Edgar Filing: MARITRANS INC /DE/

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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-K
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Fiscal Year Ended December 31, 2000
or
[ ] Transition Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the Transition Period from _______ to _______

Commission File Number 1-9063
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MARITRANS INC.
(Exact name of registrant as specified in its charter)

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

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

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

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

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

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

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

As of March 8, 2001, the aggregate market value of the common stock held by
non-affiliates of the registrant was $87,366,958. As of March 8, 2001,
Maritrans Inc. had 10,638,155 shares of common stock outstanding.

Documents Incorporated By Reference

Part III incorporates information by reference from the registrant's Proxy
Statement for Annual Meeting of Stockholders to be held on May 3, 2001.

Exhibit Index is located on page 36.
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MARITRANS INC.
TABLE OF CONTENTS

PART I
Item 1. Business ..................................................................... 1
Item 2. Properties ................................................................... 7
Item 3. Legal Proceedings ............................................................ 7
Item 4. Submission Of Matters To A Vote Of Security Holders .......................... 8
PART II
Item 5. Market For The Registrant's Common Equity And Related Stockholder Matters .... 9
Item 6. Selected Financial Data ...................................................... 10
Item 7. Management's Discussion And Analysis Of Financial Condition And Results Of
Operations ................................................................... 10
Item 8. Financial Statements & Supplemental Data ..................................... 17
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure ................................................................... 33
PART III
Item 10. Directors and Executive Officers of the Registrant ........................... 33
Item 11. Executive Compensation ....................................................... 34
Item 12. Security Ownership of Certain Beneficial Owners and Management ............... 34
Item 13. Certain Relationships and Related Transactions ............................... 34
PART IV
Item 14. Exhibits, Financial Statement Schedules And Reports On Form 8-K .............. 35
Signatures ............................................................................. 39

Special Note Regarding Forward-Looking Statements

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

The forward-looking statements included in this 10-K relate to future
events or the Company's future financial performance. In some cases, the reader
can identify forward-looking statements by terminology such as "may," "should,"
"believe," "future," "potential," "estimate," "offer," "opportunity,"
"quality," "growth," "expect," "intend," "plan," "focus," "through,"
"strategy," "provide," "meet," "allow," "represent," "commitment," "create,"
"implement," "result," "seek," "increase," "establish," "work," "perform,"
"make," "continue," "can," "will," "include," or the negative of such terms or
comparable terminology. These forward-looking statements inherently involve
certain risks and uncertainties, although they are based on the Company's
current plans or assessments that are believed to be reasonable as of the date
of this 10-K. Factors that may cause actual results, goals, targets or
objectives to differ materially from those contemplated, projected, forecast,
estimated, anticipated, planned or budgeted in such forward-looking statements
include, among others, the factors outlined in this 10-K and general financial,
economic, environmental and regulatory conditions affecting the oil and marine
transportation industry in general. Given such uncertainties, current or
prospective investors are cautioned not to place undue reliance on any such
forward-looking statements. These factors may cause the Company's actual
results to differ materially from any forward-looking statement.

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

PART I

Item 1. BUSINESS

General

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

Structure

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

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

Overview. Since 1981, Maritrans and its predecessors have transported
annually over 189 million barrels of crude oil and refined petroleum products.
The Company operates a fleet of oil tankers, tank barges and tugboats. Its
largest barge has a capacity of approximately 380,000 barrels and its current
operating cargo fleet capacity aggregates approximately 3.6 million barrels.

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

Management also believes that the level of domestic consumption of
imported refined products is also significant to the Company's business.
Imported refined petroleum products generally can be shipped on foreign-flag
vessels directly into the United States ports for storage, distribution and
eventual consumption. These shipments reduce the need for domestic marine
transportation service providers such as Maritrans to carry products from
United States refineries to such ports. Operations directly supporting clean
oil transportation are located in Tampa, Florida, and provide marine
transportation services for petroleum products from refineries located in
Texas, Louisiana, Mississippi and Puerto Rico to distribution points along the
Gulf and Atlantic Coasts, generally south of Cape Hatteras, North Carolina and
particularly into Florida. Operations directly supporting lightering services
for large tankers are located in the Philadelphia area. Lightering is a process
of off-loading crude oil or petroleum products from deeply laden inbound
tankers into smaller tankers and/or barges. This enables the tanker to navigate
draft-restricted rivers and ports to discharge cargo at a refinery or storage
and distribution terminal.

In 1999, the Company sold various assets. The assets sold consisted of two
small tug and barge units working in Puerto Rico, petroleum storage terminals
in Philadelphia, PA and Salisbury, MD and twenty-seven of the smaller tugboats
and tank barges working primarily in the Northeastern United States. These
asset sales are discussed in greater detail in "Management's Discussion and
Analysis of Financial Condition and Results of Operations".

Sales and Marketing

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

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

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

In 2000, approximately 87 percent of the Company's revenues were generated
from 10 customers. Contracts with Sunoco Inc., Marathon Ashland Petroleum and
Chevron accounted for approximately 24 percent, 18 percent, and 12 percent,
respectively, of the Company's revenue. During 2000, contracts were renewed
with some of the Company's' larger customers. There could be a material effect
on Maritrans if any of these customers were to cancel or terminate their
various agreements with the Company. However, management believes that
cancellation or termination of all its business with any of its larger
customers is unlikely.

Competition and Competitive Factors

Overview. The maritime petroleum transportation industry is highly
competitive. The Jones Act, a federal law, restricts United States
point-to-point maritime shipping to vessels built in the United States, owned
by U.S. citizens and manned by U.S. crews. In Maritrans' market areas, its
primary direct competitors are the operators of U.S. flag oceangoing barges and
U.S. flag tankers. In the Southern clean-oil market, management believes the
primary competitors are the fleets of other independent petroleum transporters
and integrated oil companies. In the lightering operations, Maritrans competes
with foreign-flag operators which lighter offshore. Some of the integrated oil
company fleets with which the Company competes are larger than the Company's
fleet. Additionally, in certain geographic areas and in certain business
activities, Maritrans competes with the operators of petroleum product
pipelines. Competitive factors that also affect Maritrans include the output of
United States refineries and the importation of refined petroleum products.

U.S. Flag Barges and Tankers. Maritrans' most direct competitors are the
other operators of U.S. flag oceangoing barges and tankers. Because of the
restrictions imposed by the Jones Act, a finite number of vessels are currently
eligible to engage in U.S. maritime petroleum transport. The Company believes
that more Jones-Act eligible tonnage is being retired due to OPA than is being
added as replacement double-hull tonnage. However, the Company believes that
overcapacity will continue for some time. Competition in the industry is based
upon vessel availability, price and service and is intense.

A significant portion of the Company's revenues in 2000 was generated in
the coastal transportation of petroleum products from refineries or pipeline
terminals in the Gulf of Mexico to ports that are not served by

pipelines. Maritrans currently operates nine barges and three oil tankers in
this market, which is a significant number of the vessels able to compete in
this market. The relatively large size of the Company's fleet can generally
provide greater flexibility in meeting customers' needs.

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

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

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

Delaware River Channel Deepening. Legislation approved by the United
States Congress in 1992 authorizes the U.S. Army Corps of Engineers to deepen
the channel of the Delaware River between the river's mouth and Philadelphia
from forty to forty-five feet. Congress had appropriated $10 million in the
2000 fiscal year budget and has appropriated $29 million in the 2001 fiscal
year budget for construction. A Project Cooperation Agreement (PCA) must be
executed before the Corps of Engineers can use the appropriated funds. As of
the end of 2000, the Company was not aware of the PCA having been executed. If
this project becomes fully funded at the federal and state levels and fully
constructed (including access dredging by private refineries), it would have a
material adverse effect on Maritrans' lightering business. The Company's
lightering business primarily occurs at the mouth of the Delaware Bay with
transportation up the Delaware River to the Delaware Valley refineries. The
deepening of the channel would allow arriving ships to proceed up the river
with larger loads.

Employees and Employee Relations

In 1999, the Company significantly reduced the number of its shoreside
staff. In addition, the Company sold petroleum storage terminals and twenty-six
vessels, which decreased the number of seagoing personnel. At December 31,
2000, Maritrans and its subsidiaries had a total of 373 employees. Of these
employees, 54 are employed at the Tampa, Florida headquarters of the Company or
at the Philadelphia office, 202 are seagoing employees who work aboard the tugs
and barges and 117 are seagoing employees who work aboard the tank ships.
Maritrans and its predecessors have had collective bargaining agreements with
the Seafarers' International Union of North America, Atlantic, Gulf and Inland
District, AFL-CIO ("SIU"), and with the American Maritime

Officers ("AMO"), formerly District 2 Marine Engineers Beneficial Association,
Associated Maritime Officers, AFL-CIO, for over 40 years. Approximately
one-third of the total number of seagoing employees employed by the Company are
supervisors. These supervisors are covered by an agreement with the AMO limited
to a provision for benefits. The collective bargaining agreement with the SIU
covers approximately 130 employees consisting of seagoing non-supervisory
personnel on the tug/barge units and on the tankers. The tug/barge supplement
of the agreement expires on May 31, 2002. The tankers supplement of the
agreement expires on May 31, 2001 and is expected to be renewed at that time.
The collective bargaining agreement with the AMO covers approximately 82
non-supervisory seagoing employees and expires on October 8, 2007. Shore-based
employees are not covered by any collective bargaining agreements.

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

Regulation

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

Jones Act. The Jones Act is a federal law that restricts maritime
transportation between United States points to vessels built and registered in
the United States and owned and manned by United States citizens. Since the
Company engages in maritime transportation between United States points, it is
subject to the provisions of the law. As a result, the Company is responsible
for monitoring the ownership of its subsidiaries that engage in maritime
transportation and for taking any remedial action necessary to insure that no
violation of the Jones Act ownership restrictions occurs. The Jones Act also
requires that all United States flag vessels be manned by United States
citizens. Foreign-flag seamen generally receive lower wages and benefits than
those received by United States citizen seamen. This requirement significantly
increases the labor and certain other operating costs of United States flag
vessel operations compared to foreign-flag vessel operations. Certain foreign
governments subsidize those nations' shipyards. This results in lower shipyard
costs both for new vessels and repairs than those paid by United States-flag
vessel owners, such as Maritrans, to United States shipyards. Finally, the
United States Coast Guard and American Bureau of Shipping maintain the most
stringent regime of vessel inspection in the world, which tends to result in
higher regulatory compliance costs for United States-flag operators than for
owners of vessels registered under foreign flags of convenience. Because
Maritrans transports petroleum and petroleum products between United States
ports, most of its business depends upon the Jones Act remaining in effect.
There have been various unsuccessful attempts in the past by foreign
governments and companies to gain access to the Jones Act trade, as well as by
interests within the United States to modify, limit or do away with the Jones
Act. Legislation to this effect was introduced into Congress during 2000 and
opposed by the Maritime Cabotage Task Force, a coalition of ship owners, ship
operators, maritime unions and industry trade groups. Congress took no action
on this legislation. Management expects that efforts to gain access to the
Jones Act trade as well as attempts to block the introduction will continue.

Environmental Matters

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

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

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

OPA establishes a federal limit of liability of the greater of $1,200 per
gross ton or $10 million per tank vessel. A vessel owner's liability is not
limited, however, if the spill results from a violation of federal safety,
construction or operating regulations. In addition, OPA does not preclude
states from adopting their own liability laws. Numerous states in which
Maritrans operates have adopted legislation imposing unlimited strict liability
for vessel owners and operators. Management believes that the liability
provisions of OPA and similar state laws have greatly expanded the Company's
potential liability in the event of an oil spill, even where the Company is not
at fault.

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

OPA requires all newly constructed petroleum tank vessels engaged in
marine transportation of oil and petroleum products in the U.S. to be
double-hulled. It also gradually phases out the operation of single-hulled tank
vessels in U.S. waters, based on size and age, which includes most of
Maritrans' existing barges. Three of the Company's large oceangoing,
single-hulled barges will be affected on January 1, 2005. Currently four of the
Company's barges and two tankers are equipped with double-hulls meeting OPA's
requirements. Maritrans has initiated a program to rebuild its single-hull tank
barges to comply with OPA. This rebuilding relies upon a process of computer
assisted design and prefabrication. In January 2001, the Company was granted a
patent for this process. The first rebuilt barge, the MARITRANS 192, was
completed and entered service in November 1998. The second rebuilt barge, the
MARITRANS 244, was completed and entered service in December 2000. Work has
already commenced on a third single-hull barge, the OCEAN CITIES. The cost of
rebuilding single-hull barges is approximately $55-75 per barrel compared to
estimated costs of approximately $125-175 per barrel for construction of a
completely new double-hull barge. The total cost of rebuilding the Company's
entire single-hull fleet is expected to exceed $150 million.

OPA further requires all tank vessel operators to submit detailed vessel
oil spill contingency plans which set forth their capacity to respond to a
worst case spill situation. In certain circumstances involving oil spills from
vessels, OPA and other environmental laws may impose criminal liability upon
vessel and shoreside marine

personnel and upon the corporate entity. Liability can be imposed for
negligence without criminal intent, or it may be strictly applied. The Company
believes the laws, in their present form, may negatively impact efforts to
recruit Maritrans seagoing employees. In addition, many of the states in which
the Company does business have enacted laws providing for strict, unlimited
liability for vessel owners in the event of an oil spill. Certain states have
also enacted or are considering legislation or regulations involving at least
some of the following provisions: tank-vessel-free zones, contingency planning,
state inspection of vessels, additional operating, maintenance and safety
requirements and state financial responsibility requirements. However, in March
of 2000, the U.S. Supreme Court (the "Court") decided United States v. Locke, a
suit brought by INTERTANKO challenging tanker regulations imposed by the State
of Washington. The Court struck down a number of state regulations and remanded
to the lower courts for further review of other regulations. The ruling
significantly limits the authority of states to regulate vessels, holding that
regulation of maritime commerce is generally a federal responsibility because
of the need for national and international uniformity.

OPA and similar state laws are expected to have a continuing adverse
effect on the entire U.S. oil and petroleum marine transportation industry,
including Maritrans. The effects on the industry could include, among others,
(i) increased requirements for capital expenditures (ii) increased maintenance,
training, insurance and other operating costs, (iii) civil penalties and the
potential for other liability and (iv) decreased operating revenues as a result
of a further reduction of volumes transported by vessels. These effects could
adversely affect Maritrans' results of operations and liquidity.

The following table sets forth Maritrans' quantifiable cargo oil spill
record for the period January 1, 1996 through December 31, 2000:

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

1/1/1996 -- 12/31/1996 9,160,000 3 .08 .009
1/1/1997 -- 12/31/1997 10,136,000 1 .05 .005
1/1/1998 -- 12/31/1998 10,987,000 3 .29 .027
1/1/1999 -- 12/31/1999 10,463,000 5 .06 .006
1/1/2000 -- 12/31/2000 7,951,000 1 .008 .001

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

Water Pollution Regulations. The Federal Water Pollution Control Act of
1972 ("FWPCA"), as amended by the Clean Water Act of 1977, imposes strict
prohibitions against the discharge of oil (and its derivatives) and hazardous
substances into navigable waters of the United States. FWPCA provides civil and
criminal penalties for any discharge of petroleum products in harmful
quantities and imposes substantial liability for the clean-up costs of removing
an oil spill. State laws for the control of water pollution also provide
varying civil and criminal penalties and clean-up cost liabilities in the case
of a release of petroleum or its derivatives into surface waters. In the course
of its vessel operations, Maritrans engages contractors to remove and dispose
of waste material, including tank residue. In the event that any of such waste
is deemed "hazardous," as defined in FWPCA or the Resource Conservation and
Recovery Act, and is disposed of in violation of applicable law, the Company
could be jointly and severally liable with the disposal contractor for the
clean-up costs and any resulting damages. The United States Environmental
Protection Agency ("EPA") previously determined not to classify most common
types of "used oil" as a "hazardous waste," provided that certain recycling
standards are met. While it is unlikely that used oil will be classified as
hazardous, the management of used oil under EPA's proposed regulations will
increase the cost of disposing of or recycling used oil from the Company's
vessels. Some states in which the Company operates, however, have classified
"used oil" as hazardous. Maritrans has found it increasingly expensive to
manage the wastes generated in its operations.

Air Pollution Regulations. Pursuant to the 1990 amendments to the Clean
Air Act, the EPA and/or states have imposed regulations affecting emissions of
volatile organic compounds ("VOCs") and other air pollutants

from tank vessels. It is likely that the EPA and/or various state environmental
agencies will require that additional air pollution abatement equipment be
installed in tugboats, tank barges or tank ships, including those owned by
Maritrans. In December 1999, the EPA issued its final rule for emissions
standards for marine diesel engines. The final rule applies emissions standards
only to new engines, beginning with the 2004 model year. The EPA retained the
right to revisit the issue of applying emission standards to rebuilt or
remanufactured engines if, in the agency's opinion, the industry does not take
adequate steps to introduce new emission-reducing technologies. Recently, the
EPA entered into a court settlement that will expand its rule making to include
large diesel engines that were not previously addressed in the 1999 final rule.
In addition, a recent U. S. Supreme Court ruling confirmed the EPA's authority
to set air health-based quality standards without regard to the cost of
compliance. The implications, if any, of this ruling upon Maritrans is not
known at this time. The emission control requirements noted herein could result
in a material expenditure by Maritrans, which could have an adverse effect on
Maritrans' profitability if it is not able to recoup these costs through
increased charter rates.

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

Item 2. PROPERTIES

Vessels. The Company's subsidiaries owned, at December 31, 2000, a fleet
of 28 vessels, of which 4 are oil tankers, 12 are barges and 12 are tugboats.

The oil tanker fleet consists of four tankers ranging in capacity from
242,000 barrels to 265,000 barrels. These vessels were constructed between 1975
and 1981.

The barge fleet consists of twelve superbarges ranging in capacity from
175,000 to 380,000 barrels. The oldest vessel in that class is the OCEAN 250,
which was constructed in 1970. The largest vessel is the OCEAN 400 for which
modifications were completed as recently as 1990. The bulk of the superbarge
fleet was constructed during the 1970's and early 1980's. One of the
superbarges is currently not operating. Two of the superbarges that were single
hulled vessels, the MARITRANS 192 and the MARITRANS 244, have been rebuilt to a
double hull configuration.

The tugboat fleet consists of one 11,000 horsepower class vessel, one
7,000 horsepower class vessel, nine 6,000 horsepower class vessels and one
15,000 horsepower class vessel, which is not currently operating. The year of
construction or substantial renovation of these vessels ranges from 1962 to
1990. The majority of the tugboats were constructed between 1970 and 1981.

Most of the vessels in the fleet are subject to first preferred ship
mortgages. These mortgages require the Operating Partnership to maintain the
vessels to a high standard and to continue a life-extension program for certain
of its larger barges. At December 31, 2000, Maritrans is in compliance with the
Operating Partnership's mortgage covenants.

Other Real Property. Maritrans' operations are headquartered in Tampa,
Florida. In Tampa, the Company leases office space and also four acres of Port
Authority land. The southern clean oil fleet operations are run out of this
office. The Company also leases office space near Philadelphia, Pennsylvania.
The crude oil lightering operations are run out of this office.

Item 3. LEGAL PROCEEDINGS

Maritrans is a party to routine, marine-related claims, lawsuits and labor
arbitrations arising in the ordinary course of its business. The claims made in
connection with Maritrans' marine operations are covered by marine

insurance, subject to applicable policy deductibles that are not material as to
any type of insurance coverage. Based on its current knowledge, management
believes that such lawsuits and claims, even if the outcomes were to be
adverse, would not have a material adverse effect on the Company's financial
condition.

The Company has been sued by approximately 60 individuals alleging
unspecified damages for exposure to asbestos and, in most of these cases, for
exposure to tobacco smoke. Although the Company believes these claims are
without merit, it is impossible at this time to express a definitive opinion on
the final outcome of any such suit. Management believes that any liability
would be adequately covered by applicable insurance and would not have a
material adverse effect.

In 1996, Maritrans filed suit against the United States government under
the Fifth Amendment to the U.S. Constitution for "taking" Maritrans' tank
barges without just compensation. The Fifth Amendment specifically prohibits
the United States government from taking private property for public use
without just compensation. Maritrans asserts that its vessels were taken by
Section 4115 of OPA, which prohibits all existing single-hull tank vessels from
operating in U.S. waters under a retirement schedule that began January 1,
1995, and ends on January 1, 2015. This OPA provision will force Maritrans' to
remove its single-hull barges from service commencing on January 1, 2005 or
rebuild them, thus depriving the Company of their continued use for a
significant portion of their remaining economic lives. The United States Court
of Federal Claims ("the Court") has held that Maritrans' claim is presently
ripe for judicial determination only with respect to vessels that were rebuilt,
sold or scrapped in response to OPA's double-hull requirements. A trial was
held with respect to eight of the Company's barges that were considered ripe
for adjudication. The trial concluded on February 13, 2001. Routine post-trial
briefing is ongoing, and a decision is expected from the Court within the next
few months. If Maritrans prevails, claims for other of the Company's barges
will be the subject of future legal proceedings as the vessels are forced from
service by OPA.

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

No matters were submitted to a vote of the Registrant's security holders,
through the solicitation of proxies or otherwise, during the last quarter of
the year ended December 31, 2000.

PART II

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

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

QUARTERS ENDED IN 2000: HIGH LOW
----------------------- ---- ---
March 31, 2000 $6.938 $5.063
June 30, 2000 6.250 5.250
September 30, 2000 6.500 5.000
December 31, 2000 8.375 5.500

QUARTERS ENDED IN 1999: HIGH LOW
----------------------- ---- ---
March 31, 1999 $6.875 $5.625
June 30, 1999 6.438 5.375
September 30, 1999 5.563 4.813
December 31, 1999 5.938 4.688

As of March 8, 2001, the Registrant had 10,638,155 Common Shares
outstanding and approximately 813 stockholders of record.

Dividends
---------
For the years ended December 31, 2000 and 1999, Maritrans Inc. paid the
following cash dividends to stockholders:

PAYMENTS IN 2000: PER SHARE
----------------- ---------
March 8, 2000 $.10
June 7, 2000 $.10
September 6, 2000 $.10
December 6, 2000 $.10
----
Total $.40
====

PAYMENTS IN 1999: PER SHARE
----------------- ---------
March 10, 1999 $.10
June 9, 1999 $.10
September 8, 1999 $.10
December 8, 1999 $.10
----
Total $.40
====

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

Item 6. SELECTED FINANCIAL DATA

MARITRANS INC.
----------------------------------------------------------------------------------
JANUARY 1 TO DECEMBER 31,
2000 1999 1998 1997 1996
-------------- -------------- -------------- -------------- --------------
($000, except per share amounts)

CONSOLIDATED INCOME STATEMENT DATA:
Revenues (a) .......................... $ 123,715 $ 151,667 $ 151,839 $ 135,781 $ 126,994
Operating income before depreciation
and amortization ..................... 28,288 28,092 30,407 38,339 30,249
Depreciation and amortization ......... 17,254 20,279 19,578 16,943 16,565
Operating income ...................... 11,034 7,813 10,829 21,396 13,684
Interest expense, net ................. 6,401 6,778 6,945 7,565 9,494
Income before income taxes ............ 8,113 21,151 4,986 18,157 8,379
Provision for income taxes ............ 3,101 9,095 1,870 6,696 3,130
Net income ............................ 5,012 12,056 3,116 11,461 5,249
Basic earnings per share .............. $ 0.46 $ 1.03 $ 0.26 $ 0.95 $ 0.44
Diluted earnings per share ............ $ 0.45 $ 1.02 $ 0.26 $ 0.94 $ 0.44
Cash dividends per share .............. $ 0.40 $ 0.40 $ 0.37 $ 0.315 $ 0.275

CONSOLIDATED BALANCE SHEET DATA (at period end):
Total assets .......................... $ 242,360 $ 251,021 $ 254,906 $ 251,023 $ 235,221
Long-term debt ........................ 67,988 75,861 83,400 75,365 79,123
Stockholders' equity .................. 90,446 94,697 89,815 90,795 82,594

------------
(a) The decrease in revenue in 2000 resulted from the sale of vessels and
petroleum storage terminals, which occurred in 1999 and is discussed in
Note 2 "Sale of Assets" in the financial statements.

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

The following is a discussion of the consolidated financial condition and
results of operations of Maritrans Inc. (the "Company"), and, together with its
subsidiaries and its predecessor, Maritrans Partners L.P. (the "Partnership"),
herein called "Maritrans" or the "Company."

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

The forward-looking statements included in this 10-K relate to future
events or the Company's future financial performance. In some cases, you can
identify forward-looking statements by terminology such as "may," "should,"
"believe," "future," "potential," "estimate," "offer," "opportunity,"
"quality," "growth," "expect," "intend," "plan," "focus," "through,"
"strategy," "provide," "meet," "allow," "represent," "commitment," "create,"
"implement," "result," "seek," "increase," "establish," "work," "perform,"
"make," "continue," "can," "will," "include," or the negative of such terms or
comparable terminology. These forward-looking statements inherently involve
certain risks and uncertainties, although they are based on the Company's
current plans or assessments that are believed to be reasonable as of the date
of this 10-K. Factors that may cause actual results, goals, targets or
objectives to differ materially from those contemplated, projected, forecast,
estimated, anticipated, planned or budgeted in such forward-looking statements
include, among others, the factors outlined

in this 10-K and general financial, economic, environmental and regulatory
conditions affecting the oil and marine transportation industry in general.
Given such uncertainties, current or prospective investors are cautioned not to
place undue reliance on any such forward-looking statements. These factors may
cause the Company's actual results to differ materially from any
forward-looking statement.

Overview

Maritrans serves the petroleum and petroleum product distribution industry
by using oil tankers, tank barges and tugboats to provide marine transportation
services primarily along the Gulf and Atlantic coasts of the United States.
Between 1996 and 2000, the Company has transported at least 189 million barrels
annually, a high of 262 million barrels in 1998, and a low of 189 million
barrels in 2000. The decrease in the barrels transported in 2000 resulted from
the sale of vessels that occurred in 1999 and is discussed in greater detail in
"Liquidity and Capital Resources". Many factors affect the number of barrels
transported and will affect future results for Maritrans. Such factors include
the Company's vessel and fleet size and average trip lengths, the continuation
of federal law restricting United States point-to-point maritime shipping to
U.S. vessels (the Jones Act), domestic oil consumption, environmental laws and
regulations, oil companies' operating and sourcing decisions, competition,
labor and training costs and liability insurance costs. Overall U.S. oil
consumption during 1996-2000 fluctuated between 17.7 million and 19.5 million
barrels a day.

In 1999, the Company made several strategic moves in order to focus on
those markets where it believes it possesses a long-term competitive advantage
and that should provide additional opportunities. As a result, the Company sold
two small tug and barge units, which were working in Puerto Rico, two petroleum
storage terminals in Philadelphia, PA and Salisbury, MD, and twenty-seven
vessels working primarily in the Northeastern United States. Before their
sales, the sold vessels had transported approximately 69 million barrels in
1999 and had represented approximately 23 percent of 1999 revenues. Maritrans
has successfully rebuilt two of its existing, single-hulled, barges to a
double-hull design configuration, which complies with the provisions of the Oil
Pollution Act of 1990 ("OPA"). The MARITRANS 192, a 175,000-barrel barge was
completed in 1998 and the MARITRANS 244, a 245,000-barrel barge was completed
in 2000. Prefabrication has already commenced on a third single-hull barge, the
OCEAN CITIES that is scheduled to be in the shipyard in the spring and summer
of 2001. The Company intends to apply the same methodology to up to six more of
its existing large, oceangoing, single-hull barges and two tankers. The timing
of the rebuilds will be determined by a number of factors, including market
conditions, shipyard pricing and availability, customer requirements and OPA
retirement dates for the vessels. The OPA retirement dates fall between 2005
and 2010. Each of the Company's superbarges represent approximately 5 to 7
percent of the total fleet capacity, which will be removed from revenue
generating service during the rebuilding of that vessel.

Legislation

The enactment of OPA significantly increased the liability exposure of
marine transporters of petroleum in the event of an oil spill. In addition,
several states in which Maritrans operates have enacted legislation increasing
the liability for oil spills in their waters. The Company currently maintains
oil pollution liability insurance of up to one billion dollars per occurrence
on each of its vessels. There can be no assurance that such insurance will be
adequate to cover potential liabilities in the event of a catastrophic spill,
that additional premium costs will be recoverable through increased vessel
charter rates, or that such insurance will continue to be available in
satisfactory amounts.

OPA has increased the Company's operating costs for the steps taken to
minimize the risk of spills. These costs include additional training, safety
and contingency programs and have not yet been, and may never be, fully
recovered through increased vessel charter rates. In addition, management
believes that the legislation has reduced the total volume of waterborne
petroleum transportation because shippers of petroleum have tried to limit
their exposure to OPA liability. OPA has had a material adverse effect on
Maritrans' operations, financial performance and expectations.

OPA is expected to continue having negative effects on the entire U.S. oil
and marine petroleum transportation industry, including Maritrans. These
negative effects could include, among others, (i) increased capital
expenditures to cover the cost of mandated double-hulled vessels, (ii)
continued increased maintenance, training, insurance and other operating costs,
(iii) increased liability and exposure to civil penalties and (iv) decreased
operating revenues as a result of further reductions in volumes transported on
vessels. These effects could adversely affect Maritrans' financial condition,
profitability and liquidity.

Results of Operations

Year Ended December 31, 2000 Compared With Year Ended December 31, 1999

Revenues for 2000 were $123.7 million compared to $151.7 million in 1999,
a decrease of $28.0 million or 18.5 percent. Although revenue in 2000 decreased
$38.3 million as a result of the sale of thirty-one vessels and the petroleum
storage terminals in 1999, revenue for the remaining fleet for the comparable
periods increased $10.3 million. This revenue increase resulted primarily from
increases in the average daily rates charged to customers, which occurred later
in 2000 and to increased fuel costs, discussed in operating expenses below,
much of which the Company was able to pass through to customers under its
contractual agreements. The increase in average daily rates over the comparable
period in 1999 was due primarily to the amount of capacity already under
contract to major oil companies and to low distillate inventories in the United
States, particularly heating oil in the Northeast. Both factors have raised
rates for available Jones Act capacity. The Company expects the strong market
rates to continue for several quarters and to have a positive impact on
revenue. Vessel utilization, as measured by revenue days divided by calendar
days available, decreased from 87.8 percent in 1999 to 85.7 percent in 2000 for
the comparable fleet. The overall decrease was the result of the MARITRANS 244
being out of service for nine months in 2000, for its double hull rebuild.
Excluding the MARITRANS 244, utilization for the operating vessels was 88.5
percent, which was moderately higher than 1999's utilization of 87.8 percent
for the comparable fleet. Barrels of cargo transported decreased from 249.1
million in 1999 to 189.3 million in 2000, due to the smaller fleet.

Total costs and operating expenses for 2000 were $112.7 million compared
to $143.9 million in 1999, a decrease of $31.2 million or 21.7 percent. This
decrease was due primarily to the sale of assets discussed above. In addition,
shoreside related expenses decreased as a result of the reduction in shoreside
staff in 1999. In September 1999, the Company recorded a severance charge of
$0.9 million for these employees, which was paid in 2000. Maintenance expense
decreased due to the reduction in fleet size and the impact of the rebuilding
of the single-hulled barges to double-hulled barges, which allows certain
maintenance procedures to be performed while the vessel is in the shipyard for
its double-hulling. Offsetting these decreases in operating expenses was an
increase in fuel expense for fuel used on the vessels. In 2000, the average
fuel rate increased 75% compared to 1999. Based on market expectations of oil
prices continuing at or above $30 per barrel, the Company believes that its
fuel costs will continue at rates higher than those in 1999 for the next
several quarters. Some of this increase in fuel costs was passed through to
customers under contractual agreements and will continue to be passed on in
2001. In 2000, the Company incurred $1.4 million in relocation costs for the
move of the corporate headquarters from Philadelphia, PA to Tampa, FL in the
spring of 2000.

Operating income increased from $7.8 million in 1999 to $11.0 million in
2000, as a result of the aforementioned changes in revenue and expenses.

Interest income increased from $0.6 million in 1999 to $4.0 million in
2000, an increase of $3.4 million. Interest income consisted of interest earned
on investments, which increased primarily due to the proceeds generated on the
sales of assets in 1999.

Other income included a pre-tax loss on the sale of Philadelphia real
estate and equipment of $0.7 million. Other income for the year ended December
31, 1999 included a gain of $18.5 million on the disposition of vessels and
petroleum storage terminals.

The Company's effective income tax rate decreased from 43% in 1999 to 38%
in 2000. The decrease in the effective tax rate is due primarily to the impact
of state taxes on certain asset sales in 1999.

Net income for the twelve months ended December 31, 2000, decreased to
$5.0 million from $12.1 million for the twelve months ended December 31, 1999.
This decrease was due to the aforementioned changes in revenue and expenses.
Net income for 1999 included $10.5 million, net of tax, from the gain on the
sale of assets.

Year Ended December 31, 1999 Compared With Year Ended December 31, 1998

Revenues for 1999 of $151.7 million were flat compared to $151.8 million
in 1998. Barrels of cargo transported in 1999 decreased from 261.6 million in
1998 to 249.1 million in 1999. Although barrels decreased, overall vessel
utilization, including changes in the structure of the fleet, increased from
78.7 percent in 1998 to 81.8 percent in 1999. Revenue increased as a result of
the 260,000-barrel oil tanker which went into operation late in 1998. 1999's
results reflect the first complete year of operations for that tanker.
Additionally, positively affecting revenues were a high level of contract
business and a temporary increase in demand due to West Coast refinery
disruptions. Offsetting this increase was the sale of a significant number of
vessels and terminals during 1999. The Company sold five vessels in the first
quarter of 1999 and sold the petroleum storage terminals in September 1999, all
of which were operating in 1998. In December 1999, the Company completed the
sale of twenty-six vessels most of which had worked in the Northeast United
States. Since this transaction occurred late in the year, revenue was affected
only in December. This transaction represented approximately twenty-five
percent of the Company's cargo carrying capacity. Compared to 1998, utilization
improved as the MARITRANS 192 returned to service after being rebuilt with a
new internal double-hull. Utilization of the remaining fleet, after vessel
divestitures, was 87.8 percent in 1999 compared to 78.5 percent in 1998.

Total costs and operating expenses were $143.9 million in 1999 compared to
$141.0 million in 1998, an increase of $2.9 million or 2.1 percent. This
increase was due to the addition to the fleet of the 260,000-barrel oil tanker
late in 1998, costs associated with turnover of qualified seagoing personnel
and crew costs associated with vessels returning to service in 1999, which had
been in the shipyard during related periods in 1998. Additionally, the Company
recorded a severance charge of $0.9 million, in the third quarter of 1999, for
the impact of Company's twenty-five percent reduction of shoreside staff, which
was announced in September 1999. These increases were offset by a reduction in
operating costs as a result of the disposition of vessels and terminals
discussed in revenue above.

Operating income decreased from $10.8 million in 1998 to $7.8 million in
1999, as a result of the aforementioned changes in revenue and expenses.

Other income in 1999 includes a gain of $18.5 million on the disposition
of vessels and the petroleum storage terminals in 1999. The vessel sales
consisted of seventeen barges and fourteen tugboats. The tug and barge units
were predominantly working in the Northeastern United States and Puerto Rico.

The Company's effective income tax rate increased from 38% in 1998 to 43%
in 1999. The increase in the effective tax rate is due primarily to the impact
of state taxes on certain asset sales in 1999.

Net income for the twelve months ended December 31, 1999, increased to
$12.1 million from $3.1 million for the twelve months ended December 31, 1998,
due primarily to the gain on the sale of assets.

Liquidity and Capital Resources

In 2000, funds provided by operating activities were sufficient to meet
debt service obligations and loan agreement restrictions, to make capital
acquisitions and improvements and to allow Maritrans Inc. to pay a dividend in
each quarter of the year. While dividends have been made quarterly in each of
the last three years, there can be no assurances that the dividend will
continue. The ratio of total debt to capitalization is .46:1 at December 31,
2000, compared to .47:1 at December 31, 1999.

Management believes that in 2001, funds provided by operating activities,
augmented by financing transactions and investing activities, will be
sufficient to finance operations, anticipated capital expenditures, lease
payments and required debt repayments.

The indenture governing the Operating Partnership's long-term debt permits
cash distributions by Maritrans Operating Partners L.P. to Maritrans Inc., so
long as no default exists under the indenture and if such distributions do not
exceed contractually prescribed amounts.

On February 9, 1999, the Board of Directors authorized a share buyback
program for the acquisition of up to one million shares of the Company's common
stock, which represented approximately 8 percent of the 12.1 million shares
outstanding at that time. In February 2000 and again in February 2001, the
Board of Directors authorized the acquisition of an additional one million
shares in the program. The total authorized shares under the buyback program
are three million. As of December 31, 2000, 1,596,700 shares had been purchased
under the plan and financed by internally generated funds. The Company intends
to hold the majority of the shares as treasury stock, although some shares will
be used for employee compensation plans and others may be used for acquisition
currency and/or other corporate purposes. Subsequent to December 31, 2000 and
through March 8, 2001, the Company has purchased an additional 295,000 shares
of its common stock at a total cost of $2,593,000 under the program.

On July 30, 1999, the Company awarded a contract to rebuild a second large
single-hull barge, the OCEAN 244, to a double-hull configuration. Late in
December, this vessel was completed and put back into service with a new name,
the MARITRANS 244. The total cost of the rebuild was $13.8 million. The Company
financed this project from internally generated funds.

In September 1999, the Company announced a significant reduction of its
shoreside staff. The Company accrued $0.9 million of severance costs in 1999
for the cash benefits to be paid to the employees who were terminated. At
December 31, 2000, these expenses have been paid. The Company does not expect
to incur any additional significant severance costs related to this reduction
in staff.

In December 1999, the Company sold twenty-six vessels that worked in the
Northeastern U.S. coastal waters, in separate transactions to Vane Line
Bunkering Inc. and K-Sea Transportation LLC. The transactions, which included
fifteen barges and eleven tugboats, represented a divestiture of approximately
twenty-five percent of the Company's cargo-carrying capacity. The combined sale
price of the two transactions was $48 million. The Company received proceeds of
$39 million in cash and $8.5 million in notes. Due to uncertainties regarding
collectibility of the notes received, the Company recorded a reserve of $4.5
million. The remaining $0.5 million of the sales price will be received by the
Company upon certain conditions as defined in one of the sales agreements;
accordingly, the $0.5 million will be included in net income if the conditions
are met and the amounts are earned. In 1999, the Company negotiated a waiver
and amendment to the indenture and mortgage securing substantially all of the
vessels sold. The proceeds from the sale were required to be deposited with the
trustee, Wilmington Trust Company, and may be withdrawn to fund repairs and
improvements on mortgaged vessels, including double-hull rebuilding, to make
debt repayments and to pay income taxes resulting from the vessel transactions.
At December 31, 2000, the balance of the cash deposited with the trustee is
$13.5 million.

In April 2000, the Company moved its corporate headquarters from
Philadelphia, PA to Tampa, FL. In 2000, the Company paid $1.4 million of
relocation costs. The Company does not expect to incur any additional
significant relocation costs.

In June 2000, the Company sold real estate and equipment located in
Philadelphia, PA to Vane Terminals III, L.P. The sales price totaled $1.75
million of which $1.58 million was received in the form of a note.

On August 17, 2000, the Company awarded a contract to rebuild a third
large single-hull barge, the OCEAN CITIES, to a double-hull configuration, at
an expected total cost of approximately $15.5 million. As of December 31, 2000,
the Company has advanced $4.8 million on this project to the shipyard
contractor for prefabrication and other design work. The vessel is scheduled to
enter the shipyard in the second quarter of 2001. The Company expects to
finance this project from internally generated funds.

Debt Obligations and Borrowing Facility

At December 31, 2000, the Company had $75.9 million in total outstanding
debt, secured by mortgages on most of the fixed assets of the Company. The
current portion of this debt at December 31, 2000, is $7.9 million.

The Company has $45.5 million remaining on the fleet mortgage at December
31, 2000 that was part of the original indebtedness of $115.0 million incurred
when the Company became a public company in 1987. This mortgage is
collateralized by mortgages on a majority of the tugs and barges.

In 1997, Maritrans entered into a multi-year revolving credit facility for
amounts up to $33 million with Mellon Bank, N.A. This facility is
collateralized by mortgages on the tankers. In 2000, this facility was extended
to October 30, 2002. At December 31, 2000, the balance of borrowings
outstanding is $22 million.

In August 1999, the Company entered into an agreement with Coastal Tug and
Barge Inc. to purchase the MV PORT EVERGLADES. The outstanding debt on this
transaction at December 31, 2000, is $3.3 million payable to Coastal Tug and
Barge Inc. and is secured by a Mellon Bank N.A. Letter of Credit.

In December 1999, the Company entered into an agreement with General
Electric Capital Corporation to purchase two tugboats, the Enterprise and the
Intrepid. The vessels had previously been operated by the Company under
operating leases. The outstanding debt on this purchase at December 31, 2000,
is $5.1 million payable to General Electric Capital Corporation.

Market Risk

The principal market risk to which the Company is exposed is a change in
interest rates on debt instruments. The Company manages its exposure to changes
in interest rate fluctuations by optimizing the use of fixed and variable rate
debt. The information below summarizes the Company's market risks associated
with debt obligations and should be read in conjunction with Note 11 of the
Consolidated Financial Statements.

The table below presents principal cash flows and the related interest
rates by year of maturity. Fixed interest rates disclosed represent the actual
rate as of the period end. Variable interest rates disclosed fluctuate with the
LIBOR and federal fund rates and represent the weighted average rate at
December 31, 2000.

EXPECTED YEARS OF MATURITY

(Dollars in $000's)

2001 2002 2003 2004 2005 Thereafter Total
--------- ---------- --------- --------- --------- ------------ -------

Long-term debt, including
current portion:
Fixed rate ........................ 7,222 7,271 7,322 7,377 6,576 13,000 48,768
Average interest rate (%) ......... 9.07 9.07 9.07 9.07 9.07 9.07
Variable rate ..................... 650 22,650 650 650 650 1,842 27,092
Average interest rate (%) ......... 7.94 7.94 9.00 9.00 9.00 9.00

Impact of Recent Accounting Pronouncements

establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives), and for hedging activities. The
Company will adopt Statement 133 on January 1, 2001, and the effect of adoption
will not have a material effect on the Company.

Item 7a. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

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

Item 8. FINANCIAL STATEMENTS & SUPPLEMENTAL DATA

Report of Independent Auditors

Stockholders and Board of Directors
Maritrans Inc.

We have audited the accompanying consolidated balance sheets of Maritrans Inc.
as of December 31, 2000 and 1999, and the related consolidated statements of
income, cash flows and stockholders' equity for each of the three years in the
period ended December 31, 2000. Our audits also included the financial
statement schedule listed in the Index at Item 14(a). These financial
statements and schedule are the responsibility of the management of Maritrans
Inc. Our responsibility is to express an opinion on these financial statements
and schedule based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Maritrans Inc. at
December 31, 2000 and 1999, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended December 31,
2000, in conformity with accounting principles generally accepted in the United
States. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

/s/ ERNST & YOUNG LLP
Philadelphia, Pennsylvania
January 26, 2001

MARITRANS INC.
CONSOLIDATED BALANCE SHEETS

($000)

December 31,
--------------------------
2000 1999
------------ -----------

ASSETS
Current assets:
Cash and cash equivalents ................................................... $ 36,598 $ 13,232
Cash and cash equivalents -- restricted ..................................... 11,400 21,000
Trade accounts receivable (net of allowance for doubtful accounts of
$1,216 and $1,393, respectively) ........................................... 9,505 14,676
Other accounts receivable ................................................... 4,279 5,782
Inventories ................................................................. 3,182 3,355
Deferred income tax benefit ................................................. 9,176 4,013
Prepaid expenses ............................................................ 2,067 3,101
--------- --------
Total current assets ..................................................... 76,207 65,159
Vessels and equipment .......................................................... 289,447 278,471
Less accumulated depreciation ............................................... 133,838 119,013
--------- --------
Net vessels and equipment ................................................ 155,609 159,458
Note receivable (net of allowance of $4,500) ................................... 4,724 3,692
Other (including $2,100 and $18,000 of cash and cash equivalents -- restricted
in 2000 and 1999, respectively) ............................................... 5,820 22,712
--------- --------
Total assets ............................................................. $ 242,360 $251,021
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Debt due within one year .................................................... $ 7,872 $ 7,773
Trade accounts payable ...................................................... 1,242 1,686
Accrued interest ............................................................ 1,052 1,203
Accrued shipyard costs ...................................................... 7,971 6,961
Accrued wages and benefits .................................................. 2,527 2,727
Accrued income taxes ........................................................ -- 2,421
Other accrued liabilities ................................................... 8,552 7,230
--------- --------
Total current liabilities ................................................ 29,216 30,001
Long-term debt ................................................................. 67,988 75,861
Deferred shipyard costs ........................................................ 11,956 10,442
Other liabilities .............................................................. 3,757 4,095
Deferred income taxes .......................................................... 38,997 35,925
Stockholders' equity:
Preferred stock, $.01 par value, authorized 5,000,000 shares; none
issued ..................................................................... -- --
Common stock, $.01 par value, authorized 30,000,000 shares; issued:
2000 -- 13,287,887 shares; 1999 -- 13,186,065 shares ....................... 133 132
Capital in excess of par value .............................................. 78,959 78,279
Retained earnings ........................................................... 26,444 25,945
Unearned compensation ....................................................... (1,012) (1,172)
Less: Cost of shares held in treasury: 2000 -- 2,421,212 shares; 1999 --
1,483,175 shares ........................................................... (14,078) (8,487)
--------- --------
Total stockholders' equity ............................................... 90,446 94,697
--------- --------
Total liabilities and stockholders' equity ............................... $ 242,360 $251,021
========= ========

See accompanying notes.

MARITRANS INC.
CONSOLIDATED STATEMENTS OF INCOME

($000, except per share amounts)

For the year ended December 31,
---------------------------------------
2000 1999 1998
----------- ----------- -----------

Revenues ................................................. $123,715 $151,667 $151,839
Costs and expenses:
Operation expense ..................................... 69,407 86,049 86,616
Maintenance expense ................................... 17,234 28,213 26,148
General and administrative ............................ 8,786 9,313 8,668
Depreciation and amortization ......................... 17,254 20,279 19,578
-------- -------- --------
112,681 143,854 141,010
-------- -------- --------
Operating income ......................................... 11,034 7,813 10,829
Interest expense (net of capitalized interest of $662, $73
and $417, respectively).................................. (6,401) (6,778) (6,945)
Interest income .......................................... 3,973 599 470
Other income (loss), net ................................. (493) 19,517 632
-------- -------- --------
Income before income taxes ............................... 8,113 21,151 4,986
Income tax provision ..................................... 3,101 9,095 1,870
-------- -------- --------
Net income ............................................... $ 5,012 $ 12,056 $ 3,116
======== ======== ========
Basic earnings per share ................................. $ 0.46 $ 1.03 $ 0.26
Diluted earnings per share ............................... $ 0.45 $ 1.02 $ 0.26

See accompanying notes.

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

($000)

For the year ended December 31,
-----------------------------------------
2000 1999 1998
------------ ------------ -----------

Cash flows from operating activities:
Net income .............................................................. $ 5,012 $ 12,056 $ 3,116
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization .......................................... 17,254 20,279 19,578
Deferred income taxes .................................................. (2,091) 5,685 733
Stock compensation ..................................................... 803 1,030 378
Changes in receivables, inventories and prepaid expenses ............... 8,036 7,488 (4,756)
Changes in current liabilities, other than debt ........................ (779) 34 (4,971)
Non-current changes, net ............................................... 1,884 1,939 (2,687)
(Gain) loss on sale of assets .......................................... 637 (18,937) --
--------- --------- ---------
Total adjustments to net income ........................................ 25,744 17,518 8,275
--------- --------- ---------
Net cash provided by operating activities .............................. 30,756 29,574 11,391

Cash flows from investing activities:
Proceeds from sale of marine vessels and equipment ..................... 165 60,136 --
Purchase of cash and cash equivalents -- restricted, resulting from
the sale of vessels and equipment .................................... -- (39,000) --
Release of cash and cash equivalents -- restricted ..................... 25,500 -- --
Collections on notes receivable ........................................ 386 -- --
Insurance proceeds from dock settlement ................................ -- -- 1,025
Purchase of marine vessels and equipment ............................... (15,498) (9,000) (30,190)
--------- --------- ---------
Net cash provided by (used in) investing activities ................... 10,553 12,136 (29,165)

Cash flows from financing activities:
Payment of long-term debt .............................................. (7,773) (10,916) (16,423)
New borrowings under credit facilities ................................. 2,500 14,909 43,863
Repayments of borrowings under credit facilities ....................... (2,500) (25,481) (17,290)
Proceeds from stock option exercises ................................... 143 -- --
Purchase of treasury stock ............................................. (5,800) (3,402) --
Dividends declared and paid ............................................ (4,513) (4,802) (4,474)
--------- --------- ---------
Net cash provided by (used in) financing activities ................... (17,943) (29,692) 5,676

Net increase (decrease) in cash and cash equivalents .................... 23,366 12,018 (12,098)
Cash and cash equivalents at beginning of year .......................... 13,232 1,214 13,312
--------- --------- ---------
Cash and cash equivalents at end of year ................................ $ 36,598 $ 13,232 $ 1,214
========= ========= =========
Supplemental Disclosure of Cash Flow Information:
Interest paid ........................................................... $ 7,057 $ 6,914 $ 7,574
Income taxes paid ....................................................... $ 8,015 $ 1,750 $ 1,600

Non-cash activities:
Note receivable from sale of property .................................. $ 1,575 -- --
Purchase of vessels financed with issuance of long-term debt ........... -- $ 9,850 --
Note receivable from sale of vessels, net of reserve of $4,500 ......... -- $ 4,000 --

See accompanying notes.

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

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

Balance at December 31, 1997 ......... 12,055,261 130 76,881 20,049 (5,433) (832) 90,795
Net income ........................... 3,116 3,116
Cash dividends ($0.37 per share of
Common Stock) ....................... (4,474) (4,474)
Stock incentives ..................... 89,345 1 977 -- (266) (334) 378
---------- --- ------ ------ ------ ---- ------
Balance at December 31, 1998 ......... 12,144,606 131 77,858 18,691 (5,699) (1,166) 89,815
---------- --- ------ ------ ------ ------ ------
Net income ........................... 12,056 12,056
Cash dividends ($0.40 per share of
Common Stock) ....................... (4,802) (4,802)
Purchase of treasury shares .......... (614,400) (3,402) (3,402)
Stock incentives ..................... 172,684 1 421 -- 614 (6) 1,030
---------- --- ------ ------ ------ ------ ------
Balance at December 31, 1999 ......... 11,702,890 132 78,279 25,945 (8,487) (1,172) 94,697
---------- --- ------ ------ ------ ------ ------
Net income ........................... 5,012 5,012
Cash dividends ($0.40 per share of
Common Stock) ....................... (4,513) (4,513)
Purchase of treasury shares .......... (982,300) (5,800) (5,800)
Stock incentives ..................... 146,085 1 680 -- 209 160 1,050
---------- --- ------ ------ ------ ------ ------
Balance at December 31, 2000 ......... 10,866,675 $133 $78,959 $ 26,444 $ (14,078) $(1,012) $ 90,446
========== ==== ======= ======== ========= ======= ========

See accompanying notes.

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

1. Organization and Significant Accounting Policies

Organization

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

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

Principles of Consolidation

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

Reclassifications

Certain amounts in the prior year financial statements have been
reclassified to conform to their current year presentation.

Use of Estimates

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

Vessels and Equipment

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

Maintenance and Repairs

Provision is made for the cost of upcoming major periodic overhauls of
vessels and equipment in advance of performing the related maintenance and
repairs. The current portion of this estimated cost is included in accrued
shipyard costs while the portion of this estimated cost not expected to be
incurred within one year is classified as long-term. Non-overhaul maintenance
and repairs are expensed as incurred.

Inventories

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

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS -- (Continued)

1. Organization and Significant Accounting Policies -- (Continued)

Income Taxes

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

Revenue Recognition

Revenue is recognized when services are performed.

Significant Customers

During 2000, the Company derived revenues aggregating 54 percent of total
revenues from three customers, each one representing more than 10 percent of
revenues. In 1999, revenues from three customers aggregated 52 percent of total
revenues and in 1998, revenues from three customers aggregated 52 percent of
total revenues. The Company does not necessarily derive 10 percent or more of
its total revenues from the same group of customers each year. In 2000,
approximately 87 percent of the Company's total revenue were generated by ten
customers. Credit is extended to various companies in the petroleum industry in
the normal course of business. The Company generally does not require
collateral. This concentration of credit risk within this industry may be
affected by changes in economic or other conditions and may, accordingly,
affect the overall credit risk of the Company.

Related Party Transactions

The Company obtained protection and indemnity insurance coverage from a
mutual insurance association, whose chairman is also the chairman of Maritrans
Inc. The related insurance expense was $1,854,000, $2,680,000 and $2,577,000
for the years ended December 31, 2000, 1999 and 1998, respectively. In 2000,
1999 and 1998, the Company paid amounts for legal services to a law firm, a
partner of which serves on the Company's Board of Directors. In 1998, the
Company also paid the law firm for the lease of office space. A summary of
payments to the law firm is as follows:

2000 1999 1998
------ ------ -------
($000)
Lease of office space ......... $ -- $ -- $114
Legal services ................ 220 207 120
---- ---- ----
Total ......................... $220 $207 $234
==== ==== ====

Impact of Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133., Accounting for Derivative Instruments
and Hedging Activities ("Statement 133"). Statement 133 establishes accounting
and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts (collectively referred to as
derivatives), and for hedging activities. The Company will adopt Statement 133
on January 1, 2001, and the effect of adoption will not have a material effect
on the Company.

2. Sale of Assets

In June 2000, the Company sold real estate and equipment located in
Philadelphia, PA. The sales price totaled $1.75 million of which $1.58 million
was received in the form of a note. The pre-tax loss on the sale is $0.7
million and is included in other income in the statement of income.

In December 1999, the Company sold twenty-six vessels, which worked in the
Northeastern U.S. coastal waters, in separate transactions to Vane Line
Bunkering Inc. and K-Sea Transportation LLC ("Vessel Sale"). The transactions,
which included fifteen barges and eleven tugboats, represented a divestiture of

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS -- (Continued)

2. Sale of Assets -- (Continued)

approximately twenty-five percent of the Company's cargo-carrying capacity. The
combined sale price of the two transactions was $48 million. The Company
received proceeds of $39 million in cash and $8.5 million in notes. Due to
uncertainties regarding collectibility of the notes received, the Company
recorded a reserve of $4.5 million. The remaining $0.5 million of the sales
price will be received by the Company upon certain conditions as defined in one
of the sales agreements; accordingly, the $0.5 million will be included in net
income if the conditions are met and the amounts are earned. The total gain on
the Vessel Sale of the assets was $20.0 million, which includes a write-off of
goodwill of approximately $1.4 million. The gain on the Vessel Sale is included
in other income in the consolidated statements of income.

In September 1999, the Company sold its petroleum storage terminal
operations, located in Philadelphia, PA and Salisbury, MD. The proceeds of the
sale totaled $10 million, of which $3.6 million was used to pay off the
outstanding debt on the Philadelphia terminal. The loss on the sale of these
assets was $5.9 million and is included in other income in the consolidated
statements of income.

In March 1999, the Company sold five vessels. The vessels consisted of two
tug and barge units that were working in Puerto Rico and a tugboat working on
the Atlantic Coast. The gain on the sale of these assets was $4.4 million and
is included in other income in the consolidated statements of income.

The following unaudited pro forma results of operations for the fiscal
years ended December 31, 1999 and 1998 assumes that the sale of vessels and
petroleum storage terminal operations were disposed as of the beginning of the
period presented and excludes the net gain on the sale of these assets of $10.5
million, net of taxes. No pro forma adjustment has been made for expenses not
specifically allocable to the assets sold.

1999 1998
------------- --------------
($000, except per share
amounts)
Revenue ............................ $ 115,053 $ 104,643
Net income ......................... 924 399
Diluted earnings per share ......... $ 0.08 $ 0.03

3. Corporate Relocation and Downsizing

In September 1999, the Company announced its intent to relocate the
corporate headquarters from Philadelphia, PA to Tampa, FL. At the same time,
the Company announced a reduction of approximately twenty-five percent of the
shoreside staff. The Company accrued $0.9 million of severance costs in
September 1999 for the cash benefits to be paid to the employees who had been
terminated. As of December 31, 2000, these expenses have been paid.

4. Stock Buyback

On February 9, 1999, the Board of Directors authorized a stock buyback
program for the acquisition of up to one million shares of the Company's common
stock. In February 2000, the Board of Directors authorized the acquisition of
an additional one million shares in the program. As of December 31, 2000,
1,596,700 shares were purchased under the plan. The total cost of the shares
repurchased during 2000 was $5.8 million.

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS -- (Continued)

5. Earnings per Common Share

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

2000 1999 1998
---------- ---------- ---------
(thousands)

Income available to common stockholders used
in basic EPS ................................ $ 5,012 $12,056 $ 3,116
======= ======= =======
Weighted average number of common shares
used in basic EPS ........................... 10,883 11,682 11,929
Effect of dilutive securities:
Stock options and restricted shares ......... 315 126 258
------- ------- -------
Weighted number of common shares and
dilutive potential common stock used in
diluted EPS ................................. 11,198 11,808 12,187
======= ======= =======

6. Shareholder Rights Plan

In 1993, Maritrans Inc. adopted a Shareholder Rights Plan (the "Plan") in
connection with the conversion from partnership to corporate form. Under the
Plan, each share of Common Stock has attached thereto a Right (a "Right") which
entitles the registered holder to purchase from the Company one one-hundredth
of a share (a "Preferred Share Fraction") of Series A Junior Participating
Preferred Shares, par value $.01 per share, of the Company ("Preferred
Shares"), or a combination of securities and assets of equivalent value, at a
Purchase Price of $40, subject to adjustment. Each Preferred Share Fraction
carries voting and dividend rights that are intended to produce the equivalent
of one share of Common Stock. The Rights are not exercisable for a Preferred
Share Fraction until the earlier of (each, a "Distribution Date") (i) 10 days
following a public announcement that a person or group has acquired, or
obtained the right to acquire, beneficial ownership of 20 percent or more of
the outstanding shares of Common Stock or (ii) the close of business on a date
fixed by the Board of Directors following the commencement of a tender offer or
exchange offer that would result in a person or group beneficially owning 20
percent or more of the outstanding shares of Common Stock.

The Rights may be exercised for Common Stock if a "Flip-in" or "Flip-over"
event occurs. If a "Flip-in" event occurs and the Distribution Date has passed,
the holder of each Right, with the exception of the acquirer, is entitled to
purchase $40 worth of Common Stock for $20. The Rights will no longer be
exercisable into Preferred Shares at that time. "Flip-in" events are events
relating to 20 percent stockholders, including without limitation, a person or
group acquiring 20 percent or more of the Common Stock, other than in a tender
offer that, in the view of the Board of Directors, provides fair value to all
of the Company's shareholders. If a "Flip-over" event occurs, the holder of
each Right is entitled to purchase $40 worth of the acquirer's stock for $20. A
"Flip-over" event occurs if the Company is acquired or merged and no
outstanding shares remain or if 50 percent of the Company's assets or earning
power is sold or transferred. The Plan prohibits the Company from entering into
this sort of transaction unless the acquirer agrees to comply with the
"Flip-over" provisions of the Plan.

The Rights can be redeemed by the Company for $.01 per Right until up to
ten days after the public announcement that someone has acquired 20 percent or
more of the Company's Common Stock (unless the redemption period is extended by
the Board in its discretion). If the Rights are not redeemed or substituted by
the Company, they will expire on August 1, 2002.

7. Cash and Cash Equivalents

Cash and cash equivalents at December 31, 2000 and 1999 consisted of cash
and commercial paper, the carrying value of which approximates fair value. For
purposes of the consolidated financial statements, short-term highly liquid
debt instruments with original maturities of three months or less are
considered to be cash equivalents.

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS -- (Continued)

7. Cash and Cash Equivalents -- (Continued)

In 1999, the Company negotiated a waiver and amendment to the indenture
and mortgage securing substantially all of the vessels sold in 1999. The
proceeds from the sale of vessels were required to be deposited with the
trustee, Wilmington Trust Company, and may be withdrawn to fund repairs and
improvements on mortgaged vessels, including double-hull rebuilding, to make
debt repayments and to pay income taxes resulting from the vessel sale. At
December 31, 2000, deposits held by the trustee are $13.5 million. Of this
amount, $11.4 million is classified as restricted cash and is included in
current assets, as this amount will be used in current operations. The
remaining balance of $2.1 million is included in other assets on the Company's
consolidated balance sheet.

8. Stock Incentive Plans

The Company has elected to follow Accounting Principles Board Opinion No.
25, Accounting for Stock Issued to Employees and Related Interpretations in
accounting for its employee stock options because the alternative fair value
accounting provided for under FAS Statement No. 123, Accounting for Stock-Based
Compensation, requires the use of option valuation models that were not
developed for use in valuing employee stock options. The effect of applying
Statement No. 123's fair value method to the Company's stock-based awards
results in pro forma net income and earnings per share that is not materially
different from amounts reported. Pro forma results of operations may not be
representative of the effects on pro forma results of operations for future
years.

Maritrans Inc. has a stock incentive plan (the "Plan"), whereby
non-employee directors, officers and other key employees may be granted stock,
stock options and, in certain cases, receive cash under the Plan. Any
outstanding options granted under the Plan are exercisable at a price not less
than market value of the shares on the date of grant. The maximum aggregate
number of shares available for issuance under the Plan is 1,750,000. The Plan
provides for the automatic grant of non-qualified stock options to non-employee
directors, on a formulaic biannual basis, of options to purchase shares equal
to two multiplied by the aggregate number of shares distributed to such
non-employee director under the Plan during the preceding calendar year. In
2000, 1999 and 1998 there were 6,528, 5,663 and 3,864 shares issued to
non-employee directors. Compensation expense equal to the fair market value on
the date of the grant to the directors is included in general and
administrative expense in the consolidated statement of income. During 2000,
1999 and 1998, there were 64,526, 63,705 and 115,178 shares of restricted stock
issued under the Plan and subject to restriction provisions. The restrictions
lapse in up to a three-year period from the date of grant. The weighted average
fair value of the restricted stock issued during 2000, 1999 and 1998 was $6.00,
$6.00 and $7.68. The shares are subject to forfeiture under certain
circumstances. Unearned compensation, representing the fair market value of the
shares at the date of issuance, is amortized to expense on a straight-line
basis over the vesting period. At December 31, 2000 and 1999, 372,023 and
435,274 remaining shares and options within the Plan were reserved for grant,
respectively.

In May 1999, the Company adopted the Maritrans Inc. 1999 Directors' and
Key Employees Equity Compensation Plan (the "99 Plan"), which provides
non-employee directors, officers and other key employees with certain rights to
acquire common stock and stock options. The aggregate number of shares
available for issuance under the 99 Plan is 900,000 and the shares are to be
issued from treasury shares. Any outstanding options granted under the Plan are
exercisable at a price not less than market value of the shares on the date of
grant. During 2000 and 1999, there were 94,962 and 103,316 shares of restricted
stock issued under the 99 Plan and subject to restriction provisions. The
restrictions lapse in up to a three-year period from the date of grant. The
weighted average fair value of the restricted stock issued during 2000 and 1999
was $5.99 and $6.00. The shares are subject to forfeiture under certain
circumstances. Unearned compensation, representing the fair market value of the
shares at the date of issuance, is amortized to expense on a straight-line
basis over the vesting period. At December 31, 2000 and 1999, 299,232 and
416,474 remaining shares and options within the Plan were reserved for grant,
respectively.

Compensation expense for all restricted stock was $851,000, $995,000 and
$434,000 for the years ended December 31, 2000, 1999 and 1998, respectively.

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS -- (Continued)

8. Stock Incentive Plans -- (Continued)

Information on stock options follows:

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

Outstanding at 12/31/97 ......... 547,198 4.000-7.937 5.01
Granted ........................ 66,918 9.000-9.188 9.11
Exercised ...................... -- -- --
Cancelled or forfeited ......... 35,991 5.375-6.000 5.78
Expired ........................ 98,489 4.000-5.000 4.35
------- ------------ ----
Outstanding at 12/31/98 ......... 479,636 4.000-9.188 5.64
------- ------------ ----
Granted ........................ 598,169 6.000-6.000 6.00
Exercised ...................... -- -- --
Cancelled or forfeited ......... 31,492 6.000-9.188 6.41
Expired ........................ -- -- --
------- ------------ ----
Outstanding at 12/31/99 ......... 1,046,313 4.000-9.188 5.82
--------- ------------ ----
Granted ........................ 83,270 5.750-6.000 5.89
Exercised ...................... 30,768 4.000-6.250 4.64
Cancelled or forfeited ......... 32,300 6.000-6.000 6.00
Expired ........................ -- -- --
--------- ------------ ----
Outstanding at 12/31/00 ......... 1,066,515 4.000-9.125 5.87
--------- ------------ ----
Exercisable
December 31, 1998 .............. 318,971 4.000-9.125 4.55
December 31, 1999 .............. 352,474 4.000-9.125 4.78
December 31, 2000 .............. 380,712 4.000-9.125 5.21

Outstanding options have an original term of up to ten years, are exercisable
in installments over two to four years, and expire beginning in 2002. The
weighted average remaining contractual life of the options outstanding at
December 31, 2000 is six years.

9. Income Taxes

The income tax provision consists of:

2000 1999 1998
----------- ---------- ---------
($000)
Current:
Federal .............. $ 4,259 $ 15,567 $1,011
State ................ 122 1,943 126
Deferred:
Federal .............. (1,244) (7,583) 547
State ................ (36) (832) 186
-------- -------- ------
$ 3,101 $ 9,095 $1,870
-------- -------- ------

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS -- (Continued)

9. Income Taxes -- (Continued)

The differences between the federal statutory tax rate in 2000, 1999 and
1998, and the effective tax rates were as follows:

2000 1999 1998
--------- --------- ---------
($000)

Statutory federal tax provision ............................... $2,840 $7,403 $1,695
State income taxes, net of federal income tax benefit ......... 88 722 206
Non-deductible items .......................................... 249 602 131
Other ......................................................... (76) 368 (162)
------ ------ ------
$3,101 $9,095 $1,870
====== ====== ======

Principal items comprising deferred income tax liabilities and assets as
of December 31, 2000 and 1999 are:

2000 1999
---------- ----------
($000)

Deferred tax liabilities:
Depreciation ........................................ $38,997 $46,278
Prepaid expenses .................................... 1,258 1,662
------- -------
40,255 47,970
------- -------
Deferred tax assets:
Reserves and accruals ............................... 10,434 16,028
Net operating loss and credit carryforwards ......... -- --
------- -------
10,434 16,028
------- -------
Net deferred tax liabilities ......................... $29,821 $31,912
======= =======

10. Retirement Plans

Most of the shoreside employees participate in a qualified defined benefit
retirement plan of Maritrans Inc. Substantially all of the seagoing supervisors
who were supervisors in 1984, or who were hired as or promoted into supervisory
roles between 1984 and 1998 have pension benefits under the Company's
retirement plan for that period of time. Beginning in 1999, the seagoing
supervisors retirement benefits are provided through contributions to an
industry-wide, multi-employer seaman's pension plan. Upon retirement, those
seagoing supervisors will be provided with retirement benefits from the
Company's plan for service periods between 1984 and 1998, and from the
multi-employer seaman's plan for other covered periods. As a result of the
implementation of changes in the retirement plan provider, the Company
recognized a curtailment gain during 1999 in the amount of $2.6 million, which
is reflected in the 1999 net pension cost. Additionally, the Company modified
its plan for those seagoing supervisors who had been originally covered by the
District 2 Marine Engineers Beneficial Association and met certain service
requirements. As a result of this modification, additional benefits of $1.7
million have been recorded and reflected in net periodic benefit cost for the
year ended December 31, 1999.

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

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS -- (Continued)

10. Retirement Plans -- (Continued)

The following table sets forth changes in the plan's benefit obligation,
changes in plan assets and the plan's funded status as of December 31, 2000 and
1999:

2000 1999
------------ -----------
($000)

Change in benefit obligation
Benefit obligation at beginning of year ................ $25,945 $25,647
Service cost ........................................... 489 1,419
Interest cost .......................................... 1,606 1,635
Benefit enhancement .................................... -- 1,666
Actuarial (gain) loss .................................. (1,549) (979)
Curtailment gain ....................................... -- (2,579)
Benefits paid .......................................... (1,209) (864)
-------- --------
Benefit obligation at end of year ...................... $25,282 $25,945
-------- --------
Change in plan assets
Fair value of plan assets at beginning of year ......... $30,599 $30,533
Actual return on plan assets ........................... 1,778 930
Benefits paid .......................................... (1,209) (864)
-------- --------
Fair value of plan assets at end of year ............... $31,168 $30,599
-------- --------
Funded status .......................................... 5,886 4,654
Unrecognized net actuarial (gain) loss ................. (8,949) (8,054)
Unrecognized transition amount ......................... (204) (408)
-------- --------
Accrued benefit cost ................................... ($ 3,267) ($ 3,808)
-------- --------
Weighted average assumptions as of December 31, 2000
Discount rate .......................................... 6.75% 6.75%
Expected rate of return ................................ 6.75% 6.75%
Rate of compensation increase .......................... 5.00% 5.00%

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

2000 1999 1998
----------- ----------- -----------
($000)

Components of net periodic benefit pension cost
Service cost of current period ........................ $ 489 $ 1,419 $ 1,482
Interest cost on projected benefit obligation ......... 1,606 1,635 1,553
Expected return on plan assets ........................ (2,025) (2,032) (1,832)
Actual (gain) loss on plan assets ..................... 246 1,102 (1,683)
Benefit enhancement ................................... -- 1,666 --
Curtailment gain ...................................... -- (2,579) --
Net (amortization) and deferral ....................... (858) (1,733) 1,480
------- ------- --------
Net periodic pension cost ............................. ($ 542) ($ 522) $ 1,000
======= ======= ========

Substantially all of the shoreside employees participate in a qualified
defined contribution plan. Contributions under the plan are determined annually
by the Board of Directors of Maritrans Inc. and were $375,000, $59,000 and $0
for the years ended December 31, 2000, 1999 and 1998, respectively.

Approximately 57 percent of the Company's employees are covered under
collective bargaining agreements, and approximately 14 percent of the employees
are covered under collective bargaining agreements that expire within one year.

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS -- (Continued)

10. Retirement Plans -- (Continued)

Beginning in 1999, all of the Company's seagoing employee retirement
benefits are provided through contributions to industry-wide, multi-employer
seaman's pension plans. Prior to 1999, the seagoing supervisors were included
in the Company's retirement plan as discussed above. Contributions to
industry-wide, multi-employer seamen's pension plans, which cover substantially
all seagoing personnel, were approximately $1,029,000, $1,527,000 and $889,000
for the years ended December 31, 2000, 1999 and 1998, respectively. These
contributions include funding for current service costs and amortization of
prior service costs of the various plans over periods of 30 to 40 years. The
pension trusts and union agreements provide that contributions be made at a
contractually determined rate per man-day worked. Maritrans Inc. and its
subsidiaries are not administrators of the multi-employer seamen's pension
plans.

11. Debt

The Company has $45.5 million remaining at December 31, 2000, on the fleet
mortgage that was part of the original indebtedness of $115.0 million incurred
when the Company became a public company in 1987. This mortgage is
collateralized by mortgages on a majority of the tugs and barges.

In 1997, Maritrans entered into a multi-year revolving credit facility, as
amended, for amounts up to $33 million with Mellon Bank, N.A. This facility is
collateralized by mortgages on tankers acquired in 1997 and 1998. Borrowings
outstanding under this facility at December 31, 2000 and 1999 were $22.0
million. The interest rate on the indebtedness is variable. The weighted
average interest rate during 2000 was 7.9 percent.

In August 1999, the Company entered into an agreement to purchase the MV
Port Everglades, a tugboat. The Company paid $2.5 million of cash at the
closing and entered into a note of $4.9 million payable to the previous owner.
The note has no stated interest rate, therefore the Company recorded the note
at the present value of the future cash payments. The note is secured by a
Mellon Bank N.A. Letter of Credit.

In December 1999, the Company purchased two tugboats, the Enterprise and
the Intrepid, which had previously been operated by the Company under operating
leases. The purchase price of the vessels was $5.7 million in the form of a
note payable to the previous owner.

Long term debt is as follows:

December 31,
2000 1999
---------- ----------
($000)

Fleet Mortgage, annual principal payment of $6.5 million, interest rate 9.25%........... $45,500 $ 52,000
Revolving credit facility with Mellon Bank N.A., maturity date October 2002, variable
interest rate (7.69% at December 31, 2000) ............................................ 22,000 22,000
Vessel notes payable, monthly payments of $76,104 including interest, no stated interest
rate (interest imputed at a rate of 6.5%) ............................................. 3,267 3,945
Vessel notes payable, monthly payments of $54,183 including interest with a balloon
payment of $1,137,838 due February 2007, variable interest rate, (9.00% at December
31, 2000) ............................................................................. 5,093 5,689
------- --------
75,860 83,634
Less current portion ................................................................... 7,872 7,773
------- --------
$67,988 $ 75,861
======= ========

Terms of the indebtedness require the subsidiaries to maintain their
properties in a specific manner, maintain specified insurance on their
properties and business, and abide by other covenants which are customary with
respect to such borrowings. The Company was in compliance with all applicable
covenants at December 31, 2000.

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS -- (Continued)

11. Debt -- (Continued)

Based on the borrowing rates currently available for loans with similar
terms and maturities, the fair value of long-term debt was $77.2 million and
$76.3 million at December 31, 2000 and 1999, respectively. The maturity
schedule for outstanding indebtedness under existing debt agreements at
December 31, 2000, is as follows:

($000)
2001 .......................... $ 7,872
2002 .......................... 29,921
2003 .......................... 7,972
2004 .......................... 8,027
2005 .......................... 7,226
Thereafter .................... 14,842
-------
$75,860
=======

12. Commitments and Contingencies

Minimum future rental payments under noncancellable operating leases at
December 31, 2000, are as follows:

($000)
2001 .......................... $ 461
2002 .......................... 476
2003 .......................... 491
2004 .......................... 507
2005 .......................... 457
Thereafter .................... 1,831
------
$4,223
======

Total rent expense for all operating leases was $584,000, $1,897,000, and
$2,029,000 for the years ended December 31, 2000, 1999 and 1998, respectively.

The indenture governing the Operating Partnership's long-term debt permits
cash distributions by Maritrans Operating Partners L.P. to Maritrans Inc., so
long as no default exists under the indenture and provided that such
distributions do not exceed contractually prescribed amounts.

In the ordinary course of its business, claims are filed against the
Company for alleged damages in connection with its operations. Management is of
the opinion that the ultimate outcome of such claims at December 31, 2000, will
not have a material adverse effect on the consolidated financial statements.

13. Quarterly Financial Data (Unaudited)

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

2000
----
Revenues .................................. $ 30,671 $ 28,053 $ 32,744 $ 32,247
Operating income .......................... 667 1,365 4,684 4,318
Net income (loss) ......................... (67) 76 2,708 2,295
Basic earnings (loss) per share ........... $ (0.01) $ 0.01 $ 0.25 $ 0.22
Diluted earnings (loss) per share ......... $ (0.01) $ 0.01 $ 0.24 $ 0.21
1999
----
Revenues .................................. $ 38,398 $ 39,834 $ 39,185 $ 34,250
Operating income .......................... 1,455 2,780 1,755 1,823
Net income (loss) ......................... 2,085 900 (2,909) 11,980
Basic earnings (loss) per share ........... $ 0.17 $ 0.08 $ (0.25) $ 1.05
Diluted earnings (loss) per share ......... $ 0.17 $ 0.08 $ (0.25) $ 1.03

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS -- (Continued)

13. Quarterly Financial Data (Unaudited) -- (Continued)

In the second quarter of 2000, the Company sold real estate and equipment
located in Philadelphia, PA. The loss on the sale of these assets was $0.7
million ($0.4 million net of tax or $ 0.04 diluted earnings per share) and is
included in other income in the statements of income.

In the first quarter of 1999, the Company sold five vessels consisting of
two tug and barge units that were working in Puerto Rico and a tugboat working
on the Atlantic Coast. The gain on the sale of these assets was $4.4 million
($2.7 million net of tax or $ 0.22 diluted earnings per share) and is included
in other income in the consolidated statements of income.

In the third quarter of 1999, the Company sold its petroleum storage
terminal operations. The loss on the sale of these assets was $5.9 million
($3.6 million net of tax or $0.30 diluted loss per share) and is included in
other income in the consolidated statements of income.

In the fourth quarter of 1999, the Company sold twenty-six vessels, most
of which worked in the Northeastern U.S. coastal waters. The total gain on the
sale was $20.0 million ($11.4 million net of tax or $0.98 diluted earnings per
share) and is included in other income in the consolidated statements of
income.

In the fourth quarter of 1999, the Company recorded a credit to expense of
$1.4 million ($0.8 million net of tax or $0.12 diluted earnings per share)
related to changes in the pension plan described in Note 10.

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

None.

PART III

Item 10. Directors and Executive Officers of the Registrant

Information with respect to directors of the Registrant, and information
with respect to compliance with Section 16(a) of the Securities Exchange Act of
1934, is incorporated herein by reference to the Registrant's definitive Proxy
Statement (the "Proxy Statement") to be filed with the Securities and Exchange
Commission (the "Commission") not later than 120 days after the close of the
year ended December 31, 2000, under the captions "Information Regarding
Nominees For Election As Directors And Regarding Continuing Directors" and
"Section 16(A) Beneficial Ownership Reporting Compliance."

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

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

Stephen A. Van Dyck (4) ................ 57 Chairman of the Board of Directors and Chief Executive Officer
Dr. Robert E. Boni (2)(3) .............. 73 Lead Director
Dr. Craig E. Dorman (2)(3)(4) .......... 60 Director
Robert J. Lichtenstein (4) ............. 53 Director
Brent A. Stienecker (2)(3) ............. 62 Director
H. William Brown ....................... 62 Chief Financial Officer
Janice M. Smallacombe .................. 41 Senior Vice President and Secretary
John J. Burns .......................... 48 President, Maritrans Operating Partners L.P.
Walter T. Bromfield .................... 45 Treasurer and Controller
Stephen M. Hackett ..................... 42 President, Maritrans Chartering Co., Inc.
Philip J. Doherty ...................... 41 Vice President Corporate Projects

------------
(1) As of March 1, 2001
(2) Member of the Compensation Committee
(3) Member of the Audit Committee
(4) Member of the Nominating Committee

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

Mr. Brown was named Chief Financial Officer of the Company in June 1997.
Previously, Mr. Brown was Chief Financial Officer of Conrail Inc., where he had
been employed since 1978. Mr. Brown is also a member of the Board of Directors
of XTRA Corporation.

Ms. Smallacombe is Senior Vice President and Secretary and has been
continuously employed by the Company or its predecessors in various capacities
since 1982.

Mr. Burns is President of Maritrans Operating Partners L.P. and has been
continuously employed by the Company or its predecessors in various capacities
since 1975.

Mr. Bromfield is Treasurer and Controller of the Company, and has been
continuously employed in various capacities by Maritrans or its predecessors
since 1981.

Mr. Hackett is President of Maritrans Chartering Co., Inc. and has been
continuously employed in various capacities by Maritrans or its predecessors
since 1980.

Mr. Doherty is Vice President Corporate Projects and has been continuously
employed by Maritrans since 1997. Previously, Mr. Doherty was Director of
Business Development for Computer Command and Control Company where he had been
employed since April 1995.

Item 11. Executive Compensation*

Item 12. Security Ownership of Certain Beneficial Owners and Management*

Item 13. Certain Relationships and Related Transactions*

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

PART IV

Item 14. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES AND REPORTS ON FORM 8-K

Page
-----

(a) (1) Financial Statements

Report of Independent Auditors 17

Maritrans Inc. Consolidated Balance Sheets at December 31, 2000 and 1999 18

Maritrans Inc. Consolidated Statements of Income for the years ended
December 31, 2000, 1999 and 1998 19

Maritrans Inc. Consolidated Statements of Cash Flows for the years ended
December 31, 2000, 1999 and 1998 20

Maritrans Inc. Consolidated Statements of Stockholders' Equity for the years ended
December 31, 2000, 1999 and 1998 21

Notes to the Consolidated Financial Statements 22

(2) Financial Statement Schedules

Schedule II Maritrans Inc. Valuation Account for the years ended December 31, 2000,
1999 and 1998 40

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

(b) Reports on Form 8-K

No reports on Form 8-K were filed in the quarter ended December 31, 2000.

Exhibit Index Page
----------------------------------------------------------------------------------------------------- ------

3.1# Certificate of Incorporation of the Registrant, as amended.

3.2# By Laws of the Registrant, amended and restated February 9, 1999.

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

4.2 Shareholder Rights Agreement amended and restated February, 1999.

10.1* Amended and Restated Agreement of Limited Partnership of Maritrans Operating Partners L.P., dated as
of April 14, 1987 (Exhibit 3.2).

10.2+ Certificate of Limited Partnership of Maritrans Operating Partners L.P., dated January 29, 1987
(Exhibit 3.4).

10.3* Form of Maritrans Capital Corporation Note Purchase Agreement, dated as of March 15, 1987
(Exhibit 10.6).

10.3(a)* Indenture of Trust and Security Agreement, dated as of March 15, 1987 from Maritrans Operating
Partners L.P. and Maritrans Capital Corporation to The Wilmington Trust Company (Exhibit 10.6(a)).

10.3(b)* Form of First Preferred Ship Mortgage, dated April 14, 1987 from Maritrans Operating Partners L.P.,
mortgagor, to The Wilmington Trust Company, mortgagee (Exhibit 10.6(b)).

10.3(c)* Guaranty Agreement by Maritrans Operating Partners L.P. regarding $35,000,000 Series A Notes Due
April 1, 1997 and $80,000,000 Series B Notes Due April 1, 2007 of Maritrans Capital Corporation
(Exhibit 10.6(C)).

10.3(d)= Second Supplemental Indenture of Trust and Security Agreement, dated as of April 1, 1996 from
Maritrans Operating Partners L.P. and Maritrans Capital Corporation to Wilmington Trust Company, as
Trustee.

10.3(e)= Supplement To First Preferred Ship Mortgages, dated May 8, 1996 from Maritrans Operating Partners
L.P., Mortgagor, to Wilmington Trust Company, as Trustee, Mortgagee.

10.3(f) Third Supplemental Indenture of Trust and Security Agreement, dated as of December 1, 1999 from
Maritrans Operating Partners L.P. and Maritrans Capital Corporation to Wilmington Trust Company, as
Trustee.

10.4- Credit Agreement of October 17, 1997, by and among Maritrans Tankers Inc., Maritrans Inc., and
Mellon Bank, N.A. for a revolving credit facility up to $33,000,000 (Exhibit 10.2).

10.4(a)- Guaranty (Suretyship) Agreement of October 17, 1997, by Maritrans Inc. regarding up to $50,000,000 in
principal amount of credit accommodations to Maritrans Tankers Inc. by Mellon Bank, N.A. (Exhibit
10.1).

10.4(b)- Note of Maritrans Tankers Inc. to Mellon Bank, N.A., dated October 17, 1997 (Exhibit 10.3).

Exhibit Index Page
----------------------------------------------------------------------------------------------------- ------

10.4 (C)- First Preferred Ship Mortgage, dated October 17, 1997, by Maritrans Tankers Inc., mortgagor, to
Mellon Bank, N.A., mortgagee, on the vessel ALLEGIANCE (Exhibit 10.4).

10.4 (d)- First Preferred Ship Mortgage, dated October 17, 1997, by Maritrans Tankers Inc., mortgagor, to
Mellon Bank, N.A., mortgagee, on the vessel PERSEVERANCE (Exhibit 10.5).

10.4 (e)o Agreement of Sale dated October 11, 1999 between Maritrans Operating Partners L.P. and K-Sea
Transportation LLC Executive Compensation Plans and Arrangements

10.5 Severance and Non-Competition Agreement, as amended and restated effective June 30, 1999, between
Maritrans General Partner Inc. and Stephen M. Hackett.

10.6 Severance and Non-Competition Agreement, as amended and restated effective July 16, 1999, between
Maritrans General Partner Inc. and John J. Burns.

10.7 - Employment Agreement, dated October 5, 1993 between Maritrans General Partner Inc. and Stephen A. Van
Dyck (Exhibit 10.6).

10.9 Severance and Non-Competition Agreement, as amended and restated effective June 30, 1999, between
Maritrans General Partner Inc. and Janice M. Smallacombe.

10.10- Profit Sharing and Savings Plan of Maritrans Inc. as amended and restated effective November 1, 1993
(Exhibit 10.13).

10.11@ Executive Award Plan of Maritrans GP Inc. (Exhibit 10.31).

10.12@ Excess Benefit Plan of Maritrans GP Inc. as amended and restated effective January 1, 1988
(Exhibit 10.32).

10.13@ Retirement Plan of Maritrans GP Inc. as amended and restated effective January 1, 1989
(Exhibit 10.33).

10.14- Performance Unit Plan of Maritrans Inc. effective April 1, 1993 (Exhibit 10.17).

10.15& Executive Compensation Plan as amended and restated effective March 18, 1997.

10.16% 1999 Directors Equity and Key Employees Equity Compensation Plan

10.17 Severance and Non-Competition Agreement, as amended and restated effective December 1, 1998, between
Maritrans General Partner Inc. and Philip J. Doherty.

10.18 Severance and Non-Competition Agreement, as amended and restated effective Janu ary 7, 2000, between
Maritrans General Partner Inc. and Walter T. Bromfield.

21.1 Subsidiaries of Maritrans Inc.

23.1 Consent of Independent Auditors

* Incorporated by reference herein to the Exhibit number in parentheses filed
on March 24, 1988 with Amendment No. 1 to Maritrans Partners L. P. Form 10-K
Annual Report, dated March 3, 1988, for the fiscal year ended December 31,
1987.

+ Incorporated by reference herein to the Exhibit number in parentheses filed
with Maritrans Partners L. P. Form S-1 Registration Statement No. 33-11652
dated January 30, 1987 or Amendment No. 1 thereto dated March 20, 1987.

# Incorporated by reference herein to the Exhibit of the same number filed with
the Corporation's Post-Effective Amendment No. 1 to Form S-4 Registration
Statement No. 33-57378 dated January 26, 1993.

& Incorporated by reference herein to Exhibit A of the Registrant's definitive
Proxy Statement filed on March 31, 1997.

@ Incorporated by reference herein to the Exhibit number in parentheses filed
with Maritrans Partners L. P. Annual Report on Form 10-K, dated March 29,
1993 for the fiscal year ended December 31, 1992.

- Incorporated by reference herein to the Exhibit number in parentheses filed
with Maritrans Inc. Annual Report on Form 10-K, dated March 30, 1994 for the
fiscal year ended December 31, 1993.

= Incorporated by reference herein to the Exhibit of the same number filed with
Maritrans Inc. Annual Report on Form 10-K, dated March 31, 1997 for the
fiscal year ended December 31, 1996.

- Incorporated by reference herein to the Exhibit number in parentheses filed
with Maritrans Inc. quarterly report on Form 10-Q, dated November 12, 1997
for the quarter ended September 30, 1997.

" Incorporated by reference herein to the Exhibit number in parentheses filed
with Maritrans Inc. Annual Report on Form 10-K, dated March 30, 1998 for the
fiscal year ended December 31, 1997.

% Incorporated by reference herein to the Exhibit number in parentheses filed
with the Maritrans Inc. Form S-8 Registration Statement No. 333-79891 dated
June 3, 1999.

o Incorporated by reference herein to the Exhibit number in parentheses filed
with the Maritrans Inc. Form 8-K Current Report dated December 22, 1999.

SIGNATURES

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

MARITRANS INC.
(Registrant)
By: /s/ Stephen A. Van Dyck
-------------------------
Stephen A. Van Dyck
Chairman of the Board
Dated: March 14, 2001

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

By: /s/ Stephen A. Van Dyck Chairman of the Board and Dated: March 14, 2001
---------------------------- Chief Executive Officer
Stephen A. Van Dyck (Principal Executive Officer)

By: /s/ Dr. Robert E. Boni Lead Director Dated: March 14, 2001
----------------------------
Dr. Robert E. Boni

By: /s/ Dr. Craig E. Dorman Director Dated: March 14, 2001
----------------------------
Dr. Craig E. Dorman

By: /s/ Robert J. Lichtenstein Director Dated: March 14, 2001
----------------------------
Robert J. Lichtenstein

By: /s/ Brent A. Stienecker Director Dated: March 14, 2001
----------------------------
Brent A. Stienecker

By: /s/ H. William Brown Chief Financial Officer Dated: March 14, 2001
---------------------------- (Principal Financial Officer)
H. William Brown

By: /s/ Walter T. Bromfield Treasurer and Controller Dated: March 14, 2001
---------------------------- (Principal Accounting Officer)
Walter T. Bromfield

MARITRANS INC.
SCHEDULE II -- VALUATION ACCOUNT

($000)

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

JANUARY 1 TO DECEMBER 31, 1998
Allowance for doubtful accounts ......... $ 1,258 $ 129 $ -- $ 1,387
Accrued shipyard costs .................. $21,808 $ 15,795 $ 18,106(c) $19,497

JANUARY 1 TO DECEMBER 31, 1999
Allowance for doubtful accounts ......... $ 1,387 $ 237 $ 231(a) $ 1,393
Allowance for notes receivable .......... $ -- $ 4,500(b) $ -- $ 4,500
Accrued shipyard costs .................. $19,497 $ 17,170 $ 15,284(c) $17,403
3,980(d)
JANUARY 1 TO DECEMBER 31, 2000
Allowance for doubtful accounts ......... $ 1,393 $ 77 $ 254(a) $ 1,216
Allowance for notes receivable .......... $ 4,500 $ -- $ -- $ 4,500
Accrued shipyard costs .................. $17,403 $ 10,466 $ 7,942(c) $19,927

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

(b) Represents valuation recorded against the notes received during 1999 from
the sale of assets.

(d) Reflects reduction in reserve for shipyard accrual related to vessels sold
in 1999. Amount is included in the gain on asset sales discussed in Note 2
to the consolidated financial statements.