NEW YORK--(BUSINESS WIRE)--Overseas Shipholding Group, Inc. (NYSE MKT LLC - the “NYSE MKT”:OSGB), a provider of energy transportation services, today reported results for the third quarter of fiscal 2014 ended September 30, 2014.
For the quarter ended September 30, 2014, the Company reported TCE1 revenues of $176.2 million, a decrease of $11.4 million, or 6%, from $187.6 million in the comparable 2013 quarter. For the quarter ended September 30, 2014, the Company reported shipping revenues of $206.3 million, a decrease of $61.1 million from $267.3 million in the comparable 2013 quarter. Net income for the quarter ended September 30, 2014 was $8.4 million, or $0.02 per diluted share, compared with net income of $1.0 million, or $0.03 per diluted share, in the same period in 2013. After adjusting for special items that increased net income by $10.9 million, or $0.03 per diluted share, third quarter 2014 net loss was $2.4 million, or $0.01 per diluted share, compared with net income of $12.7 million, or $0.42 per diluted share, in the third quarter of 2013. Details on special items for the third quarter of 2014 are provided later in this press release. In addition, see Appendix 1 for reconciliation of net income/(loss) to adjusted net income/(loss), a non-GAAP measure.
For the nine months ended September 30, 2014, the Company reported TCE revenues of $562.4 million, a decrease of $7.0 million, or 1%, from $569.4 million in the comparable 2013 period. For the nine months ended September 30, 2014, the Company reported shipping revenues of $740.5 million, a decrease of $2.4 million from $742.9 million in the comparable 2013 period. Net loss for the nine months ended September 30, 2014 was $185.2 million, or $1.38 per diluted share, compared with a net loss of $190.9 million, or $6.26 per diluted share, in the same period in 2013. After adjusting for special items that increased net loss by $94.9 million, or $0.70 per diluted share, net loss for the nine months ended September 30, 2014 was $90.4 million, or $0.68 per diluted share, compared with net income of $32.1 million, or $1.05 per diluted share, in the nine months ended September 30, 2013.
1 See Appendix 1 for reconciliation of TCE (time charter equivalent) revenues, a non-GAAP measure, to shipping revenues.
Select Quarterly Income Statement Detail
Results for the quarter ended September 30, 2014 were significantly impacted by transactions, expenses and provisions resulting from the Company’s emergence from bankruptcy on August 5, 2014.
The $11.4 million (6%) decrease in TCE revenues for the quarter ended
September 30, 2014 from the prior-year quarter was due principally to
a significant decrease in revenue days of 907 days reflecting the
redelivery of eight vessels (six Aframaxes, one Suezmax and one MR) at
the expiry of their short-term time charters-in as well as the
Company’s exit from the full service International Flag Lightering
business, and a weakening of rates in the International Flag Handysize
Product Carrier fleet. These factors were partially offset by an
improvement in average rates in the International Flag VLCC and
- TCE revenues for the International Product Carriers segment decreased by $5.1 million, or 15% to $28.8 million from $33.9 million in the third quarter of 2013. This decrease in TCE revenues resulted primarily from a period-over-period decrease in the average rate earned by the Handysize Product Carrier fleet. This decrease was partially offset by the delivery and entry into service of a newbuild LR2 to the Company in July 2014.
- TCE revenues for the U.S. Flag segment decreased by $2.8 million, or 3%, to $97.9 million from $100.7 million in the third quarter of 2013. While the Jones Act market remained strong during the third quarter, the decrease in revenue was primarily attributable to the Non-Jones Act Handysize Products Carriers due to the timing of voyages performed under a contract of affreightment (“COA”) that earns a premium to the spot International Flag MR market, which resulted in fewer voyages being performed under this COA than in the comparable period in the prior year. A 95 day increase in drydock and repair days in the current quarter also contributed to the decrease in revenue.
- TCE revenues for the International Crude Tankers segment decreased by $2.5 million, or 5%, to $49.4 million from $51.9 million in the third quarter of 2013. This decrease in TCE revenues reflects a 691 day decrease in revenue days. The decrease in revenue days primarily reflects a reduction in the size of International Crude Tankers Lightering fleet ahead of the Company’s exit from the full service International Flag Lightering business in September 2014. This reduction included the sale of two 1994-built Aframaxes that had been utilized in the International Flag Lightering business, the first in March 2014 and the second in September 2014, and the redelivery of two other vessels at the expiry of their short-term time charters-in. Also contributing to the decrease in revenue days were fewer chartered-in days in the Aframax and Suezmax fleets, which decreased by 340 and 83 days, respectively. These decreases were partially offset by higher average rates for the Aframax and VLCC sectors.
- Vessel expenses increased by $2.5 million from the third quarter of 2013 to $68.0 million, principally reflecting increased daily vessel expenses of $1,170 per day in the International Product Carriers segment (related to technical management fees paid to V.Ships, higher damage repairs and the timing of the delivery of lubricating oils) and $719 per day in the U.S. Flag segment (related primarily to higher crew costs). These increases in daily vessel expenses were partially offset by a net decrease in owned and bareboat chartered-in vessels following the sales of the two Aframaxes and the delivery and entry into service of the newbuild LR2.
- Charter hire expenses decreased by $12.0 million from the third quarter of 2013 to $34.7 million, principally reflecting the redelivery of eight vessels at the expiry of their short-term time charters-in referred to above.
- Depreciation and amortization decreased by $4.0 million from the third quarter of 2013 to $40.2 million, principally reflecting reductions in vessel bases that resulted from impairment charges aggregating $366.0 million recorded in the International Crude Tankers and International product Carriers segments in the fourth quarter of 2013. These decreases were partially offset by the impact of the delivery of the LR2 in July 2014.
- General and administrative (“G&A”) expenses decreased $4.0 million from third quarter of 2013 to $19.1 million, principally reflecting a decrease in compensation and benefits for shore-based staff of approximately $4.7 million attributable to (i) a reduction in the number of shore-based staff, (ii) the classification in the 2014 period of 2014 incentive bonus related accruals associated with staff included in the restructuring plan announced in January 2014 as part of severance costs, (iii) a decrease in retention bonuses under programs approved by the Bankruptcy Court in late-March 2013, and (iv) a decrease in stock compensation expense as a result of the cancellation of the 2004 Stock Incentive Plan. In addition, G&A declined due to decreases in consulting costs of approximately $0.4 million and in rent and facility related expenses and travel and entertainment totaling $0.7 million. All of the above decreases were partially offset by an increase in liability insurance of $2.2 million, principally related to the acceleration of certain directors and officers liability insurance costs and a one-time premium paid for runoff coverage for the former directors and officers of the Company.
- Interest expense of $29.1 million for the third quarter of 2014 includes $22.0 million associated with the Company’s reinstated unsecured senior notes and new Exit Financing Facilities (as defined below). The balance of interest expense recognized during the third quarter of 2014 represents contractual post-petition interest on allowed claims associated with our pre-reorganized OSG loan agreements (excluding the reinstated unsecured senior notes) and certain rejected executory contracts, from July 1, 2014 through the claim settlement date, which was generally August 5, 2014. Interest expense for the three months ended September 30, 2014 is not indicative of the expense that will be recognized in future quarters, nor is it comparable to interest expense recognized in the third quarter of 2013 (a quarter during which the Company was in bankruptcy).
- For the three months ended September 30, 2014, the Company recorded an income tax benefit of $63.5 million. The benefit reflects the release of a deferred tax liability associated with undistributed earnings of its foreign subsidiaries, offset in part by the impact of non-deductible costs incurred in connection with the bankruptcy proceedings. As part of the Company’s emergence from bankruptcy, the Company repaid the $1.5 billion unsecured revolving credit facility, for which OSG International, Inc., a wholly-owned Marshall Islands subsidiary of OSG, was liable on a joint and several basis. As a result, the amount of undistributed earnings of its foreign subsidiaries attributable to the excess of the $1.5 billion facility limit over the cumulative potential deemed dividends arising from the drawdowns by OSG under such facility were released and recorded as an income tax benefit of $55.6 million.
The Company currently plans to treat certain payments made by OSG in connection with the Company’s emergence from bankruptcy in August 2014 as having been made in its capacity as guarantor of the obligation of subsidiaries of OIN, a wholly owned subsidiary of the Company incorporated in the Marshall Islands, arising under certain loan agreements and deductible for U.S. income tax purposes. In connection with these payments, the Company has recorded a tax benefit; however, due to significant uncertainty as to whether the IRS will agree with the Company’s position on the deductibility of those payments, the Company has established a reserve to fully offset the benefit.
Special items in the third quarter of 2014 (which are included in the discussion above) increased quarterly net income by a net of $10.9 million, or $0.03 per diluted share, and included:
Increases relating to:
- Release of a deferred tax liability for undistributed earnings of foreign subsidiaries of $55.6 million, or $0.16 per diluted share; and
- Gain on disposal of vessels of $2.8 million, or $0.01 per diluted share.
Offset by decreases relating to:
- Reorganization items, which includes all transactions (including but not limited to, all professional fees and other expenses, realized gains and losses, and provisions for losses) directly associated with the reorganization and restructuring of the business, of $43.4 million, or $0.13 per diluted share; and
- Costs incurred of $4.1 million, or $0.01 per diluted share, associated with employee severance and technical management transition.
Emergence from Bankruptcy and Other Financial Highlights
- On May 2, 2014, the Company entered into an equity commitment agreement with certain equity interest holders of the outstanding shares of the Company (collectively, the “Commitment Parties”). That equity commitment agreement was amended on May 20, 2014 and May 26, 2014 (as amended, the “ECA”). Pursuant to the ECA, the Company conducted a subscription rights offering (“Rights Offering”) to its OSG equity holders (“Equity Interest Holders”) and the Commitment Parties under which an aggregate 503,333,133 of New Securities (defined below) including Class A common stock (“Class A Shares”) and/or penny warrants (“Class A Warrants” and collectively with Class A Shares, the “Class A Securities”) and Class B common stock (“Class B Shares”) and/or penny warrants (“Class B Warrants” and collectively with Class B Shares, the “Class B Securities”) were issued for an aggregate subscription price of $1.51 billion. The ECA was subject to an underwriting fee of 5%, which was paid to the Commitment Parties through the issuance of 25,166,668 additional Class A Securities at emergence. These transactions resulted in the recapitalization of the Company (prior to such recapitalization, “Pre-Reorganized OSG”) upon emergence from bankruptcy along with the cancellation of Pre-Reorganized OSG’s existing common stock. The proceeds received from the issuance of the Class A Securities and Class B Securities, together with certain proceeds from the Exit Financing Facilities, were used primarily to settle allowed claims under the Company’s plan of reorganization (“Equity Plan”), including interest, to pay certain transaction related expenses and fund working capital requirements.
- On August 5, 2014, to support the Equity Plan, the Company and certain of its affiliates entered into secured debt facilities consisting of: (i) a secured asset-based revolving loan facility of $75.0 million, among OSG, OBS, certain OBS subsidiaries, Wells Fargo Bank, National Association, (“Wells Fargo”) as Administrative Agent, and other lenders party thereto (the “OBS ABL Facility”), secured by a first lien on substantially all of the U.S. Flag assets of OBS and its subsidiaries and a second lien on certain other specified U.S. Flag assets of OBS and its subsidiaries; (ii) a secured term loan of $603.0 million, among OSG, OBS, certain OBS subsidiaries Jefferies Finance LLC (“Jefferies”), as Administrative Agent, and other lenders party thereto (the “OBS Term Loan”), secured by a first lien on certain specified U.S. Flag assets of OBS and its subsidiaries and a second lien on substantially all of the other U.S. Flag assets of OBS and its subsidiaries; and (iii) a secured term loan facility of approximately $628.4 million (the “OIN Term Loan”) and a revolving loan facility of $50.0 million (the “OIN Revolver Facility” and, together with the OBS ABL Facility, the OBS Term Loan and the OIN Term Loan, the “Exit Financing Facilities”), among OSG, OIN, OIN Delaware LLC, certain OIN subsidiaries, Jefferies, as Administrative Agent, and the other lenders party thereto, both secured by a first lien on substantially all of the International Flag assets of OIN and its subsidiaries that, collectively and together with the proceeds from the issuance of the Class A Securities and Class B Securities in the Rights Offering, provided the Company with the funding necessary to satisfy the Equity Plan’s cash payment obligations, the expenses associated with closing the Exit Financing Facilities and working capital to fund the Company’s operations after emergence from bankruptcy. On August 5, 2014, the available amounts under each of the OBS Term Loan and OIN Term Loan were drawn in full and proceeds therefrom were used to satisfy certain of the Equity Plan’s cash payment obligations and the expenses associated with closing the Exit Financing Facilities. As of September 30, 2014, no amounts were drawn under the OBS ABL Facility or the OIN Revolver Facility.
- Cash and cash equivalents aggregated $296.3 million as of September 30, 2014, including approximately $73 million held by borrowers under the OBS Term Loan and approximately $155 million held by borrowers under the OIN Term Loan. The Company has designated cash reserves of $131.7 million, which is included in the restricted cash line item on the balance sheet; to be utilized for the settlement of certain unsecured claims and other bankruptcy related costs.
- As of September 30, 2014, OSG was in compliance with all of the financial covenants contained in its Exit Financing Facilities and other debt agreements.
- On October 9, 2014, the Company’s Class B Common Stock was approved for listing on the NYSE MKT. The listing and commencement of trading of the Company’s Class B Common Stock on the NYSE MKT is a significant corporate milestone for OSG.
- On July 23, 2014, we redelivered one of the two remaining time chartered-in vessels employed in the full service International Crude Tankers lightering business to owners. The one remaining time chartered-in vessel utilized in such business was redelivered on August 13, 2014.
- On September 22, 2014, we sold and delivered to buyers one Aframax that had previously been engaged in the International Flag Lightering business.
- One Aframax was redelivered at the expiry of its time charter-in on September 24, 2014.
- The Overseas Shenandoah, an LR2, was delivered on July 24, 2014.
- OSG’s Jones Act product tanker fleet remains fully committed under time charters, with renewals in the year 2014 to date at rates in excess of expiring rates.
- The conversion of the Overseas Tampa to a shuttle tanker was completed August 2, 2014. The vessel will commence a ten-year charter as a shuttle tanker in mid-2015.
Spot and Fixed TCE Rates Achieved and Revenue Days
The following tables provides a breakdown of TCE rates achieved for spot and fixed charters and the related revenue days for the three months ended September 30, 2014 and the comparable period of 2013. Revenue days in the quarter ended September 30, 2014 totaled 7,200 compared with 8,107 in the prior year quarter. The decrease in revenue days resulted principally from the redelivery of eight vessels (six Aframaxes, one Suezmax and one MR) at the expiry of their short-term time charters-in. A summary fleet list by vessel class can be found later in this press release.
|Three Months Ended September 30, 2014||Three Months Ended September 30, 2013|
|Business Unit – Crude Oil|
|VLCC (< 15 years old)|
|Average TCE Rate||$19,778||$ —||$17,385||$17,757|
|Number of Revenue Days||714||—||714||689||54||743|
|VLCC (> 15 years old)|
|Average TCE Rate||$16,189||$ —||$8,855||$ —|
|Number of Revenue Days||184||—||184||183||—||183|
|Average TCE Rate||$ —||$ —||$11,256||$ —|
|Number of Revenue Days||—||—||—||83||—||83|
|Average TCE Rate||$20,167||$ —||$12,687||$ —|
|Number of Revenue Days||913||—||913||1,071||—||1,071|
|Aframax – Lightering|
|Average TCE Rate||$10,853||$ —||$19,827||$ —|
|Number of Revenue Days||150||—||150||587||—||587|
|Average TCE Rate||$21,012||$12,062||$19,232||$11,178|
|Number of Revenue Days||355||459||814||459||342||801|
|Total Crude Oil Revenue Days||2,316||459||2,775||3,072||396||3,468|
|Business Unit – Products|
|Average TCE Rate||$7,649||$ —||$ —||$ —|
|Number of Revenue Days||56||—||56||—||—||—|
|Average TCE Rate||$21,804||$13,970||$19,020||$12,626|
|Number of Revenue Days||92||268||360||183||184||367|
|Average TCE Rate||$11,814||$ —||$13,999||$11,949|
|Number of Revenue Days||1,963||—||1,963||1,738||310||2,048|
|Total Refined Products Revenue Days||2,111||268||2,379||1,921||494||2,415|
|Business Unit – U.S. Flag|
|Handysize Product Carrier|
|Average TCE Rate||$ —||$58,705||$ —||$56,476|
|Number of Revenue Days||—||1,035||1,035||—||1,077||1,077|
|Non-Jones Act Product Carrier|
|Average TCE Rate||$12,014||$12,895||$27,417||$ —|
|Number of Revenue Days||141||43||184||183||—||183|
|Average TCE Rate||$ —||$34,557||$36,267||$33,522|
|Number of Revenue Days||—||640||640||47||642||689|
|Average TCE Rate||$67,654||$ —||$66,289||$ —|
|Number of Revenue Days||187||—||187||183||—||183|
|Total U.S. Flag Revenue Days||328||1,718||2,046||413||1,719||2,132|
|Other – Number of Revenue Days||—||—||—||—||92||92|
|TOTAL REVENUE DAYS||4,755||2,445||7,200||5,406||2,701||8,107|
Unaudited Consolidated Statements of Operations
|($ in thousands, except per share amounts)||Three Months Ended September 30,||Nine Months Ended September 30,|
|Time and bareboat charter revenues||95,733||95,355||287,470||270,772|
|Voyage charter revenues||65,571||137,002||334,580||332,630|
|Total Shipping Revenues||206,283||267,342||740,506||742,894|
|Charter hire expenses||34,650||46,682||120,115||162,106|
|Depreciation and amortization||40,232||44,168||119,839||130,311|
|General and administrative||19,119||23,117||63,029||69,172|
|Technical management transition costs||854||-||2,686||-|
|(Gain)/loss on disposal of vessels and other fixed assets||(2,753||)||63||(4,234||)||(1,143||)|
|Total Operating Expenses||193,927||259,574||699,326||733,473|
|Income from Vessel Operations||12,356||7,768||41,180||9,421|
|Equity in Income of Affiliated Companies||11,313||9,667||29,444||30,530|
Income before interest expense, reorganization items
and income taxes
Income/(loss) before reorganization items
and income taxes
|Reorganization items, net||(49,756||)||(14,705||)||(165,135||)||(236,829||)|
|Income (loss) before income taxes||(55,099||)||2,907||(297,878||)||(196,736||)|
|Income tax benefit (provision)||63,544||(1,947||)||112,629||5,787|
|Net Income / (Loss)||$8,445||$960||$(185,249||)||$(190,949||)|
|Weighted Average Number of Common Shares Outstanding:|
|Basic - Class A||322,529,046||108,691,107|
|Basic - Class B||16,532,116||30,493,981||25,903,529||30,479,054|
|Diluted - Class A||322,529,765||108,691,107|
|Diluted - Class B||16,532,116||30,493,981||25,903,529||30,479,054|
|Per Share Amounts:|
|Basic net income/(loss) - Class A and Class B||$0.02||$(1.38||)|
|Diluted net (loss)/income - Class A and Class B||$0.02||$(1.38||)|
|Basic net (loss)/income - Common Stock||$0.03||$(6.26||)|
|Diluted net (loss)/income - Common Stock||$0.03||$(6.26||)|
Unaudited Consolidated Balance Sheets
|($ in thousands)||
|Cash and cash equivalents||$296,345||$601,927|
|Income tax recoverable||61,514||3,952|
|Inventories , prepaid expenses and other current assets||27,465||41,168|
|Deferred income taxes||5,464||5,464|
|Total Current Assets||639,841||817,313|
Vessels and other property, including construction in progress of $54,644 (2013),
less accumulated depreciation
|Deferred drydock expenditures, net||62,554||57,248|
|Total Vessels, Deferred Drydock and Other Property||2,352,950||2,416,600|
|Investments in affiliated companies||327,207||323,327|
|Intangible assets, less accumulated amortization||56,444||60,167|
|LIABILITIES AND EQUITY / (DEFICIT)|
|Accounts payable, accrued expenses and other current liabilities||$123,675||$121,582|
|Income taxes payable||883||256,258|
|Current installments of long-term debt||12,314||-|
|Total Current Liabilities||136,872||377,840|
|Reserve for uncertain tax positions||33,054||26,585|
|Deferred income taxes||292,209||369,954|
|Liabilities subject to compromise||-||2,888,173|
|Total Equity /(Deficit)||1,267,599||(60,247||)|
|Total Liabilities and Equity /(Deficit)||$3,440,897||
Unaudited Consolidated Statements of Cash Flows
|($ in thousands)||Nine Months Ended September 30,|
|Cash Flows from Operating Activities:|
|Net loss||$ (185,249||)||$(190,949||)|
|Items included in net loss not affecting cash flows:|
|Depreciation and amortization||119,839||130,311|
|Amortization of deferred gain on sale and leasebacks||-||42|
|Amortization of debt discount and other deferred financing costs||1,689||-|
|Compensation relating to restricted stock and stock option grants||644||(571||)|
|Deferred income tax benefit||(76,141||)||(24,093||)|
|Undistributed earnings of affiliated companies||(25,947||)||(26,960||)|
|Deferred payment obligations on charters-in||2,669||4,177|
|Reorganization items, non-cash||55,511||198,521|
|Gain on sublease contracts||-||(896||)|
|Other – net||1,945||1,688|
|Loss on sale of securities and other investments – net||-||198|
|Gain on disposal of vessels – net||(4,234||)||(1,143||)|
|Payments for drydocking||(29,385||)||(17,110||)|
|Bankruptcy and IRS claim payments||(786,651||)||-|
|Changes in other operating assets and liabilities||182,689||29,211|
|Net cash (used in) / provided by operating activities||(742,621||)||102,426|
|Cash Flows from Investing Activities:|
|Change in restricted cash||(131,703||)||-|
|Proceeds from sale of marketable securities and investments||-||344|
|Expenditures for vessels||(32,068||)||(27,769||)|
|Proceeds from disposal of vessels||16,081||485|
|Expenditures for other property||(345||)||(1,754||)|
|Distributions from affiliated companies||30,197||854|
|Other – net||647||932|
|Net cash provided by / (used in) investing activities||(117,191||)||(26,908||)|
|Cash Flows from Financing Activities:|
|Issuance of common stock, net of issuance costs||1,510,000||-|
|Purchases of treasury stock||(162||)||(42||)|
|Issuance of debt, net of issuance and deferred financing costs||1,178,760||-|
|Payments on debt, including adequate protection payments||(2,134,368||)||(12,186||)|
|Net cash provided by / (used in) financing activities||554,230||(12,228||)|
|Net (decrease) / increase in cash and cash equivalents||(305,582||)||63,290|
|Cash and cash equivalents at beginning of year||601,927||507,342|
|Cash and cash equivalents at end of period||$296,345||$570,632|
As of September 30, 2014, OSG’s owned and operated fleet totaled 85 International Flag and U.S. Flag vessels (66 vessels owned and 19 chartered-in) compared with 90 at September 30, 2013. Those figures include vessels in which the Company has a partial ownership interest through its participation in joint ventures. The Company’s fleet list excludes vessels chartered-in where the charter duration was one year or less at inception
|Vessels Owned||Vessels Chartered-in||Total at September 30, 2014|
|VLCC and ULCC||11||11.0||—||—||11||11.0||3,486,039|
|International Flag Crude Tankers||29||28.0||1||1.0||30||29.0||5,880,001|
|International Flag Product Carriers||19||19.0||8||8.0||27||27.0||1,562,975|
|Total Int’l Flag Operating Fleet||48||47.0||9||9.0||57||56.0||7,442,976|
|Handysize Product Carriers||4||4.0||10||10.0||14||14.0||561,117|
|Total U.S. Flag Operating Fleet||14||14.0||10||10.0||24||24.0||878,293|
|LNG Fleet||4||2.0||—||—||4||2.0||864,800 cbm|
|Total Operating Fleet||66||63.0||19||19.0||85||82.0||
Appendix 1 – Reconciliation to Non-GAAP Financial Information
Reconciliation of time charter equivalent revenues of the segments to shipping revenues as reported in the consolidated statements of operations follow:
|Three Months Ended Sep. 30,||Nine Months Ended Sep. 30,|
|($ in thousands)||2014||2013||2014||2013|
|Time charter equivalent revenues||$176,237||$187,634||$562,438||$569,445|
|Add: Voyage Expenses||30,046||79,708||178,068||173,449|
Consistent with general practice in the shipping industry, the Company uses time charter equivalent revenues, which represents shipping revenues less voyage expenses, as a measure to compare revenue generated from a voyage charter to revenue generated from a time charter. Time charter equivalent revenues, a non-GAAP measure, provides additional meaningful information in conjunction with shipping revenues, the most directly comparable GAAP measure, because it assists Company management in making decisions regarding the deployment and use of its vessels and in evaluating their financial performance.
Adjusted Net Income/(Loss) Reconciliation
Reconciliation of income/(loss) as reported in the consolidated statements of operations to adjusted net income/(loss) follow:
|Three Months Ended Sep. 30,||Nine Months Ended Sep. 30,|
|($ in thousands)||2014||2013||2014||2013|
|Reported net income/(loss)||$8,445||$960||$(185,249||)||$(190,949||)|
|Adjustments to remove impact of special items:|
|Severance and technical management transition costs||4,089||181||18,748||2,123|
|(Gain)/loss on disposal of vessels and other fixed assets||(2,753||)||63||(4,234||)||(1,143||)|
|Reorganization items, net||43,412||11,505||135,939||222,044|
|Release of deferred taxes for undistributed earnings of foreign subsidiaries||(55,602||)||—||(55,602||)||—|
|Adjusted net income/(loss)||$(2,409||)||$12,709||$(90,398||)||$32,075|
|Three Months Ended Sep. 30,||Nine Months Ended Sep. 30,|
|(per share amounts)||2014||2013||2014||2013|
|Reported net income/(loss) per diluted share||$0.02||$0.03||$(1.38||)||$(6.26||)|
|Adjustments to remove impact of special items:|
|Severance and technical management transition costs||0.01||0.01||0.14||0.07|
|(Gain)/loss on disposal of vessels and other fixed assets||(0.01||)||0.00||(0.03||)||(0.04||)|
|Reorganization items, net||0.13||0.38||1.00||7.28|
|Release of deferred taxes for undistributed earnings of foreign subsidiaries||(0.16||)||—||(0.41||)||—|
|Adjusted net income/(loss) per diluted share||$(0.01||)||$0.42||$(0.68||)||$1.05|
The Company has included in this press release a non-GAAP performance measure (net income (loss) adjusted for special items). This non-GAAP performance measure does not have any standardized meaning prescribed by GAAP and, therefore, may not be comparable to similar measures presented by other companies. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, this non-GAAP measure may provide certain investors with additional information that will better enable them to evaluate the Company’s performance. Accordingly, this non-GAAP measure is intended to provide supplemental information, and should not be considered in isolation or as a substitute for measures of performance prepared with GAAP.
Overseas Shipholding Group, Inc. (NYSE MKT:OSGB) is a publicly traded tanker company providing energy transportation services for crude oil and petroleum products in the U.S. and International Flag markets. OSG is committed to setting high standards of excellence for its quality, safety and environmental programs. OSG is recognized as one of the world’s most customer-focused marine transportation companies and is headquartered in New York City, NY. More information is available at www.osg.com.
This release contains forward-looking statements regarding the tanker and articulated tug/barge markets, and the Company's prospects, including prospects for certain strategic alliances and investments. All statements other than statements of historical facts should be considered forward-looking statements. There are a number of factors, risks and uncertainties, many of which are beyond the control of the Company, that could cause actual results to differ materially from the expectations expressed or implied in these forward-looking statements; the Company’s ability to generate cash; the Company’s ability to raise cash through the sale of non-core assets; the success of the Company’s strategic investment decisions; the success of the Company’s plan to reduce its cost structure, including to implement the outsourcing of the technical and commercial management of its International Flag fleet, and the Company’s dependence on third party service providers for such management; the Company’s ability to attract, retain and motivate key employees; continued weakness or worsening of economic conditions; the Company’s ability to streamline its operations and reduce its general and administrative expenses; the highly cyclical nature of OSG’s industry; fluctuations in the market value of vessels; an increase in the supply of vessels without a commensurate increase in demand; adequacy of OSG’s insurance to cover its losses; constraints on capital availability; acts of piracy on ocean-going vessels; terrorist attacks and international hostilities and instability; changing economic, political and governmental conditions abroad; compliance with environmental laws or regulations, including compliance with regulations concerning discharge of ballast water and effluents scheduled to become effective in the next few years; seasonal variations in OSG’s revenues; the effect of the Company’s indebtedness on its ability to finance operations, pursue desirable business operations and successfully run its business in the future; the Company’s ability to generate cash to service its indebtedness; potential costs, penalties and adverse effects associated with litigation and regulatory inquiries regarding the restatement of the Company’s prior financial statements; the Company’s compliance with the Jones Act provisions on coastwise trade and the continuing existence of these provisions and international trade agreements; the Company’s ability to renew its time charters when they expire or to enter into new time charters for newbuilds; delays or cost overruns in building new vessels (including delivery of new vessels); the scheduled shipyard maintenance of the Company’s vessels or rebuilding or conversion of the Company’s vessels; termination or change in the nature of OSG’s relationship with any of the pools in which it participates; OSG’s ability to compete effectively for charters with companies with greater resources; increased operating costs and capital expenses as the Company’s vessels age; refusal of certain customers to use vessels of a certain age; the failure of contract counterparties to meet their obligations; the shipping income of OSG’s foreign subsidiaries becoming subject to current taxation in the United States; the potential for audit or material adjustment by the IRS of certain tax benefits recognized by the Company; unexpected drydock costs; and the arrest of OSG’s vessels by maritime claimants. The Company assumes no obligation to update or revise any forward looking statements. Forward looking statements in this release and written and oral forward looking statements attributable to the Company or its representatives after the date of this release are qualified in their entirety by the cautionary statement contained in this paragraph and in other reports hereafter filed by the Company with the Securities and Exchange Commission. Factors, risks and uncertainties that could cause actual results to differ from the expectations reflected in these forward-looking statements are described in the Company’s Annual Report for 2013 on Form 10-K and in our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2014 and September 30, 2014, and those risks discussed in the other reports OSG files with the Securities and Exchange Commission.