NOTE D - SIGNIFICANT OPERATIONS

Major Customers

We have seven PCTCs, which carry automobiles for customers worldwide. Of the seven PCTCs, six are chartered to one customer. Gross revenues from this customer were approximately $37.9 million, $36.5 million, and $37.4 million for the years ended December 31, 2014, 2013 and 2012, respectively. All of the aforementioned revenues are included in our PCTC Segment.

We have eight vessels that qualified under the MSP program in 2014, 2013 and 2012. The MSP revenue was approximately $24.5 million, $22.3 million, and $24.1 million for the years ended December 31, 2014, 2013 and 2012, respectively. These revenues are included in both our PCTC and Specialty Contract segments.

Our U.S. Flag PCTCs also carry supplemental cargo. Gross revenues from these cargoes were approximately $16.1 million, $30.8 million, and $44.7 million for the years ended December 31, 2014, 2013 and 2012, respectively.

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 $34.6 million, $37.2 million, and $33.3 million for the years ended December 31, 2014, 2013 and 2012, respectively.

We have five Dry Bulk Carrier vessels, excluding two redelivered in November of 2013 and in May of 2014. Revenues from this segment were approximately $18.0 million, $21.1 million, and $26.1 million for the years ended December 31, 2014, 2013 and 2012, respectively. Gross revenues from these seven vessels are included in our Dry Bulk Carrier segment. As previously discussed, we sold one of our Handysize vessels in March 2015 and the other two Handysize vessels are currently held for sale.

We have six Jones Act vessels, which carry coal and fertilizer for TEC and Mosaic. The revenue from these customers represents approximately 62%, 53%, and 58% of total revenue for the years ending December 31, 2014, 2013, and 2012 for our Jones Act segment.

Concentrations

A significant portion of our traffic receivables is due from contracts with the United States Government.

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 75% at December 31, 2014.

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)		2014		2013		2012
	United States	$	165,268	$	192,332	$	123,782
	Asian Countries		62,542		67,830		63,860
	Rail-Ferry Service Operating Between U.S. Gulf Coast and Mexico		32,521		34,366		32,479
	South America		-		2,905		10,416
	Europe		10,449		6,966		12,474
	Other Countries		24,054		5,729		485
Total Revenues		$	294,834	$	310,128	$	243,496

Operating Segments

We report our operating results in the following six segments:

Jones Act

Pure Car Truck Carriers

Dry Bulk Carriers

Rail-Ferry

Specialty Contracts

Other

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 TEC 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 TEC and Mosaic, respectively. The three Integrated Tug-Barge units and the Harbor Tug operate under contracts of affreightment with TEC and Mosaic. We also own one additional Integrated Tug-Barge unit acquired from UOS which is currently inactive and held for sale. 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 O - Leases.

Pure Car Truck Carriers: Under our Pure Car Truck Carriers segment, we deploy seven PCTCs, four of which are U.S. Flag vessels and three 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 four U.S. Flag PCTCs and lease the other two U.S. Flag PCTCs, with buy back options in 2018 and 2019.

Dry Bulk Carriers: Our modern, diversified bulk carrier fleet ranges in size, design and classification from an 8,000 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) three Handysize Bulk carriers which we own, and (iii) a Capesize Bulk Carrier, which is currently under a 12-16 month time charter contract through at least the end of 2015. 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

We previously acquired a 25% shareholding interest in 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 certain of our vessels to be reduced to 23.68%. We currently have a 25% shareholding interest in 8 Mini-Bulk carriers and a 23.68% interest in the other 8 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 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, six 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.

During 2014, we invested approximately $5.8 million cash and $2.1 million cash to acquire a 30% interest in Saltholmen Shipping Ltd and Brattholmen Shipping Ltd, respectively. Brattholmen Shipping Ltd was organized to purchase and operate two Asphalt Tankers. Saltholmen Shipping Ltd was organized to purchase and operate two newbuilding Chemical Tankers. All four vessels were immediately employed on long-term bareboat charters.

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 in order to derive our gross voyage profit numbers. 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
2014
Total Revenue from External Customers	$	124,854		$	78,081		$	18,045		$	34,577		$	39,765		$	(488)		$	294,834
Intersegment Revenues (Eliminated)		-			-			-			-			-			(18,350)			(18,350)
Intersegment Expenses Eliminated		-			-			-			-			-			18,350			18,350
Voyage Expenses		82,913			65,696			13,327			28,743			33,973			(1,612)			223,040
Amortization Expenses		15,813			2,606			236			994			2,433			25			22,107
(Income) Loss of Unconsolidated Entities		-			-			468			193			(671)			-			(10)
Gross Voyage Profit	$	26,128		$	9,779		$	4,014		$	4,647		$	4,030		$	1,099		$	49,697
Gross Voyage Profit Margin Percentage		21	%		13	%		22	%		13	%		10	%		(225)	%		17	%
Segment Assets	$	126,936		$	159,203		$	122,401		$	43,776		$	18,644		$	6,173		$	477,133
Expenditures for Segment Assets	$	9,528		$	62,155		$	1,949		$	363		$	495		$	5,211		$	79,701
2013
Total Revenue from External Customers	$	122,751			94,608			21,098			37,183			34,483			5		$	310,128
Intersegment Revenues (Eliminated)		-			-			-			-			-			(17,876)			(17,876)
Intersegment Expenses Eliminated		-			-			-			-			-			17,876			17,876
Voyage Expenses		84,942			77,078			17,588			29,166			29,057			(1,130)			236,701
Amortization Expenses		10,285			2,077			837			1,054			2,133			-			16,386
Loss of Unconsolidated Entities		-			-			1,587			74			-			-			1,661
Gross Voyage Profit	$	27,524		$	15,453		$	1,086		$	6,889		$	3,293		$	1,135		$	55,380
Gross Voyage Profit Margin Percentage		22	%		16	%		5	%		19	%		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		24,430			83,233			16,559			28,435			26,141			62			178,860
Amortization Expenses		2,800			2,455			2,576			1,040			730			-			9,601
(Income) Loss of Unconsolidated Entities		-			-			(75)			290			-			-			215
Gross Voyage Profit	$	6,491		$	27,833		$	7,020		$	3,570		$	8,655		$	1,251		$	54,820
Gross Voyage Profit Margin Percentage		19	%		25	%		27	%		11	%		24	%		95	%		23	%
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

*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:


(All Amounts in Thousands)		Year Ended December 31,
Profit or Loss:		2014		2013		2012
Total Gross Voyage Profit for Reportable Segments		$	49,697	$	55,380	$	54,820
Unallocated Amounts:
	Vessel and Other Depreciation		(26,984)		(24,930)		(24,975)
	Administrative and General Expenses		(20,985)		(22,378)		(22,714)
	Impairment Loss		(38,213)		-		-
	(Loss) Gain on Sale of Other Assets		(2)		(16)		16,625
	(Income) Loss from Unconsolidated Entities		(10)		1,661		215
Operating (Loss) Income		$	(36,497)	$	9,717	$	23,971
	Interest		(9,962)		(9,504)		(10,409)
	Derivative Income (Loss)		132		(438)		(485)
	Gain on Sale of Investment		-		-		580
	Investment Income		373		114		470
	Other Income from Vessel Financing		1,858		2,122		2,387
	Foreign Exchange Gain (Loss)		(184)		5,914		5,506
(Loss) Income before Income Taxes		$	(44,280)	$	7,925	$	22,020


(All Amounts in Thousands)		Year Ended December 31,
Assets:		2014		2013
Total Assets for Reportable Segments		$	477,133	$	507,957
Unallocated Amounts:
	Current Assets		85,494		86,841
	Investment in Unconsolidated Entities		21,837		14,818
	Due from Related Parties		1,660		1,974
	Other Assets		4,843		7,383
	Goodwill		2,735		2,735
	Deferred Tax Asset		-		7,325
	Notes Receivable		24,455		27,659
Total Assets		$	618,157	$	656,692