NOTE O - SIGNIFICANT OPERATIONS

Major Customers

We have six PCTCs, which carry automobiles for the same charterer. Gross revenues from this customer were approximately $36.5 million, $37.4 million and $32.8 million for the years ended December 31, 2013, 2012 and 2011, respectively. All of the aforementioned revenues are included in our PCTC Segment.

Our five U.S. Flag PCTCs qualified under the MSP. MSP revenue was approximately $15.9 million, $17.9 million and $17.5 million for the years ended December 31, 2013, 2012 and 2011, respectively. In addition to our five U.S. Flag PCTCs, we have two container vessels that qualified under the MSP. MSP revenue for these two vessels was approximately $5.6 million, $6.2 million and $5.9 million for the years ended December 31, 2013, 2012 and 2011, respectively. The five U.S. Flag PCTCs are included in our PCTC Segment and the two container vessels are included in our Specialty Segment. By late third quarter of 2013, we reflagged one of our U. S. Flag PCTC vessels to an international flag and added one chartered Heavy Lift Dry Cargo vessel to our fleet. The MSP revenue for the chartered Heavy Lift Dry Cargo vessel was $775,000 for the year ended December 31, 2013.

Our five U.S. Flag PCTCs also carry supplemental cargo. Gross revenues from these cargoes were approximately $30.8 million, $44.7 million, and $39.4 million for the years ended December 31, 2013, 2012 and 2011, respectively.

In addition to the foregoing PCTC information, we operated four PCTCs under various contracts transporting automobiles worldwide. Gross revenues under these contracts were approximately $11.3 million, $13.5 million and $24.3 million for the years ended December 31, 2013, 2012 and 2011, 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 rail cars between the U.S. Gulf Coast and Mexico. Gross revenues from these two Special Purpose vessels are included in our Rail-Ferry segment. Gross revenues from this segment were approximately $37.2 million, $33.3 million and $36.3 million for the years ended December 31, 2013, 2012 and 2011, respectively.

We have six Dry Bulk Carrier vessels, excluding one redelivered in November of 2013. Revenues from this segment were approximately $21.1 million, $26.1 million and $19.7 million for the years ended December 31, 2013, 2012 and 2011, respectively. Gross revenues from these seven vessels are included in our Dry Bulk Carriers segment.

We have six Jones Act vessels, which carry coal for TECO. The revenue from TECO represents approximately 33.5% of total revenue for the year ending December 31, 2013 for our Jones Act segment.

Concentrations

A significant portion of our traffic receivables is due from contracts with the United States Government. There are no concentrations of receivables from customers or geographic regions that exceeded 10% of revenues at December 31, 2013, 2012 or 2011.

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 76% at December 31, 2013.

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, PCTCs, 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,
(All Amounts in Thousands)		2013		2012
	United States	$	192,332	$	123,782
	Asian Countries		67,830		63,860
	Rail-Ferry Service Operating Between U.S. Gulf Coast and Mexico		34,390		32,479
	South America		2,905		10,416
	Europe		6,966		12,474
	Other Countries		5,729		485
Total Revenues		$	310,152	$	243,496

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

The new segmentation, which began with the fourth quarter of 2012, is based primarily by the market in which the segment assets are deployed, the physical characteristics of those assets, and the type of services provided to our customers. We believe this reorganization better aligns our segment disclosures with the information now reviewed by our chief operating decision maker and believe it improves the transparency with which we communicate to our investors. All prior period data for each of our segments has been recast based on this new segmentation methodology.

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, that are constructed in the U.S., owned by U.S. citizens and crewed by U.S. citizens. 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 TECO and the primary marine transporter of unfinished phosphate rock for Mosaic.

Under our Jones Act segment, we deploy (i) two Bulk carriers, three Integrated Tug-Barge units, each consisting of one tug and one barge, and one Harbor Tug acquired in the UOS acquisition, (ii) one Belt 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. The two Bulk Carriers primarily transport coal and phosphate for TECO and Mosaic, respectively. The three Integrated Tug-Barge units and the Harbor Tug operate under contracts of affreightment with TECO and Mosaic. We also own one additional Integrated Tug-Barge unit acquired from UOS which is currently inactive, but could be opportunistically deployed based on market demand. 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 - Leases.

Pure Car Truck Carriers: Under our Pure Car Truck Carriers segment, we deploy seven PCTCs, five of which are U.S. Flag vessels and two of which are International Flag vessels. These vessels transport all types of vehicles, from fully assembled passenger cars to construction machinery and equipment, in large numbers on multiple internal decks.

All of our PCTCs operate under time charters. Under these contracts, we 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 time charter hire income, we also earn from time to time supplemental voyage income as a result of chartering back our U.S. Flag PCTCs for the carriage of supplemental cargo when available.

We have operated PCTCs since 1986, when we entered into contracts with major Japanese companies. We own both of our International Flag PCTCs, each of which is employed under a long-term time charter contract. We own two of our five U.S. Flag PCTCs and lease the other three U.S. Flag PCTCs, 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 deadweight ton Capesize Bulk Carrier. Our Dry Bulk vessels carry a wide variety of cargoes, including iron ore, coal, grain, fertilizer, steel, agricultural and forest products.

The vessels which we deploy in this segment include (i) one Supramax Bulk Carrier, which we own, and operate in a revenue-sharing agreement with European partners, (ii) four Handysize Bulk carriers, three of which we own and one of which we time charter, under another revenue-sharing agreement, and (iii) a Capesize Bulk Carrier, which is currently under a time charter contract through late 2014. Under our 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 under the revenue-sharing agreement

Between 2009 and November 2013, we acquired a 25% shareholding interest in 15 Mini-Bulk Carriers included within our Dry Bulk Carriers segment. On July 1, 2013, a stock issuance to an unaffiliated co-investor caused our interest in six of the vessels to be reduced to 23.7%. 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 waterborne 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 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 the Eastern United States providing more efficient direct service and the option of not crossing 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 - Acquisitions 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 to another shipping company, (ii) two Multi-Purpose vessels, two Tankers, and three Container vessels which has serviced our contract since 1995 to transport fuel and supplies for an Indonesian mining company, (iii) one Multi-Purpose Heavy Lift Dry Cargo vessel which is time chartered to another shipping company, and (iv) one Multi-Purpose Ice Strengthened vessel deployed in the spot market. For a number of years prior to February 2012, we operated three Roll-on/Roll-off vessels on behalf of the U.S. Military Sealift Command which we no longer operate.

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			Dry Bulk Carriers			Rail-Ferry			Specialty Contracts			Other			Total
2013
Total Revenue from External Customers	$	122,751		$	94,608		$	21,098		$	37,207		$	34,483		$	5		$	310,152
Intersegment Revenues (Eliminated)		-			-			-			-			-			(17,876)			(17,876)
Intersegment Expenses Eliminated		-			-			-			-			-			17,876			17,876
Voyage Expenses**		95,227			79,155			18,425			30,456			31,190			(1,130)			253,323
Loss of Unconsolidated Entities		-			-			1,587			74			-			-			1,661
Gross Voyage Profit	$	27,524		$	15,453		$	1,086		$	6,677		$	3,293		$	1,135		$	55,168
Gross Voyage Profit Margin Percentage		22	%		16	%		5	%		18	%		10	%		227	%		18	%
Segment Assets	$	150,529		$	117,252		$	158,521		$	32,982		$	25,467		$	23,206		$	507,957
Expenditures for Segment Assets	$	41,973		$	23,324		$	3,043		$	763		$	3,116		$	261		$	72,480
2012
Total Revenue from External Customers	$	33,721		$	113,521		$	26,080		$	33,335		$	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			19,135			29,522			26,871			62			188,508
(Income) Loss of Unconsolidated Entities		-			-			(75)			290			-			-			215
Gross Voyage Profit	$	6,491		$	27,833		$	7,020		$	3,523		$	8,655		$	1,251		$	54,773
Gross Voyage Profit Margin Percentage		19	%		25	%		27	%		11	%		24	%		95	%		22	%
Segment Assets	$	119,377		$	122,403		$	162,921		$	35,196		$	27,767		$	25,134		$	492,798
Expenditures for Segment Assets	$	90,319		$	5,969		$	21,899		$	3,766		$	23,695		$	540		$	146,188
2011
Total Revenue from External Customers	$	29,836		$	122,341		$	20,183		$	36,422		$	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			9,786			30,664			35,916			2,070			192,082
Loss of Unconsolidated Entities		-			-			63			347			-			-			410
Gross Voyage Profit	$	2,130		$	36,401		$	10,334		$	5,411		$	16,110		$	318		$	70,704
Gross Voyage Profit Margin Percentage		7	%		30	%		51	%		15	%		31	%		13	%		27	%
Segment Assets	$	9,363		$	298,919		$	129,692		$	38,440		$	28,448		$	24,289		$	529,151
Expenditures for Segment Assets	$	158		$	86,077		$	74,603		$	4,483		$	1,120		$	99		$	166,540

*2012 reflects one month of UOS.

**Includes amortization.

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


(All Amounts in Thousands)		Year Ended December 31,
Profit or Loss:		2013		2012		2011
Total Gross Voyage Profit for Reportable Segments		$	55,168	$	54,773	$	70,704
Unallocated Amounts:
	Vessel and Other Depreciation		(24,432)		(24,398)		(25,388)
	Administrative and General Expenses		(22,734)		(23,244)		(20,961)
	Gain on Sale of Other Assets		(16)		16,625		-
	Loss from Unconsolidated Entities		1,661		215		410
	Gain on Dry Bulk Transaction		-		-		18,844
Operating Income		$	9,647	$	23,971	$	43,609
	Interest		(9,504)		(10,409)		(10,361)
	Derivative Loss		(438)		(485)		(101)
	Gain (Loss) on Sale of Investment		-		580		(747)
	Investment Income		114		470		637
	Other Income from Vessel Financing		2,122		2,387		2,653
	Foreign Exchange Gain (Loss)		5,914		5,506		(3,051)
Income before Income Taxes		$	7,855	$	22,020	$	32,639


(All Amounts in Thousands)		Year Ended December 31,
Assets:		2013		2012
Total Assets for Reportable Segments		$	507,957	$	492,797
Unallocated Amounts:
	Current Assets		87,104		89,244
	Investment in Unconsolidated Entities		14,818		12,676
	Due from Related Parties		1,699		1,709
	Other Assets		7,383		5,509
	Goodwill		2,735		2,700
	Deferred Tax Asset		7,020		-
	Notes Receivable		27,659		33,381
Total Assets		$	656,375	$	638,016