News Column

INTERNATIONAL SHIPHOLDING CORP - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

August 5, 2014

Forward-Looking Statements

This report and other documents filed or furnished by us under the federal securities laws include, and future oral or written statements or press releases by us and our management may include, forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, and as such may involve known and unknown risks, uncertainties, and other factors that may cause our actual results to be materially different from the anticipated future results expressed or implied by such forward-looking statements. Forward-looking statements may include the words "may," "will," "estimate," "intend," "continue," "believe," "expect," "plan," "anticipate," "project," "seek," "hope," "should," or "could" and similar words. Such forward-looking statements include, without limitation, statements regarding (1) anticipated future operating and financial performance, financial position and liquidity, growth opportunities and growth rates, acquisition and divestiture opportunities, business prospects, regulatory and competitive outlook, investment plans or results, strategic alternatives, business strategies, and other similar statements of expectations or objectives; (2) our plans for operating the business and using cash, including our pricing, investment, expenditure and cash deployment plans; (3) our projected ability to deploy vessels in the spot market, under medium to long-term contracts, or otherwise; (4) our outlook on prevailing vessel time charter and voyage rates, including estimates of the impact of dry cargo fleet supply or demand on time charter and voyage rates; (5) 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; (6) estimated scrap values of assets; (7) estimated proceeds from selling assets and the anticipated cost of constructing or purchasing new or existing vessels; (8) estimated fair values of financial instruments, such as interest rate and currency swap agreements; (9) estimated losses under self-insurance arrangements; (10) estimated gains or losses on certain contracts, trade routes, lines of business or asset dispositions; (11) estimated outcomes of, or losses attributable to litigation; (12) estimated obligations, and the timing thereof, relating to vessel repair or maintenance work; (13) the adequacy of our capital resources and the availability of additional capital resources on commercially acceptable terms; (14) our ability to remain in compliance with applicable regulations; (15) anticipated trends in supplemental cargoes; (16) anticipated trends in government spending, funding, or appropriations; (17) our ability to effectively service our debt or meet the financial covenants contained in our debt and lease agreements; (18) financing opportunities and sources (including the impact of financings on our financial position, financial performance or credit ratings); (19) changes in laws, regulations or tax rates, or the outcome of pending legislative or regulatory initiatives; and (20) assumptions underlying any of the foregoing. Our forward-looking statements are based on our judgment and assumptions as of the date such statements are made concerning future developments and events, many of which are beyond our control. These forward-looking statements, and the assumptions upon which they are based, are inherently speculative and are subject to a number of risks and uncertainties. Actual events and results may differ materially from those anticipated, estimated, projected, expressed or implied by us in those statements if one or more of these risks or uncertainties materialize, or if our underlying assumptions prove incorrect. 35 --------------------------------------------------------------------------------

Table of Contents



Factors that could cause our actual results to differ materially from our expectations include our ability to:

· maximize the usage of our newly-purchased and incumbent vessels and other

assets on favorable economic terms, including our ability to (i) renew our time

charters and other contracts when they expire, (ii) maximize our carriage of

supplemental cargoes and (iii) improve the return on our international flag dry

bulk fleet if and when market conditions improve;

· timely and successfully respond to competitive or technological changes

affecting our markets;

· effectively handle our leverage by servicing and complying with each of our

debt instruments, thereby avoiding any defaults under those instruments and

avoiding cross defaults under others;

· secure financing on satisfactory terms to repay existing debt or support

operations, including to acquire, modify, or construct vessels if such

financing is necessary to service the potential needs of current or future

customers;

· successfully retain and hire key personnel, and successfully negotiate

collective bargaining agreements with our maritime labor unions on reasonable

terms without work stoppages;

· service our preferred stock dividend payments and to continue to pay a

quarterly common stock dividend, which may be affected by changes, among other

things, in our cash requirements, spending plans, business strategies, cash

flows or financial position;

· procure adequate insurance coverage on acceptable terms; and

· manage the amount and rate of growth of our operating, capital, administrative

and general expenses.

Other factors that could cause our actual results to differ materially from our expectations include, without limitation:

· changes in domestic or international transportation markets that reduce the

demand for shipping generally or our vessels in particular;

· industry-wide changes in cargo freight rates, charter rates, vessel design,

vessel utilization or vessel valuations, or in charter hire, fuel or other

operating expenses;

· unexpected out-of-service days on our vessels whether due to drydocking delays,

unplanned maintenance, accidents, equipment failures, adverse weather, natural

disasters, piracy or other causes;

· the rate at which competitors add or scrap vessels, as well as demolition scrap

prices and the availability of scrap facilities in the areas in which we

operate;

· the possibility that the anticipated benefits from corporate vessel

acquisitions cannot be fully realized or may take longer to realize than

expected.

· political events in the United States and abroad, including terrorism, piracy

and trade restrictions, and the response of the U.S. and other nations to those

events;

· election results and the appropriation of funds by the U.S. Congress, including

the impact of any further cuts to federal spending similar to the

"sequestration" cuts;

· changes in foreign currency exchange rates or interest rates;

· changes in laws and regulations, including those related to government

assistance programs, inspection programs, trade controls and protection of the

environment;

· our continued access to credit on favorable terms;

36

--------------------------------------------------------------------------------

Table of Contents



· the ability of customers to fulfill their obligations with us, including the

timely receipt of payments by the U.S. government;

· the performance of our unconsolidated subsidiaries, revenue sharing agreements,

and joint ventures;

· the impact on our financial statements of nonrecurring accounting charges that

may result from, among other things, our ongoing evaluation of business

strategies, asset valuations, and organizational structures;

· the frequency and severity of claims against us, and unanticipated outcomes of

current or possible future legal proceedings; and

· the effects of more general factors such as changes in tax laws or rates, in

accounting policies or practices, in medical or pension costs, or in general

market, labor or economic conditions. These and other uncertainties related to our business are described in greater detail elsewhere below in this report, including "Risk Factors" appearing in Part II, Item 1A of this report. Due to these uncertainties, we cannot assure that we will attain our anticipated results, that our judgments or assumptions will prove correct, or that unforeseen developments will not occur. Accordingly, you are cautioned not to place undue reliance upon any of our forward-looking statements, which speak only as of the date made. Additional risks that we currently deem immaterial or that are not presently known to us could also cause our actual results to differ materially from those expected in our forward-looking statements. Except for meeting our ongoing obligations under the federal securities laws, we undertake no obligation to update or revise for any reason any forward-looking statements made by us or on our behalf, whether as a result of new information, future events or developments, changed circumstances or otherwise. Executive Summary



Overview of Second Quarter 2014

Overall Strategy

We operate a diversified fleet of U.S. and International Flag vessels that provide domestic and international maritime transportation services to commercial and governmental customers primarily under medium to long-term contracts. Our business strategy consists of identifying niche growth opportunities, utilizing our extensive experience to meet those opportunities, maintaining a diverse portfolio of medium to long-term contracts, and maintaining strong relations with our long-standing customer base by providing quality transportation services.



Overview

Our second quarter 2014 operating income improved as compared to the first quarter of 2014. The results were driven by improved results from our Jones Act vessels, driven primarily by an increase in operating days and additional cargoes carried by our Rail-Ferry vessels and Molten Sulphur vessel. The time charter and voyage rates on our Handysize Bulk Carrier vessels were lower as compared to the first quarter and are still wavering near historical lows. Our second quarter 2014 supplemental revenues were very comparable to the first quarter 2014 results. Our second quarter 2014 operating income increased compared to operating income for the same period in 2013, due to an additional 74 operating days, partially offset by higher voyage expenses in our UOS Jones Act operations due to non-cash drydock amortization expenses. 37 --------------------------------------------------------------------------------

Table of Contents Key drivers to our operating performance are our variable revenues and the on-hire performance of our vessels. Our variable revenues are driven by our supplemental revenues, dry bulk rates, and our Rail-Ferry results. The Handysize market has continued to weaken in the second quarter of 2014 and, given the current market, medium to long term rates cannot be fixed at acceptable levels. During the second quarter of 2014, we derived $58.7 million of our revenues from fixed contracts as compared to $51.0 million for the same period in 2013. Our variable revenues decreased from $23.9 million in the second quarter of 2013 to $18 million for the second quarter of 2014. Our fixed revenues increased as a result of improved revenues from our UOS Jones Act vessels and Capesize Bulk Carrier, which is operating on a fixed contract through the end of 2015. The decrease in our variable revenues is primarily the result of lower supplemental revenues and the depressed Handysize Bulk rates.



Consolidated Financial Performance - Second Quarter 2014 vs. Second Quarter 2013

Overall net income decreased from a $1.9 million profit in the second quarter of 2013 to a loss of $664,000 in the second quarter of 2014. Included in the second quarter 2013 results was a $1.8 million non-cash foreign exchange gain. Our operating income for the second quarter of 2014 increased by approximately $256,000 when compared to the results from the same period of 2013, reflecting improved results from our Dry Bulk Carriers and Jones Act, partially offset by reductions in our supplemental cargo revenues and higher voyage expenses in our UOS Jones Act operations.



Segment Performance - Second Quarter 2014 vs. Second Quarter 2013

Jones Act

§ Increase of $514,000 in gross voyage profits primarily based on an improvement

in UOS results.

§ 59 non-operating days in 2014 as compared to 156 days in 2013.

Pure Car Truck Carriers

§ Decrease in gross voyage profits from $4.6 million to $2.3 million.

§ Decrease primarily based on less supplemental cargo.

Dry Bulk Carriers

§ Increase in gross voyage profits of approximately $1.4 million.

§ Results driven by an increase year over year in time charter rates on our

Capesize vessel and redelivery of a chartered-in vessel.

Rail-Ferry

§ A 2% increase in revenues was driven by an increase in cargo volume carried

primarily southbound. Specialty Contracts



§ Increase of $33,000 in gross voyage profits primarily due to the addition of

one Multi-Purpose Heavy Lift chartered-in vessel on October 1, 2013, which

generated a small profit margin. 38

--------------------------------------------------------------------------------

Table of Contents



Financial Discipline & Balance Sheet

§ Total cash available of $15.8 million at June 30, 2014.

§ Cash generated from operations of $11.7 million for the six months ended June

30, 2014.

§ Working capital of $10.9 million at June 30, 2014.

§ Approximately $15.5 million of borrowing capacity available on our line of

credit at June 30, 2014. Because of the overall condition of the global economy in general, and the marine transportation industry specifically, we continue to test our long-lived assets quarterly to determine whether or not the fair value of each of our segment vessels (based upon projected segment undiscounted cash flows) exceed each of our segment vessels' carrying amounts. Based on our assessment, we believe no impairments existed as of June 30, 2014. As of this same date, the total aggregated fair value of the vessels that we own, based on the most recent appraisal of each vessel, was $477.1 million, as compared to the total aggregated net book value of $415.2 million. 39 --------------------------------------------------------------------------------

Table of Contents



The following table lists the 53 vessels in our operating fleet as of June 30, 2014, 21 of which are owned by our wholly-owned subsidiaries:

Weight Business Carrying Segment Bareboat Operating Partially Capacity Vessels Year Built (1)



Owned Charter/ Leased Contracts Owned (MT)

BELT SELF-UNLOADING BULK Jones 1 ENERGY ENTERPRISE CARRIER 1983 Act X 38,847 Jones



2 SULPHUR ENTERPRISE MOLTEN SULPHUR CARRIER 1994 Act

X 27,678 COASTAL 303/ALABAMAJones

3 ENTERPRISE ATB TUG/BARGE UNIT 1973/1981 Act X 23,314 NAIDA RAMIL/PEGGY Jones 4 PALMER ATB TUG/BARGE UNIT (2) 1994/1981 Act X 34,367 COASTAL 101/LOUISIANA Jones 5 ENTERPRISE ATB TUG/BARGE UNIT 1973/1984 Act X 33,529

COASTAL 202/FLORIDAJones

6 ENTERPRISE ITB TUG/BARGE UNIT 1977 Act X 33,220 Jones 7 MARY ANN HUDSON BULK CARRIER 1981 Act X 37,061 MISSISSIPPI Jones 8 ENTERPRISE BULK CARRIER 1980 Act X 37,244 Jones 9 ROSIE PARIS HARBOR TUG 1974 Act X N/A 10 GREEN BAY PURE CAR/TRUCK CARRIER 2007 PCTC X 18,312 11 GREEN COVE PURE CAR/TRUCK CARRIER 1999 PCTC X 22,747 12 GREEN DALE PURE CAR/TRUCK CARRIER 1999 PCTC X 16,157 13 GREEN LAKE PURE CAR/TRUCK CARRIER 1998 PCTC X 22,799 14 GREEN POINT PURE CAR/TRUCK CARRIER 1994 PCTC X 14,930 15 GREEN RIDGE PURE CAR/TRUCK CARRIER 1998 PCTC X 21,523 16 GLOVIS COUNTESS PURE CAR/TRUCK CARRIER 2010 PCTC X 18,701 ROLL-ON/ROLL-OFF 17 BALI SEA SPV 1995 RF X 20,737 ROLL-ON/ROLL-OFF 18 BANDA SEA SPV 1995 RF X 20,664 19 EGS CREST HANDYSIZE BULK CARRIER 2011 Dry Bulk X 35,914 20 EGS TIDE HANDYSIZE BULK CARRIER 2011 Dry Bulk X 35,916 21 EGS WAVE HANDYSIZE BULK CARRIER 2011 Dry Bulk X 35,916 22 BULK AUSTRALIA CAPESIZE BULK CARRIER 2003 Dry Bulk X 170,578 23 BULK AMERICAS SUPRAMAX BULK CARRIER 2012 Dry Bulk X 57,959 24 OSLO BULK 1 MINI BULK CARRIER 2010 Dry Bulk X 8,040 25 OSLO BULK 2 MINI BULK CARRIER 2010 Dry Bulk X 8,028 26 OSLO BULK 3 MINI BULK CARRIER 2010 Dry Bulk X 8,029 27 OSLO BULK 4 MINI BULK CARRIER 2010 Dry Bulk X 8,040 28 OSLO BULK 5 MINI BULK CARRIER 2010 Dry Bulk X 8,040 29 OSLO BULK 6 MINI BULK CARRIER 2011 Dry Bulk X 8,040 30 OSLO BULK 7 MINI BULK CARRIER 2011 Dry Bulk X 8,040 31 OSLO BULK 8 MINI BULK CARRIER 2011 Dry Bulk X 8,040 32 OSLO BULK 9 MINI BULK CARRIER 2011 Dry Bulk X 8,040 33 OSLO BULK 10 MINI BULK CARRIER 2011 Dry Bulk X 8,040 34 OSLO BULK 11 MINI BULK CARRIER 2008 Dry Bulk X 8,000 35 SEA CARRIER MINI BULK CARRIER 2010 Dry Bulk X 9,300 36 OSLO CARRIER 2 MINI BULK CARRIER 2010 Dry Bulk X 9,300 37 OSLO CARRIER 3 MINI BULK CARRIER 2011 Dry Bulk X 9,300 38 SEA STEAMER MINI BULK CARRIER 2011 Dry Bulk X 9,300 39 MT BOW TRAJECTORY CHEMICAL TANKER 2014 SP X 50,510 40 MT BOW TRIBUTE CHEMICAL TANKER 2014 SP X 50,510 41 MT ASPHALT SPRING ASPHALT TANKER 2007 SP X 6,726 42 MT ASPHALT SUMMER ASPHALT TANKER 2007 SP X 6,654 43 MAERSK ALABAMA CONTAINER VESSEL 1998 SP X 17,525 44 MAERSK CALIFORNIA CONTAINER VESSEL 1992 SP X 25,375 45 MARINA STAR 2 CONTAINER VESSEL 1982 SP X 13,193 46 MARINA STAR 3 CONTAINER VESSEL 1983 SP X 13,193 47 TERRITORY TRADER CONTAINER VESSEL 1991 SP X 3,183 48 FLORES SEA MULTI-PURPOSE VESSEL 2008 SP X 11,151 49 SAWU SEA MULTI-PURPOSE VESSEL 2008 SP X 11,184 50 OCEAN PORPOISE TANKER 1996 SP X 13,543 51 OCEAN HERO TANKER 1996 SP X 13,543 MULTI-PURPOSE HEAVY LIFT 52 OCEAN GIANT DRY CARGO VESSEL 2012 SP X 19,382 ICE STRENGTHENED 53 OSLO WAVE MULTI-PURPOSE VESSEL 2000 SP X 17,381 21 7 6 19 1,176,743

(1) Business Segments: Jones Act Jones Act PCTC Pure Car Truck Carriers RF Rail-Ferry Dry Bulk Dry Bulk Carriers SP Specialty Contracts (2) Currently Inactive 40

--------------------------------------------------------------------------------

Table of Contents



Management Gross Voyage Profit Financial Measures

In connection with discussing the results of our various operating segments in this report, we refer to "gross voyage profit," a metric that management reviews to assist in monitoring and managing our business. The following table provides a reconciliation of consolidated gross voyage profit to our operating (loss) income. Three Months Ended June 30, Year to date as of June 30, (All Amounts in Thousands) 2014 2013 2014 2013 Revenues $ 76,752$ 74,897$ 149,446$ 156,021 Voyage Expenses* 63,325 61,508 125,957 131,099 Net Loss of Unconsolidated Entities 80 75 188 345 Gross Voyage Profit 13,347 13,314 23,301 24,577 Vessel Depreciation 6,517 5,804 13,238 11,575 Other Depreciation 18 11 36 34 Gross Profit 6,812 7,499 10,027 12,968 Other Operating Expenses: Administrative and General Expenses 5,232 6,170 10,811 11,603 Less: Net Loss of Unconsolidated Entities (80) (75) (188) (345) Total Other Operating Expenses 5,152 6,095 10,623 11,258 Operating Income (Loss) $ 1,660$ 1,404 $ (596) $ 1,710 * Includes Intangible Amortization 41

--------------------------------------------------------------------------------

Table of Contents RESULTS OF OPERATIONS Three MONTHS ENDED JUNE 30, 2014 COMPARED TO THE Three MONTHS ENDED JUNE 30, 2013 Pure Car (All Amounts in Truck Dry Bulk Specialty Thousands) Jones Act Carriers Carriers Rail Ferry Contracts Other Total 2014



Fixed Revenue $ 33,216$ 15,295$ 1,758 $ - $ 8,487 $ - $ 58,756

Variable Revenue - 3,858 3,505 9,739 911 (17) 17,996 Total Revenue from External Customers 33,216 19,153 5,263 9,739 9,398 (17) 76,752 Intersegment Revenues (Eliminated) - - - - - (4,321) (4,321) Intersegment Expenses Eliminated - - - - - 4,321 4,321 Voyage Expenses 27,181 16,903 3,412 7,870 8,446 (487) 63,325 Loss (Income) of Unconsolidated Entities - - 89 39 (48) - 80



Gross Voyage Profit $ 6,035$ 2,250$ 1,762$ 1,830$ 1,000$ 470$ 13,347

Gross Voyage Profit Margin 18 % 12 % 33 % 19 % 11 % 2765 % 17 % 2013 Fixed Revenue $ 27,725$ 16,804$ 665 $ - $ 5,835 $ - $ 51,029 Variable Revenue - 8,286 4,188 9,523 1,671 200 23,868 Total Revenue from External Customers 27,725 25,090 4,853 9,523 7,506 200 74,897 Intersegment Revenues (Eliminated) - - - - - (5,519) (5,519) Intersegment Expenses Eliminated - - - - - 5,519 5,519

Voyage Expenses 22,204 20,453 4,473 7,762 6,539 77 61,508 Loss of Unconsolidated Entities - - 7 68 - - 75



Gross Voyage Profit $ 5,521$ 4,637$ 373$ 1,693$ 967$ 123$ 13,314

Gross Voyage Profit Margin 20 % 18 % 8 % 18 % 13 % 62 % 18 % For the purposes of this report, operating days are defined as days that our vessels/units are generating revenues or positioning to generate revenues, and non-operating days are defined as all other days. 42

--------------------------------------------------------------------------------

Table of Contents



Revenues and Gross Voyage Profits

The following table shows the breakout of revenues by segment between fixed and variable for the three months ended June 30, 2014 and 2013:

[[Image Removed: Picture 2]]



[[Image Removed: Picture 3]][[Image Removed: Picture 8]][[Image Removed: Picture

5]][[Image Removed: Picture 7]]



The changes in revenues and expenses associated with each of our segments are discussed within the gross voyage profit analysis below:

Jones Act: Overall revenues and gross voyage profit increased by $5.5 million and $514,000, respectively, when comparing second quarter 2014 to 2013. The increase was primarily due to an additional 97 operating days in the second quarter of 2014 compared to the same period in the prior year, which had significant amount of scheduled drydock days. Voyage expenses increased year over year due to the drydock amortization expenses.



Pure Car Truck Carriers: Overall revenues decreased by $5.9 million when comparing second quarter 2014 to 2013. The decrease was driven primarily by a reduction in the amount of supplemental cargo carried. We believe the supplemental cargo revenues will improve in the third and fourth quarters of 2014. The decrease in revenue resulted in gross voyage profit decreasing

43 --------------------------------------------------------------------------------

Table of Contents from $4.6 million in the second quarter of 2013 to $2.3 million in the same period in 2014. Our fixed contract revenues for this segment were $15.3 million and $16.8 million in second quarter 2014 and 2013, respectively. Our variable revenues were $3.9 million and $8.3 million for the same periods in 2014 and 2013, respectively, and represent revenues derived from supplemental cargoes. The second quarter 2014 operating cost for the vessels in this segment was on or near budget and comparable to second quarter 2013 operating costs. Dry Bulk Carriers: Overall revenues and gross voyage profit increased $410,000 and $1.4 million, respectively, when comparing the second quarter of 2014 to 2013. The improvement in our results was primarily driven by the deployment of our Capesize vessel on a fixed time charter through the end of 2015 and improved voyage expense due to the redelivery of a chartered-in vessel. Rail-Ferry: Revenues increased by $216,000 when comparing the second quarter of 2014 to the same period in 2013. Gross voyage profit increased by $137,000 when comparing 2013 to 2014. The improvements are attributable mainly to an increase in cargo volume carried. The vessels operated this past quarter within our operating budget. Specialty Contracts: Revenues increased from $7.5 million in the second quarter 2013 to $9.4 million in the second quarter 2014 while gross voyage profit increased by $33,000 for the same period. The improved revenues are the result of the addition of one Multi-Purpose Heavy Lift chartered-in vessel October 1, 2013, which generated a small profit margin. Administrative and General Expense: Administrative and general expenses decreased from $6.2 million in the second quarter of 2013 to $5.2 million in the second quarter of 2014. The following table shows the significant components of administrative and general expenses for the second quarter of 2014 and 2013, respectively. Three Months Ended Three Months Ended A&G Account June 30, 2014 June 30, 2013 Variance Wages and Benefits $ 2,480 $ 3,383 $ (903) A Executive Stock Compensation 385 448 (63) Professional Services 536 715 (179) B Office Building Expense 399 362 37 Insurance & Worker's Comp. 491 253 238 C Other 941 1,009 (68) TOTAL: $ 5,232 $ 6,170 $ (938)



A) The decrease is due to less accrued bonus expense in the second quarter of 2014.

B) The decrease is due to additional audit and legal fees in 2013 related to our preferred stock offering.

C) The increase is due to an increase in our asbestos insurance reserve.

Other Income and Expense

Interest Expense was $2.0 million for the second quarter of 2014, which was essentially unchanged from the interest expense for the second quarter of 2013.

Derivative Loss/(Gain) decreased to a $18,000 loss in the second quarter of 2014

from $205,000 of income in the second quarter of 2013 based on changes in the fair value of the ineffective portion of a 2010 interest rate swap.

Other income from vessel financing decreased from $539,000 to $472,000 in the second quarter of 2013 and 2014, respectively, driven by a lower principal balance upon which interest is earned on a note receivable issued to us in connection with our sale of two vessels to an Indonesian company in the third quarter of 2009. 44

--------------------------------------------------------------------------------

Table of Contents Foreign Exchange Loss of $9,000 in the second quarter of 2014 is associated with our normal recurring period-end currency revaluations, including the impact of revaluing our obligations under the forward contracts relating to the Yen-denominated financing of one of our PCTC vessels. The exchange loss was principally attributable to a change in the exchange rate of 105.31 Yen to 1 USD at December 31, 2013 compared to 101.33 Yen to 1 USD at June 30, 2014, net of the impact of foreign forward exchange contracts we entered into in the fourth quarter of 2013 and subsequently rolled forward into 2014 and 2015, to limit our exposure to fluctuations in the value of the Yen, see Note 10 for more information on our derivative contract.



Income Taxes

We recorded a tax provision of $653,000 on our $69,000 of income before taxes and equity in net loss of unconsolidated entities for the three months ended June 30, 2014. For the three months ended June 30, 2013, we recorded an income tax provision of $15,000 on our $1.9 million of income before taxes and equity in net income of unconsolidated entities. Included in both our 2014 and 2013 tax provisions are taxes on our qualifying U.S. flag operations, which continue to be taxed under a "tonnage tax" regime rather than under the normal U.S. corporate income tax regime, 35% provision on our U.S. flag Jones Act results, and foreign tax withholdings. Our 2014 tax provision also includes recognition of (i) deferred tax benefits, which we were unable to recognize in 2013 due to the valuation allowance that we reversed in the fourth quarter of 2013, as discussed in our Annual Report on Form 10-K for the year ended December 31, 2013 and (ii) a tax liability on our income from vessel financing in 2014 that was exempt from tax in 2013. For further information on certain tax laws and elections, see our Annual Report on Form 10-K filed for the year ended December 31, 2013, including "Note J - Income Taxes" to the consolidated financial statements included therein.



Equity in Net (Loss) Income of Unconsolidated Entities

Equity in net (loss) income from unconsolidated entities, net of taxes, was comparable year over year.

45

-------------------------------------------------------------------------------- Table of Contents RESULTS OF OPERATIONS SIX MONTHS ENDED June 30, 2014 COMPARED TO THE SIX MONTHS ENDED June 30, 2013 Pure Car (All Amounts in Truck Dry Bulk Specialty Thousands) Jones Act Carriers Carriers Rail Ferry Contracts Other Total 2014 Fixed Revenue $ 62,315$ 30,911$ 3,284 $ - $ 17,188 $ - $ 113,698 Variable Revenue - 7,799 7,094 17,667 3,158 30 35,748 Total Revenue from External Customers 62,315 38,710 10,378 17,667 20,346 30 149,446 Intersegment Revenues(Eliminated) - - - - - (8,642) (8,642) Intersegment Expenses Eliminated - - - - - 8,642 8,642 Voyage Expenses 52,057 34,101 7,055 14,912 18,646 (814) 125,957 (Income) Loss of Unconsolidated Entities - - 169 67 (48) - 188 Gross Voyage Profit $ 10,258$ 4,609$ 3,154$ 2,688$ 1,748$ 844$ 23,301 Gross Voyage Profit Margin 16 % 12 % 30 % 15 % 9 % 2813 % 16 % 2013 Fixed Revenue $ 59,579$ 33,757$ 1,538 $ - $ 12,667 $ - $ 107,541 Variable Revenue 19,207 7,549 18,697 2,526 501 48,480 Total Revenue from External Customers 59,579 52,964 9,087 18,697 15,193 501 156,021 Intersegment Revenues (Eliminated) - - - - - (11,038) (11,038) Intersegment Expenses Eliminated - - - - - 11,038 11,038 Voyage Expenses 47,694 43,926 9,674 15,482 14,037 286 131,099 Loss of Unconsolidated Entities - - 338 7 - - 345 Gross Voyage Profit (Loss) $ 11,885$ 9,038$ (925)$ 3,208$ 1,156$ 215$ 24,577 Gross Voyage Profit Margin 20 % 17 % (10) % 17 % 8 % 43 % 16 % 46

--------------------------------------------------------------------------------

Table of Contents



Revenues and Gross Voyage Profits

The following table shows the breakout of revenues by segment between fixed and variable for the six months ended June 30, 2014 and 2013:

[[Image Removed: Picture 3]]



[[Image Removed: Picture 3]][[Image Removed: Picture 8]][[Image Removed: Picture

5]][[Image Removed: Picture 7]]



The changes in revenues and expenses associated with each of our segments are discussed within the gross voyage profit analysis below:

Jones Act: Revenues increased by $2.7 million, while gross voyage profit decreased by $1.6 million, when comparing the six months ending June 30, 2014 to 2013. The increase in revenue was primarily due to an additional 152 operating days in the six months ending June 30, 2014 compared to the six months ending June 30, 2013. The decrease in gross voyage profit is the result of an increase in voyage expenses, primarily non-cash drydock amortization expense. Pure Car Truck Carriers: Overall revenues decreased by $14.2 million when comparing the six months ending June 30, 2014 to 2013. The decrease was driven primarily by a reduction in our variable revenues, which is comprised of our supplemental cargoes. 47

--------------------------------------------------------------------------------

Table of Contents



The decrease in revenue resulted in gross voyage profit decreasing from $9.0 million in the first half of 2013 to $4.6 million in the first half of 2014.

Dry Bulk Carriers: Overall revenues and gross voyage profit increased $1.3 million and $4.1 million, respectively, when comparing the six months ending June 30, 2014 to 2013. The improvement in our results was primarily driven by the deployment of our Capesize vessel on a fixed time charter through the end of 2015 and improved voyage expenses due to the redelivery of a chartered-in vessel. Rail-Ferry: Revenues decreased by $1.0 million when comparing the six months ending June 30, 2014 to 2013. Gross voyage profit decreased by $520,000 when comparing 2014 to 2013 and was driven by lower cargo volumes. Specialty Contracts: Revenues increased from $15.2 million in the six months ending June 30, 2013 to $20.3 million in the six months ending June 30, 2014 while gross voyage profit for the first half of 2014 increased by $592,000 over the same period in 2013. The slight improvement reflects the increased utilization of our Ice Strengthened Multi-purpose vessel, which was in drydock during part of the first and second quarters of 2013, and the addition of one Multi-Purpose Heavy Lift chartered in vessel. Administrative and General Expense: Administrative and general expenses decreased from $11.6 million in the six months ended June 30, 2013 to $10.8 million in the six months ended June 30, 2014. The following table shows the significant components of administrative and general expenses for the second quarter of 2014 and 2013, respectively. Six Months Ended Six Months Ended A&G Account June 30, 2014 June 30, 2013 Variance Wages and Benefits $ 5,384 $ 6,682 $ (1,298) A Executive Stock Compensation 831 721 110 B Professional Services 1,182 1,031 151 C Office Building Expense 805 790 15 Insurance & Worker's Comp. 722 415 307 D Other 1,887 1,964 (77) TOTAL: $ 10,811 $ 11,603 $ (792)



A) The reduction is due to accrued bonus in the first two quarters of 2013 that was not repeated in the first two quarters of 2014.

B) Due to higher stock prices.

C) The increase is due to lower legal fees in prior year.

D) Primarily related to an increase in asbestos insurance reserves.

Other Income and Expense

Interest Expense was $4.2 million for the six months ending June 30, 2014, which was essentially unchanged from the interest expense for the same period of 2013.

Derivative Loss/(Gain) decreased to a $32,000 loss in the six months ending June 30, 2014 from $282,000 of income for the same period of 2013 based on changes in the fair value of the ineffective portion of a 2010 interest rate swap. 48 --------------------------------------------------------------------------------

Table of Contents Other income from vessel financing decreased from $1.1 million to $1.0 million in the six months ending June 30, 2013 and 2014, respectively, driven by a lower principal balance upon which interest is earned on a note receivable issued to us in connection with our sale of two vessels to an Indonesian company in the third quarter of 2009. Foreign Exchange Loss of $93,000 in the six month ending June 30, 2014 is associated with our normal recurring period-end currency revaluations, including the impact of revaluing our obligations under the forward contracts relating to the Yen-denominated financing of one of our PCTC vessel. The exchange loss was principally attributable to a change in the exchange rate of 105.31 Yen to 1 USD at December 31, 2013 compared to 101.33 Yen to 1 USD at June 30, 2014, net of the impact of foreign forward exchange contracts we entered into in the fourth quarter of 2013 and subsequently rolled forward into 2014 and 2015, limiting our exposure to fluctuations in the value of the Yen.



Income Taxes

We recorded a tax benefit of $229,000 on our $3.9 million of loss before taxes and equity in net loss of unconsolidated entities for the six months ended June 30, 2014. For the six months ended June 30, 2013, we recorded an income tax provision of $50,000 on our $3.9 million of income before taxes and equity in net income of unconsolidated entities. Included in both our 2014 tax benefit and our 2013 tax provision are taxes on our qualifying U.S. flag operations, which continue to be taxed under a "tonnage tax" regime rather than under the normal U.S. corporate income tax regime, 35% provision on our U.S. flag Jones Act results, and foreign tax withholdings. Our 2014 tax benefit also includes recognition of deferred tax benefits, which we were unable to recognize in 2013 due to the valuation allowance that we reversed in the fourth quarter of 2013, as discussed in our Annual Report on Form 10-K for the year ended December 31, 2013, and a tax liability on our income from vessel financing in 2014 that was exempt from tax in 2013. For further information on certain tax laws and elections, see our Annual Report on Form 10-K filed for the year ended December 31, 2013, including "Note J - Income Taxes" to the consolidated financial statements included therein.



Equity in Net (Loss) Income of Unconsolidated Entities

Equity in net (loss) income from unconsolidated entities, net of taxes, improved from a loss of $345,000 for the six months ending June 30, 2013 to a loss of $188,000 for the same period of 2014, driven primarily by improved charter hire rates on our equity investment in Mini Bulker vessels and our recent investment in two Chemical Tankers. 49

--------------------------------------------------------------------------------

Table of Contents LIQUIDITY AND CAPITAL RESOURCES The following discussion should be read in conjunction with the more detailed Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Cash Flows included in Item 1 of Part I of this report.



Working Capital

Our working capital (defined as the difference between our total current assets and total current liabilities) decreased from $16.4 million at December 31, 2013 to $10.9 million at June 30, 2014. This $5.5 million decrease in working capital was primarily driven by a $4.2 million decrease in cash and cash equivalents during the first six months of 2014 to a total of $15.8 million at June 30, 2014. The decrease in cash and cash equivalents was a result of cash used in financing activities of $6.1 million and cash used in investing activities of $9.8 million, partially offset by cash provided by operating activities of $11.7 million. Total current liabilities of $69.0 million as of June 30, 2014 included $19.9 million of current maturities of long-term debt.



Restricted Cash

As of June 30, 2014 we had $8.0 million of cash classified as restricted cash, of which $6.0 million was associated with a performance guarantee and $2.0 million was associated with a deposit under a PCTC operating lease, which was previously classified as a long term asset. We expect to repurchase this vessel and release the $2 million deposit, see Note 21. As of December 31, 2013, we had $8.5 million of cash classified as restricted cash, of which $6.0 million was associated with a performance guarantee and $2.5 million was associated with a covenant to maintain a minimum loan to value ratio on loans associated with the financing of one Capesize vessel, one Supramax Bulk Carrier, and three Handysize Bulk Carriers. The loan to value was normalized in 2014 and this deposit was returned.



Net Cash Provided by Operating Activities

Net cash provided by operating activities for the six months ended June 30, 2014, was $11.7 million after adjusting our net loss of $3.9 million upward for non-cash items such as depreciation, deferred charges, amortization, and non-cash stock based compensation, which was partially offset by $4.1 million in deferred drydocking payments, and various other items specified in our consolidated statements of cash flows. The decrease in our operating cash flow was driven primarily from changes in our working capital.



Net Cash Used in Investing Activities

Net cash used in investing activities of $9.8 million for the six months ended June 30, 2014, primarily consisted of $6.5 million of capital outlays, which is primarily made up of $3.7 million for the purchase of property in New Orleans and $1.9 million for the construction of our Handysize newbuilding scheduled for 2015 delivery, and $7.9 million related to our minority investment in two Chemical Tankers and two Asphalt Tankers delivered in the second quarter of 2014. These amounts were partially offset by a $2.5 million decrease in restricted cash, of which $2 million was previously in long term assets, and $2.1 million of cash received on notes receivables. 50

--------------------------------------------------------------------------------

Table of Contents



Net Cash Used In Financing Activities

Net cash used in financing activities of $6.1 million for the six months ended June 30, 2014 included $18.0 million of proceeds from a draw on our line of credit, which was largely offset by $9.5 million of regularly scheduled debt payments, $8.0 million of payments to reduce our line of credit indebtedness, and $6.3 million of common stock and preferred stock dividend payments.



Capital Outlays

Our capital outlays are separated into two categories, our investments in capital assets and capital expenditures that enhance the value or safety of our vessels, including scheduled drydock costs.

In addition to our periodic vessel purchases, we regularly incur drydocking and other capital expenditures on an ongoing basis in order to extend the useful life of our vessels, to improve and modernize our fleet, to comply with various requirements or standards imposed by insurers or governmental or quasi-governmental authorities, and to upgrade our on-shore infrastructure. The amount of our capital expenditures is influenced by, among other things, changes in regulatory, quasi-regulatory or insurance requirements or standards, drydocking schedules for our various vessels, demand for our services, cash flow generated by our operations, and cash required for other purposes. Based on current strategic plans, we currently estimate our total capital outlays for 2014 will be approximately $26.6 million which includes approximately $8.6 million on the purchase price and renovation of the new headquarters in New Orleans, Louisiana that we plan to build, and approximately $1.9 million of installment payment on the investment in our Handysize Vessel scheduled for delivery in early 2015. The following table discloses (i) our capital outlays for the first two quarters of 2014 and (ii) our projected capital outlays for the balance of 2014: Quarter Ended Quarter Ended Estimated Expenditures (All Amounts In Thousands) 31-Mar 30-Jun 30-Sep 31-Dec Total Capital Improvements $ 386 $ 304 $ 2,950 $ - $ 3,640 Building 3,565 89 1,624 3,280 8,558 Construction In Progress 1,919 - - - 1,919 Other 13 163 - 500 676 $ 5,883 $ 556 $ 4,574$ 3,780$ 14,793 Drydock 1,775 2,323 5,805 1,947 11,850 Total Capital Outlays $ 7,658$ 2,879$ 10,379$ 5,727$ 26,643 Debt and Lease Obligations Debt Obligations On September 24, 2013, we terminated our previously-existing revolving credit facility scheduled to expire in September 2014 and five-year variable rate financing agreement that we entered into on November 30, 2012. Concurrently with these terminations, we and all of our domestic subsidiaries entered into a new senior secured credit facility ("Credit Facility") that (i) increased our borrowing capacity up to $95.0 million, with a potential increase up to $145.0 million on the terms described below, (ii) modified our covenant restrictions, (iii) extended the maturity date of our facility to September 24, 2018, (iv) further monetized the value of our U.S. assets, and (v) allowed us to refinance and retire all indebtedness outstanding under our previously-existing revolving credit facility and five-year variable rate financing agreement. The total amount paid off on September 24, 2013 was approximately $46.6 million, of which $21.0 million was drawn from the new revolving credit facility under the Credit Facility. 51

--------------------------------------------------------------------------------

Table of Contents The Credit Facility includes a term loan facility in the principal amount of $45.0 million and a revolving credit facility (the "LOC") in the principal amount up to $50 million. The LOC includes a $20.0 million sublimit for the issuance of standby letters of credit and a $5.0 million sublimit for swingline loans. The Credit Facility carries an accordion feature, whereby an additional term loan of up to $50.0 million may be advanced subject to certain financial requirements. The Credit Facility has four lenders, each with commitments ranging from $15.0 million to $30.0 million. As of June 30, 2014, we had $31.0 million of borrowings and $3.5 million of letters of credit outstanding under our LOC, leaving us with approximately $15.5 million of borrowing capacity Under the Credit Facility, each of our domestic subsidiaries is a joint and several co-borrower. The obligations of all the borrowers under the Credit Facility are secured by all personal property of the borrowers, including the U.S. flagged vessels owned by ISH's domestic subsidiaries and collateral related to such vessels. Several of our international flagged vessels are pledged as collateral securing several of our other secured debt facilities.



Effective March 31, 2014, we amended the Credit Facility in the manner discussed below under the heading "- Debt Covenants."

The Credit Facility, as amended, includes usual and customary covenants and events of default for credit facilities of its type. Our ability to borrow under the Credit Facility is conditioned upon continued compliance with such covenants, including, among others, (i) covenants that restrict our ability to engage in certain asset sales, mergers or other fundamental changes, to incur liens or to engage in various other transactions or activities and (ii) various financial covenants, including those that stipulate that we maintain a consolidated leverage ratio of 4.50 to 1.0 through the fiscal quarter ending June 30, 2014, and 4.25 to 1.0 thereafter, liquidity of not less than $15.0 million through June 30, 2014, and $20.0 million thereafter, and a consolidated net worth of not less than the sum of $228.0 million plus 50% of our consolidated net income earned after December 31, 2011, plus 100% of the proceeds of all issuances of equity interests received after December 31, 2011 (with all such terms or amounts as defined in or determined under the Credit Facility). For more information on our compliance with these covenants, see "- Debt Covenants" below. Lease Obligations As of June 30, 2014, we held six vessels under operating contracts and seven vessels under bareboat charter or lease agreements. The types of vessels held under these agreements include (i) a Molten-Sulphur Carrier in our Jones Act segment, (ii) three Pure Car Truck Carriers that operate under our PCTC segment, (iii) two Multi-Purpose vessels, one Tanker, five Container vessels, and one Heavy Lift vessel, all of which operate in our Specialty Contracts segment. Our vessel operating lease agreements have early buy-out options and fair value purchase options that enable us to purchase the vessels under certain specified circumstances. The lease agreements impose certain financial covenants, including defined minimum working capital and net worth requirements, and prohibit us from incurring, without prior written consent, additional debt or lease obligations, subject to certain specified exceptions. These financial covenants are generally similar, but not identical, to the above-described financial covenants set forth in the Credit Facility. See "- Debt Covenants" below. On February 22, 2012, we completed a sale and leaseback transaction with Wells Fargo Bank Northwest National Association of our 2007-built PCTC. The sale generated proceeds of $59.0 million, which we used to pay down debt of $54.5 million. We are leasing the vessel back under a ten-year lease agreement with early buyout options that we can exercise in 2017 and 2019 under certain specified circumstances. The sale resulted in a gain of $14.9 million, which we recorded as a deferred gain on the balance sheet and recognize as income over the length of the lease. On November 27, 2012, we sold our Molten-Sulphur Carrier to BMO Harris Equipment Finance Company for approximately $32 million cash and commenced a seven-year lease agreement with an early buy-out option that can be exercised in 2017 under 52

--------------------------------------------------------------------------------

Table of Contents certain specified circumstances. This lease is classified as an operating lease, with the $8.0 million gain on this sale-leaseback being deferred and recognized over the term of the lease. On November 27, 2012, we sold a 1998-built PCTC to CapitalSource Bank for approximately $31 million cash and commenced a six-year lease agreement with an early buy-out option that can be exercised in 2017. This lease is classified as an operating lease, with the $11.7 million gain on this sale-leaseback being deferred and recognized over the term of the lease. We used the net proceeds of approximately $63 million from the November 27, 2012 transactions to finance a portion of the purchase price for our acquisition of UOS, which was completed on November 30, 2012. On December 27, 2012, we sold a 1999-built PCTC to BB&T Equipment Finance for $32 million cash and commenced a six-year lease agreement with an early buy-out option that can be exercised in 2015 or again in 2018 under certain specified circumstances. This lease is classified as an operating lease. In conjunction with our acquisition of UOS in November 2012, we assumed a binding commitment to purchase a Tug/Barge unit previously operated by UOS under a third-party lease. On September 25, 2013, we concluded the purchase of the Tug/Barge unit. We also conduct certain of our operations from leased office facilities. On September 19, 2013, we executed a five year lease agreement for office space in Tampa, Florida housing our UOS employees. The lease calls for graduated payments in equal amounts over the 60-month term of the lease. In addition to the Tampa office, we signed a new two year lease agreement for our Shanghai, China office space. This lease is effective October 1, 2013 through September 30, 2015. As previously announced, we intend to relocate our corporate headquarters from Mobile, Alabama to New Orleans, Louisiana during the fourth quarter of 2015 after we complete renovations of a new facility in downtown New Orleans. Our renovation and relocation costs are expected to be partially offset by approximately $10.2 million in incentives offered by the State of Louisiana. We are planning to terminate our Mobile office lease in late 2015 and in doing so will incur approximately $3.0 million in lease termination expenses. There were no significant expenditures in the second quarter of 2014 related to the relocation. For additional information on our fixed commitments, see the table quantifying our aggregate debt and lease obligations included in our Annual Report on Form 10-K for the year ended December 31, 2013 under the heading, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Contractual Obligations and Other Commitments." For additional information on pending financing transactions that would impact our fixed commitments, see Note 21 herein.



Debt Covenants

All of our principal credit agreements and operating leases require us to comply with various loan covenants, including financial covenants that require minimum levels of net worth, working capital, liquidity, and interest expense or fixed charges coverage and a maximum amount of debt leverage. For more information, see "Risk Factors" in Item 1A of Part II of this report. As of March 31, 2014, our principal senior secured lenders and two of our lessors agreed at our request to, among other things, defer the date upon which we are required to attain a more stringent leverage ratio and increased liquidity from December 31, 2013 to June 30, 2014. Under the prior terms, we were required to maintain a consolidated leverage ratio of 4.50 to 1.0 through the fiscal quarter ending December 31, 2013 and 4.25 to 1.0 thereafter, and liquidity of not less than $15 million through December 31, 2013 and $20 million thereafter. Under these new terms, we are required to maintain a consolidated leverage ratio of 4.50 to 1.0 through the fiscal quarter ending June 30, 2014, and 4.25 to 1.0 thereafter, and liquidity of not less than $15 million through June 30, 2014 and $20 million thereafter. Over time, we hope to establish a common set of covenants that are consistent for all credit facilities. 53 --------------------------------------------------------------------------------

Table of Contents The following table represents the actual and required covenant amounts required under our principal credit agreements and operating leases (after giving effect to the new terms described above) for the six months ending June 30, 2014: Actual Required Net Worth (thousands of dollars) (1) $ 323,923 $



299,396

Working Capital (thousands of dollars) (2) $ 10,880 $



1

Interest Expense Coverage Ratio (minimum) (3) 5.62



2.50

EBITDAR to Fixed Charges (minimum) (4) 1.22



1.15

Total Indebtedness Leverage Ratio - EBITDAR (maximum) (5) 4.33

4.50 Minimum Liquidity (6) $ 28,869$ 15,000 1. Defined as total stockholder's equity less goodwill. 2. Defined as total current assets minus total current liabilities.



3. Defined as the ratio between consolidated earnings before interest, taxes,

depreciation, and amortization ("EBITDA") to interest expense.

4. Defined as the ratio between fixed charges to consolidated earnings before

interest, taxes, depreciation, amortization and rent ("EBITDAR"). 5. Defined as the ratio between adjusted unconsolidated indebtedness to consolidated EBITDAR. 6. Defined as available borrowing capacity under our line of credit plus available cash. Although we expect that our operating results for the remainder of 2014 to be stronger than our first half 2014 results, our failure to produce improved results could jeopardize our ability to attain one or more of our financial covenants in the future. Based on current conditions and our expectations for improved performance over the last six months of 2014, we currently believe that we will be able to attain all of our financial covenants through the end of 2014, but cannot assure you of this. Our ability to attain our financial covenants after December 31, 2014 will be dependent upon a wide range of factors, several of which are outside of our control. For additional information, see "Risk Factors - We cannot assure you that we will be able to comply with all of our loan covenants" in Item 1A of Part II of this report. In the unanticipated event that our cash flow and capital resources are not sufficient to fund our debt service obligations, we could be forced to reduce or delay capital expenditures, sell assets, obtain additional capital, enter into financings of our unencumbered vessels or restructure debt. Based on current circumstances, we believe we can continue to fund our working capital and routine capital investment liquidity needs through cash flow from operations. To the extent we are required to seek additional capital; our efforts could be hampered by continuing uncertainties in the credit markets. See "Risk Factors" in Item 1A of Part II of this report.



Pension Obligations

We contributed $300,000 to our pension plan for the six months ended June 30, 2014. Based on current conditions, we expect to contribute an additional $300,000 before December 31, 2014.

Shelf Registration Statement and Other Matters

On December 4, 2013, the SEC declared effective our new universal shelf registration statement, which enables us to sell up to $200 million of certain registered debt and equity securities. The new registration statement replaces our 2010 universal shelf registration statement, under which we issued $56.5 million of preferred stock. We routinely evaluate the acquisition of additional vessels or businesses and from time to time evaluate possible vessel divestitures. At any given time, we may be engaged in discussions or negotiations regarding acquisitions or dispositions. We 54

--------------------------------------------------------------------------------

Table of Contents generally do not announce our acquisitions or dispositions until we have entered into a definitive agreement. We may require additional financing in connection with any such acquisitions, refinancing transactions or to increase working capital. Our consummation of any such financing transactions could have a material impact on our financial condition or operations.



Cash Dividend Payments

The payment of dividends to common stockholders and preferred stockholders are at the discretion and subject to the approval of our Board of Directors. On October 29, 2008, our Board of Directors authorized the reinstitution of a quarterly cash common stock dividend program beginning in the fourth quarter of 2008. Since then, the Board of Directors has declared a cash common stock dividend each quarter. On January 7, 2014, the Board of Directors declared a dividend of $2.375 and $2.25 per share on our 9.5% Series A Cumulative Perpetual Preferred Stock and 9.0% Series B Cumulative Perpetual Preferred Stock, respectively, to preferred stockholders of record on January 29, 2014, which was paid on January 30, 2014. Additionally, the Board of Directors declared a dividend of $0.25 per share of common stock to common stockholders of record as of February 17, 2014, which was paid on March 3, 2014. On April 7, 2014, the Board of Directors declared a dividend of $2.375 and $2.25 per share on our 9.5% Series A Cumulative Perpetual Preferred Stock and 9.0% Series B Cumulative Perpetual Preferred Stock, respectively, to preferred stockholders of record on April 29, 2014, which was paid on April 30, 2014. On April 30, 2014, the Board of Directors declared a dividend of $.25 per share of common stock to common stockholders of record as of May 16, 2014, payable on June 3, 2014. On July 7, 2014, the Board of Directors declared a dividend of $2.375 and $2.25 per share on our 9.5% Series A Cumulative Perpetual Preferred Stock and 9.0% Series B Cumulative Perpetual Preferred Stock, respectively, to preferred stockholders of record on July 29, 2014, which was paid on July 30, 2014.



On

July 30, 2014, the Board of Directors declared a dividend of $.25 per share of common stock to common stockholders of record as of August 15, 2014, payable on September 4, 2014.



Holders of our equity securities have no contractual or other legal right to receive dividends. See "Risk Factors" in Part II, Item 1A, of this report.

Environmental Issues

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 occurrence, with deductible amounts not exceeding $250,000 for each incident. Certain international maritime organizations have proposed various regulations relating to marine fuel emissions and ballast water that could in the aggregate increase our operating costs.



New Accounting Pronouncements

In May 2014, the Financial Accounting Standard Board ("FASB") issued ASU 2014-09, "Revenue from Contracts with Customers", to amend Accounting Standards Codification Topic 605, "Revenue Recognition". The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning on or after December 15th, 2016. Early adoption is not permitted. We are currently evaluating the impact of the adoption of this standard. 55

--------------------------------------------------------------------------------

Table of Contents In June 2014, the FASB issued ASU 2014-12, "Compensation - Stock Compensation", to give explicit guidance on whether to treat a performance target that could be achieved after the requisite service period as a performance condition that affects vesting or as a nonvesting condition that affects the grant-date fair value of an award. ASU 2014-12 is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The effective date is the same for both public business entities and all other entities. We are currently evaluating the impact of the adoption of this standard. 56

--------------------------------------------------------------------------------

Table of Contents


For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: Edgar Glimpses


Story Tools






HispanicBusiness.com Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters