-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, OKe4yDv7fP0yQy4b24j3AtIXTaSg3Y8P3U/fwhhW+hBfPBVrrdwyQ9U29vm/q6ON 8oSjsRWLPv+u1YZgws4rrA== 0000278041-94-000013.txt : 19940520 0000278041-94-000013.hdr.sgml : 19940520 ACCESSION NUMBER: 0000278041-94-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940513 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL SHIPHOLDING CORP CENTRAL INDEX KEY: 0000278041 STANDARD INDUSTRIAL CLASSIFICATION: 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: 94528043 BUSINESS ADDRESS: STREET 1: 650 POYDRAS ST STE 1700 CITY: NEW ORLEANS STATE: LA ZIP: 70130 BUSINESS PHONE: 5045295461 10-Q 1 FIRST QUARTER 1994 FORM 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 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 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 requirements 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 5,346,611 shares (March 31, 1994) 2 PART I - FINANCIAL INFORMATION INTERNATIONAL SHIPHOLDING CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in Thousands) (Unaudited)
March 31, December 31, 1994 1993 ASSETS __________ ___________ Current Assets: Cash and Cash Equivalents $38,274 $32,770 Accounts Receivable, Net 42,851 46,134 Net Investment in Direct Financing Leases 2,240 2,257 Current Deferred Income Taxes 1,501 1,955 Other Current Assets 3,354 6,666 Material and Supplies Inventory, At Cost 8,324 7,853 _______ _______ Total Current Assets 96,544 97,635 _______ _______ Investments In and Advances to Unconsolidated Entities 29,894 30,367 _______ _______ Net Investment in Direct Financing Leases 28,222 28,775 _______ _______ Vessels, Property and Other Equipment, At Cost: Vessels and Barges 461,661 432,429 Other Marine Equipment 3,857 3,842 Terminal Facilities 17,874 17,521 Land 2,317 2,317 Furniture and Equipment 10,093 9,676 _______ _______ 495,802 465,785 Less - Accumulated Depreciation (196,307) (189,924) ________ ________ 299,495 275,861 ________ ________ Other Assets: Deferred Charges in Process of Amortization 38,605 41,992 Acquired Contract Costs, Net of Accumulated Amortization 26,023 26,781 Due from Related Parties, Net of Allowance for Doubtful Accounts 4,115 4,360 Other 11,170 12,929 ________ ________ 79,913 86,062 ________ ________ $534,068 $518,700 ======== ======== The accompanying notes are an integral part of these statements.
3 INTERNATIONAL SHIPHOLDING CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in Thousands) (Unaudited)
March 31, December 31, 1994 1993 _________ __________ LIABILITIES AND STOCKHOLDERS' INVESTMENT Current Liabilities: Current Maturities of Long-Term Debt $ 26,392 $ 25,879 Current Maturities of Capital Lease Obligations 5,127 5,000 Accounts Payable and Accrued Liabilities 46,659 49,447 Current Liabilities to be Refinanced (246) (340) _______ ________ Total Current Liabilities 77,932 79,986 _______ ________ Current Liabilities to be Refinanced 246 340 _______ ________ Billings in Excess of Income Earned and Expenses Incurred 5,283 4,133 _______ ________ Long-Term Capital Lease Obligations, Less Current Maturities 25,942 27,020 _______ ________ Long-Term Debt, Less Current Maturities 229,324 213,112 ________ ________ Reserves and Deferred Credits: Deferred Income Taxes 34,587 35,613 Claims and Other 24,078 23,999 ________ ________ 58,665 59,612 ________ ________ Stockholders' Investment: Common Stock 5,405 5,405 Additional Paid-in Capital 54,450 54,450 Retained Earnings 77,954 75,775 Less - Shares of Common Stock in Treasury, at Cost (1,133) (1,133) ________ ________ 136,676 134,497 ________ ________ $534,068 $518,700 ======== ======== The accompanying notes are an integral part of these statements.
4 INTERNATIONAL SHIPHOLDING CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Dollars in Thousands Except Per Share Data) (Unaudited)
Three Months Ended March 31, 1994 1993 ________ ________ Revenues $78,443 $79,398 Operating Differential Subsidy 4,918 4,599 ________ ________ 83,361 83,997 ________ ________ Operating Expenses: Voyage Expenses 62,188 62,470 Vessel and Barge Depreciation 6,107 5,796 ________ ________ Gross Voyage Profit 15,066 15,731 ________ ________ Administrative and General Expenses 6,620 6,330 Gain on Sale of Assets 7 10 ________ ________ Operating Income 8,453 9,411 ________ ________ Interest: Interest Expense 5,339 4,934 Investment Income (456) (198) ________ ________ 4,883 4,736 ________ ________ Unconsolidated Entities (Net of Applicable Taxes): Equity in Net Income (Loss) of Unconsolidated Entities 142 (1,969) ________ ________ Income Before Provision for Income Taxes 3,712 2,706 ________ ________ Provision for Income Taxes: Current 1,819 1,185 Deferred (572) 424 State 18 41 ________ ________ 1,265 1,650 ________ ________ Net Income $ 2,447 $ 1,056 Less: Preferred Stock Dividends -- 355 Accretion of Discount on Preferred Stock -- 63 ________ ________ Net Income Applicable to Common and Common Equivalent Shares $ 2,447 $ 638 ======== ======== Earnings Per Share: Net Income $ 0.46 $ 0.12 ======== ======== Common and Common Equivalent Shares 5,346,611 5,135,572 The accompanying notes are an integral part of these statements.
5 INTERNATIONAL SHIPHOLDING CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' INVESTMENT (Dollars in Thousands) (Unaudited)
Additional Common Paid-In Retained Treasury Stock Capital Earnings Stock Total _________ _________ _________ _________ _________ Balance at December 31, 1992 $ 4,978 $ 48,216 $ 71,943 $ (1,133) $ 124,004 Net Income for Year Ended December 31, 1993 5,929 5,929 Preferred Stock Dividends (868) (868) Accretion of Discount on Preferred Stock (202) (202) Cash Dividends (1,027) (1,027) Issuance of Stock, 427,500 Shares Pursuant to Exercise of Warrants 427 6,234 6,661 _________ _________ _________ _________ _________ Balance at December 31, 1993 $ 5,405 $ 54,450 $ 75,775 $ (1,133) $ 134,497 Net Income for Three Months Ended March 31, 1994 2,447 2,447 Cash Dividends (268) (268) _________ _________ _________ _________ _________ Balance at March 31, 1994 $ 5,405 $ 54,450 $ 77,954 $ (1,133) $ 136,676 ========= = ======= ========= ========= ========= The accompanying notes are an integral part of these statements.
6 INTERNATIONAL SHIPHOLDING CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited)
Three Months Ended March 31, 1994 1993 ________ _________ Cash Flows from Operating Activities: Net Income $ 2,447 $ 1,056 Adjustment to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation 6,392 6,003 Amortization of Deferred Charges and Other Assets 4,114 4,697 (Benefit) Provision for Deferred Income Taxes (572) 424 Equity in Unconsolidated Entities (142) 1,969 Gain on Sale of Vessels and Other Property (7) (10) Changes in: Reserve for Claims and Other Deferred Credits 79 (4,784) Net Investment in Direct Financing Leases 570 580 Unearned Income 1,150 (3,837) Other Assets 2,315 503 Accounts Receivable 3,283 3,301 Inventories and Other Current Assets 2,841 480 Accounts Payable and Accrued Liabilities (1,085) 8,091 ________ ________ Net Cash Provided by Operating Activities 21,385 18,473 _________ ________ Cash Flows from Investing Activities: Purchase of Vessels and Other Property (29,348) (3,511) Additions to Deferred Charges (2,663) (3,460) Proceeds from Sale of Vessels and Other Property 9 599 Investment in and Advances to Unconsolidated Entities 615 (3,756) _________ _________ Net Cash Used by Investing Activities (31,387) (10,128) _________ _________ Cash Flows from Financing Activities: Proceeds from Issuance of Debt and Capital Lease Obligations 21,109 22,132 Reduction of Debt and Capital Lease Obligations (5,335) (25,177) Preferred and Common Stock Dividends Paid (268) (601) _________ _________ Net Cash Provided (Used) by Financing Activities 15,506 (3,646) _________ _________ Net Increase in Cash and Cash Equivalents 5,504 4,699 Cash and Cash Equivalents at Beginning of Period 32,770 30,879 _________ _________ Cash and Cash Equivalents at End of Period $38,274 $35,578 ========= ========= The accompanying notes are an integral part of these statements.
7 INTERNATIONAL SHIPHOLDING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS MARCH 31, 1994 (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, 1993. Interim statements are subject to possible adjustments in connection with the annual audit of the Company's accounts for the full year 1994; 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 1994 interim results are not necessarily indicative of the results of operations for the full year 1994. The Company's policy is to consolidate all subsidiaries in which it holds a 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 a 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. Certain investments previously accounted for under the equity method are currently accounted for under the cost method as a result of a sale of partial interests as further discussed in the "Results of Operations". 8 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 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 decreased slightly by 4.2% to $15.1 million in the first quarter of 1994 as compared to $15.7 million for the first quarter of 1993. Gross profit for the Company's LASH vessels which are employed in a liner service between ports on the U.S. Gulf/U.S. Atlantic Coast and South Asia (Trade Routes 18 and 17) decreased during the first quarter of 1994 as compared to the comparable period in 1993. This was primarily the result of a decline in freight rates and lost voyage days resulting from weather delays and a casualty involving one of the Company's FLASH units employed in this service. The vessel has been repaired and is now back in service. Results for the vessels chartered to the Military Sealift Command ("MSC") decreased in the first quarter of 1994 as compared to the first quarter of 1993 due to scheduled reductions in charterhire rates. Gross profit was favorably affected by improved charterhire rates and increased volume of westbound cargo in the Company's foreign flag LASH liner service during the first quarter of 1994 as compared to the comparable period in 1993. Vessel and barge depreciation expense increased by 5.3% to $6.1 million during the first quarter of 1994 as compared to $5.8 million for the first quarter of 1993 due to costs associated with the Company's barge refurbishment program, costs associated with 9 vessel upgrade work done on the Amazon and the acquisition in June, 1993 of the remaining 50% ownership interest in a company which operates a LASH barge intermodal terminal located in Memphis, Tennessee. This increased the Company's interest from 50% to 100%. Other Income and Expense. Administrative and general expense increased slightly from $6.3 million for the first quarter of 1993 to $6.6 million for the first quarter of 1994 in large part due to the aforementioned acquisition of a LASH barge intermodal terminal facility whose results have been included in the Company's consolidated statements since June 1, 1993. Interest expense increased to $5.3 million in the first quarter of 1994 as compared to $4.9 million in the first quarter of 1993, primarily due to interest incurred on the $100 million, 9% Senior Unsecured Notes issued in July, 1993. Partially offsetting this increase were lower interest payments on other company debt as the result of the prepayment of approximately $63.8 million of debt during 1993 from the aforementioned bond issue. The Company's share of earnings from unconsolidated entities increased from a net loss of $1,969,000 in the first quarter of 1993 to net income of $142,000 in the first quarter of 1994. The loss in the first quarter of 1993 resulted primarily from the Company's investment in A/S Havtor and A/S Havtor Management, Norwegian companies in which the Company has an interest. During the first quarter of 1993 the Company sold an 18.5% direct interest in A/S Havtor for $7.6 million, of which $2.8 million was received in cash and $4.8 million was received in the form of a promissory note. The transaction reduced the Company's direct interest in A/S Havtor to 14.8% and resulted in a gain before taxes of approximately $ 1.4 million. A provision for doubtful accounts equal to the pre-tax gain was recorded which will have the effect of deferring recognition of the gain until receipt of the proceeds from the promissory note, which matures in mid-1996. Since the Company has no substantive control regarding their operations and holds direct and indirect ownership interests in each that are less than 20%, the investments have been accounted for since April 1, 1993 under the cost method of accounting, which permits recognition of income only upon the distribution of dividends. The Company has been advised that A/S Havtor and A/S Havtor Management are planning a restructuring, the objective of which is the development of a large integrated shipowning company whose shares are publicly traded in international markets. In exchange for shares held in A/S Havtor and A/S Havtor Management, the Company would receive in the restructuring shares representing a smaller interest in a 10 larger consolidated company. Other unrelated companies are also expected to acquire similar equity interests. Also contributing to the improved results for the non- consolidated entities in 1994 was an additional 11% interest acquired in the first quarter of 1993 in two PROBO vessels increasing the Company's interest to 50%. Increased charterhire rates on these two PROBO vessels as compared to the same period in 1993 also contributed to the improvement. Income Taxes. In the first quarter of 1994, the Company provided $1.3 million for federal income taxes at the statutory rate of 35% as compared to a provision of $1.6 million at the statutory rate of 34% in the first quarter of 1993. Income of non-consolidated entities is shown net of applicable taxes. The Company's effective tax rate decreased from 61% in the first quarter of 1993 to 34% in the first quarter of 1994. The decrease was attributable primarily to the fact that $2.0 million in losses from unconsolidated entities in the first quarter of 1993 were recorded net of applicable taxes. Liquidity and Capital Resources _______________________________ The Company's working capital increased from $17.6 million at December 31, 1993 to $18.6 million at March 31, 1994, after provision for current maturities of long-term debt of $26.4 million and capital lease obligations of $5.1 million. Cash and cash equivalents increased during the first quarter of 1994 by $5.5 million to a total of $38.3 million at March 31, 1994. Accounts payable and accrued expenses decreased by $2.8 million or 5.6% during the first quarter of 1994 primarily due to interest payments made in January, 1994 which had been accrued at December 31, 1993. Positive cash flows were achieved from operating activities in the first quarter of 1994 in the amount of $21.4 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 $31.4 million during the first quarter of 1994. Capital investments included $26.9 million for construction costs of a molten sulphur carrier, $1.0 million for the refurbishment of barges and $1.4 million in other miscellaneous items. Also, the Company added $2.7 million of deferred charge items, primarily drydocking and vessel survey expenditures. Net cash provided by financing activities during the first quarter of 1994 was $15.5 million. Included in this amount were proceeds in the amount of $21.1 million drawn under an interim financing agreement for the construction of a sulphur carrier vessel. 11 These proceeds were offset by regularly scheduled principal payments of $5.3 million for debt and lease obligations. Additionally, $268,000 was used to meet common stock dividend requirements. The Company's molten sulphur carrier is scheduled for delivery at the end of July, 1994. Upon delivery she will be named "SULPHUR ENTERPRISE" and will enter a long-term contract with Freeport-McMoRan Resource Partners ("FRP") carrying molten sulphur between Louisiana and Westcoast Florida, in support of FRP production of agricultural fertilizers. As of March 31, 1994, the Company had paid $41.7 million of the estimated cost of approximately $58 million. Of these costs, $26.9 million was paid during the first quarter of 1994 and the balance was paid during 1993 and 1992. Capitalized interest related to this construction totalled $140,000 for the first quarter of 1994. Interim construction financing has been arranged through a pool of commercial banks and is expected to be repaid with permanent financing after construction is completed. At the Company's option, the construction loan can be converted to a three-year term loan with the same banks when the vessel commences operation. Draws on the interim loan currently total $29.8 million. As an alternative to the aforementioned term loan, the Company has received a commitment for a Title XI guarantee to cover the permanent financing of 75% of the cost of the vessel. The Company has entered into a long-term transportation contract with P.T. Freeport Indonesia Company (an affiliate of Freeport-McMoRan Copper and Gold Inc.) for the movement of various supply cargoes between Singapore, Australia and Indonesia. The Company will have built two multi-purpose vessels and will have built or acquire one containership in order to fulfill the requirements of the contract which is expected to commence in the fourth quarter of 1995. The Company anticipates financing a major portion of the cost of the vessel acquisitions through medium- to long- term loans with commercial banks. Two of the U.S. Flag LASH vessels operating in the Company's LASH liner service, "ROBERT E. LEE" and "STONEWALL JACKSON", have been operating under leases since their delivery from the builders in 1974. These leases provide the Company with the option to purchase the vessels at the termination of the leases in October, 1994. The Company has notified the lessor of its intent to exercise the option to purchase these vessels at the fair market value to be determined by an appraisal panel organized under the terms of the lease. The Company feels that long-term financing can be arranged for the purchase. In the interim, amounts available under the Company's undrawn lines of credit may be utilized. 12 The Financial Accounting Standards Board issued Statement No. 112, "Employers' Accounting for Postemployment Benefits", during 1992. This statement will be adopted in 1994 and is not expected to have a material effect on the Company's financial position or results of operations. To meet short-term requirements when fluctuations occur in working capital, the Company has available three lines of credit totalling $15 million. At March 31, 1994, these lines were undrawn. 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 20, 1994, the Board of Directors declared a quarterly dividend of five cents per share of common stock to be paid on June 16, 1994 to its stockholders of record as of June 2, 1994. 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 March 31, 1994. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. INTERNATIONAL SHIPHOLDING CORPORATION /s/ Gary L. Ferguson Gary L. Ferguson Vice President and Chief Financial Officer May 13, 1994 Date -----END PRIVACY-ENHANCED MESSAGE-----