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, 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.
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 10, 1995 - 36,217,346
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 1995 AND DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARCH DECEMBER
31, 1995 31, 1994 (A)
(UNAUDITED)
ASSETS
Current Assets:
<S> <C> <C>
Cash, including interest-bearing deposits
of $144,746,000 and $88,490,000 $ 155,371,000 $ 100,034,000
Receivables 32,998,000 33,804,000
Prepaid expenses 30,448,000 26,868,000
-------------- --------------
Total Current Assets 218,817,000 160,706,000
Investments in Marketable Securities 24,861,000 36,052,000
Capital Construction and Restricted Funds 110,137,000 105,570,000
Vessels, at cost, less accumulated
depreciation of $514,056,000 and
$500,477,000 - Note F 1,145,076,000 1,063,784,000
Vessels Under Capital Leases, less
accumulated amortization of $142,742,000
and $140,020,000 116,736,000 119,457,000
Investment in Celebrity Cruise Lines
Inc. - Note B 229,380,000 230,642,000
Investments in Bulk Shipping Joint
Ventures - Note C 84,167,000 82,894,000
Other Assets 88,639,000 106,304,000
-------------- --------------
$2,017,813,000 $1,905,409,000
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
<S> <C> <C>
Accounts payable $ 3,983,000 $ 4,563,000
Sundry liabilities and accrued expenses 41,966,000 39,242,000
-------------- --------------
45,949,000 43,805,000
Current installments of long-term debt -
Note F 15,161,000 17,638,000
Current obligations under capital leases 9,847,000 9,737,000
-------------- --------------
Total Current Liabilities 70,957,000 71,180,000
Advance Time Charter Revenues 4,563,000 4,828,000
Long-term Debt - Note F 871,034,000 749,185,000
Obligations Under Capital Leases 159,514,000 160,871,000
Minority Interest 3,670,000 3,803,000
Deferred Federal Income Taxes ($99,670,000
and $102,170,000) and Deferred Credits -
Note E 103,184,000 105,763,000
Shareholders' Equity - Notes E and H:
Common Stock, par value $1 per share:
Authorized - 60,000,000 shares
Issued - 39,590,759 shares 39,591,000 39,591,000
Paid-in Additional Capital 93,634,000 93,599,000
Retained Earnings 728,846,000 737,583,000
-------------- --------------
862,071,000 870,773,000
Less - cost of Treasury Stock - 3,373,926
and 3,380,838 shares 49,415,000 49,491,000
-------------- --------------
812,656,000 821,282,000
Less - net unrealized loss on
marketable securities 7,765,000 11,503,000
-------------- --------------
Total Shareholders' Equity 804,891,000 809,779,000
Commitments and Other Comments - Note H
-------------- --------------
$2,017,813,000 $1,905,409,000
============== ==============
<FN>
(A) The balance sheet at December 31, 1994 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 OPERATIONS AND RETAINED EARNINGS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND MARCH 31, 1994
(UNAUDITED)
MARCH MARCH
31, 1995 31, 1994
------------ ------------
<S> <C> <C>
Shipping Revenues:
Revenue from voyages $105,743,000 $ 98,805,000
Income attributable to bulk shipping joint
ventures - Note C 1,202,000 1,693,000
------------ ------------
106,945,000 100,498,000
------------ ------------
Shipping Expenses:
Vessel and voyage - Note D 65,939,000 64,047,000
Depreciation of vessels and amortization
of capital leases 16,475,000 14,848,000
Agency fees - Note D 7,582,000 7,548,000
General and administrative 3,042,000 3,296,000
------------ ------------
93,038,000 89,739,000
------------ ------------
Income from Vessel Operations 13,907,000 10,759,000
Equity in Results of Celebrity Cruise Lines
Inc. - Note B (1,261,000) 1,683,000
Other Income/(expense) (net) - Note G ( 665,000) 6,110,000
------------ ------------
11,981,000 18,552,000
Interest Expense 16,587,000 11,821,000
------------ ------------
Income/(loss) before Federal Income Taxes (4,606,000) 6,731,000
Provision/(credit) for Federal Income Taxes
(all deferred) - Note E (1,300,000) 1,715,000
------------ ------------
Net Income/(loss) (3,306,000) 5,016,000
Retained Earnings at beginning of period 737,583,000 764,987,000
------------ ------------
734,277,000 770,003,000
Cash Dividends Declared 5,431,000 4,912,000
------------ ------------
Retained Earnings at end of period $728,846,000 $765,091,000
============ ============
Per Share Amounts - Note H:
Net income/(loss) ($.09) $.15
==== ====
Cash dividends declared $.15 $.15
==== ====
<FN>
(See Accompanying Notes)
</TABLE>
<PAGE>
<TABLE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND MARCH 31, 1994
(UNAUDITED)
<CAPTION>
MARCH MARCH
31, 1995 31, 1994
<S> <C> <C>
Net cash provided by Operating Activities $ 20,216,000 $ 9,407,000
------------ ------------
Cash Flows from Investing Activities:
Purchases of marketable securities ( 414,000) (6,192,000)
Proceeds from sales of marketable
securities 12,211,000 9,234,000
Proceeds from disposal of other
investments 8,609,000
Additions to vessels (94,872,000) (72,702,000)
Proceeds from disposal of vessels 11,608,000
Other - net (3,217,000) 1,171,000
----------- ------------
Net cash used in investing activities (77,683,000) (56,881,000)
----------- ------------
Cash Flows from Financing Activities:
Issuance of Common Stock 76,004,000
Issuance of long-term debt 125,000,000
Payments on long-term debt and
obligations under capital leases (6,875,000) (48,066,000)
Cash dividends paid (5,431,000) (4,912,000)
Other - net 110,000 298,000
------------ ------------
Net cash provided by
financing activities 112,804,000 23,324,000
------------ ------------
Net Increase/(decrease) in Cash 55,337,000 (24,150,000)
Cash, including interest-bearing
deposits, at beginning of period 100,034,000 110,167,000
------------ ------------
Cash, including interest-bearing
deposits, at end of period $155,371,000 $ 86,017,000
============ ============
<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, 1994.
The statements as of and for the three month period ended March 31, 1995
and for the three month period ended March 31, 1994 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, 1995
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, 1995 31, 1994
-------------- --------------
<S> <C> <C>
Current Assets $ 41,413,000 $ 41,515,000
Vessels, net 944,343,000 859,939,000
Investment in Celebrity Cruise Lines Inc. 229,380,000 230,642,000
Other Assets 118,827,000 119,065,000
-------------- --------------
1,333,963,000 1,251,161,000
-------------- --------------
Current Installments of Long-term Debt 9,426,000 11,958,000
Other Current Liabilities 14,246,000 17,212,000
-------------- --------------
Total Current Liabilities 23,672,000 29,170,000
Long-term Debt, including intercompany,
and Deferred Credits, etc. 355,873,000 276,477,000
-------------- --------------
379,545,000 305,647,000
-------------- --------------
Net Assets $ 954,418,000 $ 945,514,000
============== ==============
<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, 1995 31, 1994
------------ ------------
<S> <C> <C>
Current assets $ 85,817,000 $101,149,000
Vessels, net 713,945,000 696,126,000
Other assets 45,674,000 51,084,000
------------ ------------
845,436,000 848,359,000
------------ ------------
Short-term debt and current
installments of long-term debt 55,248,000 54,676,000
Other current liabilities 67,576,000 65,289,000
------------ ------------
Total current liabilities 122,824,000 119,965,000
Long-term debt 257,415,000 260,643,000
------------ ------------
380,239,000 380,608,000
------------ ------------
Net assets (principally capital
contributions) $465,197,000 $467,751,000
============ ============
THREE MONTHS ENDED
MARCH 31,
1995 1994
------------ -----------
<S> <C> <C>
Revenue $ 64,877,000 $82,684,000
Costs and expenses 67,431,000 79,231,000
------------- -----------
Net income/(loss) ($ 2,554,000) $ 3,453,000
============= ===========
The Company's equity in the results of CCLI for each of the periods is
before interest expense of approximately $3,900,000 (three months
ended March 31, 1995) and $2,900,000 (three months ended March 31,
1994), estimated to have been incurred by the Company in connection
with the funding of its investment in CCLI. These amounts were
calculated based on the Company's long-term interest rates during the
respective periods.
As of May 10, 1995, CCLI has commitments (which are nonrecourse to OSG)
with an approximate aggregate unpaid cost of $930,000,000 for the
construction of three cruise ships, one scheduled for delivery in late
1995, one in late 1996 and the third in late 1997. Unpaid costs are
net of $99,000,000 of progress payments (all paid prior to April 1,
1995). Long-term financing arrangements exist for substantially all of
the unpaid cost of these ships. Approximately 57% of the unpaid cost
is denominated in German marks, substantially all of which is covered
by forward contracts or option contracts; this includes approximately
17% of the unpaid cost hedged by currency option contracts that
terminate in the event that the exchange rate of the German mark to
the dollar falls below certain levels.
</TABLE>
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
(See Notes on Following Pages)
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Financial Statements
Note C - Bulk Shipping Joint Ventures (Continued):
operations of the bulk shipping joint ventures follows:
AS OF
-----------------------------
MARCH DECEMBER
31, 1995 31, 1994
------------- ------------
[S] [C] [C]
Cash ($53,040,000 and $62,486,000) and other
current assets (including $8,707,000
and $8,265,000 due from owners) $ 70,316,000 $ 78,412,000
Vessels, net 89,819,000 73,286,000
Other assets (including $25,054,000
and $26,279,000 due from owners) 26,782,000 29,573,000
------------ ------------
186,917,000 181,271,000
Current liabilities 6,499,000 4,214,000
------------ ------------
Net assets (principally undistributed
net earnings) $180,418,000 $177,057,000
============ ============
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------
1995 1994
---- ----
<S> <C> <C>
Revenue, primarily from voyages (including
$7,494,000, and $7,625,000 from vessels
chartered to other owners) $11,132,000 $11,411,000
Costs and expenses 7,771,000 7,670,000
----------- -----------
Net income $ 3,361,000 $ 3,741,000
=========== ===========
As of May 10, 1995, certain 50%-owned companies have commitments (which are
nonrecourse to OSG) with an aggregate unpaid cost of $108,000,000 for
the construction of two foreign flag VLCCs (very large crude carriers)
scheduled for delivery in late 1996 and early 1997. Unpaid costs are
net of $72,000,000 of progress payments and prepayments (including
$31,000,000 paid subsequent to April 1, 1995) and of discounts
resulting from such prepayments. The joint venture companies expect to
pay the unpaid costs from their available cash resources and to utilize
existing long-term shipyard financing arrangements as needed. Upon
delivery, these vessels will commence eight-year charters to the joint
venture partner.
</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 $1,446,000 (three months ended March 31, 1995), and
$1,491,000 (three months ended March 31, 1994), 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.
(See Notes on Following Pages)
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Financial Statements
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 $9,104,000 (three months ended March 31,
1995) and $7,340,000 (three months ended March 31, 1994) 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 Company's
share of the undistributed earnings of CCLI was required, since it is
intended that such undistributed earnings will be indefinitely
reinvested.
Federal income taxes paid (which related to prior periods in each case)
amounted to $600,000 and $4,200,000 in the three months ended March 31,
1995 and 1994, respectively.
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, 1995 to $68,700,000.
As of March 31, 1995, the Company is a party to fixed to floating interest
rate swaps (designated as hedges against certain debt) 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 contain no
leverage features and have various maturity dates from 1995 to 2008.
Approximately 20% of the net book amount of the Company's vessels,
representing three foreign flag and nine U.S. flag vessels, is pledged
as collateral for certain long-term debt.
Interest paid approximated $13,582,000 (three months ended March 31, 1995)
and $7,510,000 (three months ended March 31, 1994), excluding
capitalized interest.
(See Notes on Following Pages)
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Financial Statements
Note G - Other Income/(expense) - net:
Other income/(expense) - net consists of the following:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------
1995 1994
---- ----
<S> <C> <C>
Investment income:
Interest and dividends $ 2,682,000 $1,759,000
Gain on sale of securities 104,000 2,416,000
----------- ----------
2,786,000 4,175,000
Gain on disposal of vessels 2,512,000
Foreign currency exchange (loss) (2,386,000) (564,000)
Minority interest 133,000 11,000
Miscellaneous - net (1,198,000) (24,000)
----------- ----------
($ 665,000) $6,110,000
=========== ==========
</TABLE>
Note H - Commitments and Other Comments:
1. As of May 10, 1995, the Company has commitments with an aggregate unpaid
cost of approximately $290,400,000 for the construction of six foreign
flag bulk vessels, two of which are scheduled for delivery in 1995, two
in late 1996 and the other two in 1997. Unpaid costs are net of
$159,000,000 of progress payments and prepayments (all paid prior to
April 1, 1995) and of discounts arising from such prepayments. Long-
term shipyard financing arrangements exist for approximately
$76,000,000 of the unpaid cost of certain of the vessels.
2. Net income/(loss) per share is based on the weighted average number of
common shares outstanding during each period, 36,213,000 shares (three
months ended March 31, 1995) and 33,702,000 shares (three months ended
March 31, 1994).
Stock options have not been included in the computation of net income/(loss)
per share since their effect thereon would either be antidilutive or
not material.
3. The Company has hedged its exchange rate risk with respect to contracted
future charter revenues receivable in Japanese yen by entering into
currency swaps with a major financial institution to deliver such
foreign currency at fixed rates that will result in the Company
receiving approximately $142,000,000 for such foreign currency from
April 1, 1995 through 2004.
<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.
Rates in the international tanker markets were weak in the first quarter of
1995, although Aframax vessels (80-110,000 dwt) were earning more than
in the first quarter of 1994. Rates did not change appreciably in the
early part of the second quarter. Dry bulk rates rose in the second
half of 1994 and, in the first and early second quarters of 1995, were
nearly double those of the same periods of the prior year. Demand for
U.S. flag tankers decreased in the first quarter of 1995 from the
unsatisfactory 1994 levels. As of May 10, 1995, four of OSG's U.S. flag
tankers were idle.
Income from vessel operations for the quarter ended March 31, 1995 increased
by approximately $3,100,000 compared to the first quarter of 1994. This
increase was attributable to improved income of approximately
$10,500,000 from foreign flag vessel operations reflecting the positive
effect of four Aframax vessels which entered the operating fleet after
the first quarter of 1994, higher rates obtained in 1995 than in 1994
for a VLCC that commenced a long-term charter toward the end of the
first quarter of 1994 and improved rates earned by certain crude
carriers and petroleum products carriers in the 1995 period compared to
1994. Dry cargo vessels also obtained higher rates in the 1995 quarter
compared to 1994. Income from operations of the U.S. flag fleet
declined approximately $7,400,000 in the 1995 first quarter from the
1994 period. Four of the Company's U.S. flag crude carriers were idle
for significant portions of the 1995 first quarter and results from two
U.S. flag dry bulk carriers were less favorable in the 1995 first
quarter than in 1994.
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
Equity in Results of Celebrity Cruise Lines Inc. ("CCLI")
The Company's share of CCLI's results was a loss of approximately $1,300,000
for the first quarter of 1995 compared with income of approximately
$1,700,000 for the 1994 period. This decline reflects weaker demand in
the premium segment of the North American cruise market.
Other Income/(Expense) - Net
The details of other income/(expense) are shown in Note G. Interest and
dividends increased in the 1995 quarter as compared to 1994 because of
higher rates of return on interest-bearing deposits and investments and
increased amounts utilized for such deposits and investments. Gain on
sale of securities approximated $100,000 in the first quarter of 1995
compared to approximately $2,400,000 in the corresponding 1994 period.
In the first quarter of 1994, disposal of vessels resulted in a gain of
approximately $2,500,000 (there were no sales of vessels in the 1995
period). Other income/(expense) also reflects the results of foreign
currency transactions in both periods and a loss of approximately
$1,500,000 (included in miscellaneous - net) in the 1995 quarter from
other investments.
Interest Expense
Interest expense increased in the first quarter of 1995 from the comparable
period of 1994 as a result of increases in the average amount of debt
outstanding in the 1995 period compared to 1994, including debt
incurred in connection with vessels entering the operating fleet,
increased rates on floating rate debt and decreased interest costs
capitalized in connection with vessel construction. Interest expense
reflects $1,000,000 in the 1995 period and $3,800,000 in the 1994
period, of net benefits from the interest rate swaps referred to below
in Liquidity and Sources of Capital.
Provision for Federal Income Taxes
There was an income tax credit in the first quarter of 1995 of $1,300,000 as
a result of the pretax loss, adjusted to reflect items that are not
subject to tax and the dividends received deduction. The tax provision
in the comparable period of 1994 was based on pretax income, adjusted
for the same items referred to above.
Liquidity and Sources of Capital
Working capital at March 31, 1995 was approximately $148,000,000. Current
assets are 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 $25,000,000 at March 31, 1995.
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
Liquidity and Sources of Capital (continued)
Net cash provided by operating activities in the first three months of 1995
approximated $20,000,000 (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. The Company has
used interest rate swaps to effectively convert a portion of its fixed
rate debt to a floating rate basis, reflecting management's interest
rate outlook. As of March 31, 1995, the Company is a party to fixed to
floating interest rate swaps (designated as hedges against certain
debt) 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 contain no leverage features and have various maturity dates
from 1995 to 2008. The Company uses derivative financial instruments
for trading purposes from time to time. The Company has hedged its
exchange rate risk with respect to contracted future charter revenues
receivable in Japanese yen to minimize the effect of foreign exchange
rate fluctuations on reported income by entering into currency swaps
with a major financial institution to deliver such foreign currency at
fixed rates that will result in the Company receiving approximately
$142,000,000 for such foreign currency from April 1, 1995 through 2004.
The Company has an unsecured long-term credit facility of $500,000,000, of
which $277,000,000 was used at March 31, 1995, and an unsecured short-
term credit facility of $30,000,000, which was unused at that date. At
May 10, 1995, the Company has commitments with an aggregate unpaid cost
of approximately $290,400,000 for the construction of six foreign flag
bulk vessels, two of which are scheduled for delivery in 1995, two in
late 1996 and the other two in 1997. Long-term shipyard financing
arrangements exist for approximately $76,000,000 of the unpaid cost of
certain of the vessels.
Ratio of Earnings to Fixed Charges
There was a deficiency of earnings to fixed charges for the three months
ended March 31, 1995 of $6,335,000. This has been computed by
subtracting the sum of loss before Federal income taxes and fixed
charges from 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, 1995 and for the three
months ended March 31, 1995 and 1994 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 16.
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, 1995.
<PAGE>
Ernst & Young LLP 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, 1995
and the related condensed consolidated statements of operations and
retained earnings and cash flows for the three month periods ended
March 31, 1995 and 1994. 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, 1994, and the related
consolidated statements of operations and retained earnings and cash
flows for the year then ended, not presented herein, and in our report
dated February 21, 1995 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, 1994, is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been
derived.
ERNST & YOUNG LLP
May 10, 1995
<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 11, 1995 s/Morton P. Hyman
----------------- ---------------------------------
Morton P. Hyman
President
Date: May 11, 1995 s/Alan Carus
----------------- ------------------------
Alan Carus
Controller
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
EXHIBIT INDEX
12. Computation of Ratio of Earnings to Fixed Charges.
15. Letter from Ernst & Young LLP.
27. Financial Data Schedule.
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.
EXHIBIT 12
<TABLE>
<CAPTION>
OVERSEAS SHIPHOLDING GROUP, INC.
RATIO OF EARNINGS TO FIXED CHARGES
For the three months ended March 31, 1995
(In thousands)
Presented in connection with Amendment No. 1
filed on November 9, 1993 to Registration Statement No. 33-50441
<S> <C>
Loss before Federal income taxes ($ 4,606)
Adjustments of income related to
companies owned less than 100% 1,446
Interest expense 16,587
Proportionate share of interest of
50% - owned companies 2,026
Interest component of an operating
lease 621
Amortization of capitalized interest 674
-------
Earnings $16,748
=======
Interest expense $16,587
Proportionate share of fixed charges
of 50% - owned companies 3,038
Capitalized interest 2,837
Interest component of an operating
lease 621
-------
Fixed charges $23,083
=======
Deficiency of earnings available to cover
fixed charges ($ 6,335)
========
</TABLE>
EXHIBIT 15
May 12, 1995
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
10, 1995 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, 1995.
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 Section 7 or 11
of the Securities Act of 1933.
ERNST & YOUNG LLP
New York, New York
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SEC Form
10-Q and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 155,371
<SECURITIES> 24,861
<RECEIVABLES> 32,998
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 218,817
<PP&E> 1,918,610
<DEPRECIATION> 656,798
<TOTAL-ASSETS> 2,017,813
<CURRENT-LIABILITIES> 70,957
<BONDS> 1,030,548
<COMMON> 39,591
0
0
<OTHER-SE> 765,300
<TOTAL-LIABILITY-AND-EQUITY> 2,017,813
<SALES> 0
<TOTAL-REVENUES> 105,019
<CGS> 0
<TOTAL-COSTS> 93,038
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,587
<INCOME-PRETAX> ( 4,606 )
<INCOME-TAX> ( 1,300 )
<INCOME-CONTINUING> ( 3,306 )
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> ( 3,306 )
<EPS-PRIMARY> ( 0.09 )
<EPS-DILUTED> ( 0.09 )
</TABLE>
