0000278041-95-000013.txt : 19950810 0000278041-95-000013.hdr.sgml : 19950810 ACCESSION NUMBER: 0000278041-95-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950809 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL SHIPHOLDING CORP CENTRAL INDEX KEY: 0000278041 STANDARD INDUSTRIAL CLASSIFICATION: DEEP SEA FOREIGN TRANSPORTATION OF FREIGHT [4412] IRS NUMBER: 362989662 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10852 FILM NUMBER: 95559968 BUSINESS ADDRESS: STREET 1: 650 POYDRAS ST STE 1700 CITY: NEW ORLEANS STATE: LA ZIP: 70130 BUSINESS PHONE: 5045295461 10-Q 1 SECOND QUARTER 1995 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1995 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 incorporation or organization) Identification Number) 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. X YES 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 5,346,611 shares (June 30, 1995) INTERNATIONAL SHIPHOLDING CORPORATION CONSOLIDATED BALANCE SHEETS (Dollars in Thousands) (Unaudited)
June 30, December 31, 1995 1994 ---------- ------------ ASSETS Current Assets: Cash and Cash Equivalents $ 38,890 $ 29,611 Marketable Securities 7,344 7,096 Accounts Receivable, Net 40,441 46,844 Net Investment in Direct Financing Leases 2,186 2,186 Other Current Assets 4,547 3,847 Material and Supplies Inventory, At Cost 9,271 8,954 --------- ------------ Total Current Assets 102,679 98,538 Investments in and Advances to Unconsolidated Entities 0 33,160 Marketable Equity Securities 44,136 0 Net Investment in Direct Financing Leases 25,523 26,588 Vessels, Property and Other Equipment, At Cost: Vessels and Barges 517,676 484,354 Other Marine Equipment 6,688 3,999 Terminal Facilities 18,850 18,116 Land 2,317 2,317 Furniture and Equipment 15,100 14,071 ---------- ----------- 560,631 522,857 Less - Accumulated Depreciation (230,385) (214,395) ---------- ----------- 330,246 308,462 Other Assets: Deferred Charges in Process of Amortization 28,348 30,613 Acquired Contract Costs, Net of Accumulated Amortization 22,959 24,185 Due from Related Parties 9,422 6,174 Other 17,061 19,371 ----------- ------------ 77,790 80,343 ----------- ------------ $580,374 $547,091 =========== ============ The accompanying notes are an integral part of these statements.
INTERNATIONAL SHIPHOLDING CORPORATION CONSOLIDATED BALANCE SHEETS (Dollars in Thousands) (Unaudited)
June 30, December 31, 1995 1994 ----------- ------------ LIABILITIES AND STOCKHOLDERS' INVESTMENT Current Liabilities: Current Maturities of Long-Term Debt 29,759 26,755 Current Maturities of Capital Lease Obligations 1,469 1,329 Accounts Payable and Accrued Liabilities 54,633 53,061 Federal Income Tax Payable 437 260 Current Deferred Income Tax Liability 1,378 314 ---------- ----------- Total Current Liabilities 87,676 81,719 Billings in Excess of Income Earned and Expenses Incurred 5,561 4,471 Long-Term Capital Lease Obligations, Less Current Maturities 19,873 21,092 Long-Term Debt, Less Current Maturities 244,175 230,852 Reserves and Deferred Credits: Deferred Income Taxes 43,000 39,414 Claims and Other 21,824 23,227 --------- ---------- 64,824 62,641 Stockholders' Investment: Common stock 5,405 5,405 Additional Paid-in Capital 54,450 54,450 Retained Earnings 91,328 87,757 Less - Treasury Stock (1,133) (1,133) Unrealized Holding Gain (Loss) on Marketable Securities 8,215 (163) --------- --------- 158,265 146,316 $ 580,374 $ 547,091 ========== ========== The accompanying notes are an integral part of these statements.
INTERNATIONAL SHIPHOLDING CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Dollars in Thousands Except Per Share Data) (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, 1995 1994 1995 1994 -------- ------- -------- -------- Revenues $ 79,418 $83,490 $157,326 $161,933 Operating Diferrential Subsidy 5,426 5,658 10,820 10,576 -------- ------- -------- -------- 84,844 89,148 168,146 172,509 -------- ------- -------- -------- Operating Expenses: Voyage Expenses 63,553 68,535 125,818 130,723 Vessel and Barge Depreciation 6,227 6,123 12,294 12,230 -------- ------- -------- -------- Gross Voyage Profit 15,064 14,490 30,034 29,556 -------- ------- -------- -------- Administrative and General Expenses 6,212 6,748 12,674 13,368 Gain on Sale of Assets 1 0 2 7 -------- ------- -------- -------- Operating Income 8,853 7,742 17,362 16,195 -------- ------- -------- -------- Interest: Interest Expense 6,498 5,055 12,812 10,394 Investment Income ( 740) (1,018) ( 1,516) ( 1,474) -------- ------- -------- -------- 5,758 4,037 11,296 8,920 -------- ------- -------- -------- Unconsolidated Entities (Net of Applicable Tax): Equity in Net Income of Unconsolidated Entities 105 144 331 286 (Allowance) for Doubtful Accounts 0 900 0 900 -------- ------- -------- -------- 105 1,044 331 1,186 Income Before Provision for Income Taxes 3,200 4,749 6,397 8,461 -------- ------- -------- -------- Provision for Income Taxes: Current 286 904 2,091 2,723 Deferred 800 365 21 (207) State 94 89 179 107 -------- ------- -------- -------- 1,180 1,358 2,291 2,623 Net Income $ 2,020 $ 3,391 $ 4,106 $ 5,838 ======== ======== ======== ======== Earnings Per Common Share: Net Income $ 0.38 $ 0.63 $ 0.77 $ 1.09 ======== ======== ======== ======== Weighted Average Shares of Common Stock Outstanding 5,346,611 5,346,611 5,346,611 5,346,611 The accompanying notes are an integral part of these statements.
INTERNATIONAL SHIPHOLDING CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' INVESTMENT (Dollars in Thousands) (Unaudited)
Net Additional Unrealized Common Paid-In Retained Treasury Holding Stock Capital Earnings Stock Gain/(Loss) Total ----------------------------------------------------- Balance at December 31, 1993 $ 5,405 $54,450 $75,775 $(1,133) $ - $134,497 Net Income for Year Ended December 31, 1994 - - 13,051 - - 13,051 Cash Dividends - - (1,069) - - (1,069) Unrealized Holding Loss on Marketable Securities, Net of Deferred Tax - - - - (163) (163) ----------------------------------------------------- Balance at December 31, 1994 $ 5,405 $54,450 $87,757 $(1,133) (163) $146,316 Net Income for Six Months Ended June 30, 1995 - - 4,106 - - 4,106 Cash Dividends - - (535) - - (535) Unrealized Holding Gain on Marketable Securities, Net of Deferred Tax - - - - 8,378 8,378 ----------------------------------------------------- Balance at June 30, 1995 $ 5,405 $54,450 $91,328 $(1,133) $8,215 $158,265 ==================================================== The accompanying notes are an integral part of these statements.
INTERNATIONAL SHIPHOLDING CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited)
Six Months Ended June 30, 1995 1994 -------- ------ Cash Flows from Operating Activities: Net Income 4,106 5,838 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation 13,093 12,825 Amortization of Deferred Charges and Other Assets 8,659 8,316 Provision (Benefit) for Deferred Income Taxes 2,112 (207) Gain on Sale of Assets (2) (7) Net Investment in Direct Financing Leases 1,065 1,135 Unearned Income 1,090 (2,074) Equity in Unconsolidated Subsidiaries (372) (1,186) Reserve for Claims and Other Deferred Credits (2,021) 1,015 Other Assets 2,890 1,132 Change in Working Capital: Accounts Receivable 6,863 5,978 Inventories and Other Current Assets (1,009) 3,995 Federal Income Taxes Payable (2,085) 0 Accounts Payable and Accrued Liabilities 493 (2,443) ------ ------ Net Cash Provided by Operating Activities 34,882 34,317 Cash Flows from Investing Activities: Purchase of Vessels and Other Property (34,242) (33,969) Additions to Deferred Charges (6,073) (3,801) Investment in and Advances to Unconsolidated Subsidiaries 13 753 Proceeds from Sale of Assets 0 417 Proceeds from Short Term Investments 0 6,932 Other Investing Activities (14) 0 -------- -------- Net Cash Used by Investing Activities (40,316) (29,668) Cash Flows from Financing Activities: Proceeds from Issuance of Debt and Capital Lease Obligations 39,096 21,109 Reduction of Debt and Capital Lease Obligations (23,848) (16,560) Common Stock Dividends (535) (534) -------- -------- Net Cash Provided by Financing Activities 14,713 4,015 Net Increase in Cash and Cash Equivalents 9,279 8,664 Cash and Cash Equivalents at Beginning of Period 29,611 21,626 -------- -------- Cash and Cash Equivalents at End of Period 38,890 30,290 ======== ======== The accompanying notes are an integral part of these statements.
INTERNATIONAL SHIPHOLDING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS JUNE 30, 1995 (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, 1994. 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 1995; 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 1995 interim results are not necessarily indicative of the results of the operations for the full year 1995. The Company's policy is to consolidate all subsidiaries in which it holds greater than 50% voting interest. All significant intercompany accounts and transactions have been eliminated. The Company uses the cost method to account for investments in entities in which it holds less than 20% voting interest and in which the Company cannot exercise significant influence over operating and financial activities. The Company uses the equity method to account for investments in entities in which it holds a 20% to 50% voting interest. As of December 31, 1994, these investments were classified on the Balance Sheet as Investments In and Advances to Unconsolidated Entities. The more significant of the investments were interests in Havtor AS, A/S Havtor Management and Bulkowners 1984. During the first half of 1995, A/S Havtor Management and the gas carrier activities of Kvaerner, an unrelated Norwegian company, were merged with Havtor AS. In addition, Havtor AS agreed to acquire other vessels and vessel interests, including the interest held by the Company in two PROBO vessels held through Bulkowners 1984. Subsequent to these transactions, the Company's interest in Havtor AS, a publicly listed company on the Oslo Stock Exchange, approximated 7.7%. Due to the liquidity of these shares, this investment is reflected in the Balance Sheet at June 30, 1995 as Marketable Equity Securities and is stated at fair market value. Unrealized holding gains, net of tax, are excluded from earnings and reported as a separate component of shareholders' equity. INTERNATIONAL SHIPHOLDING CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The Company's vessels are operated under a variety of charters, liner services, and contracts. The nature of these arrangements is such that, without a material variation in gross voyage profits (total revenues less voyage expenses and vessel and barge depreciation), the revenues and expenses attributable to a vessel deployed under one type of charter or contract can differ substantially from those attributable to the same vessel if deployed under a different type of charter or contract. Accordingly, depending on the mix of charters or contracts in place during a particular accounting period, the Company's revenues and expenses can fluctuate substantially from one period to another even though the number of vessels deployed, the number of voyages completed, the amount of cargo carried and the gross voyage profit derived from the vessels remain relatively constant. As a result, fluctuations in voyage revenues and expenses are not necessarily indicative of trends in profitability, and management believes that gross voyage profit is a more appropriate measure of performance than revenues. Accordingly, the discussion below addresses variations in gross voyage profits rather than variations in revenues. Gross Voyage Profit. Gross voyage profit for the first half of 1995 of $30.0 million was slightly above the amount earned during first half of 1994 of $29.6 million. Positively impacting the current period results was the addition of the SULPHUR ENTERPRISE to the Company's fleet in early fourth quarter of 1994. This increase was offset by reductions in gross voyage profit resulting from lower freight rates and higher operating costs such as fuel and voyage time experienced by the Company's LASH vessels employed in liner service between ports on the U. S. Gulf/U. S. Atlantic Coast and South Asia (Trade Routes 18 and 17). The quarter was also negatively impacted by a scheduled rate reduction on one of the Company's vessels chartered to the Military Sealift Command (the "MSC"). The addition of the SULPHUR ENTERPRISE, partially offset by the aforementioned negative events, also accounted for the 4.0% increase in gross voyage profit for the second quarter of 1995 as compared to the comparable period of 1994. Vessel and barge depreciation for the first half of 1995 was consistent with the amount in the same period of 1994. An increase in depreciation due to the addition of the SULPHUR ENTERPRISE in early fourth quarter of 1994 was offset by a reduction resulting from the life extension of two LASH vessels which were purchased in 1994 upon the termination of the capital lease of these vessels. Other Income and Expense. Administrative and general expense decreased by 5.2% to $12.7 million during the first half of 1995 as compared to $13.4 million in the comparable period of 1994 stemming from continuing cost reduction efforts. These efforts also resulted in a reduction in administrative and general expenses of 7.9% during the second quarter of 1995 as compared to the same period in 1994. Interest Expense increased 23.3% to $12.8 million in the first half of 1995 as compared to $10.4 million in the same period in 1994 primarily due to debt incurred in late 1994 when the SULPHUR ENTERPRISE delivered from the shipyard and commenced operation. Additionally impacting interest expense was interest on $12 million received in early 1995 from a medium term loan with a commercial bank for general corporate purposes and interest incurred under interest rate conversion agreements. These items also impacted interest expense in the second quarter of 1995. Increases in both the first half of 1995 and second quarter of 1995 were partially offset by regularly scheduled payments on other outstanding debt. Investment income approximated $1.5 million in both the first half of 1994 and 1995. Income Taxes. The Company provided $2.1 million for federal income taxes in the first half of 1995 at the statutory rate of 35% as compared to $2.5 million in the first half of 1994 at the same rate. Income of unconsolidated entities is shown net of applicable taxes. LIQUIDITY AND CAPITAL RESOURCES The Company's working capital decreased from $16.8 million at December 31, 1994, to $15.0 million at June 30, 1995, after provision for current maturities of long-term debt of $29.8 million and capital lease obligations of $1.5 million. Cash and cash equivalents increased during the first half of 1995 by $9.3 million to a total of $38.9 million. Positive cash flows were achieved from operating activities in the first six months of 1995 in the amount of $34.9 million. The major source of cash from operations was net income, adjusted for non-cash provisions such as depreciation and amortization. Net cash used for investing activities amounted to $40.3 million during the first half of 1995. Capital investments included $31.8 million for the purchase and conversion of two semi-submersible vessels, $1.7 million for computer development and upgrades and approximately $700,000 for other miscellaneous items. Other uses of cash included the addition of $6.1 million of deferred charge items, primarily for vessel drydocking. Net cash provided by financing activities during the first six months of 1995 totalled $14.7 million. Proceeds from the issuance of debt obligations of $39.1 million included $12.0 million from a medium term loan which was used for general corporate purposes, $19.1 million received from a long-term loan associated with the acquisition and conversion of two semi- submersible vessels and $8.0 million drawn under the Company's lines of credit. Cash used for financing activities included regularly scheduled principal payments of $9.9 million for debt and capital lease obligations, repayment of $13 million drawn under lines of credit and $900,000 to prepay a portion of the Senior Notes issued in 1993. Additionally, $535,000 was used to meet common stock dividend requirements. The Company has entered into a long-term contract with a major copper and gold mining company to provide transportation services for supplies associated with the operation of a copper and gold mine on the Indonesian Island of Irian Jaya. The Company has acquired and is converting two semi- submersible barge carrying vessels and is having 26 cargo barges built to be used with the aforementioned vessels. As of June 30, 1995, the Company had paid approximately $33 million of the total cost of approximately $78 million. The Company will also charter a small container vessel to fulfill the requirements of the contract which is expected to commence in late 1995. The Company has arranged financing for approximately 60% of the cost of these acquisitions through a long-term loan with a commercial bank. Draws under this loan totalled $19.1 million as of June 30, 1995 with additional draws anticipated in the second half of 1995. The Company contracted, in October 1994, to purchase a U. S. Flag Coal Carrier with delivery now anticipated in the third quarter of 1995. The vessel will be placed under long-term charter to a major electric utility company to carry part of its fuel supply. The ship will also be used from time to time to carry cargoes for the account of other charterers. The Company has arranged financing with a commercial bank for a major portion of the purchase price of the vessel. As of December 31, 1994, the Company held an approximate 9% interest in Havtor AS, a publicly listed company on the Oslo Stock Exchange, and a 14.2% equity interest in A/S Havtor Management, a privately held Norwegian ship management company. In addition, the company held a 50% interest in a foreign entity, Bulkowner's 1984, which was formed to own and operate two combination dry cargo/petroleum products, PROBO vessels. The Company also held a 10% interest in a limited partnership with certain Norwegian interests to construct and own a liquified petroleum gas carrier which delivered in 1993. During the First Quarter of 1995, the Company signed an agreement whereby A/S Havtor Management and the gas carrier activities of Kvaerner, an unrelated Norwegian company, would be merged into Havtor AS. In addition, Havtor AS agreed to acquire other vessels and vessel interests, including the 50% interest held by the Company in two PROBO vessels and the 10% interest held in a liquified petroleum gas carrier. The merger was approved by shareholders in a general meeting held in April 1995. Subsequent to the merger the Company's interest inHavtor AS approximated 6.4%. In addition, Havtor AS stock was held by the Company as collateral for a promissory note which matures in mid-1996. During the second quarter of 1995 the Company purchased the Norwegian interest which held this promissory note. After the acquisition the Company's interest in Havtor AS approximated 7.7%. Due to the liquidity of the shares held in Havtor AS, the investment is reflected in the financial statements at fair market value with unrealized holding gains of approximately $8.2 million, net of tax, excluded from earnings and reported as a separate component of shareholders' equity in accordance with the required accounting treatment for investments in equity securities that have readily determinable fair values. To meet short-term requirements when fluctuations occur in working capital, the Company has available four lines of credit totaling $35.0 million of which $5.0 million was drawn at June 30, 1995. The Company has not been notified that it is a potentially responsible party in connection with any environmental matters. At a regular meeting held July 19, 1995, the Board of Directors declared a quarterly dividend of five cents per share of common stock to be paid on September 8, 1995, to its stockholders of record as of September 1, 1995. PART II-OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (b) No reports on Form 8-K have been filed for the three months ended June 30, 1995. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. INTERNATIONAL SHIPHOLDING CORPORATION /s/ Gary L. Ferguson ____________________________________________________ Gary L. Ferguson Vice President and Chief Financial Officer Date: August 9, 1995 EX-27 2 FINANCIAL DATA SCHEDULE
5 1000 6-MOS DEC-31-1995 JUN-30-1995 38890 7344 40441 0 9271 102679 560631 (230385) 580374 87676 264048 5405 0 0 152860 580374 0 168146 0 138112 25486 0 11296 6397 2291 0 0 0 0 4106 .77 .77