October 28, 2004

International Shipholding sees tax savings ahead

International Shipholding Corporation (NYSE:ISH) has joined the parade of U.S.-based shipowners expecting to benefit from the recently enacted American Jobs Creation Act of 2004.

In reporting its latest quarterly figures it noted that the act will change the United States tax treatment of both its domestic and foreign shipping operations.

"The act will allow us to elect to replace the normal corporate income tax structure on a portion of our operations with a 'tonnage tax,' and will allow us to defer the recognition of earnings on our foreign operations until those earnings are repatriated," notes New Orleans based International Shipholding.

"We are currently analyzing the new law, which we expect to materially reduce our effective tax rate. Upon completion of the analysis, we will, in due course, report its conclusions."

The company today reported results for the three month and nine month periods ended September 30, 2004. Net income for the three months ended September 30, 2004 was $220,000 as compared to a net loss of $1.644 million for the three months ended September 30, 2003. For the first nine months of 2004, net income was $4.945 million as compared to net income of $3.840 million for the same period of 2003.

The combined operating results for our LASH liner services during the third quarter of 2004 were approximately in line with the results for the same quarter of 2003 in spite of higher fuel costs and unanticipated repairs.

Results for time charter vessels showed improvement in the third quarter of 2004 as compared to the same quarter of 2003 primarily as a result of the late 2003 sale of a multi-purpose vessel that had operated unprofitably during the third quarter of 2003 following the termination of its charter to the U.S. Military Sealift Command. Conversely, the third quarter 2004 results for the U.S. Flag Coal Carrier, ENERGY ENTERPRISE, were down from the same quarter of 2003 as a result of the vessel being out of service eight days in 2004 for unscheduled repairs.

Third quarter 2004 results for the vessel SULPHUR ENTERPRISE, operating under a Contract of Affreightment, and results forthe company's Mexican Rail/Ferry Service were both down from the comparable quarter of 2003 as a result of higher than anticipated operating costs primarily due to machinery deficiencies, weather delays, and in the case of the Rail/Ferry Service, added rail hire related to delays on north and south bound rail cargoes and higher fuel costs.

The third quarter 2004 results from the company's investments in a fleet of cement carriers and two Capesize bulk carriers showed improvement over the same quarter of 2003 due to a continuing strong market and increased investment in the Capesize bulk carriers from a 12 1/2 percentinvestment in four vessels to a 50 percent investment in two vessels which occurred in late 2003. These improvements were partially offset in the third quarter of 2004 by poor results from the company's insurance subsidiary which experienced higher than anticipated hull and machinery claims for the current policy year.

Fleet wide, several of vessels experienced weather delays during the third quarter of 2004 as a result of hurricanes in the Gulf of Mexico and South Atlantic which on a combined basis negatively impacted the quarter by approximately $700,000 before taxes.

For the first nine months of 2004, income from the company's LASH liner service improved over the comparable period of 2003 primarily as a result of improved cargo volume in our Transatlantic liner service and in spite of higher fuel costs and weather delays. "However," says International,"during the same period, we experienced a reduction in the results of our time charter vessels as a result of our U.S. Flag Pure Car/Truck Carriers carrying less supplemental cargoes which are in addition to the time charter agreements. The results of our U.S. Flag Pure Car/Truck Carriers were further impacted by a casualty on one vessel resulting in twenty-six unplanned out of service days during the first nine months of 2004. The results of our U.S. Flag Coal Carrier were impacted by an accelerated drydock and other required repair work and upgrading which resulted in the vessel being out of service forty-three days in 2004 versus full employment in 2003. Results in the first nine months of 2004 for our Rail/Ferry Service were down from 2003 primarily as a result of higher operating costs due to unanticipated maintenance problems, higher fuel costs, added rail hire, as described above, and weather delays."

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