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Commission File No.
FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of August, 1999
ENTERPRISES SHIPHOLDING CORPORATION
(Translation of registrant's name into English)
c/o Enterprises Shipping & Trading S.A.
Poseidonos Avenue 11
Elliniko GR-16777
Athens, Greece
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will
file annual reports under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
Indicate by check mark whether the registrant by furnishing
the information contained in this Form is also thereby furnishing
the information to the commission pursuant to Rule 12g3-2(b)
under the Securities Exchange Act of 1934.
Yes No X
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Athens 24th August 1999
TO THE NOTEHOLDERS OF ENTERPRISES SHIPHOLDING CORPORATION:
Enclosed is the unaudited financial information accompanied by a
Management's Discussion and Analysis of Financial Condition and
Results of Operations for the period ended June 30, 1999.
During the first half of 1999 the reefer industry was faced with
the consequences of the market conditions and the weather
disturbances that had affected the reefer industry during 1998.
The activities were basically driven by the increased export
volume from Chile where the growing conditions are back to
normal, while Ecuador, the world largest exporter of bananas
slowly recovered from the devastating effect of the El Nino
phenomenon. Another negative factor during the first half of 1999
was the depressed retail prices of the bananas, which forced the
banana companies to reduce the selling quantities in Europe. The
spot freight rates ranged from $0.28/cu.ft during January to
$0.90/cu.ft for March to $0.30/cu.ft in June while in August they
reached the dismal levels of $0.10/cu.ft. Due to the depressed
market conditions around 100 vessels went for lay up and around
34 vessels have been reported as scrapped during the first half
of the year.
In the first half of 1999 12 vessels of our fleet were trading in
the spot market contributing $4.1 million of EBITDA compared to
last year where 5 vessels contributed $1.9 million of EBITDA. The
outlook of the spot market during the third and fourth quarter
remains very sluggish and as such we have decided to lay-up all
our vessels with no period employment to avoid trading in the
spot market due to uneconomic freight levels. The remaining 14
vessels are on a period time charter with an average rate of
$0.57 per cubic feet calculated on a monthly basis up to each
vessel's existing charter expiration.
We have implemented a scrapping program and during the first half
of 1999 we sold five vessels built between 1969 and 1978
realizing around $2.5 million of net proceeds. The current
average age of the fleet is 16 years.
The newbuilding program continues uninterrupted and the first
vessel, due for delivery at the end of September, has been
chartered at market rates from a major charterer.
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For the six months ending June 30, 1999, the Company's revenues
were $31 million, EBITDA was $13.5 million and net income was a
loss of $(0.8) million. While we had anticipated lower figures
from last year's results this is the first time over the past ten
years that the Company has faced a loss, which is expected to
increase due to worse than anticipated market conditions, the
laying up of vessels and increased financing costs.
We have not scheduled a conference call in lieu of our
presentation in the DLJ Leverage Conference. However Kostas
Koutsoubelis, Director and Chief Financial Officer and myself are
available to discuss with you the second quarter results and
answer to any questions that you might have at: Tel:
Int+301+8945061 and Fax: Int+301+8983595
Sincerely yours,
Victor Restis
President and
Chief Executive Officer
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company is one of the world's leading independent
owners and operators of reefer vessels with a fleet of 21
vessels, including 19 reefer vessels and two high reefer intake
container vessels, and has on order 2 combined container reefer
vessels and 5 high reefer intake containers vessels. The
following discussion presents financial information for the
Company and its subsidiaries on a consolidated basis for all
periods presented. The Company acquired such subsidiaries in
October 1997 (the "Combination") in an exchange of stock
transaction. Subsequent to the Combination, the financial
statements of the Company were restated to reflect the
consolidation of all companies.
The Company's fleet currently consists of 21 vessels:
(i) 19 reefer vessels ranging in size from approximately 200,000
to 600,000 cu.ft. of cargo capacity, including two modern reefer
vessels each with 427,806 cu.ft. of capacity delivered from their
builder in the first half of 1996; and (ii) two reefer container
vessels, each with a cargo capacity of 324 TEU. The following
table sets forth changes in the Company's fleet from December 31,
1994 through June 30, 1999.
YEAR ENDED DECEMBER 31, JUNE 30,
_____________________________ ________
1994 1995 1996 1997 1998 1999
_____________________________ ________
Fleet owned at beginning of period..... 15 17 20 24 26 26
Newbuildings and other acquisitions
during period........................ 2 3 4 2 0 0
Sales and dispositions during period... 0 0 0 0 0 5
Fleet owned at end of period........... 17 20 24 26 26 21
Newbuildings on order.................. 0 0 0 0 7 7
Reefer Cargo Capacity (at end of
period) (millions cft.).............. 7.5 8.8 10.3 10.3 10.3 8.5
TEU Capacity (at end of period)........ 0 0 0 648 648 648
Reefer shipping is a highly specialized segment of the
global shipping industry that provides seaborne transportation of
perishable commodities, such as bananas, other fruits, meat,
seafood, vegetables and dairy products, in a temperature
controlled environment. The reefer industry is comprised of
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approximately 20 leading participants and numerous medium to
small reefer fleet owners and operators.
Reefer vessels are employed under time charters, voyage
charters, contracts of affreightment ("COAs"), and bareboat (or
demise) charters. Reefer vessels that operate in a pool are
generally time chartered to the pool by the owner and the pools
secure employment for the vessels they control through a
combination of COAs, voyage charters and time charters with other
operators or end-users.
The reefer vessel industry is characterized by cyclical
changes in supply and demand, resulting in wide swings in charter
rates and vessel utilization and, consequently, in profitability
for reefer vessel owners and operators. The supply of reefer
vessel cargo carrying capacity is a function of the number and
size of new vessels built and older vessels scrapped. The demand
for reefer vessel capacity reflects several variables, including
the size of fruit harvests, import quotas, the impact of general
economic conditions on consumer demand, and trends in worldwide
consumption and prices for reefer commodities. When growth in
demand exceeds the current or anticipated carrying capacity of
worldwide supply, charter rates generally increase. When charter
rates reach sufficiently high levels, the scrapping rate of older
vessels declines and orders for newbuildings increase. Once
commissioned, a newbuilding generally takes 18 months to 24
months to be built.
Recent trends in reefer vessel charter rates are as
follows: The average time charter rate for quality, midsize,
pallet-friendly reefer vessels more than doubled from $0.41 per
cu.ft. in 1985 to $0.85 per cu.ft. in 1991. The steady increase
in freight rates resulted in relatively heavy investment in cargo
capacity during this period, with worldwide reefer capacity (over
100,000 cu.ft.) growing by approximately 34% between 1986 and
1993. By 1993, reefer vessel cargo carrying capacity had
increased at a greater rate than reefer vessel shipping volumes.
Shipping volumes were adversely affected in late 1992 and 1993 by
the size of various fruit harvests, the European Union quota on
"dollar" bananas grown in Central America, and recessionary
conditions in various importing countries. Accordingly, time
charter rates for older, pallet-friendly vessels declined to
approximately $0.50 in 1993, a 41.2% decline from the peak in
1991. As a result of the decline in freight rates, scrapping of
older vessels increased and the construction of newbuildings
decreased, thereby causing a decline in the supply of cargo
carrying capacity. Charter rates began to improve in 1994 as a
result of the decline in supply capacity along with the increased
cargo shipping demand. According to Klaveness reports average
rates for older, pallet-friendly vessels increased to
approximately $0.53 in 1994, $0.60 in 1995 and to $0.67 in 1996,
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but declined to $0.65 in 1997 and to $0.65 in 1998. Spot rates
for the first six months of 1998 have ranged between $0.50 in
January to a high of $1.10 in March to a low of $0.25 in June
compared to $0.50 in January of 1997, to a high of $1.30 in March
and April to a low of $0.50 in June of 1997. On the contrary
spot rates during the first six months of 1999 were $0.28 in
January, $0.55 in February and $0.90 in March to a low of $0.28
in June.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated,
selected operating data as a percent of net revenue:
YEAR ENDED DECEMBER 31, JUNE 30,
_____________________________ ________
1994 1995 1996 1997 1998 1999
_____________________________ ________
Revenue from vessels, net............. 100% 100% 100% 100% 100% 100%
Voyage and running expenses........... 36.5 39.4 41.6 40.0 37.5 47.3
Depreciation and amortization......... 19.0 20.4 16.8 18.3 20.7 24.7
General and administrative expenses... 4.3 4.1 3.9 4.3 7.4 9.1
_____________________________ ________
Income from operations................ 40.3 36.1 37.7 37.4 34.4 18.9
Interest expense, net................. 3.7 3.9 4.2 3.5 13.5 21.6
Loss (gain) on sale of vessels........ 0.0 0.0 0.0 (7.9) 0.0 0.0
Other expenses (income)............... (1.0) 0.6 (0.7) (2.2) 0.0 0.0
Minority interest..................... 0.6 0.0 0.0 0.0 0.0 0.0
_____________________________ ________
Net income............................ 37.0 31.6 34.2 44.1 21.9 (2.7)
REVENUE FROM VESSELS, NET. Revenues are generated
primarily from U.S. Dollar denominated charter hire payments
under time charters, COAs or voyage charters to independent
reefer operators, reefer pool operators and integrated
multinational fruit companies. Revenues from vessels are
presented net of shipbrokers' commissions. Historically,
substantially all of the Company's time charters have been for
periods of 12 months or more. During the past three years,
revenues from time charters of 12 months or longer represented
86% of the Company's net revenues while for 1998 revenues from
time charters represented 92% of the Company's net revenues
compared to 84% during 1997. Depending on market conditions, the
Company also charters out its vessels on COAs, and in the spot
market on voyage charters. In 1996 and 1997, the Company derived
22% and 16% of its net revenues from COAs and spot market voyage
charters, respectively. For 1998, the Company's share of revenues
from spot charters was only 8% due to shortfall in spot market
demand resulting from the effects of the El Nino phenomenon and
the financial crisis in various countries. In the first half of
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1999 revenues from time charter represented 74% of the Company's
revenues reflecting the market conditions and the unwillingness
of the charterers to commit to period charters.
The Company's aggregate revenues are a function of the
average freight rate that it earns per vessel per day and the
total number of vessel days the fleet is in operation. The
following table summarizes the Company's average revenue per
vessel per day and total operating days:
YEAR ENDED DECEMBER 31, JUNE 30,
______________________________________ ________
1994 1995 1996 1997 1998 1999
______________________________________ ________
Average revenue per vessel per
day........................... $8,169 $8,418 $10,086 $10,555 $ 9,319 $ 8,900
Percentage increase (decrease) - 3.0% 19.8% 4.7% (11.7)% (4.5)%
Total operating days.......... 5,625 6,037 7,777 7,492 7,666 3,484
Percentage increase........... - 7.3% 28.8% (3.7)% 2.3% NA
VOYAGE AND RUNNING EXPENSES(VAR). Voyage and running
expenses include costs of crewing, spares and stores, insurance
premiums, lubricants, repairs and maintenance, and victualling.
The time charterer, subject to certain adjustments pays bunkers
and port expenses for vessels under time charters. Bunkers and
port expenses for vessels under voyage charters and COAs are paid
by the vessel owner and are included in voyage expenses. The
following table sets forth the Company's average voyage and
running expenses per vessel per day:
YEAR ENDED DECEMBER 31, JUNE 30,
______________________________________ ________
1994 1995 1996 1997 1998 1999
______________________________________ ________
Average VAR expenses per
vessel per day................ $2,791 $3,002 $3,989 $3,437 $ 2,824 $ 3,349
Percentage increase (decrease) - 7.5% 32.9% (13.8)% (17.8)% 18.5%
GENERAL AND ADMINISTRATIVE EXPENSES. General and
administrative expenses include management fees of $500 per day
per vessel paid to EST for technical management, headquarters
expense, office staff and the expense of administrative, legal,
quality assurance, information systems and centralized accounting
support functions. Such fees are reduced to $300 per day per
vessel when the vessel is in lay-up condition.
DEPRECIATION AND AMORTIZATION. The Company depreciates
its vessels on a straight-line basis over an estimated useful
life of 25 years. For secondhand vessels, the Company depreciates
vessel acquisition costs on a straight-line basis over the
balance of such vessel's useful life of 25 years. Amortization
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includes dry docking costs of the vessels, which are carried out
approximately every two and one-half years. These costs are
deferred and amortized through the next dry docking period. Legal
costs and financing fees incurred in connection with the
financing of a vessel are also deferred and amortized over the
loans' repayment period. Costs relating to loans that are repaid
are expensed in the period of repayment.
SIX MONTHS ENDED JUNE 30, 1999, COMPARED WITH SIX MONTHS ENDED
JUNE 30, 1998
REVENUE FROM VESSELS, NET. Revenue from vessels, net,
decreased $8.9 million to $31.0 million in the first half of
1999, compared to $39.9 million in the first half of 1998,
representing a 22.3% decrease. Average daily revenue per vessel
decreased to $8,900 in the first six months of 1999 from $9,538
in the first six months of 1998, representing a 6.6% decrease.
Operating days decreased to 3,484 days in the first half of 1999
from 4,186 days in the first half of 1998, representing a 16.8%
decrease. The reason for the decrease in revenues was that the
vessels operating in the spot market were directly affected by
the low spot rates and fewer voyage days due to increased idle
time. In the first half of 1999 12 vessels were in the spot
market operating 1,146 days out of the 1,889 available days
compared to the first half of 1998 where 5 vessels were in the
spot market operating 577 days out of the 900 available days.
Consequently, revenues from time charters in the first half of
1999 were $22.8 million and $8.1 million from the voyage charters
compared to $35.2 million and $4.8 million respectively for the
first half of 1998.
VOYAGE AND RUNNING EXPENSES. Voyage and running
expenses increased by $0.4 million, to $14.7 million in the first
half of 1999 from $14.3 million in the first half of 1998. As a
percentage of revenues, voyage and running expenses increased to
47.3% in the first half of 1999 compared to 35.8% in the first
six months of 1998. The increase of $0.4 million was mainly due
to the fact that more vessels operated under voyage charters
which meant that bunkers, port dues and other expenses were paid
by us. Voyage expenses were $2.9 million and $2.0 million in the
first six months of 1999 and 1998, respectively.
GENERAL AND ADMINISTRATIVE EXPENSES. General and
administrative expenses increased by $0.5 million to $2.8 million
in the first six months of 1999 compared to $2.3 million in the
first half of 1998. This increase was mainly due to the new
compensation of the Directors, which was effective from 1st
September 1998.
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DEPRECIATION AND AMORTIZATION. Depreciation and
amortization increased by $0.4 million to $7.7 million in the
first six months of 1999 from $7.3 million in the first half of
1998. This increase was mainly due to the new depreciation of
the vessel Bolivar that was rebuilt after the accident the vessel
suffered during the fourth quarter of 1997.
INTEREST EXPENSE, NET. Interest expense, net, increased
by $4.0 million, to $6.7 million in the first half of 1999 from
$2.6 million in the first half of 1998. This increase was
primarily due to the interest of $7.8 million on the Company's
Senior Notes from January 1 to June 30, 1999. Interest income
in the first half of 1999 and in 1998 was $1.1 million and $1.6
million, respectively.
NET INCOME. Net income decreased by $13.9 million, to
$(0.8) million in the first half of 1999 from $13.1 million in
the first half of 1998. As a percentage of revenues, net income
decreased to (2.7)% in the first half of 1999 from 32.9% in the
first half of 1998. This decrease of $13.9 million was mainly due
to the decrease of net revenues by $8.9 million due to the low
spot market freight rates, increase in the Company's net interest
expense by $4.1 million due to the higher interest cost of the
Senior Notes.
YEAR ENDED DECEMBER 31, 1998, COMPARED WITH YEAR ENDED DECEMBER
31, 1997
REVENUE FROM VESSELS, NET. Revenue from vessels, net,
decreased $7.3 million to $71.4 million in 1998, compared to $79
million in 1997, representing a 9.2 % decrease. Average daily
revenue per vessel decreased to $9,319 in 1998 from $10,555 in
1997, representing an 11.7 % decrease. Operating days increased
to 7,666 days in 1998 from 7,492 days in 1997, representing a
2.3% increase. The reason for the decrease in revenues was that
the vessels operating in the spot market were directly affected
by lower spot rates and by the lack of additional cargoes, as
banana crops were destroyed by heavy rainfalls and floods caused
by the El Nino phenomenon. Even though the total fleet operating
days increased in 1998 compared to 1997 the vessels that were in
the spot market operated only 422 days in the first six months of
1998 compared to 633 days for the same period of 1997,while
during the third and fourth quarter of 1998 they were in lay-up.
Consequently, revenues from time charters in 1998 were $65.8
million and $5.6 million from the voyage charters.
VOYAGE AND RUNNING EXPENSES. Voyage and running
expenses decreased by $4.8 million, to $26.8 million in 1998 from
$31.6 million in 1997. As a percentage of revenues, voyage and
running expenses decreased to 37.5% in 1998 compared to 40% in
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1997. The decrease of $4.8 million was partially due to the fact
that the vessels in voyage charters operated fewer days and thus
concluded fewer voyages, which means that bunkers, port dues and
other expenses were reduced significantly. Voyage expenses were
$2.7 million and $4.6 million in 1998 and 1997, respectively. Due
to the continuous preventive maintenance that the company is
enforcing in its vessels the running expenses decreased by $2.8
million dollars in 1998.
GENERAL AND ADMINISTRATIVE EXPENSES. General and
administrative expenses increased by $1.8 million to $5.3 million
in 1998 compared to $3.4 million in 1997. This increase was due
primarily to the new management fee of $500 per day per vessel
based on the new management agreement with EST that was put into
effect as of January 1, 1998. For the previous year the
management fee was $350 per day per vessel. The fees are reduced
to $300 per day per vessel when a vessel is in lay-up. During
1998 the fleet had 1,637 lay-up days out of 9,360 days of
operating availability compared to 1,485 lay-up days out of 9,160
days of operating availability in 1997.
DEPRECIATION AND AMORTIZATION. Depreciation and
amortization increased by $0.4 million to $14.8 million in 1998
from $14.4 million in 1997. This increase was due to the write-
off of loan expenses due to prepayment of the related loan from
the proceeds of the Company's Senior Notes offering as well as
the amortization of the legal expenses in relation to the Senior
Notes offering.
INTEREST EXPENSE, NET. Interest expense, net, increased
by $6.8 million, to $9.6 million in 1998 from $2.8 million in
1997. This increase was primarily due to the interest of $10.5
million on the Company's Senior Notes from April 27 to December
31, 1998. Interest expense in 1998 and in 1997 was $12 million
and $4.6 million, respectively; interest expense on bank loans
was $4.6 million and $1.4 million in 1997 and 1998, respectively.
Interest income in 1998 and in 1997 was $2.8 million and $1.8
million, respectively. The increase in the interest income was
due to the high cash balances that the Company had from the
proceeds of the Senior Notes offering.
NET INCOME. Net income decreased by $19.2 million, to
$15.6 million in 1998 from $34.8 million in 1997. As a
percentage of revenues, net income decreased to 21.9% in 1998
from 44.1% in 1997. This decrease of $19.2, including the
extraordinary gain of $6.3 in 1997, was due to the decrease of
net revenues by $7.6 million due to spot market conditions,
increase in the Company's net interest expense by $6.8 million
due to the higher interest cost of the Senior Notes, and
decreased voyage and running expenses of $4.8 million resulting
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from fewer spot voyages and efficient management of the Company's
vessels.
LIQUIDITY AND CAPITAL RESOURCES
The Company operates in a capital-intensive industry
requiring extensive investment in revenue producing assets. The
liquidity requirements of the Company relate to servicing its
debt, funding investments in vessels, funding working capital and
maintaining cash reserves. Net cash flow generated from
operations is the main source of liquidity for the Company. Net
cash provided by operating activities was $10.2 million in the
first half of 1999 versus $25.4 million for the same period in
1998. Additional sources of liquidity include proceeds from asset
sales and borrowings generally secured by one or more of the
Company's vessels, together with the proceeds of the Company's
offering of Senior Notes.
Net cash provided by operating activities decreased to
$10.2 million in the first half of 1999 from $25.4 million in the
first half of 1998, primarily due to the lower net income of
$(0.8) million for the period compared with the net income of
$13.1 million for the same period last year. Net cash provided
by operating activities consists of the Company's net income,
increased by non-cash expenses such as depreciation and
amortization of deferred charges, and adjusted by changes in
working capital.
Net cash used in investing activities was $7.9 million
out of which $10.5 million has been paid to the shipyard in
Taiwan for the third installment of two vessels and the fourth
installment of one vessel under construction. The remaining
installments within 1999 and 2000 amounts to $35.8 million and
$19.7 million respectively. The net proceeds from the scrapping
of the five older vessels were $2.5 million. The Company's
principal uses of cash in investing activities has been vessel
acquisitions and improvements, mainly new vessels, and purchases
of equipment, as well as installment payments for vessels under
construction.
Net cash used in financing activities in the first half
of 1999 was $7.5 million, which was the payment of the declared
dividend for the period ended December 31 1998. Thus, cash and
cash equivalents at June 30, 1999 were decreased to $21.6
million. The Company expects to fund the remaining $55.5 million
for the acquisition of the newbuildings vessels from its existing
cash together with a portion of the cash generated from the
operations of the existing fleet while the balance of the order
amounting to $120 million will be financed by secured bank
facilities.
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The Senior Notes Indenture contains certain covenants
that, among other things, limit the ability of the Company and
its Restricted Subsidiaries to: (i) incur additional
indebtedness; (ii) make restricted payments; (iii) allow
restrictions on distributions from subsidiaries; (iv) incur
liens; (v) enter into certain transactions with affiliates; (vi)
sell, assign, transfer, lease, convey or otherwise dispose of all
or substantially all of the assets of the Company; (vii) enter
into sale and leaseback transactions; (viii) issue capital stock
of its subsidiaries; (ix) enter into certain business activities;
and (x) merge or consolidate with any other person. Events of
default under the Senior Notes Indenture include (i) failure to
pay principal or interest when due; (ii) failure to comply with
certain restrictions on mergers, consolidations and transfers of
assets, (iii) failure to comply with certain agreements and
covenants in the Senior Notes Indenture; (iv) certain events of
default on other indebtedness; (v) certain events of bankruptcy,
and (vi) the breach of any representation or warranty.
The Company believes that based on current levels of
operating performance and expected market conditions, its cash
flow from operations, together with the net proceeds of the
Senior Notes Offering and other available sources of funds, will
be adequate to make the required payment of the installments due
to the shipyard, to permit anticipated capital expenditures and
to fund the working capital requirements until the end of 1999.
INFLATION
Although inflation had a moderate impact on operating
expenses, dry docking expenses and corporate overhead, management
does not consider inflation to be a significant risk to direct
costs in the current and foreseeable economic environment.
However, in the event that inflation becomes a significant factor
in the world economy, inflationary pressures would result in
increased operating and financing costs.
FOREIGN EXCHANGE RATE FLUCTUATION
The international reefer industry's functional currency
is the U.S. Dollar and, as a result, virtually all of the
Company's revenues are in U.S. Dollars. Historically, general and
administrative expenses are incurred in Greek Drachmae, while a
significant portion of the cost of revenues is incurred in U.S.
Dollars and, to a much lesser extent, other currencies. The
Company has a policy of continuously monitoring and managing its
foreign exchange exposure, but the Company currently does not
have any, and does not believe that it has any current need to
enter into, foreign currency hedging transactions.
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ENTERPRISES SHIPHOLDING CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND JUNE 30 1999
(Expressed in thousands of U.S. Dollars - except per share data)
ASSETS 1998 1999
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 26,854 $ 21,632
----------- -----------
Marketable Securities 24,126 23,888
Accounts receivable-
Trade 785 0
Insurance claims 1,276 587
Others receivables 1,451 817
----------- -----------
3,512 1,404
----------- -----------
Inventories 1,869 1,305
Prepayments and other 229 1,746
Total current assets 56,590 49,975
----------- ------------
FIXED ASSETS:
Advances for vessel under
reconstruction 36,592 47,157
Vessels' cost 224,929 213,439
Accumulated depreciation (71,988) (71,270)
----------- -----------
----------- -----------
Total fixed assets 189,533 189,326
----------- -----------
OTHER NON CURRENT ASSETS:
Deferred charges, net of amortization
of $2,204 and $709 at
December 31, 1998 and June 30, 1999 5,014 4,484
----------- -----------
Total assets $ 251,137 $ 243,785
=========== ===========
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 0 $ 0
----------- -----------
Accounts payable-
Trade 3,558 3,870
Due to a related company 570 0
Master accounts 691 611
----------- -----------
4,819 4,481
----------- -----------
Dividends payable 7,500 0
Due to management companies 409 591
Unearned revenue 1,156 1,629
Accrued interest and finance charges 2,589 2,589
Other accrued liabilities 648 1,294
Due to shareholders 0 0
----------- -----------
Total current liabilities 17,121 10,584
----------- -----------
LONG-TERM DEBT, net of current maturities
Senior notes payable 175,000 175,000
Banks 0 0
Related party 0 0
----------- -----------
175,000 175,000
----------- -----------
SHAREHOLDERS' EQUITY:
Share capital, nominal value $0.01 each
(100,000,000 shares authorised,
issued and outstanding at
December 31, 1998 and June 30, 1999) 1,000 1,000
Retained earnings 57,125 56,295
Other comprehensive income 891 906
----------- -----------
Total shareholders' equity 59,016 58,201
----------- -----------
Total liabilities and
shareholders' equity $ 251,137 $ 243,785
=========== ===========
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ENTERPRISES SHIPHOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE PERIOD ENDED JUNE 30, 1998 AND JUNE 30, 1999
(Expressed in thousands of U.S. Dollars - except per share data)
1998 1999
----------- -----------
REVENUE FROM VESSELS, net $ 39,926 $ 31,007
VOYAGE AND RUNNING EXPENSES (14,283) (14,669)
----------- -----------
Gross profit 25,643 16,338
DEPRECIATION AND AMORTIZATION (7,309) (7,666)
GENERAL AND ADMINISTRATIVE EXPENSES (2,300) (2,800)
----------- -----------
Income from operations 16,034 5,872
----------- -----------
OTHER INCOME (EXPENSES):
Interest and finance expenses, net (2,637) (6,696)
Foreign currency gain (loss) 79 89
Other, net (350) (95)
----------- -----------
Total other income (expenses) (2,908) (6,702)
----------- -----------
Net Income $ 13,126 $ (830)
=========== ===========
Earnings per share, basic $ 0.13 $ (0.01)
=========== ===========
Weighted average number of shares, basic $100,000,000 $ 100,000,000
============= =============
15
<PAGE>
EBITDA $ 23,343 $ 13,538
Ratio of EBITDA to interest expense.net 8.85 2.02
EBITDA Margin 58.47% 43.66%
16
<PAGE>
ENTERPRISES SHIPHOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE PERIOD ENDED JUNE 30, 1998
(Expressed in thousands of U.S. Dollars - except per share data)
Valuation
of
Marketable
Capital Securities Retained
Stock Surplus (Loss) Earnings Total
--------- -------------- ---------- --------
BALANCE, December 31, 1997 $ 1,000 $ 0 $ 49,000 $ 50,000
Net Income 0 0 13,126 0 13,126
Valuation of Marketable
Securities 0 (550) 0 (550)
--------- -------- ---------- ---------
BALANCE JUNE 30, 1998 $ 1,000 $ (550) $ 62,126 $ 62,576
========= ======== ========= =========
ENTERPRISES SHIPHOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE PERIOD ENDED JUNE 30,1999
(Expressed in thousands of U.S. Dollars - except per share data)
Valuation
of
Marketable
Capital Securities Retained
Stock Surplus (Loss) Earnings Total
---------- -------------- ---------- ---------
BALANCE, December 31, 1998 $ 1,000 $ 891 $ 57,125 $ 59,016
Loss 0 0 (830) (830)
Valuation of Marketable sec. 0 15 0 15
--------- ---------- --------- ---------
BALANCE, JUNE 30, 1999 $ 1,000 $ 906 $ 56,295 $ 58,201
========== =========== ========== ==========
17
<PAGE>
ENTERPRISES SHIPHOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE PERIODS ENDED JUNE 30, 1998 AND JUNE 30, 1999
(Expressed in thousands of U.S. Dollars)
1998 1999
----------- ------------
Cash Flows from operating activities:
Net income $ 13,126 $ (830)
Adjustments to reconcile net income to
net cash provided by operating activities-
Depreciation 6,863 6,957
Amortization of deferred charges 630 709
Loss from vessels sale 0 1,249
(Increase) Decrease in:
Accounts receivable (1,659) 2,108
Inventories (4) 564
Prepayments and other 384 (1,517)
Increase (Decrease) in:
Accounts payable 3,583 (338)
Other accrued liabilities 2,817 646
Unearned revenue 365 473
Amounts due to management companies (646) 182
Other 0 0
0 0
----------- -----------
Net cash provided by operating activities 25,459 10,203
----------- -----------
Cash Flows (for) from investing activities:
Advances for vessels under
construction/reconstruction (5,822) (10,565)
Payments for vessels' acquisition
and improvements 0 0
Net proceeds from vessels sale 0 2,566
Payments for drydocking and special
survey costs (204) (179)
Purchase of marketable securities (19,788) 0
Proceeds from sale of marketable securities 0 253
----------- -----------
Net cash (used in) provided by investing
activities (25,814) (7,925)
----------- -----------
Cash Flows (for) from financing activities:
Proceeds from shareholders, net of
withdrawals (237) 0
Proceeds from long-term debt, banks 0 0
Proceeds from issuance of Senior Notes 175,000 0
18
<PAGE>
Payments and repayment of long-term debt,
banks (64,844) 0
Payments and repayment of long-term debt,
related party (47,133) 0
Payments for financing fees 0 0
Payments for dividends 0 (7,500)
Notes issuance and distribution (4,379) 0
----------- -----------
Net cash (used in) provided by
financing activities 58,407 (7,500)
----------- -----------
Net increase (decrease) in cash
and cash equivalents 58,052 (5,222)
----------- -----------
Cash and Cash Equivalents, beginning of period 5,590 26,854
----------- -----------
Cash and Cash Equivalents, end of period $ 63,642 $ 21,632
=========== ===========
19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly
authorized.
ENTERPRISES SHIPHOLDING CORPORATION
(registrant)
Dated: August 24, 1999 By: /s/ Victor Restis
___________________________
Victor Restis
President and Chief
Executive Officer
20
02391004.AB2
