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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-K
(Mark One)

|X| Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934

For the Fiscal Year Ended December 31, 2002

or

|_| Transition Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934

For the Transition Period from _______ to _______

Commission File Number 1-9063


MARITRANS INC.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)




DELAWARE 51-0343903
------------------------------------------------ ------------------------------------
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification No.)
organization)

TWO HARBOUR PLACE
302 KNIGHTS RUN AVENUE
TAMPA, FLORIDA 33602
--------------------------------------- ----------
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (813) 209-0600
Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class Name of Each Exchange on Which Registered
------------------- -----------------------------------------
Common Stock, Par Value $.01 Per Share New York Stock Exchange


Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such requirements
for the past 90 days. Yes |X| No |_|

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. |_|

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes |X| No |_|

As of June 30, 2002, the last business day of our most recently completed second
fiscal quarter, the aggregate market value of the common stock held by
non-affiliates of the registrant (based on the last sales price on that date)
was $61,922,724.

As of March 5, 2003, Maritrans Inc. had 8,174,897 shares of common stock
outstanding.

Documents Incorporated By Reference

Part III incorporates information by reference from the registrant's Proxy
Statement for Annual Meeting of Stockholders to be held on April 30, 2003.

Exhibit Index is located on page 38.





MARITRANS INC.
TABLE OF CONTENTS


PART I



Item 1. Business.............................................................................................1
Item 2. Properties...........................................................................................8
Item 3. Legal Proceedings....................................................................................8
Item 4. Submission Of Matters To A Vote Of Security Holders..................................................9

PART II
Item 5. Market For The Registrant's Common Equity And Related Stockholder Matters...........................10
Item 6. Selected Financial Data ............................................................................11
Item 7. Management's Discussion And Analysis Of Financial Condition And Results Of Operations...............11
Item 8. Financial Statements & Supplemental Data............................................................19
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure................35

PART III
Item 10. Directors and Executive Officers of the Registrant..................................................35
Item 11 Executive Compensation..............................................................................36
Item 12 Security Ownership of Certain Beneficial Owners and Management......................................36
Item 13 Certain Relationships and Related Transactions......................................................36

PART IV
Item 14. Controls and Procedures.............................................................................36
Item 15. Exhibits, Financial Statement Schedules And Reports On Form 8-K.....................................37
Signatures....................................................................................................40





Special Note Regarding Forward-Looking Statements

Some of the statements under "Business," "Properties," "Legal Proceedings,"
"Market for Registrant's Common Stock and Related Stockholder Matters" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and elsewhere in this Annual Report on Form 10-K (this "10-K")
constitute forward-looking statements under Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, including statements made with respect to present or anticipated
utilization, future revenues and customer relationships, capital expenditures,
future financings, and other statements regarding matters that are not
historical facts and involve predictions. These statements involve known and
unknown risks, uncertainties and other factors that may cause actual results,
levels of activity, growth, performance, earnings per share or achievements to
be materially different from any future results, levels of activity, growth,
performance, earnings per share or achievements expressed in or implied by such
forward-looking statements.

The forward-looking statements included in this 10-K relate to future events
or the Company's future financial performance. In some cases, the reader can
identify forward-looking statements by terminology such as "may," "seem,"
"should," "believe," "future," "potential," "estimate," "offer," "opportunity,"
"quality," "growth," "expect," "intend," "plan," "focus," "through," "strategy,"
"provide," "meet," "allow," "represent," "commitment," "create," "implement,"
"result," "seek," "increase," "establish," "work," "perform," "make,"
"continue," "can," "will," "include," or the negative of such terms or
comparable terminology. These forward-looking statements inherently involve
certain risks and uncertainties, although they are based on the Company's
current plans or assessments that are believed to be reasonable as of the date
of this 10-K. Factors that may cause actual results, goals, targets or
objectives to differ materially from those contemplated, projected, forecast,
estimated, anticipated, planned or budgeted in such forward-looking statements
include, among others, the factors outlined in this 10-K, changes in oil
companies' decisions as to the type and origination point of the crude that it
processes, changes in the amount of imported petroleum products, competition for
marine transportation, domestic and international oil consumption, the
continuation of federal law restricting United States point-to-point maritime
shipping to U.S. vessels (the Jones Act), demand for petroleum products, future
spot market rates, changes in interest rates, the effect of war or terrorists
activities and the general financial, economic, environmental and regulatory
conditions affecting the oil and marine transportation industry in general.
Given such uncertainties, current or prospective investors are cautioned not to
place undue reliance on any such forward-looking statements. These factors may
cause the Company's actual results to differ materially from any forward-looking
statement.

Although the Company believes that the expectations in the forward-looking
statements are reasonable, the Company cannot guarantee future results, levels
of activity, performance, growth, earnings per share or achievements. However,
neither the Company nor any other person assumes responsibility for the accuracy
and completeness of such statements. The Company is under no duty to update any
of the forward-looking statements after the date of this 10-K to conform such
statements to actual results.







PART I

Item 1. BUSINESS

General

Maritrans Inc. and its subsidiaries (the "Company" or the "Registrant"),
together with its predecessor, Maritrans Partners L.P. (the "Partnership"),
herein collectively called "Maritrans," has historically served the petroleum
and petroleum product industry by using tank barges, tugboats and oil tankers to
provide marine transportation services primarily along the East and Gulf Coasts
of the United States.

The Company makes available, free of charge, all filings made with the
Securities and Exchange Commission as soon as reasonably practicable on our
website www.maritrans.com.

Structure

Current. The Registrant is a Delaware corporation whose common stock, par
value $.01 per share ("Common Stock"), is publicly traded. The Registrant
conducts most of its marine transportation business activities through Maritrans
Operating Company L.P. and its managing general partner, Maritrans General
Partner Inc. Both entities are wholly owned subsidiaries of the Registrant.

Historical. Maritrans' predecessor was founded in the 1850's and
incorporated in 1928 under the name Interstate Oil Transport Company. Interstate
Oil Transport Company was one of the first tank barge operators in the United
States with a fleet that increased in size and capacity as United States
consumption of petroleum products increased. On December 31, 1980, the
predecessor operations and tugboat and barge affiliates were acquired by Sonat
Inc. ("Sonat"). On April 14, 1987, the Partnership acquired the tug and barge
business and related assets from Sonat. On March 31, 1993, the limited partners
of the Partnership voted on a proposal to convert the Partnership to a
corporation. The proposal was approved and on April 1, 1993, Maritrans Inc.,
then a newly formed Delaware corporation, succeeded to all assets and
liabilities of the Partnership. The holders of general and limited partnership
interests in Maritrans Partners L.P. and in Maritrans Operating Partners L.P.
were issued shares of Common Stock in exchange for their partnership interest
representing substantially the same percentage equity interest, directly or
indirectly, in the Registrant as they had in the Partnership. Each previously
held Unit of Limited Partnership Interest in the Partnership was exchanged for
one share of Common Stock of the Registrant.

Overview. Since 1987, Maritrans and its predecessors have transported
annually over 178 million barrels of crude oil and refined petroleum products.
The Company operates a fleet of tank barges, tugboats and oil tankers. Its
largest barge has a capacity of approximately 380,000 barrels and its current
operating cargo fleet capacity aggregates approximately 3.6 million barrels.

Demand for the Company's services is dependent primarily upon general demand
for petroleum and petroleum products in the geographic areas served by its
vessels. Management believes that United States petroleum consumption, and
particularly consumption on the Gulf and Atlantic Coasts, is a significant
indicator of demand for the Company's services. Increases in product consumption
generally increase demand for services; conversely, decreases in consumption
generally lessen demand for services.

Management also believes that the level of domestic consumption of imported
refined products is also significant to the Company's business. Imported refined
petroleum products generally can be shipped on foreign-flag vessels directly
into the United States ports for storage, distribution and eventual consumption.
These shipments reduce the need for domestic marine transportation service
providers such as Maritrans to carry products from United States refineries to
such ports.

Marine transportation services are provided for refined petroleum products
("clean oil") from refineries located primarily in Texas, Louisiana and
Mississippi to distribution points along the Gulf and Atlantic Coasts, generally
south of Cape Hatteras, North Carolina and particularly into Florida. Lightering
is a process of off-loading crude oil or petroleum products from deeply laden
inbound tankers into smaller tankers and/or barges. This enables the larger
inbound tanker to navigate draft-restricted rivers and ports to discharge cargo
at a refinery or storage and distribution terminal. The Company's lightering
services are performed in the Delaware Bay area. Maritrans maintains offices and
support personnel in both Tampa, Florida and in the Philadelphia, Pennsylvania
area.



1


In October 2001, the Company repaid $33.0 million of its long-term debt in
advance of its due date. The Company recorded an extraordinary charge of
approximately $2.5 million, net of taxes, or approximately $0.24 per share, in
prepayment penalties and the write-off of unamortized financing costs in the
fourth quarter of 2001as a result of the repayment.

In November 2001, the Company entered into an $85 million credit and
security agreement ("Credit Facility") with Citizens Bank (formerly Mellon Bank,
N.A.) and a syndicate of other financial institutions ("Lenders"). Pursuant to
the terms of the Credit Facility, the Company could borrow up to $45 million of
term loans and up to $40 million under a revolving credit facility. Interest is
variable based on either the LIBOR rate plus an applicable margin (as defined)
or the prime rate. Principal payments on the term loans are required on a
quarterly basis and began in April 2002. The Credit Facility expires in January
2007. The Company has granted first preferred ship mortgages and a first
security interest in some of the Company's vessels and other collateral to the
Lenders as a guarantee of the debt. At December 31, 2002, there was $41.3
million of term loans outstanding under the Credit Facility and $27.5 million
outstanding under the revolving line of credit.


During December 2001, the Company announced a self-tender offer (the
"Offer") to purchase up to 2,000,000 shares of its common stock at a price
between $11.00 and $12.50. On January 18, 2002, the Offer closed, and the
Company subsequently purchased 2,176,296 shares of common stock for a purchase
price of $11.50 per share, or approximately $25.0 million. The purchase price
was funded through borrowings under the Company's Credit Facility.

Sales and Marketing

Maritrans provides marine transportation services primarily to integrated
oil companies, independent oil companies, petroleum trading companies and
petroleum distributors in the southern and eastern United States. The Company
monitors the supply and distribution patterns of its actual and prospective
customers and focuses its efforts on providing services that are responsive to
the current and future needs of these customers.

The Company relies primarily on direct sales efforts. Business is done on
both a term contract basis and a spot market basis. The Company strives to
maintain an appropriate mix of contracted business, based on current market
conditions.

In light of the potential liabilities of oil companies and other shippers of
petroleum products under the Oil Pollution Act of 1990 ("OPA") and analogous
state laws, management believes that some shippers select transporters in larger
measure than in the past on the basis of a demonstrated record of safe
operations. Maritrans believes that the measures it has implemented to promote
higher quality operations and its longstanding commitment to safe transportation
of petroleum products benefit its marketing efforts with these shippers. In July
1998, all of Maritrans' vessels received ISM (International Safety Management)
certification, which is an international requirement for all tankers. Maritrans
voluntarily undertook tug and barge certification as well. Maritrans continues
to maintain these certifications.

In 2002, approximately 90 percent of the Company's revenues were generated
from 10 customers. Contracts with ChevronTexaco, Sunoco Inc. and Marathon
Ashland Petroleum accounted for approximately 18 percent, 17 percent, and 15
percent, respectively, of the Company's revenue. During 2002, contracts were
renewed with some of the Company's' larger customers. The Company's current
portfolio of contracts includes some with terms that extend through 2005. There
could be a material effect on Maritrans if any of these customers were to cancel
or terminate their various agreements with the Company. However, management
believes that cancellation or termination by any of its larger customers is
unlikely.

Competition and Competitive Factors

Overview. The maritime petroleum transportation industry is highly
competitive. The Jones Act, a federal law, restricts United States
point-to-point maritime shipping to vessels built in the United States, owned by
U.S. citizens and manned by U.S. crews. In Maritrans' market areas, its primary
direct competitors are the operators of U.S. flag oceangoing barges and U.S.
flag tankers. In the Southern clean-oil market, management believes the primary
competitors are the fleets of other independent petroleum transporters and
integrated oil companies. In the lightering operations, Maritrans competes with
foreign-flag operators which lighter offshore. Additionally, in certain


2


geographic areas and in certain business activities, Maritrans competes with the
operators of petroleum product pipelines. Competitive factors that also affect
Maritrans include the output of United States refineries and the importation of
refined petroleum products.

U.S. Flag Barges and Tankers. Maritrans' most direct competitors are the
other operators of U.S. flag oceangoing barges and tankers. Because of the
restrictions imposed by the Jones Act, a finite number of vessels are currently
eligible to engage in U.S. maritime petroleum transport. The Company believes
that more Jones-Act eligible tonnage is being retired due to OPA than is being
added as replacement double-hull tonnage and that this trend is reducing, but
not eliminating, what has historically been an over-supply of capacity.
Competition in the industry is based upon vessel availability, price and service
and is intense.

A significant portion of the Company's revenues in 2002 was generated in the
coastal transportation of petroleum products from refineries or pipeline
terminals in the Gulf of Mexico to ports that are not served by pipelines.
Maritrans currently operates nine barges and three oil tankers in this market.
The Company can generally provide flexibility in meeting customers' needs as a
result of the relatively large size and composition of the Company's fleet.

General Agreement on Trade in Services ("GATS") and North American Free
Trade Agreement ("NAFTA"). Cabotage is vessel trade or marine transportation
between two points within the same country. Currently cabotage is not included
in the GATS and the NAFTA, although the possibility exists that cabotage could
be included in the GATS, NAFTA or other international trade agreements in the
future. If maritime services are deemed to include cabotage and are included in
any multi-national trade agreements in the future, management believes the
result will be to open the Jones Act trade (i.e., transportation of maritime
cargo between U.S. ports in which Maritrans and other U.S. vessel owners
operate) to foreign-flag vessels. These vessels would operate at significantly
lower costs. This could have a material adverse effect on the Company. Maritrans
and the U.S. maritime industry will continue to resist the inclusion of cabotage
in the GATS, NAFTA and any other international trade agreements.

Refined Product Pipelines. Existing refined product pipelines generally are
the lowest incremental cost method for the long-haul movement of petroleum and
refined petroleum products. Other than the Colonial Pipeline system, which
originates in Texas and terminates at New York Harbor, the Plantation Pipeline,
which originates in Louisiana and terminates in Washington D.C., and smaller
regional pipelines between Philadelphia and New York, there are no pipelines
carrying refined petroleum products to the major storage and distribution
facilities currently served by Maritrans. Management believes that high capital
costs, tariff regulation and environmental considerations make it unlikely that
a new refined product pipeline system will be built in its market areas in the
near future. It is possible, however, that new pipeline segments (including
pipeline segments that connect with existing pipeline systems) could be built or
that existing pipelines could be converted to carry refined petroleum products.
Either of these occurrences could have an adverse effect on Maritrans' ability
to compete in particular locations.

Imported Refined Petroleum Products. A significant factor affecting the
level of Maritrans' business operations is the level of refined petroleum
product imports. Imported refined petroleum products may be transported on
foreign-flag vessels, which are generally less costly to operate than U.S. flag
vessels. To the extent that there is an increase in the importation of refined
petroleum products to any of the markets served by the Company, there could be a
decrease in the demand for the transportation of refined products from United
States refineries, which would likely have an adverse impact upon Maritrans.

Delaware River Channel Deepening. Legislation approved by the United States
Congress in 1992 authorizes the U.S. Army Corps of Engineers (the "ACOE") to
deepen the channel of the Delaware River between the river's mouth and
Philadelphia from forty to forty-five feet (the "Project"). If this Project
becomes fully funded at the federal and state levels and fully constructed
(including access dredging by private refineries), it would reduce the quantity
of lightering performed by Maritrans in the Delaware Bay. The Company's
lightering business primarily occurs at the mouth of the Delaware Bay with
transportation up the Delaware River to the Delaware Valley refineries. The
deepening of the channel would allow arriving ships to proceed up the river with
larger loads. The reduction of lightering resulting from a completed channel
deepening project may have a material adverse effect on Maritrans' lightering
business. However, the effect of the Project on the Company's business overall
is uncertain. Once initiated, the Project will take at least five years to
complete, and options at that time to reduce the impact of lightering volume
reduction may include rate adjustments or vessel re-deployments that offset the
effect of lightering reduction.


3


At this time, it is uncertain whether this Project will actually be
undertaken. In June 2002, the General Accounting Office issued a review of the
ACOE's economic justification for the project, and concluded that the ACOE's
analysis was fundamentally flawed and failed to provide reliable support for
undertaking the Project. In response, the ACOE suspended work on the Project and
performed an economic "re-analysis," in which the ACOE again concluded that the
Project was economically justified. However, management believes that the
re-analysis also contains fundamental material errors that again demonstrate the
absence of an economic basis for proceeding with the Project. Members of
Congress have again asked the General Accounting Office to review the latest
ACOE's effort. Further, the States of New Jersey and Delaware are reconsidering
whether they will contribute necessary non-federal funding for the Project.
Management is closely monitoring developments regarding the Project, but does
not foresee an immediate impact on its business.

Employees and Employee Relations

At December 31, 2002, Maritrans and its subsidiaries had a total of 396
employees. Of these employees, 60 are employed at the Tampa, Florida
headquarters of the Company or at the Philadelphia area office, 216 are seagoing
employees who work aboard the tugs and barges and 120 are seagoing employees who
work aboard the tankers. Maritrans and its predecessors have had collective
bargaining agreements with the Seafarers' International Union of North America,
Atlantic, Gulf and Inland District, AFL-CIO ("SIU"), and with the American
Maritime Officers ("AMO"), formerly District 2 Marine Engineers Beneficial
Association, Associated Maritime Officers, AFL-CIO, for over 40 years.
Approximately 40 percent of the total number of seagoing employees employed by
the Company are supervisors. These supervisors are covered by an agreement with
the AMO limited to a provision for benefits. The collective bargaining agreement
with the SIU covers approximately 163 employees consisting of seagoing
non-supervisory personnel on the tug/barge units and on the tankers. The
tug/barge supplement of the agreement expires on May 31, 2005. The tankers
supplement of the agreement expires on May 31, 2006. The collective bargaining
agreement with the AMO covers approximately 40 non-supervisory seagoing
employees and expires on October 8, 2007. Shore-based employees are not covered
by any collective bargaining agreements.

Management believes that the seagoing supervisory and non-supervisory
personnel contribute significantly to responsive customer service. Maritrans
maintains a policy of seeking to promote from within, where possible, and
generally seeks to draw from its marine personnel to fill supervisory and other
management positions as vacancies occur. Management believes that its
operational audit program (performed by Tidewater School of Navigation, Inc.),
Safety Management System and training programs are essential to insure that its'
employees are knowledgeable and highly skilled in the performance of their
duties as well as in their preparedness for any unforeseen emergency situations
that may arise. Consequently, various training sessions and additional skill
improvement seminars are held throughout the year.

Regulation

Marine Transportation -- General. The Interstate Commerce Act exempts from
economic regulation the water transportation of petroleum cargoes in bulk.
Accordingly, Maritrans' transportation rates, which are negotiated with its
customers, are not subject to special rate regulation under the provisions of
such act or otherwise. The operation of tank ships, tugboats and barges is
subject to regulation under various federal laws and international conventions,
as interpreted and implemented primarily by the United States Coast Guard, as
well as certain state and local laws. Tank ships, tugboats and barges are
required to meet construction and repair standards established by the American
Bureau of Shipping, a private organization, and/or the United States Coast Guard
and to meet operational and safety standards presently established by the United
States Coast Guard. Maritrans' seagoing supervisory personnel are licensed by
the United States Coast Guard. Seamen and tankermen are certificated by the
United States Coast Guard.

Jones Act. The Jones Act is a federal law that restricts maritime
transportation between United States points to vessels built and registered in
the United States and owned and manned by United States citizens. Since the
Company engages in maritime transportation between United States points, it is
subject to the provisions of the law. As a result, the Company is responsible
for monitoring the ownership of its subsidiaries that engage in maritime
transportation and for taking any remedial action necessary to insure that no
violation of the Jones Act ownership restrictions occurs. The Jones Act also
requires that all United States flag vessels be manned by United States
citizens. Foreign-flag seamen generally receive lower wages and benefits than
those received by United States citizen seamen. Foreign-flag vessels are
generally exempt from U.S. legal requirements and from U.S. taxes. As a result,
U.S. vessel operators incur significantly higher labor and operating costs
compared to foreign-flag vessel operators. Certain foreign governments subsidize


4


those nations' shipyards. This results in lower shipyard costs both for new
vessels and repairs than those paid by United States-flag vessel owners, such as
Maritrans, to United States shipyards. Finally, the United States Coast Guard
and American Bureau of Shipping maintain the most stringent regime of vessel
inspection in the world, which tends to result in higher regulatory compliance
costs for United States-flag operators than for owners of vessels registered
under foreign flags of convenience. Because Maritrans transports petroleum and
petroleum products between United States ports, most of its business depends
upon the Jones Act remaining in effect. There have been various unsuccessful
attempts in the past by foreign governments and companies to gain access to the
Jones Act trade, as well as by interests within the United States to modify,
limit or do away with the Jones Act. The Maritime Cabotage Task Force, a
coalition of ship owners, ship operators, shipyards, maritime unions and
industry trade groups, has opposed these efforts. Recent legislative attempts to
modify the Jones Act have been unsuccessful. Management expects that efforts to
gain access to the Jones Act trade as well as attempts to block the introduction
will continue.

Port Security Act. The Maritime Transportation Security Act of 2002 (the
"MTSA") was signed into law on November 25, 2002. This landmark legislation
establishes a series of complex requirements applicable to a broad array of U.S.
vessels and facilities. The MTSA requires, among other things, U.S. and foreign
port vulnerability assessments; national, area, vessel, and facility security
plans; terrorist incident response requirements; security cards; security teams;
and automatic electronic identification systems. Although the Coast Guard has
yet to issue final rules implementing the requirements, the Company has already
prepared vessel security plans and has undertaken an initial training program to
address the security issues identified in the Act. The Company will incur
additional operating expenses to comply with the Act, but at this time does not
believe such costs will have a material adverse impact on the financial
condition and results of operations of the Company.

Environmental Matters

Maritrans' operations present potential environmental risks, primarily
through the marine transportation of petroleum. Maritrans, as well as its
competitors, is subject to regulation under federal, state and local
environmental laws that have the effect of increasing the costs and potential
liabilities arising out of its operations. The Company is committed to
protecting the environment and complying with applicable environmental laws and
regulations.

The general framework of significant environmental legislation and
regulation affecting Maritrans' operations is described herein. Legislation and
regulation of the marine industry has historically been driven largely in
response to major marine casualties. In the event of future serious marine
industry incidents that occur in U.S. waters resulting in significant Resource
Conservation and Recovery Act oil pollution, it is foreseeable that additional
legislation or regulation could be imposed on marine carriers that could affect
Maritrans' profitability.

Water Pollution Legislation. OPA and other federal statutes, such as the
Clean Water Act and the Refuse Act, create substantial liability exposure for
owners and operators of vessels, oil terminals and pipelines. Under OPA, each
responsible party for a vessel or facility from which oil is discharged will be
jointly, strictly and severally liable for all oil spill containment and
clean-up costs and certain other damages arising from the discharge. These other
damages are defined broadly to include (i) natural resource damage (recoverable
only by government entities), (ii) real and personal property damage, (iii) net
loss of taxes, royalties, rents, fees and other lost revenues (recoverable only
by government entities), (iv) lost profits or impairment of earning capacity due
to property or natural resource damage, and (v) net cost of public services
necessitated by a spill response, such as protection from fire, safety or health
hazards.

The owner or operator of a vessel from which oil is discharged will be
liable under OPA unless it can be demonstrated that the spill was caused solely
by an act of God, an act of war, or the act or omission of a third party
unrelated by contract to the responsible party. Even if the spill is caused
solely by a third party, the owner or operator must pay all removal cost and
damage claims and then seek reimbursement from the third party or the trust fund
established under OPA.

OPA establishes a federal limit of liability for tank vessels of $1,200 per
gross ton. A vessel owner's liability is not limited, however, if the spill
results from a violation of federal safety, construction or operating
regulations. In addition, OPA does not preclude states from adopting their own
liability laws. Numerous states in which Maritrans operates have adopted
legislation imposing unlimited strict liability for vessel owners and operators.


5



OPA also requires all vessels to maintain a certificate of financial
responsibility for oil pollution in an amount equal to the greater of $1,200 per
gross ton per vessel, or $10 million per vessel in conformity with U.S. Coast
Guard regulations. Additional financial responsibility in the amount of $300 per
gross ton is required under U.S. Coast Guard regulations under the Comprehensive
Environmental Response Compensation and Liability Act ("CERCLA"), the federal
Superfund law. Owners of more than one tank vessel, such as Maritrans, however,
are only required to demonstrate financial responsibility in an amount
sufficient to cover the vessel having the greatest maximum liability
(approximately $40 million in Maritrans' case). The Company has acquired such
certificates through filing required financial information with the U.S. Coast
Guard.

The Company presently maintains oil pollution liability insurance in the
amount of $1 billion to cover environmental liabilities. Although liability
exceeding the Company's insurance coverage amount is possible, management
believes that such liability is unlikely and that such insurance is sufficient
to cover foreseeable oil pollution liability arising from operations.

OPA requires all newly constructed petroleum tank vessels engaged in marine
transportation of oil and petroleum products in the U.S. to be double-hulled. It
also gradually phases out the operation of single-hulled tank vessels in U.S.
waters, based on size and age, which includes most of Maritrans' existing
barges. Currently six of the Company's barges and two tankers are equipped with
double-hulls meeting OPA's requirements. Maritrans is in the midst of a barge
rebuild program. Under the program, the Company's single-hull tank barges are
rebuilt to comply with OPA. This rebuilding of the single-hull barges relies
upon a process of computer assisted design and prefabrication. In January 2001,
the Company was granted a patent for this process.

The following table summarizes the vessels the Company has rebuilt as part
of the double-hull rebuild program:




Previous Name New Name Original Build Date OPA Retirement Date Re-Delivery Date
- ------------- ------------- ------------------- ------------------- ----------------

Ocean 192 Maritrans 192 1979 2006 November 1998
Ocean 244 Maritrans 244 1971 2005 December 2000
Ocean Cities Maritrans 252 1972 2005 February 2002
Ocean 250 M254 1970 2005 November 2002
Ocean States TBD 1975 2005 Estimated - 2004


It is the Company's intention to rebuild all of its single-hulled barges
prior to their respective retirement dates. The cost of rebuilding single-hull
barges is approximately $50-100 per barrel compared to estimated costs of
approximately $150-200 per barrel for construction of a completely new
double-hull barge. The total cost of the barge rebuild program is expected to
exceed $200 million of which approximately $63 million has already been
incurred. The OPA 90-mandated retirement dates are significantly in advance of
the useful working life of the barges. Once the vessels are rebuilt, the useful
life is assumed to exceed 20 years from reconstruction. In 2001, the Company
initiated a program to refurbish each married tugboat at the same time its barge
is being double-hulled. In 2001, the Company extensively refurbished the tugboat
that works with the MARITRANS 252 at a cost of approximately $5 million. The
Company also refurbished the tugboat that works with the M254 at a cost of $6
million during the time that the M254 underwent her double-hull rebuilding. The
Company plans to continue the tug refurbishment process during future barge
rebuilds. In November 2002, the Company entered into a contract with a shipyard
to double hull the OCEAN STATES. The OCEAN STATES rebuild is expected to cost
approximately $21 million and will commence no earlier than the third quarter of
2003. The rebuild of the OCEAN STATES will include the insertion of an
additional set of tanks ("midbody") that increases the cargo capacity by
approximately 15 percent. The cost for the midbody is equivalent to new building
costs.

OPA further requires all tank vessel operators to submit detailed vessel
oil spill contingency plans which set forth their capacity to respond to a worst
case spill situation. In certain circumstances involving oil spills from
vessels, OPA and other environmental laws may impose criminal liability upon
vessel and shoreside marine personnel and upon the corporate entity. Liability
can be imposed for negligence without criminal intent, or it may be strictly
applied. The Company believes the laws, in their present form, may negatively
impact efforts to recruit Maritrans seagoing employees. In addition, many of the
states in which the Company does business have enacted laws providing for
strict, unlimited liability for vessel owners in the event of an oil spill.
Certain states have also enacted or are considering legislation or regulations
involving at least some of the following provisions: tank-vessel-free zones,


6



contingency planning, state inspection of vessels, additional operating,
maintenance and safety requirements and state financial responsibility
requirements. However, in March of 2000, the U.S. Supreme Court (the "Court")
decided United States v. Locke, a suit brought by INTERTANKO challenging tanker
regulations imposed by the State of Washington. The Court struck down a number
of state regulations and remanded to the lower courts for further review of
other regulations. The ruling significantly limits the authority of states to
regulate vessels, holding that regulation of maritime commerce is generally a
federal responsibility because of the need for national and international
uniformity.

To the extent not covered by OPA and the Refuse Act, strict liability is
also imposed for discharges of hazardous substances into the navigable waters by
the Clean Water Act and CERCLA.

Since its inception, Maritrans has maintained and cultivated a strong safety
culture and environmental ethic. The following table sets forth Maritrans'
quantifiable cargo oil spill record for the period January 1, 1998 through
December 31, 2002:




Gallons Spilled
No. of No. of Gals. Per Million
Period No. of Gals. Carried Spills Spilled Gals. Carried
------ -------------------- ------ ------------ ----------------
(000) (000)

1/1/1998 -- 12/31/1998 10,987,000 3 .29 .027
1/1/1999 -- 12/31/1999 10,463,000 5 .06 .006
1/1/2000 -- 12/31/2000 7,951,000 1 .008 .001
1/1/2001 -- 12/31/2001 7,705,000 3 .001 .000
1/1/2002 -- 12/31/2002 7,460,000 1 .001 .000



Maritrans believes that its spill ratio compares favorably with the other
independent, coastwise operators in the Jones Act trade.

Hazardous Waste Regulation. In the course of its vessel operations,
Maritrans engages contractors to remove and dispose of waste material, including
tank residue. In the event that any of such waste is deemed "hazardous," as
defined in the Federal Water Pollution Control Act, CERCLA or the Resource
Conservation and Recovery Act, and is disposed of in violation of applicable
law, the Company could be jointly and severally liable with the disposal
contractor for the clean-up costs and any resulting damages. The United States
Environmental Protection Agency ("EPA") previously determined not to classify
most common types of "used oil" as a "hazardous waste," provided that certain
recycling standards are met. Some states in which the Company operates, however,
have classified "used oil" as hazardous. Maritrans has found it increasingly
expensive to manage the wastes generated in its operations.

Air Pollution Regulations. Pursuant to the 1990 amendments to the Clean Air
Act, the EPA and/or states have imposed regulations affecting emissions of
volatile organic compounds ("VOCs") and other air pollutants from tank vessels.
It is likely that the EPA and/or various state environmental agencies will
require that additional air pollution abatement equipment be installed in oil
tankers, tank barges or tugboats, including those owned by Maritrans. In
December 1999, the EPA issued its final rule for emissions standards for marine
diesel engines. The final rule applies emissions standards only to new engines,
beginning with the 2004 model year. The EPA retained the right to revisit the
issue of applying emission standards to rebuilt or remanufactured engines if, in
the agency's opinion, the industry does not take adequate steps to introduce new
emission-reducing technologies. The emission control requirements noted herein
could result in a material expenditure by Maritrans, which could have an adverse
effect on Maritrans' profitability if it is not able to recoup these costs
through increased charter rates.

User Fees and Taxes. The Water Resources Development Act of 1986 permits
local non-federal entities to recover a portion of the costs of new port and
harbor improvements from vessel operators with vessels benefiting from such
improvements. A Harbor Maintenance Tax has been proposed, but not adopted.
Federal legislation has been enacted imposing user fees on vessel operators such
as Maritrans to help fund the U.S. Coast Guard's activities. Federal, state and
local agencies or authorities could also seek to impose additional user fees or
taxes on vessel operators and their vessels. There can be no assurance that
current fees will not materially increase or that additional user fees will not
be imposed in the future. Such fees could have a material adverse effect upon
the financial condition and results of operations of Maritrans.

7



War Risk. In February 2002, insurance carriers reaffirmed that terrorist
attacks would only be covered under the Company's traditional "war risk"
protection and indemnity insurance. The maximum amount of coverage available
under war risk liability insurance is currently $400 million. While the Company
has traditional protection and indemnity insurance in excess of $4 billion and
oil spill insurance of $1 billion, if an incident was deemed to be a terrorist
attack, the maximum coverage would be $400 million per incident plus any hull
value, which could prove to be insufficient. The Company is currently seeking
higher levels of coverage. In addition, the Company carries war risk insurance
on the hull value of the Company's vessels.

Item 2. PROPERTIES

Vessels. The Company's subsidiaries owned, at December 31, 2002, a fleet of
27 vessels, of which 11 are tank barges, 12 are tugboats and 4 are oil tankers.
The following table summarizes the Company's fleet:


Double-Hull
Barges Capacity in Barrels Double-Hull Redelivery Date Married Tugboat Horsepower
------ ------------------- ----------- --------------- --------------- ----------

MARITRANS 400 380,000 YES ** CONSTITUTION 11,000
MARITRANS 300 265,000 YES ** LIBERTY 7,000
M254 250,000 YES 2002 INTREPID 6,000
MARITRANS 252 250,000 YES 2002 NAVIGATOR 6,000
MARITRANS 244 245,000 YES 2000 SEAFARER 6,000
OCEAN 215 210,000 NO FREEDOM 6,000
OCEAN 211 207,000 NO INDEPENDENCE 6,000
OCEAN 210 207,000 NO COLOMBIA 6,000
OCEAN STATES 180,000 NO Est. 2004 HONOUR 6,000
OCEAN 193 178,000 NO VALOUR 6,000
MARITRANS 192 175,000 YES 1998 ENTERPRISE 6,000


Oil Tankers Capacity in Barrels Double-Hull
- ----------- ------------------- -----------
ALLEGIANCE 252,000 NO
PERSEVERANCE 252,000 NO
INTEGRITY 265,000 YES **
DILIGENCE 265,000 YES **


** These vessels were originally built with double-hulls.

The tugboat fleet also includes a 15,000 horsepower class vessel, which is
not currently operating.

Other Real Property. Maritrans is headquartered in Tampa, Florida. In Tampa,
the Company leases office space and four acres of Port Authority land. The
Company also leases office space near Philadelphia, Pennsylvania. In addition,
the Company owns property in Philadelphia not used in its operations, which is
currently for sale.

Item 3. LEGAL PROCEEDINGS

Maritrans is a party to routine, marine-related claims, lawsuits and labor
arbitrations arising in the ordinary course of its business. The claims made in
connection with Maritrans' marine operations are covered by marine insurance,
subject to applicable policy deductibles that are not material as to any type of
insurance coverage. Based on its current knowledge, management believes that
such lawsuits and claims, even if the outcomes were to be adverse, would not
have a material adverse effect on the Company's financial condition.


8


The Company has been sued by approximately 90 individuals alleging
unspecified damages for exposure to asbestos and, in most of these cases, for
exposure to tobacco smoke. Although the Company believes these claims are
without merit, it is impossible at this time to express a definitive opinion on
the final outcome of any such suit. Management believes that any liability would
be adequately covered by applicable insurance and would not have a material
adverse effect.

In 1996, Maritrans filed suit against the United States government under
the Fifth Amendment to the U.S. Constitution for "taking" Maritrans' tank barges
without just compensation. The Fifth Amendment specifically prohibits the United
States government from taking private property for public use without just
compensation. Maritrans asserts that its vessels were taken by Section 4115 of
OPA, which prohibits all existing single-hull tank vessels from operating in
U.S. waters under a retirement schedule that began January 1, 1995, and ends on
January 1, 2015. This OPA provision will force Maritrans to remove its
single-hull barges from service commencing on January 1, 2005 or rebuild them,
thus depriving the Company of their continued use for a significant portion of
their remaining economic lives. In December 2001, the United States Court of
Federal Claims ruled that the OPA double hull requirement did not constitute a
taking of Maritrans' vessels. The Company is currently appealing the decision.
On February 7, 2003, Oral Argument was held before the Court of Appeals for the
Federal Circuit on Maritrans appeal. The Company anticipates receiving a
decision in 2003.

The Company is engaged in litigation instituted by a competitor to
challenge its double-hull patent. Penn Maritime, Inc. v. Maritrans Inc., was
filed in the U.S. District Court for the Eastern District of New York on
September 6, 2001. The Plaintiff is seeking damages of $3 million and an
injunction restraining Maritrans from enforcing its patent, which if awarded,
would have a material adverse effect on the Company. However, management
believes the suit to be without merit. Maritrans is challenging the jurisdiction
of the Court to hear the matter in New York and upon resolution of the
jurisdictional issue, intends to seek affirmative damages from Penn Maritime,
Inc. for infringement of its patent as well as other claims arising from the
conduct of Penn Maritime, Inc.'s double hull program.

In December 1999, Maritrans sold 18 vessels from its Northeast fleet to
K-Sea Transportation. The purchaser alleged that Maritrans breached warranties
in the contract of sale pertaining to one of the vessels and initiated binding
arbitration to recover damages arising from the alleged breach. The purchaser
claimed damages of approximately $1.5 million. On January 24, 2002, the
arbitrators concluded that the Company had technically, if inadvertently,
breached a warranty, but also concluded that much of K-Sea's claim was not
attributable to Maritrans. The arbitrator deemed that K-Sea was two-thirds at
fault for its damages and Maritrans one-third. The Company was ordered to pay
$334,546, including pre-judgment interest to K-Sea Transportation. The award is
not subject to appeal.


Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of the Registrant's security holders,
through the solicitation of proxies or otherwise, during the last quarter of the
year ended December 31, 2002.


9



PART II

Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

Market Information and Holders
------------------------------

Maritrans Inc. Common Shares trade on the New York Stock Exchange under the
symbol "TUG." The following table sets forth, for the periods indicated, the
high and low sales prices per share as reported by the New York Stock Exchange.

QUARTERS ENDED IN 2002: HIGH LOW
- ----------------------- ---- ---
March 31, 2002 $14.00 $10.95
June 30, 2002 $15.70 $13.01
September 30, 2002 $13.86 $10.65
December 31, 2002 $13.50 $10.75


QUARTERS ENDED IN 2001: HIGH LOW
- ----------------------- ---- ---
March 31, 2001 $9.10 $8.25
June 30, 2001 $10.05 $8.30
September 30, 2001 $9.70 $8.70
December 31, 2001 $12.00 $8.51

As of March 5, 2003, the Registrant had 8,174,897 Common Shares outstanding
and approximately 658 stockholders of record.

Dividends
---------

For the years ended December 31, 2002 and 2001, Maritrans Inc. paid the
following cash dividends to stockholders:

PAYMENTS IN 2002: PER SHARE
----------------- ---------
March 6, 2002 $ .10
June 5, 2002 $ .10
September 4, 2002 $ .11
December 4, 2002 $ .11
-----
Total $ .42
=====

PAYMENTS IN 2001: PER SHARE
----------------- ---------
March 7, 2001 $ .10
June 6, 2001 $ .10
September 5, 2001 $ .10
December 5, 2001 $ .10
-----
Total $ .40
=====

The dividend policy is determined at the discretion of the Board of
Directors of Maritrans Inc. While dividends have been made quarterly in each of
the last two years, there can be no assurance that the dividend will continue.

10




Item 6. SELECTED FINANCIAL DATA



MARITRANS INC.
---------------------------------------------------------------
January 1 to December 31,
($000, except per share amounts)
CONSOLIDATED INCOME STATEMENT DATA:
2002 2001 2000 1999 1998
---- ---- ---- ---- ----

Revenues (a) ....................................... $128,987 $123,410 $123,715 $151,667 $151,839
Operating income before depreciation and
amortization ..................................... 35,741 35,770 28,288 28,092 30,407
Depreciation and amortization ...................... 19,137 17,958 17,254 20,279 19,578
Operating income ................................... 16,604 17,812 11,034 7,813 10,829
Interest expense ................................... 2,600 4,437 6,401 6,778 6,945
Income before income taxes and extraordinary item .. 15,222 16,308 8,113 21,151 4,986
Income tax provision ............................... 5,708 6,115 3,101 9,095 1,870
Extraordinary item, net of taxes (b) ............... -- 2,501 -- -- --
Net income ......................................... $ 9,514 $ 7,692 $ 5,012 $ 12,056 $ 3,116
Basic earnings per share ........................... $ 1.18 $ 0.77 $ 0.46 $ 1.03 $ 0.26
Diluted earnings per share ......................... $ 1.10 $ 0.72 $ 0.45 $ 1.02 $ 0.26
Cash dividends per share ........................... $ 0.42 $ 0.40 $ 0.40 $ 0.40 $ 0.37

CONSOLIDATED BALANCE SHEET DATA (at period end):

Total assets ........................................ $211,557 $200,427 $247,579 $251,021 $254,906
Long-term debt ...................................... $ 63,000 $ 32,250 $ 67,988 $ 75,861 $ 83,400
Stockholders' equity ................................ $ 69,387 $ 88,064 $ 90,446 $ 94,697 $ 89,815

- ------------

(a) The decrease in revenue in 2000 resulted from the sale of vessels and
petroleum storage terminals, which occurred in 1999.

(b) The extraordinary item resulted from the early extinguishment of debt and is
discussed in Note 8 of the consolidated financial statements.


Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The following is a discussion of the consolidated financial condition and
results of operations of the Company.

Some of the statements under this section entitled "Management's Discussion
and Analysis of Financial Condition and Results of Operations" constitute
forward-looking statements under Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended,
including statements made with respect to present or anticipated utilization,
future revenues and customer relationships, capital expenditures, future
financings, and other statements regarding matters that are not historical facts
and involve predictions. These statements involve known and unknown risks,
uncertainties and other factors that may cause actual results, levels of
activity, growth, performance, earnings per share or achievements to be
materially different from any future results, levels of activity, growth,
performance, earnings per share or achievements expressed in or implied by such
forward-looking statements.

The forward-looking statements included in this 10-K relate to future events
or the Company's future financial performance. In some cases, you can identify
forward-looking statements by terminology such as "may," "seem," "should,"
"believe," "future," "potential," "estimate," "offer," "opportunity," "quality,"
"growth," "expect," "intend," "plan," "focus," "through," "strategy," "provide,"


11



"meet," "allow," "represent," "commitment," "create," "implement," "result,"
"seek," "increase," "establish," "work," "perform," "make," "continue," "can,"
"will," "include," or the negative of such terms or comparable terminology.
These forward-looking statements inherently involve certain risks and
uncertainties, although they are based on the Company's current plans or
assessments that are believed to be reasonable as of the date of this 10-K.
Factors that may cause actual results, goals, targets or objectives to differ
materially from those contemplated, projected, forecast, estimated, anticipated,
planned or budgeted in such forward-looking statements include, among others,
the factors outlined in this 10-K, changes in oil companies' decisions as to the
type and origination point of the crude that it processes, changes in the amount
of imported petroleum products, competition for marine transportation, domestic
and international oil consumption, the continuation of federal law restricting
United States point-to-point maritime shipping to U.S. vessels (the Jones Act),
demand for petroleum products, future spot market rates, changes in interest
rates, the effect of war or terrorists activities and the general financial,
economic, environmental and regulatory conditions affecting the oil and marine
transportation industry in general. Given such uncertainties, current or
prospective investors are cautioned not to place undue reliance on any such
forward-looking statements. These factors may cause the Company's actual results
to differ materially from any forward-looking statement.

Although the Company believes that the expectations in the forward-looking
statements are reasonable, the Company cannot guarantee future results, levels
of activity, performance, growth, earnings per share or achievements. However,
neither the Company nor any other person assumes responsibility for the accuracy
and completeness of such statements. The Company is under no duty to update any
of the forward-looking statements after the date of this 10-K to conform such
statements to actual results.

Overview

Maritrans serves the petroleum and petroleum product distribution industry
by using tank barges, tugboats and oil tankers to provide marine transportation
services primarily along the Gulf and Atlantic coasts of the United States.
Between 1998 and 2001, the Company has transported at least 178 million barrels
annually, with a high of 262 million barrels in 1998 and a low of 178 million
barrels in 2002. Maritrans sold vessels in 1999 resulting in a reduction in
capacity. In 2002 and 2001, the Company has transported 178 million and 183
million barrels, respectively. Many factors affect the number of barrels
transported and may affect future results for Maritrans. Such factors include
the Company's vessel and fleet size and average trip lengths, the continuation
of federal law restricting United States point-to-point maritime shipping to
U.S. vessels (the Jones Act), domestic oil consumption, environmental laws and
regulations, oil companies' decisions as to the type and origination point of
the crude that it processes, changes in the amount of imported petroleum
products, competition, labor and training costs and liability insurance costs.
Overall U.S. oil consumption during 1998-2002 fluctuated between 19.0 million
and 19.7 million barrels a day.

In 1999, the Company made several strategic moves in order to focus on those
markets where it believes it possesses a long-term competitive advantage and
that should provide additional opportunities. As a result, the Company sold two
small tug and barge units, which were working in Puerto Rico, two petroleum
storage terminals in Philadelphia, Pennsylvania and Salisbury, Maryland, and
twenty-seven vessels working primarily in the Northeastern United States. Before
the sales, the sold vessels had transported approximately 69 million barrels in
1999 and had represented approximately 23 percent of 1999 revenues.

Maritrans has successfully rebuilt four of its existing, single-hulled,
barges to a double-hull design configuration, which complies with the provisions
of the OPA (see table in "Legislation" below). The Company intends to apply the
same methodology to up to five more of its existing large, oceangoing,
single-hull barges. The timing of the rebuilds will be determined by a number of
factors, including market conditions, shipyard pricing and availability,
customer requirements and OPA retirement dates for the vessels. The OPA
retirement dates fall between 2005 and 2010. Each of the Company's superbarges
represent approximately 5 to 7 percent of the total fleet capacity, which will
be removed from revenue generating service during the rebuilding of that vessel.

Results of Operations

Time Charter Equivalent ("TCE") is a commonly used industry measure where
direct voyage costs are deducted from revenue. Maritrans enters into various
types of charters, some of which involve the customer paying substantially all
voyage costs, while other types of charters involve Maritrans paying some or
substantially all of the voyage costs. The Company monitors the TCE basis


12




because it essentially nets the voyage costs and voyage revenue to yield a
measure that is comparable between periods regardless of the types of charters
utilized. The Company began reporting on the TCE basis in the first quarter of
2002. For comparison purposes, the following table lists the TCE revenue for all
quarters in 2002 and 2001:


12/31/02 9/30/02 6/30/02 3/31/02 12/31/01 9/30/01 6/30/01 3/31/01
-------- ------- ------- ------- -------- ------- ------- -------

Voyage revenue $34,610 $30,586 $32,468 $31,323 $31,717 $28,276 $31,826 $31,558
Voyage costs 5,498 4,906 4,970 4,381 4,803 4,995 5,707 5,997
------- ------- ------- ------- ------- ------- ------- -------
Time Charter Equivalent $29,112 $25,680 $27,498 $26,942 $26,914 $23,281 $26,119 $25,561
======= ======= ======= ======= ======= ======= ======= =======



Year Ended December 31, 2002 Compared With Year Ended December 31, 2001

TCE revenue for the year ended December 30, 2002 compared to the year ended
December 30, 2001 is as follows:

12/31/02 12/31/01
-------- --------
Voyage revenue $128,987 $123,377
Voyage costs 19,755 21,502
-------- --------
Time Charter Equivalent $109,232 $101,875
======== ========

TCE revenue increased from $101.9 million for the year ended December 31,
2001 to $109.2 million for the year ended December 31, 2002, an increase of $7.3
million or 7 percent. Vessel utilization, as measured by revenue days divided by
calendar days available, decreased from 83.4 percent for the year ended December
31, 2001 to 81.9 percent for the year ended December 31, 2002. Utilization
decreased due to more vessel out of service time in the year ended December 31,
2002 as a result of vessels being taken out of service for maintenance. In late
May 2002, the OCEAN 250 went out of service for her double hull rebuild and
re-entered service in the fourth quarter of 2002. In addition, the MARITRANS 252
was out of service in the beginning of 2002 while her double hull rebuild was
being completed. She re-entered service in the first quarter of 2002.

Term contract rates renewed with customers in 2001 were renewed at higher
levels than those experienced in 2000 on long-term contracts. The increase in
these rates resulted from a more stable supply/demand relationship in the Jones
Act trade. These rate increases had a positive impact on 2002 revenue and helped
to offset the weak spot market. Spot market rates were significantly lower in
2002 than in 2001 as a result of the following factors. Warm weather in the
early part of 2002 in the Northeast reduced the demand for heating oil resulting
in excess distillate inventory through most of the year. The cold weather in the
Northeast in the fourth quarter of 2002 increased heating oil demand, but that
demand was met mostly by the high inventories and imports from Europe. 2002 saw
a continued reduction in the demand for jet fuel, which began with the terrorist
attack of September 11th and continued throughout the year. Gasoline demand
remained high throughout 2002. This demand was met primarily from increased
imports from Europe as their sluggish economy reduced their internal demand.
Refined product imports typically reduce demand for the Company's services by
diminishing the need for U.S. Gulf refineries to supply product to the Atlantic
coast. The Company believes the spot market will continue to be fairly soft
through much of 2003 due to all these factors. The Company believes that a
European economic recovery would have a positive impact on rates by reducing
refined product imports into our market. It is uncertain at this time what the
impact of a continued strike of the Venezuelan oil industry or a war with Iraq
would have on the Company's revenue. Barrels of cargo transported decreased from
183.5 million in the year ended December 31, 2001 to 177.6 million in the year
ended December 31, 2002, due to decreases in demand and utilization (as
discussed above).

Voyage costs decreased from $21.5 million for the year ended December 31,
2001 to $19.8 million for the year ended December 31, 2002, a decrease of $1.7
million or 8 percent. The primary decrease in voyage costs was in fuel costs,
which resulted from the downturn in the economy in the later part of 2001 and
continued in 2002. The average price per gallon of fuel decreased approximately
12 percent in 2002 compared to 2001.

13


Total costs and operating expenses, excluding voyage costs discussed above,
increased from $84.1 million for the year ended December 31, 2001 to $92.7
million for the year ended December 31, 2002, an increase of $8.6 million or 10
percent. Routine maintenance expenses incurred during voyages and in port have
declined in 2002 compared to 2001, while expenditure levels for maintenance
incurred in shipyards has increased. This reflects efforts being made to meet
increased regulatory and customer vetting requirements and rising shipyard
costs. These shipyard expenses are expected to continue to increase and the
Company has adjusted the 2003 shipyard accrual rate to meet these increased
costs. In addition, insurance costs increased for the year ended December 31,
2002 compared to the year ended December 31, 2001 as the result of increased
premiums charged by the insurance companies on policies renewed and to
additional deductible amounts paid in the current year. Seagoing salary
increases, which took effect early in 2002, increased crew costs for the year
ended December 31, 2002 compared to the year ended December 31, 2001.
Professional fees increased in the year ended December 31, 2002 compared to the
year ended December 31, 2001 for consulting fees incurred to review port
security and other security issues.

General and administrative expenses increased due to increased professional
fees including higher litigation and consulting costs for the year ended
December 31, 2002 compared to the year ended December 31, 2001. Litigation costs
and professional fees arose from both immaterial litigation arising in the
ordinary course of business and the legal proceedings described in Part II Item
1 of this Form 10-K. In addition, the Company experienced increased premiums
charged by the insurance companies on the Directors and Officers policy renewed
in 2002.

Operating income decreased as a result of the aforementioned changes in
revenue and expenses.

Interest expense for the year ended December 31, 2002 of $2.6 million
decreased compared to $4.4 million for the year ended December 31, 2001 as a
result of the refinancing of debt that took place in the fourth quarter of 2001.
The new debt has a variable interest rate, which is lower than the fixed
interest rate of 9.25 percent on most of the previously held debt and therefore
resulted in decreased interest expense when compared to 2001.

Interest and other income for the year ended December 31, 2002 was $1.2
million compared to interest and other income for the year ended December 31,
2001 of $2.9 million. Other income is made up primarily of interest income.
Interest income decreased due to a lower amount of cash invested in 2002
compared to 2001. The decrease in the average cash balance is primarily the
result of the debt refinancing discussed above. Other income in the year ended
December 31, 2002 includes both a $0.5 million litigation settlement received
and a charge of $0.3 million for a litigation settlement to be paid in 2003 (see
Item 3 "Legal Proceedings"). Other income in the year ended December 31, 2001
includes a pre-tax gain of $0.2 million on the sale of a barge.

Net income for the year ended December 31, 2002 increased compared to the
year ended December 31, 2001 due to the aforementioned changes in revenue and
expenses.


Year Ended December 31, 2001 Compared With Year Ended December 31, 2000

Revenues for 2001 of $123.4 million were consistent with revenues for 2000
of $123.7 million. Vessel utilization, as measured by revenue days divided by
calendar days available, decreased from 85.7 percent in 2000 to 83.4 percent in
2001. Utilization decreased due to more vessel out of service time for
maintenance in 2001 compared to 2000. In 2000, the MARITRANS 244 was out of
service for nine months for her double hull rebuild. The MARITRANS 252 went out
of service for her double hull rebuild late in the second quarter of 2001 and
re-entered service early in February 2002. As a result, the fleet lost less days
to double hull rebuilding in 2001 than in 2000, offsetting the maintenance out
of service time.

Term contract rates renewed with customers in 2001 were renewed at higher
levels than those experienced in 2000. The increase in these rates resulted from
a more stable supply/demand relationship in the Jones Act trade. Spot market
rates fluctuated greatly in 2001, and overall were slightly higher than in 2000.
In the first half of the year, spot rates were significantly higher than the
same period in 2000 due to increased distillate demand and the restocking of
inventory balances. In the third quarter, spot rates dropped as a result of
refinery maintenance projects and less demand for refined products. In addition,
there was a general downturn in the economy, which continued through the end of
the year. In the fourth quarter, spot rates declined to below 2000 levels for
the comparable period. The terrorists attacks on September 11th worsened the
downturn in the economy. As a result, gasoline inventories grew and the demand


14


for jet fuel decreased. In addition, warm weather in the Northeast reduced the
demand for heating oil. Barrels of cargo transported decreased from 189.3
million in 2000 to 183.5 million in 2001, due to decreases in demand during the
year.

Total costs and operating expenses for 2001 were $105.6 million compared to
$112.7 million in 2000, a decrease of $7.1 million or 6.3 percent. The primary
decreases in operating expenses were in voyage costs, which are primarily fuel
consumed and port charges incurred. In 2001 more of the Company's tankers were
under contracts that pass all fuel and other voyage costs directly to the
customer than in 2000, resulting in a decrease in expenses. The downturn in the
economy in 2001, discussed above, also reduced fuel prices. The average price
per gallon of fuel decreased 8 percent compared to 2000. The decrease in
utilization, discussed above, also caused port charges and fuel costs to
decrease compared to the same period in 2000. Offsetting these decreases was an
increase in crew costs. In 2001, a higher volume of seminars and training took
place than in 2000. Routine maintenance increased during 2001 as a result of a
higher number of vessel repairs. Other maintenance expenses decreased due to the
extensive renewals and refurbishments that occur during the rebuilding of the
single-hulled barges to double- hulled barges. In 2000, the Company had incurred
$1.4 million in relocation costs as a result of moving the corporate
headquarters from Philadelphia, Pennsylvania to Tampa, Florida, which were not
incurred in 2001.

Operating income increased from $11.0 million in 2000 to $17.8 million in
2001, as a result of the aforementioned changes in revenue and expenses.

Interest and other income in 2001 included interest income of $2.4 million
and a gain of $0.5 million on the sale of a barge. Interest and other income in
2000 included interest income of $4.0 million offset by a loss of $0.7 million
on the sale of Philadelphia real estate and equipment. Interest income decreased
due to a lower amount of cash invested in 2001 compared to 2000.

The extraordinary loss of $2.5 million, net of taxes, resulted from
prepayment penalties and the write-off of unamortized financing costs on the
prepayment of the Company's fleet mortgage.

Net income increased from $5.0 million for the twelve months ended December
31, 2001 to $7.7 million for the twelve months ended December 31, 2002. This
increase was due to the aforementioned changes in revenue and expenses.

Liquidity and Capital Resources

In 2002, net cash provided by operating activities was $31.2 million. These
funds, augmented by the Company's Credit Facility, were sufficient to meet debt
service obligations and loan agreement restrictions, to make capital
acquisitions and improvements and to allow Maritrans Inc. to pay a dividend in
the current quarter. Management believes funds provided by operating activities,
augmented by the Company's Credit Facility, described below, and investing
activities, will be sufficient to finance operations, anticipated capital
expenditures, lease payments and required debt repayments in the foreseeable
future. While dividends have been made quarterly in each of the last two years,
there can be no assurances that the dividend will continue. The ratio of total
debt to capitalization is .50:1 at December 31, 2002.

On February 9, 1999, the Board of Directors authorized a share buyback
program for the acquisition of up to one million shares of the Company's common
stock, which represented approximately 8 percent of the 12.1 million shares
outstanding at that time. In February 2000 and again in February 2001, the Board
of Directors authorized the acquisition of an additional one million shares in
the program. The total authorized shares under the buyback program are three
million. As of December 31, 2002, 2,456,700 shares had been purchased under the
plan and financed by internally generated funds. The Company intends to hold the
majority of the shares as treasury stock, although some shares will be used for
employee compensation plans and others may be used for acquisition currency
and/or other corporate purposes. Subsequent to December 31, 2002 and through
March 5, 2003, the Company purchased 10,000 shares of its common stock under the
share buyback program.

In August 2000, the Company awarded a contract to rebuild a third large
single hull barge, the OCEAN CITIES, to a double hull configuration. In February
2002, this vessel was completed and put back into service as the MARITRANS 252.
The total cost of the rebuild and other improvements made while in the shipyard
was $18.9 million. The Company financed this project from internally generated
funds.


15


In September 2001, the Company awarded a contract to rebuild a fourth large
single hull barge, the OCEAN 250, to a double hull configuration. In November
2002, this vessel was completed and put back into service as the M254. The total
cost of the rebuild was $19.5 million. The Company financed this project from a
combination of internally generated funds and borrowings under the Company's
Credit Facility.

In October 2001, the Company repaid $33.0 million of its long-term debt in
advance of its due date. The Company recorded an extraordinary charge of
approximately $2.5 million, net of taxes, or approximately $0.24 per share, in
prepayment penalties and the write-off of unamortized financing costs in the
fourth quarter as a result of the repayment.

In November 2001, the Company entered into a credit facility, discussed in
"Debt Obligations and Borrowing Facility" below. The amortization of the term
portion of the facility calls for escalating payments over the life of the debt.
The Credit Facility requires the Company to maintain its properties in a
specific manner, maintain specified insurance on its properties and business,
and abide by other covenants, which are customary with respect to such
borrowings. The Credit Facility also requires the Company to meet certain
financial covenants. If the Company fails to comply with any of the covenants
contained in the Credit Facility, the Lenders may foreclose on the collateral or
call the entire balance outstanding on the Credit Facility immediately due and
payable. The Company was in compliance with all applicable covenants at December
31, 2002 and currently expects to remain in compliance going forward.

Total future commitments and contingencies related to the Company's
outstanding debt facility and noncancellable operating leases, as of December
31, 2002, are as follows:


($000's)
Less than One Year One to Five Years After Five Years
------------------ ----------------- ----------------

Debt Obligations $5,750 $63,000 $ -
Operating Leases 491 1,792 1,001
------ ------- ------
Total $6,241 $64,792 $1,001
====== ======= ======


In December 2001, the Company announced a self-tender offer (the "Offer") to
purchase up to 2,000,000 shares of its common stock at a price between $11.00
and $12.50. On January 18, 2002, the Offer closed, and the Company subsequently
purchased 2,176,296 shares of common stock for a purchase price of $11.50 per
share, or approximately $25.0 million. The purchase price was funded through
borrowings under the Company's Credit Facility with Citizens Bank.

In November 2002, the Company awarded a contract to rebuild a fifth large
single hull barge, the OCEAN STATES, to a double hull configuration, which is
expected to have a total cost of approximately $21 million. The Company intends
to finance this project from a combination of internally generated funds and
borrowings under the Company's Credit Facility.

Debt Obligations and Borrowing Facility

At December 31, 2002, the Company had $68.8 million in total outstanding
debt, secured by mortgages on some of the fixed assets of the Company. The
current portion of this debt at December 31, 2002, is $5.8 million.

In August 1999, the Company entered into an agreement with Coastal Tug and
Barge Inc. to purchase the MV PORT EVERGLADES. The Company had a vessel note
payable to Coastal Tug and Barge Inc. as a result of the sale, which the Company
paid off in the first quarter of 2002.

In December 1999, the Company entered into an agreement with General
Electric Capital Corporation to purchase two tugboats, the Enterprise and the
Intrepid. The Company had a vessel note payable to General Electric Credit
Corporation as a result of the purchase, which the Company paid off in the first
quarter of 2002.

In October 2001, the Company paid off the fleet mortgage that was part of
the original indebtedness incurred when the Company became a public company in
1987. The Company recorded an extraordinary charge of $2.5 million, net of
taxes, or approximately $0.24 per share, in prepayment penalties and the
write-off of unamortized financing costs during the fourth quarter as a result
of the repayment.


16


In November 2001, the Company entered into an $85 million credit and
security agreement ("Credit Facility") with Citizens Bank (formerly Mellon Bank,
N.A.) and a syndicate of other financial institutions ("Lenders"). Pursuant to
the terms of the Credit Facility, the Company could borrow up to $45 million of
term loans and up to $40 million under a revolving credit facility. Interest is
variable based on either the LIBOR rate plus an applicable margin (as defined)
or the prime rate. Principal payments on the term loans are required on a
quarterly basis and began in April 2002. The Credit Facility expires in January
2007. The Company has granted first preferred ship mortgages and a first
security interest in some of the Company's vessels and other collateral to the
Lenders as a guarantee of the debt. At December 31, 2002, there was $41.3
million of term loans outstanding under the Credit Facility and $27.5 million
outstanding under the revolving line of credit.

Critical Accounting Policies

Maintenance and Repairs

Provision is made for the cost of upcoming major periodic overhauls of
vessels and equipment in advance of performing the related maintenance and
repairs. Based on the Company's methodology, approximately one-third of this
estimated cost is included in accrued shipyard costs as a current liability with
the remainder classified as long-term. Although the timing of the actual
disbursements have fluctuated over the years, particularly as a result of
changes in the size of the fleet and timing of the large maintenance projects,
the classification has been in line with the actual disbursements over time. The
Company believes that providing for such overhauls in advance of performing the
related maintenance and repairs provides a more appropriate view of the
financial position of the Company at any point in time.

In September 2001, the rule making body of the AICPA issued an Exposure
Draft on a Statement of Position, "Accounting for Certain Costs and Activities
Related to Property, Plant, and Equipment" (the "Proposed Statement"). This
group, referred to as AcSEC, recently decided that it will no longer issue
accounting guidance and planned to transition the majority of its projects to
the FASB. However, the FASB subsequently requested that AcSEC address certain
portions of the Proposed Statement in smaller scope projects. The FASB expressed
their concern that the project would not be completed timely, by AcSEC or the
FASB, if the scope of the project was not reduced. At this time, it is unclear
whether the Proposed Statement will be issued or in what form.

If the existing Proposed Statement is issued, it would require the Company
to modify its accounting policy for maintenance and repairs. Such costs would no
longer be accrued in advance of performing the related maintenance and repairs;
rather, the Proposed Statement requires these costs to be capitalized and
amortized over their estimated useful life. The Company has not yet quantified
the impact of adopting the Proposed Statement on its financial statements;
however, the Company's preliminary assessment is that the adoption of this
pronouncement would increase the value of vessels and equipment, decrease the
shipyard accrual and increase stockholders' equity of the Company.

Market Risk

The principal market risk to which the Company is exposed is a change in
interest rates on debt instruments. The Company manages its exposure to changes
in interest rate fluctuations by optimizing the use of fixed and variable rate
debt. As of December 31, 2002, all of the Company's debt is variable rate debt.
The information below summarizes the Company's market risks associated with its
debt obligations and should be read in conjunction with Note 8 of the
Consolidated Financial Statements.

The table below presents principal cash flows by year of maturity. Variable
interest rates disclosed fluctuate with the LIBOR and federal fund rates. The
weighted average interest rate at December 31, 2002 was 3.69%.

Expected Years of Maturity
($000)

2003 ......................................... $5,750
2004 ......................................... 7,500
2005 ......................................... 11,000
2006 ......................................... 13,500
2007 ......................................... 31,000
-------
$68,750
=======

17


Impact of Recent Accounting Pronouncements

The Company adopted Statement of Financial Accounting Standards ("SFAS")
No. 142 "Goodwill and Intangible Assets" as of January 1, 2002. SFAS No. 142
provides that goodwill and intangible assets with indefinite lives will not be
amortized. As such, the Company did not record goodwill amortization for the
year ended December 31, 2002. Rather, the Company performed an impairment test
on its net carrying value as of January 1, 2002, its initial test, as required
by SFAS No. 142. The Company was not required to record an impairment charge
based on its test. The test required estimates, assumptions and judgments and
results could be materially different if different estimates, assumptions and
judgments had been used.

In April 2002, the Financial Accounting Standards Board issued Statements
of Financial Accounting Standards No. 145, "Rescission of FASB Statements No. 4,
44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections" ("SFAS
145"). SFAS 145 requires, among other things, gains or losses on extinguishment
of debt to be classified as income (loss) from continuing operations rather than
as an extraordinary item, unless such extinguishment is determined to be
extraordinary pursuant to Accounting Principles Board Opinion No. 30, "Reporting
the Results of Operations - Reporting the Effects of a Disposal of a Segment of
a Business and Extraordinary, Unusual, and Infrequently Occurring Transactions"
("Opinion 30"). The provisions of SFAS 145 related to the rescission of SFAS 4
are effective for fiscal years beginning after May 15, 2002. Any gain or loss on
extinguishment of debt that was classified as an extraordinary item in prior
periods presented that does not meet the criteria in Opinion 30 for
classification as an extraordinary item must be reclassified.

The Company will adopt the provisions of SFAS 145 beginning January 1, 2003
and accordingly, will reclassify the loss of $2.5 million on the retirement of
debt during the year ended December 31, 2001, from an extraordinary item to a
separate component of income before taxes.

In December 2002, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure" ("SFAS 148"). SFAS 148 amends FASB
Statement No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), to
provide three alternative methods of transition for a voluntary change to the
fair value based method of accounting for stock-based employee compensation. In
addition, SFAS 148 also amends the disclosure provisions of SFAS 123 and APB
Opinion No. 28, "Interim Financial Reporting". SFAS 148 is effective for fiscal
years ending after December 15, 2002, with certain disclosure requirements
effective for interim periods beginning after December 15, 2002. Accordingly,
the Company has disclosed the required provisions in its notes to the
consolidated financial statements for the year ended December 31, 2002. In
addition, the Company will adopt the transition provisions of SFAS 148 using the
prospective method beginning January 1, 2003. The prospective method requires
the Company to recognize the fair value of all employee stock awards in its
consolidated financial statements of income beginning on the date of adoption.
If the Company had adopted SFAS 148 using the prospective method on January 1,
2002, diluted earnings per share would have been lower by $.01 for the year
ended December 31, 2002. The Company is currently unable to quantify the effect
of adoption on earnings per share for the year ended December 31, 2003, as
actual information such as stock price, fair value, and number of shares
outstanding is unknown.

Item 7a. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

See discussion under "Market Risk" included in Management's Discussion and
Analysis of Financial Condition and Results of Operations.


18



Item 8. FINANCIAL STATEMENTS & SUPPLEMENTAL DATA

Report of Independent Certified Public Accountants


Stockholders and Board of Directors

Maritrans Inc.

We have audited the accompanying consolidated balance sheets of Maritrans
Inc. as of December 31, 2002 and 2001, and the related consolidated statements
of income, cash flows and stockholders' equity for each of the three years in
the period ended December 31, 2002. Our audits also included the financial
statement schedule listed in the Index at Item 14(a). These financial statements
and schedule are the responsibility of the management of Maritrans Inc. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Maritrans Inc.
at December 31, 2002 and 2001, and the consolidated results of its operations
and its cash flows for each of the three years in the period ended December 31,
2002, in conformity with accounting principles generally accepted in the United
States. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

/s/ ERNST & YOUNG LLP





Tampa, Florida
January 23, 2003

19

MARITRANS INC.
CONSOLIDATED BALANCE SHEETS

($000, except share amounts)


December 31,
--------------------------
2002 2001
---- ----

ASSETS
Current assets:
Cash and cash equivalents ............................................. $ 239 $ 3,558
Trade accounts receivable (net of allowance for doubtful accounts of
$690) .............................................................. 9,396 8,703
Other accounts receivable ............................................. 2,696 3,620
Inventories ........................................................... 3,253 2,453
Deferred income tax benefit ........................................... 8,097 7,258
Prepaid expenses ...................................................... 3,135 2,659
-------- --------
Total current assets .............................................. 26,816 28,251
Vessels and equipment ..................................................... 339,574 307,540
Less accumulated depreciation ........................................ 162,713 144,223
-------- --------
Net vessels and equipment ......................................... 176,861 163,317
Notes receivable (net of allowance of $4,500).............................. 3,780 4,271
Other...................................................................... 4,100 4,588
-------- --------
Total assets ...................................................... $211,557 $200,427
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Debt due within one year............................................... $ 5,750 $10,738
Trade accounts payable ................................................ 2,829 681
Accrued shipyard costs ................................................ 5,060 6,370
Accrued wages and benefits ............................................ 1,718 2,098
Other accrued liabilities ............................................. 3,642 2,353
-------- --------
Total current liabilities ......................................... 18,999 22,240
Long-term debt ............................................................ 63,000 32,250
Accrued shipyard costs .................................................... 7,590 9,555
Other liabilities ......................................................... 3,149 3,527
Deferred income taxes ..................................................... 49,432 44,791
Stockholders' equity:......................................................
Preferred stock, $.01 par value, authorized 5,000,000 shares; none -- --
issued..............................................................
Common stock, $.01 par value, authorized 30,000,000 shares; issued:
2002 - 13,558,970 shares; 2001 - 13,342,018 shares ................. 135 133
Capital in excess of par value ........................................ 80,980 79,781
Retained earnings ..................................................... 36,061 29,983
Unearned compensation ............................................... (759) (855)
Less: Cost of shares held in treasury: 2002 - 5,418,653 shares; 2001 -
3,181,792 shares.................................................... (47,030) (20,978)
-------- --------
Total stockholders' equity ........................................ 69,387 88,064
-------- --------
Total liabilities and stockholders' equity ........................ $211,557 $200,427
======== ========


See accompanying notes.

20


MARITRANS INC.
CONSOLIDATED STATEMENTS OF INCOME

($000, except per share amounts)




For the year ended December 31,
---------------------------------------
2002 2001 2000
---- ---- ----

Revenues. .................................................... $128,987 $123,410 $123,715
Costs and expenses:...........................................
Operation expense ......................................... 66,299 64,665 69,407
Maintenance expense ....................................... 19,088 15,652 17,234
General and administrative ................................ 7,859 7,323 8,786
Depreciation and amortization ............................. 19,137 17,958 17,254
-------- -------- --------
112,383 105,598 112,681
-------- -------- --------
Operating income ............................................. 16,604 17,812 11,034
Interest expense (net of capitalized interest of $383, $472,
and $662 respectively)..................................... (2,600) (4,437) (6,401)
Interest income............................................... 857 2,405 3,973
Other income (loss), net ..................................... 361 528 (493)
-------- -------- --------
Income before income taxes and extraordinary item............. 15,222 16,308 8,113
Income tax provision ......................................... 5,708 6,115 3,101
-------- -------- --------
Income before income taxes and extraordinary item............. 9,514 10,193 5,012
Extraordinary charge on early extinguishment of debt, net of
taxes of $1,500........................................... -- 2,501 --
-------- -------- --------
Net income ................................................... $ 9,514 $ 7,692 $ 5,012
======== ======== ========

Basic earnings per share .....................................
Income before extraordinary item .......................... $ 1.18 $ 1.02 $ 0.46
Extraordinary item......................................... -- (0.25) --
-------- -------- --------
Net income ................................................ $ 1.18 $ 0.77 $ 0.46
======== ======== ========

Diluted earnings per share ...................................
Income before extraordinary item .......................... $ 1.10 $ 0.96 $ 0.45
Extraordinary item......................................... -- (0.24) --
-------- -------- --------
Net income ................................................ $ 1.10 $ 0.72 $ 0.45
======== ======== ========

See accompanying notes.

21



MARITRANS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents

($000)


For the year ended December 31,
----------------------------------------
2002 2001 2000
---- ---- ----

Cash flows from operating activities:
Net income ....................................................... $ 9,514 $ 7,692 $ 5,012
Adjustments to reconcile net income to net cash provided by
operating activities:..........................................
Depreciation and amortization ................................ 19,137 17,958 17,254
Deferred income taxes ........................................ 3,802 1,438 (2,091)
Stock compensation ........................................... 193 852 803
Extraordinary loss ........................................... -- 4,001 --
Changes in receivables, inventories and prepaid expenses ..... (1,045) 1,898 8,036
Changes in current liabilities, other than debt .............. 1,747 (8,796) (779)
Non-current changes, net ..................................... (2,130) (4,154) 1,884
(Gain) loss on sale of assets ................................ -- (472) 637
------- ------- -------
Total adjustments to net income ............................. 21,704 12,725 25,744
------- ------- -------
Net cash provided by operating activities ................. 31,218 20,417 30,756

Cash flows from investing activities:.............................
Proceeds from sale of marine vessels and equipment ........... -- 175 165
Release of cash and cash equivalents - restricted............. -- 13,500 25,500
Collections on notes receivable............................... 766 478 386
Purchase of marine vessels and equipment ..................... (32,681) (20,172) (15,498)
------- ------- -------
Net cash (used in) provided by investing activities ....... (31,915) (6,019) 10,553

Cash flows from financing activities:
Borrowings under long-term debt ............................. 9,000 36,000 --
Prepayment of Fleet Mortgage, including prepayment penalty of
$3,640 ................................................... -- (36,640) --
Payment of long-term debt ................................... (10,738) (13,872) (7,773)
Net borrowings (repayments) under credit facilities ......... 27,500 (22,000) --
Proceeds from stock option exercises ........................ 878 298 143
Purchase of treasury stock .................................. (25,826) (7,071) (5,800)
Dividends declared and paid ................................. (3,436) (4,153) (4,513)
------- ------- -------
Net cash used in financing activities ...................... (2,622) (47,438) (17,943)

Net (decrease) increase in cash and cash equivalents ............ (3,319) (33,040) 23,366
Cash and cash equivalents at beginning of year ................... 3,558 36,598 13,232
------- ------- -------
Cash and cash equivalents at end of year ......................... $ 239 $ 3,558 $36,598
======= ======= =======

Supplemental Disclosure of Cash Flow Information:
Interest paid .................................................... $ 2,624 $ 5,630 $ 7,057
Income taxes paid ................................................ $ 500 $ 5,516 $ 8,015

Non-cash activities:
Note receivable from sale of property........................... -- -- $1,575
Note receivable from sale of vessels............................ -- $ 300 --



See accompanying notes.


22

MARITRANS INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
($000, except share amounts)


Outstanding Common Capital in
shares of Stock, $.01 excess of Retained Treasury Unearned
Common Stock Par Value Par Value Earnings Stock Compensation Total
------------ ----------- --------- -------- -------- ------------- ---------

Balance at January 1, 2000.......... 11,702,890 $132 $78,279 $25,945 $(8,487) $(1,172) $94,697
Net income.......................... 5,012 5,012
Cash dividends ($0.40 per share of
Common Stock).................... (4,513) (4,513)
Purchase of treasury shares......... (982,300) (5,800) (5,800)
Stock option exercises ............. 30,768 143 143
Stock incentives ................... 115,317 1 537 -- 209 160 907
----------- ---- ------- ------- ------- ------- -------
Balance at December 31, 2000........ 10,866,675 133 78,959 26,444 (14,078) (1,012) 90,446
----------- ---- ------- ------- ------- ------- -------
Net income.......................... 7,692 7,692
Cash dividends ($0.40 per share of
Common Stock)................... (4,153) (4,153)
Purchase of treasury shares......... (802,000) (7,071) (7,071)
Stock option exercises ............. 44,587 146 152 298
Stock incentives ................... 50,964 -- 676 -- 19 157 852
----------- ---- ------- ------- ------- ------- -------
Balance at December 31, 2001........ 10,160,226 133 79,781 29,983 (20,978) (855) 88,064
----------- ---- ------- ------- ------- ------- -------
Net income.......................... 9,514 9,514
Cash dividends ($0.42 per share of
Common Stock).................... (3,436) (3,436)
Purchase of treasury shares......... (2,234,296) (25,826) (25,826)
Stock option exercises ............. 210,311 2 773 103 878
Stock incentives ................... 4,076 -- 426 -- (329) 96 193
----------- ---- ------- ------- ------- ------- -------
Balance at December 31, 2002........ 8,140,317 $ 135 $80,980 $36,061 $(47,030) $ (759) $69,387
=========== ===== ======= ======= ======== ======= =======

See accompanying notes.

23


NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

1. Organization and Significant Accounting Policies

Organization

Maritrans Inc. owns Maritrans Operating Company L.P. (the "Operating
Company"), Maritrans General Partner Inc., Maritrans Tankers Inc., Maritrans
Barge Co., Maritrans Holdings Inc. and other Maritrans entities (collectively,
the "Company"). These subsidiaries, directly and indirectly, own and operate
oceangoing petroleum tank barges, tugboats, and oil tankers principally used in
the transportation of oil and related products along the Gulf and Atlantic
Coasts.

The Company primarily operates in the Gulf of Mexico and along the coastal
waters of the Northeastern United States, particularly the Delaware Bay. The
nature of services provided, the customer base, the regulatory environment and
the economic characteristics of the Company's operations are similar, and the
Company moves its revenue-producing assets among its operating locations as
business and customer factors dictate. Maritrans believes that aggregation of
the entire marine transportation business provides the most meaningful
disclosure.

Principles of Consolidation

The consolidated financial statements include the accounts of Maritrans Inc.
and subsidiaries, all of which are wholly owned. All significant intercompany
transactions and accounts have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

Cash and Cash Equivalents

Cash and cash equivalents at December 31, 2002 and 2001 consisted of cash
and commercial paper, the carrying value of which approximates fair value. For
purposes of the consolidated financial statements, short-term highly liquid debt
instruments with original maturities of three months or less are considered to
be cash equivalents.

Inventories

Inventories, consisting of materials, supplies and fuel are carried at cost,
which does not exceed net realizable value.

Vessels and Equipment

Vessels and equipment, which are carried at cost, are depreciated using the
straight-line method. Vessels are depreciated over a period of up to 30 years.
Certain electronic equipment is depreciated over periods of 7 to 10 years. Other
equipment is depreciated over periods ranging from 2 to 20 years. Gains or
losses on dispositions of fixed assets are included in other income in the
accompanying consolidated statements of income. The Oil Pollution Act of 1990
requires all newly constructed petroleum tank vessels engaged in marine
transportation of oil and petroleum products in the U.S. to be double-hulled and
gradually phases out the operation of single-hulled tank vessels based on size
and age. The Company has announced a construction program to rebuild its
single-hulled barges with double hulls over the next several years. By July
2005, two of the Company's large oceangoing, single-hulled vessels will be at
their legislatively determined retirement date if they are not rebuilt by that
time.

Long-lived assets, including goodwill, are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. When required, an impairment loss is recognized based on
the difference between the fair value of an asset and its related carrying
value. During the years ended December 31, 2002, 2001 and 2000, the Company did
not recognize an impairment loss.

24

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS (Continued)

Intangible Assets

Other assets include $2,863,000 of goodwill at December 31, 2002 and 2001.
Goodwill represents the excess cost over the fair market value of the net assets
acquired at the date of acquisition. Goodwill was being amortized using the
straight-line method over twenty-five years through December 31, 2001.

Maintenance and Repairs

Provision is made for the cost of upcoming major periodic overhauls of
vessels and equipment in advance of performing the related maintenance and
repairs. Based on the Company's methodology, approximately one-third of this
estimated cost is included in accrued shipyard costs as a current liability with
the remainder classified as long-term. Although the timing of the actual
disbursements have fluctuated over the years, particularly as a result of
changes in the size of the fleet and timing of the large maintenance projects,
the classification has been in line with the actual disbursements over time. The
Company believes that providing for such overhauls in advance of performing the
related maintenance and repairs provides a more appropriate view of the
financial position of the Company at any point in time. Non-overhaul maintenance
and repairs are expensed as incurred.

In September 2001, the rule making body of the AICPA issued an Exposure
Draft on a Statement of Position, "Accounting for Certain Costs and Activities
Related to Property, Plant, and Equipment" (the "Proposed Statement"). This
group, referred to as AcSEC, recently decided that it will no longer issue
accounting guidance and planned to transition the majority of its projects to
the FASB. However, the FASB subsequently requested that AcSEC address certain
portions of the Proposed Statement in smaller scope projects. The FASB expressed
their concern that the project would not be completed timely, by AcSEC or the
FASB, if the scope of the project was not reduced. At this time, it is unclear
whether the Proposed Statement will be issued or in what form.

If the existing Proposed Statement is issued, it would require the Company
to modify its accounting policy for maintenance and repairs. Such costs would no
longer be accrued in advance of performing the related maintenance and repairs;
rather, the Proposed Statement requires these costs to be capitalized and
amortized over their estimated useful life. The Company has not yet quantified
the impact of adopting the Proposed Statement on its financial statements;
however, the Company's preliminary assessment is that the adoption of this
pronouncement would increase the value of vessels and equipment, decrease the
shipyard accrual and increase stockholders' equity of the Company.

Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences
between the amount of assets and liabilities for financial reporting purposes
and the amount used for income tax purposes.

Revenue Recognition

Revenue is recognized when services are performed.

Significant Customers

During 2002, the Company derived revenues aggregating 50 percent of total
revenues from three customers, each one representing more than 10 percent of
revenues. In 2001, revenues from three customers aggregated 61 percent of total
revenues and in 2000, revenues from three customers aggregated 54 percent of
total revenues. The Company does not necessarily derive 10 percent or more of
its total revenues from the same group of customers each year. In 2002,
approximately 90 percent of the Company's total revenue was generated by ten
customers. Credit is extended to various companies in the petroleum industry in
the normal course of business. The Company generally does not require
collateral. This concentration of credit risk within this industry may be
affected by changes in economic or other conditions and may, accordingly, affect
the overall credit risk of the Company.


Related Party Transactions

The Company obtained protection and indemnity insurance coverage from a
mutual insurance association, whose chairman is also the chairman of Maritrans
Inc. The related insurance expense was $2,398,000, $1,926,000 and $1,854,000 for
the years ended December 31, 2002, 2001 and 2000, respectively. The Company paid
amounts for legal services to a law firm, a partner of which serves on the
Company's Board of Directors. The related legal expense was $569,000, $381,000
and $220,000 for the years ended December 31, 2002, 2001 and 2000, respectively.


25

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS (Continued)


Fair Value of Financial Instruments

The book value of cash, accounts and notes receivable, accounts payable, and
accrued expenses approximate the carrying value due to the short-term nature of
these financial instruments. The carrying value of the Company's long-term debt
approximates fair value based on variable interest rates.


Impact of Recent Accounting Pronouncements

In September 2001, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards No. 141, Business Combinations, and
No. 142, Goodwill and Other Intangible Assets, effective for fiscal years
beginning after December 15, 2001. Under the new rules, goodwill is no longer
amortized but is subject to the annual impairment tests in accordance with the
Statements. Other intangible assets continue to be amortized over their useful
lives. The Company adopted the new rules on accounting for goodwill and other
intangible assets on January 1, 2002. A reconciliation of net income for the
years ended December 31, 2001 and 2000 had goodwill not been amortized pursuant
to FASB No. 142 is as follows:


($000, except per share amounts) Year Ended Year Ended
December 31, 2001 December 31, 2000
----------------- -----------------

Net income as reported $7,692 $5,012
Elimination of goodwill amortization 279 284
------ ------
Adjusted net income $7,971 $5,296
====== ======
Adjusted basic earnings per share $ .79 $ .49
====== ======
Adjusted diluted earnings per share $ .75 $ .47
====== ======


The Company has completed its required impairment tests of goodwill for the
year ended December 31, 2002 and the Company has concluded that there is no
impairment of goodwill on the accompanying consolidated balance sheet.

In April 2002, the Financial Accounting Standards Board issued Statements
of Financial Accounting Standards No. 145, "Rescission of FASB Statements No. 4,
44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections" ("SFAS
145"). SFAS 145 requires, among other things, gains or losses of extinguishment
of debt to be classified as income (loss) from continuing operations rather than
as an extraordinary item, unless such extinguishment is determined to be
extraordinary pursuant to Accounting Principles Board Opinion No. 30, "Reporting
the Results of Operations - Reporting the Effects of a Disposal of a Segment of
a Business and Extraordinary, Unusual, and Infrequently Occurring Transactions"
("Opinion 30"). The provisions of SFAS 145 related to the rescission of SFAS 4
are effective for fiscal years beginning after May 15, 2002. Any gain or loss on
extinguishment of debt that was classified as an extraordinary item in prior
periods presented that does not meet the criteria in Opinion 30 for
classification as an extraordinary item must be reclassified.

The Company will adopt the provisions of SFAS 145 beginning January 1, 2003
and accordingly, will reclassify the loss of $2.5 million on the retirement of
debt during the year ended December 31, 2001, from an extraordinary item to a
separate component of income before taxes.

26

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS (Continued)

In December 2002, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure" ("SFAS 148"). SFAS 148 amends FASB
Statement No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), to
provide three alternative methods of transition for a voluntary change to the
fair value based method of accounting for stock-based employee compensation. In
addition, SFAS 148 also amends the disclosure provisions of SFAS 123 and APB
Opinion No. 28, "Interim Financial Reporting". SFAS 148 is effective for fiscal
years ending after December 15, 2002, with certain disclosure requirements
effective for interim periods beginning after December 15, 2002. Accordingly,
the Company has disclosed the required provisions in its notes to the
consolidated financial statements for the year ended December 31, 2002. In
addition, the Company will adopt the transition provisions of SFAS 148 using the
prospective method beginning January 1, 2003. The prospective method requires
the Company to recognize the fair value of all employee stock awards in its
consolidated financial statements of income beginning on the date of adoption.
If the Company had adopted SFAS 148 using the prospective method on January 1,
2002, diluted earnings per share would have been lower by $.01 for the year
ended December 31, 2002. The Company is currently unable to quantify the effect
of adoption on earnings per share for the year ended December 31, 2003, as
actual information such as stock price, fair value, and number of shares
outstanding is unknown.


Through December 31, 2002, the Company has elected to follow Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees and
Related Interpretations in accounting for its employee stock options. Pro forma
information regarding net income and earnings per share is required by Statement
123 and has been determined as if the Company had accounted for its employee
stock options under the fair value method of that Statement. The fair value of
these options was estimated at the date of grant using the Black-Scholes option
pricing model with the following weighted average assumptions for 2002, 2001 and
2000, respectively: risk free rates of 4.4%, 5% and 5%; weighted average
dividend yields of 3.4%, 5% and 5%; weighted average volatility factors of the
expected market price of the Company's common stock of 0.30, 0.26 and 0.43; and
a weighted average expected life of the option of seven years. The weighted
average fair value of options granted in 2002, 2001 and 2000 was $3.12, $1.47
and $1.49, respectively.

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options vesting period. The Company's pro forma
information is as follows:




2002 2001 2000
---- ---- ----
($000, except per share data)


Net income as reported........................... $9,514 $7,692 $5,012
Pro forma net income............................. $9,400 $7,553 $4,815
Basic earnings per share as reported............. $ 1.18 $ 0.77 $ 0.46
Pro forma basic earnings per share .............. $ 1.17 $ 0.75 $ 0.44
Diluted earnings per share as reported........... $ 1.10 $ 0.72 $ 0.45
Pro forma diluted earnings per share ............ $ 1.08 $ 0.71 $ 0.43


2. Stock Buyback

On February 9, 1999, the Board of Directors authorized a stock buyback
program for the acquisition of up to one million shares of the Company's common
stock. In February 2000 and again in February 2001, the Board of Directors
authorized the acquisition of an additional one million shares in the program.
The total authorized shares under the program are three million. As of December
31, 2002, 2,456,700 shares were purchased under the plan. The total cost of the
shares repurchased during 2002 was $0.7 million.

In December 2001, the Company announced a self-tender offer (the "Offer")
to purchase up to 2,000,000 shares of its common stock. On January 18, 2002, the
Offer closed and the Company subsequently purchased 2,176,296 shares of common
stock for a purchase price of $11.50 per share, or approximately $25.0 million,
on January 29, 2002. The purchase price was funded through borrowings under the
Company's Credit Facility.


27


NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS (Continued)


3. Earnings per Common Share

The following data show the amounts used in computing basic and diluted
earnings per share (EPS):


2002 2001 2000
---- ---- ----
(thousands)

Income available to common stockholders used
in basic EPS.......................... $ 9,514 $ 7,692 $ 5,012
======= ======= =======
Weighted average number of common shares used
in basic EPS.......................... 8,055 10,043 10,883
Effect of dilutive securities:
Stock options and restricted shares... 629 594 315
------- ------- -------
Weighted number of common shares and dilutive
potential common stock used in diluted EPS 8,684 10,637 11,198
======= ======= =======


The following options to purchase shares of common stock with their range
of exercise prices were not included in the computation of diluted earnings per
share for each period because their exercise prices were greater than the
average market price of common stock during the relevant periods:


2002 2001 2000
---- ---- ----

Number of options. 18,040 -- 132,271
Range of exercise price $14.20 -- $6.25-$9.125


4. Shareholder Rights Plan

On June 26, 2002, the Board of Directors of Maritrans Inc. adopted a new
Shareholder Rights Plan (the "Plan"), which became effective on August 1, 2002
and declared a dividend distribution of one Right for each outstanding share of
Common Stock, $.01 par value of the Company to stockholders of record at the
close of business on August 1, 2002. The Plan became effective immediately upon
the expiration of the Company's previous shareholder rights plan adopted in
1993. Under the Plan, each share of Common Stock has attached thereto a Right (a
"Right") which entitles the registered holder to purchase from the Company one
one-hundredth of a share (a "Preferred Share Fraction") of Series A Junior
Participating Preferred Shares, par value $.01 per share, of the Company
("Preferred Shares"), or a combination of securities and assets of equivalent
value, at a Purchase Price of $57, subject to adjustment. Each Preferred Share
Fraction carries voting and dividend rights that are intended to produce the
equivalent of one share of Common Stock. The Rights are not exercisable for a
Preferred Share Fraction until the earlier of (each, a "Distribution Date") (i)
10 days following a public announcement that a person or group has acquired, or
obtained the right to acquire, beneficial ownership of 20 percent or more of the
outstanding shares of Common Stock or (ii) the close of business on a date fixed
by the Board of Directors following the commencement of a tender offer or
exchange offer that would result in a person or group beneficially owning 20
percent or more of the outstanding shares of Common Stock.

The Rights may be exercised for Common Stock if a "Flip-in" or "Flip-over"
event occurs. If a "Flip-in" event occurs and the Distribution Date has passed,
the holder of each Right, with the exception of the acquirer, is entitled to
purchase $114 worth of Common Stock for $57. The Rights will no longer be
exercisable into Preferred Shares at that time. "Flip-in" events are events
relating to 20 percent stockholders, including without limitation, a person or
group acquiring 20 percent or more of the Common Stock, other than in a tender
offer that, in the view of the Board of Directors, provides fair value to all of
the Company's shareholders. If a "Flip-over" event occurs, the holder of each
Right is entitled to purchase $114 worth of the acquirer's stock for $57. A
"Flip-over" event occurs if the Company is acquired or merged and no outstanding
shares remain or if 50 percent of the Company's assets or earning power is sold
or transferred. The Plan prohibits the Company from entering into this sort of
transaction unless the acquirer agrees to comply with the "Flip-over" provisions
of the Plan.

The Rights can be redeemed by the Company for $.01 per Right until up to ten
days after the public announcement that someone has acquired 20 percent or more
of the Company's Common Stock (unless the redemption period is extended by the
Board in its discretion). If the Rights are not redeemed or substituted by the
Company, they will expire on August 1, 2012.


28


NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS (Continued)


5. Stock Incentive Plans

Maritrans Inc. has a stock incentive plan (the "Plan"), whereby non-employee
directors, officers and other key employees may be granted stock, stock options
and, in certain cases, receive cash under the Plan. Any outstanding options
granted under the Plan are exercisable at a price not less than market value of
the shares on the date of grant. The maximum aggregate number of shares
available for issuance under the Plan is 1,750,000. The Plan provides for the
automatic grant of non-qualified stock options to non-employee directors, on a
formulaic biannual basis, of options to purchase shares equal to two multiplied
by the aggregate number of shares distributed to such non-employee director
under the Plan during the preceding calendar year. In 2002, 2001 and 2000 there
were 3,203, 4,064 and 6,528 shares, respectively, issued to non-employee
directors. Compensation expense equal to the fair market value on the date of
the grant to the directors is included in general and administrative expense in
the consolidated statement of income. During 2002, 2001 and 2000, there were
26,172, 31,858 and 64,526 shares, respectively, of restricted stock issued under
the Plan and subject to restriction provisions. The restrictions lapse in up to
a three-year period from the date of grant. The weighted average fair value of
the restricted stock issued during 2002, 2001 and 2000 was $11.45, $8.85 and
$6.00. The shares are subject to forfeiture under certain circumstances.
Unearned compensation, representing the fair market value of the shares at the
date of issuance, is amortized to expense on a straight-line basis over the
vesting period. At December 31, 2002 and 2001, 287,416 and 318,606 remaining
shares and options within the Plan were reserved for grant, respectively.

In May 1999, the Company adopted the Maritrans Inc. 1999 Directors' and Key
Employees Equity Compensation Plan (the "99 Plan"), which provides non-employee
directors, officers and other key employees with certain rights to acquire
common stock and stock options. The aggregate number of shares available for
issuance under the 99 Plan is 900,000 and the shares are to be issued from
treasury shares. Any outstanding options granted under the 99 Plan are
exercisable at a price not less than market value of the shares on the date of
grant. During 2002, 2001 and 2000, there were 35,706, 35,147 and 94,962,
respectively, shares of restricted stock issued under the 99 Plan and subject to
restriction provisions. The restrictions lapse in up to a three-year period from
the date of grant. The weighted average fair value of the restricted stock
issued during 2002, 2001 and 2000 was $11.62, $8.82 and $5.99. The shares are
subject to forfeiture under certain circumstances. Unearned compensation,
representing the fair market value of the shares at the date of issuance, is
amortized to expense on a straight-line basis over the vesting period. At
December 31, 2002 and 2001, 165,154 and 207,298 remaining shares and options
within the Plan were reserved for grant, respectively.

Compensation expense for all restricted stock was $715,000, $749,000 and
$851,000 for the years ended December 31, 2002, 2001 and 2000, respectively.

Information on stock options follows:


Number of Weighted Average
Options Exercise Price Exercise Price
---------- -------------- ----------------

Outstanding at 12/31/99 ............. 1,046,313 4.000-9.188 5.82
Granted ........................ 83,270 5.750-6.000 5.89
Exercised ...................... 30,768 4.000-6.250 4.64
Cancelled or forfeited ......... 32,300 6.000-6.000 6.00
Expired ........................ -- -- --
--------- ------------- -----
Outstanding at 12/31/00 ............. 1,066,515 4.000-9.125 5.87
--------- ------------- -----
Granted ........................ 89,429 8.550-8.850 8.77
Exercised ...................... 44,587 5.375-9.125 6.68
Cancelled or forfeited ......... -- -- --
Expired ........................ 15,147 6.250-9.125 8.03
--------- ------------- -----
Outstanding at 12/31/01 ............. 1,096,210 4.000-9.125 6.04
--------- ------------- -----
Granted ........................ 79,131 11.450-14.200 12.08
Exercised ...................... 220,630 4.000-9.125 4.38
Cancelled or forfeited ......... 14,697 6.000-8.850 7.47
Expired ........................ 5,023 7.938-9.125 8.19
--------- ------------- -----
Outstanding at 12/31/02.............. 934,991 5.000-14.200 6.90
--------- ------------- -----

Exercisable..........................
December 31, 2000 .............. 380,712 4.000-9.125 5.21
December 31, 2001 .............. 544,905 4.000-9.125 5.51
December 31, 2002 .............. 543,777 5.000-9.125 6.25

29


NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS (Continued)


Outstanding options have an original term of up to ten years, are
exercisable in installments over two to four years, and expire beginning in
2002. The weighted average remaining contractual life of the options outstanding
at December 31, 2002 is six years.


6. Income Taxes

The income tax provision consists of:


2002 2001 2000
---- ---- ----
($000)

Current:
Federal ................................... $1,499 $4,426 $4,259
State ..................................... 407 251 122
Deferred:
Federal .................................... 3,639 1,380 (1,244)
State ...................................... 163 58 (36)
------ ------ ------
$5,708 $6,115 $3,101
====== ====== ======


The differences between the federal statutory tax rate in 2002, 2001 and
2000 and the effective tax rates were as follows:


2002 2001 2000
---- ---- ----
($000)

Statutory federal tax provision ....................... $5,328 $5,707 $2,840
State income taxes, net of federal income tax benefit . 492 235 88
Non-deductible items .................................. 68 249 249
Other ................................................. (180) (76) (76)
------ ------ ------
$5,708 $6,115 $3,101
====== ====== ======


Principal items comprising deferred income tax liabilities and assets as of
December 31, 2002 and 2001 are:


2002 2001
---- ----
($000)

Deferred tax liabilities:
Depreciation ................................... $49,432 $44,791
Prepaid expenses ............................... 2,037 1,562
------- -------
51,469 46,353
------- -------
Deferred tax assets:
Reserves and accruals .......................... 10,134 8,820
------- -------

10,134 8,820
------- -------
Net deferred tax liabilities .......................... $41,335 $37,533
======= =======


30

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS (Continued)

7. Retirement Plans

Most of the shoreside employees participate in a qualified defined benefit
retirement plan of Maritrans Inc. Substantially all of the seagoing supervisors
who were supervisors in 1984, or who were hired as or promoted into supervisory
roles between 1984 and 1998 have pension benefits under the Company's retirement
plan for that period of time. Beginning in 1999, the seagoing supervisors
retirement benefits are provided through contributions to an industry-wide,
multi-employer seaman's pension plan. Upon retirement, those seagoing
supervisors will be provided with retirement benefits from the Company's plan
for service periods between 1984 and 1998, and from the multi-employer seaman's
plan for other covered periods.

Net periodic pension cost was determined under the projected unit credit
actuarial method. Pension benefits are primarily based on years of service and
begin to vest after two years. Employees who are members of unions participating
in Maritrans' collective bargaining agreements are not eligible to participate
in the qualified defined benefit retirement plan of Maritrans Inc.

The following table sets forth changes in the plan's benefit obligation,
changes in plan assets and the plan's funded status as of December 31, 2002 and
2001:


2002 2001
---- ----
($000)

Change in benefit obligation
Benefit obligation at beginning of year......................... $ 26,156 $ 25,282
Service cost.................................................... 505 513
Interest cost................................................... 1,772 1,665
Actuarial loss.................................................. 540 --
Benefits paid................................................... (1,507) (1,304)
-------- --------
Benefit obligation at end of year............................... $ 27,466 $ 26,156
-------- --------

Change in plan assets
Fair value of plan assets at beginning of year.................. $ 29,114 $ 31,168
Actual return on plan assets.................................... (2,222) (750)
Benefits paid................................................... (1,507) (1,304)
-------- --------
Fair value of plan assets at end of year........................ $ 25,385 $ 29,114
-------- --------
Funded status................................................... (2,081) 2,958
Unrecognized net actuarial gain................................. (1,970) (7,070)
Unrecognized prior service cost................................. 1,329 1,398
Unrecognized net (asset)/obligation.............................
-- --
-------- --------
Accrued benefit cost............................................ ($ 2,722) ($ 2,714)
======== ========

Weighted average assumptions as of December 31, 2002
Discount rate................................................... 6.75% 6.75%
Expected rate of return......................................... 6.75% 6.75%
Rate of compensation increase................................... 5.00% 5.00%


Net periodic pension cost included the following components for the years ended
December 31,


2002 2001 2000
---- ---- ----
($000)

Components of net periodic benefit pension cost
Service cost of current period .................... $ 505 $ 513 $ 489
Interest cost on projected benefit obligation ..... 1,772 1,665 1,606
Expected return on plan assets..................... (2,006) (2,062) (2,025)
Amortization of net (asset)/obligation ............ -- (204) (204)
Amortization of prior service cost................. 138 132 132
Recognized net actuarial (gain)/loss............... (401) (597) (540)
------ ------- -------
Net periodic pension cost ......................... $ 8 ($ 553) ($ 542)
====== ======= ========


31

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS (Continued)

Substantially all of the shoreside employees participate in a qualified
defined contribution plan. Contributions under the plan are determined annually
by the Board of Directors of Maritrans Inc. and were $132,000, $256,000 and
$375,000 for the years ended December 31, 2002, 2001 and 2000, respectively.
Approximately 51 percent of the Company's employees are covered under collective
bargaining agreements.

Beginning in 1999, all of the Company's seagoing employee retirement
benefits are provided through contributions to industry-wide, multi-employer
seaman's pension plans. Prior to 1999, the seagoing supervisors were included in
the Company's retirement plan as discussed above. Contributions to
industry-wide, multi-employer seamen's pension plans, which cover substantially
all seagoing personnel, were approximately $997,000, $940,000 and $1,029,000 for
the years ended December 31, 2002, 2001 and 2000, respectively. These
contributions include funding for current service costs and amortization of
prior service costs of the various plans over periods of 30 to 40 years. The
pension trusts and union agreements provide that contributions be made at a
contractually determined rate per man-day worked. Maritrans Inc. and its
subsidiaries are not administrators of the multi-employer seamen's pension
plans.

8. Debt

Long term debt is as follows:



December 31,
2002 2001
---- ----
($000)

Term loan, graduated quarterly payments, maturity date January 2007, variable
interest rate (3.64% at December 31, 2002) ..................................... $ 41,250 $ 36,000
Revolving credit facility with Citizens Bank variable interest rate ................ 27,500 --
Vessel notes payable, no stated interest rate (interest imputed at a rate of 6.5%)
repaid in 2002 ................................................................. -- 2,545
Vessel notes payable, variable interest rate (5.48% at December 31, 2001) repaid
in 2002 ........................................................................ -- 4,443
------- -------
68,750 42,988
Less current portion ............................................................... 5,750 10,738
------- -------
$63,000 $32,250
======= =======


In October 2001, the Company paid off the Fleet Mortgage that was part of
the original indebtedness incurred when the Company became a public company in
1987. The Company recorded an extraordinary charge of $2.5 million, net of
taxes, or approximately $0.24 per share diluted, in prepayment penalties and the
write-off of unamortized financing costs related to the refinanced debt during
the fourth quarter as a result of the repayment.

In November 2001, the Company entered into an $85 million credit and
security agreement ("Credit Facility") with Citizens Bank (formerly Mellon Bank
N.A.) and a syndicate of other financial institutions ("Lenders"). Pursuant to
the terms of the Credit Facility, the Company could borrow up to $45 million of
term loans and up to $40 million under a revolving credit facility. Interest is
variable based on either the LIBOR rate plus an applicable margin (as defined)
or at prime rate. Principal payments on the term loans are required on a
quarterly basis and began in April 2002. The Credit Facility expires in November
2007, at which time all amounts are due. The Company has granted first preferred
ship mortgages and a first security interest in some of the Company's vessels
and other collateral to the Lenders as a guarantee of the Credit Facility. At
December 31, 2002, there was $41.3 million of term loans outstanding under the
Credit Facility and $27.5 million outstanding under the revolving line of
credit.

32

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS (Continued)

The Credit Facility requires the Company to maintain its properties in good
condition, maintain specified insurance on its properties and business, and
abide by other covenants, which are customary with respect to such borrowings.
The Credit Facility also requires the Company to meet certain financial
covenants. The Company was in compliance with all applicable covenants at
December 31, 2002.


The maturity schedule for outstanding indebtedness under existing debt
agreements at December 31, 2002 is as follows:

($000)

2003 ......................................... $5,750
2004 ......................................... 7,500
2005 ......................................... 11,000
2006 ......................................... 13,500
2007 ......................................... 31,000
-------
$68,750
=======

9. Commitments and Contingencies

Minimum future rental payments under noncancellable operating leases at
December 31, 2002 are as follows:

($000)

2003 ................................... $ 491
2004 ................................... 507
2005 ................................... 457
2006 ................................... 407
2007 ................................... 421
Thereafter ............................. 1,001
------
$3,284
======

Total rent expense for all operating leases was $578,000, $582,000, and
$584,000 for the years ended December 31, 2002, 2001 and 2000, respectively.

In the ordinary course of its business, claims are filed against the Company
for alleged damages in connection with its operations. Management is of the
opinion that the ultimate outcome of such claims at December 31, 2002 will not
have a material adverse effect on the consolidated financial statements.

In July 2002, the Company received a $0.5 million litigation award and is
included in other income in the consolidated statement of income.

The Company is engaged in litigation instituted by a competitor to
challenge its double-hull patent. Penn Maritime, Inc. v. Maritrans Inc., was
filed in the U.S. District Court for the Eastern District of New York on
September 6, 2001. The Plaintiff is seeking damages of $3 million and an
injunction restraining Maritrans from enforcing its patent, which if awarded,
would have a material adverse effect on the Company. However, management
believes the suit to be without merit. Maritrans is challenging the jurisdiction
of the Court to hear the matter in New York and upon resolution of the
jurisdictional issue, intends to seek affirmative damages from Penn Maritime,
Inc. for infringement of its patent as well as other claims arising from the
conduct of Penn Maritime, Inc.'s double hull program.

In November 2002, the Company awarded a contract to rebuild a fifth large
single hull barge, the OCEAN STATES, to a double hull configuration, which is
expected to have a total cost of approximately $21 million. The Company intends
to finance this project from a combination of internally generated funds and
borrowings under the Company's Credit Facility.

33

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS (Continued)

10. Subsequent Event

In December 1999, the Company sold 18 vessels from its Northeast fleet
to K-Sea Transportation. The purchaser alleged that the Company breached
warranties in the contract of sale pertaining to one of the vessels and
initiated binding arbitration to recover damages arising from the alleged
breach. The purchaser claimed damages of approximately $1.5 million. On January
24, 2002, the arbitrators ordered the Company to pay $335,000, including
pre-judgment interest to K-Sea Transportation. This amount was recorded in other
income in the year ended December 31, 2002 consolidated statement of income.

11. Quarterly Financial Data (Unaudited)


First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
($000, except per share amounts)

2002
- ----
Revenues .................................. $31,323 $32,468 $ 30,586 $ 34,610
Operating income .......................... 5,311 4,738 2,600 3,955
Net income ................................ 2,957 2,759 1,687 2,111
Basic earnings per share................... $ 0.35 $ 0.35 $ 0.21 $ 0.27
Diluted earnings per share................. $ 0.32 $ 0.32 $ 0.20 $ 0.25

2001
- ----
Revenues .................................. $31,567 $31,834 $ 28,284 $ 31,725
Operating income .......................... 4,897 5,336 2,684 4,895
Income before extraordinary item .......... 2,660 2,954 1,422 3,157
Net income 2,660 2,954 1,422 656
Income before extraordinary item per share.
Basic earnings per share................ $ 0.26 $ 0.29 $ 0.14 $ 0.33
Diluted earnings per share.............. $ 0.24 $ 0.28 $ 0.14 $ 0.30



In the fourth quarter of 2001, the Company repaid $33.0 million of
long-term debt in advance of its due date. The Company recorded an extraordinary
charge of $2.5 million, net of taxes, or approximately $0.24 diluted earnings
per share, in prepayment penalties and the write-off of unamortized financing
costs related to the refinanced debt in the fourth quarter as a result of the
repayment.


34




Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

None.
PART III

Item 10. Directors and Executive Officers of the Registrant

Information with respect to directors of the Registrant, and information
with respect to compliance with Section 16(a) of the Securities Exchange Act of
1934, is incorporated herein by reference to the Registrant's definitive Proxy
Statement (the "Proxy Statement") to be filed with the Securities and Exchange
Commission (the "Commission") not later than 120 days after the close of the
year ended December 31, 2002, under the captions "Information Regarding Nominees
For Election As Directors And Regarding Continuing Directors" and "Section 16(A)
Beneficial Ownership Reporting Compliance."

The individuals listed below are directors and executive officers of
Maritrans Inc. or its subsidiaries.



Name Age(1) Position
---- ------ --------

Stephen A. Van Dyck 59 Chairman of the Board of Directors and Chief Executive Officer
Dr. Robert E. Boni (2)(3) 75 Lead Director
Dr. Craig E. Dorman (2)(4) 62 Director
Frederick C. Haab (2)(3) 65 Director
Robert J. Lichtenstein (4) 55 Director
Brent A. Stienecker (3) 64 Director
Philip J. Doherty 43 President of Maritrans General Partner Inc.
Walter T. Bromfield 47 Vice President and Chief Financial Officer
Stephen M. Hackett 44 President, Chartering Division of Maritrans Operating Company L.P.
Peter G. Nielsen 53 President, Operations Division of Maritrans Operating Company L.P.
Janice M. Van Dyck 43 Secretary


(1) As of March 1, 2003
(2) Member of the Compensation Committee
(3) Member of the Audit Committee
(4) Member of the Nominating Committee


35




In February 2003, the Board of Directors of Maritrans Inc. announced the
appointment of Philip J. Doherty to Chief Executive Officer effective April 1,
2003. Stephen A. Van Dyck will continue to be employed by the Company as
Chairman of Maritrans Inc.

Mr. Van Dyck has been Chairman of the Board and Chief Executive Officer of
the Company and its predecessor since April 1987. For the previous year, he was
a Senior Vice President - Oil Services, of Sonat Inc. and Chairman of the Boards
of the Sonat Marine Group, another predecessor, and Sonat Offshore Drilling Inc.
For more than five years prior to April 1986, Mr. Van Dyck was the President and
a director of the Sonat Marine Group and Vice President of Sonat Inc. Mr. Van
Dyck is a member of the Board of Directors of Amerigas Propane, Inc. Mr. Van
Dyck is also the Chairman of the Board and a director of the West of England
Ship Owners Mutual Insurance Association (Luxembourg), a mutual insurance
association. See "Certain Transactions" in the Proxy Statement.

Mr. Doherty is President of Maritrans General Partner Inc., a wholly owned
subsidiary of the Company, and has been continuously employed by Maritrans since
1997. Previously, Mr. Doherty was Director of Business Development for Computer
Command and Control Company where he had been employed since April 1995.

Mr. Bromfield is Vice President and Chief Financial Officer of the Company.
Previously, Mr. Bromfield served as Treasurer and Controller of the Company and
has been continuously employed in various capacities by Maritrans or its
predecessors since 1981.

Mr. Hackett is President, Chartering Division of Maritrans Operating Company
L.P., a wholly owned subsidiary of the Company, and has been continuously
employed in various capacities by Maritrans or its predecessors since 1980.

Mr. Nielsen is President, Operations Division of Maritrans Operating Company
L.P., a wholly owned subsidiary of the Company and began employment with the
Company in 2002. From 2000 to 2002, Mr. Nielsen was Managing Partner of P.G.
Nielsen and Company, LLC. From 1998 to 2000, Mr. Nielsen Managing Director at
Seabulk Offshore, S.A. From 1996 to 1998, Mr. Nielsen was Director, Project
Management at Hvide Marine Inc.

Ms. Van Dyck is Secretary of the Company. Previously, Ms. Van Dyck served as
Senior Vice President of the Company and has been continuously employed by the
Company or its predecessors in various capacities since 1982.

Item 11 Executive Compensation*

Item 12 Security Ownership of Certain Beneficial Owners and Management*

Item 13 Certain Relationships and Related Transactions*

*The information required by Item 11, Executive Compensation, by Item 12,
Security Ownership of Certain Beneficial Owners and Management, and by Item 13,
Certain Relationships and Related Transactions, is incorporated herein by
reference to the Proxy Statement under the headings "Compensation of Directors
and Executive Officers", "Security Ownership of Certain Beneficial Owners and
Management" and "Certain Transactions".

Item 14 Controls and Procedures

As of December 31, 2002, an evaluation was performed with the participation
of the Company's management, including the CEO and CFO, of the effectiveness of
the design and operation of the Company's disclosure controls and procedures.
Based on that evaluation, the Company's management, including the CEO and CFO,
concluded that the Company's disclosure controls and procedures were effective
as of December 31, 2002. There have been no significant changes in the Company's
internal controls or other factors that could significantly affect internal
controls subsequent to December 31, 2002.


36



PART IV


Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K




Page
----

(a) (1) Financial Statements

Report of Independent Certified Public Accountants 19

Maritrans Inc. Consolidated Balance Sheets at December 31, 2002 and 2001 20

Maritrans Inc. Consolidated Statements of Income for the years ended 21
December 31, 2002, 2001 and 2000

Maritrans Inc. Consolidated Statements of Cash Flows for the years ended 22
December 31, 2002, 2001 and 2000

Maritrans Inc. Consolidated Statements of Stockholders' Equity for the years 23
ended December 31, 2002, 2001 and 2000

Notes to the Consolidated Financial Statements 24

(2) Financial Statement Schedules

Schedule II Maritrans Inc. Valuation Accounts for the years ended December 43
31, 2002, 2001 and 2000.

All other schedules called for under Regulation S-X are not
submitted because they are not applicable, not required, or
because the required information is not material, or is included
in the financial statements or notes thereto.

(b) Reports on Form 8-K


No reports on Form 8-K were filed in the quarter ended December 31, 2002


37




Exhibits

Exhibit Index
-------------

3.1 Certificate of Incorporation of the Registrant, as amended
(Incorporated by reference herein to the Exhibit of the same number
filed with the Corporation's Post-Effective Amendment No. 1 to Form S-4
Registration Statement No. 33-57378 dated January 26, 1993).

3.2 By Laws of the Registrant, amended and restated February 9, 1999
(Incorporated by reference herein to the Exhibit number in parentheses
filed with Maritrans Inc. Annual Report on Form 10-K, dated March 30,
1999 for the fiscal year ended December 31, 1998.).

4.1 Certain instruments with respect to long-term debt of the Registrant or
Maritrans Operating Partners L.P., Maritrans Philadelphia Inc. or
Maritrans Barge Company which relate to debt that does not exceed 10
percent of the total assets of the Registrant are omitted pursuant to
Item 601(b) (4) (iii) (A) of Regulation S-K. Maritrans hereby agrees to
furnish supplementally to the Securities and Exchange Commission a copy
of each such instrument upon request.

4.2 Rights Agreement dated as of August 1, 2002, between Maritrans Inc, and
American Stock Transfer and Trust (Incorporated by reference herein to
Exhibit 4 filed with the Maritrans Inc. Form 8-K, dated August 1,
2002).

10.4(a) Agreement of Sale dated October 11, 1999 between Maritrans Operating
Partners L.P. and K-Sea Transportation LLC (Incorporated by reference
herein to Exhibit 10 filed with the Maritrans Inc. Form 8-K, dated
December 22, 1999).

10.4(b) Credit and Security Agreement dated November 20, 2001, among Maritrans
Inc., the Other Borrowers and Lenders and Mellon Bank N.A. for a term
loan up to $45,000,000 and a revolving credit facility up to
$40,000,000 (Incorporated by reference herein to Exhibit 10.4(f) filed
with the Maritrans Inc. Annual Report on Form 10-K, dated March 15,
2002 for the fiscal year ended December 31, 2001).

Executive Compensation Plans and Arrangements

10.5 Severance and Non-Competition Agreement, as amended and restated
effective June 30, 2001, between Maritrans General Partner Inc. and
Stephen M. Hackett (Incorporated by reference herein to the Exhibit
10.5 filed with the Maritrans Inc. Annual Report on Form 10-K, dated
March 15, 2002 for the fiscal year ended December 31, 2001).

10.7 Employment Agreement, as amended and restated effective April 1, 2003
between Maritrans Inc. and Stephen A. Van Dyck.

10.9 Employment, Severance and Non-Competition Agreement, effective December
14, 2001, between Maritrans Inc. and Janice M. Van Dyck (Incorporated
by reference herein to the Exhibit 10.9 filed with the Maritrans Inc.
Annual Report on Form 10-K, dated March 15, 2002 for the fiscal year
ended December 31, 2001).

10.10 Profit Sharing and Savings Plan of Maritrans Inc. as amended and
restated effective January 1, 2002.

10.11 Executive Award Plan of Maritrans GP Inc. (Incorporated by reference
herein to Exhibit 10.31 filed with the Maritrans Partners L. P. Annual
Report on Form 10-K, dated March 29, 1993 for the fiscal year ended
December 31, 1992).

10.12 Excess Benefit Plan of Maritrans GP Inc. as amended and restated
effective January 1, 1988 (Incorporated by reference herein to Exhibit
10.32 filed with the Maritrans Partners L. P. Annual Report on Form
10-K, dated March 29, 1993 for the fiscal year ended December 31,
1992).

38



10.13 Retirement Plan of Maritrans GP Inc. as amended and restated effective
January 1, 2002

10.15 Executive Compensation Plan as amended and restated effective March 18,
1997 (Incorporated by reference herein to Exhibit A of the Registrant's
definitive Proxy Statement filed on March 31, 1997).

10.16 1999 Directors Equity and Key Employees Equity Compensation Plan
(Incorporated by reference herein to the Exhibit 99.1 filed with the
Maritrans Inc. Form S-8 Registration Statement No. 333-79891 dated June
3, 1999).

10.17 Severance and Non-Competition Agreement, as amended and restated
effective October 1, 2002, between Maritrans General Partner Inc. and
Philip J. Doherty (Incorporated by reference herein to the Exhibit
10.17 filed with the Maritrans Inc. quarterly report on Form 10-Q,
dated November 12, 2002 for the quarter ended September 30, 2002).

10.18 Severance and Non-Competition Agreement, as amended and restated
effective July 12, 2002, between Maritrans Inc. and Walter T. Bromfield
(Incorporated by reference herein to the Exhibit 10.18 filed with the
Maritrans Inc. quarterly report on Form 10-Q, dated November 12, 2002
for the quarter ended September 30, 2002).

10.19 Severance and Non-Competition Agreement effective September 25, 2002,
between Maritrans General Partner Inc. and Peter G. Nielsen
(Incorporated by reference herein to the Exhibit 10.19 filed with the
Maritrans Inc. quarterly report on Form 10-Q, dated November 12, 2002
for the quarter ended September 30, 2002).

21.1 Subsidiaries of Maritrans Inc.

23.1 Consent of Independent Certified Public Accountants

99.1 Certification of Chief Executive Officer

99.2 Certification of Chief Financial Officer


39




SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

MARITRANS INC.
(Registrant)
By: /s/ Stephen A. Van Dyck
------------------------------
Stephen A. Van Dyck
Chairman of the Board
Dated: March 10, 2003


Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.



By:
/s/ Stephen A. Van Dyck
----------------------------------------
Stephen A. Van Dyck Chairman of the Board and Dated: March 10, 2003
Chief Executive Officer
(Principal Executive Officer)
By:
/s/ Dr. Robert E. Boni
----------------------------------------
Dr. Robert E. Boni Lead Director Dated: March 10, 2003
By:
/s/ Dr. Craig E. Dorman
----------------------------------------
Dr. Craig E. Dorman Director Dated: March 10, 2003
By:
/s/ Frederick C. Haab
----------------------------------------
Frederick C. Haab Director Dated: March 10, 2003
By:
/s/ Robert J. Lichtenstein
----------------------------------------
Robert J. Lichtenstein Director Dated: March 10, 2003
By:
/s/ Brent A. Stienecker
----------------------------------------
Brent A. Stienecker Director Dated: March 10, 2003
By:
/s/ Walter T. Bromfield
----------------------------------------
Walter T. Bromfield Chief Financial Officer Dated: March 10, 2003
(Principal Financial Officer)
By:
/s/ Judith M. Cortina
----------------------------------------
Judith M. Cortina Controller Dated: March 10, 2003
(Principal Accounting Officer)


40



CERTIFICATION

I, Stephen A. Van Dyck, certify that:

1. I have reviewed this annual report on Form 10-K of Maritrans Inc.;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:

a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report (the "Evaluation Date");
and

c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):

a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.


Date: March 10, 2003 /s/ Stephen A. Van Dyck
------------------------
Stephen A. Van Dyck
Chief Executive Officer

41



CERTIFICATION

I, Walter T. Bromfield, certify that:

1. I have reviewed this annual report on Form 10-K of Maritrans Inc.;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:

a. designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this annual report is being prepared;

b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report (the "Evaluation Date");
and

c. presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):

a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b. any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.


Date: March 10, 2003 /s/ Walter T. Bromfield
------------------------
Walter T. Bromfield
Chief Financial Officer

42



MARITRANS INC.

SCHEDULE II - VALUATION ACCOUNTS

($000)



BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND AT END OF
DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS PERIOD
----------- ---------- ---------- ---------- ---------

JANUARY 1 TO DECEMBER 31, 2000
Allowance for doubtful accounts .......... $1,393 $ 77 $ 254(a) $1,216
Allowance for notes receivable............ $4,500 $ -- $ -- $4,500
Accrued shipyard costs ................... $17,403 $10,466 $7,942(b) $19,927

JANUARY 1 TO DECEMBER 31, 2001
Allowance for doubtful accounts .......... $1,216 $(469) $ 57(a) $ 690
Allowance for notes receivable............ $4,500 $ -- $ -- $4,500
Accrued shipyard costs ................... $19,927 $ 7,927 $11,929(b) $15,925

JANUARY 1 TO DECEMBER 31, 2002
Allowance for doubtful accounts .......... $ 690 $ -- $ -- $ 690
Allowance for notes receivable............ $4,500 $ -- $ -- $4,500
Accrued shipyard costs ................... $15,925 $ 12,860 $16,135(b) $12,650


- ------------

(a) Deductions are a result of write-offs of uncollectible accounts receivable
for which allowances were previously provided.

(b) Deductions reflect expenditures for major periodic overhauls.



43