UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-K

þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMERCIAL BARGE LINE COMPANY

(Exact Name of Registrant as Specified in Charter)

Delaware		333-124454-12		03-0552365
(State or other jurisdiction of incorporation or organization)		(Commission File Number)		(I.R.S. Employer Identification No.)

1701 E. Market Street, Jeffersonville, Indiana (Address of principal executive offices)		47130 (Zip Code)

1701 East Market Street Jeffersonville, Indiana (Address of principal executive offices)		47130 (Zip Code)

(812) 288-0100
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)

     Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

     Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
Yes þ No o

     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 filing requirements for the past 90 days. Yes o No o Not applicable.

     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of 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. þ

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o		Accelerated filer o		Non-accelerated filer þ (Do not check if a smaller reporting company)		Smaller reporting company o

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).
Yes o No þ

     

     State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. Not applicable

     Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. Not applicable.

DOCUMENTS INCORPORATED BY REFERENCE
None

 

 

Table of Contents

		Page
PART I			5
Item 1. Business			5
Item 1A. Risk Factors			14
Item 1B. Unresolved Staff Comments			22
Item 2. Properties			22
Item 3 Legal Proceedings			24
Item 4. Submission of Matters to a Vote of Security Holders			26
PART II			26
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			26
Item 6. Selected Financial Data			27
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation			29
Item 7A. Quantitative and Qualitative Disclosures About Market Risk			52
Item 8. Financial Statements and Supplementary Data			54
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			92
Item 9A. Controls and Procedures			92
Item 9B. Other Information			92
PART III			93
Item 10. Directors and Executive Officers of the Registrant			93
Item 11. Executive Compensation			95
Item 12. Security Ownership of Certain Beneficial Owners and Management			113
Item 13. Certain Relationships and Related Transactions			114
Item 14. Principal Accountant Fees and Services			115
PART IV			115
Item 15. Exhibits and Financial Statement Schedules			115
Signatures			118

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     This annual report on Form 10-K includes certain “forward-looking statements” that involve many risks and uncertainties. When used, words such as “anticipate,” “expect,” “believe,” “intend,” “may be,” “will be” and similar words or phrases, or the negative thereof, unless the context requires otherwise, are intended to identify forward-looking statements. These forward-looking statements are based on management’s present expectations and beliefs about future events. As with any projection or forecast, these statements are inherently susceptible to uncertainty and changes in circumstances. The Company is under no obligation to, and expressly disclaims any obligation to, update or alter our forward-looking statements whether as a result of such changes, new information, subsequent events or otherwise. Important factors that could cause actual results to differ materially from those reflected in such forward-looking statements and that should be considered in evaluating our outlook include, but are not limited to, the following:

	•		The aftermath of the global economic crisis, which began in 2008, may continue to have detrimental impacts on our business.
	•		Freight transportation rates for the Inland Waterways fluctuate from time to time and may decrease.
	•		An oversupply of barging capacity may lead to reductions in freight rates.
	•		Yields from North American and worldwide grain harvests could materially affect demand for our barging services.
	•		Any decrease in future demand for new barge construction may lead to a reduction in sales volume and prices for new barges.
	•		Volatile steel prices may lead to a reduction in or delay of demand for new barge construction.
	•		Higher fuel prices, if not recouped from our customers, could dramatically increase operating expenses and adversely affect profitability.
	•		Our operating margins are impacted by a low margin legacy contract and by spot rate market volatility for grain volume and pricing.
	•		We are subject to adverse weather and river conditions, including marine accidents.
	•		Seasonal fluctuations in industry demand could adversely affect our operating results, cash flow and working capital requirements.
	•		The aging infrastructure on the Inland Waterways may lead to increased costs and disruptions in our operations.
	•		The inland barge transportation industry is highly competitive; increased competition could adversely affect us.
	•		Global trade agreements, tariffs and subsidies could decrease the demand for imported and exported goods, adversely affecting the flow of import and export tonnage through the Port of New Orleans and the demand for barging services.
	•		Our failure to comply with government regulations affecting the barging industry, or changes in these regulations, may cause us to incur significant expenses or affect our ability to operate.
	•		Our maritime operations expose us to numerous legal and regulatory requirements, and violation of these regulations could result in criminal liability against us or our officers.
	•		The Jones Act restricts foreign ownership of our stock, and the repeal, suspension or substantial amendment of the Jones Act could increase competition on the Inland Waterways and have a material adverse effect on our business.
	•		We are named as a defendant in lawsuits and we are in receipt of other claims and we cannot predict the outcome of such litigation and claims, which may result in the imposition of significant liability.
	•		Our insurance may not be adequate to cover our operational risks.
	•		Our aging fleet of dry cargo barges may lead to a decline in revenue if we do not replace the barges or drive efficiency in our operations.
	•		Our cash flows and borrowing facilities may not be adequate for our additional capital needs and our future cash flow and capital resources may not be sufficient for payments of interest and principal of our substantial indebtedness.
	•		A significant portion of our borrowings are tied to floating interest rates which may expose us to higher interest payments should interest rates increase substantially.
	•		We face the risk of breaching covenants in our Existing Credit Facility.
	•		The loss of one or more key customers, or material nonpayment or nonperformance by one or more of our key customers, could cause a significant loss of revenue and may adversely affect profitability.
	•		A major accident or casualty loss at any of our facilities or affecting free navigation of the Gulf or the Inland Waterways could significantly reduce production.
	•		Potential future acquisitions or investments in other companies may have a negative impact on our business.
	•		A temporary or permanent closure of the river to barge traffic in the Chicago area in response to the threat of Asian carp migrating into the Great Lakes may have an adverse effect on operations in the area.
	•		Interruption or failure of our information technology and communications systems, or compliance with requirements related to controls over our information technology protocols, could impair our ability to effectively provide our services or the integrity of our information.
	•		Many of our employees are covered by federal maritime laws that may subject us to job-related claims.
	•		We have experienced work stoppages by union employees in the past, and future work stoppages may disrupt our services and adversely affect our operations.

	•		The loss of key personnel, including highly skilled and licensed vessel personnel, could adversely affect our business.
	•		Failure to comply with environmental, health and safety regulations could result in substantial penalties and changes to our operations.
	•		We are subject to, and may in the future be subject to disputes, or legal or other proceedings that could involve significant expenditures by us.
	•		Our substantial debt could adversely affect our financial condition.
	•		We may be unable to service our indebtedness.

     See Item 1A “Risk Factors” of this annual report on Form 10-K for a more detailed discussion of the foregoing and certain other factors that could cause actual results to differ materially from those reflected in such forward-looking statements and that should be considered in evaluating our outlook.

PART I

ITEM 1. THE BUSINESS

The Company

     Commercial Barge Line Company (“CBL” or the “Company”), a Delaware corporation, is one of the largest and most diversified inland marine transportation and service companies in the United States. CBL provides barge transportation and related services under the provisions of the Jones Act and manufactures barges, primarily for brown-water use. CBL also provides certain naval architectural services to its customers. CBL was incorporated in 2004. CBL is a wholly-owned subsidiary of American Commercial Lines Inc. (“ACL”). ACL is a wholly-owned subsidiary of ACL I Corporation (“ACL I”). ACL I is a wholly owned subsidiary of Finn Holding Corporation (“Finn”). Finn is owned by certain affiliates of Platinum Equity, LLC (“Platinum”). On December 21, 2010, we announced the consummation of the previously announced acquisition of ACL by Platinum (the “Acquisition”). The Acquisition was accomplished through the merger of Finn Merger Corporation, a Delaware corporation and a wholly owned subsidiary of ACL I, a Delaware corporation, with and into American Commercial Lines Inc.

     The assets of ACL consist principally of its ownership of all of the stock of CBL. The assets of CBL consist primarily of its ownership of all of the equity interests in American Commercial Lines LLC, ACL Transportation Services LLC, and Jeffboat LLC, Delaware limited liability companies, and their subsidiaries. Additionally, CBL owns ACL Professional Services, Inc., a Delaware corporation. CBL is responsible for corporate income taxes. ACL and CBL do not conduct any operations independent of their ownership interests in the consolidated subsidiaries.

     CBL’s principal executive offices are located at 1701 East Market Street in Jeffersonville, Indiana. CBL’s mailing address is P.O. Box 610, Jeffersonville, Indiana 47130.

     The Platinum Equity group (“Platinum Group”) is a global acquisition firm headquartered in Beverly Hills, California with offices in Boston, New York and London. Since its founding in 1995, Platinum Group has acquired more than 120 businesses in a broad range of market sectors including technology, industrials, logistics, distribution, maintenance and service. Platinum Group’s current portfolio includes over 30 companies. The firm has a diversified capital base that includes the assets of its portfolio companies as well as capital commitments from institutional investors in private equity funds managed by the firm.

Information Available on our Website

     Our website address is www.aclines.com. All of our filings with the Securities and Exchange Commission, including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports can be accessed free of charge through the News link on the website. ACL filed these reports until December 30, 2010. Reports after that date were filed by CBL. In addition, the Code of Ethics is also available on the website.

Operating Segments

     We currently operate in two primary business segments, transportation and manufacturing. We are the third largest provider of dry cargo barge transportation and second largest provider of liquid cargo barge transportation on the United States Inland Waterways consisting of the Mississippi River System, its connecting waterways and the Gulf Intracoastal Waterway (the “Inland Waterways”), accounting for 11.6% of the total inland dry cargo barge fleet and 10.8% of the total inland liquid cargo barge fleet as of December 31, 2010, according to Informa Economics, Inc., a private forecasting service (“Informa”).Our manufacturing segment is the second largest manufacturer of brown water barges in the United States according to year end 2010 data from Criton Corporation, publisher of River Transport News (“Criton”). Comparative financial information regarding our transportation, manufacturing and other business segments is included in both the notes to our consolidated financial statements and in Management’s Discussion and Analysis of Financial Conditions and Results of Operations. This financial information includes for each segment, as defined by generally accepted accounting principles, revenues from external customers, a measure of profit or loss and total assets for each of the last three fiscal years.

     In addition to our primary two business segments, we also operate a smaller services company, Elliott Bay Design Group LLC (“EBDG”) which provides architecture, engineering and production support to its many customers in the commercial marine industry. Elliot Bay also provides ACL with expertise in support of its transportation and manufacturing businesses. EBDG is not significant to the primary operating segments of ACL and, due to its relative insignificance, is included in “All other segments.”

     During the second quarter of 2008, we completed the acquisition of Summit Contracting, LLC (“Summit”). Summit provided environmental and civil construction services to a variety of customers. Summit was sold in the fourth quarter of 2009 and is excluded from segment disclosures due to its reclassification to discontinued operations in all periods presented.

     For year ended December 31, 2010, our transportation segment accounted for 86.6% ($632.7 million) of our consolidated revenue, 99.5% ($49.8 million) of our operating income and 95.6% ($94.5 million) of our consolidated earnings before interest, taxes, depreciation and amortization (“EBITDA”), while our manufacturing segment, Jeffboat, accounted for 12.3% ($90.0 million) of our consolidated revenue and 3.4% ($3.4 million) of our EBITDA. Jeffboat was essentially breakeven at the operating profit level and, therefore, was not a measurable percentage of operating income in 2010. Our other businesses that are not classified within these segments accounted for remaining revenues and EBITDA for the year ended December 31, 2010 Management considers EBITDA to be a meaningful indicator of operating performance and uses it as a measure to assess the operating performance of the Company’s business segments. EBITDA provides us with an understanding of one aspect of earnings before the impact of investing and financing transactions and income taxes. Additionally, covenants in our debt agreements contain financial ratios based on EBITDA. EBITDA should not be construed as a substitute for net income or as a better measure of liquidity than cash flow from operating activities, which is determined in accordance with generally accepted accounting principles (“GAAP”). EBITDA excludes components that are significant in understanding and assessing our results of operations and cash flows. In addition, EBITDA is not a term defined by GAAP and as a result our measure of EBITDA might not be comparable to similarly titled measures used by other companies.

     The Company believes that EBITDA is relevant and useful information, which is often reported and widely used by analysts, investors and other interested parties in our industry. Accordingly, the Company is disclosing this information to allow a more comprehensive analysis of its operating performance. A reconciliation of net income to EBITDA is contained herein at Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A) under the caption Consolidated Financial Overview — Non-GAAP Financial Measure Reconciliation.

     In 2010 our transportation segment transported a total of approximately 33.8 billion ton-miles, with 31.0 billion ton-miles transported under affreightment contracts and 2.8 billion ton-miles transported under towing and day rate contracts. In total this was a decrease of 3.3 billion ton-miles or 8.8% compared to 2009. The decreased ton-miles were produced with an average barge fleet that was 4.5% smaller than the prior year. We believe that ton-miles, which are computed based on the extension of tons by the number of miles transported, are the best available volume measurement for the transportation business and are a key part of how we measure our performance.

     Our operations are tailored to service a wide variety of shippers and freight types. We provide additional value-added services to our customers, including third-party logistics through our BargeLink LLC joint venture. Our operations incorporate advanced fleet management practices and information technology systems which allow us to effectively manage our fleet. Our barging operations are complemented by our marine repair, maintenance and port services (e.g. fleeting, shifting, repairing and cleaning of barges and towboats) located strategically throughout the Inland Waterways.

     Our freight contracts are typically matched to the individual requirements of the shipper depending on the shipper’s need for capacity, specialized equipment, timing and geographic coverage. Primarily as a result of strong customer demand relative to barge industry capacity, average freight rates for commodities moved under term contracts increased significantly during the period from 2003 to 2006, retracted during the recession beginning in 2008 and began to strengthen in the second half of 2010. Due to the expected continued retirement of aged barge capacity during the next several years, we anticipate that the pricing on term contract renewals over the longer term will be flat to slightly positive during the same period, although we can make no assurance that this will occur.

     Other than during the recent recession, spot rates, primarily for grain and for a portion of our coal shipments, have also been generally higher over the last five years. However, these spot rates have been and are expected to continue to be more volatile within and across years. Grain volatility is based not only on the supply and demand for barges but additionally weather, crop size, export demand, ocean port freight differentials and producer market timing.

     Our dry cargo barges transport a variety of bulk and non-bulk commodities. In 2010 grain was our largest class of dry cargo transported, accounting for 29.5% of our transportation revenue, followed by bulk and coal. The bulk commodities classification contains a variety of cargo segments including steel, salt, alumina, fertilizers, cement, ferro alloys, ore and gypsum.

     We also transport chemicals, petroleum, ethanol, edible oils and other liquid commodities with our fleet of tank barges, accounting for 27.6% of our 2010 transportation revenue.

     Located in Jeffersonville, Indiana, on the Ohio River, our manufacturing segment, Jeffboat, is, we believe, one of the largest inland shipyards in the United States. The manufacturing segment designs and manufactures barges and other vessels for Inland Waterways service for third-party customers and our transportation business. It also manufactures equipment for coastal and offshore markets and has long employed advanced inland marine technology. In addition, it also provides complete dry-docking capabilities and full machine shop facilities for repair and storage of towboat propellers, rudders and shafts. The segment also offers technically advanced marine design and manufacturing capabilities for both inland and ocean service vessels. The manufacturing segment utilizes sophisticated computer-aided design and manufacturing systems to develop, calculate and analyze all manufacturing and repair plans.

     Historically, our transportation business has been one of the manufacturing segment’s most significant customers. We believe the synergy created by our transportation operations and our manufacturing and repair capabilities is a competitive advantage. Our vertical

integration allows us to source barges at cost and permits optimization of manufacturing schedules and asset utilization between internal requirements and sales to third-party customers. Additionally, manufacturing segment engineers have the opportunity to collaborate both with our barge operations and with our naval architects on innovations that enhance towboat performance and barge life.

CUSTOMERS AND CONTRACTS

     Transportation. Our primary customers include many of the major industrial and agricultural companies in the United States. Our relationships with our top ten customers have been in existence for several years, some for more than 30 years. We enter into a wide variety of contracts with these customers, ranging from single spot movements to renewable one-year contracts and multi-year extended contracts. The contracts vary in duration. Some contracts provide guarantees for a percentage of the customer’s volume shipped in certain traffic lanes.

     In 2010 our ten largest customers accounted for approximately 40.9% of our revenue with no individual customer exceeding 10%. We have many long-standing customer relationships, including Cargill, Inc., North American Salt Company, the David J. Joseph Company, Consolidated Grain & Barge Company, Bunge North America, Inc., United States Steel Corporation, Nucor Steel, Alcoa, Inc., Shell Chemical Company/Shell Trading Company, DuPont, Ineos—Nova Chemicals, Inc. and Archer Daniels Midland Co. We also have a long-standing contractual relationship, extended during the emergence from bankruptcy in 2005, until 2015, with Louisiana Generating LLC, a subsidiary of NRG Energy, Inc. (“LaGen”) and Burlington Northern Santa Fe Railway (“BNSF”). Many of our customers were significantly affected by the recent recession and we anticipate that some of our customers may continue to struggle into 2011. We are continuing to closely monitor the credit worthiness of our portfolio. We did experience the bankruptcy of one of our liquids customers, which had been one of our top ten customers, early in 2009, resulting in cumulative bad debt expenses totaling $1.2 million recorded in late 2008 and early 2009. Additionally, the contract with the customer was rejected in bankruptcy. The lost business with this customer impacted both our revenue and margins in 2009.

     In 2011, we anticipate that approximately 55% to 60% of our barging revenue will be derived from customer contracts that vary in duration, but generally are one year to four years in length. The average contract maturity is approximately two years. Most of our multi-year contracts are set at a fixed price, with adjustment provisions for fuel, and, in many cases, labor cost and general inflation, which increases stability of the contract margins. Generally, contracts that are less than one year are priced at the time of execution, which we refer to as the spot market. All of our grain freight has been priced in the spot market for the past five years. In 2010 the transportation segment generated approximately 73% of its revenues under term contracts and spot market arrangements with customers to transport cargoes on a per ton basis from an origin point to a destination point along the Inland Waterways on our barges, pushed primarily by our towboats. These contracts are referred to as affreightment contracts.

     Our dedicated service contracts typically provide for equipment specially configured to meet the customer’s requirements for scheduling, parcel size and product integrity. The contract may take the form of a “consecutive voyages” affreightment agreement, under which the customer commits to loading the barges on consecutive arrivals. Alternatively, the contract may be a “day rate plus towing” agreement under which the customer essentially charters a barge or set of barges for a fixed daily rate and pays a towing charge for the movement of the tow to its destination. A “unit tow” contract provides the customer with a set of barges and a boat for a fixed daily rate, with the customer paying the cost of fuel. Chemical shippers, until the economic slowdown beginning late in 2008, typically used dedicated service contracts to ensure reliable supplies of specialized feedstocks to their plants. Petroleum distillates and fuel oils have historically also moved under “unit tow” contracts. Many dedicated service customers formerly also sought capacity in the spot market for peaking requirements. Since the beginning of the recession, much of this business has reverted to spot market pricing and the resultant over-supply of liquid barge capacity has driven spot rates down. Outside towing revenue is earned by moving barges for other affreightment carriers at a specific rate per barge move. Transportation services revenue is earned for fleeting, shifting and cleaning services provided to third parties. Under charter/day rate contracts, our boats and barges are leased to third parties who control the use (loading, unloading, and movement) of the vessels. During 2008, 2007 and 2006 we deployed additional barges to serve customers under charter/day rate contracts due to strong demand and attractive pricing for such service. The demand for such arrangements decreased significantly during and after the recession. We ended 2010 with 131 barges in dedicated service. An average total of 122, 122 and 155 tank barges or 36.3%, 33.0% and 40.5% of our average liquid tanker fleet in the years 2010, 2009 and 2008 respectively, were devoted to these non-affreightment contracts. The pricing attained for this type of service and the varying number of barges deployed drove charter and day rate revenue flat in 2010, down 15.4% in 2009, up 17% in 2008 and up 52% in 2007, respectively, in comparison to the immediately preceding year. The transportation segment non-affreightment revenues are generated either by demurrage charges for customers’ delays, beyond contractually allowed days for loading and unloading, of our equipment under affreightment contracts or by one of three other distinct contractual arrangements with customers: (i) dedicated service contracts; (ii) outside towing contracts or (iii) other marine services contracts. Transportation services revenue is further summarized in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

     Marine services revenue is earned for fleeting, shifting and cleaning services provided to third parties. Outside towing revenue is earned by moving barges for other affreightment carriers at a specific rate per barge move.

     Manufacturing. The primary third-party customers of our barge and other vessel manufacturing subsidiary, Jeffboat, are other operators within the inland barging industry. Because barge and other vessel manufacturing requirements for any one customer are dependent upon the customer’s specific replacement and growth strategy, and due to the long-lived nature of the equipment manufactured, the manufacturing segment’s customer base varies from year-to-year. Our transportation business is a significant customer of the manufacturing segment. In 2010, 2009 and 2008, our transportation segment accounted for 27%, 10% and 10%, respectively, of the manufacturing segment’s revenue before intercompany eliminations.

     At December 31, 2010, the manufacturing segment’s approximate vessel backlog for external customers was $102 million compared to $49 million at December 31, 2009. The backlog consists of vessels to be constructed under signed customer contracts or exercised contract options that have not yet been recognized as revenue. We have seen some return of demand as the economy has recovered. We expect two production lines to be fully utilized in 2011.

     As more normal levels of demand return, we continue to believe that future demand for dry and liquid tank barges in the two to five year time horizon will be relatively strong driven primarily by the need for replacement of retiring dry covered hopper capacity. Industry data from Informa indicates that more than 18% of the dry cargo barges in service at December 31, 2010 were more than 26 years old. The aging of the in-service dry fleet is expected to continue to drive demand for replacement dry barges.

     Another continuing driver of new barge demand is the requirement to replace all single-hull tank barges with double-hull tank barges. By federal law, single-hull tank barges will not be allowed to operate after 2015. All of our tank barges have double hulls. There are, however, still some single-hull barges in operation within the industry. The ultimate realization of the replacement activity or the timing of the replacement will likely be impacted by overall tank barge demand as the current economic environment has allowed retirement of such barges without current need for replacement. We are continuing steps to “right-size” our manufacturing capacity to be more efficient and profitable through all economic cycles. The price we have been able to charge for manufacturing production has fluctuated historically based on a variety of factors including the cost of raw materials, the cost of labor and the demand for new barge builds compared to the barge manufacturing capacity within the industry at the time. During the period from the beginning of 2007 through 2008, we were able to maintain or improve the pricing on new barge orders, net of steel costs, in response to continued demand for new barge construction. Pricing strength decreased during the recession but has recently been improving and over the longer term, as we re-enter a period of strong demand for replacement barges, we plan to continue improving the pricing on our barges, net of steel.

     Steel is the largest component of our raw materials, representing 50% to 90% of the raw material cost, depending on steel prices and barge type. We have established relationships with our steel vendors and have not had an issue with obtaining the quantity or quality of steel required to meet our commitments. The price of steel, however, varies significantly with changes in supply and demand. Because of the volatile nature of steel prices, we generally pass back to our customers the cost of steel used in the production of our customers’ barges. A number of the contracts in the backlog contain steel price adjustments, though in some more recent contracts we have fixed steel prices, as vendors had been willing to commit to fixed prices over an extended period, during which we pre-purchased steel to lock in prices. The actual price of steel at the time of construction may result in contract prices that are greater than or less than those used to calculate the backlog at December 31, 2010. Several contracts in the backlog also contain options for the customer to purchase additional barges in the future, which are not included in the reported backlog until exercised. All orders in the backlog at December 31, 2010, are expected to be produced in 2011. The backlog also excludes our planned construction of internal replacement barges.

TRANSPORTATION FLEET

     Barges. As of December 31, 2010, our total transportation fleet was 2,411 barges, consisting of 1,777 covered dry cargo barges, 309 open dry cargo barges and 325 tank barges. We operate 430 of these dry cargo barges and 23 of these tank barges pursuant to charter agreements. The charter agreements have terms ranging from one to fourteen years. Generally, we expect to be able to renew or replace our charter agreements as they expire. As of December 31, 2010, the average age of our covered dry cargo barges was 19.5 years, the average age of our dry open barges was 31.2 years and the average age of our tank barges was 21.1 years. Our dry fleet and liquid fleets are approximately 5 years and 2.7 years older than the industry averages contained in the industry age profile discussed in “Item 1. The Business — Competition” Covered hoppers are most often used to transport grain and other farm products, metallic ores and non-metallic minerals, while open hoppers are most often used to transport coal, sand, rock and stones. We use tank barges primarily for transportation of chemicals, petroleum and related liquid products.

     Towboats. As of December 31, 2010, our barge fleet was powered by 111 Company-owned towboats and 18 additional towboats operated exclusively for us by third parties. This is 12 less owned boats and one more chartered boat than we operated at December 31, 2009. The size and diversity of our towboat fleet allows us to deploy our towboats to areas of the Inland Waterways where they can operate most effectively. For example, our larger horsepower towboats typically operate with tow sizes of as many as 40 barges along the Lower Mississippi River, where the river channels are wider and there are no restricting locks and dams. Our medium horsepower towboats predominantly operate along the Ohio, Upper Mississippi and Illinois Rivers, where the river channels are narrower and restricting locks and dams are more prevalent. We also deploy smaller horsepower towboats for canal, shuttle and harbor services. During 2010 and 2009 we continued to assess our boat power needs. Based on that assessment we sold 12 boats in

2010. We currently have an additional three boats which are being actively marketed and are included in assets held for sale. A summary of the number of owned boats by power class is included in “Item 7. MD&A — Owned Boat Counts and Average Age by Horsepower Class.”

PORT SERVICES ASSETS

     To support our barge fleet, we operate port service facilities. ACL Transportation Services LLC (“ACLT”), a wholly-owned subsidiary of the Company, operates facilities throughout the Inland Waterways that provide fleeting, shifting, cleaning and repair services for both barges and towboats, primarily for ACL, but also for third-party customers. ACLT has active port service facilities in the following locations: Lemont, Illinois; St. Louis, Missouri; Cairo, Illinois; Louisville, Kentucky; Baton Rouge, Louisiana; Vacherie, Louisiana (Armant fleet); Harahan, Louisiana and Houston, Texas. Its operations consist of fleets, towboat repair shops, dry docks, scrapping facilities and cleaning operations. Late in 2009 our maintenance shop, formerly located in Louisville, Kentucky, was physically relocated to Cairo, Illinois. At that time the Company also realigned its ACLT business into two regional divisions. The Southern Division, based in Harahan, Louisiana will include the Company’s network south of Baton Rouge, Louisiana. The Northern Division, based in Cairo, Illinois will include the Company’s network north of Baton Rouge, Louisiana.

     ACLT also operates a coal receiving, storage and transfer facility in St. Louis, Missouri. Together with BNSF, we also transport coal from mines in the Powder River Basin of Wyoming and Montana to the LaGen power plant in Louisiana under an agreement with LaGen. Currently these activities account for less than 10% of our revenue. Our St. Louis terminal also receives and stores coal from third-party shippers who source coal on the BNSF and ship to inland utilities on our barges. ACLT’s liquid terminal in Memphis, Tennessee provides liquid tank storage for third parties and processes oily bilge water from towboats. The oil recovered from this process is blended for fuel used by ACL’s towboats or is sold to third parties. Certain of our facilities also sublease land to vendors, such as fuel vendors, which reduces our costs and augments services available to our fleets and those of third parties.

THIRD-PARTY LOGISTICS, INTERMODAL SERVICES

     Our fleet size, diversity of cargo transported and experience enables us to provide transportation logistics services for our customers. We own 50% of BargeLink LLC, a joint venture with MBLX, Inc. (“BargeLink”), based in New Orleans. BargeLink provides third-party logistics services to international and domestic shippers who distribute goods primarily throughout the inland rivers. BargeLink provides and arranges for ocean freight, customs clearance, stevedoring (loading and unloading cargo), trucking, storage and barge freight for its customers. BargeLink tracks customers’ shipments across multiple carriers using proprietary tracking software developed by BargeLink.

     At our Lemont Terminal, located approximately 25 miles southwest of downtown Chicago, we have direct access to Highways 55, 355 and 294 and a truck delivery radius including Iowa, Michigan, Indiana, Illinois, Wisconsin and Ohio. From this location we distribute truck-to-barge and barge-to-truck multi-modal shipments of both northbound and southbound freight from inland river system origins and destinations in Mexico, Texas, Louisiana, Alabama, Florida, Pennsylvania and points between. We also have 48,000 square feet of indoor temperature controlled space for product storage in Lemont, as well as 35 acres for outside storage.

COMPETITION

     Transportation. Competition within the U.S. inland barging industry is diverse and includes integrated transportation companies and small operators, as well as captive fleets, owned by various U.S. power generating, grain, refining and petrochemical companies. Foreign competition within the industry is restricted due to the Jones Act, a federal cabotage law that restricts domestic non-proprietary-cargo marine transportation in the United States to vessels built and registered in the United States, manned by U.S. citizens and 75% owned by U.S. citizens (the “Jones Act”). Competition within the barging industry for major commodity contracts is significant, with a number of companies offering transportation services on the Inland Waterways. We compete with other carriers primarily on the basis of commodity shipping rates, but also with respect to customer service, available routes, value-added services (including scheduling convenience and flexibility), information timeliness, quality of equipment, accessorial terms, freight payment terms, free days and demurrage days.

     We believe our vertical integration provides us with a competitive advantage. By using our ACLT and our manufacturing segment’s barge and towboat repair facilities, ACLT vessel fleeting facilities and our manufacturing segment’s shipbuilding capabilities, we are able to support our core barging business and offer a combination of competitive pricing and high quality service to our customers. We believe that the size and diversity of our fleet allows us to optimize the use of our equipment and offer our customers a broad service area, at competitive rates, with a high frequency of arrivals and departures from key ports.

     Since 1980 the industry has experienced consolidation as the acquiring companies have moved toward attaining the widespread geographic reach necessary to support major national customers. According to Informa, we had the second largest covered dry cargo barge fleet in the industry with 16.3% of the industry capacity as of December 31, 2010. We believe our large covered dry cargo fleet gives us a unique position in the marketplace that allows us to service the transportation needs of customers requiring covered barges to ship their products. It also provides us with the flexibility to shift covered dry cargo fleet capacity to compete in the open dry cargo barge market simply by storing the barge covers. This adaptability allows us to operate the barges in open barge trades for a short or

long term period of time to take advantage of market opportunities. Carriers that have barges designed for open dry cargo barge service only cannot easily retrofit their open dry cargo barges with covers without significant expense, time and effort.

     According to Informa, the Inland Waterways fleet peaked at 23,092 barges at the end of 1998. From 1999 to 2005, the Inland Waterways fleet size was reduced by 2,407 dry cargo barges and 54 liquid tank barges for a total reduction of 2,461 barges, or 10.7%. From that date through the end of 2010, the industry fleet, net of barges scrapped, increased by 125 dry cargo barges and increased by 171 tank barges, ending 2010 at 17,914 dry and 3,013 liquid barges, for a total fleet size of 20,927, 9.4% below the 1998 level. During 2010 the industry placed 757 new dry cargo barges into service while retiring 341 dry cargo barges and expanded the liquid cargo barge fleet by four barges. Our life expectancy of a dry cargo barge in our fleet is up to 35 years and a liquid barge in our fleet is up to 40 years, with the age of retirement depending on the physical condition of a barge and amount of reinvestment and repair. We also believe that approximately 25% of the industry’s existing dry cargo barge fleet will need to be retired or refurbished due to their age over the next three to seven years. Competition is significant for barge freight transportation. The top five carriers (by fleet size) of dry and liquid barges comprise over 57% of the industry fleet in each sector as of December 31, 2010.

TOP 5 CARRIERS BY FLEET SIZE*
(as of December 31, 2010)

Dry Cargo Barge Fleet		Dry**				Average Age				Industry Share
Ingram Barge Company			3,796				15.2				21.2	%
AEP River Operations			3,199				11.0				17.9	%
American Commercial Lines LLC			2,086				21.2				11.6	%
American River Transportation			1,752				20.5				9.8	%
SCF Marine, Inc.			1,130				13.9				6.3	%
Top five			11,963				15.8				66.8	%
Industry Total			17,914				15.2				100.0	%

Liquid Cargo Barge Fleet		Liquid				Average Age				Industry Share
Kirby Corporation			828				20.6				27.5	%
American Commercial Lines LLC			325				21.1				10.8	%
Canal Barge Line Co. Inc.			211				11.5				7.0	%
Florida Marine Transporters			203				6.2				6.7	%
Ingram Barge Company			172				31.0				5.7	%
Top five			1,739				18.9				57.7	%
Industry Total			3,013				18.4				100.0	%

     The inland barge freight market is influenced by a variety of factors, including the size of the Inland Waterways barge fleet, local weather patterns, domestic and international consumption of agricultural and industrial products, crop production, trade policies, the price of fuel and the price of steel. Freight rates in both the dry and liquid markets are a function of the relationship between the amount of freight demand for these commodities and the number of barges available to load freight. The demand for dry cargo freight on the Inland Waterways is driven by the production volumes of dry bulk commodities transported by barge as well as the attractiveness of barging as a means of freight transportation. Historically the major drivers of demand for dry cargo freight are coal for domestic utility companies, industrial and coke producers and export markets; construction commodities such as cement, limestone, sand and gravel; and coarse grain such as corn and soybeans for export markets. Other commodity drivers include products used in the manufacturing of steel, finished and partially-finished steel products, ores, salt, gypsum, fertilizer and forest products. The demand for our liquid freight is driven by the demand for bulk chemicals used in domestic production, including styrene, methanol,

ethylene glycol, propylene oxide, caustic soda and other products. It is also affected by the demand for clean petroleum products and agricultural-related products such as ethanol, edible oils, bio-diesel and molasses. From its 1998 peak of 23,092 total barges until the end of 2010, the Inland Waterways fleet size was reduced to 20,927 barges, for a total reduction of 2,165 barges, or 9.4% below the 1998 level. This decline in the industry fleet size has resulted in a more favorable supply-demand dynamic for Inland Waterways freight transportation.

     Certain spot rate contracts, particularly for grain, are subject to significant seasonal and other fluctuations. Grain rates and volume demand are also reactive to the freight cost spreads for grain export between west coast ports and through the gulf. Demand in our liquid and bulk commodity markets was significantly impacted by the recent recession, negatively impacting price, business mix and margin. Demand has recently been improving and is more in line with industry capacity. We continue to pursue currently available volume, with the most success in our grain and legacy coal markets, focusing on productivity, prudent capital investment and cost control to enable us to be ready to capitalize on market demand shifts. We continue to believe that barge transportation remains the lowest cost and most ecologically friendly provider of domestic transportation. We continue to provide quality services to our existing customers and to seek new customers, particularly modal conversions which offer the significant cost advantage of barge transportation for commodities currently being transported primarily by rail and truck.

     Manufacturing. The inland barge manufacturing industry competes primarily on quality of manufacture, delivery schedule, design capabilities and price. We consider Trinity Industries, Inc. to be our manufacturing segment’s most significant competitor for the large-scale manufacture of inland barges, although other firms have barge building capability on a smaller scale. We believe there are a number of shipyards located on the Gulf Coast that compete with our manufacturing segment for the manufacturing of liquid tank barges. In addition, certain other shipyards may be able to reconfigure to manufacture inland barges and related equipment. We believe that Jeffboat and its most significant competitor together comprise the significant majority of barge manufacturing capacity in the U.S. and believe that the new dry barge builds required to replace retiring barges will strain the capacity of barge manufacturing during the next five years. According to industry data provided by Informa, from 2005 through 2009, Jeffboat’s brown water liquid and dry cargo barge production accounted for between 25% and 43% of the overall market.

     Due to the relatively long life of barges and the manufacturing boom of the late 1970’s and early 1980’s, older barges are reaching the end of their life expectancy and single-hulled liquid barges are retiring ahead of U.S. Coast Guard requirements for liquid tank barges to be double-hulled by 2015. According to Informa, 4,535 new hoppers are expected to be built by 2015, with almost all going towards replacement of the aging fleet. We also believe that approximately 25% of the industry’s existing dry cargo barge fleet will need to be retired or refurbished due to their age over the next three to seven years.

SEASONALITY

     Our transportation segment’s revenue stream within any year reflects the variance in seasonal demand, with revenues earned in the first half of the year lower than those earned in the second half of the year. Historically, grain has experienced the greatest degree of seasonality among all the commodity segments, with demand generally following the timing of the annual harvest. Increased demand for grain movement generally begins around the Gulf Coast and Texas regions and the southern portions of the Lower Mississippi River, or the Delta area, in late summer of each year. The demand for freight spreads north and east as the grain matures and harvest progresses through the Ohio Valley, the Mid-Mississippi River area, and the Illinois River and Upper Mississippi River areas. System-wide demand generally peaks in the mid-fourth quarter. Demand normally tapers off through the mid-first quarter, when traffic is generally limited to the Ohio River as the Upper Mississippi River normally closes from approximately mid-December to mid-March, and ice conditions can hamper navigation on the upper reaches of the Illinois River. The transportation of grain in the spot market, including demurrage charges, represented 29.5% of our annual total transportation segment revenues for 2010 compared to 31% in 2009. Average grain tariff rates for the mid-Mississippi River, which we believe is generally a directional indicator of the total market, were 416% for the year ended December 31, 2010, and 337% for the year ended December 31, 2009. The unusual harvest conditions in 2009 resulted in rates that were the lowest since 2005 and were, on average, 40% below the prior year and 15% below the average of the prior five years. The more normal harvest in 2010 contributed to the higher rates in that year in line with five year averages. The annual differential between peak and trough rates for this river segment has averaged more than 106% a year over the five prior years. We did not see the normal compressed harvest season rates in 2009 as the differential was only 68% but jumped to 96% for the 2010 year. Our achieved grain pricing, across all river segments, was up 10.9% and 9.3% in the quarter and year ended December 31, 2010.

     The chart below depicts the seasonal movements in what we believe to be a directionally representative tariff rate over time for a river segment we track as part of the mid-Mississippi River. We do not track January and February for this segment due to significantly reduced volumes on the segment during that time frame.

MID-MISSISSIPPI TARIFF RATES

     Fertilizer movements are timed for delivery prior to annual planting, generally moving from late August through April. Salt movements are heaviest in the winter, when the need for road salt in cold weather regions drives demand, and are more ratable throughout the balance of the year as stockpiles are replaced. Overall demand for other bulk and liquid products delivered by barge is more ratable throughout the year.

     Additionally, we have generally experienced higher expenses in the winter months, because winter conditions historically result in higher costs of operation and reduced equipment demand. The seasonal reduction in demand also permits scheduling major boat maintenance exacerbating higher costs during that period.

     Our manufacturing segment’s costs are also subject to seasonal variations. Costs may increase with seasonal precipitation and temperatures below 20 degrees, as extra shifts and overtime are required in certain cases to maintain production schedules.

EMPLOYEE MATTERS

     Employee Count

		December 31,				December 31,
Function		2010				2009
Administration (including Jeffboat)			185				236
Transportation services			1,500				1,518
Manufacturing			693				763
Other			54				55
			2,432				2,572

     As of December 31, 2010, we employed 2,432 people. Approximately 645 employees were represented by unions. Most of these unionized employees (approximately 625 individuals) are represented by General Drivers, Warehousemen and Helpers, Local Union

     No. 89, affiliated with the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, at our shipyard facility under a three-year collective bargaining agreement that expires April 1, 2013. Our remaining unionized employees (approximately 20 positions) are represented by the International Union of United Mine Workers of America, District 12—Local 2452 at ACL Transportation Services LLC in St. Louis, Missouri under a collective bargaining agreement that expires in December 2010. We are currently operating under a letter extension of such agreement that requires a 30-day notice prior to termination and we are in negotiations with Union representatives. We do not believe that a work stoppage at this facility would have a material impact on our operations.

INSURANCE AND RISK MANAGEMENT

     The Company procures and manages insurance policies and provides claims management services for our subsidiaries internally through our risk management department. The Company is exposed to traditional hazards associated with its manufacturing and marine transportation operations on the Inland Waterways. A program of insurance is maintained to mitigate risk of loss to the Company’s property, vessels and barges, loss and contamination of cargo and as protection against personal injury to third parties and company employees. Our general marine liability policy insures against all operational risks for our marine activities. Pollution liability coverage is maintained as well. The Company also maintains excess liability coverage above the noted casualty risks. All costs of defense, negotiation and costs incurred in settling a claim, such as surveys and damage estimates, are considered insured costs. Our personnel costs involved in managing insured claims are not reimbursed. We evaluate our insurance coverage regularly. The Company believes that our insurance coverage is adequate.

GOVERNMENT REGULATION

     General. Our business is subject to extensive government regulation in the form of national, state and local laws and regulations, as well as laws relating to the discharge of materials into the environment. Because such laws and regulations are regularly reviewed and revised by issuing governments, we are unable to predict the ultimate cost or impact of future compliance. In addition, we are required by various governmental and quasi-governmental agencies to obtain certain permits, licenses and certificates with respect to our business operations. The types of permits, licenses and certificates required for our vessels depend upon such factors as the commodity transported, the waters in which the vessel operates, the nationality of the vessel’s crew, the age of the vessel and our status as owner, operator or charterer. As of December 31, 2010, we had obtained all material permits, licenses and certificates necessary for operations.

     Our transportation operations are subject to regulation by the U.S. Coast Guard, Environmental Protection Agency, federal laws and state laws.

     The majority of our inland tank barges carry regulated cargoes. All of our inland tank barges that carry regulated cargoes are inspected by the U.S. Coast Guard and carry certificates of inspection. Towboats are subject to U.S. Coast Guard inspection and will be required to carry certificates of inspection once the associated regulations are promulgated by the U.S. Coast Guard. Our dry cargo barges are not subject to U.S. Coast Guard inspection requirements, but are now subject to Environmental Protection Agency inspection and reporting requirements.

     Additional regulations relating to homeland security, the environment or additional vessel inspection requirements may be imposed on the barging industry.

     Jones Act. The Jones Act is a federal cabotage law that restricts domestic non-proprietary cargo marine transportation in the United States to vessels built and registered in the United States. Furthermore, the Jones Act requires that the vessels be manned by U.S. citizens and owned by U.S. citizens. For a limited liability company to qualify as a U.S. citizen for the purposes of domestic trade, 75% of the company’s beneficial equity holders must be U.S. citizens. We currently meet all of the requirements of the Jones Act for our owned vessels.

     Compliance with U.S. ownership requirements of the Jones Act is very important to our operations, and the loss of Jones Act status could have a significant negative effect on our business, financial condition and results of operations. We monitor the citizenship requirements under the Jones Act of our employees, boards of directors and managers and beneficial equity holders and will take action as necessary to ensure compliance with the Jones Act.

     User Fees and Fuel Tax. Federal legislation requires that inland marine transportation companies pay a user fee in the form of a tax assessed upon propulsion fuel used by vessels engaged in trade along the Inland Waterways. These user fees are designed to help defray the costs associated with replacing major components of the waterway system, including dams and locks, and to build new projects. Significant portions of the Inland Waterways on which our vessels operate are maintained by the U.S. Army Corps of Engineers.

     We presently pay a federal fuel tax of 20.1 cents per gallon of propulsion fuel consumed by our towboats in some geographic regions. In the future, user fees may be increased or additional user fees may be imposed to defray the costs of Inland Waterways’ infrastructure and navigation support. Increases in these taxes are normally passed through to our customers by contract.

     Homeland Security Requirements. The Maritime Transportation Security Act of 2002 requires, among other things, submission to and approval by the U.S. Coast Guard of vessel and waterfront facility security plans (“VSP” and “FSP,” respectively). Our VSP and our FSP have been approved and we have complied with both since June 30, 2004. As a result, we are subject to continuing requirements to engage in training and participate in exercises and drills.

ENVIRONMENTAL REGULATION

     Our operations, facilities, properties and vessels are subject to extensive and evolving laws and regulations pertaining to air emissions, wastewater discharges, the handling and disposal of solid and hazardous materials, hazardous substances and wastes, the investigation and remediation of contamination, and other laws and regulations related to health, safety and the protection of the environment and natural resources. As a result, we are involved from time to time in administrative and legal proceedings related to environmental, health and safety matters and have incurred and will continue to incur capital costs and other expenditures relating to such matters.

     In addition to environmental laws that regulate our ongoing operations, we are also subject to environmental remediation liability under the Comprehensive Environmental Response Compensation and Liability Act (“CERCLA”) and analogous state laws, and the Oil Pollution Act of 1990 (“OPA 90”). We may be liable as a result of the release or threatened release of hazardous substances or wastes or other pollutants into the environment at or by our facilities, properties or vessels, or as a result of our current or past operations. These laws typically impose liability and cleanup responsibility without regard to whether the owner or operator knew of or caused the release or threatened release. Even if more than one person may be liable for the release or threatened release, each person covered by these environmental laws may be held responsible for all of the cleanup costs and damages incurred. In addition, third parties may sue the owner or operator of a site for damages based on personal injury, property damage or other costs, including cleanup costs and damages resulting from environmental contamination.

     A release or threatened release of hazardous substances or wastes, or other pollutants into the environment at or by our facilities, properties or vessels, as the result of our current or past operations, or at a facility to which we have shipped wastes, or the existence of historical contamination at any of our properties, could result in material liability to us. We conduct loading and unloading of dry commodities, liquids and scrap materials on and near waterways. These operations present a potential that some such material might be spilled or otherwise released into the environment, thereby exposing us to potential liability.

     As of December 31, 2010, we had minimal reserves for environmental matters. Any cash expenditures that are necessary to comply with applicable environmental laws or to pay for any remediation efforts will therefore result in charges to earnings if not subject to insurance claims. We may incur future costs related to the sites associated with the environmental reserves. The discovery of additional sites, the modification of existing or the promulgation of new laws or regulations, more vigorous enforcement by regulators, the imposition of joint and several liability under CERCLA or analogous state laws or OPA 90 and other unanticipated events could also result in additional environmental costs. For more information, see “Item 3. Legal Proceedings — Environmental Litigation.”

OCCUPATIONAL HEALTH AND SAFETY MATTERS

     Our vessel operations are primarily regulated by the U.S. Coast Guard for occupational health and safety standards. Our shore operations are subject to the U.S. Occupational Safety and Health Administration regulations. As of December 31, 2010, we were in material compliance with these regulations. However, we may experience claims against us for work-related illness or injury as well as further adoption of occupational health and safety regulations.

     We endeavor to reduce employee exposure to hazards incident to our business through safety programs, training and preventive maintenance efforts. We emphasize safety performance in all of our operating subsidiaries. We believe that our safety performance consistently places us among the industry leaders as evidenced by what we believe are lower injury frequency levels than those of many of our competitors. We have been certified in the American Waterway Operators Responsible Carrier Program, which is oriented to enhancing safety in vessel operations.

INTELLECTUAL PROPERTY

     We register our material trademarks and trade names. Our trademark and tradename registrations in the United States are for a ten year period and are renewable every ten years, prior to their respective expirations, as long as they are used in the regular course of trade. We believe we have current intellectual property rights sufficient to conduct our business.

ITEM 1A. RISK FACTORS

     Set forth below is a detailed discussion of risks related to our industry and our business. In addition to the other information in this document, you should consider carefully the following risk factors. Any of these risks or the occurrence of any one or more of the uncertainties described below could have a material adverse effect on our financial condition and the performance of our business.

Risks Related to Our Industry

     The aftermath of the global economic crisis, which began in 2008, may continue to have detrimental impacts on our business.

     Although we cannot predict the extent, timing and full ramifications, we believe that the recession, which began in 2008 and its aftermath, at a minimum, heighten the following risks.

     Potential recession impacts—In the year ended December 31, 2010, we saw demand increases over the prior year in specific commodities that are currently shipped by barge. However this improved demand level continues to be significantly diminished from pre-recession levels and negatively impacts price/mix/volume. Notwithstanding the recent demand increase, demand levels continue to be lower than prior to the recession and, as a result, there continues to be an oversupply of barges, which results in reduced rates that we can charge for our services, particularly in the spot markets. Such lower rates have negatively impacted our revenues and financial condition in our transportation segment. This loss of demand has also and could continue to result in tow-size and barge positioning inefficiencies. The stagnant freight markets also may delay investment decisions by customers of our manufacturing segment.

     Credit availability to our customers and suppliers—We believe that many of our customers and suppliers rely on liquidity from operative global credit markets. If credit availability remains restricted for these customers, demand for our products and services may be constricted resulting in lower revenues and barge production backlogs and we may not be able to enforce contracts or collect on outstanding invoices.

     Market risk—We have significant costs associated with our pension plan, which costs depend on many factors including the return on plan assets. Plan assets declined significantly in 2008. Though plan assets increased in 2009 and 2010, the combined return from the beginning of 2008 remains below the average assumed rate of return used for actuarial estimation purposes. Further declines in the value of plan assets or continued lower than assumed returns over time could increase required expense provisions and contributions under the plan. See Note 7 to the consolidated financial statements for the year ended December 31, 2010.

     Freight transportation rates for the Inland Waterways fluctuate from time to time and may decrease.

     Freight transportation rates fluctuate from season-to-season and year-to-year. Levels of dry and liquid cargo being transported on the Inland Waterways vary based on several factors including global economic conditions and business cycles, domestic agricultural production and demand, international agricultural production and demand, and foreign exchange rates. Additionally, fluctuation of ocean freight rate spreads between the Gulf of Mexico and the Pacific Northwest affects demand for barging on the Inland Waterways, especially in grain movements. Grain, particularly corn for export, has been a significant part of our business. Since the beginning of 2006, all grain transported by us has been under spot market contracts. Spot grain contracts are normally priced at, or near, the quoted tariff rates in effect for the river segment of the move at the time they are contracted, which ranges from immediately prior to the transportation services to 90 days or more in advance. We generally manage our risk related to spot rates by contracting for business over a period of time and holding back some capacity to leverage the higher spot rates in periods of high demand. Spot rates can vary widely from quarter-to-quarter and year-to-year. A decline in spot rates could negatively impact our business. The number of barges and towboats available to transport dry and liquid cargo on the Inland Waterways also varies from year-to-year as older vessels are retired and new vessels are placed into service. The resulting relationship between levels of cargos and vessels available for transport affects the freight transportation rates that we are able to charge. Since the recession which began in 2008, overall freight demand, particularly in the liquid barge market, has declined, reducing the demand for dedicated service contracts. This decline in those contracts has resulted in an oversupply of liquid barges to serve liquid spot demand and has lowered the rates we can charge for that service. Significantly lower demand for dry non-grain cargoes has also contributed to lower spot rates for grain moves which represent a significant portion of our business.

     An oversupply of barging capacity may lead to reductions in freight rates.

     Our industry suffered from an oversupply of barges relative to demand for barging services for many years following the boom in barge production in the late seventies and early eighties. The economic crisis that began in the fall of 2008 has led to a temporary oversupply, particularly in parts of the liquid business, despite reductions in the size of the industry fleet. We cannot currently estimate the likely duration of this temporary oversupply. Additionally, even if the recession impact abates, oversupply conditions may recur due to a variety of factors, including a more permanent drop in demand, overbuilding, delays in scrapping or extension of use through refurbishing of barges approaching the end of their life expectancies. We believe that approximately 25% of the industry’s existing dry cargo barge fleet will need to be retired or refurbished due to their age over the next three to seven years. If retirement occurs, demand for barge services returns to more normal levels and new builds do not replace retired capacity, we believe that barge capacity may be constrained. However, if an oversupply of barges were to occur, it could take several years before supply growth matches demand due to the variable nature of the barging industry and the freight transportation industry in general, and the relatively long life of marine equipment. Such oversupply could lead to reductions in the freight rates that we are able to charge until volume demand returns.

     Yields from North American and worldwide grain harvests could materially affect demand for our barging services.

     Demand for dry cargo barging in North America is significantly affected by the volume of grain exports flowing through ports on the Gulf of Mexico. The volume of grain exports through the Gulf of Mexico can vary due to, among other things, crop harvest yield levels in the United States and abroad, ocean going freight spreads between the Gulf and the Pacific Northwest. Overseas grain shortages increase demand for U.S. grain, while worldwide over-production decreases demand for U.S. grain. Other factors, such as domestic ethanol demand and overseas markets’ acceptance of genetically altered products and the exchange rate, may also affect demand for U.S. grain. Fluctuations in demand for U.S. grain exports can lead to temporary barge oversupply, which in turn can lead to reduced freight rates. We cannot assure that historical levels of U.S. grain exports will continue in the future.

     Any decrease in future demand for new barge construction may lead to a reduction in sales volume and prices for new barges.

     The prices we have been able to charge for manufacturing segment production have fluctuated historically based on a variety of factors including our customers’ cost and availability of debt financing, cost of raw materials, particularly steel, the cost of labor and the demand for new barge builds compared to the barge manufacturing capacity within the industry at the time. From 2007 through 2008, we increased the pricing on our barges, net of steel costs, in response to increased demand for new barge construction. Although we plan to continue increasing the longer term pricing on our barges, net of steel, in conjunction with the expected additional long-term demand for new barge construction as well as inflation of our costs, the recession has affected our customers’ need and ability to build new barges in the near-term. If demand for new barge construction diminishes or the recession deepens or extends we may not be able to maintain or increase pricing over our current levels.

     Volatile steel prices may lead to a reduction in or delay of demand for new barge construction.

     A number of the contracts for Jeffboat production contain steel price adjustments, though in some contracts we have fixed steel prices, as vendors have been willing to commit to fixed prices over an extended period. Steel prices have been volatile in recent years including a recent trend upward. Due to the steel price adjustments in the contracts, the total price incurred by our customers for new barge construction has also varied. Some customers may consider steel prices when determining to build new barges resulting in fluctuating demand for new barge construction.

     Higher fuel prices, if not recouped from our customers, could dramatically increase operating expenses and adversely affect profitability.

     Fuel expenses represented 19.2% and 19.8% of transportation revenues in the years ended December 31, 2010 and 2009 respectively. Fuel prices are subject to fluctuation as a result of domestic and international events. Generally, our term contracts contain provisions that allow us to pass through (effectively on approximately a 45 day delay basis) a significant portion of any fuel expense increase to our customers, thereby reducing, but not eliminating, our fuel price risk. We also have contracts that do not contain such clauses, or where the clauses do not fully cover increased fuel pricing. Fuel price is a key, but not the only variable in spot market pricing. Therefore, fuel price and the timing of contractual rate adjustments can be a significant source of quarter-over-quarter and year-over-year volatility, particularly in periods of rapidly changing fuel prices. Negotiated spot rates may not fully recover fuel price increases. From time to time we hedge the expected cash flows from anticipated purchases of unprotected gallons through fuel price swaps. We choose how much fuel to hedge depending on the circumstances. However, we may not effectively control our fuel price risk and may incur fuel costs that exceed our projected cost of fuel. At December 31, 2010, the market value of our fuel price swaps represented an asset of approximately $2.9 million. Assuming no further changes in market value prior to settlement dates in 2010 and 2011, this amount will be credited to operations as the fuel is used keeping our costs under fixed fuel contracts in line with our expectations. A significant decline in fuel prices could result in losses under our fuel price swaps.

     Our operating margins are impacted by a low margin legacy contract and by spot rate market volatility for grain volume and pricing.

     We emerged from bankruptcy in January 2005. Our largest term contract for the movement of coal predates the emergence and was negotiated at a low margin. Though it contains a fuel adjustment mechanism, the mechanism does not fully recover increases in fuel cost. The majority of our coal moves under this contract, since bankruptcy and through the 2015 expiration of the contract, may be at a low or negative margin. This concentration of low margin business was approximately $37.6, $51.1 million and $43.1 million of our total revenues in 2010, 2009 and 2008 respectively. We expect the revenue volume under this contract to be higher in 2011 than in 2010. All of our grain shipments since the beginning of 2006 have been under spot market contracts. Spot rates can vary widely from quarter-to-quarter and year-to-year. Spot grain contracts are normally priced at, or near, the quoted tariff rates in effect for the river segment of the move at the time they are contracted, which ranges from immediately prior to the transportation services to 90 days or more in advance. We generally manage our risk related to spot rates by contracting for business over a period of time and holding back some capacity to leverage the higher spot rates in periods of high demand. The available pricing and the volume under such contracts is impacted by many factors including global economic conditions and business cycles, domestic agricultural

production and demand, international agricultural production and demand, foreign exchange rates, fluctuation of ocean freight rate spreads between the Gulf of Mexico and the Pacific Northwest and the extent of demand for dry barge services in the non-grain dry bulk market. The revenues generated under such contracts, therefore, ultimately may not cover inflation, particularly for wages and fuel, in any given period. These circumstances may reduce the margins we are able to realize on the contract grain movements during 2010. Revenues from grain volumes were 30%, 31% and 21% of our total transportation segment revenues in 2010, 2009 and 2008 respectively.

     We are subject to adverse weather and river conditions, including marine accidents.

     Our barging operations are affected by weather and river conditions. Varying weather patterns can affect river levels, contribute to fog delays and cause ice to form in certain river areas of the United States. For example, the Upper Mississippi River closes annually from approximately mid-December to mid-March, and ice conditions can hamper navigation on the upper reaches of the Illinois River during the winter months. Such conditions typically increase our repair and other operating costs. During hurricane season in the summer and early fall we may be subject to revenue loss, business interruptions and equipment and facilities damage, particularly in the Gulf region. In addition, adverse river conditions can result in lock closures as well as affect towboat speed, tow size and loading drafts and can delay barge movements. Terminals may also experience operational interruptions as a result of weather or river conditions. Idle weather-related barge days declined in 2010 compared to 2009. Adverse weather conditions may also affect the volume of grain produced and harvested, as well as impact harvest timing and therefore pricing. In the event of a diminished or delayed harvest, the demand for barging services will likely decrease. Marine accidents involving our or others’ vessels may impact our ability to efficiently operate on the Inland Waterways. Such accidents, particularly those involving spills, can effectively close sections of the Inland Waterways to marine traffic.

     Our manufacturing segment’s waterfront facility is subject to occasional flooding. Its manufacturing operation, much of which is conducted outdoors, is also subject to weather conditions. As a result, these operations are subject to production schedule delays or added costs to maintain production schedules caused by weather. During 2010, adverse weather conditions caused weather-related lost production days to increase by 12.5 days from the prior year.

     Seasonal fluctuations in industry demand could adversely affect our operating results, cash flow and working capital requirements.

     Segments of the inland barging business are seasonal. Historically, our revenue and profits have been lower during the first six months of the year and higher during the last six months of the year. This seasonality is due primarily to the timing of the North American grain harvest and seasonal weather patterns. Our working capital requirements typically track the rise and fall of our revenue and profits throughout the year. As a result, adverse market or operating conditions during the last six months of a calendar year could disproportionately adversely affect our operating results, cash flow and working capital requirements for the year.

     The aging infrastructure on the Inland Waterways may lead to increased costs and disruptions in our operations.

     Many of the dams and locks on the Inland Waterways were built early in the last century, and their age makes them costly to maintain and susceptible to unscheduled maintenance and repair outages. The delays caused by malfunctioning dams and locks or by closures due to repairs or construction may increase our operating costs, delay the delivery of our cargoes and create other operational inefficiencies. This could result in interruption of our service and lower revenues. Much of this infrastructure needs to be replaced, but federal government funding has historically been limited. Funding has been supplemented by diesel fuel user taxes paid by the towing industry. There can be no guarantee that government funding levels will be sufficient to sustain infrastructure maintenance and repair costs or that a greater portion of the costs will not be imposed on operators. Higher diesel fuel user taxes could be imposed which would increase our costs. A “lockage fee” could be imposed to supplement or replace the current fuel user tax. Such a fee could increase our costs in certain areas affected by the lockage fee. We may not be able to recover increased fuel user taxes or such lockage fees through pricing increases.

     The inland barge transportation industry is highly competitive; increased competition could adversely affect us.

     The inland barge transportation industry is highly competitive. Increased competition in the future could result in a significant increase in available shipping capacity on the Inland Waterways, which could create downward rate pressure for us or result in our loss of business.

     Global trade agreements, tariffs and subsidies could decrease the demand for imported and exported goods, adversely affecting the flow of import and export tonnage through the Port of New Orleans and the demand for barging services.

     The volume of goods imported through the Port of New Orleans and other Gulf-coast ports is affected by subsidies or tariffs imposed by U.S. or foreign governments. Demand for U.S. grain exports may be affected by the actions of foreign governments and global or regional economic developments and natural disasters. Foreign subsidies and tariffs on agricultural products affect the

pricing of and the demand for U.S. agricultural exports. U.S. and foreign trade agreements can also affect demand for U.S. agricultural exports as well as goods imported into the United States. Similarly, national and international embargoes of the agricultural products of the United States or other countries may affect demand for U.S. agricultural exports. Additionally, the strength or weakness of the U.S. dollar against foreign currencies can impact import and export demand. These events, all of which are beyond our control, could reduce the demand for our services.

     Our failure to comply with government regulations affecting the barging industry, or changes in these regulations, may cause us to incur significant expenses or affect our ability to operate.

     The barging industry is subject to various laws and regulations, including national, state and local laws and regulations, all of which are subject to amendment or changes in interpretation. In addition, various governmental and quasi-governmental agencies require barge operators to obtain and maintain permits, licenses and certificates and require routine inspections, monitoring, recordkeeping and reporting respecting their vessels and operations. Any significant changes in laws or regulations affecting the inland barge industry, or in the interpretation thereof, could cause us to incur significant expenses. Enacted regulations call for increased inspection of towboats. The United States Coast Guard interpretation of these regulations could result in boat delays and significantly increased maintenance and upgrade costs for our boat fleet. Furthermore, failure to comply with current or future laws and regulations may result in the imposition of fines and/or restrictions or prohibitions on our ability to operate. Though we work actively with regulators at all levels to avoid inordinate impairment of our operations, regulations and their interpretations may ultimately have a negative impact on the industry.

     In addition, changes in environmental laws impacting the shipping business, including the passage of climate change legislation or other regulatory initiatives that restrict emissions of greenhouse gases, may require costly vessel modifications, the use of higher-priced fuel and changes in operating practices that may not all be able to be recovered through increased payments from customers.

     Our maritime operations expose us to numerous legal and regulatory requirements, and violation of these regulations could result in criminal liability against us or our officers.

     Because we operate in marine transportation, we are subject to numerous environmental laws and regulations. Violations of these laws and regulations in the conduct of our business could result in fines, criminal sanctions or criminal liability against us or our officers.

     The Jones Act restricts foreign ownership of our stock, and the repeal, suspension or substantial amendment of the Jones Act could increase competition on the Inland Waterways and have a material adverse effect on our business.

     The Jones Act requires that, to be eligible to operate a vessel transporting non-proprietary cargo on the Inland Waterways, the company that owns the vessel must be at least 75% owned by U.S. citizens at each tier of its ownership. The Jones Act therefore restricts, directly or indirectly, foreign ownership interests in the entities that directly or indirectly own the vessels which we operate on the Inland Waterways. If we at any point cease to be 75% owned by U.S. citizens we may become subject to penalties and risk forfeiture of our Inland Waterways operations. The Jones Act continues to be in effect, but has from time to time come under scrutiny. If the Jones Act was to be repealed, suspended or substantially amended and, as a consequence, competitors with lower operating costs were to enter the Inland Waterways market, our advantages as a U.S. citizen operator of Jones Act vessels could be eroded over time.

   Risks Related to Our Business

     We are named as a defendant in lawsuits and we are in receipt of other claims and we cannot predict the outcome of such litigation and claims, which may result in the imposition of significant liability.

     Litigation and claims are pending relating to a collision on July 23, 2008, involving one of our tank barges that was being towed by DRD Towing and the motor vessel Tintomara, operated by Laurin Maritime, at Mile Marker 97 of the Mississippi River in the New Orleans area. For additional information, see “Business— Legal Proceedings.” We filed an action in the United States District Court for the Eastern District of Louisiana seeking exoneration from or limitation of liability. All lawsuits filed against us have been consolidated in this action. Claims under the Oil Pollution Act of 1990 (“OPA 90”) are also afforded an administrative process to settle such claims. We were designated a responsible party under OPA 90, and we performed the cleanup and are responding to OPA 90 claims. We have made a demand on DRD Towing and Laurin Maritime for cleanup, defense and indemnification. However, there is no assurance that DRD Towing and Laurin Maritime or any other party that may be found responsible for the accident will have the insurance or financial resources available to provide such defense and indemnification. We have various insurance policies covering pollution, property, marine and general liability that we believe will be sufficient to cover our liabilities. However, there can be no assurance that our insurance coverage will be adequate. See “—Our insurance may not be adequate to cover our operational risks” below. We cannot predict the outcome of this litigation which may result in the imposition of significant liability.

     Our insurance may not be adequate to cover our operational risks.

     While we believe that we have satisfactory insurance coverage for pollution, property, marine and general liability, if costs exceed our available insurance or additional liability is imposed on us for which we are unable to seek reimbursement, our business and operations could be materially and adversely affected. We may not be able to continue to procure adequate insurance coverage at commercially reasonable rates in the future, and some claims may not be paid. In the past stricter environmental regulations and significant environmental incidents have led to higher costs for insurance covering environmental damage or pollution, and new regulations or changes to existing laws and regulations could lead to similar increases or even make certain types of insurance unavailable.

     Our aging fleet of dry cargo barges may lead to a decline in revenue if we do not replace the barges or drive efficiency in our operations.

     Our life expectancy of a dry cargo barge in our fleet is up to 35 years and a liquid barge in our fleet is up to 40 years, with the age of retirement depending on the physical condition of a barge and amount of reinvestment and repair necessary to continue to operate it. As of December 31, 2010, approximately 26% of our dry cargo barges had reached 30 years of age. As a dry cargo barge approaches 35 years of age, absent significant reinvestment and repair, the cost to maintain and operate these barges may increase such that it becomes more cost effective for the barges to be sold for scrap. If we elect to conduct repairs on such barges in lieu of retiring and scrapping these vessels, the additional operating costs of such repairs and maintenance could adversely affect cash flows and earnings. Although we anticipate future capital investment in dry cargo barges, we may choose not to replace all of the barges that we elect to scrap. Our decision to replace scrapped barges with new barges will depend upon the availability of financing, current hauling capacity and shipyard availability. Replacing scrapped barges requires significant capital outlays. We may not be able to generate sufficient sources of capital to fund necessary barge replacements in a timely manner, or at all. If our fleet size significantly declines over time, our ability to maintain our hauling capacity will decrease absent improvements in fleet utilization through a variety of ongoing initiatives, including scheduled service, minimizing empty barge miles, a reduction in non-revenue generating stationary days, better power utilization and improved fleeting, among others. If these improvements in utilization are not achieved, a significant decline in the number of barges in our fleet could have an adverse effect on our cash flows and results of operations.

     Our cash flows and borrowing facilities may not be adequate for our additional capital needs and our future cash flow and capital resources may not be sufficient for payments of interest and principal of our substantial indebtedness.

     Our operations are capital intensive and require significant capital investment. We intend to fund substantially all of our needs to operate the business and make capital expenditures, including adequate investment in our aging boat and barge fleet, through operating cash flows and borrowings. Capital may not be continuously available to us and may not be available on commercially reasonable terms. We may need more capital than may be available under the terms of our credit facility and therefore we would be required to obtain other sources of financing. If we incur additional indebtedness, the risk that our future cash flow and capital resources may not be sufficient for payments of interest on and principal of our substantial indebtedness would increase. We may not be able to obtain other sources of financing on commercially reasonable terms, or at all. If we are unable to obtain additional capital, we may be required to curtail our capital expenditures and we may not be able to invest in our aging boat and barge fleet and to meet our obligations, including our obligations to pay the principal and interest under our indebtedness.

     A significant portion of our borrowings are tied to floating interest rates which may expose us to higher interest payments should interest rates increase substantially.

     At December 31, 2010, we had approximately $150.3 million of floating rate debt outstanding, representing the outstanding balance of borrowings under our revolving credit facilities. Each 100 basis point increase in the interest rate in effect at December 31, 2010 would increase our annual cash interest expense by approximately $1.5 million.

     We face the risk of breaching covenants in our Existing Credit Facility.

     Our Existing Credit Facility contains financial covenants, including, among others, a limit on the ratio of debt to earnings before interest, taxes, depreciation, and amortization that are effective when remaining availability is less than a certain defined level set forth in the Existing Credit Facility. Although none of our covenants are currently in effect based on our current borrowing levels, our ability to meet the financial covenants can be affected by events beyond our control, and we cannot provide assurance that we will meet those tests. A breach of any of these springing covenants could result in a default. Upon the occurrence of an event of default, all amounts outstanding can be declared immediately due and payable and terminate all commitments to extend further credit. If the repayment of borrowings is accelerated, we may not have sufficient assets to repay our credit.

     The loss of one or more key customers, or material nonpayment or nonperformance by one or more of our key customers, could cause a significant loss of revenue and may adversely affect profitability.

     In 2010, our largest customer, Cargill, accounted for approximately 8.5% of our revenue and our largest ten customers accounted for approximately 41% of our revenue. Many of our customers have been significantly affected by the current recession and we anticipate that some of our customers may continue to struggle in 2010. If we were to lose one or more of our large customers, or if one or more of our large customers were to significantly reduce the amount of barging services they purchase from us and we were unable to redeploy that equipment on similar terms, or if one or more of our key customers fail to pay, we could experience a significant loss of revenue. In early 2009, we experienced the bankruptcy of a liquids customer, which had been one of our top ten customers, and we were not successful in maintaining any volume with the successor-in-bankruptcy of the former customer.

     A major accident or casualty loss at any of our facilities or affecting free navigation of the Gulf or the Inland Waterways could significantly reduce production.

     One or more of our facilities or equipment may experience a major accident and may be subject to unplanned events such as explosions, fires, inclement weather, acts of God and other transportation interruptions. Any shutdown or interruption of a facility could reduce the production from that facility and could prevent us from conducting our business for an indefinite period of time at that facility, which could substantially impair our business. For example, such an occurrence at our Manufacturing segment’s facility could disrupt or shut down our manufacturing activities. Our insurance may not be adequate to cover our resulting losses.

     Potential future acquisitions or investments in other companies may have a negative impact on our business.

     From time to time, we evaluate and acquire assets and businesses that we believe complement our existing assets and businesses. Acquisitions may require substantial capital and negotiations of potential acquisitions and the integration of acquired business operations could disrupt our business by diverting management away from day-to-day operations. The difficulties of integration may be increased by the necessity of coordinating geographically diverse organizations, integrating personnel with disparate business backgrounds and combining different corporate cultures. At times, acquisition candidates may have liabilities or adverse operating issues that we fail to discover through due diligence prior to the acquisition. If we consummate any future acquisitions, our capitalization and results of operations may change significantly. Any acquisition involves potential risks, including, among other things: 1) an inability to integrate successfully the businesses we acquire; 2) an inability to hire, train or retain qualified personnel to manage and operate our business and assets; 3) the assumption of unknown liabilities; 4) limitations on rights to indemnity from the seller; 5) mistaken assumptions about the overall costs of equity or debt; 6) the diversion of management’s and employees’ attention from other business concerns; 7) unforeseen difficulties operating in new product areas or new geographic areas; and 8) customer or key employee losses at the acquired businesses. Acquisitions or investments may require us to expend significant amounts of cash, resulting in our inability to use these funds for other business purposes. The potential impairment or complete write-off of goodwill and other intangible assets related to any such acquisition may reduce our overall earnings, which in turn could negatively affect our capitalization and results of operations.

     A temporary or permanent closure of the river to barge traffic in the Chicago area in response to the threat of Asian carp migrating into the Great Lakes may have an adverse effect on operations in the area.

     We have numerous customers in the Chicago and Great Lakes areas that ship freight through certain locks in the Chicago area. If certain of these locks are permanently closed due to migration of Asian carp, these customers may use other means of transportation to ship their products. If there are temporary or periodic closures of these locks or other river closures in the area, we could experience an increase in operating costs, delay in delivery of cargoes and other operational efficiencies. Such interruptions of our service could result in lower revenues. If barge transportation becomes impossible or impracticable for our Lemont facility, we may be forced to close the Lemont facility.

     Interruption or failure of our information technology and communications systems, or compliance with requirements related to controls over our information technology protocols, could impair our ability to effectively provide our services or the integrity of our information.

     Our services rely heavily on the continuing operation of our information technology and communications systems, particularly our Integrated Barge Information System. While in the past years we have not experienced any significant system outages, we have continued to add redundancy to eliminate any negative impact should an unplanned outage occur. In the event of a natural disaster, we have a tested disaster recovery plan that is intended to restore our systems within a reasonable period of time at an off-site facility. While we believe we have the plans in place to quickly restore our systems, there can be no assurance that such plan will be effective in the event of an unplanned outage or that it will not impair our ability to effectively provide our services or the integrity of our information.

     Many of our employees are covered by federal maritime laws that may subject us to job-related claims.

     Many of our employees are covered by federal maritime laws, including provisions of the Jones Act, the Longshore and Harbor Workers Act and the Seaman’s Wage Act. These laws typically operate to make liability limits established by state workers’ compensation laws inapplicable to these employees and to permit these employees and their representatives to pursue actions against employers for job-related injuries in federal court. Although we have insurance coverage for these types of claims, because we are not generally protected by the limits imposed by state workers’ compensation statutes for these employees, we may have greater exposure for any claims made by these employees than is customary for non-maritime workers in the individual states. Recent proposed changes of existing laws and regulations could result in additional monetary remedies and could ultimately lead to increases in insurance premiums or even make certain kinds of insurance unavailable.

     We have experienced work stoppages by union employees in the past, and future work stoppages may disrupt our services and adversely affect our operations.

     As of December 31, 2010, approximately 645 of our employees were represented by unions. Most of these unionized employees are represented by General Drivers, Warehousemen and Helpers, Local Union No. 89, affiliated with the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America (“Teamsters”), at our shipyard facility under a three-year collective bargaining agreement that expires April 1, 2013. Our remaining unionized employees (approximately 20 positions) are represented by the International Union of United Mine Workers of America, District 12—Local 2452 at ACL Transportation Services LLC in St. Louis, Missouri under a collective bargaining agreement that expired March 14, 2011 after a short extension for negotiations. We have unilaterally implemented new contract terms, mostly terms agreed with the Union, and the employees continue to work without interruption. We do not believe that a work stoppage at this facility would have a material impact on our operations. Although we believe that our relations with our employees and with the recognized labor unions are generally good, we cannot assure that we will not be subject to work stoppages, other labor disruption or that we will be able to pass on increased costs to our customers in the future.

     The loss of key personnel, including highly skilled and licensed vessel personnel, could adversely affect our business.

     We believe that our ability to successfully implement our business strategy and to operate profitably depends on the continued employment of our senior management team and other key personnel, including highly skilled and licensed vessel personnel. Specifically, experienced vessel operators, including captains, are not quickly replaceable and the loss of high-level vessel employees over a short period of time could impair our ability to fully man all of our vessels. If key employees depart, we may have to incur significant costs to replace them. Our ability to execute our business model could be impaired if we cannot replace them in a timely manner. Therefore, any loss or reduction in the number of such key personnel could adversely affect our future operating results.

     Failure to comply with environmental, health and safety regulations could result in substantial penalties and changes to our operations.

     Our operations, facilities, properties and vessels are subject to extensive and evolving laws and regulations. These laws pertain to air emissions; water discharges; the handling and disposal of solid and hazardous materials and oil and oil-related products, hazardous substances and wastes; the investigation and remediation of contamination; and health, safety and the protection of the environment and natural resources. Failure to comply with these laws and regulations may trigger a variety of administrative, civil and criminal enforcement measures, including the assessment of civil and criminal penalties, the imposition of remedial obligations, assessment of monetary penalties and the issuance of injunctions limiting or preventing some or all of our operations. As a result, we are involved from time to time in administrative and legal proceedings related to environmental, health and safety matters and have in the past and will continue to incur costs and other expenditures relating to such matters. In addition to environmental laws that regulate our ongoing operations, we are also subject to environmental remediation liability. Under federal and state laws we may be liable as a result of the release or threatened release of hazardous substances or wastes or other pollutants into the environment at or by our facilities, properties or vessels, or as a result of our current or past operations, including facilities to which we have shipped wastes. These laws, such as the federal Clean Water Act, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”), the Resource Conservation and Recovery Act (“RCRA”) and OPA 90, typically impose liability and cleanup responsibility without regard to whether the owner or operator knew of or caused the release or threatened release. Even if more than one person may be liable for the release or threatened release, each person covered by the environmental laws may, under certain circumstances, be held wholly responsible for all of the cleanup costs and damages. In addition, third parties may sue the owner or operator of a site or vessel for damage based on personal injury, property damage or other costs and cleanup costs, resulting from environmental contamination. Under OPA 90 owners, operators and bareboat charterers are jointly and severally strictly liable for the discharge of oil within the internal and territorial waters of the United States, and the 200-mile exclusive economic zone around the United States. Additionally, an oil spill could result in significant liability, including fines, penalties, criminal liability and costs for natural resource damages. Most states bordering on a navigable waterway have enacted legislation providing for potentially unlimited liability for the discharge of pollutants within their waters. As of December 31, 2010, we were involved in several matters relating to the investigation or remediation of locations where hazardous materials have or might have been released or where we or our vendors

have arranged for the disposal of wastes. These matters include situations in which we have been named or are believed to be a potentially responsible party under applicable federal and state laws. As of December 31, 2010, we had no significant reserves for these environmental matters. Any cash expenditures required to comply with applicable environmental laws or to pay for any remediation efforts in excess of such reserves or insurance will therefore result in charges to earnings. We may incur future costs related to the sites associated with the environmental issues, and any significant additional costs could adversely affect our financial condition. The discovery of additional sites, the modification of existing laws or regulations or the promulgation of new laws or regulations, more vigorous enforcement by regulators, the imposition of joint and several liability under CERCLA or analogous state laws or OPA 90 and other unanticipated events could also result in a material adverse effect.

     We are subject to, and may in the future be subject to disputes, or legal or other proceedings that could involve significant expenditures by us.

     The nature of our business exposes us to the potential for disputes or legal or other proceedings from time to time relating to labor and employment matters, personal injury and property damage, product liability matters, environmental matters, tax matters, contract disputes and other matters. Specifically, we are subject to claims for cargo damage from our customers and injury claims from our vessel personnel. These disputes, individually or collectively, could affect our business by distracting our management from the operation of our business. If these disputes develop into proceedings, these proceedings, individually or collectively, could involve significant expenditures. We are currently involved in several environmental matters. See “Business—Legal Proceedings” for additional information.

     Our substantial debt could adversely affect our financial condition.

     We have a substantial amount of indebtedness, which will require significant interest and principal payments. As of December 31, 2010, we had $385.2 million of total debt outstanding including approximately $35.0 million of premium on the debt balances recorded in conjunction with the Acquisition. Subject to the limits contained in the debt instruments, we may be able to incur additional debt from time to time to finance working capital, capital expenditures, investments or acquisitions, or for other purposes. If we do so, the risks related to our high level of debt could intensify which could trigger violation of our covenants. Specifically, our high level of debt could make it more difficult for us to satisfy our obligations with respect to our debt, limit our ability to obtain additional financing to fund future working capital, capital expenditures, or other general corporate requirements, require a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, increase our vulnerability to general adverse economic and industry conditions, limit our flexibility in planning for and reacting to changes in the industry in which we compete, place us at a disadvantage compared to other, less leveraged competitors; and increase our cost of borrowing, if such financing could be arranged.

     We may be unable to service our indebtedness.

     Our ability to make scheduled payments on and to refinance our indebtedness depends on and is subject to our financial and operating performance, which in turn is affected by general and regional economic, financial, competitive, business and other factors, including the availability of financing in the banking and capital markets as well as the other risks described herein. We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us in an amount sufficient to enable us to service our debt, to refinance our debt or to fund our other liquidity needs. If we are unable to meet our debt obligations or to fund our other liquidity needs, we will need to restructure or refinance all or a portion of our debt which could cause us to default on our debt obligations and impair our liquidity. Any refinancing of our indebtedness could be at higher interest rates and may require us to comply with more onerous covenants which could further restrict our business operations.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

     None.

ITEM 2. PROPERTIES

Properties

     We operate numerous land-based facilities in support of our marine operations. These facilities include a major manufacturing shipyard in Jeffersonville, Indiana; terminal facilities for cargo transfer and handling at St. Louis, Missouri, Lemont, Illinois and Memphis, Tennessee; port service facilities at Lemont, Illinois, St. Louis, Missouri, Cairo, Illinois, Louisville, Kentucky, Baton Rouge, Louisiana, Vacherie, Louisiana, Harahan, Louisiana, Marrero, Louisiana and Houston, Texas; boat repair facilities at St. Louis, Missouri, Harahan, Louisiana and Cairo, Illinois; and a corporate office complex in Jeffersonville, Indiana. For the properties that we lease, the majority of leases are long term agreements. The map below shows the locations of our primary transportation and

manufacturing facilities, along with our Inland Waterways routes. The most significant of our facilities among these properties, all of which we own, except as otherwise noted, are as follows:

	•		Our manufacturing segment’s shipbuilding facility in Jeffersonville, Indiana is a large single-site shipyard facility on the Inland Waterways, occupying approximately 64 acres of owned land and approximately 5,600 feet of frontage on the Ohio River. There are 32 buildings on the property comprising approximately 318,020 square feet under roof. In addition, we lease an additional four acres of land under leases expiring in 2015.
	•		ACLT’s coal transfer terminal in St. Louis, Missouri occupies approximately 69 acres. There are six buildings on the property comprising approximately 21,000 square feet. In addition, we lease 2,400 feet of river frontage from the City of St. Louis under a lease expiring in 2020. The lease may be terminated with one-year advance notice by ACLT. Additional parcels in use include property of BNSF under leases that either party can terminate with 30 days prior written notice.
	•		ACLT operates a terminal in Memphis, Tennessee that processes boat and barge waste water, direct transfer services for liquid commodities, along with tank storage services for approximately 60,000 barrels of vegetable oils. There are three buildings occupying approximately 7,000 square feet on almost three acres. ACLT leases an easement to this facility that expires in 2018. Either party may cancel the lease with 90 days prior written notice.
	•		ACLT’s Armant facilities located in Vacherie, Louisiana, occupies approximately 482 acres, with approximately 10,726 feet of river frontage. An additional 3,840 feet of river frontage is provided under a lease expiring in 2011. The facility provides barge fleeting and shifting, barge cleaning and repairs on the Mississippi River as part of our Gulf Fleet Operations.
	•		ACLT’s fleet facility in Cairo, Illinois occupies approximately 37 acres, including approximately 900 feet of owned river frontage. In addition, we lease approximately 22,400 feet of additional river frontage under various leases expiring between 2011 and 2013. This facility provides the base of operations for our barge fleeting and shifting, barge cleaning and repair and topside towboat repair.
	•		ACLT’s Tiger Fleet near Baton Rouge (Port Allen), Louisiana, operates on approximately 83 acres, with an estimated 3,300 feet of river frontage. An additional 13,700 lineal feet of riverfront fleeting space is provided under a lease expiring in 2011. This facility provides barge fleeting and shifting services and is adjacent to our joint venture investment known as T. T. Barge Services Mile 237, L.L.C., that provides barge cleaning and repair services.

	•		ACLT’s facilities in St. Louis, Missouri, operates two owned parcels, one being approximately 3.2 acres, with an estimated 600 linear feet of riverfront, and an additional 7.3 acres with approximately 1,393 linear feet of adjoining waterfront footage leased under an agreement expiring in 2011. The facility provides fleeting and shifting services, boat repair and maintenance, plus warehouse services for vessels.
	•		ACLT’s operations at Harahan, Louisiana are located on approximately 156 acres with an estimated 7,067 feet of riverfront. The facility is the base of operations for our Gulf Operations, including barge shifting and fleeting, boat and barge maintenance and repairs. An additional 4,749 lineal feet of river frontage for shifting and fleeting is leased under various leases expiring between 2011 and 2013.
	•		ACLT’s Houston (Channelview), Texas facility is located on approximately 32 acres with 1,796 feet of riverfront. Improvements include an estimated 6,400 square foot office building. An additional 29.4 acres of waterfront property along the Lost Lake Disposal Area, adjacent to the Houston Ship Channel, for shifting and fleeting, complements this facility, under a lease agreement expiring in 2028.
	•		ACLT’s facilities in Lemont, Illinois occupy approximately 81 acres, including approximately 10,000 feet of river frontage, under various leases expiring between 2016 and 2044. This facility provides the base of operations for our barge fleeting and shifting, barge cleaning and repairs on the Illinois River, along with a 48,000 square foot, climate controlled warehouse, providing terminaling for bulk, non-bulk and break-bulk warehousing and stevedoring services.
	•		ACLT’s Marrero, Louisiana Fleet is comprised of approximately 24.9 acres of batture, providing an estimated 2,529 feet of riverfront for barge shifting and fleeting operations.
	•		Our corporate offices in Jeffersonville, Indiana occupy approximately 22 acres, comprising approximately 165,000 square feet of office space.
	•		The liquids division of our transportation segment was formerly headquartered in approximately 26,800 square feet of leased space in Houston, Texas under a lease expiring in August 2015. This lease was terminated in 2010, as we have relocated the work to alternative sites, including our corporate offices.
	•		In addition to the above properties, our wholly-owned naval architecture subsidiary operates in leased facilities consisting of approximately 10,000 square feet in Seattle, Washington and 2,200 square feet in New Orleans, Louisiana. The lease of the Seattle facility expires in September 2015. The lease of the New Orleans facility expires in 2018.

We believe that our facilities are suitable and adequate for our current needs.

ITEM 3. LEGAL PROCEEDINGS

The nature of our business exposes us to the potential for legal proceedings relating to labor and employment, personal injury, property damage and environmental matters. Although the ultimate outcome of any legal matter cannot be predicted with certainty, based on present information, including our assessment of the merits of each particular claim, as well as our current reserves and insurance coverage, we do not expect that any known legal proceeding will in the foreseeable future have a material adverse impact on our financial condition or the results of our operations.

Stockholder litigation. On October 22, 2010, a putative class action lawsuit was commenced against us, our directors, Platinum Equity LLC (“Platinum Equity”), Finn and Finn Merger Corporation (“Merger Sub”) in the Court of Chancery of the State of Delaware. The lawsuit is captioned Leonard Becker v. American Commercial Lines Inc., et al, Civil Action No. 5919-VCL. Plaintiff amended his complaint on November 5, 2010, prior to a formal response from

any defendant. On November 9, 2010, a second putative class action lawsuit was commenced against us, our directors, Platinum Equity, Finn and Merger Sub in the Superior/Circuit Court for Clark County in the State of Indiana. The lawsuit is captioned Michael Eakman v. American Commercial Lines Inc., et al., Case No. 1002-1011-CT-1344. In both actions, plaintiffs allege generally that our directors breached their fiduciary duties in connection with the Transaction by, among other things, carrying out a process that they allege did not ensure adequate and fair consideration to our stockholders. They also allege that various disclosures concerning the Transaction included in the Definitive Proxy Statement are inadequate. They further allege that Platinum Equity aided and abetted the alleged breaches of duties. Plaintiffs purport to bring the lawsuits on behalf of the public stockholders of the Company and seek equitable relief to enjoin consummation of the merger, rescission of the merger and/or rescissory damages, and attorneys’ fees and costs, among other relief. The Company believes the lawsuits are without merit. On December 3, 2010, counsel for the parties in the Delaware action entered into a Memorandum of Understanding (“MOU”) in which they agreed on the terms of a settlement of the Delaware litigation, which includes the supplementation of the Definitive Proxy Statement and the dismissal with prejudice of all claims against all of the defendants in both the Delaware and Indiana actions. The proposed settlement is conditional upon, among other things, the execution of an appropriate stipulation of settlement and final approval of the proposed settlement by the Delaware Court of Chancery. Counsel for the named plaintiffs in both actions agreed to stay the actions pending consideration of final approval of the settlement in the Delaware Court of Chancery. Assuming such approval, the named plaintiffs in both actions would dismiss their respective lawsuits with prejudice against all defendants. In connection with the settlement agreed upon in the MOU, the parties contemplate that plaintiffs’ counsel will seek an award of attorneys’ fees and expenses as part of the settlement. There can be no assurance that the parties will ultimately enter into a stipulation of settlement or that the Delaware Court of Chancery will approve the settlement as stipulated by the parties. In such event, the proposed settlement as contemplated by the MOU may be terminated.

We have been involved in the following environmental matters relating to the investigation or remediation of locations where hazardous materials have or might have been released or where we or our vendors have arranged for the disposal of wastes. These matters include situations in which we have been named or are believed to be a potentially responsible party (“PRP”) under applicable federal and state laws.

Collision Incident, Mile Marker 97 of the Mississippi River. ACL and American Commercial Lines LLC, an indirect wholly-owned subsidiary of ACL, (“ACLLLC”), have been named as defendants in the following putative class action lawsuits, filed in the United States District Court for the Eastern District of Louisiana (collectively the “Class Action Lawsuits”): Austin Sicard et al on behalf of themselves and others similarly situated vs. Laurin Maritime (America) Inc., Whitefin Shipping Co. Limited, D.R.D. Towing Company, LLC, American Commercial Lines, Inc. and the New Orleans-Baton Rouge Steamship Pilots Association, Case No. 08-4012, filed on July 24, 2008; Stephen Marshall Gabarick and Bernard Attridge, on behalf of themselves and others similarly situated vs. Laurin Maritime (America) Inc., Whitefin Shipping Co. Limited, D.R.D. Towing Company, LLC, American Commercial Lines, Inc. and the New Orleans-Baton Rouge Steamship Pilots Association, Case No. 08-4007, filed on July 24, 2008; and Alvin McBride, on behalf of himself and all others similarly situated v. Laurin Maritime (America) Inc.; Whitefin Shipping Co. Ltd.; D.R.D. Towing Co. LLC; American Commercial Lines Inc.; The New Orleans-Baton Rouge Steamship Pilots Association, Case No. 09-cv-04494 B, filed on July 24, 2009. The McBride v. Laurin Maritime, et al. action has been dismissed with prejudice because it was not filed prior to the deadline set by the Court. The claims in the Class Action Lawsuits stem from the incident on July 23, 2008, involving one of ACLLLC’s tank barges that was being towed by DRD Towing Company L.L.C. (“DRD”), an independent towing contractor. The tank barge was involved in a collision with the motor vessel Tintomara, operated by Laurin Maritime, at Mile Marker 97 of the Mississippi River in the New Orleans area. The tank barge was carrying approximately 9,900 barrels of #6 oil, of which approximately two-thirds was released. The tank barge was damaged in the collision and partially sunk. There was no damage to the towboat. The Tintomara incurred minor damage. The Class Action Lawsuits include various allegations of adverse health and psychological damages, disruption of business operations, destruction and loss of use of natural resources, and seek unspecified economic, compensatory and punitive damages for claims of negligence, trespass and nuisance. The Class Action Lawsuits were stayed pending the outcome of the two actions filed in the United States District Court for the Eastern District of Louisiana seeking exoneration from, or limitation of, liability related to the incident as discussed in more detail below. All claims in the class actions have been settled with payment to be made from funds on deposit with the court in the IINA interpleader, mentioned below. IINA is DRD’s primary insurer. The settlement is agreed to by all parties and we are awaiting final approval from the court and a dismissal of all lawsuits against all parties, including our company, with prejudice. Claims under OPA 90 were dismissed without prejudice. There is a separate administrative process for making a claim under OPA 90 that must be followed prior to litigation. We are processing OPA 90 claims properly presented, documented and recoverable. We have also received numerous claims for personal injury, property damage and various economic damages, including notification by the National Pollution Funds Center of claims it has received. Additional lawsuits may be filed and claims submitted. The claims that remain for personal injury are by the three DRD crewmen on the vessel at the time of the incident. Two crew members have agreed to a settlement of their claims to be paid from the funds on deposit in the interpleader action mentioned below. We are in early discussions with the Natural Resource Damage Assessment Group, consisting of various State and Federal agencies, regarding the scope of environmental damage that may have been caused by the incident. Recently Buras Marina filed suit in the Eastern District of Louisiana in Case No. 09-4464 against the Company seeking payment for “rental cost” of its marina for cleanup operations. ACL and ACLLLC have also been named as defendants in the following interpleader action brought by DRD’s primary insurer IINA seeking court approval as to the disbursement of the funds: Indemnity Insurance Company of North America v. DRD Towing Company, LLC; DRD Towing Group, LLC; American Commercial Lines, LLC; American Commercial Lines, Inc.; Waits Emmet & Popp, LLC, Daigle, Fisse & Kessenich; Stephen Marshall Gabarick;

Bernard Attridge; Austin Sicard; Lamont L. Murphy, individually and on behalf of Murphy Dredging; Deep Delta Distributors, Inc.; David Cvitanovich; Kelly Clark; Timothy Clark, individually and on behalf of Taylor Clark, Bradley Barrosse; Tricia Barrosse; Lynn M. Alfonso, Sr.; George C. McGee; Sherral Irvin; Jefferson Magee; and Acy J. Cooper, Jr., United States District Court, Eastern District of Louisiana, Civil Action 08-4156, Section “I-5,” filed on August 11, 2008. DRD’s excess insurers, IINA and Houston Casualty Company intervened into this action and deposited $9 million into the Court’s registry. ACLLLC has filed two actions in the United States District Court for the Eastern District of Louisiana seeking exoneration from or limitation of liability relating to the foregoing incident as provided for in Rule F of the Supplemental Rules for Certain Admiralty and Maritime Claims and in 46 U.S.C. sections 30501, 30505 and 30511. We have also filed a declaratory judgment action against DRD seeking to have the contracts between them declared “void ab initio”. Trial has been set for August of 2011 and discovery has begun. We participated in the U.S. Coast Guard investigation of the matter and participated in the hearings which have concluded. A finding has not yet been announced. We have also made demand on DRD (including its insurers as an additional insured) and Laurin Maritime for reimbursement of cleanup costs, defense and indemnification. However, there is no assurance that any other party that may be found responsible for the accident will have the insurance or financial resources available to provide such defense and indemnification. We have various insurance policies covering pollution, property, marine and general liability. While the cost of cleanup operations and other potential liabilities are significant, we believe our company has satisfactory insurance coverage and other legal remedies to cover substantially all of the cost.

ITEM 4. (REMOVED AND RESERVED)

PART II

ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Information and Holders

     There is no public trading market for the common stock of the Company, which is a wholly-owned subsidiary of ACL.

Dividends

     CBL did not declare or pay any cash dividends in fiscal years 2009 or 2010. The revolving credit facility, of which CBL is a borrower and our Senior Secured Notes due 2017, of which CBL is the issuer, currently restrict our ability to pay dividends.

Equity Compensation Plans

     The table below outlines the number of shares of the Finn Holding Corporation common stock that are subject to outstanding options and stock unit awards granted under its stock compensation plans, the per share weighted-average exercise price of those options and stock unit awards, and the number of shares of Company common stock remaining available for future awards under the current stock compensation plans. The numbers in the table are as of December 31, 2010.

Number of

Number of Securities

Securities to be

Remaining Available

Issued Upon

Weighted-Average

for Future Issuance

Exercise of

Exercise Price of

Under Equity

Outstanding Options(1)

Outstanding Options

Compensation Plans

Equity compensation plans approved by stockholders

26,052.50

213.03

8,799

Equity compensation plans not approved by stockholders

—

—

Total

26,052.50

213.03

8,799

ITEM 6. SELECTED FINANCIAL DATA.

     Set forth below is Commercial Barge Line Company’s selected consolidated financial data for each of the five fiscal years ended December 31, 2010. This selected consolidated financial data is derived from Commercial Barge Line Company’s audited financial statements. The selected consolidated financial data should be read in conjunction with Commercial Barge Line Company’s consolidated financial statements and with “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

																		Predecessor				Successor
																		Company				Company
		Predecessor Company																Jan. 1. 2010				Dec. 22, 2010
		Fiscal Years Ended December 31,																to				to
		2006				2007				2008				2009				Dec. 21, 2010				Dec. 31, 2010
Statement of Operating Data:
Transportation and Services revenue		$	787,348			$	810,443			$	905,126			$	630,481			$	620,753			$	19,779
Manufacturing revenue			155,204				239,917				254,794				215,546				85,054				4,986
Total revenue			942,552				1,050,360				1,159,920				846,027				705,807				24,765
Operating expenses:
Materials, supplies and other			249,500				279,359				304,858				225,647				212,567				6,311
Rent			22,445				24,595				23,345				21,715				20,222				570
Labor and fringe benefits			90,294				111,617				118,737				115,998				122,462				3,102
Fuel			157,070				169,178				227,489				122,752				117,372				3,986
Depreciation and amortization			45,489				46,694				47,255				48,615				41,737				2,532
Taxes, other than income taxes			17,667				16,594				14,855				14,072				11,741				330
Gain on property dispositions			(194	)			(3,390	)			(954	)			(20,282	)			(9,021	)			—
Cost of goods sold — services			—				590				2,080				3,707				3,048				90
Cost of goods sold — manufacturing			141,589				228,190				242,309				189,565				82,504				4,838
Cost of sales			723,860				873,427				979,974				721,789				602,632				21,759
Selling, general and administrative expenses			66,280				68,727				77,536				70,082				47,874				8,227
Goodwill impairment			—				—				855				—				—				—
Total operating expenses			790,140				942,154				1,058,365				791,871				650,506				29,986
Operating income			152,412				108,206				101,555				54,156				55,301				(5,221	)
Other income			3,799				2,532				2,279				1,259				313				19
Interest expense			18,354				20,578				26,829				40,932				37,923				805
Debt retirement expenses			1,437				23,938				2,379				17,659				8,701				—
Income (loss) from continuing operations before income taxes			136,420				66,222				74,626				(3,176	)			8,990				(6,007	)
Income taxes (benefit)			49,822				21,855				27,243				(1,148	)			5,540				628
Net income (loss) before discontinued operations			86,598				44,367				47,383				(2,028	)			3,450				(6,635	)
Discontinued operations, net of tax (a)			5,654				(6	)			628				(10,030	)			300				—
Net income (loss)		$	92,252			$	44,361			$	48,011			$	(12,058	)		$	3,750			$	(6,635	)

		Predecessor Company Fiscal Years Ended December 31,																Successor Company
		2006				2007				2008				2009				2010
Statement of Financial Position Data:
Cash and cash equivalents		$	5,113			$	5,021			$	1,217			$	1,198			$	3,707
Accounts receivable, net			102,228				114,921				138,695				93,295				97,802
Inventory			61,504				70,890				69,635				39,070				50,834
Working capital (b)			44,251				70,434				75,735				35,097				59,626
Property and equipment, net			455,710				511,832				554,580				521,068				979,655
Total assets			671,191				1,067,310				879,133				761,241				1,259,272
Long-term debt, including current portion			119,500				439,760				419,970				345,533				385,152
Stockholders’ equity			108,007				172,237				198,591				207,941				428,956

		Predecessor Company																Predecessor Company Jan. 1. 2010				Successor Company Dec. 22, 2010
		Fiscal Years Ended December 31,																to				to
		2006				2007				2008				2009				Dec. 21, 2010				Dec. 31, 2010
Other Data:
Net cash provided by operating activities		$	134,781			$	189,054			$	120,480			$	128,852			$	63,125			$	8,032
Net cash used in investing activities		$	(63,899	)		$	(131,291	)		$	(104,207	)		$	(6,537	)		$	(46,948	)		$	(1,735	)
Net cash (used in) provided by financing activities		$	(79,728	)		$	320,253			$	(20,077	)		$	(122,334	)		$	5,093			$	(25,058	)
EBITDA ( c )		$	211,811			$	159,758			$	156,567			$	93,575			$	101,164			$	(2,342	)
Capital expenditures		$	90,042			$	109,315			$	97,892			$	33,226			$	57,798			$	—

		Fiscal Years Ended December 31,
		2006				2007				2008				2009				2010
Towboats (at period end) (d)			148				162				152				140				129
Barges (at period end) (d)			3,010				2,828				2,645				2,510				2,411
Ton-miles from continuing operations affreightment			41,797,859				39,271,112				35,361,326				34,024,295				30,962,150
Ton-miles from continuing operations non-affreightment			3,317,000				4,326,404				4,100,050				3,077,305				2,884,304

	a)		In all periods presented the operations of the Dominican Republic, Venezuela and Summit businesses, on a net of tax basis, have been presented as discontinued operations. The 2009 net of tax loss resulted primarily from the impairment and subsequent loss on sale of Summit. Included in 2006 is the $4.8 million net of tax gain on the sale of the Venezuela business.
	b)		We define working capital as total current assets minus total current liabilities.
	c)		EBITDA represents net income before interest, income taxes, depreciation and amortization, as reconciled to net income below. EBITDA provides useful information to investors about us and our financial condition and results of operations for the following reasons: (i) it is one of the measures used by our board of directors and management team to evaluate our operating performance, (ii) it is one of the measures used by our management team to make day-to-day operating decisions, (iii) certain management compensation is based upon performance metrics which include EBITDA as a component, (iv) it is used by securities analysts, investors and other interested parties as common performance measure to compare results across companies in our industry and (v) covenants in our debt agreements contain financial ratios based on EBITDA. For these reasons we believe EBITDA is a useful measure to represent to our investors and other stakeholders.
	d)		Includes equipment operated by foreign subsidiaries through date of disposal.
	e)		The following table reconciles net income to EBITDA.

																		Predecessor
																		Company				Successor Company
		Predecessor Company																Jan. 1. 2010				Dec. 22, 2010
		Fiscal Years Ended December 31,																to				to
		2006				2007				2008				2009				Dec. 21, 2010				Dec. 31, 2010
Net income (loss)		$	92,252			$	44,361			$	48,011			$	(12,058	)		$	3,750			$	(6,635	)
Interest income			(697	)			(295	)			(194	)			(67	)			(3	)			—
Interest expense			19,791				44,516				29,243				58,621				46,624				805
Depreciation and Amortization			48,806				49,371				51,876				53,838				45,253				2,860
Income Taxes			51,659				21,805				27,631				(6,759	)			5,540				628
EBITDA		$	211,811			$	159,758			$	156,567			$	93,575			$	101,164			$	(2,342	)

     EBITDA has limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of our results as reported under U.S. generally accepted accounting principles. Some of these limitations are:

	•		EBITDA does not reflect our current or future cash requirements for capital expenditures;
	•		EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
	•		EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debts;
	•		Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and
	•		Other companies in our industry may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure.

     EBITDA is not a measurement of our financial performance under GAAP and should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance with GAAP or as a measure of our liquidity. Because of these limitations, EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA only as a

supplement to those GAAP results. See the statements of cash flow included in our consolidated financial statements.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

     This MD&A includes certain “forward-looking statements” that involve many risks and uncertainties. When used, words such as “anticipate,” “expect,” “believe,” “intend,” “may be,” “will be” and similar words or phrases, or the negative thereof, unless the context requires otherwise, are intended to identify forward-looking statements. These forward-looking statements are based on management’s present expectations and beliefs about future events. As with any projection or forecast, these statements are inherently susceptible to uncertainty and changes in circumstances. The Company is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements whether as a result of such changes, new information, subsequent events or otherwise.

     The readers of this document are cautioned that any forward-looking statements are not guarantees of future performance and involve risks and uncertainties. See the risk factors included in “Item 1A. Risk Factors” of this annual report on Form 10-K as well as the items described under the heading “Cautionary Statement Regarding Forward-Looking Statements” of this annual report on Form 10-K for a detailed discussion of important factors that could cause actual results to differ materially from those reflected in such forward-looking statements. The potential for actual results to differ materially from such forward-looking statements should be considered in evaluating our outlook.

INTRODUCTION

     This MD&A is provided as a supplement to the accompanying consolidated financial statements and footnotes to help provide an

understanding of the financial condition, changes in financial condition and results of operations of Commercial Barge Line Company MD&A should be read in conjunction with, and is qualified in its entirety by reference to, the accompanying consolidated financial statements and footnotes. MD&A is organized as follows.

	•		Overview. This section provides a general description of the Company and its business, as well as developments the Company believes are important in understanding the results of operations and financial condition or in understanding anticipated future trends.
	•		Results of Operations. This section provides an analysis of the Company’s results of operations for the year ended December 31, 2010, compared to the results of operations for the year ended December 31, 2009, and an analysis of the Company’s results of operations for the year ended December 31, 2009, compared to the results of operations for the year ended December 31, 2008.
	•		Liquidity and Capital Resources. This section provides an overview of the Company’s sources of liquidity, a discussion of the Company’s debt that existed as of December 31, 2010, and an analysis of the Company’s cash flows for the years ended December 31, 2010, December 31, 2009 and December 31, 2008. This section also provides information regarding certain contractual obligations.
	•		Seasonality. This section describes the seasonality of our business.
	•		Changes in Accounting Standards. This section describes certain changes in accounting and reporting standards applicable to the Company.
	•		Critical Accounting Policies. This section describes accounting policies that are considered important to the Company’s financial condition and results of operations, require significant judgment and require estimates on the part of management in application. The Company’s significant accounting policies, including those considered to be critical accounting policies, are also summarized in Note 1 to the accompanying consolidated financial statements.
	•		Quantitative and Qualitative Disclosures about Market Risk. This section describes our exposure to potential loss arising from adverse changes in fuel prices, interest rates and foreign currency exchange rates.
	•		Risk Factors and Caution Concerning Forward-Looking Statements. This section references important factors that could adversely affect the operations, business or financial results of the Company or its business segments and the use of forward-looking information appearing in this annual report on Form 10-K, including in MD&A and the consolidated financial statements. Such information is based on management’s current expectations about future events, which are inherently susceptible to uncertainty and changes in circumstances.

      Due to the relative insignificance of the Successor Company’s results of operations in 2010, we have not bifurcated the MD&A discussion of operating results.

OVERVIEW

Our Business

     We are one of the largest and most diversified marine transportation and services companies in the United States, providing barge transportation and related services under the provisions of the Jones Act, as well as the manufacturing of barges and other vessels, including ocean-going liquid tank barges. We currently operate in two primary business segments, transportation and manufacturing, and a smaller “All other segment” that consists of our services company, EBDG. We are the third largest provider of dry cargo barge transportation and second largest provider of liquid tank barge transportation on the Inland Waterways, accounting for 11.6% of the total inland dry cargo barge fleet and 10.8% of the total inland liquid cargo barge fleet as of December 31, 2010, according to Informa.

     Our manufacturing segment was the second largest manufacturer of brown-water barges in the United States in 2010 according to Criton industry data.

     We provide additional value-added services to our customers, including warehousing and third-party logistics through our BargeLink LLC joint venture. Our operations incorporate advanced fleet management practices and information technology systems which allows us to effectively manage our fleet.

     EBDG, which we acquired during the fourth quarter of 2007, is much smaller than either the transportation or manufacturing segment and is not significant to the primary operating segments of CBL. EBDG is a naval

architecture and marine engineering firm, which provides architecture, engineering and production support to customers in the commercial marine industry, while providing ACL with expertise in support of its transportation and manufacturing businesses.

     During the second quarter of 2008, we acquired the remaining ownership interests of Summit Contracting, a provider of environmental and civil construction services to a variety of customers. In May 2007 we had previously purchased a 30% ownership stake in that business. We sold our equity in Summit in November 2009 and reclassified its results of operations to discontinued operations for all periods presented.

     Certain of the Company’s international operations have been recorded as discontinued operations in all periods presented due to the sale of all remaining international operations in 2006. Operations ceased in the Dominican Republic in the third quarter of 2006 and operations ceased in Venezuela in the fourth quarter of 2006. The only remaining activities are related to the formal exit from the Dominican Republic.

The Industry

     Transportation Industry. While freight movements on the domestic waterways represent a substantial portion of U.S. ton-mile volume, ranking third in 2006 at 15.1% behind rail (49.8%) and truck (34.7%), these movements represent a much smaller portion (1%) of the $735 billion domestic freight market when ranked by dollar value. We believe the highly favorable comparison of revenue per ton-mile is one of the best illustrations of the advantages of shipping freight over the waterways as compared to other transportation modes. In addition to being significantly more cost effective, shipping freight via barge is more energy efficient and safer than transporting via rail or truck. These advantages have contributed to the shifting of freight volumes from truck and rail to barge, particularly for high volume, less time sensitive freight, such as dry bulk and liquid commodities. We believe that the current supply/demand relationship for dry cargo freight indicates that market freight rates obtained in the last several years should be sustained and improved over the long term.

     Barge market behavior is driven by the fundamental forces of supply and demand, influenced by a variety of factors including the size of the Inland Waterways barge fleet, local weather patterns, navigation circumstances, domestic and international consumption of agricultural and industrial products, crop production, trade policies, the price of steel, the availability of capital and general economic conditions.

     Transportation Mode Comparison. We believe that barge transportation on the Inland Waterways is the most cost efficient, environmentally friendly and safest method of moving freight in the U.S. as compared to railroads or trucks. A typical Lower Mississippi River tow of 40 barges has the carrying capacity of approximately 640 railcars or approximately 2,800 tractor-trailers, and is able to move 576 ton-miles per gallon of fuel compared to 413 ton-miles per gallon of fuel for rail transportation or 155 ton-miles per gallon of fuel for truck transportation. In addition, when compared to inland barges, trains and trucks produce significantly greater quantities of certain air pollutants. Carbon dioxide emissions for trains are 39% greater than barge emissions and carbon dioxide emissions for trucks are 371% greater than barge emissions when moving equivalent amounts of freight over equivalent distances. Barge transportation is also the safest mode of U.S. freight transportation, based on the percentage of injuries per ton-mile transported. Inland barge transportation predominantly operates away from population centers, which generally reduces both the number and impact of waterway incidents.

     As discussed in “Item 1. The Business — Competition” the industry fleet size at the end of 2010 was significantly below the number of barges in operation at the 1998 peak.

     Competition continues to be intense for barge freight transportation volumes. The top five carriers (by fleet size) of dry and liquid barges comprised approximately 66.8% and 57.7% of the respective industry fleet in each sector as of December 31, 2010. The economic recession which began in the fall of 2008 exacerbated the competitive environment in both liquid and dry market sectors. The impact in the liquid sector was more pronounced as fewer customers signed or renewed dedicated service contracts to ensure liquid barge availability, freeing more barges for spot rate service in that sector. Though we have seen some recovery in 2010, many of our customers have not returned to pre-recession volume levels.

     The demand drivers for freight and freight pricing on the Inland Waterways are discussed in detail in “Item 1. The Business — Competition.” For purposes of industry analysis, the commodities transported in the Inland Waterways can be broadly divided into four categories: grain, bulk, coal, and liquids. Using these broad cargo categories, the following graph depicts the total millions of tons shipped through the United States Inland Waterways for 2010, 2009 and the prior five year average by all carriers according to data from the US Army Corps of Engineers Waterborne Commerce Statistics Center (the “Corps”). The Corps does not estimate ton-miles, which we believe is a more accurate volume metric. Note that the most recent periods are typically estimated for the Corps’ purposes by lockmasters and retroactively adjusted as shipper data is received.

Source: U.S. Army Corps of Engineers Waterborne Commerce Statistics Center

     The Manufacturing Industry: Our manufacturing segment competes with companies also engaged in building equipment for use on both the Inland Waterways system and in ocean-going trade. Due to the relatively long life of the vessels produced by inland shipyards and the relative over-supply of barges built in the late 1970’s and early 1980’s, there has only recently been a resurgence in the demand for new barges as older barges are retired or made obsolete by U.S. Coast Guard requirements for liquid tank barges. This heightened demand may ultimately increase the competition within the segment over the longer term. We have in the last half of 2010 seen an increase in demand for new barge construction and believe that we will be at our desired capacity through 2011.

Consolidated Financial Overview

     For the years ended December 31, 2010, 2009 and 2008, the Company had a net loss of $2.9 million, a net loss of $12.1 million and net income of $48.0 million, respectively.

     The following table displays certain individually significant drivers of non-comparability in the respective periods.

						Year ended
		December 31,
		2010				2009				2008
Reduction in force charges		$	(0.5	)		$	(3.2	)		$	(1.9	)
Houston office closure charges			(0.1	)			(3.7	)			—
Charges for customer bankruptcy							(0.7	)			(0.5	)
Jeffboat inventory valuation adjustment							—				—
Jeffboat contract dispute			0.4				(4.2	)			—
Jeffboat strike costs			(0.4	)
Refinancing cost write-off							—				(1.5	)
Insurance deductible major spill							—				(0.9	)
Interest expense			(38.7	)			(40.9	)			(26.8	)
Debt retirement expenses			(8.7	)			(17.7	)			(2.4	)
Acquired goodwill impairment charge							—				(0.9	)
Vacation reversal on policy change			0.4				1.6				—
Asset management (gains, impairment, scrapping)			14.3				20.1				12.6
Pension reversal/ (buy-out)							—				2.1
Acquisition costs			(14.0	)			—				—
All other operating results		$	50.3			$	45.5			$	94.8
(Loss) income from continuing operations before income tax and discontinued operations		$	3.0			$	(3.2	)		$	74.6
Income taxes (benefit)			6.2				(1.1	)			27.2
Net (loss) income before discontinued operations		$	(3.2	)		$	(2.1	)		$	47.4
Discontinued operations, net of tax		$	0.3			$	(10.0	)		$	0.6
Net (loss) income		$	(2.9	)		$	(12.1	)		$	48.0

Note: Columns may not foot due to rounding

Year ended December 31, 2010 compared to December 31, 2009

     In 2010 the Company’s net loss of $2.9 million, was an improvement of $9.2 million from the prior year’s net loss of $12.1 million.

     Non-comparable items in 2010 and 2009 are described as follows. In connection with the Acquisition of our parent, ACL, we incurred $14.0 million in acquisition expenses in 2010. Debt retirement expenses of $8.7 million in 2010 related to the Company’s fourth quarter 2010 replacement of its revolving credit facility concurrent with the Acquisition of its parent ACL. These 2010 expenses were $9.0 million lower than the debt retirement expenses incurred in 2009 which are more fully described in the comparison of Year ended December 31, 2009 compared to December 31, 2008 below.

     During 2009 charges of $4.2 million related to manufacturing segment contract disputes and settlements were incurred, of which $0.4 was recovered in 2010. In addition Jeffboat incurred incremental costs related to the 2010 labor strike of $0.4 million.

     As a result of the decision to close the Houston office in early 2009, the Company incurred charges totaling $3.7 million. When the Houston lease terminated in 2010 we incurred an additional $0.1 million of expense. The 2010 reduction in force charges of $0.5 million were lower than those in 2009 by $2.7 million. These charges were partially offset by an accrued vacation reversal due to a change in vacation policy of $0.4 million in 2010 and $1.6 million in 2009.

     For the full-year 2010, average outstanding debt declined $34.8 million from the prior year levels. Total 2010 interest expense was $38.7 million or $2.2 million lower than those expenses in 2009. The total of asset management actions in 2010 including boat sales, impairment adjustments and scrapping of surplus barges was $14.3 million in 2010 or $5.8 million lower than 2009.

     The 2010 decline compared to 2009 in all other operating results was primarily higher transportation segment operating income significantly offset by lower operating income from our manufacturing segment and EBDG.

     Compared to 2010 levels, transportation segment operating income improved by $18.2 million or 57.7% in 2010 and manufacturing segment operating income decreased $21.4 million or 100%. The primary causes of changes in segment operating income in our transportation and manufacturing segments are generally described in the segment overview below in this consolidated financial overview section and more fully described in the Operating Results by Business Segments within this Item 7.

     The lower losses on discontinued operations were attributable to losses in 2009 on the sale of Summit. The majority of the 2009 loss in discontinued operations was due to a $4.4 million impairment of certain Summit intangibles recorded prior to its sale and to the $7.5 million loss on the sale of Summit. See Note 13 to the accompanying consolidated financial statements.

     In 2010 EBITDA from continuing operations was $98.5 million, a decrease of 8.6% from 2009. See the table at the end of this Consolidated Financial Overview and Selected Financial Data for a definition of EBITDA and a reconciliation of EBITDA to consolidated net income.

     In 2010 $48.7 million of cash was used in investing activities during the year, as our $57.8 million capital expenditures and other investing activities of $0.8 million were partially offset by proceeds from property dispositions of $7.3 million and government capital funding grant proceeds of $2.6 million. The capital expenditures were primarily for new barge construction, boat and barge upgrades and investments in our facilities. At December 31, 2009, we had total indebtedness of $385.2 million, including the $34.8 million premium recorded at the Acquisition date to recognize the fair value of the Senior Notes, net of amortization for the ten day period ended December 31, 2010. At this level of debt we had $239.7 million in remaining availability under our bank credit facility. The bank credit facility has no maintenance financial covenants unless borrowing availability is generally less than $59.4 million. At December 31, 2010, debt levels we were $180.3 million above this threshold.

Year ended December 31, 2009 compared to December 31, 2008

     In 2009 the Company’s net loss of $12.1 million, was a decline of $60.1 million from the prior year’s net income of $48.0 million.

     Non-comparable items in 2009 and 2008 are described as follows. Debt retirement expenses of $17.7 million related to the Company’s first quarter debt amendment and its third quarter debt refinancing were $15.3 million higher than in 2008. During 2009 charges of $4.2 million related to manufacturing segment contract disputes and settlements were incurred. As a result of the decision to close the Houston office in early 2009, the Company incurred charges totaling $3.7 million. Reduction in force charges of $3.2 million exceeded those in 2008 by $1.3 million. These charges were partially offset by an accrued vacation reversal due to a change in vacation policy of $1.6 million.

     For the full-year 2009, though average outstanding debt declined $42.6 million from the prior year levels, higher effective interest rates on outstanding balances drove after-tax interest expenses $14.1 million higher to $40.9 million. Full year 2009 results also benefitted from net gains of $20.1 million from asset management actions including boat sales, impairment adjustments and scrapping of surplus barges which exceeded 2008 totals by $7.5 million. During 2008 the $2.1 million accrual for the withdrawal from a multi-employer pension plan, which had been expensed in a prior year, was reversed as a result of a negotiated agreement with the union. Also in 2008 a $0.9 million charge related to acquired goodwill, primarily as a result of the increase in that year of the Company’s weighted average cost of capital, which was utilized to discount projected cash flows of Elliot Bay Design Group at its acquisition, resulted in an excess of carrying value over the estimated fair value. This matter is further discussed in Notes 1 and 14 to the consolidated financial statements.

     The 2009 decline compared to 2008 in all other operating results was primarily the result of transportation segment operating income that was $60.6 million lower, partially offset by higher operating income from our manufacturing segment and from EBDG.

     The primary causes of changes in segment operating income in our transportation and manufacturing segments are generally described in the segment overview below in this consolidated financial overview section and more fully described in the Operating Results by Business Segments within this Item 7.

     The higher losses on discontinued operations were attributable to Summit which was sold in November 2009. The majority of the increased discontinued operations loss was due to a $4.4 million impairment of certain Summit intangibles recorded prior to its sale and to the $7.5 million loss on the sale of Summit. See Notes 1, 13 and 14 to the accompanying consolidated financial statements. Operating income from Elliot Bay was higher in 2009 compared to 2008 and resulted almost equally from higher royalties derived from its designs in 2009 and lower goodwill impairment charges in 2009 when compared to the prior year.

     In 2009 EBITDA from continuing operations was $107.8 million, a decrease of 30.0% from 2008. See the table at the end of this Consolidated Financial Overview and Selected Financial Data for a definition of EBITDA and a reconciliation of EBITDA to consolidated net income.

     In 2009 $6.5 million of cash was used in investing activities during the year, as our $33.2 million capital expenditures and other investing activities of $4.4 million were largely offset by proceeds from the sale of vessels and the sale of our investment in Summit. The capital expenditures include $5 million to complete some liquid barges that were started in 2008 and $4 million to start construction of some internal dry barges for delivery in 2010.

Segment overview

     We operate in two predominant business segments: transportation and manufacturing.

Transportation

Year ended December 31, 2010 compared to December 31, 2009

     In general, as illustrated in the Industry Tonnage chart contained in the Industry section above, 2010 for waterborne carriers was characterized by a rebound from the low 2009 levels of demand in bulk and liquids, but not to the levels achieved, on average in the prior five years. Coal tonnage improved in the industry, but had little impact on the Company as the vast majority of our coal trade moves under a low margin legacy coal contract.

     Our volumes were impacted by a 15.3% increase in our liquids ton-miles and slight increase in bulk ton-miles, offset by 11.7% lower grain ton-miles and 21.5% lower coal ton-miles. We experienced a favorable revenue mix shift with a partial return of volumes of steel and liquids markets, in combination with the lower coal volume. Grain pricing was 9.3% higher than the prior year largely mitigating the impact of the lower grain volumes.

     Affreightment contracts comprised approximately 72.5% and 70.5% of the Company’s transportation segment revenues in 2010 and 2009 respectively.

     The remaining segment revenues (“non-affreightment revenues”) were generated either by demurrage charges related to affreightment contracts or by one of three other distinct contractual arrangements with customers: charter/day rate contracts, outside towing contracts, or other marine services contracts. See “Item 1. The Business — Customers and Contracts” for a description of these types of contracts. Transportation services revenue for each contract type is summarized in the key operating statistics table that follows.

     On average, only 122 of our barges in 2010 were serving customers under charter/day rate contracts, essentially flat with 2009 in terms of number of barges and revenues from this service. The number of barges deployed in this service in 2010 and 2009 is more than 30 barges less than we averaged in 2008 prior to the recession. Additionally, the decrease in barges in charter/day rate service within the industry, as a whole, increases the number of barges available for affreightment service. This increase in available barges for affreightment service has, to an extent, constrained liquid spot rate strength.

     The operating ratio, which is the percentage comparison of all expenses to revenues in the transportation segment, improved to 92.1% in 2010 from 94.9% in 2009. This improvement drove an $18.2 million or 57.7% increase in the transportation segment’s operating income. The increase in operating income was primarily a result of positive revenue mix, decreases in personnel costs and other operating costs including SG&A expenses, partially offset by $5.8 million lower asset management gains in 2010.

     Key operating statistics regarding our transportation segment for the years ended December 31, 2010, 2009 and 2008 are summarized in the following table.

		Year Ended				% Change to				Year Ended				% Change to				Year Ended
		December 31, 2010				2009				December 31, 2009				2008				December 31, 2008
Ton-miles (000’s):
Total dry			28,883,577				(10.4	%)			32,220,773				(0.9	%)			32,509,103
Total liquid			2,078,573				15.3	%			1,803,522				(36.8	%)			2,852,223
Total affreightment ton-miles			30,962,150				(9.0	%)			34,024,295				(3.8	%)			35,361,326
Total non-affreightment ton-miles			2,884,304				(6.3	%)			3,077,305				(24.9	%)			4,100,050
Total ton-miles			33,846,454				(8.8	%)			37,101,600				(6.0	%)			39,461,376
Average ton-miles per affreightment barge			13,325				(5.0	%)			14,032				1.6	%			13,817
Rates per ton mile:
Dry rate per ton-mile							15.1	%							(28.7	%)
Fuel neutral dry rate per ton-mile							12.1	%							(21.9	%)
Liquid rate per ton-mile							1.5	%							(19.4	%)
Fuel neutral liquid rate per-ton mile							(3.5	%)							(2.0	%)
Overall rate per ton-mile		$	14.84				15.3	%		$	12.87				(30.0	%)		$	18.38
Overall fuel neutral rate per ton-mile		$	14.41				11.9	%		$	14.30				(22.2	%)		$	16.46
Revenue per average barge operated		$	257,078				6.7	%		$	240,830				(26.5	%)		$	327,830
Fuel price and volume data:
Fuel price		$	2.19				12.4	%		$	1.95				(38.6	%)		$	3.17
Fuel gallons			55,305				(12.2	%)			63,007				(12.1	%)			71,704
Revenue data (in thousands):
Affreightment revenue		$	458,572				4.8	%		$	437,643				(32.6	%)		$	649,212
Towing			35,867				(12.7	%)			41,097				(49.7	%)			81,629
Charter and day rate			65,549				0.7	%			65,121				(15.4	%)			76,977
Demurrage			41,370				(11.4	%)			46,710				(5.8	%)			49,579
Other			31,310				3.4	%			30,289				(24.0	%)			39,875
Total non-affreightment revenue			174,096				(5.0	%)			183,217				(26.1	%)			248,060
Total transportation segment revenue		$	632,668				1.9	%		$	620,860				(30.8	%)		$	897,272

     Data regarding changes in our barge fleet for the fourth quarter of 2010 and the past three years ended December 31, 2010, are summarized in the following table.

Barge Fleet Changes

Current Quarter		Dry				Tankers				Total
Barges operated as of the end of the 3rd qtr of 2010			2,083				326				2,409
Retired (includes reactivations)			(21	)			(1	)			(22	)
New builds			25				—				25
Purchased			—				—				—
Change in number of barges leased			(1	)			—				(1	)
Barges operated as of the end of the 4th qtr of 2010			2,086				325				2,411

Barges - Last three years		Dry				Tankers				Total
Barges operated as of the end of 2007			2,440				388				2,828
Retired			(123	)			(8	)			(131	)
New builds			—				11				11
Purchased			16				—				16
Change in number of barges leased			(79	)			—				(79	)
Barges operated as of the end of 2008			2,254				391				2,645
Retired			(95	)			(36	)			(131	)
New builds			—				13				13
Purchased			1				2				3
Change in number of barges leased			(11	)			(9	)			(20	)
Barges operated as of the end of 2009			2,149				361				2,510
Retired			(127	)			(36	)			(163	)
New builds			75				—				75
Purchased			—				6				6
Change in number of barges leased			(11	)			(6	)			(17	)
Barges operated as of the end of 2010			2,086				325				2,411

     Data regarding our boat fleet at December 31, 2010, is contained in the following table.

Owned Boat Counts and Average Age by Horsepower Class

Horsepower Class		Number				Average Age
1950 or less			36				32.6
Less than 4300			21				35.0
Less than 6200			43				36.0
7000 or over			11				32.2
Total/overall age			111				34.3

     In addition to the 111 boats detailed above, the Company had 18 towboats operated exclusively for us by third parties. This is 12 fewer owned boats and one more chartered boat than we operated at December 31, 2009. During 2009 we continued to assess our boat power needs. Based on that assessment we sold 12 boats during the year. We currently have an additional three boats which are being actively marketed and are included in assets held for sale. The average life of a boat (with refurbishment) exceeds 50 years.

Manufacturing

     The decline in manufacturing segment revenues was attributable to fewer barges built for third parties in 2010 partially offset by higher relative steel pricing.

     Manufacturing segment operating income was breakeven in 2010, decreasing $21.4 million compared to 2009. The breakeven operating income from the manufacturing segment resulted from an decrease driven primarily by $3.4 million in losses on a production run of deck barges and the lower total number of barges produced for external customers. During 2010 we have redesigned our bid estimation process and do not expect a recurrence of the deck barge loss in 2011 and beyond.

Manufacturing segment units produced for sale or internal use:

		Years ended December 31,
		2010				2009				2008
External sales:
Liquid tank barges			7				43				53
Ocean tank barges			2				4				4
Deck barges			34
Hybrid barges							—				10
Dry cargo barges			97				130				191
Total external units sold			140				177				258
Internal sales:
Liquid tank barges			—				13				11
Dry cargo barges			75				—				—
Total units into production			75				13				11
Total units produced			215				190				269

Year ended December 31, 2009 compared to December 31, 2008

     In general, as illustrated in the Industry Tonnage chart contained in the Industry section above, 2009 for waterborne carriers was characterized by a continuation of weak overall demand, with declines of approximately 7.7% in total tons compared to 2008 and 15.3% compared to 2007. The volume increases in our lower margin grain and legacy coal markets, and significant volume decreases in our highest margin steel and chemicals markets drove a significant negative revenue mix shift. In our higher margin metals and chemicals markets, revenues on a fuel-neutral basis were down 61% and 38% respectively in 2009 compared to 2008. There was some sequential improvement in metal market volumes during the fourth quarter 2009. There also was a stabilization at low levels in our liquid chemicals business but no meaningful signs of a near term recovery in this market. Grain pricing that was $56.4 million lower, almost completely offset a 34% increase in grain ton-mile volume, driving grain revenue to only 1% above prior year.

     The chart below describes in more detail the fuel neutral change in revenue dollars for major commodity classes for the years ended December 31, 2009 and 2008.

Transportation Segment Comparative Revenue Commodity Mix (Adjusted for Fuel)

     Affreightment contracts comprised approximately 70.5% and 72.4% of the Company’s transportation segment revenues in 2009 and 2008 respectively.

     The remaining segment revenues (“non-affreightment revenues”) were generated either by demurrage charges related to affreightment contracts or by one of three other distinct contractual arrangements with customers: charter/day rate contracts, outside towing contracts, or other marine services contracts. See “Item 1. The Business — Customers and Contracts” for a description of these types of contracts. Transportation services revenue for each contract type is summarized in the key operating statistics table that follows.

     On average, 32 fewer liquid tank barges in 2009 were serving customers under charter/day rate contracts when compared to 2008. This decrease in the number of barges drove charter and day rate revenue down approximately 15.4% in 2009, compared to the prior year. Additionally, the decrease in barges in charter/day rate service within the industry, as a whole, increases the number of barges available for affreightment service. This increase in available barges for affreightment service has a negative impact on liquid spot rates.

     The operating ratio, which is the percentage comparison of all expenses to revenues in the transportation segment, deteriorated to 94.9% in 2009 from 89.7% in 2008. This decline drove a $60.6 million decrease in the transportation segment’s operating income. The decrease in operating income was primarily a result of significantly lower grain freight pricing, substantial volume declines in our higher margin liquids and metals markets, and the increased costs of moving empty barges due to an imbalance of north and south bound volumes. These decreases were partially offset by reductions in personnel costs and other operating costs. Additionally, overall operating conditions for barge transportation in 2009 were more favorable than those experienced in 2008, with lost barge days down 58% from 42,000 in the prior year to a more normal 17,500 in 2009. The improved operating conditions contributed to improved boat efficiency in 2009.

Manufacturing

     The decline in manufacturing segment revenues was attributable to fewer barges built for third parties in 2009 and to lower relative steel pricing.

     Manufacturing segment operating income increased $11.7 million in 2009 compared to 2008, despite the lower revenues. The $21.4 million in operating income from the manufacturing segment resulted from an increase in operating margin to 9.9%. During 2009 we advanced our Jeffboat strategic initiative to operate the shipyard more efficiently and more safely. Our improvements in safety and production efficiency, combined with more attractive contract terms, drove the improved 2009 Jeffboat margin results.

Consolidated Financial Overview — Non-GAAP Financial Measure Reconciliation

NET INCOME TO EBITDA RECONCILIATION

		Year Ended December 31,
		2010				2009				2008
		(Dollars in thousands)
		(Unaudited)
Net (loss) income from continuing operations		$	(3,185	)		$	(2,028	)		$	47,383
Discontinued operations, net of income taxes			300				(10,030	)			628
Consolidated net (loss) income		$	(2,885	)		$	(12,058	)		$	48,011
Adjustments from continuing operations:
Interest income			(3	)			(66	)			(148	)
Interest expense			38,728				40,932				26,829
Debt retirement expenses			8,701				17,659				2,379
Depreciation and amortization			48,113				52,475				50,446
Taxes			6,168				(1,148	)			27,243
Adjustments from discontinued operations:
Interest income			—				(1	)			(46	)
Interest expense			—				30				35
Depreciation and amortization			—				1,363				1,430
Taxes			—				(5,611	)			388
EBITDA from continuing operations			98,522				107,824				154,132
EBITDA from discontinued operations			300				(14,249	)			2,435
Consolidated EBITDA		$	98,822			$	93,575			$	156,567
Selected segment EBITDA calculations:
Transportation net (loss) income		$	(3,349	)		$	(24,761	)		$	38,015
Interest income			(2	)			(66	)			(145	)
Interest expense			38,728				40,932				26,788
Debt retirement expenses			8,701				17,659				2,379
Depreciation and amortization			44,269				48,615				47,255
Taxes			6,168				(1,148	)			27,114
Transportation EBITDA		$	94,515			$	81,231			$	141,406
Manufacturing net (loss) income		$	(164	)		$	21,582			$	16,577
Depreciation and amortization			3,566				3,524				2,858
Total Manufacturing EBITDA			3,402				25,106				19,435
Intersegment profit			—				—				(6,839	)
External Manufacturing EBITDA		$	3,402			$	25,106			$	12,596

     Management considers EBITDA to be a meaningful indicator of operating performance and uses it as a measure to assess the operating performance of the Company’s business segments. EBITDA provides us with an understanding of one aspect of earnings before the impact of investing and financing transactions and income taxes. Additionally, covenants in our debt agreements contain financial ratios based on EBITDA. EBITDA should not be construed as a substitute for net income or as a better measure of liquidity than cash flow from operating activities, which is determined in accordance with generally accepted accounting principles (“GAAP”). EBITDA excludes components that are significant in understanding and assessing our results of operations and cash flows. In addition, EBITDA is not a term defined by GAAP and as a result our measure of EBITDA might not be comparable to similarly titled measures used by other companies.

     The Company believes that EBITDA is relevant and useful information, which is often reported and widely used by analysts, investors and other interested parties in our industry. Accordingly, the Company is disclosing this information to allow a more comprehensive analysis of its operating performance.

Outlook

     We were acquired by Platinum on December 21, 2010. Though we expect to accelerate many of our strategic initiatives under the direction of our new parent, we will continue to proactively work with our customers, focusing on barge transportation’s position as the lowest cost, most ecologically friendly provider of domestic transportation.

     During 2010 we generated $71.2 million in cash flow from operations, paid down debt and invested in 75 new dry covered hopper barges. As discussed in the Liquidity section and in Note 2 to the consolidated financial statements, concurrent with the acquisition we entered into a replacement senior secured asset-based revolving credit facility in an aggregate principal amount of $475.0 million (currently capped at $390.0 million) with a final maturity date of December 21, 2015 (the “Existing Credit Agreement”). Proceeds are available for use for working capital and general corporate purposes. At the Acquisition, proceeds of the Existing Credit Agreement were used, in part, to fund the liquidation of the Company’s previous facility and certain expenses associated with the Acquisition. Given the term of the new Credit Agreement and the Notes, we believe that we have the appropriate longer term, lower cost and more flexible capital structure that will allow us to focus on executing our tactical and strategic plans through the various economic cycles. We expect to remain disciplined in how we deploy our capital, but now have the flexibility to fully enact our cost reduction and productivity plans and to reinvest in the business when market demand and financial returns warrant such actions. Given our strategic objective to reduce the age of our fleet by replacing aging barges, we presently intend to build approximately 100 new covered dry hopper barges and four liquid tank barges in 2011 for our transportation segment.

     The Company may use the Credit Facility in connection with the issuance of letters of credit up to $50.0 million. Availability under the Existing Credit Facility is capped at a borrowing base, all as further set forth in the Credit Agreement. The Company is currently prohibited from incurring more than $390.0 million of indebtedness under the Existing Credit Facility.

     The Existing Credit Facility does not have maintenance covenants unless our borrowing availability is generally less than $59.4 million. At December 31, 2010, we had available liquidity of $239.7 million. This is $180.3 million less than the availability at December 31, 2010. The covenants in the new facility include a leverage covenant which is based on only first lien senior debt, which excludes debt under the Notes, while the leverage covenant in the former facility included total debt. We also enhanced our flexibility to execute sale leasebacks, sell assets, and issue additional debt under the new facility to raise additional funds, with no restrictions on capital spending.

     Although we have seen some recovery in the second half of 2010, we do not expect the economy to reach pre-recession levels in 2011. With a slow recovery, however, we remain focused on reducing costs, generating strong cash flow from operations and implementing and accelerating our strategic initiatives. In the second half of 2010 we saw a continuing rebound in demand in our metals and liquids markets driven by the improving economy. Compared to the same periods of the prior year for the transportation segment, in the six months ended June 30, 2010 revenues decreased 5.3%, while in the six months ended December 31, 2010 revenues increased by 8.7%. We also saw a firming of pricing in the second half of 2010, particularly in the fourth quarter, in both the dry and the liquid spot markets. In the first quarter of 2011, we are seeing the same continuing trend of improved demand in the metals and liquids markets and we are starting to see improved pricing opportunities. Demand for export coal has increased significantly in the past six months, driven by increased demand in Asia and mining supply disruptions in some foreign locations. This has firmed up the dry barge supply/demand balance and has lead to significantly improved pricing compared to the prior year in the dry spot market, for grain and other dry commodities, as well as for spot and contract coal volumes. There is no assurance this will be a long term dynamic but we expect the strength for export coal will be sustainable for the balance of 2011.

     Though the general economy and its rate of recovery are beyond our control, we believe that the Company’s model of executing the fundamentals of building and moving barges and improving the fundamentals of our business will be achieved by executing our major strategic initiatives. When we execute these initiatives well, improving our fundamentals, we believe we will develop a company that is profitable in tough times, and highly profitable in strong economic times. Many of our strategic initiatives are further defined in the segment descriptions in the balance of this “Outlook” section.

     We believe the Company possesses several competitive strengths.

     Leading Market Positions. We are the third largest provider of dry cargo barge transportation and the second largest provider of liquid cargo barge transportation on the Inland Waterway System in the United States. We are also the second largest manufacturer of dry cargo and tank barges in the United States. In 2010, we built approximately 19.1% of the industry’s dry cargo barges. We believe that these positions provide us with significant competitive advantages in generating revenues and managing costs.

     Proven Ability to Manage Cash Flow. We are actively managing our cost structure for sustained profitability and cash flow, while continuing to re-invest in our business. We have consistently generated sufficient cash flow to re-invest in the fleet and service our indebtedness. We have generated strong cash flow from operations during the recession that began in 2008 by reducing our cost structure, managing our net capital expenditures and improving our receivables and inventory management processes to reduce working capital. To enhance cash flow for fleet re-investment and to maintain moderate debt levels, we are continuing to optimize our overhead cost structure. During 2010, we reduced our selling, general and administrative expenses by approximately $17.0 million over the prior year while we improved our transportation operating cost structure. We also have the ability to manage the timing of

new barge builds for the transportation segment and build barges at lower costs than our competitors for comparable barges through our in-house manufacturing capabilities at Jeffboat. As a result of these in-house capabilities, we do not have to enter into purchase commitments to procure new barges as we can schedule the building of barges when barge freight market demand and investment returns warrant.

     Management Expertise. Our management team has detailed knowledge of each of our businesses and end markets, and their depth of experience will help us continue to improve our competitive position. Our management team has considerable experience in the transportation and diversified industrial sectors, previously holding various leadership positions with such companies as CSX, Canadian National Railway, McCollister’s Transportation Systems, Acument and Honeywell.

     Strong Customer Base. We have a diverse and stable customer base, including high quality industrial and agricultural companies in the United States. We enter into a variety of contracts with these customers, ranging from single spot movements to renewable one-year contracts and multi-year extended contracts. Our relationships with our top ten customers range between five and thirty years in length.

     Favorable Industry Fundamentals. Barge transportation is the least expensive mode of moving freight, and also benefits from the highest fuel efficiency, best safety record and lowest emissions, relative to rail and truck. The barge transportation industry has demonstrated in recent years, and is expected to continue to demonstrate in a normal demand environment, favorable supply and demand fundamentals, resulting in an attractive rate environment and high fleet utilization. According to Informa, more than 4,535 new hoppers are expected to be built over the next four years, with essentially all going towards replacement of the aging industry fleet.

     Favorable Regulatory Environment. ACL and the industry in which it operates benefit from a regulated competitive landscape. Specifically, the Jones Act, a federal cabotage law enacted in 1920, requires all vessels transporting cargo between covered U.S. ports, subject to limited exceptions, to be built in the United States, registered under the U.S. flag, manned by predominantly U.S. crews, and owned and operated by U.S. organized companies that are controlled and at least 75% owned by U.S. citizens. As a result, we and our competitors in the U.S. are largely insulated from foreign competition.

     Low-Cost and Flexible Sourcing. Historically, our transportation segment has been one of Jeffboat’s significant customers, providing us the ability to source barges at competitive prices, as well as providing a guaranteed supply of barges in a tight manufacturing environment. It also provides the ability to build new barges for internal use only when demand warrants and financial returns are attractive. Unlike our competitors, we do not have to lock into new build contracts in advance.

     Our objective is to continue providing high quality service and products to our customers, while sustaining profitable growth through the principal strategies outlined below:

     Productivity and Cost Control. In our transportation segment, we are focused on rightsizing our fleet and improving barge and boat efficiency to drive profitability. We expect to improve profitability through a disciplined approach that optimizes our barge fleet size and mix and our traffic network. This approach includes the implementation of a scheduled service program to increase fleet utilization and asset efficiency, reduce costs and provide a superior service differentiation to customers through consistent, predictable delivery schedules. We plan to upgrade our aging dry hopper fleet over the next few years with selective capital investment to reduce the average age of our dry fleet, which is expected to drive higher barge utilization and profitability and reduce barge maintenance and downtime costs. Due to our in-house sourcing through Jeffboat, we can time these upgrades to coincide with industry demand and as new hoppers are required. We also plan to continue tightening our footprint on the Inland Waterways in which we operate, to reduce nonrevenue-producing days and increase our overall loaded miles percentage. We believe this increased traffic density, focused on existing high margin routes and customers, and patterned to service the high margin liquid and bulk businesses, will increase barge productivity and further strengthen EBITDA margins. We also have numerous other efficiency and productivity initiatives underway including (1) continuing to improve our fuel consumption efficiency through improved boat operating procedures and boat engine efficiency, (2) the consolidation of our fleeting locations to reduce costs and improve traffic flow, (3) further streamlining our overhead structure to eliminate costs, including costs associated with having been a public company, (4) further reduce average staffing levels on boats by eliminating non-essential functions, (5) improving average tow sizes per boat and tons loaded per barge to increase freight hauling capacity at minimal incremental cost, (6) improving our supply chain sourcing processes, (7) insourcing barge and boat maintenance and repair functions at our existing facilities and (8) strategically making investment in technology to improve the information we have to manage the business and to allow us to manage at a lower ongoing cost. Our cumulative salaried compensation reductions since 2008 now exceed $34 million and when combined with hourly reductions due to the lower level of activity in our shipyard, now total more than $59 million in total compensation cost reduction. We are continuing to make changes to drive productivity and cost-reduction throughout the organization. In 2009, we realigned our transportation management resources to be closer to the business and the customers; positioning our most experienced barge industry managers on the river property where they can manage the people and the assets with much greater effectiveness. We believe this new model requires fewer management personnel, will reduce cost and will produce better service for our customers. By broadening the span of control of our managers and

streamlining decision-making, we have eliminated more than one-half of the vice president and senior vice president positions in the last thirty-three months. We have taken actions in early 2011 to eliminate over $8.0 million in additional compensation and benefits.

     In our manufacturing segment, we are focused on establishing an infrastructure that optimizes our production capabilities and efficiencies, to maximize profitability and return on capital.

     Focus on Cash Flow Generation and Prudent Capital Investment. As we mentioned above, we intend to continue our aggressive cost control efforts in order to improve margins and cash flow, optimize our operations and position us for sustained profitability in the future. As the demand for our services improves in response to the macro-economic improvement, we intend to utilize our operating cash flow to reinvest in areas that we determine to have attractive rates of return, while maintaining leverage levels. We have made over $435 million in aggregate capital expenditures from 2005 to December 31, 2010, and we will undertake key capital investment projects over a five-year horizon, including upgrades to our dry hopper fleet with selective replacements and utilizing an approximate dry barge replacement ratio of one new barge for every two barge retirements. We also anticipate that we will continue to fund a portion of the investment in new barges through the selective sale of boats no longer necessary due to our improvements in boat utilization, improved tow sizes and reduced overall fleet size.

     High Quality Business Portfolio. We continually strive to maintain an optimal freight and manufacturing product mix across our transportation and manufacturing segments, one that is focused on securing profitable, ratable, long-term contractual business operating with an optimized barge fleet. The strategy for the transportation segment is to increase the proportion of our revenues derived from higher margin and more ratable liquids and bulk businesses, enabling us to be more opportunistic in quoting spot business. We intend to continue pursuing a comprehensive sales and marketing program towards freight that has traditionally been moved by barge, as well as freight that is currently moved by rail and truck. We intend to partner with key strategic customers to move products in freight lanes that are attractive to us. In our manufacturing segment, we intend to capitalize on increasing market demand for replacement dry hoppers over the next few years and selectively build tank barges and ocean going vessels. We are employing the same market-based contractual pricing approach to securing new contracts at Jeffboat as we do in our transportation segment. Our goal is not to focus on the quantity of barges produced, but rather on building barges that optimize our production capabilities and efficiencies, while maximizing EBITDA. As of December 31, 2010, our external manufacturing sales backlog was approximately $102 million of contracted revenue, with expected deliveries extending through 2011. This backlog excludes unexercised customer options and barges expected to be built for our transportation business.

     Safety and Environmental Stewardship. We believe we are an industry leader in environmental, health, safety, and security management. We are committed to continually improving our environmental and safety performance. In 2009, we began the implementation of certain strategic initiatives that we believe will guide our company to the highest levels of performance in our almost 100 years of operating on the Inland Waterways. The first of these initiatives is the drive to zero injuries, accidents and incidents. While we are proud of the fact that we lead the industry in safety, we believe that the only acceptable number when it comes to injuries, accidents and incidents is zero. We have taken some significant steps on our drive to zero, including realigning our transportation services, establishing northern and southern regional headquarters. One of the primary goals of this realignment is to move operations leaders to the field, closer to our customers, our employees and the work we do. By doing so, we believe we will increase accountability, improve communication and increasing our ability to provide more daily, hands-on safety training, all of which are designed to help us achieve our goal of zero accidents, injuries and incidents. Our commitment to the environment is also one of our key operating priorities. We are a member of the American Chemistry Counsel’s Responsible Care Program, which requires its members to: (i) adopt the Responsible Care management system for relevant portions of their operations; (ii) obtain an independent certification that their systems have been fully implemented and function according to professional standards; (iii) measure and publicly disclose compliance with these standards and systems and (iv) implement a Responsible Care Security Code. We have also initiated a drive to zero spills, zero violations and zero impact on the environment. Our commitment to environmental stewardship has not gone unnoticed as we received the Rear Admiral William M. Benkert Marine Environmental Silver Award for Excellence in 2008, which recognizes leadership in the field of marine environmental protection safety.

COMMERCIAL BARGE LINE COMPANY OPERATING RESULTS by BUSINESS SEGMENT
Year Ended Dec. 31, 2010 as compared with Year Ended Dec. 31, 2009
(Dollars in thousands except where noted)
(Unaudited)

														% of Consolidated
														Revenue
		Year Ended Dec. 31,												Year Ended
		2010				2009				Variance				2010				2009
REVENUE
Transportation and Services		$	640,532			$	630,481			$	10,051				87.7	%			74.5	%
Manufacturing (external and internal)			122,627				239,885				(117,258	)			16.8	%			28.4	%
Intersegment manufacturing elimination			(32,587	)			(24,339	)			(8,248	)			(4.5	%)			(2.9	%)
Consolidated Revenue			730,572				846,027				(115,455	)			100.0	%			100.0	%
OPERATING EXPENSE
Transportation and Services			590,418				597,727				(7,309	)
Manufacturing (external and internal)			122,661				218,483				(95,822	)
Intersegment manufacturing elimination			(32,587	)			(24,339	)			(8,248	)
Consolidated Operating Expense			680,492				791,871				(111,379	)			93.1	%			93.6	%
OPERATING INCOME (LOSS)
Transportation and Services			50,114				32,754				17,360
Manufacturing (external and internal)			(34	)			21,402				(21,436	)
Intersegment manufacturing elimination			—				—				—
Consolidated Operating Income			50,080				54,156				(4,076	)			6.9	%			6.4	%
Interest Expense			38,728				40,932				(2,204	)
Debt Retirement Expenses			8,701				17,659				(8,958	)
Other Expense (Income)			(332	)			(1,259	)			927
Income Before Income Taxes			2,983				(3,176	)			6,159
Income Taxes (Benefit)			6,168				(1,148	)			7,316
Discontinued Operations			300				(10,030	)			10,330
Net (Loss) Income		$	(2,885	)		$	(12,058	)		$	9,173
Domestic Barges Operated (average of period beginning and end)			2,461				2,578				(117	)
Revenue per Barge Operated (Actual)		$	257,077			$	240,830			$	16,247