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. 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 2018 and 2017 fiscal years, and 53 weeks in the 2016 fiscal year.

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 $95.4 million, $81.3 million and $62.0 million for the years ended December 31, 2018, 2017 and 2016, respectively, have been eliminated from Logistics’ operating revenues due to the nature of how those services were performed.

Reportable segment financial information for the years ended December 31, 2018, 2017 and 2016, and identifiable asset segment information at December 31, 2018 and 2017, are as follows:


	Years Ended December 31,
(In millions)	2018		2017		2016
Operating Revenue:
Ocean Transportation	$	1,641.3	$	1,571.8	$	1,541.1
Logistics		581.5		475.1		400.5
Total Operating Revenue	$	2,222.8	$	2,046.9	$	1,941.6
Operating Income:
Ocean Transportation (1)	$	131.1	$	126.4	$	144.5
Logistics (2)		32.7		20.9		12.2
Total Operating Income		163.8		147.3		156.7
Interest expense, net		(18.7)		(24.2)		(24.1)
Other income (expense), net		2.6		2.1		(2.1)
Income before Income Taxes		147.7		125.2		130.5
Income taxes (3)		(38.7)		105.8		(49.1)
Net Income (3)	$	109.0	$	231.0	$	81.4

Capital Expenditures:
Ocean Transportation	$	385.4	$	305.3	$	179.1
Logistics		15.8		1.7		0.3
Total Capital Expenditures	$	401.2	$	307.0	$	179.4

Depreciation and Amortization:
Ocean Transportation	$	87.0	$	93.3	$	92.6
Logistics		7.4		7.9		4.5
		94.4		101.2		97.1
Deferred dry-docking amortization - Ocean Transportation		37.4		46.2		38.9
Total Depreciation and Amortization	$	131.8	$	147.4	$	136.0

(1)

Ocean Transportation segment information includes $36.8 million, $28.2 million, and $15.8 million of equity in income from the Company’s equity investment in SSAT for the years ended December 31, 2018, 2017, and 2016, respectively.

(2)

Logistics segment information includes the operations of Span Alaska acquired as of August 4, 2016.

(3)

Income taxes and net income were adjusted for an immaterial correction of an error for the year ended December 31, 2017 (see Note 2).


	As of December 31,
(In millions)	2018		2017
Identifiable Assets:
Ocean Transportation (1) (2)	$	2,071.6	$	1,941.5
Logistics		358.8		310.1
Total Assets (2)	$	2,430.4	$	2,251.6

(1)

The Ocean Transportation segment includes $87.0 million and $93.2 million related to the Company’s equity investment in SSAT as of December 31, 2018 and 2017, respectively.

(2)

Amounts as of December 31, 2017 have been adjusted for an immaterial correction of an error (see Note 2).