REPORTABLE SEGMENTS

6 Months Ended

Jun. 30, 2020

REPORTABLE SEGMENTS

REPORTABLE SEGMENTS

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 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 SSAT segment has been aggregated into the Company’s Ocean Transportation segment due to the operations of SSAT 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 in certain transactions. Accordingly, inter-segment revenue of $24.2 million and $25.3 million for the three months ended June 30, 2020 and 2019, and $43.6 million and $47.1 million for the six months ended June 30, 2020 and 2019, respectively, have been eliminated from operating revenues in the table below. 

Reportable segment financial information for the three and six months ended June 30, 2020 and 2019 are as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In millions)	2020		2019		2020		2019
Operating Revenue:
Ocean Transportation (1)	$	410.8	$	415.4	$	811.7	$	813.3
Logistics (2)		113.3		142.5		226.3		277.0
Total Operating Revenue	$	524.1	$	557.9	$	1,038.0	$	1,090.3
Operating Income:
Ocean Transportation (3)	$	42.3	$	19.7	$	50.2	$	29.1
Logistics		8.9		11.3		14.0		19.4
Total Operating Income		51.2		31.0		64.2		48.5
Interest expense, net		(8.2)		(6.1)		(16.8)		(10.7)
Other income (expense), net		1.5		0.8		2.1		1.4
Income before Income Taxes		44.5		25.7		49.5		39.2
Income taxes		(11.7)		(7.3)		(12.9)		(8.3)
Net Income	$	32.8	$	18.4	$	36.6	$	30.9

(1) Ocean Transportation operating revenue excludes inter-segment revenue of $11.9 million and $13.8 million for the three months ended June 30, 2020 and 2019, and $21.3 million and $25.2 million for the six months ended June 30, 2020 and 2019, respectively.

(2) Logistics operating revenue excludes inter-segment revenue of $12.3 million and $11.5 million for the three months ended June 30, 2020 and 2019, and $22.3 million and $21.9 million for the six months ended June 30, 2020 and 2019, respectively.

(3) Ocean Transportation segment information includes $3.7 million and $0.9 million of equity in income from the Company’s equity investment in SSAT for the three months ended June 30, 2020 and 2019, and $7.7 million and $9.4 million for the six months ended June 30, 2020 and 2019, respectively.