NOTE J- LEASES

Direct Financing Leases

In 2005, we entered into a direct financing lease of a U.S. Flag PCTC expiring in 2015; and, in 1999, we entered into a direct financing lease of a International Flag PCTC expiring in 2019. The schedule of future minimum rentals to be received by us under these direct financing leases in effect at December 31, 2011, is as follows:


(Amounts intThousands)	Receivables Under Direct Financing Leases
Year Ended December 31,
2012	$	13,117
2013		13,097
2014		12,707
2015		11,044
2016		6,844
Thereafter		16,363
Total Minimum Lease Payments Receivable		73,172
Estimated Residual Value of Leased Property		8,051
Less: Unearned Income		(31,108	)
Total Net Investment in Direct Financing Leases		50,115
Current Portion		(6,278	)
Long-Term Net Investment in Direct Financing Leases at December 31, 2011	$	43,837

Operating Leases

As of December 31, 2011, we leased from third parties a Molten Sulphur Carrier vessel and office space. We are committed to a lease for this vessel with the lease term expiring in August 2017. In February 2012, we entered into a sale-leaseback covering one of our U.S. Flag PCTC for a term of 10 years. This lease is classified as an operating lease, with the gain on this sale-leaseback being deferred and recognized over the term of the lease. We operate the vessels under these leases under fixed charter agreements covering the terms of the respective leases.

Our operating lease agreements have fair value renewal options and fair value purchase options. Most of the agreements impose defined minimum working capital and net worth requirements, impose restrictions on the payment of dividends, and prohibit us from incurring, without prior written consent, additional debt or lease obligations, except as defined. In July 2011, we purchased two previously leased vessels for an aggregate purchase price of $64.5 million pursuant to early buy-out options.

The Mobile corporate office lease, which commenced on April 1, 2007, has a twenty year term with periodic graduating payments that are accounted for on a straight line basis. We incurred $730,000 in leasehold improvements and were provided with incentives in the amount of $1.4 million, both of which are amortized over the life of the lease with the incentives amortized as a credit to rent expense. In October 2008, the Company renewed its lease agreement on its New York office space under a ten year term with the first nine months as free rent and includes periodic graduating payments. The rent expense is amortized on a straight line basis over the term of the lease. In addition, we incurred $503,000 in leasehold improvements which will be amortized over the life of the lease. The Company also leases a Shanghai office, with the current term expiring in June 2012, and a Singapore office, with the current term expiring in September 2014 with an option to renew for three years. We incurred $199,000 in leasehold improvements on the Singapore office which is being amortized over the life of the lease.

In addition to those operating leases with terms expiring after December 31, 2011, we also operated certain vessels under short-term operating charters during 2011.

Rent expense related to all of our operating leases totaled approximately $13,634,000, $28,844,000 and $35,745,000 for the years ended December 31, 2011, 2010 and 2009, respectively. The following is a schedule, by year, of future minimum payments required under operating leases that have initial non-cancelable terms in excess of one year as of December 31, 2011:

	Payments Under Operating Leases
(Amounts in thousands)	U.S. Flag Vessels		Other Leases		Total
Year Ended December 31,
2012	$	8,036	$	1,240	$	9,276
2013		8,897		1,227		10,124
2014		8,897		1,195		10,092
2015		8,897		1,071		9,968
2016		8,466		1,095		9,561
Thereafter		35,461		8,140		43,601

Total Future Minimum Payments	$	78,654	$	13,968	$	92,622