View:
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):
July 27, 2004
ALEXANDER & BALDWIN, INC.
(Exact name of registrant as specified in its charter)
Hawaii 0-565 99-0032630
------ ----- ----------
(State or other (Commission (I.R.S. Employer Identification No.)
jurisdiction of File Number)
incorporation)
822 Bishop Street, P. O. Box 3440
Honolulu, Hawaii 96801
----------------------
(Address of principal executive offices and zip code)
(808) 525-6611
--------------
(Registrant's telephone number,
including area code)
Item 12. Disclosure of Results of Operations and Financial Condition
- ---------------------------------------------------------------------
Alexander & Baldwin, Inc. issued a press release on July 27, 2004,
announcing its 2004 second quarter consolidated earnings. This information,
attached as Exhibit 99.1, is being furnished to the SEC pursuant to Item 12 of
Form 8-K.
(a) Exhibits
--------
99.1 Press Release announcing 2004 second quarter
consolidated earnings issued on July 27, 2004.
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: July 27, 2004
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
HOLD FOR RELEASE:
6:30 P.M. EASTERN TIME
Tuesday, July 27, 2004
A&B REPORTS 2ND QUARTER 2004 EARNINGS OF $30.1 MILLION
------------------------------------------------------
2nd Quarter EPS Up 27%
Honolulu (July 27, 2004) -- Alexander & Baldwin, Inc. (NASDAQ:ALEX)
today reported second quarter 2004 net income of $30,100,000, or $0.71 per basic
share. Net income in the second quarter of 2003 was $23,200,000, or $0.56 per
basic share. Revenue in the second quarter of 2004 was $377,100,000, compared
with revenue of $314,200,000 in the second quarter of 2003.
Net income for the first half of 2004 was $57,200,000, or $1.35 per
basic share. For the first half of 2003, the Company reported net income of
$40,800,000, or $0.99 per basic share. Revenue in the first half of 2004 was
$720,800,000, compared with $587,200,000 in the first half of 2003.
COMMENTS ON QUARTER, OUTLOOK
"These favorable second quarter results continue the pattern that
started with this year's first quarter," said Allen Doane, president and chief
executive officer of A&B. "A&B is benefiting from the combination of improved
performance at Matson and strong real estate sales.
"In particular, sales included substantial contributions from recently
acquired properties, like the development parcels and house lots at the Wailea
resort on Maui, and from office condominiums in Honolulu, as well as lots in our
existing industrial parks. On the transportation side, Matson enjoyed unit
volume increases, higher cargo yields and flat total year-over-year costs. As a
result, the profit margin in Ocean Transportation was a record for any recent
second quarter.
"Results this quarter in the Food Products segment began to reflect
this year's expected poor sugar harvest and continuing low raw sugar prices. The
rest of the year will be very difficult for this segment.
"For the balance of 2004, we expect that Matson's pace of improvement
will moderate somewhat, reflecting scheduled contractual cost escalations. And,
repeating the pattern that took place in 2003, most of the property sales that
we expected would occur throughout this year actually closed during the first
half. Overall, however, the outlook remains very good for A&B to report
increased earnings this year.
"Looking just ahead, we will take delivery very shortly of the MV
Maunawili, Matson's newest container ship. Maunawili will enter the Hawaii
service immediately, and we expect that this new ship will perform as well as
its sister ship, MV Manukai, which entered service last year."
TRANSPORTATION--OCEAN TRANSPORTATION
- --------------------------------------------------------------------------------
Quarter Ended June 30
- --------------------------------------------------------------------------------
Dollars in Millions 2004 2003 Change
- --------------------------------------------------------------------------------
Revenue $ 208.1 $ 199.3 4%
Operating Profit $ 31.4 $ 23.2 35%
- --------------------------------------------------------------------------------
Volume (Units)
- --------------------------------------------------------------------------------
Hawaii Containers 40,400 39,900 1%
Hawaii Automobiles 41,600 41,600 --
Guam Containers 4,300 4,600 - 7%
Ocean Transportation revenue of $208.1 million for the second quarter
of 2004 was $8.8 million, or four percent, higher than the second quarter of
2003. This increase was due to improved yields and cargo mix, increases in the
bunker fuel surcharge and higher container volume. Total container volume was
one percent higher than the second quarter of 2003. Within that total, the
number of Hawaii-bound containers showed four-percent growth over the second
quarter of 2003, reflecting a return to normalized shipments of consumer goods
and growth in construction-related products.
Operating profit of $31.4 million was $8.2 million, or 35 percent,
better than the second quarter of 2003. This improvement was primarily the
result of favorable yields, the absence of an excise tax accrual that took place
in 2003, higher container volume, and lower administrative and employee benefit
costs. These positive factors were partially offset by higher vessel operating
expenses and depreciation.
During the 2004 second quarter, Matson initiated a new roll-on/roll-off
service from the island of Hawaii to the U.S. West Coast. This service is
expected to directly benefit customers in cattle and nursery businesses by
reducing transit times.
Effective June 6, 2004, Matson increased its Guam service rates by $125
per container and $25 per vehicle. Also effective on June 6, Matson increased
its West Coast terminal handling charge in the Guam service by $25 per container
and by $5 per automobile.
- --------------------------------------------------------------------------------
Six Months Ended June 30
- --------------------------------------------------------------------------------
Dollars in Millions 2004 2003 Change
- --------------------------------------------------------------------------------
Revenue $ 404.6 $ 385.4 5%
Operating Profit $ 50.0 $ 35.3 42%
- --------------------------------------------------------------------------------
Volume (Units)
- --------------------------------------------------------------------------------
Hawaii Containers 80,100 78,900 2%
Hawaii Automobiles 77,900 79,100 - 2%
Guam Containers 8,800 9,000 - 2%
Ocean Transportation revenue of $404.6 million for the first half of
2004 was $19.2 million, or five percent, higher than the first half of 2003.
This increase was due to improved yields and cargo mix, increases in the fuel
surcharge and higher container volume. As in the second quarter, higher
container volume reflected a return to normalized shipments of consumer goods,
increasing growth in construction-related products and a steadily improving
Hawaii economy. Hawaii-bound cargo also showed four percent growth in the first
half of 2004 compared with the first half of 2003.
Operating profit of $50.0 million was $14.7 million, or 42 percent,
better than the first half of 2003. This improvement was primarily the result of
favorable yields, the absence of the excise tax accrual that took place in 2003,
higher volume, and lower administrative and employee benefit costs, partially
offset by higher vessel operating expenses, higher cargo handling costs, and
depreciation.
In the second half of 2004, labor and operating costs are expected to
increase modestly, due to the timing of contractual increases.
TRANSPORTATION--LOGISTICS SERVICES
- --------------------------------------------------------------------------------
Quarter Ended June 30
- --------------------------------------------------------------------------------
Dollars in Millions 2004 2003 Change
- --------------------------------------------------------------------------------
Revenue $ 93.5 $ 57.4 63%
Operating Profit $ 2.6 $ 1.4 86%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Six Months Ended June 30
- --------------------------------------------------------------------------------
Dollars in Millions 2004 2003 Change
- --------------------------------------------------------------------------------
Revenue $167.6 $108.4 55%
Operating Profit $ 3.6 $ 1.9 89%
- --------------------------------------------------------------------------------
Strong growth in revenue and operating profit for the second quarter
and first half of 2004 in the logistics services business was mainly the result
of increased customer volume, in large part, due to an acquisition in late 2003.
Also contributing was unit growth in all business segments--domestic,
international and highway.
PROPERTY DEVELOPMENT & MANAGEMENT--LEASING
- --------------------------------------------------------------------------------
Quarter Ended June 30
- --------------------------------------------------------------------------------
Dollars in Millions 2004 2003 Change
- --------------------------------------------------------------------------------
Revenue $ 20.4 $ 20.6 - 1%
Operating Profit $ 9.2 $ 9.5 - 3%
- --------------------------------------------------------------------------------
Occupancy Rates
- --------------------------------------------------------------------------------
Mainland 94% 96% - 2%
Hawaii 90% 90% --
Before removing amounts treated as discontinued operations, property
leasing revenue for the second quarter of 2004 was one percent lower than the
amount reported for the second quarter of 2003. Lower occupancies in the
Mainland commercial leasing portfolio were nearly offset by higher contributions
from replacement property acquired after the 2003 second quarter. Lower
operating profit was mainly due to the additional expense of repairs to siding
on a commercial building in Honolulu.
- --------------------------------------------------------------------------------
Six Months Ended June 30
- --------------------------------------------------------------------------------
Dollars in Millions 2004 2003 Change
- --------------------------------------------------------------------------------
Revenue $ 41.2 $ 39.7 4%
Operating Profit $ 18.7 $ 18.1 3%
- --------------------------------------------------------------------------------
Occupancy Rates
- --------------------------------------------------------------------------------
Mainland 94% 92% 2%
Hawaii 90% 90% --
Before removing amounts treated as discontinued operations, growth in
property leasing revenue and operating profit in the first half of 2004
reflected higher occupancies in the Mainland commercial leasing portfolio and
higher contributions from replacement property acquired since the 2003 first
quarter.
PROPERTY DEVELOPMENT & MANAGEMENT--SALES
- --------------------------------------------------------------------------------
Quarter Ended June 30
- --------------------------------------------------------------------------------
Dollars in Millions 2004 2003 Change
- --------------------------------------------------------------------------------
Revenue $ 28.3 $ 26.4 7%
Operating Profit $ 13.4 $ 6.9 94%
- --------------------------------------------------------------------------------
Sales during the second quarter of 2004 included 13 Maui and Oahu
commercial properties for $8.9 million, three residential development parcels
for $13.8 million, one floor of an office condominium for $1 million, and five
residential properties for $4.3 million. Second quarter results also included
$1.3 million for the company's share of earnings in three real estate joint
ventures.
By comparison, sales during the second quarter of 2003 included the
sales of a commercial property in Nevada for $23.5 million, and three
residential properties for $2.1 million. Operating profit for 2003 also included
the Company's share of earnings in two real estate joint ventures of $1 million.
- --------------------------------------------------------------------------------
Six Months Ended June 30
- --------------------------------------------------------------------------------
Dollars in Millions 2004 2003 Change
- --------------------------------------------------------------------------------
Revenue $ 68.4 $ 43.1 59%
Operating Profit $ 32.4 $ 18.5 75%
- --------------------------------------------------------------------------------
Sales during the first half of 2004 included 30 Maui and Oahu
commercial properties for $21.1 million, three residential development parcels
for $13.8 million, 8-1/2 office condominium floors for $9.8 million and 28
residential properties for $23.2 million. Operating profit for 2004 also
included the Company's share of earnings in three real estate joint ventures of
$2.1 million.
By comparison, sales during the first half of 2003 included the sales
of a commercial property in Nevada for $23.5 million, ten commercial properties
for $15.4 million, and eight residential properties for $3.7 million. Operating
profit for 2003 also included the Company's share of earnings in two real estate
joint ventures of $2.2 million.
Property sales for the second half of 2004 are not expected to continue
at the pace of the first half of the year. Although the Company continues to
pursue the sales of inventoried and income producing properties, a significant
portion of the sales expected to close during 2004 took place in the first half.
In the second quarter and first half of 2004, discontinued operations
included the sale, for $1 million, of a property on Maui and the operating
results of a commercial property in Ontario, Calif., that the company intends to
sell. In 2003, discontinued operations included, in the second quarter, the sale
of a property in Reno, Nev., and, in the first half, the sales of five
commercial properties on Maui.
FOOD PRODUCTS
- --------------------------------------------------------------------------------
Quarter Ended June 30
- --------------------------------------------------------------------------------
Dollars in Millions 2004 2003 Change
- --------------------------------------------------------------------------------
Revenue $ 28.9 $ 35.1 - 18%
Operating Profit $ 0.3 $ 2.3 - 87%
- --------------------------------------------------------------------------------
Tons Sugar Produced 53,200 68,900 - 23%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Six Months Ended June 30
- --------------------------------------------------------------------------------
Dollars in Millions 2004 2003 Change
- --------------------------------------------------------------------------------
Revenue $ 42.3 $ 50.0 - 15%
Operating Profit $ 2.9 $ 4.2 - 31%
- --------------------------------------------------------------------------------
Tons Sugar Produced 64,900 87,600 - 26%
- --------------------------------------------------------------------------------
Food Products revenue and operating profit declined for both the second
quarter and first half of 2004 compared with 2003, due mainly to lower sugar
production and sales prices that were about seven percent below 2003. Lower
sugar production in 2004 was due to very wet field conditions and unburnt, or
poorly burnt, cane that affected harvesting and processing conditions adversely.
During the second quarter, the cost of crop was increased by three percent to
reflect lower estimated total-year production.
In comparison with 2003, operating profit for both the second quarter
and first half of 2004 benefited from higher electrical power sales. In
addition, stronger food-grade sugar and roasted coffee sales helped the second
quarter and first half results. The benefit of these factors was more than
outweighed by the lower raw sugar production and sales prices.
Full-year 2004 operating profit for Food Products is expected to be much
less than the amount reported last year, due to the lower raw sugar production
and continuing low sugar prices. 2004 production could drop from between five to
seven percent below the 206,000 tons produced in 2003. Combined with lower sugar
prices, and despite cost reduction efforts that have been initiated, the
production shortfall will significantly erode the first half operating profit.
BALANCE SHEET COMMENTS
During the third quarter of 2004, Matson expects to take delivery of a
new vessel. Concurrent with the delivery and financing of that vessel, Matson
will retire $100 million of commercial paper notes. In anticipation of that
repayment, $100 million of debt has been reclassified as current, as has $100
million in the capital construction fund, which will be used to make the
repayment. Changes to current assets, the capital construction fund, current
liabilities and long-term debt associated with this transaction are the most
prominent changes in the balance sheet since year-end.
CASH FLOW COMMENTS
Comparing the first half of 2004 with that of 2003, operating cash
flows increased by $22.6 million. The increase was due principally to better
operating results, the timing of sales of real estate developments that are
classified as "real estate held for sale" and fluctuations in other working
capital balances.
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 property
development and management, 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 that involve a number of risks
and uncertainties described in the Company's Form 10-Q for the period ending
March 31, 2004 and on page 21 of the Company's Annual Report on Form 10-K, which
is included in the Company's 2003 annual report to shareholders. These factors
could cause actual results to differ materially from those projected in
the statements.
ALEXANDER & BALDWIN, INC.
-------------------------
2004 and 2003 Second-Quarter and First-Half Results
---------------------------------------------------
2004 2003
---- ----
Three Months Ended June 30
--------------------------
Revenue $377,100,000 $314,200,000
Income From Continuing Operations $29,200,000 $18,700,000
Discontinued Operations: Properties 1 $900,000 $4,500,000
Net Income $30,100,000 $23,200,000
Basic Share Earnings
Continuing Operations $0.69 $0.45
Net Income $0.71 $0.56
Diluted Share Earnings
Continuing Operations $0.68 $0.45
Net Income $0.70 $0.56
Average Shares Outstanding 42,500,000 41,400,000
Six Months Ended June 30:
------------------------
Revenue $720,800,000 $587,200,000
Income From Continuing Operations $56,000,000 $29,100,000
Discontinued Operations: Properties1 $1,200,000 $11,700,000
Net Income $57,200,000 $40,800,000
Basic Share Earnings
Continuing Operations $1.32 $0.70
Net Income $1.35 $0.99
Diluted Share Earnings
Continuing Operations $1.30 $0.70
Net Income $1.33 $0.98
Average Shares Outstanding 42,400,000 41,400,000
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 Six Months Ended
------------------ ----------------
June 30, June 30,
------- --------
2004 2003 2004 2003
---- ---- ---- ----
Revenue
- -------
Transportation
Ocean Transportation $ 208.1 $ 199.3 $ 404.6 $ 385.4
Logistics Services 93.5 57.4 167.6 108.4
Property Development & Management
Leasing 20.4 20.6 41.2 39.7
Sales 28.3 26.4 68.4 43.1
Less Amounts Reported In
Discontinued Operations (1.5) (24.6) (1.9) (39.4)
Food Products 28.9 35.1 42.3 50.0
Intercompany and Other (0.6) - (1.4) -
---------- ---------- ---------- ----------
Total Revenue $ 377.1 $ 314.2 $ 720.8 $ 587.2
========== ========== ========== ==========
Operating Profit, Net Income:
- ----------------------------
Transportation
Ocean Transportation $ 31.4 $ 23.2 $ 50.0 $ 35.3
Logistics Services 2.6 1.4 3.6 1.9
Property Development & Management
Leasing 9.2 9.5 18.7 18.1
Sales 13.4 6.9 32.4 18.5
Less Amounts Reported In
Discontinued Operations (1.4) (7.3) (1.9) (18.8)
Food Products 0.3 2.3 2.9 4.2
--------- ---------- ---------- ----------
Total Operating Profit 55.5 36.0 105.7 59.2
Interest Expense (3.2) (2.4) (6.4) (5.0)
Corporate Expenses (4.8) (4.1) (9.0) (8.2)
---------- ---------- ---------- ----------
Income From Continuing Operations
Before Income Taxes 47.5 29.5 90.3 46.0
Income Taxes (18.3) (10.8) (34.3) (16.9)
---------- ---------- ---------- ----------
Income From Continuing Operations 29.2 18.7 56.0 29.1
Discontinued Operations: Properties 0.9 4.5 1.2 11.7
---------- ---------- ---------- ----------
Net Income $ 30.1 $ 23.2 $ 57.2 $ 40.8
========== ========== ========== ==========
Basic Earnings Per Share, Continuing Operations $ 0.69 $ 0.45 $ 1.32 $ 0.70
Basic Earnings Per Share, Net Income $ 0.71 $ 0.56 $ 1.35 $ 0.99
Average Shares 42.5 41.4 42.4 41.4
Consolidated Balance Sheets
---------------------------
(In Millions)
June 30, December 31,
-------- ------------
2004 2003
---- ----
(Unaudited)
ASSETS
Current Assets $ 385 $ 247
Investments 99 68
Real Estate Developments 73 77
Property, Net 1,044 1,079
Capital Construction Fund 66 165
Other Assets 119 124
----------- -----------
Total $ 1,786 $ 1,760
=========== ===========
LIABILITIES & EQUITY
Current Liabilities $ 313 $ 183
Long-Term Debt 198 330
Post-Retirement Benefit Obligs. 44 44
Other Long-Term Liabilities 37 36
Deferred Income Taxes 344 356
Shareholders' Equity 850 811
----------- -----------
Total $ 1,786 $ 1,760
=========== ===========
Consolidated Statements of Cash Flows
-------------------------------------
(In Millions)
Six Months Ended
----------------
June 30,
-------
2004 2003
---- ----
(Unaudited)
Operating Cash Flows $ 84.1 $ 61.5
Capital Expenditures (23.6) (19.2)
CCF Deposits, Net (0.2) (2.3)
Investments, Net (22.0) (1.9)
Proceeds From Issuance of
(Payment of) Debt, Net (31.1) (13.0)
Repurchases of Capital Stock (2.3) -
Dividends Paid (19.1) (18.6)
All Other, Net 28.9 7.6
------------- -------------
Increase/(Decrease) In Cash $ 14.7 $ 14.1
============= =============
Depreciation $ (39.7) $ (35.2)
============= =============