UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended
MARCH 31, 1994
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.
1-6479-1
OVERSEAS SHIPHOLDING GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-2637623
(State or other jurisdiction of (IRS Employer Identi-
incorporation or organization) fication No.)
1114 Avenue of the Americas, New York, New York 10036
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including
area code (212) 869-1222
No Change
Former name, former address and former fiscal year, if
changed since last report
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
Common Shares outstanding as of May 11, 1994 - 36,203,902
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 1994 AND DECEMBER 31, 1993
<TABLE>
<CAPTION>
MARCH DECEMBER
31, 1994 31, 1993 (A)
(UNAUDITED)
ASSETS
Current Assets:
<S> <C> <C>
Cash, including interest-bearing deposits
of $76,796,000 and $101,790,000 $ 86,017,000 $ 110,167,000
Receivables 30,835,000 27,182,000
Prepaid expenses 29,459,000 25,738,000
-------------- --------------
Total Current Assets 146,311,000 163,087,000
Investments in Marketable Securities 17,929,000 21,158,000
Capital Construction and Restricted Funds 105,698,000 105,654,000
Vessels, at cost, less accumulated depreciation of
$471,414,000 and $463,864,000 - Note F 1,052,049,000 999,782,000
Vessels Under Capital Leases, less accumulated
amortization of $131,857,000 and $129,135,000 127,621,000 130,342,000
Investment in Celebrity Cruise Lines Inc. - Note B 231,463,000 229,780,000
Investments in Bulk Shipping Joint Ventures - Note C 80,262,000 78,484,000
Other Assets 96,621,000 95,450,000
-------------- --------------
$1,857,954,000 $1,823,737,000
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
<S> <C> <C>
Accounts payable $ 5,554,000 $ 3,811,000
Sundry liabilities and accrued expenses 43,616,000 36,251,000
-------------- --------------
49,170,000 40,062,000
Current installments of long-term debt - Note F 15,364,000 15,003,000
Current obligations under capital leases 8,775,000 8,555,000
-------------- --------------
Total Current Liabilities 73,309,000 63,620,000
Advance Charter Revenues 4,208,000 7,722,000
Long-term Debt - Note F 658,154,000 705,558,000
Obligations Under Capital Leases 169,473,000 170,716,000
Minority Interest 4,077,000 4,368,000
Deferred Federal Income Taxes ($102,176,000 and
$100,161,000) and Deferred Credits - Note E 105,484,000 103,316,000
Shareholders' Equity - Notes E and H:
Common Stock, par value $1 per share:
Authorized - 60,000,000 shares
Issued - 39,590,759 and 36,140,759 shares 39,591,000 36,141,000
Paid-in Additional Capital 93,591,000 21,035,000
Retained Earnings 765,091,000 764,987,000
-------------- --------------
898,273,000 822,163,000
Less - cost of Treasury Stock - 3,386,857 and
3,436,765 shares 49,560,000 50,136,000
-------------- --------------
848,713,000 772,027,000
Less - net unrealized loss on
marketable securities 5,464,000 3,590,000
-------------- --------------
Total Shareholders' Equity 843,249,000 768,437,000
Commitments and Other Comments - Note H
-------------- --------------
$1,857,954,000 $1,823,737,000
============== ==============
<FN>
(A) The balance sheet at December 31, 1993 has been derived from the
audited financial statements at that date.
(See Accompanying Notes)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND MARCH 31, 1993
(UNAUDITED)
---------------------------
MARCH MARCH
31, 1994 31, 1993
------------- ------------ -
<S> <C> <C>
Shipping Revenues:
Revenue from voyages $ 98,805,000 $ 99,682,000
Income from Celebrity Cruise Lines Inc. - Note B 1,683,000 794,000
Income attributable to bulk shipping joint
ventures - Note C ------------ ------------
1,693,000 1,568,000
102,181,000 102,044,000
------------ ------------
Shipping Expenses:
Vessel and voyage - Note D 64,047,000 66,620,000
Depreciation of vessels and amortization
of capital leases 14,848,000 14,986,000
Agency fees - Note D 7,548,000 7,918,000
General and administrative 3,296,000 2,559,000
------------ ------------
89,739,000 92,083,000
------------ ------------
Income from Vessel Operations 12,442,000 9,961,000
Other Income (net) - Note G 6,110,000 7,401,000
------------ ------------
18,552,000 17,362,000
Interest Expense 11,821,000 11,086,000
------------ ------------
Income before Federal Income taxes 6,731,000 6,276,000
Provision for Federal income taxes, reflecting deferred
provision of $1,715,000 and $1,400,000 - Note E 1,715,000 1,400,000
------------ ------------
------------ ------------
Net Income 5,016,000 4,876,000
Retained Earnings at beginning of period 764,987,000 766,647,000
------------ ------------
770,003,000 771,523,000
Cash Dividends Declared 4,912,000 4,901,000
------------ ------------
Retained Earnings at end of period $765,091,000 $766,622,000
============ ============
Per Share Amounts - Note H:
Net income $.15 $.15
==== ====
Cash dividends declared $.15 $.15
==== ====
<FN>
(See Accompanying Notes)
</TABLE>
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND MARCH 31, 1993
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH MARCH
31, 1994 31, 1993
<S> <C> <C>
Net cash provided by Operating Activities $ 9,407,000 $ 20,462,000
------------- ------------
Cash Flows from Investing Activities:
Purchases of marketable securities (6,192,000) (19,009,000)
Proceeds from sales of marketable
securities 9,234,000 4,866,000
Additions to vessels (72,702,000) (2,014,000)
Proceeds from disposal of vessels 11,608,000 21,193,000
Other - net 1,171,000 (5,176,000)
-------------- ------------
Net cash used in investing activities (56,881,000) (140,000)
-------------- ------------
Cash Flows from Financing Activities:
Issuance of Common Stock 76,004,000
Payments on long-term debt and
obligations under capital leases (48,066,000) (15,666,000)
Purchases of treasury stock (237,000)
Cash dividends paid (4,912,000) (4,901,000)
Other - net 298,000 49,000
------------- ------------
Net cash provided by/(used in)
financing activities 23,324,000 (20,755,000)
------------- ------------
Net Decrease in Cash (24,150,000) (433,000)
Cash, including interest-bearing
deposits, at beginning of period 110,167,000 85,699,000
------------- ------------
Cash, including interest-bearing
deposits, at end of period $ 86,017,000 $ 85,266,000
============= ============
<FN>
(See Accompanying Notes)
</TABLE>
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Financial Statements
General - As contemplated by the Securities and Exchange Commission, the
accompanying financial statements and footnotes, which have been
rounded to the nearest thousand dollars, have been condensed and
therefore do not contain all disclosures required by generally
accepted accounting principles. Reference should be made to the
Company's Annual Report to Shareholders for the year ended December
31, 1993.
The statements as of and for the three month period ended March 31, 1994
and for the three month period ended March 31, 1993 are unaudited. In
the opinion of the Company all adjustments (which were of a normal
recurring nature) have been made to present fairly the results for
such unaudited interim periods.
The results of operations for the three month period ended March 31, 1994
are not necessarily indicative of those for a full fiscal year.
Note A - Foreign Subsidiaries:
A condensed summary of the combined assets and liabilities of the Company's
foreign (incorporated outside the U.S.) subsidiaries, whose operations
are principally conducted in U.S. Dollars, follows:
<TABLE>
<CAPTION>
AS OF
--------------------------------
MARCH DECEMBER
31, 1994 31, 1993
-------------- ---------------
<S> <C> <C>
Current Assets $ 39,664,000 $ 38,730,000
Vessels, net 829,974,000 765,850,000
Investment in Celebrity Cruise Lines Inc. 231,463,000 229,780,000
Other Assets 98,978,000 95,628,000
-------------- --------------
1,200,079,000 1,129,988,000
-------------- --------------
Current Installments of Long-term Debt 10,039,000 9,728,000
Other Current Liabilities 11,413,000 8,692,000
-------------- --------------
Total Current Liabilities 21,452,000 18,420,000
Long-term Debt, including intercompany,
and Deferred Credits, etc. 246,683,000 187,252,000
-------------- --------------
268,135,000 205,672,000
-------------- --------------
Net Assets $ 931,944,000 $ 924,316,000
============== ==============
<FN>
(See Notes on Following Pages)
</TABLE>
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Financial Statements
Note B - Investment in Celebrity Cruise Lines Inc.:
A condensed summary of the assets and liabilities of Celebrity Cruise Lines
Inc. ("CCLI"), the Company's cruise industry joint venture, and the
results of its operations follows:
<TABLE>
<CAPTION>
AS OF
----------------------------
MARCH DECEMBER
31, 1994 31, 1993
------------ ------------
<S> <C> <C>
Current assets $123,745,000 $147,344,000
Vessels, net 681,546,000 670,459,000
Other assets 50,339,000 48,072,000
------------ ------------
855,630,000 865,875,000
------------ ------------
Current installments of long-term debt 41,508,000 42,593,000
Other current liabilities 71,365,000 70,612,000
------------ ------------
Total current liabilities 112,873,000 113,205,000
Long-term debt 273,258,000 286,624,000
------------ ------------
386,131,000 399,829,000
------------ ------------
Net assets (principally capital
contributions) $469,499,000 $466,046,000
============ ============
THREE MONTHS ENDED
MARCH 31,
1994 1993
------------ ------------
Revenue $82,684,000 $ 77,928,000
Costs and expenses 79,231,000 76,267,000
------------ ------------
Net income $ 3,453,000 $ 1,661,000
As of May 11, 1994, CCLI has commitments with an aggregate unpaid cost of
$872,000,000 for the construction of three cruise ships, one scheduled
for delivery in late 1995, one in 1996 and the third in late 1997.
Unpaid costs are net of $80,200,000 of progress payments (of which
$15,900,000 was paid subsequent to March 31, 1994). Long-term
financing arrangements exist for substantially all of the unpaid cost
of these ships.
Note C - Bulk Shipping Joint Ventures:
Certain subsidiaries have investments in bulk shipping joint ventures. A
condensed summary of the combined assets and liabilities and results
of operations of the bulk shipping joint ventures follows:
AS OF
-----------------------------
MARCH DECEMBER
31, 1994 31, 1993
------------- ------------
<S> <C> <C>
Current assets (including $6,827,000
and $6,814,000 due from owners) $ 86,174,000 $ 75,236,000
Vessels, net 56,979,000 64,013,000
Other assets (including $31,587,000
and $33,172,000 due from owners) 32,977,000 34,880,000
------------ ------------
176,130,000 174,129,000
Current liabilities 5,052,000 6,792,000
------------ ------------
Net assets (principally undistributed
net earnings) $171,078,000 $167,337,000
============ ============
(See Notes on Following Pages)
</TABLE>
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Financial Statements
Note C - Bulk Shipping Joint Ventures (continued):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------
1994 1993
---- ----
<S> <C> <C>
Revenue, primarily from voyages (including
$7,625,000 and $8,710,000 from vessels
chartered to other owners) $11,411,000 $10,545,000
Costs and expenses 7,670,000 7,242,000
----------- -----------
Net income $ 3,741,000 $ 3,303,000
=========== ===========
</TABLE>
Note D - Agency Fees and Brokerage Commissions:
All subsidiaries with vessels and certain joint ventures are parties to
agreements with Maritime Overseas Corporation ("Maritime") that
provide, among other matters, for Maritime and subsidiaries to render
services related to the chartering and operation of the vessels and
certain general and administrative services for which Maritime and
subsidiaries receive specified compensation. Vessel and voyage
expenses include $1,491,000 (three months ended March 31, 1994) and
$1,580,000 (three months ended March 31, 1993) of brokerage commissions
to Maritime. Maritime is owned by a director of the Company; directors
or officers of the Company constitute all four of the directors and the
majority of the principal officers of Maritime.
Note E - Taxes:
Effective from January 1, 1987, earnings of the foreign shipping companies,
other than CCLI, are subject to U.S. income taxation currently; post-
1986 taxable income may be distributed to the U.S. parent without
further tax. Prior thereto, tax on such earnings was deferred as long
as the earnings were reinvested in foreign shipping operations.
Foreign income, substantially all of which was earned by companies
which are not subject to income taxes in their country of incorporation,
aggregated $7,340,000 (three months ended March 31, 1994) and $10,634,000
(three months ended March 31, 1993) before any U.S. income tax effect.
No provision for U.S. income taxes on the undistributed income of the
foreign shipping companies accumulated through December 31, 1986 was
required, since such undistributed earnings have been reinvested or are
intended to be reinvested in foreign shipping operations so that the
qualified investment therein is not expected to be reduced below the
corresponding amount at December 31, 1986. Further, no provision for
U.S. income taxes on the undistributed earnings of CCLI was required,
since it is intended that such undistributed earnings will be
indefinitely reinvested.
Federal income taxes paid (all of which related to 1993) amounted to
$4,200,000 in the three months ended March 31, 1994. No payments of
Federal income taxes were required or made during the three month
period ended March 31, 1993. The Company received a Federal income tax
refund of $6,800,000 in the first quarter of 1993.
(See Notes on Following Pages)
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Financial Statements
Note F - Long-term Debt:
Agreements relating to long-term debt provide for prepayment privileges (in
certain instances with penalties), limitations on the amount of secured
debt and total borrowings, and acceleration of payment under certain
circumstances, including if any of the minimum consolidated financial
covenants contained in certain of such agreements are not met. The
amount that the Company can use for Restricted Payments, as defined,
including dividends and purchases of its capital stock, is limited as
of March 31, 1994 to $97,000,000.
In March 1994, the Company terminated a floating to fixed interest rate swap
(which was designated as a hedge against certain debt) with a bank
covering a notional amount of $24,000,000. The cost of terminating the
swap is being amortized over the remaining term of the hedged debt.
As of March 31, 1994, the Company is a party to fixed to floating interest
rate swaps (designated as hedges against certain debt) ranging between
three and fifteen years with various banks covering notional amounts
aggregating $685,000,000, pursuant to which it pays LIBOR and receives
fixed rates ranging from 5.3% to 8.1% calculated on the notional
amounts. These agreements have various maturity dates from 1995 to
2008.
Approximately 25% of the net book amount of the Company's vessels,
representing approximately 11% of the number of foreign flag and 55% of
the number of U.S. flag vessels, is pledged as collateral for certain
long-term debt.
Interest paid approximated $7,510,000 (three months ended March 31, 1994)
and $13,299,000 (three months ended March 31, 1993), excluding
capitalized interest.
<PAGE>
Note G - Other Income - net:
Other income - net consists of the following:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------
1994 1993
---- ----
<S> <C> <C>
Investment income:
Interest and dividends $1,759,000 $2,071,000
Gain on sale of securities 2,416,000 62,000
---------- ----------
4,175,000 2,133,000
Gain on disposal of vessels 2,512,000 6,077,000
Foreign currency exchange (loss) (564,000) (902,000)
Minority interest 11,000 (143,000)
Miscellaneous - net (24,000) 236,000
---------- ----------
$6,110,000 $7,401,000
========== ==========
(See Note on Following Page)
</TABLE>
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Financial Statements
Note H - Commitments and Other Comments:
1. As of May 11, 1994, commitments with an aggregate unpaid cost of
approximately $75,200,000 exist for the construction of five foreign flag
bulk vessels, scheduled to be delivered in 1994 and 1995. Unpaid costs
are net of $262,000,000 of progress payments and prepayments (all paid
prior to March 31, 1994) and of discounts resulting from such
prepayments.
2. In March 1994, the Company sold 3,450,000 shares of its common stock in a
public offering. Net proceeds were $76,004,000, which were credited to
common stock ($3,450,000) and paid-in additional capital ($72,554,000).
Net income per share is based on the weighted average number of common
shares outstanding during each period, 33,702,000 shares (three months
ended March 31, 1994) and 32,674,000 shares (three months ended March
31, 1993).
Stock options have not been included in the computation of net income per
share since their effect would not be material. The effect on net
income per share assuming that the aforementioned sale of shares and
the use of a portion of the proceeds to reduce amounts outstanding
under the Revolving Credit Agreement had occurred at the beginning of
1994 was not material.
3. The Company has hedged its exchange rate risk with respect to contracted
future charter revenues receivable in a foreign currency by entering
into currency swaps with a major financial institution to deliver such
foreign currency at rates which will result in the Company receiving
approximately $150,000,000 for such foreign currency through 2004.
Changes in the value of the currency swaps are deferred and are offset
against corresponding changes in the value of the charter hire, over
the related charter periods.
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
OPERATIONS AND FINANCIAL CONDITION
Operations
Income from Vessel Operations
Revenues and income from vessel operations of the Company are highly
sensitive to patterns of supply and demand for vessels of the types and
sizes owned and operated by the Company and the markets in which those
vessels operate. Freight rates for major bulk commodities are
determined by market forces including local and worldwide demand for
such commodities, volumes of trade, distances between sources and
destinations of cargoes and amount of available tonnage both at the
time such tonnage is required and over periods of projected
requirements. Available tonnage is affected, over time, by the amount
of newbuilding deliveries and removal of existing tonnage from service.
Results in particular periods are also affected by such factors as the mix
between voyage and time charters, the timing of the completion of
voyage charters, the time and prevailing rates when charters that are
currently being performed were negotiated, the levels of applicable
rates and the business available as particular vessels come off
existing charters, and the timing of drydocking of vessels.
Historically, the diversity of the Company's fleet has tended to cushion the
effects of weakness in particular markets. However, since early 1992
there has been weakness in all of the Company's major markets, although
at various times during 1993 and 1994 market rates in certain trades
were somewhat improved. Beginning in the fourth quarter of 1993, spot
market freight rates for foreign flag VLCCs (over 200,000 dwt) and dry
bulk carriers weakened, while rates for foreign and U.S. flag products
carriers experienced seasonal increases which continued in the first
quarter of 1994.
Overall, rates in the first quarter of 1994 were disappointing for crude
carriers, particularly for VLCCs and, on average, were below those in
the first quarter of 1993. Dry bulk rates generally stabilized during
the first quarter of 1994, but remained near the lowest levels seen in
the past several years, except for Capesize vessels (100,000 dwt or
more). Rates for the Capesize ships were at about the same levels as in
the first quarter of 1993. The international tanker and dry bulk cargo
markets did not significantly improve in the early part of the second
quarter of 1994. Near the end of the first quarter of 1994 rates for
U.S. flag product tankers fell sharply as seasonal requirements eased
and tankers that had operated in the crude market for a time returned
to the products trades. Tonnage demand for U.S. flag crude carriers has
also weakened; four of the Company's U.S. flag tankers were redelivered
from charters and, as of May 11, 1994, remained unemployed, as does a
U.S. flag dry bulk carrier.
Income from vessel operations for the quarter ended March 31, 1994 increased
by approximately $2,500,000 from the results for the first quarter of
1993. This increase was attributable to improved income from foreign
flag vessel operations, reflecting increased charter rates obtained in
the 1994 first quarter for petroleum products carriers compared to the
rates obtained
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
Income from Vessel Operations (Continued)
during the 1993 period for those vessels. Rates obtained for certain crude
carrier tonnage were lower in the 1994 quarter than in 1993. The
effect of vessels sold in 1994 and 1993 is also reflected. Income from
operations of the U.S. flag fleet declined somewhat in the 1994 first
quarter from the
1993 period, resulting primarily from a dry bulk carrier and certain crude
carrier tonnage being idle due to lack of employment during the latter
part of the quarter. This was substantially offset by improved
earnings of another U.S. flag dry bulk carrier and increased rates for
certain U.S. flag petroleum products carrier tonnage in the 1994 first
quarter as compared to 1993.
Other Income-Net
The details of other income are shown in Note G. Interest and dividends
decreased in the 1994 quarter as compared to 1993, reflecting a change
in the mix of the Company's investment portfolio. During the 1994
period, the Company's investments in common stocks and interest-bearing
deposits increased compared to the 1993 quarter, at which time the
Company had investments in certain preferred stocks which were redeemed
or sold subsequent to the first quarter of 1993; these 1994 investments
had lower yields than the ones held in 1993. The total amounts utilized
for interest-bearing deposits and investments in the 1994 quarter
compared to the corresponding 1993 period increased. Disposal of
vessels resulted in gains of approximately $2,500,000 in the first
quarter of 1994 and approximately $6,100,000 in the 1993 first quarter.
Gain on sale of securities approximated $2,400,000 in the first quarter
of 1994 compared to $62,000 in the corresponding 1993 period. Other
income also reflects the results of foreign currency transactions in
both periods.
Interest Expense
Interest expense increased slightly in the first quarter of 1994 from the
comparable period of 1993 primarily as a result of an increase in the
average amount of debt outstanding in the 1994 quarter and slightly
increased rates on floating rate debt, net of increased interest costs
capitalized in connection with vessel construction. Interest expense in
both periods also reflects $3,800,000 and $3,000,000, respectively, of
net benefits from interest rate swaps.
Provision for Federal Income Taxes
The provision for Federal income taxes in the first quarter of 1994
increased from the comparable period of 1993 because of the increase in
the Federal statutory rate from 34% to 35% enacted in August 1993 and a
decrease in 1994 in the amount of the Company's dividends received
deduction. The effect of other nontaxable items is also reflected.
Liquidity and Sources of Capital
As reflected in the accompanying condensed financial statements working
capital at March 31, 1994 was approximately $73,000,000. Current assets
are
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
Liquidity and Sources of Capital (Continued)
highly liquid, consisting principally of cash, interest-bearing deposits and
receivables. The Company also had investments in marketable securities
carried as noncurrent assets, other than securities included in
restricted funds, with a market value of approximately $18,000,000.
Net cash provided by operating activities in the first quarter of 1994
approximated $9,000,000 (which is not necessarily indicative of the
cash to be provided by operating activities for a full fiscal year).
Current
financial resources, together with cash anticipated to be generated from
operations, are expected to be adequate to meet requirements for short-
term funds in the next year. As of March 31, 1994, the Company is a
party to fixed to floating interest rate swaps (designated as hedges
against certain debt) ranging between three and fifteen years with
various banks covering notional amounts aggregating $685,000,000,
pursuant to which it pays LIBOR and receives fixed rates ranging from
5.3% to 8.1% calculated on the notional amounts. These agreements have
various maturity dates from 1995 to 2008.
The Company has an unsecured long-term credit facility of $500,000,000, of
which $49,000,000 was used at March 31, 1994, and an unsecured short-
term credit facility of $30,000,000, which was unused at that date. In
March 1994, the Company sold 3,450,000 shares of its common stock for
net proceeds of approximately $76,000,000, of which $50,000,000 was
used to reduce amounts outstanding under the Revolving Credit
Agreement. The remaining proceeds were added to working capital. At May
11, 1994, commitments with an aggregate unpaid cost of approximately
$75,200,000 exist for the construction of five foreign flag bulk
vessels scheduled for delivery in 1994 and 1995.
Ratio of Earnings to Fixed Charges
The ratio of earnings to fixed charges for the three months ended March 31,
1994 was 1.14 and has been computed by dividing the sum of income
before Federal income taxes and fixed charges by fixed charges. Fixed
charges consist of interest expense, including the proportionate share
of interest of joint venture companies, capitalized interest and an
estimate of the interest component of an operating lease.
Independent Accountant's Report on Review of Interim Financial Information
The accompanying financial statements as of March 31, 1994 and for the three
months ended March 31, 1994 and 1993 are unaudited; however, such
financial statements have been reviewed by the Company's independent
accountants.
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
PART II
Item 6(a). Exhibits
See Exhibit Index on page 17.
Item 6(b). Reports on Form 8-K
The registrant was not required to file any report on Form 8-K during the
quarter ended March 31, 1994.
<PAGE>
Ernst & Young 787 Seventh Avenue Phone: 212 773 3000
New York, New York 10019
INDEPENDENT ACCOUNTANTS' REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION
To the Shareholders
Overseas Shipholding Group, Inc.
We have reviewed the accompanying condensed consolidated balance sheet of
Overseas Shipholding Group, Inc. and subsidiaries as of March 31, 1994
and the related condensed consolidated statements of income and
retained earnings and cash flows for the three month periods ended
March 31, 1994 and 1993. These financial statements are the
responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying
analytical procedures to financial data, and making inquiries of
persons responsible for financial and accounting matters. It is
substantially less in scope than an audit in accordance with generally
accepted auditing standards, which will be performed for the full year
with the objective of expressing an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the condensed consolidated financial statements
referred to above for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Overseas Shipholding
Group, Inc. and subsidiaries as of December 31, 1993, and the related
consolidated statements of income and retained earnings and cash flows
for the year then ended, not presented herein, and in our report dated
March 7, 1994, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set
forth in the accompanying condensed consolidated balance sheet as of
December 31, 1993, is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been
derived.
ERNST & YOUNG
May 11, 1994
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC.
AND SUBSIDIARIES
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.
OVERSEAS SHIPHOLDING GROUP, INC.
--------------------------------
(Registrant)
Date: May 12, 1994 Morton P. Hyman
----------------- ---------------------------------
Morton P. Hyman
President
Date: May 12, 1994 Alan Carus
----------------- ----------------------------------
Alan Carus
Controller
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
EXHIBIT INDEX
12. Computation of Ratio of Earnings to Fixed Charges.
23. Letter from Ernst & Young.
NOTE: Instruments authorizing long-term debt of the
registrant and subsidiaries, which do not exceed
10% of their total assets on a consolidated basis,
are not being filed herewith. The registrant
agrees to furnish a copy of each such instrument
to the Commission upon request.
<TABLE>
<CAPTION>
OVERSEAS SHIPHOLDING GROUP, INC.
RATIO OF EARNINGS TO FIXED CHARGES
For the three months ended March 31, 1994
(In thousands, except ratios)
Presented in connection with Amendment No. 1
filed on November 9, 1993 to Registration Statement No. 33-50441
<S> <C>
Income before Federal income taxes $ 6,731
Adjustments of income related to
companies owned less than 100% ( 2)
Interest expense 11,821
Proportionate share of interest of
50% - owned companies 2,496
Interest component of an operating
lease 751
Amortization of capitalized interest 588
-------
Earnings $22,385
=======
Interest expense $11,821
Proportionate share of fixed charges
of 50% - owned companies 3,077
Capitalized interest 4,047
Interest component of an operating
lease 751
-------
Fixed charges $19,696
=======
Ratio of earnings to fixed charges 1.14x
==========
</TABLE>
<PAGE>
May 13, 1994
Securities and Exchange Commission
Washington, D. C. 20549
We are aware of the incorporation by reference in the Registration
Statements (Form S-8 No. 33-44013 and Form S-3 No. 33-50441) of
Overseas Shipholding Group, Inc. of our report dated May 12, 1994
relating to the unaudited condensed consolidated interim financial
statements of Overseas Shipholding Group, Inc. which are included in
its Form 10-Q for the quarter ended March 31, 1994.
Pursuant to Rule 436(c) of the Securities Act of 1933 our report is not part
of the registration statement prepared or certified by accountants
within the meaning of Section 7 or 11 of the Securities Act of 1933.
ERNST & YOUNG
New York, New York
