<PAGE 1>
INTERNATIONAL SHIPHOLDING CORPORATION AND SUBSIDIARIES
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission file number 2-63322
INTERNATIONAL SHIPHOLDING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-2989662
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
650 Poydras Street New Orleans, Louisiana 70130
(Address of principal executive offices) (Zip Code)
(504) 529-5461
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing for the past 90 days. YES X NO
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest
practicable date.
Common Stock $1 Par Value 6,682,887 shares (March 29, 1996)
<PAGE 2>
PART I -FINANCIAL INFORMATION
<TABLE>
INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
<CAPTION>
March 31, December 31,
ASSETS 1996 1995
------------ ------------
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents $ 65,181 $ 54,281
Marketable Securities 3,837 4,630
Accounts Receivable, Net 50,492 46,834
Net Investment in Direct Financing Leases 2,082 2,104
Other Current Assets 1,169 3,521
Material and Supplies Inventory, At Cost 10,577 10,545
------------ -----------
Total Current Assets 133,338 121,915
------------ -----------
Net Investment in Direct Financing Leases 23,970 24,482
------------ -----------
Vessels, Property and Other Equipment, At Cost:
Vessels and Barges 648,266 634,905
Other Marine Equipment 7,570 7,570
Terminal Facilities 18,134 18,126
Land 2,317 2,317
Furniture and Equipment 16,266 15,892
------------ -----------
692,553 678,810
Less - Accumulated Depreciation (252,378) (243,929)
------------ -----------
440,175 434,881
------------ -----------
Other Assets:
Deferred Charges in Process of Amortization 25,311 26,952
Acquired Contract Costs,
Net of Accumulated Amortization 21,120 21,733
Due from Related Parties 499 535
Other 7,443 17,082
------------ -----------
54,373 66,302
------------ -----------
$ 651,856 $ 647,580
============ ===========
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE 3>
<TABLE>
INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
<CAPTION>
March 31, December 31,
1996 1995
LIABILITIES AND STOCKHOLDERS' INVESTMENT ------------ ------------
<S> <C> <C>
Current Liabilities:
Current Maturities of Long-Term Debt $ 41,214 $ 40,785
Current Maturities of Capital
Lease Obligations 1,981 1,469
Accounts Payable and Accrued Liabilities 82,653 77,481
Federal Income Tax Payable 616 6,520
Current Deferred Income Tax Liability 482 1,283
Current Liabilities to be Refinanced (12,035) (19,030)
------------ -----------
Total Current Liabilities 114,911 108,508
------------ -----------
Current Liabilities to be Refinanced 12,035 19,030
------------ -----------
Billings in Excess of Income Earned
and Expenses Incurred 5,688 4,639
------------ -----------
Long-Term Capital Lease Obligations,
Less Current Maturities 17,892 19,623
------------ -----------
Long-Term Debt, Less Current Maturities 274,423 269,872
------------ -----------
Reserves and Deferred Credits:
Deferred Income Taxes 38,862 38,668
Claims and Other 19,993 20,979
------------ -----------
58,855 59,647
------------ -----------
Stockholders' Investment:
Common Stock 6,756 6,756
Additional Paid-in Capital 54,450 54,450
Retained Earnings 107,988 106,158
Less - Treasury Stock (1,133) (1,133)
Unrealized Holding Gain on
Marketable Securities 3 30
Unrealized Translation Loss (12) -
------------ -----------
168,052 166,261
------------ -----------
$ 651,856 $ 647,580
============ ===========
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE 4>
<TABLE>
INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in Thousands Except Per Share Data)
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
1996 1995
--------- ---------
<C> <S> <S>
Revenues $ 89,490 $ 77,908
Operating Differential Subsidy 5,745 5,394
--------- ---------
95,235 83,302
--------- ---------
Operating Expenses:
Voyage Expenses 70,093 62,265
Vessel and Barge Depreciation 7,995 6,067
--------- ---------
Gross Voyage Profit 17,147 14,970
--------- ---------
Administrative and General Expenses 6,687 6,462
(Loss) Gain on Sale of Assets (3) 1
--------- ---------
Operating Income 10,457 8,509
--------- ---------
Interest:
Interest Expense 7,295 6,314
Investment Income (426) (776)
--------- ---------
6,869 5,538
--------- ---------
Unconsolidated Entities
(Net of Applicable Taxes):
Equity in Net Income of
Unconsolidated Entities - 226
--------- ---------
Income Before Provision for
Income Taxes 3,588 3,197
--------- ---------
Provision for Income Taxes:
Current 1,882 1,805
Deferred (592) (779)
State 50 85
--------- ---------
1,340 1,111
--------- ---------
Net Income $ 2,248 $ 2,086
========= =========
Earnings Per Common Share:
Net Income $ 0.34 $ 0.31
========= =========
Weighted Average Shares
of Common Stock Outstanding 6,682,887 6,682,887
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE 5>
<TABLE>
INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' INVESTMENT
(Dollars in Thousands)
(Unaudited)
<CAPTION>
Net
Additional Unrealized Unrealized
Common Paid-In Retained Treasury Holding Translation
Stock Capital Earnings Stock Gain/(Loss) Loss Total
-------------------------------------------------------------
<C> <S> <S> <S> <S> <S> <S> <S>
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
Net Income for
Three Months
Ended March 31,
1996 - - 2,248 - - - 2,248
Cash Dividends - - (418) - - - (418)
Unrealized
Holding Loss
on Marketable
Securities,
Net of Deferred
Taxes - - - - (27) - (27)
Unrealized
Translation
Loss - - - - - (12) (12)
------------------------------------------------------------
Balance at
March 31,
1996 $ 6,756 $54,450 $107,988 ($1,133) $ 3 ($12) $168,052
============================================================
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE 6>
<TABLE>
INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
1996 1995
--------- ---------
<C> <S> <S>
Cash Flows from Operating Activities:
Net Income $ 2,248 $ 2,086
Adjustments to Reconcile
Net Income to Net Cash Provided
by Operating Activities:
Depreciation 8,519 6,450
Amortization of Deferred
Charges and Other Assets 4,495 4,321
Provision for Deferred Income Taxes 1,360 1,026
Equity in Unconsolidated Entities - (226)
Loss (Gain) on Sale of Assets 3 (1)
Unearned Income 1,049 3,023
Reserve for Claims and
Other Deferred Credits (986) (1,140)
Changes in:
Accounts Receivable (3,658) (64)
Net Investment in Direct
Financing Leases 534 551
Other Assets (252) 296
Inventories and Other
Current Assets 2,320 569
Accounts Payable and
Accrued Liabilities 7,201 (3,817)
Federal Income Taxes Payable (7,718) (341)
--------- ---------
Net Cash Provided by Operating Activities 15,115 12,733
--------- ---------
Cash Flows from Investing Activities:
Purchase of Vessels and Other Property (15,987) (1,533)
Additions to Deferred Charges (1,002) (3,793)
Proceeds from Sale of Assets - 36
Proceeds from Short-Term Investments 726 -
Investment in and Advances to
Unconsolidated Entities - 359
Other Investing Activities 9,919 (1,397)
--------- ---------
Net Cash Used by Investing Activities (6,344) (6,328)
--------- ---------
Cash Flows from Financing Activities:
Proceeds from Issuance of Debt and
Capital Lease Obligations 19,814 15,000
Reduction of Debt and Capital
Lease Obligations (16,053) (15,974)
Additions to Deferred Financing Charges (1,214) (115)
Common Stock Dividends Paid (418) (267)
--------- ---------
Net Cash Provided (Used) by
Financing Activities 2,129 (1,356)
--------- ---------
Net Increase in Cash and Cash Equivalents 10,900 5,049
Cash and Cash Equivalents at Beginning of
Period 54,281 29,611
--------- ---------
Cash and Cash Equivalents at End of Period $ 65,181 $ 34,660
========= =========
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE 7>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1996
(Unaudited)
Note 1. Basis of Preparation
The accompanying unaudited interim financial statements
have been prepared pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information
and footnote disclosures required by generally accepted
accounting principles for complete financial statements have
been omitted. It is suggested that these interim
statements be read in conjunction with the financial
statements and notes thereto included in the Form 10-K of
International Shipholding Corporation for the year ended
December 31, 1995. Certain reclassifications have been made
to prior period financial information in order to conform to
current year presentations.
Interim statements are subject to possible adjustments
in connection with the annual audit of the Company's
accounts for the full year 1996. In the opinion of
management, all adjustments (consisting of only normal
recurring adjustments) necessary for a fair presentation of
the information shown have been included.
The foregoing 1996 interim results are not necessarily
indicative of the results of the operations for the full
year 1996.
The Company's policy is to consolidate all subsidiaries
in which it holds greater than 50% voting interest. All
significant intercompany accounts and transactions have been
eliminated.
The Company uses the cost method to account for
investments in entities in which it holds less than 20%
voting interest and in which the Company cannot exercise
significant influence over operating and financial
activities. The Company uses the equity method to account
for investments in entities in which it holds a 20% to 50%
voting interest.
<PAGE 8>
INTERNATIONAL SHIPHOLDING CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company's vessels are operated under a variety of
charters, liner services and contracts. The nature of these
arrangements is such that, without a material variation in
gross voyage profits (total revenues less voyage expenses
and vessel and barge depreciation), the revenues and
expenses attributable to a vessel deployed under one type of
charter or contract can differ substantially from those
attributable to the same vessel if deployed under a
different type of charter or contract. Accordingly,
depending on the mix of charters or contracts in place
during a particular accounting period, the Company's
revenues and expenses can fluctuate substantially from one
period to another even though the number of vessels
deployed, the number of voyages completed, the amount of
cargo carried and the gross voyage profit derived from the
vessels remain relatively constant. As a result,
fluctuations in voyage revenues and expenses are not
necessarily indicative of trends in profitability, and
management believes that gross voyage profit is a more
appropriate measure of performance than revenues.
Accordingly, the discussion below addresses variations in
gross voyage profits rather than variations in revenues.
RESULTS OF OPERATIONS
GROSS VOYAGE PROFIT. Gross voyage profit increased
14.5% to $17.1 million in the First Quarter of 1996 as
compared to $15.0 million in the same period of 1995. Gross
voyage profit was positively impacted by the commencement of
operations of the ENERGY ENTERPRISE, a U. S. Flag Coal
Carrier under contract to a major U. S. utility company, and
two Special Purpose Vessels ("SPV") and related barges under
contract to provide transportation services to a major
mining company. Improved freight rates 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 favorably impacted gross voyage profit.
Partially offsetting these increases were lower charter
rates on the Company's cape-size bulk carrier, and the
redelivery of one of the Company's vessels at the end of its
Military Sealift Command contract in late 1995. This vessel
is currently being operated in the Company's Trans-Atlantic
liner service.
<PAGE 9>
Vessel and barge depreciation for the First Quarter of
1996 increased to $8.0 million as compared to $6.1 million
in the same period of 1995 due to the addition of the ENERGY
ENTERPRISE and the two SPV's and related barges.
OTHER INCOME AND EXPENSES. Administrative and general
expenses increased slightly to $6.7 million in the First
Quarter of 1996 as compared to $6.5 million in the same
period of 1995. This increase was due primarily to the
amortization of deferred costs related to information
systems implemented in late 1995.
Interest expense increased 15.5% to $7.3 million in the
First Quarter of 1996 as compared to $6.3 million in the
same period of 1995 primarily due to interest incurred on
the financing of the ENERGY ENTERPRISE and the two SPV's and
related barges. These increases were partially offset by
reductions resulting from regularly scheduled payments on
other outstanding debt.
Investment income decreased from $776,000 in the First
Quarter of 1995 to $426,000 in the First Quarter of 1996
reflecting a reduction in the balance of invested funds.
The Company's 50% ownership interest in two PROBO
vessels which produced the $226,000 of earnings from
unconsolidated entities in First Quarter of 1995 was sold in
late 1995.
INCOME TAXES. The Company provided $1.3 million for
federal income taxes in the First Quarter of 1996 at a
statutory rate of 35% as compared to $1.1 for the same
period of 1995 at the same rate. Income of unconsolidated
entities is shown net of applicable taxes.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital increased from $13.4
million at December 31, 1995, to $18.4 million at March 31,
1996, after provision for current maturities of long-term
debt of $41.2 million and capital lease obligations of $2.0
million. Cash and cash equivalents increased during the
First Quarter of 1996 by $10.9 million to a total of $65.2
million.
Positive cash flows were achieved from operating
activities in the First Quarter of 1996 in the amount of
$15.1 million. The major source of cash from operations was
net income, adjusted for non-cash provisions such as
depreciation and amortization.
<PAGE 10>
Net cash used for investing activities amounted to $6.3
million during the First Quarter of 1996. Major capital
investments included $9.0 million for the conversion of two
SPV's, $4.8 million for work on the ENERGY ENTERPRISE to
meet classification requirements and for preventative
maintenance and $1.4 million for the final payment on the
SULPHUR ENTERPRISE, a Molten Sulphur Carrier delivered in
late 1994. Other uses of cash included the addition of $1.0
million of deferred vessel drydocking charges. Proceeds
from investing activities included $8.1 million received
from the repayment of a long-term note receivable and the
release of $3.7 million previously held in escrow as
collateral for a loan. Cash used for other investments
included the placement of $2.0 million in escrow for future
payments on long-term debt.
Net cash provided by financing activities during the
First Quarter of 1996 totaled $2.1 million. Proceeds from
the issuance of debt obligations of $19.8 million included
$15.0 million drawn under the Company's lines of credit and
$4.8 million drawn on a long-term loan associated with the
acquisition and conversion of the two SPV's. Cash used for
financing activities included $9.5 million for prepayment of
a long-term debt and $6.6 for regularly scheduled payments
on debt and capital lease obligations. Other uses of cash
for financing activities included $1.2 million for deferred
financing charges and $418,000 to meet common stock dividend
requirements.
During early Second Quarter of 1996, the Company
contracted to purchase a LASH vessel for approximately $8.5
million. Assuming all requirements of the purchase contract
are met and the purchase is concluded, certain additional
costs will be incurred to bring the vessel up to the
Company's normal operating standards. It is anticipated
that this vessel will deliver in the Third Quarter of 1996
and will be operated in the Company's Trans-Atlantic service
or one of its other services depending upon demand when the
ship is ready for delivery. Initial financing will be
through internally generated funds.
To meet short-term requirements when fluctuations occur
in working capital, the Company has available four lines of
credit totaling $35.0 million of which $15.0 million was
drawn at March 31, 1996, and repaid in early Second Quarter
of 1996.
In March 1995, the Financial Accounting Standards Board
issued Statement No. 121, "Accounting for the Impairment of
Long-Lived Assets to Be Disposed Of". Adoption of the
statement in 1996 did not have a material effect on the
Company's financial position or results of operations.
<PAGE 11>
The Company has not been notified that it is a
potentially responsible party in connection with any
environmental matters.
At a regular meeting held April 17, 1996, the Board of
Directors declared a quarterly dividend of $.0625 per common
share payable on June 21, 1996, to shareholders of record on
June 7, 1996.
<PAGE 12>
PART II-OTHER INFORMATION
Item 2. Changes in Securities
(a) An amendment of the Certificate of Incorporation to
regulate the ownership of the capital stock of the
Corporation by persons who are not citizens of the United
States was approved by shareholders at the Company's Annual
Meeting on April 17, 1996. The Company is in the process of
filing this amendment with the State of Delaware. See
"Effect of Amendment on Stockholders" on page 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, and incorporated herein by reference. This
amendment in its entirety was included as Appendix A of the
aforementioned Proxy Statement.
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders was held April 17,
1996. The matters voted upon and the results of the voting
were as follows:
(1) Election of Board of Directors:
Shares Withheld
Voted For Authority
Niels W. Johnsen 6,013,573 31,093
Erik F. Johnsen 6,013,560 31,106
Harold S. Grehan 6,013,854 30,812
Niels M. Johnsen 6,013,564 31,102
Laurance Eustis 6,015,361 29,305
Raymond V. O'Brien 6,017,742 26,924
Edwin Lupberger 6,017,742 26,924
Edward K. Trowbridge 6,017,274 27,392
Erik L. Johnsen 6,012,427 32,239
(1) Ratification of Arthur Andersen, LLP, certified public
accountants, as independent auditors for the
Corporation for the fiscal year ending December 31,
1996:
Shares Voted For 6,040,806
Shares Voted Against 1,876
Abstentions 1,984
(2) Proposed amendment of the Corporation's Certificate of
Incorporation to regulate the ownership of the capital
stock of the Corporation by persons who are not
citizens of the United States as set forth in Appendix
A of the aforementioned Proxy Statement:
Shares Voted For 5,453,496
Shares Voted Against 8,536
Abstentions 1,921
Broker Non-Votes 580,713
<PAGE 13>
Item 6.
Exhibits and Reports on form 8-K
(a) EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
27 Financial Data Schedule
(b) No reports on Form 8-K have been filed for the three
months ended March 31, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
INTERNATIONAL SHIPHOLDING CORPORATION
/S/ Gary L. Ferguson
____________________________________________
Gary L. Ferguson
Vice President and Chief Financial Officer
May 13, 1996
Date ___________________________
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 65181
<SECURITIES> 3837
<RECEIVABLES> 50492
<ALLOWANCES> 0
<INVENTORY> 10577
<CURRENT-ASSETS> 133338
<PP&E> 692553
<DEPRECIATION> 252378
<TOTAL-ASSETS> 651856
<CURRENT-LIABILITIES> 114911
<BONDS> 292315
0
0
<COMMON> 6756
<OTHER-SE> 161296
<TOTAL-LIABILITY-AND-EQUITY> 651856
<SALES> 0
<TOTAL-REVENUES> 95235
<CGS> 0
<TOTAL-COSTS> 84775
<OTHER-EXPENSES> 7295
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7295
<INCOME-PRETAX> 3588
<INCOME-TAX> 1340
<INCOME-CONTINUING> 2248
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2248
<EPS-PRIMARY> 0.34
<EPS-DILUTED> 0
<FN>
AMOUNTS INAPPLICABLE OR NOR DISCLOSED AS A SEPARATE
LINE ON THE BALANCE SHEET OR STATEMENT OF INCOME ARE
REPORTED AS 0 HEREIN.
NOTES AND ACCOUNTS RECEIVABLE - TRADE ARE REPORTED NET
OF ALLOWANCES FOR DOUBTFUL ACCOUNTS IN THE BALANCE
SHEET.
</TABLE>
