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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
____________________
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From _________ to _________
Commission File No. 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 No.)
650 Poydras Street, New Orleans, Louisiana 70130
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(504) 529-5461
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------------ --------------------------
Common Stock, $1 Par Value New York Stock Exchange
9% Senior Notes Due 2003 New York Stock Exchange
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 requirements for the past 90
days. YES x NO ____
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best of
registrant's knowledge in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. x
State the aggregate market value of the voting stock
held by non-affiliates of the registrant.
Date Amount
------ -----------
March 1, 1996 $89,203,249
Indicate the number of shares outstanding of each of
the registrant's classes of common stock, as of the latest
practicable date.
Common stock, $1 par value. . . . . . . . 6,682,887 shares
outstanding as of March 1, 1996
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for the
fiscal year ended December 31, 1995, have been incorporated
by reference into Parts I and II of this Form 10-K.
Portions of the registrant's definitive proxy statement
dated March 12, 1996 have been incorporated by reference
into Part III of this Form 10-K.
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<TABLE>
<CAPTION>
INTERNATIONAL SHIPHOLDING CORPORATION
Form 10-K
Table of Contents
<S> <C>
PART I. PAGE
ITEM 1. BUSINESS 2
General 2
History 4
Liner Service/Contracts of Affreightment 5
Military Sealift Command 6
Pure Car Carriers 8
Bulk Carrier 8
Float-On/Float-Off
Special Purpose Vessels 9
Domestic Transportation Services 9
Investments in Specialized Vessels 10
Ancillary Services 11
Marketing 11
Insurance 11
Regulation 12
Competition 14
Employees 15
ITEM 2. PROPERTIES 16
ITEM 3. LEGAL PROCEEDINGS 17
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS 17
ITEM 4a. EXECUTIVE OFFICERS AND DIRECTORS
OF THE REGISTRANT 18
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON
STOCK AND RELATED SECURITY
HOLDER MATTERS 20
ITEM 6. SELECTED FINANCIAL DATA 20
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS 20
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANT'S ON ACCOUNTING AND
FINANCIAL DISCLOSURE 20
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF
THE REGISTRANT 21
ITEM 11. EXECUTIVE COMPENSATION 21
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND
MANAGEMENT 21
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
MATTERS 21
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K. 22
SIGNATURES 24
</TABLE>
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PART I
ITEM 1. BUSINESS
GENERAL
The Company, through its subsidiaries, operates a
diversified fleet of U. S. and international flag vessels
that provide international and domestic maritime
transportation services to commercial customers and agencies
of the United States government primarily under medium- to
long-term charters or contracts. The Company's fleet
consists of 29 ocean-going vessels, 15 towboats, 129 river
barges, 26 special purpose barges, approximately 1,650 LASH
barges and related shoreside handling facilities. The
Company's strategy is to
(i) identify customers with marine transportation needs
requiring specialized vessels or operating techniques;
(ii) seek medium- to long-term charters or contracts
with those customers and, if necessary, modify, acquire
or construct vessels to meet the requirements of those
charters or contracts and;
(iii) secure financing for the vessels predicated
primarily on those charter or contract arrangements.
The Company believes that this strategy has produced
valuable long-term relationships with its customers and
stable operating cash flows.
The Company is the only significant operator of the
LASH (lighter aboard ship) system, which it pioneered in
1969. The Company's LASH fleet includes ten large LASH
vessels, four LASH feeder vessels and approximately 1,650
LASH barges. In its liner services, the Company uses the
LASH system primarily to gather cargo on rivers, in island
chains and in harbors that are too shallow for traditional
vessels and to transport to and from those areas large
items, such as forest products, natural rubber and steel,
that cannot be transported efficiently in containerized
vessels. In addition, the LASH system enables barges to be
rapidly loaded onto and unloaded from the large LASH vessels
without shoreside support facilities while minimizing the
number of times that the cargo is handled. Because the
Company's LASH barges are used primarily to transport large
items, the Company's LASH fleet often has a competitive
advantage over containerized vessels. Additionally, because
containerized and breakbulk vessels cannot operate in
certain of the areas where the Company's LASH system
operates, the Company often has a competitive advantage over
such vessels.
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The Company's diversified ocean-going fleet also
includes the following:
(i) two international flag and two U.S. flag pure
car carriers specially designed to transport
automobiles;
(ii) two U.S. flag ice-strengthened multi-purpose
vessels;
(iii) three roll-on/roll-off vessels that permit rapid
deployment of rolling stock, munitions and other
military cargoes requiring special handling;
(iv) one international flag cape-size bulk carrier;
(v) one U.S. flag semi-submersible barge;
(vi) one U.S. flag molten sulphur carrier, which is
used to carry molten sulphur from Louisiana and/or
Texas to a processing plant on the Florida Gulf Coast;
(vii) two international flag float-on/float-off special
purpose vessels, which, together with 26 special
purpose barges, are used to provide ocean
transportation of supplies for the Indonesian
operations of a major copper and gold mining company;
(viii) and one U.S. flag conveyor-equipped self-
unloading coal carrier which, under a long-term
charter, carries coal in the coastwise and near-sea
trade.
The Company also operates 14 inland waterway towboats
and 111 super-jumbo river barges that transport coal from
Indiana to Florida for an electric utility via shoreside
unloading facilities owned and operated by the Company.
Through its principal operating subsidiaries, Central
Gulf Lines, Inc. ("Central Gulf"), LCI Shipholdings, Inc.
("LCI"), Forest Lines Inc. ("Forest Lines") and Waterman
Steamship Corporation ("Waterman"), the Company engages
primarily in five types of services:
(i) international flag LASH liner service between U. S.
Gulf and East Coast ports and ports in northern Europe,
and a subsidized U. S. flag LASH liner service between
U. S. Gulf and East Coast ports and ports in South
Asia, the Middle East and northern Africa;
(ii) time charters to and other contracts with the
Military Sealift Command ("MSC") for use in its
military prepositioning program and to service
scientific operations in the Arctic and Antarctic;
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(iii) time charters to transport Toyota and Honda
automobiles from Japan to the United States and Hyundai
automobiles from Korea primarily to the United States
and Europe;
(iv) a contract with a major copper and gold mining
company to provide ocean transportation of its supplies
for its mining operations in Indonesia and;
(v) domestic transportation services, primarily
involving its coal and sulphur contracts and its
ownership of an inter-modal transfer and warehouse
facility in Memphis, Tennessee.
The Company currently has time charters or contracts to
carry cargoes for commercial customers that include
International Paper Company, Freeport-McMoRan Resource
Partners, P. T. Freeport Indonesia Company, The Goodyear
Tire and Rubber Company, Toyota Motor Corporation, Honda
Motor Co., Ltd., Hyundai Motor Company and New England Power
Co. The Company operates eight vessels for the MSC under
charters or contracts that typically contain options
permitting MSC to extend the charter or contract on similar
terms and conditions for one or more extension periods. In
most cases, the MSC has exercised its renewal options on the
Company's charters or contracts, and the Company generally
has been successful in winning charter or contract renewals
when they are rebid.
The Company's business historically has generated
stable cash flows because most of its medium- to long-term
charters provide for a daily charter rate that is owed
whether or not the charterer utilizes the vessel (unless the
vessel is unavailable for the charterer's use) and most of
its medium- to long-term contracts guarantee a minimum
amount of cargo for transportation. The Company is
partially insulated from increases in certain operating
expenses because time charters generally require the
charterer to pay certain voyage costs, including fuel, port
and stevedoring expenses, and often include cost escalation
features covering certain of the expenses paid by the
Company.
HISTORY
Central Gulf was founded in 1947 by the late Niels F.
Johnsen and his sons, Niels W. Johnsen, the Company's
current Chairman, and Erik F. Johnsen, its current
President. Central Gulf was privately held until 1971 when
it was acquired by Trans Union Corporation. In 1978, the
Company was formed to act as a holding company for Central
Gulf, LCI and other affiliated companies in connection with
the 1979 spin-off by Trans Union of the Company's common
stock to Trans Union's stockholders. In 1986, the Company
acquired the assets of Forest Lines, and, in 1989, the
Company acquired the stock of Waterman. Since its spin-off
from Trans Union, the Company has continued to act solely as
a holding company, and its only significant assets consist
of the capital stock of its subsidiaries.
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LINER SERVICES/CONTRACTS OF AFFREIGHTMENT
INTERNATIONAL FLAG. Under the name "Forest Lines",
the Company operates two international flag LASH vessels and
a self-propelled, semi-submersible feeder vessel on a
scheduled liner service. Forest Lines normally makes 11
round trip sailings per LASH vessel per year between U. S.
Gulf and East coast ports and ports in northern Europe.
Approximately one-half of the aggregate eastbound cargo
space is reserved for International Paper Company under a
long-term contract of affreightment. The remaining space is
provided on a voyage affreightment basis to commercial
shippers. Historically, approximately 20% has been used by
other paper manufacturers. The remaining 30% has been used
by various commercial shippers to carry general cargo.
Since 1969, when the LASH liner service commenced operation,
the vessels generally have been fully utilized on their
eastbound voyages.
The Company has had ocean transportation contracts with
International Paper since 1969 when the Company had two LASH
ships built to accommodate International Paper's trade. The
Company's contract of affreightment with International Paper
is for the carriage of wood pulp, liner board and other
forest products, the characteristics of which are well
suited for transportation by LASH vessels. The LASH system
minimizes damage to such cargo by reducing the number of
times that the cargo is handled. In addition, the LASH
system permits the Company to load and unload these products
at the shipper's and the receiver's facilities, which are
generally located on river systems that container and
breakbulk vessels do not serve. The Company's current
contract with International Paper is for a ten-year term
ending in 2002.
Over the years, the Company has established a base of
commercial shippers to which it provides space on the
westbound Forest Lines service. The principal cargoes
carried westbound are high-grade paper products, aluminum
slabs, steel products and other general cargo. Over the
last five years, the westbound utilization rate for these
vessels averaged approximately 88% per year.
U. S. FLAG. Waterman is a party to an operating
differential subsidy agreement with the U. S. Maritime
Administration, an agency of the Department of
Transportation ("MarAd"), that permits the Company to
operate U. S. flag vessels on designated international trade
routes and receive subsidy payments from the United States
government approximating the excess of certain vessel
expenses, primarily wages, over comparable costs of the
Company's principal foreign flag competitors on the same
trade routes. Under the subsidy agreement, the Company
operates a scheduled liner service that makes approximately
16 round trip voyages per year (four per vessel) between U.
S. Gulf and Atlantic ports and ports in the Red Sea, Persian
Gulf and Indian Ocean (Trade Route No. 18) and ports in
Indonesia, Malaysia and Singapore (Trade Route No. 17). The
subsidy agreement also permits the Company to make up to 18
calls per year at Egyptian ports on the Mediterranean and up
to 12 calls per year to south and east African ports. The
Company also operates FLASH vessels as feeder
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vessels in
this service in southeast Asia. In 1995, the Company
received approximately $22.7 million under its subsidy
agreement. The Company's subsidy agreement with MarAd
expires on December 31, 1996, and it is unlikely that it
will be renewed in its current form, if at all. See "Item
1. Business - Regulation" for a discussion of the subsidy
program.
On the eastbound portion of this service, a significant
part of each vessel's cargo traditionally has been shipped
to lesser developed countries under the Public Law-480
program, pursuant to which the United States government
sells or donates surplus food products for export to
developing countries. 75% of this cargo is reserved for
carriage by U.S. flag vessels, if they are available at
reasonable rates. Awards under the Public Law-480 program
are made on a voyage-to-voyage basis through periodic
competitive bidding. The remaining eastbound cargo consists
of general cargo, including some military equipment. Over
the last five years, these vessels generally have been fully
utilized on their eastbound voyages.
On the westbound portion of this service, the Company
provides a significant portion of its cargo space to
Goodyear for the transportation of natural rubber under a
contract of affreightment expiring in December 1996. Space
is also provided on a voyage-to-voyage basis to other
importers of natural rubber, including Uniroyal Goodrich
Tire Co., Bridgestone/Firestone, Inc. and certain members of
the Rubber Trade Association. The Company has had a
continuing relationship with such companies and the
Association since the early 1970s. The Company's LASH
barges are ideally suited for large shipments of natural
rubber because damage to rubber due to compression is
minimal as compared to the damage that can occur when
shipments are made in traditional breakbulk vessels. As a
result, Waterman is the largest U.S. flag carrier of natural
rubber from southeast Asia to the United States. The
remaining westbound cargo generally consists of coffee,
jute, guar, piece goods and other general cargo. Over the
last five years, these vessels generally have been fully
utilized on their westbound voyages.
MILITARY SEALIFT COMMAND
GENERAL. The Company has had contracts with the MSC
(or its predecessor) almost continuously for several
decades. At the present time, the Company's subsidiaries
have eight vessels under contract to the MSC. These vessels
are employed in the MSC's prepositioning programs, which
strategically place military cargo throughout the world, or
are chartered to the MSC to service long-term scientific
operations. The Company believes that the demand for
military prepositioning vessels will at least remain steady
during the near term, notwithstanding planned reductions in
overall military spending, because these vessels are vital
to the military's ability to respond quickly to
international incidents throughout the world without
incurring the significant costs of operating foreign bases,
some of which also may not be available because of changing
political situations.
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MSC charters and contracts are awarded through
competitive bidding, for fixed terms with options allowing
the MSC to extend the charters or contracts for additional
periods. In most cases, the MSC has always exercised its
extension options, and the Company generally has been
successful in winning renewals when the charters and
contracts are rebid. All charters and contracts require the
MSC to pay certain voyage costs, including fuel, port and
stevedoring expenses, and certain charters and contracts
include cost escalation features covering certain of the
expenses paid by the Company.
LASH VESSELS. The Company charters four U. S. flag
LASH vessels to the MSC under time charters. One of these
charters expires in July 1996, and provides the MSC with an
option to renew the contract for two additional 17-month
periods. The other three charters expire in April 1996, May
1996, and March 1997, respectively. After these charters
expire, it is anticipated that the MSC will invite rebidding
for these contracts. The Company has generally been
successful in winning renewals when contracts are rebid. In
the event MSC does not invite rebids, or the Company is
unsuccessful in winning renewals, these vessels will most
likely be placed in commercial service. The fourth charter
expires in July 1996, and provides the MSC with an option to
renew the contract for two additional 17-month periods.
These vessels are in the MSC's prepositioning force
stationed in the Indian Ocean area.
ICE-STRENGTHENED MULTI-PURPOSE VESSELS. The Company
owns and operates the only two U.S. flag ice-strengthened
multi-purpose vessels. These vessels are capable of
transporting containerized and breakbulk cargo. One of the
vessels is being operated under a charter with the MSC that
will expire in August 1996 and may be extended for an
additional 17-month period at the option of the MSC. The
vessel is being used by the MSC to resupply Pacific rim
military bases and to supply scientific projects in the
Arctic and Antarctic. The other vessel was operated under a
charter with MSC until that charter expired in late 1995.
The MSC did not exercise its option to renew the charter for
an additional 17-month period, and the vessel is now being
operated in the open market on a cargo offered basis.
ROLL-ON/ROLL-OFF VESSELS. In 1983, Waterman was
awarded a contract to operate three U. S. flag roll-on/roll-
off vessels under time charters to the MSC for use by the
United States Navy in its maritime prepositioning ship
("MPS") program. These vessels represent three of the four
MPS vessels currently in the MSC's Atlantic fleet, which
provides support for the U. S. Marine Corps. These ships
are designed primarily to carry rolling stock and
containers, and can each carry support equipment for 17,000
military personnel. Waterman sold the three vessels to
unaffiliated corporations shortly after being awarded the
contract, but retained the right to operate the vessels
under operating agreements. The MSC time charters commenced
in late 1984 and early 1985 for initial five-year periods
and were renewable at the MSC's option for additional five-
year periods up to a maximum of twenty-five years. In 1993,
the Company reached an agreement with MSC to make certain
reductions in future charter hire payments in consideration
of fixing the period of these charters for the full twenty-
five years. The
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charters will now terminate in the years
2009 and 2010. The operating agreements are for
corresponding periods and are renewed as the charters are
renewed.
SEMI-SUBMERSIBLE BARGE. In late 1989, the Company
acquired and commenced operation of a U. S. flag semi-
submersible barge, the Caps Express. The Caps Express was
initially deployed under a charter to the MSC and was used
extensively in Operation Desert Shield/Desert Storm. The
charter expired in April 1991, and the MSC did not exercise
its renewal option. Since that time, the Caps Express has
been operated in the commercial market.
PURE CAR CARRIERS
U. S. FLAG. In 1986, the Company entered into multi-
year charters to carry Toyota and Honda automobiles from
Japan to the United States. To service these charters, the
Company had constructed two U. S. flag pure car carriers
specially designed to carry 4,000 and 4,660 automobiles,
respectively. Both vessels were built in Japan, but are
registered under the U.S. flag, making them two of only four
U.S. flag pure car carriers in the Japanese trade. To be
competitive with foreign flag vessels operated by foreign
crews, the Company worked in close cooperation with the
unions representing the Company's U.S. citizen shipboard
personnel. Service under these charters commenced in the
fourth quarter of 1987. These charters have since been
renewed for additional multi-year terms.
INTERNATIONAL FLAG. Since 1988, the Company has
transported Hyundai automobiles from Korea primarily to the
United States and Europe under two long-term charters. To
service these charters, the Company had two new pure car
carriers constructed by a shipyard affiliated with Hyundai.
Each of the vessels has a carrying capacity of 4,800
automobiles.
Under each of the car carrier charters, the charterers
are responsible for voyage costs including fuel, port and
stevedoring expenses while the Company is responsible for
normal operating expenses including crew wages, repairs and
insurance. The Hyundai charters also include escalation
features covering certain of the expenses paid by the
Company. During the terms of these charters, the Company is
entitled to its full fee irrespective of the number of
voyages completed or the number of cars carried per voyage.
BULK CARRIER
In 1990, the Company acquired a 148,000 dwt cape size
dry bulk carrier. The vessel has since been fully employed
under various charters in specific trading areas where bulk
cargoes move on a regular basis.
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FLOAT-ON/FLOAT-OFF SPECIAL PURPOSE VESSELS
During 1994, the Company entered into a long-term
contract to provide ocean transportation services to a major
mining company producing copper concentrates at its mine in
West Irian Jaya, Indonesia. The Company acquired two semi-
submersible barge carrying vessels and had 26 cargo barges
constructed by shipyards in the Orient to be used with the
aforementioned vessels. The Company also charters a small
container vessel in order to fulfill the requirements of the
contract, which commenced in late 1995. See "Item 7.
Management's Discussion and Analysis of Financial Condition
and Results of Operations - Liquidity and Capital
Resources."
DOMESTIC WATER TRANSPORTATION SERVICES
COAL. In 1981, the Company entered into a 22-year
contract expiring in 2004 with a Florida based rural
electric generation and transmission cooperative for the
transportation of coal from Mt. Vernon, Indiana to Gulf
County, Florida. Under this contract, which was awarded
pursuant to competitive bidding, the Company is annually
guaranteed a minimum of 2.7 million tons of coal to be
transported by inland waterways through its operation of 14
chartered towboats, 108 chartered super-jumbo river barges
and three such barges that it owns. Under this contract,
the Company typically has transported three million tons of
coal per year. To protect both parties against cost
variations, the contract contains escalation and de-
escalation clauses designed to adjust the contract price for
fluctuations in fuel costs, wages and other operating
expenses. The Company is also responsible for unloading the
barges at the discharge point in Gulf County, Florida and
transferring the coal into railcars. To facilitate this
process, the Company owns and operates an automated terminal
facility. The terminal can be operated by relatively few
employees and is capable of loading and unloading three
times the amount of coal currently transported through the
facility under the contract.
In late 1995, the Company purchased an existing U.S.
flag self-unloading Coal Carrier which it concurrently
chartered to a New England based electric utility company
under a 15-year contract to carry coal in the coastwise and
near-sea trade. The ship will also be used, from time to
time during this charter period, to carry coal and other
bulk commodities for account of other major charterers. See
"Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital
Resources."
MOLTEN SULPHUR. In 1994, the Company entered into a 15-
year transportation contract with an affiliate of a major
sulphur producer for which it had built a 24,000 deadweight
ton molten sulphur carrier that carries molten sulphur from
Louisiana and/or Texas to a fertilizer plant on the Florida
Gulf Coast. Under the terms of this contract, the Company
is guaranteed the transportation of a minimum of 1.8 million
tons of
<PAGE 10>
sulphur per year. The contract also gives the
charterer three five-year renewal options. The vessel
delivered and began service during late 1994.
LITCO FACILITY. During 1991, the Company entered into
an agreement with Cooper/T. Smith Stevedoring pursuant to
which the Company acquired a 50% interest in a newly
constructed, all weather rapid cargo transfer facility at
the river port of Memphis, Tennessee for handling LASH
barges transported by subsidiaries of the Company in its
LASH liner services. The terminal began operation in May
1992 and provides 287,500 square feet of enclosed warehouse
and loading/discharging stations for LASH barge, rail, truck
and heavy-lift operations. In June 1993, the Company
purchased the other 50% interest for $1.9 million from
Cooper/T. Smith Stevedoring, which will continue to manage
the facility under a management agreement with the Company.
INVESTMENTS IN SPECIALIZED VESSELS
LIQUID PETROLEUM GAS. In 1985, the Company purchased a
one-third interest in A/S Havtor, a Norwegian company that
owned interests in and chartered-out on a long-term basis
vessels specializing in the transportation of liquid
petroleum gas and various chemical products. In 1985, the
Company also purchased a 14.2% interest in A/S Havtor
Management, a Norwegian ship management company affiliated
with A/S Havtor.
During the first quarter of 1993, the Company sold an
18.5% interest in A/S Havtor thereby reducing its interest
to approximately 14.8%.
In 1994, A/S Havtor, certain associated companies and a
portion of A/S Havtor Management were merged into Havtor AS,
a publicly held company listed on the Oslo Stock Exchange.
After this merger, the Company's interest in Havtor AS was
approximately 12.6%, including both direct and indirect
holdings. Havtor AS operates mainly a fleet of about 25
liquified petroleum gas carriers, 7 dry bulk carriers and
was also joint owner with the Company in two PROBO vessels.
During the first half of 1995, A/S Havtor Management
and the gas carrier activities of Kvaerner, an unrelated
Norwegian company, 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 a 10% interest held in a Liquified
Petroleum Gas carrier. Subsequent to this merger, the
Company's interest in Havtor AS approximated 6.4%.
During the second quarter of 1995, the Company
purchased the Norwegian interest A/S Havfond which held a
promissory note collateralized by shares of Havtor AS.
After this acquisition, the Company's interest in Havtor AS
approximated 7.7%.
In November 1995, the Company sold its 7.7% interest in
Havtor AS for cash of approximately $48 million. The sale
resulted in a before tax gain of approximately $17 million.
See "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations-Other Income
and Expense".
<PAGE 11>
ANCILLARY SERVICES
The Company has several subsidiaries providing ship
charter brokerage, agency, barge fleeting and other
specialized services to the Company's subsidiaries and, in
the case of ship charter brokerage and agency services, to
unaffiliated companies. The income produced by these
services substantially covers the related overhead expenses.
These services facilitate the Company's operations by
allowing it to avoid reliance on third parties to provide
these essential shipping services. The Company also has a
50% equity interest in a firm offering ship management
services in Singapore.
MARKETING
The Company maintains marketing staffs in Washington,
D. C., New York, New Orleans, Houston, Chicago, Baltimore,
Oakland, Rotterdam and Singapore and maintains a network of
marketing agents in major cities around the world who market
the Company's liner, charter and contract services. The
Company markets its Trans-Atlantic LASH liner service under
the trade name "Forest Lines", and its LASH liner service
between the U. S. Gulf and Atlantic coast ports and South
Asia ports under the Waterman house flag. The Company
advertises its service in trade publications in the United
States and abroad.
INSURANCE
The Company maintains protection and indemnity ("P&I")
insurance to cover liabilities arising out of the ownership
or operation of vessels with Assuranceforeningen GARD and
the Standard Steamship Owners' Protection & Indemnity
Association (Bermuda) Ltd., which are mutual shipowners'
insurance organizations commonly referred to as P&I clubs.
Both clubs are participants in and subject to the rules of
their respective international group of P&I associations.
The premium terms and conditions of the P&I coverage
provided to the Company are governed by the rules of each
club.
The Company maintains hull and machinery insurance
policies on each of its vessels in amounts related to the
value of each vessel. This insurance coverage, which
includes increased value, freight and time charter hire, is
maintained with a syndicate of hull underwriters from the
United States, British, French and Scandinavian insurance
markets. The Company maintains war risk insurance on each
of the Company's vessels in an amount equal to each vessel's
total insured hull value. War risk insurance is placed
through U.S., British, French and Scandinavian insurance
markets and covers physical damage to the vessels and P&I
risks for which coverage would be excluded by reason of war
exclusions under either the hull policies or the rules of
the applicable P&I club.
<PAGE 12>
The Company also maintains loss of hire insurance with
U.S., British, French and Scandinavian markets to cover its
loss of revenue in the event that a vessel is unable to
operate for a certain period of time due to loss or damage
arising from the perils covered by the hull and machinery
policy.
Insurance coverage for shoreside property, shipboard
consumables and inventory, spare parts, workers'
compensation, office contents, and general liability risks
are maintained with underwriters in the United States and
British markets. The Company also carries insurance to meet
certain liabilities that could arise from the discharge of
oil or hazardous substances in U.S., international and
foreign waters.
Insurance premiums for the coverage described above
vary from year to year depending upon the Company's loss
record and market conditions. In order to reduce premiums,
the Company maintains certain deductible and co-insurance
provisions that it believes are prudent and generally
consistent with those maintained by other shipping companies
and in recent years has increased the self-retention portion
under its insurance program.
REGULATION
The Company's operations between the United States and
foreign countries are subject to the Shipping Act of 1916
(the "Shipping Act"), which is administered by the Federal
Maritime Commission, and certain provisions of the Federal
Water Pollution Control Act, the Oil Pollution Act of 1990
and the Comprehensive Environmental Response Compensation
and Liability Act, all of which are administered by the U.
S. Coast Guard, and certain other international, federal,
state and local laws and regulations, including
international conventions and laws and regulations of the
flag nations of its vessels. Pursuant to the requirements
of the Shipping Act, the Company has on file with the
Federal Maritime Commission tariffs reflecting the outbound
and inbound rates currently charged by the Company to
transport cargo between the United States and foreign
countries as a common carrier. These tariffs are filed by
the Company either individually or in connection with its
participation as a member of rate or conference agreements,
which are agreements that (upon becoming effective following
filing with the Federal Maritime Commission) permit the
members to agree concertedly upon rates and practices
relating to the carriage of goods in U. S. and foreign ocean
commerce. Tariffs filed by a company unilaterally or
collectively under rate or conference agreements are subject
to Federal Maritime Commission approval. Once a rate or
conference agreement is filed, rates may be changed in
response to market conditions on 30 days' notice, with
respect to a rate increase, and one day's notice, with
respect to a rate decrease.
The Merchant Marine Act of 1936, as amended (the
"Merchant Marine Act"), authorizes the Federal government to
pay an operating differential subsidy to U. S. flag
<PAGE 13>
vessels
employed in the foreign trade of the United States. Under
the subsidy program, MarAd is authorized to pay qualified
U.S. flag operators (i) the differential between U. S. and
foreign crew wage costs and (ii) the differential between
U.S. and foreign costs of protection and indemnity
insurance, hull and machinery insurance, and maintenance
and repairs not compensated by insurance, so that U.S. ships
can compete on an equal footing with their lower-cost
foreign competitors. To qualify for the subsidy, vessels
must be built in the United States, documented under the
U.S. flag and be at least 75% owned by U.S. citizens. Under
subsidy contracts, which are typically 20 years in length,
operators provide service on "essential trade routes" as
determined by MarAd. The typical subsidized operator is
required to employ its vessels between a stated minimum and
maximum number of sailings each year. Currently, four liner
operators, including Waterman, and 13 bulk carrier operators
hold subsidy contracts for a total of 47 liner and 28 bulk
ships. Total U.S. governmental subsidy appropriations for
the fiscal year ended September 30, 1995, were $214.4
million, and $163.6 million has been appropriated for the
fiscal year ending September 30, 1996. Approximately 85% of
the aggregate subsidy is paid to offset crew wage
differentials.
Since 1981, the Federal government has entered into no
new subsidy contracts. In 1991, the Bush administration
announced that current contracts would be honored, but no
new subsidy contracts would be entered into as the old
contracts expire. The Clinton administration has continued
this policy. Waterman's subsidy contract expires on
December 31, 1996, and all other subsidy agreements with
U.S. flag liner operators expire by December 31, 1998. This
year, the Clinton administration proposed legislation that
would implement a new subsidy program, the Maritime Security
Program. If enacted, this program would authorize funding
for approximately 50 U.S. flag ships for up to ten years.
Legislation to authorize the Maritime Security Program has
passed the U.S. House of Representatives and is pending in
the U.S. Senate. Funding for the first year of this program
is likewise pending in Congress. Both Waterman and Central
Gulf would intend to apply for participation in this new
program. There can be no assurance that the Maritime
Security Program will be adopted and funded by Congress,
that if adopted it will be signed by the President, or that
if enacted into law, it will provide funding to all or some
of the Waterman and Central Gulf vessels. Therefore, it is
possible that the existing program will be terminated, that
no replacement program will be enacted, or that a
replacement program will provide substantially less funding
than the current program. Alternative steps are under
consideration so as to continue the Company's competitive
position.
Seven of the Company's U.S. flag LASH vessels were
constructed with the aid of construction differential
subsidies and Title XI loan guarantees administered by
MarAd, the receipt of which obligates the Company to comply
with various dividend and other financial restrictions.
Vessels constructed with the aid of construction
differential subsidies may not be operated in domestic
coastwise trade or domestic trade with Hawaii, Puerto Rico
or Alaska without the permission of MarAd and without
repayment of the construction differential subsidy under a
formula established by law. Recipients of Title XI loan
guarantees must pay an annual fee of up to 1% of the loan
amount.
<PAGE 14>
Under the Merchant Marine Act, U.S. flag vessels are
subject to requisition or charter by the United States
whenever the President declares that the national security
requires such action. The owners of any such vessels must
receive just compensation as provided in the Merchant Marine
Act, but there is no assurance that lost profits, if any,
will be fully recovered. In addition, during any extension
period under each MSC charter or contract, the MSC has the
right to terminate the charter or contract on 30 days'
notice. However, the MSC has never exercised such
termination right with respect to the Company.
Certain of the Company's operations, including its
subsidized U.S. flag LASH liner service and its carriage of
U.S. foreign aid cargoes, as well as the Company's coal and
molten sulphur transportation contracts and its Title XI
financing arrangements, require the Company to be as much as
75% owned by U.S. citizens. The Company monitors its stock
ownership to verify its continuing compliance with these
requirements and has never had more than 1% of its common
stock held of record by non-U.S. citizens. The Company's
charter and stock transfer procedures do not prohibit the
acquisition of its common stock by non-U.S. citizens,
although the Board of Directors has proposed an amendment to
the charter to do so, and that amendment will be voted on by
the Company's stockholders at the Company's annual meeting
to be held in April 1996. See the information contained
under the caption "Proposed Amendment to Certificate of
Incorporation" on pages 11, 12, 13 and 14 of the Company's
"Definitive Proxy Statement" dated March 12, 1996, filed
pursuant to Section 14(a) of the Securities Exchange Act of
1934, which information is incorporated herein by reference.
The Company is required by various governmental and
quasi-governmental agencies to obtain permits, licenses and
certificates with respect to its vessels. The kinds of
permits, licenses and certificates required depend upon such
factors as the country of registry, the commodity
transported, the waters in which the vessel operates, the
nationality of the vessel's crew, the age of the vessel and
the status of the Company as owner or charterer. The
Company believes that it has or can readily obtain all
permits, licenses and certificates necessary to permit its
vessels to operate.
COMPETITION
The shipping industry is intensely competitive and is
influenced by events largely outside the control of shipping
companies. Varying economic factors can cause wide swings
in freight rates and sudden shifts in traffic patterns.
Vessel redeployments and new vessel construction can lead to
an overcapacity of vessels offering the same service or
operating in the same market. Changes in the political or
regulatory environment can also create competition that is
not necessarily based on normal considerations of profit and
loss. The Company's strategy is to reduce competitive
pressures and the effects of cyclical market conditions by
operating specialized vessels in identifiable market
segments and deploying a substantial number of its vessels
<PAGE 15>
under medium- to long-term charters or contracts and on
trade routes where it has established market shares. The
Company also seeks to compete effectively in the traditional
areas of price, reliability and timeliness of service.
Competition principally comes from numerous breakbulk
vessels and, occasionally, containerized vessels.
Much of the Company's revenue is generated by contracts
with the MSC and contracts to transport Public Law-480 U.S.
government-sponsored cargo, a cargo preference program
requiring that 75% of all foreign aid "Food for Peace" cargo
must be transported on U.S. flag vessels, if they are
available at reasonable rates. The Company competes with
all U.S. flag companies, including Overseas Shipholding
Group, Inc., OMI Corporation, Marine Transport Lines, Inc.,
Farrell Lines, Inc., Lykes Brothers Steamship Company, Sea-
Land Service, Inc. and American President Lines, Inc. for
the MSC work and the Public Law-480 cargo. Additionally,
the Company's principal foreign competitors include Hoegh
Lines, Star Shipping, Wilhelmsen Lines, and the Shipping
Corporation of India.
The Company's international flag LASH liner service
faces competition from foreign flag liner operators and, to
a lesser degree, from U. S. flag liner operators, including
those receiving operating differential subsidies. In
addition, during periods in which the Company participates
in conference agreements or rate agreements, competition
includes not only the other participants obligated to charge
the same rates, but also non-participants charging lower
rates.
Because the Company's LASH barges are used primarily to
transport large items, such as forest products, natural
rubber and steel, that cannot be transported as efficiently
in containerized vessels, the Company's LASH fleet often has
a competitive advantage over these vessels for this type of
cargo. In addition, the Company believes that the ability
of its LASH system to operate in shallow harbors and river
systems and its specialized knowledge of these harbors and
river systems give it a competitive advantage over operators
of containerized and breakbulk vessels, which are too large
to operate in these areas.
The Company's pure car carriers operate worldwide in
markets where foreign flag vessels with foreign crews
predominate. The Company believes that its U.S. flag pure
car carriers can continue to compete effectively if it
continues to receive the cooperation of its unions in
controlling costs.
EMPLOYEES
The Company employs approximately 431 shipboard
personnel and 331 shoreside personnel. The Company
considers relations with its employees to be excellent.
<PAGE 16>
All of the Company's U.S. shipboard personnel and
certain shoreside personnel are covered by collective
bargaining agreements. Central Gulf, Waterman and other
U.S. shipping companies are subject to collective bargaining
agreements for shipboard personnel in which the shipping
companies servicing U.S. Gulf and East coast ports also must
make contributions to pension plans for dockside workers.
The Employee Retirement Income Security Act of 1974, as
amended, provides for liabilities for withdrawal from a
multi-employer pension plan if an employer reduces its
operations below a minimum level. It is possible that the
failure or withdrawal of any shipping company employer may
cause other employers (such as the Company) to increase
their plan contributions or result in additional potential
liability. The Company has experienced no strikes or other
significant labor problems during the last ten years.
ITEM 2. PROPERTIES
Vessels. Of the 29 ocean-going vessels in the
Company's fleet, 26 are owned by the Company and three are
operated under operating contracts. Of the approximately
1,650 LASH barges operated in conjunction with the Company's
LASH and FLASH vessels, the Company owns approximately 1,330
barges and leases 320 barges under leases with 12-year terms
expiring in late 2003 and early 2004. The Company also owns
approximately 78 additional LASH barges, which are not
required for current vessel operations. All of the
Company's barges are registered under the U.S. flag. The
Company time charters-in 108 super-jumbo river barges (and
owns three such barges) and 14 towboats specially built to
meet the requirements of the Company's coal transportation
contract. The Company also owns 18 standard river barges
chartered to unaffiliated companies on a short-term basis
and one towboat currently operated on the spot market.
Until May 1993, the 18 river barges were bareboat chartered-
in from affiliates of the Company. Upon the expiration of
these bareboat charters, the Company purchased the barges
from these affiliates for $1.6 million in the aggregate.
Except for the approximately 78 LASH barges that are
not required for the Company's operations, all of the
vessels owned, operated or leased by the Company are in good
condition. Since 1988, the Company has completed life
extension work on six LASH vessels, completed the
refurbishment of approximately 1,300 related barges and
acquired 167 LASH barges. Management believes that the
useful lives of these vessels have been extended by this
work through at least 2003. Under governmental regulations,
insurance policies and certain of the Company's financing
agreements and charters, the Company is required to maintain
its vessels in accordance with standards of seaworthiness,
safety and health prescribed by governmental regulations or
promulgated by certain vessel classification societies.
Vessels in the fleet are maintained in accordance with
governmental regulations and the highest classification
standards of the American Bureau of Shipping or, for certain
vessels registered overseas, of Norwegian Veritas or Lloyds
Register classification societies.
<PAGE 17>
Certain of the vessels and barges owned by the
Company's subsidiaries are mortgaged to various lenders to
secure such subsidiaries' long-term debt. See Note B of the
Notes to the Company's Consolidated Financial Statements
included elsewhere herein.
Other Properties. The Company leases its corporate
headquarters in New Orleans, its administrative and sales
office in New York and office space in Houston, Chicago,
Oakland and Washington, D. C. The Company also leases space
in St. Charles and Orleans Parishes, Louisiana for the
fleeting of barges. Additionally, the Company leases a
terminal in Memphis, Tennessee that is a totally enclosed
multi-modal cargo transfer facility. In 1995, the aggregate
annual rental payments under these operating leases were
approximately $2.4 million.
The Company owns two separate facilities in St. Charles
Parish, Louisiana and one facility in Jefferson Parish,
Louisiana that are used primarily for the storage and
fleeting of barges. The Company also owns a terminal in
Gulf County, Florida that is used in its coal transportation
contract.
ITEM 3. LEGAL PROCEEDINGS
The Company is a defendant in various lawsuits that
have arisen in the ordinary course of its business in which
claimants seek damages of various amounts for personal
injuries, property damage and other matters. All material
claims asserted under lawsuits of this nature are believed
to be covered by insurance.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
<PAGE 18>
ITEM 4a. EXECUTIVE OFFICERS AND DIRECTORS OF THE REGISTRANT
Set forth below is information concerning the directors
and executive officers of the Company. Directors are
elected by the shareholders for one year terms. Executive
officers serve at the pleasure of the Board of Directors.
<TABLE>
<CAPTION>
Name Current Position
<S> <C>
Niels W. Johnsen Chairman and Chief Executive Officer
Erik F. Johnsen President,Chief Operating Officer and Director
Harold S. Grehan, Jr. Vice President and Director
Niels M. Johnsen Vice President and Director
Erik L. Johnsen Vice President and Director
Gary L. Ferguson Vice President and Chief Financial Officer
David B. Drake Treasurer
Laurance Eustis Director
Raymond V. O'Brien, Jr. Director
Edwin Lupberger Director
Edward K. Trowbridge Director
</TABLE>
Niels W. Johnsen, 73, has been the Chairman and Chief
Executive Officer of the Company since its commencement of
operations in 1979 and is also Chairman and Chief Executive
Officer of each of the Company's principal subsidiaries. He
previously served as Chairman of Trans Union Corporation's
ocean shipping group of companies from December 1971 through
May 1979. He was one of the founders of Central Gulf in
1947 and held various positions with Central Gulf until
Trans Union acquired Central Gulf in 1971. He is also a
director and trustee of Atlantic Mutual Companies, an
insurance company and a director of Reserve Fund, Inc., a
money market fund.
Erik F. Johnsen, 70, has been the President, Chief
Operating Officer and Director of the Company since its
commencement of operations in 1979 and is also the President
and Chief Operating Officer of each of the Company's
principal subsidiaries except Waterman for which he serves
as Chairman of the Executive Committee. Along with his
brother, Niels W. Johnsen, he was one of the founders of
Central Gulf in 1947 and has served as its President since
1966. Mr. Johnsen is also a director of First Commerce
Corporation, a bank holding company.
Harold S. Grehan, Jr., 68, is Vice President of the
Company. He joined Central Gulf in 1958 and became Vice
President in 1959, Senior Vice President in 1973 and
Executive Vice President and Director in 1979. He
participated in the development of the Company's LASH
program and has direct responsibility for conventional and
LASH vessel traffic movements.
<PAGE 19>
Niels M. Johnsen, 50, is Vice President of the Company.
Mr. Johnsen has served as a director of the Company since
April 1988. He joined Central Gulf on a full time basis in
1970 and held various positions with the Company before
being named Vice President in 1986. He is also President of
Waterman Steamship Corporation and N. W. Johnsen & Co.,
Inc., subsidiaries of the Company engaged in LASH liner
service and ship and cargo charter brokerage, respectively.
He is the son of Niels W. Johnsen.
Erik L. Johnsen, 38, is Vice President of the Company.
He joined Central Gulf in 1979 and held various positions
with the Company before being named Vice President in 1987.
He is responsible for all operations of the Company's vessel
fleet and leads the Company's Ship Management Group. He is
also President of Sulphur Carriers, Inc., a wholly-owned
subsidiary of the Company. He is the son of Erik F.
Johnsen.
Gary L. Ferguson, 55, is Vice President and Chief
Financial Officer of the Company. He joined Central Gulf in
1968 where he held various positions with the Company prior
to being named Controller in 1977, and Vice President and
Chief Financial Officer in 1989.
David B. Drake, 40, is Treasurer of the Company. He
joined Central Gulf in 1979 and held various positions prior
to being named Treasurer in 1995.
Laurance Eustis, 82, has served as a director of the
Company since 1979. He is the Chairman of the Board of
Eustis Insurance, Inc., mortgage banking and general
insurance, located in New Orleans, Louisiana. Mr. Eustis is
also a director of First Commerce Corporation, a bank
holding company, and Pan American Life Insurance Company.
Raymond V. O'Brien, Jr., 68, has served as a director
of the Company since 1979. He is also a director of
Emigrant Savings Bank. He served as Chairman of the Board
and Chief Executive Officer of the Emigrant Savings Bank
from January 1978 through December 1992.
Edwin Lupberger, 59, has served as a director of the
Company since April 1988. Mr. Lupberger is the Chairman of
the Board, Chief Executive Officer and Director of Entergy
Corporation and its wholly-owned subsidiaries. He also is a
director of First Commerce Corporation, a bank holding
company.
Edward K. Trowbridge, 67, has served as a director of
the Company since April 1994. He served as Chairman of the
Board and Chief Executive Officer of the Atlantic Mutual
Companies from July 1988 through November 1993.
<PAGE 20>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND
RELATED SECURITY HOLDER MATTERS.
The information called for by Item 5 is included in the
1995 Annual Report to Shareholders in the section entitled
"Common Stock Prices and Dividends for Each Quarterly Period
of 1994 and 1995" and is incorporated herein by reference to
page 23 of Exhibit 13 filed with this 10-K.
ITEM 6. SELECTED FINANCIAL DATA
The information called for by Item 6 is included in the
1995 Annual Report to Shareholders in the section entitled
"Summary of Selected Consolidated Financial Data" and is
incorporated herein by reference to page 1 of Exhibit 13
filed with this 10-K.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The information called for by Item 7 is included in the
1995 Annual Report to Shareholders in the section entitled
"Management's Discussion and Analysis of Financial Condition
and Results of Operations" and is incorporated herein by
reference to pages 7 through 9 of Exhibit 13 filed with this
10-K.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated balance sheets as of December 31,
1995, and December 31, 1994, and the related consolidated
statements of income, changes in stockholders' investment
and cash flows for each of the three years in the period
ended December 31, 1995 are included in the 1995 Annual
Report to the Shareholders and are incorporated herein by
reference to pages 10 through 14 of Exhibit 13 filed with
this 10-K. Such statements have been audited by Arthur
Andersen LLP, independent public accountants, as set forth
in their report included in such Annual Report and
incorporated herein by reference to page 24 of Exhibit 13
filed with this 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None
<PAGE 21>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information called for by Item 10 is incorporated
herein by reference to Item 4a, Executive Officers and
Directors of the Registrant.
ITEM 11. EXECUTIVE COMPENSATION
The information called for by Item 11 is included on
pages 7, 8 and 9 of the Company's definitive proxy statement
dated March 12, 1996, filed pursuant to Section 14(a) of the
Securities Exchange Act of 1934, and is incorporated herein
by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The information called for by Item 12 is included on
pages 2, 3, 4 and 5 of the Company's definitive proxy
statement dated March 12, 1996, filed pursuant to Section
14(a) of the Securities Exchange Act of 1934, and is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information called for by Item 13 is included on
pages 2, 3, 4, 5 and 9 of the Company's definitive proxy
statement dated March 12, 1996, filed pursuant to Section
14(a) of the Securities Exchange Act of 1934, and is
incorporated herein by reference.
<PAGE 22>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K
The following financial statements, schedules and
exhibits are filed as part of this report:
(a) 1. FINANCIAL STATEMENTS
The following financial statements and related
notes are included in the Company's 1995 Annual
Report to Shareholders and are incorporated herein
by reference to pages 10 through 24 of Exhibit 13
filed with this 10-K.
Consolidated Balance Sheets at December 31,
1995 and 1994
Consolidated Statements of Income for the years
ended December 31, 1995, 1994, and 1993
Consolidated Statements of Changes in
Stockholders' Investment for the years ended
December 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows for the
years ended December 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
Report of Independent Public Accountants
2. FINANCIAL STATEMENT SCHEDULES
None.
3. EXHIBITS
(3) Restated Certificate of Incorporation, as
amended, and By-Laws of the Registrant
(filed with the Securities and Exchange
Commission as Exhibit 3 to the Registrant's
Annual Report on Form 10-K for the year
ended December 31, 1987 and incorporated
herein by reference)
(4) Specimen of Common Stock Certificate (filed
as an exhibit to the Company's Form 8-A
filed with the Securities and Exchange
Commission on April 25, 1980 and
incorporated herein by reference)
<PAGE 23>
(4.1) Form of Indenture between the Company
and the Bank of New York, as Trustee,
with respect to 9% Senior Notes due
July 1, 2003 (filed as Exhibit 4(c)
to Amendment No. 1 to the Company's
Registration Statement on Form S-2
(Registration No. 33-62168) and
incorporated herein by reference).
(4.2) Form of 9% Senior Note due July 1, 2003
(included in Exhibit (4.1) hereto and
incorporated herein by reference).
(11) Statement regarding Computation of Earnings
per Share
(13) 1995 Annual Report to Shareholders
(21) Subsidiaries of International Shipholding
Corporation
(b) The Company filed a form 8-K Current Report dated
November 16, 1995, which reported under Item 5 the sale
of their interest of approximately 8% in Havtor AS, a
publicly listed company on the Oslo Stock Exchange. No
financial statements were filed with the Report.
(c) The Index of Exhibits and required Exhibits are
included following the signatures beginning at page 26 of
this Report.
<PAGE 24>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
(Registrant)
/S/Gary L. Ferguson
March 25, 1996 By ______________________________
Gary L. Ferguson
Vice President and Chief Financial
Officer
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities and on the dates indicated.
INTERNATIONAL SHIPHOLDING CORPORATION
(Registrant)
/S/Niels W. Johnsen
March 25, 1996 By ____________________________
Niels W. Johnsen
Chairman of the Board, Director and
Chief Executive Officer
/S/Erik F. Johnsen
March 25, 1996 By _____________________________
Erik F. Johnsen
President and Director
/S/Harold S. Grehan, Jr.
March 25, 1996 By _____________________________
Harold S. Grehan, Jr.
Vice President and Director
<PAGE 25>
/S/Niels M. Johnsen
March 25, 1996 By _____________________________
Niels M. Johnsen
Vice President and Director
/S/Erik L. Johnsen
March 25, 1996 By _____________________________
Erik L. Johnsen
Vice President and Director
/S/Gary L. Ferguson
March 25, 1996 __________________________
Gary L. Ferguson
Vice President and
Chief Financial Officer
/S/Laurance Eustis
March 25, 1996 By __________________________
Laurance Eustis
Director
/S/Raymond V. O'Brien, Jr.
March 25, 1996 By __________________________
Raymond V. O'Brien, Jr.
/S/Edwin Lupberger
March 25, 1996 By __________________________
Edwin Lupberger
Director
/S/Edward K. Trowbridge
March 25, 1996 By ____________________________
Edward K. Trowbridge
Director
<page 26>
/S/Deanie E. Jones
March 25, 1996 By _____________________________
Deanie E. Jones
Chief Accounting Officer
<PAGE 27>
INTERNATIONAL SHIPHOLDING CORPORATION
EXHIBIT INDEX
<TABLE>
<CAPTION>
Page
Exhibit Number
------- -------
<S> <C>
(3) Restated Certificate of Incorporation, as amended, and as
amended, and By-Laws of the Registrant (filed with the
Securities and Exchange Commission as Exhibit 3 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1987 and incorporated herein by reference) --
(4) Specimen of Common Stock certificate (filed as an exhibit to
the Company's Form 8-A filed with the Securities and Exchange
Commission on April 25, 1980 and incorporated herein by reference) --
(4.1)Form of Indenture between the Company and the Bank of New
York, as Trustee, with respect to 9% Senior Notes due July 1,
2003 (filed as Exhibit 4(c) to Amendment No. 1 to the Company's
Registration Statement on Form S-2 (Registration No.33-62168)
and incorporated herein by reference). --
(4.2)Form of 9% Senior Note due July 1, 2003 (included in Exhibit (4.1)
hereto and incorporated herein by reference. --
(11) Statement Regarding Computation of Earnings Per Share --
(13) 1995 Annual Report to Shareholders --
(22) Subsidiaries of International Shipholding Corporation --
</TABLE>
<PAGE 1>
INTERNATIONAL SHIPHOLDING CORPORATION
SUMMARY OF SELECTED CONSOLIDATED FINANCIAL DATA
(All Amounts in Thousands Except Share, Per Share Data and
Ratios)
<TABLE>
Consistent Operating Results
($ In Millions)
<CAPTION>
OPERATING
YEAR EBITDA* INCOME
- - ---- ------ ---------
<S> <C> <C>
1989 61.8 31.4
1990 73.0 34.9
1991 73.5 33.5
1992 75.2 30.9
1993 81.2 36.5
1994 79.5 37.9
1995 81.9 37.9
</TABLE>
The following summary of selected consolidated
financial data is not covered by the auditors' report
appearing elsewhere herein. However, in the opinion of
management the summary of selected consolidated financial
data includes all adjustments necessary for a fair
representation of each of the years presented. This summary
should be read in conjunction with the consolidated
financial statements and the notes thereto appearing
elsewhere in this annual report.
<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994 1993 1992 1991
-------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues $ 341,789 $ 342,333 $ 341,651 $ 324,608 $ 328,429
Gross Voyage Profits $ 64,536 $ 65,315 $ 64,318 $ 57,581 $ 61,303
Operating Income $ 37,921 $ 37,861 $ 36,486 $ 30,935 $ 33,457
Income Before
Extraordinary Item and
Cumulative Effect of
Accounting Change $ 20,980 $ 13,051 $ 7,645 $ 6,499 $ 15,233
Extraordinary Item - - $ (1,716) - -
Cumulative Effect of
Accounting Change - - - $ (3,218) -
Net Income $ 20,980 $ 13,051 $ 5,929 $ 3,281 $ 15,233
Earnings Per Common
and Common Equivalent
Shares:
Before Extraordinary
Item and Cumulative
Effect of Accounting
Change $ 3.14 $ 1.95 $ 1.01 $ 0.77 $ 2.13
Extraordinary Item - - $ (0.26) - -
Cumulative Effect of
Accounting Change - - - $ (0.50) -
Net Income $ 3.14 $ 1.95 $ 0.75 $ 0.27 $ 2.13
* Earnings Before
Interest, Taxes,
Depreciation and
Amortization $ 81,877 $ 79,482 $ 81,166 $ 75,209 $ 73,482
BALANCE SHEET DATA:
Working Capital $ 13,407 $ 16,819 $ 17,649 $ 7,920 $ 28,327
Total Assets $ 647,580 $ 547,091 $ 531,372 $ 519,963 $ 496,994
Long-Term Debt
(including
Capital Lease
Obligations) $ 289,495 $ 251,944 $ 240,132 $ 231,148 $ 200,472
Redeemable Preferred
Stock - - - $ 13,548 $ 13,290
Common Stockholders'
Investment $ 166,261 $ 146,316 $ 134,497 $ 124,004 $ 123,408
Ratio of Long-Term
Debt and Capital Lease
Obligations to Common
Stockholders'
Investment 1.74:1 1.72:1 1.79:1 1.86:1 1.62:1
Ratio of Long-Term
Debt to Earnings
Before Interest,
Taxes, Depreciation
and Amortization 3.54:1 3.17:1 2.96:1 3.07:1 2.73:1
Long-Term Debt as a
Percentage of Sum of
Long-Term Debt,
Redeemable Preferred
Preferred Stock and
Common Stockholders'
Investment 64% 63% 64% 63% 59%
OTHER DATA:
Cash Dividends Per
Common Share $ 0.1825 $ 0.16 $ 0.16 $ 0.16 $ 0.16
Weighted Average of
Common and Common
Equivalent Shares: 6,682,887 6,682,887 6,525,259 6,423,583 6,406,933
</TABLE>
[FN]
All per share and weighted average share amounts have been
restated for November 17, 1995 twenty-five percent stock
dividend.
<PAGE 2>
TO THE SHAREHOLDERS
Net profit for the fourth quarter ended December 31,
1995 was $14.845 Million or $2.23 per share compared to a net
profit in the fourth quarter 1994 of $3.715 Million or $0.69
per share ($.55 per share after restatement for 25% stock
Dividend). For the twelve months ended December 31, 1995,
net profit was $20.980 Million or $3.14 per share compared
with a net profit of $13.051 Million or $2.44 per share ($1.95
per share after restatement for 25% stock dividend) for
the twelve months ended December 31, 1994. The fourth
quarter 1995 and twelve months 1995 reflect an after tax
gain of $11.3 Million on the sale of our 8% interest in
Havtor A/S, a Norwegian shipowning company acquired by
another Norwegian shipowner in an expansion of its interests
in Liquified Petroleum Gas Carriers. The proceeds from this
sale are available for reinvestment or retiring debt.
Aside from the gain on the sale of Havtor A/S shares,
our operating income for the year ended December 31, 1995
was $37.921 Million compared to $37.861 Million in 1994,
$36.5 Million in 1993, $30.9 Million in 1992 and $33.5
Million in 1991. For the last five years, our Earnings
Before Interest, Taxes, Depreciation and Amortization
(EBITDA) have run from $73.5 Million to $81.9 Million
(average of $78.26 Million) providing conservative coverage
for debt service.
The book equity of the Company has grown from $123.408
Million in 1991 to $166.261 Million in 1995. Our
conservative approach in the market place has enabled us to
report 45 consecutive quarters without a loss.
Forest Lines Trans-Atlantic LASH service completed
another good year. If cargo offerings continue at the
current favorable level, we expect to be able to add a third
LASH vessel to the service by mid-year 1996.
Waterman service between U.S. Gulf and Atlantic ports
and South Asia had a down year in 1995, but a notable
improvement in the fourth quarter. Freight rates have now
increased slightly for some Eastbound cargoes along with
better volume. We look forward to somewhat improved results
for this service in 1996.
During 1995, we continued our LASH vessels and two
Multi-Purpose Ice-Strengthened vessels on medium term
charters to the Military Sealift Command (MSC). Also, three
RO/RO vessels continued to operate on long-term charter to
MSC. Results were satisfactory. One of the Ice-
Strengthened vessels, the "GREEN RIDGE", was redelivered at
year's end and is now employed in the carriage of general
cargo in the Atlantic Ocean area. We are now reviewing
future employment opportunities for the two LASH vessels
whose charters expire in May, 1996. They are potential
candidates for renewal of charters with MSC and/or
deployment in one of our other services.
Our Cape-Size Bulk carrier, "AMAZON", was redelivered
from a time charter in January, 1996 and is now employed
carrying grain in the spot market. Freight rates in the
bulk carrier markets have recently become depressed. We
intend to utilize the "AMAZON" on short voyages until
freight rates increase.
The four specialized Car Carriers in our fleet continue
to operate successfully on long-term charters to major
Japanese and South Korean car manufacturers.
The M.V. "SULPHUR ENTERPRISE" as of the end of 1995 has
made 100 trips carrying a total of about 2.4 Million tons of
molten sulphur since her delivery from the shipbuilders in
October, 1994. She is performing under a long-term contract
with a major mineral resource company.
The M.V. "BALI SEA" and M.V. "BANDA SEA", two Float-
On/Float-Off Heavy Lift vessels, together with 26 Special
Purpose Barges, were all delivered to one of our subsidiary
companies from Far Eastern shipyards between August, 1995
and December, 1995. These vessels have now begun service as
of December, 1995, under a long-term contract providing ocean
transportation of supplies to a large mining operation on
Irian Jaya, Indonesia, from various ports in the South
Pacific area.
The S.S. "ENERGY ENTERPRISE", a 38,164 long ton
deadweight capacity conveyor-belt equipped coal carrier
finally completed shipyard work on February 6, 1996, shifted
to Newport News, Virginia, and loaded her first coal cargo
under our ownership and charter to a New England electric
utility company. She thereby began employment under a 15-
year charter carrying coal in the coastwise and near-sea
trade. From time to time during this charter period, she
will also perform service for other customers.
During 1995, our river barge system carried a total of
3,200,000 tons of coal from loading points on the Ohio
River to Florida via the Mississippi River Intracoastal
Waterways and our coal transfer facility in Gulf County,
Florida.
After completion of the merger of Havtor A/S with
Kvaerner Industries reported in our 1994 Annual Report, a
further merger of the combined companies was effected with
Bergesen A/S, another large Norwegian
<PAGE 3>
shipowning company. The
surviving company, Bergesen, is now the world's largest
owner of Liquified Petroleum Gas (LPG) Carriers in addition
to a substantial fleet of Oil Tankers, a total of sixty-six
(66) LPG Carriers and twenty (20) VLCC and ULCC Tankers. We
accepted cash for our shares of Havtor A/S as reported
above.
1995 was a relatively good year in the international
dry bulk cargo markets. Rates peaked at highest level
achieved in recent years in May; but as the year unfolded ,
rates began to decline. New large bulk carriers entered the
market from Far Eastern shipyards before a sufficient number
of obsolete vessels were sold for demolition. A total of
about 16.8 million deadweight tons of ships were sold for
demolition during the year, about 3.6 million deadweight
tons less than 1994. Of the tonnage sold for scrapping in
1995, 12.3 million deadweight tons were tankers and
combination carriers. The balance were dry cargo carriers,
much less than necessary to offset newbuilding deliveries.
As the new year begins, the dry bulk cargo markets enter
another down cycle particularly for Cape-Size bulk carriers.
The outlook, therefore, is for depressed freight rates for
the rest of 1996 until more of the older ships are scrapped
and cargo volumes increase to absorb scheduled newbuildings.
However, lower freight rates should encourage older bulk
carriers to be sold for scrapping.
Since almost all of our business is medium to long-term
contracts or market share in dedicated trades, we are not
seriously impacted by the fluctuating bulk cargo markets.
We, therefore, expect to ride out the 1996 depressed bulk
market while expecting an upturn in 1997. In the meantime,
the Company's strong financial position will enable it to
take advantage of investing in new projects meeting our
policy goals.
At a regular meeting on January 24, 1996, the Board of
Directors declared a quarterly dividend of $.0625 per share
payable on March 15, 1996 to shareholders of record on March
1, 1996. Previously , the Board authorized a 25% stock
dividend paid on November 17, 1995 and increased the
quarterly dividend rate payable December 15, 1995 to the new
rate of $.0625 per share.
/s/Niels W. Johnsen
Niels W. Johnsen
Chairman
/s/Erik F. Johnsen
Erik F. Johnsen
President
<PAGE 4>
INTERNATIONAL SHIPHOLDING CORPORATION
REVIEW OF OPERATIONS
International Shipholding Corporation, through its
subsidiaries and associates, is engaged in various types of
waterborne freight transportation-LASH (for Lighter Aboard
Ship) carriage, Pure Car Carrier services, roll-on/roll-off,
breakbulk and bulk carrier services, inland vessel and barge
transportation-with emphasis on medium to long-term
contracts and charters. The Company has offices in New
York, New Orleans, Washington, D.C., and Houston, and
maintains a network of marketing agents in major cities
worldwide.
Principal subsidiaries of the Company include Central Gulf
Lines, Inc., Waterman Steamship Corporation, Forest Lines
Inc., and LCI Shipholdings, Inc., who together operate a
fleet of 29 modern vessels.
LASH-The Company placed the world's first two LASH vessels
in operation in 1969 and 1970, and has continued as a
leading owner and operator of this type of ocean
transportation. The Company's LASH system operations
consist of 10 large ocean carriers, three ocean towed feeder
LASH vessels, one self-propelled feeder LASH vessel, and a
fleet of 1,650 LASH barges.
The large LASH vessels each carry between 83 and 89
LASH barges and utilize additional spaces aboard ship for
cargo not loaded into barges. The barges, all of a standard
size with cargo capacity of 375 tons, are towed in ports and
on inland waterways to various shipping points where they
are loaded with cargo and returned to the ocean going
vessel. They are hoisted aboard by a special ship-board
gantry-type crane and transported overseas where the process
is reversed.
The LASH ships do not require special docks or
terminals, and are generally worked at anchor in river,
roadsteads and light traffic port areas. LASH cargo rarely
requires transshipment, moving from origin to destination
under one bill of lading.
Waterman Steamship Corporation operates four of the
large U.S. Flag LASH vessels on subsidized liner service
between the U.S. Gulf and Atlantic coasts and the Middle
East, East Africa, the Indian Sub-Continent, and southeast
Asia. A variety of general, bulk and project cargo is
transported outbound, while large amounts of rubber, coffee
and general cargo are carried inbound.
Waterman also operates a fifth large U.S. Flag LASH
vessel under charter to the U.S. Navy's Military Sealift
Command (MSC).
Two of the Company's large international flag LASH
vessels are being operated in the Trans-Atlantic service by
the Company's subsidiary, Forest Lines Inc. Outbound the
vessels carry a variety of cargoes and have medium to long-
term contracts with several major shippers; inbound they
carry various general cargoes, primarily steel, from
European ports to the United States.
Central Gulf Lines, Inc. operates the other three large
U.S. Flag LASH vessels under time charters to the Military
Sealift Command.
FLASH-The three 8-LASH barge capacity, ocean towed, float-
on/float-off feeder LASH (FLASH) units are being operated
between various southeast Asian ports as an integral part of
the Waterman service.
DOCKSHIP-The 15-LASH barge capacity float-on/float-off
DOCKSHIP is being operated in conjunction with Forest Lines'
Trans-Atlantic LASH service to facilitate movement of LASH
barges between European ports.
PURE CAR CARRIERS-Central Gulf Lines, Inc. continued the
operation during 1995 of its two U.S. Flag Pure Car
Carriers, M/V "GREEN LAKE" and M/V "GREEN BAY", under
contracts with Toyota Motor Corporation and Honda Motor Co.,
Ltd. to transport automobiles between Japan and North
America.
The Company, through its LCI Shipholdings, Inc.
subsidiary, also continued the operation of its two 4,800-
car capacity Pure Car Carriers, M/V "CYPRESS PASS" and M/V
"CYPRESS TRAIL", transporting automobiles from the Far East
to the United States and Europe for the account of Hyundai.
BREAKBULK SERVICES-The Company's U.S. Flag Semi-Submersible
Barge (SSB), "CAPS EXPRESS", is being operated in the open
market on a cargo offered basis.
ROLL-ON/ROLL-OFF SERVICES-The Company, through its Waterman
Steamship Corporation subsidiary, is operating three modern
U.S. Flag Roll-On/Roll-Off vessels,
<PAGE 5>
S.S. "SGT. MATEJ KOCAK",
S.S. "PFC. E.A. OBREGON", AND S.S. "MAJ. S.W. PLESS", under
long-term charters to the Military Sealift Command.
ICE STRENGTHENED MULTI-PURPOSE VESSELS-During 1995 the
Company's two U.S. Flag Ice Strengthened Multi-Purpose
vessels, M/V "GREEN WAVE" and M/V "GREEN RIDGE", continued
to be operated under medium term charters to the Military
Sealift Command. The "GREEN RIDGE" was redelivered from
its MSC charter in December 1995, and is currently employed
in the carriage of general cargo.
CAPE-SIZE BULK CARRIER-The Company's 148,000 DWT. Cape-Size
Bulk Carrier, M/V "AMAZON", was redelivered from a time
charter in January, 1996 and is now employed in the spot
market carrying grain.
SULPHUR CARRIER-The M/V "SULPHUR ENTERPRISE" continued to
carry molten sulphur from Louisiana to U.S. Gulf ports under
its long-term contract with a large mineral resource
company.
FLOAT-ON/FLOAT-OFF SPECIAL PURPOSE VESSEL (SPV)-The Company
in 1995 acquired two semi-submersible barge-carrying vessels
and had them converted to carry newbuilt special purpose
barges under a long-term contract with a major copper and
gold mining company to provide ocean transportation of
supplies to its mining operation in Indonesia. The two
Float-On/Float-Off SPV's, renamed M/V "BALI SEA" and M/V
"BANDA SEA", together with 26 special purpose barges,
commenced work on the contract in December, 1995.
COAL CARRIER-The Company took title in September of 1995 to
the S.S. "ENERGY INDEPENDENCE", a self-unloading, conveyor-
belt equipped U.S. Flag Coal Carrier eligible for U.S.
domestic trade. The 38,164 DWT, vessel, renamed "ENERGY
ENTERPRISE", completed shipyard work and commenced service
in February, 1996 under a long-term charter to a New England
electric utility company, carrying coal in the coastwise and
near-sea trade.
<PAGE 6>
<TABLE>
FLEET
STATISTICS
<CAPTION>
Total Dead- Total Dead-
Weight Carrying Weight Carrying
Owned vessels Number Capacity (ea.) Capacity
- - ----------------------------------------------------------
<S> <C> <C> <C>
LASH 3 47,500 L.T. 142,500 L.T.
LASH 6 46,150 276,900
LASH 1 39,493 39,493
PURE CAR CARRIERS 2 10,500 21,000
PURE CAR CARRIERS 2 12,700 25,400
FLASH 3 3,600 10,800
DOCKSHIP 1 6,800 6,800
RO/RO 3* 25,476 76,428
ICE STRENGTHENED
MULTI-PURPOSE 2 12,820 25,640
CAPE-SIZE BULK
CARRIER 1 148,000 148,000
MOLTEN SULPHUR
CARRIER 1 29,000 29,000
SEMI-SUBMERSIBLE
BARGE (SSB) 1 14,894 14,894
FLOAT-ON/FLOAT-
OFF SPECIAL
PURPOSE VESSELS
(SPV) 2 21,880 43,760
COAL CARRIER 1 38,164 38,164
JUMBO RIVER
BARGES 111* 3,100 344,100
RIVER BARGES 18 1,500 27,000
- - -------------------------------------------------
FLEET CAPACITY - 1995 1,269,879
VESSELS 29*
LASH BARGES 1,650*
RIVER BARGES 129*
SPECIAL
PURPOSE
BARGES 26
TOWBOATS 15*
*Includes leased equipment.
DOMESTIC TRANSPORTATION-Central Gulf Lines, Inc. has a long-
term contract with a Florida based electric utility for the
transportation of coal from Mt. Vernon, Indiana to the
Company's coal transfer facility at Port St. Joe, Florida,
where the coal is trans-loaded into railcars and moved to
the utility's plant site at Palatka, FL. The Company is
responsible for the waterborne movement of the coal from the
loading point on the Ohio River to the discharge point at
the terminal and for unloading the barges there and
transferring the coal into railcars.
The Company operates 111 hopper barges, 15 towboats and
certain terminal transfer equipment in carrying out the
requirements of the contract.
LITCO TERMINAL COMPLEX-The Company's LITCO (LASH Intermodal
Terminal Company) Terminal at Memphis is in its fourth year
of operation and has continued to experience satisfactory
utilization. The terminal is the only totally enclosed
multi-modal cargo transfer facility in the United States,
providing 287,000 sq. ft. of enclosed warehouse and
loading/discharging stations for LASH barge, rail, truck,
and heavy-lift operations.
LITCO is strategically located to move cargo on just-in-
time scheduling between major inland markets and world
ports, and is contributing positively to the performance of
both Forest Lines and Waterman services by improved turn-
around time of the Company's LASH barge fleet.
<PAGE 7>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Company's vessels are operated under a variety of
charters 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 vessel 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 operating performance than revenues.
Accordingly, the discussion below addresses variations in
gross voyage profits rather than variations in revenues.
RESULTS OF OPERATIONS
Year ended December 31, 1995 Compared to Year Ended
December 31, 1994
GROSS VOYAGE PROFIT. Gross voyage profit decreased 12%
to $64.5 million in 1995 as compared to $65.3 million in
1994. Gross voyage profit was negatively impacted by lower
freight rates and higher operating costs for the Company's
LASH vessels employed in liner service between ports on the
U.S. Gulf/U.S. Atlantic Coast and South Asia (Trade Routes
18 and 17). Also impacting 1995 results was a scheduled
rate reduction on one of the Company's vessels chartered to
the Military Sealift Command (the "MSC"). Partially
offsetting these reductions was the addition of a molten
sulphur carrier in early fourth quarter of 1994.
The Company currently charters eight vessel to the MSC.
A new charter with an initial period of seventeen months
with two seventeen month option periods began in early 1995
for one of the Company's LASH vessels. During 1995, the MSC
exercised the second of two seventeen month option periods
which extends through early 1997 on another of the Company's
LASH vessels. The two remaining LASH vessels on charter to
the MSC are operating under charters which expire in mid-
1996 and future employment opportunities for these vessels
are being reviewed. During 1995, the MSC also exercised the
first of two seventeen month option periods on one of the
Company's two ice strengthened multi-purpose vessels which
extends into mid-1996. The MSC did not exercise its option
to renew the charter of the Company's other ice strengthened
multi-purpose carrier when it expired in late 1995. This
vessel is now being operated in the open market on a cargo
offered basis. The three Roll-On/Roll-Off vessels on
charter to the Military Prepositioning Service are fixed on
MSC charters that will terminate in the years 2009 and 2010.
Vessel and barge depreciation increased by 6.3% to
$24.7 million during 1995 as compared to $23.3 million in
1994 primarily due to the addition of a molten sulphur
carrier in early fourth quarter of 1994. This increase was
partially offset by 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 EXPENSES. Administrative and general
expenses decreased 2.7% to $26.6 million during 1995 as
compared to $27.4 million in 1994 stemming from a continuing
cost reduction program.
Interest expense increased 18.1% to $25.6 million in
1995 as compared to $21.7 million in 1994 primarily due to
interest incurred on the following: the financing of a
molten sulphur carrier that delivered in October 1994,
interest rate conversion agreements, and financing received
in early 1995 for general corporate purposes in the amount
of $12.0 million. This increase was partially offset by
regularly scheduled debt payments of $28.5 million.
Investment income decreased slightly from $2.8 million
in 1994 to $2.7 million in 1995 reflecting a reduction in
the average balance of invested funds. Additionally,
investment income in 1994 reflected the recognition of
interest on a promissory note related to the sale of an
investment in an unconsolidated entity. This promissory
note was acquired by the Company in the first half of 1995.
The Company's equity in net income of unconsolidated
entities was $0.3 million in 1995 as compared to equity in
losses of $0.1 million in 1994. The Company's interest in
these entities was liquidated in 1995.
As of December 31, 1994, the Company held an
approximate 12.6% interest including both direct and
indirect interests in Havtor AS, a publicly listed company
on the Oslo Stock Exchange. The Company also held a 14.2%
interest in A/S Havtor Management, a privately held
Norwegian ship management company affiliated with Havtor AS.
As of December 31, 1994, 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 half of 1995, A/S Havtor Management
and the gas carrier activities of Kvaerner, an unrelated
Norwegian company, 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. Subsequent to the merger, the
Company's interest including both direct and indirect
interests in Havtor AS approximated 7.7%. During November
1995 the Company sold this 7.7% interest in Havtor AS for
approximately $48 million. The sale resulted in a before
tax gain of approximately $17 million.
INCOME TAXES. The Company provided $11.4 million and
$6.6 million for Federal income taxes at the statutory rate
of 35% for 1995 and 1994, respectively. Income of
unconsolidated entities is shown net of applicable taxes.
<PAGE 8>
Year Ended December 31, 1994 Compared to Year Ended
December 31, 1993
GROSS VOYAGE PROFIT. Gross voyage profit increased
1.6% to $65.3 million in 1994 as compared to $64.3 million
in 1993. Positively affecting 1994 results were improved
freight rates and increased volume in the Company's Trans-
Atlantic LASH liner service. Also contributing to the
increased gross voyage profit in 1994 was the addition in
early fourth quarter of a newly built vessel employed
carrying molten sulphur under a long-term contract with a
major sulphur producer. Results for 1994 also reflected
only 79 days out-of-service for drydocking, an unusually low
number, as compared to 292 days in 1993. These increases
were partially offset by reduced freight rates on the
Eastbound leg of the Company's LASH vessels employed in
liner service between ports on the U.S. Gulf/U.S. Atlantic
Coast and South Asia (Trade Routes 18 and 17). Also
impacting 1994 results were scheduled reductions in rates
earned on some of the Company's MSC charter operations,
primarily reflecting negotiated adjustments for three Roll-
On/Roll-Off vessels in consideration of fixing the period of
these charter for the full 25 years. Scheduled rate
reductions were also implemented upon the exercise of the
first option periods for two LASH vessels.
Vessel and barge depreciation decreased by 2.8% to
$23.3 million during 1994 as compared to $23.9 million in
1993 primarily due to the life extension of two LASH vessels
which were purchased in 1994 upon the termination of the
capital lease of these vessels. The reduction was partially
offset by the amortization of costs associated with the
Company's barge refurbishment program and costs associated
with upgrade work on a breakbulk vessel.
OTHER INCOME AND EXPENSES. Administrative and general
expenses decreased 3.0% to $27.4 million during 1994 as
compared to $28.2 million in 1993. This reduction resulted
primarily from the expensing in 1993 of approximately $1.0
million in costs that related to a proposed acquisition that
was not consummated.
Interest expense increased to $21.7 million in 1994 as
compared to $21.2 million in 1993 primarily due to interest
incurred on the Company's $100 million, 9% Senior Notes
issued in July, 1993, interest incurred on the financing of
a molten sulphur carrier that delivered in October 1994, and
higher interest rates on variable rate loans. This increase
was partially offset by regularly scheduled debt payments of
$37.1 million in 1994 and prepayment of $58.9 million of
debt during 1993 from the proceeds of the $100 million
Senior Notes.
Investment income increased from $1.7 million in 1993
to $2.8 million in 1994. This increase reflected higher
interest rates earned on invested funds and the recognition
of interest earned on a promissory note related to the sale
of an 18.5% interest in A/S Havtor as further discussed
below. Additionally impacting the favorable variance was a
higher average balance of invested funds during 1994.
The Company's equity in losses of unconsolidated
entities decreased from $2.3 million in 1993 to $0.1 million
in 1994, primarily resulting from the sale during 1994 of
interests the Company held in A/S Havtor and A/S Havtor
Management.
During 1993 the Company sold an 18.5% direct interest
in A/S Havtor for $7.6 million, of which $2.8 million was
received in cash and $4.8 million was received in the form
of a promissory note. The transaction reduced the Company's
direct interest in A/S Havtor to 14.8% and resulted in a
gain after taxes of approximately $.9 million. A provision
for doubtful accounts was recorded in 1993 to reflect the
deferral of the gain until receipt of the proceeds from the
promissory note, which was scheduled to mature in mid-1996.
In 1994, A/S Havtor and associated Norwegian companies
merged with a publicly listed company the on Oslo Stock
Exchange. This new public company, Havtor AS, operated
mainly Liquified Petroleum Gas (LPG) carriers. In
substitution for the A/S Havtor stock held as collateral
under the aforementioned promissory note, shares of Havtor
AS were pledged. Due to the liquidity and market value of
these shares, deferral of the gain was no longer necessary;
therefore during 1994 the related allowance was reversed
resulting in income after tax of $0.9 million.
INCOME TAXES. The Company provided $6.6 million for
Federal income taxes at the statutory rate of 35% for both
years 1994 and 1993.
OPERATING DIFFERENTIAL SUBSIDY.
For the years ended December 31, 1995, 1994 and 1993,
the Company received aggregate operating differential
subsidy payments of $22.7 million, $21.7 million and $19.3
million, respectively. The Company's subsidy agreement
expires on December 31, 1996, and all other subsidy
agreements with U.S. flag operators expire on December 31,
1997. It is not clear at this point whether the subsidies
will be renewed. If the subsidy program is not renewed, the
Company will be required to consider various options for its
U.S. Flag vessels receiving operating differential subsidy,
including vessel modifications that would increase fuel
efficiency, reduction of crew size and wages to more closely
approximate those of non-subsidized vessels, reduction of
other operating expenses, and/or transfer to foreign flag
operations with foreign crews.
____________________________________________________________
LIQUIDITY AND CAPITAL RESOURCES
The following discussion should be read in conjunction
with the more detailed Consolidated Balance Sheets and
Consolidated Statements of Cash Flows included elsewhere
herein as part of the Company's Consolidated Financial
Statements.
The Company's working capital decreased from $16.8
million at December 31, 1994 to $13.4 million at December
31, 1995 after provision for current maturities of long-term
debt of $40.8 million and capital lease obligations of $1.5
million. Cash and cash equivalents increased during 1995 by
$24.7 million to a total of $54.3 million.
Positive cash flows were achieved from operating
activities during 1995 in the amount of $54.0 million. The
major source of cash from operations was net income,
adjusted for noncash provisions such as depreciation,
amortization and gains and losses on the sale of assets.
<PAGE 9>
Net cash used for investing activities amounted to
$79.2 million during 1995. Capital investments included
$65.4 million for the purchase of a U.S. flag coal carrier,
$53.6 million for the purchase and conversion of two semi-
submersible vessels and related cargo barges, $2.6 million
for upgrades to information systems, $2.6 million for the
purchase of a towboat and $3.7 million in other
miscellaneous items. Also, the Company added $11.7 million
of deferred charge items, primarily drydocking and vessel
survey expenditures. The Company received approximately
$48.6 million from the sale of the Company's interest in
Havtor AS and $2.8 million from the liquidation of
securities. Net cash used for other investing activities
amounted to $9.1 million and included $3.1 million
previously placed in escrow for the purchase of a coal
carrier which was delivered in 1995 and $5.6 million
previously held as collateral for a letter of credit
related to the construction of 26 barges which were
delivered in 1995.
Net cash provided by financing activities amounted to
$49.9 million. Proceeds from the issuance of debt
obligations of $105.7 million included $50.0 million
received from a medium-term loan used for the purchase of a
U.S. flag coal carrier, $29.2 million received from a long-
term loan associated with the acquisition and conversion of
two semi-submersible barge carrying vessels and related
cargo barges, $14.5 million drawn under lines of credit, and
$12.0 million from a medium-term loan which was used for
general corporate purposes. These proceeds were partially
offset by regularly scheduled principal payments of $28.5
million and repayment of $24.5 million drawn under lines of
credit and $0.9 million to prepay a portion of the Senior
Notes issued in 1993. The Company also added $0.6 million
in deferred financing charges. Additionally, $1.2 million
was used to meet common stock dividend requirements.
The Company has entered into a long-term contract to
provide ocean transportation services to a major mining
company producing copper concentrates at its mine in West
Irian Jaya, Indonesia. The Company has acquired two semi-
submersible barge carrying vessels and constructed 26 cargo
barges to be used with the aforementioned vessels. The cost
of these capital expenditures is expected to approximate
$80.1 million of which $55.6 million was paid during 1995.
The remaining $24.5 million will be paid during 1996 with a
major portion to be financed through a long-term loan from
commercial banks on a variable rate basis.
During the third quarter of 1995, the Company acquired
a U.S. Flag Coal Carrier at which time the vessel entered a
shipyard to undergo work to meet classification requirements
and for preventative maintenance. The vessel completed
shipyard work in early 1996 and began employment under a 15
year charter carrying coal in the coastwise and near-sea
trade and from time to time during this charter period will
also perform service for other customers. The Company
obtained medium-term financing on a variable rate basis with
a commercial bank for $50 million to cover a major portion
of the combined cost of the acquisition and subsequent
shipyard requirement totaling approximately $73 million. In
late 1995, the Company received a commitment for long-term
refinancing of the $50 million through the private placement
market at more favorable terms.
In the third quarter of 1988, the Board of Directors
declared a quarterly dividend of $.05 per share and has
continued quarterly dividends in the same amount for each
quarterly period through the third quarter of 1995. The
Board increased the dividend to $.0625 per share in the
fourth quarter of 1995 and has expressed its intent to
continue to declare similar quarterly dividends in the
future, subject to the ability of the Company's operating
subsidiaries to continue to achieve satisfactory earnings.
During fourth quarter of 1995, the Company distributed a
twenty-five percent stock split effected in the form of a
stock dividend. Cash dividends on common stock during 1995
amounted to approximately $1.2 million.
The Financial Accounting Standards Board issued
Statement No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to Be Disposed Of",
during 1995. This statement requires that long-lived assets
be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying value of an asset
may not be recoverable. Measurement of the impairment loss
should be based on the fair value of the asset. Adoption of
the statement, which is required in 1996, is not anticipated
to have a material effect on the Company's financial
position or results of operations. However, there can be no
assurance that current circumstances and market values of
the Company's long-lives assets will not change.
Management believes that normal operations will provide
sufficient working capital and cash flows to meet debt
service and dividend requirements during the foreseeable
future.
To meet short-term requirements when fluctuations occur
in working capital, the Company has available four lines of
credit totaling $35 million, none of which were drawn as of
December 31, 1995.
The Company has not been notified that it is a
potentially responsible party in connection with any
environmental matters.
<PAGE 10>
</TABLE>
<TABLE>
INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED BALANCE SHEETS
(All Amounts in Thousands)
<CAPTION>
December 31, December 31,
ASSETS 1995 1994
------------ ------------
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents $ 54,281 $ 29,611
Marketable Securities 4,630 7,096
Accounts Receivable, Net of
Allowance for Doubtful
Accounts of $409 and $404 in
1995 and 1994, Respectively:
Traffic 30,659 28,952
Agents' 10,352 10,087
Claims and Other 5,823 7,805
Net Investment in Direct
Financing Leases 2,104 2,186
Other Current Assets 3,521 3,847
Material and Supplies
Inventory, At Cost 10,545 8,954
------- -------
Total Current Assets 121,915 98,538
------- -------
Investments in and
Advances to Unconsolidated
Entities:
At Cost - 13,152
At Equity - 20,008
------- -------
- 33,160
------- -------
Net Investment in Direct
Financing Leases 24,482 26,588
------- -------
Vessel, Property
and Other Equipment,
At Cost:
Vessels and Barges 634,905 481,814
Other Marine Equipment 7,570 7,745
Terminal Facilities 18,126 17,925
Land 2,317 2,317
Furniture and Equipment 15,892 13,056
------- -------
678,810 522,857
Less - Accumulated Depreciation (243,929) (214,395)
-------- --------
434,881 308,462
-------- --------
Other Assets:
Deferred Charges in Process of
Amortization 26,952 30,613
Acquired Contract Costs, Net of
Accumulated Amortization
of $16,496 and $14,044 in
1995 and 1994, Respectively 21,733 24,185
Due from Related Parties 535 6,174
Other 17,082 19,371
------- -------
66,302 80,343
------- -------
$ 647,580 $ 547,091
======= =======
</TABLE>
[FN]
The accompanying notes are an integral part of these statements.
<PAGE 11>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' INVESTMENT
(ALL AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)
December 31, December 31,
1995 1994
------------ ------------
<S> <C> <C>
Current Liabilities:
Current Maturities of Long-Term Debt $ 40,785 $ 26,755
Current Maturities of Capital
Lease Obligations 1,469 1,329
Accounts Payable and Accrued
Liabilities 77,481 53,061
Federal Income Tax Payable 6,520 260
Current Deferred Income Tax Liability 1,283 314
Current Liabilities to be Refinanced (19,030) -
-------- -------
Total Current Liabilities 108,508 81,719
-------- -------
Current Liabilities to be Refinanced 19,030 -
-------- -------
Billings in Excess of Income Earned
and Expenses Incurred 4,639 4,471
-------- -------
Long-Term Capital Lease Obligations,
Less Current Maturitites 19,623 21,092
-------- -------
Long-Term Debt, Less Current Maturities 269,872 230,852
-------- -------
Reserves and Deferred Credits:
Deferred Income Taxes 38,668 39,414
Claims and Other 20,979 23,227
------- -------
59,647 62,641
------- -------
Stockholders' Investment:
Common Stock, $1.00 Par Value,
10,000,000 Shares Authorized,
6,756,330 and 5,405,366 Shares
Issued at December 31, 1995 and
1994, Respectively 6,756 5,405
Additional Paid-in Capital 54,450 54,450
Retained Earnings 106,158 87,757
Less - 73,443 and 58,755 Shares
of Common Stock in Treasury,
at cost, at December 31, 1995
and 1994, Respectively (1,133) (1,133)
Unrealized Holding Gain (Loss) on
Marketable Securities 30 (163)
------- -------
166,261 146,316
------- -------
$ 647,580 $ 547,091
========= ==========
</TABLE>
[FN]
The accompanying notes are an integral part of these statements.
<PAGE 12>
<TABLE>
INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
(All Amounts in Thousands Except Per Share Data)
Year Ended December 31,
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Revenues $ 319,084 $ 320,585 $ 322,313
Operating Differential Subsidy 22,705 21,748 19,338
--------- --------- ---------
341,789 342,333 341,651
--------- --------- ---------
Operating Expenses:
Voyage Expenses 252,506 253,729 253,386
Vessel and Barge Depreciation 24,747 23,289 23,947
--------- --------- ---------
Gross Voyage Profit 64,536 65,315 64,318
--------- --------- ---------
Administrative and
General Expenses 26,622 27,371 28,206
Gain(Loss) on Sale of Assets 7 (83) 374
--------- --------- ---------
Operating Income 37,921 37,861 36,486
--------- --------- ---------
Interest:
Interest Expense 25,561 21,650 21,245
Investment Income (2,676) (2,826) (1,748)
--------- --------- ---------
22,885 18,824 19,497
--------- --------- ---------
Gain on Sale of Investments 17,409 - -
--------- --------- ---------
Unconsolidated Entities (Net
of Applicable Taxes):
Equity in Net Income (Loss)
of Unconsolidated Entities 331 (124) (2,289)
Gain on Sale of Equity
Interests - - 900
Provision for Doubtful
Accounts - 900 (900)
--------- --------- ---------
331 776 (2,289)
--------- --------- ---------
Income Before Provision for
Income Taxes and
Extraordinary Item 32,776 19,813 14,700
--------- --------- ---------
Provision for Income Taxes:
Current 11,296 4,961 714
Deferred 94 1,621 5,851
State 406 180 490
--------- --------- ---------
11,796 6,762 7,055
--------- --------- ---------
Income Before Extraordinary Item $ 20,980 $ 13,051 $ 7,645
--------- --------- ---------
Extraordinary Loss on Early
Extinguishment of Debt (Net of
Income Tax Benefit of $924) - - (1,716)
--------- --------- ---------
Net Income $ 20,980 13,051 5,929
Less:
Preferred Stock Dividends - - 868
Accretion of Discount on
Preferred Stock - - 202
--------- --------- ---------
Net Income Applicable to
Common and Common
Equivalent Shares $ 20,980 $ 13,051 $ 4,859
========= ========= =========
Earnings Per Share:
Income Before Extraordinary
Loss $ 3.14 $ 1.95 $ 1.01
Extraordinary Loss $ - $ - $ (0.26)
--------- --------- ---------
Net Income $ 3.14 $ 1.95 $ 0.75
========= ========= =========
</TABLE>
[FN]
The accompanying notes are an integral part of these statements.
<PAGE 13>
<TABLE>
INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' INVESTMENT
<CAPTION>
Net
(All Amounts in Additional Unrealized
Thousands Except Common Paid-In Retained Treasury Holding
Share Data) Stock Capital Earnings Stock Gain/(Loss) Total
-----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at
December 31,1992 $4,978 $48,216 $71,943 ($1,133) $ - $124,004
Net Income for
Year Ended
December 31, 1993 - - 5,929 - - 5,929
Preferred Stock
Dividends - - (868) - - (868)
Accretion of
Discount on
Preferred Stock - - (202) - - (202)
Cash Dividends - - (1,027) - - (1,027)
Issuance of Stock,
427,500 Shares
Pursuant to Exercise
of Warrants 427 6,234 - - - 6,661
------ ------- ---------- -------- ----------- --------
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 Taxes - - - - (163) (163)
------- ------- ---------- --------- ----------- -------
Balance at
December 31,1994 $ 5,405 $54,450 $ 87,757 ($1,133) ($163) $146,316
======= ======= ========== ========= =========== ========
Net Income for Year
Ended December 31,
1995 - - 20,980 - - 20,980
Cash Dividends - - ( 1,228) - - (1,228)
25% Stock Dividend 1,351 - ( 1,351) - - -
Unrealized Holding
Gain on Marketable
Securities, Net of
Deferred Taxes - - - - 193 193
----- ------- --------- --------- ----------- -------
Balance at December
31,1995 $6,756 $54,450 $106,158 ($1,133) $ 30 $166,261
====== ======= ========== ========= =========== ========
</TABLE>
[FN]
The accompanying notes are an integral part of these statements.
<PAGE 14>
<TABLE>
INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Year Ended December 31,
1995 1994 1993
(All Amounts in Thousands) ------- ------- --------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net Income $20,980 $13,051 $ 5,929
Adjustments to Reconcile Net
Income to Net Cash Provided
by Operating Activities:
Depreciation 26,653 24,516 24,895
Amortization of Deferred
Charges and Other Assets 17,310 17,105 19,785
Provision for Deferred
Income Taxes 94 1,568 5,851
Equity in Unconsolidated
Subsidiaries (331) (776) 2,289
Loss (Gain) on Sale of
Vessel and Other Property (7) 83 (374)
Gain on Sale of Investment
in Havtor AS (17,409) - -
Extraordinary Loss - - 1,716
Changes in:
Accounts Receivable 543 (466) (534)
Net Investment in
Direct Financing Leases 2,188 2,258 2,314
Other Assets 2,599 1,138 3,267
Inventories and Other
Current Assets (1,334) 1,718 (1,551)
Accounts Payable and
Accrued Liabilities (694) (634) 11,989
Federal Income Taxes
Payable 6,084 - -
Unearned Income 168 45 (6,431)
Reserve for Claims and
Other Deferred Credits (2,866) (772) (5,926)
-------- ---------- ---------
Net Cash Provided by Operating
Activities 53,978 58,834 63,219
-------- ---------- ---------
Cash Flows from Investing Activities:
Purchase of Vessels and Other
Property (127,942) (56,977) (12,044)
Additions to Deferred Charges (11,682) ( 6,188) (19,612)
Proceeds from Sale of Vessels
and Other Property 7 710 3,201
Proceeds from (Purchase of)
Short-Term Investments 2,763 12,182 (19,278)
Investment in and Advances to
Unconsolidated Entities - 1,447 377
Purchase of LITCO - - (1,606)
Proceeds from Sale of Havtor AS 48,621 - -
Other Investing Activities 9,067 (7,983) -
--------- --------- ---------
Net Cash Used by Investing
Activities (79,166) (56,809) (48,962)
--------- --------- ---------
Cash Flows from Financing Activities:
Proceeds from Issuance of Debt
and Capital Lease Obligations 105,651 90,538 146,748
Reduction of Debt and Capital
Lease Obligations (53,930) (83,121) (154,224)
Additions to Deferred
Financing Charges (635) (388) (4,639)
Preferred and Common Stock
Dividends Paid (1,228) (1,069) (1,895)
Proceeds from Issuance of
Common Stock - - 4,250
Redemption of Preferred Stock - - (13,750)
-------- --------- ----------
Net Cash Provided (Used) by
Financing Activities 49,858 5,960 (23,510)
-------- --------- ----------
Net Increase (Decrease) in Cash
and Cash Equivalents 24,670 7,985 (9,253)
Cash and Cash Equivalents at
Beginning of Period 29,611 21,626 30,879
-------- --------- ----------
Cash and Cash Equivalents at
End of Period $ 54,281 $ 29,611 $ 21,626
======== ========= ==========
</TABLE>
[FN]
The accompanying notes are an integral part of these statements.
<PAGE 15>
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying financial statements include the
accounts of International Shipholding Corporation and its
consolidated subsidiaries (the Company). 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 a 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.
Certain reclassifications have been made to the prior
period financial information in order to conform to current
year presentation.
NATURE OF OPERATIONS
The Company, through its subsidiaries, operates a
diversified fleet of U.S. and international flag vessels
that provide international and domestic maritime
transportation services to commercial customers and agencies
of the United States government primarily under medium- to
long-term charters or contracts. The Company's fleet
consists of 29 ocean-going vessels, 15 towboats, 129 river
barges, 26 special purpose barges, approximately 1,650 LASH
barges and related shoreside handling facilities. The
Company's strategy is to (i) identify customers with marine
transportation needs requiring specialized vessels or
operating techniques, (ii) seek medium- to long-term
charters or contracts with those customers and, if
necessary, modify, acquire or construct vessels to meet the
requirements of those charters or contracts, and (iii)
secure financing for the vessels predicated primarily on
those charter or contract arrangements.
PERVASIVENESS OF ESTIMATES
The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates.
VOYAGE ACCOUNTING
Revenues and expenses relating to voyages are recorded
on the percentage-of-completion method, except that
provisions for loss voyages are recorded when contracts for
the voyages are fixed or when losses become apparent for
voyages in progress. Use of the percentage-of-completion
method requires management to make estimates and assumptions
that affect the reported amount of revenues and expenses
during the reported period. Actual results could differ
from those estimates.
VESSELS AND OTHER PROPERTY
Costs of all major property additions and betterments
are capitalized. Ordinary maintenance and repair costs are
expensed as incurred. Interest and finance costs relating
to vessels, barges and other equipment under construction
are capitalized to properly reflect the cost of assets
acquired. Capitalized interest totaled $2,721,000,
$1,763,000, and $918,000 for the years ended December 31,
1995, 1994, and 1993, respectively.
Assets under capital lease are recorded on the balance
sheet under the caption Vessels, Property and Other
Equipment (See Note G).
For financial reporting purposes, vessels are generally
depreciated over their estimated useful life of 25 years
from construction using the straight-line method. As a
result of major capital improvements during 1990, 1991, and
early 1992, the useful lives of the Company's LASH vessels
have been extended from 25 to 30 years. In late 1994, the
Company purchased two previously leased LASH vessels at fair
market value. The estimated useful lives from construction
of each of these vessels is 30 years. The two pure car
carriers along with the two SPLASH vessels and associated
Fuel and Hopper barges are being depreciated over estimated
useful lives of 20 years. The coal terminal is being
depreciated over 22 years and the LITCO terminal is being
depreciated over 11 years. Other marine equipment is being
depreciated predominantly over a four year period.
The Company groups all LASH barges into pools with
estimated useful lives corresponding to the remaining useful
lives of the vessels with which they are utilized. Major
barge refurbishments are capitalized and included in the
aforementioned group of barge pools. The estimated useful
lives of the pools have been extended through 2003 in
accordance with the extension of the vessel lives. The
Company refurbished a major portion of these barges during
1990 through 1992 to allow utilization through 2003.
From time to time, the Company disposes of barges in
the ordinary course of business. In these cases, proceeds
from the disposition are credited to the remaining net book
value of the respective pool and future depreciation charges
are adjusted accordingly.
INCOME TAXES
Deferred income taxes are provided on items of income
and expense which affect taxable income in one period and
financial income in another.
Certain foreign operations are not subject to income
taxation under pertinent provisions of the laws of the
country of incorporation or operation. However, pursuant to
existing U.S. Tax Laws, earnings from certain foreign
operations are subject to U.S. income taxes (See Note D).
FOREIGN CURRENCY TRANSLATION
All exchange adjustments are charged or credited to
income in the year incurred. Exchange losses of $159,000,
$119,000, and $359,000 were recognized for the years ended
December 31, 1995, 1994, and 1993, respectively.
<PAGE 16>
DIVIDEND POLICY
On November 17, 1995, the Company distributed a twenty-
five percent stock split effected in the form of a stock
dividend to shareholders of record at the close of business
on November 3, 1995. Fractional shares were purchased by
the Company at the reported last sale price per share on the
record date, adjusted to reflect the dividend. All per
share and weighted average share amounts have been restated
to reflect the 25% dividend. The Board of Directors
declared and paid dividends of $.05 per share ($.04 per
share after giving effect to the 25% stock dividend) for the
first, second, and third quarters in 1995 and for each
quarter in 1994 and 1993. A dividend of $.0625 was declared
and paid for the fourth quarter in 1995.
Subsequent to year end a dividend of $.0625 per
common share was declared to be paid in the first quarter of
1996. The payment of dividends is subject to restrictions
set forth in certain of the Company's debt instruments. The
Company paid dividends on its common stock of $1,228,000,
$1,069,000, and $1,027,000 in 1995, 1994, and 1993,
respectively. Such amounts did not exceed restrictions set
forth in these agreements or its other debt instruments.
NET INCOME PER COMMON SHARE
Primary earnings per common share are based on the
weighted average number of shares outstanding during the
period after consideration of the dilutive effect of stock
warrants based on the average market price of common stock
for the period. The primary weighted average number of
common shares outstanding was 6,682,887, 6,682,887, and
6,525,259 for the years ended December 31, 1995, 1994, and
1993, respectively. Primary and fully diluted weighted
average common shares outstanding were the same for each of
these years.
OPERATING DIFFERENTIAL SUBSIDY AGREEMENTS
The Company operates a fleet of four U.S. Flag vessels
under an operating differential subsidy ("ODS") agreement
with the U.S. Maritime Administration ("MarAd"), an agency
of the Department of Transportation ("DOT") under Title VI
of the Merchant Marine Act of 1936, as amended. Under this
agreement, MarAd agrees to pay the excess of certain vessel
expenses over comparable vessel expenses of principal
foreign competitors in each respective trade route through
the scheduled termination date of December 31, 1996. These
vessels are employed in a liner service between ports on the
U.S. Gulf/U.S. Atlantic Coast and South Asia (Trade Routes
18 and 17).
The Company's subsidy agreement expires on December 31,
1996, and all other subsidy agreements with U.S. flag
operators expire on December 31, 1997. It is not clear at
this point whether the subsidies will be renewed. If the
subsidy program is not renewed the Company will be required
to consider various options for its U.S. Flag vessels
receiving ODS, including vessel modifications that would
increase fuel efficiency, reduction of crew size and wages
to more closely approximate those of non-subsidized vessels,
reduction of other operating expenses, and/or transfer to
foreign flag operations with foreign crews.
Traffic accounts receivable include $4,949,000 and
$3,080,000 due from MarAd under these ODS agreements at
December 31, 1995 and 1994, respectively. Subsidy billings
are based on rates furnished by MarAd.
SELF-RETENTION INSURANCE
Effective December 1, 1993, the Company became self-
insured for most Personal Injury and Cargo claims under
$1,000,000 and for Hull claims under $2,500,000. The
Company maintains insurance for claims over the above
amounts and maintains Stop Loss insurance to cover aggregate
claims below $1,000,000 and $ 2,500,000.00. Under the Stop
Loss insurance, the Company is responsible for all claims
under $1,000,000 and $2,500,000 until the total amount of
claims between primary deductibles and the above amounts
reach $7,000,000 in the aggregate per year. Primary
deductibles are $25,000 for Hull, Personal Injury and
Cargo, and $1,000 for LASH barges. After the Company has
retained $7,000,000 in the aggregate, all additional claims
are recoverable from underwriters. From February 20, 1992
until December 1, 1993, the Company was self-insured for
most personal injury and cargo claims under $250,000.
Provisions for losses are recorded based on the Company's
estimate of the eventual settlement costs. The current
portions of these liabilities were $4,698,000 and $1,978,000
at December 31, 1995 and 1994, and the noncurrent portions
of these liabilities were $5,459,000 and $5,789,000 at
December 31, 1995 and 1994, respectively.
NOTE B - LONG-TERM DEBT
<TABLE>
<CAPTION>
(All Amounts in Thousands)
December 31, Balance at December 31,
Description 1995 1994 Due 1995 1994
- - ----------- ----------- ----------- ---------- ------- -------
<S> <C> <C> <C> <C> <C>
Unsecured Senior
Notes - Fixed Rate 9.00% 9.00% 2003 $93,891 $94,800
Fixed Rate Notes
Payable 8.25-10.50% 8.25-10.50% 1999-2002 52,926 67,707
Variable Rate
Notes Payable 6.625-7.808% 6.6875-7.75% 1997-2005 113,479 39,824
U.S. Government
Guaranteed Ship
Financing Notes
and Bonds -
Fixed Rate 6.58-8.30% 6.58-8.30% 2000-2009 50,361 55,276
------- -------
$310,657 $257,607
Less Current Maturities (40,785) (26,755)
------- -------
$269,872 $230,852
======== ========
</TABLE>
<PAGE 17>
The aggregate principal payments required as of
December 31, 1995 for each of the next five years are
$40,785,000 in 1996, $35,035,000 in 1997, $32,804,000 in
1998, $28,876,000 in 1999, and $19,445,000 in 2000.
Certain of the vessels and barges owned by the Company
are mortgaged under certain debt agreements. Additional
collateral includes a security interest in certain operating
contracts and receivables. Most of these agreements, among
other things, impose minimum working capital and net worth
requirements, as defined, impose restrictions on the payment
of dividends (see Note A), and prohibit the Company from
incurring, without prior written consent, additional debt or
lease obligations, except as defined. The Company has
consistently met the minimum working capital and net worth
requirements during the period covered by the agreements and
is in compliance with these requirements as of December 31,
1995.
Under the most restrictive of its credit agreements,
the Company cannot declare or pay dividends unless (1) the
total of (a) all dividends paid, distributions on or other
payments made with respect to the Company's capital stock
during the period beginning October 1, 1989 and ending on
the date of dividend declaration or other payment and (b)
all investments other than Qualified Investments (as
defined) of the Company and certain designated subsidiaries
will not exceed the sum of $3,000,000 plus 50% (or, in case
of a loss, minus 100%) of the Company's consolidated net
income during the period described above plus the net cash
proceeds received from the issuance of common stock by the
Company during the above period, and (2) no default or event
of default has occurred.
Certain loan agreements also restrict the ability of
the Company's subsidiaries to make dividend payments, loans
or advances, the most restrictive of which contain covenants
that restrict payments of dividends, loans or advances to
the Company from Central Gulf Lines, Inc., Waterman
Steamship Corporation and Sulphur Carriers, Inc. unless
certain financial ratios are maintained. As long as those
ratios are maintained, there is no restriction on loans or
advances to the Company from those subsidiaries; however,
dividends generally are restricted to 40% of the most recent
four quarters' net income of Central Gulf Lines, Inc., and
Waterman Steamship Corporation. Dividends of Sulphur
Carriers, Inc. are restricted to 40% of undistributed
earnings.
The amounts of restricted assets as of December 31,
were as follows:
<TABLE>
<CAPTION>
(In Thousands)
1995 1994
-------- ---------
<S> <C> <C>
New Combo, Inc. $ - $ 415
Cypress Auto Carriers,Inc. 9,264 8,625
Sulphur Carriers, Inc. 21,588 21,588
Waterman Steamship Corporation 65,136 69,674
Central Gulf Lines, Inc. 79,581 69,141
-------- --------
Total Restricted Net Assets $175,569 $169,443
======== ========
</TABLE>
The Company has available four lines of credit totaling
$35,000,000. These lines were undrawn as of December 31,
1995, and two of these lines were fully drawn as of December
31, 1994 for an amount totaling $10,000,000. These lines of
credit are used to meet short-term requirements when
fluctuations occur in working capital. The Company is
required to maintain a $375,000 compensating balance for one
of the lines of credit. This balance is included in Cash
and Cash Equivalents.
Under certain of the above described loan agreements,
deposits are made into bank retention accounts to meet the
requirements of the applicable agreements. At December 31,
1995, these escrowed amounts totaled $4,867,000, which was
included in Other Assets. At December 31, 1994, these
escrowed amounts totaled $21,021,000 of which $1,000,000 was
included in Cash and Other Cash Equivalents, $7,096,000 in
Marketable Securities, and $12,925,000 in Other Assets.
NOTE C - PENSION PLAN AND POSTRETIREMENT BENEFITS
The Company's retirement plan covers all full-time
employees of domestic subsidiaries who are not otherwise
covered under union-sponsored plans. The benefits are based
on years of service and the employee's highest sixty
consecutive months of compensation. The Company's funding
policy is based on minimum contributions required under
ERISA as determined through an actuarial computation. Plan
assets consist primarily of investments in certain bank
common trust funds of trust quality assets and money market
holdings.
The following table sets forth the plan's funded status
and pension costs recognized by the Company at December 31,
1995 and 1994.
Actuarial Present Value of Benefit Obligations:
<TABLE>
<CAPTION>
(All Amounts in Thousands) December 31, December 31,
1995 1994
---------- -----------
<S> <C> <C>
Vested Benefit Obligation $ (9,680) $ (8,658)
========== ===========
Accumulated Benefit Obligation $ (9,795) $ (8,784)
========== ===========
Projected Benefit Obligation $ (10,886) $ (9,805)
Plan Assets at Fair Value 12,306 10,172
---------- ----------
Plan Assets in Excess of
Projected Benefit Obligation 1,420 367
Unrecognized Net Gain (1,310) (373)
Prior Service Cost Not Yet Recognized
in Net Periodic Pension Cost 157 184
Unrecognized Net Obligation Being
Recognized Over 15 Years 371 445
---------- -----------
Accrued Pension Asset $ 638 $ 623
========== ===========
</TABLE>
<TABLE>
Net Periodic Pension Cost:
<CAPTION>
1995 1994 1993
______ ______ ______
<S> <C> <C> <C>
Service Cost $ 451 $ 469 $ 396
Interest Cost on Projected Benefit
Obligation 752 701 630
Actual Return on Plan Assets (2,130) 150 (1,033)
Net Amortization and Deferral (1,355) (922) 343
------- ------ ------
Net Periodic Pension Cost $ 428 $ 398 $ 336
======= ====== ======
</TABLE>
Actuarial assumptions used to develop the components of
pension expense for the years ended December 31, 1995, 1994
and 1993 were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
----- ---- ----
<S> <C> <C> <C>
Discount Rate 7.25% 8.0% 7.5%
Rate of Increase in Future
Compensation Levels 5.0% 6.0% 6.0%
Expected Long-term Rate of
Return on Assets 8.5% 8.5% 8.5%
</TABLE>
<PAGE 18>
Crew members on the Company's U.S. flag vessels belong
to union-sponsored pension plans. The Company contributed
approximately $2,004,000, $2,106,000 and $2,495,000 to these
plans for the years ended December 31, 1995, 1994 and 1993,
respectively. These contributions are in accordance with
provisions of negotiated labor contracts and generally are
based on the amount of straight pay received by the union
members. Information from the plans' administrators is not
available to permit the Company to determine whether there
may be unfunded vested benefits.
The Company's postretirement benefit plans currently
provide medical, dental and life insurance benefits to
eligible retired employees and their eligible dependents.
The following table sets forth the plans' combined funded
status reconciled with the amount included in the Company's
balance sheet classification Reserves and Deferred Credits
at December 31, 1995 and 1994 (All Amounts in Thousands):
<TABLE>
Accumulated Postretirement Benefit Obligation:
<CAPTION>
1995 1994
________ ________
<S> <C> <C>
Retirees $ (4,638) $ (3,594)
Fully eligible active plan participants (1,655) (1,345)
Other active plan participants (1,265) (1,405)
--------- ---------
$ (7,558) $ (6,344)
Plan Assets at Fair Value - -
--------- ---------
Accumulated Postretirement Benefit
Obligation in Excess of Plan Assets (7,558) (6,344)
Unrecognized Experience Loss 1,685 799
--------- ---------
Accrued Postretirement Benefit Cost
in Balance Sheet $ (5,873) $ (5,545)
========= =========
</TABLE>
<TABLE>
Net postretirement benefit cost includes the following
components:
<CAPTION>
1995 1994
_______ _______
<S> <C> <C>
Service Cost $ 100 $ 107
Interest Cost on Accumulated
Postretirement Benefit Obligation 520 464
Net Amortization 37 71
------- -------
Net Postretirement Benefit Cost $ 667 $ 642
======= =======
</TABLE>
The accumulated postretirement benefit obligation was
computed using an assumed discount rate of 7.25%. The
health and dental care cost trend rate was assumed to be 11%
for 1996, then the trend rate was assumed to decline until
the year 2003 at which time the rate remains 5.0%.
If the health and dental care cost trend rate was
increased one percent for all future years, the accumulated
postretirement benefit obligation as of December 31, 1995
would have increased approximately $902,000 or 12%. The
effect of this change in the net postretirement benefit cost
for 1995 would have been an increase of approximately
$73,000 or 11%.
The Company continues to evaluate ways in which it can
better manage these benefits and control the costs. Any
changes in the plan or revisions to assumptions that affect
the amount of expected future benefits may have a
significant effect on the amount of the reported obligation
and annual expense.
In November 1992, the Financial Accounting Standards
Board issued Statement 112, "Employers' Accounting for
Postemployment Benefits", which requires adoption for fiscal
years beginning after December 15, 1993. The new standard
requires an obligation to be recorded if the following four
conditions are met: (1) the obligation is attributable to
employees' services already rendered, (2) employees' rights
to those benefits accumulate or vest, (3) payment of the
benefit is probable and (4) the amount of the benefit can be
reasonably estimated. This is a change from the Company's
policy of recognizing these costs on a cash basis. Adoption
did not have a material impact on the Company's financial
position or results of operations.
NOTE D - INCOME TAXES
The Federal income tax returns of the Company are filed
on a consolidated basis and include the results of operations
of its wholly-owned U.S. subsidiaries. Pursuant to the Tax
Reform Act of 1986, the earnings of foreign subsidiaries
($12,001,257 in 1995, $4,147,420 in 1994 and $11,904 in 1993)
are also included.
Prior to 1987, deferred income taxes were not provided on
undistributed foreign earnings of $6,689,245, all of which are
expected to remain invested indefinitely. In accordance with
the Tax Reform Act of 1986, commencing in 1987 earnings
generated from profitable controlled foreign subsidiaries are
subject to Federal income taxes.
In February 1992, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes", which superseded accounting
standards for income taxes which the Company adopted in 1988.
The Company adopted Statement No. 109 effective January 1, 1993
and adoption had no impact on the Company's financial position or
results of operations.
Components of the net deferred tax liability/(asset) are
as follows:
<TABLE>
<CAPTION>
December 31, December 31,
(All Amounts in Thousands) 1995 1994
------------ ------------
<S> <C> <C>
Gross Liabilities:
Fixed Assets $ 31,939 $ 35,036
Deferred Charges 6,174 5,234
Unterminated voyage revenue/
expense 2,045 2,047
Intangible Assets 7,498 8,465
Other Liabilities 14,492 11,747
Gross Assets:
Insurance and claims reserve (4,239) (5,394)
Net operating loss carryforward/
unutilized deficit (1,838) (6,752)
Valuation allowance 879 879
Other assets (16,999) (11,534)
-------- --------
Total deferred tax liability, net $39,951 $39,728
======== ========
</TABLE>
Deferred tax liability increased during 1995 due to the
recognition of the deferred federal income tax expense of
$94,000, a deferred tax liability of $104,000 due to an unrealized
holding gain on marketable securitites, and a prior year
increase to deferred tax liability of $25,000.
<PAGE 19>
The following is a reconciliation of the U.S. statutory tax
rate to the Company's effective tax rate:
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------
1995 1994 1993
----- ----- -----
<S> <C> <C> <C>
Statutory Rate 35.0% 35.0% 35.0%
State Income Taxes 1.2% .9% 3.3%
(Income) Loss of
Unconsolidated Entities -- (1.6%) 5.1%
Tax Rate Adjustment -- -- 5.2%
Other ( .3%) ( .2%) ( .6%)
------ ------ ------
35.9% 34.1% 48.0%
====== ====== ======
</TABLE>
The Company has available at December 31, 1995,
unused operating loss carryforwards of $.4 million and
unused foreign deficits of $4.9 million. The operating
loss carryforwards will expire in 2001.
NOTE E - TRANSACTIONS WITH RELATED PARTIES
The Company was a party to agreements with certain
corporations controlled by members of the Company's
management to charter 39 river barges owned by such
corporations for use in the Company's domestic and
international operations. The Company paid $440,000 for the
period ended April 30, 1993 in barge rentals under the
agreements. The Company purchased these barges for
$1,600,000 in the aggregate in May of 1993. Accordingly,
there were no amounts due to related parties associated with
these transactions at December 31, 1995 and 1994.
During 1990, the Company sold one if its subsidiaries
to a former employee at a sales price of $500,000. At the
end of 1993, the Company sold another subsidiary to the same
party for a sales price of $692,000. The receivables due
from this related party totaled $591,000 and $665,000 at
December 31, 1995 and 1994, respectively. The long-term
portion of this receivable was included in Due From Related
Parties and the current portion was included in Accounts
Receivable - Claims and Other. Collections on the total
receivable were $55,000 and $300,000 for the years ended
December 31, 1995 and 1994, respectively. This receivable
is for a period of ten years and bears interest at the rate
of 6% for the first five years and a variable rate of LIBOR
plus 2% thereafter.
Since the Company's inception, the legal firm of Jones,
Walker, Waechter, Poitevent, Carrere and Denegre has been
utilized for various legal services. During 1992, a son of
the President of the Company became a partner of the firm.
The Company made payments to the firm totaling approximately
$1,301,000, $1,525,000 and $1,781,000 for the years ending
December 31, 1995, 1994 and 1993, respectively. Amounts due
to the legal firm were $94,000 and $78,000 at December 31,
1995 and 1994, respectively, and were included in Accounts
Payable and Accrued Liabilities.
The total amount in Due From Related Parties at
December 31, 1994 also included a receivable in the amount
of $5,497,000 from a Norwegian interest, A/S Havfond, as
further discussed in Note K.
NOTE F - COMMITMENTS AND CONTINGENCIES
During 1994, the Company entered into a long-term
contract to provide ocean transportation services to a major
mining company. The Company purchased and converted two
semi-submersible barge carrying vessels and built 26 cargo
barges to be used with the aforementioned vessels. The
total cost of these capital expenditures is expected to
approximate $80,131,000 of which $55,674,000 was paid as of
December 31, 1995. The remaining cost of $24,457,000 is
expected to be paid within one year and is included in
Accounts Payable and Accrued Liabilities at December 31,
1995. A major portion of these costs will be funded through
draws of approximately $16,849,000 remaining on a long-term
loan with a commercial bank.
As of December 31, 1995, 22 vessels that the Company
owns or operates were under various contracts extending
beyond 1995 and expiring at various dates through 2024. In
addition the Company also operates 111 jumbo river barges,
15 towboats and certain terminal transfer equipment under a
contract which expires in 2004. Certain of these agreements
also contain options to extend the contracts beyond their
minimum terms.
The Company also maintains a $600,000 line of credit to
cover standby letters of credit for membership in various
shipping conferences.
In late 1995, the Company committed to the refinancing
in early 1996 of a $50,000,000 medium-term, commercial bank
loan through the private placement market at more favorable
terms.
NOTE G - LEASES
In 1988, the Company entered into direct financing
leases of two foreign flag pure car carriers expiring in the
year 2000. The schedule of future minimum rentals to be
received under these direct financing leases in effect at
December 31, 1995 is as follows:
<TABLE>
<CAPTION>
Receivables
Under
(All Amounts in Thousands) Financing
Year Ended December 31, Leases
----------
<S> <C>
1996 $ 5,328
1997 4,972
1998 4,621
1999 4,265
2000 1,313
----------
Total Minimum Lease
Payments Receivable 20,499
Estimated Residual Values of
Leased Properties 18,000
Less Unearned Income (11,913)
------------
Total Net Investment in Direct
Financing Leases 26,586
Current Portion (2,104)
------------
Long-Term Net Investment in
Direct Financing Leases
at December 31, 1995 $ 24,482
============
</TABLE>
The Company was also a party to a capital lease
agreement for two LASH vessels. The term of the lease was
twenty years and expired in the Fourth Quarter of 1994. The
Company purchased these previously leased capital assets at
their fair market value.
<PAGE 20>
The Company entered into sale-leaseback agreements in
1991 and 1992 for a group of the Company's LASH barges.
These leases meet the required criteria for a capital lease
and are accounted for as such. The terms of the leases are
12 years.
The aforementioned capital leases are included in
Vessels, Property and Other Equipment as follows:
<TABLE>
<CAPTION>
(All Amounts in Thousands) 1995 1994
------- -------
<S> <C> <C>
Vessels and LASH barges $24,950 $24,950
Less Accumulated Depreciation 8,224 6,134
------- -------
Total $16,726 $18,816
======= =======
</TABLE>
The following is a schedule, by year, of future minimum
lease payments under capital leases, together with the
present value of the minimum payments as of December 31,
1995:
<TABLE>
<CAPTION>
Payments Under
(All Amounts in Thousands) Capital Leases
Year ended December 31, --------------
<S> <C>
1996 $ 3,705
1997 4,061
1998 4,450
1999 4,521
2000 4,528
Thereafter 10,638
-------
31,903
Less -
Amount Representing Interest (10,811)
--------
Present Value of Future Minimum
Payments (Based on a Weighted
Average of 10.39%) $ 21,092
==========
</TABLE>
The Company conducts certain of its operations from
leased office facilities and uses certain data processing,
transportation and other equipment under operating leases
expiring at various dates to 2003. The following is a
schedule, by year, of future minimum payments required under
operating leases that have initial or remaining non-
cancelable terms in excess of one year as of December 31,
1995:
<TABLE>
<CAPTION>
Payments
Under
(All Amounts in Thousands) Operating
Year Ended December 31, Leases
----------
<S> <C>
1996 $ 2,375
1997 2,231
1998 1,466
1999 489
2000 489
Thereafter 1,338
----------
Total Future Minimum Payments $ 8,388
==========
</TABLE>
NOTE H - DEFERRED CHARGES AND ACQUIRED CONTRACT COSTS
The Company defers certain costs related to the
acquisition of vessel operating contracts, the cost of
placing vessels in service, and the drydocking of vessels.
The costs of acquiring vessel operating contracts and vessel
prepositioning are amortized over the applicable contract
periods. Deferred drydocking costs are amortized over the
period between drydockings (generally two to five years).
Financing charges are amortized over the life of the
applicable debt involved. Deferred costs are comprised of
the following:
<TABLE>
<CAPTION>
Year Ended
December 31,
--------------------
(All Amounts in Thousands) 1995 1994
-------- --------
<S> <C> <C>
Drydocking $ 13,567 $ 18,152
Prepositioning 4,826 4,487
Financing Charges and Other 8,559 7,974
-------- --------
$ 26,952 $ 30,613
======== ========
</TABLE>
The Company amortizes acquired contract costs over the
contracts' useful lives using the straight-line method of
amortization. The acquired contract cost represents the
portion of the purchase price paid for Waterman Steamship
Corporation applicable primarily to that company's maritime
prepositioning ship contracts and operating differential
subsidy agreements. These costs are being amortized over
useful lives ranging from seven to twenty-one years from the
acquisition date.
NOTE I - SIGNIFICANT OPERATIONS
The Company has several medium to long-term contracts
related to the operations of various vessels (See Note F),
from which revenues represent a significant amount of the
Company's total revenue. Revenues from the contracts with
the United States Military Sealift Command were $75,086,000,
$75,137,000, and $82,239,000 for the years ended December
31, 1995, 1994 and 1993, respectively. Additionally, the
Company operates four U.S. Flag LASH vessels on subsidized
liner service between the U.S. Gulf and South Asia (Trade
Routes 18 and 17). Revenues, including ODS, from this
operation were $129,067,000, $137,021,000, and $143,811,000
for the years ended December 31, 1995, 1994 and 1993,
respectively.
The Company currently operates two international flag
LASH vessels on a scheduled liner service between U.S. Gulf
and East Coast ports and ports in Northern Europe. Revenues
for these operations were $67,500,000, $68,287,000 and
$58,455,000 for the years ended December 31, 1995, 1994, and
1993, respectively.
A significant portion of the Company's traffic
receivables are due from contracts with the U.S. Military
Sealift Command and transportation of government sponsored
cargo. There are no other concentrations of receivables
from customers or geographic regions that exceed 10% of
stockholders' investment at December 31, 1995 or 1994.
The Company has operations in several principal markets
including international service between the U.S. Gulf and
East ports and ports in the Middle East, Far East, and
northern Europe and domestic transportation and services
along the Mississippi River and U.S. Gulf Coast.
<PAGE 21>
NOTE J - REDEEMABLE PREFERRED STOCK
In 1987 and 1989, the Company issued 85,000 and 25,000
shares, respectively, of cumulative redeemable preferred
stock, together with warrants to purchase shares of common
stock. The coupon rate and warrants were adjustable under
certain conditions. As of 1993, the coupon rate on the
preferred stock ranged from 8.822% to 10.898%, and the
number of shares of common stock purchasable under the
warrants totaled 427,500.
During 1993, the Company redeemed the remaining
preferred stock outstanding of $13.750 million at a total
redemption cost including accrued interest and prepayment
penalties of $14.178 million. The warrant holders exercised
their rights under the warrants to purchase the 427,500
shares of common stock at an exercise price of $10.12 per
share.
NOTE K - UNCONSOLIDATED ENTITIES
As of December 31, 1994, the Company held an
approximate 9% interest in Havtor AS, a publicly listed
company on the Oslo Stock Exchange. In addition, shares
which represented a 3.6% interest in Havtor AS were held by
the Company as collateral for a promissory note which was
scheduled to mature in mid-1996. The Company also held a
14.2% interest in A/S Havtor Management, a privately held
Norwegian ship management company affiliated with Havtor AS.
As of December 31, 1994, the Company held a 50% interest in
a foreign entity, Bulkowners 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 half of 1995, A/S Havtor Management
and the gas carrier activities of Kvaerner, an unrelated
Norwegian company 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. Subsequent to the merger, the
Company's interest in Havtor AS approximated 6.4%.
During the second quarter of 1995, the Company
purchased the Norwegian interest, A/S Havfond, which held
the promissory note scheduled to mature in mid-1996 and
collateralized by shares of Havtor AS. The acquisition was
accounted for as a purchase and results for A/S Havfond have
been included in the accompanying consolidated financial
statements since the date of acquisition. After the
acquisition, the Company's interest in Havtor AS
approximated 7.7%. During November 1995 the Company sold
this 7.7% interest in Havtor AS for approximately $48
million. The sale resulted in a before tax gain of
approximately $17 million.
At December 31, 1993, the Company held a 14.8% interest
in A/S Havtor and a 14.2% interest in A/S Havtor Management.
During 1994, A/S Havtor, certain associated companies, and a
portion of A/S Havtor Management were merged into the
publicly listed company, Havtor AS. No earnings were
distributed from Havtor AS since the merger. No dividends
were received from A/S Havtor Management during 1993, 1994
or 1995. Since the Company had no substantive control or
input regarding the operations of Havtor AS or A/S Havtor
Management, and its direct and indirect ownership in both
was below 20%, the investments were accounted for under the
cost method of accounting which permits recognition of
income only upon distribution of dividends or sale of
interests.
At December 31, 1994, the Company held a 50% interest
in Bulkowner's 1984 which was accounted for under the equity
method. Following is a summary of the unaudited financial
data of Bulkowner's 1984:
<TABLE>
<CAPTION>
(All Amounts in Thousands)
1994
-------
<S> <C>
Current Assets $27,385
Non-current Assets 42,577
-------
Total Assets $69,962
=======
Current Liabilities $325
Non-current Liabilities 63,978
Equity 5,659
-------
Total Liabilities and
Shareholder's Equity $69,962
=======
</TABLE>
<TABLE>
<CAPTION>
Twelve Months
Ended October 31,
------------------
1994 1993
------ ------
<S> <C> <C>
Gross Revenues $9,052 $8,809
====== ======
Gross Profit $4,132 $3,919
====== ======
Net Income $1,840 $1,126
====== ======
</TABLE>
The Company has a 50% interest in a foreign entity,
Marco Shipping Company, (PTE.) Ltd. ("Marco"), which acts in
an agent capacity on behalf of the Company. The Company's
investment in Marco at December 31, 1995 and 1994 had been
fully written off through the recognition of losses
generated from the entity.
During 1993, the Company purchased the remaining 50%
interest in a LASH barge intermodal company ("LITCO") for
$1,900,000. The acquisition was accounted for as a purchase
and the results of LITCO have been included in the
accompanying consolidated financial statements since the
date of acquisition.
Income of foreign unconsolidated entities is recorded
net of applicable taxes of approximately $201,000 and
$32,000 in 1995 and 1994, respectively. In 1993 losses from
unconsolidated entities were recorded net of applicable tax
benefits of approximately $1,405,000.
<PAGE 22>
NOTE L - CASH FLOW INFORMATION
<TABLE>
<CAPTION>
Year Ended December 31,
(All Amounts in Thousands) 1995 1994 1993
------- ------- --------
<S> <C> <C> <C>
Non-Cash Investing and
Financing Activities:
Accounts Payable to
be Refinanced $19,030 $ - $ 340
Cash Payments:
Interest Paid Net of
Capitalized Interest 26,633 23,537 20,510
Taxes Paid 5,478 2,982 3,087
</TABLE>
During 1993, the Company reacquired an 11% interest in
a foreign entity, Bulkowner's 1984. Notes receivable from
the sellers in the amount of $2,896,000 were canceled as a
part of the purchase price. The Company also sold an
interest in A/S Havtor in 1993 for $7,557,000 of which
$2,777,000 was received in cash and $4,780,000 in the form
of a promissory note which is included in Other Assets: Due
from Related Parties at December 31, 1994. During 1995, the
Company purchased A/S Havfond, the Norwegian interest which
held this promissory note.
For purposes of the accompanying statement of cash
flows, the Company considers highly liquid debt instruments
purchased with a maturity of three months or less to be cash
equivalents.
NOTE M - FAIR VALUE OF FINANCIAL INSTRUMENTS AND DERIVATIVES
The following methods and assumptions were used to
estimate the fair value of each class of financial
instruments for which it is practicable to estimate that
value:
CASH AND CASH EQUIVALENTS AND MARKETABLE SECURITIES
The carrying amount approximates fair value for each of
these instruments.
INTEREST RATE CONVERSION AGREEMENTS
The Company has only limited involvement with
derivative financial instruments. They are used to manage
well-defined interest rate risks and are not used for
trading purposes. During 1993, the Company entered into
interest rate conversion agreements with two commercial
banks to reduce the possible impact of higher rates in the
long-term market by utilizing potentially lower rates in the
short-term market. The floating rate payor is the Company,
and the commercial banks are the fixed rate payors. The
floating rate and fixed rates at December 31, 1995 were
5.875% and 4.72%, respectively. The floating rate and fixed
rates at December 31, 1994 were 5.125% and 4.72%,
respectively. The contract amounts totaled $100,000,000 at
December 31, 1995 and 1994 and will expire August 1996. The
Company made payments under these agreements totaling
$1,265,000 during 1995 and received payments totaling
$1,146,000 during 1994. A payment of $620,000 was made
under the agreements in early 1996. Net receipts or
payments under the agreements are recognized as an
adjustment to interest expense. The fair value of interest
rate swaps is the estimated amount that the bank would
receive or pay to terminate the swap agreements at the
reporting date, taking into account current market
conditions and interest rates.
FOREIGN CURRENCY CONTRACTS
The Company enters into forward exchange contracts to
hedge certain firm purchase and sale commitments denominated
in foreign currencies. The term of the currency derivatives
is rarely more than one year. The purpose of the Company's
foreign currency hedging activities is to protect the
Company from the risk that the eventual dollar cash inflows
or outflows resulting from revenue collections from foreign
customers and purchases from foreign suppliers will be
adversely affected by changes in exchange rates. As of
December 31, 1995, the Company had entered into various
forward purchase contracts for Singapore Dollars totaling
$23,316,000 U.S. Dollar equivalents to hedge against future
payments due to Singapore shipyards for conversion work on
two float-on/float-off vessels. As of December 31, 1994,
the Company had entered into various forward purchase
contracts for Singapore Dollars totaling $24,048,000 U.S.
Dollar equivalents to hedge against future payments due to
Singapore shipyards for conversion work on two float-
on/float-off vessels and drydocking cost of a bulk carrier.
Gains or losses on forward exchange contracts which hedge
exposures on firm foreign currency commitments are deferred
and recognized as adjustments to the bases of those assets.
As of December 31, 1995 and 1994, the Company was also a
party to forward sales contracts in various currencies
totaling $515,000 and $1,175,000 U.S. Dollar equivalents
which approximated fair market value. Gains and losses on
these contracts are recognized in net income of the period
in which the exchange rate changes.
LONG-TERM DEBT
The fair value of the Company's debt is estimated based
on quoted market prices for the publicly listed Senior Notes
and the current rates offered to the Company on other
outstanding obligations.
INVESTMENTS IN UNCONSOLIDATED ENTITIES RECORDED UNDER
THE COST METHOD OF ACCOUNTING
The fair market value of some investments are estimated
based on quoted market prices and for others are based on
ship values collected from an independent broker with
adjustments for value of freight contracts, management
activity and ship pool participation as applicable.
AMOUNTS DUE FROM RELATED PARTIES
The carrying amount of these notes receivable
approximated fair market value as of December 31, 1995 and
1994. Fair market value takes into consideration the
current rates at which similar notes would be made and the
market value of collateral underlying the notes.
RESTRICTED INVESTMENTS
The carrying amount of these investments, which were
included in Other Assets, approximated fair market value as
of December 31, 1995 and 1994 based upon current rates
offered on similar instruments.
<PAGE 23>
The estimated fair values of the Company's financial
instruments and derivatives are as follows
(asset/(liability)):
<TABLE>
<CAPTION>
1995 1994
------------------- ------------------
Carrying Fair Carrying Fair
(All Amounts in Amount Value Amount Value
Thousands) --------- -------- --------- --------
<S> <C> <C> <C> <C>
Interest Rate
Conversion
Agreements - ($ 552) - $( 4,908)
Forward Purchase
Contracts - 54 - 318
Long-Term Debt ($310,657) (315,929) ($257,607)(251,429)
Investments in
Unconsolidated
Entities
Recorded at Cost - - 13,152 28,412
</TABLE>
Disclosure of the fair value of all balance sheet
classifications is not required, including but not limited
to certain vessels, property, plant and equipment, direct
financing leases or intangible assets which may have a fair
value in excess of historical cost. Therefore, this
disclosure does not purport to represent the fair value of
the Company.
NOTE N - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Detailed below are the components of the Consolidated
Balance Sheet classification Accounts Payable and Accrued
Liabilities for the periods indicated.
<TABLE>
<CAPTION>
(All Amounts in Thousands) 1995 1994
------- -------
<S> <C> <C>
Trade Accounts Payable $11,278 $ 8,966
Accrued Salaries and
Benefits 3,509 2,665
Accrued Voyage Expenses 27,571 31,573
Accrued Interest 10,666 7,257
Accrued Vessel Costs 24,457 2,600
Taxes Payable 6,520 260
------- -------
$84,001 $53,321
======= =======
</TABLE>
NOTE O-QUARTERLY FINANCIAL INFORMATION - (Unaudited)
<TABLE>
<CAPTION>
Quarter Ended
-------------------------------------
March 31 June 30 Sept. 30 Dec. 31
-------- --------- --------- --------
(All amounts in thousands except per share data)
<S> <C> <C> <C> <C>
1995 Revenue $ 83,302 $ 84,844 $ 84,108 $ 89,535
Expense 68,332 69,780 68,533 70,608
Gross Voyage Profit 14,970 15,064 15,575 18,927
Net Income 2,086 2,020 2,029 14,845
Earnings per Common and
Common Equivalent Share:
Primary:
Net Income 0.31* 0.30* 0.30* 2.23
1994 Revenue $ 83,361 $ 89,148 $ 81,568 $ 88,256
Expense 68,295 74,658 64,792 69,273
Gross Voyage Profit 15,066 14,490 16,776 18,983
Net Income 2,447 3,391 3,498 3,715
Earnings per Common and
Common Equivalent Share:
Primary:
Net Income 0.37* 0.51* 0.52* 0.55*
1993 Revenue $ 83,997 $ 89,843 $ 82,214 $ 85,597
Expense 68,266 72,623 66,876 69,568
Gross Voyage Profit 15,731 17,220 15,338 16,029
Income Before
Extraordinary Item 1,056 3,184 1,465 1,940
Extraordinary Item -- (1,703) 110 (123)
Net Income 1,056 1,481 1,575 1,817
Earnings per Common and
Common Equivalent Share:
Primary:
Income Before
Extraordinary Item 0.10* 0.43* 0.19* 0.29*
Extraordinary Item -- (0.26)* 0.02* (0.02)*
Net Income 0.10* 0.17* 0.21* 0.27*
</TABLE>
[FN]
*Restated for November 17, 1995, stock dividend of
twenty-five percent for each one share of common stock
outstanding.
<TABLE>
COMMON STOCK PRICES AND DIVIDENDS FOR EACH QUARTERLY
PERIOD OF 1994 AND 1995
(Source: New York Stock Exchange)
<CAPTION>
Cash
Dividends
1994 High Low Paid
----------- -------- ------- ----------
<S> <C> <C> <C>
1st 18 1/2* 14 5/8* .04/Share*
Quarter
2nd 18 1/8* 16* .04/Share*
Quarter
3rd 17 3/8* 15 3/4* .04/Share*
Quarter
4th 17 1/4* 15 5/8* .04/Share*
Quarter
</TABLE>
<TABLE>
<CAPTION>
Cash
Dividends
1995 High Low Paid
----------- ------- ------- ----------
<S> <C> <C> <C>
1st 16 1/2* 15 3/8* .04/Share*
Quarter
2nd 17 1/4* 16* .04/Share*
Quarter
3rd 20 1/8* 16 5/8* .04/Share*
Quarter
4th 21 3/4* 18 7/8 .0625/Share
Quarter
<FN>
<FN1>Approximate Number of Common Stockholders of Record
at March 1, 1996 - 900
<FN2>*Restated for November 17, 1995, stock dividend of
twenty-five percent for each one share of common stock
outstanding.
<PAGE 24>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The Stockholders of International Shipholding
Corporation:
We have audited the accompanying consolidated balance
sheets of International Shipholding Corporation (a Delaware
corporation) and subsidiaries (the Company) as of December
31, 1995 and 1994, and the related consolidated statements
of income, changes in stockholders' investment and cash
flows for each of the three years in the period ended
December 31, 1995. These financial statements are the
responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the
financial position of International Shipholding Corporation
and subsidiaries as of December 31, 1995 and 1994, and the
consolidated results of their operations and their cash
flows for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted
accounting principles.
New Orleans, Louisiana
January 12, 1996
/S/ Arthur Andersen LLP
Arthur Andersen LLP
</TABLE>
<PAGE>
<TABLE>
EXHIBIT 11(1)
<CAPTION>
Year Ended
December 31,
1995 1994 1993
_________ _________ _________
<S> <C> <C> <C>
Primary:
Average Shares
Outstanding 6,682,887 6,682,887 6,359,711
Net Effect of Dilutive
Stock Warrants - Based
on the Treasury Stock
Method Using Average
Market Price -- -- 165,548
--------- --------- ---------
Common and Common
Equivalent Shares 6,682,887 6,682,887 6,525,259
========= ========= =========
Fully Diluted:
Average Shares
Outstanding 6,682,887 6,682,887 6,359,711
Net Effect of
Dilutive Stock
Warrants - Using
Ending Market Price
Unless Average Market
Price is Higher -- -- 165,548
Common and Common
Equivalent Shares 6,682,887 6,682,887 6,525,259
========= ========= =========
Income before
Extraordinary Item $20,980,000 $13,051,000 $7,645,000
Extraordinary Item -- -- (1,716,000)
----------- ----------- ----------
Net Income $20,980,000 $13,051,000 $5,929,000
Less:
Preferred Stock Dividends -- -- (868,000)
Accretion of Discount on
Preferred Stock -- -- (202,000)
----------- ----------- -----------
Net Income Applicable to
Common and Common
Equivalent Shares $20,980,000 $13,051,000 $4,859,000
=========== =========== ==========
Per Share Amount:
Income before
Extraordinary Item $ 3.14 $ 1.95 $ 1.01
Extraordinary Item $ -- $ -- $ (0.26)
----------- ----------- ---------
Net Income $ 3.14 $ 1.95 $ .75
=========== =========== =========
</TABLE>
[FN]
All per share and weighted average share amounts have been
restated for November 17, 1995 twenty-five percent stock
dividend.
<TABLE>
INTERNATIONAL SHIPHOLDING CORPORATION
SUBSIDIARIES OF THE REGISTRANT
AS OF DECEMBER 31, 1995
<CAPTION>
Jurisdiction
Under
Which Organized
__________________
<S> <C>
International Shipholding Corporation
(Registrant) Delaware
International Shipholding Corporation (1) New York
River Towing, Inc. Delaware
A/S Havfond Norwegian
Waterman Steamship Corporation New York
Sulphur Carriers, Inc. Delaware
Central Gulf Lines, Inc. Delaware
Florida Barge Lines Corporation Delaware
Material Transfer, Inc. Delaware
Enterprise Ship Company, Inc. Delaware
Bay Insurance Company Bermuda
LCI Shipholdings, Inc. Liberia
Gulf South Inc. Liberia
Gulf South Shipping Pte. Ltd. Singapore
Cypress Auto Carriers, Inc. Liberia
New Combo, Inc. Liberia
Forest Lines Inc. Liberia
Marco Shipping Co. Pte. Ltd. (2) Singapore
Marcoship Agencies Malaysia
N. W. Johnsen & Co., Inc. New York
St. Rose Fleeting Company, Inc. Louisiana
Lash Marine Services, Inc. Louisiana
Lash Intermodal Terminal Company Delaware
Resource Carriers, Inc. Delaware
</TABLE>
[FN]
<FN1> (1) New York name-holding corporation
<FN2> (2) 50% owned by the Registrant
<FN3> All of the subsidiaries listed above are wholly-
owned subsidiaries and are included in the consolidated
financial statements incorporated by reference herein unless
otherwise indicated.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 54281
<SECURITIES> 4630
<RECEIVABLES> 47243
<ALLOWANCES> (409)
<INVENTORY> 10545
<CURRENT-ASSETS> 121915
<PP&E> 678810
<DEPRECIATION> (243929)
<TOTAL-ASSETS> 647580
<CURRENT-LIABILITIES> 108508
<BONDS> 289495
6756
0
<COMMON> 0
<OTHER-SE> 159505
<TOTAL-LIABILITY-AND-EQUITY> 647580
<SALES> 0
<TOTAL-REVENUES> 341789
<CGS> 0
<TOTAL-COSTS> 303875
<OTHER-EXPENSES> 25561
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25561
<INCOME-PRETAX> 32776
<INCOME-TAX> 11796
<INCOME-CONTINUING> 20980
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20980
<EPS-PRIMARY> 3.14
<EPS-DILUTED> 0
</TABLE>
