Exhibit 99.3
KNOT OFFSHORE PARTNERS LP
Unaudited Pro Forma Consolidated and Combined Carve-Out Statement of Operations
for the year ended December 31, 2013
(In U.S. Dollars, thousands)
On August 1, 2013, KNOT Shuttle Tankers AS (“KST”), a wholly owned subsidiary of KNOT Offshore Partners LP (“KNOP”), acquired a 100% interest in Knutsen Shuttle Tankers 13 AS (“KST 13”), the company that owns and operates theCarmen Knutsen. The purchase consideration was $145.0 million for the vessel less the assumed bank debt of $89.1 million and other purchase price adjustments of $ 0.1 million. TheCarmen Knutsen was delivered to its current charterer, Repsol Sinopec Brasil, B.V., in January 2013 under a charter expiring in January 2018. The purchase price was settled by way of a cash payment of $45.4 million and with seller financing provided by Knutsen NYK Offshore Tankers AS in the form of a loan in the amount of $10.5 million.
The following unaudited pro forma consolidated and combined financial information is shown as if KNOP’s acquisition and the financing of theCarmen Knutsen had taken place on January 1, 2013. Since theCarmen Knutsen was delivered on January 2, 2013, there is no pro forma figure for year 2012. The unaudited pro forma consolidated and combined financial information is based on estimates and assumptions, which have been solely for purposes of developing such pro forma information.
The historical information for KST 13 for the period of January 1, 2013 through July 31, 2013 has been derived from the unaudited financial information for the seven-month period ended July 31, 2013.
The unaudited pro forma consolidated and combined carve-out statement of operations is prepared in accordance with accounting principles generally accepted in the United States.
KNOT OFFSHORE PARTNERS LP – Unaudited pro forma consolidated and combined results (In U.S. dollars, thousands)
| Historical KNOP as of December 31, 2013 | Historical KST 13 as of July 31, 2013 | Pro Forma Adjustments | Pro Forma Consolidated and Combined Results as of December 31, 2013 | |||||||||||||
Time charter and bareboat revenues | 73,151 | 9,511 | 1,125 | (1) | 83,787 | |||||||||||
Loss of hire insurance recoveries | 250 | 250 | ||||||||||||||
Total revenues | 73,401 | 9,511 | 1,125 | 84,037 | ||||||||||||
Operating expenses: | ||||||||||||||||
Vessel operating expenses | 14,288 | 2,666 | — | 16,954 | ||||||||||||
Depreciation and amortization | 23,768 | 2,711 | 686 | (2) | 27,165 | |||||||||||
General and administrative expenses | 5,361 | 78 | — | 5,439 | ||||||||||||
Total operating expenses | 43,417 | 5,455 | 686 | 49,558 | ||||||||||||
Operating income | 29,984 | 4,056 | 439 | 34,479 | ||||||||||||
Finance income (expense) : | ||||||||||||||||
Interest income | 30 | — | — | 30 | ||||||||||||
Interest expense | (10,773 | ) | (1,764 | ) | (896 | ) (3) | (13,433 | ) | ||||||||
Other finance expense | (2,048 | ) | (263 | ) | 230 | (4) | (2,081 | ) | ||||||||
Realized and unrealized gain (loss) on derivative instruments | 505 | — | — | 505 | ||||||||||||
Net gain (loss) on foreign currency transactions | 193 | (171 | ) | — | 22 | |||||||||||
Total finance expense | (12,093 | ) | (2,198 | ) | (666 | ) | (14,957 | ) | ||||||||
Income (loss) before income taxes | 17,891 | 1,858 | (227 | ) | 19,522 | |||||||||||
Income tax benefit (expense) | (2,827 | ) | — | — | (2,827 | ) | ||||||||||
Net income (loss) | $ | 15,064 | $ | 1,858 | $ | (227 | ) | $ | 16,695 | |||||||
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| (1) | Adjustment to eliminate cost related to termination of commercial management contract with KNOT Management AS. |
| (2) | Adjustment to record depreciation on increased value after acquisition of the vessel theCarmen Knutsen. |
| (3) | Adjustment to record finance expenses related to the additional borrowings as if the acquisition had taken place on January 1, 2013. |
| (4) | Adjustment to eliminate guarantee commission paid to Knutsen NYK Offshore Tankers AS and TS Shipping Invest AS included in the historical financial statements of KST 13. |
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