and adjusts the carrying amount for its share of the earnings or losses of the affiliate subsequent to the date of
investment and reports the recognized earnings or losses in income. Dividends received from an affiliate reduce the carrying amount of the investment. The Company recognizes gains and losses in earnings for the issuance of shares by its affiliates,
provided that the issuance of such shares qualifies as a sale of such shares. When the Companys share of losses in an affiliate equals or exceeds its interest in the affiliate, the Company does not recognize further losses, unless the Company
has incurred obligations or made payments on behalf of the affiliate.
Navios Acquisition evaluates its equity method investments, for other than
temporary impairment, on a quarterly basis. Consideration is given to (1) the length of time and the extent to which the fair value has been less than the carrying value, (2) the financial condition and near-term prospects and (3) the intent and
ability of the Company to retain its investments for a period of time sufficient to allow for any anticipated recovery in fair value.
(d)
Subsidiaries:
Subsidiaries are those entities in which the Company has an interest of
more than one half of the voting rights and/or otherwise has power to govern the financial and operating policies. The acquisition method of accounting is used to account for the acquisition of subsidiaries if deemed to be a business combination.
The cost of an acquisition is measured as the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition. The excess of the cost of acquisition over the fair value of the net assets acquired and liabilities
assumed is recorded as goodwill.
As of September 30, 2016, and 2015 the entities included in these consolidated financial statements were:
|
|
|
|
|
|
|
|
|
Navios Maritime Acquisition Corporation
and
Subsidiaries:
|
|
Nature
|
|
Country of
Incorporation
|
|
2016
|
|
2015
|
Company Name
|
|
|
|
|
|
|
|
|
Aegean Sea Maritime Holdings Inc.
|
|
Sub-Holding Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Amorgos Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Andros Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Antikithira Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Antiparos Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Amindra Navigation Co.
|
|
Sub-Holding Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Crete Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Folegandros Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Ikaria Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Ios Shipping Corporation
|
|
Vessel-Owning Company
|
|
Cayman Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Kithira Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Kos Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Mytilene Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Navios Maritime Acquisition Corporation
|
|
Holding Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Navios Acquisition Finance (U.S.) Inc.
|
|
Co-Issuer
|
|
Delaware
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Rhodes Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Serifos Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Shinyo Dream Limited
|
|
Vessel-Owning Company
(3)
|
|
Hong Kong
|
|
|
|
1/1 - 6/17
|
F-8
NAVIOS MARITIME ACQUISITION CORPORATION
UNAUDITED CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except share and per share data)
|
|
|
|
|
|
|
|
|
Shinyo Loyalty Limited
|
|
Vessel-Owning Company
(1)
|
|
Hong Kong
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Shinyo Navigator Limited
|
|
Vessel-Owning Company
(2)
|
|
Hong Kong
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Sifnos Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Skiathos Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Skopelos Shipping Corporation
|
|
Vessel-Owning Company
|
|
Cayman Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Syros Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Thera Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Tinos Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Oinousses Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Psara Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Antipsara Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Samothrace Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Thasos Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Limnos Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Skyros Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Alonnisos Shipping Corporation
|
|
Vessel-Owning Company
(4)
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Makronisos Shipping Corporation
|
|
Vessel-Owning Company
(4)
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Iraklia Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Paxos Shipping Corporation
|
|
Vessel-Owning Company
(5)
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Antipaxos Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Donoussa Shipping Corporation
|
|
Vessel-Owning Company
(6)
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Schinousa Shipping Corporation
|
|
Vessel-Owning Company
(7)
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Navios Acquisition Europe Finance Inc
|
|
Sub-Holding Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Sikinos Shipping Corporation
|
|
Vessel-Owning Company
(3)
|
|
Marshall Is.
|
|
|
|
1/1 - 6/17
|
Kerkyra Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Lefkada Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Zakynthos Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Leros Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Kimolos Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Samos Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
Tilos Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
|
Delos Shipping Corporation
|
|
Vessel-Owning Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
|
Navios Maritime Midstream Partners GP LLC
|
|
Holding Company
|
|
Marshall Is.
|
|
1/1 - 9/30
|
|
1/1 - 9/30
|
(1)
|
Former vessel-owner of the Shinyo Splendor which was sold to an unaffiliated third party on May 6, 2014.
|
(2)
|
Former vessel-owner of the Shinyo Navigator which was sold to an unaffiliated third party on December 6, 2013.
|
(3)
|
Navios Midstream acquired all of the outstanding shares of capital stock of the vessel-owning subsidiary in June 2015.
|
(4)
|
Each company had the rights over a shipbuilding contract of an MR2 product tanker vessel. In February 2015, these shipbuilding contracts were terminated, with no exposure to Navios Acquisition, due to the
shipyards inability to issue a refund guarantee.
|
(5)
|
Former vessel-owner of the Nave Lucida which was sold to an unaffiliated third party on January 27, 2016.
|
(6)
|
Vessel has been classified as held for sale and was sold to unaffiliated third party on October 4, 2016
|
(7)
|
Vessel has been classified as held for sale and was sold to an unaffiliated third party on November 15, 2016.
|
(e)
Use of estimates:
The preparation of consolidated financial statements in conformity with U.S. GAAP
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the dates of the financial statements and the reported amounts of revenues
and expenses during the reporting periods. On an on-going basis, management evaluates the estimates and judgments, including those related to uncompleted voyages, future dry dock dates, the carrying value of investments in affiliates, the selection
of useful lives for tangible assets and scrap value, expected future cash flows from long-lived assets to support impairment tests, provisions necessary for accounts receivable, provisions for legal disputes and contingencies. Management bases its
estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results could differ from those estimates under different assumptions and/or conditions.
(f) Vessels, net
:
Vessels are stated at historical cost, which consists of the contract price, delivery and acquisition expenses and
capitalized interest costs while under construction. Vessels acquired in an asset acquisition or in a business combination are recorded at fair value. 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.
F-9
NAVIOS MARITIME ACQUISITION CORPORATION
UNAUDITED CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except share and per share data)
Depreciation is computed using the straight line method over the useful life of the vessels, after
considering the estimated residual value. Management estimates the residual values of our tanker vessels based on a scrap value of $360 per lightweight ton, as we believe these levels are common in the shipping industry. Residual values are
periodically reviewed and revised to recognize changes in conditions, new regulations or other reasons. Revisions of residual values affect the depreciable amount of the vessels and affect depreciation expense in the period of the revision and
future periods.
Management estimates the useful life of our vessels to be 25 years from the vessels 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.
(g) Vessels held for sale:
Vessels are classified as Vessels held for sale when all of the following criteria are met: management
has committed to a plan to sell the vessel; the vessel is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of vessels; an active program to locate a buyer and other actions required
to complete the plan to sell the vessel have been initiated; the sale of the vessel is probable and transfer of the vessel is expected to qualify for recognition as a completed sale within one year; the asset is being actively marketed for sale at a
price that is reasonable in relation to its current fair value and actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Vessels classified as held
for sale are measured at the lower of their carrying amount or fair value less cost to sell. These vessels are not depreciated once they meet the criteria to be held for sale.
(h) Impairment of long-lived asset group:
Vessels, other fixed assets and other long-lived assets held and used by Navios Acquisition 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. Navios Acquisitions 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 asset group (consisting of the individual vessel and the intangible with respect to
the time charter agreement to that vessel) and compared to the vessel carrying value and related carrying value of the intangible with respect to the time charter agreement attached to that vessel or the carrying value of deposits for new buildings,
if any. Within the shipping industry, vessels are often bought and sold with a charter attached. The value of the charter may be favorable or unfavorable when comparing the charter rate to the then current market rates. The loss recognized either on
impairment (or on disposition) will reflect the excess of carrying value over fair value (selling price) for the vessel individual asset group.
(i)
Revenue Recognition:
Revenue is recorded when services are rendered, under a signed charter agreement or other evidence of an arrangement, the price is fixed or determinable, and collection is reasonably assured. Revenue is generated
from the voyage charter and the 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, a vessel is provided for the transportation of specific goods between specific ports in return for payment of an agreed upon freight 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. A time charter involves placing a vessel at the charterers disposal for a period of time during which the charterer uses the vessel in return for the payment of a
specified daily hire rate. Under time charters, operating costs such as for crews, maintenance and insurance are typically paid by the owner of the vessel.
Profit sharing revenues are calculated at an agreed percentage of the excess of the charterers average daily income (calculated on a quarterly or
half-yearly basis) over an agreed amount and accounted for on an accrual basis based on provisional amounts and for those contracts that provisional accruals cannot be made due to the nature of the profit share elements, these are accounted for on
the actual cash settlement.
F-10
NAVIOS MARITIME ACQUISITION CORPORATION
UNAUDITED CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except share and per share data)
Revenues are recorded net of address commissions. Address commissions represent a discount provided directly
to the charterers based on a fixed percentage of the agreed upon charter or freight rate. Since address commissions represent a discount (sales incentive) on services rendered by the Company and no identifiable benefit is received in exchange for
the consideration provided to the charterer, these commissions are presented as a reduction of revenue.
Pooling arrangements:
For vessels
operating in pooling arrangements, the Company earns a portion of total revenues generated by the pool, net of expenses incurred by the pool. The amount allocated to each pool participant vessel, including the Companys vessels, is determined
in accordance with an agreed-upon formula, which is determined by points awarded to each vessel in the pool based on the vessels age, design and other performance characteristics. Revenue under pooling arrangements is accounted for on the
accrual basis and is recognized when an agreement with the pool exists, price is fixed, service is provided and the collectability is reasonably assured.
The allocation of such net revenue may be subject to future adjustments by the pool however, such changes are not expected to be material.
Recent Accounting Pronouncements
In November 2016, the
FASB issued Accounting Standards Update 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. This Update addresses the classification and presentation of changes in restricted cash on the statement of cash flows under Topic 230, Statement
of Cash Flows. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted for all entities. The Company is currently
assessing the impact that adopting this new accounting guidance will have on its consolidated financial statements.
In August 2016, the FASB issued
Accounting Standards Update No. 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (ASU 2016-15). This Update addresses eight specific cash flow issues with the objective of reducing
the existing diversity in practice. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted for all entities. The
Company is currently assessing the impact that adopting this new accounting guidance will have on its consolidated financial statements.
In March 2016,
the FASB issued Accounting Standards Update No. 2016-09, Compensation - Stock Compensation (Topic 718) (ASU 2016-09). ASU 2016-09 simplifies several aspects of accounting for stock based compensation including the tax
consequences, classification of awards as equity or liabilities, forfeitures and classification on the statement of cash flows. The ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal
years. Early application is permitted. The Company is currently assessing the impact that adopting this new accounting guidance will have on its consolidated financial statements and footnotes disclosures.
In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02). ASU 2016-02 will apply to
both types of leases capital (or finance) leases and operating leases. According to the new Accounting Standard, lessees will be required to recognize assets and liabilities on the balance sheet for the rights and obligations created by all
leases with terms of more than 12 months. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. The Company is currently assessing the impact
that adopting this new accounting guidance will have on its consolidated financial statements and footnotes disclosures.
In August 2014, the FASB issued
ASU No. 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties About an Entitys Ability to Continue as a Going Concern. This standard requires management to assess an
entitys ability to continue as a going concern, and to provide related footnote disclosures in certain circumstances. Before this new standard, no accounting guidance existed for management on when and how to assess or disclose going concern
uncertainties. The amendments are effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early application is permitted. The adoption of the new standard is not
expected to have a material impact on the Companys results of operations, financial position or cash flows.
In May 2014, the FASB issued ASU
2014-09 Revenue from Contracts with Customers clarifying the method used to determine the timing and requirements for revenue recognition on the statements of income. Under the new standard, an entity must identify the performance
obligations in a contract, the transaction price and allocate the price to specific performance obligations to recognize the revenue when the obligation is completed. The amendments in this update also require disclosure of sufficient information to
allow users to understand the nature, amount, timing and uncertainty of revenue and cash flow arising from contracts. The new accounting guidance was originally effective for interim and annual periods beginning after December 15, 2016. On July 9,
2015, the FASB finalized a one-year deferral of the effective date for the new revenue standard. The standard will be effective for public entities for annual reporting periods beginning after December 15, 2017 and interim periods therein. The
Company is currently reviewing the effect of ASU No. 2014-09 on its revenue recognition.
F-11
NAVIOS MARITIME ACQUISITION CORPORATION
UNAUDITED CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except share and per share data)
NOTE 3: CASH AND CASH EQUIVALENTS
Cash and cash equivalents consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
September 30, 2016
|
|
|
December 31, 2015
|
|
Cash on hand and at banks
|
|
$
|
30,428
|
|
|
$
|
51,831
|
|
Short-term deposits
|
|
|
12,808
|
|
|
|
2,974
|
|
|
|
|
|
|
|
|
|
|
Total cash and cash equivalents
|
|
$
|
43,236
|
|
|
$
|
54,805
|
|
|
|
|
|
|
|
|
|
|
Short-term deposits relate to time deposit accounts held in banks for general purposes.
Cash deposits and cash equivalents in excess of amounts covered by government-provided insurance are exposed to loss in the event of non-performance by
financial institutions. The Company does maintain cash deposits and equivalents in excess of government-provided insurance limits. The Company also minimizes exposure to credit risk by dealing with a diversified group of major financial
institutions.
Restricted cash consists of an amount of $5,812 and $6,840 as of September 30, 2016 and as of December 31, 2015, respectively, which are
held in retention accounts in order to service debt and interest payments, as required by certain of Navios Acquisitions credit facilities.
NOTE
4: VESSELS, NET
|
|
|
|
|
|
|
|
|
|
|
|
|
Vessels
|
|
Cost
|
|
|
Accumulated
Depreciation
|
|
|
Net Book
Value
|
|
Balance at January 1, 2015
|
|
$
|
1,487,606
|
|
|
$
|
(111,675
|
)
|
|
$
|
1,375,931
|
|
Additions
|
|
|
207,000
|
|
|
|
(57,164
|
)
|
|
|
149,836
|
|
Disposals
|
|
|
(104,274
|
)
|
|
|
20,142
|
|
|
|
(84,132
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2015
|
|
$
|
1,590,332
|
|
|
$
|
(148,697
|
)
|
|
$
|
1,441,635
|
|
Additions
|
|
|
|
|
|
|
(43,397
|
)
|
|
|
(43,397
|
)
|
Disposals
|
|
|
(16,817
|
)
|
|
|
1,794
|
|
|
|
(15,023
|
)
|
Transferred to Vessels held for sale (Note 6)
|
|
|
(68,502
|
)
|
|
|
6,430
|
|
|
|
(62,072
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2016
|
|
$
|
1,505,013
|
|
|
$
|
(183,870
|
)
|
|
$
|
1,321,143
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On January 27, 2016, Navios Acquisition sold the Nave Lucida to an unaffiliated third party for net cash proceeds of $18,449.
The gain on sale of the vessel was $2,282.
On June 18, 2015, Navios Midstream exercised its option to acquire the shares of the vessel-owning
subsidiaries of the Nave Celeste and the C. Dream from Navios Acquisition for a sale price of $100,000. The sale price consisted of $73,000 cash consideration and the issuance of 1,592,920 Subordinated Series A Units to Navios Acquisition. The
gain on sale of vessels amounted to $5,771.
On February 11, 2015, Navios Acquisition took delivery of the Nave Velocity, a newbuilding, 49,999 dwt,
MR2 product tanker, from an unaffiliated third party for a total cost of $39,233.
F-12
NAVIOS MARITIME ACQUISITION CORPORATION
UNAUDITED CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except share and per share data)
On January 8, 2015, Navios Acquisition took delivery of the Nave Sextans, a newbuilding, 49,999 dwt, MR2
product tanker, from an unaffiliated third party for a total cost of $33,373.
For the nine month periods ended September 30, 2016 and 2015, capitalized
interest amounted to $0 and $104, respectively. For each of the three month periods ended September 30, 2016 and 2015, capitalized interest amounted to $0.
NOTE 5: GOODWILL
Goodwill as of September 30, 2016
and December 31, 2015 consisted of the following:
|
|
|
|
|
Balance January 1, 2015
|
|
$
|
1,579
|
|
|
|
|
|
|
Balance December 31, 2015
|
|
|
1,579
|
|
|
|
|
|
|
Balance September 30, 2016
|
|
$
|
1,579
|
|
|
|
|
|
|
NOTE 6: VESSELS HELD FOR SALE
During April 2016, Navios Acquisition entered into two separate Memoranda of Agreement (MOA) with an unaffiliated third party, for the disposal of
the Nave Constellation, a 2013-built chemical tanker of 45,281 dwt, and the Nave Universe, a 2013-built chemical tanker of 45,513 dwt, for an aggregate sale price of $74,600. Both vessels are subject to an existing time charter and management
committed to a plan to sell the vessels within the next twelve months. As of June 30, 2016, the vessels were classified as held for sale as the relevant criteria for the classification were met and, therefore, they are presented in the condensed
consolidated balance sheets as held for sale. The sale of the vessels is expected to result in a gain and therefore, the vessels are reflected at their carrying value of $62,072. Proceeds from the sale of the vessels will be used to fully repay the
outstanding amount of the HSH Nordbank AG credit facility (See Note 10).
NOTE 7: INVESTMENT IN AFFILIATES
Navios Europe I
On October 9, 2013, Navios
Holdings, Navios Acquisition and Navios Maritime Partners L.P. (Navios Partners) established Navios Europe Inc. (Navios Europe I) and have ownership interests of 47.5%, 47.5% and 5.0%, respectively. On December 18, 2013,
Navios Europe I acquired ten vessels for an aggregate consideration consisting of: (i) cash which was funded with the proceeds of senior loan facility (the Senior Loan I) and loans aggregating $10,000 from Navios Holdings, Navios
Acquisition and Navios Partners (in each case, in proportion to their ownership interests in Navios Europe I) (collectively, the Navios Term Loans I); and (ii) the assumption of a junior participating loan facility (the Junior Loan
I). In addition to the Navios Term Loans I, Navios Holdings, Navios Acquisition and Navios Partners will also make available to Navios Europe I (in each case, in proportion to their ownership interests in Navios Europe I) revolving loans up to
$24,100 to fund working capital requirements (collectively, the Navios Revolving Loans I).
On an ongoing basis, Navios Europe I is required
to distribute cash flows (after payment of operating expenses, amounts due pursuant to the terms of the Senior Loan I and repayments of the Navios Revolving Loans I) according to a defined waterfall calculation as follows:
|
|
First, Navios Holdings, Navios Acquisition and Navios Partners will each earn a 12.7% preferred distribution on the Navios Term Loans I and the Navios Revolving Loans I; and
|
|
|
Second, any remaining cash is then distributed on an 80%/20% basis, respectively, between (i) the Junior Loan I holder and (ii) the holders of the Navios Term Loans I.
|
The Navios Term Loan I will be repaid from the future sale of vessels owned by Navios Europe I and is deemed to be the initial investment by Navios
Acquisition. Navios Acquisition evaluated its investment in Navios Europe I under ASC 810 and concluded that Navios Europe I is a VIE and that the Company is not the party most closely associated with Navios Europe I and,
accordingly, is not the primary beneficiary of Navios Europe I based on the following:
|
|
the power to direct the activities that most significantly impact the economic performance of Navios Europe I are shared jointly between: (i) Navios Holdings, Navios Acquisition and Navios Partners; and (ii) and the
Junior Loan I holder; and
|
|
|
while Navios Europe Is residual is shared on an 80%/20% basis, respectively, between (i) the Junior Loan I holder and (ii) Navios Holdings, Navios Acquisition and Navios Partners, the Junior Loan I holder is
exposed to a substantial portion of Navios Europe Is risks and rewards.
|
F-13
NAVIOS MARITIME ACQUISITION CORPORATION
UNAUDITED CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except share and per share data)
Navios Acquisition further evaluated its investment in the common stock of Navios Europe I under ASC 323 and
concluded that it has the ability to exercise significant influence over the operating and financial policies of Navios Europe I and, therefore, its investment in Navios Europe I is accounted for under the equity method.
The fleet of Navios Europe I is managed by subsidiaries of Navios Holdings.
As of September 30, 2016 and December 31, 2015, the estimated maximum potential loss by Navios Acquisition in Navios Europe I would have been $17,648 and
$15,764, respectively, which represents the Companys carrying value of its investment of $5,884 (December 31, 2015: $5,498) the Companys portion of the carrying balance of the Navios Revolving Loans I including accrued interest on the
Navios Term Loans I of $9,136 (December 31, 2015: $8,523), which is included under Due from related parties, long-term and the accrued interest income on the Navios Revolving Loans I in the amount of $2,628 (December 31, 2015: $1,743)
which is included under Due from related parties, short-term. Refer to Note 12 for the terms of the Navios Revolving Loans I.
Income
recognized for the three month period ended September 30, 2016 was $119 (September 30, 2015: $221). Income recognized for the nine month period ended September 30, 2016 was $387 (September 30, 2015: $430).
Accounting for basis difference
The initial
investment in Navios Europe I recorded under the equity method of $4,750, at the inception included the Companys share of the basis difference between the fair value and the underlying book value of the assets of Navios Europe I, which
amounted to $6,763. This difference is amortized through Equity in net earnings of affiliated companies over the remaining life of Navios Europe I. As of September 30, 2016 and December 31, 2015, the unamortized difference between the
carrying amount of the investment in Navios Europe I and the amount of the Companys underlying equity in net assets of Navios Europe I was $4,879, and $5,386, respectively.
Navios Europe II
On February 18, 2015, Navios
Holdings, Navios Acquisition and Navios Partners established Navios Europe (II) Inc. (Navios Europe II) and have ownership interests of 47.5%, 47.5% and 5.0%, respectively. From June 8, 2015 through December 31, 2015, Navios Europe II
acquired fourteen vessels for: (i) cash consideration of $145,550 (which was funded with the proceeds of $131,550 of senior loan facilities (the Senior Loans II) and loans aggregating $14,000 from Navios Holdings, Navios Acquisition and
Navios Partners (in each case, in proportion to their ownership interests in Navios Europe II) (collectively, the Navios Term Loans II); and (ii) the assumption of a junior participating loan facility (the Junior Loan II). In
addition to the Navios Term Loans II, Navios Holdings, Navios Acquisition and Navios Partners will also make available to Navios Europe II (in each case, in proportion to their ownership interests in Navios Europe II) revolving loans up to $38,500
to fund working capital requirements (collectively, the Navios Revolving Loans II).
On an ongoing basis, Navios Europe II is required to
distribute cash flows (after payment of operating expenses, amounts due pursuant to the terms of the Senior Loans and repayments of the Navios Revolving Loans II) according to a defined waterfall calculation as follows:
|
|
First, Navios Holdings, Navios Acquisition and Navios Partners will each earn a 18.0% preferred distribution on the Navios Term Loans II and the Navios Revolving Loans II; and
|
|
|
Second, any remaining cash is then distributed on an 80%/20% basis, respectively, between (i) the Junior Loan II holder and (ii) the holders of the Navios Term Loans II.
|
The Navios Term Loan II will be repaid from the future sale of vessels owned by Navios Europe II and is deemed to be the initial investment by Navios
Acquisition. Navios Acquisition evaluated its investment in Navios Europe II under ASC 810 and concluded that Navios Europe II is a VIE and that the Company is not the party most closely associated with Navios Europe II and, accordingly,
is not the primary beneficiary of Navios Europe II based on the following:
|
|
the power to direct the activities that most significantly impact the economic performance of Navios Europe II are shared jointly between: (i) Navios Holdings, Navios Acquisition and Navios Partners; and (ii) the Junior
Loan holder II; and
|
|
|
while Navios Europe IIs residual is shared on an 80%/20% basis, respectively, between: (i) the Junior Loan holder II; and (ii) Navios Holdings, Navios Acquisition and Navios Partners, the Junior Loan II holder is
exposed to a substantial portion of Navios Europe IIs risks and rewards.
|
F-14
NAVIOS MARITIME ACQUISITION CORPORATION
UNAUDITED CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except share and per share data)
Navios Acquisition further evaluated its investment in the common stock of Navios Europe II under ASC 323 and
concluded that it has the ability to exercise significant influence over the operating and financial policies of Navios Europe II and, therefore, its investment in Navios Europe II is accounted for under the equity method.
The fleet of Navios Europe II is managed by subsidiaries of Navios Holdings.
As of September 30, 2016, the estimated maximum potential loss by Navios Acquisition in Navios Europe II would have been $21,580 (December 31, 2015: $15,867),
which represents the Companys carrying value of the investment of $6,200 (December 31, 2015: $7,342), the Companys balance of the Navios Revolving Loans II including accrued interest on the Navios Term Loans II of $13,270 (December 31,
2015: $7,952), which is included under Due from related parties, long-term, and the accrued interest income on the Navios Revolving Loans II in the amount of $2,110 (December 31, 2015: $573), which is included under Due from
related parties, short-term. Refer to Note 12 for the terms of the Navios Revolving Loans II.
Loss recognized for the three month period ended
September 30, 2016 was $472. Loss recognized for the nine month period ended September 30, 2016 was $1,142. Income recognized for the three and nine month periods ended September 30, 2015 was $239.
Accounting for basis difference
The initial
investment in Navios Europe II recorded under the equity method of $6,650, at the inception included the Companys share of the basis difference between the fair value and the underlying book value of the assets of Navios Europe II, which
amounted to $9,419. This difference is amortized through Equity in net earnings of affiliated companies over the remaining life of Navios Europe II. As of September 30, 2016, and December 31, 2015 the unamortized difference between
the carrying amount of the investment in Navios Europe II and the amount of the Companys underlying equity in net assets of Navios Europe II was $8,189 and $8,895, respectively.
Navios Midstream (Revised)
On October 13, 2014,
the Company formed in the Marshall Islands a wholly-owned subsidiary, Navios Midstream. The purpose of Navios Midstream is to own, operate and acquire crude oil tankers, refined petroleum product tankers, chemical tankers and liquefied petroleum gas
tankers under long-term employment contracts.
On the same day, the Company formed in the Marshall Islands a limited liability company, Navios Maritime
Midstream Partners GP LLC (the Navios Midstream General Partner) a wholly-owned subsidiary to act as the general partner of Navios Midstream.
Navios Midstream completed an IPO of its units on November 18, 2014 and is listed on the NYSE under the symbol NAP.
In connection with the IPO of Navios Midstream in November 2014, Navios Acquisition sold all of the outstanding shares of capital stock of four of Navios
Acquisitions vessel-owning subsidiaries (Shinyo Ocean Limited, Shinyo Kannika Limited, Shinyo Kieran Limited and Shinyo Saowalak Limited) in exchange for: (i) all of the estimated net cash proceeds from the IPO amounting to $110,403; (ii)
$104,451 of the $126,000 borrowings under Navios Midstreams new credit facility; (iii) 9,342,692 subordinated units and 1,242,692 common units; and (iv) 381,334 general partner units, representing a 2.0% general partner interest in Navios
Midstream, and all of the incentive distribution rights in Navios Midstream to the Navios Midstream General Partner.
F-15
NAVIOS MARITIME ACQUISITION CORPORATION
UNAUDITED CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except share and per share data)
The Company evaluated its investment in Navios Midstream under ASC 810 and concluded that Navios Midstream is
not a VIE.
The Company further evaluated the power to control the board of directors of Navios Midstream under the voting interest model. As
of the IPO date, Navios Acquisition, as the general partner, delegated all its powers to the board of directors of Navios Midstream and does not have the right to remove or replace the elected directors from the board of directors. Elected directors
were appointed by the general partner, but as of the IPO date are deemed to be elected directors. The elected directors represent the majority of the
board of directors of Midstream and therefore, the Company concluded that it does not hold a controlling financial interest in Navios Midstream but concluded
that it does maintain significant influence and deconsolidated the vessels sold as of the IPO date.
Following the deconsolidation of Navios Midstream,
the Company accounts for all of its interest in the general partner and in each of the common and subordinated units under the equity method of accounting.
In connection with the sale of Nave Celeste and the C. Dream to Navios Midstream in June 2015, Navios Acquisition received 1,592,920 Subordinated Series A
Units of Navios Midstream, as part of the sales price. In conjunction with the transaction, Navios Midstream also issued 32,509 general partner units to the General Partner for $551, in order for the General Partner to maintain its 2.0% general
partnership interest. The Company analyzed its investment in the subordinated Series A units and concluded that this is to be accounted for under the equity method on the basis that the Company has significant influence over Navios Midstream. The
Companys investment in the subordinated Series A units was fair valued at $17.02 per unit, in total $27,111 on the date of the sale of the vessels to Navios Midstream.
On July 29, 2016, Navios Midstream launched a continuous public offering of its common units for an aggregate offering of up to $25,000.
On September 30, 2016, Navios Acquisition entered into a securities purchase agreement with Navios Midstream pursuant to which Navios Acquisition made an
investment in Navios Midstream by purchasing 5,655 general partnership interests for an aggregate consideration of $75, in order to maintain its 2.0% partnership interest in Navios Midstream in light of such continuous public offering.
The Company determined, under the equity method, that the issuance of common units of Navios Midstream qualified as a sale of shares by the investee. As a
result, a loss of $254 was recognized in Equity in net earnings of affiliated companies for the three and nine month periods ended September 30, 2016.
Following the above transactions, as of September 30, 2016 the Company owned a 2.0% general partner interest in Navios Midstream through the Navios Midstream
General Partner and a 58.06% limited partnership interest through the ownership of subordinated units (44.54%), the subordinated series A units (7.59%) and through common units (5.92%), based on all of the outstanding common, subordinated and
general partner units.
As of September 30, 2016 and December 31, 2015, the carrying amount of the investment in Navios Midstream was $186,887 and
$191,968, respectively.
Accounting for basis difference
The initial investment in Navios Midstream following the completion of the IPO recorded under the equity method of $183,141, as of the deconsolidation date
included the Companys share of the basis difference between the fair value and the underlying book value of Navios Midstreams assets, which amounted to $20,169. Of this difference, an amount of $(332) was allocated on the intangibles
assets and $20,501 was allocated on the tangible assets. This difference is amortized through Equity in net earnings of affiliated companies over the remaining life of Navios Midstreams tangible and intangible assets.
In connection with the sale of the Nave Celeste and the C. Dream, the Company recognized its incremental investment upon the receipt of the Subordinated
series A units in Navios Midstream, which amounted to $27,665 under Investment in affiliates. The investment was recognized at fair value at $17.02 per unit. The incremental investment included the Companys share of the basis
difference between the fair value and the underlying book value of Navios Midstreams assets at the transaction date, which amounted to $2,554. Of this difference an amount of $(72) was allocated to the intangible assets and $2,626 was
allocated to the tangible assets. This difference is amortized through Equity in net earnings of affiliated companies over the remaining life of Navios Midstreams tangible and intangible assets.
F-16
NAVIOS MARITIME ACQUISITION CORPORATION
UNAUDITED CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except share and per share data)
As of September 30, 2016 and December 31, 2015, the unamortized difference between the carrying amount of the
investment in Navios Midstream and the amount of the Companys underlying equity in net assets of Navios Midstream was $21,506 and $22,120, respectively. This difference is amortized through Equity in net earnings of affiliated
companies over the remaining life of Navios Midstreams tangible and intangible assets.
For the three month periods ended September 30, 2016
and 2015, total income from Navios Midstream recognized in Equity in net earnings of affiliated companies was $2,969 and $3,898, respectively. For the nine month periods ended September 30, 2016 and 2015, total income from the Navios
Midstream recognized in Equity in net earnings of affiliated companies was $10,915 and $10,393, respectively.
Dividends received during the
three month period ended September 30, 2016 were $5,320 ($5,194 for the three month period ended September 30, 2015). Dividends received during the nine month period ended September 30, 2016 were $15,960 ($11,882 for the nine month period ended
September 30, 2015).
Summarized financial information of the affiliated companies is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2016
|
|
|
December 31, 2015
|
|
Balance Sheet
|
|
Navios
Midstream
|
|
|
Navios
Europe I
|
|
|
Navios
Europe II
|
|
|
Navios
Midstream
|
|
|
Navios
Europe I
|
|
|
Navios
Europe II
|
|
Cash and cash equivalents, including restricted cash
|
|
$
|
49,228
|
|
|
$
|
10,161
|
|
|
$
|
16,851
|
|
|
$
|
37,834
|
|
|
$
|
11,839
|
|
|
$
|
17,366
|
|
Current assets
|
|
$
|
56,412
|
|
|
$
|
15,015
|
|
|
$
|
19,350
|
|
|
$
|
45,860
|
|
|
$
|
14,782
|
|
|
$
|
22,539
|
|
Non-current assets
|
|
$
|
421,852
|
|
|
$
|
172,361
|
|
|
$
|
236,241
|
|
|
$
|
434,708
|
|
|
$
|
179,023
|
|
|
$
|
245,154
|
|
Current liabilities
|
|
$
|
6,218
|
|
|
$
|
16,862
|
|
|
$
|
20,468
|
|
|
$
|
4,078
|
|
|
$
|
15,377
|
|
|
$
|
16,897
|
|
Long-term debt including current portion, net of deferred finance cost and discount
|
|
$
|
197,336
|
|
|
$
|
88,695
|
|
|
$
|
121,726
|
|
|
$
|
197,819
|
|
|
$
|
96,580
|
|
|
$
|
129,185
|
|
Financial liabilities at fair value*
|
|
$
|
|
|
|
$
|
70,898
|
|
|
$
|
14,550
|
|
|
$
|
|
|
|
$
|
68,535
|
|
|
$
|
23,568
|
|
Non-current liabilities
|
|
$
|
196,678
|
|
|
$
|
178,256
|
|
|
$
|
168,216
|
|
|
$
|
197,176
|
|
|
$
|
182,537
|
|
|
$
|
173,543
|
|
(*)
|
representing the fair value of Junior Loan I and Junior Loan II, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Month Period Ended
September 30, 2016
|
|
|
Three Month Period Ended
September 30, 2015
|
|
Income Statement
|
|
Navios
Midstream
|
|
|
Navios Europe I
|
|
|
Navios Europe II
|
|
|
Navios
Midstream
|
|
|
Navios Europe I
|
|
|
Navios Europe II
|
|
Revenue
|
|
$
|
22,209
|
|
|
$
|
9,946
|
|
|
$
|
7,617
|
|
|
$
|
22,473
|
|
|
$
|
11,051
|
|
|
$
|
9,387
|
|
Net (loss)/income before non-cash change in fair value of Junior Loan
|
|
$
|
|
|
|
$
|
(530
|
)
|
|
$
|
(7,450
|
)
|
|
$
|
|
|
|
$
|
542
|
|
|
$
|
1,492
|
|
Net income/(loss)
|
|
$
|
5,457
|
|
|
$
|
(498
|
)
|
|
$
|
(3,223
|
)
|
|
$
|
6,232
|
|
|
$
|
(740
|
)
|
|
$
|
5,619
|
|
|
|
Nine Month Period Ended
September 30, 2016
|
|
|
Nine Month Period Ended
September 30, 2015
|
|
Income Statement
|
|
Navios
Midstream
|
|
|
Navios Europe I
|
|
|
Navios Europe II
|
|
|
Navios
Midstream
|
|
|
Navios Europe I
|
|
|
Navios Europe II
|
|
Revenue
|
|
$
|
69,053
|
|
|
$
|
30,475
|
|
|
$
|
22,343
|
|
|
$
|
57,526
|
|
|
$
|
30,911
|
|
|
$
|
10,381
|
|
Net (loss)/income before non-cash change in fair value of Junior Loan
|
|
$
|
|
|
|
$
|
(1,270
|
)
|
|
$
|
(19,364
|
)
|
|
$
|
|
|
|
$
|
(813
|
)
|
|
$
|
1,906
|
|
Net income/(loss)
|
|
$
|
18,841
|
|
|
$
|
(3,633
|
)
|
|
$
|
(10,346
|
)
|
|
$
|
17,938
|
|
|
$
|
(5,540
|
)
|
|
$
|
6,033
|
|
NOTE 8: DIVIDEND PAYABLE
On February 4, 2016, the Board of Directors declared a quarterly cash dividend in respect of the fourth quarter of 2015 of $0.05 per share of common stock
payable on March 23, 2016 to stockholders of record as of March 17, 2016. A dividend in the aggregate amount of $7,928 was paid on March 23, 2016 out of which $7,544 was paid to the stockholders of record as of March 17, 2016 and $384 was paid to
Navios Holdings, the holder of the 1,000 shares of Series C Preferred Stock.
F-17
NAVIOS MARITIME ACQUISITION CORPORATION
UNAUDITED CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except share and per share data)
On May 11, 2016, the Board of Directors declared a quarterly cash dividend in respect of the first
quarter of 2016 of $0.05 per share of common stock payable on June 22, 2016 to stockholders of record as of June 17, 2016. A dividend in the aggregate amount of $7,923 was paid on June 22, 2016 out of which $7,539 was paid to the
stockholders of record as of June 17, 2016 and $384 was paid to Navios Holdings, the holder of the 1,000 shares of Series C Preferred Stock.
On
August 10, 2016, the Board of Directors declared a quarterly cash dividend in respect of the second quarter of 2016 of $0.05 per share of common stock payable on September 21, 2016 to stockholders of record as of September 14, 2016. A
dividend in the aggregate amount of $7,918 was paid on September 21, 2016 out of which $7,534 was paid to the stockholders of record as of September 14, 2016 and $384 was paid to Navios Holdings, the holder of the 1,000 shares of Series C Preferred
Stock.
The declaration and payment of any further dividends remain subject to the discretion of the Board of Directors and will depend on, among other
things, Navios Acquisitions cash requirements as measured by market opportunities and restrictions under its credit agreements and other debt obligations and such other factors as the Board of Directors may deem advisable.
NOTE 9: ACCRUED EXPENSES
Accrued expenses as of
September 30, 2016 and December 31, 2015 consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
|
December 31,
2015
|
|
Accrued voyage expenses
|
|
$
|
618
|
|
|
$
|
485
|
|
Accrued loan interest
|
|
|
22,668
|
|
|
|
9,026
|
|
Accrued legal and professional fees
|
|
|
444
|
|
|
|
291
|
|
|
|
|
|
|
|
|
|
|
Total accrued expenses
|
|
$
|
23,730
|
|
|
$
|
9,802
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2016, the amount of $2,750, that was authorized and approved by the Compensation committee of Navios
Acquisition in December 2015 subject to fulfillment of certain service conditions that were provided and completed during the second quarter of 2016, was included in accrued legal and professional fees. As of September 30, 2016, an accrued
amount of $220 is included in accrued legal and professional fees as an amount of $2,530 was paid during the third quarter of 2016. The amount has been recorded in general and administrative expenses on the statements of income for the three and the
nine month periods ended September 30, 2016.
NOTE 10: BORROWINGS
|
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
|
December 31,
2015
|
|
Commerzbank AG, Alpha Bank AE, Credit Agricole Corporate and Investment Bank
|
|
$
|
111,750
|
|
|
$
|
119,250
|
|
BNP Paribas S.A. and DVB Bank S.E.
|
|
|
61,500
|
|
|
|
65,250
|
|
Eurobank Ergasias S.A. $52,200
|
|
|
38,979
|
|
|
|
41,025
|
|
Eurobank Ergasias S.A. $52,000
|
|
|
36,714
|
|
|
|
38,550
|
|
Norddeutsche Landesbank Girozentrale
|
|
|
25,781
|
|
|
|
26,953
|
|
DVB Bank S.E. and Credit Agricole Corporate and Investment Bank
|
|
|
49,609
|
|
|
|
51,953
|
|
Ship Mortgage Notes $670,000
|
|
|
670,000
|
|
|
|
670,000
|
|
Deutsche Bank AG Filiale Deutschlandgeschäft and Skandinaviska Enskilda Banken AB
|
|
|
101,437
|
|
|
|
125,000
|
|
HSH Nordbank AG $40,300
|
|
|
32,744
|
|
|
|
34,633
|
|
BNP Paribas $44,000
|
|
|
42,000
|
|
|
|
44,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,170,514
|
|
|
|
1,216,614
|
|
Less: Deferred finance cost, net
|
|
|
(17,789
|
)
|
|
|
(20,640
|
)
|
Add: bond premium
|
|
|
1,448
|
|
|
|
1,609
|
|
|
|
|
|
|
|
|
|
|
Total borrowings
|
|
$
|
1,154,173
|
|
|
$
|
1,197,583
|
|
|
|
|
|
|
|
|
|
|
Less: current portion, net of deferred finance cost
|
|
|
(74,158
|
)
|
|
|
(62,643
|
)
|
|
|
|
|
|
|
|
|
|
Total long-term borrowings, net of current portion, bond premium and deferred finance
cost
|
|
$
|
1,080,015
|
|
|
$
|
1,134,940
|
|
|
|
|
|
|
|
|
|
|
F-18
NAVIOS MARITIME ACQUISITION CORPORATION
UNAUDITED CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except share and per share data)
Long-Term Debt Obligations and Credit Arrangements
Ship Mortgage Notes:
8 1/8% First Priority Ship
Mortgages:
On November 13, 2013, the Company and its wholly owned subsidiary, Navios Acquisition Finance (US) Inc. (Navios Acquisition Finance and together with the Company, the 2021 Co-Issuers) issued $610,000 in first
priority ship mortgage notes (the Existing Notes) due on November 15, 2021 at a fixed rate of 8.125%.
On March 31, 2014, the Company
completed a sale of $60,000 of its first priority ship mortgage notes due in 2021 (the Additional Notes, and together with the Existing Notes, the 2021 Notes). The terms of the Additional Notes are identical to the Existing
Notes and were issued at 103.25% plus accrued interest from November 13, 2013.
The 2021 Notes are fully and unconditionally guaranteed on a joint and
several basis by all of Navios Acquisitions subsidiaries with the exception of Navios Acquisition Finance (a co-issuer of the 2021 Notes).
The 2021
Co-Issuers have the option to redeem the 2021 Notes in whole or in part, at any time: (i) before November 15, 2016, at a redemption price equal to 100% of the principal amount, plus a make-whole premium, plus accrued and unpaid interest, if any; and
(ii) on or after November 15, 2016, at a fixed price of 106.094% of the principal amount, which price declines ratably until it reaches par in 2019, plus accrued and unpaid interest, if any.
At any time before November 15, 2016, the 2021 Co-Issuers may redeem up to 35% of the aggregate principal amount of the 2021 Notes with the net proceeds of an
equity offering at 108.125% of the principal amount of the 2021 Notes, plus accrued and unpaid interest, if any, so long as at least 65% of the aggregate principal amount of the Existing Notes remains outstanding after such redemption.
In addition, upon the occurrence of certain change of control events, the holders of the 2021 Notes will have the right to require the 2021 Co-Issuers to
repurchase some or all of the 2021 Notes at 101% of their face amount, plus accrued and unpaid interest to the repurchase date.
The 2021 Notes contain
covenants which, among other things, limit the incurrence of additional indebtedness, issuance of certain preferred stock, the payment of dividends, redemption or repurchase of capital stock or making restricted payments and investments, creation of
certain liens, transfer or sale of assets, entering in transactions with affiliates, merging or consolidating or selling all or substantially all of the 2021 Co-Issuers properties and assets and creation or designation of restricted
subsidiaries. The 2021 Co-Issuers were in compliance with the covenants as of September 30, 2016.
The Existing Notes and the Additional Notes are treated
as a single class for all purposes under the indenture including, without limitation, waivers, amendments, redemptions and other offers to purchase and the Additional Notes rank evenly with the Existing Notes. The Additional Notes and the Existing
Notes have the same CUSIP number.
Guarantees
The
Companys 2021 Notes are fully and unconditionally guaranteed on a joint and several basis by all of the Companys subsidiaries with the exception of Navios Acquisition Finance (a co-issuer of the 2021 notes). The Companys 2021 Notes
are unregistered. The guarantees of our subsidiaries that own mortgaged vessels are senior secured guarantees and the guarantees of our subsidiaries that do not own mortgaged vessels are senior unsecured guarantees. All subsidiaries, including
Navios Acquisition Finance, are 100% owned. Navios Acquisition does not have any independent assets or operations. Except as provided above, Navios Acquisition does not have any subsidiaries that are not guarantors of the 2021 Notes.
F-19
NAVIOS MARITIME ACQUISITION CORPORATION
UNAUDITED CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except share and per share data)
Credit Facilities
As of September 30, 2016, the Company had secured credit facilities with various banks with a total outstanding balance of $500,514. The purpose of the
facilities was to finance the construction or acquisition of vessels or refinance existing indebtedness. All of the facilities are denominated in U.S. Dollars and bear interest based on LIBOR plus spread ranging from 250 bps to 320 bps per annum.
The facilities are repayable in either semi-annual or quarterly installments, followed by balloon payments with maturities, ranging from October 2016 to October 2022. See also the maturity table included below.
Deutsche Bank AG Filiale Deutschlandgeschäft and Skandinaviska Enskilda Banken AB
: On January 27, 2016, Navios Acquisition sold the Nave Lucida to
an unaffiliated third party for net cash proceeds of $18,449. Navios Acquisition prepaid $12,097 being the respective tranche of the Deutsche Bank AG Filiale Deutschlandgeschäft and Skandinaviska Enskilda Banken AB facility that was drawn to
finance the Nave Lucida. Following the prepayment in January 2016, an amount of $214, was written-off from the deferred financing cost. As of September 30, 2016, $101,437 was outstanding under this facility.
As of September 30, 2016, no amount was available to be drawn from our facilities.
The loan facilities include, among other things, compliance with loan to value ratios and certain financial covenants: (i) minimum liquidity higher of $40,000
or $1,000 per vessel; (ii) net worth ranging from $50,000 to $135,000; and (iii) total liabilities divided by total assets, adjusted for market values to be lower than 75%. It is an event of default under the credit facilities if such covenants are
not complied with, including the loan to value ratios for which the Company may provide sufficient additional security to prevent such an event.
As of
September 30, 2016, the Company was in compliance with its covenants.
Amounts drawn under the facilities are secured by first preferred mortgages on
Navios Acquisitions vessels and other collateral and are guaranteed by each vessel-owning subsidiary. The credit facilities contain a number of restrictive covenants that prohibit or limit Navios Acquisition from, among other things:
incurring or guaranteeing indebtedness; entering into affiliate transactions; changing the flag, class, management or ownership of Navios Acquisitions vessels; changing the commercial and technical management of Navios Acquisitions
vessels; selling Navios Acquisitions vessels; and subordinating the obligations under each credit facility to any general and administrative costs relating to the vessels, including the fixed daily fee payable under the management agreement.
The credit facilities also require Navios Acquisition to comply with the ISM Code and ISPS Code and to maintain valid safety management certificates and documents of compliance at all times.
The maturity table below reflects the principal payments of all notes and credit facilities outstanding as of September 30, 2016 for the next five years
and thereafter are based on the repayment schedule of the respective loan facilities (as described above) and the outstanding amount due under the 2021 Notes.
|
|
|
|
|
|
|
Amount
|
|
Long-Term Debt Obligations:
|
|
|
|
|
Year
|
|
|
|
|
September 30, 2017
|
|
$
|
75,670
|
|
September 30, 2018
|
|
|
55,577
|
|
September 30, 2019
|
|
|
130,963
|
|
September 30, 2020
|
|
|
92,257
|
|
September 30, 2021
|
|
|
72,094
|
|
September 30, 2021 and thereafter
|
|
|
743,953
|
|
|
|
|
|
|
Total
|
|
$
|
1,170,514
|
|
|
|
|
|
|
NOTE 11: FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of each class of financial instruments:
Cash and cash equivalents:
The carrying amounts reported in the consolidated balance sheets for interest bearing deposits approximate their fair
value because of the short maturity of these investments.
F-20
NAVIOS MARITIME ACQUISITION CORPORATION
UNAUDITED CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except share and per share data)
Restricted Cash:
The carrying amounts reported in the consolidated balance sheets for interest
bearing deposits approximate their fair value because of the short maturity of these investments.
Due from related parties, short-term:
The
carrying amount of due from related parties, short-term reported in the balance sheet approximates its fair value due to the short-term nature of these receivables.
Due from related parties, long-term:
The carrying amount of due from related parties, long-term reported in the balance sheet approximates its
fair value.
Other long-term debt, net of deferred finance cost:
As a result of the adoption of ASU 2015-03, the book value has been
adjusted to reflect the net presentation of deferred financing costs. The outstanding balance of the floating rate loans continues to approximate its fair value, excluding the effect of any deferred finance cost.
Ship Mortgage Notes and premiums:
The fair value of the 2021 Notes, which has a fixed rate, was determined based on quoted market prices, as
indicated in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2016
|
|
|
December 31, 2015
|
|
|
|
Book Value
|
|
|
Fair Value
|
|
|
Book Value
|
|
|
Fair Value
|
|
Cash and cash equivalents
|
|
$
|
43,236
|
|
|
$
|
43,236
|
|
|
$
|
54,805
|
|
|
$
|
54,805
|
|
Restricted cash
|
|
$
|
5,812
|
|
|
$
|
5,812
|
|
|
$
|
6,840
|
|
|
$
|
6,840
|
|
Ship mortgage notes and premium
|
|
$
|
659,259
|
|
|
$
|
494,547
|
|
|
$
|
658,048
|
|
|
$
|
589,185
|
|
Other long-term debt, net of deferred finance cost
|
|
$
|
494,914
|
|
|
$
|
500,514
|
|
|
$
|
539,535
|
|
|
$
|
546,614
|
|
Due from related parties, long-term
|
|
$
|
78,281
|
|
|
$
|
78,932
|
|
|
$
|
16,474
|
|
|
$
|
16,474
|
|
Due from related parties, short-term
|
|
$
|
20,607
|
|
|
$
|
20,607
|
|
|
$
|
17,837
|
|
|
$
|
17,837
|
|
Fair Value Measurements
The estimated fair value of our financial instruments that are not measured at fair value on a recurring basis, categorized based upon the fair value
hierarchy, are as follows:
Level I: Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets that we have the ability
to access. Valuation of these items does not entail a significant amount of judgment.
Level II: Inputs other than quoted prices included in Level I that
are observable for the asset or liability through corroboration with market data at the measurement date.
Level III: Inputs that are unobservable. The
Company did not use any Level III inputs as of September 30, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at September 30, 2016 Using
|
|
|
|
Total
|
|
|
Level I
|
|
|
Level II
|
|
|
Level III
|
|
Cash and cash equivalents
|
|
$
|
43,236
|
|
|
$
|
43,236
|
|
|
$
|
|
|
|
$
|
|
|
Restricted cash
|
|
$
|
5,812
|
|
|
$
|
5,812
|
|
|
$
|
|
|
|
$
|
|
|
Ship mortgage notes and premium
|
|
$
|
494,547
|
|
|
$
|
494,547
|
|
|
$
|
|
|
|
$
|
|
|
Other long-term debt
(1)
|
|
$
|
500,514
|
|
|
$
|
|
|
|
$
|
500,514
|
|
|
$
|
|
|
Due from related parties,
long-term
(2)
|
|
$
|
78,932
|
|
|
$
|
|
|
|
$
|
78,932
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at December 31, 2015 Using
|
|
|
|
Total
|
|
|
Level I
|
|
|
Level II
|
|
|
Level III
|
|
Cash and cash equivalents
|
|
$
|
54,805
|
|
|
$
|
54,805
|
|
|
$
|
|
|
|
$
|
|
|
Restricted cash
|
|
$
|
6,840
|
|
|
$
|
6,840
|
|
|
$
|
|
|
|
$
|
|
|
Ship mortgage notes and premium
|
|
$
|
589,185
|
|
|
$
|
589,185
|
|
|
$
|
|
|
|
$
|
|
|
Other long-term debt
(1)
|
|
$
|
546,614
|
|
|
$
|
|
|
|
$
|
546,614
|
|
|
$
|
|
|
Due from related parties,
long-term
(2)
|
|
$
|
16,474
|
|
|
$
|
|
|
|
$
|
16,474
|
|
|
$
|
|
|
F-21
NAVIOS MARITIME ACQUISITION CORPORATION
UNAUDITED CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except share and per share data)
(1)
|
The fair value of the Companys other long-term debt is estimated based on currently available debt with similar contract terms, interest rate and remaining maturities as well as taking into account the
Companys creditworthiness.
|
(2)
|
The fair value of the Companys long term amounts due from related parties is estimated based on currently available debt with similar contract terms, interest rate and remaining maturities as well as taking into
account the counterpartys creditworthiness.
|
NOTE 12: TRANSACTIONS WITH RELATED PARTIES
The Navios Holdings Credit Facilities:
On September 19, 2016, Navios Acquisition entered into a $70,000 secured loan facility with Navios Holdings. The
loan facility is secured by all of Navios Holdings interest in Navios Acquisition and 78.5% of Navios Holdings interest in Navios Logistics, representing a majority of the shares outstanding of Navios Logistics. The
secured loan facility provided for an arrangement fee of $700, is available for up to five drawings and has a fixed interest rate of 8.75% with a maturity date of November 15, 2018. As of September 30, 2016, the outstanding receivable balance of
$49,471, included in the condensed consolidated balance sheets under Due from related parties, long-term, consisted of the drawdown of $50,000 on September 20, 2016 net of the arrangement fee, upon deduction of the applicable expenses
for the origination of the loan facility and the accrued interest of $122. The arrangement fee is deferred and amortized using the effective interest rate method.
In March 2016, Navios Acquisition entered into the $50,000 Revolver with Navios Holdings, which was available for multiple drawings up to a limit of $50,000.
The Revolver had a margin of LIBOR plus 300bps and a maturity until December 2018. On April 14, 2016, Navios Acquisition and Navios Holdings announced that the Revolver was terminated. No borrowings had been made under the Revolver. Please
refer to Legal Proceedings in Note 13.
In 2010, Navios Acquisition entered into a $40,000 credit facility with Navios Holdings, which matured
in December 2015. The facility was available for multiple drawings up to a limit of $40,000 and had a margin of LIBOR plus 300 basis points. As of its maturity date, December 31, 2015, all amounts drawn had been fully repaid.
Management fees:
Pursuant to the Management Agreement dated May 28, 2010 and as amended in May 2012 and May 2014, the Manager provided commercial and
technical management services to Navios Acquisitions vessels for a fixed daily fee of: (a) $6.0 per MR2 product tanker and chemical tanker vessel; (b) $7.0 per LR1 product tanker vessel; and (c) $9.5 per VLCC, through May 2016.
Pursuant to an amendment to the Management Agreement dated as of May 19, 2016, Navios Acquisition fixed the fees for commercial and technical ship management
services of the fleet for two additional years from May 29, 2016, following the expiration of the previous fixed fee period, through May 2018, at a daily fee of: (a) $6.4 per MR2 product tanker and chemical tanker vessel; (b) $7.2 per LR1 product
tanker vessel; and (c) the current daily fee of $9.5 per VLCC.
Effective March 30, 2012, Navios Acquisition can, upon request to Navios Holdings,
partially or fully defer the reimbursement of dry docking and other extraordinary fees and expenses under the Management Agreement to a later date, but not later than January 5, 2016, and if reimbursed on a later date, such amounts would bear
interest at a rate of 1% per annum over LIBOR. Commencing as of September 28, 2012, Navios Acquisition can, upon request, reimburse Navios Holdings partially or fully, for any fixed management fees outstanding for a period of not more than nine
months under the Management Agreement at a later date, but not later than January 5, 2016, and if reimbursed on a later date, such amounts would bear interest at a rate of 1% per annum over LIBOR.
Dry docking expenses are reimbursed by Navios Acquisition at cost.
Total management fees for each of the three month periods ended September 30, 2016 and 2015 amounted to $25,107 and $23,092, respectively. Total
management fees for the nine month periods ended September 30, 2016 and 2015 amounted to $73,611 and $71,427, respectively.
Included in direct
vessel expenses is an amount of $730 for the nine month period ended September 30, 2016, that was incurred for specialized work performed in connection with certain vessels of our fleet.
F-22
NAVIOS MARITIME ACQUISITION CORPORATION
UNAUDITED CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except share and per share data)
General and administrative expenses:
On May 28, 2010, Navios Acquisition entered into an
Administrative Services Agreement with Navios Holdings, pursuant to which Navios Holdings provides certain administrative management services to Navios Acquisition 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 services. Navios Holdings is reimbursed for reasonable costs and expenses incurred in connection with the
provision of these services. In May 2014, Navios Acquisition extended the duration of its existing Administrative Services Agreement with Navios Holdings, until May 2020.
For the three month periods ended September 30, 2016 and 2015, the expenses arising from administrative services rendered by Navios Holdings amounted to
$2,375 and $1,850, respectively. For the nine month periods ended September 30, 2016 and 2015, the administrative services rendered by Navios Holdings amounted to $7,143 and $5,711, respectively.
Balance due from related parties (excluding Navios Europe I, Navios Europe II and Navios Holdings Credit Facility):
Balance due from related parties as
of September 30, 2016 and December 31, 2015 was $22,273 and $15,520, respectively, and included the short-term and long-term amounts due from Navios Holdings and Navios Midstream. The balances mainly consisted of administrative expenses and
special survey and dry docking expenses for certain vessels of our fleet, as well as management fees, in accordance with the Management Agreement.
Omnibus Agreements
Acquisition Omnibus Agreement:
Navios Acquisition entered into an omnibus agreement (the Acquisition Omnibus Agreement) with Navios Holdings and Navios Partners in connection with the closing of Navios Acquisitions initial vessel acquisition, pursuant to
which, among other things, Navios Holdings and Navios Partners agreed not to acquire, charter-in or own liquid shipment vessels, except for container vessels and vessels that are primarily employed in operations in South America without the consent
of an independent committee of Navios Acquisition. In addition, Navios Acquisition, under the Acquisition Omnibus Agreement, agreed to cause its subsidiaries not to acquire, own, operate or charter-in drybulk carriers under specific exceptions.
Under the Acquisition Omnibus Agreement, Navios Acquisition and its subsidiaries grant to Navios Holdings and Navios Partners a right of first offer on any proposed sale, transfer or other disposition of any of its drybulk carriers and related
charters owned or acquired by Navios Acquisition. Likewise, Navios Holdings and Navios Partners agreed to grant a similar right of first offer to Navios Acquisition for any liquid shipment vessels they might own. These rights of first offer will not
apply to a: (a) sale, transfer or other disposition of vessels between any affiliated subsidiaries, or pursuant to the existing terms of any charter or other agreement with a counterparty; or (b) merger with or into, or sale of substantially all of
the assets to, an unaffiliated third party.
Midstream Omnibus Agreement:
Navios Acquisition entered into an omnibus agreement (the Midstream
Omnibus Agreement), with Navios Midstream, Navios Holdings and Navios Partners in connection with the Navios Midstream IPO, pursuant to which Navios Acquisition, Navios Midstream, Navios Holdings, Navios Partners and their controlled
affiliates generally have agreed not to acquire or own any VLCCs, crude oil tankers, refined petroleum product tankers, LPG tankers or chemical tankers under time charters of five or more years without the consent of the Navios Midstream General
Partner. The Midstream Omnibus Agreement contains significant exceptions that will allow Navios Acquisition, Navios Holdings, Navios Partners or any of their controlled affiliates to compete with Navios Midstream under specified circumstances.
Under the Midstream Omnibus Agreement, Navios Midstream and its subsidiaries will grant to Navios Acquisition a right of first offer on any proposed sale,
transfer or other disposition of any of its VLCCs or any crude oil tankers, refined petroleum product tankers, LPG tankers or chemical tankers and related charters owned or acquired by Navios Midstream. Likewise, Navios Acquisition will agree (and
will cause its subsidiaries to agree) to grant a similar right of first offer to Navios Midstream for any of the VLCCs, crude oil tankers, refined petroleum product tankers, LPG tankers or chemical tankers under charter for five or more years it
might own. These rights of first offer will not apply to a: (a) sale, transfer or other disposition of vessels between any affiliated subsidiaries, or pursuant to the terms of any charter or other agreement with a charter party, or (b) merger with
or into, or sale of substantially all of the assets to, an unaffiliated third-party.
Backstop Agreement:
On November 18, 2014, Navios
Acquisition entered into backstop agreements with Navios Midstream. In accordance with the terms of the backstop agreements, Navios Acquisition has provided a backstop commitment to charter-in the Shinyo Ocean and the Shinyo Kannika for a two-year
period as of their scheduled redelivery at the currently contracted rate if the market charter rate is lower than the currently contracted rate. Further, Navios Acquisition has provided a backstop commitment to charter-in the Nave Celeste for a
two-year period as of its scheduled redelivery, at the net time charter-out rate per day (net of commissions) of $35 if the market charter rate is lower than the charter-out rate of $35. Navios Acquisition has also provided a backstop commitment to
charter-in the option vessels, the Nave Galactic and the Nave Quasar for a four-year period as of their scheduled redelivery, at the net time charter-out rate per day (net of commissions) of $35 if the market charter rate is lower than the
F-23
NAVIOS MARITIME ACQUISITION CORPORATION
UNAUDITED CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except share and per share data)
charter-out rate of $35. Conversely, if market charter rates are higher during the backstop period, such vessels will be chartered-out to third-party charterers at prevailing market rates and
Navios Acquisitions backstop commitment will not be triggered. The backstop commitment does not include any profit sharing.
Navios Midstream
General Partner Option Agreement with Navios Holdings:
Navios Acquisition entered into an option agreement, dated November 18, 2014, with Navios Holdings under which Navios Acquisition grants Navios Holdings the option to acquire any or all of
the outstanding membership interests in Navios Midstream General Partner and all of the incentive distribution rights in Navios Midstream representing the right to receive an increasing percentage of the quarterly distributions when certain
conditions are met. The option shall expire on November 18, 2024. Any such exercise shall relate to not less than twenty-five percent of the option interest and the purchase price for the acquisition of all or part of the option interest shall be an
amount equal to its fair market value.
Option Vessels:
In connection with the IPO of Navios Midstream, Navios Acquisition granted options to
Navios Midstream, exercisable until November 2016, to purchase seven VLCCs (two of which, the Nave Celeste and the C. Dream, were sold to Navios Midstream in June 2015 pursuant to such option) from Navios Acquisition at fair market value.
Balance due from Navios Europe I:
Navios Holdings, Navios Acquisition and Navios Partners have made available to Navios Europe I (in each
case, in proportion to their ownership interests in Navios Europe I) revolving loans up to $24,100 to fund working capital requirements (collectively, the Navios Revolving Loans I). See Note 7 for the Investment in Navios Europe I
and the respective ownership interests.
Balance due from Navios Europe I as of September 30, 2016 amounted to $11,764 (December 31, 2015: $10,266) which
included the Navios Revolving Loans I of $7,125 (December 31, 2015: $7,125), the non-current amount of $2,011 (December 31, 2015: $1,398) related to the accrued interest income earned under the Navios Term Loans I under the caption Due
from related parties, long-term and the accrued interest income earned under the Navios Revolving Loans I of $2,628 (December 31, 2015: $1,743) under the caption Due from related parties, short-term.
The Navios Revolving Loans I and the Navios Term Loans I earn interest and an annual preferred return, respectively, at 12.7% per annum, on a quarterly
compounding basis and are repaid from free cash flow (as defined in the loan agreement) to the fullest extent possible at the end of each quarter. There are no covenant requirements or stated maturity dates. As of September 30, 2016, the amount
undrawn under the Navios Revolving Loans I was $9,100, of which Navios Acquisition was committed to fund $4,323.
Balance due from Navios Europe
II:
Navios Holdings, Navios Acquisition and Navios Partners have made available to Navios Europe II (in each case, in proportion to their ownership interests in Navios Europe II) revolving loans up to $38,500 to fund working capital
requirements (collectively, the Navios Revolving Loans II). See Note 7 for the Investment in Navios Europe II and respective ownership interests.
Balance due from Navios Europe II as of September 30, 2016 amounted to $15,380 (December 31, 2015: $8,525) which included the Navios Revolving Loans II of
$11,602 (December 31, 2015: $7,327), the non-current amount of $1,668 (December 31, 2015: $625) related to the accrued interest income earned under the Navios Term Loans II under the caption Due from related parties, long-term and
the accrued interest income earned under the Navios Revolving Loans II of $2,110 (December 31, 2015: $573) under the caption Due from related parties, short-term.
The Navios Revolving Loans II and the Navios Term Loans II earn interest and an annual preferred return, respectively, at 18% per annum, on a quarterly
compounding basis and are repaid from free cash flow (as defined in the loan agreement) to the fullest extent possible at the end of each quarter. There are no covenant requirements or stated maturity dates. As of September 30, 2016, the amount
undrawn under the Navios Revolving Loans II was $14,075, of which Navios Acquisition was committed to fund $6,686.
Participation in offerings of
affiliates:
Refer to Note 7 for Navios Acquisitions participation in the continuous public offering of Navios Midstream. On September 30, 2016, Navios Acquisition entered into a securities purchase agreement with Navios Midstream pursuant
to which Navios Acquisition made an investment in Navios Midstream by purchasing 5,655 general partnership interests for an aggregate consideration of $75, in order to maintain its 2.0% partnership interest in Navios Midstream in light of such
continuous public offering.
F-24
NAVIOS MARITIME ACQUISITION CORPORATION
UNAUDITED CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except share and per share data)
NOTE 13: COMMITMENTS AND CONTINGENCIES
On November 18, 2014, Navios Acquisition entered into a backstop agreement with Navios Midstream. In accordance with the terms of the backstop agreement,
Navios Acquisition has committed to charterin the Shinyo Ocean and Shinyo Kannika for a two-year period at the time of their redelivery at the currently contracted rate if the market charter rate is lower than the currently contracted rate.
Furthermore, Navios Acquisition has committed to charterin the following vessels: a) Nave Celeste for a two-year period at the time of her redelivery at the currently contracted rate if the market charter rate is lower than the currently
contracted rate and b) Nave Galactic and Nave Quasar for a four-year period at the net time charter-out rate per day (net of commissions) of $35 if the market charter rate is lower than the charter-out rate of $35. Conversely, if market charter
rates are higher during the backstop period, such vessels will be chartered out to third-party charterers at prevailing market rates and Navios Acquisitions backstop commitment will not be triggered. The backstop commitment does not include
any profit-sharing.
The Company 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 the Company believes that a liability may be probable, and for which the amounts are reasonably estimable, based upon facts known at the date of the financial statements were
prepared. In the opinion of the management, the ultimate disposition of these matters individually and in aggregate will not materially affect the Companys financial position, results of operations or liquidity.
Legal Proceedings
On April 1, 2016, Navios Holdings was
named as a defendant in a putative shareholder derivative lawsuit brought by two alleged shareholders of Navios Acquisition purportedly on behalf of nominal defendant, Navios Acquisition, in the United States District Court for the Southern District
of New York, captioned
Metropolitan Capital Advisors International Ltd., et al. v. Navios Maritime
Holdings, Inc. et al.
, No. 1:16-cv-02437. The lawsuit challenged the March 9, 2016 loan agreement between Navios
Holdings and Navios Acquisition pursuant to which Navios Acquisition agreed to provide a $50,000 credit facility (the Revolver) to Navios Holdings.
On April 14, 2016, Navios Holdings and Navios Acquisition announced that the Revolver had been cancelled, and that no borrowings had been made under the
Revolver. In June 2016, the parties reached an agreement resolving the plaintiffs application for attorneys fees and expenses which was approved by an order of the Court. The litigation was dismissed upon notice of the order being
provided to Navios Acquisitions shareholders via the inclusion of the order as an attachment to a Navios Acquisition Form 6-K and the payment of $775 by Navios Acquisition in satisfaction of the plaintiffs request for attorneys
fees and expenses. A copy of the order was provided as an exhibit to Navios Acquisitions Form 6-K filed with the Securities and Exchange Commission on June 9, 2016.
NOTE 14: PREFERRED AND COMMON STOCK
Preferred Stock
On March 30, 2011, pursuant to an Exchange Agreement Navios Holdings exchanged 7,676,000 shares of Navios Acquisitions common stock it held for
1,000 non-voting Series C Convertible Preferred Stock of Navios Acquisition. Each holder of shares of Series C Convertible Preferred Stock shall be entitled at their option at any time, after March 31, 2013 to convert all or any of the
outstanding shares of Series C Convertible Preferred Stock into a number of fully paid and non-assessable shares of Common Stock determined by multiplying each share of Series C Convertible Preferred Stock to be converted by 7,676, subject to
certain limitations. Upon the declaration of a common stock dividend, the holders of the Series C Convertible Preferred Stock are entitled to receive dividends on the Series C Convertible Preferred Stock in an amount equal to the amount that would
have been received in the number of shares of Common Stock into which the Shares of Series C Convertible Preferred Stock held by each holder thereof could be converted. For the purpose of calculating earnings / (loss) per share this preferred stock
is treated as in-substance common stock and is allocated income / (losses) and considered in the diluted calculation.
On September 17, 2010, Navios
Acquisition issued 3,000 shares of the Companys authorized Series A Convertible Preferred Stock to an independent third party as a consideration for certain consulting and advisory fees related to the VLCC acquisition. The preferred stock has
no voting rights, is only convertible into shares of common stock and does not participate in dividends until such time as the shares are converted into common stock. The Series A shares of preferred stock were fully converted to common stock that
was issued on March 11, 2016.
On October 29, 2010, Navios Acquisition issued 540 shares of the Companys authorized Series B Convertible Preferred
Stock to the seller of the two LR1 product tankers. The preferred stock contains a 2% per annum dividend payable quarterly starting on January 1,
F-25
NAVIOS MARITIME ACQUISITION CORPORATION
UNAUDITED CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except share and per share data)
2011 and upon declaration by the Companys Board commences payment on March 31, 2011. The Series B Convertible Preferred Stock, plus any accrued but unpaid dividends, will mandatorily
convert into shares of common stock as follows: 30% of the outstanding amount will convert on June 30, 2015 and the remaining outstanding amounts will convert on June 30, 2020 at a price per share of common stock not less than $25.00. The holder of
the preferred stock shall have the right to convert the shares of preferred stock into common stock prior to the scheduled maturity dates at a price of $35.00 per share of common stock. The preferred stock does not have any voting rights.
On June 30, 2015, 162 shares of Series B Convertible Preferred Stock (being 30% of the 540 shares originally issued), with nominal value of $10 per share,
were mandatorily converted into 64,800 shares of common stock at a conversion ratio of 1:25.
On October 27, 2015, the remaining 378 shares of Series B
Convertible Preferred Stock (being 70% of the 540 shares originally issued), with nominal value of $10 per share, were converted into 108,000 shares of common stock at a conversion ratio of 1:35.
On March 11, 2016, 1,200,000 shares of common stock were issued as a result of the conversion of 3,000 shares of Series A Convertible Preferred Stock.
As of September 30, 2016, the Company was authorized to issue 10,000,000 shares of $0.0001 par value preferred stock including these already issued
with such designations, voting and other rights and preferences as may be determined from time to time by the Board of Directors.
As of September 30,
2016, the Companys issued and outstanding preferred stock consisted of the 1,000 Series C Convertible Preferred Stock. As of December 31, 2015, the Companys issued and outstanding preferred stock consisted of the 1,000 Series C
Convertible Preferred Stock and the 3,000 Series A Convertible Preferred Stock.
Series D Convertible Preferred Stock
On each of August 31, 2012, October 31, 2012, February 13, 2013 and April 24, 2013, Navios Acquisition issued 300 shares of its authorized Series D Convertible
Preferred Stock (nominal and fair value $3,000) to a shipyard, in partial settlement of the purchase price of each of the newbuilding LR1 product tankers, Nave Cassiopeia, Nave Cetus, Nave Atropos and Nave Rigel. The preferred stock includes a 6%
per annum dividend payable quarterly, starting one year after delivery of each vessel. The Series D Convertible Preferred Stock mandatorily converted into shares of common stock 30 months after issuance at a price per share of common stock equal to
$10.00. The holder of the preferred stock shall have the right to convert such shares of preferred stock into common stock prior to the scheduled maturity dates at a price of $7.00 per share of common stock. The Series D Convertible Preferred Stock
does not have any voting rights. Navios Acquisition is obligated to redeem the Series D Convertible Preferred Stock (or converted common shares) at their nominal value of $10.00 at the holders option. Beginning 18 months and no later than 60
months after the issuance of the preferred stock, the holder can exercise the option to request the redemption of up to 250 shares of preferred stock (or such number that has been converted to common shares) on a quarterly basis.
The fair value was determined using a combination of the Black-Scholes model and discounted projected cash flows for the conversion option and put,
respectively. The model used takes into account the credit spread of Navios Acquisition, the volatility of its stock, as well as the price of its stock at the issuance date. The convertible preferred stock is classified as temporary equity (i.e.,
apart from permanent equity) as a result of the redemption feature upon exercise of the put option granted to the holder of the preferred stock.
In
January 2015, Navios Acquisition redeemed, through the holders put option, 250 shares of the Series D Convertible Preferred Stock and paid $2,500 to the holder upon redemption.
In March 2015, 200 shares of Series D Convertible Preferred Stock were mandatorily converted into 200,000 shares of common stock. In conjunction with the
conversion, the 200,000 shares of common stock have been reclassified to puttable common stock within temporary equity, as a result of an embedded put option of the holder for up to 30 months after the conversion date.
In April 2015, Navios Acquisition redeemed, through the holders put option, 75 shares of the Series D Convertible Preferred Stock and paid $750 to the
holder upon redemption.
In April 2015, 200 shares of Series D Convertible Preferred Stock were mandatorily converted into 200,000 shares of common stock.
In conjunction with the conversion, the 200,000 shares of common stock have been reclassified to puttable common stock within temporary equity, as a result of an embedded put option of the holder for up to 30 months.
F-26
NAVIOS MARITIME ACQUISITION CORPORATION
UNAUDITED CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except share and per share data)
In July 2015, Navios Acquisition redeemed, through the holders put option 50 shares of its Series D
Convertible Preferred Stock and paid $500 to the holder upon redemption.
In August 2015, 200 shares of Series D Convertible Preferred Stock were
mandatorily converted into 200,000 shares of common stock. In conjunction with the conversion, the 200,000 shares of common stock have been reclassified to puttable common stock within temporary equity, as a result of an embedded put option of the
holder for up to 30 months after the conversion date.
In October 2015, Navios Acquisition redeemed, through the holders put option 25 shares of its
Series D Convertible Preferred Stock and paid $250 to the holder upon redemption.
In October 2015, 200 shares of Series D Convertible Preferred Stock
were converted into 200,000 shares of common stock. In conjunction with the conversion, the 200,000 shares of common stock have been reclassified to puttable common stock within temporary equity, as a result of an embedded put option of the holder
for up to 30 months after the conversion date.
On January 6, 2016, Navios Acquisition redeemed, through the holders put option, 100,000 shares
of the puttable common stock and paid cash of $1,000 to the holder upon such redemption.
On April 1, 2016, Navios Acquisition redeemed, through the
holders put option, 100,000 shares of the puttable common stock and paid cash of $1,000 to the holder upon redemption.
On July 1, 2016, Navios
Acquisition redeemed, through the holders put option, 100,000 shares of the puttable common stock and paid cash of $1,000 to the holder upon redemption.
As of each of September 30, 2016 and December 31, 2015, no shares of Series D Convertible Preferred Stock were outstanding:
|
|
|
|
|
|
|
|
|
|
|
Series D Preferred Stock
|
|
|
|
Number of
preferred shares
|
|
|
Amount
|
|
Balance at December 31, 2014
|
|
|
1,200
|
|
|
$
|
12,000
|
|
Conversion of 800 shares of the Series D Preferred Stock into 800,000 shares of puttable common
stock
|
|
|
(800
|
)
|
|
|
(8,000
|
)
|
Redemption of Series D Preferred Stock
|
|
|
(400
|
)
|
|
|
(4,000
|
)
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2015
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2016
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2016 and December 31, 2015, the following shares of puttable common stock were outstanding:
|
|
|
|
|
|
|
|
|
|
|
Puttable Common Stock
|
|
|
|
Number of
common shares
|
|
|
Amount
|
|
Balance at December 31, 2014
|
|
|
|
|
|
$
|
|
|
Conversion of 800 shares of the Series D Preferred Stock into 800,000 shares of puttable common
stock
|
|
|
800,000
|
|
|
|
8,000
|
|
Redemption of puttable common stock
|
|
|
(150,000
|
)
|
|
|
(1,500
|
)
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2015
|
|
|
650,000
|
|
|
$
|
6,500
|
|
Redemption of 300,000 shares of the puttable common stock
|
|
|
(300,000
|
)
|
|
|
(3,000
|
)
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2016
|
|
|
350,000
|
|
|
$
|
3,500
|
|
|
|
|
|
|
|
|
|
|
F-27
NAVIOS MARITIME ACQUISITION CORPORATION
UNAUDITED CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except share and per share data)
Common Stock and puttable common stock
Pursuant to an Exchange Agreement entered into on March 30, 2011, Navios Holdings exchanged 7,676,000 shares of Navios Acquisitions common stock it held
for 1,000 non-voting shares of Series C Convertible Preferred Stock of Navios Acquisition.
On February 20, 2014, Navios Acquisition completed the public
offering of 14,950,000 shares of its common stock at $3.85 per share, raising gross proceeds of $57,556. These figures include 1,950,000 shares sold pursuant to the underwriters option, which was exercised in full. Total net proceeds of the
above transactions, net of agents costs of $3,022 and offering costs of $247, amounted to $54,289.
On March 2, 2015, 200 shares of the Series D
Convertible Preferred Stock were mandatorily converted into 200,000 shares of puttable common stock and on April 24, 2015, 25,000 shares of such puttable common stock were redeemed for $250.
On April 30, 2015, 200 shares of the Series D Convertible Preferred Stock were mandatorily converted into 200,000 shares of puttable common stock.
On June 30, 2015, 162 shares of Series B Convertible Preferred Stock were converted into 64,800 shares of common stock.
On July 15, 2015, Navios Acquisition redeemed, through the holders put option, 50,000 shares of the puttable common stock and paid $500 to the holder
upon redemption.
On August 13, 2015, 200 shares of the Series D Convertible Preferred Stock were mandatorily converted into 200,000 shares of puttable
common stock.
On October 2, 2015, Navios Acquisition redeemed, through the holders put option, 75,000 shares of the puttable common stock and paid
$750 to the holder upon redemption.
On October 26, 2015, 200 shares of the Series D Convertible Preferred Stock were converted into 200,000 shares of
puttable common stock.
On October 27, 2015, 378 shares of Series B Convertible Preferred Stock were mandatorily converted into 108,000 shares of common
stock.
Under the share repurchase program, for up to $50,000, approved and authorized by the Board of Directors, Navios Acquisition has repurchased
2,704,752 shares for a total cost of approximately $9,904, as of December 31, 2015.
On March 11, 2016, 1,200,000 shares of common stock were issued
as a result of the conversion of 3,000 shares of Series A Convertible Preferred Stock.
As of September 30, 2016, the Company was authorized to issue
250,000,000 shares including these already issued of $0.0001 par value common stock.
Stock based compensation
In October 2013, Navios Acquisition authorized and issued to its directors in the aggregate of 2,100,000 restricted shares of common stock and options to
purchase 1,500,000 shares of common stock having an exercise price of $3.91 per share and an expiration term of 10 years. These awards of restricted common stock and stock options are based on service conditions only and vest ratably over a period
of over three years (33.33% each year). The holders of restricted stock are entitled to dividends paid on the same schedule as paid to the common stockholders of the company. The fair value of restricted stock is determined by reference to the
quoted stock price on the date of grant of $3.99 per share (or total fair value of $8,379).
F-28
NAVIOS MARITIME ACQUISITION CORPORATION
UNAUDITED CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except share and per share data)
The fair value of stock option grants is determined with reference to option pricing model, and principally
adjusted Black-Scholes models, using historical volatility, historical dividend yield, zero forfeiture rate, risk free rate equal to 10-year US treasury bond and the simplified method for determining the expected option term since the Company does
not have sufficient historical exercise data upon which to have a reasonable basis to estimate the expected option term. The fair value of stock options was calculated to $0.79 per option (or $1,188). Compensation expense is recognized based on a
graded expense model over the vesting period of three years from the date of the grant.
The effect of compensation expense arising from the stock-based
arrangements described above amounted to $267 and $670, for the three month period ended September 30, 2016 and 2015, respectively, and was reflected in general and administrative expenses on the statements of income. For the nine month period
ended September 30, 2016 and 2015, the effect of compensation expense arising from the stock-based arrangements described above amounted to $795 and $1,989, respectively.
The recognized compensation expense for the period was presented as adjustment to reconcile net income to net cash provided by operating activities on the
statements of cash flows.
There were no restricted stock or stock options exercised, forfeited or expired during the three and nine month periods ended
September 30, 2016 and 2015, respectively. Restricted shares outstanding and not vested amounted to 700,005 shares as of September 30, 2016 and the number of stock options outstanding as of September 30, 2016 amounted to 1,500,000.
The estimated compensation cost relating to service conditions of non-vested (a) stock options and (b) restricted stock not yet recognized was
$8.6 and $60.6, respectively, as of September 30, 2016 and is expected to be recognized over the weighted average period of 0.07 years. The weighted average contractual life of stock options outstanding as at September 30, 2016 was 7.1
years.
NOTE 15: SEGMENT INFORMATION
Navios
Acquisition reports financial information and evaluates its operations by charter revenues. Navios Acquisition 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 Acquisition has determined that it operates under one reportable segment.
The following table sets out operating revenue by geographic region for Navios Acquisitions reportable segment. Revenue is allocated on the basis of the
geographic region in which the customer is located. Tanker vessels operate worldwide. Revenues from specific geographic region which contribute over 10% of total revenue are disclosed separately.
Revenue by Geographic Region
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Month
Period ended
September 30,
2016
(unaudited)
|
|
|
Three Month
Period ended
September 30,
2015
(unaudited)
|
|
|
Nine Month
Period ended
September 30,
2016
(unaudited)
|
|
|
Nine Month
Period ended
September 30,
2015
(unaudited)
|
|
Asia
|
|
$
|
40,982
|
|
|
$
|
53,198
|
|
|
$
|
139,722
|
|
|
$
|
158,822
|
|
Europe
|
|
|
9,889
|
|
|
|
8,779
|
|
|
|
29,007
|
|
|
|
30,024
|
|
United States
|
|
|
17,198
|
|
|
|
15,715
|
|
|
|
54,254
|
|
|
|
47,865
|
|
Total
|
|
$
|
68,069
|
|
|
$
|
77,692
|
|
|
$
|
222,983
|
|
|
$
|
236,711
|
|
F-29
NAVIOS MARITIME ACQUISITION CORPORATION
UNAUDITED CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except share and per share data)
NOTE 16: EARNINGS PER COMMON SHARE
Income per share is calculated by dividing net income available to common stockholders by the weighted average number of shares of common stock of Navios
Acquisition outstanding during the period.
Potential common shares of 9,176,000 for each of nine months period ended September 30, 2016 and 2015
(which include Series C Convertible Preferred Stock and Stock options) have an anti-dilutive effect (i.e. those that increase income per share) and are therefore excluded from the calculation of diluted income per share.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months
Ended
September 30,
2016
|
|
|
For the Three
Months
Ended
September 30,
2015
|
|
|
For the Nine
Months
Ended
September 30,
2016
|
|
|
For the Nine
Months
Ended
September 30,
2015
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
8,817
|
|
|
$
|
23,216
|
|
|
$
|
44,771
|
|
|
$
|
69,612
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend on Series B preferred shares
|
|
|
|
|
|
|
(19
|
)
|
|
|
|
|
|
|
(73
|
)
|
Dividend on Series D preferred shares
|
|
|
|
|
|
|
(50
|
)
|
|
|
|
|
|
|
(249
|
)
|
Dividend declared on restricted shares
|
|
|
(35
|
)
|
|
|
(70
|
)
|
|
|
(105
|
)
|
|
|
(210
|
)
|
Undistributed (income) attributable to Series C participating preferred shares
|
|
|
(432
|
)
|
|
|
(1,123
|
)
|
|
|
(2,185
|
)
|
|
|
(3,356
|
)
|
Net income attributable to common shareholders, basic
|
|
$
|
8,350
|
|
|
$
|
21,954
|
|
|
$
|
42,481
|
|
|
$
|
65,724
|
|
Plus:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend on Series B preferred shares
|
|
|
|
|
|
|
19
|
|
|
|
|
|
|
|
73
|
|
Dividend declared on Series D preferred shares
|
|
|
|
|
|
|
50
|
|
|
|
|
|
|
|
249
|
|
Dividend declared on restricted shares
|
|
|
35
|
|
|
|
70
|
|
|
|
105
|
|
|
|
210
|
|
Net income attributable to common stockholders, diluted
|
|
$
|
8,385
|
|
|
$
|
22,093
|
|
|
$
|
42,586
|
|
|
$
|
66,256
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for basic net income per share weighted average shares
|
|
|
149,984,072
|
|
|
|
150,040,892
|
|
|
|
149,774,591
|
|
|
|
150,315,899
|
|
Series A preferred stock
|
|
|
|
|
|
|
1,200,000
|
|
|
|
312,088
|
|
|
|
1,200,000
|
|
Series B preferred stock
|
|
|
|
|
|
|
151,200
|
|
|
|
|
|
|
|
194,400
|
|
Series D preferred stock
|
|
|
|
|
|
|
368,012
|
|
|
|
|
|
|
|
836,503
|
|
Restricted shares
|
|
|
700,005
|
|
|
|
1,400,006
|
|
|
|
700,005
|
|
|
|
1,400,006
|
|
Denominator for diluted net income per share adjusted weighted average shares
|
|
|
150,684,077
|
|
|
|
153,160,110
|
|
|
|
150,786,684
|
|
|
|
153,946,808
|
|
Basic net income per share
|
|
$
|
0.06
|
|
|
$
|
0.15
|
|
|
$
|
0.28
|
|
|
$
|
0.44
|
|
Diluted net income per share
|
|
$
|
0.06
|
|
|
$
|
0.14
|
|
|
$
|
0.28
|
|
|
$
|
0.43
|
|
F-30
NAVIOS MARITIME ACQUISITION CORPORATION
UNAUDITED CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars except share and per share data)
NOTE 17: INCOME TAXES
Marshall Islands, Cayman Islands, British Virgin Islands, and Hong Kong, do not impose a tax on international shipping income. Under the laws of these
countries, the countries of incorporation of the Company and its subsidiaries and /or vessels registration, the companies are subject to registration and tonnage taxes which have been included in the daily management fee.
In accordance with the currently applicable Greek law, foreign flagged vessels that are managed by Greek or foreign ship management companies having
established an office in Greece are subject to duties towards the Greek state which are calculated on the basis of the relevant vessels tonnage. The payment of said duties exhausts the tax liability of the foreign ship owning company and the
relevant manager against any tax, duty, charge or contribution payable on income from the exploitation of the foreign flagged vessel. The amount included in Navios Acquisitions statements of income for the nine months ended September 30,
2016, and 2015 related to the Greek Tonnage tax was $612 and $543, respectively, and for the three months ended September 30, 2016 and 2015, it was $0 and $5, respectively.
Pursuant to Section 883 of the Internal Revenue Code of the United States (the Code), 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 Navios Acquisitions ship-operating subsidiaries satisfy these initial criteria. In addition, these companies must meet an ownership test. Subject to
proposed regulations becoming finalized in their current form, the management of Navios Acquisition believes by virtue of a special rule applicable to situations where the ship operating companies are beneficially owned by a publicly traded company
like Navios Acquisition, the second criterion can also be satisfied based on the trading volume and ownership of the Companys shares, but no assurance can be given that this will remain so in the future.
NOTE 18: SUBSEQUENT EVENTS
On October 3, 2016,
Navios Acquisition redeemed, through the holders put option, 100,000 shares of the puttable common stock and paid cash of $1,000 to the holder upon redemption.
On October 4, 2016, Navios Acquisition sold the Nave Universe to an unaffiliated third party for a sale price of $37,300. Navios Acquisition prepaid $16,372,
being the respective tranche drawn from the HSH Nordbank AG credit facility. The sale of the vessel is expected to result in a gain.
On October 25, 2016,
Navios Acquisition extended the purchase options already granted to Navios Midstream, of the Nave Buena Suerte, the Nave Neutrino and the Nave Electron for an additional two-year period expiring on November 18, 2018. The extended purchase options do
not include any backstop commitments from Navios Acquisition.
On November 4, 2016, the Board of Directors declared a quarterly cash dividend in
respect of the third quarter of 2016 of $0.05 per share of common stock payable on December 21, 2016 to stockholders of record as of December 14, 2016. The declaration and payment of any further dividends remain subject to the discretion
of the Board of Directors and will depend on, among other things, Navios Acquisitions cash requirements as measured by market opportunities and restrictions under its credit agreements and other debt obligations and such other factors as the
Board of Directors may deem advisable.
On November 15, 2016, Navios Acquisition sold the Nave Constellation to an unaffiliated third party for a sale
price of $37,300. Navios Acquisition prepaid $16,372, being the respective tranche drawn from the HSH Nordbank AG credit facility. The sale of the vessel is expected to result in a gain.
F-31