<PAGE 1>
INTERNATIONAL SHIPHOLDING CORPORATION AND SUBSIDIARIES
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
x For the quarterly period ended March 31,1997
-------------
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 31, 1997)
----------------
<PAGE 2>
<TABLE>
Part I - Financial Information
INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(All Amounts in Thousands)
(Unaudited)
<CAPTION>
March 31, December 31,
ASSETS 1997 1996
------------- -------------
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents $ 38,250 $ 43,020
Marketable Securities 2,209 2,727
Accounts Receivable, Net of Allowance for
Doubtful Accounts of $236 and $256 in
1997 and 1996, Respectively:
Traffic 33,212 42,404
Agents' 9,378 10,343
Claims and Other 2,102 3,048
Federal Income Taxes Receivable 1,201 1,366
Net Investment in Direct Financing Leases 1,991 2,033
Other Current Assets 7,815 6,216
Material and Supplies Inventory, at Cost 12,868 12,043
------------- ------------
Total Current Assets 109,026 123,200
------------- ------------
Net Investment in Direct Financing Leases 21,978 22,797
------------- ------------
Vessels, Property and Other Equipment, at Cost:
Vessels and Barges 676,390 676,267
Other Marine Equipment 7,515 7,500
Terminal Facilities 18,245 18,535
Land 2,317 2,317
Furniture and Equipment 18,464 17,401
------------- ------------
722,931 722,020
Less - Accumulated Depreciation (285,765) (276,222)
------------- ------------
437,166 445,798
------------- ------------
Other Assets:
Deferred Charges in Process of
Amortization 40,154 43,318
Acquired Contract Costs, Net of
Accumulated Amortization of $19,311 and
$18,706 in 1997 and 1996, Respectively 18,918 19,523
Due from Related Parties 425 443
Other 6,656 6,517
------------- ------------
66,153 69,801
------------- ------------
$ 634,323 $ 661,596
============= ============
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE 3>
<TABLE>
INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(All Amounts in Thousands)
(Unaudited)
<CAPTION>
March 31, December 31,
LIABILITIES AND STOCKHOLDERS' INVESTMENT 1997 1996
------------- ------------
<S> <C> <C>
Current Liabilities:
Current Maturities of Long-Term Debt $ 31,279 $ 33,470
Current Maturities of Capital
Lease Obligations 2,579 1,981
Accounts Payable and Accrued Liabilities 53,489 67,690
Current Deferred Income Tax Liability 387 811
Current Liabilities to be Refinanced (1,908) (7,680)
------------- -------------
Total Current Liabilities 85,826 96,272
------------- -------------
Current Liabilities to be Refinanced 1,908 7,680
------------- -------------
Billings in Excess of Income Earned
and Expenses Incurred 6,324 8,635
------------- -------------
Long-Term Capital Lease Obligations,
Less Current Maturities 15,313 17,642
------------- -------------
Long-Term Debt, Less Current Maturities 291,790 299,434
------------- -------------
Reserves and Deferred Credits:
Deferred Income Taxes 41,110 40,673
Claims and Other 19,448 18,853
------------- -------------
60,558 59,526
------------- -------------
Commitments and Contingent Liabilities
Stockholders' Investment:
Common Stock 6,756 6,756
Additional Paid-in Capital 54,450 54,450
Retained Earnings 112,485 112,310
Less - Treasury Stock (1,133) (1,133)
Unrealized Holding Gain on
Marketable Securities 46 24
------------- -------------
172,604 172,407
------------- -------------
$ 634,323 $ 661,596
============= =============
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE 4>
<TABLE>
INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(All Amounts in Thousands Except Share and Per Share Data)
(Unaudited)
<CAPTION>
Three Months Ended
March 31, March 31,
1997 1996
------------- -------------
<S> <C> <C>
Revenues $ 83,519 $ 89,490
Subsidy Revenue 6,475 5,745
------------- -------------
89,994 95,235
------------- -------------
Operating Expenses:
Voyage Expenses 66,898 70,093
Vessel and Barge Depreciation 8,522 7,995
------------- -------------
Gross Voyage Profit 14,574 17,147
------------- -------------
Administrative and General Expenses 6,878 6,690
------------- -------------
Operating Income 7,696 10,457
------------- -------------
Interest:
Interest Expense 7,001 7,295
Investment Income (372) (426)
------------- -------------
6,629 6,869
------------- -------------
Income Before Provision for Income Taxes 1,067 3,588
------------- -------------
Provision for Income Taxes:
Federal 389 1,290
State 85 50
------------- -------------
474 1,340
------------- -------------
Net Income $ 593 $ 2,248
============= =============
Earnings Per Common Share:
Net Income $ 0.09 $ 0.34
============= =============
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
(All Amounts in Thousands)
(Unaudited)
<CAPTION>
Net
Additional Unrealized
Common Paid-In Retained Treasury Holding
Stock Capital Earnings Stock Gain/(Loss) Total
------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at
December 31,
1995 $6,756 $54,450 $106,158 ($1,133) $30 $166,261
Net Income for Year
Ended December 31,
1996 - - 7,823 - - 7,823
Cash Dividends - - (1,671) - - (1,671)
Unrealized Holding Loss
on Marketable
Securities,
Net of Deferred
Taxes - - - - (6) (6)
------------------------------------------------------------
Balance at
December 31,
1996 $6,756 $54,450 $112,310 ($1,133) $24 $172,407
=============================================================
Net Income for Three
Months Ended
March 31, 1997 - - 593 - - 593
Cash Dividends - - (418) - - (418)
Unrealized Holding Gain
on Marketable
Securities,
Net of Deferred
Taxes - - - - 22 22
-----------------------------------------------------------
Balance at March 31,
1997 $6,756 $54,450 $112,485 ($1,133) $46 $172,604
============================================================
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE 6>
<TABLE>
INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(All Amounts in Thousands)
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
1997 1996
---------- ----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 593 $ 2,248
Adjustments to Reconcile Net Income
to Net Cash Provided by
Operating Activities:
Depreciation 9,226 8,519
Amortization of Deferred Charges
and Other Assets 5,628 4,495
Provision for Deferred Income Taxes 389 1,360
Loss on Sale of Assets - 3
Changes in:
Accounts Receivable 10,504 (3,658)
Net Investment in Direct
Financing Leases 861 534
Inventories and Other Current Assets (2,369) 2,320
Other Assets 374 (252)
Accounts Payable and Accrued
Liabilities (10,081) 7,201
Federal Income Taxes Payable (192) (7,718)
Unearned Income (2,311) 1,049
Reserve for Claims and Other
Deferred Credits 595 (986)
---------- ----------
Net Cash Provided by Operating Activities 13,217 15,115
---------- ----------
Cash Flows from Investing Activities:
Purchase of Vessels and Other Property (4,073) (15,987)
Additions to Deferred Charges (2,479) (1,002)
Proceeds from Short-Term Investments - 726
Other Investing Activities 573 9,919
---------- ----------
Net Cash Used by Investing Activities (5,979) (6,344)
---------- ----------
Cash Flows from Financing Activities:
Proceeds from Issuance of Debt 38,657 19,814
Reduction of Debt and Capital Lease
Obligations (50,224) (16,053)
Additions to Deferred Financing Charges (23) (1,214)
Common Stock Dividends Paid (418) (418)
---------- ----------
Net Cash (Used) Provided by Financing Activities (12,008) 2,129
---------- ----------
Net (Decrease) Increase in Cash and Cash
Equivalents (4,770) 10,900
Cash and Cash Equivalents at Beginning of
Period 43,020 54,281
---------- ----------
Cash and Cash Equivalents at End of Period $ 38,250 $ 65,181
========== ==========
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE 7>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1997
(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, 1996. 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 1997. 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 1997 interim results are not necessarily
indicative of the results of operations for the full year
1997.
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.
Note 2. Current Liabilities to be Refinanced
The Company has $1,908,000 remaining to be drawn on a
long-term loan with a commercial bank obtained to finance
the purchase and refurbishment of a LASH vessel to provide
ocean transportation services. The costs remaining for the
refurbishment are expected to be paid within one year and
are included in "Accounts Payable and Accrued Liabilities"
on the Company's March 31, 1997, consolidated balance
sheet. To properly reflect the Company's "Current
Liabilities" as of March 31, 1997, this amount to be
refinanced of $1,908,000 was reclassified as a long-term
liability and included in "Current Liabilities to be
Refinanced".
<PAGE 8>
Note 3. Earnings Per Share
In February of 1997, the Financial Accounting Standards
Board issued Statement No. 128 (FAS 128), "Earnings Per
Share," which simplifies the computation of earnings per
share. FAS 128 is effective for financial statements issued
for periods ending after December 1, 1997, and requires
restatement for all prior period earnings per share data
presented. Earnings per share calculated in accordance with
FAS 128 would be unchanged for the periods presented.
<PAGE 9>
INTERNATIONAL SHIPHOLDING CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Certain statements made in this report or elsewhere by,
or on behalf of, the Company that are not based on
historical facts are intended to be forward-looking
statements within the meaning of the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are based on assumptions about
future events and are therefore subject to risks and
uncertainties. The Company cautions readers that certain
important factors have affected and may affect in the future
the Company's actual consolidated results of operations and
may cause future results to differ materially from those
expressed in or implied by any forward-looking statements
made in this report or elsewhere by, or on behalf of, the
Company. For a description of certain of these important
factors, refer to the Company's Form 10-K filed with the
Securities and Exchange Commission for the year ended
December 31, 1996.
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.
<PAGE 10>
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997
COMPARED TO THE THREE MONTHS ENDED MARCH 31, 1996
Gross Voyage Profit
- -------------------
Gross voyage profit decreased 15.0% to $14.6 Million in
the first quarter of 1997 as compared to $17.1 Million in
the same period of 1996. Gross voyage profit was primarily
impacted by lower operating results from the Company's LASH
vessels employed in its liner services. The Company's liner
service between ports on the U.S. Gulf/U.S. Atlantic Coast
and South Asia produced less gross voyage profit primarily
due to an increase in the number of days out of service for
vessel drydocking during the first quarter of 1997 as
compared to the same period last year. Early in the first
quarter of 1997, the Company added the newly acquired and
refurbished LASH vessel, the Atlantic Forest, to its
TransAtlantic liner service. This added capacity coincided
with a soft spot in the market complicated by a strengthened
dollar that tended to reduce U.S. exports resulted in a
lower gross voyage profit from this service during the first
quarter of 1997 as compared to the first quarter of 1996.
To a lesser degree, the following factors contributed
to the decrease in gross voyage profit: scheduled
charterhire rate reductions, effective January 1, 1997, for
the Company's three Roll-On/Roll-Off vessels employed in the
Military Prepositioning Service; lower spot market
charterhire rates on the Company's Cape-Size Bulk Carrier;
the lay-up for most of the first quarter of 1997 of one of
the Company's ice-strengthened multi-purpose vessels which
operated in the Company's TransAtlantic liner service during
the first quarter of last year (this vessel will commence a
Military Sealift Command (MSC) charter in the third quarter
of this year); and a reduction in the amount of coal moved
by the Company's domestic river operations due to adverse
conditions on the Mississippi and Ohio Rivers.
These decreases in gross voyage profit were partially
offset by the operation of the Company's U.S. Flag Coal
Carrier, the Energy Enterprise, on long-term contract to a
major U.S. utility for the full first quarter of 1997, as
compared to the first quarter of 1996, when the vessel
operated for only part of the quarter. Additionally, there
was an increase in the amount of cargo moved by the
Company's Special Purpose Vessels ("SPV") and barges under
long-term contract providing transportation services to a
major mining company in Indonesia as compared to the same
period in 1996.
<PAGE 11>
The Company's Operating Differential Subsidy (ODS)
agreement for its four LASH vessels in Waterman's liner
service expired for each of the vessels as their respective
1996 year-end cross-over voyages terminated during the first
and second quarters of 1997. Upon the expiration of ODS,
these vessels began participation in the Maritime Subsidy
Program (MSP), which provides for subsidy payments of
approximately $2.1 Million per vessel per year, as compared
to approximately $5.8 Million per vessel per year under the
ODS. In an effort to overcome the decrease in the amount of
subsidy payments to be provided under MSP, as compared to
ODS, the Company is pursuing various options such as
reduction of shipboard and shoreside costs. Two of the
Company's Pure Car Carriers completed their first full
quarter as participants in the MSP during the first quarer
of 1997.
Vessel and barge depreciation for the first quarter of
1997 increased 6.6% to $8.5 Million as compared to $8.0
Million in the same period of 1996 primarily because the
Energy Enterprise was in service for the full first quarter
of this year but did not commence operations until February
of 1996. Additionally, depreciation expense increased
because the Atlantic Forest and associated LASH barges,
which the Company purchased and refurbished late last year,
began operations in early 1997. These increases in
depreciation expense were partially offset by a decrease
resulting from the sale, in mid-1996, of the Company's semi-
submersible barge, the Caps Express.
Other Income and Expenses
- -------------------------
In its continuing effort to decrease overhead expenses,
the Company effected a small reduction in force at the end
of the first quarter of this year. Severance payments
resulting from this reduction were the primary reason for
the increase in administrative and general expenses from
$6.7 Million in the first quarter of 1996 to $6.9 Million in
the same period in 1997.
Interest expense decreased 4.0% from $7.3 Million in
the first quarter of 1996 to $7.0 Million in the same period
of 1997 primarily due to regularly scheduled payments on
existing outstanding debt, the early repayment of a $9.5
Million long-term debt at the end of the first quarter of
1996, and the expiration last year of an interest rate swap
agreement on which the Company had incurred interest during
the first quarter of 1996. These decreases were partially
offset by increases resulting from interest incurred on
higher outstanding balances drawn on lines of credit,
additional draws on the long-term financing of the SPV's,
and the financing of the Atlantic Forest and associated
barges.
<PAGE 12>
Investment income decreased from $426,000 in the first
quarter of 1996 to $372,000 in the same period of 1997
reflecting a reduction in the balance of invested funds.
Income Taxes
- ------------
The Company provided $474,000 for Federal income taxes
in the first quarter of 1997 as compared to $1.3 Million in
the first quarter of 1996. The statutory rate was 35% for
both periods.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital decreased from $26.9
Million at December 31, 1996, to $23.2 Million at March 31,
1997. Cash and cash equivalents decreased during the first
quarter of 1997 by $4.8 Million to a total of $38.3 Million.
Positive cash flows were achieved from operating
activities in the first quarter of 1996 in the amount of
$13.2 Million. The major sources of cash from operations
were net income, adjusted for non-cash provisions such as
depreciation and amortization, and collections on Accounts
Receivable. These sources of cash were partially offset by
the use of cash to reduce Accrued Liabilities and Accounts
Payable.
Net cash used for investing activities amounted to $6.0
Million during the first quarter of 1997. Major investments
included capital improvements on the Atlantic Forest, Energy
Enterprise, and the SPV's which amounted to $1.8 Million,
$812,000, and $572,000, respectively. Other uses of cash
included the addition of $2.5 Million in deferred vessel
drydocking charges. Proceeds from investing activities
included $573,000 received upon the maturity of certain
marketable securities.
Net cash used by financing activities during the first
quarter of 1997 totaled $12.0 Million. Proceeds from the
issuance of debt obligations of $38.7 Million included $28.0
Million drawn under the Company's lines of credit, of which
$18.5 Million was outstanding as of March 31, 1997, $6.5
Million from the refinancing of balloon notes due on certain
of the Company's debt early this year, and $4.2 Million
associated with the refurbishment of the Atlantic Forest.
Cash used for financing activities included $39.5 Million to
repay amounts which were drawn under lines of credit in late
1996 and early 1997, $10.7 Million for regularly scheduled
<PAGE 13>
payments on other outstanding debt and capital lease
obligations, and $418,000 to meet common stock dividend
requirements.
To meet short-term requirements when fluctuations occur
in working capital, the Company has available three lines of
credit totaling $35.0 Million. As of March 31, 1997, $18.5
Million was drawn on these lines of credit, of which $7.0
Million was repaid early in the second quarter of 1997.
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 16, 1997, the Board of
Directors declared a quarterly dividend of 6.25 cents per
Common Share payable on June 20, 1997, to shareholders of
record on June 6, 1997.
<PAGE 14>
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders was held April 16, 1997.
The matters voted upon and the results of the voting were as follows:
(1) Election of Board of Directors:
Shares Voted For Withheld Authority
---------------- ------------------
Niels W. Johnsen 5,798,589 50,299
Erik F. Johnsen 5,798,589 50,299
Harold S. Grehan 5,798,589 50,299
Niels M. Johnsen 5,798,589 50,299
Laurance Eustis 5,799,739 49,149
Raymond V. O'Brien 5,800,464 48,424
Edwin Lupberger 5,800,464 48,424
Edward K. Trowbridge 5,799,996 48,892
Erik L. Johnsen 5,797,164 51,724
(2) Ratification of Arthur Andersen, LLP, certified public accountants,
as independent auditors for the Corporation for the fiscal year ending
December 31, 1997:
Shares Voted For 5,815,853
Shares Voted Against 4,802
Abstentions 28,233
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBIT INDEX
Exhibit Number Description
----------------- ----------------------------
Part I Exhibits: 27 Financial Data Schedule
Part II 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 Form 10-Q
for the quarterly period ended
June 30, 1996, and incorporated
herein by reference)
(b) No reports on Form 8-K have been filed for the three months ended
March 31, 1997.
<PAGE 15>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
INTERNATIONAL SHIPHOLDING CORPORATION
/s/ Gary L. Ferguson
_____________________________________________
Gary L. Ferguson
Vice President and Chief Financial Officer
Date May 13, 1997
-----------------
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 38250
<SECURITIES> 2209
<RECEIVABLES> 44692
<ALLOWANCES> 236
<INVENTORY> 12868
<CURRENT-ASSETS> 109026
<PP&E> 722931
<DEPRECIATION> 285765
<TOTAL-ASSETS> 634323
<CURRENT-LIABILITIES> 85826
<BONDS> 309011
0
0
<COMMON> 6756
<OTHER-SE> 165848
<TOTAL-LIABILITY-AND-EQUITY> 634323
<SALES> 0
<TOTAL-REVENUES> 89994
<CGS> 0
<TOTAL-COSTS> 82298
<OTHER-EXPENSES> 7001
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7001
<INCOME-PRETAX> 1067
<INCOME-TAX> 474
<INCOME-CONTINUING> 593
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 593
<EPS-PRIMARY> 0.09
<EPS-DILUTED> 0.09
</TABLE>
