Exhibit 99.1
International Shipholding Corporation Reports Second Quarter Results
NEW ORLEANS--(BUSINESS WIRE)--July 28, 2006--International Shipholding
Corporation (NYSE: ISH) today reported results for the three month and six month
periods ended June 30, 2006. Net loss from operations for the three months ended
June 30, 2006 was $6.464 million, which included a non-cash charge of $8.866
million before taxes and $5.763 million after taxes associated with the
impairment of our investment in the Rail/Ferry service's terminal in New
Orleans. Net income for the three months ended June 30, 2005 was $3.973 million.
For the first six months of 2006, net loss was $4.378 million as compared to net
income of $8.066 million for the same period of 2005. The net loss to common
stockholders for the second quarter was $7.064 million while for the six month
period ended June 30, 2006, the net loss was $5.578 million after dividends on
the Company's preferred stock issue.
Operating results during the quarter were affected by our U.S. Flag Coal
Carrier being out of service for 71 days in the quarter as a result of
pre-planned repairs and special survey. This special survey will now permit the
vessel to operate without interruption for five years barring unforeseen events.
The vessel will operate the remainder of the year under her firm Time Charter
agreement contributing to the already favorable results for the Time Charter
segment the last two quarters of this fiscal year. The TransAtlantic LASH
service was impacted by a drop in eastbound cargo volumes, some of which can be
attributable to Hurricane Katrina. U.S. Gulf petcoke production was seriously
damaged resulting in lack of shipments which make up cargo volumes eastbound for
this service. Eastbound cargo volumes for the second half of the year are
expected to improve. The U.S. Flag LASH vessel was temporarily laid up for 30
days in the quarter while awaiting cargoes.
Hurricane Katrina severely impacted our subsidiary CG Railway's operations.
When we moved that service from Mobile in early June 2005 to the New Orleans
terminal, which was partially completed, we had a commitment from the State of
Louisiana to contribute to the construction of a double ramp rail terminal
located on the Mississippi River Gulf Outlet (MR-GO). The terminal costs were
estimated at $27 million with $15 million contributed by the State, $2 million
by the City of New Orleans, and $10 million by CG Railway. The double ramp
terminal was scheduled for completion in October 2005. CG Railway simultaneously
contracted with a Louisiana shipyard to construct and install second decks on
each of the two ferry vessels used in the service. This construction was also
expected to be completed in October 2005, at which time CG Railway's capacity
was scheduled to double. CG Railway's trade support then and now warranted the
program expansion.
Hurricane Katrina struck the Gulf Coast at the end of August of 2005, and
many claimed that the MR-GO contributed to the flooding of New Orleans. Dredging
of the MR-GO was indefinitely suspended by the Corps of Engineers. Subsequently,
Congress has passed legislation instructing the Corps to formulate a plan for
the closure of the MR-GO. Throughout these maneuvers, CG Railway continues to
operate using the MR-GO with single deck capacity on its two vessels. Even
though we currently use the MR-GO, all construction is terminated and CG Railway
has agreed with the State of Louisiana to terminate all agreements due to force
majeure. Early on the Company commenced negotiations with the State of Alabama
and Mobile State Docks, and in June 2006, CG Railway reached agreement with
Alabama for the construction of a double level ramped terminal similar to the
original design contemplated for New Orleans. The Mobile terminal will be ready
end 2006 or early 2007, at which time CG Railway will relocate to Mobile. The
second decks will also be installed by that time, and the Rail/Ferry service
will operate with double its current capacity. Included in the Alabama agreement
is the provision for the State of Alabama to grant $10 million toward the
construction of this new terminal. As a result, this arrangement with Alabama
effectively maintains the project budget as originally projected. CG Railway has
a lease with the Port of New Orleans on the New Orleans terminal. CG Railway is
negotiating to amend this lease so that it can effectively use the New Orleans
terminal and take advantage of its leasehold improvements. In this connection we
are actively pursuing a number of alternatives:
1. Negotiating with the Port of New Orleans to amend the lease terms to
allow other commercial uses of the facility.
2. Having discussions with third parties who may have interest in
utilizing the facility.
3. Closely following and urging Congress to pass pending legislation that
would call for the federal government to pay mitigating damages to
parties that must relocate from the MR-GO to other locations in the
Gulf Opportunity Zone.
Despite these efforts, because of the uncertainty of the long-term use of
the New Orleans facility, we believe it is appropriate to be conservative
regarding the probability of achieving one of these alternatives, and have
currently concluded that our net investment of $8.866 million in the New Orleans
terminal has been fully impaired. Accordingly, an impairment loss of $8.866
million was recorded during the second quarter of 2006.
Additionally, as announced in a press release last month, the Company will
also relocate its corporate headquarters from New Orleans to Mobile and will
receive assistance from the State of Alabama and the City and County of Mobile
for that relocation.
Excluding the U.S. Flag Coal Carrier, the Time Charter and Contract of
Affreightment segments showed improvements over the 2005 comparable quarterly
period.
The Company's Mexican Rail/Ferry segment, excluding the aforementioned
impairment loss on the MR-GO terminal, continued to show slight improvement
resulting from increases in volume. The Company now expects to have the second
deck capacity added to these vessels within the first quarter of 2007.
Unfortunately, Hurricane Katrina effectively delayed this installation one year
from our original plans.
Depreciation expense was higher in the second quarter of 2006 resulting
from capital improvements in the beginning of the year on one of our LASH
vessels as well as both of the vessels used in our Rail/Ferry service. Also
contributing was the added depreciation on the Company's newly acquired U.S.
Flag Pure Car/Truck Carrier, which was placed in service during the fourth
quarter of 2005.
Interest expense in the quarter increased primarily as a result of the
investment in the aforementioned U.S. Flag Pure Car/Truck Carrier and the
financing cost of the Rail/Ferry service's New Orleans terminal. Administrative
and general expenses continued to trend higher primarily due to higher fees for
professional services.
In addition to the aforementioned, the lower results for the comparable six
month periods ended June 30, 2006 reflect gains in the 2005 results of $1.225
million and $540,000 from the sale of a vessel owned by one of our
unconsolidated entities and the sale of some LASH barges, respectively.
Our year to date income tax benefit reflects losses in our segments subject
to the statutory rate, a tax liability on the shipping income from the Company's
foreign subsidiaries offset by a valuation allowance, and the results of our
international U.S. Flag operations taxed at the lower tonnage tax rate.
Certain statements made in this release on our behalf that are not based on
historical facts are intended to be forward-looking statements within the
meaning of the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements are based on assumptions about
future events and are therefore subject to risks and uncertainties. We caution
readers that certain important factors have affected and may affect in the
future our actual consolidated results of operations and may cause future
results to differ materially from those expressed in or implied by any
forward-looking statements made in this release on our behalf. A description of
certain of these important factors is contained in our Form 10-K filed with the
Securities and Exchange Commission for the year ended December 31, 2005.
The common stock of International Shipholding Corporation is traded on the
New York Stock Exchange with the symbol ISH. The Company's preferred stock is
traded on the NYSE with the symbol "ISH Pr".
Unaudited results for the period indicated along with prior year results
are (in thousands except share and per share data):
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2006 2005 2006 2005
----------- ----------- ----------- -----------
Revenues $ 70,080 $ 67,731 $ 138,410 $ 136,554
Operating Expenses:
Voyage Expenses 59,837 53,778 115,700 108,039
Vessel and Barge
Depreciation 6,088 5,422 11,817 10,845
Impairment Loss 8,866 - 8,866 -
----------- ----------- ----------- -----------
Gross Voyage (Loss)
Profit (4,711) 8,531 2,027 17,670
----------- ----------- ----------- -----------
Administrative and
General Expenses 4,375 4,120 8,641 8,336
Gain on Sale of Other
Assets (55) (559) (60) (613)
----------- ----------- ----------- -----------
Operating (Loss)
Income (9,031) 4,970 (6,554) 9,947
----------- ----------- ----------- -----------
Interest and Other:
Interest Expense 2,809 2,270 5,677 4,813
Gain on Sale of
Investment (167) - (468) -
Investment Income (291) (360) (747) (645)
Loss (Gain) on
Early
Extinguishment
of Debt 89 (74) 89 (74)
----------- ----------- ----------- -----------
2,440 1,836 4,551 4,094
----------- ----------- ----------- -----------
(Loss) Income from
Continuing Operations
Before (Benefit)
Provision for Income
Taxes and Equity in
Net Income of
Unconsolidated
Entities (11,471) 3,134 (11,105) 5,853
----------- ----------- ----------- -----------
(Benefit) Provision
for Income Taxes (3,478) 219 (4,214) 694
----------- ----------- ----------- -----------
Equity in Net Income
of Unconsolidated
Entities (Net of
Applicable Taxes) 1,529 1,254 2,513 3,433
----------- ----------- ----------- -----------
(Loss) Income from
Continuing Operations (6,464) 4,169 (4,378) 8,592
----------- ----------- ----------- -----------
Loss from Discontinued
Operations - (196) - (526)
----------- ----------- ----------- -----------
Net (Loss) Income $ (6,464) $ 3,973 $ (4,378) $ 8,066
=========== =========== =========== ===========
Preferred Stock
Dividends 600 600 1,200 1,167
----------- ----------- ----------- -----------
Net (Loss) Income
Available to Common
Stockholders $ (7,064) $ 3,373 $ (5,578) $ 6,899
=========== =========== =========== ===========
Basic and Diluted
Earnings Per Common
Share:
Net (Loss) Income
Available to
Common
Stockholders
Continuing
Operations
$ (1.15) $ 0.58 $ (0.91) $ 1.22
Discontinued
Operations - (0.03) - (0.09)
----------- ----------- ----------- -----------
$ (1.15) $ 0.55 $ (0.91) $ 1.13
=========== =========== =========== ===========
Weighted Average
Shares of Common
Stock Outstanding:
Basic 6,119,176 6,082,887 6,112,832 6,082,887
Diluted 6,119,176 6,100,091 6,112,832 6,105,999
CONTACT: International Shipholding Corporation
Erik F. Johnsen, 504-529-5461
or
Niels M. Johnsen, 212-943-4141