NOTE P -FAIR VALUE OF FINANCIAL INSTRUMENTS, DERIVATIVES AND MARKETABLE SECURITIES

The Company uses derivative instruments to manage certain foreign currency exposures and interest rate exposures. The Company does not use derivative instruments for speculative trading purposes. All derivative instruments are recorded on the balance sheet at fair value. For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is recorded to other comprehensive income, and is reclassified to earnings when the derivative instrument is settled. Any ineffective portion of changes in the fair value of the derivative is reported in earnings. None of the Company's derivative contracts contain credit-risk related contingent features that would require us to settle the contract upon the occurrence of such contingency. However, all of our contracts contain clauses specifying events of default under specified circumstances, including failure to pay or deliver, breach of agreement, default under the specific agreement to which the hedge relates, bankruptcy, misrepresentation and mergers, without exception. The remedy for default is settlement in entirety or payment of the fair value of the contracts, which is $9.2 million in the aggregate for all of our contracts as of December 31, 2011. The unrealized loss related to the Company's derivative instruments included in accumulated other comprehensive income (loss) was $8.6 million and $8.7 million as of December 31, 2011 and 2010, respectively.

The notional and fair value amounts of our derivative instruments as of December 31, 2011 were as follows:

(Amounts in thousands)		Asset Derivatives 2011		Liability Derivatives 2011
	Current Notional	Balance Sheet	Fair	Balance Sheet	Fair Value
As of December 31, 2011	Amount	Location	Value	Location
Interest Rate Swaps-S/T	$ 12,845	-	-	Current Liabilities	($545)
Interest Rate Swaps-L/T*	$ 140,455	-	-	Other Liabilities	($8,901)
Foreign Exchange Contracts	$2,400	Other Assets	$202	-	-
Total derivatives designated as hedging instruments	$155,700	-	$202	-	($9,446)

*We have outstanding a variable-to-fixed interest rate swap with respect to a Yen-based facility for the financing of a PCTC delivered in March 2010. The notional amount under this contract is $74,839,660 (based on a Yen to USD exchange rate of 76.92 as of December 31, 2011). With the bank exercising its option to reduce the underlying Yen loan from 80% to 65% funding of the vessel's delivery cost, the 15% reduction represents the ineffective portion of this swap, which consists of the portion of the derivative instrument that is no longer supported by underlying borrowings. The change in fair value related to the ineffective portion of this swap was a $101,000 loss for the year ended December 31, 2011 and this amount was included in earnings. We paid down this facility in January 2012 in an amount of Yen 86,319,000 to bring our Asset Maintenance Loan to Value Facility requirement in line.

The notional and fair value amounts of our derivative instruments as of December 31, 2010 were as follows:

(Amounts in thousands)		Asset Derivatives 2010		Liability Derivatives 2010
	Current Notional	Balance Sheet	Fair	Balance Sheet	Fair Value
As of December 31, 2010	Amount	Location	Value	Location
Interest Rate Swaps*	$ 143,466	-	-	Other Liabilities	$9,620
Foreign Exchange Contracts	$3,000	Other Current Assets	$157	-	-
Total Derivatives designated as hedging instruments	$146,466	-	$157	-	$9,620

*With regard to the interest rates of our long-term debt that have been swapped to a fixed rate under contracts, they include an interest rate swap on a Yen based facility for the financing of a new PCTC delivered in March 2010. The notional amount under this contract is approximately $75,300,000 (Based on a Yen to USD exchange rate of 82). With the bank exercising its option to reduce the underlying Yen loan from 80% to 65% funding of the vessel's delivery cost, the 15% reduction represents the ineffective portion, which consists of the portion of the derivative instrument that is no longer supported by an underlying credit facility. The change in fair value related to the ineffective portion of this swap was a $426,000 loss for the year ended December 31, 2010 and this amount was included in earnings. .

The effect of derivative instruments designated as cash flow hedges on our consolidated statement of income for the year ended December 31, 2011 is as follows:

(Amounts in thousands)	Gain Recognized in Other Comprehensive Income	Location of Gain(Loss) Reclassified from AOCI to Income	Amount of Gain(Loss) Reclassified from AOCI to Income	Gain (Loss) Recognized in Income from Ineffective portion
Interest Rate Swaps	$72	Interest Expense	($3,982)	($101)
Foreign Exchange Contracts	$29	Other Revenues	$434	-
Total Derivatives designated as hedging instruments	$101	-	($3,548)	($101)

The effect of derivative instruments designated as cash flow hedges on our consolidated statement of income for the year ended December 31, 2010 is as follows:

(Amounts in thousands)	Gain (Loss) Recognized in Other Comprehensive Income	Location of Gain (Loss) Reclassified from AOCI to Income	Amount of Gain (Loss) Reclassified from AOCI to Income	Gain (Loss) Recognized in Income from Ineffective portion
Interest Rate Swaps	($1,514)	Interest Expense	($3,966)	($426)
Foreign Exchange Contracts	($342)	Voyage Expenses	$1,589	-
Total	($1,856)	-	($2,377)	($426)

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

Interest Rate Swap Agreements

We enter into interest rate swap agreements to manage well-defined interest rate risks. The Company records the fair value of the interest rate swaps as an asset or liability on its balance sheet. The Company's interest rate swaps are accounted for as effective cash flow hedges. Accordingly, the effective portion of the change in fair value of the swap is recorded in Other Comprehensive Income (Loss). As of December 31, 2011, the Company has the following swap contracts outstanding:

Effective Date	Termination Date	Current Notional Amount	Swap Rate	Type
11/30/05	11/30/12	$12,845,000	5.17%	Fixed
3/31/08	9/30/13	$9,796,333	3.46%	Fixed
9/30/10	9/30/13	$9,796,333	2.69%	Fixed
9/30/10	9/30/13	$9,796,333	2.45%	Fixed
9/26/05	9/28/15	$7,666,667	4.41%	Fixed
9/26/05	9/28/15	$7,666,667	4.41%	Fixed
3/15/09	9/15/20	*$74,839,660	2.065%	Fixed
6/29/11	6/29/18	$20,892,858	1.80%	Fixed
Total:		$153,299,851

*Notional Amount converted from Yen at December 31, 2011 at a Yen to USD exchange rate of 76.92

Foreign Currency Contracts

We enter into forward exchange contracts to hedge certain firm purchase and sale commitments denominated in foreign currencies. The purpose of our foreign currency hedging activities is to protect us from the risk that the eventual dollar cash inflows or outflows resulting from revenue collections from foreign customers and purchases from foreign suppliers will be adversely affected by changes in exchange rates. The term of the currency contracts is rarely more than one year. Our foreign currency contracts are accounted for as effective cash flow hedges. Accordingly, the effective portion of the change in fair value is recorded in Other Comprehensive Income (Loss).

During 2011, we entered into four forward purchase contracts which expire in 2012. The first was for Mexican Pesos for $750,000 U.S. Dollar equivalents at an exchange rate of 12.1818, the second was for Mexican Pesos for $1,200,000 U.S. Dollar equivalents at an exchange rate of 12.4717, the third was for Mexican Pesos for $450,000 U.S. Dollar equivalents at an exchange rate of 13.036 and the fourth was for Mexican Pesos for $750,000 U.S. Dollar equivalents at an exchange rate of 14.0292. Our foreign exchange contracts represent approximately 100% of our projected Mexican Peso exposure. There were no forward sales contracts as of December 31, 2011 or 2010.

The following table summarizes these contracts:

(Amounts in thousands)
Transaction Date	Type of Currency	Transaction Amount in USD	Effective Date	Expiration Date
August 2011	Peso	$450	September 2011	June 2012
August 2011	Peso	900	September 2011	December 2012
September 2011	Peso	450	July 2012	December 2012
September 2011	Peso	600	October 2011	December 2012
Total:		$2,400

Long-Term Debt

The fair value of long-term debt, which is estimated based on the current rates offered to us on outstanding obligations, approximated the carrying amounts of $322.1 million and $221.6 million as of December 31, 2011 and 2010, respectively.

Amounts Due from Related Parties

The carrying amount of these notes receivable approximated fair market value as of December 31, 2011 and 2010. Fair market value takes into consideration the current rates at which similar notes would be made.

Marketable Securities

We have categorized all marketable securities as available-for-sale securities. Management performs a quarterly evaluation of marketable securities for any other-than-temporary impairment. For the years ended December 31, 2011 and 2010, respectively, there were no impairments taken on any of our marketable securities. For the year ended December 31, 2009, we recognized impairment charges of $757,000 related to certain equity investments which were determined to have other-than-temporary impairments. These impairment charges represented the difference between each investment's cost and fair value on the respective balance sheet dates. The fair value was determined using market prices that represented Level 1 inputs in the fair value hierarchy described in Note V. Our entire portfolio of stocks was sold in the fourth quarter of 2009, generating a gain of approximately $980,000.

The following tables include cost and valuation information on our marketable securities:

(Amounts in thousands)	December 31, 2011
Security Type	Cost Basis	AOCI Unrealized Holding Gains	Estimated Fair Value
Corporate Bonds*	$ 8,553	$ 70	$ 8,623
Mutual Funds	4,146	58	4,204
	$ 12,699	$ 128	$ 12,827

* Various maturity dates from April 2014 – November 2016.

	December 31, 2010
Security Type	Cost Basis	AOCI Unrealized Holding Gains	Estimated Fair Value
Corporate Bonds*	$ 11,394	$ 133	$ 11,527
Mutual Funds	4,249	-	4,249
	$ 15,643	$ 133	$ 15,776

* Various maturity dates from February 2011 – February 2015.