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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):
January 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
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(Address of principal executive offices and zip code)
(808) 525-6611
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(Registrant's telephone number,
including area code)
Item 2.02. Disclosure of Results of Operations and Financial Condition
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Alexander & Baldwin, Inc. issued a press release on January 27, 2005,
announcing its 2004 fourth quarter and year-end consolidated earnings.
This information, attached as Exhibit 99.1, is being furnished to the SEC
pursuant to Item 2.02 of Form 8-K.
(a) Exhibits
--------
99.1 Press Release announcing 2004 fourth quarter and
year-end consolidated earnings issued on January 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 thereunto duly authorized.
Date: January 27, 2005
ALEXANDER & BALDWIN, INC.
By: /s/ Christopher J. Benjamin
---------------------------
Christopher J. Benjamin
Vice President and Chief Financial Officer
For further information, contact:
John B. Kelley, Vice President
Phone 808-525-8422
E-mail: invrel@abinc.com
For Immediate Release
Thursday, January 27, 2005
A&B REPORTS 2004 NET INCOME OF $100.7 MILLION
---------------------------------------------
FULL-YEAR INCOME UP 24%
Honolulu (January 27, 2005)--Alexander & Baldwin, Inc. (NASDAQ:ALEX)
today reported net income for the full year 2004 of $100,700,000, or $2.33 per
fully diluted share. For the full year 2003, the Company reported net income of
$81,300,000, or $1.94 per fully diluted share. Fully diluted earnings per share
rose by $0.39, or 20 percent. Revenue in the full year 2004 was $1,494,300,000,
compared with $1,228,500,000 in the full year 2003.
For the fourth quarter of 2004, net income was $18,700,000, or $0.42
per fully diluted share. Net income in the fourth quarter of 2003 was
$18,800,000, or $0.44 per fully diluted share. Revenue in the fourth quarter of
2004 was $394,000,000, compared with revenue of $326,700,000 in the fourth
quarter of 2003.
COMMENTS ON QUARTER, YEAR & OUTLOOK
"2004 results were outstanding, exceeding objectives that the Company
had established at the beginning of the year," said Allen Doane, president and
chief executive officer of A&B. "Our Transportation segment achieved a 20
percent increase in operating profit as a result of management initiatives as
well as continued strengthening of the Hawaii economy. These same economic
conditions in Hawaii, when added to a number of well-timed and executed new
development investments, resulted in our Real Estate segment increasing its
operating profit by 21 percent in 2004. In fact, our investments over the last
several years in A&B's two core businesses were essential to the company's
growth in 2004.
"Even the fourth quarter results exceeded our internal targets, thanks
primarily to Matson Navigation Company and its subsidiary, Matson Integrated
Logistics. Matson realized extremely strong growth in volume in the quarter,
necessitating the addition of reserve shipping capacity to its Hawaii service.
In Food Products, HC&S had a strong finish to a difficult year. Full-year
results in Food Products finished only slightly below the prior year as a result
of the strong finish. Although there was nominal sales activity in Real Estate-
Sales in the quarter, this had been anticipated and described in earlier
communications. For the year, operating profit from Real-Estate Sales increased
a stellar 45 percent.
"As far as the outlook for 2005, we expect to improve upon 2004.
Matson's Hawaii fleet is now back to its normal 8-ship configuration and
Hawaii's economy appears to have momentum that will carry through for the
remainder of the year. The real estate market continues to be
favorable--conditions are certainly better suited to sellers of real estate than
to buyers.
"2005 will not be without its challenges, however. We expect increased
competitive impact at Matson as new competitor capacity is brought into the
Hawaii trade. In addition, we fully intend to maintain our real estate
acquisition discipline, suggesting that it will be more difficult to find new
investments with attractive returns in the near term. We will be patient, as we
know that in real estate there is a time to buy and a time to sell.
"Challenges notwithstanding, we are optimistic about our Company's
prospects for the years ahead."
TRANSPORTATION--OCEAN TRANSPORTATION
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Quarter Ended December 31
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Dollars in Millions 2004 2003 Change
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Revenue $ 230.5 $ 199.3 16%
Operating Profit $ 25.3 $ 32.8 - 23%
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Volume (Units)
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Hawaii Containers 45,600 42,200 8%
Hawaii Automobiles 46,700 36,200 29%
Guam Containers 4,000 4,100 - 2%
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For the fourth quarter of 2004, Ocean Transportation revenue of $230.5
million was $31.2 million, or 16 percent, higher than the fourth quarter of
2003. This increase was due to higher Hawaii container and auto volume, improved
yields and cargo mix, and increases in the bunker fuel surcharge necessitated by
higher fuel costs. Total Hawaii container volume was eight percent higher than
the fourth quarter of 2003. Total Hawaii automobile volume was 29 percent
higher, the result of unusually high shipments of autos for use in rental car
fleets. The greater cargo volume continues to reflect Hawaii's economic growth
and, especially, the continuing high level of construction activity.
Operating profit of $25.3 million was $7.5 million, or 23 percent,
lower than the fourth quarter of 2003. This decrease was primarily the result of
a $16.7 million pension conversion settlement gain--the largest of three
non-recurring items that together boosted operating profit by a net $10.7
million in the fourth quarter of 2003. During the fourth quarter of 2004, cargo
volume was strong but Matson operated two additional ships for most of the
quarter to help meet that demand and to offset the effects of shoreside labor
shortages in Southern California ports.
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Year Ended December 31
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Dollars in Millions 2004 2003 Change
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Revenue $ 850.1 $ 776.3 10%
Operating Profit $ 108.3 $ 93.2 16%
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Volume (Units)
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Hawaii Containers 169,300 162,400 4%
Hawaii Automobiles 157,000 145,200 8%
Guam Containers 17,200 17,800 - 3%
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For the full year 2004, Ocean Transportation revenue of $850.1 million
was $73.8 million, or 10 percent, higher than the full year 2003. This increase
was due to higher Hawaii cargo volume, improved yields and cargo mix, increases
in the fuel surcharge and vessel charters. Total Hawaii container cargo rose
four percent and automobiles eight percent in the full year 2004 compared with
the full year 2003.
Operating profit of $108.3 million was $15.1 million, or 16 percent,
higher than the full year 2003. This improvement was primarily the result of the
factors that increased revenue, plus the absence of an excise tax accrual that
took place in 2003, and lower general and administrative costs. These factors
were partially offset by added vessel operating expenses, higher cargo handling
costs and depreciation. Matson's bunker fuel surcharge offset markedly higher
fuel costs. As in the fourth quarter, the three non-recurring items added a net
$10.7 million to 2003 results. Absent that factor, the improvement between 2003
and 2004 would have been greater.
TRANSPORTATION--LOGISTICS SERVICES
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Quarter Ended December 31
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Dollars in Millions 2004 2003 Change
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Revenue $ 109.8 $ 68.5 60%
Operating Profit $ 3.1 $ 1.0 3.1 X
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Year Ended December 31
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Dollars in Millions 2004 2003 Change
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Revenue $ 376.9 $ 237.7 59%
Operating Profit $ 8.9 $ 4.3 2.1 X
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As in prior periods, the strong growth in revenue and operating profit
for the fourth quarter and full year 2004 in the Logistics Services business was
mainly the result of increased customer volume. A 40 percent increase in
units handled in the quarter and a 48 percent increase for the year were due to
the combined effect of an acquisition in late 2003 and unit growth in virtually
all segments of the business--domestic, international, highway and airfreight.
REAL ESTATE--LEASING
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Quarter Ended December 31
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Dollars in Millions 2004 2003 Change
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Revenue $ 21.7 $ 20.3 7%
Operating Profit $ 10.0 $ 9.8 2%
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Occupancy Rates
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Mainland 95% 94% 1%
Hawaii 91% 91% --
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Leasable Space (Million sq. ft.)
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Mainland 3.7 3.7 --
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Hawaii 1.7 1.7 --
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For the fourth quarter of 2004 (before removing amounts treated as
discontinued operations), property leasing revenue of $21.7 million was $1.4
million, or seven percent, higher than in the fourth quarter of 2003. Operating
profit was $200,000, or two percent, higher. The improved revenue and operating
profit resulted from a small increase in Mainland property occupancy levels and
the net effect of numerous changes in rental rates and occupancies, and receipt
of a lease termination payment. Comparing the two periods, the composition of
the leased property portfolio was relatively stable. At year-end 2004, it
consisted of 3.7 million square feet of leasable space on the Mainland and 1.7
million in Hawaii, the same as at year-end 2003.
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Year Ended December 31
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Dollars in Millions 2005 2003 Change
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Revenue $ 83.8 $ 80.3 4%
Operating Profit $ 38.8 $ 37.0 5%
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Occupancy Rates
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Mainland 95% 93% 2%
Hawaii 90% 90% --
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For the full year 2004 (before removing amounts treated as discontinued
operations), growth in property leasing revenue and operating profit reflected
primarily higher occupancies in the Mainland commercial leasing portfolio and
higher rental rates.
REAL ESTATE--SALES
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Quarter Ended December 31
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Dollars in Millions 2004 2003 Change
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Revenue $ 2.3 $ 10.3 - 78%
Operating Profit ($ 0.3) $ 2.8 NA
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As anticipated and described in earlier earnings releases, few property
sales took place in the fourth quarter of 2004. Sales revenue of $2.3 million
was $8.0 million lower than in the fourth quarter of 2003. In both 2003 and
2004, the majority of property sales in the respective years took place prior to
the fourth quarter.
The most prominent sales during the fourth quarter of 2004 were of two
floors at the Alakea Corporate Tower office condominium for a total of $2.0
million. By comparison, sales during the fourth quarter of 2003 included two
lots at Maui Business Park for $1.0 million and eight floors at the Alakea
Corporate Tower for a total of $8.7 million, as well as joint venture income,
including sales of 37 homes at Kai Lani, on Oahu.
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Year Ended December 31
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Dollars in Millions 2004 2003 Change
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Revenue $ 82.3 $ 63.8 29%
Operating Profit $ 34.6 $ 23.9 45%
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For the full year 2004, sales revenue of $82.3 million was $18.5
million, or 29 percent greater than in 2003. Operating profit of $34.6 million
was $10.7 million, or 45 percent, greater. Sales in 2004 included 33 Maui and
Oahu commercial properties for $24 million, three residential development
parcels for $13.8 million, 17-1/2 office condominium floors for a total of
$19.3 million and 28 residential properties for $23.2 million.
By comparison, sales during the full year 2003 included a shopping
center in Nevada for $23.5 million, 18 Maui and Oahu commercial properties for
$19.3 million, 8 office condominium floors for a total of $8.7 million and 23
residential properties for $9.2 million.
There were no sales of property during the fourth quarters of 2004 or
2003 that resulted in discontinued operations. Leasing revenue and operating
profit for the two quarters included one commercial property in California,
one commercial property in Texas and one office building in Hawaii that the
Company intends to sell.
Discontinued operations for the full year 2004 included the sale, for
$1.0 million, of a Maui property and the leasing income from the above-mentioned
commercial properties in California and Texas, and the office building in
Hawaii. Sales in 2003 that were classified as discontinued operations
included the sales of the Nevada property and five commercial properties on
Maui.
FOOD PRODUCTS
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Quarter Ended December 31
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Dollars in Millions 2004 2003 Change
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Revenue $ 32.2 $ 29.3 10%
Operating Profit $ 1.3 $ 0.5 2.6 X
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Tons Sugar Produced 56,400 49,500 14%
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For the fourth quarter of 2004, Food Products revenue of $32.2 million
was $2.9 million, or 10 percent, higher than in 2003, due mainly to higher power
sales volume and rates, and higher raw sugar production and sales. In the
continuing effort to recover from the production shortfall in the first half of
the year, 6,900 more tons of raw sugar were harvested and processed in this
year's fourth quarter than during the comparable period of 2003.
Operating profit for the fourth quarter of 2004 exceeded the fourth
quarter of 2003 by about $800,000. The factors noted above that raised revenue
were nearly offset by a $1.6 million write-down of the '04 coffee crop to market
value due to an unexpectedly low harvest and to continuing low sugar prices.
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Year Ended December 31
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Dollars in Millions 2004 2003 Change
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Revenue $ 112.8 $ 112.9 0%
Operating Profit $ 4.8 $ 5.1 - 6%
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Tons Sugar Produced 198,800 205,700 - 3%
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For the full year 2004, Food Products revenue was flat with that of
2003. The benefits of higher electrical power sales volume and prices, and
stronger food-grade sugar and roasted coffee sales were offset by the lower raw
sugar production and sales prices. Power sales of $15.3 million were 56 percent
higher than the full year 2003.
Full-year 2004 operating profit declined by $300,000 compared with
2003, due mainly to lower raw sugar prices, three-percent lower raw sugar
production, the $1.6 million coffee write -down and multiple effects of high
energy costs, partially offset by the benefits of higher power sales and rates.
CORPORATE EXPENSE, TAX RATE
For the fourth quarter of 2004, corporate expenses of $6.1 million were
$1.1 million, or 22 percent higher than the fourth quarter of 2003. For the full
year 2004, corporate expenses of $20.3 million were $5.1 million, or 34 percent,
higher than full-year 2003. The increases were due principally to expenses of
Sarbanes-Oxley compliance and also to an increase in incentive bonus accruals.
The consolidated tax rate was 38.0 percent for 2004. This compared with
a rate of 36.8 percent in 2003. The increase in the rate was due in large part
to an increase in current state income taxes due to higher income. The Company's
statutory combined federal and state tax rate is approximately 38.2%. The
effective rate varies with changes in the geographic location of our operations.
BALANCE SHEET COMMENTS
During the third quarter of 2004, Matson took delivery of a new vessel.
Related to the delivery and financing of the ship, Matson retired $100 million
of commercial paper notes using funds from the capital construction
fund. The combination of those steps accounts for virtually all of the $125
million net reduction in the capital construction fund balance. The $116 million
reduction in long-term debt is the net of the commercial paper retirement and
normal debt repayments, offset by the new borrowing for the ship. The $43
million net increase in investments was primarily due to the Hokua joint
venture. The $54 million increase in Property, Net is primarily due to the new
ship offset, in part, by depreciation.
CASH FLOW COMMENTS
Comparing the full year 2004 with that of 2003, operating cash flows
increased by $37 million, due primarily to higher earnings. The net $140 million
withdrawn from the capital construction fund and the net $102 million decrease
in debt also reflect primarily the previously mentioned ship delivery, financing
and associated retirement of commercial paper.
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.
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2004 and 2003 Fourth-Quarter and Full-Year Results
--------------------------------------------------
2004 2003
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Three Months Ended December 31:
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Revenue $394,000,000 $326,700,000
Income From Continuing Operations $18,400,000 $18,000,000
Discontinued Operations: Properties1 $300,000 $800,000
Net Income $18,700,000 $18,800,000
Basic Share Earnings
Continuing Operations $0.43 $0.43
Net Income $0.44 $0.44
Diluted Share Earnings
Continuing Operations $0.42 $0.42
Net Income $0.42 $0.44
Average Shares Outstanding 42,900,000 42,000,000
Diluted Average Shares Outstanding 43,600,000 42,500,000
Year Ended December 31:
----------------------
Revenue $1,494,300,000 $1,228,500,000
Income From Continuing Operations $98,700,000 $68,300,000
Discontinued Operations: Properties1 $2,000,000 $13,000,000
Net Income $100,700,000 $81,300,000
Basic Share Earnings
Continuing Operations $2.32 $1.64
Net Income $2.37 $1.95
Diluted Share Earnings
Continuing Operations $2.29 $1.63
Net Income $2.33 $1.94
Average Shares Outstanding 42,600,000 41,600,000
Diluted Average Shares Outstanding 43,200,000 41,900,000
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 Year Ended
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December 31, December 31,
------------ ------------
2004 2003 2004 2003
---- ---- ---- ----
Revenue:
Transportation
Ocean Transportation $ 230.5 $ 199.3 $ 850.1 $ 776.3
Logistics Services 109.8 68.5 376.9 237.7
Real Estate
Leasing 21.7 20.3 83.8 80.3
Sales 2.3 10.3 82.3 63.8
Less Amounts Reported In
Discontinued Operations (1.0) (1.0) (5.1) (42.5)
Food Products 32.2 29.3 112.8 112.9
Reconciling Items (1.5) - (6.5) -
---------- ---------- ---------- ----------
Total Revenue $ 394.0 $ 326.7 $ 1,494.3 $ 1,228.5
========== ========== ========== ==========
Operating Profit, Net Income:
Transportation
Ocean Transportation $ 25.3 $ 32.8 $ 108.3 $ 93.2
Logistics Services 3.1 1.0 8.9 4.3
Real Estate
Leasing 10.0 9.8 38.8 37.0
Sales (0.3) 2.8 34.6 23.9
Less Amounts Reported In
Discontinued Operations (0.6) (1.3) (3.3) (20.9)
Food Products 1.3 0.5 4.8 5.1
---------- ---------- ---------- ----------
Total Operating Profit 38.8 45.6 192.1 142.6
Write-Down of Long-Lived Assets - (7.7) - (7.7)
Interest Expense (3.1) (3.5) (12.7) (11.6)
Corporate Expenses (6.1) (5.0) (20.3) (15.2)
---------- ---------- ---------- ----------
Income From Continuing Operations
Before Income Taxes 29.6 29.4 159.1 108.1
Income Taxes (11.2) (11.4) (60.4) (39.8)
---------- ---------- ---------- ----------
Income From Continuing Operations 18.4 18.0 98.7 68.3
Discontinued Operations: Properties 0.3 0.8 2.0 13.0
---------- ---------- ---------- ----------
Net Income $ 18.7 $ 18.8 $ 100.7 $ 81.3
========== ========== ========== ==========
Basic Earnings Per Share, Continuing Operations $ 0.43 $ 0.43 $ 2.32 $ 1.64
Basic Earnings Per Share, Net Income $ 0.44 $ 0.44 $ 2.37 $ 1.95
Diluted Earnings Per Share, Net Income $ 0.42 $ 0.44 $ 2.33 $ 1.94
Average Shares 42.9 42.0 42.6 41.6
Diluted Shares 43.6 42.5 43.2 41.9
Consolidated Balance Sheets
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(In Millions)
December 31, December 31,
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2004 2003
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(Unaudited)
ASSETS
Current Assets $ 288 $ 247
Investments 111 68
Real Estate Developments 82 77
Property, Net 1,133 1,079
Capital Construction Fund 40 165
Other Assets 124 124
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Total $ 1,778 $ 1,760
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LIABILITIES & EQUITY
Current Liabilities $ 235 $ 183
Long-Term Debt 214 330
Post-Retirement Benefit Obligs. 45 44
Other Long-Term Liabilities 41 36
Deferred Income Taxes 339 356
Shareholders' Equity 904 811
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Total $ 1,778 $ 1,760
=========== ===========
Consolidated Statements of Cash Flows
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(In Millions)
Year Ended
----------
December 31,
------------
2004 2003
---- ----
(Unaudited)
Operating Cash Flows $ 173.0 $ 135.7
Capital Expenditures (151.2) (214.0)
CCF Withdrawals, Net 140.3 43.0
Proceeds From Issuance of
(Payment of) Debt, Net (101.8) 60.1
Repurchases of Capital Stock (2.3) -
Dividends Paid (38.3) (37.4)
All Other, Net 16.4 18.4
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Increase/(Decrease) In Cash $ 36.1 $ 5.8
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Depreciation $ (80.3) $ (72.6)
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