FORM 10-K/A
AMENDMENT No. 1
Date of Amendment: January 14, 2002
Date of Report Being Amended: March 26, 2001
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
/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
Commission file number 0-565
ALEXANDER & BALDWIN, INC.
(Exact name of registrant as specified in its charter)
HAWAII 99-0032630
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
822 BISHOP STREET
POST OFFICE BOX 3440, HONOLULU, HAWAII 96801
(Address of principal executive offices and zip code)
808-525-6611
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, WITHOUT PAR VALUE
(Title of Class)
NUMBER OF SHARES OF COMMON STOCK OUTSTANDING AT FEBRUARY 15, 2001:
40,545,220
AGGREGATE MARKET VALUE OF COMMON STOCK HELD BY NON-AFFILIATES AT FEBRUARY 15,
2001:
$1,068,959,024
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes 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 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. [x]
DOCUMENTS INCORPORATED BY REFERENCE
PORTIONS OF REGISTRANT'S PROXY STATEMENT DATED MARCH 12, 2001 (PART III OF FORM
10-K).
PORTIONS OF REGISTRANT'S ANNUAL REPORT TO SHAREHOLDERS FOR THE YEAR ENDED
DECEMBER 31, 2000 (PARTS I, II AND IV OF FORM 10-K).
EXPLANATORY NOTE:
This Form 10-K/A amends the Form 10-K filed by Alexander & Baldwin, Inc.
("Registrant") with the Securities and Exchange Commission for the year ended
December 31, 2000, to include the complete text of the first page (cover page)
of the Form 10-K. The Registrant has made no further changes to its Form 10-K
filed with the Securities and Exchange Commission on March 26, 2001 or to the
exhibits included with that Form 10-K.
TABLE OF CONTENTS
PART I
Page
----
Items 1. & 2. Business and Properties .............................. 1
A. Ocean Transportation ....................................... 2
(1) Freight Services ..................................... 2
(2) Vessels .............................................. 3
(3) Terminals ............................................ 3
(4) Other Services ....................................... 5
(5) Competition .......................................... 5
(6) Labor Relations ...................................... 7
(7) Rate Regulation ...................................... 7
B. Property Development and Management ........................ 7
(1) General .............................................. 7
(2) Planning and Zoning .................................. 8
(3) Residential Projects ................................. 9
(4) Commercial and Industrial Properties ................. 11
C. Food Products .............................................. 15
(1) Production ........................................... 15
(2) Marketing of Sugar and Coffee......................... 17
(3) Competition and Sugar Legislation .................... 18
(4) Properties and Water ................................. 20
D. Employees and Labor Relations .............................. 20
E. Energy ..................................................... 22
Item 3. Legal Proceedings .......................................... 23
Item 4. Submission of Matters to a Vote of
Security Holders ........................................... 23
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters ................................ 24
Item 6. Selected Financial Data .................................... 24
Item 7. Management's Discussion and Analysis
of Financial Condition and Results of
Operations ................................................. 24
Item 7A. Quantitative and Qualitative Disclosures
About Market Risk .......................................... 25
Item 8. Financial Statements and Supplementary Data ............... 26
Item 9. Changes in and Disagreements With
Accountants on Accounting and Financial
Disclosure ................................................ 26
PART III
Item 10. Directors and Executive Officers of
the Registrant ............................................ 26
A. Directors ............................................... 26
B. Executive Officers of the Registrant ....................... 27
Item 11. Executive Compensation .................................... 28
Item 12. Security Ownership of Certain Beneficial
Owners and Management ..................................... 29
Item 13. Certain Relationships and Related
Transactions ..............................................29
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K ................................... 29
A. Financial Statements ....................................... 29
B. Financial Statement Schedules .............................. 29
C. Exhibits Required by Item 601 of
Regulation S-K ............................................. 30
D. Reports on Form 8-K ........................................ 38
Signatures ....................................................... 39
Independent Auditors' Report ........................................ 41
Schedule I ....................................................... 42
Independent Auditors' Consent ....................................... 47
ALEXANDER & BALDWIN, INC.
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FORM 10-K
---------
ANNUAL REPORT FOR THE FISCAL YEAR
ENDED DECEMBER 31, 2000
PART I
------
ITEMS 1 AND 2. BUSINESS AND PROPERTIES
- ---------------------------------------
Alexander & Baldwin, Inc. ("A&B") is a diversified corporation with most
of its operations centered in Hawaii. It was founded in 1870 and incorporated
in 1900. Ocean transportation operations and related shoreside operations of
A&B are conducted by a wholly-owned subsidiary, Matson Navigation Company, Inc.
("Matson"), and several Matson subsidiaries. Real property and food products
operations are conducted by A&B and certain other wholly-owned subsidiaries of
A&B.
The industry segments of A&B are as follows:
A. Ocean Transportation - carrying freight, primarily between various
--------------------
ports on the United States Pacific Coast and major Hawaii ports and
Guam; chartering vessels to third parties; providing terminal,
stevedoring, tugboat and container equipment maintenance services in
Hawaii; arranging intermodal transportation in North America; and
providing supply and distribution services.
B. Property Development and Management - purchasing, developing,
-----------------------------------
selling, managing and leasing retail, office, industrial, commercial
and residential properties, in Hawaii and on the U.S. Mainland.
C. Food Products - growing sugar cane and coffee in Hawaii; producing
-------------
bulk raw sugar, specialty food-grade sugars, molasses and green
coffee; marketing and distributing roasted coffee and green coffee;
providing sugar and molasses hauling and storage, general freight and
petroleum hauling in Hawaii; generating and selling electricity; and
producing composite panel board from sugar cane fiber.
For information about the revenue, operating profits and identifiable
assets of A&B's industry segments for the three years ended December 31, 2000,
see "Industry Segment Information" on page 26 of the Alexander & Baldwin, Inc.
2000 Annual Report to Shareholders ("2000 Annual Report"), which information is
incorporated herein by reference.
DESCRIPTION OF BUSINESS AND PROPERTIES
A. OCEAN TRANSPORTATION
--------------------
(1) FREIGHT SERVICES
----------------
Matson's Hawaii Service offers containership freight services
between the ports of Los Angeles, Oakland, Seattle, and the major ports in
Hawaii, which are located on the islands of Oahu, Kauai, Maui and Hawaii.
Roll-on/roll-off service is provided between California and the major ports in
Hawaii. Container cargo also is received at and delivered to Portland, Oregon,
and moved overland between Portland and Seattle at no extra charge.
Matson is the principal carrier of ocean cargo between the
United States Pacific Coast and Hawaii. In 2000, a fiscal year which for
Matson consisted of 52 weeks, Matson carried 151,496 containers (compared with
151,215 in 1999, which consisted of 53 weeks) and 132,186 motor vehicles
(compared with 101,095 in 1999) between those destinations. In response to the
strengthening Hawaii economy and an increase in demand, Matson added a seventh
vessel to its Hawaii Service in May 2000 and an eighth vessel in October 2000,
and increased the frequency of service. Principal westbound cargoes carried by
Matson to Hawaii include dry containers of mixed commodities, refrigerated
cargoes, packaged foods, building materials and motor vehicles. Principal
eastbound cargoes carried by Matson from Hawaii include household goods, canned
pineapple, refrigerated containers of fresh pineapple, motor vehicles and
molasses. The preponderance of Matson's Hawaii Service revenue is derived from
the westbound carriage of containerized freight and motor vehicles.
Matson's Guam Service provides containership freight service
between the United States Pacific Coast and Guam and Micronesia. Matson's Guam
Service is a component of the Pacific Alliance Service, a strategic alliance
established in 1996 by Matson and American President Lines, Ltd. ("APL") to
provide freight service between the United States Pacific Coast and Hawaii,
Guam, and several Far East ports. In 2000, Matson carried 18,165 containers
(compared with 17,614 in 1999) and 2,616 automobiles (compared with 2,215 in
1999) in the Guam Service. The alliance currently utilizes five vessels (three
Matson vessels and two APL vessels) in a schedule which provides service from
the United States Pacific Coast to Guam and Micronesia, continuing through Far
East ports, and returning to California.
Through October 2000, Matson's Pacific Coast Service provided
containership freight service between Los Angeles, Oakland, Seattle, and
Vancouver, Canada. Beginning in November, that service was succeeded by the
Pacific Coast Express, a twice-weekly rail and truck service between Los
Angeles and Seattle operated by Matson Intermodal System, Inc. ("Matson
Intermodal"), a wholly-owned subsidiary of Matson, and weekly containership
service between Seattle and Oakland. In 2000, Matson carried 22,842 containers
in the Pacific Coast Service (compared with 33,676 in 1999) and transported
2,678 containers in the Pacific Coast Express.
Matson's Mid-Pacific Service offers container and conventional
freight service between the United States Pacific Coast and the ports of
Kwajalein, Ebeye and Majuro in the Republic of the Marshall Islands and
Johnston Island, all via Honolulu.
See "Rate Regulation" below with respect to Matson's freight
rates.
(2) VESSELS
-------
Matson's cargo fleet consists of eleven containerships, four
combination container/trailerships, one roll-on/roll-off barge, two container
barges equipped with cranes which serve the neighbor islands of Hawaii and one
container barge equipped with cranes in the Mid-Pacific Service. Currently,
three containerships are time-chartered to APL in connection with the Pacific
Alliance Service, and two container/trailerships are bareboat-chartered to Sea
Star Line, LLC, which operates the vessels in the Florida-Puerto Rico trade.
These nineteen vessels represent an investment of approximately $770,352,000
expended over the past 30 years. The majority of vessels in the Matson cargo
fleet have been acquired with the assistance of withdrawals from a Capital
Construction Fund established under Section 607 of the Merchant Marine Act,
1936, as amended.
Matson's fleet units are described on the list on the
following page.
As a complement to its fleet, Matson owns approximately
15,900 containers, 9,900 container chassis, 535 auto-frames and miscellaneous
other equipment. Capital expenditures by Matson in 2000 for vessels, equipment
and systems totaled approximately $36,800,000.
(3) TERMINALS
---------
Matson Terminals, Inc. ("Matson Terminals"), a wholly-owned
subsidiary of Matson, provides container stevedoring, container equipment
maintenance and other terminal services for Matson and other ocean carriers at
its 108-acre marine terminal in Honolulu. Matson Terminals owns and operates
seven cranes at the terminal, which handled 402,500 containers in 2000
(compared with 373,048 in 1999), and can accommodate three vessels at one time.
Matson Terminals' lease with the State of Hawaii runs through September 2016.
In 2000, planning was finalized for a $32 million terminal improvements project
that will include converting the Honolulu marine terminal from a straddle
carrier-based container handling system to a chassis-based system. The project
is expected to be completed substantially during 2001.
SSA Terminals, LLC ("SSAT"), a joint venture formed by Matson
and Stevedoring Services of America ("SSA") in July 1999, provides terminal and
stevedoring services at West Coast terminal facilities in Los Angeles, Long
Beach, Oakland and Seattle.
Capital expenditures incurred by Matson Terminals for
terminals and equipment totaled approximately $1,500,000 in 2000.
MATSON NAVIGATION COMPANY, INC.
-------------------------------
FLEET - 3/1/01
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Usable Cargo Capacity
-----------------------------------------------------------
Containers Vehicles Molasses
Year Maximum Maximum ------------------------------- -------------- --------
Official Year Recon- Speed Deadweight Reefer
Vessel Name Number Built structed Length (Knots) (Long Tons) 20' 24' 40' Slots TEUs (1) Autos Trailers Short Tons
- -----------------------------------------------------------------------------------------------------------------------------------
Diesel-Powered Ships
- --------------------
R.J. PFEIFFER 979814 1992 713'6" 23.0 27,100 48 171 988 300 2,229 -- -- --
MOKIHANA (2) 655397 1983 860'2" 23.0 30,167 182 0 1,340 408 2,824 -- -- --
MAHIMAHI (2) 653424 1982 860'2" 23.0 30,167 182 0 1,340 408 2,824 -- -- --
MANOA (2) 651627 1982 860'2" 23.0 30,187 182 0 1,340 408 2,824 -- -- --
Steam-Powered Ships
- -------------------
KAUAI 621042 1980 1994 720'5-1/2" 22.5 26,308 -- 458 538 300 1,626 44 -- 2,600
MAUI 591709 1978 1993 720'5-1/2" 22.5 26,623 -- 458 538 300 1,626 -- -- 2,600
EL YUNQUE (3) 573223 1976 1990 790'9" 21.5 14,551 48 -- 420 168 960 323 112 --
EL MORRO (3) 557149 1974 1990 790'9" 21.5 14,976 48 -- 420 168 960 323 110 --
MATSONIA 553090 1973 1987 760'0" 21.5 22,501 16 128 771 285 1,712 450 56 4,300
LURLINE 549900 1973 1982 826'6" 21.5 22,213 6 162 713 292 1,379 220 81 2,100
EWA (4) 530140 1972 1978 787'8" 21.0 38,747 286 276 681 228 1,979 -- -- --
CHIEF GADAO 530138 1971 1978 787'8" 21.0 37,346 230 464 597 274 1,981 -- -- --
LIHUE 530137 1971 1978 787'8" 21.0 38,656 286 276 681 188 1,979 -- -- --
MANULANI 528400 1970 720'5-1/2" 22.5 27,109 26 160 659 216 1,536 -- -- 5,300
MANUKAI (4) 524219 1970 720'5-1/2" 22.5 27,107 -- 537 416 251 1,476 -- -- 5,300
Tugs and Barges
- ---------------
WAIALEALE (5) 978516 1991 345'0" -- 5,621 -- -- -- 35 -- 230 45 --
ISLANDER (6) 933804 1988 372'0" -- 6,837 -- 276 24 70 380 -- -- --
MAUNA LOA (6) 676973 1984 350'0" -- 4,658 -- 144 72 84 316 -- -- 2,100
HALEAKALA (6) 676972 1984 350'0" -- 4,658 -- 144 72 84 316 -- -- 2,100
MAOI (7) 618705 1980 75'0" 10.0 --
JOE SEVIER (7) 500799 1965 80'0" 10.0 --
- ------------------------------------------------------
(1) "Twenty-foot Equivalent Units" (including trailers). TEU is a standard measure of cargo volume correlated to the volume of a
standard 20-foot dry cargo container.
(2) Time-chartered to APL until February 2006.
(3) Formerly Kaimoku and Kainalu. Bareboat-chartered to Sea Star Line, LLC until 2005 and 2006, respectively.
(4) Reserve Status
(5) Roll-on/Roll-off Barge
(6) Container Barge
(7) Tug
(4) OTHER SERVICES
--------------
Matson Intermodal is an intermodal marketing company which
arranges North American rail and truck transportation for shippers and
carriers, frequently in conjunction with ocean transportation. Through volume
purchases of rail and motor carrier transportation services, augmented by such
services as shipment tracing and single-vendor invoicing, Matson Intermodal is
able to reduce transportation costs for customers. Matson Intermodal currently
has 28 offices and manages 30 equipment depots across the United States
Mainland.
Matson Services Company, Inc. ("Matson Services"), a
wholly-owned subsidiary of Matson, owns two tugboats, which are employed in
Hawaiian waters under operating agreements with various vessel operators or
their agents to provide harbor assistance to vessels calling at the islands of
Hawaii and Maui.
Matson Logistics Solutions, Inc. ("Matson Logistics"), a
wholly-owned subsidiary of Matson, provides supply and distribution services to
Matson customers and others.
(5) COMPETITION
-----------
Matson's Hawaii and Guam Services have one major
containership competitor which serves Long Beach, Oakland, Tacoma, Honolulu and
Guam.
Other competitors in the Hawaii Service include two common
carrier barge services, unregulated proprietary and contract carriers of bulk
cargoes and air cargo services. Although air freight competition is intense
for time-sensitive or perishable cargoes, historic and projected inroads of
such competition in cargo volume are limited by the amount of cargo space
available in passenger aircraft and by generally higher air freight rates.
Competitors in the Pacific Coast Express include other truck, rail and ocean
carrier services.
Matson vessels are operated on schedules which make available
to shippers and consignees regular day-of-the-week sailings from the United
States Pacific Coast and day-of-the-week arrivals in Hawaii. Under its current
schedule, Matson operates 208 Hawaii round-trip voyages per year, 60 percent
more than its closest competitor, and arranges additional voyages when cargo
volumes require additional capacity. This service is attractive to customers
because it decreases their overall distribution costs. In addition, Matson
competes by offering more comprehensive service to customers, supported by its
scope of equipment and its efficiency and experience in the handling of
containerized cargoes, and by competitive pricing.
The carriage of cargo between the United States Pacific Coast
and Hawaii on foreign-built or foreign-documented vessels is prohibited by
Section 27 of the Merchant Marine Act, 1920, frequently referred to as the
Jones Act. However, foreign-flag vessels carrying cargo to Hawaii from foreign
sources provide indirect competition for Matson's container freight service
between the United States Pacific Coast and Hawaii. Far East countries,
Australia and New Zealand have direct foreign-flag services to Hawaii.
In response to coordinated efforts by various interests to
convince Congress to repeal the Jones Act, Matson joined other businesses and
organizations in 1995 to form the Maritime Cabotage Task Force, which supports
the retention of the Jones Act and other cabotage laws. Repeal of the Jones
Act would allow all foreign-flag vessel operators, which do not have to abide
by U.S. laws and regulations, to sail between American ports in direct
competition with Matson and other U.S. operators which must comply with such
laws and regulations. The Task Force seeks to inform elected officials and the
public about the economic, national security, commercial, safety and
environmental benefits of the Jones Act and similar cabotage laws.
Matson Intermodal competes for freight with a number of large
and small companies engaged in intermodal transportation. Matson Services
competes with several larger operators of tugboats in Hawaiian waters. Matson
Logistics competes with many larger providers of logistics services and with
transportation companies whose services include logistics.
(6) LABOR RELATIONS
---------------
The absence of strikes and the availability of labor through
hiring halls are important to the maintenance of profitable operations by
Matson. Matson's operations have not been disrupted significantly by strikes
in the past 29 years. See "Employees and Labor Relations" below for a
description of labor agreements and certain unfunded liabilities for multi-
employer pension plans to which Matson and Matson Terminals contribute.
(7) RATE REGULATION
---------------
Matson is subject to the jurisdiction of the Surface
Transportation Board with respect to its domestic rates. A rate in the
noncontiguous domestic trade is presumed reasonable and will not be subject to
investigation if the aggregate of increases and decreases is not more than 7.5
percent above, or more than 10 percent below, the rate in effect one year
before the effective date of the proposed rate. Matson filed a 3.9 percent
across-the-board increase in its Hawaii Service shipping rates, which became
effective on February 14, 2000. Also in 2000, substantial increases in bunker
fuel costs required Matson on three occasions to file increases in the fuel
surcharge, which rose from 1.75 percent at the beginning of 2000 to 4.25
percent at the end of 2000. A 3.5 percent across-the-board increase in the
Hawaii Service became effective on February 14, 2001.
B. PROPERTY DEVELOPMENT AND MANAGEMENT
-----------------------------------
(1) GENERAL
-------
A&B and its subsidiaries own approximately 91,100 acres of
land, consisting of approximately 90,800 acres in Hawaii and approximately 300
acres elsewhere, as follows:
LOCATION NO. OF ACRES
-------- ------------
Oahu ................................... 38
Maui ................................... 68,898
Kauai .................................. 21,898
California ............................. 121
Texas .................................. 66
Washington ............................. 13
Arizona ................................ 28
Nevada ................................. 19
Colorado ............................... 10
------
TOTAL ................................ 91,091
======
As described more fully in the table below, the bulk of this acreage currently
is used for agricultural and related activities, and includes pasture land
leased to ranchers, watershed and conservation reserves. The balance is used
or planned for development or other urban uses. An additional 3,403 acres on
Maui and Kauai are leased from third parties.
CURRENT USE NO. OF ACRES
----------- ------------
HAWAII
Fully-entitled urban (defined below) ............... 1,292
Agricultural, pasture and
miscellaneous .................................... 60,195
Watershed land/conservation ........................ 29,347
U.S. MAINLAND
Fully-entitled urban ............................... 247
Agriculture, pasture and
miscellaneous .................................... 10
------
TOTAL .......................................... 91,091
======
A&B and its subsidiaries are actively involved in the entire
spectrum of land development, including planning, zoning, financing,
constructing, purchasing, managing and leasing, and selling and exchanging real
property.
(2) PLANNING AND ZONING
-------------------
The entitlement process for development of property in Hawaii
is both time-consuming and costly, involving numerous State and County
regulatory approvals. For example, conversion of an agriculturally-zoned
parcel to residential zoning usually requires the following approvals:
- amendment of the County general plan to reflect the desired residential
use;
- approval by the State Land Use Commission to reclassify the parcel from
the "Agricultural" district to the "Urban" district;
- County approval to rezone the property to the precise residential use
desired; and,
- if the parcel is located in the Special Management Area, the granting of
a Special Management Area permit by the County.
The entitlement process is complicated by the conditions, restrictions and
exactions that are placed on these approvals, including, among others, the
construction of infrastructure improvements, payment of impact fees, restric-
tions on the permitted uses of the land, provision of affordable housing,
and/or mandatory fee sale of portions of the project.
A&B actively works with regulatory agencies, commissions and
legislative bodies at various levels of government to obtain zoning
reclassification of land to its highest and best use. A&B designates a parcel
as "fully-entitled" or "fully-zoned" when all necessary government land use
approvals have been obtained.
As described in more detail below, in 2000, work to obtain
entitlements for urban use focused on (i) obtaining Community Plan designations
for various A&B lands on Maui, and (ii) obtaining County entitlements for a
proposed single-family subdivision on Maui. The Community Plans serve to guide
planning and development activity on Maui. A&B has obtained and continues to
seek various urban designations for its undeveloped lands within the four Com-
munity Plans where most of its Maui lands are located.
(3) RESIDENTIAL PROJECTS
--------------------
A&B is pursuing a number of residential projects in Hawaii,
including:
(a) KUKUI'ULA. Kukui'Ula is a 1,045-acre master planned
---------
resort residential community located in Poipu, Kauai. Approximately 837 acres
are fully entitled for up to 900 hotel and vacation ownership (timeshare)
units, 3,000 residential units, a golf course, and commercial uses. The
balance of the project is partially entitled and planned for up to 750
residential units. During 2000, A&B, through its subsidiary, Kukui'ula
Development Company, Inc. ("KDC"), engaged in a number of development
activities intended to position the project for resort development and for
securing bulk buyers and joint venture partners.
In December 2000, KDC received tentative approval from the
County of Kauai for the large lot subdivision of the project. Final sub-
division approval, which will enable KDC to convey fee simple title to these
land areas to a joint venture or bulk buyer, is anticipated in the second
quarter of 2001. Also in December, State permits were obtained to implement
the initial phase of beach improvements. The result is a larger and more
attractive beach that will be a crucial amenity to the Kukui'Ula resort
community.
Discussions with potential joint venture partners, as well as
hotel, timeshare and golf course developers, have been held and are ongoing.
Other activities include updating the project's overall water master plan and
identifying short-term and long-term water sources, preparing preliminary
phasing plans and construction cost estimates, analyzing infrastructure
requirements, and addressing various zoning requirements.
Sales of lots at Koloa Estates, Kukui'Ula's initial
residential project, continued in 2000. Koloa Estates features 32 large lots
of at least one-half acre in size, underground utilities and common area
landscaping. Over half the lots have been purchased by U.S. Mainland buyers,
including second home buyers and retirees. As of March 1, 2001, 24 lots have
been sold and 7 lots are in escrow. Plans are under way to obtain necessary
governmental permits for the next residential phase at Kukui'Ula.
(b) THE VINTAGE AT KAANAPALI. In October 1999, the Company
------------------------
acquired 17 acres in the Kaanapali Golf Estates project in Kaanapali, Maui.
This land, which is surrounded by the Kaanapali South Golf Course, is being
developed as 73 detached single-family homes under a condominium regime. Home
construction began in February 2000, and all homes are either completed or
currently under construction. As of March 1, 13 of the 73 units had been sold
and 59 units were in escrow. The average sales price of the homes sold or in
escrow is $590,000. The project is expected to be completed and sold out in
the fourth quarter of 2001.
(c) THE SUMMIT AT KAANAPALI. In January 2000, the Company
-----------------------
acquired an additional 17 acres in the Kaanapali Golf Estates project. This
land is intended to be developed into 55 single-family homes or house lots.
Construction of site improvements commenced in October 2000, with the first
unit closings anticipated in the fourth quarter of 2001. Forty-one non-binding
reservations have been received to date for the 17 homes in Increment I.
Prices for homes in this project are expected to average about $850,000.
(d) KAHULUI IKENA. In 2000, the final seven apartments in
-------------
the 102 unit Kahului Ikena condominium project on Maui were sold. The
development of this central Kahului project began in 1994.
(e) OTHER MAUI SUBDIVISIONS. Progress was made in 2000 on
-----------------------
the development of the 37-lot Maunaolu agricultural subdivision (minimum two-
acre-sized lots), located in Haliimaile. The County of Maui has approved the
construction and subdivision plans for the project, but development continues
to be delayed, due to lack of available water sources for the region in which
the subdivision is located.
In addition, A&B continues to seek entitlements for two
single-family subdivisions on Maui: (i) an approximately 200-unit subdivision
on 67 acres in Haliimaile, and (ii) an approximately 400-unit subdivision on
210 acres in Spreckelsville, which includes the possible expansion of the
nearby nine-hole Maui Country Club golf course into an 18-hole course. In July
2000, the Maui County Council's Zoning Committee held a public hearing on the
zoning application for the Haliimaile project, which the Maui County Planning
Commission had recommended for approval in 1999. Although general approval was
expressed for the project, issues relating to water availability and traffic
need to be addressed. A final decision by the Maui County Council is
anticipated in 2001. Also in 2000, "residential" designation for the
Spreckelsville project was sought from the Maui County Council as part of its
ten-year update of the Wailuku-Kahului Community Plan. However, community
opposition has arisen over traffic and other project impact concerns. Final
action by the Maui County Council on this project also is anticipated in 2001.
(4) COMMERCIAL AND INDUSTRIAL PROPERTIES
------------------------------------
An important source of property revenue is the lease rental
income A&B and its subsidiaries receive from nearly 5.2 million leasable square
feet of industrial and commercial building space, ground leases on 271 acres
for commercial/industrial use, and leases on 11,776 acres for agricultural/
pasture use.
(a) HAWAII COMMERCIAL/INDUSTRIAL PROPERTIES
---------------------------------------
In Hawaii, most of the approximately 1.3 million square feet
of income-producing commercial and industrial properties owned by A&B and its
subsidiaries are located in the central Kahului/Wailuku area of Maui and in
central Oahu. They consist primarily of two shopping centers and eight office
buildings, as well as several improved commercial and industrial properties.
The average occupancy for A&B's Hawaii improved commercial properties increased
to 86% in 2000, from 81% in 1999. The improvement was due primarily to
increased tenancies in the Company's Maui properties.
In June 2000, the Judd Building, a five-story office building
located in downtown Honolulu, was acquired through a tax-deferred exchange
under Section 1031 of the Internal Revenue Code, as amended ("IRC"). The Judd
Building contains 20,200 square feet of space and is currently 78% occupied.
The Pacific Guardian Tower, an eighteen-story office
building, containing 124,000 square feet of leasable area, was acquired in
February 2001, as part of an IRC Section 1031 exchange. Acquired with the
Pacific Guardian Tower was an adjacent 13,000-square-foot commercial building.
These properties, situated immediately across the Ala Moana Shopping Center in
Honolulu, were 98% occupied at the time of acquisition.
The primary Hawaii commercial/industrial properties are as
follows:
LEASABLE AREA
PROPERTY LOCATION TYPE (square ft.)
-------- -------- ---- -------------
Maui Mall Kahului,Maui Retail 190,200
Pacific Guardian Tower Honolulu, Oahu Office 124,000
P&L Warehouse Kahului, Maui Warehouse 104,100
Kahului Shopping Kahului, Maui Retail 99,700
Center
Ocean View Center Honolulu, Oahu Office 99,200
One Main Plaza Wailuku, Maui Office 85,300
Hawaii Business Park Pearl City, Oahu Warehouse 85,200
Haseko Center Honolulu, Oahu Office 84,100
Wakea Business Center Kahului, Maui Warehouse/Retail 61,500
Kahului Office Kahului, Maui Office 53,900
Building
Kahului Office Kahului, Maui Office 29,800
Center
Stangenwald Building Honolulu, Oahu Office 28,200
Apex Building Kahului, Maui Retail 28,000
Judd Building Honolulu, Oahu Office 20,200
In addition to the above-described properties, a number of
other commercial and industrial projects are being developed on Maui, Oahu and
Kauai, including:
(i) TRIANGLE SQUARE. Development and marketing
---------------
efforts are continuing for this 10.6-acre, light industrial zoned, commercial
subdivision in Kahului, Maui. The 28,000-square-foot Apex Building is 100%
occupied by retail users. Construction commenced in October 2000 on a 15,000-
square-foot, multi-tenant commercial center and a 6,200-square-foot automobile
dealership. Both buildings are projected to be completed in the third quarter
of 2001. A lease was secured in August 2000 with a national restaurant chain
for 4,500 square feet in the commercial center, with negotiations under way
with prospective tenants for the remaining space. Four lots remain available
for ground leases and commercial development.
(ii) PORT ALLEN. A long-term master plan for the
----------
development of 80 acres in Port Allen, Kauai was completed in August 1999.
Permitting and marketing efforts began in May 2000 for the first three projects
to be developed under this plan. County zoning and special management area
permits were secured in the second half of 2000 to build a proposed 32,000-
square-foot multi-tenant commercial center on 1.7 acres, a 29,700-square-foot
warehouse complex on 2.5 acres, and a 10,500-square-foot restaurant/retail
facility on 1.9 acres. Construction of the first of these projects is expected
to begin in mid-2001.
(iii) MAUI BUSINESS PARK. The Maui Business Park
------------------
development consists of a planned total of approximately 250 acres, and is
expected to be developed in four phases over a 20-year horizon. The initial
phase (Phase I) of Maui Business Park was developed in two subphases: Phase
IA, completed in 1995, consists of 37.4 saleable acres, and Phase IB,
substantially completed in November 2000, consists of 32.0 saleable acres.
The Maui Marketplace retail center, owned by a third
party, occupies 20.3 acres of Phase IA and includes such anchor tenants as
Lowe's Home Improvement Warehouse, Office Max, Sports Authority, Old Navy and
Border's Books and Music. The remaining area consists of 30 lots with an
average size of 22,900 square feet, of which 15 lots (8.3 saleable acres)
remain available for sale or lease.
In August 2000, Home Depot purchased 12.8 acres in
Phase IB and began construction of a 135,000-square-foot store, which is
scheduled to open in May 2001. In February 2001, Wal-Mart purchased 14.0 acres
and began construction of a 149,000-square-foot store, which is scheduled to
open by the end of 2001. The remaining 5.2 saleable acres were subdivided in
June 2000 into ten lots with an average size of 22,800 square feet, and are
being marketed for sale or lease.
(iv) MILL TOWN CENTER. The Mill Town Center, located
----------------
in Waipahu, Oahu, near Honolulu, is a light-industrial subdivision consisting
of 27.5 saleable acres. The project is being developed in two phases: Phase
IA (10.2 saleable acres) consists of 23 lots with an average size of 19,200
square feet, and Phase IB (17.3 saleable acres) is planned to consist of 40
lots with an average size of 18,800 square feet.
Construction of infrastructure improvements for Phase
IA was completed in June 1999. In 2000, 4 lots were sold to commercial and
industrial businesses. Twelve lots (4.4 saleable acres) remain available for
sale or lease. Construction of infrastructure improvements for Phase IB is
scheduled to commence in the first quarter of 2001 and is expected to be
completed by the end of 2001. The Phase IB lots may be consolidated to accom-
modate larger users. Sales activity is expected to start in mid-2001.
(v) KAHULUI AIRPORT HOTEL. Entitlement applications
---------------------
were filed in January 2001 for a proposed 140-room hotel near the Kahului
Airport on Maui. The hotel is expected to service primarily business travelers
and local residents, and a management agreement has been signed with Marriott
International for the operation of the hotel under the Courtyard by Marriott
brand. The project requires Community Plan, zoning and special management area
approvals from the County of Maui before development can proceed.
(vi) FAIRWAY SHOPS AT KAANAPALI. Construction began
--------------------------
in December 2000 on a 35,000-square-foot retail center in Kaanapali, Maui,
along Kaanapali's main corridor, Honoapiilani Highway. The center is located
on a 3.2-acre leasehold parcel acquired by A&B in August 2000, and is expected
to be completed in the fourth quarter of 2001.
(b) U.S. MAINLAND COMMERCIAL/INDUSTRIAL PROPERTIES
----------------------------------------------
On the U.S. Mainland, A&B and its subsidiaries own a
portfolio of commercial and industrial properties, acquired primarily by way of
tax-deferred exchanges under Section 1031 of the IRC, comprising a total of
approximately 3.9 million square feet of leasable area, as follows:
LEASABLE AREA
PROPERTY LOCATION TYPE (square ft.)
-------- -------- ---- -------------
Ontario Distribution Ontario, CA Warehouse/ 895,500
Center Industrial
Great Southwest Dallas, TX Industrial 842,900
Industrial
Ontario-Pacific Ontario, CA Warehouse/ 246,700
Business Centre Industrial
Valley Freeway Kent, WA Industrial 229,100
Corporate Park
Airport Square Reno, NV Retail 170,800
2868 Prospect Park Sacramento, CA Office 162,200
San Pedro Plaza San Antonio, TX Office 161,400
Day Creek Industrial Ontario, CA Warehouse/ 147,300
Industrial
Arbor Park San Antonio, TX Retail 139,600
Moulton Plaza Laguna Hills, CA Retail 134,000
Mesa South Center Phoenix, AZ Retail 133,600
San Jose Avenue City of Industrial 126,000
Warehouse Industry, CA
Southbank II Phoenix, AZ Office 120,800
Village at Indian Wells, CA Retail 104,600
Indian Wells
2450 Venture Oaks Sacramento, CA Office 98,100
Northwest Business San Antonio, TX Service Center/ 87,000
Center Warehouse
Wilshire Center Greeley, CO Retail 46,700
Market Square Greeley, CO Retail 43,300
TOTAL: 3,889,600
In August 2000, A&B acquired the Ontario Distribution Center
warehouse facility located in Ontario, CA, as part of an IRC Section 1031
exchange. This three-building warehouse complex is fully leased to five
tenants. In January 2001, A&B sold its Bainbridge Property portfolio located
on Bainbridge Island, WA, comprised of two retail properties and one office
property, having a total leasable area of 114,600 square feet.
Major leases signed in 2000 included a lease for 480,000
square feet in the Ontario Distribution Center, four leases having a total area
of 73,900 square feet at the 2868 Prospect Park office building, three leases
having a total area of 86,300 square feet in the Great Southwest Industrial
portfolio, and a lease for a 45,000-square-foot space at Mesa South Center
shopping center.
A&B's Mainland commercial properties continued their strong
performance in 2000, achieving an average occupancy rate of 96%, as compared to
the 1999 average of 94%. The increase resulted from the leasing of several
large warehouse spaces in Dallas, TX, strong office leasing in the Sacramento,
CA properties, and the addition of new properties with high occupancy rates.
C. FOOD PRODUCTS
-------------
(1) PRODUCTION
----------
A&B has been engaged in activities relating to the production
of cane sugar and molasses in Hawaii since 1870, and production of coffee in
Hawaii since 1987. A&B's current food products operations consist of a sugar
plantation on the island of Maui, operated by its Hawaiian Commercial & Sugar
Company ("HC&S") division, and a coffee farm on the island of Kauai, operated
by its Kauai Coffee Company, Inc. ("Kauai Coffee") subsidiary.
HC&S is Hawaii's largest producer of raw sugar, producing
210,269 tons of raw sugar in 2000, or 70% of the raw sugar produced in Hawaii,
compared with 227,832 tons of raw sugar in 1999. Total Hawaii sugar
production, in turn, amounted to approximately four percent of total United
States sugar production. HC&S harvested 17,266 acres of sugar cane in 2000,
compared with 17,278 acres in 1999. Yields averaged 12.2 tons of sugar per
acre in 2000, compared with 13.2 tons per acre in 1999. The decrease reflects
the negative impact of a two-year drought on Maui. The average cost per ton of
sugar produced at HC&S was $331 in 2000, compared with $360 in 1999. The
decrease in cost per ton is primarily attributable to lower operating costs.
As a by-product of sugar production, HC&S also produced 70,551 tons of molasses
in 2000, compared with 92,246 tons in 1999. The decrease in molasses
production is attributable to improved sugar recovery. In response to the
drought-reduced yields and historically-low raw sugar prices, in September
2000, HC&S closed one of its two sugar mills and consolidated all processing
at the remaining mill. Neither the number of acres in sugar cane nor the total
sugar production is expected to be affected by such action.
In 2000, 5,626 tons of HC&S's raw sugar were produced as
specialty food-grade raw sugars and sold under HC&S's "Maui Brand" trademark.
A $2.4 million expansion of the production facilities for these sugars was
completed in February 2001.
During 2000, Kauai Coffee had approximately 3,400 acres of
coffee trees under cultivation. The harvest of the 2000 coffee crop yielded
approximately 2.8 million pounds of green coffee, compared with 4.6 million
pounds in 1999. Although the size of the 2000 harvest was unusually low, due
to, among other reasons, lack of rainfall and the cyclicality of coffee yields,
the quality of the mix was the best since Kauai Coffee's inception, with two-
thirds of the coffee beans in specialty grades.
In October 2000, work was completed on a $10 million
facility, located near HC&S's sugar mill, that is expected to produce
approximately 15 million square feet a year of a premium composite panel
board. The panel board will be produced from bagasse (sugar cane fiber),
and will be a strong, light, moisture-resistant and environmentally-friendly
substitute for conventional particle board and medium density fiberboard in a
variety of applications. The plant, which is operated by Hawaiian DuraGreen,
Inc., a subsidiary of A&B, started test production in December 2000, and
shipment of test product commenced in February 2001.
HC&S and McBryde Sugar Company, Limited ("McBryde"), the
parent company of Kauai Coffee, produce electricity for internal use and for
sale to the local electric utility companies. HC&S's power is produced by
burning bagasse, by hydroelectric power generation and, when necessary, by
burning fossil fuels, whereas McBryde produces power solely by hydroelectric
generation. The price for the power sold by HC&S and McBryde is equal to the
utility companies' "avoided cost" of not producing such power themselves. In
addition, HC&S receives a capacity payment to provide a guaranteed power
generation capacity to the local utility. (See "Energy" below.)
Kahului Trucking & Storage, Inc., a subsidiary of A&B,
provides sugar and molasses hauling and storage, petroleum hauling, mobile
equipment maintenance and repair services, and self-service storage facilities
on Maui. Kauai Commercial Company, Incorporated, another subsidiary of A&B,
provides similar services on Kauai, as well as general trucking services.
(2) MARKETING OF SUGAR AND COFFEE
-----------------------------
Substantially all of the raw sugar produced in Hawaii is
purchased, refined and marketed by C&H Sugar Company, Inc. ("C&H"), of which
A&B owns a 36 percent common stock interest. The results of A&B's equity
investment in C&H are reported in A&B's financial statements as an investment
in an affiliate. C&H processes the raw cane sugar at its refinery at Crockett,
California, and markets the refined products primarily in the western and
central United States. HC&S markets its specialty food-grade raw sugars to
food and beverage producers and to retail stores under its "Maui Brand" label,
and to distributors which repackage the sugars under their own labels. HC&S's
largest food-grade raw sugar customers are Cumberland Packing Corp. and Sugar
Foods Corporation, which repackage HC&S's turbinado sugar for their "Sugar in
the Raw" products.
Hawaiian Sugar & Transportation Cooperative ("HS&TC"), a
cooperative consisting of the two remaining sugar cane growers in Hawaii
(including HC&S), has a ten-year supply contract with C&H, ending in June 2003,
pursuant to which the growers sell their raw sugar to C&H at a price equal to
the New York #14 Contract settlement price, less a discount and less costs of
sugar vessel discharge and stevedoring. This price, after deducting the mar-
keting, operating, distribution, transportation and interest costs of HS&TC,
reflects the gross revenue to the Hawaii sugar growers, including HC&S.
Notwithstanding the ten-year supply contract, HC&S has arranged directly with
C&H for the forward pricing of a substantial portion of its 2001 harvest, as
described in Item 7A ("Quantitative and Qualitative Disclosures About Market
Risk"), on pages 25-26 below.
At Kauai Coffee, coffee marketing efforts continue to be
directed toward developing a market for premium-priced, estate-grown Kauai
green coffee. Most of the 2000 coffee crop is being marketed on the U.S.
Mainland and in Asia as green (unroasted) coffee. In addition to the sale of
green coffee, Kauai Coffee produces and sells a roasted, packaged coffee
product in Hawaii under the "Kauai Coffee" trademark.
(3) COMPETITION AND SUGAR LEGISLATION
---------------------------------
Hawaii sugar growers produce more sugar per acre than other
major producing areas of the world, but that advantage is partially offset by
Hawaii's high labor costs and the distance to the U.S. Mainland market.
Hawaiian refined sugar is marketed primarily west of Chicago. This is also the
largest beet sugar growing and processing area and, as a result, the only
market area in the United States which produces more sugar than it consumes.
Sugar from sugar beets is the greatest source of competition in the refined
sugar market for the Hawaiian sugar industry.
The overall U.S. caloric sweetener market continues to grow.
The use of non-caloric (artificial) sweeteners accounts for a relatively small
percentage of the domestic sweetener market. The anticipated increased use of
high fructose corn syrup and artificial sweeteners is not expected to affect
sugar markets significantly in the near future.
The U.S. Congress historically has sought, through
legislation, to assure a reliable domestic supply of sugar at stable and
reasonable prices. Congress's most recent renewal of protective legislation
for domestic sugar, the Federal Agriculture Improvement and Reform Act (the
"1996 Act"), provides a sugar loan program for the 1996 through 2002 crops,
with a loan rate (support price) of 18 cents per pound for raw sugar. The
loan rate represents the value of sugar given as collateral for government
price-support loans. The government is required to administer the sugar
program at no net cost, and this is accomplished by adjusting fees and quotas
for imported sugar to maintain the domestic price at a level that discourages
producers from defaulting on loans. The ten-year supply contract between HS&TC
and C&H limits HC&S's ability to place sugar under loan pursuant to the sugar
loan program. The 1996 Act also eliminated marketing allotments, thereby
removing the means of limiting domestic production. The 1.25-million-ton
minimum import quota set under the General Agreement on Tariff and Trade
("GATT") is retained in the 1996 Act.
Beginning in mid-1999, U.S. domestic raw sugar prices fell
to 20-year lows, dropping below 17 cents per pound in 2000, due to excess
supplies of raw cane sugar as well as excess refined products made from cane
and beet sugar. In contrast, U.S. domestic raw sugar prices (measured by the
closing price of the quoted spot contract) averaged 22.31 cents per pound
during the period from January 1994 through July 1999. Although prices
improved in late 2000, to over 20 cents per pound, primarily due to loan
forfeitures and government action to lower sugar supplies, at present, it
remains unclear how more favorable long-term price levels can be restored.
The situation continues to be harmful, even to efficient producers like
HC&S. A chronological chart of the average U.S. domestic raw sugar prices,
based on the average daily New York Contract #14 settlement price for domestic
raw sugar, is shown below:
[The printed document includes a graph of the prices; the data points for this
graph are shown below.]
U.S. Raw Sugar Prices
(New York Contract #14)
(Average cents per pound)
1998 1999 2000
---- ---- ----
January 22.11 22.41 17.70
February 21.79 22.34 17.05
March 21.74 22.55 18.46
April 22.20 22.58 19.41
May 22.28 22.65 19.12
June 22.30 22.63 19.26
July 22.32 22.61 17.64
August 22.30 21.31 18.13
September 22.25 20.10 18.97
October 22.15 20.51 21.20
November 22.03 17.45 21.39
December 21.97 17.67 20.53
Liberalized international trade agreements, such as the GATT,
include provisions relating to agriculture which can affect the U.S. sugar or
sweetener industries materially. A "side" agreement that modified the North
American Free Trade Agreement ("NAFTA") alleviated some of the sugar producers'
concerns by limiting Mexico's exports of sugar to the U.S. under NAFTA.
However, the export ceiling provided for in the side agreement increased to
250,000 tons of sugar in the year 2000, and will be eliminated in the year
2007. The increased sugar supply could affect domestic sugar prices adversely.
Kauai Coffee competes with coffee growers located worldwide,
including Hawaii. Due to an oversupply of coffee in the marketplace, coffee
commodity prices dropped significantly in 1999 and continued to drop in 2000.
(4) PROPERTIES AND WATER
--------------------
The HC&S sugar plantation, the largest in Hawaii, consists of
approximately 43,300 acres of land, including 2,000 acres leased from the State
of Hawaii and 1,300 acres under lease from private parties. Approximately
37,000 acres are under cultivation, and the balance either is used for
contributory purposes, such as roads and plant sites, or is not suitable for
cultivation.
McBryde owns approximately 9,500 acres of land on Kauai, of
which approximately 2,400 acres are used for watershed and other conservation
uses, approximately 3,900 acres are used by Kauai Coffee, and the remaining
acreage is leased to various agricultural enterprises for cultivation of a
variety of crops and for pasturage.
Large quantities of water are needed by HC&S and Kauai Coffee
for their sugar cane and coffee growing operations. Because of the importance
of water, access to water, reliable sources of supply and efficient irrigation
systems are crucial for the successful growing of sugar cane and coffee. A&B's
plantations use a "drip" irrigation system that distributes water to the roots
through small holes in plastic tubes. All of the cultivated cane land owned by
HC&S is drip irrigated. All of Kauai Coffee's fields also are drip irrigated.
A&B owns 16,000 acres of watershed lands on Maui which supply
a portion of the irrigation water used by HC&S. A&B also held four water
licenses to 38,000 acres owned by the State of Hawaii, which over the years
supplied approximately one-third of the irrigation water used by HC&S. The
last of these water license agreements expired in 1986, and all four agreements
have been extended as revocable permits that are renewable annually. The State
Board of Land and Natural Resources has indicated its intention to replace
these four permits with one or more long-term licenses. The issuance of such
license(s) currently is pending a hearing before the Board.
D. EMPLOYEES AND LABOR RELATIONS
-----------------------------
As of December 31, 2000, A&B and its subsidiaries had approximately
2,029 regular full-time employees. About 923 regular full-time employees were
engaged in the growing of sugar cane and coffee and the production of raw sugar
and green coffee, 870 were engaged in ocean transportation, 38 were engaged in
property development and management, and the balance was in administration and
miscellaneous operations. Approximately 55% were covered by collective
bargaining agreements with unions.
As of December 31, 2000, Matson and its subsidiaries also had
approximately 315 seagoing employees. Approximately 27% of Matson's regular
full-time employees and all of the seagoing employees were covered by
collective bargaining agreements.
Matson's seagoing employees are represented by six unions. Matson
and Matson Terminals shoreside bargaining unit employees are represented by
four locals of the International Longshore and Warehouse Union ("ILWU") and by
three unions which also represent the seagoing employees. Matson Terminals is
a member of the Hawaii Stevedoring Industry Committee and the Hawaii Employers
Council, organizations through which two Hawaii collective bargaining
agreements are negotiated.
Historically, collective bargaining with the longshore and seagoing
unions has been complex and difficult. However, Matson and Matson Terminals
consider their respective relations with the ILWU, other unions, and their
non-union employees generally to be satisfactory.
During 2000, collective bargaining agreements were renewed with two
unions representing licensed crew members for five-year terms, and with one
union representing licensed crew members for a three-year term.
Matson contributed during 2000 to multi-employer pension plans for
vessel crews. If Matson were to withdraw from or significantly reduce its
obligation to contribute to one of the plans, Matson would review and evaluate
data, actuarial assumptions, calculations and other factors used in determining
its withdrawal liability, if any, and, in the event of material disagreement
with such determination, would pursue the various means available to it under
federal law for the adjustment or removal of its withdrawal liability. Matson
Terminals participates in a multi-employer pension plan for its Hawaii
longshore employees. For a discussion of withdrawal liabilities under the
Hawaii longshore and seagoing plans, see Note 8 to A&B's financial statements
on pages 45 and 46 of the 2000 Annual Report, which Note is incorporated herein
by reference.
Bargaining unit employees of HC&S are covered by two collective
bargaining agreements with the ILWU. The agreements with the HC&S production
unit employees and clerical bargaining unit employees were renegotiated in 2000
and will expire January 31, 2002. A collective bargaining agreement with the
ILWU for production employees of Hawaiian DuraGreen, Inc. was negotiated in
2000 and expires September 15, 2003. The collective bargaining agreements
covering two of the three ILWU bargaining units at Kahului Trucking & Storage,
Inc. will expire June 30, 2002; the third will expire March 31, 2001 and is
currently being renegotiated. The two collective bargaining agreements with
Kauai Commercial Company, Incorporated employees represented by the ILWU will
expire April 30, 2001, and negotiations to renew the contracts are expected to
begin soon. The collective bargaining agreement with the ILWU for the
production unit employees of Kauai Coffee was renegotiated in 2001 and will
expire on January 31, 2004.
E. ENERGY
------
Matson and Matson Terminals purchase residual fuel oil, lubricants,
gasoline and diesel fuel for their operations. Residual fuel oil is by far
Matson's largest energy-related expense. In 2000, Matson vessels consumed
approximately 1.8 million barrels of residual fuel oil, the same as in 1999.
Residual fuel oil prices paid by Matson started 2000 at $147.75 per
metric ton and ended the year at $123.78 per metric ton. A high of $199.50 per
metric ton occurred in March, and a low of $123.78 per metric ton occurred in
December. Sufficient fuel for Matson's requirements is expected to be
available in 2001.
As has been the practice with sugar plantations throughout Hawaii,
HC&S uses bagasse, the residual fiber of the sugar cane plant, as a fuel to
generate steam for the production of most of the electrical power for sugar
milling and irrigation pumping operations. In addition to bagasse, HC&S uses
No. 6 (heavy) oil and coal to produce power, principally for pumping irrigation
water during the factory shutdown period when bagasse is not being produced.
Since 1992, when suppliers of No. 6 oil to HC&S discontinued regular shipments
as a result of unlimited liability concerns arising from federal and state
environmental laws, heavy oil has been provided to HC&S on a space-available
basis. In 2000, HC&S produced 217,279 MWH of electric power and sold
67,105 MWH, compared with 222,115 MWH produced and 70,210 MWH sold in 1999.
The reduction in power sold was caused by HC&S's increased need to pump
irrigation water, due to drought conditions during most of 2000. HC&S's oil
use decreased to 100,313 barrels in 2000, from the 185,250 barrels used in
1999. Coal use for power generation increased, from 24,216 short tons in 1999
to 61,222 short tons in 2000. The increase in the usage of coal over fuel oil
was primarily the result of higher fuel oil prices, as well as lower bagasse
production, attributed to the negative impact of the prolonged drought.
In 2000, McBryde produced 31,971 MWH of hydroelectric power,
compared with 35,861 MWH of hydroelectric power produced in 1999. Power sales
in 2000 amounted to 23,375 MWH, compared with 24,555 MWH sold in 1999. The
reduction in power production and sales was due to less rainfall in 2000.
ITEM 3. LEGAL PROCEEDINGS
- --------------------------
See "Business and Properties - Ocean Transportation - Rate Regulation"
above for a discussion of rate and other regulatory matters in which Matson is
routinely involved.
On September 14, 1998, Matson was served with a complaint filed by the
Government of Guam with the Surface Transportation Board, alleging that
Sea-Land Services, Inc. ("Sea-Land"), American President Lines, Ltd. ("APL")
and Matson charged unreasonable rates in the Guam trade since January 1991.
Matson did not enter the trade until February 1996. On November 12, 1998,
Matson filed an answer, denying that its rates have been unreasonable. Matson,
Sea-Land and APL filed a joint motion to dismiss the complaint on February 16,
1999. The Government of Guam filed an answer to the motion on April 1, 1999.
On April 15, 1999, Matson, Sea-Land and APL filed a reply brief. The
Government of Guam filed a surreply on April 22, 1999. To date, the Surface
Transportation Board has not ruled on the motion.
On January 11, 2001, Matson concluded a settlement with U.S. Attorneys
for the Central District of California, the Northern District of California,
and the Western District of Washington, which arose out of an investigation
commenced in 1999 by the U.S. Attorney for the Central District of California.
Matson entered into a plea agreement that resolves for Matson findings that
between August 1996 and April 1998 certain crew members on a Matson ship
falsely stated in an engine room log book that oil-water separating equipment
was in operation while bilge water was being discharged overboard and presented
the log book containing false entries to the U.S. Coast Guard on six separate
occasions during inspections. Pursuant to the plea agreement, Matson paid
fines totaling $3 million. The settlement, which is reflected in A&B's
consolidated financial statements for the fiscal year ended December 31, 2000,
did not have a material effect on earnings.
A&B and its subsidiaries are parties to, or may be contingently liable in
connection with, other legal actions arising in the normal conduct of their
businesses, the outcomes of which, in the opinion of management after consulta-
tion with counsel, would not have a material adverse effect on A&B's results of
operations or financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------
For the information about executive officers of A&B required to be
included in this Part I, see paragraph B of "Directors and Executive Officers
of the Registrant" in Part III below, which is incorporated into Part I by
reference.
PART II
-------
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
- ------------------------------------------------------------------------------
This information is contained in the sections captioned "Common Stock"
and "Dividends" on the inside back cover of the 2000 Annual Report, which
sections are incorporated herein by reference.
At February 15, 2001, there were 4,393 record holders of A&B common
stock. In addition, Cede & Co., which appears as a single record holder,
represents the holdings of thousands of beneficial owners of A&B common stock.
ITEM 6. SELECTED FINANCIAL DATA
- --------------------------------
Information for the years 1996 through 2000 is contained in the
comparative table captioned "Five-Year Summary of Selected Financial Data" on
page 27 of the 2000 Annual Report, which information is incorporated herein by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------------------------------------------------------------------------
RESULTS OF OPERATIONS
- ---------------------
A&B's financial statements, including the results of operations discussed
herein, are based on the historical-cost method of accounting, in accordance
with generally accepted accounting principles. If estimated current costs of
property and inventory were applied to reflect the effects of inflation on
A&B's businesses, total assets would be higher and net income lower than shown
by the historical-cost financial statements. Additional information regarding
the fair values of A&B's assets and liabilities is included in Notes 1, 3, 4,
and 5 on pages 37 through 43 of the 2000 Annual Report, which Notes are
incorporated herein by reference.
Additional information applicable to this Item 7 is contained in the
section captioned "Management's Discussion and Analysis" on pages 28 through 31
of the 2000 Annual Report, which section is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- --------------------------------------------------------------------
A&B, in the normal course of doing business, is exposed to the risks
associated with fluctuations in the market value of certain financial
instruments. A&B maintains a portfolio of marketable equity securities
available for sale, preferred stock investments in an affiliated company, and
an investment in mortgage-backed securities. Details regarding these financial
instruments are described in Notes 4 and 5 on pages 41 through 43 of the 2000
Annual Report, which Notes are incorporated herein by reference. A&B believes
that, as of December 31, 2000, its exposure to market risk fluctuations for
these financial instruments is not material.
A&B also is exposed to changes in U.S. interest rates, primarily as a
result of its borrowing and investing activities used to maintain liquidity and
to fund business operations. In order to manage its exposure to changes in
interest rates, A&B utilizes a balanced mix of debt maturities, along with both
fixed-rate and variable-rate debt. A&B does not hedge its interest rate
exposure. The nature and amount of A&B's long-term and short-term debt can be
expected to fluctuate as a result of future business requirements, market
conditions and other factors. The following tables summarize A&B's debt
obligations at December 31, 2000 and 1999, presenting principal cash flows and
related interest rates by expected fiscal year of maturity. Variable interest
rates represent the weighted-average rates of the portfolio at December 31,
2000 and 1999. A&B estimates that the carrying value of its debt is not
materially different from its fair value. The information presented below
should be read in conjunction with Note 6 on pages 43 and 44 of the 2000 Annual
Report, which Note is incorporated herein by reference.
Expected Fiscal Year of Maturity at December 31, 2000
-----------------------------------------------------
2001 2002 2003 2004 2005 Thereafter Total
---- ---- ---- ---- ---- ---------- -----
(dollars in thousands)
----------------------
Fixed rate $15,000 $7,500 $9,643 $12,500 $17,500 $ 62,857 $125,000
Average interest rate 7.35% 7.17% 7.33% 7.38% 7.42% 7.50%
Variable rate $15,500 $ -- $ -- $ -- $ -- $220,766 $236,266
Average interest rate 6.88% - - - - 6.92%
Expected Fiscal Year of Maturity at December 31, 1999
-----------------------------------------------------
2000 2001 2002 2003 2004 Thereafter Total
---- ---- ---- ---- ---- ---------- -----
(dollars in thousands)
----------------------
Fixed rate $17,500 $15,000 $7,500 $9,643 $9,643 $ 63,214 $122,500
Average interest rate 7.38% 7.35% 7.34% 7.35% 7.37% 7.47%
Variable rate $ 5,000 -- -- -- -- $172,570 $177,570
Average interest rate 6.34% -- -- -- -- 6.16%
A&B's sugar plantation, HC&S, has a contract to sell its raw sugar
production to HS&TC until 2003. Under that contract, the price paid will
fluctuate with the New York Contract #14 settlement price for domestic raw
sugar, less a fixed discount. For 2001, however, the price for a substantial
portion of the raw sugar deliveries has been set at approximately $21 per
hundredweight (cwt). A&B is not exposed to foreign currency exchange rate
risk.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ----------------------------------------------------
This information is contained in the financial statements and
accompanying notes on pages 32 through 52 of the 2000 Annual Report, the
Independent Auditors' Report on page 25 of the 2000 Annual Report, the
Industry Segment Information for the years ended December 31, 2000, 1999 and
1998 appearing on page 26 of the 2000 Annual Report and incorporated into the
financial statements by Note 12 thereto, and the section captioned "Quarterly
Results (Unaudited)" on page 53 of the 2000 Annual Report, all of which are
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------------------------------------------------------------------------
FINANCIAL DISCLOSURE
- --------------------
Not applicable.
PART III
--------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------------------------------
A. DIRECTORS
---------
For information about the directors of A&B, see the section captioned
"Election of Directors" on pages 2 through 4 of A&B's proxy statement dated
March 12, 2001 ("A&B's 2001 Proxy Statement"), which section is incorporated
herein by reference.
B. EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------
The name of each executive officer of A&B (in alphabetical order),
age (in parentheses) as of March 31, 2001, and present and prior positions with
A&B and business experience for the past five years are given below.
Generally, the term of office of executive officers is at the
pleasure of the Board of Directors. For a discussion of compliance with
Section 16(a) of the Securities Exchange Act of 1934 by A&B's directors and
executive officers, see the subsection captioned "Section 16(a) Beneficial
Ownership Reporting Compliance" on page 7 of A&B's 2001 Proxy Statement, which
subsection is incorporated herein by reference. For a discussion of severance
agreements between A&B and certain of A&B's executive officers, see the
subsection captioned "Severance Agreements" on page 13 of A&B's 2001 Proxy
Statement, which subsection is incorporated herein by reference.
James S. Andrasick (57)
- -----------------------
Senior Vice President, Chief Financial Officer and Treasurer of A&B, 6/00-
present; President and Chief Operating Officer, C. Brewer and Company, Limited,
9/92-3/00.
Meredith J. Ching (44)
- ----------------------
Vice President (Government & Community Relations) of A&B, 10/92-present;
Vice President of A&B-Hawaii, Inc. ("ABHI") (Government & Community Relations),
10/92-12/99; first joined A&B or a subsidiary in 1982.
W. Allen Doane (53)
- -------------------
President and Chief Executive Officer of A&B, and Director of A&B and
Matson, 10/98-present; Vice Chairman of Matson, 12/98-present; Executive Vice
President of A&B, 8/98-10/98; Director of ABHI, 4/97-12/99; Chief Executive
Officer of ABHI, 1/97-12/99; President of ABHI, 4/95-12/99; Chief Operating
Officer of ABHI, 4/91-12/96; Executive Vice President of ABHI, 4/91-4/95; first
joined A&B or a subsidiary in 1991.
Raymond J. Donohue (64)
- -----------------------
Senior Vice President of Matson, 4/86-present; Chief Financial Officer of
Matson, 2/81-present; first joined Matson in 1980.
John F. Gasher (67)
- -------------------
Vice President (Human Resources) of A&B, 12/99-present; Vice President
(Human Resources Development) of ABHI, 1/97-12/99; first joined A&B or a
subsidiary in 1960.
G. Stephen Holaday (56)
- -----------------------
Vice President of A&B, 12/99-present; Senior Vice President of ABHI, 4/89-
12/99; Vice President and Controller of A&B, 4/93-1/96; Chief Financial Officer
and Treasurer of ABHI, 4/89-1/96; first joined A&B or a subsidiary in 1983.
John B. Kelley (55)
- -------------------
Vice President (Corporate Planning & Investor Relations) of A&B, 10/99-
present; Vice President (Investor Relations) of A&B, 1/95-10/99; Vice President
of ABHI, 9/89-12/99; first joined A&B or a subsidiary in 1979.
Stanley M. Kuriyama (47)
- ------------------------
Vice President (Properties Group) of A&B, 2/99-present; Chief Executive
Officer and Vice Chairman of A&B Properties, Inc., 12/99-present; Executive
Vice President of ABHI, 2/99-12/99; Vice President of ABHI, 1/92-1/99; first
joined A&B or a subsidiary in 1992.
Michael J. Marks (62)
- ---------------------
Vice President and General Counsel of A&B, 9/80-present; Secretary of A&B,
8/84-1/99; Senior Vice President and General Counsel of ABHI, 4/89-12/99; first
joined A&B or a subsidiary in 1975.
C. Bradley Mulholland (59)
- --------------------------
Executive Vice President of A&B, 8/98-present; President of Matson,
5/90-present; Chief Executive Officer of Matson, 4/92-present; Chief Operating
Officer of Matson, 7/89-4/92; Director of A&B, 4/91-present; Director of
Matson, 7/89-present; Director of ABHI, 4/91-12/99; first joined Matson in
1965.
Alyson J. Nakamura (35)
- -----------------------
Secretary of A&B, 2/99-present; Assistant Secretary of A&B, 6/94-1/99;
Secretary of ABHI, 6/94-12/99; first joined A&B or a subsidiary in 1994.
Thomas A. Wellman (42)
- ----------------------
Controller of A&B, 1/96-present; Assistant Treasurer, 1/96-12/99, 6/00-
present; Treasurer of A&B, 1/00-5/00; Assistant Controller of A&B, 4/93-1/96;
Vice President of ABHI, 1/96-12/99; Controller of ABHI, 11/91-12/99; first
joined A&B or a subsidiary in 1989.
ITEM 11. EXECUTIVE COMPENSATION
- --------------------------------
See the section captioned "Executive Compensation" on pages 7 through 15
of A&B's 2001 Proxy Statement, which section is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- ------------------------------------------------------------------------
See the section captioned "Security Ownership of Certain Shareholders"
and the subsection titled "Security Ownership of Directors and Executive
Officers" on pages 5 through 7 of A&B's 2001 Proxy Statement, which section and
subsection are incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------
See the subsection captioned "Certain Relationships and Transactions" on
page 7 of A&B's 2001 Proxy Statement, which subsection is incorporated herein
by reference.
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
- --------------------------------------------------------------------------
A. FINANCIAL STATEMENTS
--------------------
Financial Statements of Alexander & Baldwin, Inc. and Subsidiaries
and Independent Auditors' Report (incorporated by reference to the pages of the
2000 Annual Report shown in parentheses below):
Balance Sheets, December 31, 2000 and 1999
(pages 34 and 35).
Statements of Income for the years ended
December 31, 2000, 1999 and 1998 (page 32).
Statements of Shareholders' Equity for the
years ended December 31, 2000, 1999 and
1998(page 36).
Statements of Cash Flows for the years ended
December 31, 2000, 1999 and 1998 (page 33).
Notes to Financial Statements (pages 37 through
52 and page 26 to the extent incorporated by
Note 12).
Independent Auditors' Report (page 25).
B. FINANCIAL STATEMENT SCHEDULES
-----------------------------
Financial Schedules of Alexander & Baldwin, Inc. and Subsidiaries as
required by Rule 5-04 of Regulation S-X (filed herewith):
I - Condensed Financial Information of
Registrant - Balance Sheets, December 31,
2000 and 1999; Statements of Income and of
Cash Flows for the years ended December 31,
2000, 1999 and 1998; Notes to Condensed
Financial Statements.
NOTE: All other schedules are omitted because of the absence of the conditions
under which they are required or because the information called for is included
in the financial statements or notes thereto.
C. EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K
-----------------------------------------------
Exhibits not filed herewith are incorporated by reference to the
exhibit number and previous filing shown in parentheses. All previous exhibits
were filed with the Securities and Exchange Commission in Washington, D.C.
Exhibits filed pursuant to the Securities Exchange Act of 1934 were filed under
file number 0-565. Shareholders may obtain copies of exhibits for a copying
and handling charge of $0.15 a page by writing to Alyson J. Nakamura,
Secretary, Alexander & Baldwin, Inc., P. O. Box 3440, Honolulu, Hawaii 96801.
3. Articles of incorporation and bylaws.
3.a. Restated Articles of Association of Alexander & Baldwin, Inc.,
as restated effective May 5, 1986, together with Amendments dated April
28, 1988 and April 26, 1990 (Exhibits 3.a.(iii) and (iv) to A&B's Form
10-Q for the quarter ended March 31, 1990).
3.b. (i) Revised Bylaws of Alexander & Baldwin, Inc. (as Amended
Effective February 22, 2001)
(ii) Amendments to Articles III, IV and VII of the Revised
Bylaws of Alexander & Baldwin, Inc., effective February 22, 2001.
4. Instruments defining rights of security holders, including indentures.
4.a. Equity.
4.a. Rights Agreement, dated as of June 25, 1998 between Alexander &
Baldwin, Inc. and ChaseMellon Shareholder Services, L.L.C. and Press
Release of Alexander & Baldwin, Inc. (Exhibits 4 and 99 to A&B's Form 8-K
dated June 25, 1998).
4.b. Debt.
4.b. (i) Second Amended and Restated Revolving Credit and Term Loan
Agreement, effective as of December 31, 1996, among Alexander & Baldwin,
Inc. and A&B-Hawaii, Inc. and First Hawaiian Bank, Bank of America
National Trust & Savings Association, Credit Lyonnais Los Angeles Branch,
Bank of Hawaii and The Union Bank of California, N.A. (Exhibit 4.b to
A&B's Form 10-K for the year ended December 31, 1996).
(ii) First Amendment to Second Amended and Restated Revolving
Credit and Term Loan Agreement, effective as of December 10, 1997, among
Alexander & Baldwin, Inc. and A&B-Hawaii, Inc. and First Hawaiian Bank,
Bank of America National Trust & Savings Association, Credit Lyonnais Los
Angeles Branch, Bank of Hawaii, The Union Bank of California, N.A. and The
Bank of New York (Exhibit 4.b.(ii) to A&B's Form 10-K for the year ended
December 31, 1997).
(iii) Second Amendment to Second Amended and Restated Revolving
Credit and Term Loan Agreement, effective as of November 30, 1998, among
Alexander & Baldwin, Inc. and A&B-Hawaii, Inc. and First Hawaiian Bank,
Bank of America National Trust & Savings Association, Credit Lyonnais Los
Angeles Branch, Bank of Hawaii, The Union Bank of California, N.A. and The
Bank of New York (Exhibit 4.b.(iii) to A&B's Form 10-K for the year ended
December 31, 1998).
(iv) Third Amendment to Second Amended and Restated Revolving
Credit and Term Loan Agreement, effective as of November 30, 1999, among
Alexander & Baldwin, Inc. and A&B-Hawaii, Inc. and First Hawaiian Bank,
Bank of America National Trust & Savings Association, Bank of Hawaii and
The Bank of New York (Exhibit 4.b.(iv) to A&B's Form 10-K for the year
ended December 31, 1999).
10. Material contracts.
10.a. (i) Issuing and Paying Agent Agreement between Matson Navigation
Company, Inc. and U.S. Bank National Association, as successor-in-interest
to Security Pacific National Trust (New York), with respect to Matson
Navigation Company, Inc.'s $150 million commercial paper program dated
September 18, 1992 (Exhibit 10.b.1.(xxviii) to A&B's Form 10-Q for the
quarter ended September 30, 1992).
(ii) Note Agreement among Alexander & Baldwin, Inc., A&B-Hawaii,
Inc. and The Prudential Insurance Company of America, effective as of
December 20, 1990 (Exhibit 10.b.(ix) to A&B's Form 10-K for the year ended
December 31, 1990).
(iii) Note Agreement among Alexander & Baldwin, Inc., A&B-Hawaii,
Inc. and The Prudential Insurance Company of America, dated as of June 4,
1993 (Exhibit 10.a.(xiii) to A&B's Form 8-K dated June 4, 1993).
(iv) Amendment dated as of May 20, 1994 to the Note Agreements
among Alexander & Baldwin, Inc., A&B-Hawaii, Inc. and The Prudential
Insurance Company of America, dated as of December 20, 1990 and June 4,
1993 (Exhibit 10.a.(xviv) to A&B's Form 10-Q for the quarter ended June
30, 1994).
(v) Amendment dated January 23, 1995 to the Note Agreement among
Alexander & Baldwin, Inc., A&B-Hawaii, Inc. and The Prudential Insurance
Company of America, dated as of December 20, 1990 (Exhibit 10.a.(xvi) to
A&B's Form 10-K for the year ended December 31, 1994).
(vi) Amendment dated as of June 30, 1995 to the Note Agreements,
among Alexander & Baldwin, Inc., A&B-Hawaii, Inc. and The Prudential
Insurance Company of America, dated as of December 20, 1990 and June 4,
1993 (Exhibit 10.a.(xxvii) to A&B's Form 10-Q for the quarter ended
June 30, 1995).
(vii) Amendment dated as of November 29, 1995 to the Note
Agreements among Alexander & Baldwin, Inc., A&B-Hawaii, Inc. and The
Prudential Insurance Company of America, dated as of December 20, 1990 and
June 4, 1993 (Exhibit 10.a.(xvii) to A&B's Form 10-K for the year ended
December 31, 1995).
(viii) Revolving Credit Agreement between Alexander & Baldwin,
Inc., A&B-Hawaii, Inc., and First Hawaiian Bank, dated December 30, 1993
(Exhibit 10.a.(xx) to A&B's Form 10-Q for the quarter ended September 30,
1994).
(ix) Amendment dated August 31, 1994 to the Revolving Credit
Agreement between Alexander & Baldwin, Inc., A&B-Hawaii, Inc., and First
Hawaiian Bank dated December 30, 1993 (Exhibit 10.a.(xxi) to A&B's
Form 10-Q for the quarter ended September 30, 1994).
(x) Second Amendment dated March 29, 1995 to the Revolving
Credit Agreement between Alexander & Baldwin, Inc., A&B-Hawaii, Inc., and
First Hawaiian Bank, dated December 30, 1993 (Exhibit 10.a.(xxiii) to
A&B's Form 10-Q for the quarter ended March 31, 1995).
(xi) Third Amendment dated November 30, 1995 to the Revolving
Credit Agreement between Alexander & Baldwin, Inc., A&B-Hawaii, Inc., and
First Hawaiian Bank, dated December 30, 1993 (Exhibit 10.a.(xvii) to A&B's
Form 10-K for the year ended December 31, 1996).
(xii) Fourth Amendment dated November 25, 1996 to the Revolving
Credit Agreement between Alexander & Baldwin, Inc., A&B-Hawaii, Inc., and
First Hawaiian Bank, dated December 30, 1993 (Exhibit 10.a.(xviii) to
A&B's Form 10-K for the year ended December 31, 1996).
(xiii) Fifth Amendment dated November 28, 1997 to the Revolving
Credit Agreement between Alexander & Baldwin, Inc., A&B-Hawaii, Inc., and
First Hawaiian Bank, dated December 30, 1993 (Exhibit 10.a.(xix) to A&B's
Form 10-K for the year ended December 31, 1997).
(xiv) Sixth Amendment dated November 30, 1998 to the Revolving
Credit Agreement between Alexander & Baldwin, Inc., A&B-Hawaii, Inc., and
First Hawaiian Bank, dated December 30, 1993 (Exhibit 10.a.(xiv) to A&B's
Form 10-K for the year ended December 31, 1998).
(xv) Seventh Amendment dated November 23, 1999 to the Revolving
Credit Agreement between Alexander & Baldwin, Inc., A&B-Hawaii, Inc., and
First Hawaiian Bank, dated December 30, 1993 (Exhibit 10.a.(xv) to A&B's
Form 10-K for the year ended December 31, 1999).
(xvi) Eighth Amendment dated May 3, 2000 to the Revolving Credit
Agreement ("Agreement") between Alexander & Baldwin, Inc. and First
Hawaiian Bank, dated December 30, 1993 (A&B-Hawaii, Inc., an original
party to the Agreement, was merged into Alexander & Baldwin, Inc.
effective December 31, 1999) (Exhibit 10.a.(xxvii) to A&B's Form 10-Q for
the quarter ended June 30, 2000).
(xvii) Ninth Amendment dated November 16, 2000 to the Revolving
Credit Agreement ("Agreement") between Alexander & Baldwin, Inc. and
First Hawaiian Bank, dated December 30, 1993.
(xviii) Private Shelf Agreement between Alexander & Baldwin, Inc.,
A&B-Hawaii, Inc., and Prudential Insurance Company of America, dated as of
August 2, 1996 (Exhibit 10.a.(xxxiii) to A&B's Form 10-Q for the quarter
ended September 30, 1996).
(xix) First Amendment, dated as of February 5, 1999, to the
Private Shelf Agreement between Alexander & Baldwin, Inc., A&B-Hawaii,
Inc., and Prudential Insurance Company of America, dated as of August 2,
1996 (Exhibit 10.a.(xxii) to A&B's Form 10-K for the year ended
December 31, 1998).
(xx) Amended and Restated Asset Purchase Agreement, dated as of
December 24, 1998, by and among California and Hawaiian Sugar Company,
Inc., A&B-Hawaii, Inc., McBryde Sugar Company, Limited and Sugar
Acquisition Corporation (without exhibits or schedules)
(Exhibit 10.a.1.(xxxvi) to A&B's Form 8-K dated December 24, 1998).
(xxi) Amended and Restated Stock Sale Agree-
ment, dated as of December 24, 1998, by and between California and
Hawaiian Sugar Company, Inc. and Citicorp Venture Capital, Ltd. (without
exhibits)(Exhibit 10.a.1.(xxxvii) to A&B's Form 8-K dated December 24,
1998).
(xxii) Pro forma financial information relative to the Amended and
Restated Asset Purchase Agreement, dated as of December 24, 1998, by and
among California and Hawaiian Sugar Company, Inc., A&B-Hawaii, Inc.,
McBryde Sugar Company, Limited and Sugar Acquisition Corporation, and the
Amended and Restated Stock Sale Agreement, dated as of December 24, 1998,
by and between California and Hawaiian Sugar Company, Inc. and Citicorp
Venture Capital, Ltd. (Exhibit 10.a.1.(xxxviii) to A&B's Form 8-K dated
December 24, 1998).
*10.b.1. (i) Alexander & Baldwin, Inc. 1989 Stock Option/ Stock Incentive
Plan (Exhibit 10.c.1.(ix) to A&B's Form 10-K for the year ended
December 31, 1988).
(ii) Amendment No. 1 to the Alexander & Baldwin, Inc. 1989 Stock
Option/Stock Incentive Plan (Exhibit 10.b.1.(xxvi) to A&B's Form 10-Q for
the quarter ended June 30, 1992).
(iii) Amendment No. 2 to the Alexander & Baldwin, Inc. 1989 Stock
Option/Stock Incentive Plan (Exhibit 10.b.1.(iv) to A&B's Form 10-Q for
the quarter ended March 31, 1994).
(iv) Amendment No. 3 to the Alexander & Baldwin, Inc. 1989 Stock
Option/Stock Incentive Plan (Exhibit 10.b.1.(ix) to A&B's Form 10-K for
the year ended December 31, 1994).
(v) Amendment No. 4 to the Alexander & Baldwin, Inc. 1989 Stock
Option/Stock Incentive Plan.
_______________
* All exhibits listed under 10.b.1. are management contracts or compensatory
plans or arrangements.
(vi) Alexander & Baldwin, Inc. 1989 Non-Employee Director Stock
Option Plan (Exhibit 10.c.1.(x) to A&B's Form 10-K for the year ended
December 31, 1988).
(vii) Amendment No. 1 to the Alexander & Baldwin, Inc. 1989 Non-
Employee Director Stock Option Plan (Exhibit 10.b.1.(xxiv) to A&B's Form
10-K for the year ended December 31, 1991).
(viii) Amendment No. 2 to the Alexander & Baldwin, Inc. 1989 Non-
Employee Director Stock Option Plan (Exhibit 10.b.1.(xxvii) to A&B's Form
10-Q for the quarter ended June 30, 1992).
(ix) Amendment No. 3 to the Alexander & Baldwin, Inc. 1989 Non-
Employee Director Stock Option Plan.
(x) Alexander & Baldwin, Inc. 1998 Stock Option/Stock Incentive
Plan (Exhibit 10.b.1.(xxxii) to A&B's Form 10-Q for the quarter ended
March 31, 1998).
(xi) Amendment No. 1 to the Alexander & Baldwin, Inc. 1998 Stock
Option/Stock Incentive Plan.
(xii) Alexander & Baldwin, Inc. 1998 Non-Employee Director Stock
Option Plan (Exhibit 10.b.1.(xxxiii) to A&B's Form 10-Q for the quarter
ended March 31, 1998).
(xiii) Amendment No. 1 to the Alexander & Baldwin, Inc. 1998 Non-
Employee Director Stock Option Plan.
(xiv) Alexander & Baldwin, Inc. Non-Employee Director Stock
Retainer Plan, dated June 25, 1998 (Exhibit 10.b.1.(xxxiv) to A&B's Form
10-Q for the quarter ended June 30, 1998).
(xv) Amendment No. 1 to Alexander & Baldwin, Inc. Non-Employee
Director Stock Retainer Plan, effective December 9, 1999
(Exhibit 10.b.1.(xi) to A&B's Form 10-K for the year ended December 31,
1999).
(xvi) Second Amended and Restated Employment Agreement between
Alexander & Baldwin, Inc. and R. J. Pfeiffer, effective as of October 25,
1990 (Ex-hibit 10.c.1.(xiii) to A&B's Form 10-K for the year ended
December 31, 1990).
(xvii) Agreement between Alexander & Baldwin, Inc. and John C.
Couch dated August 10, 1999 (Exhibit 10.b.1.(xxxviii) to A&B's Form 10-Q
for the quarter ended September 30, 1999).
(xviii) Agreement between Alexander & Baldwin, Inc. and Glenn R.
Rogers dated October 7, 1999 (Exhibit 10.b.1.(xvii) to A&B's Form 10-K for
the year ended December 31, 1999).
(xix) A&B Deferred Compensation Plan for Outside Directors
(Exhibit 10.c.1.(xviii) to A&B's Form 10-K for the year ended December 31,
1985).
(xx) Amendment No. 1 to A&B Deferred Compensation Plan for
Outside Directors, effective October 27, 1988 (Exhibit 10.c.1.(xxix) to
A&B's Form 10-Q for the quarter ended September 30, 1988).
(xxi) A&B Life Insurance Plan for Outside Directors
(Exhibit 10.c.1.(xix) to A&B's Form 10-K for the year ended December 31,
1985).
(xxii) A&B Excess Benefits Plan, Amended and Restated effective
February 1, 1995 (Exhibit 10.b.1.(xx) to A&B's Form 10-K for the year
ended December 31, 1994).
(xxiii) Amendment No. 1 to the A&B Excess Benefits Plan, dated
June 26, 1997 (Exhibit 10.b.1.(xxxi) to A&B's Form 10-Q for the quarter
ended June 30, 1997).
(xxiv) Amendment No. 2 to the A&B Excess Benefits Plan, dated
December 10, 1997 (Exhibit 10.b.1.(xx) to A&B's Form 10-K for the year
ended December 31, 1997).
(xxv) Amendment No. 3 to the A&B Excess Benefits Plan, dated April
23, 1998 (Exhibit 10.b.1.(xxxv) to A&B's Form 10-Q for the quarter ended
June 30, 1998).
(xxvi) Amendment No. 4 to the A&B Excess Benefits plan, dated June
25, 1998 (Exhibit 10.b.1.(xxxvi) to A&B's Form 10-Q for the quarter ended
June 30, 1998).
(xxvii) Amendment No. 5 to the A&B Excess Benefits Plan, dated
December 9, 1998 (Exhibit 10.b.1.(xxii) to A&B's Form 10-K for the year
ended December 31, 1998).
(xxviii) Amendment No. 6 to the A&B Excess Benefits Plan, dated
October 25, 2000.
(xxix) Restatement of the A&B Executive Survivor/Retirement Benefit
Plan, effective February 1, 1995 (Exhibit 10.b.1.(xxii) to A&B's Form 10-K
for the year ended December 31, 1994).
(xxx) Amendment No. 1 to the A&B Executive Survivor/Retirement
Benefit Plan, dated October 25, 2000.
(xxxi) Restatement of the A&B 1985 Supplemental Executive
Retirement Plan, effective February 1, 1995 (Exhibit 10.b.1.(xxiv) to
A&B's Form 10-K for the year ended December 31, 1994).
(xxxii) Amendment No. 1 to the A&B 1985 Supplemental Executive
Retirement Plan, dated August 27, 1998 (Exhibit 10.b.1.(xliii) to A&B's
Form 10-Q for the quarter ended September 30, 1998).
(xxxiii) Amendment No. 2 to the A&B 1985 Supplemental Executive
Retirement Plan, dated October 25, 2000.
(xxxiv) Restatement of the A&B Retirement Plan for Outside
Directors, effective February 1, 1995 (Exhibit 10.b.1.(xxvi) to A&B's
Form 10-K for the year ended December 31, 1994).
(xxxv) Amendment No. 1 to the A&B Retirement Plan for Outside
Directors, dated August 27, 1998 (Exhibit 10.b.1.(xlii) to A&B's Form
10-Q for the quarter ended September 30, 1998).
(xxxvi) Amendment No. 2 to the A&B Retirement Plan for Outside
Directors, dated October 25, 2000.
(xxxvii) Form of Severance Agreement entered into with certain
executive officers, as amended and restated effective August 24, 2000
(Exhibit 10.b.1.(xli) to A&B's Form 10-Q for the quarter ended
September 30, 2000).
(xxxviii) Alexander & Baldwin, Inc. One-Year Performance Improvement
Incentive Plan, as restated effective October 22, 1992
(Exhibit 10.b.1.(xxi) to A&B's Form 10-K for the year ended December 31,
1992).
(xxxix) Alexander & Baldwin, Inc. Three-Year Performance Improvement
Incentive Plan, as restated effective October 22, 1992
(Exhibit 10.b.1.(xxii) to A&B's Form 10-K for the year ended December 31,
1992).
(xl) Alexander & Baldwin, Inc. Deferred Compensation Plan
effective August 25, 1994 (Exhibit 10.b.1.(xxv) to A&B's Form 10-Q for the
quarter ended September 30, 1994).
(xli) Amendment No. 1 to the Alexander & Baldwin, Inc. Deferred
Compensation Plan, effective July 1, 1997 (Exhibit 10.b.1.(xxxii) to A&B's
Form 10-Q for the quarter ended June 30, 1997).
(xlii) Amendment No. 2 to the Alexander & Baldwin, Inc. Deferred
Compensation Plan, dated June 25, 1998 (Exhibit 10.b.1.(xxxvii) to A&B's
Form 10-Q for the quarter ended June 30, 1998).
(xliii) Amendment No. 3 to the Alexander & Baldwin, Inc. Deferred
Compensation Plan, dated October 25, 2000.
(xliv) Alexander & Baldwin, Inc. Restricted Stock Bonus Plan, as
restated effective April 28, 1988 (Exhibit 10.c.1.(xi) to A&B's Form 10-Q
for the quarter ended June 30, 1988).
(xlv) Amendment No. 1 to the Alexander & Baldwin, Inc. Restricted
Stock Bonus Plan, effective December 11, 1997 (Exhibit 10.b.1.(ii) to
A&B's Form 10-K for the year ended December 31, 1997).
(xlvi) Amendment No. 2 to the Alexander & Baldwin, Inc. Restricted
Stock Bonus Plan, dated June 25, 1998 (Exhibit 10.b.1.(xxxviii) to A&B's
Form 10-Q for the quarter ended June 30, 1998).
11. Statement re computation of per share earnings.
13. Annual report to security holders.
13. Alexander & Baldwin, Inc. 2000 Annual Report.
21. Subsidiaries.
21. Alexander & Baldwin, Inc. Subsidiaries as of February 28, 2001.
23. Consent of Deloitte & Touche LLP dated March 26, 2001 (included as the
last page of A&B's Form 10-K for the year ended December 31, 2000).
D. REPORTS ON FORM 8-K
-------------------
No reports on Form 8-K were filed during the quarter ended
December 31, 2000.
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.
ALEXANDER & BALDWIN, INC.
(Registrant)
Date: March 26, 2001 By /s/ W. Allen Doane
----------------------------------------
W. Allen Doane, President
and Chief Executive Officer
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 in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ W. Allen Doane President and March 26, 2001
- ------------------------ Chief Executove
W. Allen Doane Officer and
Director
/s/ James S. Andrasick Senior Vice March 26, 2001
- ------------------------ President, Chief
James S. Andrasick Financial Officer
and Treasurer
/s/ Thomas A. Wellman Controller March 26, 2001
- ------------------------ and Assistant
Thomas A. Wellman Treasurer
- ------------------------
/s/ Charles M. Stockholm Chairman of March 26, 2001
- ------------------------ the Board and
Charles M. Stockholm Director
/s/ Michael J. Chun Director March 26, 2001
- ------------------------
Michael J. Chun
/s/ Leo E. Denlea, Jr. Director March 26, 2001
- ------------------------
Leo E. Denlea, Jr.
/s/ Walter A. Dods, Jr. Director March 26, 2001
- ------------------------
Walter A. Dods, Jr.
/s/ Charles G. King Director March 26, 2001
- ------------------------
Charles G. King
/s/ Carson R. McKissick Director March 26, 2001
- ------------------------
Carson R. McKissick
/s/ C. Bradley Mulholland Director March 26, 2001
- ------------------------
C. Bradley Mulholland
/s/ Lynn M. Sedway Director March 26, 2001
- ------------------------
Lynn M. Sedway
/s/ Maryanna G. Shaw Director March 26, 2001
- ------------------------
Maryanna G. Shaw
INDEPENDENT AUDITORS' REPORT
Alexander & Baldwin, Inc.:
We have audited the consolidated financial statements of Alexander & Baldwin,
Inc. and its subsidiaries as of December 31, 2000 and 1999, and for each of
the three years in the period ended December 31, 2000, and have issued our
report thereon dated January 25, 2001; such financial statements and report
are included in your 2000 Annual Report to Shareholders and are incorporated
herein by reference. Our audits also included the financial statement
schedules of Alexander & Baldwin, Inc. and its subsidiary, listed in Item
14.B. These financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion based on
our audits. In our opinion, such financial statement schedules, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Honolulu, Hawaii
January 25, 2001
ALEXANDER & BALDWIN, INC.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
Schedule I
ALEXANDER & BALDWIN, INC. (Parent Company)
CONDENSED BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
(In thousands)
- -------------------------------------------------------------------------------
2000 1999
---- ----
ASSETS
Current Assets:
Cash and cash equivalents $ 126 $ 253
Income tax receivable -- 1,918
Accounts and notes receivable, net 10,065 64
Prepaid expenses and other 13,432 1,330
---------- ---------
Total current assets 23,623 3,565
---------- ---------
Investments:
Subsidiaries consolidated, at equity 678,636 612,958
Other 110,714 91,828
---------- ---------
Total investments 789,350 704,786
---------- ---------
Property, at Cost 348,774 95,005
Less accumulated depreciation and amortization 161,246 13,682
---------- ---------
Property -- net 187,528 81,323
---------- ---------
Due from Subsidiaries 46,706 --
---------- ---------
Other Assets 27,973 4,495
---------- ---------
Total $1,075,180 $ 794,169
========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 7,500 $ --
Accounts payable 2,784 514
Income taxes payable 1,000 --
Other 22,693 4,616
---------- ---------
Total current liabilities 33,977 5,130
---------- ---------
Long-term Debt 231,000 --
---------- ---------
Other Long-term Liabilities 14,762 5,149
---------- ---------
Due to Subsidiaries -- 56,243
---------- ---------
Deferred Income Taxes 101,790 56,684
---------- ---------
Commitments and Contingencies
Shareholders' Equity:
Capital stock 33,248 34,933
Additional capital 58,007 53,124
Unrealized holding gains on securities 61,937 49,461
Retained earnings 552,637 545,849
Cost of treasury stock (12,178) (12,404)
---------- ---------
Total shareholders' equity 693,651 670,963
---------- ---------
Total $1,075,180 $ 794,169
========== =========
See accompanying notes.
ALEXANDER & BALDWIN, INC. (Parent Company)
CONDENSED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
(In thousands)
2000 1999 1998
---- ---- ----
Revenue:
Food products $ 77,190 $ -- $ -
Property leasing 14,397 10,999 10,245
Property sales 19,732 803 10,463
Interest, dividends and other 5,055 3,180 3,958
--------- --------- ---------
Total revenue 116,374 14,982 24,666
--------- --------- ---------
Costs and Expenses:
Cost of goods and agricultural services 77,302 -- --
Cost of property sales and leasing service 8,194 4,808 11,390
Selling, general and administrative 11,609 9,686 9,303
Interest and other 20,220 1,770 774
Income taxes (1,273) (3,271) 462
--------- --------- ---------
Total costs and expenses 116,052 12,993 21,929
--------- --------- ---------
Income Before Equity in Net Income
of Subsidiaries Consolidated 322 1,989 2,737
Equity in Net Income of Subsidiaries
Consolidated 90,252 60,590 22,405
--------- --------- ---------
Net Income 90,574 62,579 25,142
Unrealized holding gains (losses) on securities
(net of income taxes) 12,476 (13,868) 8,185
--------- --------- ---------
Comprehensive Income $ 103,050 $ 48,711 $ 33,327
========= ========= =========
See accompanying notes.
ALEXANDER & BALDWIN, INC. (Parent Company)
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
(In thousands)
2000 1999 1998
---- ---- ----
Cash Flows from Operations $ (5,634) $ 3,579 $ 9,664
-------- -------- --------
Cash Flows from Investing Activities:
Capital expenditures (18,107) (1,346) (1,437)
Proceeds from disposal of property 2,645 -- --
Proceeds from sale of investments 1,060 -- --
Dividends received from subsidiaries 50,000 50,000 40,000
-------- -------- --------
Net cash provided by investing activities 35,598 48,654 38,563
-------- -------- --------
Cash Flows from Financing Activities:
Increase (decrease) in intercompany payable (8,507) 20,757 13,180
Proceeds from issuance of long-term debt, net 60,500 -- --
Proceeds from issuances of capital stock 2,961 101 1,575
Repurchase of capital stock (48,260) (34,824) (20,838)
Dividends paid (36,785) (38,899) (40,323)
-------- -------- --------
Net cash used in financing activities (30,091) (52,865) (46,406)
-------- -------- --------
Cash and Cash Equivalents:
Net increase (decrease) for the year (127) (632) 1,821
Balance, beginning of year 253 885 (936)
-------- -------- --------
Balance, end of year $ 126 $ 253 $ 885
======== ======== ========
Other Cash Flow Information:
Interest paid, net of amounts capitalized $ 16,485 $ 303 $ 263
Income taxes paid 31,807 34,213 34,672
Other Non-cash Information:
Depreciation 11,037 2,550 2,396
Tax-deferred property sales 18,692 -- 11,049
Tax-deferred property purchases 18,459 -- 8,390
See accompanying notes.
ALEXANDER & BALDWIN, INC. (Parent Company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(a) ORGANIZATION AND OPERATIONS
Alexander & Baldwin, Inc. ("Company"), headquartered in Honolulu, is engaged in
ocean transportation, through its subsidiary Matson Navigation Company, Inc.,
in property development and management, through A&B Properties, Inc., and in
food products.
Due to a merger, one of the Company's subsidiaries, A&B-Hawaii, Inc. is
included in the Company's financial statements for 2000.
(b) INVESTMENTS
Subsidiaries consolidated at equity consisted of all wholly owned subsidiaries
at December 31, 2000 and 1999.
Investments - "Other" consisted principally of marketable equity securities at
December 31, 2000 and 1999.
(c) OTHER LONG-TERM LIABILITIES
At December 31, 2000 and 1999, other long-term liabilities of $14,762,000 and
$5,149,000, respectively, consisted principally of deferred compensation,
executive benefit plans and self-insurance liabilities.
(d) LONG-TERM DEBT
At December 31, 2000 long-term debt consisted of the following (in thousands):
- ----------------------------------------------------------------
Bank variable rate loans, due after 2000,
2000 high 7.53%, low 6.06% $ 121,000
Term loans:
7.29%, payable through 2007 52,500
7.42%, payable through 2009 20,000
7.43%, payable through 2007 15,000
7.57%, payable through 2009 15,000
7.55%, payable through 2009 15,000
- ----------------------------------------------------------------
Total 238,500
Less current portion 7,500
- ----------------------------------------------------------------
Long-term debt $ 231,000
================================================================
Variable Rate Loans: The Company has a revolving credit and term loan
agreement with four commercial banks, whereby it may borrow up to
$140,000,000 under revolving loans to November 30, 2001, at varying rates of
interest. Any revolving loan outstanding on that date may be converted into
a term loan, which would be payable in 12 equal quarterly installments. The
agreement contains certain restrictive covenants, the most significant of
which requires the maintenance of an interest coverage ratio of 2:1. At
December 31, 2000 $113,500,000 was outstanding under this agreement.
The Company has an uncommitted $70,000,000 short-term revolving credit
agreement with a commercial bank. This facility was increased from
$45,000,000 during 2000. The agreement extends to November 30, 2001, but may
be canceled by the bank or the Company at any time. The amount which the
Company may draw under the facility is reduced by the amount drawn against the
bank under the previously referenced $140,000,000 multi-bank facility, in which
it is a participant, and by letters of credit issued under the $70,000,000
uncommitted facility. At December 31, 2000, $7,500,000 was outstanding under
this agreement. Under the borrowing formula for this facility, the Company
could have borrowed an additional $22,700,000 at December 31, 2000.
The Company has an uncommitted $25,000,000 revolving credit agreement with a
commercial bank. AT December 31, 2000, no amounts were outstanding under the
agreement.
Other Debt Agreements: The Company has a private shelf agreement for a total
of $65,000,000. At December 31, 2000 this full amount had been drawn. The
amounts drawn on the agreement are included in term loans.
Long-term Debt Maturities: At December 31, 2000, maturities and planned
prepayments of all long-term debt during the next five years is $7,500,000 for
2001, $7,500,000 for 2002, $9,643,000 for 2003, $12,500,000 for 2004 and
$17,500,000 for 2005.
(e) COMMITMENTS AND CONTINGENCIES
The Company and certain subsidiaries are parties to various legal actions and
are contingently liable in connection with claims and contracts arising in the
normal course of business, the outcome of which, in the opinion of management
after consultation with legal counsel, will not have a material adverse effect
on the Company's financial position or results of operations. At December 31,
2000, the Company did not have any significant firm commitments.
(f) INCOME TAXES
In 1999, the Company reached an agreement with the Internal Revenue Service
settling certain valuation issues relating to the Company's tax returns for
1992 through 1995. This agreement resulted in a one-time reduction of income
tax expense of $2,815,000, due to the reversal of previously accrued income tax
liabilities.
REVISED BYLAWS OF
ALEXANDER & BALDWIN, INC.
(AS AMENDED EFFECTIVE FEBRUARY 22, 2001)
ARTICLE I
PRINCIPAL OFFICE, SEAL
SECTION 1. PRINCIPAL OFFICE. The principal office of the Corporation shall be
----------------
in Honolulu, Hawaii; there may be such subordinate or branch offices in such
place or places within Hawaii or elsewhere as may be considered necessary or
requisite by the Board of Directors to transact the business of the
Corporation.
SECTION 2. SEAL. The Corporation shall have a corporate seal (and one or more
----
duplicates thereof) of such form and device as the Board of Directors shall
determine.
ARTICLE II
STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS. The annual meeting of the stockholders of the
---------------
Corporation shall be held on such date and at such time and place as shall be
designated from time to time by the Board of Directors or the President. The
annual meeting shall be a general meeting and at such meeting any business
within the powers of the Corporation may be transacted without special notice
of such business, except as may be required by law, by the Articles of
Association, or by these Bylaws.
SECTION 2. SPECIAL MEETINGS. Special meetings of the stockholders may be held
----------------
at any time. Such meetings shall be held upon the call of the Chairman of the
Board, if appointed, the President or a majority of the directors then in
office and shall not be held upon the call of any other person or persons
except as provided by Section 416-73, Hawaii Revised Statutes.
SECTION 3. NOTICES OF MEETINGS. Notices of every meeting of stockholders,
-------------------
whether annual or special, shall state the place, day, and hour of the meeting,
whether it is annual or special, and in the case of any special meeting, shall
state briefly the business proposed to be transacted thereat. Such notice
shall be given by mailing a written or printed copy thereof, postage prepaid,
not less than ten nor more than seventy days before the date assigned for the
meeting, to each stockholder entitled to vote at such meeting at his address
as it appears on the transfer books of the Corporation. Upon notice being
given in accordance with the provisions hereof, the failure of any stockholder
to receive actual notice of any meeting shall not, in any way, invalidate the
meeting or the proceedings thereat.
SECTION 4. QUORUM. At all meetings of stockholders the presence in person or
------
by proxy of stockholders owning a majority of all of the shares of stock issued
and outstanding and entitled to vote at said meeting shall constitute a quorum,
and the action of the holders of a majority of the shares of stock present or
represented at any meeting at which a quorum is present, shall be valid and
binding upon the Corporation and its stockholders, except as otherwise provided
by law, by the Articles of Association, or by these Bylaws.
SECTION 5. VOTING, PROXIES. At any meeting of the stockholders, each
---------------
stockholder, except where otherwise provided by the clauses and terms
applicable to the stock held by such stockholder, shall be entitled to vote in
person or by proxy appointed by an instrument in writing subscribed by such
stockholder or his duly authorized attorney and filed with the Secretary, and
shall have one vote for each share of voting stock registered in his name at
the close of business on such record date as may be fixed by the Board of
Directors. In the case of an adjourned meeting, unless otherwise provided by
the Board of Directors, the record date for the purpose of voting at such
adjourned meeting shall be the same as the original record date fixed for the
original meeting. When voting stock is transferred into the name of a pledgee
under a pledge agreement, the pledgor shall have the right to vote such stock
unless prior to the meeting the pledgee or his authorized representative shall
file with the Secretary written authorization from the pledgor authorizing
such pledgee to vote such stock. An executor, administrator, guardian, or
trustee may vote stock of the Corporation held by him in such capacity at all
meetings, in person or by proxy, whether or not such stock shall have been
transferred into his name on the books of the Corporation, but if such stock
shall have not been so transferred, he shall, if requested as a prerequisite
to so voting, file with the Secretary a certified copy of his letters as such
executor, administrator or guardian or evidence of his appointment or authority
as such trustee. If there be two or more executors, administrators, guardians,
or trustees, any one of them may vote the stock in person or by proxy. The
instrument appointing a proxy shall be signed by the appointer, or if such
appointer is a corporation, by the proper officers thereof, provided that
minor variations between such signature and the name of the appointer as it
appears upon the stock books of the Corporation, or in the case of a
corporation, failure to affix the corporate seal, shall not invalidate the
proxy and, provided further, that if a proxy is appointed by telecopy, telex,
datagram, cable or radiogram, the typewritten signature of the appointer shall
be sufficient. Unless expressly limited by its terms, every instrument
appointing a proxy shall continue in full force and effect until a written
revocation thereof shall be filed with the Secretary. It is expressly provided
that the provisions of Section 416-77 of the Corporation Law of Hawaii, Title
23 of Hawaii Revised Statutes, shall not be applicable to any annual or
special meeting of stockholders of the Corporation.
SECTION 6. ELECTION OF DIRECTORS. Unless otherwise specifically required by
---------------------
law (upon the demand of one or more shareholders or otherwise) or by the
Corporation's Articles of Association, there shall be no cumulative voting in
the election of directors.
SECTION 7. ACTION AT MEETINGS OF STOCKHOLDERS. No business may be transacted
----------------------------------
at an annual meeting of stockholders, other than business that is either
(a) specified in the notice of meeting (or any supplement thereto) given by or
at the direction of the Board of Directors, (b) otherwise properly brought
before the annual meeting by or at the direction of the Board of Directors or
(c) otherwise properly brought before the annual meeting by any stockholder of
the Corporation (i) who is a stockholder of record on the date of the giving of
the notice provided for in this Section 7 and on the record date for the
determination of stockholders entitled to vote at such annual meeting and
(ii) who complies with the notice procedures set forth in this Section 7.
In addition to any other applicable requirements, for business properly to be
brought before an annual meeting by a stockholder, such stockholder must have
given timely notice thereof in proper written form to the Chairman of the
Board, if any, the President, or the Secretary of the Corporation.
To be timely, a stockholder's notice must be delivered to or mailed and
received at the principal executive offices of the Corporation not less than
ninety (90) days nor more than one hundred twenty (120) days prior to the
anniversary date of the immediately preceding annual meeting of stockholders;
provided, however, that in the event that the annual meeting is called for a
- -------- -------
date that is not within thirty (30) days before or after such anniversary
date, notice by the stockholder in order to be timely must be so received not
later than the close of business on the tenth (10th) day following the day on
which such notice of the date of the annual meeting was mailed or such public
disclosure of the date of the annual meeting was made, whichever first occurs.
To be in proper written form, a stockholder's notice must set forth as to each
matter such stockholder proposes to bring before the annual meeting (i) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (ii) the name
and record address of such stockholder, (iii) the class or series and number of
shares of capital stock of the Corporation which are owned beneficially or of
record by such stockholder, (iv) a description of all arrangements or
understandings between such stockholder and any other person or persons
(including their names) in connection with the proposal of such business by
such stockholder and any material interest of such stockholder in such business
and (v) a representation that such stockholder intends to appear in person or
by proxy at the annual meeting to bring such business before the meeting.
No business shall be conducted at the annual meeting of stockholders except
business brought before the annual meeting in accordance with the procedures
set forth in this Section 7, provided, however, that, once business has been
-------- -------
brought properly before the annual meeting in accordance with such procedures,
nothing in this Section 7 shall be deemed to preclude discussion by any
stockholder of any such business. If the Chairman of an annual meeting
determines that business was not brought properly before the annual meeting in
accordance with the foregoing procedures, the Chairman shall declare to the
meeting that the business was not brought properly before the meeting and such
business shall not be transacted.
The business transacted at any special meeting of stockholders called in the
manner set forth in Article II, Section 2 hereof shall be confined to the
business stated in the notice of meeting, as determined by the person or
persons calling such meeting.
SECTION 8. ADJOURNMENT. Any meeting of stockholders, whether annual or
-----------
special, and whether a quorum be present or not, may be adjourned from time to
time by the Chairman thereof, with the consent of the holders of a majority of
all of the shares of stock present or represented at such meeting, and entitled
to vote thereat, without notice other than the announcement at such meeting.
At any such adjourned meeting at which a quorum shall be present, any business
may be transacted which might have been transacted at the original meeting as
originally called and noticed.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. NUMBER AND TERM OF OFFICE. The Board of Directors shall consist of
-------------------------
not less than five directors, the exact number of directors to be determined
from time to time by resolution adopted by the affirmative vote of a majority
of the directors then in office. The Directors, except as otherwise in these
Bylaws provided, shall hold office until the annual meeting held next after
their election and until their respective successors, if any, shall have been
elected. The number of directors constituting the Board may be increased by
the Board of Directors from time to time during the period between annual
meetings.
No person shall be elected as a director at any annual meeting or special
meeting who has achieved the age of seventy-two years prior to such annual or
special meeting; provided, however, that this provision shall not be applicable
to any person who, prior to such annual or special meeting, has served as Chief
Executive Officer of the Corporation for a period of not less than five years.
Only persons who are nominated in accordance with the following procedures
shall be eligible for election as directors of the Corporation. Nominations of
persons for election to the Board of Directors may be made at any annual
meeting of stockholders, or at any special meeting of stockholders called in
the manner set forth in Article II, Section 2 hereof for the purpose of
electing directors, (a) by or on behalf of the Board of Directors or (b) by any
stockholder of the Corporation (i) who is a stockholder of record on the date
of the giving of the notice provided for in this Section 1 and on the record
date for the determination of stockholders entitled to vote at such meeting
and (ii) who complies with the notice procedures set forth in this Section 1.
In addition to any other applicable requirements, for a nomination to be made
by a stockholder, such stockholder must have given timely notice thereof in
proper written form to the Chairman of the Board, if any, the President, or
the Secretary of the Corporation.
To be timely, a stockholder's notice must be delivered to or mailed and
received at the principal executive offices of the Corporation (a) in the case
of an annual meeting, not less than sixty (60) days nor more than ninety (90)
days prior to the anniversary date of the immediately preceding annual meeting
of stockholders; provided, however, that in the event that the annual meeting
-------- -------
is called for a date that is not within thirty (30) days before or after such
anniversary date, notice by the stockholder in order to be timely must be so
received not later than the close of business on the tenth (10th) day following
the day on which such notice of the date of the annual meeting was mailed or
such public disclosure of the date of the annual meeting was made, whichever
first occurs; and (b) in the case of a special meeting of stockholders called
in the manner set forth in Article II, Section 2 hereof for the purpose of
electing directors, not later than the close of business on the tenth (10th)
day following the day on which notice of the date of the special meeting was
mailed or public disclosure of the date of the special meeting was made,
whichever first occurs.
To be in proper written form, a stockholder's notice must set forth (a) as to
each person whom the stockholder proposes to nominate for election as a
director (i) the name, age, business address and residence address of the
person, (ii) the principal occupation or employment of the person, (iii) the
class or series and number of shares of capital stock of the Corporation which
are owned beneficially or of record by the person and (iv) any other informa-
tion relating to the person that would be required to be disclosed in a proxy
statement or other filings required to be made in connection with solicitations
of proxies for election of directors pursuant to Section 14 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations promulgated thereunder; and (b) as to the stockholder giving the
notice (i) the name and record address of such stockholder, (ii) the class
or series and number of shares of capital stock of the Corporation which are
owned beneficially or of record by such stockholder, (iii) a description of all
arrangements or understandings between such stockholder and each proposed
nominee and any other person or persons (including their names) pursuant to
which the nomination(s) are to be made by such stockholder, (iv) a
representation that such stockholder intends to appear in person or by proxy at
the meeting to nominate the persons named in its notice and (v) any other
information relating to such stockholder that would be required to be disclosed
in a proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to Section 14 of
the Exchange Act and the rules and regulations promulgated thereunder. Such
notice must be accompanied by a written consent of each proposed nominee to
being named as a nominee and to serve as a director if elected.
No person shall be eligible for election as a director of the Corporation
unless nominated in accordance with the procedures set forth in this Section 1.
If the Chairman of the meeting determines that a nomination was not made in
accordance with the foregoing procedures, the Chairman shall declare to the
meeting that the nomination was defective and such defective nomination shall
be disregarded.
The directors may, at any time upon the affirmative vote of a majority of the
directors then in office, be divided into two or three classes, designated
Class I, Class II and, if any, Class III. The aggregate number of directors to
be divided into classes shall be fixed by the affirmative vote of a majority of
the directors then in office, but shall not be less than five directors, or
such higher or lower number as may be permitted by the Articles of Association.
Each class shall consist, as nearly as may be possible, of one-half or
one-third, as the case may be, of the total number of directors constituting
the entire Board. Each initial director in Class I shall hold office until the
first annual meeting of stockholders following the director's election; each
initial director in Class II shall hold office until the second annual meeting
of stockholders following the director's election; and each initial director in
Class III, if any, shall hold office until the third annual meeting of
stockholders following the director's election. At each succeeding annual
meeting of stockholders, successors to the class of directors whose term
expires at that annual meeting shall be elected for a two- or three-year term,
as the case may be. If the number of directors is changed, any increase or
decrease shall be apportioned among the classes so as to maintain the number
of directors in each class as nearly equal as possible, and any additional
director of any class elected to fill a vacancy resulting from an increase in
such class shall hold office for a term that shall coincide with the remaining
term of that class, but in no case will a decrease in the number of directors
shorten the term of any incumbent director. A director shall hold office until
the annual meeting for the year in which the director's term expires and until
the director's successor shall be elected, subject, however, to prior death,
resignation, retirement, disqualification or removal from office. Any vacancy
on the Board of Directors shall be filled by resolution adopted by a majority
of the directors then in office. Any director elected to fill a vacancy not
resulting from an increase in the number of directors shall have the same
remaining term as that of the director's predecessor.
Notwithstanding the foregoing, whenever the holders of any one or more classes
or series of preferred stock issued by the Corporation shall have the right,
voting separately by class or series, to elect directors at an annual or
special meeting of stockholders, the election, term of office, filling of
vacancies and other features of such directorship shall be governed by the
terms of the Articles of Association applicable thereto, and such directors so
elected shall not be divided into classes pursuant to this Section unless
expressly provided by such terms.
SECTION 2. REMOVAL OF DIRECTORS. At any annual meeting or any special meeting
--------------------
of stockholders duly called in accordance with these Bylaws for the purpose,
any director may be removed from office only for cause by the affirmative vote
of the holders of a majority of all of the shares of capital stock of the
Corporation outstanding and entitled to vote, and another person may be elected
in his place to serve for the remainder of his term. In case any vacancy so
created shall not be filled by the stockholders at such meeting, such vacancy
may be filled by the Board of Directors.
In addition, any director may be removed for cause at any time by the
affirmative vote of a majority of the other directors then in office. Any
vacancy in the Board of Directors created pursuant to the preceding sentence
may be filled by the remaining directors as provided in Section 6 of this
Article III.
SECTION 3. REGISTRATION, MEETINGS, NOTICE.
------------------------------
(a) Each director shall, upon election to such office, register with the
Corporation his mailing address.
(b) The Board of Directors shall, without any notice being given, hold a
meeting for the purpose of organization as soon as may be after each
annual meeting of stockholders.
(c) The Board of Directors may, in its discretion, schedule regular meetings
of the Board to be held at a stated time and place and no notice, written
or otherwise, of such meetings shall be required. The Board of Directors
may, in its discretion, alter the time and place for such regular meetings
from time to time.
(d) Special meetings of the Board of Directors may be called by the Chairman
of the Board of Directors, or in the absence of the Chairman, or if no
Chairman shall have been appointed, at the call of the President, and in
any case, at the call of any two Directors.
(e) The Secretary shall give notice of every special meeting of the Board of
Directors orally or by mailing or delivering a copy of the same to each
Director at his registered mailing address, not less than twenty-four
hours prior to any such meeting. Such notice shall constitute full legal
notice of any special meeting, whether actually received or not. No
special meeting and no business transacted at any such meeting shall be
invalidated or in any way affected by the failure of the Secretary to give
notice of such meeting to any director, or of any director to receive such
notice, if a quorum of the directors shall be present at such meeting.
SECTION 4. QUORUM, VOTING, ADJOURNMENT. A majority of the Board of Directors
---------------------------
in office from time to time shall constitute a quorum for the transaction of
any business. The act of a majority of the directors present at a meeting at
which a quorum is present shall be the act of the Board of Directors, except as
otherwise provided in these Bylaws. In the absence of a quorum, the Chairman
or a majority of the Directors present may adjourn the meeting from time to
time without further notice until a quorum shall be had.
SECTION 5. ACTION WITHOUT A MEETING. Any action required or permitted to be
------------------------
taken by the Board of Directors or any committee thereof may be taken without
a meeting if all of the members of the Board of Directors or all of the members
of the committee, as the case may be, shall consent in writing to the action
taken or to be taken at any time before or after the intended effective date of
such action. Such consent shall be filed with the minutes of the meetings of
the Board of Directors or committee, as the case may be, and shall have the
same effect as a unanimous vote.
SECTION 6. PERMANENT VACANCIES. If any permanent vacancy shall occur in the
-------------------
Board of Directors through death, resignation, removal or other cause, the
remaining directors, by the affirmative vote of a majority of directors then
in office, may elect a successor director to hold office for the unexpired
portion of the term of the director whose place shall be vacant.
SECTION 7. TEMPORARY VACANCIES, SUBSTITUTE DIRECTORS. If any temporary
-----------------------------------------
vacancy shall occur in the Board of Directors through the absence, sickness or
disability of any director, the remaining directors, whether constituting a
majority or a minority of the whole Board, may by the affirmative vote of a
majority of such remaining directors appoint some person as a substitute
director, who shall be a director during such absence, sickness or disability
and until such director shall return to duty or the office of such director
shall become permanently vacant. The determination of the Board of Directors,
as shown on the minutes, of the fact of such absence, sickness or disability
shall be conclusive as to all persons and to the Corporation.
SECTION 8. EXPENSES AND FEES. By resolution of the Board of Directors, such
-----------------
compensation, fees and expenses as the Board may from time to time determine
shall be allowed and paid to directors for services on the Board of any
Committee created by the Board, provided that nothing herein contained shall
be construed to preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.
SECTION 9. COMMITTEES. The Board of Directors may create such committees
----------
(including an executive committee or committees) consisting of such members of
the Board of Directors as the Board of Directors may designate from time to
time. The authorities and powers of each committee shall be as prescribed
from time to time by the Board of Directors. Each committee may make its own
rules of procedure unless otherwise prescribed by the Board of Directors.
SECTION 10. ELECTION OF PERSONS TO FILL DIRECTORSHIPS ESTABLISHED DURING THE
----------------------------------------------------------------
PERIOD BETWEEN ANNUAL MEETINGS. The election of persons to fill directorships
- ------------------------------
established by the Board of Directors by an increase in the size of the Board
shall be either by (a) the affirmative vote of a majority of the directors
then in office or (b) a vote of stockholders at a special meeting of
stockholders called for such purpose. Persons elected to newly-established
directorships shall hold office until the annual meeting of stockholders held
next after their election and until their respective successors, if any,
shall have been elected.
SECTION 11. LIMITATIONS ON NUMBER OF DIRECTORS. The only limitation on the
----------------------------------
power and authority of the Board of Directors to determine the number of
directors is that there shall be not less than five directors. There shall be
no other limitations, whether numerical, based on percentage increase or
decrease in the number of directors, or otherwise, on the power and authority
of the Board of Directors to determine the number of directors.
ARTICLE IV
OFFICERS, MANAGEMENT AND AUDITOR
SECTION 1. APPOINTMENT, TERM, REMOVAL. The officers of the Corporation shall
--------------------------
be the President, one or more vice presidents, the Secretary, the Treasurer,
the Controller and in addition thereto, in the discretion of the Board of
Directors, a Chairman of the Board, one or more assistant secretaries, one or
more assistant treasurers, and such other officers, with such duties, as the
Board of Directors shall from time to time determine. All officers shall be
appointed annually by the Board of Directors and, subject to removal as
hereinafter provided, shall serve until their respective successors shall have
been appointed. Any officer shall be subject to removal at any time, with or
without cause, by the affirmative vote of the majority of the whole Board. One
person may hold more than one office. The Board of Directors may, in its
discretion, appoint acting or temporary officers, and may appoint officers to
fill vacancies occurring for any reason whatsoever, and may, in its discretion,
from time to time limit or enlarge the duties and powers of any officer
appointed by it.
SECTION 2. CHAIRMAN OF THE BOARD. The Chairman of the Board, if appointed,
---------------------
shall preside at all meetings of the stockholders and the Board of Directors
unless otherwise prescribed by the Board. He shall also exercise such powers
and perform such other duties as may be assigned to him by the Articles of
Association or these Bylaws or by resolution of the Board of Directors.
SECTION 3. THE PRESIDENT. The President (in the absence of the Chairman of
-------------
the Board, if appointed) shall preside at all of the meetings of the stock-
holders and Board of Directors. He shall be responsible for the general
management and supervision of the operations and affairs of the corporation
unless otherwise prescribed by the Board of Directors. He shall also exercise
such powers and perform such other duties as may be assigned to him by the
Articles of Association or these Bylaws or by resolution by the Board of
Directors.
SECTION 4. THE VICE PRESIDENT OR VICE PRESIDENTS. The Vice President or Vice
-------------------------------------
Presidents shall, in such order as the Board of Directors shall determine,
perform all the duties and exercise all of the powers of the President provided
by these Bylaws or otherwise, during the absence or disability of the President
or whenever the office of President shall be vacant, and shall perform all
other duties assigned to him or them by the Board of Directors.
SECTION 5. THE SECRETARY. The Secretary shall attend all meetings of the
-------------
stockholders, the Board of Directors, and, if created, the Executive Committee,
and shall have responsibility for preparation and custody of the minutes of
such meetings and for authenticating records of the Corporation. He shall give
notice, in conformity with these Bylaws, of meetings of stockholders and, where
required, of the Board of Directors. In the absence of the Chairman of the
Board of Directors and of the President and the Vice President or vice
presidents, if more than one, he shall have power to call such meetings and
shall preside thereat until a president pro tempore shall be chosen.
The Secretary shall keep, or cause to be kept, at the principal office of the
Corporation or at the office of the Corporation's stock transfer agent, a share
register, or a duplicate share register, showing the names of the stockholders
and their addresses, the number and classes of shares held by each, the number
and date of cancellation of every certificate surrendered for cancellation.
The Secretary shall perform all other duties incident to his office, or which
may be assigned to him by the Board of Directors or the President or the
Bylaws.
SECTION 6. THE TREASURER. The Treasurer shall have custody of all the funds,
-------------
notes, bonds and other investments of the Corporation. He shall deposit or
cause to be deposited in the name of the Corporation all monies and other
valuable effects in such banks, trust companies, or other depositories as shall
from time to time be designated by the Board of Directors. He shall make such
disbursements as the regular course of the business of the Corporation may
require or the Board of Directors may order. He shall render to the President
and Directors, whenever they request it, an account of all of the transactions
as Treasurer, and shall have such other powers and perform such other duties as
may be prescribed by the Board of Directors or the President or the Bylaws.
SECTION 7. ASSISTANT SECRETARY AND ASSISTANT TREASURER. The Assistant
-------------------------------------------
Secretary or assistant secretaries and the Assistant Treasurer or assistant
treasurers, if appointed, shall, in such order as the Board of Directors may
determine, perform all of the duties and exercise all of the powers of the
Secretary and Treasurer, respectively, during the absence or disability of, and
in the event of a vacancy in the office of, the Secretary or Treasurer,
respectively, and shall perform all of the duties assigned to him or them by
the President, the Secretary in the case of assistant secretaries, the
Treasurer in the case of the assistant treasurers, or the Board of Directors.
SECTION 8. ABSENCE OF OFFICERS. In the absence or disability of the President
-------------------
and the Chairman of the Board, if appointed, and the Vice President or vice
presidents, if more than one, the duties of the President (other than the
calling of meetings of the stockholders and the Board of Directors) shall be
performed by such persons as may be designated for such purpose by the Board of
Directors. In the absence or disability of the Secretary and of the Assistant
Secretary or assistant secretaries, if more than one, or of the Treasurer and
the Assistant Treasurer or assistant treasurers, if more than one, the duties
of the Secretary or of the Treasurer, as the case may be, shall be performed by
such person or persons as may be designated for such purpose by the Board of
Directors.
SECTION 9. AUDITOR. The Auditor shall audit the books and accounts of the
-------
Corporation at such time or times as may be required by the Board of Directors,
but in any event not less often than annually, and shall certify his findings
and report thereon in writing to the stockholders. The Auditor shall make such
other audits, examinations and reports as the Board of Directors shall
determine from time to time.
SECTION 10. CONTROLLER. The Controller shall have custody of and supervise
----------
and control the keeping of the accounts and books of this Corporation, and
shall develop records and procedures for control of costs; maintain proper
tax records and supervise the preparation of tax returns, develop procedures
for internal auditing and maintain proper relationships with the external
auditors designated by the stockholders; administer programs relating to
capital expenditure and operating budgets, prepare the financial statements
of the Company, and perform such other duties as the President may from time
to time determine.
ARTICLE V
EXECUTION OF INSTRUMENTS
SECTION 1. PROPER OFFICERS. Except as hereinafter provided, or as required by
---------------
law, all checks, drafts, notes, bonds, acceptances, deeds, leases, contracts,
bills of exchange, orders for the payment of money, licenses, endorsements,
stock powers, powers of attorney, proxies, waivers, consents, returns, reports,
applications, notices, mortgages, and other instruments or writings of any
nature which require execution on behalf of the Corporation, shall be signed or
endorsed by such person or persons and in such manner as the Board of Directors
may determine from time to time by resolution.
SECTION 2. FACSIMILE SIGNATURES. The Board of Directors may, from time to
--------------------
time, by resolution provide for the execution of any corporate instrument or
document, including, but not limited to, checks, warrants, drafts, and other
orders for the payment of money, by a mechanical device or machine or by the
use of facsimile signatures under such terms and conditions as shall be set
forth in such resolution.
ARTICLE VI
VOTING OF STOCK BY THE CORPORATION
In all cases where the Corporation owns, holds, or represents under power of
attorney or by proxy or in any other representative capacity shares of capital
stock of any corporation or shares or interests in business trusts,
co-partnerships, or other associations, such shares or interest shall be
represented or voted in person or by proxy by the Chairman of the Board (if
also Chief Executive Officer) or in the absence of the Chairman of the Board
(or if such person is not also Chief Executive Officer) by the President, or
in his absence by the Vice President, or if there be more than one vice
president present, then by such vice president as the Board of Directors shall
have designated as Executive Vice President, or failing any such designation,
by any vice president, or in the absence of any vice president, by the
Treasurer, or in his absence, by the Secretary; provided, however, that any
person specifically appointed by the Board of Directors for the purpose shall
have the right and authority to represent and vote such shares or interests
with precedence over all of the above-named.
ARTICLE VII
CAPITAL STOCK
SECTION 1. CERTIFICATES OF STOCK. The certificates of stock of each class
---------------------
shall be in such form and of such device as the Board of Directors may, from
time to time, determine. They shall be signed by the Chairman of the Board, if
appointed, or the President or a vice president and by the Treasurer or the
Secretary or an assistant treasurer or assistant secretary and shall bear the
corporate seal, provided, however, that the Board of Directors in its
discretion may provide that any certificate which shall be signed by a transfer
agent or by a registrar may be sealed with only the facsimile seal of the
Corporation and may be signed with only the facsimile signatures of the
officers above designated. In case any officer who has signed or whose
facsimile signature has been placed upon any certificate shall have ceased to
be such officer before such certificate is issued, such certificate may,
nevertheless, be issued with the same effect as if such officer had not ceased
to be such at the date of its issue. Certificates shall not be issued for nor
shall there be registered any transfer of any fraction of a share. In the
event that fractional parts of or interests in any share shall result in any
manner from any action by the stockholders or directors of the Corporation,
the Treasurer may sell the aggregate of such fractional interests under such
reasonable terms and conditions as the Treasurer shall determine subject,
however, to the control of the Board of Directors, and distribute the proceeds
thereof to the person or persons entitled thereto.
SECTION 2. HOLDER OF RECORD. The Corporation shall be entitled to treat the
----------------
person whose name appears on the stock books of the Corporation as the owner of
any share, as the absolute owner thereof for all purposes, and shall not be
under any obligation to recognize any trust or equity or equitable claim to or
interest in such share, whether or not the Corporation shall have actual or
other notice thereof.
SECTION 3. TRANSFER OF STOCK. Transfer of stock may be made in any manner
-----------------
permitted by law, but no transfer shall be valid (except between the parties
thereto) until the transfer shall have been duly recorded in the stock books of
the Corporation and a new certificate issued. No transfer shall be entered in
the stock books of the Corporation, nor shall any new certificate be issued
until the old certificate, properly endorsed, shall be surrendered and
canceled.
SECTION 4. CLOSING OF TRANSFER BOOKS. The Board of Directors shall have power
-------------------------
for any corporate purpose from time to time to close the stock transfer books
of the Corporation for a period not exceeding thirty consecutive business days,
provided, however, that in lieu of closing the stock transfer books as
aforesaid, the Board of Directors may fix a record date for the payment of any
dividend or for the allotment of rights or for the effective date of any
change, conversion or exchange of capital stock or in connection with obtaining
the consent of stockholders in any matter requiring their consent or for the
determination of the stockholders entitled to notice of or to vote at any
meeting of stockholders, and in any such case, only such stockholders as shall
be stockholders of record on the record date so fixed shall be entitled to the
rights, benefits and privileges incident to ownership of the shares of stock
for which such record date has been fixed, notwithstanding any transfer of
stock on the books of the corporation after such record date.
SECTION 5. LOST CERTIFICATES. The Board of Directors may, subject to such
-----------------
rules and regulations as it may adopt from time to time, order a new
certificate or certificates of stock to be issued in the place of any
certificate or certificates of stock of the Corporation alleged to have been
lost or destroyed, but in every such case, the owner of the lost or destroyed
certificate or certificates shall be required to file with the Board of
Directors or the stock transfer agent of the Corporation sworn evidence showing
the facts connected with such loss or destruction. The Board of Directors may,
in its discretion, further require that a notice or notices shall be published
not less than once each week for three consecutive weeks or for such other
length of time as the Board of Directors may provide in any special case in one
or more newspapers of general circulation, which notice shall describe the lost
or destroyed certificate, seek its recovery and warn all persons against
negotiating, transferring or accepting the same. Unless the Board of Directors
shall otherwise direct, the owner of the lost or destroyed certificate shall be
required to give to the Corporation a bond or undertaking in such sum, in such
form, and with such surety or sureties as the Board of Directors may approve,
to indemnify the Corporation against any loss, damage, or liability that the
Corporation may incur by reason of the issuance of a new certificate or
certificates. Nothing in this section contained shall impair the right of the
Board of Directors, in its discretion, to refuse to replace any allegedly lost
or destroyed certificate, save upon the order of the court having jurisdiction
in the matter.
SECTION 6. STOCK RIGHTS AND OPTIONS. The Corporation may create and issue,
------------------------
whether or not in connection with the issuance and sale of any of its shares or
other securities, rights or options entitling the holders thereof to purchase
from the Corporation shares of any class or classes. Such rights or options
shall be evidenced in such manner as the Board shall approve and, subject to
the provisions of the Articles of Association, shall set forth the terms upon
which, the time or times within which, and the price or prices at which, such
shares may be purchased from the Corporation upon the exercise of any right or
option. The documents evidencing such rights or options may include conditions
on the exercise of such rights or options, including conditions that preclude
the holder or holders, including any subsequent transferees, of at least a
specified percentage of the common stock of the Corporation from exercising
such rights or options. No approval by the stockholders of the Corporation
shall be required for the issuance of such rights or options to directors,
officers or employees of the Corporation or any subsidiary, or to the
stockholders.
SECTION 7. CONSIDERATION FOR SHARES. The Corporation may issue any share of
------------------------
stock, with or without par value, in consideration of any one or any combina-
tion of more than one of the following: money paid; labor done; services
actually rendered; debts or securities canceled; tangible or intangible
property actually received; amounts transferred to capital from any surplus
of the Corporation upon the issue of shares as a stock dividend; and such other
consideration as may be permitted by Chapter 416, Hawaii Revised Statutes.
Except as may be prohibited by Chapter 416, nothing herein is intended to
prohibit the issuance of shares of stock held as treasury shares by the
Corporation to any officer, director or employee of the Corporation pursuant to
any stock bonus plan or plans, in consideration of future services to be
performed by such officer, director or employee for the Corporation.
SECTION 8. VOTING RECORD. The officer or agent having charge of the
-------------
Corporation's stock transfer books shall make a complete record of the
stockholders entitled to vote at any meeting of stockholders or adjournment
thereof, in accordance with the provisions of Section 415-31, Hawaii Revised
Statutes. Such record shall be produced and kept open at the time and place of
the stockholders' meeting and shall be subject to the inspection of any
stockholder during the whole time of the meeting for the purposes thereof, and
such record shall not be produced and kept open for such inspection at any
other time and place, or for copying at any time and place, except in either
case as may be required pursuant to Section 415-52, Hawaii Revised Statutes.
ARTICLE VIII
AMENDMENT
These Bylaws may be altered, amended or repealed from time to time by the Board
of Directors, subject to repeal or change by the affirmative vote of the
holders of a majority of all of the shares of capital stock of the Corporation
outstanding and entitled to vote.
ALEXANDER & BALDWIN, INC.
Resolutions of the
Board of Directors
February 22, 2001
-------------------
Amendments to A&B Bylaws
------------------------
RESOLVED, that the Revised Bylaws of the Corporation, as amended effective
June 25, 1998 (the "Bylaws") be, and they hereby are, amended effective as of
this date as follows:
1. Article III of the Bylaws is amended by adding the following new
Section 11:
"SECTION 11. Limitations on Number of Directors. The only limitation
----------------------------------
on the power and authority of the Board of Directors to determine the
number of directors is that there shall be not less than five
directors. There shall be no other limitations, whether numerical,
based on percentage increase or decrease in the number of directors,
or otherwise, on the power and authority of the Board of Directors to
determine the number of directors."
2. Section 5 of Article IV of the Bylaws (captioned "The Secretary") is
amended by replacing the first sentence thereof with the following
sentence:
"The Secretary shall attend all meetings of the stockholders, the
Board of Directors, and, if created, the Executive Committee, and
shall have responsibility for preparation and custody of the minutes
of such meetings and for authenticating records of the Corporation."
3. Section 6 of Article VII of the Bylaws (captioned "Stock Rights and
Options") is amended by adding the following sentence between the second
and third sentences thereof:
"The documents evidencing such rights or options may include
conditions on the exercise of such rights or options, including
conditions that preclude the holder or holders, including any
subsequent transferees, of at least a specified percentage of the
common stock of the Corporation from exercising such rights or
options."
4. Article VII of the Bylaws is amended by adding the following new
Section 8:
"SECTION 8. Voting Record. The officer or agent having charge of the
-------------
Corporation's stock transfer books shall make a complete record of the
stockholders entitled to vote at any meeting of stockholders or
adjournment thereof, in accordance with the provisions of Section
415-31, Hawaii Revised Statutes. Such record shall be produced and
kept open at the time and place of the stockholders' meeting and shall
be subject to the inspection of any stockholder during the whole time
of the meeting for the purposes thereof, and such record shall not be
produced and kept open for such inspection at any other time and
place, or for copying at any time and place, except in either case as
may be required pursuant to Section 415-52, Hawaii Revised Statutes."
FURTHER RESOLVED, that the Chairman of the Board, the President, any Vice
President, and the Secretary or any Assistant Secretary of this Corporation be,
and they hereby are, authorized and empowered for and on behalf of this
Corporation to execute, seal with the corporate seal and deliver such
restatements, certifications and other documents and to take any and all other
actions as may, in the discretion of the officers so acting, be deemed
necessary, appropriate or desirable to effectuate the Bylaw amendments
authorized by the foregoing resolution.
Prepared by A&B Law Department
NINTH AMENDMENT TO GRID NOTE
----------------------------
THIS NINTH AMENDMENT TO GRID NOTE is made on November 16, 2000, and
effective as of November 30, 2000, by and between ALEXANDER & BALDWIN, INC., a
Hawaii corporation, hereinafter called the "Maker", and FIRST HAWAIIAN BANK, a
Hawaii corporation, hereinafter called the "Bank";
WITNESSETH THAT;
----------------
WHEREAS, the Bank extended to the Maker that certain uncommitted line of
credit facility in the principal amount not to exceed FORTY MILLION AND NO/100
DOLLARS ($40,000,000.00) which line of credit is evidenced by that certain Grid
Note (the "Note") dated December 30, 1993, with a final maturity of said Note
being November 30, 1994; and
WHEREAS, the Maker and the Bank subsequently entered into that certain
Amendment to Grid Note dated August 31, 1994, whereby the Note was increased to
SIXTY-FIVE MILLION AND NO/100 DOLLARS ($65,000,000.00), Section 4 of the Note,
"Limitation" was deleted in its entirety and replaced, and the Note was
- ------------
extended to November 30, 1995; and
WHEREAS, the Maker and the Bank subsequently entered into that Second
Amendment to Grid Note dated March 29, 1995, whereby the Note was decreased to
FORTY-FIVE MILLION AND NO/100 DOLLARS ($45,000,000.00), and Section 4 of the
Note, entitled "Limitation" was deleted in its entirety and replaced, and
------------
WHEREAS, the Maker and the Bank subsequently entered into that Third
Amendment to Grid Note dated November 17, 1995, whereby the Note was extended
to November 30, 1996; and
WHEREAS, the Maker and the Bank subsequently entered into that Fourth
Amendment to Grid Note dated November 25, 1996, whereby the Note was extended
to November 30, 1997; and
WHEREAS, the Maker and the Bank subsequently entered into that Fifth
Amendment to Grid Note dated November 28, 1997, whereby the Note was extended
to November 30, 1998; and
WHEREAS, the Maker and the Bank subsequently entered into that Sixth
Amendment to Grid Note dated November 30, 1998, whereby the Note was extended
to November 30, 1999; and
WHEREAS, the Maker and the Bank subsequently entered into that Seventh
Amendment to Grid Note dated November 23, 1999, whereby the Note as extended to
November 30, 2000, and with the merger of A&B-Hawaii, Inc. into Alexander &
Baldwin, Inc., with Alexander & Baldwin, Inc. being the surviving corporation,
the obligations of A&B-Hawaii, Inc. under the Note were terminated, with all
references in the Note to the Maker deemed to be references to Alexander &
Baldwin, Inc.; and
WHEREAS, the Maker and the Bank subsequently entered into that certain
Eighth Amendment to Grid Note dated May 3, 2000, whereby the Note was
increased to SEVENTY MILLION AND NO/100 DOLLARS ($70,000,000.00), and Section 4
of the Note, "Limitation" was deleted in its entirety and replaced; and
------------
WHEREAS, the Maker and the Bank desire to further amend the Note as
hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the Maker and the Bank agree as follows:
1. The Maturity Date of the Note, as previously amended, shall be and
hereby is further amended to provide that all unpaid principal and accrued but
unpaid interest shall be due and payable on NOVEMBER 30, 2001, unless sooner
due as otherwise provided in the Note.
2. In all other respects, the Note, as herein amended, shall remain
unmodified and in full force and effect, and the Maker hereby reaffirms all of
its obligations under the Note, as previously amended, and as amended hereby.
Without limiting the generality of the foregoing, the Maker hereby expressly
acknowledges and agrees that, as of the date of this NINTH AMENDMENT TO GRID
NOTE, the Maker has no offsets, claims or defenses whatsoever against the Bank
or against any of the Maker's obligations under the Note, as previously
amended, and as amended hereby, and that if any such claims, defenses or
offsets exist, they are hereby irrevocably waived and released.
IN WITNESS WHEREOF, this Ninth Amendment to Grid Note is executed by the
undersigned parties on the date first above written.
ALEXANDER & BALDWIN, INC., FIRST HAWAIIAN BANK,
a Hawaii corporation a Hawaii corporation
By: /s/ Thomas A. Wellman By: /s/ Danford H. Oshima
--------------------- ---------------------
Its: Controller & Asst. Treasurer Its: Vice President
By: /s/ J. S. Andrasick
---------------------
Its: Senior VP, CFO & Treasurer
ALEXANDER & BALDWIN, INC.
1989 STOCK OPTION/STOCK INCENTIVE PLAN
--------------------------------------
AMENDMENT NO. 4
---------------
The Alexander & Baldwin, Inc. 1989 Stock Option/Stock Incentive Plan (the
"Plan") is hereby amended, effective as of October 25, 2000, as follows:
1. Subparagraphs D of the "CORPORATE TRANSACTION/CHANGE IN CONTROL"
---------------------------------------
sections under Articles II and III of the Plan are hereby amended by replacing
clauses (i) and (ii) thereof with the following:
"(i) any "person" (defined as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "bene-
ficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 35%
or more of the combined voting power of the Company's then outstanding
securities;
(ii) at least a majority of the Board ceases to consist of
(a) individuals who have served continuously on the Board since
January 1, 2000 and (b) new directors (other than a director whose
initial assumption of office is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company)
whose election, or nomination for election by the Company's share-
holders, was approved by a vote of at least two-thirds of the direc-
tors then still in office who shall at that time have served
continuously on the Board since January 1, 2000 or whose election or
nomination was previously so approved;
(iii) there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with any
other entity, other than (a) a merger or consolidation immediately
following which the individuals who comprise the Board immediately
prior thereto constitute at least a majority of the board of directors
of the Company, the entity surviving such merger or consolidation or
any parent thereof or (b) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction)
in which no person is or becomes the beneficial owner, directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such person any securities acquired
directly from the Company or its affiliates) representing 35% or more
of the combined voting power of the Company's then outstanding securi-
ties; or
(iv) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or there is
consummated an agreement for the sale or disposition by the Company of
all or substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the
Company's assets to an entity at least a majority of the board of
directors of which or of any parent thereof is comprised of indi-
viduals who comprised the Board immediately prior to such sale or
disposition;"
2. Subparagraphs D of the "CORPORATE TRANSACTION/CHANGE IN CONTROL"
---------------------------------------
sections under Articles II and III of the Plan are hereby further amended by
adding the following sentence to the end thereof:
"Notwithstanding the foregoing, a Change in Control of the Company
shall not be deemed to have occurred by virtue of the consummation of
any transaction or series of integrated transactions immediately
following which the holders of the common stock of the Company
immediately prior to such transaction or series of transactions
continue to have substantially the same proportionate ownership in an
entity which owns all or substantially all of the assets of the
Company immediately following such transaction or series of
transactions."
3. Subparagraph A.3.c. of the "Corporate Transaction/
----------------------
Change in Control" section under Article IV of the Plan is hereby amended by
replacing clauses (i) and (ii) thereof with the following:
"(i) any "person" (defined as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "bene-
ficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 35%
or more of the combined voting power of the Company's then outstanding
securities;
(ii) at least a majority of the Board ceases to consist of
(a) individuals who have served continuously on the Board since
January 1, 2000 and (b) new directors (other than a director whose
initial assumption of office is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company)
whose election, or nomination for election by the Company's share-
holders, was approved by a vote of at least two-thirds of the direc-
tors then still in office who shall at that time have served
continuously on the Board since January 1, 2000 or whose election or
nomination was previously so approved;
(iii) there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with any
other entity, other than (a) a merger or consolidation immediately
following which the individuals who comprise the Board immediately
prior thereto constitute at least a majority of the board of directors
of the Company, the entity surviving such merger or consolidation or
any parent thereof or (b) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction)
in which no person is or becomes the beneficial owner, directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such person any securities acquired
directly from the Company or its affiliates) representing 35% or more
of the combined voting power of the Company's then outstanding securi-
ties; or
(iv) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or there is
consummated an agreement for the sale or disposition by the Company of
all or substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the
Company's assets to an entity at least a majority of the board of
directors of which or of any parent thereof is comprised of indi-
viduals who comprised the Board immediately prior to such sale or
disposition.
Notwithstanding the foregoing, a Change in Control of the Company
shall not be deemed to have occurred by virtue of the consummation of
any transaction or series of integrated transactions immediately
following which the holders of the common stock of the Company
immediately prior to such transaction or series of transactions
continue to have substantially the same proportionate ownership in an
entity which owns all or substantially all of the assets of the
Company immediately following such transaction or series of
transactions."
4. Except as modified by this Amendment, all the terms and provisions
of the Alexander & Baldwin, Inc. 1989 Stock Option/Stock Incentive Plan shall
continue in full force and effect.
IN WITNESS WHEREOF, Alexander & Baldwin, Inc. has caused this
Amendment to be executed on its behalf by its duly-authorized officers on this
25th day of October, 2000.
ALEXANDER & BALDWIN, INC.
By /s/ John F. Gasher
Its Vice President
By /s/ Alyson J. Nakamura
Its Secretary
ALEXANDER & BALDWIN, INC.
1989 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
--------------------------------------------
AMENDMENT NO. 3
---------------
The Alexander & Baldwin, Inc. 1989 Non-Employee Director Stock Option
Plan (hereinafter the "Plan") is hereby amended, effective as of October 25,
2000, as follows:
1. Subparagraph A of the "CANCELLATION OF OPTIONS" section under
Article II of the Plan is hereby amended by replacing clauses (i) and (ii)
thereof with the following:
"(i) any "person" (defined as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "bene-
ficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Corporation representing
35% or more of the combined voting power of the Corporation's then
outstanding securities;
(ii) at least a majority of the Board ceases to consist of
(a) individuals who have served continuously on the Board since
January 1, 2000 and (b) new directors (other than a director whose
initial assumption of office is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the
Corporation) whose election, or nomination for election by the
Corporation's shareholders, was approved by a vote of at least
two-thirds of the directors then still in office who shall at that
time have served continuously on the Board since January 1, 2000 or
whose election or nomination was previously so approved;
(iii) there is consummated a merger or consolidation of the
Corporation or any direct or indirect subsidiary of the Corporation
with any other entity, other than (a) a merger or consolidation
immediately following which the individuals who comprise the Board
immediately prior thereto constitute at least a majority of the board
of directors of the Corporation, the entity surviving such merger or
consolidation or any parent thereof or (b) a merger or consolidation
effected to implement a recapitalization of the Corporation (or
similar transaction) in which no person is or becomes the beneficial
owner, directly or indirectly, of securities of the Corporation (not
including in the securities beneficially owned by such person any
securities acquired directly from the Corporation or its affiliates)
representing 35% or more of the combined voting power of the Corpora-
tion's then outstanding securities; or
(iv) the stockholders of the Corporation approve a plan of
complete liquidation or dissolution of the Corporation or there is
consummated an agreement for the sale or disposition by the
Corporation of all or substantially all of the Corporation's assets,
other than a sale or disposition by the Corporation of all or substan-
tially all of the Corporation's assets to an entity at least a
majority of the board of directors of which or of any parent thereof
is comprised of individuals who comprised the Board immediately prior
to such sale or disposition;"
2. Subparagraph A of the "CANCELLATION OF OPTIONS" section under
Article II of the Plan is hereby further amended by adding the following
sentence to the end thereof:
"Notwithstanding the foregoing, a Change in Control of the Corporation
shall not be deemed to have occurred by virtue of the consummation of
any transaction or series of integrated transactions immediately
following which the holders of the common stock of the Corporation
immediately prior to such transaction or series of transactions
continue to have substantially the same proportionate ownership in an
entity which owns all or substantially all of the assets of the
Corporation immediately following such transaction or series of
transactions."
3. Except as modified by this Amendment, all the terms and provisions
of the Alexander & Baldwin, Inc. 1989 Non-Employee Director Stock Option Plan
shall continue in full force and effect.
IN WITNESS WHEREOF, Alexander & Baldwin, Inc. has caused this
Amendment to be executed on its behalf by its duly-authorized officers on this
25th day of October, 2000.
ALEXANDER & BALDWIN, INC.
By /s/ John F. Gasher
Its Vice President
By /s/ Alyson J. Nakamura
Its Secretary
ALEXANDER & BALDWIN, INC.
1998 STOCK OPTION/STOCK INCENTIVE PLAN
--------------------------------------
AMENDMENT NO. 1
---------------
The Alexander & Baldwin, Inc. 1998 Stock Option/Stock Incentive Plan (the
"Plan") is hereby amended, effective as of October 25, 2000, as follows:
1. The definition of "Change in Control" set forth in the Appendix is
hereby amended in its entirety to read as follows:
"B. CHANGE IN CONTROL shall mean a change in control of a nature
-----------------
that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the 1934 Act, whether
or not the Corporation in fact is required to comply with Regula-
tion 14A thereunder; provided that, without limitation, such a change
in control shall be deemed to have occurred if:
(i) any "person" (defined as such term is used in Sections
13(d) and 14(d) of the 1934 Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of
securities of the Corporation representing 35% or more of the combined
voting power of the Corporation's then outstanding securities;
(ii) at least a majority of the Board ceases to consist of
(a) individuals who have served continuously on the Board since
January 1, 2000 and (b) new directors (other than a director whose
initial assumption of office is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the
Corporation) whose election, or nomination for election by the
Corporation's shareholders, was approved by a vote of at least
two-thirds of the directors then still in office who shall at that
time have served continuously on the Board since January 1, 2000 or
whose election or nomination was previously so approved;
(iii) there is consummated a merger or consolidation of the
Corporation or any direct or indirect subsidiary of the Corporation
with any other entity, other than (a) a merger or consolidation
immediately following which the individuals who comprise the Board
immediately prior thereto constitute at least a majority of the board
of directors of the Corporation, the entity surviving such merger or
consolidation or any parent thereof or (b) a merger or consolidation
effected to implement a recapitalization of the Corporation (or
similar transaction) in which no person is or becomes the beneficial
owner, directly or indirectly, of securities of the Corporation (not
including in the securities beneficially owned by such person any
securities acquired directly from the Corporation or its affiliates)
representing 35% or more of the combined voting power of the
Corporation's then outstanding securities; or
(iv) the stockholders of the Corporation approve a plan of
complete liquidation or dissolution of the Corporation or there is
consummated an agreement for the sale or disposition by the
Corporation of all or substantially all of the Corporation's assets,
other than a sale or disposition by the Corporation of all or substan-
tially all of the Corporation's assets to an entity at least a
majority of the board of directors of which or of any parent thereof
is comprised of individuals who comprised the Board immediately prior
to such sale or disposition.
Notwithstanding the foregoing, a Change in Control of the Corporation
shall not be deemed to have occurred by virtue of the consummation of
any transaction or series of integrated transactions immediately
following which the holders of the common stock of the Corporation
immediately prior to such transaction or series of transactions
continue to have substantially the same proportionate ownership in an
entity which owns all or substantially all of the assets of the
Corporation immediately following such transaction or series of
transactions."
2. Except as modified by this Amendment, all the terms and provisions
of the Alexander & Baldwin, Inc. 1998 Stock Option/Stock Incentive Plan shall
continue in full force and effect.
IN WITNESS WHEREOF, Alexander & Baldwin, Inc. has caused this Amendment
No. 1 to be executed on its behalf by its duly-authorized officers on this 25th
day of October, 2000.
ALEXANDER & BALDWIN, INC.
By /s/ John F. Gasher
Its Vice President
By /s/ Alyson J. Nakamura
Its Secretary
ALEXANDER & BALDWIN, INC.
1998 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
--------------------------------------------
AMENDMENT NO. 1
---------------
The Alexander & Baldwin, Inc. 1998 Non-Employee Director Stock Option
Plan (hereinafter the "Plan") is hereby amended, effective as of October 25,
2000, as follows:
1. Paragraph A of Section III ("CHANGE IN CONTROL") under Article Two
-----------------
of the Plan is hereby amended in its entirety to read as follows:
"A. Each option outstanding at the time of a Change in Control,
as defined below, but not otherwise fully exercisable shall automatically
accelerate so that each such option shall, immediately prior to the
effective date of the Change in Control, become exercisable for all of
the shares of Common Stock at the time subject to that option and may
be exercised for any or all of those shares as fully-vested shares of
Common Stock. A Change in Control shall mean a change in control of a
nature that would be required to be reported in response to Item 6(e)
of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), whether or not the
Corporation in fact is required to comply with Regulation 14A
thereunder; provided that, without limitation, such a change in
control shall be deemed to have occurred if:
(i) any "person" (defined, for purposes of this
Section III, as such term is used in Sections 13(d) and
14(d) of the 1934 Act) is or becomes the "beneficial owner"
(defined, for purposes of this Section III, as defined in
Rule 13d-3 under the 1934 Act), directly or indirectly, of
securities of the Corporation representing 35% or more of
the combined voting power of the Corporation's then out-
standing securities;
(ii) at least a majority of the Board ceases to consist of
(a) individuals who have served continuously on the Board
since January 1, 2000 and (b) new directors (other than a
director whose initial assumption of office is in connection
with an actual or threatened election contest, including but
not limited to a consent solicitation, relating to the
election of directors of the Corporation) whose election, or
nomination for election by the Corporation's shareholders,
was approved by a vote of at least two-thirds of the
directors then still in office who shall at that time have
served continuously on the Board since January 1, 2000 or
whose election or nomination was previously so approved;
(iii) there is consummated a merger or consolidation of the
Corporation or any direct or indirect subsidiary of the
Corporation with any other entity, other than (a) a merger
or consolidation immediately following which the individuals
who comprise the Board immediately prior thereto constitute
at least a majority of the board of directors of the
Corporation, the entity surviving such merger or
consolidation or any parent thereof or (b) a merger or
consolidation effected to implement a recapitalization of
the Corporation (or similar transaction) in which no person
is or becomes the beneficial owner, directly or indirectly,
of securities of the Corporation (not including in the
securities beneficially owned by such person any securities
acquired directly from the Corporation or its affiliates)
representing 35% or more of the combined voting power of the
Corporation's then outstanding securities; or
(iv) the stockholders of the Corporation approve a plan of
complete liquidation or dissolution of the Corporation or
there is consummated an agreement for the sale or
disposition by the Corporation of all or substantially all
of the Corporation's assets, other than a sale or disposi-
tion by the Corporation of all or substantially all of the
Corporation's assets to an entity at least a majority of the
board of directors of which or of any parent thereof is
comprised of individuals who comprised the Board immediately
prior to such sale or disposition.
Notwithstanding the foregoing, a Change in Control of the Corporation
shall not be deemed to have occurred by virtue of the consummation of
any transaction or series of integrated transactions immediately
following which the holders of the common stock of the Corporation
immediately prior to such transaction or series of transactions
continue to have substantially the same proportionate ownership in an
entity which owns all or substantially all of the assets of the
Corporation immediately following such transaction or series of
transactions."
2. Except as modified by this Amendment, all the terms and provisions
of the Alexander & Baldwin, Inc. 1998 Non-Employee Director Stock Option Plan
shall continue in full force and effect.
IN WITNESS WHEREOF, Alexander & Baldwin, Inc. has caused this
Amendment to be executed on its behalf by its duly-authorized officers on this
25th day of October, 2000.
ALEXANDER & BALDWIN, INC.
By /s/ John F. Gasher
Its Vice President
By /s/ Alyson J. Nakamura
Its Secretary
A&B EXCESS BENEFITS PLAN
------------------------
AMENDMENT NO. 6
---------------
The A&B Excess Benefits Plan (the "Plan"), as amended and restated
effective February 1, 1995, is hereby amended, effective as of October 25,
2000, as follows:
1. Section 6.02(b) is hereby amended in its entirety to read as follows:
"(b) DEFINITION OF CHANGE IN CONTROL. For purposes of this
-------------------------------
Section 6.02, a "Change in Control" of Alexander & Baldwin, Inc. shall
mean a change in control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended (the
"1934 Act"), whether or not Alexander & Baldwin, Inc. in fact is
required to comply with Regulation 14A thereunder; provided that,
without limitation, such a change in control shall be deemed to have
occurred if:
(i) any "person" (defined, for purposes of this Section 6.02, as
such term is used in Sections 13(d) and 14(d) of the 1934 Act) is or
becomes the "beneficial owner" (defined, for purposes of this
Section 6.02, as defined in Rule 13d-3 under the 1934 Act), directly
or indirectly, of securities of Alexander & Baldwin, Inc. representing
35% or more of the combined voting power of its then outstanding
securities;
(ii) at least a majority of the Board of Directors ceases to
consist of (a) individuals who have served continuously on the Board of
Directors since January 1, 2000 and (b) new directors (other than a
director whose initial assumption of office is in connection with an
actual or threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of
Alexander & Baldwin, Inc.) whose election, or nomination for election
by Alexander & Baldwin, Inc.'s shareholders, was approved by a vote of
at least two-thirds of the directors then still in office who shall at
that time have served continuously on the Board of Directors since
January 1, 2000 or whose election or nomination was previously so
approved;
(iii) there is consummated a merger or consolidation of Alexander &
Baldwin, Inc. or any direct or indirect subsidiary of Alexander &
Baldwin, Inc. with any other entity, other than (a) a merger or
consolidation immediately following which the individuals who comprise
the Board of Directors immediately prior thereto constitute at least a
majority of the board of directors of Alexander & Baldwin, Inc., the
entity surviving such merger or consolidation or any parent thereof or
(b) a merger or consolidation effected to implement a recapitalization
of Alexander & Baldwin, Inc. (or similar transaction) in which no
person is or becomes the beneficial owner, directly or indirectly, of
securities of Alexander & Baldwin, Inc. (not including in the secu-
rities beneficially owned by such person any securities acquired
directly from Alexander & Baldwin, Inc. or its affiliates)
representing 35% or more of the combined voting power of Alexander &
Baldwin, Inc.'s then outstanding securities; or
(iv) the stockholders of Alexander & Baldwin, Inc.
approve a plan of complete liquidation or dissolution of Alexander &
Baldwin, Inc. or there is consummated an agreement for the sale or
disposition by Alexander & Baldwin, Inc. of all or substantially all
of Alexander & Baldwin, Inc.'s assets, other than a sale or disposi-
tion by Alexander & Baldwin, Inc. of all or substantially all of
Alexander & Baldwin, Inc.'s assets to an entity at least a majority of
the board of directors of which or of any parent thereof is comprised
of individuals who comprised the Board of Directors immediately prior
to such sale or disposition.
Notwithstanding the foregoing, a Change in Control of Alexander &
Baldwin, Inc. shall not be deemed to have occurred by virtue of the
consummation of any transaction or series of integrated transactions
immediately following which the holders of the common stock of
Alexander & Baldwin, Inc. immediately prior to such transaction or
series of transactions continue to have substantially the same propor-
tionate ownership in an entity which owns all or substantially all of
the assets of Alexander & Baldwin, Inc. immediately following such
transaction or series of transactions.
A "Change in Control" of a subsidiary of Alexander & Baldwin, Inc.
shall be deemed to have occurred if any "person" is or becomes the
"beneficial owner," directly or indirectly, of securities of such sub-
sidiary representing 35% or more of the combined voting power of its
then outstanding securities. If a Change in Control shall take place
with respect to any company, a Change in Control shall be deemed to
have taken place with respect to any subsidiary of such company."
2. Except as modified by this Amendment, all terms and provisions of the
A&B Excess Benefits Plan shall continue in full force and effect.
IN WITNESS WHEREOF, Alexander & Baldwin, Inc. has caused this Amendment to
be executed on its behalf by its duly authorized officers on this 25th day of
October, 2000.
ALEXANDER & BALDWIN, INC.
By /s/ John F. Gasher
Its Vice President
By /s/ Alyson J. Nakamura
Its Secretary
A&B EXECUTIVE SURVIVOR/RETIREMENT BENEFIT PLAN
----------------------------------------------
AMENDMENT NO. 1
---------------
The A&B Executive Survivor/Retirement Benefit Plan, as amended and
restated effective February 1, 1995, is hereby amended, effective October 25,
2000, as follows:
1. Section 2.08 is hereby revised in its entirety to read as follows:
"2.08 "CHANGE IN CONTROL" of Alexander & Baldwin, Inc. shall mean a
change in control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regu-
lation 14A promulgated under the Securities Exchange Act of
1934, as amended (the "1934 Act"), whether or not Alexander &
Baldwin, Inc. in fact is required to comply with Regula-
tion 14A thereunder; provided that, without limitation, such a
change in control shall be deemed to have occurred if:
(i) any "person" (defined, for purposes of this Section 2.08,
as such term is used in Sections 13(d) and 14(d) of the 1934
Act) is or becomes the "beneficial owner" (defined, for
purposes of this Section 2.08, as defined in Rule 13d-3 under
the 1934 Act), directly or indirectly, of securities of
Alexander & Baldwin, Inc. representing 35% or more of the com-
bined voting power of its then outstanding securities;
(ii) at least a majority of the Board ceases to consist of
(a) individuals who have served continuously on the Board
since January 1, 2000 and (b) new directors (other than a
director whose initial assumption of office is in connection
with an actual or threatened election contest, including but
not limited to a consent solicitation, relating to the
election of directors of Alexander & Baldwin, Inc.) whose
election, or nomination for election by Alexander & Baldwin,
Inc.'s shareholders, was approved by a vote of at least
two-thirds of the directors then still in office who shall at
that time have served continuously on the Board since
January 1, 2000 or whose election or nomination was previously
so approved;
(iii) there is consummated a merger or consolidation of
Alexander & Baldwin, Inc. or any direct or indirect subsidiary
of Alexander & Baldwin, Inc. with any other entity, other than
(a) a merger or consolidation immediately following which the
individuals who comprise the Board immediately prior thereto
constitute at least a majority of the board of directors of
Alexander & Baldwin, Inc., the entity surviving such merger or
consolidation or any parent thereof or (b) a merger or
consolidation effected to implement a recapitalization of
Alexander & Baldwin, Inc. (or similar transaction) in which no
person is or becomes the beneficial owner, directly or
indirectly, of securities of Alexander & Baldwin, Inc. (not
including in the securities beneficially owned by such person
any securities acquired directly from Alexander & Baldwin,
Inc. or its affiliates) representing 35% or more of the
combined voting power of Alexander & Baldwin, Inc.'s then
outstanding securities; or
(iv) the stockholders of Alexander & Baldwin, Inc. approve a
plan of complete liquidation or dissolution of Alexander &
Baldwin, Inc. or there is consummated an agreement for the
sale or disposition by Alexander & Baldwin, Inc. of all or
substantially all of Alexander & Baldwin, Inc.'s assets, other
than a sale or disposition by Alexander & Baldwin, Inc. of all
or substantially all of Alexander & Baldwin, Inc.'s assets to
an entity at least a majority of the board of directors of
which or of any parent thereof is comprised of individuals who
comprised the Board immediately prior to such sale or disposi-
tion.
Notwithstanding the foregoing, a Change in Control of
Alexander & Baldwin, Inc. shall not be deemed to have occurred
by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the
holders of the common stock of Alexander & Baldwin, Inc.
immediately prior to such transaction or series of
transactions continue to have substantially the same propor-
tionate ownership in an entity which owns all or substantially
all of the assets of Alexander & Baldwin, Inc. immediately
following such transaction or series of transactions.
A "Change in Control" of a subsidiary of Alexander & Baldwin,
Inc. shall be deemed to have occurred if any "person" is or
becomes the "beneficial owner," directly or indirectly, of
securities of such subsidiary representing 35% or more of the
combined voting power of its then outstanding securities. If
a Change in Control shall take place with respect to any
company, a Change in Control shall be deemed to have taken
place with respect to any subsidiary of such company."
2. Except as modified by this Amendment, all terms and provisions of
the A&B Executive Survivor/Retirement Benefit Plan shall continue in full force
and effect.
IN WITNESS WHEREOF, Alexander & Baldwin, Inc. has caused its authorized
officers to affix the corporate name and seal hereto this 25th day of October,
2000.
ALEXANDER & BALDWIN, INC.
By /s/ John F. Gasher
Its Vice President
By /s/ Alyson J. Nakamura
Its Secretary
A&B 1985 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
-----------------------------------------------
AMENDMENT NO. 2
---------------
The A&B 1985 Supplemental Executive Retirement Plan, as amended and
restated effective February 1, 1995, is hereby amended, effective as of
October 25, 2000, as follows:
1. Section 2.09 is hereby amended in its entirety to read as follows:
"2.09. "Change in Control" of Alexander & Baldwin, Inc. shall mean a
change in control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regu-
lation 14A promulgated under the Securities Exchange Act of
1934, as amended (the "1934 Act"), whether or not Alexander &
Baldwin, Inc. in fact is required to comply with Regula-
tion 14A thereunder; provided that, without limitation, such a
change in control shall be deemed to have occurred if:
(i) any "person" (defined, for purposes of this Section 2.09,
as such term is used in Sections 13(d) and 14(d) of the 1934
Act) is or becomes the "beneficial owner" (defined, for
purposes of this Section 2.09, as defined in Rule 13d-3 under
the 1934 Act), directly or indirectly, of securities of
Alexander & Baldwin, Inc. representing 35% or more of the com-
bined voting power of its then outstanding securities;
(ii) at least a majority of the Board ceases to consist of
(a) individuals who have served continuously on the Board
since January 1, 2000 and (b) new directors (other than a
director whose initial assumption of office is in connection
with an actual or threatened election contest, including but
not limited to a consent solicitation, relating to the
election of directors of Alexander & Baldwin, Inc.) whose
election, or nomination for election by Alexander & Baldwin,
Inc.'s shareholders, was approved by a vote of at least
two-thirds of the directors then still in office who shall at
that time have served continuously on the Board since
January 1, 2000 or whose election or nomination was previously
so approved;
(iii) there is consummated a merger or consolidation of
Alexander & Baldwin, Inc. or any direct or indirect subsidiary
of Alexander & Baldwin, Inc. with any other entity, other than
(a) a merger or consolidation immediately following which the
individuals who comprise the Board immediately prior thereto
constitute at least a majority of the board of directors of
Alexander & Baldwin, Inc., the entity surviving such merger or
consolidation or any parent thereof or (b) a merger or
consolidation effected to implement a recapitalization of
Alexander & Baldwin, Inc. (or similar transaction) in which no
person is or becomes the beneficial owner, directly or
indirectly, of securities of Alexander & Baldwin, Inc. (not
including in the securities beneficially owned by such person
any securities acquired directly from Alexander & Baldwin,
Inc. or its affiliates) representing 35% or more of the
combined voting power of Alexander & Baldwin, Inc.'s then
outstanding securities; or
(iv) the stockholders of Alexander & Baldwin, Inc. approve a
plan of complete liquidation or dissolution of Alexander &
Baldwin, Inc. or there is consummated an agreement for the
sale or disposition by Alexander & Baldwin, Inc. of all or
substantially all of Alexander & Baldwin, Inc.'s assets, other
than a sale or disposition by Alexander & Baldwin, Inc. of all
or substantially all of Alexander & Baldwin, Inc.'s assets to
an entity at least a majority of the board of directors of
which or of any parent thereof is comprised of individuals who
comprised the Board immediately prior to such sale or disposi-
tion.
Notwithstanding the foregoing, a Change in Control of
Alexander & Baldwin, Inc. shall not be deemed to have occurred
by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the
holders of the common stock of Alexander & Baldwin, Inc.
immediately prior to such transaction or series of
transactions continue to have substantially the same propor-
tionate ownership in an entity which owns all or substantially
all of the assets of Alexander & Baldwin, Inc. immediately
following such transaction or series of transactions.
A "Change in Control" of a subsidiary of Alexander & Baldwin,
Inc. shall be deemed to have occurred if any "person" is or
becomes the "beneficial owner," directly or indirectly, of
securities of such subsidiary representing 35% or more of the
combined voting power of its then outstanding securities. If
a Change in Control shall take place with respect to any
company, a Change in Control shall be deemed to have taken
place with respect to any subsidiary of such company."
2. Except as modified by this Amendment, all terms and provisions of
the Plan shall continue in full force and effect.
IN WITNESS WHEREOF, Alexander & Baldwin, Inc. has caused this Amendment
No. 1 to be executed on its behalf by its duly authorized officers on this 25th
day of October, 2000.
ALEXANDER & BALDWIN, INC.
By /s/ John F. Gasher
Its Vice President
By /s/ Alyson J. Nakamura
Its Secretary
A&B RETIREMENT PLAN FOR OUTSIDE DIRECTORS
-----------------------------------------
AMENDMENT NO. 2
---------------
The A&B Retirement Plan for Outside Directors, as amended and restated
effective February 1, 1995, is hereby amended, effective October 25, 2000, as
follows:
1. Section 3.02 is hereby amended by replacing the first paragraph
thereof with the following:
"3.02. CHANGE IN CONTROL. Upon the occurrence of a "Change in Con-
-----------------
trol," as defined hereafter, the Plan shall immediately and
automatically terminate. Upon such a termination, the interest of
each Participant shall become due and payable as described in Sec-
tions 3.02(a) and 3.02(b) below; provided, however, that, if the terms
of the Change in Control provide, as a prerequisite to the
consummation of the Change in Control, that A&B's responsibilities
under this Plan are to be assumed by the successor organization, then
the Plan shall not terminate and no lump-sum payment shall be made to
any Participant. For purposes of this provision, a "Change in
Control" shall mean a change in control of A&B of a nature that would
be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934,
as amended (the "1934 Act"), whether or not A&B in fact is required to
comply with Regulation 14A thereunder; provided that, without limi-
tation, such a change in control shall be deemed to have occurred if:
(i) any "person" (defined, for purposes of this Section 3.02, as
such term is used in Sections 13(d) and 14(d) of the 1934 Act) is or
becomes the "beneficial owner" (defined, for purposes of this Sec-
tion 3.02, as defined in Rule 13d-3 under the 1934 Act), directly or
indirectly, of securities of A&B representing 35% or more of the com-
bined voting power of A&B's then outstanding securities;
(ii) at least a majority of the Board of Directors of A&B ceases
to consist of (a) individuals who have served continuously on the
Board of Directors of A&B since January 1, 2000 and (b) new directors
(other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including
but not limited to a consent solicitation, relating to the election of
directors of A&B) whose election, or nomination for election by A&B's
shareholders, was approved by a vote of at least two-thirds of the
directors then still in office who shall at that time have served
continuously on the Board of Directors of A&B since January 1, 2000 or
whose election or nomination was previously so approved;
(iii) there is consummated a merger or consolidation of A&B or
any direct or indirect subsidiary of A&B with any other entity, other
than (a) a merger or consolidation immediately following which the
individuals who comprise the Board of Directors of A&B immediately
prior thereto constitute at least a majority of the board of directors
of A&B, the entity surviving such merger or consolidation or any
parent thereof or (b) a merger or consolidation effected to implement
a recapitalization of A&B (or similar transaction) in which no person
is or becomes the beneficial owner, directly or indirectly, of
securities of A&B (not including in the securities beneficially owned
by such person any securities acquired directly from A&B or its
affiliates) representing 35% or more of the combined voting power of
A&B's then outstanding securities; or
(iv) the stockholders of A&B approve a plan of complete
liquidation or dissolution of A&B or there is consummated an agreement
for the sale or disposition by A&B of all or substantially all of
A&B's assets, other than a sale or disposition by A&B of all or sub-
stantially all of A&B's assets to an entity at least a majority of the
board of directors of which or of any parent thereof is comprised of
individuals who comprised the Board of Directors of A&B immediately
prior to such sale or disposition.
Notwithstanding the foregoing, a Change in Control of A&B shall not be
deemed to have occurred by virtue of the consummation of any
transaction or series of integrated transactions immediately following
which the holders of the common stock of A&B immediately prior to such
transaction or series of transactions continue to have substantially
the same proportionate ownership in an entity which owns all or
substantially all of the assets of A&B immediately following such
transaction or series of transactions."
2. Except as modified by this Amendment No. 2, all terms and provisions
of the A&B Retirement Plan for Outside Directors shall continue in full force
and effect.
IN WITNESS WHEREOF, Alexander & Baldwin, Inc. has caused its authorized
officers to affix the corporate name and seal hereto this 25th day of October,
2000.
ALEXANDER & BALDWIN, INC.
By /s/ John F. Gasher
Its Vice President
By /s/ Alyson J. Nakamura
Its Secretary
ALEXANDER & BALDWIN, INC. DEFERRED COMPENSATION PLAN
----------------------------------------------------
AMENDMENT NO. 3
---------------
The Alexander & Baldwin, Inc. Deferred Compensation Plan, effective
August 25, 1994, is hereby amended, effective as of October 25, 2000, as
follows:
1. Section II is hereby amended by replacing the definition of "Change
in Control" in its entirety with the following:
"Change in Control shall mean a change in control of the Company of a
-----------------
nature that would be required to be reported in response to Item 6(e)
of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), whether or not the
Company in fact is required to comply with Regulation 14A thereunder;
provided that, without limitation, such a change in control shall be
deemed to have occurred if:
(i) any "person" (defined, for purposes of Section IX
hereinbelow, as such term is used in Sections 13(d) and 14(d) of the
1934 Act) is or becomes the "beneficial owner" (defined, for purposes
of Section IX hereinbelow, as defined in Rule 13d-3 under the 1934
Act), directly or indirectly, of securities of the Company repre-
senting 35% or more of the combined voting power of the Company's then
outstanding securities;
(ii) at least a majority of the Board ceases to consist of
(a) individuals who have served continuously on the Board since
January 1, 2000 and (b) new directors (other than a director whose
initial assumption of office is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company)
whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least two-thirds of the
directors then still in office who shall at that time have served
continuously on the Board since January 1, 2000 or whose election or
nomination was previously so approved;
(iii) there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with any
other entity, other than (a) a merger or consolidation immediately
following which the individuals who comprise the Board immediately
prior thereto constitute at least a majority of the board of directors
of the Company, the entity surviving such merger or consolidation or
any parent thereof or (b) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction)
in which no person is or becomes the beneficial owner, directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such person any securities acquired
directly from the Company or its affiliates) representing 35% or more
of the combined voting power of the Company's then outstanding
securities; or
(iv) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an
agreement for the sale or disposition by the Company of all or sub-
stantially all of the Company's assets, other than a sale or disposi-
tion by the Company of all or substantially all of the Company's
assets to an entity at least a majority of the board of directors of
which or of any parent thereof is comprised of individuals who com-
prised the Board immediately prior to such sale or disposition.
Notwithstanding the foregoing, a Change in Control of the Company
shall not be deemed to have occurred by virtue of the consummation of
any transaction or series of integrated transactions immediately
following which the holders of the common stock of the Company
immediately prior to such transaction or series of transactions
continue to have substantially the same proportionate ownership in an
entity which owns all or substantially all of the assets of the
Company immediately following such transaction or series of
transactions."
2. Except as modified by this Amendment No. 3, all terms and provisions
of the Alexander & Baldwin, Inc. Deferred Compensation Plan shall continue in
full force and effect.
IN WITNESS WHEREOF, Alexander & Baldwin, Inc. has caused its authorized
officers to affix the corporate name and seal hereto this 25th day of October,
2000.
ALEXANDER & BALDWIN, INC.
By /s/ John F. Gasher
Its Vice President
By /s/ Alyson J. Nakamura
Its Secretary
EXHIBIT 11
ALEXANDER & BALDWIN, INC.
COMPUTATION OF EARNINGS PER SHARE
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
(In thousands, except per share amounts)
2000 1999 1998
---- ---- ----
Basic Earnings Per Share
- ------------------------
Net income $ 90,574 $ 62,579 $ 25,142
========= ========= =========
Average number of shares outstanding 40,898 43,206 44,760
========= ========= =========
Basic earnings per share $ 2.21 $ 1.45 $ 0.56
========= ========= =========
Diluted Earnings Per Share
- --------------------------
Net income $ 90,574 $ 62,579 $ 25,142
========= ========= =========
Average number of shares outstanding 40,898 43,206 44,760
Effect of assumed exercise of
outstanding stock options 109 30 75
--------- --------- ---------
Average number of shares outstanding
after assumed exercise of
outstanding stock options 41,007 43,236 44,835
========= ========= =========
Diluted earnings per share $ 2.21 $ 1.45 $ 0.56
========= ========= =========
ALEXANDER & BALDWIN 2000 AR
[Inside Front Cover]
CORPORATE PROFILE
Alexander & Baldwin, Inc. is a diversified corporation with most of its
operations centered in Hawaii. Its principal businesses are:
PROPERTY DEVELOPMENT & MANAGEMENT
Developing real property, primarily in Hawaii
Selling residential and commercial property
Managing a portfolio of commercial/industrial properties
OCEAN TRANSPORTATION
Carrying freight, primarily between Pacific Coast ports, Hawaii ports and Guam
Conducting related shoreside operations
Arranging domestic intermodal transportation
FOOD PRODUCTS
Growing sugar cane and producing raw sugar
Growing, marketing and distributing coffee
A&B was founded in 1870 and incorporated in 1900. Alexander & Baldwin's
corporate headquarters are located in Honolulu, Hawaii. Its common stock is
traded on The Nasdaq Stock MarketSM under the symbol ALEX.
FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------
2000 1999 Change
- ---------------------------------------------------------------------------
Revenue1 $1,068,646,000 $ 999,998,000 7%
Operating Profit $ 158,576,000 $ 142,931,000 11%
Net Income $ 90,574,000 $ 62,579,000 45%
Per Share $ 2.21 $ 1.45 52%
Cash Dividends $ 36,785,000 $ 38,899,000 -5%
Per Share $ 0.90 $ 0.90 _
Average Shares Outstanding 40,898,000 43,206,000 -5%
Total Assets $1,666,012,000 $1,561,460,000 7%
Shareholders' Equity $ 693,651,000 $ 670,963,000 3%
Per Share $ 17.19 $ 15.78 9%
Return on Beginning
Shareholders' Equity 13.5% 9.0% _
Debt/Debt + Equity 34% 31% _
1 In response to accounting guidance from the SEC, revenue for 1999 has been
restated. The change is explained in Footnote 2 of the financial statements.
Uniquely Strong
Growing in key markets
Matson's 110-acre Sand Island terminal in Honolulu
The Vintage at Kaanapali under construction
Committed to our Community
Resourceful On Land and Sea
Kukui'ula, A&B's Residential resort Development on Kauai
OUR UNIQUE STRENGTH
There is no other company exactly like Alexander & Baldwin, and we believe that
our uniqueness holds the key to our strength. Our strength is in our numbers,
with a consistently strong balance sheet and cash flow, and strong 2000
performance. Our growth is in our diverse business assets in transportation and
real estate. Our commitment is in our diversity, culturally and geographically.
Our assets lie in our rich heritage and long history of providing value for our
customers.
FELLOW SHAREHOLDERS
Alexander & Baldwin had a very good year. Before one-time items, earnings per
share increased 15 percent in 2000. This represents a second year of
significant growth for the Company, as earnings per share (again before
one-time items) have now increased 44 percent over a two-year span.
The Hawaii economy did strengthen in 2000, as anticipated. According to most
forecasts, the economy grew at about a three percent rate, with accompanying
growth in tourism, consumer spending, construction activity and job count.
Although psychology can be fragile, there is general optimism in Hawaii that
better days are ahead.
We noted in last year's annual report that fuel and sugar prices were a concern
entering into 2000. Both commodities did move in directions detrimental to the
Company's profitability during 2000, with fuel prices increasing 60 percent in
the year and sugar prices dropping to a 20-year low. Despite these challenges,
the Company was able to react quickly and recover to achieve positive results.
HIGHLIGHTS OF 2000
Matson had another strong year, carrying more cargo and successfully addressing
the dramatically higher fuel costs. Its operating profit was up 12 percent, to
$94 million.
A&B Properties had an exceptionally good year, with its sales generating the
highest profit in a decade. The real estate business's operating profit rose 21
percent to $54 million.
Although sharply lower sugar prices and drought conditions hurt our results in
food products, the sugar price problem eased during the second half of 2000.
This segment's operating profit of $8 million was off by a third.
Matson's Sand Island Terminal in Honolulu was the focus of attention during the
year. A $32 million investment program has been launched to substantially
improve the operating efficiency and capacity of this key terminal hub. This
follows the formation of a joint venture with Stevedoring Services of America
in 1999 to improve the efficiency and capacity of Matson's three major West
Coast terminals in Los Angeles, Oakland and Seattle. In two years, decisive
action has been taken to improve performance at each of Matson's key terminal
operations.
A&B Properties has also concluded a second year of significantly increased
acquisition activity in Hawaii. In just over two years, the Company has
acquired nine properties in the state of Hawaii -- six on Oahu and three on
Maui. Total capital investment in these properties will approximate $155
million. We are confident these acquisitions will add considerable value to
the Company.
FINANCIAL POSITION
A&B's financial position remains strong, with a year-end debt-to-capital ratio
of 34 percent and consistently positive free cash flow. Capital spending in the
year was up and there was a large increase in share repurchases, but the
Company continues to have the capacity to grow its businesses and provide
returns to its shareholders.
SHAREHOLDER RETURNS
During 2000, A&B paid $37 million to its shareholders in dividends and spent
$48 million to repurchase nearly 2.4 million shares. In all, A&B purchased 5.6
percent of the shares that had been outstanding at the start of the year. The
A&B share price also rose more than 15 percent in 2000 -- a year of difficulty
in most equity markets.
BUSINESS DIRECTION
OCEAN TRANSPORTATION
Matson has regained its operating momentum and its performance in 2000 placed
it in the top tier of shipping companies worldwide. As a result of modest
increases in container freight and substantial gains in automobile shipments,
Matson added a seventh ship to the Hawaii service in May and an eighth ship in
October. These increases in cargo capacity were a result of both competitive
success and a more robust Hawaii economy. However, they also represent a
"double-edged sword," as Matson and its principal competitor both added
shipping capacity at nearly the same time.
Matson maintains its strong market position in Hawaii because of its excellent
service. But, the market is mature and, as a result, there is unrelenting
pressure to control costs and improve efficiency. The main focus of this in
2001 will be the implementation of the previously mentioned Sand Island
initiative. Fuel price increases are always an issue, but Matson has been able
to recover most of the recent surge in energy costs.
Matson also is expanding its application of Internet technology and has just
introduced its new Virtual Customer Support Center at www.matson.com, providing
improved customer service. Matson's Western Pacific business to Guam remains
strong, and its large and growing intermodal transportation subsidiary expects
a year of increased profitability in 2001.
REAL ESTATE
The Company is highly active in the Hawaii real estate market. In addition to
over a dozen entitlement and development projects on the Company's 91,000 acres
of land, aggressive efforts continue to acquire other attractive Hawaii
properties. In the early part of 2001, the Pacific Guardian Life Building, a
well-located office building in Honolulu, was the first announced acquisition
of the year. There are still excellent opportunities for value-adding
acquisitions in Hawaii and we will continue to pursue them. At the same time,
we are particularly enthusiastic about the development of Kukui'Ula, A&B's
1,045-acre master planned residential-resort community in Poipu, Kauai.
Although there are a large number of competitors in the business, A&B
Properties' objective is to be the premier Hawaii real estate company. We are
well on our way to meeting this objective.
FOOD PRODUCTS
The historical "roots" of A&B have been in agriculture, but today this facet of
A&B represents just 12 percent of our capital. As noted, HC&S had a difficult
2000 because of depressed sugar prices and persistent drought. Because of
improved sugar prices and forward sales made by the Company, we are confident
that sugar prices will not drag down results in 2001. It is heartening to note
that Kauai Coffee, our small coffee growing and marketing company on Kauai,
achieved its first year of profitability after many years of losses. It is also
noteworthy that a difficult, but necessary, decision was made in 2000 to close
the Paia Mill at HC&S and process all sugar on Maui through the one mill
remaining at Puunene. This step will be a major one, as HC&S is positioning
itself to be among the most competitive producers of sugar in the United
States.
2001 OUTLOOK
As this letter is written, Hawaii continues to exhibit the healthy, but
moderate, growth experienced during 2000. There are no direct indications that
the Hawaii economy is being influenced by the recent but clear slow-down of
growth on the U.S. mainland. If Hawaii's economy remains at its current level
of strength, we do expect to achieve improved results in 2001.
2000 was a historical milestone for Alexander & Baldwin, Inc. as we
commemorated the 130th year of the founding of the organization and our 100th
year as a corporation. To use a somewhat worn but ever-so-true phrase, "you
only become old when you refuse to change." A&B has had a long and
distinguished history of changing with the times. Much has been accomplished,
ut even more remains. With the continued enthusiastic and energetic support of
our employees and the valued direction of our Board of Directors, we look
forward to a future of promise and much accomplishment.
We thank you, our shareholders, for your support.
/s/ Charles M. Stockholm /s/ W. Allen Doane
Charles M. Stockholm W. Allen Doane
Chairman of the Board President & Chief Executive Officer
February 16, 2001
Alexander & Baldwin -- A Unique Company That Defies Traditional Wall Street
Categories.
OCEAN TRANSPORTATION
Identifiable Assets
$911 million
Operations / Hawaii
> Hawaii service:
> 208 annual voyages
> 8 ships
> 4 major container terminals
> Neighbor Islands service:
> 3 specialized barges
> hub & spoke system
Operations / Outside Hawaii
> Guam service: weekly via APL ships
> Mid-Pacific service: monthly barge
> Matson Intermodal:
all-modes service provider
> SSAT: West Coast terminals
> Pacific Coast Express
> Matson Logistics:
special transport services
> Sea Star: Puerto Rico liner service, two vessels chartered
Operating Profit / 2000
$94 Million
Operating Profit / vs 1999
+12%
2000 Accomplishments
> Neutralized fuel cost increases
> Attracted greater cargo volume
> Increased Hawaii fleet from 6 to 8 ships
> Regained profitability for Matson Intermodal
> Web-enabled customer interface
PROPERTY DEVELOPMENT & MANAGEMENT
Identifiable Assets
$440 million
Operations / Hawaii
> 91,100 acres of land
> Property development:
> residential
> commercial
> light industrial
> 1.2 M sq. ft. of income properties
> Entitlements process
Operations /Outside Hawaii
> 4 M sq. ft. of income properties in 6 Western states
Operating Profit / 2000
$54 Million
Operating Profit / vs 1999
+21%
2000 Accomplishments
> Earned decade-high operating profit
> Sold COSTCO fee parcel
> Sold Maui Business Park parcel to Home Depot
> Began development of The Vintage at Kaanapali
FOOD PRODUCTS
Identifiable Assets
$197 million
Operations / Hawaii
> Basic crops:
> 37,000 acres in sugar cane
> 3,800 acres in coffee
> Cogeneration of power
> Trucking
Operations /Outside Hawaii
> Sales of raw sugar to C&H for refining and marketing
> Major coffee sales to Japan
Operating Profit / 2000
$8 Million
Operating Profit / vs 1999
-33%
2000 Accomplishments
> Consolidated sugar processing into one mill
> Adapted operations to drought
> Coffee profitable for first time
INVESTMENTS, OTHER
Identifiable Assets
$117 million
Operations / Hawaii
> BancWest
> Pacific Century Financial
Operating Profit / 2000
$3 Million
Operating Profit / vs 1999
+1%
CONSOLIDATED
Identifiable Assets
$1,666 million
Operating Profit / 2000
$159 Million
Operating Profit / vs 1999
+11%
2000 Accomplishments
> Grew recurring eps 15%
> Raised ROE
> Repurchased 2.4 m shares
> Lowered corporate expenses 18%
> $107 M in consolidated capex
REVIEW OF OPERATIONS
REAL ESTATE
At year-end 2000, the Company owned a total of about 91,100 acres. Of these,
1,549 acres were fully zoned for urban use. At least one step in the
entitlement process has been completed for an additional 1,710 acres, and
8,714 acres have long-term urban-use potential. Most of the remaining acreage
will be in agricultural or conservation use for the foreseeable future.
The Company creates value through an integrated program of entitlement,
development and asset management. It realizes value through sales and invests
for growth, with a priority on investments in Hawaii real estate.
DEVELOPMENTS & SALES In June 2000, the Company sold a 13-acre ground lease
under a Costco Wholesale Corporation store in Kahului, Maui.
Nearby, at the Company's Maui Business Park, onsite improvements for the
34-acre phase IB were substantially completed in November 2000. In August 2000,
A&B sold 12.7 acres in phase IB to Home Depot for a planned 135,000-square-foot
store, anticipated to open in spring 2001. In early February 2001, the Company
announced that Wal-Mart Stores, Inc. purchased a 14-acre parcel in phase IB for
a 142,000-square-foot store planned to open in fall 2001. Ten half-acre lots in
phase IB remain available for sale. In addition, three lots in Maui Business
Park phase IA were sold in 2000 and 15 remain available for sale.
In October 1999, the Company purchased 17 acres at Kaanapali, Maui, to develop
single-family residential resort condominiums. At year-end 2000, 69 of the 73
homes planned at The Vintage were under construction and 70 already were sold
or in escrow, at an average price of $580,000. A&B purchased a second 17-acre
parcel nearby in January 2000. Site work for this project, called The Summit,
is under way for the construction of 55 residential units. A&B also acquired
3.2 acres in the same community for development of a 35,500-square-foot retail
center.
A&B'S LANDHOLDINGS, BY CATEGORY
Hawaii
--------------------------------
(acres) Maui Kauai Oahu Total Mainland Total
Fully Entitled Urban 332 922 38 1,292 257 1,549
Agric./Pasture/Misc 52,554 7,641 _ 60,195 10 60,205
Conservation 16,012 13,335 _ 29,347 _ 29,347
----------------------------------------------------
Total 68,898 21,898 38 90,834 267 91,101
Designated Urban 1,472 238 _ 1,710 _ 1,710
Urban Potential 5,264 3,450 _ 8,714 _ 8,714
At Kahului, Maui, A&B is constructing two buildings at its Triangle Square
development. One will be a 15,000-square-foot commercial building and the other
a 6,200-square-foot automobile dealership.
On the island of Kauai, A&B is pursuing planning and engineering for
development of its 1,045-acre Kukui'Ula project. The development has full
entitlements for more than 200 hotel rooms, 700 vacation-ownership units,
commercial uses and up to 3,000 residential units. Initial development
contemplates a small four-star hotel, a championship golf course, vacation
ownership projects, resort residential home sites and condominiums. Discussions
are being held with potential joint venture partners, as well as hotel, time-
share and golf course developers. Sales of lots at Koloa Estates, the initial
residential development at Kukui'Ula, continued in 2000, with 17 of the
remaining 27 lots being sold.
On Oahu, only four lots were sold during 2000 in the 14-acre first phase of the
Mill Town business center, but interest in the project is high. A&B will
construct infrastructure for the 23-acre second phase early in 2001.
ENTITLEMENTS A&B strives to put its land to the highest and best use that is
consistent with community needs.
On Maui, final approval of plans for development of a 196-unit, single-family
subdivision on 67 acres at Haliimaile awaits resolution of water source and
road access issues. In spite of several votes in 2000, the Wailuku-Kahului
Community Plan still is not final. The update process began in 1993. A number
of A&B residential and industrial projects are being proposed for inclusion in
the Plan.
In response to significant growth of boating tour activity at Port Allen,
Kauai, the Company is pursuing a conceptual plan for phased long-term
development of 80 acres for a variety of commercial and residential uses.
ASSET AND PROPERTY MANAGEMENT
MAINLAND PORTFOLIO At year-end 2000, A&B's portfolio of 19 income properties in
six Western states consisted of 4 million square feet of leasable space.
Occupancies averaged 96 percent throughout 2000. Twelve mainland properties had
100 percent occupancy rates at year-end 2000. In August 2000, an
895,500-square-foot warehouse distribution facility was acquired in Ontario,
Calif.
STATUS OF A&B'S RESIDENTIAL PROJECTS IN HAWAII
Total Available Sold Available Sold Available
Project Units In 1999 In 1999 In 2000 In 2000 In 2001
- --------------------------------------------------------------------------------------------
Kahului Ikena 102 20 13 7 7 Sold Out
Koloa Estates 32 32 5 27 17 10
The Vintage At Kaanapali 73 _ _ _ 3 70
The Summit At Kaanapali 55 _ _ _ _ 55
HAWAII PORTFOLIO At the end of 2000, A&B's Hawaii property portfolio consisted
of 1.2 million square feet of leasable commercial space, plus ground leases
totaling 271 acres for commercial uses and 11,776 acres for agricultural uses.
Occupancy of the commercial properties averaged 86 percent throughout 2000.
INVESTMENTS During 2000, a total of $34 million was invested in the acquisition
of improved properties and development projects. Of the $34 million, $23
million was funded through Internal Revenue Code Section 1031 reinvestments of
proceeds from property sales in 2000. The purchases included three income-
producing properties, comprising 924,200 square feet of leasable space and the
leasehold interest in a three-acre site for commercial development.
PROPERTY DEVELOPMENT & MANAGEMENT OUTLOOK Assuming there is no major U.S.
economic downturn, 2001 segment operating profit is likely to be moderately
lower than the unusually strong results of 2000. Property leasing activity is
forecast to step up moderately, primarily on the contributions of recently
acquired properties and higher lease rates. Revenue from projected property
sales likely will be higher, but the anticipated mix of sales has lower profit
margins than did the properties sold during 2000. Efforts to conclude long-
pending entitlements on Maui will continue, and investment opportunities,
especially in Hawaii, will remain a primary focus.
STATUS OF A&B'S COMMERCIAL/INDUSTRIAL PROJECTS IN HAWAII
Total Available Sold Available Sold Available
Project Units In 1999 In 1999 In 2000 In 2000 In 2001
- ---------------------------------------------------------------------------------------
Maui Business Park IA 32 19 1 18 3 15
Maui Business Park IB 10 _ _ _ _ 10
Mill Town Center IA 23 23 7 16 4 12
Mill Town Center IB 40 _ _ _ _ 40
OCEAN TRANSPORTATION
HAWAII SERVICE The historical core business of Matson Navigation Company, Inc.
(Matson) is its Hawaii service. In 2000, economic growth in Hawaii led to
strengthened cargo demand. Container volume rose slightly, but automobile
volume was 31 percent higher. Within the total, construction materials stood
out as a growing portion of westbound cargo. Matson currently measures and
reports its freight demand in terms of the absolute number of containers
carried, no matter what size. If the size of the containers had been
considered, however, westbound container volume in 2000 was nearly two
percent above the previous high in 1994. Additional auto carriage resulted
principally from increased market share, strong tourist demand for rental cars
and higher sales by Hawaii dealers.
In response to growing cargo levels, Matson added a seventh ship to its Hawaii
service fleet in May 2000, and an eighth ship in October. With the eight-ship
fleet, Matson now offers four arrivals in Hawaii weekly from the West Coast,
with two direct arrivals each from Los Angeles and Oakland. One of the Oakland
ships each week makes a prior call at Seattle.
Operating costs again were affected adversely by rapid, steady increases in
bunker fuel costs during 2000. The fleet consumed about 1.8 million barrels of
fuel in 2000 and the cost per barrel was 60 percent above that of 1999. In
response, Matson was forced three times during 2000 to add to the 1.75 percent
bunker surcharge in place at the start of the year. At the start of 2001, the
surcharge was 4.25 percent.
Separately, Matson also increased shipping rates by 3.5 percent, effective
February 14, 2001, in order to offset ongoing cost increases and to support
necessary capital investments, especially in container equipment and
information technology.
During 2000, Matson prepared to introduce a new Virtual Customer Service Center
at www.matson.com. First offered for use of shippers in February 2001, this
substantial addition to the Matson Web site offers customers the option of
booking, tracking and handling all of their shipment information needs via the
Internet. Other online features include secure account balance information,
tariffs, vessel schedules, submission of billing instructions and retrieval of
billing documents. Customers may utilize customized booking templates to reduce
the necessary number of "clicks" for routine transactions. The site also gives
online customers the option of contacting a "live" service representative to
assist with a transaction. With the new features developed largely from
customers' input, the new Virtual Customer Support Center will continue to
evolve to reflect their interests and needs.
GUAM SERVICE Matson and American President Lines, Ltd. serve Guam through a
trans-Pacific operating alliance. Guam's economy remained relatively weak in
2000, and that factor was reflected in modestly lower import cargo volume.
Westbound auto volume was higher, however, due to competitive gains. Eastbound
container cargo also rose, due to increased shipments of garments and
competitive gains.
PACIFIC COAST SERVICE Matson replaced its single-vessel coastwise service in
October 2000 with a twice weekly, fixed-day, rail-based service in conjunction
with the Burlington Northern Santa Fe Corporation. The added frequency allows
customers more flexibility in scheduling their shipments. Matson Intermodal
System is managing the new service.
MATSON TERMINALS, INC. (MTI) During 2000, MTI carried out planning and design
work in preparation for the conversion of its Sand Island container terminal in
Honolulu from a straddle carrier-based container-handling system to a chassis-
based system. The $32 million project, to be substantially completed during
2001, will increase the terminal's capacity to handle future growth, improve
customer service and reduce cargo-handling costs.
MATSON INTERMODAL SYSTEM, INC. (MIS) MIS links Matson's and other companies'
seagoing services with inland shippers. During 2000, MIS focused on both
improved operating performance and growth. Its revenue grew 11 percent, to $132
million. MIS acquired Paragon Transportation Group, a diversified
transportation services marketing company.
JOINT VENTURES, INVESTMENTS Matson's West Coast terminal operating joint
venture, SSA Terminals, LLC, operated efficiently and profitably in 2000. Plans
are proceeding for moving to new, larger terminals in Seattle, Oakland and Long
Beach in 2002 and 2003. Matson also has a minority ownership in Sea Star Line,
LLC, serving the Puerto Rico trade. That trade presently suffers from
overcapacity but, fortunately, Sea Star enjoys certain operating cost
advantages.
OCEAN TRANSPORTATION OUTLOOK The performance of this segment is expected to
improve again in 2001, with a modest increase in operating profit. The steady
economic growth projected for Hawaii is, however, highly dependent on the
performance of the U.S. mainland economy.
HAWAII SERVICE CARGO STATISTICS
- -------------------------------------------
(Units) 2000 1999 1998
- -------------------------------------------
Freight 151,500 151,200 143,400
Automobiles 132,200 101,100 73,700
FOOD PRODUCTS
SEGMENT COMPOSITION In December 1998, the Company sold approximately 60 percent
of its equity interest in California and Hawaiian Sugar Company, Inc. (C&H) to
an investor group. Food products results in 1999 and 2000 reflect primarily
A&B's sugar- and coffee-growing activities.
RAW SUGAR PRODUCTION Hawaiian Commercial & Sugar Company (HC&S), located on
Maui, is Hawaii's largest producer of raw cane sugar, growing 70 percent of the
state's 2000 crop. HC&S' total production in 2000 -- 210,000 tons of raw sugar
- -- was about eight percent below that of 1999, primarily due to prolonged
drought conditions. Low raw sugar prices prevailed for much of the year, until
forfeitures of sugar under federal loans reduced excess domestic supplies.
HC&S permanently closed one of its two sugar mills in September 2000.
Consolidating sugar processing in one factory will save about $5 million
annually, beginning in 2001. During 2000, investments were made to produce
environment-friendly panelboard made from sugarcane bagasse, a residual
commodity, and to produce and package more food-grade specialty sugar products.
COFFEE PRODUCTION AND MARKETING Kauai Coffee Company, Inc. achieved profitable
operations during 2000, the result of successful marketing and sales efforts,
and aggressive cost controls. The 2000 harvest was unusually small, at 2.8
million pounds, but its quality mix was favorable.
POWER, TRUCKING The Company's hydroelectric plants on Maui and Kauai, as well
as cogeneration units on Maui, generate surplus electricity, which is sold to
the local public utilities. During 2000, drought conditions reduced hydropower
output and increased internal power demands for irrigation pumping. The Company
also has trucking operations on both Maui and Kauai that support its
agricultural operations and serve independent customers in each community.
SUGAR REFINING AND MARKETING Raw sugar produced by HC&S continues to be sold to
C&H under a long-term contract.
FOOD PRODUCTS OUTLOOK Despite the likelihood of continued drought-induced lower
production, the present improved level of raw sugar prices and the forward sale
of a substantial portion of the 2001 harvest, coupled with aggressive cost
reductions, should provide better segment results in 2001 than in 2000.
[DIRECTORS' PHOTOGRAPHS]
FINANCIAL REPORT
24 Management's Report
25 Independent Auditors' Report
26 Industry Segment Information
27 Five-Year Summary of Selected Financial Data
28 Management's Discussion and Analysis
32 Statements of Income
33 Statements of Cash Flows
34 Balance Sheets
36 Statements of Shareholders' Equity
37 Notes to Financial Statements
53 Quarterly Results
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING
The management of Alexander & Baldwin, Inc. has the responsibility for
preparing the accompanying consolidated financial statements and related
notes accurately and objectively. The statements have been prepared in
accordance with accounting principles generally accepted in the United States
of America, consistently applied, and necessarily include amounts based on
judgments and estimates made by management. Management also prepared the other
information in this annual report and is responsible for its accuracy and
consistency with the financial statements.
The Company maintains internal control systems, and related policies and
procedures, designed to provide reasonable assurance that assets are
safeguarded, that transactions are properly executed and recorded in accordance
with management's authorization, and that underlying accounting records may be
relied upon for the accurate preparation of financial statements and other
financial information. The design, monitoring and revision of internal control
systems involve, among other things, management's judgment with respect to the
relative cost and expected benefits of specific control measures. The Company
maintains an internal auditing function that evaluates and formally reports on
the adequacy and effectiveness of internal controls, policies and procedures.
The Company's financial statements have been audited by Deloitte & Touche LLP,
its independent auditors, who have expressed their opinion with respect to the
fairness, in all material aspects, of the presentation of financial position,
results of operations and cash flows under accounting principles generally
accepted in the United States of America. Management has made available to
Deloitte & Touche LLP all of the Company's financial records and related data.
Furthermore, management believes that all representations made to Deloitte &
Touche LLP during its audit were valid and appropriate.
The Board of Directors, through its Audit Committee (composed of non-employee
directors), oversees management's responsibilities in the preparation of the
financial statements and nominates the independent auditors, subject to
shareholder election. The Audit Committee meets regularly with the external
and internal auditors to evaluate the effectiveness of their work in
discharging their respective responsibilities and to assure their independent
and free access to the Committee.
/s/ W. Allen Doane
W. Allen Doane
President and Chief Executive Officer
/s/ James S. Andrasick
James S. Andrasick
Senior Vice President and Chief Financial Officer
INDEPENDENT AUDITORS' REPORT
TO THE SHAREHOLDERS OF ALEXANDER & BALDWIN, INC.:
We have audited the accompanying balance sheets of Alexander & Baldwin, Inc.
and its subsidiaries as of December 31, 2000 and 1999 , and the related
statements of income, shareholders' equity, and cash flows for each of the
three years in the period ended December 31, 2000 (pages 26 and 32 to 52).
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audits 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, such financial statements present fairly, in all material
respects, the financial position of Alexander & Baldwin, Inc. and its
subsidiaries at December 31, 2000 and 1999, and the results of their operations
and their 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 of America.
As discussed in Note 2 to the financial statements, the Company changed its
method of accounting for vessel drydocking costs in 2000 and changed its method
of accounting for assessments from a second injury workers' compensation fund
in 1998.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Honolulu, Hawaii
January 25, 2001
INDUSTRY SEGMENT INFORMATION
(In thousands)
- ---------------------------------------------------------------------------------------------------------------
For the Year 2000 1999 1998 1997 1996
- ---------------------------------------------------------------------------------------------------------------
REVENUE:
Ocean transportation $ 850,692 $ 778,535 $ 748,121 $ 720,962 $ 686,637
Property development and management:
Leasing 62,105 53,910 44,433 43,606 41,553
Sales 46,322 48,036 82,382 35,916 31,909
Food products 106,341 116,362 465,661 486,912 506,909
Other 3,186 3,155 2,878 2,815 3,490
- ---------------------------------------------------------------------------------------------------------------
Total revenue $1,068,646 $ 999,998 $1,343,475 $1,290,211 $1,270,498
===============================================================================================================
OPERATING PROFIT:
Ocean transportation $ 93,732 $ 83,778 $ 66,298 $ 80,385 $ 81,618
Property development and management:
Leasing 30,120 27,497 22,634 24,559 23,875
Sales 24,228 17,402 21,663 13,262 15,307
Food products 7,522 11,310 21,327 27,083 26,863
Other 2,974 2,944 2,696 2,639 3,220
- ---------------------------------------------------------------------------------------------------------------
Total operating profit 158,576 142,931 134,618 147,928 150,883
Write-down of long-lived assets -- (15,410) (20,216) -- --
Loss on partial sale of subsidiary -- -- (19,756) -- --
Insurance settlement -- -- -- 19,965 --
Interest expense, net (24,252) (17,774) (24,799) (28,936) (34,081)
General corporate expenses (11,609) (14,207) (14,552) (11,745) (12,769)
- ---------------------------------------------------------------------------------------------------------------
Income before income taxes
and accounting changes $ 122,715 $ 95,540 $ 55,295 $ 127,212 $ 104,033
===============================================================================================================
IDENTIFIABLE ASSETS:
Ocean transportation $ 911,109 $ 894,607 $ 898,277 $ 930,636 $1,005,741
Property development and management 440,416 384,515 338,090 317,622 312,829
Food products 197,143 173,069 261,712 382,109 386,986
Other 117,344 109,269 107,561 74,431 90,559
- ---------------------------------------------------------------------------------------------------------------
Total assets $1,666,012 $1,561,460 $1,605,640 $1,704,798 $1,796,115
===============================================================================================================
CAPITAL EXPENDITURES:
Ocean transportation $ 40,190 $ 19,232 $ 60,403 $ 20,828 $ 171,110
Property development and management1 44,821 66,752 107,408 30,790 7,275
Food products 21,677 17,271 18,237 18,806 12,058
Other 216 258 441 242 412
- ---------------------------------------------------------------------------------------------------------------
Total capital expenditures $ 106,904 $ 103,513 $ 186,489 $ 70,666 $ 190,855
===============================================================================================================
DEPRECIATION AND AMORTIZATION:
Ocean transportation $ 54,586 $ 56,174 $ 61,543 $ 62,192 $ 62,055
Property development and management 8,972 7,299 6,357 6,281 6,214
Food products 8,285 9,962 20,086 19,538 20,144
Other 461 466 514 547 538
- ---------------------------------------------------------------------------------------------------------------
Total depreciation and
amortization $ 72,304 $ 73,901 $ 88,500 $ 88,558 $ 88,951
===============================================================================================================
See Note 2 for information regarding changes in presentation for certain revenues and expenses.
See Notes 3 and 4 for discussion of the write-down of long-lived assets in 1999
and 1998 and the partial sale of California and Hawaiian Sugar Company, Inc. in 1998.
1Includes tax-deferred property purchases which are considered non-cash
transactions in the Statements of Cash Flows; excludes capital expenditures for
real estate developments held for sale.
Five-Year Summary of Selected Financial Data
(Dollars and shares in thousands, except per-share amounts)
Alexander & Baldwin Inc. and Subsidiaries
2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ----------
ANNUAL OPERATIONS
Net sales and other operating revenue* $1,068,646 $ 999,998 $1,343,475 $1,310,176 $1,270,498
Deduct:
Cost of goods sold and operating expenses* 849,375 812,783 1,174,881 1,065,470 1,043,433
Depreciation and amortization 72,304 73,901 88,500 88,558 88,951
Interest expense 24,252 17,774 24,799 28,936 34,081
Income taxes 44,391 32,961 24,352 45,825 38,748
---------- ---------- ---------- ---------- ----------
Income before accounting changes 78,324 62,579 30,943 81,387 65,285
Cumulative effect of change
in accounting methods 12,250 - (5,801) - -
---------- ---------- ---------- ---------- ----------
Net income $ 90,574 $ 62,579 $ 25,142 $ 81,387 $ 65,285
========== ========== ========== ========== ==========
Comprehensive income $ 103,050 $ 48,711 $ 33,327 $ 88,326 $ 73,660
========== ========== ========== ========== ==========
Earnings per share before accounting changes:
Basic $ 1.92 $ 1.45 $ 0.69 $ 1.80 $ 1.44
Diluted $ 1.91 $ 1.45 $ 0.69 $ 1.80 $ 1.44
Return on beginning equity 13.5% 9.0% 3.5% 11.9% 10.0%
Cash dividends per share $ 0.90 $ 0.90 $ 0.90 $ 0.88 $ 0.88
Average number of shares outstanding 40,898 43,206 44,760 45,182 45,303
Gross profit percentage* 23.0% 22.1% 17.0% 20.1% 19.8%
Effective income tax rate 36.5% 34.5% 45.4% 36.0% 37.3%
MARKET PRICE RANGE PER SHARE
High $ 28.250 $ 27.125 $ 31.125 $ 29.375 $ 29.250
Low 17.938 18.625 18.813 24.375 22.500
Close 26.250 22.813 23.250 27.313 25.000
AT YEAR END
Shareholders of record 4,438 4,761 5,125 5,481 5,881
Shares outstanding 40,353 42,526 44,028 44,881 45,339
Shareholders' equity $ 693,651 $ 670,963 $ 694,642 $ 719,588 $ 684,328
Per-share 17.19 15.78 15.78 16.03 15.09
Total assets 1,666,012 1,561,460 1,605,640 1,704,798 1,796,115
Working capital 55,861 59,805 67,113 114,806 95,579
Cash and cash equivalents 3,451 3,333 86,818 21,623 23,824
Real estate developments - noncurrent 62,628 60,810 57,690 68,056 70,144
Investments - noncurrent 183,141 158,726 159,068 102,813 91,602
Capital Construction Fund 150,405 145,391 143,303 148,610 178,616
Long-term debt - noncurrent 330,766 277,570 255,766 292,885 357,657
Current ratio 1.4 to 1 1.4 to 1 1.4 to 1 1.7 to 1 1.4 to 1
Capital stock price/earnings
ratio at December 31 11.9 to 1 15.7 to 1 41.5 to 1 15.2 to 1 17.4 to 1
*Current and prior year values have been restated. See Note 2 for information regarding changes in presentation for
certain revenues and expenses.
MANAGEMENT'S DISCUSSION AND ANALYSIS
ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS
Consolidated Earnings and Revenue: Net income in 2000 was $90,574,000 or $2.21
per basic share, versus $62,579,000, or $1.45 per basic share, in 1999 and
$25,142,000, or $0.56 per basic share, in 1998. Revenue in 2000 was
$1,068,646,000, compared with revenue of $999,998,000 in 1999 and
$1,343,475,000 in 1998.
Accounting Changes and Significant Charges: During 2000, the Company made two
changes in accounting methods (See Note 2 to the Financial Statements). The
first change was for vessel drydocking costs at Matson Navigation Company, Inc.
("Matson"), the Company's ocean transportation subsidiary. Previously, the
estimated costs for future drydocking of vessels were accrued in advance of the
drydocking. Subsequent payments were charged against the accrued liability.
Under the new method, drydocking expenditures which benefit future periods are
capitalized and depreciated. This change increased 2000 net income by
$12,250,000 (net of income tax expense of $7,668,000) or $0.29 per basic share.
The second change was for the presentation of certain costs recorded in the
ocean transportation and property leasing segments, which previously were
recorded as an offset to revenue. This accounting change had no impact on
segment operating profit, but did increase both revenue and operating costs by
$49,305,000, $40,726,000 and $31,855,000 in 2000, 1999 and 1998, respectively.
This change was made in response to guidance provided by the Securities and
Exchange Commission's Staff Accounting Bulletin No. 101, "Revenue Recognition
in Financial Statements."
In 1999, following continuing operating losses, depressed coffee prices and
negative cash flows at Kauai Coffee Company, Inc. ("Kauai Coffee"), the
Company's coffee plantation, the Company recorded an after-tax charge of
$9,571,000, or $0.22 per basic share, to write down the recorded value of
orchards and other non-current assets to their estimated fair values.
During 1998, net income was reduced by three one-time items. First, the sale
of the Company's majority interest in C&H resulted in an after-tax loss of
$15,955,000, or $0.36 per basic share. Second, changes in development plans
for a real estate project on Kauai that resulted from extended weak real estate
market conditions, led to an after-tax charge of $12,837,000, or $0.29 per
basic share. This reduced the carrying value of certain assets associated with
that project to fair value. Third, the cumulative effect of a required
accounting change, related to federal workers' compensation assessments,
resulted in an after-tax charge of $5,801,000, or $0.13 per basic share.
2000 COMPARED WITH 1999
Ocean Transportation revenue of $850,692,000 was nine percent higher than 1999
revenue of $778,535,000. Operating profit of $93,732,000 showed a 12 percent
improvement over 1999 operating profit of $83,778,000. Hawaii service
container volume was flat compared with 1999 and automobile volume was 31
percent higher. The primary revenue gains occurred in the lower margin
intermodal business. Operating results for 2000 benefited from improved
performance by the Company's SSAT terminal operating joint venture and its
Intermodal Systems subsidiary. Operating results for 1999 were adversely
affected by lower productivity, due to disruptions related to the 1999
renegotiation of longshore labor agreements.
Matson's total Hawaii Service container volume was 151,500 units in 2000,
compared with 151,200 units in 1999. Matson's total Hawaii Service automobile
volume, at 132,200 units, was 31 percent higher than 1999 automobile volume of
101,100 units.
In November 2000, Matson announced a 3.5 percent increase in Hawaii Service
rates, effective in February 2001. A 3.9 percent increase in Hawaii Service
rates announced in 1999 took effect in February 2000. To mitigate partially
the effect of rising fuel prices, the 1.75 percent fuel surcharge in effect at
the end of 1999 was increased, in three steps, to 4.25 percent during 2000.
Total fuel costs increased by $17,900,000 in 2000 versus 1999, partially offset
by increased fuel surcharges of $15,600,000.
Property Leasing revenue of $62,105,000 was 15 percent higher than 1999 revenue
of $53,910,000 and operating profit of $30,120,000 improved ten percent
compared with 1999 operating profit of $27,497,000. These improvements were
due to higher occupancy levels, increased rents and newly acquired properties.
Occupancy rates for the Mainland properties averaged 96 percent in 2000, versus
94 percent in 1999. The Company owned four million square feet of leasable
property on the Mainland at year-end 2000, compared with 3.1 million square
feet at year-end 1999. Occupancy levels for the Hawaii properties averaged 86
percent in 2000, versus 81 percent in 1999. The Company owned 1.2 million
square feet of leasable property in Hawaii at the end of both 2000 and 1999.
Property Sales revenue of $46,322,000 was down slightly from the $48,036,000 in
sales recorded in 1999, while operating profit of $24,228,000 was 39 percent
higher than the $17,402,000 achieved in 1999, due to mix. Property sales in
2000 included the ground lease for a Costco store, a 13-acre parcel at Maui
Business Park to Home Depot, 16 business parcels and 28 residential properties.
Sales in 1999 included an office/research building in Seattle, two developed
business parcels, three undeveloped parcels and 41 residential properties.
The mix of property sales in any year can be diverse. Sales can include
property sold under threat of condemnation, developed residential real estate,
commercial properties, developable subdivision lots and undeveloped land. The
sale of undeveloped land and vacant parcels generally provides a greater
contribution margin than does the sale of developed and commercial property,
due to the low historical-cost basis of the Company's Hawaii land.
Consequently, property sales revenue trends and the amount of real estate held
for sale on the balance sheets do not necessarily indicate future profitability
for this segment.
Food Products revenue of $106,341,000 in 2000 compared with revenue of
$116,362,000 in 1999. Operating profit of $7,522,000 in 2000 was 33 percent
lower than the $11,310,000 earned in 1999. The primary reasons for the
declines were U.S. raw sugar prices which were 20 percent below historical
levels, lower raw sugar production that resulted from continuing drought
conditions on the island of Maui, and the write down of certain assets
associated with the closure of the Company's raw sugar processing factory in
Paia, Maui, which consolidated the processing operation into one factory.
These factors were offset partially by benefit plan settlement gains,
insurance-related gains at Hawaiian Commercial & Sugar Company ("HC&S"), the
Company's raw sugar producing unit on Maui, and a profit turn around at Kauai
Coffee.
Although HC&S harvested about the same number of acres, sugar production of
approximately 210,000 tons in 2000 was eight percent lower than the prior
year's production of 228,000 tons. Lower production was due to the drought
conditions noted earlier.
As described in the 1999 Annual Report to Shareholders, the outlook for raw
sugar prices in 2000 was not favorable and significantly lower earnings were
expected. The average No. 14 domestic raw sugar price for 2000 was $19.10/cwt.
This was $3.08/cwt. below 1999's price of $22.18/cwt. and was the lowest level
in 20 years. For 2001, HC&S has forward-priced 70 percent of its crop, which
is expected to stabilize its raw sugar prices at approximately $21/cwt.
HC&S' labor contract with the ILWU, which expired in January 2000, was
renegotiated and extended for two years.
Results from Kauai Coffee showed a small profit for 2000, following a
successful business re-engineering in 1999, which included the write-down of
its orchards and processing equipment to fair values and the implementation
of other business process improvements. In addition, sales and marketing
efforts were improved during 2000.
1999 COMPARED WITH 1998
Ocean Transportation revenue of $778,535,000 increased four percent and
operating profit of $83,778,000 increased 26 percent in 1999, compared with
1998. Both increases were due primarily to higher container and automobile
volume in the Hawaii Service. The increased revenue was offset partially by
handling costs associated with the higher volume and by the adverse impact, in
late 1999, of longshore labor disruptions on the West Coast and in Hawaii.
For the year, Matson's total Hawaii Service container volume, at 151,200 units
in 1999, was five percent higher than 1998 container volume of 143,400 units.
Matson's total Hawaii Service automobile volume, at 101,100 units, was 37
percent higher than 1998 automobile volume of 73,700 units.
Operating costs were higher in 1999 than in 1998, primarily reflecting higher
freight volume, higher fuel and labor costs and lower productivity, due to
labor disruptions. The longshore labor agreements on the West Coast and in
Hawaii were renegotiated in 1999. The negotiation process involved work
slowdowns, and in some instances work stoppages, that resulted in significant
increases in operating expenses. New agreements were reached without any
strikes; however, the new contracts contain significant wage and pension
benefit increases during their three-year term.
Property Leasing revenue of $53,910,000 for 1999 rose 21 percent compared with
1998 and operating profit of $27,497,000 for 1999 increased 21 percent compared
with 1998. The increase was due primarily to the contributions from properties
acquired in 1999 and late in 1998, as well as higher occupancy rates. The
full-year results in 1999 also benefited from a one-time buyout of a long-term
ground lease. Occupancy rates for the Mainland properties averaged 94 percent
in 1999, versus 91 percent in 1998. Occupancy levels for the Hawaii properties
averaged 81 percent in 1999, versus 68 percent in 1998.
Property Sales revenue of $48,036,000 for 1999 was considerably lower than the
$82,382,000 in sales recorded in 1998. Operating profit from property sales in
1999 of $17,402,000 was 20 percent lower than the $21,663,000 achieved in 1998.
In context, however, 1998 represented the Company's highest level of property
sales since 1989. Significant sales in 1999 included an office/research
building in Seattle with net proceeds of $25,130,000, two developed business
parcels, three undeveloped parcels and 41 residential properties. Sales in
1998 included a large R&D and office complex in Cupertino, California, a
remaining interest in a 14-acre parcel at Maui Business Park, five developed
business parcels and 64 residential properties.
Food Products revenue of $116,362,000 in 1999 compared with revenue of
$465,661,000 in 1998. Operating profit of $11,310,000 in 1999 was 47 percent
lower than the $21,327,000 earned in 1998. Both reductions were due primarily
to the December 1998 sale of the Company's majority interest in C&H and to
operating losses at Kauai Coffee, partially offset by better performance at
HC&S. Sugar production of about 228,000 tons in 1999, the highest level in a
decade, was about 6 percent higher than in 1998.
FINANCIAL CONDITION AND LIQUIDITY
Liquid resources of the Company, comprising cash and cash equivalents,
receivables, inventories and unused lines of credit, less accrued deposits to
the Capital Construction Fund (CCF), totaled $245,072,000 at December 31, 2000,
a decrease of $8,289,000 from December 31, 1999. This net reduction was
primarily due to larger balances drawn on revolving credit facilities and
higher accrued deposits to the CCF, partially offset by the renewal of a $25
million credit facility which had expired in late 1999 and increased trade
receivable balances.
Working capital was $55,861,000 at December 31, 2000, a decrease of $3,944,000
from a year earlier. The lower working capital was due primarily to higher
current portion of debt and accrued liabilities and lower prepaid assets,
partially offset by a larger inventory of real estate held for sale and higher
trade receivables. The higher debt was the result of increased short-term
borrowing on a working capital facility. The increased inventory of real estate
held for sale was due to the completion of a residential development project on
Maui. Trade receivables were higher than in the previous year, due to
increased ocean transportation revenue and to the timing of billing cycles
which overlap year-end. The fluctuations in accrued liabilities and prepaid
assets were in the ordinary course of business.
Net cash provided by operations was $104,278,000 and $109,379,000 for 2000 and
1999, respectively. Net operating cash flows were used principally for capital
expenditures, payments of debt, dividends, repurchases of capital stock and
deposits into the CCF. Withdrawals from the CCF in 2000 were used principally
for vessel modifications and equipment purchases.
Capital additions during 2000 were $106,904,000, compared with $103,513,000 in
1999. Ocean transportation capital additions in 2000 of $40,190,000 were
primarily for vessel modifications, technology investments and the acquisition
of container and terminal equipment. Property development and management
capital additions in 2000 of $44,821,000, which included the reinvestment of
$22,703,000 of tax-deferred sales proceeds, were for development of commercial
and residential real estate property, for the purchase of developed commercial
property, and for improvements to leased properties. Food products capital
additions in 2000 of $21,677,000 were primarily for a panelboard processing
facility, power generation, field equipment, and factory modifications.
Capital expenditures approved but not yet spent were $92,679,000 at December
31, 2000. These expenditures are primarily for the conversion of the Company's
leased Honolulu terminal facility to a partially wheeled operation, real estate
developments held for investment purposes, containers and operating equipment
and vessel modifications. For 2001, internal cash flows and short-term
borrowing facilities are expected to be sufficient to finance working capital
needs, dividends, capital expenditures and debt service.
OTHER MATTERS
Tax-Deferred Real Estate Exchanges: In 2000, the Company sold, on a tax-
deferred basis, nine land parcels for $35,569,000, the most significant of
which were the Costco and Home Depot sites noted earlier. During the year, the
Company reinvested $22,703,000 in three replacement properties. At the end of
2000, approximately $12,900,000 of tax-deferred sales had not been reinvested.
These funds are held by a third party agent and are included in other non-
current assets on the Balance Sheets. The proceeds from tax-deferred sales and
the subsequent purchases of replacement property are reported in the Statement
of Cash Flows under the caption "Non-cash Activities."
Share Repurchases: In 2000, the Company repurchased 2,378,195 shares of its
common stock for an aggregate price of $48,260,000 (average of $20.29 per
share). During 1999, it repurchased 1,564,500 shares of its common stock for
about $34,824,000 (average of $22.26 per share). In January 2001, the Board of
Directors authorized the repurchase of up to 1,000,000 additional shares of the
Company's stock.
Environmental Matters: As with most industrial and land-development companies
of its size, the Company's operations have certain risks which could result in
expenditures for environmental remediation. The Company believes that it is in
compliance, in all material respects, with applicable environmental laws and
regulations, and works proactively to identify potential environmental
concerns. Management believes that appropriate liabilities have been accrued
for environmental matters.
Outlook: Information about the Company's outlook for 2001 and its plans to
address issues affecting primary business units are included in the Letter to
Shareholders on pages 9 through 11 and in the business unit discussions
included on pages 14 through 21 of the Annual Report to Shareholders, which
sections are incorporated herein by reference.
Year 2000: Between 1997 and 2000, the Company expended approximately
$6,200,000 for remediation, replacements and other computer-related work in
preparation for the year 2000 ("Y2K"). As a result of the Company's advance
preparations and its execution of remedial plans, the Company did not
experience any Y2K problems.
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The Company, from time to time, may make or may have made certain forward-
looking statements, whether orally or in writing, such as forecasts and
projections of the Company's future performance or statements of management's
plans and objectives. Such forward-looking statements may be contained in,
among other things, Securities and Exchange Commission (SEC) filings, such as
the Forms 10-K, press releases made by the Company, the Company's Internet Web
sites (including Web sites of its subsidiaries), and oral statements made by
the officers of the Company. Except for historical information contained in
these written or oral communications, such communications contain forward-
looking statements. These forward-looking statements involve a number of risks
and uncertainties that could cause actual results to differ materially from
those projected in the statements, including, but not limited to: (1) economic
conditions in Hawaii and elsewhere; (2) market demand; (3) competitive factors
and pricing pressures in the Company's primary markets; (4) legislative and
regulatory environments at the federal, state and local levels, such as
government rate regulations, land-use regulations, government administration of
the U.S. sugar program, and modifications to or retention of cabotage laws; (5)
dependence on third-party suppliers; (6) fuel prices; (7) raw sugar prices; (8)
labor relations; (9) risks associated with current or future litigation; and
(10) other risk factors described elsewhere in these communications and from
time to time in the Company's filings with the SEC.
STATEMENTS OF INCOME
(In thousands, except per-share amounts)
- --------------------------------------------------------------------------------------------
Year Ended December 31, 2000 1999 1998
- --------------------------------------------------------------------------------------------
REVENUE:
Ocean transportation $ 839,535 $ 768,414 $ 738,017
Property leasing 61,710 53,416 43,702
Property sales 46,158 47,894 82,167
Food products 102,229 113,680 465,433
Interest and dividends 19,014 16,594 14,156
- --------------------------------------------------------------------------------------------
Total revenue 1,068,646 999,998 1,343,475
- --------------------------------------------------------------------------------------------
COSTS AND EXPENSES:
Cost of transportation services 687,223 628,104 612,856
Cost of property sales and leasing services 47,366 51,764 77,838
Cost of goods and agricultural services 98,820 105,052 429,329
Selling, general and administrative 88,270 86,354 103,386
Write-down of long-lived assets -- 15,410 20,216
Loss on partial sale of subsidiary -- -- 19,756
Interest 24,252 17,774 24,799
- --------------------------------------------------------------------------------------------
Total costs and expenses 945,931 904,458 1,288,180
- --------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING METHODS 122,715 95,540 55,295
Income taxes 44,391 32,961 24,352
- --------------------------------------------------------------------------------------------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING METHODS 78,324 62,579 30,943
Cumulative effect of change in accounting
methods (see Note 2) (net of income taxes
of $7,668 in 2000 and of $3,481 in 1998) 12,250 -- (5,801)
- --------------------------------------------------------------------------------------------
NET INCOME 90,574 62,579 25,142
Unrealized holding gains (losses) on
securities (net of income taxes of $7,525
in 2000, $8,088 in 1999 and $5,337 in 1998) 12,476 (13,868) 8,185
- --------------------------------------------------------------------------------------------
COMPREHENSIVE INCOME $ 103,050 $ 48,711 $ 33,327
============================================================================================
BASIC EARNINGS PER SHARE OF COMMON STOCK:
Before cumulative effect of accounting changes $ 1.92 $ 1.45 $ 0.69
Accounting changes 0.29 -- (0.13)
- --------------------------------------------------------------------------------------------
Net income $ 2.21 $ 1.45 $ 0.56
============================================================================================
DILUTED EARNINGS PER SHARE OF COMMON STOCK:
Before cumulative effect of accounting changes $ 1.91 $ 1.45 $ 0.69
Accounting changes 0.30 -- (0.13)
- --------------------------------------------------------------------------------------------
Net income $ 2.21 $ 1.45 $ 0.56
============================================================================================
AVERAGE COMMON SHARES OUTSTANDING 40,898 43,206 44,760
See notes to financial statements.
STATEMENTS OF CASH FLOWS
(In thousands)
- -----------------------------------------------------------------------------------------------
Year Ended December 31, 2000 1999 1998
- -----------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATIONS:
Net income $ 90,574 $ 62,579 $ 25,142
Adjustments to reconcile net income to net cash
provided by operations:
Depreciation and amortization 72,304 73,901 88,500
Gains on disposal of assets (20,407) (10,661) (10,259)
Equity in (income) loss of affiliates (6,859) (3,002) 276
Write-down of long-lived assets -- 15,410 20,216
Loss on partial sale of subsidiary -- -- 19,756
Change in accounting methods (Note 2) (12,250) -- 5,801
Changes in assets and liabilities:
Accounts and notes receivable (4,161) (6,007) 7,859
Inventories (1,219) (1,326) 4,605
Prepaid expenses and other assets (7,933) (8,852) (9,213)
Pension and post-retirement assets and obligations (26,169) (18,174) (16,376)
Accounts and income taxes payable 9,305 10,436 5,345
Deferred income taxes payable 17,358 8,465 (8,248)
Other liabilities 10,235 (3,408) 3,840
Capital expenditures for real estate developments
held for sale (16,500) (9,982) (13,116)
- -----------------------------------------------------------------------------------------------
Net cash provided by operations 104,278 109,379 124,128
- -----------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for property and developments (84,201) (68,606) (100,593)
Receipts from disposal of income producing
property, investments and other assets 3,877 3,688 4,818
Proceeds from recapitalization of subsidiary -- -- 83,841
Proceeds from partial sale of subsidiary -- -- 14,940
Deposits into Capital Construction Fund (12,220) (19,464) (10,000)
Withdrawals from Capital Construction Fund 8,574 11,458 14,377
(Increase) decrease in investments - net 894 (3,285) (7,745)
- -----------------------------------------------------------------------------------------------
Net cash used in investing activities (83,076) (76,209) (362)
- -----------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 98,500 39,500 30,000
Payments of long-term debt (48,000) (30,533) (68,985)
Proceeds (payments) from short-term
borrowings - net 10,500 (52,000) 40,000
Repurchases of capital stock (48,260) (34,824) (20,838)
Proceeds from issuance of capital stock 2,961 101 1,575
Dividends paid (36,785) (38,899) (40,323)
- -----------------------------------------------------------------------------------------------
Net cash used in financing activities (21,084) (116,655) (58,571)
- -----------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS:
Net increase (decrease) for the year 118 (83,485) 65,195
Balance, beginning of year 3,333 86,818 21,623
- -----------------------------------------------------------------------------------------------
Balance, end of year $ 3,451 $ 3,333 $ 86,818
- -----------------------------------------------------------------------------------------------
OTHER CASH FLOW INFORMATION:
Interest paid, net of amounts capitalized $ 24,663 $ 17,772 $ 26,890
Income taxes paid, net of refunds 31,807 34,213 34,672
NON-CASH ACTIVITIES:
Tax-deferred property sales 35,569 34,883 67,258
Tax-deferred property purchases 22,703 34,907 85,896
Transfer of assets to joint venture -- 16,438 --
Securities retained in connection with
partial sale of subsidiary -- -- 34,960
See notes to financial statements.
BALANCE SHEETS
(In thousands, except per-share amount)
- ----------------------------------------------------------------------------------------
December 31, 2000 1999
- ----------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,451 $ 3,333
Accounts and notes receivable:
Trade, less allowances of $6,579 and $7,860 129,373 122,604
Other 12,180 14,033
Inventories:
Sugar and coffee 4,435 4,543
Materials and supplies 12,702 11,384
Real estate held for sale 19,324 12,706
Deferred income taxes 13,186 16,260
Prepaid expenses and other assets 18,736 20,739
Accrued deposits to Capital Construction Fund (4,520) (3,152)
- ----------------------------------------------------------------------------------------
Total current assets 208,867 202,450
- ----------------------------------------------------------------------------------------
INVESTMENTS 183,141 158,726
- ----------------------------------------------------------------------------------------
REAL ESTATE DEVELOPMENTS 62,628 60,810
- ----------------------------------------------------------------------------------------
PROPERTY:
Land 95,195 86,421
Buildings 271,314 241,009
Vessels 770,352 766,525
Machinery and equipment 534,894 510,407
Water, power and sewer systems 80,084 83,980
Other property improvements 56,355 60,244
- ----------------------------------------------------------------------------------------
Total 1,808,194 1,748,586
Less accumulated depreciation and amortization 853,502 819,959
- ----------------------------------------------------------------------------------------
Property - net 954,692 928,627
- ----------------------------------------------------------------------------------------
CAPITAL CONSTRUCTION FUND 150,405 145,391
- ----------------------------------------------------------------------------------------
PENSION ASSETS 50,476 40,987
- ----------------------------------------------------------------------------------------
OTHER ASSETS - NET 55,803 24,469
- ----------------------------------------------------------------------------------------
Total $1,666,012 $1,561,460
========================================================================================
See notes to financial statements.
- ----------------------------------------------------------------------------------------
2000 1999
- ----------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable and current portion of long-term debt $ 30,500 $ 22,500
Accounts payable 63,075 55,655
Payrolls and vacation due 18,170 16,699
Uninsured claims 11,514 12,742
Taxes other than income 3,456 4,414
Post-retirement benefit obligations - current portion 2,213 2,878
Accrued and other liabilities 24,078 27,757
- ----------------------------------------------------------------------------------------
Total current liabilities 153,006 142,645
- ----------------------------------------------------------------------------------------
LONG-TERM LIABILITIES:
Long-term debt 330,766 277,570
Post-retirement benefit obligations 44,752 60,767
Uninsured claims 20,857 16,780
Other 35,841 34,381
- ----------------------------------------------------------------------------------------
Total long-term liabilities 432,216 389,498
- ----------------------------------------------------------------------------------------
DEFERRED INCOME TAXES 387,139 358,354
- ----------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Capital stock - common stock without par value;
authorized, 150,000 shares ($.75 stated value
per share); outstanding, 40,353 shares in 2000
and 42,526 shares in 1999 33,248 34,933
Additional capital 58,007 53,124
Unrealized holding gains on securities 61,937 49,461
Retained earnings 552,637 545,849
Cost of treasury stock (12,178) (12,404)
- ----------------------------------------------------------------------------------------
Total shareholders' equity 693,651 670,963
- ----------------------------------------------------------------------------------------
Total $1,666,012 $1,561,460
========================================================================================
STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands, except per-share amounts)
ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES
Three Years Ended December 31, 2000
- --------------------------------------------------------------------------------------------------------------------
Capital Stock
------------------------------------------
Issued In Treasury
--------------------- ------------------
Unrealized
Additional Holding Retained
Shares Stated Value Shares Cost Capital Gains Earnings
- --------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1997 49,026 $ 36,769 4,145 $(12,897) $ 49,437 $ 55,144 $591,135
Changes in 1998:
Shares repurchased and retired (969) (727) (20,111)
Stock options exercised 67 50 1,558 (23)
Issued--incentive plans 8 6 (41) 346 951
Unrealized holding gain on
securities 8,185
Net income 25,142
Cash dividends, $0.90 per share (40,323)
- --------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998 48,132 36,098 4,104 (12,551) 51,946 63,329 555,820
Changes in 1999:
Shares repurchased and retired (1,565) (1,173) (33,651)
Stock options exercised 5 4 97
Issued--incentive plans 7 4 (51) 147 1,081
Unrealized holding loss on
securities (13,868)
Net income 62,579
Cash dividends, $0.90 per share (38,899)
- --------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999 46,579 34,933 4,053 (12,404) 53,124 49,461 545,849
CHANGES IN 2000:
Shares repurchased and retired (2,378) (1,783) (46,477)
Stock options exercised 126 94 3,378 (524)
Issued--incentive plans 4 4 (75) 226 1,505
Unrealized holding gain on
securities 12,476
Net income 90,574
Cash dividends, $0.90 per share (36,785)
- --------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2000 44,331 $ 33,248 3,978 $(12,178) $ 58,007 $ 61,937 $552,637
====================================================================================================================
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
ALEXANDER & BALDWIN, INC.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation: The consolidated financial statements include the
accounts of Alexander & Baldwin, Inc. and all wholly owned subsidiaries
("Company"), after elimination of significant intercompany amounts.
Significant investments in businesses, partnerships and joint ventures in which
the Company does not have control are accounted for under the equity method.
Generally, these are investments in 20 to 50 percent owned businesses.
Segment Information: The Company has three operating segments: Ocean
Transportation, Real Estate Development and Management, and Food Products. The
Company reports segment information in the same way that management assesses
segment performance. Additional information regarding these segments is found
on page 26 and in Note 12.
Cash and Cash Equivalents: Cash equivalents are composed of all highly liquid
investments with an original maturity of three months or less and which have no
significant risk of change in value.
Inventories: Raw sugar and coffee inventories are stated at the lower of cost
(first-in, first-out basis) or market. Other inventories, composed principally
of materials and supplies, are stated at the lower of cost (principally average
cost) or market. Materials and supplies inventories are carried at historical
cost, which is not greater than replacement cost.
Property: Property is stated at cost. Expenditures for major renewals and
betterments are capitalized. Replacements, maintenance and repairs, which do
not improve or extend asset lives, are charged to expense as incurred. Gains
or losses from property disposals are included in the determination of net
income.
As discussed in Note 2, the Company changed its accounting for drydocking costs
in 2000. Costs of regularly scheduled drydocking of vessels and planned major
vessel repairs performed during drydocking are capitalized and amortized over
the periods benefited.
Coffee Orchards: Costs of developing coffee orchards are capitalized during
the development period and depreciated over the estimated productive lives. In
1999, following the provisions of Statement of Financial Accounting Standards
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," the Company reduced the carrying value of its coffee
orchards and field and factory processing equipment. This is described further
in Note 3.
Capitalized Interest: Interest costs incurred in connection with significant
expenditures for real estate developments or the construction of assets are
capitalized. Interest expense is shown net of capitalized interest on the
Statements of Income, because the amounts are not significant.
Construction Expenditures: Expenditures for real estate developments are
capitalized during construction and are classified as Real Estate Developments
on the Balance Sheets. When construction is complete, the costs are
reclassified as either Real Estate Held for Sale or Property, based upon the
Company's intent to sell the completed asset or to hold it as an investment.
Cash flows related to real estate developments are classified as either
operating or investing activities, based upon the Company's intention to sell
the property or to retain ownership of the property as an investment following
completion of construction.
Depreciation: Depreciation is computed using the straight-line method.
Estimated useful lives of property are as follows:
--------------------------------------------
Range of Life
Classification (in years)
--------------------------------------------
Buildings 10 to 50
Vessels 10 to 40
Marine containers 2 to 25
Terminal facilities 3 to 35
Machinery and equipment 3 to 35
Utility systems and other 5 to 60
--------------------------------------------
Fair Values: The carrying values of current assets (other than inventories,
real estate held for sale, deferred income taxes, and prepaid and other current
assets) and of debt instruments are reasonable estimates of their fair values.
Real estate is carried at the lower of cost or fair value. Fair values are
generally determined using the expected market value for the property, less
sales costs. For residential units and lots held for sale, market value is
determined by reference to the sales of similar property, market studies, tax
assessments and cash flows. For commercial property, market value is
determined using recent comparable sales, tax assessments and cash flows. A
large portion of the Company's real estate is undeveloped land located in
Hawaii. This land has a cost basis which averages approximately $150 per
acre, a value which is much lower than fair value.
Impairments of Long-lived Assets: Long-lived assets are reviewed for possible
impairment when events or circumstances indicate that the carrying value may
not be recoverable. In such evaluation, the estimated future undiscounted cash
flows generated by the asset are compared with the amount recorded for the
asset to determine if a write-down may be required. If this review determines
that the recorded value will not be recovered, the amount recorded for the
asset is reduced to estimated fair value. (See Note 3.)
Voyage Revenue Recognition: Voyage revenue and variable costs and expenses
associated with voyages are included in income at the time each voyage leg
commences. This method of accounting does not differ materially from other
acceptable accounting methods. Freight rates are provided in tariffs filed
with the Surface Transportation Board of the U.S. Department of Transportation.
Real Estate Sales Revenue Recognition: Sales are recorded when the risks and
benefits of ownership have passed to the buyers (generally on closing dates),
adequate down payments have been received, and collection of remaining balances
is reasonably assured.
Sugar and Coffee Revenue Recognition: Revenue from bulk raw sugar sales is
recorded when delivered to the cooperative of Hawaiian producers, based on the
estimated net return to producers in accordance with contractual agreements.
Revenue from coffee is recorded when the title to the product and risk of loss
passes to third parties and when collection is reasonably assured.
Non-voyage Ocean Transportation Costs: Vessel depreciation, charter hire,
terminal operating overhead and general and administrative expenses are charged
to expense as incurred.
Agricultural Costs: Costs of growing and harvesting sugar cane are charged to
the cost of production in the year incurred and to cost of sales as raw sugar
is delivered to the cooperative of Hawaiian producers as allowed in Statement
of Position No. 85-3. Costs of growing coffee are charged to inventory in the
year incurred and to cost of sales as coffee is sold.
Employee Benefit Plans: Certain ocean transportation subsidiaries are members
of the Pacific Maritime Association (PMA) and the Hawaii Stevedoring Industry
Committee, which negotiate multi-employer pension plans covering certain
shoreside bargaining unit personnel. The subsidiaries directly negotiate
multi-employer pension plans covering other bargaining unit personnel. Pension
costs are accrued in accordance with contribution rates established by the PMA,
the parties to a plan or the trustees of a plan. Several trusteed, non-
contributory, single-employer defined benefit plans, a profit sharing plan and
an individual deferred contribution plan cover substantially all other
employees.
Stock-based Compensation: In 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting
for Stock-Based Compensation." As allowed by that standard, the Company has
elected to continue to apply the principles of Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees," as discussed in
Note 10.
Income Taxes: Deferred tax assets and liabilities are established for
temporary differences between the way certain income and expense items are
reported for financial reporting and tax purposes. Deferred tax assets and
liabilities are adjusted to the extent necessary to reflect tax rates expected
to be in effect when the temporary differences reverse. A valuation allowance
is established for deferred tax assets for which realization is not likely.
Basic and Diluted Earnings per Share of Common Stock: Basic Earnings per Share
is determined by dividing Net Income by the weighted-average common shares
outstanding during the year. The impact on Earnings per Share of the Company's
stock options is immaterial; consequently, Diluted Earnings per Share is
generally the same amount as Basic Earnings per Share.
Comprehensive Income: Comprehensive Income includes changes from either
recognized transactions or other economic events, excluding capital stock
transactions, which impact Shareholders' Equity. For the Company, the only
difference between Net Income and Comprehensive Income is the unrealized
holding gains on securities available for sale. Comprehensive Income is not
used in the calculation of Earnings per Share.
Environmental Costs: Environmental expenditures that relate to current
operations are expensed or capitalized, as appropriate. Expenditures that
relate to an existing condition caused by past operations or events, and which
do not contribute to current or future revenue generation, are charged to
expense. Liabilities are recorded when environmental assessments or remedial
efforts are probable and the costs can be estimated reasonably.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements
and accompanying notes. Future actual amounts could differ from those
estimates.
Impact of Newly Issued Accounting Standards: SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," as amended, establishes the
accounting and reporting standards for derivative instruments and hedging
activities. Adoption of the standard was required on January 1, 2001. The
Company has reviewed its contracts and agreements, and has determined that
adoption of this standard will not have a material effect on the financial
statements.
The Company has adopted SFAS No. 140, "Accounting for Transfers and Servicing
of Financial Assets and Extinguishment of Liabilities." SFAS No. 140 provides
standards for transfers and servicing of financial assets and extinguishments
of liabilities using a financial-components approach that focuses on control.
While application of this standard is prospective, no significant changes in
the Company's accounting practices are expected to result from its adoption.
Reclassifications: Certain amounts in the 1999 and 1998 financial statements
have been reclassified to conform with the 2000 presentation.
2. CHANGE IN ACCOUNTING METHODS
2000 - Change in Accounting Method for Vessel Drydocking Costs: The Company
changed its method of accounting for vessel drydocking costs, as of January 1,
2000, from the accrual method to the deferral method. Drydocking costs had
been accrued as a liability and an expense on an estimated basis, in advance
of the next scheduled drydocking. Subsequent payments for drydocking were
charged against the accrued liability. Under the deferral method, actual
drydocking costs are capitalized when incurred and amortized over the period
benefited; generally, this is the period between scheduled drydockings. This
method eliminates the uncertainty of estimating these costs. This change was
made to conform with prevailing industry accounting practices. The cumulative
effect of this accounting change, as of January 1, 2000, is shown separately in
the Statements of Income and resulted in net income of $12,250,000 (net of
income tax expense of $7,668,000) or $0.29 per basic share.
The effect of this change in accounting method on the balance sheets was to
increase other assets by $4,765,000, eliminate drydocking reserves of
$15,153,000, increase deferred taxes by $7,668,000, and increase total
shareholders' equity by $12,250,000. Had this change been applied
retroactively, the impact on net income for 1999 and 1998 would not have been
materially different from reported net income.
2000 - Change in Accounting for Certain Revenues and Expenses: The Company
changed its method of presentation for certain freight services that are
performed by third parties and billed by the Company to its customers. The
expenses and related revenue for these services were previously reported on a
net basis and were not reflected on the Statements of Income. Accordingly,
operating revenue and expenses have been increased by $38,059,000, $31,874,000
and $25,377,000 for 2000, 1999 and 1998, respectively.
The Company also changed its method of presentation for common area maintenance
(CAM) costs. These costs, which are incurred by the Company but which are
charged to tenants under various lease arrangements, were previously netted
against Property Leasing Revenue. The Company now records CAM amounts in Costs
of Leasing Services in the Statements of Income. Accordingly, Property Leasing
Revenue and Costs of Leasing Services have been increased by $11,246,000,
$8,852,000 and $6,478,000 for 2000, 1999 and 1998, respectively.
These two changes were in response to the Securities and Exchange Commission's
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements," which provides guidance about the classification, on a gross
basis, of revenues and expenses. These changes had no effect on earnings or
segment operating profit. Revenue on pages 26 and 32 for Ocean Transportation
and Property Leasing have been restated to reflect this change.
1998 - Change in Accounting Method for Insurance-related Assessments: The
Company self-insures a portion of its federal workers' compensation liability.
As such, the Company utilized the U.S. Department of Labor (DOL) second injury
fund, as authorized by Section 8(f) of the U.S. Longshore and Harborworkers'
Compensation Act. Under this Act, the DOL annually assesses self-insurers for
their share of the related costs. Through 1997, these assessments were
recorded as an expense in the years the amounts were assessed and paid.
Effective January 1, 1998, the Company adopted the provisions of the American
Institute of Certified Public Accountants Statement of Position 97-3,
"Accounting by Insurance and Other Enterprises for Insurance-Related
Assessments." This statement requires that the Company record, as a liability,
the expected cost of future assessments relating to existing compensation
claims made prior to the end of the fiscal year. In adopting this statement,
the Company recorded a one-time, non-cash charge to 1998 earnings of $5,801,000
(net of income tax benefit of $3,481,000) or $0.13 per basic share. The effect
of the change on operating costs was not significant for the current or prior
years. The discount rate, discounted liability, and undiscounted liability at
December 31, 2000, 1999 and 1998 were as follows (amounts in thousands):
---------------------------------------------------------
2000 1999 1998
---------------------------------------------------------
Discount Rate 6% 6.76% 5.43%
Discounted Liability $ 9,956 $ 9,862 $ 9,282
Undiscounted Liability $14,753 $15,364 $13,869
---------------------------------------------------------
3. WRITE-DOWN OF LONG-LIVED ASSETS
1999 - The Company began growing coffee in Hawaii in 1987 as an alternative
crop to sugar cane. Since inception, the Company's coffee operation
continually has generated operating losses and negative cash flows. During the
second half of 1999, the Company significantly reduced the coffee workforce and
changed its coffee marketing and selling plans. To exacerbate the problem,
coffee commodity prices dropped significantly in 1999 due to an oversupply of
coffee in the marketplace. Because of continuing cash-flow losses, the ongoing
viability of the coffee operation was evaluated again. As a result, the
Company determined that the estimated future cash flows of the coffee operation
were less than the carrying value of its productive assets, consisting mainly
of orchards and field and processing equipment. Accordingly, a $15,410,000
(pre-tax) charge was recorded to write down these productive assets to their
fair value (i.e., present value of estimated future cash flows).
1998 - The Company changed the strategic direction of its 1,045-acre Kukui'Ula
real estate development, from a single master-planned residential community to
a series of individual subdivisions with fewer units, as a result of continued
weaknesses in the State's and Kauai's economy and real estate markets. As a
result, the Company determined that its investment in a waste water treatment
plant (WWTP) could not be recovered through the WWTP's future cash flows;
accordingly, the costs of the WWTP were reduced by $15,900,000, to the plant's
fair value, which was based on the present value of estimated future cash
flows. Under the original higher-density Kukui'Ula development plan, the cost
of the WWTP would have been recoverable from its future cash flows. The
changes in the development plan also resulted in the write-off of $4,316,000
for design and study costs, which were determined to have no future economic
benefit. The remaining carrying cost of the Kukui'Ula project is approximately
$29,650,000 and, based on current development plans, the Company has determined
that this amount is recoverable from the project's future cash flows.
4. INVESTMENTS AND PARTIAL SALE OF SUBSIDIARY
At December 31, 2000 and 1999, investments consisted principally of marketable
equity securities, equity in affiliated companies, limited partnership
interests and purchase-money mortgages, as follows (in thousands):
- ---------------------------------------------------------------------------
2000 1999
- ---------------------------------------------------------------------------
Marketable equity securities $108,069 $ 88,485
Equity in affiliated companies:
California and Hawaiian Sugar Company, Inc. (C&H) 41,705 37,591
SSA Terminals, LLC (SSAT) 21,867 18,278
Sea Star Line, LLC (Sea Star) 7,586 8,429
Other 300 300
Limited partnership interests, purchase-money
mortgages and other 3,614 5,643
- ---------------------------------------------------------------------------
Total Investments $183,141 $158,726
===========================================================================
Marketable Equity Securities: The marketable equity securities are classified
as "available for sale" and are stated at quoted market values as traded on
national exchanges. The unrealized holding gains on these securities, net of
deferred income taxes, have been recorded as a separate component of
Shareholders' Equity and Comprehensive Income.
The components of the net unrealized holding gains at December 31, 2000 and
1999 were as follows (in thousands):
- ---------------------------------------------------------------------------
2000 1999
- ---------------------------------------------------------------------------
Market value $108,069 $ 88,485
Less historical cost 9,761 10,173
- ---------------------------------------------------------------------------
Unrealized holding gains 98,308 78,312
Less deferred income taxes 36,371 28,851
- ---------------------------------------------------------------------------
Net unrealized holding gains $ 61,937 $ 49,461
===========================================================================
Equity in Affiliated Companies: On December 24, 1998, the Company recognized a
loss of $19,756,000 on the sale of a majority of its equity interest in its
sugar refining and marketing unit, C&H. The Company received approximately
$45,000,000 in cash, after the repayment of certain C&H indebtedness,
$25,000,000 in senior preferred stock, and $9,600,000 in junior preferred
stock. The Company retained an approximately 36-percent common stock interest
in the recapitalized C&H. The Company continues to hold all of C&H's senior
preferred stock and 40 percent of C&H's junior preferred stock. Dividends on
the senior and junior preferred stocks are cumulative. Through December 2003,
dividends on the senior preferred stock may be paid either in cash or by
issuance of additional shares of senior preferred stock. Shares of senior
preferred stock received as dividends are valued at their estimated realizable
values. C&H must redeem from the Company, at one thousand dollars per share,
the outstanding senior preferred stock in December 2009 and outstanding junior
preferred stock in December 2010. C&H is included in the consolidated results
of the Company up to the date of the sale. The Company accounts for its
investment in C&H under the equity method. Financial information for C&H as of
and for the years ended December 31, 2000 and 1999 follows (in thousands):
- ---------------------------------------------------------------------------
CONDENSED BALANCE SHEETS 2000 1999
- ---------------------------------------------------------------------------
ASSETS:
Current $117,687 $ 82,707
Property and other 133,056 136,941
- ---------------------------------------------------------------------------
Total $250,743 $219,648
===========================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current $ 62,702 $ 39,044
Long-term debt and other 120,797 117,064
Shareholders' equity, including preferred stock 67,244 63,540
- ---------------------------------------------------------------------------
Total $250,743 $219,648
===========================================================================
- ---------------------------------------------------------------------------
CONDENSED STATEMENTS OF INCOME 2000 1999
- ---------------------------------------------------------------------------
Revenue $413,250 $470,838
Cost and Expenses 409,545 463,454
- ---------------------------------------------------------------------------
Net Income $ 3,705 $ 7,384
===========================================================================
The Company has an investment in a limited liability corporation (LLC) with
Saltchuk Resources, Inc. and International Shipping Agency, Inc., named Sea
Star Line, LLC, which operates an ocean transportation service between Florida
and Puerto Rico. The Company charters two vessels to Sea Star Line, LLC. This
investment represents a minority interest and is accounted for under the equity
method.
The Company is part owner of an LLC with Stevedoring Services of America, named
SSA Terminals, LLC, which provides stevedoring and terminal services at six
terminals in three West Coast ports to the Company and other shipping lines.
In 1999, each company contributed the assets of California and Seattle,
Washington terminals to form the LLC. This investment represents a minority
interest and is accounted for under the equity method.
The carrying amounts of investments in unconsolidated affiliated companies
approximated their fair values at December 31, 2000 and 1999.
Limited Partnership Interests and Purchase-money Mortgages: The investments in
limited partnerships are recorded at the lower of cost or fair value and
purchase-money mortgages are recorded at cost. The purchase-money mortgages
are intended to be held to maturity. The values of the investments in limited
partnerships are assessed annually.
See Note 5 for a discussion of fair values of investments in the Capital
Construction Fund.
5. CAPITAL CONSTRUCTION FUND
A subsidiary is party to an agreement with the United States government which
established a Capital Construction Fund (CCF) under provisions of the Merchant
Marine Act, 1936, as amended. The agreement has program objectives for the
acquisition, construction or reconstruction of vessels and for repayment of
existing vessel indebtedness. Deposits to the CCF are limited by certain
applicable earnings. Such deposits are federal income tax deductions in the
year made; however, they are taxable, with interest payable from the year of
deposit, if withdrawn for general corporate purposes or other non-qualified
purposes, or upon termination of the agreement. Qualified withdrawals for
investment in vessels and certain related equipment do not give rise to a
current tax liability, but reduce the depreciable bases of the vessels or other
assets for income tax purposes.
Amounts deposited into the CCF are a preference item for calculating federal
alternative minimum taxable income. Deposits not committed for qualified
purposes within 25 years from the date of deposit, will be treated as non-
qualified withdrawals over the subsequent five years. As of December 31, 2000,
the oldest CCF deposits date from 1994. Management believes that all amounts
on deposit in the CCF at the end of 2000 will be used or committed for
qualified purposes prior to the expiration of the applicable 25-year periods.
Under the terms of the CCF agreement, the subsidiary may designate certain
qualified earnings as "accrued deposits" or may designate, as obligations of
the CCF, qualified withdrawals to reimburse qualified expenditures initially
made with operating funds. Such accrued deposits to and withdrawals from the
CCF are reflected on the Balance Sheets either as obligations of the Company's
current assets or as receivables from the CCF.
The Company has classified its investments in the CCF as "held-to-maturity"
and, accordingly, has not reflected temporary unrealized market gains and
losses on the Balance Sheets or Statements of Income. The long-term nature of
the CCF program supports the Company's intention to hold these investments to
maturity.
At December 31, 2000 and 1999, the balances on deposit in the CCF are
summarized as follows (in thousands):
- ---------------------------------------------------------------------------------------------------------
2000 1999
--------------------------------- ----------------------------------
Amortized Fair Unrealized Amortized Fair Unrealized
Cost Value Gain (Loss) Cost Value Loss
- ---------------------------------------------------------------------------------------------------------
Mortgage-backed securities $ 32,302 $ 32,281 $ (21) $ 37,086 $ 35,843 $ (1,243)
Cash and cash equivalents 113,583 113,871 288 105,153 104,958 (195)
Accrued deposits 4,520 4,520 -- 3,152 3,152
- ---------------------------------------------------------------------------------------------------------
Total $150,405 $150,672 $ 267 $145,391 $143,953 $ (1,438)
=========================================================================================================
Fair value of the mortgage-backed securities was determined by an outside
investment management company, based on experience trading identical or
substantially similar securities. No central exchange exists for these
securities; they are traded over-the-counter. The Company earned $2,654,000 in
2000, $3,152,000 in 1999, and $4,514,000 in 1998 on its investments in
mortgage-backed securities. The fair values of other CCF investments are based
on quoted market prices. These other investments mature no later than December
2, 2002. Three securities classified as "held-to-maturity" were sold during
2000 for a combined loss of $48,400. These securities no longer met authorized
credit requirements. No securities classified as "held-to-maturity" were sold
in 1999.
6. NOTES PAYABLE AND LONG-TERM DEBT
At December 31, 2000 and 1999, long-term debt consisted of the following (in
thousands):
- -------------------------------------------------------------------
2000 1999
- -------------------------------------------------------------------
Commercial paper, 2000 high 6.79%, low 5.66% $ 99,766 $ 99,570
Bank variable rate loans, due after 2000,
2000 high 7.53%, low 6.06% 136,500 78,000
Term loans:
7.29%, payable through 2007 52,500 60,000
7.42%, payable through 2009 20,000 --
7.43%, payable through 2007 15,000 15,000
7.57%, payable through 2009 15,000 15,000
7.55%, payable through 2009 15,000 15,000
7.65%, payable through 2001 7,500 10,000
8%, repaid in 2000 -- 7,500
- -------------------------------------------------------------------
Total 361,266 300,070
Less current portion 30,500 22,500
- -------------------------------------------------------------------
Long-term debt $330,766 $277,570
===================================================================
Commercial Paper: At December 31, 2000, $99,766,000 of commercial paper notes
was outstanding under a commercial paper program used by a subsidiary to
finance the construction of a vessel. Maturities ranged from two to 24 days.
The borrowings outstanding under this program are classified as long-term
because the subsidiary intends to continue the program and, eventually, to
repay the borrowings with qualified withdrawals from the Capital Construction
Fund.
Variable Rate Loans: The Company has a revolving credit and term loan agree-
ment with four commercial banks, whereby it may borrow up to $140,000,000 under
revolving loans to November 30, 2001, at varying rates of interest. Any
revolving loan outstanding on that date may be converted into a term loan,
which would be payable in 12 equal quarterly installments. The agreement
contains certain restrictive covenants, the most significant of which requires
the maintenance of an interest coverage ratio of 2:1. At December 31, 2000 and
1999, $113,500,000 and $60,000,000, respectively, were outstanding under this
agreement.
The Company has an uncommitted $70,000,000 short-term revolving credit
agreement with a commercial bank. This facility was increased from $45,000,000
during 2000. The agreement extends to November 30, 2001, but may be canceled
by the bank or the Company at any time. The amount which the Company may draw
under the facility is reduced by the amount drawn against the bank under the
previously referenced $140,000,000 multi-bank facility, in which it is a
participant, and by letters of credit issued under the $70,000,000 uncommitted
facility. At December 31, 2000 and 1999, $7,500,000 and $13,000,000,
respectively, were outstanding under this agreement. Under the borrowing
formula for this facility, the Company could have borrowed an additional
$22,700,000 at December 31, 2000.
The Company has a $50,000,000 one-year revolving credit agreement with a
commercial bank containing a two-year term option. At December 31, 2000 and
1999, $15,500,000 and $5,000,000, respectively, were outstanding under this
agreement.
The Company has a $25,000,000 one-year revolving credit agreement with a
commercial bank which serves as a commercial paper liquidity back-up line. At
December 31, 2000 and 1999, no amounts were outstanding under this agreement.
In 1999, the Company had an uncommitted $25,000,000 revolving credit agreement
with a commercial bank. That agreement expired December 31, 1999 and was
replaced in January 2000 with a comparable uncommitted $25,000,000 revolving
credit agreement with another commercial bank.
Other Debt Agreements: The Company has a private shelf agreement for a total
of $65,000,000. At December 31, 2000 this full amount had been drawn. At
December 31, 1999, $20,000,000 had not been drawn on the facility. The amounts
drawn on the agreement are included in term loans.
Long-term Debt Maturities: At December 31, 2000, maturities and planned
prepayments of all long-term debt during the next five years is $30,500,000 for
2001, $7,500,000 for 2002, $9,643,000 for 2003, $12,500,000 for 2004 and
$17,500,000 for 2005.
7. LEASES
The Company as Lessee: Principal operating leases include office and terminal
facilities, containers and equipment, leased for periods which expire between
2002 and 2052. Management expects that, in the normal course of business, most
operating leases will be renewed or replaced by other similar leases.
Rental expense under operating leases totaled $19,741,000, $28,343,000 and
$45,519,000 for the years ended December 31, 2000, 1999 and 1998, respectively.
Future minimum payments under operating leases as of December 31, 2000 were as
follows (in thousands):
---------------------------------------------------------------
Operating
Leases
---------------------------------------------------------------
2001 $ 11,701
2002 11,884
2003 11,882
2004 11,865
2005 8,759
Thereafter 99,567
---------------------------------------------------------------
Total minimum lease payments $155,658
===============================================================
The Company is obligated to pay terminal facility rent equal to the principal
and interest on Special Facility Revenue Bonds issued by the Department of
Transportation of the State of Hawaii. Interest on the bonds is payable semi-
annually and principal, in the amount of $16,500,000, is due in 2013. An
accrued liability of $9,887,000 and $9,344,000 at December 31, 2000 and 1999,
respectively, included in other long-term liabilities, provides for a pro-rata
portion of the principal due on these bonds.
The Company as Lessor: The Company leases land, buildings, land improvements,
and five vessels under operating leases. Two of the vessels are chartered-out
to an unconsolidated affiliate. The historical cost of and accumulated
depreciation on leased property at December 31, 2000 and 1999 were as follows
(in thousands):
---------------------------------------------------------------
2000 1999
---------------------------------------------------------------
Leased property $621,860 $571,640
Less accumulated amortization 154,467 129,465
---------------------------------------------------------------
Property under operating leases - net $467,393 $442,175
===============================================================
Total rental income under these operating leases for the three years ended
December 31, 2000 was as follows (in thousands):
- ---------------------------------------------------------------------------
2000 1999 1998
- ---------------------------------------------------------------------------
Minimum rentals $ 98,607 $ 93,275 $ 79,268
Contingent rentals (based on sales volume) 1,917 1,244 1,079
- ---------------------------------------------------------------------------
Total $100,524 $ 94,519 $ 80,347
===========================================================================
Future minimum rental income on non-cancelable leases at December 31, 2000 was
as follows (in thousands):
--------------------------------------------------------------
Operating
Leases
--------------------------------------------------------------
2001 $ 94,657
2002 90,913
2003 87,132
2004 81,211
2005 76,138
Thereafter 139,925
--------------------------------------------------------------
Total $569,976
==============================================================
8. EMPLOYEE BENEFIT PLANS
The Company has funded single-employer defined benefit pension plans which
cover substantially all non-bargaining unit employees.
In addition, the Company has plans that provide certain retiree health care and
life insurance benefits to substantially all salaried and to certain hourly
employees. Employees are generally eligible for such benefits upon retirement
and completion of a specified number of years of credited service. The Company
does not pre-fund these benefits and has the right to modify or terminate
certain of these plans in the future. Certain groups of retirees pay a portion
of the benefit costs.
The status of the funded defined benefit pension plans and the unfunded
accumulated post-retirement benefit plans, at December 31, 2000, 1999 and 1998,
is shown in Table 1 (page 47).
The net periodic benefit cost for the defined benefit pension plans and the
post-retirement health care and life insurance benefit plans during 2000, 1999
and 1998 is summarized in Table 2 (page 48).
As described in Note 4, the Company sold a majority of its interest in C&H
during 1998. The impact of this transaction on the benefit obligation and the
plan assets is noted in Table 1. At the time of the transaction, C&H had
recorded in its financial statements net obligations of $12,300,000 and
$46,500,000 for its pension and post-retirement benefit plans, respectively.
The assumptions used to determine the benefit information were as follows:
------------------------------------------------------------------------------------------------
Pension Benefits Other Post-retirement Benefits
------------------------ ------------------------------
2000 1999 1998 2000 1999 1998
------------------------------------------------------------------------------------------------
Discounted rate 7.75% 7.75% 6.75% 7.75% 7.75% 6.75%
Expected return on plan assets 9.00% 9.00% 9.00% -- -- --
Rate of compensation increase 4.25% 4.25% 4.25% 4.25% 4.25% 4.25%
For post-retirement benefit measurement purposes, a ten percent annual rate of
increase in the per capita cost of covered health care benefits was assumed
through 2001. The rate was assumed to decrease to five percent for 2002 and
remain at that level thereafter. Unrecognized gains and losses of the post-
retirement benefit plans are amortized over five years.
If the assumed health care cost trend rate were increased or decreased by one
percentage point, the accumulated post-retirement benefit obligation, as of
December 31, 2000, 1999 and 1998, and the net periodic post-retirement benefit
cost for 2000, 1999 and 1998, would have increased or decreased as follows (in
thousands):
- -------------------------------------------------------------------------------------------------------
Other Post-retirement Benefits
One Percentage Point
-------------------------------------------------------------------
Increase Decrease
----------------------------- -------------------------------
2000 1999 1998 2000 1999 1998
- -------------------------------------------------------------------------------------------------------
Effect on total of service and
interest cost components $ 196 $ 416 $ 689 $ (226) $ (347) $ (583)
Effect on post-retirement
benefit obligation $ 1,664 $ 4,062 $ 5,157 $(2,278) $(3,388) $(4,387)
The assets of the defined benefit pension plans consist principally of listed
stocks and bonds. Contributions are determined annually for each plan by the
Company's pension administrative committee, based upon the actuarially
determined minimum required contribution under the Employee Retirement Income
Security Act of 1974 (ERISA), as amended, and the maximum deductible
contribution allowed for tax purposes. For the plans covering employees who
are members of collective bargaining units, the benefit formulas are determined
according to the collective bargaining agreements, either using career average
pay as the base or a flat dollar amount per year of service. The benefit
formulas for the remaining defined benefit plans are based on final average
pay.
The Company has non-qualified supplemental pension plans covering certain
employees and retirees, which provide for incremental pension payments from the
Company's general funds, so that total pension benefits would be substantially
equal to amounts that would have been payable from the Company's qualified
pension plans if it were not for limitations imposed by income tax regulations.
The obligation, included with other non-current liabilities, relating to these
unfunded plans, totaled $12,597,000 and $10,801,000 at December 31, 2000 and
1999, respectively. The annual expense associated with the non-qualified plans
was not significant.
Total contributions to the multi-employer pension plans covering personnel in
shoreside and seagoing bargaining units were $3,027,000 in 2000, $4,367,000 in
1999 and $5,633,000 in 1998. Union collective bargaining agreements provide
that total employer contributions during the terms of the agreements must be
sufficient to meet the normal costs and amortization payments required to be
funded during those periods. Contributions are generally based on union labor
paid or cargo volume. A portion of such contributions is for unfunded accrued
actuarial liabilities of the plans being funded over periods of 25 to 40 years,
which began between 1967 and 1976.
The multi-employer plans are subject to the plan termination insurance
provisions of ERISA and are paying premiums to the Pension Benefit Guarantee
Corporation (PBGC). The statutes provide that an employer who withdraws from,
or significantly reduces its contribution obligation to, a multi-employer plan
generally will be required to continue funding its proportional share of the
plan's unfunded vested benefits.
Under special rules approved by the PBGC and adopted by the Pacific Coast
longshore plan in 1984, the Company could cease Pacific Coast cargo-handling
operations permanently and stop contributing to the plan without any withdrawal
liability, provided that the plan meets certain funding obligations as defined
in the plan. The estimated withdrawal liabilities under the Hawaii longshore
plan and the seagoing plans aggregated approximately $971,000 as of December
31, 2000, based on estimates by plan actuaries. Management has no present
intention of withdrawing from and does not anticipate termination of any of the
aforementioned plans.
Table 1 (in thousands)
Pension Benefits Other Post-retirement Benefits
----------------------------------- -----------------------------------
2000 1999 1998 2000 1999 1998
- -------------------------------------------------------------------------------------------------------------
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at
beginning of year $ 218,189 $ 229,573 $ 354,883 $ 47,836 $ 55,298 $ 91,112
Service cost 4,877 5,705 7,182 504 892 1,154
Interest cost 16,882 15,013 25,024 2,939 3,460 5,474
Plan participants' contributions -- -- -- 1,165 1,423 1,615
Actuarial (gain) loss (2,016) (25,177) 20,682 (2,652) (8,198) (8,482)
Sale of subsidiary -- -- (158,758) -- -- (29,615)
Benefits paid (13,146) (12,109) (22,631) (3,635) (4,320) (6,326)
Amendments 1,137 10,129 3,191 -- -- 366
Settlements 8,602 (1,304) -- (8,247) -- --
Curtailments -- (3,823) -- -- (719) --
Special or contractual
termination benefits 475 182 -- -- -- --
- -------------------------------------------------------------------------------------------------------------
Benefit obligation at
end of year 235,000 218,189 229,573 37,910 47,836 55,298
- -------------------------------------------------------------------------------------------------------------
CHANGE IN PLAN ASSETS
Fair value of plan assets at
beginning of year 381,090 338,267 443,249 -- -- --
Actual return on plan assets (3,645) 56,236 72,646 -- -- --
Settlements -- (1,304) -- -- -- --
Sale of subsidiary -- -- (154,997) -- -- --
Benefits paid (13,146) (12,109) (22,631) -- -- --
- -------------------------------------------------------------------------------------------------------------
Fair value of plan assets
at end of year 364,299 381,090 338,267 -- -- --
- -------------------------------------------------------------------------------------------------------------
ACCRUED ASSET OBLIGATION
Plan assets less benefit
obligation 129,299 162,901 108,694 (37,910) (47,836) (55,298)
Unrecognized net actuarial gain (91,307) (135,670) (88,373) (9,134) (15,841) (10,104)
Unrecognized transition asset (63) (183) (876) -- -- --
Unrecognized prior
service cost 12,547 13,939 4,767 79 32 358
- -------------------------------------------------------------------------------------------------------------
Accrued asset (obligation) $ 50,476 $ 40,987 $ 24,212 $ (46,965) $ (63,645) $(65,044)
=============================================================================================================
_____________________________________________________________________________________________________________
Table 2 (in thousands)
- -------------------------------------------------------------------------------------------------------------
Pension Benefits Other Post-retirement Benefits
----------------------------------- -----------------------------------
2000 1999 1998 2000 1999 1998
- -------------------------------------------------------------------------------------------------------------
COMPONENTS OF NET PERIODIC
BENEFIT COST/(INCOME)
Service cost $ 4,877 $ 5,705 $ 7,182 $ 504 $ 892 $ 1,154
Interest cost 16,882 15,013 25,024 2,939 3,460 5,474
Expected return on plan
assets (33,651) (29,922) (38,862) -- -- --
Recognition of net gain (9,083) (4,251) (4,128) (2,872) (2,644) (7,221)
Amortization of prior
service cost 2,528 905 1,105 7 8 (359)
Amortization of unrecognized
transition asset (119) (713) (992) -- -- --
Recognition of settlement
(gain)/loss 8,602 53 -- (14,800) -- --
Recognition of curtailment gain -- (3,641) -- -- (292) --
- --------------------------------------------------------------------------------------------------------------
Net periodic benefit
cost/(income) $ (9,964) $ (16,957) $ (10,671) $ (14,222) $ 1,424 $ (952)
==============================================================================================================
Cost of termination benefits
recognized $ 475 $ 182 $ -- $ -- $ -- $ --
=============================================================================================================
9. INCOME TAXES
The income tax expense for the three years ended December 31, 2000 consisted of
the following (in thousands):
- ----------------------------------------------------------------------------
2000 1999 1998
- ----------------------------------------------------------------------------
Current:
Federal $ 26,186 $ 21,035 $ 28,877
State 847 3,461 3,723
- ----------------------------------------------------------------------------
Current 27,033 24,496 32,600
Deferred 17,358 8,465 (8,248)
- ----------------------------------------------------------------------------
Income tax expense $ 44,391 $ 32,961 $ 24,352
============================================================================
Income tax expense for the three years ended December 31, 2000 differs from
amounts computed by applying the statutory federal rate to pre-tax income, for
the following reasons (in thousands):
- ----------------------------------------------------------------------------
2000 1999 1998
- ----------------------------------------------------------------------------
Computed income tax expense $ 42,950 $ 33,439 $ 19,353
State tax on income, less applicable
federal tax 2,968 3,790 1,824
Low-income housing credits (1,124) (1,161) (1,204)
Dividend exclusion (954) (860) (931)
Prior years' tax settlement -- (2,815) --
Bases differences in net assets acquired -- -- 3,114
Other - net 551 568 2,196
- ----------------------------------------------------------------------------
Income tax expense $ 44,391 $ 32,961 $ 24,352
============================================================================
The tax effects of temporary differences that give rise to significant portions
of the net deferred tax liability at December 31, 2000 and 1999 were as follows
(in thousands):
- ----------------------------------------------------------------------------
2000 1999
- ----------------------------------------------------------------------------
Property basis and depreciation $ 179,510 $ 187,301
Tax-deferred gains on real estate transactions 104,033 93,966
Capital Construction Fund 58,704 52,374
Unrealized holding gains on securities 36,371 28,851
Pensions 19,447 15,913
Post-retirement benefits (17,900) (24,662)
Insurance reserves (10,740) (10,996)
Other - net 4,528 (653)
- ----------------------------------------------------------------------------
Total $ 373,953 $ 342,094
============================================================================
The Internal Revenue Service (IRS) completed its examination of the Company's
tax returns through 1997. In 1999, the Company reached an agreement with the
IRS settling certain valuation issues relating to the Company's tax returns
for 1992 through 1995. This agreement resulted in a one-time reduction of
income tax expense of $2,815,000, due to the reversal of previously accrued
income tax liabilities. The IRS is currently auditing the Company's tax
returns for 1998 and 1999. Management believes that the outcome of the current
audit will not have a material effect on the Company's financial position or
results of operations.
10. STOCK OPTIONS AND CAPITAL STOCK
Employee Stock Option Plans: The Company has two stock option plans under
which key employees are granted options to purchase shares of the Company's
common stock. There are no longer any outstanding options under a third plan,
which terminated in 1993.
Adopted in 1998, the Company's 1998 Plan provides for the issuance of non-
qualified stock options to employees of the Company. Under the 1998 Plan,
option prices may not be less than the fair market value of the Company's
common stock on the dates of grant, and the options become exercisable over
periods determined, at the dates of grant, by the committee that administers
the plan (generally ratably over three years), and generally expire ten years
from the date of grant. Payments for options exercised may be made in cash or
in shares of the Company's stock. If an option to purchase shares is exercised
within five years of the date of grant and if payment is made in shares of the
Company's stock, the option holder may receive, under a reload feature, a new
stock option grant for such number of shares as is equal to the number
surrendered, with an option price not less than the greater of the fair market
value of the Company's stock on the date of exercise or one and one-half times
the original option price.
Adopted in 1989, the 1989 Plan is substantially the same as the 1998 Plan,
except that each option is generally exercisable in-full one year after the
date granted. The 1989 Plan terminated in January 1999, but options granted
through 1997 remain exercisable.
The 1998 and 1989 Plans also permit the issuance of shares of the Company's
common stock as a reward for past service rendered to the Company or one of its
subsidiaries or as an incentive for future service with such entities. The
recipients' interest in such shares may be vested fully upon issuance or may
vest in one or more installments, upon such terms and conditions as are
determined by the committee which administers the plans. The number of
incentive shares issued during 2000 or outstanding at the end of the year was
not material.
Director Stock Option Plans: The Company has two Directors' stock option
plans. Under the 1998 Directors' Plan, each non-employee Director of the
Company, elected at an Annual Meeting of Shareholders, is automatically
granted, on the date of each such Annual Meeting, an option to purchase 3,000
shares of the Company's common stock at the fair market value of the shares on
the date of grant. Each option to purchase shares becomes exercisable in three
successive annual installments of 1,000 shares beginning one year after the
date granted.
The 1989 Directors' Plan is substantially the same as the 1998 Directors' Plan,
except that each option generally becomes exercisable in-full one year after
the date granted. This plan terminated in January 1999, but options granted
through termination remain exercisable.
Changes in shares and the weighted average exercise prices for the three years
ended December 31, 2000, were as follows (shares in thousands):
- -----------------------------------------------------------------------------------------------------------
Employee Plans Directors' Plans
------------------------ --------------------------
Weighted
1998 1989 Average
1998 1989 1983 Directors' Directors' Total Exercise
Plan Plan Plan Plan Plan Shares Price
- -----------------------------------------------------------------------------------------------------------
December 31,1997 -- 2,862 161 -- 183 3,206 $26.54
Granted 100 485 -- -- 21 606 27.10
Exercised -- (66) -- -- -- (66) 23.91
Canceled -- (18) -- -- -- (18) 28.66
- -----------------------------------------------------------------------------------------------------------
December 31, 1998 100 3,263 161 -- 204 3,728 26.69
Granted 515 -- -- 24 -- 539 20.65
Exercised -- (4) -- -- -- (4) 22.02
Canceled (2) (373) (161) -- (15) (551) 29.16
- ----------------------------------------------------------------------------------------------------------
December 31, 1999 613 2,886 -- 24 189 3,712 25.43
Granted 511 -- -- 24 -- 535 21.70
Exercised (7) (139) -- -- -- (146) 23.79
Canceled (31) (340) -- -- (21) (392) 29.49
- -----------------------------------------------------------------------------------------------------------
December 31, 2000 1,086 2,407 -- 48 168 3,709 $24.52
===========================================================================================================
Exercisable 256 2,406 -- 8 168 2,838 $25.52
===========================================================================================================
As of December 31, 2000, the Company had reserved 1,089,000 shares of its
common stock for the exercise of options. Additional information about
stock options outstanding as of 2000 year-end is summarized below
(shares in thousands):
- ----------------------------------------------------------------------------------------------
Weighted Weighted
Shares Average Weighted Shares Average
Range of Outstanding Remaining Average Exercisable Price of
Exercise as of Contractual Exercise as of Exercisable
Price 12/31/2000 Years Price 12/31/2000 Options
- ----------------------------------------------------------------------------------------------
$ 0.00 5 4.00 $ 0.00 -- $ 0.00
$20.01 - 22.00 1,254 7.30 $21.32 428 $21.41
$22.01 - 24.00 397 6.00 $23.10 357 $23.04
$24.01 - 26.00 572 1.70 $24.39 572 $24.39
$26.01 - 28.00 1,058 4.70 $27.03 1,058 $27.03
$28.01 - 30.00 325 1.50 $28.35 325 $28.35
$30.01 - 34.88 98 4.50 $33.51 98 $33.51
- ----------------------------------------------------------------------------------------------
$ 0.00 - 34.88 3,709 5.00 $24.52 2,838 $25.52
==============================================================================================
ACCOUNTING METHOD FOR STOCK-BASED COMPENSATION: The Company applies Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees,"
and related Interpretations, to account for its stock-based compensation plans.
Accordingly, no compensation cost is recognized in the Company's income
statement for stock option plans at the time grants are awarded. Pro forma
information regarding net income and earnings per share is required, using the
fair value method, by SFAS No. 123, "Accounting for Stock-based Compensation."
The fair value of options granted for the three years ended December 31, 2000
reported below have been estimated using a Black-Scholes option pricing model.
This model was developed for use in estimating the fair value of traded options
which do not have vesting requirements and which are fully transferable. The
Company's options have characteristics significantly different from those of
traded options. The following assumptions were used in determining the pro-
forma amounts:
-------------------------------------------------------------------
2000 1999 1998
-------------------------------------------------------------------
Stock volatility 25.0% 24.8% 25.1%
Expected term from grant date (in years) 6.7 6.5 5.8
Risk-free interest rate 6.0% 5.0% 5.0%
Forfeiture discount 0.3% 0.2% 0.3%
Dividend yield 3.4% 4.0% 4.0%
-------------------------------------------------------------------
Based upon the above assumptions, the computed annual weighted average fair
value of employee stock options granted during 2000, 1999 and 1998 was $5.54,
$4.63 and $5.84, respectively, per option.
Had compensation cost for the stock options granted during the past three years
been based on the estimated fair value at grant dates, as prescribed by SFAS
No. 123, the Company's pro forma net income and net income per share would have
been as follows (in thousands, except per share amounts):
--------------------------------------------------------------
2000 1999 1998
--------------------------------------------------------------
Net Income:
As reported $ 90,574 $ 62,579 $ 25,142
Pro forma $ 89,060 $ 61,108 $ 23,127
Net Income Per Share:
Basic, as reported $ 2.21 $ 1.45 $ 0.56
Basic, pro forma $ 2.18 $ 1.42 $ 0.51
Diluted, as reported $ 2.21 $ 1.45 $ 0.56
Diluted, pro forma $ 2.17 $ 1.42 $ 0.51
--------------------------------------------------------------
The pro forma disclosures of net income and earnings per share are not likely
to be representative of the pro forma effects on future net income or earnings
per share, because the number of future shares which may be issued is not
known, shares vest over several years, and assumptions used to determine the
fair value can vary significantly.
SHAREHOLDER RIGHTS PLAN: The Company has a Shareholder Rights Plan, designed
to protect the interests of shareholders in the event an attempt is made to
acquire the Company. The rights initially will trade with the Company's out-
standing common stock and will not be exercisable absent certain acquisitions
or attempted acquisitions of specified percentages of such stock. If
exercisable, the rights generally entitle shareholders to purchase additional
shares of the Company's stock or shares of an acquiring company's stock at
prices below market value.
SHARE REPURCHASES: During 2000, the Company purchased and retired 2,378,195
shares of its stock, at an average per-share price of $20.29. During 1999, the
Company purchased and retired 1,564,500 shares, at an average per-share price
of $22.26.
11. RELATED PARTY TRANSACTIONS, COMMITMENTS AND CONTINGENCIES
At December 31, 2000, the Company and its subsidiaries had an unspent balance
of total appropriations for capital expenditures of approximately $92,679,000.
However, there are no contractual obligations to spend this entire amount.
The Company has arranged for standby letters of credit totaling $25,237,000.
This includes letters of credit, totaling approximately $14,000,000, which
enable the Company to qualify as a self-insurer for state and federal workers'
compensation liabilities. The amount also includes a letter of credit of
$7,596,000 for workers' compensation claims incurred by C&H employees, under a
now-closed self-insurance plan, prior to December 24, 1998 (see Note 4). The
Company only would be called upon to honor this letter of credit in the event
of C&H's insolvency. The remaining letters of credit are for insurance-related
matters, construction performance guarantees and other routine operating
matters.
C&H, in which A&B has a 36-percent common stock interest, is a party to a long-
term sugar supply contract with Hawaiian Sugar & Transportation Cooperative
(HSTC), a raw sugar marketing and transportation cooperative that is partially
owned by the Company. Under the terms of this contract, C&H is obligated to
purchase, and HSTC is obligated to sell, all of the raw sugar delivered to HSTC
by the Hawaii sugar growers, at prices determined by the quoted domestic sugar
market. The Company delivered to HSTC raw sugar totaling $64,455,000,
$83,412,000 and $79,422,000, during 2000, 1999 and 1998, respectively. The
Company has guaranteed up to $15,000,000 of HS&TC's $35,000,000 working capital
line.
The Company's operating expenses in 2000 and 1999 include approximately
$99,151,000 and $46,856,000, respectively, paid to an unconsolidated affiliate.
A subsidiary has guaranteed obligations of $22,500,000 of an unconsolidated
affiliate in which it has a minority interest.
In 1999, a subsidiary transferred assets with a value of $16,438,000 to an
unconsolidated joint venture.
The Company and certain subsidiaries are parties to various legal actions and
are contingently liable in connection with claims and contracts arising in the
normal course of business, the outcome of which, in the opinion of management
after consultation with legal counsel, will not have a material adverse effect
on the Company's financial position or results of operations.
12. INDUSTRY SEGMENTS
Industry segment information on page 26, is incorporated herein by reference.
Operating segments are defined as components of an enterprise about which
separate financial information is available that is evaluated regularly by the
chief operating decision maker, or decision-making group, in deciding how to
allocate resources and in assessing performance. The Company's chief operating
decision-making group is made up of the president and lead executives of the
Company and each of the Company's segments. The lead executive for each
operating segment manages the profitability, cash flows and assets of his or
her respective segment's various product or service lines and businesses. The
operating segments are managed separately, because each operating segment
represents a strategic business unit that offers different products or services
and serves different markets.
The Company's reportable operating segments include Ocean Transportation,
Property Development and Management and Food Products. The Ocean
Transportation segment carries freight between various United States and
Canadian West Coast, Hawaii and other Pacific ports; holds investments in ocean
transportation and terminal service businesses (see Note 4); and provides
terminal and cargo logistics services. The Property Development and Management
segment develops, manages and sells residential, commercial and industrial
properties. The Food Products segment grows and processes raw sugar and
molasses; invests in a sugar refining and marketing business (see Note 4);
grows, mills and markets coffee; and generates and sells electricity.
The accounting policies of the operating segments are the same as those
described in the summary of significant policies. Reportable segments are
measured based on operating profit, exclusive of non-operating or unusual
transactions, interest expense, general corporate expenses and income taxes.
Quarterly Results (Unaudited)
Segment results by quarter for 2000 and 1999 are listed below (in thousands, except per-share amounts):
2000 1999
----------------------------------------- -----------------------------------------
4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
- ------------------------------------------------------------------------------------------------------------------------
Revenue:
Ocean transportation 1 $216,124 $220,759 $213,584 $200,225 $211,766 $193,798 $196,508 $176,463
Property development
and management:
Leasing 1 16,778 15,522 15,287 14,518 14,622 12,893 12,884 13,511
Sales 3,848 14,435 24,987 3,052 4,940 7,985 27,179 7,932
Food products 23,877 34,294 34,504 13,666 31,279 39,812 37,269 8,002
Other 848 776 798 764 977 726 726 726
- ------------------------------------------------------------------------------------------------------------------------
Total revenue $261,475 $285,786 $289,160 $232,225 $263,584 $255,214 $274,566 $206,634
========================================================================================================================
Operating Profit (Loss):
Ocean transportation $ 19,819 $ 26,106 $ 27,914 $ 19,893 $ 18,299 $ 21,896 $ 25,318 $ 18,265
Property development
and management:
Leasing 7,863 7,467 7,606 7,184 6,919 6,562 6,394 7,622
Sales (862) 5,472 18,917 701 323 1,590 9,949 5,540
Food products 4,613 2,901 (2,060) 2,068 2,992 4,828 2,019 1,471
Other 756 745 764 709 911 693 690 650
- ------------------------------------------------------------------------------------------------------------------------
Total operating profit 32,189 42,691 53,141 30,555 29,444 35,569 44,370 33,548
Write-down of Assets 2 -- -- -- -- (15,410) -- -- --
Interest Expense (6,285) (6,661) (5,959) (5,347) (4,669) (4,209) (4,369) (4,527)
General Corporate Expenses (3,009) (2,392) (2,706) (3,502) (3,286) (3,941) (3,100) (3,880)
- -------------------------------------------------------------------------------------------------------------------------
Income Before Income Taxes
and Accounting Change 22,895 33,638 44,476 21,706 6,079 27,419 36,901 25,141
Income taxes (8,349) (12,284) (16,233) (7,525) (1,063) (8,943) (13,652) (9,303)
Change in accounting method (net
of income taxes of $7,668) 1 -- -- -- 12,250 -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------
Net Income $ 14,546 $ 21,354 $ 28,243 $ 26,431 $ 5,016 $ 18,476 $ 23,249 $ 15,838
========================================================================================================================
Earnings Per Share:
Basic $ 0.36 $ 0.53 $ 0.69 $ 0.63 $ 0.12 $ 0.43 $ 0.54 $ 0.36
========================================================================================================================
Diluted $ 0.36 $ 0.52 $ 0.69 $ 0.63 $ 0.12 $ 0.43 $ 0.54 $ 0.36
========================================================================================================================
1 See Note 2 for discussion of changes in presentation and accounting method.
2 See Note 3 for discussion of the write-down of Kauai Coffee assets in 1999.
ALEXANDER & BALDWIN, INC.
OFFICERS
All positions as of December 31, 2000
All ages as of March 31, 2001
Charles M. Stockholm (68)
Chairman of the Board
W. Allen Doane (53)
President and
Chief Executive Officer
C. Bradley Mulholland (59)
Executive Vice President
James S. Andrasick (57)
Senior Vice President, Chief Financial Officer and Treasurer
Meredith J. Ching (44)
Vice President (Government & Community Relations)
John F. Gasher (67)
Vice President
(Human Resources)
G. Stephen Holaday (56)
Vice President (Plantation General Manager, HC&S)
John B. Kelley (55)
Vice President (Corporate Planning & Investor Relations)
Stanley M. Kuriyama (47)
Vice President (Properties Group)
(Chief Executive Officer and
Vice Chairman of the Board,
A&B Properties, Inc.)
Michael J. Marks (62)
Vice President, General Counsel
and Assistant Secretary
Thomas A. Wellman (42)
Controller and
Assistant Treasurer
Alyson J. Nakamura (35)
Secretary
MATSON NAVIGATION COMPANY, INC.
OFFICERS
Charles M. Stockholm (68)
Chairman of the Board
W. Allen Doane (53)
Vice Chairman of the Board
C . Bradley Mulholland (59)
President and
Chief Executive Officer
Raymond J. Donohue (64)
Senior Vice President and
Chief Financial Officer
Gary J. North (56)
Senior Vice President (Operations)
(President and Chief Operating Officer, Matson Terminals, Inc.)
Kevin C. O'Rourke (54)
Senior Vice President and General Counsel
Paul E. Stevens (48)
Senior Vice President (Marketing)
Richard S. Bliss (62)
Vice President (Area Manager, Pacific Northwest)
Robert L. Dawdy (56)
Vice President
(West Coast Operations)
Branton B. Dreyfus (47)
Vice President
(Area Manager, Hawaii)
Ronald J. Forest (45)
Vice President
(President &
Chief Executive Officer,
Matson Intermodal System, Inc.)
Philip M. Grill (53)
Vice President
(Government Relations)
Dale B. Hendler (47)
Vice President
(E-Commerce and Technology)
Merle A. K. Kelai (69)
Vice President
(Community Relations and Government Affairs)
Judith A. Williams (57)
Vice President (Corporate Planning & Development)
Michael J. Marks (62)
Secretary
Timothy H. Reid (54)
Treasurer
Joseph A. Palazzolo (52)
Controller
ALEXANDER & BALDWIN, INC.
HONOLULU, HAWAII
PRINCIPAL SUBSIDIARIES AND AFFILIATES1
Division:
Hawaiian Commercial & Sugar Company
Puunene, Maui
Subsidiaries:
A&B Development
Company (California)
San Francisco
A&B Properties, Inc.
Honolulu
East Maui Irrigation Company, Limited
Puunene, Maui
Hawaiian Duragreen, Inc.
Puunene, Maui
Kukui'Ula Development Company, Inc.
Poipu, Kauai
Matson Navigation Company, Inc.
San Francisco
Subsidiaries:
Matson Intermodal System, Inc.
San Francisco
Matson Logistics Solutions, Inc.
San Francisco
Matson Services
Company, Inc.
San Francisco
Matson Terminals, Inc.
San Francisco
McBryde Sugar Company, Limited
Eleele, Kauai
Subsidiary:
Kauai Coffee
Company, Inc.
Eleele, Kauai
Kahului Trucking & Storage, Inc.
Kahului, Maui
Kauai Commercial Company, Incorporated
Puhi, Kauai
Hawaiian Sugar & Transportation Cooperative2
Puunene, Maui
C&H Sugar Company, Inc.3
Crockett, California
1 Wholly owned, unless otherwise indicated
2 A cooperative, owned with other Hawaii sugar companies
3 An affiliated company, approximately 40 percent owned by A&B
INVESTOR INFORMATION
ANNUAL MEETING
The Annual Meeting of Shareholders will be held in the Plaza Meeting Room on
the ground floor of Amfac Center, 745 Fort Street, Honolulu, Hawaii, at
10 a.m. on Thursday, April 26, 2001.
INVESTOR INFORMATION
Corporate news releases, the annual report and other information about the
Company are available at A&B's Web site on the Internet:
www.alexanderbaldwin.com.
Shareholders having questions about A&B are encouraged to write to Allen Doane,
President and Chief Executive Officer; or Alyson J. Nakamura, Corporate
Secretary.
Inquiries from professional investors may be directed to
John B. Kelley, Vice President, Investor Relations,
phone (808) 525-8422, e-mail: invrel@abinc.com.
FORM 10-K
Shareholders may obtain a copy of the Company's Annual Report on Form 10-K, as
filed with the Securities and Exchange Commission, without charge, by writing
to Alyson J. Nakamura, Corporate Secretary, Alexander & Baldwin, Inc., P.O. Box
3440, Honolulu, HI 96801-3440.
TRANSFER AGENT & REGISTRAR
Mellon Investor Services, San Francisco, California, and Ridgefield Park, New
Jersey.
For questions regarding stock certificates, dividends, or other transfer-
related matters, representatives of the Transfer Agent may be reached at
1-800-356-2017 between 8 a.m. and 8 p.m., Eastern Time, or via its Web site,
www.mellon-investor.com. Correspondence may be sent to: P.O. Box 3315, So.
Hackensack, NJ 07606.
AUDITORS
Deloitte & Touche LLP, Honolulu, Hawaii.
COMMON STOCK
A&B common shares trade under the symbol ALEX on The Nasdaq Stock MarketSM. A
summary of daily stock transactions is listed in the Nasdaq National Market
Issues section of major newspapers. Trading volume averaged 98,900 shares a day
in 2000, compared with 105,800 in 1999 and 109,400 in 1998. Currently,
16 firms make a market in ALEX.
High and low sales prices per share, by quarter, for 2000 and 1999 were:
- ---------------------------------------------------------
Quarter 2000 1999
- ---------------------------------------------------------
First $22-25/32 - 17-15/16 $23-1/8 - 18-5/8
Second 24-5/8 - 19-1/4 24 - 19
Third 27-1/2 - 21-7/8 27-1/8 - 21-3/4
Fourth 28-1/4 - 21-5/8 25-3/8 - 21-3/8
DIVIDENDS
A&B strives to pay the highest possible dividends commensurate with operating
and capital needs. The Company has paid cash dividends in every quarter since
1903. The most recent increase in the quarterly dividend rate was effective in
the first quarter of 1998, from 22 cents a share to 22.5 cents. In 2000, total
dividend payments to shareholders were $36.8 million, 41 percent of reported
net income for the year. The following dividend schedule for 2001 has been
set, subject to final approval by the A&B Board of Directors:
- ----------------------------------------------
Quarterly Declaration Record Payment
Dividend Date Date Date
- ----------------------------------------------
First Jan. 25 Feb. 15 March 1
Second April 26 May 7 June 7
Third June 28 Aug. 2 Sept. 6
Fourth Oct. 25 Nov. 8 Dec. 6
GENERAL INFORMATION
BOARD OF DIRECTORS
Members of the Board of Directors beneficially own approximately two percent of
A&B shares.
The Annual Meeting of Shareholders on April 27, 2000, was the 100th regular
Annual Meeting of A&B's shareholders. At that meeting, the shareholders
reelected a total of 10 directors, all of whom were nominated by the Board.
Reelected were Michael J. Chun, Leo E. Denlea, Jr., W. Allen Doane, Walter A.
Dods, Jr., Charles G. King, Carson R. McKissick, C. Bradley Mulholland, Lynn M.
Sedway, Maryanna G. Shaw and Charles M. Stockholm. R. J. Pfeiffer, previously
Chairman of the Board and a director, continues to hold the honorary position
of Chairman Emeritus.
MANAGEMENT, ORGANIZATION
On June 1, 2000, James S. Andrasick joined A&B as senior vice president, chief
financial officer and treasurer.
At year-end 2000, A&B had 2,029 employees, versus 2,050 at year-end 1999.
CREDIT RATINGS
As discussed in Note 6 to the financial statements, Matson had outstanding
commercial paper notes totaling $99.8 million at December 31, 2000. The Matson
notes are rated A-1, P-1 and D-1 by Standard & Poor's, Moody's Investor Service
and Fitch IBCA, Duff & Phelps, respectively. Standard & Poor's rates Matson's
senior debt as A-.
STOCK INDEXES
The stock of A&B is included in the Dow Jones Transportation Index, the Dow
Jones Composite Index, the Dow Jones Marine Transportation Index, the Dow Jones
Sustainability Group Index and the S&P MidCap 400 Index.
ALEXANDER & BALDWIN, INC.
Subsidiaries as of February 28, 2001
State or Other
Jurisdiction Under
Name of Subsidiary Which Organized
- ------------------ ------------------
A & B Development Company (California) California
A & B Properties, Inc. Hawaii
ABHI-Crockett, Inc. Hawaii
McBryde Sugar Company, Limited Hawaii
Subsidiary:
Kauai Coffee Company, Inc. Hawaii
East Maui Irrigation Company, Limited Hawaii
Hawaiian DuraGreen, Inc. Hawaii
Kahului Trucking & Storage, Inc. Hawaii
Kauai Commercial Company, Incorporated Hawaii
Kukui'Ula Development Company, Inc. Hawaii
Subsidiary:
South Shore Community Services LLC Hawaii
Matson Navigation Company, Inc. Hawaii
Subsidiaries:
Matson Intermodal System, Inc. Hawaii
Matson Logistics Solutions, Inc. Hawaii
Matson Services Company, Inc. Hawaii
Matson Terminals, Inc. Hawaii
WDCI, INC. Hawaii
NOTE: Certain A&B subsidiaries, which considered in the aggregate do not
constitute a significant subsidiary, have been omitted.
INDEPENDENT AUDITORS' CONSENT Alexander & Baldwin, Inc.: We consent to the incorporation by reference in Registration Statements 33-31922, 33-31923, 33-54825, and 333-69197 of Alexander & Baldwin, Inc. and its subsidiaries on Form S-8 of our reports dated January 25, 2001, appearing in and incorporated by reference in the Annual Report on Form 10-K of Alexander & Baldwin, Inc. and its subsidiaries for the year ended December 31, 2000. /s/ Deloitte & Touche LLP Deloitte & Touche LLP Honolulu, Hawaii March 26, 2001