October 27, 2004
OSG to get huge boost from tax change
Overseas Shipholding Group, Inc. (NYSE:OSG) reported record net income for the first nine months of 2004 of $190,113,000, or $4.87 per share, an increase of 90% compared with net income of $100,111,000, or $2.89 per share, for the first nine months of 2003. President & CEO Morten Arntzen also spelled out some of the benefits the company expects to derive from the signing into law of the Jobs Creation Act.
Net income for the quarter ended September 30, 2004 was $68,521,000, or $1.74 per share, rising 388% compared with net income of $14,036,000, or $0.40 per share, in the third quarter of 2003. EBITDA for the third quarter rose to $145,398,000 from $57,946,000 in the third quarter of 2003 (
TAX LAW PUTS U.S. COMPANIES BACK ON LEVEL PLAYING FIELD
OTHER COMPANIES SEE BENEFIT, TOO
OSG is not alone in hailing the advantages of the new tax law. On Monday, Seacor Holdings, Inc NYSE:CKH) said that, as a result of the legislation, it believed it would be in the position to repatriate accumulated foreign earnings at an effective federal tax rate of 5.25% "which, in most cases, is significantly less than the Company's provision for deferred tax liabilities."
On October 12, Tidewater Inc. (NYSE: TDW) said the legislation could have a significant positive effect on its future earnings and cash flows.
"Under its current operating structure," said Tidewater, "the Act will afford Tidewater the ability to omit the majority of future international operating income from then current U.S. taxable income. The particular relevant provision, to be effective for Tidewater as of April 1, 2005, would thus enhance future cash flow as well as reported financial earnings by removing such international income from being subjected to the current United States statutory tax rate of 35%. However, such international income has historically been taxed in the relevant foreign jurisdictions at a rate that approximates 18-19% annually, which should remain unaffected by the passage of this legislation. In recent fiscal years, substantially all of Tidewater's income has been generated by its international operations.
Law firm Blank Rome has prepared a briefing on the new tax law that you can access by clicking http://www.blankrome.com/publications/BusTax/alert1004.asp