(2) Acquisitions

On December 28, 2012, the Company purchased the assets of Flag Service & Maintenance, Inc. ("Flag") for $5,100,000 in cash, before post-closing adjustments. Flag was an East Coast high-speed diesel engine service provider, operating factory-authorized full service marine dealerships for Caterpillar, Cummins, MTU and John Deere diesel engines.

On December 14, 2012, the Company completed the acquisition of Penn Maritime Inc. and Maritime Investments LLC, ("Penn"), an operator of tank barges and tugboats participating in the coastal transportation of primarily black oil products in the United States. The total value of the transaction was $300,192,000, before post-closing adjustments and excluding transaction fees, consisting of $145,855,000 of cash, $29,080,000 through the issuance of 500,000 shares of Company common stock valued at $58.16 per share, and $125,257,000 of cash for the retirement of Penn's debt. Penn's fleet, comprised of 18 double hull tank barges with a capacity of 1.9 million barrels and 16 tugboats, operates along the East Coast and Gulf Coast of the United States. Penn's tank barge fleet had an average age of approximately 13 years with a product mix that consists of primarily refinery feedstocks, asphalt and crude oil. Penn's customers include major oil companies and refiners.

The Company considers Penn to be a natural progression of the current marine transportation segment, adding increased product diversity to its coastal operations.

The analysis of the Penn fair values above is substantially complete but all fair values have not been finalized pending obtaining the information necessary to complete the analysis. Companies have one year after an acquisition to finalize acquisition accounting under current accounting rules.

As a result of the acquisition, the Company recorded $84,203,000 of goodwill and $22,600,000 of intangibles. The intangibles have a weighted average amortization period of approximately 14.9 years. The Company expects approximately thirty percent of the goodwill will be deductible for tax purposes. Acquisition related costs, consisting primarily of legal and other professional fees plus other expenses, of $728,000 were expensed as incurred to selling, general and administrative expense in 2012.

On November 1, 2012, the Company purchased from Allied Transportation Company ("Allied") 10 coastal tank barges with a total capacity of 680,000 barrels, three offshore dry-bulk barges with a total capacity of 48,000 deadweight tons and seven coastal tugboats for $107,014,000 in cash, before post-closing adjustments and excluding transaction fees, including a provision for up to $10,000,000 that will be paid contingent on developments with the sugar provisions in the United States Farm Bill. The fair value of the contingent liability recorded at the acquisition date was $9,756,000. Allied provided coastal transportation of petrochemicals as well as dry sugar products in the Northeast, Atlantic and Gulf Coast regions of the United States.

The Company considers Allied to be a natural progression of the current marine transportation segment, adding increased product diversity to its coastal operations.

The analysis of the Allied fair values above is substantially complete but all fair values have not been finalized pending obtaining the information necessary to complete the analysis. Companies have one year after an acquisition to finalize acquisition accounting under current accounting rules.

As a result of the acquisition, the Company recorded $22,817,000 of goodwill and $8,600,000 of intangibles. The intangibles have a weighted average amortization period of approximately 18.9 years. The Company expects all of the goodwill will be deductible for tax purposes. Acquisition related costs, consisting primarily of legal and other professional fees plus other expenses, of $244,000 were expensed as incurred to selling, general and administrative expense in 2012.

On December 15, 2011, the Company completed the purchase of the coastal tank barge fleet of Seaboats, Inc. and affiliated companies ("Seaboats") consisting of three 80,000 barrel coastal tank barges and tugboats for $42,745,000 in cash. The three coastal tank barges and tugboats currently operate along the United States East Coast and had an average age of five years.

On July 1, 2011, the Company completed the acquisition of K-Sea Transportation Partners L.P. ("K-Sea"), an operator of tank barges and tugboats participating in the coastal transportation primarily of refined petroleum products in the United States. The total value of the transaction was $603,427,000, excluding transaction fees, consisting of $227,617,000 of cash paid to K-Sea common and preferred unit holders and the general partner, $262,791,000 of cash to retire K-Sea's outstanding debt, and $113,019,000 through the issuance of 1,939,234 shares of Company common stock valued at $58.28 per share, the Company's closing share price on July 1, 2011.

On April 17, 2012, the Company changed the name of K-Sea to Kirby Offshore Marine, LLC ("Kirby Offshore Marine") to more fully integrate the Company's coastal operations with the Company's inland marine transportation operations. The acquired company is referred to in this report as either K-Sea or Kirby Offshore Marine, depending on the context.

On the acquisition date, Kirby Offshore Marine's fleet, comprised of 57 coastal tank barges with a capacity of 3.8 million barrels and 63 tugboats, operated along the East Coast, West Coast and Gulf Coast of the United States, as well as in Alaska and Hawaii. Kirby Offshore Marine's tank barge fleet, 54 of which were double hulled and had an average age of approximately nine years, is one of the youngest fleets in the coastal trade. Kirby Offshore Marine's customers include major oil companies and refiners, many of which are current Company customers for inland tank barge services. Kirby Offshore Marine has operating facilities in New York, Philadelphia, Seattle and Honolulu.

On April 15, 2011, the Company purchased United Holdings LLC ("United"), a distributor and service provider of engine and transmission related products for the oil and gas services, power generation and on-highway transportation industries, and manufacturer of oilfield service equipment. The purchase price was $271,192,000 in cash, plus a three-year earnout provision for up to an additional $50,000,000 payable in 2014, dependent on achieving certain financial targets. United, headquartered in Oklahoma City, Oklahoma with 21 locations across seven states, distributes and services equipment and parts for Allison Transmission ("Allison"), MTU Detroit Diesel ("MTU"), Daimler Trucks NA ("Daimler"), and other diesel and natural gas engines. United also manufactures oilfield service equipment, including pressure pumping units. United's principal customers are oilfield service companies, oil and gas operators and producers, compression companies and on-highway transportation companies.

On February 24, 2011, the Company purchased 21 inland and offshore tank barges and 15 inland towboats and offshore tugboats from Enterprise Marine Services LLC ("Enterprise") for $53,200,000 in cash. Enterprise provided transportation and delivery services for ship bunkers (engine fuel) to cruise ships, container ships and freighters primarily in the Miami, Port Everglades and Cape Canaveral, Florida area, the three largest cruise ship ports in the United States, as well as Tampa, Florida, Mobile, Alabama and Houston, Texas.

On February 9, 2011, the Company purchased from Kinder Morgan Petcoke, L.P. ("Kinder Morgan") for $4,050,000 in cash a 51% interest in Kinder Morgan's shifting operation and fleeting facility for dry cargo barges and tank barges on the Houston Ship Channel. Kinder Morgan retained the remaining 49% interest and the Company will manage the operation. In addition, the Company purchased a towboat from Kinder Morgan for $1,250,000 in cash.

The following unaudited pro forma results present consolidated information as if the United and K-Sea acquisitions had been completed as of January 1, 2010. The pro forma results do not include the acquisitions of Flag, Penn, Allied, Seaboats, Enterprise and Kinder Morgan described above as the effect of these acquisitions would not be materially different from the Company's actual results.

The pro forma results include the amortization associated with the acquired intangible assets, interest expense associated with the debt used to fund a portion of the acquisitions, the impact of the additional shares issued in connection with the K-Sea acquisition, the impact of certain fair value adjustments such as depreciation adjustments related to adjustments to property and equipment and standardization of accounting policies. The pro forma results do not include any cost savings or potential synergies related to the acquisitions nor any integration costs. The pro forma results should not be considered indicative of the results of operations or financial position of the combined companies had the acquisitions been consummated as of January 1, 2010, and are not necessarily indicative of results of future operations of the Company.

The following table sets forth the Company's pro forma revenues, net earnings attributable to Kirby, basic net earnings per share and fully diluted net earnings per share attributable to Kirby common stockholders for the years ended December 31, 2012, 2011 and 2010 (unaudited and in thousands, except per share amounts):

	2012		2011 Pro forma		2010 Pro forma
Revenues	$	2,112,658	$	2,105,904	$	1,685,173
Net earnings attributable to Kirby	$	209,438	$	172,426	$	123,981
Net earnings per share attributable to Kirby common stockholders:
Basic	$	3.75	$	3.10	$	2.22
Diluted	$	3.73	$	3.09	$	2.22