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 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 (see Note 4). Included in the reportable segment information below are 52 weeks in the 2017 and 2015 fiscal years, and 53 weeks in the 2016 fiscal year.

The Company’s Ocean Transportation segment provides ocean transportation services to the Logistics segment. Accordingly, inter-segment revenue of $40.9 million, $20.8 million and $11.3 million for the years ended December 31, 2017, 2016 and 2015, respectively, have been eliminated from Logistics’ operating revenues due to the nature of how those services were performed. Reportable segment information for 2017, 2016, and 2015, are as follows:


	Years Ended December 31,
(In millions)	2017		2016		2015
Operating Revenue:
Ocean Transportation (1)	$	1,571.8	$	1,541.1	$	1,498.0
Logistics (2)		475.1		400.5		386.9
Total Operating Revenue	$	2,046.9	$	1,941.6	$	1,884.9
Operating Income:
Ocean Transportation (1) (3)	$	128.8	$	142.7	$	187.8
Logistics (2)		20.6		11.9		8.5
Total Operating Income		149.4		154.6		196.3
Interest expense, net		(24.2)		(24.1)		(18.5)
Income before Income Taxes		125.2		130.5		177.8
Income taxes		106.8		(49.1)		(74.8)
Net Income	$	232.0	$	81.4	$	103.0

(1)

2017, 2016 and 2015 Ocean Transportation segment information include the operations of Horizon acquired as of May 29, 2015.

(2)

2017 and 2016 Logistics segment information include the operations of Span Alaska acquired as of August 4, 2016.

(3)

Ocean Transportation segment information includes $28.2 million, $15.8 million, and $16.5 million of equity in income from the Company’s Terminal Joint Venture, SSAT, for the years ended December 31, 2017, 2016, and 2015, respectively.


	As of December 31,
(In millions)	2017		2016		2015
Identifiable Assets:
Ocean Transportation (1)	$	1,937.4	$	1,722.2	$	1,601.0
Logistics		310.1		293.3		68.8
Total Assets	$	2,247.5	$	2,015.5	$	1,669.8

Capital Expenditures:
Ocean Transportation	$	305.3	$	179.1	$	67.5
Logistics		1.7		0.3		0.3
Total Capital Expenditures	$	307.0	$	179.4	$	67.8

Depreciation and Amortization:
Ocean Transportation	$	93.3	$	92.6	$	81.4
Logistics		7.9		4.5		2.0
		101.2		97.1		83.4
Deferred dry-docking amortization - Ocean Transportation		46.2		38.9		23.1
Total Depreciation and Amortization	$	147.4	$	136.0	$	106.5

(1)The Ocean Transportation segment includes $93.2 million, $82.4 million and $66.4 million related to the Company’s Terminal Joint Venture equity investment in SSAT as of December 31, 2017, 2016, and 2015, respectively.