Interest and Other
Interest expense for the three months ended March 31, 2011 increased from the comparable period in 2010. The increase is attributable to the additional debt associated with the three Handysize Bulk Carriers placed in service during this quarter and the International Flag PCTC placed in service after the 2010 first quarter. Partially offsetting the increased cost of the additional debt was a lower swap interest rate on one of the loans. The foreign exchange gain of $1.5 million is the result of the stronger U.S. dollar versus the Japanese Yen and its impact on our Yen-denominated facility. The Yen was revalued, as of March 31, 2011, at a 83.19 Yen to $1 USD exchange rate.
Federal Income Tax
The Company’s first quarter income tax provision was $208,000 as compared to a benefit of $612,000 for the 2010 comparable first quarter. The Company has no deferred tax balance, thus any losses from its on-going operations require valuation allowances which effectively eliminate tax benefits.Balance Sheet The Company’s working capital at March 31, 2011 was approximately $37 million, an increase of approximately $22 million from the December 31, 2010 balances. Repayment, during the quarter, of construction installment payments from the permanent financing facility on three Handysize vessels is the primary reason for the improved working capital position. Cash, cash equivalents and marketable securities were at approximately $63 million at March 31, 2011. We expect to utilize some of this balance over the next two quarters to fund equity positions in the acquisitions of the two car carriers which the Company has exercised its early buy-out options to purchase from its lessor. Dividend Declaration The Company’s Board of Directors authorized the payment of a $0.375 dividend payable on June 1, 2011, for each share of common stock owned on the record date of May 16, 2011. All future dividend declarations and amounts remain subject to the discretion of International Shipholding Corporation’s Board of Directors.