Mobile, Alabama, July 28, 2010 – International Shipholding Corporation (NYSE: ISH) today announced the financial results for the quarter ended June 30, 2010.
Second Quarter 2010 Highlights
• Generated net income of $9.6 million for the quarter ended June 30, 2010
• Earnings of $1.33 per share
• Bought back 223,051 shares of common stock
• Expanded owned fleet and placed two additional vessels on charters
Net Income
The Company reported net income of $9.6 million for the three months ended June 30, 2010. For the comparable three months ended June 30, 2009, the Company reported net income of $10.7 million.
Mr. Niels M. Johnsen, chairman and chief executive officer, commented: “During the most recent quarter, we agreed with our Norwegian partners to order two additional new mini bulkers through our Oslo Bulk Joint Venture bringing the total vessels on order to 10 vessels. One of our United States Flag pure car truck carriers, which had been trading on voyage to voyage contract cargoes since earlier this year, delivered under a newly negotiated long term time charter effective this month. Furthermore, one of our international flag pure car truck carriers commenced performance under a previously negotiated medium term time charter.”
“In addition to buying back 223,051 shares of our common stock, we continue to deliver tangible value to our shareholders having declared a dividend of $0.375 per share for the quarter. Going forward, we will remain focused on growing and diversifying our shipping portfolio. Even though segments of our industry continue to experience volatility and uncertainty, we are confident that we will develop new growth opportunities.”
Operating Income
Operating Income for the three months ended June 30, 2010 was $13.1 million as compared to $10.2 million for the comparable period in 2009, which included an impairment charge of $2.9 million resulting from the early redelivery of the Company’s one remaining international flag container vessel. Adjusting for the 2009 impairment charge, the current and prior year quarterly results are comparable.
The Company’s Time Charter segment had improved results primarily from additional operating days on its U.S. flag Coal Carrier and vessels operated under contract to the Military Sealift Command. Additionally, our operations in Indonesia, which had one of its vessels under repairs in 2009, operated without incident in the current quarter. Partially offsetting these favorable results were lower supplemental cargo volumes in the current quarter as compared to the second quarter of 2009. The results of the Contract of Affreightment segment were lower compared to the prior year period due to the scheduled reduction in the contracted freight rates that took effect in the fourth quarter of 2009. The results of the Company’s Rail Ferry segment were lower compared to the second quarter of 2009 as a result of lower northbound cargo volume.
Administrative and General Expense
Administrative and general expenses increased by $745,000 from the second quarter in 2009. The 2009 results included a $500,000 reversal of an accrued expense projected by the Company during the evaluation of the unsolicited conditional offer to purchase the Company. Adjusting for this credit, the higher 2010 second quarter expense is primarily a result of the amortization of 2010 performance-based stock grants provided to senior management.
Interest and Other Expense
Interest expense for the three months ended June 30, 2010, increased from the comparable period in 2009. This increase is directly attributable to the additional debt associated with the two vessels placed to support our Indonesian service and our new international flag PCTC, partially offset by otherwise scheduled principal reduction. Income from the subsequent sale and financing of the aforementioned Indonesian vessels is reflected as “Other Income from Vessel Financing”. Investment income was higher in the 2010 second quarter compared to the 2009 second quarter, as 2009 results reflected the write-down of some of the Company’s investment portfolio. Additionally, current quarter return yields are higher compared to the second quarter of 2009. The Foreign Exchange loss of $3.1 million reflects the strengthening in the Yen versus the U.S. dollar during the second quarter of 2010. The Company’s Yen-denominated loan on its newly delivered international flag PCTC is revalued at the end of the reporting period with any adjustments recorded to period earnings. The outstanding facility at June 30, 2010 was Yen 5,102,500,000.
Federal Income Tax Benefit
The Company’s total income tax benefit for the second quarter of 2010 was $30,000 compared to a benefit of $226,000 for the comparable period in 2009. The reduced benefit reflects improved results in the segments taxed at the U.S. corporate statutory rate.
Unconsolidated Entities
In the second quarter of 2010, the results from the Company’s unconsolidated entities decreased from the first quarter of 2009. Current quarter’s results include a provision of U.S. income tax on gross earnings, while in 2009 no provision was required as a result of the tax law in effect at that time. Additionally, the Company’s 25% investment in a venture contracted to build Mini-bulkers was reduced to reflect a drop in the fair market value of that venture’s interest rate hedge instrument.
Dividend Declaration
The Company’s Board of Directors authorized the payment of a $0.375 dividend for each share of common stock owned on the record date of August 17, 2010, payable on September 1, 2010. The Company intends to continue to declare quarterly dividends. All future dividend declarations and amounts remain subject to the discretion of International Shipholding Corporation’s Board of Directors.
About International Shipholding
International Shipholding Corporation, through its subsidiaries, operates a diversified fleet of U. S. and foreign flag vessels that provide international and domestic maritime transportation services to commercial and governmental customers primarily under medium to long-term charters and contracts.
Caution concerning forward-looking statements
This press release contains forward-looking statements within the meaning of the U.S. federal securities laws. These forward-looking statements are based on assumptions and opinions concerning a variety of known and unknown risks. Please refer to ISH’s Annual Report on form 10-K for the year ended December 31, 2009 as well as its future filings and reports filed with or furnished to the Securities and Exchange Commission for a description of the business environment in which ISH operates and the important factors, risks and uncertainties that may affect its business and financial results. If any assumptions or opinions prove materially incorrect, any forward-looking statements made on that basis may also prove to be materially incorrect. ISH is not under any obligation to (and expressly disclaims any such obligations to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.
Contact:
The IGB Group
Lev Janashvili
(212) 227-7098
David Burke
(646) 673-9701
International Shipholding Corporation
Niels M. Johnsen, Chairman (212) 943-4141
Erik L. Johnsen, President (251) 243-9221
