3. REPORTABLE SEGMENTS

Reportable segments are components of an enterprise that engage in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information n is available. The Company’s chief operating decision maker is its Chief Executive Officer.

The Company consists of two reportable segments, Ocean Transportation and Logistics, which are further described in Note 1. Reportable segments are measured based on operating income, exclusive of interest expense and income taxes. In arrangements where the customer purchases ocean transportation and logistics services, the revenues are allocated to each reportable segment based upon the contractual amounts for each type of service. The Company’s Terminal Joint Venture segment has been aggregated into the Company’s Ocean Transportation segment due to the operations of the Terminal Joint Venture being an integral part of the Company’s Ocean Transportation business.

The Company’s Ocean Transportation segment provides ocean transportation services to the Logistics segment, and the Logistics segment provides logistics services to the Ocean Transportation segment. Accordingly, inter-segment revenue of $27.6 million and $24.1 million for the three months ended September 30, 2018 and 2017, and $72.7 million and $62.7 million for the nine months ended September 30, 2018 and 2017, respectively, have been eliminated from operating revenue in the table below.

Reportable segment results for the three and nine months ended September 30, 2018 and 2017 consisted of the following:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In millions)	2018		2017		2018		2017
Operating Revenue:
Ocean Transportation	$	437.3	$	419.2	$	1,223.2	$	1,181.9
Logistics		152.1		124.7		434.7		348.9
Total Operating Revenue	$	589.4	$	543.9	$	1,657.9	$	1,530.8
Operating Income:
Ocean Transportation (1)	$	48.7	$	51.0	$	109.7	$	106.3
Logistics		9.9		7.3		23.6		16.2
Total Operating Income		58.6		58.3		133.3		122.5
Interest expense, net		(4.4)		(6.2)		(14.4)		(18.8)
Other income (expense), net		0.7		3.5		1.9		1.6
Income before Income Taxes		54.9		55.6		120.8		105.3
Income taxes		(13.3)		(21.5)		(32.4)		(40.2)
Net Income	$	41.6	$	34.1	$	88.4	$	65.1

(1)

Ocean Transportation segment information includes $9.2 million and $7.5 million of equity in income from the Terminal Joint Venture for the three months ended September 30, 2018 and 2017, and $28.8 million and $19.3 million for the nine months ended September 30, 2018 and 2017, respectively.