<PAGE 1>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 2-63322
INTERNATIONAL SHIPHOLDING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-2989662
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
650 Poydras Street New Orleans, Louisiana 70130
(Address of principal executive offices) (Zip Code)
(504) 529-5461
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and
(2) has been subject to such filing for the past 90
days. X YES NO
Indicate the number of shares outstanding of each of
the issuer's classes of common stock, as of the latest
practicable date.
Common Stock $1 Par Value 5,346,611 shares (June 30, 1995)
<PAGE 2>
INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
<C> <C>
<S> ---------- ------------
ASSETS
Current Assets:
Cash and Cash Equivalents $ 38,890 $ 29,611
Marketable Securities 7,344 7,096
Accounts Receivable, Net 40,441 46,844
Net Investment in
Direct Financing Leases 2,186 2,186
Other Current Assets 4,547 3,847
Material and Supplies
Inventory, At Cost 9,271 8,954
--------- ------------
Total Current Assets 102,679 98,538
Investments in and
Advances to
Unconsolidated Entities 0 33,160
Marketable Equity Securities 44,136 0
Net Investment in
Direct Financing Leases 25,523 26,588
Vessels, Property and
Other Equipment, At Cost:
Vessels and Barges 517,676 484,354
Other Marine Equipment 6,688 3,999
Terminal Facilities 18,850 18,116
Land 2,317 2,317
Furniture and Equipment 15,100 14,071
---------- -----------
560,631 522,857
Less - Accumulated Depreciation (230,385) (214,395)
---------- -----------
330,246 308,462
Other Assets:
Deferred Charges in
Process of Amortization 28,348 30,613
Acquired Contract Costs,
Net of Accumulated
Amortization 22,959 24,185
Due from Related Parties 9,422 6,174
Other 17,061 19,371
----------- ------------
77,790 80,343
----------- ------------
$580,374 $547,091
=========== ============
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE 3>
INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
----------- ------------
LIABILITIES AND STOCKHOLDERS' INVESTMENT
<S> <C> <C>
Current Liabilities:
Current Maturities of Long-Term Debt 29,759 26,755
Current Maturities of
Capital Lease Obligations 1,469 1,329
Accounts Payable and Accrued Liabilities 54,633 53,061
Federal Income Tax Payable 437 260
Current Deferred Income Tax Liability 1,378 314
---------- -----------
Total Current Liabilities 87,676 81,719
Billings in Excess of
Income Earned and Expenses Incurred 5,561 4,471
Long-Term Capital Lease Obligations,
Less Current Maturities 19,873 21,092
Long-Term Debt, Less Current Maturities 244,175 230,852
Reserves and Deferred Credits:
Deferred Income Taxes 43,000 39,414
Claims and Other 21,824 23,227
--------- ----------
64,824 62,641
Stockholders' Investment:
Common stock 5,405 5,405
Additional Paid-in Capital 54,450 54,450
Retained Earnings 91,328 87,757
Less - Treasury Stock (1,133) (1,133)
Unrealized Holding Gain (Loss) on
Marketable Securities 8,215 (163)
--------- ---------
158,265 146,316
$ 580,374 $ 547,091
========== ==========
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE 4>
INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in Thousands Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
-------- ------- -------- --------
<S> <C> <C> <C> <C>
Revenues $ 79,418 $83,490 $157,326 $161,933
Operating Diferrential Subsidy 5,426 5,658 10,820 10,576
-------- ------- -------- --------
84,844 89,148 168,146 172,509
-------- ------- -------- --------
Operating Expenses:
Voyage Expenses 63,553 68,535 125,818 130,723
Vessel and Barge Depreciation 6,227 6,123 12,294 12,230
-------- ------- -------- --------
Gross Voyage Profit 15,064 14,490 30,034 29,556
-------- ------- -------- --------
Administrative and General Expenses 6,212 6,748 12,674 13,368
Gain on Sale of Assets 1 0 2 7
-------- ------- -------- --------
Operating Income 8,853 7,742 17,362 16,195
-------- ------- -------- --------
Interest:
Interest Expense 6,498 5,055 12,812 10,394
Investment Income ( 740) (1,018) ( 1,516) ( 1,474)
-------- ------- -------- --------
5,758 4,037 11,296 8,920
-------- ------- -------- --------
Unconsolidated Entities
(Net of Applicable Tax):
Equity in Net Income of
Unconsolidated Entities 105 144 331 286
(Allowance) for Doubtful Accounts 0 900 0 900
-------- ------- -------- --------
105 1,044 331 1,186
Income Before Provision
for Income Taxes 3,200 4,749 6,397 8,461
-------- ------- -------- --------
Provision for Income Taxes:
Current 286 904 2,091 2,723
Deferred 800 365 21 (207)
State 94 89 179 107
-------- ------- -------- --------
1,180 1,358 2,291 2,623
Net Income $ 2,020 $ 3,391 $ 4,106 $ 5,838
======== ======== ======== ========
Earnings Per Common Share:
Net Income $ 0.38 $ 0.63 $ 0.77 $ 1.09
======== ======== ======== ========
Weighted Average Shares of
Common Stock Outstanding 5,346,611 5,346,611 5,346,611 5,346,611
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE 5>
INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' INVESTMENT
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Net
Additional Unrealized
Common Paid-In Retained Treasury Holding
Stock Capital Earnings Stock Gain/(Loss) Total
-----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1993 $ 5,405 $54,450 $75,775 $(1,133) $ - $134,497
Net Income for
Year Ended
December 31, 1994 - - 13,051 - - 13,051
Cash Dividends - - (1,069) - - (1,069)
Unrealized Holding
Loss on
Marketable
Securities,
Net of Deferred Tax - - - - (163) (163)
-----------------------------------------------------
Balance at
December 31, 1994 $ 5,405 $54,450 $87,757 $(1,133) (163) $146,316
Net Income for
Six Months Ended
June 30, 1995 - - 4,106 - - 4,106
Cash Dividends - - (535) - - (535)
Unrealized Holding
Gain on
Marketable
Securities,
Net of Deferred Tax - - - - 8,378 8,378
-----------------------------------------------------
Balance at
June 30, 1995 $ 5,405 $54,450 $91,328 $(1,133) $8,215 $158,265
====================================================
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE 6>
INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1995 1994
-------- ------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income 4,106 5,838
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation 13,093 12,825
Amortization of Deferred Charges
and Other Assets 8,659 8,316
Provision (Benefit) for Deferred Income Taxes 2,112 (207)
Gain on Sale of Assets (2) (7)
Net Investment in Direct Financing Leases 1,065 1,135
Unearned Income 1,090 (2,074)
Equity in Unconsolidated Subsidiaries (372) (1,186)
Reserve for Claims and Other Deferred Credits (2,021) 1,015
Other Assets 2,890 1,132
Change in Working Capital:
Accounts Receivable 6,863 5,978
Inventories and Other Current Assets (1,009) 3,995
Federal Income Taxes Payable (2,085) 0
Accounts Payable and Accrued Liabilities 493 (2,443)
------ ------
Net Cash Provided by Operating Activities 34,882 34,317
Cash Flows from Investing Activities:
Purchase of Vessels and Other Property (34,242) (33,969)
Additions to Deferred Charges (6,073) (3,801)
Investment in and
Advances to Unconsolidated Subsidiaries 13 753
Proceeds from Sale of Assets 0 417
Proceeds from Short Term Investments 0 6,932
Other Investing Activities (14) 0
-------- --------
Net Cash Used by Investing Activities (40,316) (29,668)
Cash Flows from Financing Activities:
Proceeds from Issuance of Debt
and Capital Lease Obligations 39,096 21,109
Reduction of Debt and Capital Lease Obligations (23,848) (16,560)
Common Stock Dividends (535) (534)
-------- --------
Net Cash Provided by Financing Activities 14,713 4,015
Net Increase in Cash and Cash Equivalents 9,279 8,664
Cash and Cash Equivalents at Beginning of Period 29,611 21,626
-------- --------
Cash and Cash Equivalents at End of Period 38,890 30,290
======== ========
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE 7>
INTERNATIONAL SHIPHOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1995
(Unaudited)
Note 1. Basis of Preparation
The accompanying unaudited interim
financial statements have been prepared
pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain
information and footnote disclosures required
by generally accepted accounting principles
for complete financial statements have been
omitted. It is suggested that these interim
statements be read in conjunction with the
financial statements and notes thereto
included in the Form 10-K of International
Shipholding Corporation for the year ended
December 31, 1994. Certain reclassifications
have been made to prior period financial
information in order to conform to current
year presentations.
Interim statements are subject to
possible adjustments in connection with the
annual audit of the Company's accounts for
the full year 1995; in the opinion of
management, all adjustments (consisting of
only normal recurring adjustments) necessary
for a fair presentation of the information
shown have been included.
The foregoing 1995 interim results are
not necessarily indicative of the results of
the operations for the full year 1995.
The Company's policy is to consolidate
all subsidiaries in which it holds greater
than 50% voting interest. All significant
intercompany accounts and transactions have
been eliminated.
The Company uses the cost method to
account for investments in entities in which
it holds less than 20% voting interest and in
which the Company cannot exercise significant
influence over operating and financial
activities. The Company uses the equity
method to account for investments in entities
in which it holds a 20% to 50% voting
interest.
<PAGE 8>
As of December 31, 1994, these
investments were classified on the Balance
Sheet as Investments In and Advances to
Unconsolidated Entities. The more
significant of the investments were interests
in Havtor AS, A/S Havtor Management and
Bulkowners 1984. During the first half of
1995, A/S Havtor Management and the gas
carrier activities of Kvaerner, an unrelated
Norwegian company, were merged with Havtor
AS. In addition, Havtor AS agreed to acquire
other vessels and vessel interests, including
the interest held by the Company in two PROBO
vessels held through Bulkowners 1984.
Subsequent to these transactions, the
Company's interest in Havtor AS, a publicly
listed company on the Oslo Stock Exchange,
approximated 7.7%. Due to the liquidity of
these shares, this investment is reflected in
the Balance Sheet at June 30, 1995 as
Marketable Equity Securities and is stated at
fair market value. Unrealized holding gains,
net of tax, are excluded from earnings and
reported as a separate component of
shareholders' equity.
<PAGE 9>
INTERNATIONAL SHIPHOLDING CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company's vessels are operated under
a variety of charters, liner services, and
contracts. The nature of these arrangements
is such that, without a material variation in
gross voyage profits (total revenues less
voyage expenses and vessel and barge
depreciation), the revenues and expenses
attributable to a vessel deployed under one
type of charter or contract can differ
substantially from those attributable to the
same vessel if deployed under a different
type of charter or contract. Accordingly,
depending on the mix of charters or contracts
in place during a particular accounting
period, the Company's revenues and expenses
can fluctuate substantially from one period
to another even though the number of vessels
deployed, the number of voyages completed,
the amount of cargo carried and the gross
voyage profit derived from the vessels remain
relatively constant. As a result,
fluctuations in voyage revenues and expenses
are not necessarily indicative of trends in
profitability, and management believes that
gross voyage profit is a more appropriate
measure of performance than revenues.
Accordingly, the discussion below addresses
variations in gross voyage profits rather
than variations in revenues.
Gross Voyage Profit. Gross voyage
profit for the first half of 1995 of $30.0
million was slightly above the amount earned
during first half of 1994 of $29.6 million.
Positively impacting the current period
results was the addition of the SULPHUR
ENTERPRISE to the Company's fleet in early
fourth quarter of 1994. This increase was
offset by reductions in gross voyage profit
resulting from lower freight rates and higher
operating costs such as fuel and voyage time
experienced by the Company's LASH vessels
employed in liner service between
<PAGE 10>
ports on
the U. S. Gulf/U. S. Atlantic Coast and South
Asia (Trade Routes 18 and 17). The
quarter was also negatively impacted by a
scheduled rate reduction on one of the Company's
vessels chartered to the Military Sealift
Command (the "MSC"). The addition of the
SULPHUR ENTERPRISE, partially offset by the
aforementioned negative events, also accounted
for the 4.0% increase in gross voyage profit
for the second quarter of 1995 as compared
to the comparable period of 1994.
Vessel and barge depreciation for the
first half of 1995 was consistent with the
amount in the same period of 1994. An
increase in depreciation due to the addition
of the SULPHUR ENTERPRISE in early fourth
quarter of 1994 was offset by a reduction
resulting from the life extension of two LASH
vessels which were purchased in 1994 upon the
termination of the capital lease of these
vessels.
Other Income and Expense.
Administrative and general expense decreased
by 5.2% to $12.7 million during the first
half of 1995 as compared to $13.4 million in
the comparable period of 1994 stemming from
continuing cost reduction efforts. These
efforts also resulted in a reduction in
administrative and general expenses of 7.9%
during the second quarter of 1995 as compared
to the same period in 1994.
Interest Expense increased 23.3% to
$12.8 million in the first half of 1995 as
compared to $10.4 million in the same period
in 1994 primarily due to debt incurred in
late 1994 when the SULPHUR ENTERPRISE
delivered from the shipyard and commenced
operation. Additionally impacting interest
expense was interest on $12 million received
in early 1995 from a medium term loan with a
commercial bank for general corporate
purposes and interest incurred under interest
rate conversion agreements. These items also
impacted interest expense in the second
quarter of 1995. Increases in both the first
half of 1995 and second quarter of 1995 were
partially offset by regularly scheduled
payments on other outstanding debt.
<PAGE 11>
Investment income approximated $1.5
million in both the first half of 1994 and
1995.
Income Taxes. The Company provided $2.1
million for federal income taxes in the first
half of 1995 at the statutory rate of 35% as
compared to $2.5 million in the first half of
1994 at the same rate. Income of
unconsolidated entities is shown net of
applicable taxes.
<PAGE 12>
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital decreased
from $16.8 million at December 31, 1994, to
$15.0 million at June 30, 1995, after
provision for current maturities of long-term
debt of $29.8 million and capital lease
obligations of $1.5 million. Cash and cash
equivalents increased during the first half
of 1995 by $9.3 million to a total of $38.9
million.
Positive cash flows were achieved from
operating activities in the first six months
of 1995 in the amount of $34.9 million. The
major source of cash from operations was net
income, adjusted for non-cash provisions such
as depreciation and amortization.
Net cash used for investing activities
amounted to $40.3 million during the first
half of 1995. Capital investments included
$31.8 million for the purchase and conversion
of two semi-submersible vessels, $1.7 million
for computer development and upgrades and
approximately $700,000 for other
miscellaneous items. Other uses of cash
included the addition of $6.1 million of
deferred charge items, primarily for vessel
drydocking.
Net cash provided by financing
activities during the first six months of
1995 totalled $14.7 million. Proceeds from
the issuance of debt obligations of $39.1
million included $12.0 million from a medium
term loan which was used for general
corporate purposes, $19.1 million received
from a long-term loan associated with the
acquisition and conversion of two semi-
submersible vessels and $8.0 million drawn
under the Company's lines of credit. Cash
used for financing activities included
regularly scheduled principal payments of
$9.9 million for debt and capital lease
obligations, repayment of $13 million drawn
under lines of credit and $900,000 to prepay
a portion of the Senior Notes issued in 1993.
Additionally, $535,000 was used to meet
common stock dividend requirements.
The Company has entered into a long-term
contract with a major copper and gold mining
company to provide transportation services
for supplies associated with the operation of
a copper and gold mine on the Indonesian
Island of Irian Jaya. The Company has
acquired and is converting two semi-
<PAGE 13>
submersible barge carrying vessels and is
having 26 cargo barges built to be used with
the aforementioned vessels. As of June 30,
1995, the Company had paid approximately $33
million of the total cost of approximately
$78 million. The Company will also charter a
small container vessel to fulfill the
requirements of the contract which is
expected to commence in late 1995. The
Company has arranged financing for
approximately 60% of the cost of these
acquisitions through a long-term loan with a
commercial bank. Draws under this loan
totalled $19.1 million as of June 30, 1995
with additional draws anticipated in the
second half of 1995.
The Company contracted, in October 1994,
to purchase a U. S. Flag Coal Carrier with
delivery now anticipated in the third quarter
of 1995. The vessel will be placed under
long-term charter to a major electric utility
company to carry part of its fuel supply.
The ship will also be used from time to time
to carry cargoes for the account of other
charterers. The Company has arranged
financing with a commercial bank for a major
portion of the purchase price of the vessel.
As of December 31, 1994, the Company
held an approximate 9% interest in Havtor AS,
a publicly listed company on the Oslo Stock
Exchange, and a 14.2% equity interest in A/S
Havtor Management, a privately held Norwegian
ship management company. In addition, the
company held a 50% interest in a foreign
entity, Bulkowner's 1984, which was formed to
own and operate two combination dry
cargo/petroleum products, PROBO vessels. The
Company also held a 10% interest in a limited
partnership with certain Norwegian interests
to construct and own a liquified petroleum
gas carrier which delivered in 1993.
During the First Quarter of 1995, the
Company signed an agreement whereby A/S
Havtor Management and the gas carrier
activities of Kvaerner, an unrelated
Norwegian company, would be merged into
Havtor AS. In addition, Havtor AS agreed to
acquire other vessels and vessel interests,
including the 50% interest held by the
Company in two PROBO vessels and the 10%
interest held in a liquified petroleum gas
carrier. The merger was approved by
shareholders in a general meeting held in
April 1995.
<PAGE 14>
Subsequent to the merger the Company's
interest inHavtor AS approximated 6.4%. In
addition, Havtor AS stock was held by the
Company as collateral for a promissory note
which matures in mid-1996. During the second
quarter of 1995 the Company purchased the
Norwegian interest which held this promissory
note. After the acquisition the Company's
interest in Havtor AS approximated 7.7%. Due
to the liquidity of the shares held in Havtor
AS, the investment is reflected in the
financial statements at fair market value
with unrealized holding gains of
approximately $8.2 million, net of tax,
excluded from earnings and reported as a
separate component of shareholders' equity in
accordance with the required accounting
treatment for investments in equity
securities that have readily determinable
fair values.
To meet short-term requirements when
fluctuations occur in working capital, the
Company has available four lines of credit
totaling $35.0 million of which $5.0 million
was drawn at June 30, 1995.
The Company has not been notified that
it is a potentially responsible party in
connection with any environmental matters.
At a regular meeting held July 19, 1995,
the Board of Directors declared a quarterly
dividend of five cents per share of common
stock to be paid on September 8, 1995, to its
stockholders of record as of September 1,
1995.
<PAGE 15>
PART II-OTHER INFORMATION
Item 6.
Exhibits and Reports on Form 8-K
(b) No reports on Form 8-K have been
filed for the three months ended June 30,
1995.
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.
INTERNATIONAL SHIPHOLDING CORPORATION
/s/ Gary L. Ferguson
____________________________________________________
Gary L. Ferguson
Vice President and Chief Financial Officer
Date: August 9, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 38890
<SECURITIES> 7344
<RECEIVABLES> 40441
<ALLOWANCES> 0
<INVENTORY> 9271
<CURRENT-ASSETS> 102679
<PP&E> 560631
<DEPRECIATION> (230385)
<TOTAL-ASSETS> 580374
<CURRENT-LIABILITIES> 87676
<BONDS> 264048
<COMMON> 5405
0
0
<OTHER-SE> 152860
<TOTAL-LIABILITY-AND-EQUITY> 580374
<SALES> 0
<TOTAL-REVENUES> 168146
<CGS> 0
<TOTAL-COSTS> 138112
<OTHER-EXPENSES> 25486
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11296
<INCOME-PRETAX> 6397
<INCOME-TAX> 2291
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4106
<EPS-PRIMARY> .77
<EPS-DILUTED> .77
</TABLE>
