NOTE O - SIGNIFICANT OPERATIONS

Major Customers

We have several medium to long-term contracts related to the operations of various vessels (See Note L – Commitments and Contingencies), from which revenues represent a significant amount of our total revenue. Revenues from the contracts with the MSC were $3,618,000, $26,495,000 and $34,401,000 for the years ended December 31, 2012, 2011 and 2010, respectively. In early 2009, we received notification from MSC that we had been excluded from further consideration for extending the current operating agreements on three U.S. Flag Roll-on/Roll-off vessels. Subsequently, the MSC exercised options to extend the agreements several times up to February 2012 for all three vessels. The MSC reopened the bidding process, bids were submitted, and in January 2012 we were notified that we would not be awarded the contract. All three vessels' operating contracts terminated in February 2012.

We have six PCTC's, which carry automobiles for the same charterer. Gross revenues from this customer were $37,365,000, $32,766,000 and $31,256,000 for the years ended December 31, 2012, 2011 and 2010, respectively. All of the aforementioned revenues are included in our PCTC Segment.

Our six U.S. Flag PCTC's qualified under the MSP. MSP Revenue was $17,946,000, $17,541,000 and $17,169,000 for the years ended December 31, 2012, 2011 and 2010, respectively. In addition to our six U.S. Flag PCTC's, we have two container vessels that qualified under the MSP. MSP Revenue for these two vessels was $6,200,000, $5,900,000 and $5,800,000 for the years ended December 31, 2012, 2011 and 2010, respectively. The six U.S. Flag PCTC's are included in our PCTC Segment and the two container vessels are included in our Specialty Segment.

Our six U.S. Flag PCTC's also carry supplemental cargo. Gross revenues from these cargoes were $44,667,000, $39,425,000, and $79,778,000 for the years ended December 31, 2012, 2011 and 2010, respectively.

In addition to the foregoing PCTC information, we operated three PCTC's under various contracts transporting automobiles worldwide. Gross revenues under these contracts were $13,543,000, $24,281,000 and $25,566,000 for the years ended December 31, 2012, 2011 and 2010, respectively. All of the aforementioned revenues are included in our PCTC Segment. Two of these vessels were sold in the first quarter of 2012.

We have two Special Purpose vessels which carry loaded rail cars between the U.S. Gulf Coast and Mexico. Gross revenues from this service were $33,328,000, $36,267,000 and $26,768,000 for the years ended December 31, 2012, 2011 and 2010, respectively. Gross revenues from these two Special Purpose vessels are included in our Rail-Ferry segment.

We have seven Dry Bulk Carrier vessels. Revenues from this segment were $26,080,000, $19,719,000 and $0 for the years ended December 31, 2012, 2011 and 2010, respectively. Gross revenues from these seven vessels are included in our Dry Bulk Carriers segment.

Concentrations

A significant portion of our traffic receivables is due from contracts with the United States Government and transportation of government sponsored cargo. There are no concentrations of receivables from customers or geographic regions that exceeded 10% of revenues at December 31, 2012, 2011 or 2010.

With only minor exceptions related to personnel aboard certain International Flag vessels, all of our shipboard personnel are covered by collective bargaining agreements under multiple unions. The percentage of the Company's total work force that is covered by these agreements is approximately 72% at December 31, 2012.

Geographic Information

We have operations in several principal markets, including international service between U.S. Gulf Coast, U.S. East Coast, and U.S. West Coast ports and ports in Mexico, the Middle East and the Far East, and domestic transportation services along the U.S. Gulf Coast and East Coast. Revenues attributable to the major geographic areas of the world are presented in the following table. Revenues for our Jones Act, Pure Car Truck Carriers (PCTC), Rail-Ferry, Dry Bulk Carriers, Specialty Contracts and Other segments are assigned to regions based on the location of the customer. Because we operate internationally, most of our assets are not restricted to specific locations. Accordingly, an allocation of identifiable assets to specific geographic areas is not applicable.

	Year Ended December 31,
(Amounts in thousands)	2012		2011		2010
United States	$	123,782	$	132,387	$	179,127
Asian Countries		63,860		86,342		84,146
Rail-Ferry Service Operating Between U.S. Gulf Coast and Mexico		32,479		36,422		26,768
South America		10,416
Europe		12,474		7,341		-
Other Countries		485		704		8
Total Revenues	$	243,496	$	263,196	$	290,049

Operating Segments

Following our acquisition of UOS in late 2012, we internally restructured our business to replace our prior operating segments (listed below) with the following new segments:

New Segments		Prior Segments
· Jones Act		· Time Charter Contracts – U.S. Flag
· Pure Car Truck Carriers		· Time Charter Contracts – International Flag
· Dry Bulk Carriers		· Contracts of Affreightment
· Rail-Ferry		· Rail-Ferry Service
· Specialty Contracts		· Other
· Other

For further information on the rationale for this change and the amount of revenues and gross profits contributed by each segment, please see Item 7 of this report.

Jones Act: The Merchant Marine Act of 1920, or the MMA, regulates maritime commerce in U.S. waters between U.S. ports. Section 27 of the MMA, better known as the Jones Act, requires that all goods transported by water between U.S. ports be carried aboard U.S. Flag vessels, constructed in the U.S., owned by U.S. citizens and crewed by U.S. citizens with permanent U.S. residence.

With the acquisition of UOS, we now have the largest Jones Act dry bulk fleet by vessel capacity. Vessels deployed under our Jones Act segment serve both Eastern U.S. coasts and the Gulf of Mexico and operate as the primary marine transporter of coal for Tampa Electric and the primary marine transporter of unfinished phosphate rock for The Mosaic Company ("Mosaic").

Under our Jones Act segment, we deploy (i) two bulk carriers, two integrated tug-barge units, each consisting of one tug and one barge, and one harbor tug acquired in the UOS acquisition, (ii) one conveyor belt-equipped, self-unloading Coal Carrier to transport coal under a time charter, which was previously part of our Time Charter Contracts – U.S. Flag segment, and (iii) one vessel that transports molten sulphur under a contract of affreightment through December 31, 2015, subject to the right of our customer to exercise renewal options through the end of 2024, which was previously part of our Contracts of Affreightment segment. Currently, the two bulk carriers transport grain and other preference cargoes overseas on behalf of the United States government under Public Law 480 and transport coal and phosphate for Tampa Electric and Mosaic, respectively. The two integrated tug-barge units and the harbor tug operate under contracts of affreightment with Tampa Electric and Mosaic. We also own two integrated tug-barge units acquired from UOS that are currently inactive, but we are currently in the process of activating one unit to handle additional cargo requirements. Trade for this segment is primarily driven by coal, petroleum coke, phosphate rock, sulphur and fertilizer.

We own all of the aforementioned vessels with the exception of the molten sulphur carrier, which we sold under a sale/leaseback arrangement in November 2012, with a buy back option in 2017. For more information on our Sale/Leasebacks see Note M on page F-32 and under Contractual Obligations and Other Commitments on page 46.

Pure Car Truck Carriers: Under our Pure Car Truck Carriers segment, we deploy seven Pure Car/Truck Carriers ("PCTC's"). These vessels transport all types of vehicles, from completed passenger cars to construction machinery and equipment, allowing for the efficient loading of large numbers of vehicles on multilayered decks. This segment is an aggregation of the seven PCTC's from our former Time Charter Contracts – U.S. Flag and Time Charter Contracts – International Flag segments.

All of our PCTC's operate under time charters. Under these contracts, we typically fully equip the vessel and are responsible for normal operating expenses, repairs, crew wages, and insurance, while the charterer is responsible for voyage expenses, such as fuel, port and stevedoring expenses. In addition to contractually fixed income, we also earn from time to time supplemental income from the carriage of supplemental cargo when available.

We have operated PCTC's since 1986, when we began transporting automobiles for Toyota and Honda. We own four of our seven PCTC's and lease the other three PCTC's with buy back options in 2015, 2018 and 2019.

Dry Bulk Carriers: Our modern, diversified bulk carrier fleet ranges in size, design and classification from an 8,028 metric ton Mini-Bulk Carrier to a 170,578 metric ton Capesize Bulk Carrier. Our Dry Bulk vessels carry a wide variety of unpackaged goods, including iron ore, coal, grain, fertilizer, agricultural products, steel, chemical and forest products.

The vessels which we deploy in this segment include one Capesize Bulk Carrier and one Handymax Bulk Carrier, which we own, that are part of revenue-sharing agreements with European partners, and five Handysize Bulk Carriers, three of which we own and two of which we time charter, that are part of a separate revenue-sharing agreement. Under these revenue-sharing agreements, we and the other participating vessel owners receive monthly distributions of net cash flow from voyage profits based on a participating vessel's performance capability compared with other participating vessels in the revenue-sharing agreement

Our Dry Bulk Carriers segment also includes 14 Mini-Bulk carriers in which we own a 25% share holding interest through two unconsolidated entities. In 2009, we acquired a 25% interest in eight of these Mini-Bulk carriers for $6.25 million. In 2010, we acquired a 25% interest in two more of these Mini-Bulk carriers for $3.9. In January 2013, we acquired a 25% interest in four more of these Mini-Bulk carriers, giving us a 25% investment in a total of fourteen Mini-Bulk carriers. These Mini-Bulkers are deployed in the spot market or on short to medium-term time charters. We believe these arrangements expand our global commercial and operational network.

Rail-Ferry: Our Rail-Ferry segment uses our two Roll-on/Roll-off Special Purpose double-deck vessels, which carry loaded rail cars between the U.S. Gulf Coast and Mexico in a regularly scheduled service. The service provides departures every four days from Mexico and the U.S. Gulf Coast, respectively, for a three-day transit between ports. Since 2007, we have conducted these operations out of our new terminal in Mobile, Alabama and a terminal in Coatzacoalcos, Mexico, which we upgraded in 2007 to accommodate the vessels' newly-installed second decks that doubled their carrying capacity. We own a 49% interest in Terminales Transgolfo, S.A. de C.V., which owns and operates the rail terminal in Coatzacoalcos, Mexico.

We believe this unique service provides a cost effective alternative route between Eastern United States and for shippers who elect not to cross the Texas-Mexican border. Trade for this segment is primarily driven by commodities such as forest products, sugar, metals, minerals, plastics and chemicals.

In August 2012, we acquired two related businesses that own and operate a certified rail-car repair facility near the port of Mobile, Alabama. For further information on this acquisition, see Note B of this report. We plan to continue to use these businesses to service and repair third party customers as well as rail-cars that are transported via our Rail-Ferry vessels. We believe this acquisition allows us to integrate two established services and retain revenue and profits related to the cleaning and repairs of rail-cars that was previously contracted to a third party

Specialty Contracts: Our Specialty Contracts segment is comprised of vessels not otherwise described above, operating under unique contracts and constitutes the remainder of our former Time Charter Contracts – U.S. Flag and Time Charter Contracts – International Flag segments. This segment includes (i) two container vessels which are on time charter with another shipping company, (ii) two multi-purpose vessels, two tankers, and three container vessels which service our long-term contract since 1995 to transport fuel and supplies for a mining company in Indonesia, (iii) one multi-purpose vessel which is chartered under time charter contract, and (iv) one multi-purpose ice strengthened vessel deployed in the spot market. For several years prior to February 2012, we operated three Roll-on/Roll-off vessels on behalf of the U.S. Military Sealift Command, under a program that is no longer in operation.

Other: This segment consists of operations that include ship and cargo charter brokerage and agency services provided to unaffiliated companies and our operating companies, and other specialized services provided to our operating subsidiaries. These services facilitate our operations by allowing us to avoid reliance on third parties to provide these essential services. Also reported within this segment are corporate-related items, and income and expense items not allocated to our other reportable segments.

The following table presents information about segment profit and loss and segment assets. We do not allocate administrative and general expenses, gains or losses on sales of investments, investment income, gains or losses on early extinguishment of debt, equity in net loss/income of unconsolidated entities, income taxes, or losses from discontinued operations to our segments. Intersegment revenues are based on market prices and include revenues earned by our subsidiaries that provide specialized services to the operating segments. Expenditures for segment assets represent cash outlays during the periods presented, including purchases of assets, improvements to assets, and drydock payments.

(All Amounts in Thousands)	Jones Act*			Pure Car Truck Carriers			Rail Ferry			Dry Bulk Carriers			Specialty Contracts			Other			Total
2012
Revenues from External Customers	$	33,721		$	113,521		$	33,335		$	26,080		$	35,526		$	1,313		$	243,496
Intersegment Revenues (Eliminated)																	18,638			18,638
Intersegment Expenses (Eliminated)		-			-			-			-			-			(18,638	)		(18,638	)
Voyage Expenses		27,230			85,688			29,522			19,135			26,871			62			188,508
Loss (Income) of Unconsolidated Entities		-			-			290			(75	)		-			-			215
Gross Voyage Profit		6,491			27,833			3,523			7,020			8,655			1,251			54,773
Gross Voyage Profit Margin Percentage		19	%		25	%		11	%		27	%		24	%		95	%		22	%
Vessel and Other Depreciation		2,120			11,059			2,861			6,297			2,061			-			24,398
Gross Profit	$	4,371		$	16,774		$	662		$	723		$	6,594		$	1,251		$	30,375
Interest Expense		1,614			2,933			768			3,923			628			543			10,409
Segment Profit (Loss)	$	2,757		$	13,841		$	(106	)	$	(3,200	)	$	5,966		$	708		$	19,966
Segment Assets		119,377			122,403			35,196			162,921			27,767			25,134			492,798
Expenditures for Segment Assets		90,319			5,969			3,766			21,899			23,695			540			146,188
2011
Revenues from External Customers	$	29,836		$	122,341		$	36,422		$	20,183		$	52,026		$	2,388		$	263,196
Intersegment Revenues Eliminated																	17,419			17,419
Intersegment Expenses (Eliminated)		-			-			-			-			-			(17,419	)		(17,419	)
Voyage Expenses		27,706			85,940			30,664			9,786			35,916			2,070			192,082
Loss of Unconsolidated Entities		-			-			347			63			-			-			410
Gross Voyage Profit		2,130			36,401			5,411			10,334			16,110			318			70,704
Gross Voyage Profit Margin Percentage		7	%		30	%		15	%		51	%		31	%		13	%		27	%
Vessel Depreciation		1,403			14,167			3,642			4,309			1,858			9			25,388
Gross Profit	$	727		$	22,234		$	1,769		$	6,025		$	14,252		$	309		$	45,316
Interest Expense		172			5,828			721			2,645			556			439			10,361
Segment Profit (Loss)	$	555		$	16,406		$	1,048		$	3,380		$	13,696		$	(130	)	$	34,955
Segment Assets		9,363			298,919			38,440			129,692			28,448			24,289			529,151
Expenditures for Segment Assets		158			86,077			4,483			74,603			1,120			99			166,540
2010
Revenues from External Customers	$	30,109		$	163,152		$	26,673		$	-		$	67,133		$	2,982		$	290,049
Intersegment Revenues Eliminated																	18,642			18,642
Intersegment Expenses (Eliminated)		-			-			-			-			-			(18,642	)		(18,642	)
Voyage Expenses		26,738			112,500			22,649			-			44,870			2,590			209,347
Loss (Income) of Unconsolidated Entities		-			-			48			(9,330	)		-			-			(9,282	)
Gross Voyage Profit		3,371			50,652			3,976			9,330			22,263			392			89,984
Gross Voyage Profit Margin Percentage		11	%		31	%		15	%		-			33	%		13	%		31	%
Vessel Depreciation		1,373			11,364			5,181			-			-			11			17,929
Impairment Loss		-			-			25,430			-			-			-			25,430
Gross Profit (Loss)	$	1,998		$	39,288		$	(26,635	)	$	9,330		$	22,263		$	381		$	46,625
Interest Expense		222			5,402			831			-			184			518			7,157
Segment Profit (Loss)	$	1,776		$	33,886		$	(27,466	)	$	9,330		$	22,079		$	(137	)	$	39,468
Segment Assets		12,516			313,360			40,511			-			7,951			24,722			399,060
Expenditures for Segment Assets		331			1,962			6,695			108,338			8,036			300			125,662

*2012 reflects one month of UOS.

Following is a reconciliation of the totals reported for the operating segments to the applicable line items in the consolidated financial statements:

(Amounts in thousands)	Year Ended December 31,
Profit or Loss:	2012			2011			2010
Total Profit for Reportable Segments	$	19,966		$	34,955		$	39,468
Unallocated Amounts:
Administrative and General Expenses		(23,244	)		(20,961	)		(21,202	)
Gain on Sale of Other Assets		16,625			-			42
Derivative Loss		(485	)		(101	)		(426	)
Gain (Loss) on Sale of Investment		580			(747	)		213
Investment Income		470			637			1,778
Other Income from Vessel Financing		2,387			2,653			2,335
Foreign Exchange Gain (Loss)		5,506			(3,051	)		(8,196	)
Gain on Dry Bulk Transaction		-			18,844			-
Benefit (Provision) for Income Taxes		157			(680	)		1,290

Net Income	$	21,962		$	31,549		$	15,302

(Amounts in thousands)	December 31,		December 31,
Assets:	2012		2011
Total Assets for Reportable Segments	$	492,797	$	529,153
Unallocated Amounts:
Current Assets		88,921		85,125
Investment in Unconsolidated Entities		12,676		12,800
Due from Related Parties		1,709		1,571
Other Assets		5,509		202
Goodwill		2,700		-
Notes Receivable		33,381		37,714
Total Assets	$	637,693	$	666,565