ITEM 1. BUSINESS - ------------------ Overseas Shipholding Group, Inc. (the "registrant") and
its subsidiaries (collectively the "Company") constitute a major
international shipping enterprise owning and operating a
diversified fleet of oceangoing bulk cargo vessels (principally
tankers). The Company's total bulk fleet as of February 23, 1999
consists of 51 vessels having an aggregate carrying capacity of
approximately 6,032,050 deadweight tons ("DWT"), including four
ships aggregating approximately 1,121,150 DWT which the Company
owns jointly with others and in which the Company has a 50%
interest.* Twelve vessels in the Company's fleet, which total
approximately 793,850 DWT, are registered under the U.S. flag;
the balance are registered under foreign flags. Forty tankers
and petroleum products carriers account for 85% of the total
tonnage, and ten dry bulk carriers and a pure car carrier account
for the remainder.
- ----------------------------
* The Company's "total bulk fleet" includes four vessels that are leased from financial institutions under bareboat charters having remaining terms of from 5 to 13 years, but does not include (i) two 308,700 DWT Very Large Crude Carriers ("VLCCs") on order for delivery in the first half of 2000 as discussed under "Vessel Disposals and Fleet Renewal" below, and (ii) a 29,300 DWT petroleum barge which is owned by a partnership in which the Company has a 50% interest. Subsequent to February 23, 1999 the Company sold one 31,600 DWT petroleum products carrier in March 1999 and contracted for the sale of three 64,000 DWT dry bulk carriers for delivery in the second quarter of 1999. These sales are part of the planned disposal of 16 of the Company's oldest vessels as discussed under "Vessel Disposals and Fleet Renewal" below.
The Company charters its ships to commercial shippers
and U.S. and foreign governmental agencies for the carriage of
bulk commodities, primarily crude oil, petroleum products, grain,
coal and iron ore. Generally, each ship is chartered for a
specific period of time ("time charter"), or for a specific
voyage or voyages ("voyage charter"). Under the terms of time
and voyage charters covering the Company's vessels, the ships are
equipped and operated by the Company and are manned by personnel
in the Company's employ. From time to time, the Company also has
some of its vessels on bareboat charter. Under the terms of
bareboat charters, the ships are chartered for fixed periods of
time (generally medium- or long-term) during which they are
operated and manned by the charterer. In addition, the Company
has from time to time chartered in tonnage under arrangements
where the vessels are owned and operated by third parties.
The Company's ships engage in carriage of cargo in
various parts of the world. Revenues from carriage of petroleum
and its derivatives represented approximately 91% of the voyage
revenues of the Company in 1998, 85% in 1997 and 82% in 1996.
Revenues from carriage of dry cargo accounted for the balance of
such voyage revenues for each of those years. The carriage of
petroleum and its derivatives also accounted for the majority of
the voyage revenues of the Company's bulk shipping joint
ventures. The relative contributions to voyage revenues of the
various types of cargoes carried varied from year to year,
depending upon demand for particular kinds of carriage and the
purposes for which and the terms on which the ships are
chartered.
As of February 23, 1999, all of the vessels in the
Company's fleet were employed. Forty-three of these vessels were
chartered to non-governmental commercial shippers. These 43
ships include nine U.S.-flag ships and 34 foreign-flag ships,
which together represent approximately 83% of the combined
carrying capacity of the Company's fleet. Of the remaining ships
in the Company's fleet, three U.S.-flag ships and five foreign-
flag ships were under charter to foreign or U.S. governmental
agencies.
U.S.-FLAG AND FOREIGN-FLAG OPERATIONS - ------------------------------------- The Company is principally engaged in the ocean
transportation of liquid, as well as dry bulk cargoes, in both
the worldwide markets and the self-contained U.S. markets through
the ownership and operation of a diversified fleet of bulk cargo
vessels. The bulk shipping industry has many markets that have
distinct characteristics and are subject to different market
forces. The primary markets for individual vessels are
determined to a large degree by their types, sizes and flags.
Unlike container or liner ships, which the Company does not own,
bulk vessels are not bound to specific ports or schedules and
therefore can respond to market opportunities by moving between
trades and geographical areas.
The Company's U.S.-flag and foreign-flag bulk fleets
operate substantially in separate markets. The Company believes
that ownership of a diversified fleet, with vessels of different
types, sizes and flags, enables the Company to take advantage of
chartering opportunities for domestic and international shipment
of bulk commodities and thereby cushions the effects of weakness
in particular markets. Information regarding the Company's
reportable segments and its operations under U.S. and foreign
flags for the three years ended December 31, 1998 is set forth in
the tables in Note B to the Company's financial statements
incorporated by reference in Item 8 below. For information
regarding the revenues and results of operations of the Company's
bulk shipping joint ventures for the three years ended December
31, 1998, see Note E to the Company's financial statements
incorporated by reference in Item 8 below.
EMPLOYMENT OF VESSELS - --------------------- The bulk shipping industry is highly competitive and
fragmented, with no one shipping group owning as much as 4% of
the world fleet. The Company competes with other owners of U.S.
and foreign-flag tankers and dry cargo ships operating on an
unscheduled basis similar to the Company.
In the spot and short-term charter market, the
Company's vessels compete with all other vessels of a size and
type required by a charterer that can be available at the date
specified. In the spot market, competition is based primarily on
price. Nevertheless, within a narrow price band, factors related
to quality of service and safety enter into a potential
customer's decision as to which vessel to charter. In the long-
term charter market additional factors such as financial strength
of the operator/owner and the age and quality of the vessel
become more important. In chartering vessels to the United
States government, the Company competes primarily with other
owners of U.S.-flag vessels. Demand for U.S.-flag product
carriers is closely linked to changes in regional energy demands
and in refinery activity. These vessels also compete with
pipelines and oceangoing barges and are affected by the level of
imports on foreign-flag product carriers.
Prevailing rates for charters of particular types of
ships are subject to fluctuations depending on conditions in
United States and international bulk shipping markets and other
factors. Although medium- and long-term charter business avoids,
to some extent, the sharp rate fluctuations characteristic of the
spot or voyage markets, the availability of such business in
international markets has been limited, and, when available,
rates of return have generally been unattractive.
For additional information as of February 23, 1999
regarding the 51 vessels in the Company's total bulk fleet,
including information as to the employment of such vessels, see
the tables on page 39 of the registrant's Annual Report to
Shareholders for 1998, which tables are incorporated herein by
reference.
U.S. DOMESTIC AND PREFERENCE TRADES - ----------------------------------- Under the Jones Act, shipping between United States
coastal ports, including the movement of Alaskan oil, is reserved
by law to U.S.-flag vessels, owned by U.S. citizens, crewed by
U.S. seafarers and built in the United States. The Company owns
six U.S.-flag crude carriers, five of which are under long-term,
fixed-rate charters to BP Oil Shipping Company, USA ("BP") which
have recently been extended; three of the charters now expire in
2005, one in 2006 and one at year-end 2003, coinciding with the
Oil Pollution Act of 1990 expiry dates for each such vessel.
This employment will provide a steady level of core earnings for
the Company over the next seven years. Also included in the
Company's U.S.-flag fleet are three petroleum products carriers
engaged in the U.S. coastwise trade, two dry bulk carriers that
participate in the preference trades (see below) and one car
carrier that is on long-term charter transporting vehicles from
Japan.
In each of the years 1998, 1997 and 1996 revenues from
BP were in excess of 10% of revenues from voyages, amounting in
1998 to approximately $98.6 million, in 1997 to approximately
$118 million, and in 1996 to approximately $98.3 million. No
other charterer accounted for revenues in excess of 10% of voyage
revenues.
United States military cargo must be transported on
U.S.-flag vessels, if available. The Merchant Marine Act, 1936,
as amended, requires that preference be given to U.S.-flag
vessels, if available at reasonable rates, in the shipment of at
least half of all U.S. government-generated cargoes and 75% of
food-aid cargoes.
Vessels in the Company's fleet have been chartered from
time to time to the Military Sealift Command of the United States
Navy ("MSC"), and to recipient nations for the carriage of grain
and other cargoes under United States foreign aid and
agricultural assistance programs. Charters to MSC reflect in
large part the requirements of the United States military for
waterborne carriage of cargoes, and, accordingly, depend in part
on world conditions and United States foreign policy.
Since late 1996, the Company's U.S.-flag car carrier,
which is under long-term charter, has participated in the U.S.
Maritime Security Program, which ensures that militarily-useful
U.S.-flag ships are available to the Department of Defense in the
event of war or national emergency. Under the program, the
Company receives approximately $2.1 million per year through
2005, subject to annual Congressional appropriations.
SIGNIFICANT DEVELOPMENTS - ------------------------ During 1998, the Company embarked on a number of
strategic initiatives designed to enhance the Company's
competitive position and financial strength in the years to come.
COMPANY STRENGTHENS ORGANIZATIONAL STRUCTURE. On
October 30, 1998, the registrant assumed direct management of its
bulk shipping fleet, terminating by mutual consent its
arrangement with Maritime Overseas Corporation ("MOC"), which had
managed the fleet since the registrant's inception in 1969. The
Company has employed the staff of MOC, thereby ensuring the
maintenance of customer satisfaction and high quality operations.
In addition, the Company initiated a comprehensive review of its
business processes and structure. As a result, the Company has
reduced costs of operation, eliminated organizational layers and
staff, consolidated office locations, and increased productivity.
COMPANY EXPANDS STRATEGIC ALLIANCES. The Company,
British Petroleum and Keystone Shipping Co. are collaborating to
form a joint operating company that will manage the vessels
carrying British Petroleum's Alaskan crude oil, including five of
the Company's vessels. By combining personnel from each of the
founding companies into a single operation, this joint company
will eliminate numerous interfaces and significantly streamline
operations. By incorporating the highest performance standards
of each company, the joint operating company intends to become
the premier quality provider of marine transportation services in
the environmentally sensitive Alaskan crude oil trade.
The Company's Aframax (80,000 to 120,000 DWT) tanker
pool with PDV Marina, the marine transportation subsidiary of the
Venezuelan state oil company, continues to expand its activities.
With 20 vessels, the majority of which are 1990s-built and double-
hulled, the pool is the largest modern Aframax fleet operating in
the Caribbean Basin. The pool has entered into a number of long-
term contracts of affreightment to complement the pool's
Venezuelan cargoes; this has reduced overall ballast time for the
pool vessels, facilitating optimal fleet utilization. With
increasing shipments of oil expected from Venezuela and other
Latin American countries over the next decade, the pool is poised
for continued growth.
VESSEL DISPOSALS AND FLEET RENEWAL. The Company's 1998
results reflect a reserve of $91 million ($59.2 million after
tax) related to planned vessel dispositions. The major portion
of the reserve relates to the six remaining vessels in the
Company's ten-vessel dry bulk disposal program announced in 1997.
The Asian financial crisis has continued to have a particularly
adverse effect on dry bulk markets, including the prices for
existing tonnage, and the Company has determined to adjust the
carrying value of these vessels accordingly. The balance of the
reserve reflects a reduction to estimated realizable value of the
carrying amounts for ten of the Company's older tankers scheduled
for disposal, including three held in a joint venture. Upon
completion of all these disposals, anticipated to occur during
1999, the Company will have one of the most modern fleets in the
industry. Such actions will permit the Company to focus its
capital on those areas of the bulk shipping business where the
Company's capabilities and resources will provide the highest
return. To date, three of the remaining six vessels in the
Company's dry bulk disposal program are under contract of sale
for delivery in the second quarter of 1999, and three of the
Company's ten older tankers scheduled for disposal have been sold
(including one held in a joint venture).
In August 1998, the Company reaffirmed its long-
standing policy of continual fleet renewal by placing orders, at
very competitive prices, for two 308,700 DWT double-hulled
foreign flag VLCCs. The vessels are being constructed by Hyundai
Heavy Industries Co., Ltd., for delivery in the first half of
2000. The Company expects to make additional investments in
modern tonnage through selected acquisitions of new and
secondhand tonnage, and bareboat chartering or time chartering of
tonnage.
There is no assurance that the Company's fleet will
expand, or that the Company will acquire vessels or place orders
for the construction of new vessels to the same extent as in the
past.
COMPANY'S FINANCIAL STRENGTH. During 1998, the Company
reduced long-term debt by over $220 million to $834 million from
$1,056 million. A substantial portion of this reduction was
attributable to the application of $180 million of after-tax
proceeds received from the Company's sale of 3,650,000 shares of
Royal Caribbean Cruises Ltd. common stock previously acquired in
the disposition of the Company's interest in Celebrity Cruise
Lines Inc. The Company also significantly reduced its interest
expense and increased its financial flexibility by refinancing
$310 million of debt containing the Company's most restrictive
financial covenants. The interest cost on the replacement
borrowing will be lower than the interest cost on the refinanced
debt by over $5 million per year. With more than $400 million of
aggregate liquidity and credit availability at year end, the
Company has the financial resources to implement its strategic
objectives.
In December 1998, the registrant announced its
authorization to purchase up to three million shares of its
common stock from time to time in the open market. Such
purchases will be made at the registrant's discretion and will
take into account such factors as price and prevailing market
conditions.
ADOPTION OF STOCKHOLDER RIGHTS PLAN. In October 1998,
the registrant's Board of Directors adopted a Stockholder Rights
Plan, and declared a rights distribution under the Plan of one
common stock purchase right on each outstanding share of common
stock of the registrant. The rights plan is designed to guard
against attempts to take over the Company for a price that does
not reflect the Company's full value, or that are conducted in a
manner or on terms not approved by the board as being in the best
interests of the Company and the stockholders. The rights are
preventative in nature and are not being distributed in response
to any known attempt to acquire control of the Company.
ENVIRONMENTAL MATTERS RELATING TO BULK SHIPPING - ----------------------------------------------- Since 1990, the tanker industry has experienced a more
rigorous regulatory environment. Safety and pollution concerns
have led to a greater emphasis on quality and to the
strengthening of the inspection programs of classification
societies, governmental authorities and charterers.
OPA 90. The Oil Pollution Act of 1990 ("OPA 90")
significantly expands the potential liability of a vessel owner
or operator (including a bareboat charterer), for damage
resulting from spills in U.S. waters (up to 200 miles offshore).
OPA 90 applies to all U.S. and foreign-flag vessels.
Under OPA 90, a vessel owner or operator is liable
without fault for removal costs and damages, including economic
loss without physical damage to property, up to $1,200 per gross
ton of the vessel. When a spill is proximately caused by gross
negligence, willful misconduct or a violation of a Federal
safety, construction or operating regulation, liability is
unlimited. OPA 90 did not preempt State law, and therefore States
remain free to enact legislation imposing additional liability.
Virtually all coastal States have enacted pollution prevention,
liability and response laws, many with some form of unlimited
liability.
In addition, OPA 90 imposes a requirement that tankers
calling at U.S. ports have double hulls. This requirement applied
to newly constructed tankers contracted for after June 1990, or
delivered after 1993. Beginning in 1995, the double-hull
requirement was phased in for existing tankers. The age
requirement is reduced in stages so that by the year 2000,
tankers of at least 30,000 gross tons over 23 years old (and
tankers between 15,000 and 30,000 gross tons over 30 years old)
must have double hulls, and by 2010, all tankers must have double
hulls, except that tankers with double bottoms or double sides
are afforded an additional five years for compliance but must
comply no later than the year 2015. Tankers discharging at a
deepwater port or lightering more than 60 miles offshore will not
be required to have double hulls until 2015.
OPA 90 also requires owners and operators of vessels
calling at U.S. ports to adopt contingency plans for responding
to a worst case oil spill under adverse weather conditions. The
plans must include contractual commitments with clean-up response
contractors in order to ensure an immediate response to an oil
spill. Furthermore, training programs and drills for vessel,
shore and response personnel are required. The Company has
developed and timely filed its vessel response plans with the
U.S. Coast Guard and has received approval of such plans.
Under U.S. Coast Guard financial responsibility
regulations issued pursuant to OPA 90, all vessels entering U.S.
waters are required to obtain Certificates of Financial
Responsibility ("COFRs") from the Coast Guard demonstrating
financial capability to meet potential oil spill liabilities. All
the vessels in the Company's U.S. and foreign-flag fleets have
obtained COFRs.
INTERNATIONAL REQUIREMENTS. The Company's ships undergo
routine and rigorous in-house safety reviews. They are also
routinely inspected by port authorities, classification societies
and major oil companies. All of the Company's vessels are now
certified under the new standards reflected in ISO 9002's quality
assurance program, and International Safety Management's (ISM)
safety and pollution prevention protocols.
In addition to the OPA 90 requirements, in worldwide
trade MARPOL regulations of the International Maritime
Organization (IMO) require double hulls or equivalent tanker
designs for newbuildings ordered after 1993 and mandate double
hulls for existing tankers at 30 years of age. Under MARPOL
Regulation 13G, existing tankers upon reaching 25 years of age,
are required to either have protectively located segregated
ballast tanks or double bottom spaces not used for cargo carriage
covering at least 30% of the cargo tank area, or they must
utilize hydrostatically balanced loading. These tanker
modifications will reduce the carrying capacity of the affected
vessel. Given the large number of existing VLCCs that were
delivered in the mid-1970s, these pollution protection measures
may lead to an increase in scrapping.
INSURANCE. Consistent with the currently prevailing
practice in the industry, the Company presently carries $700
million of pollution coverage per occurrence on every vessel in
its fleet. While the Company has historically been able to
obtain such insurance at commercially reasonable rates, no
assurances can be given that such insurance will continue to be
available in the future.
BULK SHIPPING MARKETS - --------------------- Information regarding bulk shipping markets is set
forth in the text of the "Global Bulk Shipping Markets" section
(pages 14 and 15) of the registrant's Annual Report to
Shareholders for 1998, which information is incorporated herein
by reference.
EMPLOYEES - --------- As of February 23, 1999, the Company employed
approximately 2,200 seagoing personnel and shore staff. The
Company has collective bargaining agreements with three different
maritime unions, covering seagoing personnel employed on the
Company's U.S.-flag vessels. These agreements are in effect
through June 15, 2001 with one of the unions and through June 15,
2000 with two of the unions. Under the collective bargaining
agreements, the Company is obligated to make contributions to
pension and other welfare programs. The Company believes that
its relations with its employees are satisfactory.
CAPITAL CONSTRUCTION FUND - ------------------------- To encourage private investment in U.S.-flag ships, the
Merchant Marine Act of 1970 permits deferral of taxes on earnings
deposited into a Capital Construction Fund and amounts earned
thereon, which can be used for the construction or acquisition
of, or retirement of debt on, qualified U.S.-flag vessels
(primarily those limited to United States foreign and
noncontiguous domestic trades). The registrant is a party to an
agreement under the Act. Under the agreement, the general
objective is (by use of assets accumulated in the fund) for three
vessels to be constructed or acquired by the end of 2004. If the
agreement is terminated or amounts are withdrawn from the Capital
Construction Fund for non-qualified purposes, such amounts will
then be subject to Federal income taxes. Monies can remain tax-
deferred in the fund for a maximum period of 25 years (commencing
January 1, 1987 for deposits prior thereto). See the second
paragraph of Note J to the Company's financial statements
incorporated by reference in Item 8 below.
UPDATE ON IMPACT OF YEAR 2000 - ----------------------------- The Company is continuing its review of all phases of
its activities that could be affected by Year 2000 issues. Year
2000 issues relate to the inability of computer programs or
microchips to distinguish between the year 1900 and the year
2000. In connection with computer processing of its financial
records, the Company primarily uses software that is Year 2000
compliant. The Company is reviewing its computer supported
operational activities (most of which do not relate to record
keeping), which include computer operated machinery or processes
or computer based backup systems on board its vessels. The
Company is testing its applications and has found those tested
either to be Year 2000 compliant or to have minor deficiencies
that are expected to be corrected by mid-1999. The Company is
performing further tests of its systems which it expects to
complete in mid-1999.
The Company has communicated with vendors and others
whose Year 2000 compliance is critical to the Company and is
following up with them concerning their plans and progress in
addressing Year 2000 issues. The Company is not aware of any
Year 2000 problems as a result of this effort.
The costs associated with the Company's Year 2000
compliance activities are not expected to be material to the
Company's financial position and such costs are being expensed as
incurred.
The failure to correct a Year 2000 problem could result
in an interruption in certain normal business activities or
operations. The Company, however, believes that, with completion
of its Year 2000 project, significant interruptions will not be
encountered.
Completion of the Company's Year 2000 project is based
on management's best estimates, which were derived utilizing
numerous assumptions regarding future events. There can,
however, be no assurance that there will not be a delay in, or
unanticipated costs associated with, the Year 2000 project.
Specific factors that might cause differences between the
estimates and actual results include, but are not limited to, the
availability and cost of personnel trained in this area, the
ability to locate and correct all relevant computer codes, timely
responses by third parties and suppliers, and similar
uncertainties. The Company expects to evaluate the necessity for
a contingency plan by mid-1999.
FORWARD-LOOKING STATEMENTS - -------------------------- This Form 10-K, including portions of the registrant's
Annual Report to Shareholders for 1998 incorporated herein by
reference, contains forward-looking statements regarding the
outlook for tanker and dry cargo markets, and the Company's
prospects, including the timing and proceeds of vessel disposals,
anticipated vessel acquisitions and fleet renewal, prospects for
certain strategic alliances with customers and the implementation
of certain overhead and operating cost reductions. There are a
number of factors, risks and uncertainties that could cause
actual results to differ from the expectations reflected in these
forward-looking statements, including changes in production of or
demand for oil and petroleum products, and various dry bulk
commodities, either generally or in particular regions; greater
than anticipated levels of newbuilding orders or less than
anticipated rates of scrapping; the timing of the Company's dry
bulk and tanker disposals or the amount of actual proceeds
generated by the disposals; the availability of suitable vessels
for acquisition or chartering in on terms the Company deems
favorable; changes in trading patterns for particular commodities
significantly impacting overall tonnage requirements; changes in
the rates of growth of the world and various regional economies;
risks incident to vessel operation, including pollution;
increases in costs of operation and unanticipated delays in
implementing various cost reduction measures; and unanticipated
changes in laws and regulations. Forward-looking statements in
the registrant's Annual Report to Shareholders for 1998 and
written and oral forward looking statements attributable to the
Company or its representatives after the date of this Form 10-K
are qualified in their entirety by the cautionary statement
contained in this paragraph and in other reports hereafter filed
by the registrant with the Securities and Exchange Commission.
ITEM 2.
ITEM 2. PROPERTIES - ------ ---------- See Item 1.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS - ------ ----------------- The Company is a party, as plaintiff or defendant, to
various suits in the ordinary course of business for monetary
relief arising principally from personal injuries, collision or
other casualty and to claims arising under charter parties. All
such personal injury, collision and casualty claims against the
Company are fully covered by insurance (subject to deductibles
not material in amount). Each of the other claims involves an
amount which in the opinion of management is not material in
relation to the consolidated current assets of the Company as
shown in the Company's Consolidated Balance Sheet as at December
31, 1998, incorporated herein by reference. There have not been
any material developments in the investigation reported on in
Item 1 of Part II of the registrant's Form 10-Q report for the
quarter ended June 30, 1996 and incorporated herein by reference.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - ------ --------------------------------------------------- None.
EXECUTIVE OFFICERS OF THE REGISTRANT - ------------------------------------
Has Served as Name Age Position Held Such Since - ---- --- ------------- -------------
Morton P. Hyman 63 President October 1971
Robert N. Cowen 50 Senior Vice President, February 1993 Secretary June 1982
Myles R. Itkin 51 Senior Vice President, June 1995 Chief Financial Officer and Treasurer
Robert E. Johnston 51 Senior Vice President October 1998
Ariel Recanati 35 Senior Vice President October 1998
Peter J. Swift 55 Vice President October 1998
The term of office of each executive officer continues
until the first meeting of the Board of Directors of the
registrant immediately following the next annual meeting of its
stockholders, to be held in June 1999, and until the election and
qualification of his successor. There is no family relationship
between the executive officers.
Messrs. Morton P. Hyman and Robert N. Cowen have served
as directors of the registrant since 1969 and 1993, respectively.
Prior to joining the registrant in 1995, Mr. Myles R. Itkin was
employed for one year by Alliance Capital Management L.P. as
Senior Vice President-Finance, and prior thereto was employed by
Northwest Airlines, Inc. as Vice President-Finance. Mr. Robert
E. Johnston has served as an officer and director of certain of
the registrant's subsidiaries during the past five years; he has
also served as a senior officer of MOC during the past five
years. Mr. Ariel Recanati has served as an officer and director
of certain of the registrant's subsidiaries during the past five
years; he has also served as a senior officer of MOC during the
past five years. Mr. Ariel Recanati is a nephew of Mr. Raphael
Recanati and a first cousin of his son, Mr. Oudi Recanati, both
directors of the registrant. Mr. Peter J. Swift has served as an
officer and director of certain of the registrant's subsidiaries
since October 1998; he also served as an officer of MOC and one
of its subsidiaries during the past five years.
PART II ------- The information called for by Items 5 through 8 is
incorporated herein by this reference from the following
respective portions and page numbers of the registrant's Annual
Report to Shareholders for 1998:
Item Incorporated from: ----- -----------------
ITEM 5.
ITEM 5. Market for Registrant's Last three paragraphs under - ------ Common Equity and "Shareholder Information" and Related the "Stock Price and Dividend Stockholder Matters Data" table, all on page 38; ------------------------
ITEM 6.
ITEM 6. Selected Financial Data The information for the years - ------ ------------------------ 1994 through 1998 under "Eleven-Year Statistical Review" section (pages 36 and 37).
ITEM 7.
ITEM 7. Management's Discussion Information set forth in text - ------ and Analysis of of "Management's Discussion Financial and Analysis" section (pages Condition and Results of 16 through 20). Operations ------------------------
ITEM 7A.
ITEM 7A. Quantitative and Information set forth in text - ------- Qualitative Disclosures of "Management's Discussion About Market Risk and Analysis" section under ------------------------ caption "Risk Management" (pages 19 and 20) and table on page 20.
ITEM 8.
ITEM 8. Financial Statements and "Consolidated Statements of - ------ Supplementary Data Operations", "Consolidated ------------------------ Balance Sheets", "Consolidated Statements of Cash Flows", "Consolidated Statements of Changes in Shareholders' Equity", "Notes to Consolidated Financial Statements" and "Report of Independent Auditors" sections (pages 21 through 35).
ITEM 9.
ITEM 9.Changes in and Disagreements with Accountants on - ------ ------------------------------------------------ Accounting and Financial Disclosure ----------------------------------- None.
PART III --------- The information called for by Items 10 through 13,
except for the information set forth in Part I above regarding
the executive officers of the registrant, is incorporated herein
by this reference from the following respective portions of the
definitive proxy statement to be filed by the registrant in
connection with its 1999 Annual Meeting of Shareholders.
Item Incorporated from: ----- -----------------
ITEM 10.
ITEM 10. Directors and Executive "Election of Directors" - ------- Officers of the Registrant --------------------------
ITEM 11.
ITEM 11. Executive Compensation "Compensation and Certain - ------- -------------------------- Transactions"*
ITEM 12.
ITEM 12. Security Ownership of "Election of Directors" - ------- Certain Beneficial Owners and "Information as to and Management Stock Ownership" --------------------------
ITEM 13.
ITEM 13. Certain Relationships and "Election of Directors" and - ------- Related Transactions "Compensation and Certain Transactions"*
- ---------
* Excluding material under "Stockholder Return Performance Presentation" and "Executive Compensation Report of the Executive Compensation Committee and the Stock Option Plan Committees".
PART IV ------- ITEM 14.
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on - -------- ------------------------------------------------------- Form 8-K -------- (a) See the accompanying index to financial statements
and schedules, and the accompanying Exhibit Index.
(b) Reports on Form 8-K: During the quarter ended
December 31, 1998 the registrant filed a report on Form 8-K dated
October 20, 1998 which reported on Item 5 (Other Events) and
Item 7 (Financial Statements, Pro Forma Information and
Exhibits).
SIGNATURES ----------
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned
thereunto duly authorized.
OVERSEAS SHIPHOLDING GROUP, INC.
By S/Myles R. Itkin ---------------------------------- Myles R. Itkin Senior Vice President, Chief Financial Officer & Treasurer
Date: March 26, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated. Each of such persons appoints Morton P. Hyman and Myles R. Itkin, and each of them, as his agents and attorneys- in-fact, in his name, place and stead in all capacities, to sign and file with the SEC any amendments to this report and any exhibits and other documents in connection therewith, hereby ratifying and confirming all that such attorneys-in-fact or either of them may lawfully do or cause to be done by virtue of this power of attorney.
By S/Morton P. Hyman ------------------------------- Morton P. Hyman, Principal Executive Officer and Director
By S/Myles R. Itkin ------------------------------- Myles R. Itkin, Principal Financial Officer and Principal Accounting Officer
By S/Robert N. Cowen ------------------------------- Robert N. Cowen, Director
By S/Ran Hettena ------------------------------- Ran Hettena, Director
By S/Solomon N. Merkin ------------------------------- Solomon N. Merkin, Director
By S/William L. Frost ------------------------------- William L. Frost, Director
By S/Thomas H. Dean ------------------------------- Thomas H. Dean, Director
By S/Joel I. Picket ------------------------------- Joel I. Picket, Director Date: March 26, 1999
FORM 10-K--ITEM 14(a) (1) and (2)
OVERSEAS SHIPHOLDING GROUP, INC. AND SUBSIDIARIES
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements of Overseas Shipholding Group, Inc. and subsidiaries, included in the annual report of the registrant to its shareholders for the year ended December 31, 1998 are incorporated by reference in Item 8:
Consolidated Balance Sheets--December 31, 1998 and 1997 Consolidated Statements of Operations -- Years Ended December 31, 1998, 1997 and 1996 Consolidated Statements of Cash Flows-- Years Ended December 31, 1998, 1997 and 1996 Consolidated Statements of Changes in Shareholders' Equity -- Years Ended December 31, 1998, 1997 and 1996 Notes to Financial Statements --December 31, 1998
All schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.
Exhibit Index
*3(i) Certificate of Incorporation of the registrant, as amended to date (previously filed more than 10 years ago and refiled herewith).
3(ii) By-Laws of the registrant, as amended to date (filed via EDGAR as Exhibit 3(ii) to the registrant's Form 10-K for 1993 and incorporated herein by reference).
4(a) Second Amended and Restated Credit Agreement dated as of August 19, 1997 (previously amended and restated as of October 31, 1994), among the registrant, two subsidiaries of the registrant and certain banks (filed via EDGAR as Exhibit 4 to the registrant's Form 10-Q for the quarter ended September 30, 1997 and incorporated herein by reference).
4(b) Rights Agreement dated as of October 20, 1998 between the registrant and ChaseMellon Shareholder Services, L.L.C., as Rights Agent, with the form of Right Certificate attached as Exhibit A thereto and the Summary of Rights to Purchase Shares attached as Exhibit B thereto (filed via EDGAR as Exhibit 4.1 to the registrant's Form 8-A filed November 9, 1998 and incorporated herein by reference).
4(c)(1) Form of Indenture dated as of December 1, 1993 between the registrant and The Chase Manhattan Bank (National Association) providing for the issuance of debt securities by the registrant from time to time (filed via EDGAR as Exhibit 4(d)(1) to the registrant's Form 10-K for 1993 and incorporated herein by reference).
4(c)(2) Resolutions dated December 2, 1993 fixing the terms of two series of debt securities issued by the registrant under the Indenture (filed via EDGAR as Exhibit 4(d)(2) to the registrant's Form 10-K for 1993 and incorporated herein by reference).
4(c)(3) Form of 8% Notes due December 1, 2003 of the registrant (filed via EDGAR as Exhibit 4(d)(3) to the registrant's Form 10-K for 1993 and incorporated herein by reference).
4(c)(4) Form of 8-3/4% Debentures due December 1, 2013 of the registrant (filed via EDGAR as Exhibit 4(d)(4) to the registrant's Form 10-K for 1993 and incorporated herein by reference).
NOTE: The Exhibits filed herewith do not include other instruments authorizing long-term debt of the registrant and its subsidiaries, where the amounts authorized thereunder do not exceed 10% of total assets of the registrant and its subsidiaries on a consolidated basis. The registrant agrees to furnish a copy of each such instrument to the Commission upon request.
*10(a) Transfer Agreement dated October 30, 1998 between the registrant, OSG Ship Management, Inc. and Maritime Overseas Corporation.
10(b)(1) Exchange Agreement dated December 9, 1969 (including exhibits thereto) between the registrant and various parties relating to the formation of the registrant (the form of which was filed as Exhibit 2(3) to Registration Statement No. 2-34124 and is incorporated herein by reference).
10(b)(2) Form of Additional Exchange Agreement referred to in Section 2.02 of Exhibit 10(c)(1) hereto (filed as Exhibit 2(4) to Registration Statement No. 2-34124 and incorporated herein by reference).
10(c)(1) Supplemental Executive Retirement Plans of the registrant, as amended and restated as of January 1, 1997 (filed via EDGAR as Exhibit 10(k)(1) to the registrant's Form 10-K for 1996 and incorporated herein by reference).
*10(c)(2) Supplemental Executive Retirement Plans of OSG Ship Management, Inc., effective as of October 30, 1998.
10(d)(1) Agreement with an executive officer (filed via EDGAR as Exhibit 10(k)(4) to the registrant's Form 10-K for 1996 and incorporated herein by reference).
10(d)(2) Agreement with an executive officer (filed via EDGAR as Exhibit 10(k)(5) to the registrant's Form 10-K for 1996 and incorporated herein by reference).
10(d)(3) Agreement with an executive officer (filed via EDGAR as Exhibit 10 to the registrant's Form 10- Q for the quarter ended September 30, 1998 and incorporated herein by reference).
*10(d)(4) Agreement with an executive officer.
*10(d)(5) Form of Amendment to the agreements listed as Exhibits (10)(d)(1), (2), (3) and (4) hereto.
*10(d)(6) Agreement with an executive officer.
*10(d)(7) Agreement with an executive officer.
10(e)(1) 1989 Stock Option Plan adopted for officers and key employees of the registrant or its subsidiaries (filed as Exhibit 10(l) to the registrant's Form 10-K for 1989 and incorporated herein by reference).
10(e)(2) Amendment adopted October 9, 1990 to the registrant's 1989 Stock Option Plan referred to above (filed as Exhibit 10(l)(2) to the registrant's Form 10-K for 1990 and incorporated herein by reference).
10(e)(3) 1998 Stock Option Plan adopted for employees of the registrant and its affiliates (filed via EDGAR as Exhibit 10 to the registrant's Form 10- Q for the quarter ended March 31, 1998 and incorporated herein by reference).
*10(e)(4) 1999 Non-Employee Director Stock Option Plan of the registrant.
*10(e)(5) Maritime Overseas Corporation 1990 Stock Option Plan, as amended, assumed by the registrant pursuant to the agreement filed as Exhibit 10(a) hereto.
10(f) Stock Purchase Agreement dated July 2, 1997 by and among Archinav Holdings Ltd., Overseas Cruiseship Inc. ("OCI"), Celebrity Cruise Lines Inc. and Royal Caribbean Cruises Ltd. (filed via EDGAR on August 7, 1997 as Exhibit 7.1 to registrant's and OCI's combined Schedule 13D and incorporated herein by reference).
*13 Such portions of the Annual Report to security holders for 1998 as are expressly incorporated herein by reference.
*21 List of subsidiaries of the registrant.
*23 Consent of Independent Auditors of the registrant.
*27 Financial Data Schedule.
NOTE: The Exhibits which have not previously been filed or listed or are being refiled are marked with an asterisk (*).
List of Executive Compensation Plans and Arrangements - See Exhibits 10(c)(1) and (2), 10(d)(1),(2),(3),(4), (5), (6) and (7), and 10(e)(1), (2), (3), (4) and (5) above.