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, 2005
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__ 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
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INTERNATIONAL SHIPHOLDING CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 36-2989662
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(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
650 Poydras Street New Orleans, Louisiana 70130
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(Address of principal executive offices) (Zip Code)
(504) 529-5461
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(Registrant's telephone number, including area code)
Not Applicable
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(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 ________
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). YES _________ NO____x_____
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 6,082,887 shares (March 31, 2005)
------------------------------- ---------------- ----------------
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PART I - FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS
INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(All Amounts in Thousands Except Share Data)
(Unaudited)
Three Months Ended
March 31,
2005 2004
--------- ---------
Revenues $ 69,788 $ 65,843
Operating Expenses:
Voyage Expenses 55,348 51,470
Vessel and Barge Depreciation 5,612 4,627
--------- ---------
Gross Voyage Profit 8,828 9,746
--------- ---------
Administrative and General Expenses 4,389 3,851
(Gain) Loss on Sale of Other Assets (31) 7
--------- ---------
Operating Income 4,470 5,888
--------- ---------
Interest and Other:
Interest Expense 2,543 2,722
Loss on Sale of Investment - 623
Investment Income (285) (168)
Loss on Early Extinguishment of Debt - 31
--------- ---------
2,258 3,208
--------- ---------
Income Before Provision for Income Taxes
and Equity in Net Income of Unconsolidated Entities 2,212 2,680
--------- ---------
Provision for Income Taxes:
Current 54 105
Deferred 230 887
State 14 3
--------- ---------
298 995
--------- ---------
Equity in Net Income of Unconsolidated
Entities (Net of Applicable Taxes) 2,179 1,212
--------- ---------
Net Income $ 4,093 $ 2,897
========= =========
Preferred Stock Dividends 567 -
--------- ---------
Net Income Available to Common Stockholders $ 3,526 $ 2,897
========= =========
Basic and Diluted Earnings Per Common Share:
Net Income Available to Common Stockholders $ 0.58 $ 0.48
========= =========
Weighted Average Shares of Common Stock Outstanding:
Basic 6,082,887 6,082,887
Diluted 6,111,906 6,092,666
The accompanying notes are an integral part of these statements.
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INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(All Amounts in Thousands)
(Unaudited)
March 31, December 31,
ASSETS 2005 2004
------------ ------------
Current Assets:
Cash and Cash Equivalents $ 32,265 $ 10,513
Marketable Securities 6,216 6,138
Accounts Receivable, Net of Allowance
for Doubtful Accounts of $174 and $146
in 2005 and 2004, Respectively:
Traffic 18,925 20,953
Agents' 5,022 3,509
Claims and Other 8,442 5,135
Federal Income Taxes Receivable 399 459
Deferred Income Tax 27 187
Net Investment in Direct Financing Lease 2,390 2,337
Other Current Assets 3,845 4,756
Material and Supplies Inventory, at
Lower of Cost or Market 3,221 3,239
Current Assets Held for Disposal 55 89
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Total Current Assets 80,807 57,315
------------ ------------
Investment in Unconsolidated Entities 13,169 11,115
------------ ------------
Net Investment in Direct Financing Lease 46,166 46,776
------------ ------------
Vessels, Property, and Other
Equipment, at Cost:
Vessels and Barges 357,086 348,307
Other Equipment 7,082 7,082
Terminal Facilities 140 140
Furniture and Equipment 3,473 3,484
------------ ------------
367,781 359,013
Less - Accumulated Depreciation (135,255) (129,560)
------------ ------------
232,526 229,453
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Other Assets:
Deferred Charges, Net of Accumulated
Amortization of $14,259 and $16,374
in 2005 and 2004, Respectively 13,368 14,809
Acquired Contract Costs, Net of Accumulated
Amortization of $23,249 and $22,886
in 2005 and 2004, Respectively 7,276 7,640
Restricted Cash 6,541 6,541
Due from Related Parties 135 2,535
Other 8,786 8,864
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36,106 40,389
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$ 408,774 $ 385,048
============ ============
The accompanying notes are an integral part of these statements.
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INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(All Amounts in Thousands Except Share Data)
(Unaudited)
March 31, December 31,
LIABILITIES AND STOCKHOLDERS' INVESTMENT 2005 2004
------------ ------------
Current Liabilities:
Current Maturities of Long-Term Debt $ 9,468 $ 9,468
Accounts Payable and Accrued Liabilities 35,479 30,197
------------ ------------
Total Current Liabilities 44,947 39,665
------------ ------------
Billings in Excess of Income Earned
and Expenses Incurred 4,243 4,723
------------ ------------
Long-Term Debt, Less Current Maturities 142,265 168,622
------------ ------------
Other Long-Term Liabilities:
Deferred Income Taxes 15,778 15,222
Other 20,953 21,362
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36,731 36,584
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Commitments and Contingent Liabilities
Convertible Exchangeable Preferred Stock 37,554 -
------------ ------------
Stockholders' Investment:
Common Stock 6,756 6,756
Additional Paid-In Capital 54,450 54,450
Retained Earnings 86,241 82,715
Treasury Stock (8,704) (8,704)
Accumulated Other Comprehensive Income 291 237
------------ ------------
139,034 135,454
------------ ------------
$ 408,774 $ 385,048
============ ============
The accompanying notes are an integral part of these statements.
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INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(All Amounts in Thousands)
(Unaudited)
Three Months Ended March 31,
2005 2004
------------ ------------
Cash Flows from Operating Activities:
Net Income $ 4,093 $ 2,897
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation 5,710 4,759
Amortization of Deferred Charges
and Other Assets 2,013 1,813
Provision for Deferred Federal
Income Taxes 230 887
Equity in Net Income of Unconsolidated
Entities (2,179) (1,212)
(Gain) Loss on Sale of Other Assets (31) 7
Loss on Early Extinguishment of Debt - 31
Loss on Sale of Investment - 623
Changes in:
Accounts Receivable (2,731) 8,153
Inventories and Other Current Assets 1,437 1,116
Deferred Drydocking Charges (1,533) (483)
Other Assets 62 182
Accounts Payable and Accrued Liabilities 5,640 (2,667)
Federal Income Taxes Payable (58) (238)
Billings in Excess of Income Earned
and Expenses Incurred (480) (3,509)
Other Long-Term Liabilities (141) (1,527)
------------ ------------
Net Cash Provided by Operating Activities 12,032 10,832
------------ ------------
Cash Flows from Investing Activities:
Net Investment in Direct Financing Lease 557 526
Additions to Vessels and Other Assets (8,844) (1,366)
Proceeds from Sale of Other Assets 88 -
Purchase of and Proceeds from Short
Term Investments - (378)
Distributions from (Investment in)
Unconsolidated Entities 723 -
Net Decrease in Restricted Cash Account - 865
Collection of Related Party Note Receivable 2,400 -
------------ ------------
Net Cash Used by Investing Activities (5,076) (353)
------------ ------------
Cash Flows from Financing Activities:
Proceeds from Issuance of Preferred Stock 37,725 -
Repayment of Debt (22,357) (4,887)
Additions to Deferred Financing Charges (5) (64)
Preferred Stock Dividends Paid (567) -
Other Financing Activities - (1)
------------ ------------
Net Cash Provided (Used) by Financing Activities 14,796 (4,952)
------------ ------------
Net Increase in Cash and Cash Equivalents 21,752 5,527
Cash and Cash Equivalents at Beginning of Period 10,513 8,881
------------ ------------
Cash and Cash Equivalents at End of Period $ 32,265 $ 14,408
============ ============
The accompanying notes are an integral part of these statements.
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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2005
(Unaudited)
Note 1. Basis of Preparation
We have prepared the accompanying unaudited interim financial statements
pursuant to the rules and regulations of the Securities and Exchange
Commission, and we have omitted certain information and footnote disclosures
required by generally accepted accounting principles for complete financial
statements. The condensed consolidated balance sheet as of December 31,
2004 has been derived from the audited financial statements at that date. We
suggest that you read these interim statements in conjunction with the
financial statements and notes thereto included in our Form 10-K for the year
ended December 31, 2004. We have made certain reclassifications to prior
period financial information in order to conform to current year
presentations.
The foregoing 2005 interim results are not necessarily indicative of
the results of operations for the full year 2005. Interim statements are
subject to possible adjustments in connection with the annual audit of our
accounts for the full year 2005. Management believes that all adjustments
necessary, consisting only of normal recurring adjustments, for a fair
presentation of the information shown have been made.
Our policy is to consolidate all subsidiaries in which we hold a
greater than 50% voting interest and to use the equity method to account
for investments in entities in which we hold a 20% to 50% voting interest.
We use the cost method to account for investments in entities in which we
hold less than 20% voting interest and in which we cannot exercise
significant influence over operating and financial activities.
We have eliminated all significant intercompany accounts and
transactions.
Note 2. Employee Benefit Plans
The following table provides the components of net periodic benefit
cost for the plans:
(All Amounts in Thousands)
Postretirement
Pension Plan Benefits
------------------ -----------------
Three Months Ended Three Months Ended
March 31, March 31,
Componenets of net periodic benefit cost: 2005 2004 2005 2004
-------- -------- -------- -------
Service cost $ 169 $ 137 $ 23 $ 19
Interest cost 315 308 134 147
Expected return on plan assets (372) (346) - -
Amortization of prior service cost - 2 (6) -
Amortization of net actuarial loss 41 23 25 25
-------- -------- -------- -------
Net periodic benefit cost $ 153 $ 124 $ 176 $ 191
======== ======== ======== =======
We do not expect to make a contribution to our pension plan or to our
postretirement benefits plan in 2005.
In December of 2003, the Medicare Prescription Drug, Improvements,
and Modernization Act of 2003 ("Act") was signed into law. In addition to
including numerous other provisions that have potential effects on an
employer's retiree health plan, the Medicare law included a special subsidy
for employers that sponsor retiree health plans with prescription drug
benefits that are at least as favorable as the new Medicare Part D benefit.
In May of 2004, the Financial Accounting Standards Board ("FASB") issued
FASB Staff Position ("FSP") 106-2, "Accounting
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and Disclosure Requirements Related to the Medicare Prescription Drug,
Improvements, and Modernization Act of 2003," that provides guidance on the
accounting for the effects of the Act for employers that sponsor
postretirement health care plans that provide drug benefits. We are still
evaluating whether our plan is actuarially equivalent, although the impact
of any adjustments on our financial position and results of operations is
not expected to be material.
Note 3. Operating Segments
Our four operating segments, Liner Services, Time Charter Contracts,
Contracts of Affreightment ("COA"), and Rail-Ferry Service, are identified
primarily by the characteristics of the contracts and terms under which our
vessels and barges are operated. We report in the Other category results
of several of our subsidiaries that provide ship charter brokerage and
agency services, as well as our over-the-road car transportation truck
company. We manage each reportable segment separately, as each requires
different resources depending on the nature of the contract or terms under
which each vessel within the segment operates.
We do not allocate administrative and general expenses, investment
income, losses or gains on early extinguishment of debt, equity in net
income of unconsolidated entities, or income taxes to our segments.
Intersegment revenues are based on market prices and include revenues
earned by our subsidiaries that provide specialized services to the
operating segments.
The following table presents information about segment profit and
loss for the three months ended March 31, 2005 and 2004:
(All Amounts in Thousands)
Time
Liner Charter Contracts of Rail-Ferry
Services Contracts Affreightment Service Other Elim. Total
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2005
Revenues from external
customers $25,642 $34,485 $4,101 $4,022 $ 1,538 - $ 69,788
Intersegment
revenues - - - - 3,104 (3,104) -
Vessel and barge
depreciation 859 3,226 604 729 194 - 5,612
Gross voyage
(loss) profit (114) 8,481 1,210 (914) 165 - 8,828
Interest expense 173 1,543 341 442 44 - 2,543
Gain on sale of
other assets - - - - 31 - 31
Segment (loss)
profit (287) 6,938 869 (1,356) 152 - 6,316
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2004
Revenues from external
customers $23,232 $29,079 $3,995 $4,056 $5,481 - $65,843
Intersegment
revenues - - - - 3,113 (3,113) -
Vessel and barge
depreciation 856 2,283 604 729 155 - 4,627
Gross voyage
Profit (loss) 462 7,715 1,301 (864) 1,132 - 9,746
Interest expense 221 1,550 391 505 55 - 2,722
Loss on sale of
other assets - - - - (7) - (7)
Segment profit
(loss) 241 6,165 910 (1,369) 1,070 - 7,017
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Following is a reconciliation of the totals reported for the operating
segments to the applicable line items in the consolidated financial statements:
(All Amounts in Thousands) Three Months Ended March 31,
2005 2004
Profit or Loss: ---------- ----------
Total Profit for Reportable Segments $6,316 $7,017
Unallocated Amounts:
Administrative and General Expenses (4,389) (3,851)
Loss on Sale of Investment - (623)
Investment Income 285 168
Loss on Early Extinguishment of Debt - (31)
---------- ----------
Income Before Provision for Income Taxes and
Equity in Net Income of Unconsolidated Entities $2,212 $2,680
========== ==========
Note 4. Unconsolidated Entities
In the fourth quarter of 2003, through our wholly-owned subsidiary, we
acquired a 50% investment in Dry Bulk Cape Holding Inc. ("Dry Bulk"), which
owns two cape-size bulk carrier vessels built in calendar years 2002 and
2003. We account for our investment in Dry Bulk under the equity method,
and as such our share of the earnings or losses of Dry Bulk is reported as
equity in net income of unconsolidated entities, net of taxes, in our
consolidated statements of income. For the three months ended March 31,
2005 and 2004, our portion of earnings, net of taxes, was $1.2 million and
$1.1 million, respectively. We expect the 2005 earnings of Dry Bulk to be
distributed in the current year, which would allow those earnings to
qualify under the temporary dividends received exclusion, which allows for
a one-time federal tax exclusion of 85% of those earnings if certain
criteria are met (see Note 7. Income Taxes for a further discussion on the
dividends received exclusion).
In April of 2004, we received a cash distribution of $1.6 million from
Dry Bulk representing first quarter earnings for 2004, which was recorded
as reductions of our investment in Dry Bulk.
At March 31, 2005, our wholly-owned subsidiary was a guarantor of a
portion of the outstanding debt of Dry Bulk. The guarantee is for the
full remaining term of the debt, which was seven years as of December 31,
2004. Performance by our subsidiary under the guarantee would be required
in the event of default by Dry Bulk on the debt. International Shipholding
Corporation has delivered a promissory note in the amount of $31.8 million
to the wholly-owned subsidiary, which the subsidiary may demand payment on
if necessary to perform its obligations under the guarantee. The subsidiary
has assigned the promissory note to the lenders to secure the subsidiary's
obligations under the guarantee. The portion of the outstanding debt that
the subsidiary guarantees was $29.6 million at March 31, 2005. The estimated
fair value of the non-contingent portion of the guarantee is immaterial.
The unaudited combined condensed results of operations of Dry Bulk are
summarized below:
(All Amounts in Thousands) Three Months Ended March 31,
2005 2004
---------- ----------
Operating Revenue $4,582 $5,682
Operating Income $3,072 $4,100
Net Income $2,307 $3,324
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Note 5. Earnings Per Share
Basic and diluted earnings per share were computed based on the weighted
average number of common shares issued and outstanding during the relevant
periods. Stock options covering 475,000 shares were included in the
computation of diluted earnings per share in the first three months of 2005
and 2004.
Note 6. Comprehensive Income
The following table summarizes components of comprehensive income for
the three months ended March 31, 2005 and 2004:
Three Months Ended March 31,
(Amounts in Thousands) 2005 2004
--------- ---------
Net Income $ 4,093 $ 2,897
Other Comprehensive Income:
Recognition of Unrealized Holding
Loss on Marketable Securities, Net
of Deferred Taxes of $216 - 402
Unrealized Holding Gain on
Marketable Securities, Net of
Deferred Taxes of $27 and $14,
Respectively 51 26
Net Change in Fair Value of
Derivatives, Net of Deferred
Taxes of $5 and $189,
Respectively 3 352
--------- ---------
Total Comprehensive Income $ 4,147 $ 3,677
========= =========
Note 7. Income Taxes
Under previous United States tax law, U.S. companies like us and their
domestic subsidiaries generally were taxed on all income, including in our
case income from shipping operations, whether derived in the United States or
abroad. With respect to any foreign subsidiary in which we hold more than a
50 percent interest (referred to in the tax laws as a controlled foreign
corporation, or "CFC"), we were treated as having received a current taxable
distribution of our pro rata share of income derived from foreign shipping
operations.
The American Jobs Creation Act of 2004 ("Jobs Creation Act"), which
became effective for us on January 1, 2005, changed the United States tax
treatment of our U.S. flag vessels in foreign operations and foreign flag
shipping operations.
During December of 2004, we made an election under the Jobs Creation
Act to have our U.S. flag operations (other than two ineligible vessels used
exclusively in United States coastwise commerce) taxed under a new "tonnage
tax" regime rather than under the usual U.S. corporate income tax regime.
As a result of that election, going forward our gross income for United
States income tax purposes with respect to our eligible U.S. flag vessels
will not include (1) income from qualifying shipping activities in U.S.
foreign trade (i.e., transportation between the U.S. and foreign ports or
between foreign ports), (2) income from cash, bank deposits and other
temporary investments that are reasonably necessary to meet the working
capital requirements of our qualifying shipping activities, and (3) income
from cash or other intangible assets accumulated pursuant to a plan to
purchase qualifying shipping assets.
Under the tonnage tax regime, our taxable income with respect to the
operations of our eligible U.S. flag vessels will be based on a "daily
notional taxable income," which will be taxed at the highest corporate
income tax
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rate. The daily notional taxable income from the operation of a qualifying
vessel will be 40 cents per 100 tons of the net tonnage of the vessel up to
25,000 net tons, and 20 cents per 100 tons of the net tonnage of the vessel
in excess of 25,000 net tons. The taxable income of each qualifying vessel
will be the product of its daily notional taxable income and the number of
days during the taxable year that the vessel operates in United States
foreign trade.
Under the Jobs Creation Act, the taxable income from the shipping
operations of CFCs will generally no longer be subject to current United
States income tax until repatriated. As of December 31, 2004, these CFCs
had an accumulated deficit of $12.4 million. A valuation allowance has
been recorded for 100% of the related tax benefits. Until the CFCs earn
income to fully recoup this accumulated deficit, no income tax provision or
benefits is expected related to these CFCs. However, the Jobs Creation Act
provides a lower effective tax rate on the taxable income from the shipping
operations of our CFCs under the one-time dividends received exclusion.
Under this one-time exclusion, which only applies to the current year's
income, 85% of the income will be exempt from U.S. taxes if those funds are
received from a CFC in the form of a dividend by the U.S. parent company,
if certain criteria are met. As a result of the Jobs Creation Act, our
effective tax rate on first quarter earnings, including the results of
unconsolidated entities, is 17.5% as compared to 36.3% in the comparable
quarter of 2004. Our effective tax rate before equity in net income of
unconsolidated entities is 13.5% in the first quarter of 2005 as compared
to 37.1% in the comparable quarter of 2004.
Note 8. Preferred Stock Offering
On January 6, 2005, we announced the completion of our public offering
of 800,000 shares of 6.0% convertible exchangeable preferred stock with a
liquidation preference of $50 per share, or $40 million in total. The
proceeds of the preferred stock offering, after deducting all associated
costs, were $37.6 million. The preferred stock accrues cash dividends from
the date of issuance at a rate of 6.0% per annum. The preferred stock is
initially convertible into two million shares of our common stock, equivalent
to an initial conversion price of $20.00 per share of our common stock and
reflecting a 34% conversion premium to the $14.90 per share closing price of
our common stock on the New York Stock Exchange on December 29, 2004. All
shares of the preferred stock, which is a new series of our capital stock,
were sold.
Note 9. New Accounting Pronouncements
In December of 2004, the FASB issued Statement No. 123 (revised 2004),
"Share-Based Payment," which is a revision of FASB Statement No. 123,
"Accounting for Stock-Based Compensation." Statement No. 123(R) supersedes
APB Opinion No. 25, "Accounting for Stock Issued to Employees," and amends
FASB Statement No.95, "Statement of Cash Flows." Statement No. 123(R)
requires all share-based payments to employees, including grants of employee
stock options, to be recognized in the income statement based on their fair
values. Pro forma disclosures are no longer an alternative. Statement No.
123(R) was initially effective for periods beginning after June 15, 2005.
In April of 2005, the U.S. Securities and Exchange Commission announced a
deferral of the effective date of Statement No. 123(R) for calendar year
companies until the beginning of 2006. We plan to adopt Statement No.
123(R) on January 1, 2006.
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Statement No. 123(R) permits public companies to adopt its
requirements using either a modified prospective method or a modified
retrospective method. Under the modified prospective method, companies
are required to record compensation cost for new and modified awards over
the related vesting period of such awards prospectively and record
compensation cost prospectively for the unvested portion, at the date of
adoption, of previously issued and outstanding awards over the remaining
vesting period of such awards. No change to prior periods presented is
permitted under the modified prospective method. Under the modified
retrospective method, companies record compensation costs for prior
periods retroactively through restatement of such periods using the pro
forma amounts previously disclosed in the footnotes. Also, in the period
of adoption and after, companies record compensation cost based on the
modified prospective method. We have not yet determined the method of
adoption we will use.
As permitted by Statement No. 123, we account for share-based payments
to employees using APB Opinion No. 25 and no compensation expense has been
recognized for employee options granted under the Stock Incentive Plan.
Accordingly, the adoption of Statement No. 123(R)'s fair value method will
have an impact on our results of operations, although it will have no impact
on our overall financial position. However, the impact of adoption of
Statement No. 123(R) cannot be predicted at this time because it will depend
on levels of share-based payments granted in the future. However, had we
adopted Statement No. 123(R) in prior periods, there would have been no
impact as described in the disclosure of pro forma net income and earnings
per share in Note E - Employee Benefit Plans of the Notes to the
Consolidated Financial Statements contained in our December 31, 2004 Form
10-K.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Forward-Looking Statements
---------------------------
Certain statements made by us or on our behalf in this report or
elsewhere 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 beliefs and assumptions about future events that are
inherently unpredictable and are therefore subject to significant risks and
uncertainties. In this report, the terms "we," "us," "our," and "the
Company" refer to International Shipholding Corporation and its subsidiaries.
Such statements include, without limitation, statements regarding (1)
estimated fair values of capital assets, the recoverability of the cost of
those assets, the estimated future cash flows attributable to those assets,
and the appropriate discounts to be applied in determining the net present
values of those estimated cash flows; (2) estimated scrap values of assets
held for disposal; (3) estimated fair values of financial instruments, such
as interest rate and commodity swap agreements; (4) estimated losses
(including independent actuarial estimates) under self-insurance
arrangements, as well as estimated losses on certain contracts, trade
routes, lines of business and asset dispositions; (5) estimated losses
attributable to asbestos claims; (6) estimated obligations, and the timing
thereof, to the U.S.
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Customs Service relating to foreign repair work; (7) the adequacy of our
capital resources and the availability of additional capital resources on
commercially acceptable terms; (8) our ability to remain in compliance with
our debt covenants; (9) anticipated trends in government sponsored cargoes;
(10) our ability to maintain or increase our government subsidies; (11) the
anticipated improvement in the results of our Rail-Ferry Service; (12) the
estimated effect on our results of operations of the American Jobs Creation
Act of 2004; and (13) assumptions underlying any of the foregoing. Forward-
looking statements may include the words "may," "will," "estimate,"
"intend," "continue," "believe," "expect," "plan" or "anticipate" and other
similar words.
Although we believe that the expectations expressed in our forward-
looking statements are reasonable, actual results could differ from those
projected or assumed in our forward-looking statements, and those variations
could be material. Our future financial condition and results of operations,
as well as any forward-looking statements, are subject to change and are
subject to inherent risks and uncertainties. Important factors that could
cause our actual results to differ materially from our expectations may
include, without limitation, (1) political events in the United States and
abroad, including terrorism, and the U.S. military's response to those
events; (2) election results, regulatory activities and the appropriation
of funds by the U.S. Congress; (3) charter hire rates and vessel utilization
rates; (4) unanticipated trends in operating expenses such as fuel and labor
costs; (5) trends in interest rates, and the availability and cost of capital
to us; (6) the frequency and severity of claims against us, and unanticipated
court results and changes in laws and regulations; (7) our success in
renewing existing contracts and securing new ones, in each case on favorable
economic terms; (8) unplanned maintenance and out-of-service days; (9) the
ability of customers to fulfill their obligations to us; (10) the performance
of our unconsolidated subsidiaries, and (11) our ability to effectively
handle our substantial leverage by servicing, and meeting the covenant
requirements in, each of our debt instruments, thereby avoiding any defaults
under those instruments and avoiding cross defaults under others.
A more complete 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, 2004.
General
--------
Our 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, our 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 our 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.
13
Executive Summary
------------------
Our net income for the first quarter of 2005 was $4.1 million compared
to $2.9 million for the first quarter of 2004. Net income available to
common shareholders was $3.5 million in 2005, after preferred stock
dividends. On January 6, 2005, we announced the completion of our public
offering of $40 million of 6% Convertible Exchangeable Preferred Stock.
The preferred stock, which has a liquidation preference of $50 per share,
accrues cumulative quarterly cash dividends from the date of issuance at a
rate of 6% per annum. The preferred stock is initially convertible into two
million shares of our common stock, equivalent to an initial conversion price
of $20.00 per share of our common stock and reflecting a 34% conversion
premium to the $14.90 per share closing price of our common stock on the New
York Stock Exchange on December 29, 2004.
The results of the quarter were favorably impacted by the Jobs Creation
Act, which taxes our U.S. flag operations (other than two ineligible vessels
used exclusively in the U.S. coastwise commerce) under the new "tonnage tax"
regime, and provides a lower effective tax rate on the taxable income from
the shipping operations of our CFCs under the one-time dividends received
exclusion. Under this one-time exclusion, which only applies to the current
year's income, 85% of the income will be exempt from U.S. taxes if those
funds are received in the form of a dividend by the U.S. parent company, if
certain criteria are met. As a result of the Jobs Creation Act, our
effective tax rate on first quarter earnings, including the results of
unconsolidated entities, is 17.5% as compared to 36.3% in the comparable
quarter of 2004. Our effective tax rate before equity in net income of
unconsolidated entities is 13.5% in the first quarter of 2005 as compared
to 37.1% in the comparable quarter of 2004.
Our Liner Services experienced lower results, primarily driven by
higher fuel costs which were partially offset by fuel surcharges passed on
to our customers.
Our Time Charter segment, excluding the addition of two used Container
vessels, continued to meet our expectations operating at approximately the
same results as 2004. The two recently purchased used Container vessels
contributed satisfactorily to the results of our Time Charter segment.
Our Contract of Affreightment segment also operated at levels
approximating 2004 results experiencing no operational problems during the
quarter.
The return from our companies owning and operating Cement Carriers
improved, stemming from our share of a gain on the sale of one of the
vessels, which before taxes was approximately $1.2 million.
In the first quarter of 2004, we experienced a loss of $623,000 on the
sale of marketable securities resulting from our decision last year to
redirect the management of our captive insurance company's investment
portfolio.
RESULTS OF OPERATIONS
-----------------------
THREE MONTHS ENDED MARCH 31, 2005
COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2004
Gross Voyage Profit
--------------------
Gross voyage profit decreased 9.4% from $9.7 million in the first
quarter of 2004 to $8.8 million in the first quarter of 2005. The changes
associated with each of our segments are discussed below.
14
Liner Services: Gross voyage profit for this segment decreased from
a profit of $462,000 in the first quarter of 2004 to a loss of $114,000 in
the first quarter of 2005. Although cargo volumes remain strong, the results
were negatively impacted by higher operating expenses, primarily attributable
to an increase in fuel costs. Higher fuel costs, which were partially offset
by fuel surcharges passed on to our customers, contributed approximately
$250,000 to our higher operating expenses. This segment was also impacted in
the first quarter of 2005 from weather delays.
Time Charter Contracts: The increase in this segment's gross voyage
profit from $7.7 million in the first quarter of 2004 to $8.5 million in the
first quarter of 2005 was primarily a result of the addition of two Container
ships we acquired in December of 2004.
Contracts of Affreightment: Gross voyage profit for this segment
decreased slightly from $1.3 million in the first quarter of 2004 to $1.2
million in the first quarter of 2005. This segment operated at levels
approximating 2004 results experiencing no operational problems during the
quarter.
Rail-Ferry Service: Gross voyage loss for this segment increased
slightly from a loss of $864,000 in the first quarter of 2004 to a loss of
$914,000 in the first quarter of 2005. Our customer base continues to grow
while we experienced some out of service days due to operational delays.
(See further discussion on this service in the Liquidity and Capital
Resources' section.)
Other: Gross voyage profit for this segment decreased from $1.1
million in the first quarter of 2004 to $165,000 in the first quarter of
2005. The decrease resulted primarily from our over-the-road car
transportation truck company experiencing higher operating costs. During
the second quarter of 2004, we acquired ten additional haul-away car
carrying trucks in anticipation of higher car hauling volumes. These have
not materialized due in part to significantly lower volumes from our
contract with one of our customers due to their loss of market share and
under utilization of our trucks due to a lack of drivers, which is an
industry-wide problem. At this time, we are evaluating all of our options
with this service. Also contributing to the decrease in gross voyage profit
for this segment is the termination of the charters of two Container ships
in 2004, whose contracts expired and were not renewed by us. The Maritime
Security Program ("MSP") contracts for these two Container ships were
allocated to the two Container ships we purchased in 2004, which are
reported under the Time Charter segment. Additionally, during the first
quarter of 2004, our insurance subsidiary experienced improved results due
to reductions of prior period policy reserves.
Other Income and Expense
-------------------------
Administrative and general expenses increased 14% from $3.9 million in
the first quarter of 2004 to $4.4 million in the first quarter of 2005. The
increase in the current period is primarily a result of normal wage and
benefit increases and higher nonrecurring legal fees.
Interest expense decreased 6.6% from $2.7 million in the first quarter
of 2004 to $2.5 million in the first quarter of 2005. The decrease resulted
primarily from early debt repayments in 2004 and regularly scheduled
payments on outstanding debt, offset by higher interest rates in 2005.
15
Investment income of $285,000 earned during the first quarter of 2005
was higher than the $168,000 in the first quarter of 2004 primarily as a
result of higher interest rates and an increase in the balance of funds
invested in the current period.
Income Taxes
--------------
In December of 2004, we made an election under the Jobs Creation Act
to have our U.S. flag operations taxed under the new tonnage tax regime,
which became effective for us on January 1, 2005. As a result of that
election, and benefits provided to our foreign operations under the Act, our
effective tax rate on earnings before equity in net income of unconsolidated
entities is 13.5% in the first quarter of 2005 as compared to 37.1% in the
comparable quarter of 2004. We had a tax provision of $298,000 and $995,000
for the first quarter of 2005 and 2004, respectively.
Equity in Net Income of Unconsolidated Entities
------------------------------------------------
Equity in net income of unconsolidated entities, net of taxes,
increased from $1.2 million in the first quarter of 2004 to $2.2 million in
the first quarter of 2005. Our 50% investment in a company owning two Cape-
Size Bulk Carriers contributed $1.2 million, net of $69,000 in taxes, in
the first quarter of 2005 compared to $1.1 million, net of $592,000 in taxes,
in the first quarter of 2004. Currently, in the first quarter of 2005, we
have met the criteria qualifiying for temporary dividend exclusion; therefore
the effective tax rate on these earnings in 2005 is 5.25% instead of the past
year's effective tax rate of 35%.
Our minority interest in a Cement Carrier company contributed $930,000,
net of $501,000 in taxes, in the first quarter of 2005 which included a pre-
tax gain of $1.2 million from our share of the sale of a Cement Carrier
compared to $112,000, net of $61,000 in taxes, in the first quarter of 2004.
LIQUIDITY AND CAPITAL RESOURCES
---------------------------------
The following discussion should be read with the more detailed
Consolidated Condensed Balance Sheets and Consolidated Statements of Cash
Flows included elsewhere herein as part of our Consolidated Financial
Statements.
Our working capital increased from $17.7 million at December 31, 2004,
to $35.9 million at March 31, 2005, primarily due to the proceeds from our
preferred stock offering, which we are currently using a portion to fund
the addition of the second decks to each of the two vessels operating in
our Rail-Ferry Service. Of the $44.9 million in current liabilities at
March 31, 2005, $9.5 million related to the current maturities of long-term
debt. Cash and cash equivalents increased during the first quarter of 2005
by $21.8 million from $10.5 million at December 31, 2004, to $32.3 million
at March 31, 2005. The increase was due to cash provided by operating
activities of $12 million and financing activities of $14.8 million,
partially offset by cash used for investing activities of $5.1 million.
16
Operating activities generated a positive cash flow after adjusting
net income of $4.1 million for non-cash provisions such as depreciation and
amortization. Cash provided by operating activities also included an
increase in accounts payable and accrued liabilities of $5.6 million
primarily due to accrued interest on our outstanding debt and the timing
of payments for our vessels' operating costs, slightly offset by an
increase in accounts receivable of $2.7 million primarily due to the timing
of collections of receivables from the Military Sealift Command and U.S.
Department of Transportation. Also included was cash used of $1.5 million
primarily to cover payments for vessel drydocking costs in 2005.
Cash used for investing activities of $5.1 million was primarily for
upgrade work on our Rail-Ferry Service assets, offset slightly by the
collection of related party note receivables from an unconsolidated entity.
Cash provided by financing activities of $14.8 million included $37.7
million in net proceeds received from our issuance in January of preferred
stock, partially offset by $2.4 million used for regularly scheduled payments
of debt, and $20 million used to repay draws on our line of credit made in
2004.
As of March 31, 2005, $49.8 million was available on our $50 million
revolving credit facility, which expires in December of 2009.
Preferred Stock Offering - On January 6, 2005, we announced the
completion of our public offering of 800,000 shares of 6.0% convertible
exchangeable preferred stock with a liquidation preference of $50 per share,
or $40 million in total. The preferred stock accrues cash dividends from
the date of issuance at a rate of 6.0% per annum. The preferred stock is
initially convertible into two million shares of our common stock,
equivalent to an initial conversion price of $20.00 per share of our
common stock and reflecting a 34% conversion premium to the $14.90 per
share closing price of our common stock on the New York Stock Exchange on
December 29, 2004. All shares of the preferred stock, which is a new series
of our capital stock, were sold.
Debt and Lease Obligations - We have several vessels under operating
leases, including three Pure Car/Truck Carriers, one LASH vessel, one
Breakbulk/Multi Purpose vessel, a Container vessel and a Tanker vessel. We
also conduct certain of our operations from leased office facilities and use
certain transportation and other equipment under operating leases. Our
obligations associated with these leases are summarized in the table below.
The following is a summary of the scheduled maturities by period of our
outstanding debt and lease obligations as of March 31, 2005:
Apr. 1-
Debt and lease Dec. 31,
obligations (000's) 2005 2006 2007 2008 2009 Thereafter
------------------------------------------------------------------------------
Long-term debt
(including current
maturities) $ 7,101 $9,468 $80,001 $7,468 $ 7,468 $44,325
Operating leases 14,172 19,088 18,962 16,907 15,936 75,622
----------------------------------------------------
Total by period $21,273 $28,556 $98,963 $24,375 $23,404 $119,947
====================================================
Debt Covenant Compliance Status - We are in compliance with all our
restrictive covenants as of March 31, 2005 and believe we will continue to
meet these requirements throughout 2005, although we can give no assurance
to that effect.
17
If our cash flow and capital resources are not sufficient to fund our
debt service obligations, we may be forced to reduce or delay capital
expenditures, sell assets, obtain additional equity capital, enter into
additional financings of our unencumbered vessels or restructure debt.
Rail-Ferry Service Results - Our service provides a unique combination
of rail and water ferry service between the U.S. Gulf and Mexico. As with
any innovative venture, we expected and have experienced an adjustment
period for the market to embrace our alternative service. Due to low
operating profit margins, high cargo volumes are necessary to achieve
meaningful levels of cash flow and profitability. The capacity of the
vessels operating in our Rail-Ferry Service has limited the revenues and,
in turn, the cash flow and gross profits that can be generated by our
Rail-Ferry Service segment.
We intend to add a second deck to each of the two vessels operating
in our Rail-Ferry Service in order to essentially double their capacity, as
well as make improvements to the terminals in Louisiana and Mexico and invest
in a transloading and storage facility. We anticipate our cost of these
upgrades after contributions from the state of Louisiana to be approximately
$29 million, with $9.1 million paid as of March 31, 2005. We believe that
these additions will significantly reduce our cost per unit of cargo carried
and significantly increase our cash flow, but only if we are able to book
substantially all of the additional capacity, and we can give no assurance at
this time that we will be successful in doing so. We are confident that the
market will sustain these vessels for the foreseeable future; however, in
the unlikely event that there is a shift in condition the vessels could be
reassigned to other business subject to retrofitting. We expect the decks
to be installed onto the vessels by the end of the year with a minimal impact
on the results of the service.
Over-The-Road Car Transportation Truck Company - Our service provides
automobile transportation using our haul-away car carrying trucks. During
the second quarter of 2004, we acquired ten additional trucks in anticipation
of higher car hauling volumes. These have not materialized due in part to
significantly lower volumes from our contract with one of our customers due
to their loss of market share and under utilization of our trucks due to a
lack of drivers, which is an industry-wide problem. At this time, we are
evaluating all of our options with this service. At March 31, 2005, we
owned 30 haul-away car carrying trucks.
Maritime Security Program Contracts - In 2003, Congress authorized an
extension of the MSP through 2015, increased the number of ships industry-
wide eligible to participate in the program from 47 to 60, and increased MSP
payments to companies in the program, all to be effective on October 1, 2005.
Annual payments for each vessel in the new MSP program will be $2.6 million
in years 2006 to 2008, $2.9 million in years 2009 to 2011, and $3.1 million
in years 2012 to 2015. On October 15, 2004, we filed applications to extend
our seven MSP contracts for another 10 years, all of which were effectively
grandfathered in the MSP reauthorization. On January 12, 2005, we were
awarded one additional MSP contract, effective October 1, 2005, for a total
of eight MSP contracts. We are continuing negotiations to conclude
employment arrangements for the vessel that will operate under the eighth MSP
contract.
Dividend Payments - Our recently issued convertible preferred stock
accrues cash dividends from the date of issuance at a rate of 6.0% per
annum, which are payable quarterly, commencing March 31, 2005. The payment
of preferred stock dividends is at the discretion of our board of directors.
The certificate of designations that governs
18
our convertible exchangeable preferred stock, and the indenture that will
govern any notes that may be exchanged for that stock, each provide that we
will not, prior to December 31, 2007, declare or pay any dividends on our
common stock. This prohibition does not apply to payment of dividends on the
preferred stock. On and after December 31, 2007, we will no longer be
prohibited from paying dividends on our common stock, and the payment of
dividends on our common stock will again be made at the discretion of our
board of directors, subject to funds being legally available for the payment
of dividends, the other restrictions in the certificate of designations and
any restrictions in our then-existing debt agreements.
Environmental Issues - We have not been notified that we are a
potentially responsible party in connection with any environmental matters,
and we have determined that we have no known risks for which assertion of a
claim is probable that are not covered by third party insurance, provided for
in our self-retention insurance reserves or otherwise indemnified. Our
environmental risks primarily relate to oil pollution from the operation of
our vessels. We have pollution liability insurance coverage with a limit of
$1 billion per each occurrence, with a deductible amount of $25,000 for each
incident.
New Accounting Pronouncements - In December of 2004, the FASB issued
Statement No. 123 (revised 2004), "Share-Based Payment," which is a revision
of FASB Statement No. 123, "Accounting for Stock-Based Compensation."
Statement No. 123(R) supersedes APB Opinion No. 25, "Accounting for Stock
Issued to Employees," and amends FASB Statement No. 95, "Statement of Cash
Flows." Statement No. 123(R) requires all share-based payments to
employees, including grants of employee stock options, to be recognized in
the income statement based on their fair values. Pro forma disclosures are
no longer an alternative. Statement No. 123(R) was initially effective for
periods beginning after June 15, 2005. In April of 2005, the U.S.
Securities and Exchange Commission announced a deferral of the effective
date of Statement No. 123(R) for calendar year companies until the beginning
of 2006. We plan to adopt Statement No. 123(R) on January 1, 2006.
Statement No. 123(R) permits public companies to adopt its requirements
using either a modified prospective method or a modified retrospective
method. Under the modified prospective method, companies are required to
record compensation cost for new and modified awards over the related
vesting period of such awards prospectively and record compensation cost
prospectively for the unvested portion, at the date of adoption, of
previously issued and outstanding awards over the remaining vesting period
of such awards. No change to prior periods presented is permitted under the
modified prospective method. Under the modified retrospective method,
companies record compensation costs for prior periods retroactively through
restatement of such periods using the pro forma amounts previously disclosed
in the footnotes. Also, in the period of adoption and after, companies
record compensation cost based on the modified prospective method. We have
not yet determined the method of adoption we will use.
As permitted by Statement No. 123, we account for share-based payments
to employees using APB Opinion No. 25 and no compensation expense has been
recognized for employee options granted under the Stock Incentive Plan.
Accordingly, the adoption of Statement No. 123(R)'s fair value method will
have an impact on our results of operations, although it will have no impact
on our overall financial position. However, the impact of adoption of
Statement No. 123(R) cannot be predicted at this time because it will depend
on levels of share-based
19
payments granted in the future. However, had we adopted Statement No. 123(R)
in prior periods, there would have been no impact as described in the
disclosure of pro forma net income and earnings per share in Note E - Employee
Benefit Plans of the Notes to the Consolidated Financial Statements contained
in our December 31, 2004 Form 10-K.
ITEM 3.
QUANTITATIVE AND QUALITATIVE INFORMATION ABOUT MARKET RISK
In the ordinary course of our business, we are exposed to foreign
currency, interest rate, and commodity price risk. We utilize derivative
financial instruments including interest rate swap agreements, commodity
swap agreements, and forward exchange contracts to manage certain of these
exposures. We hedge only firm commitments or anticipated transactions and
do not use derivatives for speculation. We neither hold nor issue
financial instruments for trading purposes.
Interest Rate Risk. The fair value of our cash and short-term
investment portfolio at March 31, 2005, approximated carrying value due to
the short-term maturities of these investments. The potential decrease in
fair value resulting from a hypothetical 10% increase in interest rates at
year-end for our investment portfolio is not material.
The fair value of long-term debt at March 31, 2005, including current
maturities, was estimated to be $157.3 million compared to a carrying value
of $155.7 million. The potential increase in fair value resulting from a
hypothetical 10% decrease in the average interest rates applicable to our
long-term debt at March 31, 2005, would be approximately $1.3 million or 1%
of the carrying value.
Commodity Price Risk. As of March 31, 2005, we have no commodity
swap agreements to manage our exposure to price risk related to the purchase
of the estimated 2005 fuel requirements for our Liner Service or Rail-
Ferry Service segments. If we had such an arrangement, it would be
structured to reduce our exposure to increases in fuel prices, however, it
would also limit the benefit we might otherwise receive from any price
decreases associated with this commodity. A 20% increase in the price of
fuel for the period April 1, 2004 through March 31, 2005 would have
resulted in an increase of approximately $2.7 million in our fuel costs
for the same period, and in a corresponding decrease of approximately $0.44
in our earnings per share based on the shares of our common stock outstanding
as of March 31, 2005, assuming that none of the price increase could have
been passed on to our customers through fuel cost surcharges during the same
period.
Foreign Exchange Rate Risk. There were no material changes in market
risk exposure for the foreign currency risk described in our Form 10-K
filed with the Securities and Exchange Commission for the year ended
December 31, 2004.
20
ITEM 4.
CONTROLS AND PROCEDURES
As of the end of the period covered by this report, we conducted an
evaluation of the effectiveness of our "disclosure controls and procedures,"
as that phrase is defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934. The evaluation was carried out under the
supervision and with the participation of our management, including our
Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO").
Based on that evaluation, our CEO and CFO have concluded that our
disclosure controls and procedures are effective as of the end of the
period covered by this report in timely alerting them to material
information required to be disclosed in our periodic filings with the
Securities and Exchange Commission ("SEC"), and in ensuring that the
information required to be disclosed in those filings is recorded,
processed, summarized and reported within the time periods specified in
the SEC's rules and forms.
There have been no changes in our internal control over financial
reporting that occurred during our most recent fiscal quarter that have
materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Our Annual Meeting of Shareholders was held April 27, 2005. The
matters voted upon and the results of the voting were as follows:
(1) Election of Board of Directors:
Nominee Shares Voted For Withheld Authority
--------------------- -------------------- ---------------------
Niels W. Johnsen 5,216,893 675,625
Erik F. Johnsen 5,696,936 195,582
Niels M. Johnsen 5,697,601 194,917
Erik L. Johnsen 5,697,601 194,917
Harold S. Grehan, Jr. 5,158,503 734,015
Raymond V. O'Brien, Jr. 5,881,203 11,315
Edwin Lupberger 5,881,585 10,933
Edward K. Trowbridge 5,881,175 11,343
H. Merritt Lane III 5,888,048 4,470
(2) Ratification of Ernst & Young LLP, certified public accountants, as our
independent auditors for the fiscal year ending December 31, 2005:
Shares Voted For 5,887,843
Shares Voted Against 3,746
Abstentions 929
21
ITEM 6.
EXHIBITS
(a) EXHIBIT INDEX
Exhibit Number Description
-------------- -------------------------------------
Part II Exhibits: 3.1 Restated Certificate of Incorporation
of the Registrant (filed with the
Securities and Exchange Commission
as Exhibit 3.1 to the Registrant's
Form 10-Q for the quarterly period
ended September 30, 2004, and
incorporated herein by reference)
3.2 By-Laws of the Registrant (filed
with the Securities and Exchange
Commission as Exhibit 3.2 to the
Registrant's Form 10-Q for the
quarterly period ended September
30, 2004, and incorporated herein
by reference)
10.1 Summary of Executive Officer's
Salaries
31.1 Certification of Chief Executive
Officer Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial
Officer Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive
Officer Pursuant to 18 U.S.C.
Section 1350 as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley
Act of 2002
32.2 Certification of Chief Financial
Officer Pursuant to 18 U.S.C.
Section 1350 as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley
Act of 2002
22
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
May 12, 2005
Date ___________________________