<PAGE 1>
INTERNATIONAL SHIPHOLDING CORPORATION AND SUBSIDIARIES
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, 1996
-----------------
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 (I.R.S. Employer
jurisdiction of Identification Number)
incorporation or organization)
650 Poydras Street New Orleans, Louisiana 70130
- ------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(504) 529-5461
- ------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing for the past 90 days. YES X NO
-------- -------
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest
practicable date.
Common Stock $1 Par Value 6,682,887 shares (June 28, 1996)
----------------
<PAGE 2>
PART I - FINANCIAL INFORMATION
INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
June 30, December 31,
ASSETS 1996 1995
---------- ------------
Current Assets:
Cash and Cash Equivalents $ 67,384 $ 54,281
Marketable Securities 2,727 4,630
Accounts Receivable, Net 51,303 46,834
Deferred Income Taxes 83 -
Net Investment in Direct
Financing Leases 2,063 2,104
Other Current Assets 2,187 3,521
Material and Supplies
Inventory, At Cost 10,370 10,545
---------- ----------
Total Current Assets 136,117 121,915
---------- ----------
Net Investment in Direct
Financing Leases 23,464 24,482
---------- ----------
Vessels,Property and
Other Equipment, At Cost:
Vessels and Barges 644,997 634,905
Other Marine Equipment 7,462 7,570
Terminal Facilities 18,091 18,126
Land 2,317 2,317
Furniture and Equipment 16,658 15,892
---------- ----------
689,525 678,810
Less - Accumulated Depreciation (258,442) (243,929)
---------- ----------
431,083 434,881
---------- ----------
Other Assets:
Deferred Charges in
Process of Amortization 29,231 26,952
Acquired Contract Costs,
Net of Accumulated
Amortization of $17,517
and $16,496 in 1996 and
1995, Respectively 20,507 21,733
Due from Related Parties 472 535
Other 7,479 17,082
---------- ----------
57,689 66,302
---------- ----------
$ 648,353 $ 647,580
========== ==========
<FN>
The accompanying notes are an integral part of these
statements.
<PAGE 3>
INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
June 30, December 31,
1996 1995
---------- ----------
LIABILITIES AND
STOCKHOLDERS' INVESTMENT
Current Liabilities:
Current Maturities
of Long-Term Debt $ 40,365 $ 40,785
Current Maturities of Capital
Lease Obligations 1,981 1,469
Accounts Payable and Accrued
Liabilities 75,575 77,481
Federal Income Tax Payable 1,608 6,520
Current Deferred Income
Tax Liability - 1,283
Current Liabilities to be
Refinanced (13,394) (19,030)
---------- ----------
Total Current Liabilities 106,135 108,508
---------- ----------
Current Liabilities to be
Refinanced 13,394 19,030
---------- ----------
Billings in Excess of Income
Earned and Expenses Incurred 5,723 4,639
---------- ----------
Long-Term Capital Lease
Obligations, Less
Current Maturities 17,892 19,623
---------- ----------
Long-Term Debt, Less
Current Maturities 276,493 269,872
---------- ----------
Reserves and Deferred Credits:
Deferred Income Taxes 37,788 38,668
Claims and Other 20,765 20,979
---------- ----------
58,553 59,647
---------- ----------
Stockholders' Investment:
Common Stock 6,756 6,756
Additional Paid-in Capital 54,450 54,450
Retained Earnings 110,256 106,158
Less - Treasury Stock (1,133) (1,133)
Unrealized Holding Gain
(Loss) on Marketable Securities (2) 30
Unrealized Translation Loss (164) -
---------- ----------
170,163 166,261
---------- ----------
$ 648,353 $ 647,580
========== ==========
<FN>
The accompanying notes are an integral part of these
statements.
<PAGE 4>
INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(All Amounts in Thousands Except Per Share Data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
--------- --------- --------- --------
Revenues $ 91,135 $ 79,418 $180,625 $157,326
Operating
Differential
Subsidy 6,640 5,426 12,385 10,820
--------- --------- --------- ---------
97,775 84,844 193,010 168,146
--------- --------- --------- ----------
Operating
Expenses:
Voyage Expenses 72,276 63,553 142,369 125,818
Vessel and Barge
Depreciation 8,040 6,227 16,035 12,294
--------- --------- --------- ---------
Gross Voyage Profit 17,459 15,064 34,606 30,034
--------- --------- --------- ---------
Administrative and
General Expenses 6,705 6,212 13,392 12,674
Gain on Sale
of Assets 90 1 87 2
--------- --------- --------- ---------
Operating Income 10,844 8,853 21,301 17,362
--------- --------- --------- ---------
Interest:
Interest Expense 7,081 6,498 14,376 12,812
Investment Income (578) (740) (1,004) (1,516)
--------- --------- --------- ---------
6,503 5,758 13,372 11,296
--------- --------- --------- ---------
Equity in Net Income
of Unconsolidated
Entities (Net of
Applicable Taxes) - 105 - 331
--------- --------- --------- ---------
Income Before
Provision for
Income Taxes 4,341 3,200 7,929 6,397
--------- --------- --------- ---------
Provision for
Income Taxes:
Current 114 286 1,996 2,091
Deferred 1,414 800 822 21
State 128 94 178 179
--------- --------- --------- ---------
1,656 1,180 2,996 2,291
Net Income $ 2,685 $ 2,020 $ 4,933 $ 4,106
========= ========= ========= =========
Earnings Per
Common Share:
Net Income $ 0.40 $ 0.30* $ 0.74 $ 0.61*
========= ========= ========= =========
Weighted Average
Shares of Common
Stock Outstanding 6,682,887 6,682,887* 6,682,887 6,682,887*
<FN>
<FN 1> * Restated for November 17, 1995, twenty-five
percent stock dividend.
<FN 2> The accompanying notes are an integral part of
these statements.
<PAGE 5>
INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'
INVESTMENT
(Dollars in Thousands)
(Unaudited)
Net
Additional Unrealized Unrealized
Common Paid-In Retained Treasury Holding Translation
Stock Capital Earnings Stock Gain/(Loss) Loss Total
----------------------------------------------------------
Balance at
December 31,
1994 $5,405 $54,450 $ 87,757 ($1,133) ($163) $ - $146,316
Net Income for
Year Ended
December 31,
1995 - - 20,980 - - - 20,980
Cash Dividends - - (1,228) - - - (1,228)
25% Stock
Dividend 1,351 - (1,351) - - - -
Unrealized
Holding Gain
on Marketable
Securities,
Net of
Deferred Taxes - - - - 193 - 193
-----------------------------------------------------------
Balance at
December 31,
1995 $6,756 $54,450 $106,158 ($1,133) $30 $ - $166,261
Net Income for
Six Months
Ended June 30,
1996 - - 4,933 - - - 4,933
Cash Dividends - - (835) - - - (835)
Unrealized
Holding Loss
on Marketable
Securities,
Net of
Deferred Taxes - - - - (32) - (32)
Unrealized
Translation Loss - - - - - (164) (164)
--------------------------------------------------------
Balance at
June 30, 1996 $6,756 $54,450 $110,256 ($1,133) ($2) ($164) $170,163
========================================================
<FN>
The accompanying notes are an integral part of these statements.
<PAGE 6>
INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
Six Months Ended
June 30,
1996 1995
--------- ---------
Cash Flows from Operating Activities:
Net Income $ 4,933 $ 4,106
Adjustments to Reconcile Net
Income to Net Cash Provided
by Operating Activities:
Depreciation 17,097 13,093
Amortization of Deferred
Charges and Other Assets 9,002 8,659
Provision for Deferred
Income Taxes 2,887 2,112
Equity in Unconsolidated
Entities - (372)
Gain on Sale of Assets (87) (2)
Unearned Income 1,084 1,090
Reserve for Claims and
Other Deferred Credits (206) (2,021)
Changes in:
Accounts Receivable (2,055) 3,534
Net Investment in
Direct Financing Leases 1,060 1,065
Other Assets 147 2,890
Inventories and Other
Current Assets 1,509 (1,009)
Accounts Payable and
Accrued Liabilities 4,513 3,822
Federal Income Taxes Payable (9,570) (2,085)
--------- ---------
Net Cash Provided by Operating
Activities 30,314 34,882
--------- ---------
Cash Flows from Investing Activities:
Purchase of Vessels and
Other Property (28,688) (34,242)
Additions to Deferred Charges (2,604) (6,073)
Proceeds from Sale of Assets 97 -
Proceeds from Short-Term Investments 1,799 -
Investment in and Advances to
Unconsolidated Entities - 13
Other Investing Activities 9,503 (14)
--------- ---------
Net Cash Used by Investing Activities (19,893) (40,316)
--------- ---------
Cash Flows from Financing Activities:
Proceeds from Issuance of Debt
and Capital Lease Obligations 44,628 39,096
Reduction of Debt and Capital
Lease Obligations (39,646) (23,848)
Additions to Deferred Financing
Charges (1,465) -
Common Stock Dividends Paid (835) (535)
--------- ---------
Net Cash Provided by Financing
Activities 2,682 14,713
--------- ---------
Net Increase in Cash and Cash
Equivalents 13,103 9,279
Cash and Cash Equivalents at
Beginning of Period 54,281 29,611
--------- ---------
Cash and Cash Equivalents at
End of Period $ 67,384 $ 38,890
========= =========
<FN>
The accompanying notes are an integral part of these
statements.
<PAGE 7>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
June 30, 1996
(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, 1995. 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 1996. 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 1996 interim results are not necessarily
indicative of the results of the operations for the full
year 1996.
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.
<PAGE 8>
INTERNATIONAL SHIPHOLDING CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND 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.
RESULTS OF OPERATIONS
Six Months Ended June 30, 1996
Compared to the Six Months Ended June 30, 1995
GROSS VOYAGE PROFIT
Gross voyage profit increased 15.2% to $34.6 million in
the first six months of 1996 as compared to $30.0 million in
the same period of 1995. Gross voyage profit was favorably
impacted by the commencement in February, 1996, of
operations of the ENERGY ENTERPRISE, a U. S. Flag Coal
Carrier under contract to a major U. S. utility company, and
the early first quarter 1996 commencement of operations of
two Special Purpose Vessels ("SPV's") under contract to
provide transportation services to a major mining company in
Indonesia. Improved freight rates in 1996 for 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) also positively impacted gross voyage profit.
Partially offsetting these increases were lower charter
rates on the
<PAGE 9>
Company's cape-size bulk carrier. Additionally, the
second quarter results, on a consolidated basis, were
negatively impacted by a damage claim made against
our insurance subsidiary. The claim resulted from a
propeller shaft accident sustained by one of the vessels
operating in the Waterman service requiring an unscheduled
drydock of approximately two months duration. The vessel
has been fully repaired and returned to service about mid-
July.
Vessel and barge depreciation for the first six months
of 1996 increased 30.4% to $16.0 million as compared to
$12.3 million in the same period of 1995 due to the addition
of the ENERGY ENTERPRISE and the two SPV's and related
barges.
OTHER INCOME AND EXPENSES
Administrative and general expenses increased 5.67% to
$13.4 million in the first six months of 1996 from $12.7
million in the comparable period of 1995 due to additional
administrative services required to support new business.
Interest expense increased 12.2% from $12.8 million in
the first six months of 1995 to $14.4 million in the same
period of 1996 primarily due to interest incurred on the
financing of the ENERGY ENTERPRISE and the two SPV's and
related barges. These increases were partially offset by
reductions resulting from regularly scheduled payments on
other outstanding debt.
Investment income decreased from $1.5 million in the
first six months of 1995 to $1.0 million in the same period
of 1996 reflecting a reduction in the balance of invested
funds.
INCOME TAXES
The Company provided $2.8 million for federal income
taxes in the first six months of 1996 at the statutory rate
of 35% as compared to $2.1 million in the first six months
of 1995 at the same rate. Income of unconsolidated entities
is shown net of applicable taxes.
Second Quarter Ended June 30, 1996
Compared to Second Quarter Ended June 30, 1995
GROSS VOYAGE PROFIT
Gross voyage profit increased 15.9% to $17.5 million in
the second quarter of 1996 as compared to $15.1 million in
the same period of 1995. As in the case of the six months
comparison discussed above, gross voyage profit was
favorably impacted in the second quarter by the commencement
of operations of the ENERGY ENTERPRISE and the two SPV's.
Improved
<PAGE 10>
freight rates for 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)
also positively impacted gross voyage profit. Partially
offsetting these increases were lower charter rates on the
Company's cape-size bulk carrier and the aforementioned
propulsion accident experienced by one of the Company's LASH
vessels.
Vessel and barge depreciation for the second quarter of
1996 increased 29.1% to $8.0 million as compared to $6.2
million in the same period of 1995 due to the addition of
the ENERGY ENTERPRISE and the two SPV's and related barges.
OTHER INCOME AND EXPENSES
Administrative and general expenses increased 7.94% to
$6.7 million in the second quarter of 1996 from $6.2 million
in the comparable period of 1995 due to additional
administrative services required to support new business.
Interest expense increased 9.0% from $6.5 million in
the second quarter of 1995 to $7.1 million in the same
period of 1996 primarily due to interest incurred on the
financing of the ENERGY ENTERPRISE and the two SPV's and
related barges. These increases were partially offset by
reductions resulting from regularly scheduled payments on
other outstanding debt.
Investment income decreased slightly from $740,000 in
the second quarter of 1995 to $578,000 in the same period of
1996 reflecting a reduction in the balance of invested
funds.
INCOME TAXES
The Company provided $1.5 million for federal income
taxes in the second quarter of 1996 at the statutory rate of
35% as compared to $1.1 million in the second quarter of
1995 at the same rate. Income of unconsolidated entities is
shown net of applicable taxes.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital increased from $13.4
million at December 31, 1995, to $30.0 million at June 30,
1996, after provision for current maturities of long-term
debt of $40.4 million and capital lease obligations of $2.0
million. Cash and cash equivalents increased during the
first six months of 1996 by $13.1 million to a total of
$67.4 million.
Positive cash flows were achieved from operating
activities in the first six months of 1996 in the amount of
$30.0 million. The major source of cash from operations was
net income, adjusted for non-cash provisions such as
depreciation and amortization.
<PAGE 11>
Net cash used for investing activities amounted to
$19.9 million during the first six months of 1996. Major
capital investments included $10.8 million for upgrade work
on the ENERGY ENTERPRISE to meet classification requirements
and for preventative maintenance and $16.0 million for the
conversion of two SPV's. Other uses of cash included the
addition of $2.6 million in deferred vessel drydocking
charges. Proceeds from investing activities included $8.1
million received from the payment of a long-term note
receivable, the release of $5.8 million previously held in
escrow as collateral for loans and $1.8 million from the
maturity of short-term investments. Cash used for other
investments included the placement of $4.6 million in escrow
for future payments on long-term debt.
Net cash provided by financing activities during the
first six months of 1996 totaled $2.7 million. Proceeds
from the issuance of debt obligations of $44.6 million
consisted of $9.6 million received from a long-term loan
associated with the acquisition and conversion of the two
SPV's and $35.0 million drawn under the Company's lines of
credit of which $20.0 million was outstanding as of June 30,
1996. Cash used for financing activities included $9.5
million for prepayment of a long-term debt, $15.0 million to
repay amounts drawn under the lines of credit and $15.1
million for regularly scheduled payments on debt and capital
lease obligations. Other uses of cash for financing
activities included $1.5 million for deferred financing
charges primarily related to the ENERGY ENTERPRISE and
$835,000 to meet common stock dividend requirements.
During early second quarter of 1996, the Company
contracted to purchase a LASH vessel for approximately $8.5
million. Assuming all requirements of the purchase contract
are met and the purchase is concluded, certain additional
costs estimated to total $7.5 million will be incurred to
bring the vessel up to the Company's normal operating
standards. Additionally, 82 LASH barges will be purchased
and refurbished to operate with this vessel at an estimated
total cost of $2.0 million. It is anticipated that this
vessel will deliver from the shipyard in the fourth quarter
of 1996 and will begin operations in the Company's Trans-
Atlantic service or one of its other services, depending
upon demand, when the ship is ready for operation.
Financing for 80% of the total purchase and upgrading costs
of the aforementioned vessel and barges has been arranged
through a medium-term loan with a commercial bank.
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 $20.0 million was
drawn at June 30, 1996 and fully repaid in July, 1996.
<PAGE 12>
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 17, 1996, the Board of
Directors declared a quarterly dividend of $.0625 per common
share payable on September 20, 1996, to shareholders of
record on September 6, 1996.
<PAGE 13>
Part II - OTHER INFORMATION
Item 2. Changes in Securities
(a) An amendment of the Certificate of Incorporation
to regulate the ownership of the capital stock of the
Corporation by persons who are not citizens of the United
States was approved by shareholders at the Company's Annual
Meeting on April 17, 1996, and was filed with the State of
Delaware May 24, 1996. See "Effect of Amendment on
Stockholders" on page 14 of the Company's Definitive Proxy
Statement dated March 12, 1996, filed pursuant to Section
14(a) of the Securities Exchange Act of 1934, and
incorporated herein by reference. This amendment in its
entirety was included as Appendix A of the aforementioned
Proxy Statement.
Item 4. Submission of Matters to a Vote of Security Holders
The matters voted upon and results of the voting at the
Company's annual meeting of shareholders held April 17,
1996, were reported in response to Item 4 of the Company's
Form 10-Q filed with the Securities and Exchange Commission
for the quarterly period ended March 31, 1996, and are
incorporated herein by reference.
Item 6. Exhibits and Reports on Form 8-K
(a) EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
Part I Exhibits: 27 Financial Data Schedule
Part II Exhibits: 3 (a) Restated Certificate of
Incorporation
(b) By-Laws of the Registrant,
as amended
99 Additional Exhibits
(a) "Effect of Amendment on
Stockholders" on page 14 of
the Definitive Proxy Statement
dated March 12, 1996, filed
pursuant to Section 14(a) of
the Securities and Exchange
Act of 1934 incorporated herein
by reference
(b) Item 4 of Form 10-Q filed with the
Securities and Exchange Commission
for the quarterly period ended
March 31, 1996, and incorporated
herein by reference
<PAGE 14>
(b) No reports on Form 8-K have been filed for the three
months ended June 30, 1996.
SIGNATURES
Pursuant to the requirements of the Securities and
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned
thereunto duly authorized.
INTERNATIONAL SHIPHOLDING CORPORATION
/S/ Gary L. Ferguson
------------------------------------------
Gary L. Ferguson
Vice President and Chief Financial Officer
Date August 5, 1996
______________________________________