International Shipholding Corporation Reports Fourth Quarter Results.

Business Editors

NEW ORLEANS--(BUSINESS WIRE)--Jan. 30, 2004

International Shipholding Corporation (NYSE:ISH) today reported results for the three month and twelve month periods ended December 31, 2003. Net income for the three months ended December 31, 2003 was $1.651 Million as compared to net income of $793,000 for the three months ended December 31, 2002. For the full year 2003, net income was $5.491 Million as compared to a net loss of $136,000 for the full year 2002.

The primary factors contributing to the improved operating results in the fourth quarter of 2003 as compared to the same quarter of 2002 were higher current quarter dividends from our minority investment in four Capesize bulk carriers resulting from a strong dry bulk freight market. Results from our Pure Car/Truck Carriers were also higher in the current quarter as a result of increased cargo volume. We sold our 12.5% investment in the aforementioned four ships during the third and fourth quarters of 2003 at about breakeven and simultaneously reinvested at a 50% level in two of the vessels. Retirements of debt during the past year, together with lower interest rates on variable rate loans, resulted in reduced interest expense during the fourth quarter of 2003 as compared to the same quarter of 2002.

Results from our Transatlantic liner service and U.S. Flag Waterman liner service were lower in the fourth quarter 2003 as compared to the same quarter of 2002 due to lower cargo volumes in the current period and higher than anticipated operating costs mainly due to the weak dollar and steel tariffs. Although the full year 2003 results from our U.S. flag coal carrier, ENERGY ENTERPRISE, which operates predominantly in the coastwise trade, were positive, the quarterly results were lower in the fourth quarter of 2003, as compared to the same quarter of 2002, because the vessel operated for a part of the 2002 quarter at higher rates as compared to 2003. The operating results for the fourth quarter of 2003 were also impacted as a result of the sale at a small gain of our special purpose vessel GREEN WAVE which, because of her age, had reached the end of its economic life. The vessel operated fully in the fourth quarter of 2002 under a charter to the Military Sealift Command.

Improvement in the full year 2003 as compared to 2002 occurred in several areas of our operations. Improved results were achieved in 2003 in our Rail/Ferry Service as a result of higher cargo volumes in the current year. Additionally, our U.S. Flag liner service made positive contributions in 2003 as compared to 2002. Also our U.S. Flag coal carrier, ENERGY ENTERPRISE, was utilized for all but two days during 2003 under its basic time charter contract as compared to the same period of the previous year when it was out of service thirty-three days for repairs and during which it operated ninety-one days in the spot market at lower rates as compared to its basic charter. As mentioned above, dividends from our minority investment in four Capesize bulk carriers were higher in 2003 as a result of a strong dry bulk freight market. However, operating results from our recently sold special purpose vessel, GREEN WAVE, were lower in 2003 as compared to 2002 when the vessel operated under a charter to the Military Sealift Command. Additionally, interest expense was lower in 2003 as a result of retirements of debt during the past year together with lower interest rates on variable rate loans.

The current year was negatively impacted by the recognition of costs associated with the retirement of debt related to our U.S. Flag coal carrier, ENERGY ENTERPRISE, amounting to $2.6 Million before tax or $1.7 Million after tax as a result of U.S. Generating New England, Inc., charterer of the ENERGY ENTERPRISE, having filed a petition for bankruptcy protection on July 8, 2003. This filing, as previously reported, became an event of default under the vessel's debt indenture resulting in the acceleration of principal and interest and triggering cross defaults under certain of our other debt agreements. In order to cure the technical defaults thereby created, we secured alternative financing during August 2003 and paid in full the outstanding obligations associated with the ENERGY ENTERPRISE loan. Settlement of the loan included the payment of a "make-whole" prepayment penalty, which we otherwise would not have had to pay, and a ...