Annual Report (Form 10-K), fiscal year 1994

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 and dry bulk carriers). The Company's operating bulk
fleet consists of 61 vessels having an aggregate carrying
capacity of approximately 5,846,100 deadweight tons ("DWT"),
including ten ships aggregating approximately 1,536,300 DWT
which the Company owns jointly with others and in which the
Company has at least a 49% interest.* Sixteen vessels in the
Company's operating bulk fleet, which total approximately 993,350
DWT and represent about 30% of the Company's investment in bulk
cargo vessels at cost, are registered under the U.S. flag; the
balance are registered under foreign flags. Forty-five tankers
account for 78% of the total tonnage, and 15 dry bulk carriers
and a pure car carrier account for the remainder. A single
company and its subsidiaries, for and under the direction and
control of the Company, act as agents in respect of the bulk
fleet of the registrant's majority-owned subsidiaries and certain
of its bulk shipping joint ventures.
------------------------ * Except as otherwise noted, references herein to the Company's "operating bulk fleet" are as of February 21, 1995. Such fleet includes eight vessels that are leased from financial institutions under bareboat charters having remaining terms of from 7 to 17 years, and two 94,000 DWT double-hulled Aframax tankers built in 1994, which the Company recently purchased and were delivered to the Company in March 1995, but does not include a 29,300 DWT petroleum barge, which is owned by a partnership in which the Company has a 50% interest, or the eight newbuildings currently on order which are more fully described under "Bulk Fleet Modernization and Expansion" below.
Celebrity Cruise Lines Inc. (together with its
subsidiaries collectively "CCLI"), the passenger cruise business
joint venture which the Company entered into in late 1992, owns
and operates cruise ships marketed primarily under the trade name
Celebrity Cruises in the premium segment of the industry. The
Celebrity Cruises fleet presently consists of three cruise ships
with a total passenger-carrying capacity of 3,834 berths. In
addition, CCLI has a budget-priced Fantasy Cruises division,
which consists of two vessels. As of February 21, 1995, CCLI had
on order three new passenger cruise ships, all for the Celebrity
fleet, scheduled for delivery in late 1995, 1996 and 1997,
respectively, which will increase the Celebrity Cruises total
passenger-carrying capacity to over 9,300 berths. See
"Investment in Cruise Business" below.
The Company's operating bulk fleet, aggregating
approximately 5,846,100 DWT, represents approximately 1% of the
total world tonnage of oceangoing bulk cargo vessels. As of
February 21, 1995, the Company had on order eight vessels,
aggregating over two million DWT, for delivery to its
international bulk fleet. See "Bulk Fleet Modernization and
Expansion" below.
The Company charters its ships to commercial shippers
and U.S. and foreign governmental agencies for the carriage of
bulk commodities, principally crude oil and petroleum products,
coal, iron ore and grain. 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.
Generally, the Company's ships engage in carriage of
cargo in various parts of the world, principally in carriage of
petroleum from Alaska to the lower 48 states and U.S.
territories, from Caribbean ports to United States, South
American and European ports, from Mediterranean, West African,
Arabian Gulf and Far East ports to European, United States,
Caribbean, South American and Far East ports, and in the United
States coastwise trade, and in carriage of dry cargo between
United States ports and Far East, Caribbean, European,
Mediterranean, Black Sea and Baltic ports, between South
American, African and various European, Black Sea, Baltic and Far
East ports, and from Australia to Japan, Korea and European
ports. The Company does not employ any container or similar
vessels in its operation.
Revenues from carriage of petroleum and its derivatives
represented approximately 78% of the voyage revenues of the
registrant and its majority-owned subsidiaries for 1994, 75% for
1993 and 78% for 1992. 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 may vary 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 21, 1995, with the exception of four
U.S.-flag crude oil carriers, all of the vessels in the Company's
operating bulk fleet were employed. Forty-six of these vessels
were chartered to non-governmental commercial shippers. These 46
ships include eight U.S.-flag ships and 38 foreign-flag ships,
which together represent approximately 83% of the combined
carrying capacity of the Company's operating bulk fleet. Of the
remaining ships in the Company's operating bulk fleet, four 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'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
flags, types and sizes and with operating flexibility, enables
the Company to take advantage of chartering opportunities for
domestic and international shipment of bulk commodities and
thereby cushion the effects of weakness in particular markets.
Information about the Company's operations under U.S. and foreign
flags for the three years ended December 31, 1994 is set forth in
the table in Note B to the Company's financial statements
incorporated by reference in Item 8 below. For information
regarding the revenues and net income of the Company's bulk
shipping joint ventures for the three years ended December 31,
1994, see Note E to the Company's financial statements
incorporated by reference in Item 8 below.
In each of the years 1994, 1993 and 1992 the Company
had one charterer (BP Oil Company, USA) from which it had
revenues in excess of 10% of revenues from voyages, amounting in
1994 to approximately $63.7 million, in 1993 to approximately
$73.7 million, and in 1992 to approximately $84.3 million.
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 primarily to U.S.-flag vessels, owned by U.S. citizens,
crewed by U.S. seafarers, and built in the United States without
construction subsidies and operated without operating
differential subsidies. The Company owns the largest independent
fleet of unsubsidized U.S.-flag tankers and is a major
participant in the Alaskan oil trade.
Demand for tonnage in the Alaskan oil trade depends on
the volume of crude shipped out of Alaska and its distribution to
ports at varying distances from the source. In recent years, the
amount of crude shipped on the long-haul route to the Gulf of
Mexico, via the Panama Pipeline, has fallen sharply, and this
development has reduced tonnage requirements. Alaskan crude oil
shipments are the main source of employment for U.S.-flag crude
carriers and are carried mostly on unsubsidized U.S.-flag crude
carriers of over 60,000 DWT. By law, exports of Alaskan crude
oil are effectively prohibited. Initiatives are under way in
Washington to permit the export of Alaskan crude oil, which, if
successful, are expected to provide significant new employment
opportunities for the Company's U.S.-flag tanker fleet.
Vessels built with construction differential subsidies
and operated with operating differential subsidies ("ODS") are
not permitted in the Jones Act trade. Under an interpretation of
the law by the Maritime Administration, tankers built with
subsidies have been deemed eligible for full coastwise privileges
when they reach 20 years of age and their ODS contracts have
expired. The Company believes that this interpretation is
contrary to law and has commenced litigation seeking to overrule
it. Recently, there have been increased calls by members of
Congress and efforts to reduce or eliminate cargo preference and,
in some cases, to weaken the long-standing requirement that U.S.
coastwise trade be conducted by U.S.-flag Jones Act ships. If
such changes were implemented, they would adversely affect the
already diminished U.S.-flag merchant marine.
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. Half of the imports into the Strategic
Petroleum Reserve, a U.S. government procurement program, must be
transported on U.S.-flag vessels.
Vessels in the Company's operating bulk 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.
EMPLOYMENT OF VESSELS --------------------- The bulk shipping industry is highly fragmented and
competitive. The Company competes in its charter operations with
other owners of U.S. and foreign-flag tankers and dry cargo ships
operating on an unscheduled basis similar to the Company and, to
some extent, with owners operating cargo ships on a scheduled
basis. About one third of the world's tanker tonnage is owned by
oil companies and is primarily engaged in the carriage of
proprietary cargoes. In chartering vessels to the United States
government, the Company competes primarily with other owners of
U.S.-flag vessels. U.S.-flag product carriers, whose trade
demand are closely linked to changes in regional energy demands
and in refinery activity, also compete with pipelines, oceangoing
barges, and, with regard to imports from abroad, foreign-flag
product carriers. 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.
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
recent years has been relatively limited, and, when available,
rates of return have generally been unattractive.
For additional information as of February 21, 1995
regarding the 61 vessels in the Company's operating bulk fleet,
including information as to the employment of such vessels, see
the table in the "To Our Shareholders" section (page 2), and the
"International Bulk Fleet" and "U.S. Bulk Fleet" tables (pages 10
and 11), of the registrant's Annual Report to Shareholders for
1994, which tables are incorporated herein by reference.
ENVIRONMENTAL MATTERS RELATING TO BULK SHIPPING ----------------------------------------------- Over the past five years, the bulk shipping industry
has experienced a more stringent regulatory environment.
Classification societies, governmental authorities and charterers
have strengthened their inspection programs, and there has been
an increasing reluctance among charterers to accept older vessels
due to safety and pollution concerns.
OPA 90. The Oil Pollution Act of 1990 ("OPA 90")
significantly expands the 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. Some operators are
reluctant to trade their vessels to the United States because of
OPA 90.
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 applies
to newly constructed tankers contracted for after June 30, 1990,
or delivered after January 1, 1994. Beginning on January 1,
1995, the double-hull requirement is 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 January 1, 2015. Tankers
discharging at a deepwater port or lightering more than 60 miles
offshore will not be required to have double hulls until January
1, 2015.
The double-hull requirement will not begin to affect
the Company's existing tanker fleet until near the end of the
decade, with most of the Company's vessels not affected until the
next decade. Each of the 16 vessels in the Company's current
fleet to which the double-hull requirements are expected to apply
in the next nine years will be at least 23 years old on the
applicable double-hull requirement date and consequently near the
end of its economic life.
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
United States Coast Guard and has received approval of such
plans.
Under new, more stringent U.S. Coast Guard financial
responsibility regulations issued pursuant to OPA 90, all tankers
entering U.S. waters on or after December 28, 1994 were required
to obtain Certificates of Financial Responsibility ("COFRs") from
the Coast Guard demonstrating substantially greater financial
capability to meet potential spill liabilities. Prior to that
date, the Company obtained such COFRs for all the vessels in its
U.S.-flag and international flag tanker fleets.
INTERNATIONAL REQUIREMENTS. In addition to the OPA 90
requirements, the International Maritime Organization ("IMO")
adopted regulations that will phase out all single-hulled tankers
in international waters at 25 years of age unless other
environmental safety steps are taken. IMO regulations also
require double-hulls or equivalent tanker designs for newbuilding
orders.
These requirements will apply to all vessels trading to
ports in countries that are parties to the International
Convention for the Prevention of Pollution by Ships, as amended
("MARPOL"), which include the world's major trading countries.
The United States has reserved its position on the IMO
regulations. Since the schedule for phasing in the double-hull
requirements under the IMO regulations is in certain instances
faster and in certain instances slower than the requirements
under OPA 90, if the United States does not accept the IMO
regulations, tankers trading between U.S. ports and ports in
countries that are parties to MARPOL will have to meet the
requirements of the earlier of the two to apply.
The Company believes that as the double-hull
requirements imposed by U.S. law and international conventions
become applicable, some older vessels will be scrapped. The
impact of the double-hull requirements of the IMO regulations on
the Company's vessels will not be significantly different from
the impact of the double-hull requirements of OPA 90. All of the
tankers the Company has on order will be double-hulled.
INSURANCE. Consistent with the currently prevailing
practice in the industry, the Company presently carries a minimum
of $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 the international bulk shipping
markets and the markets for U.S.-flag vessels, including the
Alaskan oil trade, is set forth in the text of the "Global Bulk
Shipping Markets" section (pages 14 through 16) of the
registrant's Annual Report to Shareholders for 1994, which
information is incorporated herein by reference.
BULK FLEET MODERNIZATION AND EXPANSION --------------------------------------- The Company is engaged in a major fleet modernization
program. This entails periodically selling older vessels,
placing newbuilding orders and purchasing existing modern
tonnage, when available at attractive prices. The Company's
newbuilding program totals eight ships aggregating more than two
million DWT.
NEWBUILDING ORDERS: In 1994, the Company took delivery
of four 93,300 DWT double-hulled Aframax tankers for its
international fleet, and placed orders for four double-hulled
very large crude carriers ("VLCCs"). Two of these VLCCs, 269,650
DWT tankers, were ordered with a joint venture partner and will
commence eight-year charters to the partner when the ships are
delivered in December 1996 and March 1997. The other two VLCCs,
302,150 DWT vessels, are scheduled for delivery in late 1996 and
early 1997. In late 1995, the Company will take delivery of two
double-hulled VLCCs, each 295,250 DWT, ordered in 1993. Upon
delivery of the six VLCCs, over half of the Company's tanker
tonnage will either be totally double-hulled or protected by
double sides or double bottoms. On the dry bulk side, the
Company in 1995 placed orders for two 158,100 DWT Capesize ships
for delivery in late 1996 and early 1997. All of these eight
ships are being built by major shipbuilders (six in South Korea
and two in Japan) for delivery to the Company's international
fleet. The commitments for these eight vessels are in U.S.
Dollars; for additional information as of February 21, 1995 about
the commitments, see Notes E and L(1) to the Company's financial
statements incorporated by reference in Item 8 below.
PURCHASES: In 1995, the Company purchased two 94,000
DWT double-hulled Aframax tankers built in 1994, which were each
delivered to the Company in March 1995 for its international
fleet.
SALES: In 1994, the Company sold four foreign-flag dry
bulk carriers and a 50%-owned foreign-flag single-hulled VLCC.
The Company's newbuilding program, together with the
selective upgrading of the Company's fleet through acquisition
and disposition of existing tonnage, reflects changes that the
Company makes from time to time in light of its continuing review
of changing market conditions. 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.
EMPLOYEES --------- At February 21, 1995, the Company employed
approximately 2,000 seagoing personnel to operate its ships. The
Company has collective bargaining agreements with three different
maritime unions, covering seagoing personnel employed on the
Company's U.S.-flag vessels, which agreements are in effect
through June 15, 1996 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.
U.S. SUBSIDIES -------------- To encourage private investment in U.S.-flag ships, the
Merchant Marine Act of 1970 permits deferral of taxes on earnings
deposited into capital construction funds 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 two
vessels to be constructed or acquired by the end of 1999. 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. Provision has been made
in the Company's financial statements for deferred taxes on the
amounts deposited in the capital construction fund and on the
earnings thereon. Monies can remain tax deferred in the fund for
a maximum period of twenty-five 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.
The Company does not receive any operating differential
subsidies or any construction differential subsidies under the
Merchant Marine Act, 1936, as amended.
INVESTMENT IN CRUISE BUSINESS ----------------------------- The Company owns a 49% equity investment in Celebrity
Cruise Lines Inc. (together with its subsidiaries collectively
"CCLI"), a joint venture formed in late 1992 that owns and
operates five cruise vessels. CCLI functions as an equal joint
venture and the approval of both shareholders is required for all
substantive policy matters. All debt of the joint venture is
nonrecourse to the joint venture partners. It is anticipated
that CCLI's earnings will be reinvested in the cruise business,
and accordingly the Company has made no provision for U.S. income
taxation with respect to its share of CCLI's earnings.
CCLI markets its ships primarily under the brand name
Celebrity Cruises, which is a leading provider of cruises in the
premium segment of the North American cruise market. The
Celebrity Cruises fleet consists of three ships -- ZENITH,
HORIZON and MERIDIAN -- having a total of 3,834 berths and
sailing mainly in the Caribbean and to Bermuda.
Two vessels operated in 1994 as part of CCLI's budget-
priced Fantasy Cruises division. One of these ships, BRITANIS,
was chartered in late 1994 to the U.S. Military Sealift Command,
while the division's other ship, AMERIKANIS, sailed on European
itineraries.
The 1994 results for CCLI were below those of 1993.
CCLI incurred a loss in the third quarter, normally its most
profitable quarter of the year, due to the 11-day withdrawal of a
ship from service in July 1994, following isolated cases of
Legionnaires' disease among passengers. In addition, the premium
segment of the industry experienced greater pricing pressures in
the last quarter of the year as the volume of overall bookings
declined.
During 1993, CCLI's first full year of operation, CCLI
contracted to build two cruise ships (to be named CENTURY and
GALAXY) which are scheduled for delivery in late 1995 and 1996,
respectively, and in 1994 CCLI exercised its option to build a
third sistership scheduled for delivery in late 1997. These
vessels are all for the Celebrity Cruises fleet. This fleet
expansion will increase Celebrity's passenger-carrying capacity
to over 9,300 berths and is expected to provide economies of
scale in operations and marketing as well as increase brand
recognition of Celebrity Cruises. The contracts are with the
same European shipyard that built the two newest ships in the
Celebrity Cruises fleet. The contracts provide for shipyard-
arranged long-term bank financing to CCLI for a substantial
portion of the cost of each vessel. For additional information
about CCLI and its fleets and the CCLI commitments as of February
21, 1995, see the text of the "CCLI" section (pages 17 and 18),
including the Celebrity Cruises fleet table (page 17), and the
CCLI fleet table (page 11) of the registrant's Annual Report to
Shareholders for 1994, which information is incorporated herein
by reference, and Note D to the Company's financial statements
incorporated by reference in Item 8 below.
COMPETITION. CCLI operates its vessels primarily in
the North American cruise market, which accounts for
approximately 80% of the total cruise passengers carried. The
North American cruise market is characterized by large and
generally well-capitalized companies and is highly competitive.
There are four companies in the industry each of which has a
fleet with an aggregate number of berths in excess of 10,000,
substantially more berths than CCLI's current fleet. Larger
capacity affords fleet owners certain economies of scale.
According to recently published data, the largest three companies
have about 46% of total capacity, and the largest seven
companies, including CCLI, have approximately 75% of total
capacity.
Capacity additions in the North American cruise market
averaged 7% per year during the past decade versus the 9% per
year growth in demand (measured by the number of passengers
carried). In 1994, capacity increases slowed to 1% as 6,300
berths were added and nearly 5,400 berths were removed through
retirements, redeployments and shutdowns. At year-end 1994,
North American cruise capacity was estimated to be 105,000
berths.
Consolidation continues in the industry. CCLI and
three other cruise companies account for 91% of the total
capacity additions slated for 1995 through 1998. On the basis of
the newbuilding orderbook, recently published data forecasts that
capacity will increase 7% in 1995, and before taking into
consideration any retirements and deletions from the existing
fleet, capacity is expected to increase 13% in 1996 and 10% in
1997.
Cruise lines compete with other vacation alternatives
such as land-based resort hotels and sightseeing destinations for
consumers' discretionary income. The amount of discretionary
income spent on vacations is influenced by general economic
conditions. Within the cruise industry, competition is primarily
based on product quality, itinerary and price. Product quality
is a function of ship design, onboard facilities, amenities,
service and cuisine.
REGULATORY MATTERS. Each ship is subject to
regulations of its country of registry, including regulations
issued pursuant to international treaties governing the safety of
the ship and its passengers. Each country of registry conducts
periodic inspections to verify compliance with these regulations.
In addition, ships operating from U.S. ports are subject to
inspection by the U.S. Coast Guard for compliance with
international treaties and by the U.S. Public Health Service for
sanitary conditions.
With respect to passengers to and from U.S. ports, CCLI
is required to obtain certificates from the U.S. Federal Maritime
Commission and the U.S. Coast Guard relating to its ability to
satisfy liabilities arising out of nonperformance of obligations
to passengers, casualty or personal injury and water pollution.
The Company believes CCLI is in compliance with all material
regulations applicable to its ships and has all licenses
necessary for the conduct of its business.
The International Maritime Organization's SOLAS 1974
convention, which became effective in 1980 and was last amended
in 1992, established minimum safety, fire prevention and fire
protection standards (the "SOLAS '74 standards"). Under the
amended SOLAS requirements, all passenger ships must have
upgraded fire detection and fire protection systems by October 1,
1997. The schedule for compliance with certain other aspects of
the amended requirements for passenger vessels currently meeting
SOLAS '74 standards extends until 2005 or 15 years after
construction, whichever is later.
Since substantial capital expenditures may be needed to
bring older vessels into compliance with the SOLAS requirements
that become applicable in 1997, it is likely that some ships for
which such capital expenditures would not be economical will be
removed from the market. About 40,000 berths are on ships that
are expected to need the 1997 SOLAS mandated upgrades. The
actual number of deletions will depend upon shipowners'
willingness to incur the potentially significant cost needed to
bring a vessel up to the required standards. Two of CCLI's
Celebrity vessels were delivered in 1990 and 1992, respectively,
and the third was rebuilt in 1990. Based on present estimates,
any work necessary for these vessels to meet SOLAS requirements
applicable in 1997 can be done without material capital
expenditures.
ITEM 2.



ITEM 2. PROPERTIES ------ ---------- See Item 1.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS ------- ----------------- The Company and CCLI are parties, 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 and CCLI 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, 1994, 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 59 President October 1971
Michael A. Recanati 37 Executive February 1993 Vice President, Treasurer June 1994
Robert N. Cowen 46 Senior Vice February 1993 President, Secretary, June 1982 General Counsel November 1989
Alan Carus 56 Controller December 1987
Messrs. Hyman, Recanati and Cowen are directors of the
registrant and Messrs. Hyman and Recanati are members of the
Finance and Development Committee of its Board of Directors (Mr.
Recanati is Vice Chairman of the Committee). 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
1995, and until the election and qualification of his successor.
There is no family relationship between the executive officers;
Mr. Michael A. Recanati is a son of Mr. Raphael Recanati and a
nephew of Mr. Ran Hettena, directors of the registrant.
Mr. Morton P. Hyman has served as a director of the
registrant since 1969. Mr. Michael A. Recanati has served as a
director, senior vice president and treasurer of the registrant
and as an officer and director of certain of its subsidiaries
during the past five years; he has also served as a director and
senior officer of Maritime Overseas Corporation ("MOC"), the
agent for the Company's vessels referred to in the first
paragraph of Item 1, during the past five years. Mr. Robert N.
Cowen has served as a director of the registrant since June 1993,
as an officer and director of certain of the registrant's
subsidiaries during the past five years, and as a director of MOC
since January 1991. Mr. Alan Carus 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.
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 1994:
Item Incorporated from: ---- -----------------
ITEM 5.

ITEM 5.Market for Registrant's Last three paragraphs under ------ Common Equity and Related "Shareholder Information" on Stockholder Matters inside back cover; "Stock ------------------------- Price and Dividend Data" table on last page (page 22) of "Management's Discussion and Analysis" section.
ITEM 6.

ITEM 6.Selected Financial Data The information for the years ------ ----------------------- 1990 through 1994 under "Eleven-Year Statistical Review" section (pages 38 and 39).
ITEM 7.

ITEM 7.Management's Discussion Information set forth in text ------ and Analysis of Financial of "Management's Discussion Condition and Results of and Analysis" section (pages Operations 19 through 22). -------------------------
ITEM 8.


ITEM 8.Financial Statements and "Consolidated Statements of ------ Supplementary Data Operations and Retained ------------------------ Earnings", "Consolidated Balance Sheets", "Consolidated Statements of Cash Flows", "Notes to Consolidated Financial Statements" and "Report of Independent Auditors" sections (pages 23 through 37).
Additional Supplementary Data - Ratio of Earnings to Fixed Charges ----------------------------------
There was a deficiency of earnings to fixed charges for 1994 of $26,977,000. This has been computed by subtracting the sum of loss before Federal income taxes and fixed charges from fixed charges. Fixed charges consist of interest expense, including the proportionate share of interest of joint venture companies, capitalized interest and an estimate of the interest component of an operating lease.
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 1995 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 Committee".
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: The registrant did not file
any report on Form 8-K during the quarter ended December 31,
1994.
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/Michael A. Recanati -------------------------------- Michael A. Recanati Executive Vice President & Treasurer
Date: March 29, 1995
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 Michael A. Recanati, 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/Michael A. Recanati ------------------------------ Michael A. Recanati, Principal Financial Officer and Director
By S/Alan Carus ------------------------------ Alan Carus, Controller
By S/Ran Hettena ------------------------------ Ran Hettena, Director
By S/George C. Blake ------------------------------ George C. Blake, Director
By S/Solomon N. Merkin ------------------------------ Solomon N. Merkin, Director
By S/William L. Frost ------------------------------ William L. Frost, Director
By S/Joel I. Picket ------------------------------ Joel I. Picket, Director
By S/Thomas H. Dean ------------------------------ Thomas H. Dean, Director
By S/Robert N. Cowen ------------------------------ Robert N. Cowen, Director Date: March 29, 1995
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, 1994 are incorporated by reference in Item 8:
Consolidated Balance Sheets--December 31, 1994 and 1993 Consolidated Statements of Operations and Retained Earnings-- Years Ended December 31, 1994, 1993 and 1992 Consolidated Statements of Cash Flows-- Years Ended December 31, 1994, 1993 and 1992 Notes to Financial Statements --December 31, 1994
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 (filed as Exhibit 3(a) to the registrant's Form 10-K for 1988 and incorporated herein by reference).
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) Amended and Restated Credit Agreement dated as of February 9, 1990, as amended and restated as of October 31, 1994, among the registrant, two subsidiaries of the registrant and certain banks.
4(b) Form of Note Purchase Agreement dated as of March 1, 1992 between the registrant and each of the purchasers of its senior notes (filed as Exhibit 4(b) to the registrant's Form 10-K for 1991 and incorporated herein by reference).
4(c) Form of Note Purchase Agreement dated as of June 1, 1993 between the registrant and each of the purchasers of its senior notes (filed via EDGAR as Exhibit 4 to the registrant's Form 10-Q for the quarter ended June 30, 1993 and incorporated herein by reference.)
4(d)(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(d)(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(d)(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(d)(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, none of which exceeds 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) Form of Agency Agreements between Maritime Overseas Corporation and each of the registrant's majority-owned subsidiaries that owns or operates a U.S.-flag vessel (refiled as Exhibit 10(a) to the registrant's Form 10-K for 1989 and incorporated herein by reference).
10(b) Form of Agency Agreements between Maritime Overseas Corporation and each of the registrant's majority-owned subsidiaries that owns or operates a foreign-flag vessel (refiled as Exhibit 10(b) to the registrant's Form 10-K for 1989 and incorporated herein by reference).
10(c)(1) Form of Management Agreement dated as of January 1, 1985 between Lion Insurance Company Ltd. and Maritime Overseas Corporation (filed as Exhibit 10(c)(2) to the registrant's Form 10-K for 1985 and incorporated herein by reference).
10(c)(2) Form of Amendment No. 1 dated as of April 1, 1986 to the Management Agreement between Lion Insurance Company Ltd. and Maritime Overseas Corporation (filed as Exhibit 10(c)(2) to the registrant's Form 10-K for 1986 and incorporated herein by reference).
10(d)(1) Form of General Services Agreement dated December 31, 1969 between the registrant and Maritime Overseas Corporation (the form of which was filed as Exhibit 13(3) to Registration Statement No. 2-34124 and is incorporated herein by reference).
*10(d)(2) Form of Amendment dated as of January 1, 1975 to General Services Agreement between the registrant and Maritime Overseas Corporation (previously filed more than 10 years ago and refiled herewith).
10(d)(3) Amendment dated January 10, 1980 to General Services Agreement between the registrant and Maritime Overseas Corporation (refiled as Exhibit 10(d)(3) to the registrant's Form 10-K for 1989 and incorporated herein by reference).
10(d)(4) Form of Amendment dated as of January 1, 1981 to General Services Agreement between the registrant and Maritime Overseas Corporation (refiled as Exhibit 10(d)(4) to the registrant's Form 10-K for 1990 and incorporated herein by reference).
10(d)(5) Form of Amendment dated as of October 1, 1987 to General Services Agreement between the registrant and Maritime Overseas Corporation (filed as Exhibit 10(d)(5) to the registrant's Form 10-K for 1987 and incorporated herein by reference).
*10(d)(6) Form of Amendment dated as of July 1, 1994 to General Services Agreement between the registrant and Maritime Overseas Corporation.
*10(e)(1) Form of Letter Agreement dated as of August 9, 1973 between the registrant and Maritime Overseas Corporation (previously filed more than 10 years ago and refiled herewith).
*10(e)(2) Form of Letter Agreement dated as of August 9, 1973 by Maritime Overseas Corporation (previously filed more than 10 years ago and refiled herewith).
*10(e)(3) Form of Letter Agreement dated as of August 9, 1973 by Maritime Overseas Corporation (previously filed more than 10 years ago and refiled herewith).
10(e)(4) Form of Letter Agreement dated as of January 1, 1981 between the registrant and Maritime Overseas Corporation (refiled as Exhibit 10(e)(4) to the registrant's Form 10-K for 1991 and incorporated herein by reference).
10(f)(1) Form of Service Agreements between Maritime Overseas Corporation and each of the partnerships First Shipmor Associates, Second Shipmor Associates, Third Shipmor Associates and Fourth Shipmor Associates and related letter agreements between the registrant and each of said partnerships (refiled as Exhibit 10(f)(1) to the registrant's Form 10-K for 1987 and incorporated herein by reference).
10(f)(2) Service Agreement dated January 27, 1983 between Cambridge Tankers, Inc. and Maritime Overseas Corporation relating to the OVERSEAS BOSTON (refiled as Exhibit 10(f)(2) to the registrant's Form 10-K for 1992 and incorporated herein by reference).
10(f)(3) Form of Service Agreement between respective subsidiaries of the registrant and Maritime Overseas Corporation relating to the OVERSEAS NEW ORLEANS and OVERSEAS PHILADELPHIA (not filed--substantially identical in all material respects to the agreement listed as Exhibit 10(f)(2) hereto except as to the parties, the vessels and the dates).
*10(g)(1) Form of Management Agreements between Maritime Overseas Corporation and each of First United Shipping Corporation, Interocean Tanker Corporation, Second United Shipping Corporation and Third United Shipping Corporation (previously filed more than 10 years ago and refiled herewith).
10(g)(2) Form of Amendment No. 1 and Amendment No. 2 to Management Agreements between Maritime Overseas Corporation and each of First United Shipping Corporation, Interocean Tanker Corporation, Second United Shipping Corporation and Third United Shipping Corporation (filed as Exhibit 10(g)(1)(b) to the registrant's Form 10-K for 1985 and incorporated herein by reference).
*10(g)(3) Form of Amendment No. 3 to Management Agreements between Maritime Overseas Corporation and each of First United Shipping Corporation, Interocean Tanker Corporation, Second United Shipping Corporation and Third United Shipping Corporation.
*10(g)(4) Form of Company Service Employees Agreement between Maritime Overseas Corporation and each of First Union Tanker Corporation and Second Union Tanker Corporation.
10(h)(1) Agreement dated April 1, 1992 between the registrant and Maritime Overseas Corporation (filed as Exhibit 10 to the registrant's Form 10-Q for the quarter ended March 31, 1992 and incorporated herein by reference).
10(h)(2) Letter Agreement dated November 9, 1993 amending the Agreement dated April 1, 1992 referred to above (filed via EDGAR as Exhibit 10(h)(2) to the registrant's Form 10-K for 1993 and incorporated herein by reference).
10(i) Indemnification Agreement dated December 21, 1992 among Continental Grain Company, Third Contiship Inc., Fourth Contiship Inc., OSG Bulk Ships, Inc., Third Shipco Inc., Fourth Shipco Inc. and the registrant (filed as Exhibit 10(i) to registrant's Form 10-K for 1992 and incorporated herein by reference).
10(j)(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(j)(2) Form of Additional Exchange Agreement referred to in Section 2.02 of Exhibit 10(j)(1) hereto (filed as Exhibit 2(4) to Registration Statement No. 2-34124 and incorporated herein by reference).
*10(k) Supplemental Executive Retirement Plan of the registrant, as amended and restated as of January 1, 1995.
10(l)(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(l)(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(m) 1990 Stock Option Plan adopted for officers and employees of the registrant or its subsidiaries, excluding the recipients of options under Exhibits 10(l)(1) and (2) listed above (filed as Exhibit 10(m) to the registrant's Form 10-K for 1990 and incorporated herein by reference).
10(n)(1) Joint Venture Agreement dated September 23, 1992 among Archinav Holdings Ltd. ("Archinav"), Overseas Cruiseship Inc. ("Overseas"), and Celebrity Cruise Lines Inc. ("CCLI") (excluding exhibits and schedules) and the following related agreements: Guarantee of the registrant dated September 23, 1992 and Shareholders Agreement dated October 21, 1992 among Archinav, Overseas and CCLI (excluding exhibits)(filed as Exhibits 2(a), (b) and (c), respectively, to the registrant's Report on Form 8-K dated October 21, 1992 and incorporated herein by reference).
10(n)(2) Supplemental Agreement dated January 29, 1993 to the Shareholders Agreement referred to in Exhibit 10(n)(1) above (filed as Exhibit 10(n)(2) to the registrant's Form 10-K for 1992 and incorporated herein by reference).
*12 Computation of Ratio of Earnings to Fixed Charges.
*13 Such portions of the Annual Report to security holders for 1994 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(k), 10(l)(1) and (2), and 10(m) above.