Kirby Corporation (the “Company”) is the nation’s largest domestic tank barge operator, transporting bulk liquid products throughout the Mississippi River System, on the Gulf Intracoastal Waterway, coastwise along all three United States coasts, and in Alaska and Hawaii. The Company transports petrochemicals, black oil, refined petroleum products and agricultural chemicals by tank barge. The Company also operates sixfour offshore dry-bulk cargo barges, sixfour offshore tugboats and one docking tugboat transporting dry-bulk commodities in the United States coastal trade. Through its diesel enginedistribution and services segment, the Company provides after-market servicesservice and parts for medium-speed and high-speed diesel engines, transmissions, reduction gears, and ancillary products forrelated equipment used in oilfield services, marine, and power generation, applications, distributeson-highway and services high-speed diesel engines, transmissionsother industrial applications. The Company also rents equipment including generators, industrial compressors, railcar movers, and pumps,high capacity lift trucks for use in a variety of industrial markets, and manufactures and remanufactures oilfield service equipment, including pressure pumping units, for the land-based oilfield service and oil and gas operator and producer markets.customers.

Unless the context otherwise requires, all references herein to the Company include the Company and its subsidiaries.

The Company’s principal executive office is located at 55 Waugh Drive, Suite 1000, Houston, Texas 77007, and its telephone number is (713) 435-1000. The Company’s mailing address is P.O. Box 1745, Houston, Texas 77251-1745. Kirby Corporation is a Nevada corporation and was incorporated in 1969 although the history of the Company goes back to 1921.

The Internet address of the Company’s web sitewebsite is http://www.kirbycorp.com. The Company makes available free of charge through its web site,website, all of its filings with the Securities and Exchange Commission (“SEC”), including its annual reportAnnual Report on Form 10-K, quarterly reportsQuarterly Reports on Form 10-Q, current reportsCurrent Reports on Form 8-K and amendments to those reports, as soon as reasonably practicable after they are electronically filed with or furnished to the SEC.

The following documents are available on the Company’s web sitewebsite in the Investor Relations section under Corporate Governance:

The Company is required to make prompt disclosure of any amendment to or waiver of any provision of its Business Ethics Guidelines that applies to any director or executive officer or to its chief executive officer, chief financial officer, chief accounting officer or controller or persons performing similar functions. The Company will make any such disclosure that may be necessary by posting the disclosure on its web sitewebsite in the Investor Relations section under Corporate Governance.

The Company, through its subsidiaries, conducts operations in two reportable business segments: marine transportation and diesel enginedistribution and services.

The Company, through its marine transportation segment, is a provider of marine transportation services, operating tank barges and towing vessels transporting bulk liquid products throughout the Mississippi River System, on the Gulf Intracoastal Waterway, coastwise along all three United States coasts, and in Alaska and Hawaii. The Company transports petrochemicals, black oil, refined petroleum products and agricultural chemicals by tank barge. The Company operates offshore dry-bulk barge and tugboat units engaged in the offshore transportation of dry-bulk cargoes in the United States coastal trade. The segment is a provider of transportation services for its customers and, in almost all cases, does not assume ownership of the products that it transports. All of the Company’s vessels operate under the United States flag and are qualified for domestic trade under the Jones Act.

The Company, through its diesel enginedistribution and services segment, sells genuine replacement parts, provides service mechanics to overhaul and repair medium-speed and high-speed diesel engines, transmissions, reduction gears and pumps,related oilfield services equipment, rebuilds component parts or entire diesel engines, transmissions and reduction gears, and related equipment used in oilfield services, marine, power generation, on-highway and other industrial applications. The Company also rents equipment including generators, industrial compressors, railcar movers and high capacity lift trucks for use in a variety of industrial markets, and manufactures and remanufactures oilfield service equipment, including pressure pumping units. The Company primarily services the marine, power generation and theunits, for land-based oilfield service and oil and gas operator and producer markets.customers.

The Company and its marine transportation and diesel engine services segments havehas approximately 4,0005,700 employees, substantially allthe large majority of whom are in the United States.

The marine transportation segment is primarily a provider of transportation services by tank barge for the inland and coastal markets. As of February 22, 2017,December 31, 2019, the equipment owned or operated by the marine transportation segment consisted of 8761,053 inland tank barges with 17.923.4 million barrels of capacity, 230299 inland towboats, 6949 coastal tank barges with 6.24.7 million barrels of capacity, 7547 coastal tugboats, sixfour offshore dry-bulk cargo barges, sixfour offshore tugboats and one docking tugboat with the following specifications and capacities:

The 230299 inland towboats, 7547 coastal tugboats, sixfour offshore tugboats and one docking tugboat provide the power source and the 8761,053 inland tank barges, 6949 coastal tank barges and sixfour offshore dry-bulk cargo barges provide the freight capacity for the marine transportation segment. When the power source and freight capacity are combined, the unit is called a tow. The Company’s inland tows generally consist of one towboat and from one to up to 25 tank barges, depending upon the horsepower of the towboat, the river or canalwaterway infrastructure capacity and conditions, and customer requirements. The Company’s coastal and offshore tows primarily consist of one tugboat and one tank barge or dry-bulk cargo barge.

The United States inland waterway system, composed of a network of interconnected rivers and canals that serve the nation as water highways, is one of the world’s most efficient transportation systems. The nation’s inland waterways are vital to the United States distribution system, with over 1.1 billion short tons of cargo moved annually on United States shallow draft waterways. The inland waterway system extends approximately 26,000 miles, 12,000 miles of which are generally considered significant for domestic commerce, through 38 states, with 635 shallow draft ports. These navigable inland waterways link the United States heartland to the world.

The United States coastal waterway system consists of ports along the Atlantic, Gulf and Pacific coasts, as well as ports in Alaska, Hawaii and on the Great Lakes. Like the inland waterways, the coastal trade is vital to the United States distribution system, particularly the regional distribution of refined petroleum products from refineries and storage facilities to a variety of destinations, including other refineries, distribution terminals, power plants and ships. In addition to distribution directly from refineries and storage facilities, coastal tank barges are used frequently to distribute products from pipelines. Many coastal markets receive refined petroleum products principally from coastal tank barges. Smaller volumes of petrochemicals are distributed from Gulf Coast plants to end users and black oil, including crude oil and natural gas condensate, is distributed regionally from refineries and terminals along the United States coast to refineries, power plants and distribution terminals.

Based on cost and safety, barge transportation is often the most efficient and safest means of transportingsurface transportation of bulk commodities when compared with railroads and trucks. The cargo capacity of a 27,500 barrel inland tank barge is the equivalent of 46 railroad tank cars or 144 tractor-trailer tank trucks. A typical Company lower Mississippi River linehaul tow of 15 barges has the carrying capacity of approximately 216 railroad tank cars plus six locomotives, or approximately 1,050 tractor-trailer tank trucks. The Company’s inland tank barge fleet capacity of 17.923.4 million barrels equates to approximately 30,00039,100 railroad tank cars or approximately 93,600122,500 tractor-trailer tank trucks. Furthermore, barging is much more energy efficient. One ton of bulk product can be carried 616647 miles by inland barge on one gallon of fuel, compared with 478477 miles by railcar or 150145 miles by truck. In the coastal trade, the carrying capacity of a 100,000 barrel tank barge is the equivalent of approximately 165 railroad tank cars or approximately 525 tractor-trailer tank trucks. The Company’s coastal tank barge fleet capacity of 6.24.7 million barrels equates to approximately 10,2007,900 railroad tank cars or approximately 32,30024,600 tractor-trailer tank trucks.

The Company operates within the United States inland tank barge industry, a diverse and independent mixture of approximately 30 large integrated transportation companies and small operators, as well as captive fleets owned by United States refining and petrochemical companies. The inland tank barge industry provides marine transportation of bulk liquid cargoes for customers and, in the case of captives, for their own account, throughout the Mississippi River and its tributaries and on the Gulf Intracoastal Waterway. The most significant markets in this industry include the transportation of petrochemicals, black oil, refined petroleum products and agricultural chemicals. The Company operates in each of these markets. The use of marine transportation by the petroleum and petrochemical industry is a major reason for the location of United States refineries and petrochemical facilities on navigable inland waterways. Texas and Louisiana currently account for approximately 80% of the United States production of petrochemicals. Much of the United States farm belt is likewise situated with access to the inland waterway system, relying on marine transportation of farm products, including agricultural chemicals. The Company’s principal distribution system encompasses the Gulf Intracoastal Waterway from Brownsville, Texas, to Port St. Joe, Florida, the Mississippi River System and the Houston Ship Channel. The Mississippi River System includes the Arkansas, Illinois, Missouri, Ohio, Red, Tennessee, Yazoo, Ouachita and Black Warrior Rivers and the Tennessee-Tombigbee Waterway.

The number of tank barges that operate on the inland waterways of the United States declined from an estimated 4,200 in 1982 to 2,900 in 1993, remained relatively constant at 2,900 until 2002, decreased to 2,750 from 2002 through 2006, and then increased over the years to approximately 3,850 by the end of 2016.2015 and 2016, and slightly decreased to an estimated 3,825 at the end of 2017 and an estimated 3,800 at the end of 2018 and increased slightly to an estimated 3,850 at the end of 2019. The Company believes the decrease from 4,200 in 1982 to 2,750 in 2006 primarily resulted from: the increasing age of the domestic tank barge fleet, resulting in scrapping; rates inadequate to justify new construction; a reduction in tax incentives, which previously encouraged speculative construction of new equipment; stringent operating standards to adequately cope with safety and environmental risk; the elimination of government regulations and programs supporting the many new small refineries and athe proliferation of oil traders which created a strong demand for tank barge services; an increase in the average capacity per barge; and an increase in environmental regulations that mandate expensive equipment modification, which some owners were unwilling or unable to undertake given capital constraints and the age of their fleets. The cost of tank barge hull work for required periodic United States Coast Guard (“USCG”) certifications, as well as general safety and environmental concerns, force operators to periodically reassess their ability to recover maintenance costs. The increase from 2,750 in 2006 to approximately 3,850 by the end of 2016 primarily resulted from increased barge construction and deferred retirements due to strong demand and resulting capacity shortages. The number of industry tank barges has remained relatively constant from 2016 through the end of 2019. The Company’s 8761,053 inland tank barges represent approximately 23%27% of the industry’s 3,850 inland tank barges.

For 2014,2017 and 2018, the Company estimated that industry-wide 30075 tank barges were placed in service and 100 tank barges were retired.retired each year. For 2015,2019, the Company estimated that industry-wide 260 tank barges were placed in service and 60 tank barges were retired. For 2016, the Company estimated that industry-wide 100150 tank barges were placed in service and 100 tank barges were retired. During 2015 and 2016,2017, the decline in industry-wide demand for the movement of crude oil and natural gas condensate, and the subsequent transfer of inland crude oil barges to other tank barge markets, created some excess industry-wide tank barge capacity. During 2018 and 2019, demand for inland tank barge transportation and industry utilization rates increased above 90% due to a favorable pricing environment for customers’ products, new petrochemical industry capacity that led to increased movements of petrochemicals, and higher volumes of crude oil moved from the northern U.S. to the Gulf Coast. As a result of these improved market conditions, the Company estimates that approximately 40150 tank barges were ordered during 2016 for delivery throughout 2017 and many older tank barges will be retired, dependent on 2017 market conditions.2019. The risk of an oversupply of tank barges may be mitigated by continued increased petrochemical, black oil and refined petroleum products volumes from increased production from current facilities, plant expansions or the opening of new facilities, and the fact that the inland tank barge industry has a mature fleet, with approximately 600350 tank barges over 30 years old and approximately 270240 of those are over 40 years old, which maycould lead to retirement of older tank barges.

The Company’s inland marine transportation segment also owns a shifting operation and fleeting facility for dry cargo barges and tank barges on the Houston Ship Channel and in Freeport, Texas, and a shipyard for the building of inland towboats and providing routine maintenance on marine vessels. The Company also owns a two-thirds interest in Osprey Line, L.L.C. (“Osprey”), a transporter of project cargoes and cargo containers by barge on the United States inland waterway system.

The number of coastal tank barges that operate in the 195,000 barrel or less category is approximately 295,280, of which the Company operates 6949 or approximately 23%18%. The average age of the nation’s coastal tank barge fleet is approximately 1413 years. In June 2018, the Company purchased a 155,000 barrel coastal articulated tank barge and tugboat unit (“ATB”) under construction from another operator that was delivered to the Company in the 2018 fourth quarter. The Company is aware of four coastal ATBs under construction by competitors for delivery in 2020 and 2021, including two that are in the 195,000 barrels or less category and two that are over 195,000 barrels. The coastal tank barge fleet is also mature, withhas approximately 3520 tank barges over 3025 years old and approximately 30 of those over 35 years old, which may lead to the retirementold. The number of older tank barges.barges, coupled with low industry-wide utilization levels and ballast water treatment regulations, could lead to further retirements of older tank barges in the next few years.

The tank barge industry remains very competitive. Competition in this business has historically beenis based primarily on price; however, mostprice and reliability, and with many of the industry’s customers throughemphasis on enhanced vetting requirements, an increased emphasis on safety, the environment, quality and a trend toward a “single source” supply of services, are morequality, frequently requiring that their supplier of tank barge services have the capability to handle a variety of tank barge requirements. These requirements include distribution capability throughout the inland waterway system and coastal markets, with high levels of flexibility, and an emphasis on safety, environmental responsibility and financial responsibility, as well as adequate insurance and high quality of service consistent with the customer’s own operational standards.

In the inland markets, the Company’s direct competitors are primarily noncaptive inland tank barge operators. “Captive” fleets are owned by major oil and petrochemical companies which occasionally compete in the inland tank barge market, but primarily transport cargoes for their own account. The Company is the largest inland tank barge carrier, both in terms of number of barges and total fleet barrel capacity. The Company’s inland tank barge fleet has grown from 71 tank barges in 1988 to 8761,053 tank barges as of February 22, 2017,December 31, 2019, or approximately 23%27% of the estimated total number of domestic inland tank barges.

In the coastal markets, the Company’s direct competitors are the operators of United States tank barges in the 195,000 barrels or less category. Coastal tank barges in the 195,000 barrels or less category have the ability to enter the large majority of coastal ports. Ocean-going tank barges and United States product tankers in the 300,000 barrels plus category, excluding the fleet of large tankers dedicated to Alaska crude oil transportation, primarily move large volumes of refined petroleum products within the Gulf of Mexico with occasional movements from the Gulf Coast to the East Coast, along the West Coast and from Texas and Louisiana to Florida. There are approximately 6045 such vessels and, because of their size, their access to ports is limited by terminal size and draft restrictions.

While the Company competes primarily with other tank barge companies, it also competes with companies who operate refined product and petrochemical pipelines, railroad tank cars and tractor-trailer tank trucks. As noted above, the Company believes that both inland and coastal marine transportation of bulk liquid products enjoy a substantial cost advantage over railroad and truck transportation. The Company believes that refined product and crude oil pipelines, although often a less expensive form of transportation than inland and coastal tank barges, are not as adaptable to diverse products and are generally limited to fixed point-to-point distribution of commodities in high volumes over extended periods of time.

The Company transports petrochemicals, black oil, refined petroleum products and agricultural chemicals by tank barge throughout the Mississippi River System, on the Gulf Intracoastal Waterway, coastwise along all three United States coasts and in Alaska and Hawaii. During 2016,2019, the Company’s inland marine transportation operation moved over 4550 million tons of liquid cargo on the United States inland waterway system.

Black Oil. Black oil transported includes such products as residual fuel oil, No. 6 fuel oil, coker feedstock, vacuum gas oil, asphalt, carbon black feedstock, crude oil, natural gas condensate and ship bunkers (engine fuel). Such products represented 25%23% of the segment’s 20162019 revenues. Black oil customers are refining companies, marketers and end users that require the transportation of black oil between refineries and storage terminals, to refineries and to power plants. Ship bunker customers are oil companies and oil traders in the bunkering business.

Refined Petroleum Products. Refined petroleum products transported include the various blends of finished gasoline, gasoline blendstocks, jet fuel, No. 2 oil, heating oil and diesel fuel, and represented 23%19% of the segment’s 20162019 revenues. The Company also classifies ethanol in the refined petroleum products category. Customers are oil and refining companies, marketers and ethanol producers.

Agricultural Chemicals. Agricultural chemicals transported represented 3%4% of the segment’s 20162019 revenues. Agricultural chemicals include anhydrous ammonia and nitrogen-based liquid fertilizer, as well as industrial ammonia. Agricultural chemical customers consist mainly of domestic and foreign producers of such products.

Demand for tank barge transportation services is driven by the production volumes of the bulk liquid commodities transported by barge. Marine transportation demand for the segment’s four primary commodity groups, petrochemicals, black oil, refined petroleum products and agricultural chemicals, is based on differing circumstances. While the demand drivers of each commodity are different, the Company has the flexibility, in certain cases, of re-allocatingreallocating inland equipment and coastal equipment betweenamong the petrochemical, refined petroleum products and crude oil markets as needed.

Bulk petrochemical volumes have historically tracked the general domestic economy and correlate to the United States Gross Domestic Product. The United States petrochemical industry continues to see strong production levels for both domestic consumption and exports. Low priced domestic natural gas, a basic feedstock for the United States petrochemical industry, has provided the industry with a competitive advantage against foreign petrochemical producers. As a result, United States petrochemical production has remained stable during 2016, 20152019, 2018 and 2014,2017, thereby producing increased marine transportation volumes of basic petrochemicals to both domestic consumers and terminals for export destinations. Petrochemical products are used primarily in consumer non-durable and durable goods. From late 2010 through 2015, inland petrochemical tank barge utilization remained relatively stable in the 90% to 95% range. During 2016, utilization declined slightly to the high 80% range on average with periods of utilization in the low 80% range. During 2017 and 2018, utilization ranged from the mid-80% to the mid-90% range, reaching the mid-90% range in the late 2017 third quarter from the impact of Hurricanes Harvey and Irma, and in the low to mid-90% range during the 2017 fourth quarter and the majority of 2018 and 2019 as a result of a favorable pricing environment for customers’ products, new petrochemical industry capacity that led to increased movements of petrochemicals, and the continued retirement of older barges from the segment’s fleet.  Extensive delay days due to poor operating conditions which slowed transport of customer cargoes, also contributed to increased utilization during the first half of 2019. Coastal tank barge utilization for the transportation of petrochemicals during 2016 was2017 ranged from the low 60% to low 80%. During 2018, coastal tank barge utilization levels ranged improved from the high 70% range in the 2018 first quarter to the 80% range during the 2018 last nine months and the low 90% range.to mid-80% range during 2019, reflecting the retirement of 12 out-of-service coastal barges during the 2017 fourth quarter and improved customer demand resulting in higher utilization of spot market capacity in 2019. Utilization in the coastal marine fleet continued to be impacted by the oversupply of smaller tank barges in the coastal market.

The demand for black oil, including ship bunkers, varies by type of product transported. Demand for transportation of residual oil, a heavy by-product of refining operations, varies with refinery utilization and usage of feedstocks. During the majority of 2015, and all of 2014, inland black oil tank barge utilization remained strong, in the 90% to 95% range, due to strong demand driven by steady refinery production levels from major customers, and the export of diesel fuel and heavy fuel oil. With the decline in the price of crude oil in late 2014 and the low price throughout 2015 and 2016, movements by tank barge of crude oil and natural gas condensate movements by tank barge were at reduced levels industry-wide. During 2015 and 2016, the Company and the industry were generally successful in movingrepositioning barges from that trade to other markets. During 2016,2017, 2018 and 2019, the Company continued to transport crude oil and natural gas condensate produced from the Eagle Ford and Permian Basin shale formations in Texas both along the Gulf Intracoastal Waterway with inland vessels and in the Gulf of Mexico with coastal equipment, and continued to transport Utica crude oil and natural gas condensate downriver from the Mid-Atlantic to the Gulf Coast, however, at reduced levels.levels as some of the product was transported by newly constructed pipelines. The decline in demand for crude oil and natural gas condensate movements and an industry-wide oversupply of inland tank barges resulted in a decline in inland black oil tank barge utilization in 2016in 2017 to the low-to-mid 80% range.mid-80% to low 90% range for the first three quarters and low to mid-90% range for the fourth quarter. During 2018, inland black oil tank barge utilization was in the mid-90% range, and increased into the mid-to high 90% range during 2019. Coastal black oil tank barge utilization declined from the 90% to 95% range for the majority of 2015 and all of 2014 to the low 80% range by the end of 2016, the low 60% to low 80% range during 2017 and low to mid-80% range during 2018 and the low 90% range during 2019, partly attributable to the decrease in the movements of crude oil and natural gas condensate alongand to the Gulf Coast.continued industry-wide oversupply of smaller tank barges in the coastal industry. Inland and coastal asphalt shipments are generally seasonal, with higher volumes shipped during April through November, months when weather allows for efficient road construction. The Company saw seasonally normal cessation of most operations in Alaska in the 20162017, 2018 and 2019 first and fourth quarter reduced coastal tank barge utilization, but the decline was partially offset by seasonal improvement in winter heating oil demand in the Northeast. quarters.

Refined petroleum product volumes are driven by United States gasoline and diesel fuel consumption, principally vehicle usage, air travel and weather conditions. Volumes can also relate to gasoline inventory imbalances within the United States. Generally, gasoline and No. 2 oil are exported from the Gulf Coast where refining capacity exceeds demand. The Midwest is a net importer of such products. Volumes were also driven by diesel fuel transported to terminals along the Gulf Coast for export to South America. Ethanol, produced in the Midwest, is moved from the Midwest to Gulf Coast customers. In the coastal trade, tank barges are frequently used regionally to transport refined petroleum products from a coastal refinery or terminals served by pipelines to the end markets. Many coastal areas have access to refined petroleum products only by using marine transportation as the last link in the distribution chain. Coastal refined petroleum products tank barge utilization declined from the 90% to 95% range for the majority of 2015 to the low-to-mid 80% range for the majority of 2016.2016, and declined throughout 2017 from a low 80% range in first quarter to the low 60% range in the fourth quarter, all predominately from the industry-wide oversupply of coastal tank barge capacity. In 2018 and 2019, utilization increased into the 80% range primarily due to the retirement of out-of-service coastal barges during the 2017 fourth quarter and improved customer demand resulting in higher utilization of spot market capacity in 2019.

Demand for marine transportation of domestic and imported agricultural fertilizer is seasonal and directly related to domestic nitrogen-based liquid fertilizer consumption, driven by the production of corn, cotton and wheat. During periods of high natural gas prices, the manufacturing of nitrogen-based liquid fertilizer in the United States is curtailed. During these periods, imported products, which normally involve longer barge trips, replace the domestic products to meet Midwest and southSouth Texas demands. Such products are delivered to the numerous small terminals and distributors throughout the United States farm belt.

The marine transportation segment operates a fleet of 8761,053 inland tank barges and 230299 inland towboats, as well as 6949 coastal tank barges and 7547 coastal tugboats. The segment also operates sixfour offshore dry-bulk cargo barges, sixfour offshore tugboats and one docking tugboat transporting dry-bulk commodities in United States coastal trade.

Inland Operations. The segment’s inland operations are conducted through a wholly owned subsidiary, Kirby Inland Marine, LP (“Kirby Inland Marine”). Kirby Inland Marine’s operations consist of the Canal, Linehaul and River fleets, as well as barge fleeting services.

The Canal fleet transports petrochemical feedstocks, processed chemicals, pressurized products, black oil, and refined petroleum products along the Gulf Intracoastal Waterway, the Mississippi River below Baton Rouge, Louisiana, and the Houston Ship Channel. Petrochemical feedstocks and certain pressurized products are transported from one plant to another plant for further processing. Processed chemicals and certain pressurized products are moved to waterfront terminals and chemical plants. Black oil is transported to waterfront terminals and products such as No. 6 fuel oil are transported directly to the end users. Refined petroleum products are transported to waterfront terminals along the Gulf Intracoastal Waterway for distribution.

The Linehaul fleet transports petrochemical feedstocks, chemicals, agricultural chemicals and lube oils along the Gulf Intracoastal Waterway, Mississippi River and the Illinois and Ohio Rivers. Loaded tank barges are staged in the Baton Rouge area from Gulf Coast refineries and petrochemical plants, and are transported from Baton Rouge, Louisiana to waterfront terminals and plants on the Mississippi, Illinois and Ohio Rivers, and along the Gulf Intracoastal Waterway, on regularly scheduled linehaul tows. Barges are dropped off and picked up going up and down river.

The River fleet transports petrochemical feedstocks, chemicals, refined petroleum products, agricultural chemicals and black oil along the Mississippi River System above Baton Rouge. The River fleet operates unit tows, where a towboat and generally a dedicated group of barges operate on consecutive voyages between loading and discharge points. Petrochemical feedstocks and processed chemicals are transported to waterfront petrochemical and chemical plants, while black oil, refined petroleum products and agricultural chemicals are transported to waterfront terminals.

The inland transportation of petrochemical feedstocks, chemicals and pressurized products is generally consistent throughout the year. Transportation of refined petroleum products, certain black oil and agricultural chemicals is generally more seasonal. Movements of black oil, such as asphalt, generally increase in the spring through fall months. Movements of refined petroleum products, such as gasoline blends, generally increase during the summer driving season, while heating oil movements generally increase during the winter months. Movements of agricultural chemicals generally increase during the spring and fall planting seasons.

The marine transportation inland operation moves and handles a broad range of sophisticated cargoes. To meet the specific requirements of the cargoes transported, the inland tank barges may be equipped with self-contained heating systems, high-capacity pumps, pressurized tanks, refrigeration units, stainless steel tanks, aluminum tanks or specialty coated tanks. Of the 8761,053 inland tank barges currently operated, 687828 are petrochemical and refined petroleum products barges, 120145 are black oil barges, 5470 are pressure barges and 10 are refrigerated anhydrous ammonia barges and five are specialty barges. Of the 8761,053 inland tank barges, 8421,029 are owned by the Company and 3424 are leased.

The fleet of 230299 inland towboats ranges from 800 to 52006,100 horsepower. Of the 230299 inland towboats, 161224 are owned by the Company and 6975 are chartered. Towboats in the 800 to 21002,100 horsepower classes provide power for barges used by the Canal and Linehaul fleets on the Gulf Intracoastal Waterway and the Houston Ship Channel. Towboats in the 14001,400 to 32003,200 horsepower classes provide power for both the River and Linehaul fleets on the Gulf Intracoastal Waterway and the Mississippi River System. Towboats above 36003,600 horsepower are typically used on the Mississippi River System to move River fleet unit tows and provide Linehaul fleet towing. Based on the capabilities of the individual towboats used in the Mississippi River System, the tows range in size from 10,000 to 30,000 tons.

Marine transportation services for inland movements are conducted under long-termterm or spot contracts typically ranging from one to five years, some of which have renewal options, with customers with whom the Company has traditionally had long-standing relationships, as well as under spot contracts.relationships. Typically, term contracts range from one to three years, some of which have renewal options. During the first nine months of 2016 and all of 2015 and 2014, approximately 80% of the inland marine transportation revenues were under term contracts and 20% were spot contract revenues.  During the 2016 fourth quarter,2017, approximately 75% of inland marine transportation revenues were under term contracts and 25% were spot contract revenues. During 2018 and 2019, approximately 65% of inland marine transportation revenues were under term contracts and 35% were spot contract revenues.

All of the Company’s inland tank barges used in the transportation of bulk liquid products are of double hull construction and where applicable, are capable of controlling vapor emissions during loading and discharging operations in compliance with occupational healthsafety and safetyhealth regulations and air quality regulations.

The Company is one of the few inland tank barge operators with the ability to offer to its customers’customers distribution capabilities throughout the Mississippi River System and the Gulf Intracoastal Waterway. Such distribution capabilities offer economies of scale resulting from the ability to match tank barges, towboats, products and destinations more efficiently.efficiently to meet its customers’ requirements.

Through the Company’s proprietary vessel management computer system, the fleet of barges and towboats is dispatched from a centralized dispatch at the corporate office. The towboats are equipped with satellite positioning and communication systems that automatically transmit the location of the towboat to the Company’s customer service department located in its corporate office. Electronic orders are communicated to the vessel personnel with reports of towing activities communicated electronically back to the customer service department. The electronic interface between the customer service department and the vessel personnel enables more effective matching of customer needs to barge capabilities, thereby maximizing utilization of the tank barge and towboat fleet. The Company’s customers are able to access information concerning the movement of their cargoes, including barge locations, through the Company’s web site.website.

Kirby Inland Marine operates the largest commercial tank barge fleeting service (temporary barge storage facilities) in numerous ports, including Houston, Corpus Christi, Freeport and Freeport,Orange, Texas, Baton Rouge, Covington, Lake Charles and New Orleans, Louisiana, Mobile, Alabama and other locations on the Mississippi River.Greenville, Mississippi. Included in the fleeting service is a shifting operation and fleeting service for dry cargo barges and tank barges on the Houston Ship Channel.Channel and in Freeport, Texas. Kirby Inland Marine provides service for its own barges, as well as outside customers, transferring barges within the areas noted, as well as fleeting barges.

Kirby Inland Marine also provides shore-based barge tankermantankermen to the Company and third parties. Services to the Company and third parties cover the Gulf Coast, mid-Mississippi Valley, and the Ohio River Valley.

The Company owns a two-thirds interest in Osprey, which transports project cargoes and cargo containers by barge on the United States inland waterway system.

Coastal Operations. The segment’s coastal operations are conducted through wholly owned subsidiaries, Kirby Offshore Marine, LLC (“Kirby Offshore Marine”) and Kirby Ocean Transport Company (“Kirby Ocean Transport”).

Kirby Offshore Marine provides marine transportation of refined petroleum products, petrochemicals and black oil in coastal regions of the United States. The coastal operations consist of the Atlantic and Pacific Divisions.

The Atlantic Division primarily operates along the eastern seaboard of the United States and along the Gulf Coast. The Atlantic Division vessels call on various coastal statesports from Maine to Texas, servicing refineries, storage terminals and power plants. The Atlantic Division also operates equipment, to a lesser extent, in the Eastern Canadian provinces. The tank barges and tugboats operating in the Atlantic Division are among the largest, with tank barges in the 10,000 to 194,000 barrel capacity range and coastal tugboats in the 18002,400 to 1000010,000 horsepower range, transporting primarily refined petroleum products, petrochemicals and black oil.

The Pacific Division primarily operates along the Pacific Coast of the United States, servicing refineries and storage terminals from Southern California to Washington State, throughout Alaska, including Dutch Harbor, Cook Inlet and the Alaska River Systems, and from California to Hawaii. The Pacific Division’s fleet consists of tank barges in the 26,00052,000 to 194,000 barrel capacity range and tugboats in the 20001,000 to 1100011,000 horsepower range, transporting primarily refined petroleum products.

The Pacific Division also services local petroleum retailers and oil companies distributing refined petroleum products and black oil between the Hawaiian Islands and provides other services to the local maritime community. The Hawaii fleet consists of tank barges in the 53,000 to 86,000 barrel capacity range and tugboats in the 10001,000 to 50005,000 horsepower range, transporting refined petroleum products for local and regional customers, black oil to power generation customers and delivering bunker fuel to ships. The Hawaii fleet also provides service docking, standby tug assistance and line handling to vessels using the Single Point Mooringsingle point mooring installation at Barbers Point, Oahu, Hawaii, a facility for large tankers to safely load and discharge their cargos through an offshore buoy and submerged pipeline without entering the port.

The coastal transportation of refined petroleum products and black oil is impacted by seasonality, partially dependent on the area of operations. Operations along the West Coast of the United States and in Alaska have been subject to more seasonal variations in demand than the operations along the East Coast and Gulf Coast regions.regions of the United States. Seasonality generally does not impact the Hawaiian market. Movements of refined petroleum products such as various blends of gasoline are strongest during the summer driving season while heating oil generally increases during the winter months.

The coastal fleet consists of 6949 tank barges with 6.24.7 million barrels of capacity, primarily transporting refined petroleum products, black oil and petrochemicals. The Company owns 47 of the coastal tank barges and two are leased. Of the 6949 coastal tank barges currently operating, 4833 are refined petroleum products and petrochemical barges and 2116 are black oil barges. The Company owns 62 of the coastal tank barges and seven are leased. The Company operates 7547 coastal tugboats ranging from 10001,000 to 1100011,000 horsepower, of which 6742 are owned by the Company and eightfive are chartered.

Coastal marine transportation services are conducted under long-term contracts, primarily one year or longer, some of which have renewal options, for customers with which the Company has traditionally had long-standing relationships, as well as under spot contracts. During 20162017, 2018 and the 2015 third and fourth quarters,2019, approximately 80% of the coastal marine transportation revenues were under term contracts and 20% were spot contract revenues compared with approximately 85% under term contracts and 15% under spot contract during 2014 and the 2015 first and second quarters.revenues.

Kirby Offshore Marine also operates a fleet of threetwo offshore dry-bulk barge and tugboat units involved in the transportation of sugar and other dry products between Florida and East Coast ports. These vessels primarily operate under long-term contracts of affreightment that are typically one year or less in length.affreightment.

Kirby Ocean Transport owns and operates a fleet of threetwo offshore dry-bulk barges, threetwo offshore tugboats and one docking tugboat. Kirby Ocean Transport operates primarily under term contracts of affreightment, including a contract that expires in 2020 with Duke Energy Florida (“DEF”) to transport coal across the Gulf of Mexico to DEF’s power generation facility at Crystal River, Florida.

Kirby Ocean Transport is also engaged in the transportation of coal, fertilizer, sugar and other bulk cargoes on a short-term basis between domestic ports and occasionally the transportation of grain from domestic ports to ports primarily in the Caribbean Basin.

Marine transportation inland and coastal services are conducted under term or spot contracts typically ranging from one to five years, some of which have renewal options, for customers with whom the Company has traditionally had long-standing relationships, as well as under spot contracts.relationships. Typically, term contracts range from one to three years, some of which have renewal options. The majority of the marine transportation contracts with its customers are for terms of one year. Most have been customers of the Company’s marine transportation segment for many years and management anticipates continued relationships; however, there is no assurance that any individual contract will be renewed.

A term contract is an agreement with a specific customer to transport cargo from a designated origin to a designated destination at a set rate (affreightment) or at a daily rate (time charter). The rate may or may not escalate during the term of the contract; however, the base rate generally remains constant and contracts often include escalation provisions to recover changes in specific costs such as fuel. Time charters, which insulate the Company from revenue fluctuations caused by weather and navigational delays and temporary market declines, represented approximately 52%62% of the marine transportation’s inland revenues under term contracts during 2016, 55%2019, 59% of revenue under term contracts during 20152018 and 56%49% of the revenue under term contracts during 2014.2017. A spot contract is an agreement with a customer to move cargo from a specific origin to a designated destination for a rate negotiated at the time the cargo movement takes place. Spot contract rates are at the current “market” rate and are subject to market volatility. The Company typically maintains a higher mix of term contracts to spot contracts to provide the Company with a more predictable revenue stream while maintaining spot market exposure to take advantage of new business opportunities and existing customers’ peak demands. During the first nine months of 2016 and all of 2015 and 2014, approximately 80% of the inland marine transportation revenues were under term contracts and 20% were spot contract revenues.  During the 2016 fourth quarter,2017, approximately 75% of inland marine transportation revenues were under term contracts and 25% were spot contract revenues. During 2018 and 2019, approximately 65% of inland marine transportation revenues were under term contracts and 35% were spot contract revenues. Coastal time charters represented approximately 85% of the marine transportation coastal revenues under term contracts in 2016 as compared to 90% in  20152019, 2018 and 2014.2017.

No single customer of the marine transportation segment accounted for 10% or more of the Company’s revenues in 2016, 20152019, 2018 and 2014.2017.

The Company’s marine transportation segment has approximately 3,1003,350 employees, of which approximately 2,4002,650 are vessel crew members. None of the segment’s inland operations are subject to collective bargaining agreements. The segment’s coastal operation includesoperations include approximately 925675 vessel employees some of which are subject to collective bargaining agreements in certain geographic areas. Approximately 370250 Kirby Offshore Marine vessel crew members employed in the Atlantic Division are subject to a collective bargaining agreement with the Richmond Terrace Bargaining Unit that expired on Decemberin effect through August 31, 2016. This collective bargaining agreement was extended to  January 31, 2017 and is currently subject to ongoing negotiations.2022. In addition, approximately 175150 vessel crew members of Penn Maritime Inc. vessel crew members, a wholly owned subsidiary of Kirby Offshore Marine, are represented by the Seafarers International Union under a collective bargaining agreement in effect through April 2018.30, 2022.

The principal officeoffices of Kirby Inland Marine, Kirby Offshore Marine, Kirby Ocean Transport and Osprey isare located in Houston, Texas, in the Company’sthree facilities under a leaseleases that expiresexpire in July 2021, December 2025.2025 and December 2027. Kirby Inland Marine’s operating locations are on the Mississippi River at Baton Rouge and New Orleans, Louisiana, and Greenville, Mississippi, twothree locations in Houston, Texas, on andor near the Houston Ship Channel, one in Mobile, Alabama, one in Miami, Florida, andone in Covington, Louisiana, one in Lake Charles, Louisiana, one in Corpus Christi, Texas, and one in Orange, Texas. The New Orleans, Houston and HoustonOrange facilities are owned by the Company, and the Baton Rouge, Corpus Christi, Covington, Lake Charles, Greenville, Miami and Corpus ChristiMobile facilities are leased. Kirby Offshore Marine’s operating facilities are located in Staten Island, New York, Seattle, Washington and Honolulu, Hawaii. All of Kirby Offshore Marine’s operating facilities are leased, including pierpiers and wharf facilities and office and warehouse space. San Jac’s operating location is near the Houston Ship Channel.

General. The Company’s marine transportation operations are subject to regulation by the USCG, federal laws, state laws and certain international conventions. The agencies establish safety requirements and standards and are authorized to investigate incidents.

Most of the Company’s tank barges are inspected by the USCG and carry certificates of inspection. The Company’s inland and coastal towing vessels and coastal dry-bulk barges are not currentlyalso subject to USCG regulations. The USCG has enacted safety regulations governing the inspection, requirements; however, federalstandards, and safety management systems of towing vessels. The regulations have been finalized that lay outalso create many new compliance options as well as new equipment, construction and operational requirements for design, construction, equipment, and operation of towing vessels subjecting inlandvessels. The USCG regulations supersede the jurisdiction of the United States Occupational Safety and coastalHealth Administration (“OSHA”) and any state regulations on vessel design, construction, alteration, repair, maintenance, operation, equipping, personnel qualifications and manning. The regulations requiring towing vessels to USCGobtain a certificate of inspection requirements.  These regulations became effective for existing towing vessels on July 20, 2016 and provide for2018. Other portions of the phase-in of certain requirements over time.  Existing towing vessels have untilregulations are phased in following the July 20, 2018 to meet most of the requirements of the regulations, with additional timing for other portions of the regulations. effective date through July 19, 2022.

Most of the Company’s coastal tugboats and coastal tank and dry-bulk barges are built to American Bureau of Shipping (“ABS”) classification standards and are inspected periodically by ABS to maintain the vessels in class. The crews employed by the Company aboard inland and coastal vessels, including captains, pilots, engineers, tankermen and ordinary seamen, are licensed by the USCG.

The Company is required by various governmental agencies to obtain licenses, certificates and permits for its vessels depending upon such factors as the cargo transported, the waters in which the vessels operate and other factors. The Company is of the opinion that the Company’s vessels have obtained and can maintain all required licenses, certificates and permits required by such governmental agencies for the foreseeable future. The Company’s failure to maintain these authorizations could adversely impact its operations.

The Company believes that additional security and environmental related regulations could be imposed on the marine industry in the form of contingency planning requirements. Generally, the Company endorses the anticipated additional regulations and believes it is currently operating to standards at least equal to anticipated additional regulations.

Jones Act. The Jones Act is a federal cabotage law that restricts domestic marine transportation in the United States to vessels built and registered in the United States and manned, by United States citizens, and owned and operated by United States citizens. For a corporation to qualify as United States citizens for the purpose of domestic trade, it is to be 75% owned and controlled by United States citizens.citizens within the meaning of the Jones Act. The Company monitors citizenship and meets the requirements of the Jones Act for its owned and operated vessels.

Compliance with United States ownership requirements of the Jones Act is important to the operations of the Company, and a violation of the loss of Jones Act status could have a material negative effect on the Company.Company and its vessels’ ability to operate. The Company monitors the citizenship of its employees and stockholders.stockholders and complies with United States build requirements.

User Taxes. Federal legislation requires that inland marine transportation companies pay a user tax based on propulsion fuel used by vessels engaged in trade along the inland waterways that are maintained by the United States Army Corps of Engineers. Such user taxes are designed to help defray the costs associated with replacing major components of the inland waterway system, such as locks and dams. A significant portion of the inland waterways on which the Company’s vessels operate is maintained by the Army Corps of Engineers.

The Company presently pays a federal fuel user tax of 29.1 cents per gallon consisting of a .10.1 cent per gallon leaking underground storage tank tax and 29 cents per gallon waterways user tax. The waterways user tax rate increased from 20 to 29 cents per gallon of fuel effective April 1, 2015.

Security Requirements. The Maritime Transportation Security Act of 2002 requires, among other things, submission to and approval by the USCG of vessel and waterfront facility security plans (“VSP” and “FSP”, respectively). The Company’sCompany maintains approved VSP and FSP have been approved and the Company is operating in compliance with the plans for all of its vessels and facilities that are subject to the requirements.

The Company’s operations are affected by various regulations and legislation enacted for protection of the environment by the United States government, as well as many coastal and inland waterway states and international jurisdictions to the extent that the Company’s vessels transit in international waters. Government regulations require the Company to obtain permits, licenses and certificates for the operation of its vessels. Failure to maintain necessary permits or approvals could require the Company to incur costs or temporarily suspend operation of one or more of its vessels. Violations of these laws may result in civil and criminal penalties, fines, or other sanctions.

Water Pollution Regulations. The Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977 (“Clean Water Act”), the Comprehensive Environmental Response, Compensation and Liability Act of 1981 (“CERCLA”) and the Oil Pollution Act of 1990 (“OPA”) impose strict prohibitions against the discharge of oil and its derivatives or hazardous substances into the navigable waters of the United States. These acts impose civil and criminal penalties for any prohibited discharges and impose substantial strict liability for cleanup of these discharges and any associated damages. Certain states also have water pollution laws that prohibit discharges into waters that traverse the state or adjoin the state, and impose civil and criminal penalties and liabilities similar in nature to those imposed under federal laws.

The OPA and various state laws of similar intent substantially increased over historic levels the statutory liability of owners and operators of vessels for oil spills, both in terms of limit of liability and scope of damages.

One of the most important requirements under the OPA was that all newly constructed tank barges engaged in the transportation of oil and petroleum in the United States be double hulled, and all existing single hull tank barges be either retrofitted with double hulls or phased out of domestic service by December 31, 2014.

The Company manages its exposure to losses from potential discharges of pollutants through the use of well-maintained and equipped vessels, through safety, training and environmental programs, and through the Company’s insurance program. There can be no assurance, however, that any new regulations or requirements or any discharge of pollutants by the Company will not have an adverse effect on the Company.

The following risk factors should be considered carefully when evaluating the Company, as its businesses, results of operations, or financial condition could be materially adversely affected by any of these risks. The following discussion does not attempt to cover factors, such as trends in the United States and global economies or the level of interest rates, among others, that are likely to affect most businesses.

The Inland Waterway infrastructure is aging and may result in increased costs and disruptions to the Company’s marine transportation segment. Maintenance of the United States inland waterway system is vital to the Company’s operations. The system is composed of over 12,000 miles of commercially navigable waterway, supported by over 240 locks and dams designed to provide flood control, maintain pool levels of water in certain areas of the country and facilitate navigation on the inland river system. The United States inland waterway infrastructure is aging, with more than half of the locks over 50 years old. As a result, due to the age of the locks, scheduled and unscheduled maintenance outages may be more frequent in nature, resulting in delays and additional operating expenses. One-half of the cost of new construction and major rehabilitation of locks and dams is paid by marine transportation companies through a 29 cent per gallon diesel fuel tax and the remaining 50% is paid from general federal tax revenues. Failure of the federal government to adequately fund infrastructure maintenance and improvements in the future would have a negative impact on the Company’s ability to deliver products for its customers on a timely basis. In addition, any additional user taxes that may be imposed in the future to fund infrastructure improvements would increase the Company’s operating expenses.

The Company is subject to adverse weather conditions in its marine transportation and diesel enginedistribution and services segments. The Company’s marine transportation segment is subject to weather conditions on a daily basis.condition volatility. Adverse weather conditions such as high or low water on the inland waterway systems, fog and ice, tropical storms, hurricanes and tsunamis on both the inland waterway systems and throughout the United States coastal waters can impair the operating efficiencies of the marine fleet. Such adverse weather conditions can cause a delay, diversion or postponement of shipments of products and are totally beyond the control of the Company. In addition, adverse water and weather conditions can negatively affect a towing vessel’s performance, tow size, loading drafts, fleet efficiency, place limitations on night passageslimit navigation periods and dictate horsepower requirements. The Company’s diesel enginedistribution and services segment is subject to tropical storms and hurricanes impacting its coastal locations and tornadoes impacting its Oklahoma facilities.

The Company could be adversely impacted by a marine accident or spill event. A marine accident or spill event could close a portion of the inland waterway system or a coastal area of the United States for aan extended period of time. Although statistically marine transportation is the safest means of transportingsurface transportation of bulk commodities, accidents do occur, both involving Company equipment and equipment owned by other marine carriers.

The Company transports a wide variety of petrochemicals, black oil, refined petroleum products and agricultural chemicals throughout the Mississippi River System, on the Gulf Intracoastal Waterway, coastwise along all three United States coasts and in Alaska and Hawaii. The Company manages its exposure to losses from potential unauthorized discharges of pollutants through the use of well-maintained and equipped tank barges and towing vessels, through safety, training and environmental programs, and through the Company’s insurance program, but a discharge of pollutants by the Company could have an adverse effect on the Company.Risks may arise for which the Company may not be insured. Claims covered by insurance are subject to deductibles, the aggregate amount of which could be material, and certain policies impose limitations on coverage. Existing insurance coverage may not be able to renewed at commercially reasonable rates or coverage capacity for certain risks may not be available or adequate to cover future claims. If a loss occurs that is partially or completely uninsured, or the carrier is unable or unwilling to cover the claim, the Company could be exposed to liability.

The Company’s marine transportation segment is dependent on its ability to adequately crew its towing vessels. The Company’s towing vessels are crewed with employees who are licensed or certified by the USCG, including its captains, pilots, engineers and tankermen. The success of the Company’s marine transportation segment is dependent on the Company’s ability to adequately crew its towing vessels. As a result, the Company invests significant resources in training its crews and providing crew members an opportunity to advance from a deckhand to the captain of a Company towboat or tugboat. Lifestyle issues are a deterrent for employment for inland and coastal crew members. Inland crew members generally work a 20 days on, 10 days off rotation, or a 30 days on, 15 days off rotation. For the coastal fleet, crew members are generally required to work a 14 days on, 14 days off rotation, a 21 days on, 21 days off rotation or a 30 days on, 30 days off rotation, dependent upon the location. The nature of crewmember work schedules and assignments away from home for extended periods require special recruiting and at times it can be difficult to find candidates. With ongoing retirements and competitive labor pressure in the marine transportation segment, the Company continues to monitor and implement market competitive pay practices. The Company also utilizes an internal development program to train Maritime Academy graduates for vessel leadership positions.

The Company’s marine transportation segment has approximately 3,1003,350 employees, of which approximately 2,4002,650 are vessel crew members. None of the segment’s inland operations are subject to collective bargaining agreements. The segment’s coastal operation includesoperations include approximately 925675 vessel employees, of whom approximately 545400 are subject to collective bargaining agreements in certain geographic areas. Any work stoppages or labor disputes could adversely affect coastal operations in those areas.

ReductionThe Company may be unable to make attractive acquisitions or successfully integrate acquired businesses, and any inability to do so may adversely affect the Company’s business and hinder its ability to grow. The Company has made asset and business acquisitions in the numberpast and may continue to make acquisitions of acquisitions made byassets or businesses in the future that complement or expand the Company’s current business. The Company may curtail future growth. Since 1986, the Company has been successful in the integration of 32 acquisitions in its marine transportation segment and 18 acquisitions in its diesel engine services segment. Acquisitions have played a significant part in the growth of the Company. The Company’s marine transportation revenue in 1987 was $40.2 million compared with $1.47 billion in 2016. Diesel engine services revenue in 1987 was $7.1 million compared with $298.8 million in 2016. While the Company is of the opinion that futurenot be able to identify attractive acquisition opportunities. Even if attractive acquisition opportunities exist in both its marine transportation and diesel engine services segments,are identified, the Company may not be able to continuecomplete the acquisition or do so on commercially acceptable terms. The success of any completed acquisition depends on the Company’s ability to grow through acquisitionsintegrate the acquired assets or business effectively into the Company’s existing operations. The process of integrating acquired assets or businesses may involve difficulties that require a disproportionate amount of the Company’s managerial and financial resources to resolve. The value of acquired assets or businesses may be negatively impacted by a variety of circumstances unknown to the extentCompany prior to the acquisition. In addition, possible future acquisitions may be larger and for purchase prices significantly higher than those paid for earlier acquisitions. No assurance can be given that it has in the past.Company will be able to identify additional suitable acquisition opportunities, negotiate acceptable terms, obtain financing for acquisitions on acceptable terms or successfully acquire identified targets. The Company’s failure to achieve synergies, to integrate successfully the acquired businesses and assets into the Company’s existing operations, or to minimize any unforeseen operational difficulties could have a material adverse effect on the Company’s business, financial condition, and results of operations. In addition, agreements governing the Company’s indebtedness from time to time may impose certain limitations on the Company’s ability to undertake acquisitions or make investments or may limit the Company’s ability to incur certain indebtedness and liens, which could limit the Company’s ability to make acquisitions.

The Company’s failure to comply with the Foreign Corrupt Practices Act (“FCPA”), or similar local applicable anti-bribery laws, could have a negative impact on its ongoing operations. The Company’s operations outside the United States require the Company to comply with both a number of United States and international regulations. For example, in addition to any similar applicable local anti-bribery laws, its operations in countries outside the United States are subject to the FCPA, which prohibits United States companies or their agentsemployees and employeesthird party representatives from providing anything of value to a foreign official for the purposes of influencing any act or decision of these individuals in their official capacity to help obtain or retain business, direct business to any person or corporate entity, or obtain any unfair advantage. The Company has internal control policies and procedures and has implemented training and compliance programs for its employees and agentsthird party representatives with respect to the FCPA. However, the Company’s policies, procedures and programs may not always protect it from reckless or criminal acts committed by its employees or agents,third party representatives, and severe criminal or civil sanctions could be the result of violations of the FCPA.FCPA or any other applicable anti-bribery law in countries where the Company does business. The Company is also subject to the risks that its employees, joint venture partners, and agentsthird party representatives outside of the United States may fail to comply with other applicable laws.

The Company’s marine transportation segment is subject to the Jones Act. The Company’s marine transportation segment competes principally in markets subject to the Jones Act, a federal cabotage law that restricts domestic marine transportation in the United States to vessels built and registered in the United States, and manned, owned and ownedoperated by United States citizens. The Company presently meets all of the requirements of the Jones Act for its owned and operated vessels. The loss of Jones Act status could have a significant negative effect on the Company. The requirements that the Company’s vessels be United States built and manned by United States citizens, the crewing requirements and material requirements of the USCG, and the application of United States labor and tax laws increases the cost of United States flag vessels when compared with comparable foreign flag vessels. The Company’s business could be adversely affected if the Jones Act or international trade agreements or laws were to be modified or waived as to permit foreign competition that isflag vessels to operate in the United States as these vessels are not subject to the same United States government imposed burdens.regulations, laws, and restrictions. Since the events of September 11, 2001, the United States government has taken steps to increase security of United States ports, coastal waters and inland waterways. The Company believes that it is unlikely that the current cabotage provisions of the Jones Act would be eliminated or significantly modified or eliminatedin a way that has a material adverse impact on the Company in the foreseeable future.

The Secretary of Homeland Security is vested with the authority and discretion to waive the Jones Act to such extent and upon such terms as the Secretary may prescribe whenever the Secretary deems that such action is necessary in the interest of national defense. In response toOn September 8, 2017, following Hurricanes Harvey and Irma, the effectsDepartment of Hurricanes Katrina and Rita, the Secretary waived the Jones Act generally for the transportationHomeland Security issued a waiver of petroleum products from September 1 to September 19, 2005 and from September 26, 2005 to October 24, 2005. In June 2011, the Secretary waived the Jones Act for the transportation of petroleum releaseda 7-day period for shipments from the Strategic Petroleum ReserveNew York, Pennsylvania, Texas and in November 2012 waived the Jones Act forLouisiana to South Carolina, Georgia, Florida and Puerto Rico. The waiver was specifically tailored to address the transportation of refined petroleum products due to disruptions in hurricane-affected areas. On September 11, 2017, the Northeast followingwaiver was extended for 11 days and expanded to include additional states. Following Hurricane Sandy.Maria, on September 28, 2017, the Department of Homeland Security issued a waiver of the Jones Act for movement of products shipped from United States coastwise points to Puerto Rico through October 18, 2017. Waivers of the Jones Act, whether in response to natural disasters or otherwise, could result in increased competition from foreign tank vessel operators, which could negatively impact the marine transportation segment.

The Company is subject to risks associated with possible climate change legislation, regulation and international accords. Greenhouse gas emissions, including carbon emissions or energy use, have increasingly become the subject of a large amount of international, national, regional, state and local attention. Pursuant to an April 2007 decision of the United States Supreme Court, the EPA was required to consider if carbon dioxide was a pollutant that endangers public health. On December 7, 2009, the EPA furthered its focus on greenhouse gas emissions when it issued its endangerment finding in response to a decision of“endangerment finding” regarding greenhouse gasses under the Supreme Court of the United States.CAA. The EPA found that the emission of six greenhouse gases, including carbon dioxide (which is emitted from the combustion of fossil fuels), may reasonably be anticipated to endanger public health and welfare. Based on this finding, the EPA defined the mix of these six greenhouse gases to be “air pollution” subject to regulation under the Clean Air Act.CAA. Although the EPA has stated a preference that greenhouse gas regulation be based on new federal legislation rather than the existing Clean Air Act,CAA, many sources of greenhouse gas emissions may be regulated without the need for further legislation.

The United States Congress has considered in the past legislation that would create an economy-wide “cap-and-trade” system that would establish a limit (or cap) on overall greenhouse gas emissions and create a market for the purchase and sale of emissions permits or “allowances.” Any proposed cap-and-trade legislation would likely affect the chemical industry due to anticipated increases in energy costs as fuel providers pass on the cost of the emissions allowances, which they would be required to obtain under cap-and-trade to cover the emissions from fuel production and the eventual use of fuel by the Company or its energy suppliers. In addition, cap-and-trade proposals would likely increase the cost of energy, including purchases of diesel fuel, steam and electricity, and certain raw materials used or transported by the Company. Proposed domestic and international cap-and-trade systems could materially increase raw material and operating costs of the Company’s customer base. Future environmental regulatory developments related to climate change in the United States that restrict emissions of greenhouse gases could result in financial impacts on the Company’s operations that cannot be predicted with certainty at this time.

The Company’s marine transportation segment is subject to volatility in the United States production of petrochemicals. For 2016, 49%2019, 54% of the marine transportation segment’s revenues were from the movement of petrochemicals, including the movement of raw materials and feedstocks from one refinery or petrochemical plant to another, as well as the movement of more finished products to end users and terminals for export. During 2016,2019, petrochemical volumes were stable compared with 2015.  Petrochemical volumes improved during 2015 compared with 2014.increased relative to 2018 and 2017, primarily as a result of new petrochemical capacity which came online in recent years. The United States petrochemical industry continues to benefit from a low-cost domestically produced natural gas feedstock advantage, producing strong volumes of raw materials and intermediate products for transportation between Gulf Coast petrochemical plants and the transportation of more finished products to terminals for both domestic consumers and for export destinations. In addition, approximately 20 new United States petrochemical projects, including expansion of existing plants or new plants, are scheduled to be completed during 2020 and 2021, which should provide additional movements for the marine transportation segment. Higher natural gas prices and other factors could negatively impact the United States petrochemical industry and its production volumes, which would negatively impact the Company.

The long-term risk of an oversupply of inland tank barges may be mitigated by the fact that the inland tank barge industry has a mature fleet. Of the estimated 3,850approximately 350 tank barges in the industry at the present time, approximately 600that are over 30 years old and approximately 270240 of those over 40 years old. Given the age profile of the industry inland tank barge fleet, the expectation is that older tank barges will continue to be removed from service and replaced by new tank barges that will enter the fleet,as needed, given extensive customer vetting standards, with the extent of theboth retirements and new builds dependent on 2017 petrochemical and refinery production levels and crude oil and natural gas condensate movements, both of which can have a direct effect on industry-wide tank barge utilization, as well as term and spot contract rates.

During 20142017, 2018, and the majority of 2015, the coastal operations reflected improvements in market conditions with tank barge utilization in the 90% to 95% range, occasionally declining to the high-80% level during portions of the 2015 fourth quarter. During 2014 and the majority of 2015, the Company experienced increased demand for coastal crude oil and natural gas condensate moves and success in expanding the coastal customer base to include inland customers with coastal requirements. During the 2015 fourth quarter and all of 2016,2019, a decline in industry-wide demand for the movement of crude oil and natural gas condensate transportation volumes increased available capacity and resulted in some reluctance among certain customers to extend term contracts, which led to an increase in the number of coastal vessels operating in the spot market. In addition, the Company and the industry added new coastal tank barge capacity during 20152017, 2018 and 2016,2019 with additional new capacity coming on-line in 2017 and 2018.2020. Much of this new capacity is replacement capacity for older vessels anticipated to be retired.

The Company estimates there are approximately 295280 tank barges operating in the 195,000 barrel or less coastal industry fleet, the sector of the market in which the Company operates, and approximately 3520 of those are over 3025 years old.  OneIn June 2018, the Company purchased a 155,000 barrel coastal ATB under construction from another operator that was delivered to the Company in the 2018 fourth quarter.  The Company is aware of seven coastal tank barge and tugboat unit was built and placed in service by a competitor during 2014. In January 2014, the Company signed an agreement to construct a 185,000 barrel coastal articulated tank barge and tugboat unit (“ATB”) and, in April 2014, the Company exercised its option for the construction of a second 185,000 barrel coastal ATB. The first unit wasunits placed in service in late 20152017, three in 2018, and the secondtwo in June 2016.  In July 2014, the Company signed agreements to construct two 155,000 barrel coastal ATBs.  The first unit was placed in service in November 2016 and the second unit is scheduled to be placed in service in the summer of  2017.  The Company also took delivery in December 2016 of a 35,000 barrel coastal petrochemical tank barge.  The Company is aware of eight coastal tank barges placed in service in 20162019 by competitors and 11competitors.  There are currently four announced coastal tank barge and tugboat units in the 195,000 barrel or less category under construction by competitors for delivery in 20172020 and 2018.2021.  Two of these coastal ATB units under construction are greater than 195,000 barrels.

Higher fuel prices could increase operating expenses and fuel price volatility could reduce profitability. The cost of fuel during 20162019 was approximately 7%9% of marine transportation revenue. All of the Company’s marine transportation term contracts contain fuel escalation clauses, or the customer pays for the fuel. However, there is generally a 30 to 90 day delay before contracts are adjusted depending on the specific contract. In general, the fuel escalation clauses are effective over the long-term in allowing the Company to adjust to changes in fuel costs due to fuel price changes; however, the short-term effectiveness of the fuel escalation clauses can be affected by a number of factors including, but not limited to, specific terms of the fuel escalation formulas, fuel price volatility, navigating conditions, tow sizes, trip routing, and the location of loading and discharge ports that may result in the Company over or under recovering its fuel costs. SpotThe Company’s spot contract rates generally reflect current fuel prices at the time the contract is signed but do not have escalators for fuel.

The Company’s diesel enginedistribution and services segment has had a 51-year relationship with EMD, the largest manufacturer of medium-speed diesel engines. In addition, theengines, for over 50 years. The Company, through Kirby Engine Systems, serves as both an EMD distributor and service center for select markets and locations for both service and parts. With the acquisition of S&S in September 2017, the Company added additional EMD exclusive distributorship rights in key states, primarily through the Central, South and Eastern areas of the United States. With the S&S acquisition, the Company became the United States distributor for EMD marine and power generation applications. Sales and service of EMD products account for approximately 3%4% of the Company’s revenues for 2016.2019. Although the Company considers its relationship with EMD to be strong, the loss of the EMD distributorship and service rights, or a disruption of the supply of EMD parts, could have a negative impact on the Company’s ability to service its customers.

United hasand S&S have maintained continuous exclusive distribution rights for MTU and Allison since 1946.the 1940s. United is oneand S&S are two of MTU’s top five distributors of off-highway engines in North America, with exclusive distribution rights in Oklahoma, Arkansas, Louisiana and Mississippi.multiple states. In addition, as a distributordistributors of Allison products, United hasand S&S have exclusive distribution rights in Oklahoma, Arkansasmultiple key growth states. United and Louisiana. United isS&S are also the distributor for parts, service and warranty on Daimler truck engines and related equipment in Oklahoma, Arkansas and Louisiana.multiple states. Sales and service of MTU and Allison products accounted for approximately 3%17% of the Company’s revenues during 2016.2019. Although the Company considers its relationships with MTU and Allison to be strong, the loss of MTU, Allison or Daimler distributorships and service rights, or a disruption of the supply of MTU or Allison parts, could have a negative impact on the Company’s ability to service its customers.

The Company is subject to competition in both its marine transportation and diesel enginedistribution and services segments. The inland and coastal tank barge industry remains very fragmented and competitive. The Company’s primary competitors are noncaptive inland tank barge operators and coastal operators. The Company also competes with companies who operate refined product and petrochemical pipelines, railroad tank cars and tractor-trailer tank trucks. Increased competition from any significant expansion of or additions to facilities or equipment by the Company’s competitors could have a negative impact on the Company’s results of operations. In addition, the Company’s failure to adhere to its safety, reliability and performance standards may impact its ability to retain current customers or attract new customers.

The diesel enginedistribution and services industry is also very competitive. The segment’s primary marine diesel competitors are independent diesel services companiesoil and other factory-authorized distributors, authorized service centers and authorized marine dealers. Certain operators of diesel powered marine equipment also elect to maintain in-house service capabilities. In the power generation market, the primary competitors are other independent service companies. The segment’s land-basedgas market’s principal competitors are independent diesel enginedistribution and service and oilfield manufacturing companies and other factory-authorized distributors and service centers. In addition, certain oilfield service companies that are customers of the Company also manufacture and service a portion of their own oilfield equipment. Increased competition in the diesel enginedistribution and services industry and continued low price of natural gas, crude oil or natural gas condensate, and resulting decline in drilling for such natural resources in North American shale formations, could result in less oilfield equipment being manufactured and remanufactured, lower rates for service and parts pricing and result in less manufacturing, remanufacturing, service and repair opportunities and parts sales for the Company. For the commercial and industrial market, the segment’s primary marine diesel competitors are independent diesel services companies and other factory-authorized distributors, authorized service centers and authorized marine dealers. Certain operators of diesel powered marine equipment also elect to maintain in-house service capabilities. For power generation, the primary competitors are other independent service companies.

The Company’s diesel enginedistribution and services segment could be adversely impacted by future legislation or additional regulation of hydraulic fracturing practices. The Company, through its United subsidiary,and S&S subsidiaries, is a distributor and service provider of engine and transmission related products for the oil and gas services, power generation and transportation industries, and a manufacturer of oilfield service equipment, including pressure pumping units. The EPA is studying hydraulic fracturing practices, and legislation may be introduced in Congress that would authorize the EPA to impose additional regulations on hydraulic fracturing. In addition, a number of states have adopted or are evaluating the adoption of legislation or regulations governing hydraulic fracturing.fracturing or byproducts of the fracturing process. Such federal or state legislation and/or regulations could materially impact customers’ operations and greatly reduce or eliminate demand for the Company’s pressure pumping fracturing equipment and related products. The Company is unable to predict whether future legislation or any other regulations will ultimately be enacted and, if so, the impact on the Company’s diesel enginedistribution and services segment.

The Company relies on critical information systems for the operation of its businesses, and the failure of any critical information system, including a cyber-security breach, may adversely impact its businesses. The Company is dependent on its technology infrastructure and must maintain and rely upon critical information systems for the effective and safe operation of its businesses. These information systems include software applications and hardware equipment, as well as data networks and telecommunications.

The Company’s information systems, including the Company’s proprietary vessel management computer system, are subject to damage or interruption from a number of potential sources, including but not limited to, natural disasters, software viruses, power failures and cyber-attacks. The Company has implemented measures such as emergency recovery processes, virus protection software, intrusion detection systems and annual attack and penetration audits to mitigate these risks. However, the Company cannot guarantee that its information systems cannot be damaged or compromised.

Any damage or compromise of its data security or its inability to use or access these critical information systems could adversely impact the efficient and safe operation of its businesses, or result in the failure to maintain the confidentiality of data of its customers or its employees and could subject the Company to increased operating expenses or legal action, which could have an adverse effect on the Company.

In general, lower energy prices are good for the United States economy and typically translate into increased petrochemical and refined product productiondemand and therefore increased demand for tank barge transportation services. However, during 20152016 and 20162017 lower crude oil prices resulted in a decline in domestic crude oil and natural gas condensate production and reduced volumes to be transported by tank barge. The Company estimates that at the beginning of 2015 there were approximately 550 inland tank barges and 35 coastal tank barges in the 195,000 barrels or less category transporting crude oil and natural gas condensate. At the end of 2016, the Company estimatesestimated that approximately 140 inland tank barges and approximately ten10 coastal tank barges in the 195,000 barrel or less category were transporting such products, a reduction of approximately 410 inland tank barges and 25 coastal tank barges that have moved into other markets. At the end of 2017, the Company estimated that approximately 250 inland tank barges and approximately three coastal tank barges were transporting crude and natural gas condensate. At the end of 2018, the Company estimates that approximately 375 inland tank barges and approximately three coastal tank barges were transporting crude and natural gas condensate. As of the end of 2019, the Company estimates that approximately 335 inland tank barges and approximately five coastal tank barges were transporting crude and natural gas condensate. Volatility in the price of natural gas and crude oil can also result in heightened uncertainty which may lead to decreased production and delays in new petrochemical and refinery plant construction. Increased competition for available black oil and petrochemical barge moves caused by reduced crude oil and natural gas condensate production could have an adverse impact on the Company’s marine transportation segment.

Lower energy prices generally result in a decrease in the number of oil and gas wells being drilled. Oilfield service companies reduce their capital spending, resulting in decreased demand for new parts and equipment, including pressure pumping units, provided by the Company’s diesel enginedistribution and services segment. This may also lead to order cancellations from customers or customers requesting to delay delivery of new equipment. The Company also services offshore supply vessels and offshore drillings rigs operating in the Gulf of Mexico, as well as internationally. Low energy prices may negatively impact the number of wells drilled in the Gulf of Mexico and international waters. In addition to the possibility that decreased energyProlonged downturns in oil and gas prices may resultcause substantial declines in reduced demand for the Company’s services,oilfield service and exploration expenditures and could adversely impact oil and gas manufacturing, remanufacturing, parts and equipment,distribution business. In addition, energy price volatility may also result in difficulties in the Company’s ability to ramp up and ramp down production on a timely basis and, therefore, could result in an adverse impact on the Company’s diesel enginedistribution and services segment.

The Company’s diesel enginedistribution and services segment could be adversely impacted by the construction of pressure pumping units by its competitors. In early 2015, an estimated 19.521.0 million horsepower of pressure pumping units were working, or available to work, in North America. By late 2016, the working horsepower in North America hashad declined to an estimated 9.06.0 million, with an estimated 4.52.0 million horsepower scrapped, an estimated 2.0 million horsepower available for work and an estimated 4.012.5 million horsepower stacked, the large majority of which would require major service before being placed back in service. A significant drop in demand due to the low price of crude oil resulted in an oversupply in the pressure pumping market and negatively impacted the Company’s 20162015 and 20152016 results of operations. During 2017 and 2018, with the stabilization of crude oil prices in the $40 to $70 per barrel range, the United States land rig count improved and service intensity in the well completion business increased. As a result, the Company experienced a healthy rebound in service demand during 2018, particularly with pressure pumping unit remanufacturing and transmission overhauls, and with the acquisition of S&S in September 2017, the manufacture of oilfield service equipment, including pressure pumping units, and the sale of transmissions.  At the end of 2019, an estimated 15.0 million horsepower of pressure pumping units were working in North America, with an estimated 6.0 million horsepower available to work, and 3.0 million horsepower stacked and in need of major repair.  Increased expansion of, or additions to, facilities or equipment by the Company’s competitors could have a negative impact on the Company’s results of operations.

Not applicable.

The information appearing in Item 1 under “Marine Transportation– Properties” and “Diesel Engine“Distribution and Services– Properties” is incorporated herein by reference. The Company believes that its facilities are adequate for its needs and additional facilities would be available if required.

In 2009, the Company was named by the EPA as a Potentially Responsible Party (“PRP”) in addition to a group of approximately 250 named PRPs under CERCLA with respect to a Superfund site, the Portland Harbor Superfund site (“Portland Harbor”) in Portland, Oregon. The site was declared a Superfund site in December 2000 as a result of historical heavily industrialized use due to manufacturing, shipbuilding, petroleum storage and distribution, metals salvaging, and electrical power generation activities which led to contamination of Portland Harbor, an urban and industrial reach of the lower Willamette River located immediately downstream of downtown Portland. The Company’s involvement arises from four spills at the site after it was declared a Superfund site, as a result of predecessor entities’ actions in the area. To date, there is no information suggesting the extent of the costs or damages to be claimed from the 250 notified PRPs. Based on the nature of the involvement at the Portland Harbor site, the Company believes its potential contribution is de minimis; however, to date neither the EPA nor the named PRPs have performed an allocation of potential liability in connection with the site nor have they provided costs and expenses in connection with the site.

In JanuaryOn February 20, 2015, the Company was namedserved as a defendant in a Complaint originally filed on August 14, 2014 in the U.S. District Court of the Southern District of Texas - Houston Division, USOR Site PRP Group vs. A&M Contractors, USES, Inc. et al. This is a civil action pursuant to the provisions of CERCLA and the Texas Solid Waste Disposal Act for recovery of past and future response costs incurred and to be incurred by the USOR Site PRP Group for response activities at the U.S. Oil Recovery Superfund Site. The property was a former sewage treatment plant owned by defendant City of Pasadena, Texas from approximately 1945 until it was acquired by U.S. Oil Recovery in January 2009. Throughout its operating life, the U.S. Oil Recovery facility portion of the USOR Site received and performed wastewater pretreatment of municipal and Industrial Class I and Class II wastewater, characteristically hazardous waste, used oil and oily sludges, and municipal solid waste. Associated operations were conducted at the MCC Recycling facility portion of the USOR Site after it was acquired by U.S. Oil Recovery from the City of Pasadena in January 2009. Initially,The EPA and the plaintiff stayed prosecutionPRP Group entered into an Administrative Settlement Agreement and Order for Remedial Investigation Study (“Study”) in May 2015. The Study has not been completed by EPA to date. The Company joined as a member of the case pending responses to initial settlement demands. In January 2016, the Company filed responsive pleadings in this matter. Based on the nature of the involvementPRP Group companies at the USOR Site, the Company believes its potential contribution is de minimis; however, to date neither the EPA nor the named PRPs have performed an allocation of potential liability in connection with the site nor have they provided costs and expenses in connection with the site.pro-rata allocated share.

On October 13, 2016, the Company, as a successor to Hollywood Marine, Inc., was issued a General Notice under CERCLA by the EPA in which it was named as a PRP for liabilities associated with the SBA Shipyard Site located near Jennings, Louisiana (“Site”(the “Site”). The Site was added to the EPA’s National Priorities List of sites under CERCLA in September 2016. SBA used the facility for construction, repair, retrofitting, sandblasting, and cleaning and painting of barges beginning in 1965. Three barge slips and a dry dock are located off the Mermentau River. The slips were used to dock barges during cleaning or repair. In 2001, a group of PRPs that had been former customers of the SBA Shipyard facility formed an organization called the SSIC Remediation, LLC (hereinafter, “the PRP Group Companies”) to address removal actions at the Site. In 2002, EPA approved an Interim Measures/Removal Action of Hazardous/Principal Threat Wastes at SBA Shipyards, Inc. (pursuant to RCRA Section 3008(h)) that was proposed by SBA Shipyard and the PRP Group Companies. Interim removal activities were conducted from March 2001 through January 2005 under an EPA 2002 Order and Agreement. In September 2012, the Louisiana Department of Environmental Quality requested EPA address the SBA Shipyard siteSite under CERCLA authority. The Company, is investigatingas a successor to Hollywood Marine, joined the PRP Group Companies. The PRP Group Companies have submitted a draft Study work plan to EPA for their review and comment. Higman Marine, Inc. and its activitiesaffiliated companies (“Higman”) was named as a PRP in connection with its activities at the Site. Higman is not a participant in the PRP Group Companies.

With respect to the above sites, the Company has recorded reserves, if applicable, for its estimated potential liability for its portion of the EPA’s past costs claim based on information developed to date including various factors such as the Company’s liability in proportion to other responsible partiesPRPs and the extent to which such costs are recoverable from third parties.

On October 13, 2016, the tug Nathan E. Stewart and barge DBL 55, an articulated tank bargeATB owned and tugboat unit,operated by Kirby Offshore Marine, ran aground at the entrance to Seaforth Channel on Atholone Island, British Columbia. The grounding resulted in a breach of a portion of the Nathan E. Stewart’s fuel tanks causing a discharge of diesel fuel into the water. The USCG and the National Transportation Safety Board (“NTSB”)NTSB designated the Company as a party of interest in their investigation as to the cause of the incident. The Canadian authorities including Transport Canada and the Canadian Transportation Safety Board are also investigatinginvestigated the cause of the incident. TheOn October 10, 2018, the Heiltsuk First Nation filed a civil action in the British Columbia Supreme Court against a subsidiary of the Company, is subject to claims from third parties as well as the provincialmaster and federalpilot of the tug, the vessels and the Canadian government seeking unquantified damages as a result of the incident. On May 1, 2019, the Company filed a limitation action in the Federal Court of Canada seeking limitation of liability relating to the incident as provided under admiralty law. The Heiltsuk First Nation’s civil claim has been consolidated into the Federal Court of Canada limitation action as of July 26, 2019 and it is expected that the Federal Court of Canada will decide all claims against the Company. The Company is unable to estimate the potential exposure in the civil proceeding. On July 16, 2019, the Company and the Canadian government settled the charges against the subsidiary of the Company. The subsidiary of the Company agreed to pay the Canadian government a fine of approximately $2,900,000 Canadian dollars ($2,200,000 U.S. dollars) for violations of the Canadian Fisheries Act, the Migratory Birds Convention Act, the Pilotage Act and the Shipping Act of 2001. The Company has various insurance policies covering liabilities including pollution, property, marine and general liability and believes that it has satisfactory insurance coverage for the cost of cleanup and salvage operations as well as other potential liabilities arising from the incident. The Company believes it has accrued adequate reserves for the incident and does not expect the incident to have a material adverse effect on its business or financial condition.

On March 22, 2014, two tank barges and a towboat, (thethe M/V Miss Susan),Susan, owned by Kirby Inland Marine, LP, a wholly owned subsidiary of the Company, were involved in a collision with the M/S Summer Wind on the Houston Ship Channel near Texas City, Texas. The lead tank barge was damaged in the collision resulting in a discharge of intermediate fuel oil from one of its cargo tanks.  The USCG and the NTSB namedWhile all legal action to date involving the Company andhas been resolved, the Captain of the M/V Miss Susan, as well as the owner and the pilot of the M/S Summer Wind, as parties of interest in their investigation as to the cause of the incident. Sea Galaxy Ltd is the owner of the M/S Summer Wind. The Company is participating in the natural resource damage assessment and restoration process with federal and state government natural resource trustees.

In addition, the Company is involved in various legal and other proceedings which are incidental to the conduct of its business, none of which in the opinion of management will have a material effect on the Company’s financial condition, results of operations or cash flows. Management believes that it has recorded adequate reserves and believes that it has adequate insurance coverage or has meritorious defenses for these other claims and contingencies.

Not applicable.

The Company’s common stock is traded on the New York Stock Exchange under the symbol KEX. The following table sets forth the high and low sales prices per share for the common stock for the periods indicated:

As of February 22, 2017,20, 2020, the Company had 53,957,00059,984,000 outstanding shares held by approximately 740570 stockholders of record; however, the Company believes the number of beneficial owners of common stock exceeds this number.

The Company does not have an established dividend policy. Decisions regarding the payment of future dividends will be made by the Board of Directors based on the facts and circumstances that exist at that time. Since 1989, the Company has not paid any dividends on its common stock. The Company’s credit agreements contain covenants restricting the payment of dividends by the Company at any time when there is a default under the agreements.

The comparative selected financial data of the Company and consolidated subsidiaries is presented for the five years ended December 31, 2016.2019. The information should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Company in Item 7 and the Financial Statements included under Item 8 (selected financial data in thousands, except per share amounts).

Statements contained in this Form 10-K that are not historical facts, including, but not limited to, any projections contained herein, are forward-looking statements and involve a number of risks and uncertainties. Such statements can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “anticipate,” “estimate,” or “continue,” or the negative thereof or other variations thereon or comparable terminology. The actual results of the future events described in such forward-looking statements in this Form 10-K could differ materially from those stated in such forward-looking statements. Among the factors that could cause actual results to differ materially are: adverse economic conditions, industry competition and other competitive factors, adverse weather conditions such as high water, low water, tropical storms, hurricanes, tsunamis, fog and ice, tornados, marine accidents, lock delays, fuel costs, interest rates, construction of new equipment by competitors, government and environmental laws and regulations, and the timing, magnitude and number of acquisitions made by the Company. For a more detailed discussion of factors that could cause actual results to differ from those presented in forward-looking statements, see Item 1A-Risk Factors. Forward-looking statements are based on currently available information and the Company assumes no obligation to update any such statements.

For purposes of Management’s Discussion, all net earnings per share attributable to Kirby common stockholders are “diluted earnings per share.” The weighted average number of common shares outstanding applicable to diluted earnings per share for 2016, 20152019, 2018 and 20142017 were 53,512,000, 54,826,00059,909,000, 59,689,000 and 56,867,000,55,361,000, respectively. The decreaseincrease in the weighted average number of common shares outstanding for 2016 and 20152019 compared with 20142018 primarily reflects common stock repurchases in the 2014 fourth quarter through the 2016 first quarter, partially offset by the issuance of restricted stock and restricted stock units (“RSUs”) and the exercise of stock options.  The increase in the weighted average number of common shares for 2018 compared with 2017 primarily reflects the issuance of 5,696,259 shares of common stock associated with the acquisition of S&S on September 13, 2017 and the issuance of restricted stock and RSUs and the exercise of stock options.

The Company is the nation’s largest domestic tank barge operator, transporting bulk liquid products throughout the Mississippi River System, on the Gulf Intracoastal Waterway, coastwise along all three United States coasts, and in Alaska and Hawaii. The Company transports petrochemicals, black oil, refined petroleum products and agricultural chemicals by tank barge. As of December 31, 2016,2019, the Company operated a fleet of 8761,053 inland tank barges with 17.923.4 million barrels of capacity, and operated an average of 234299 inland towboats during 2016.2019. The Company’s coastal fleet consisted of 6949 tank barges with 6.24.7 million barrels of capacity and 7547 coastal tugboats. The Company also owns and operates sixfour offshore dry-bulk cargo barges, sixfour offshore tugboats and one docking tugboat transporting dry-bulk commodities in United States coastal trade. Through its diesel enginedistribution and services segment, the Company provides after-market servicesservice and parts for medium-speed and high-speed diesel engines, transmissions, reduction gears, and ancillary products forrelated equipment used in oilfield services, marine, and power generation, applications, distributeson-highway, and services high-speed diesel engines, transmissionsother industrial applications. The Company also rents equipment including generators, industrial compressors, railcar movers, and pumps,high capacity lift trucks for use in a variety of industrial markets, and manufactures and remanufactures oilfield service equipment, including pressure pumping units, for the land-based oilfield service and oil and gas operator and producer markets.customers.

For 2016,2019, net earnings attributable to Kirby were $141,406,000,$142,347,000, or $2.62$2.37 per share, on revenues of $1,770,673,000,$2,838,399,000, compared with 20152018 net earnings attributable to Kirby of $226,684,000,$78,452,000, or $4.11$1.31 per share, on revenues of $2,147,532,000.$2,970,697,000. The 2019 fourth quarter included $35,525,000 before taxes, $27,978,000 after taxes, or $0.47 per share, non-cash inventory write-downs and $4,757,000 before taxes, $3,747,000 after taxes, or $0.06 per share, severance and early retirement expense.  The 2018 year reflected the integration of Targa Resources Corp.’s (“Targa”) pressure barge fleet, acquired on May 10, 2018, and the integration of Higman, acquired on February 14, 2018. The 2018 fourth quarter included $85,108,000 before taxes, $67,235,000 after taxes, or $1.12 per share, non-cash impairment of long-lived assets and lease cancellation costs and $2,702,000 before taxes, $2,135,000 after taxes, or $0.04 per share, non-cash impairment of goodwill.  The 2018 second quarter included a one-time non-deductible expense of $18,057,000, or $0.30 per share, related to the retirement of Joseph H. Pyne as executive Chairman of the Board of Directors, effective April 30, 2018. The 2018 first quarter included $3,261,000 before taxes, or $0.04 per share, of one-time transaction costs associated with the Higman acquisition, as well as $2,912,000 before taxes, or $0.04 per share, of severance and retirement expenses, primarily related to cost reduction initiatives in the coastal marine transportation market and the integration of Higman.

For 2016, 83%2019, 56% of the Company’s revenues were generated by its marine transportation segment. The segment’s customers include many of the major petrochemical and refining companies that operate in the United States. Products transported include intermediate materials used to produce many of the end products used widely by businesses and consumers — plastics, fiber, paints, detergents, oil additives and paper, among others, as well as residual fuel oil, ship bunkers, asphalt, gasoline, diesel fuel, heating oil, crude oil, natural gas condensate and agricultural chemicals. Consequently, the Company’s marine transportation business is directly affected by the volumes produced by the Company’s petroleum, petrochemical and refining customer base.

The Company’s marine transportation segment’s revenues for 2016 decreased 11%2019 increased 7% when compared with 2015.2018 and operating income increased 46%, when compared with 2018. The decreaseincrease was primarily due to lower inland marine transportation term and spot contract pricing, lower inland and coastal equipment utilization, a 24% decline in the average cost of marine diesel fuel which is largely passed through to the customer, and an increase in the number of coastal vessels operating in the spot market which led to increased idle time and decreased revenues, partially offset by the addition of the SEACOR Holdings Inc.Higman fleet acquired on February 14, 2018, the Targa pressure barge fleet acquired on May 10, 2018, the CGBM 100, LLC (“Seacor”CGBM”) inland tank barges acquired on December 14, 2018, and the Cenac Marine Services LLC (“Cenac”) fleet acquired on March 14, 2019, as well as improved barge utilization in April 2016. The segment’s operating income for 2016 decreased 31% compared with 2015. The decrease was primarily due to lower inlandthe coastal market and higher spot and term and spot contract pricing lowerin the inland and coastal equipment utilization,markets. Partially offsetting these increases during 2019 were unusually poor operating conditions due to heavy fog along the Gulf Coast, prolonged periods of ice on the Illinois River, high water on the Mississippi River System, closures of key waterways as a result of lock maintenance projects, extended delays in the Houston Ship Channel, and increased idle time and voyage costs forshipyard days on several large capacity coastal vessels during the 2019 first and higher depreciation expense, partially offsetfourth quarters.  Operating income for 2018 was impacted by savings from a reduction in force earlierthe Higman transaction costs and severance and retirement costs which were each incurred in the year2018 first quarter and during 2015,are discussed above.  For 2019 and a reduction in the average number of towboats operated. Marine transportation results for 2016 also included $3,792,000 of severance charges in the 2016 first quarter.  For 2016 and 2015,2018, the inland tank barge fleet contributed 67%77% and 68%76%, respectively, and the coastal fleet 33%contributed 23% and 32%24%, respectively, of marine transportation revenues.

InlandTank barge utilization levels in the Company’s inland marine transportation equipment utilization declined tomarkets averaged in the high 80% range at the end of 2016, occasionally declining to the low-to-mid 80%mid-90% range during the year,2019 first and second quarters and the low 90% range during the 2019 third quarter and fourth quarters.  For 2018, utilization ranged from the mid-90% range during the first quarter, high 80% to low 90% during the second quarter, and the low to 95%mid-90% range atduring the beginningthird and fourth quarters.  Strong demand from petrochemicals, black oil, refined petroleum products and agricultural chemicals customers, along with extensive delay days due to poor operating conditions which slowed the transport of 2016customer cargoes, contributed to increased utilization during the 2019 first and throughout 2015.  second quarters.  Better weather during the 2019 third quarter and receding flood waters on the Mississippi River System resulted in fewer delay days and contributed to modestly lower utilization during the 2019 third quarter. In the 2019 fourth quarter, weather conditions seasonally deteriorated, however, reduced refinery and chemical plant utilization for many of the Company’s major customers resulted in tank barge utilization remaining in the low 90% range for the quarter.

Coastal tank barge utilization levels also declined throughout 2016,averaged in the low 80% range during the 2019 first quarter and the mid-80% range during the 2019 second, third and fourth quarters.  In 2018, utilization improved from the high 80% to low 90%70% range induring the 2018 first quarter to the low 80% levelrange by end of 2018. The improvement in utilization in 2019 and throughout 2018 primarily reflected improved customer demand resulting in higher utilization of spot market capacity.  Utilization in the fourth quarter.  Coastal utilization levels were generallycoastal marine fleet continued to be impacted by the oversupply of smaller tank barges in the 90% to 95% range throughout the majority of 2015.coastal industry.

During the first nine months of 20162019 and all of 2015,2018, approximately 80%65% of the inland marine transportation revenues were under term contracts and 20% were spot contract revenues.  During the 2016 fourth quarter, approximately 75% of inland marine transportation revenues were under term contracts and 25%35% were spot contract revenues.  These allocations provide the operations with a more predictable revenue stream. Inland time charters, which insulate the Company from revenue fluctuations caused by weather and navigational delays and temporary market declines, represented 52%62% of the inland revenues under term contracts during 20162019 compared with 55%59% during 2015.2018. Rates on inland term contracts renewed in 2016 decreasedthe 2019 first quarter increased in the 5%4% to 9%6% average range compared with term contracts renewed in 2015.the 2018 first quarter. Rates on inland term contracts renewed in the 2019 second quarter increased in the 5% to 8% average range compared with term contracts renewed in the 2018 second quarter. Rates on inland term contracts renewed in the 2019 third quarter increased in the 3% to 4% average range compared with term contracts renewed in the 2018 third quarter. Rates on inland term contracts renewed in the 2019 fourth quarter increased in the 2% to 4% average range compared with term contracts renewed in the 2018 fourth quarter.  Spot contract rates, which include the cost of fuel, were relatively flatincreased approximately 20% in the 20162019 first quarter when compared with the 20152018 first quarter.  In both the 2019 second and third quarters, spot contract rates increased approximately 15% compared to the 2018 second and third quarters.  In the 2019 fourth quarter, and at or below termspot contract pricing duringrates increased approximately 5% compared with the balance of 2016.2018 fourth quarter.  Effective January 1, 2016,2019, annual escalators for labor and the producer price index on a number of inland multi-year contracts resulted in rate increases on those contracts of approximately 1.5%1.7%, excluding fuel.

During 20162019 and the 2015 third and fourth quarters,2018, approximately 80% of the coastal marine transportation revenues were under term contracts and 20% were spot contract revenues. During the 2015 first and second quarters, approximately 85% of the coastal marine transportation revenues were under term contracts and 15% were spot contract revenues.  The decrease in term contract revenues in 2016 and the 2015 third and fourth quarters reflected the continued trend of non-renewal of certain term contracts which put increased equipment in the spot contract market, leading to increased idle time.  However, the coastal revenues reflected the new 185,000 barrel ATB placed in service in the 2015 fourth quarter under a long-term contract. The second new 185,000 barrel ATB was placed in service in June 2016, also under a long-term contract.  Coastal time charters which insulate the Company from revenue fluctuations caused by weather and navigational delays and temporary market declines, represented approximately 85% of the coastal revenues under term contracts during 2019 and 2018.  Spot and term contract pricing in 2016 asthe coastal market are contingent on various factors including geographic location, vessel capacity, vessel type and product serviced.  Rates on coastal term contract renewed in each of the 2019 first, second, and third quarters increased in the 4% to 6% average range compared to 90%with term contracts renewed in 2015.the 2018 first, second, and third quarters.  Rates on coastal term contracts renewed in 2016 were essentially flat whenthe 2019 fourth quarter increased in the 5% to 15% average range compared with term contracts renewed in 2015.the 2018 fourth quarter.  Spot contract rates remained above termin both the 2019 first and second quarters increased in the 10% to 15% average range compared to the 2018 first and second quarters.  In the 2019 third quarter, spot contract rates duringincreased approximately 20% compared to the 2016 first2018 third quarter.  In the 2019 fourth quarter, fluctuated around termspot contract rates duringincreased approximately 10% compared to the 2016 second quarter and fell below term contract rates during the 2016 third and2018 fourth quarters.quarter.

The 20162019 marine transportation operating margin was 17.5%13.6% compared with 22.5%9.9% for 2015. The results primarily reflected lower inland marine transportation term2018.

During 2016,2019, the diesel enginedistribution and services segment generated 17%44% of the Company’s revenues, of which 61%75% was generated from overhaulsservice and service, 38% from direct parts sales and 1%25% from manufacturing. The results of the diesel enginedistribution and services segment are largely influenced by the economic cycles of the marine and power generation markets and the land-based oilfield service and oil and gas operator and producer markets, marine, power generation, on-highway and other industrial markets.

The diesel enginedistribution and services operating margin for 20162019 was 1.1%5.4% compared with 3.9%8.7% for 2015. The operating margin for 2016 reflected continued weakness in the land-based market, the Gulf of Mexico marine oilfield services market and customer deferrals of major maintenance projects throughout the marine diesel engine services market.2018.

The Company continued to generate favorable operating cash flow during 20162019 with net cash provided by operating activities of $414,038,000$511,813,000 compared with $521,305,000$346,999,000 of net cash provided by operating activities for 2015.2018, a 47% increase. The 21% decreaseimprovement was primarily from a $85,166,000 decreasedriven by increased revenues and operating income in net earnings,the marine transportation segment driven by the Higman acquisition in February 2018, the Targa acquisition in May 2018, the CGBM acquisition in December 2018, and the Cenac acquisition in March 2019, as well as improved coastal barge utilization and improved inland and coastal pricing. The improvement was also due to a net decrease of $12,452,000increase in cash flows from changesthe change in operating assets and liabilities of $153,953,000, primarily due to a $11,459,000 decrease in inventories reflecting reduced business activity levels in the provision for deferred income taxesdistribution and a $2,257,000services segment in 2019 compared to an increase in 2018. The inventory decrease in 2019 was primarily due to reduced business activity levels in the amortization of major maintenance costs, partially offset by a $8,677,000 increaseoil and gas market as compared to higher inventory levels in depreciation and amortization expense.2018 required to support higher business activity levels. In addition, during the 20162019 and 2015,2018, the Company generated cash of $321,000$57,657,000 and $3,712,000,$53,392,000, respectively, from proceeds from the disposition of assets, and $5,743,000 and $13,264,000, respectively, from proceeds from the exercise of stock options and $18,617,000 and $24,429,000, respectively,options.

For 2016,2019, cash generated and borrowings under the Company’s revolving credit facilityRevolving Credit Facility were used for capital expenditures of $231,066,000,$248,164,000, including $10,676,000$22,008,000 for inland tank barge and towboat construction, $14,884,000 in final costs for the construction of two 185,000 barrel coastal ATBs, one placed in service in late 2015 and the second in June 2016, $74,689,000$18,433,000 for progress payments on the construction of two 155,000 barrel coastal ATBs, one placed in service in November 2016 and the second scheduled to be placed in service in the summer of 2017, $10,098,000 for progress payments on the construction of two 4900 horsepower coastal tugboats, $6,593,000 for progress payments on the construction of a 35,000 barrel coastal petrochemical tank barge placed in service in December 2016, $18,000 for progress payments on sixthree 5000 horsepower coastal ATB tugboats, $114,108,000$2,294,000 for final costs on a 155,000 barrel coastal ATB under construction purchased from another operator that was delivered to the Company in the 2018 fourth quarter, and $205,429,000 primarily for upgrading existing marine equipment and marine transportation and diesel enginedistribution and services facilities, and $137,072,000facilities. The Company also used $262,491,000 for acquisitions of businesses and marine equipment.  Cash generated and borrowings under the Company’s revolving credit facility in 2016 were also used for the repurchase of 35,000 shares of the Company’s common stock for $1,827,000 and the acquisitions of noncontrolling interests for $8,438,000.

The Company’s debt-to-capitalization ratio decreased to 23.1%28.9% at December 31, 20162019 from 25.4%30.5% at December 31, 2015. The decrease was2018, primarily due to a decrease of $52,047,000 in outstanding debt and the increase in total equity from net earnings attributable to Kirby for 20162019 of $141,406,000 and$142,347,000, the exercise of stock options, the amortization of unearned equity compensation, partially offset by the acquisitions of noncontrolling interests of $8,460,000 and treasury stock purchases of $1,827,000.reduced borrowings. As of December 31, 2016,2019, the Company had $225,986,000no borrowings outstanding under its revolving credit facilityRevolving Credit Facility, $375,000,000 outstanding under the Term Loan, $500,000,000 of Senior Notes Series A and Series B, and $500,000,000 of senior notes outstanding.under the 2028 Notes (each debt agreement as defined under “Long-Term Financing” below) outstanding, offset by $7,899,000 in unamortized debt discount and issuance costs (of which $2,650,000 attributable to the Revolving Credit Facility is included in other assets on the balance sheet at December 31, 2019).

During 2016,2019, the Company took delivery of five newacquired 63 inland tank barges from Cenac with a total capacity of approximately 141,0001,833,000 barrels, acquired 27retired 17 inland tank barges, from Seacor with a total capacity of approximately 807,000 barrels, transferred one tank barge into the inland fleet from the coastal fleet with a capacity of 31,000 barrels, added one leasedsold six inland tank barge with a capacity of 11,000 barrels, returned six leasedbarges, brought back into service eight inland tank barges, and retired 50chartered two inland tank barges, reducingdecreasing its capacity by approximately 1,038,000271,000 barrels. The net result was a reductionan increase of 2250 inland tank barges and approximately 48,0001,562,000 barrels of capacity during 2016.2019.

The Company projects that capital expenditures for 20172020 will be in the $165,000,000$155,000,000 to $185,000,000$175,000,000 range. The 20172020 construction program will consist of two inland tank barges with a total capacity of 57,000 barrels, one inland towboat,$25,000,000 to $30,000,000 in progress payments on the construction of a 155,000 barrel coastal ATB scheduledsix inland towboats to be placed in service in the summer of 2017, progress payments on the construction of two 4900 horsepower coastal tugboats and six 5000 horsepower coastal ATB tugboats and final costs on the construction of a 35,000 barrel coastal petrochemical tank barge placed in service in December 2016. Based on current commitments, steel prices and projected delivery schedules, the Company’s 2017 payments on new inland tank barges and the towboat will be approximately $3,000,000, 2017 progress payments on the construction of the 155,000 barrel coastal ATB will be approximately $7,000,000, 2017 progress payments on the construction of the two 4900 horsepower coastal tugboats will be approximately $16,000,000, progress payments on the six 5000 horsepower coastal ATB tugboats will be approximately $27,000,000 and final costs on the construction of the 35,000 barrel coastal petrochemical tank barge will be approximately $2,000,000. The balance of approximately2020.  Approximately $110,000,000 to $130,000,000$120,000,000 is primarily capital upgrades and improvements to existing marine equipment and marine transportationfacilities. The balance of $20,000,000 to $25,000,000 will be for new machinery and diesel engineequipment, facilities improvements and information technology projects in the distribution and services facilities.segment and corporate.

Reduced crude oil volumes to be moved by tank barge due to additional pipelines, coupled with the large number of tank barges built during the last several years, many of which were for the movement of crude oil and natural gas condensate, has resulted in excess industry-wide tank barge capacity and lower equipment utilization for both the inland and coastal marine transportation markets. This extra capacity has placed inland and coastal tank barge rates under some pressure. As a result, the inland market for 2017 will be impacted by the pricing declines experienced throughout 2016.  However, with anticipated utilization in the mid 80% to low 90% levels for 2017, the industry could achieve a supply and demand balance during 2017, leading to modestly improving pricing in the second half of the year.  In addition, future inland tank barge demand for petrochemical and refined petroleum products volumes from increased production from current facilities, plant expansions or the opening of new facilities should benefit the inland marine transportation markets.

As of December 31, 2016,2019, the Company estimated there were approximately 3,850 inland tank barges in the industry fleet, of which approximately 600350 were over 30 years old and approximately 270240 of those over 40 years old. Given the age profile of the industry inland tank barge fleet and current market conditions, the expectation is that many older tank barges will be removed from service during 2017. The Company estimates that approximately 100130 tank barges were ordered during 2015 and 20162019 for delivery throughout 2016, of which five were for the Company, significantly less than the 260 new inland tank barges placed in service during 2015, 36 of which were for the Company.  The Company estimates that approximately 40 tank barges were ordered during 2016 for delivery throughout 2017, two of which are for the Company,2020 and many older tank barges, including an expected 36four by the Company, will be retired, dependent on 20172020 market conditions. Historically, 75 to 150 older inland tank barges are retired from service each year industry-wide, with the extent of the retirements dependent on petrochemical and refinery production levels, and crude oil and natural gas condensate movements, both of which can have a direct effect on industry-wide tank barge utilization, as well as term and spot contract rates.

As of December 31, 2016,2019, the Company estimated there were approximately 295280 tank barges operating in the 195,000 barrel or less coastal industry fleet, the sector of the market in which the Company operates, and approximately 3520 of those were over 3025 years old. In 2014 and 2015, the Company placed orders for the construction of two 185,000 barrel coastal ATBs, one of which was placed in service in late 2015 and the second in June 2016, two 155,000 barrel coastal ATBs, one of which was placed in service in November 2016 and the other scheduled for delivery in the summer of 2017, one 35,000 barrel coastal petrochemical tank barge placed in service in December 2016 and two 4900 horsepower coastal tugboats.  In addition, the Company placed an order in 2016 for the construction of six 5000 horsepower coastal ATB tugboats for delivery in 2017 and 2018. The Company is aware of eight coastal tank barges placed in service in 2016 by competitors and 11two announced coastal tank barge and tugboat units in the 195,000 barrel or less category under construction by competitors for delivery in 20172020 and 2018.2021.

Recent oilfield activity declines and crude oil price volatility have created some uncertainty for the Company is experiencing a healthy reboundCompany’s oil and gas market and are expected to result in service demand, particularly with pressure pumping unit remanufacturing.  The United States land rig count has improved from the lowslower sales of 2016, oil prices have recently traded at a consistent level in the mid-$50 per barrel range, and service intensity in the well completion business has increased.  The condition of the industry’s pressure pumping fleet is poor.  Based on these positive conditions, the Company anticipates that for 2017 the demand for pressure pumping unit remanufacturing will remain strong and that a small number of orders for new pressure pumping equipment, maintenance on existing pressure pumping units, transmission overhauls, and ancillary oilfield service supportparts sales.  Based on current activity levels, orders and deliveries of new pressure pumping equipment willare expected to remain low throughout 2020, and maintenance activities are expected to be received.minimal. Transmission overhauls and parts sales are also expected to decline compared to 2019, but increase relative to 2019 fourth quarter levels as the year progresses. As a result, revenues and operating income for the Company’s oil and gas market are expected to decline in 2020 as compared to 2019.

For the marine diesel enginedistribution and services commercial and industrial market, the Company anticipates continued weaknessrevenues and operating income in the Gulf of Mexico oilfield services market throughout 2017,2020 to be higher compared to 2019 with the other marine markets to remain relatively consistent with 2016. The Company does anticipate some modest benefit from the VPS acquisition madegrowth in on-highway and industrial markets. Activity in the 2016 fourth quarter. The power generation market should remainand the commercial marine markets are expected to be stable benefiting from engine-generator set upgrades and parts sales for both domestic and international customers.in 2020.

The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company evaluates its estimates and assumptions on an ongoing basis based on a combination of historical information and various other assumptions that are believed to be reasonable under the particular circumstances. Actual results may differ from these estimates based on different assumptions or conditions. The Company believes the critical accounting policies that most impact the consolidated financial statements are described below. It is also suggested that the Company’s significant accounting policies, as described in the Company’s financial statements in Note 1, Summary of Significant Accounting Policies, be read in conjunction with this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Accounts Receivable. The Company extends credit to its customers in the normal course of business. The Company regularly reviews its accounts and estimates the amount of uncollectible receivables each period and establishes an allowance for uncollectible amounts. The amount of the allowance is based on the age of unpaid amounts, information about the current financial strength of customers, and other relevant information. Estimates of uncollectible amounts are revised each period, and changes are recorded in the period they become known. Historically, credit risk with respect to these trade receivables has generally been considered minimal because of the financial strength of the Company’s customers; however, a United States or global recession or other adverse economic condition could impact the collectability of certain customers’ trade receivables which could have a material effect on the Company’s results of operations.

Property, Maintenance and Repairs. Property is recorded at cost. Improvements and betterments are capitalized as incurred. Depreciation is recorded on the straight-line method over the estimated useful lives of the individual assets. When property items are retired, sold or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts with any gain or loss on the disposition included in the statement of earnings. Maintenance and repairs on vessels built for use on the inland waterways are charged to operating expense as incurred and includes the costs incurred in USCG inspections unless the shipyard extends the life or improves the operating capacity of the vessel which results in the costs being capitalized. The Company’s ocean-going vessels are subject to regulatory drydocking requirements after certain periods of time to be inspected, have planned major maintenance performed and be recertified by the ABS. These recertifications generally occur twice in a five year period. The Company defers the drydocking expenditures incurred on its ocean-going vessels due to regulatory marine inspections by the ABS and amortizes the costs of the shipyard over the period between drydockings, generally 30 or 60 months, depending on the type of major maintenance performed. Drydocking expenditures that extend the life or improve the operating capability of the vessel result in the costs being capitalized. Routine repairs and maintenance on ocean-going vessels are expensed as incurred. Interest is capitalized on the construction of new ocean-going vessels.

The Company reviews long-lived assets for impairment by vessel class whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Recoverability of the assets is measured by a comparison of the carrying amount of the assets to future net cash expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. There are many assumptions and estimates underlying the determination of an impairment event or loss, if any. The assumptions and estimates include, but are not limited to, estimated fair market value of the assets and estimated future cash flows expected to be generated by these assets, which are based on additional assumptions such as asset utilization, length of service the asset will be used, and estimated salvage values. Although the Company believes its assumptions and estimates are reasonable, deviations from the assumptions and estimates could produce a materially different result.

Goodwill. The excess of the purchase price over the fair value of identifiable net assets acquired in transactions accounted for as a purchase is included in goodwill. Management monitors the recoverability of goodwill on an annual basis, or whenever events or circumstances indicate that interim impairment testing is necessary. The amount of goodwill impairment, if any, is typically measured based on projected discounted future operating cash flows using an appropriate discount rate. The assessment of the recoverability of goodwill will be impacted if estimated future operating cash flows are not achieved. There are many assumptions and estimates underlying the determination of an impairment event or loss, if any. Although the Company believes its assumptions and estimates are reasonable, deviations from the assumptions and estimates could produce a materially different result.

Accrued Insurance. The Company is subject to property damage and casualty risks associated with operating vessels carrying large volumes of bulk liquid and dry cargo in a marine environment. The Company maintains insurance coverage against these risks subject to a deductible, below which the Company is liable. In addition to expensing claims below the deductible amount as incurred, the Company also maintains a reserve for losses that may have occurred but have not been reported to the Company, or are not yet fully developed. The Company uses historic experience and actuarial analysis by outside consultants to estimate an appropriate level of reserves. If the actual number of claims and magnitude were substantially greater than assumed, the required level of reserves for claims incurred but not reported or fully developed could be materially understated. The Company records receivables from its insurers for incurred claims above the Company’s deductible. If the solvency of the insurers became impaired, there could be an adverse impact on the accrued receivables and the availability of insurance.

On October 11, 2016,January 29, 2020, the Company purchasedsigned a definitive agreement to acquire the inland tank barge fleet of Savage for approximately $278,000,000 in cash, subject to certain closing adjustments.  Savage’s tank barge fleet consists of 90 inland tank barges with approximately 2.5 million barrels of capacity and 46 inland towboats. Savage primarily moves petrochemicals, refined products, and crude oil on the Mississippi River, its tributaries, and the Gulf Intracoastal Waterway. Savage also operates a significant ship bunkering business as well as barge fleeting services along the Gulf Coast. The closing of the acquisition is expected to occur late in the first quarter of 2020 and is subject to customary closing conditions, including regulatory approvals under the Hart-Scott-Rodino Act. The purchase will be financed through additional borrowings.

On January 3, 2020, the Company completed the acquisition of substantially all the assets of VPSConvoy Servicing Company and Agility Fleet Services, LLC (collectively “Convoy”) for $11,440,000approximately $40,000,000 in cash. The assets purchased are mainly related to the EMD engine supplycash, before post-closing adjustments.  Convoy is an authorized dealer for Thermo King refrigeration systems for trucks, railroad cars and repair business of VPSother land transportation markets for North and include an EMD distributor agreement to sell enginesEast Texas as well as in nine western states.Colorado. Financing of the acquisition was through borrowings under the Company’s revolving credit facility.Revolving Credit Facility.

On June 30, 2016,During the year ended December 31, 2019, the Company purchased, from various counterparties, a barge fleeting operation in Lake Charles, Louisiana and nine inland tank barges from leasing companies for an 80,000 barrel coastal tank barge from TD Equipment Finance, Inc. (“TD Equipment”) for $13,682,000aggregate of $17,991,000 in cash. The Company had been leasing the barge from TD Equipmentbarges prior to the purchases. Financing of these acquisitions was through borrowings under the Company’s Revolving Credit Facility.

On March 14, 2019, the Company completed the acquisition of the marine transportation fleet of Cenac for $244,500,000 in cash. Cenac’s fleet consisted of 63 inland 30,000 barrel tank barges with approximately 1,833,000 barrels of capacity, 34 inland towboats and two offshore tugboats. Cenac transported petrochemicals, refined products and black oil, including crude oil, residual fuels, feedstocks and lubricants on the lower Mississippi River, its tributaries, and the Gulf Intracoastal Waterway for major oil companies and refiners. The average age of the inland tank barges was approximately five years and the inland towboats had an average age of approximately seven years.  Financing of the acquisition was through borrowings under the Company’s Revolving Credit Facility.

On December 28, 2018, the Company purchased three inland tank barges from a leasing company for $3,120,000 in cash.  The Company had been leasing the barges prior to the purchase. Financing of the equipment acquisition was through borrowings under the Company’s revolving credit facility.Revolving Credit Facility.

On June 2, 2016,December 14, 2018, the Company purchased four coastal tugboats27 inland tank barges with a barrel capacity of 306,000 barrels from Crosby Marine Transportation LLCCGBM for $26,450,000$28,500,000 in cash.  The four coastal tugboats have an27 tank barges transport petrochemicals and refined products on the Mississippi River System and the Gulf Intracoastal Waterway.  The average age of 13the barges was eight years.  Financing of the equipment acquisition was through borrowings under the Company’s revolving credit facility.Revolving Credit Facility.

On April 15, 2016,November 30, 2018, the Company purchased an inland towboat from a leasing company for $3,050,000 in cash. The Company had been leasing the towboat prior to the purchase.  Financing of the equipment acquisition was through borrowings under the Company’s Revolving Credit Facility.

On May 10, 2018, the Company completed the purchase of Targa’s inland tank barge business from a subsidiary of Targa for $69,250,000 in cash. Targa’s inland tank barge fleet consisted of Seacor from subsidiaries of Seacor for16 pressure barges with a total valuecapacity of $89,181,000.258,000 barrels, many of which were under multi-year contracts that the Company assumed from Targa. The assets purchased consisted of 27 inland 30,000 barrel16 tank barges and 14 inland towboats. The purchase price was comprised of $85,500,000 in cash and the transfer to Seacor of a Florida-based ship docking tugboat with a value of $3,681,000.  The average age of the 27 inland tank barges was ten years. Seacor, through its subsidiary, SCF Waxler Marine LLC, transported refined petroleum products,transport petrochemicals and black oil on the Mississippi River System and the Gulf Intracoastal Waterway.  Financing of the business acquisition was through borrowings under the Company’s Revolving Credit Facility.

On February 14, 2018, the Company completed the acquisition of Higman for $421,922,000 in cash. Higman’s fleet consisted of 163 inland tank barges with 4.8 million barrels of capacity, and 75 inland towboats, transporting petrochemicals, black oil, including crude oil and natural gas condensate, and refined petroleum products on the Mississippi River System and the Gulf Intracoastal Waterway. The average age of the inland tank barges was approximately seven years and the inland towboats had an average age of approximately eight years. Financing of the acquisition was through the issuance of the 2028 Notes. The 2028 Notes were issued on February 12, 2018 in preparation for closing of the acquisition.

On October 20, 2017, San Jac, a subsidiary of the Company, purchased certain assets of Sneed Shipbuilding, Inc. for $14,852,000 in cash including its Channelview, Texas shipyard. San Jac is a builder of marine vessels for both inland and offshore applications and a provider of repair and maintenance services. The Company intends to build towboats at the shipyard and use the facilities for routine maintenance. Financing of the acquisition was through borrowings under the Company’s revolving credit facility.Revolving Credit Facility.

The Company reported 20162019 net earnings attributable to Kirby of $141,406,000,$142,347,000, or $2.62$2.37 per share, on revenues of $1,770,673,000,$2,838,399,000, compared with 20152018 net earnings attributable to Kirby of $226,684,000,$78,452,000, or $4.11$1.31 per share, on revenues of $2,147,532,000,$2,970,697,000, and 20142017 net earnings attributable to Kirby of $282,006,000,$313,187,000, or $4.93$5.62 per share, on revenues of $2,566,318,000.$2,214,418,000.

Marine transportation revenues for 20162019 were $1,471,893,000,$1,587,082,000, or 83%56% of total revenues, compared with $1,663,090,000,$1,483,143,000, or 77%50% of total revenues for 2015,2018, and $1,770,684,000,$1,324,106,000, or 69%60% of total revenues for 2014. Diesel engine2017. Distribution and services revenues for 20162019 were $298,780,000,$1,251,317,000, or 17%44% of total revenues, compared with $484,442,000,$1,487,554,000, or 23%50% of total revenues for 2015,2018, and $795,634,000,$890,312,000, or 31%40% of total revenues for 2014.2017.

The 2018 fourth quarter included in$85,108,000 before taxes, $67,235,000 after taxes, or $1.12 per share, non-cash impairment of long-lived assets and lease cancellation costs and $2,702,000 before taxes, $2,135,000 after taxes, or $0.04 per share, non-cash impairment of goodwill.  The 2018 second quarter included a one-time non-deductible expense of $18,057,000, or $0.30 per share, related to the 2016retirement of Joseph H. Pyne as executive Chairman of the Board of Directors, effective April 30, 2018. The 2018 first quarter results was $5,605,000included $3,261,000 before taxes, or $.06$0.04 per share, of one-time transaction costs associated with the Higman acquisition, as well as $2,912,000 before taxes, or $0.04 per share, of severance chargesand retirement expenses, primarily related to cost reduction initiatives in the coastal marine transportation market and the integration of Higman.

The 2017 results reflect the acquisition of S&S on September 13, 2017.  The 2017 results were negatively impacted by S&S acquisition related costs of $2,119,000, or $0.02 per share. The 2017 third quarter also included an estimated net $0.03 per share negative impact of Hurricane Harvey, which were reflectedmade landfall along the Texas Gulf Coast in late August 2017, impacting the marine transportation and diesel engine businessesdistribution and corporate staff in order to reduce costs. The 2015 firstservices operations, and third quarters included $1,225,000Hurricane Irma, which disrupted the coastal marine transportation and $702,000, respectively, of severance charges which were mainly reflected indistribution and services operations along the diesel engine services results. Also, the 2015 first quarter results included a gain of $1,621,000 before taxes, or $.02 per share, on the sale of the assets of a small product line in the diesel engine services segment.East Coast.