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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 27, 2005
ALEXANDER & BALDWIN, INC.
(Exact name of registrant as specified in its charter)
Hawaii 0-565 99-0032630
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(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
- ------------------------------- ------------------------ ----------------
incorporation) Identification No.)
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822 Bishop Street, P. O. Box 3440
Honolulu, Hawaii 96801
----------------------
(Address of principal executive office and zip code)
(808) 525-6611
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(Registrant's telephone number, including area code)
Not Applicable
--------------
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2.):
_
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
_
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
_
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
_
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition
- ---------------------------------------------------------
Alexander & Baldwin, Inc. issued a press release on October 27, 2005,
announcing its 2005 third quarter consolidated earnings. This information,
attached as Exhibit 99.1, is being furnished to the SEC pursuant to Item 2.02 of
Form 8-K.
Item 9.01 Financial Statements and Exhibits
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(d) Exhibits
--------
99.1 Press Release announcing 2005 third quarter
consolidated earnings issued on October 27, 2005.
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Date: October 27, 2005
ALEXANDER & BALDWIN, INC.
/s/ Christopher J. Benjamin
------------------------------------
Christopher J. Benjamin
Senior Vice President and
Chief Financial Officer
For further information, contact:
John B. Kelley, Vice President
Phone 808-525-8422
E-mail: jkelley@abinc.com
HOLD FOR RELEASE:
6:30 P.M. EASTERN DAYLIGHT TIME
Thursday, October 27, 2005
A&B REPORTS 3rd QUARTER 2005 NET INCOME OF $35.5 MILLION
--------------------------------------------------------
Net Income 43% Higher In 3rd Quarter, 25% Higher In Year-To-Date
Honolulu (October 27, 2005)--Alexander & Baldwin, Inc. (NASDAQ:ALEX)
today reported that net income for the third quarter of 2005 was $35,500,000, or
$0.81 per fully diluted share. Net income in the third quarter of 2004 was
$24,800,000, or $0.58 per fully diluted share. Revenue in the third quarter of
2005 was $451,800,000, compared with revenue of $381,200,000 in the third
quarter of 2004.
Net income for the first nine months of 2005 was $102,600,000, or $2.33
per fully diluted share. Net income in the first nine months of 2004 was
$82,000,000, or $1.91 per fully diluted share. Revenue in the first nine months
of 2005 was $1,208,500,000, compared with revenue of $1,096,800,000 in the first
nine months of 2004.
COMMENTS ON QUARTER & OUTLOOK
"With this quarter's contribution, the company is on track for an
outstanding 2005," said Allen Doane, president and chief executive officer of
A&B. "The Transportation segments had a 14 percent year-over-year increase in
operating profit and Real Estate's total operating profit more than doubled.
Even without a one-time $5.2 million insurance gain in real estate, the quarter
was a good one for A&B Properties. As expected, the Food Products results were
down, based on lower production of sugar and coffee.
"The third quarter also was marked by buyers' first response to the 352
unit Keola La'i condominium in downtown Honolulu, where about 210 of the 225
market-priced units released for sale already have non-binding commitments. A&B
was selected over three other finalists as the potential developer of Kakaako
Makai, a prime 36-acre Honolulu waterfront site for public, retail and
residential uses. A&B Properties also received final zoning approval for
Haliimaile, a 63-acre site in upcountry Maui, which will be developed as
single-family lots and we are awaiting approval of construction plans for 60
single-family homes and 75 condominium units at Port Allen on Kauai. During the
quarter, we also acquired a prime shopping center in Kailua-Kona, on the Big
Island. Along with the existing center, we acquired the option to purchase an
adjoining, vacant 22-acre development site where we have preliminary plans for a
240,000 square-foot office and retail complex.
"At Matson, continuing above-norm profit margins reflect a combination
of higher cargo demand and pricing, operating benefits of new vessels in the
fleet and a successful response to a new competitor in the Hawaii auto shipping
business. At this point, Matson continues to operate a ninth vessel in its
Hawaii service to accommodate cargo.
"Looking ahead, some of Matson's Guam-China startup costs are now
beginning to be felt on the P&L and infrastructure spending for the new service
has commenced. Matson has been enjoying what might be characterized by `smooth
seas', but we are mindful of the recent sharp hikes in energy costs and the
widespread effects they will have on operating costs.
"Those factors notwithstanding, 2005 should be an outstanding year for
A&B."
TRANSPORTATION--OCEAN TRANSPORTATION
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Quarter Ended September 30
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Dollars in Millions 2005 2004 Change
- --------------------------------------------------------------------------------
Revenue $ 227.5 $ 215.0 6%
Operating Profit $ $36.8 $ 33.0 12%
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Volume (Units)
- --------------------------------------------------------------------------------
Hawaii Containers 45,200 43,600 4%
Hawaii Automobiles 32,000 32,400 - 1%
Guam Containers 4,300 4,400 - 2%
- --------------------------------------------------------------------------------
Third quarter 2005 Ocean Transportation revenue of $227.5 million was
$12.5 million, or 6 percent, higher than the third quarter of 2004. This
increase was primarily the result of higher Hawaii cargo volume, increases in
the fuel surcharge necessitated by higher fuel prices, improved yields and cargo
mix. Total Hawaii container volume was four percent higher than the third
quarter of 2004, reflecting continuing economic growth in the state. Total
Hawaii automobile volume was 1 percent lower.
Third quarter 2005 Ocean Transportation operating profit of $36.8
million was $3.8 million, or 12 percent, higher than the third quarter of 2004.
This increase was primarily the result of continuing good performance at SSA
Terminals, LLC (SSAT), a stevedoring and terminal operating company of which
Matson is a minority partner; favorable yields and mix in all services, lower
vessel operating costs and higher cargo volumes. The contribution from these
factors was offset, in part, by substantially higher fuel oil costs.
Matson's operating profit margin in the third quarter was 16.2 percent.
Although operations were strong, a portion of this higher-than-normal margin was
again due to SSAT's results. SSAT income is included in operating profit, but
not in revenue, so it raises profit margins disproportionately.
- --------------------------------------------------------------------------------
Nine months Ended September 30
- --------------------------------------------------------------------------------
Dollars in Millions 2005 2004 Change
- --------------------------------------------------------------------------------
Revenue $ 654.7 $ 619.6 6%
Operating Profit $ 105.2 $ 83.0 27%
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Volume (Units)
- --------------------------------------------------------------------------------
Hawaii Containers 130,800 123,700 6%
Hawaii Automobiles 110,900 110,300 1%
Guam Containers 12,500 13,200 - 5%
- --------------------------------------------------------------------------------
Nine months 2005 Ocean Transportation revenue of $654.7 million was
$35.1 million, or 6 percent, higher than the first nine months of 2004. This
increase was primarily the result of higher Hawaii cargo volume, increases in
the fuel surcharge and improved yields and cargo mix in all services. Total
Hawaii container volume was 6 percent higher than the first nine months of 2004.
Total Hawaii automobile volume was 1 percent higher.
Nine months 2005 Ocean Transportation operating profit of $105.2
million was $22.2 million, or 27 percent, higher than the first nine months of
2004. This increase was primarily the result of higher Hawaii cargo volume,
higher earnings from SSAT, improved Hawaii and Guam yields and cargo mix, and
lower vessel operating expenses.
TRANSPORTATION--LOGISTICS SERVICES
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Quarter Ended September 30
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Dollars in Millions 2005 2004 Change
- --------------------------------------------------------------------------------
Revenue $ 108.5 $ 99.5 9%
Operating Profit $ 3.5 $ 2.2 59%
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Third quarter 2005 Logistics Services revenue of $108.5 million was
$9.0 million, or 9 percent, higher than the third quarter of 2004. Revenue was
higher, with strength in highway volumes offset by declines in domestic and
international intermodal rail volumes. Yields were higher in all lines.
Third quarter 2005 Logistics Services operating profit of $3.5 million
was $1.3 million, or 59 percent, higher than in the comparable period last year.
Gross margins were higher in all lines, offset, in part, by higher G&A and other
normal operating expenses.
The operating profit margin for Logistics Services business remained at
a relatively high 3.2 percent in the third quarter of 2005, compared with 2.2
percent for the third quarter of 2004 and the previous record high of 3.4
percent in the second quarter of 2005. The continuing good performance was due
to a growing portion of higher-margin highway business in the total, and
increasing economies of scale.
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Nine Months Ended September 30
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Dollars in Millions 2005 2004 Change
- --------------------------------------------------------------------------------
Revenue $ 311.2 $ 267.1 17%
Operating Profit $ 10.1 $ 5.8 74%
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Nine months 2005 Logistics Services revenue of $311.2 million was $44.1
million, or 17 percent, higher than the first nine months of 2004. Revenue was
higher, with strength in highway volumes offset by declines in domestic and
international intermodal rail volumes, and higher yields.
Nine months 2005 Logistics Services operating profit of $10.1 million
was $4.3 million, or 74 percent, higher than in the comparable period last year.
Similar to the quarter, gross margins were higher in all lines offset, in part,
by higher normal operating expenses.
REAL ESTATE--LEASING
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Quarter Ended September 30
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Dollars in Millions 2005 2004 Change
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Revenue $ 23.3 $ 20.9 11%
Operating Profit $ 11.4 $ 10.1 13%
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Occupancy Rates
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Mainland 94% 95% - 1%
Hawaii 93% 90% 3%
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Leasable Space (Million sq. ft.)
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Mainland 3.5 3.7 - 5%
Hawaii 1.7 1.7 --
- --------------------------------------------------------------------------------
Third quarter 2005 Property Leasing revenue (before removing amounts
treated as discontinued operations) of $23.3 million was $2.4 million, or 11
percent, higher than the third quarter of 2004. Property Leasing operating
profit of $11.4 million was $1.3 million, or 13 percent, higher. The improved
revenue and operating profit resulted primarily from property acquisitions and
higher Hawaii occupancy rates.
Comparing the periods, leasable area declined slightly. On the
Mainland, two leased properties were sold during the first quarter and one
acquired during the second. In Hawaii, one property, a ground leased retail site
in Honolulu, was acquired during the first quarter.
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Nine months Ended September 30
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Dollars in Millions 2005 2004 Change
- --------------------------------------------------------------------------------
Revenue $ 66.6 $ 62.1 7%
Operating Profit $ 32.6 $ 28.8 13%
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Occupancy Rates
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Mainland 95% 94% 1%
Hawaii 92% 90% 2%
- --------------------------------------------------------------------------------
Nine months 2005 Property Leasing revenue (before removing amounts
treated as discontinued operations) of $66.6 million was $4.5 million, or 7
percent, higher than the first nine months of 2004. Property Leasing operating
profit of $32.6 million was $3.8 million, or 13 percent, higher. The improved
revenue and operating profit resulted from property acquisitions and higher
occupancies.
REAL ESTATE--SALES
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Quarter Ended September 30
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Dollars in Millions 2005 2004 Change
- --------------------------------------------------------------------------------
Revenue $ 61.7 $ 11.6 5.3X
Operating Profit $ 15.6 $ 2.5 6.2X
- --------------------------------------------------------------------------------
Third quarter 2005 Property Sales revenue of $61.7 million was $50.1
million higher than the third quarter of 2004. Property Sales operating profit
of $15.6 million was $13.1 million higher than the third quarter of 2004.
Sales during the third quarter of 2005 consisted primarily of all 100
units at the company's Lanikea residential high-rise in Waikiki for $59 million
and a Maui property for $2.5 million. A gain of $5.2 million also was recognized
due to insurance proceeds received as a result of a February 2005 fire that
destroyed much of the Kahului Shopping Center on Maui.
There were comparatively few property sales in the third quarter of
2004. They consisted primarily of seven floors of a downtown Honolulu office
condominium for $7.6 million and three Maui and Oahu commercial properties for
$2.8 million.
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Nine months Ended September 30
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Dollars in Millions 2005 2004 Change
- --------------------------------------------------------------------------------
Revenue $ 122.2 $ 80.0 53%
Operating Profit $ 36.9 $ 34.9 6%
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Nine months 2005 Property Sales revenue of $122.2 million was $42.2
million, or 53 percent, higher than the first nine months of 2004. Property
Sales operating profit of $36.9 million was $2.0 million, or 6 percent, higher
than the first nine months of 2004. Sales in both periods reflected Hawaii's
broad real estate market strength. Nine months 2005 results also benefited from
the $5.2 million insurance gain. Variations in profit margin result from the mix
of properties sold.
Sales during the first nine months of 2005 consisted primarily of the
closings at Lanikea in Waikiki; Ontario Pacific Business Centre, in Ontario,
Calif., for $17.8 million; the 80 percent balance of an installment sale of a
30-acre development parcel at Wailea, Maui; Northwest Business Center, in San
Antonio, Texas, for $6.3 million; 5-1/2 floors at Alakea Corporate Tower, a
Honolulu office condominium, for $5.5 million; an eight-acre residential resort
development parcel at Wailea for $4.5 million; a commercial development parcel
in Waikiki; three residential lots at Wailea Golf Vistas; three lots at Maui
Business Park Phase I and three lots at Mill Town Center on Oahu.
In the first nine months of 2004, sales consisted primarily of 33
commercial properties on Maui and Oahu that sold for a total of $24 million,
including 8 lots at Maui Business Park and 22 lots at Mill Town Center on Oahu;
three resort residential parcels at Wailea that sold for a total of $13.8
million; 15-1/2 floors at Alakea Corporate Tower for $17.4 million, and 28
residential lots, including 26 at Wailea Golf Vistas, for $23.2 million. In
addition, 11 sales of homes at the Kai Lani joint venture on Oahu and three at
Holo Holo Ku on the Big Island closed out those projects.
Discontinued operations in the first nine months of 2005 included the
Ontario Pacific Business Centre and Northwest Business Center, and the fee
interest in a parcel on Maui. They also included the operating results of an
office building on Maui and two office buildings in downtown Honolulu that the
Company plans to sell within the next 12 months. The amounts reported as
continuing and discontinued operations in prior quarters are restated each time
a property is designated as discontinued.
FOOD PRODUCTS
- --------------------------------------------------------------------------------
Quarter Ended September 30
- --------------------------------------------------------------------------------
Dollars in Millions 2005 2004 Change
- --------------------------------------------------------------------------------
Revenue $ 34.6 $ 38.3 - 10%
Operating Profit $ (0.1) $ 0.6 NA
- --------------------------------------------------------------------------------
Tons Sugar Produced 62,500 77,500 - 19%
- --------------------------------------------------------------------------------
Third quarter 2005 Food Products revenue in the third quarter of 2005
of $34.6 million was $3.7 million, or 10 percent, lower than in 2004. The
decrease reflected lower sugar sales volume and lower prices of sugar, partially
offset by higher electric power sales and higher molasses prices.
Third quarter 2005 Food Products operating loss of $0.1 million was
$0.7 million lower than the $0.6 million operating profit in the third quarter
of 2004. The reduction was primarily the result of lower margins on sugar sales
due to higher operating costs and lower raw sugar prices, a $1 million charge to
reduce the carrying value of coffee inventories to fair market value, partially
offset by the higher power sales and molasses prices.
- --------------------------------------------------------------------------------
Nine months Ended September 30
- --------------------------------------------------------------------------------
Dollars in Millions 2005 2004 Change
- --------------------------------------------------------------------------------
Revenue $ 89.2 $ 80.6 11%
Operating Profit $ 9.2 $ 3.5 2.6X
- --------------------------------------------------------------------------------
Tons Sugar Produced 140,300 142,400 - 1%
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Nine months 2005 Food Products revenue of $89.2 million was $8.6
million, or 11 percent, higher than in 2004. Nine months 2005 Food Products
operating profit of $9.2 million was $5.7 million, higher than that of the first
nine months of 2004. Both revenue and operating profit benefited from a $5.5
million one-time, weather-related federal relief payment received during the
first quarter.
CORPORATE EXPENSE, OTHER
Third quarter 2005 corporate expenses of $5.8 million were $0.5
million, or 9 percent, higher than the third quarter of 2004. For the first nine
months, corporate expense of $16.3 million was $2.0 million, or 14 percent
higher. The increases in both periods were due primarily to increased
amortization of restricted stock grants, increased professional services and
legal expenses, higher charitable contributions, and higher personnel costs,
partially offset by lower Sarbanes-Oxley related costs. An impairment loss of
$2.2 million was recorded in the second quarter, reducing A&B's investment in
C&H to its net realizable value.
BALANCE SHEET, CASH FLOW COMMENTS
Working capital increased by $49 million since year-end 2004, primarily
due to higher cash balances resulting from recent real estate sales. The $169
million increase in Property, Net and the $88 million increase in Long-Term Debt
both reflect primarily the delivery of the new vessel.
On the cash flow statements through September 30, the $74 million
increase in Capital Expenditures reflects primarily the delivery of the new ship
and active real estate construction. The $155 million net increase in Proceeds
From Issuance of Debt reflects primarily the delivery of the new ship.
Alexander & Baldwin, Inc., headquartered in Honolulu, is engaged in
ocean transportation and intermodal services, through its subsidiaries, Matson
Navigation Company, Inc. and Matson Integrated Logistics, Inc.; in real estate,
through A&B Properties, Inc.; and in food products, through Hawaiian Commercial
& Sugar Company and Kauai Coffee Company, Inc. Additional information about
A&B may be found at its web site: www.alexanderbaldwin.com.
-------------------------
Statements in this press release that are not historical facts are
"forward-looking statements," within the meaning of the Private Securities
Litigation Reform Act of 1995, that involve a number of risks and uncertainties
that could cause actual results to differ materially from those contemplated by
the relevant forward-looking statement. These forward-looking statements are not
guarantees of future performance. This release should be read in conjunction
with our Annual Report on Form 10-K and our other filings with the SEC through
the date of this release, which identify important factors that could affect the
forward-looking statements in this release.
ALEXANDER & BALDWIN, INC.
-------------------------
2005 and 2004 Third-Quarter and Nine-Months Results
---------------------------------------------------
2005 2004
---- ----
Three Months Ended September 30:
-------------------------------
Revenue $451,800,000 $381,200,000
Income From Continuing Operations $35,100,000 $24,200,000
Discontinued Operations: Properties(1) $400,000 $600,000
Net Income $35,500,000 $24,800,000
Basic Share Earnings
Continuing Operations $0.80 $0.57
Net Income $0.81 $0.58
Diluted Share Earnings
Continuing Operations $0.80 $0.57
Net Income $0.81 $0.58
Average Shares Outstanding 43,700,000 42,500,000
Diluted Average Shares Outstanding 44,200,000 43,000,000
Nine Months Ended September 30:
-------------------------------
Revenue $1,208,500,000 $1,096,800,000
Income From Continuing Operations $97,600,000 $79,700,000
Discontinued Operations: Properties(1) $5,000,000 $2,300,000
Net Income $102,600,000 $82,000,000
Basic Share Earnings
Continuing Operations $2.24 $1.88
Net Income $2.35 $1.93
Diluted Share Earnings
Continuing Operations $2.22 $1.85
Net Income $2.33 $1.91
Average Shares Outstanding 43,600,000 42,500,000
Diluted Average Shares Outstanding 44,000,000 43,000,000
(1) "Discontinued Operations: Properties" consists of sales, or intended sales,
of certain lands and buildings that are material and have separately
identifiable earnings and cash flows.
Industry Segment Data, Net Income
(In Millions, Except Per Share Amounts, Unaudited)
Three Months Ended Nine Months Ended
------------------ -----------------
September 30, September 30,
------------- -------------
2005 2004 2005 2004
---- ---- ---- ----
Revenue:
- -------
Transportation
Ocean Transportation $ 227.5 $ 215.0 $ 654.7 $ 619.6
Logistics Services 108.5 99.5 311.2 267.1
Real Estate
Leasing 23.3 20.9 66.6 62.1
Sales 61.7 11.6 122.2 80.0
Less Amounts Reported In
Discontinued Operations (1.7) (2.3) (29.8) (7.6)
Food Products 34.6 38.3 89.2 80.6
Reconciling Items (2.1) (1.8) (5.6) (5.0)
---------- --------- ---------- ----------
Total Revenue $ 451.8 $ 381.2 $ 1,208.5 $ 1,096.8
========== ========= ========== ==========
Operating Profit, Net Income:
- ----------------------------
Transportation
Ocean Transportation $ 36.8 $ 33.0 $ 105.2 $ 83.0
Logistics Services 3.5 2.2 10.1 5.8
Real Estate
Leasing 11.4 10.1 32.6 28.8
Sales 15.6 2.5 36.9 34.9
Less Amounts Reported In
Discontinued Operations (0.7) (1.0) (8.2) (3.7)
Food Products (0.1) 0.6 9.2 3.5
---------- --------- ---------- ----------
Total Operating Profit 66.5 47.4 185.8 152.3
Write-down of C&H (0.1) - (2.3) -
Interest Expense (4.1) (3.1) (9.9) (9.5)
Corporate Expenses (5.8) (5.3) (16.3) (14.3)
---------- --------- ---------- ----------
Income From Continuing Operations
Before Income Taxes 56.5 39.0 157.3 128.5
Income Taxes (21.4) (14.8) (59.7) (48.8)
---------- --------- ---------- ----------
Income From Continuing Operations 35.1 24.2 97.6 79.7
Discontinued Operations: Properties 0.4 0.6 5.0 2.3
---------- --------- ---------- ----------
Net Income $ 35.5 $ 24.8 $ 102.6 $ 82.0
========== ========= ========== ==========
Basic Earnings Per Share, Continuing Operations $ 0.80 $ 0.57 $ 2.24 $ 1.88
Basic Earnings Per Share, Net Income $ 0.81 $ 0.58 $ 2.35 $ 1.93
Diluted Earnings Per Share, Continuing Operations $ 0.80 $ 0.57 $ 2.22 $ 1.85
Diluted Earnings Per Share, Net Income $ 0.81 $ 0.58 $ 2.33 $ 1.91
Average Shares 43.7 42.5 43.6 42.5
Diluted Shares 44.2 43.0 44.0 43.0
Consolidated Balance Sheets
---------------------------
(In Millions)
September 30, December 31,
------------- ------------
2005 2004
---- ----
(Unaudited)
ASSETS
Current Assets $ 344 $ 288
Investments 140 111
Real Estate Developments 49 82
Property, Net 1,302 1,133
Capital Construction Fund 64 40
Other Assets 130 124
----------- -----------
Total $ 2,029 $ 1,778
=========== ===========
LIABILITIES & EQUITY
Current Liabilities $ 242 $ 235
Long-Term Debt 302 214
Post-Retirement Benefit Obligs. 47 45
Other Long-Term Liabilities 40 41
Deferred Income Taxes 404 339
Shareholders' Equity 994 904
----------- -----------
Total $ 2,029 $ 1,778
=========== ===========
Consolidated Statements of Cash Flows
-------------------------------------
(In Millions)
Nine Months Ended
-----------------
September 30,
-------------
2005 2004
---- ----
(Unaudited)
Operating Cash Flows $ 232 $ 124
Capital Expenditures (209) (135)
CCF Withdrawals/(Deposits), Net (38) 140
Proceeds From Issuance of
(Payment of) Debt, Net 77 (78)
Dividends Paid (30) (29)
All Other, Net 16 7
----------- -----------
Increase/(Decrease) In Cash $ 48 $ 29
=========== ===========
Depreciation $ (62) $ (59)
=========== ===========
#####