FORM 10-Q/A
AMENDMENT TO FORM 10-Q PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Amendment: January 14, 2002
Date of Report Being Amended: May 14, 2001
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
--------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------------- ---------------
Commission file number 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.)
P. O. BOX 3440, HONOLULU, HAWAII 96801
822 BISHOP STREET, HONOLULU, HAWAII 96813
----------------------------------- -----
(Address of principal executive (Zip Code)
offices)
(808) 525-6611
--------------
(Registrant's telephone number, including area code)
N/A
---
(Former name, former address and former
fiscal year, if changed since last report)
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 / /
Number of shares of common stock outstanding as of
March 31, 2001: 40,567,420
EXPLANATORY NOTE:
This Form 10-Q/A amends the Form 10-Q filed by Alexander & Baldwin, Inc.
("Registrant") with the Securities and Exchange Commission for the quarter ended
March 31, 2001, to include the complete text of the first page (cover page) of
the Form 10-Q. The Registrant has made no further changes to its Form 10-Q
filed with the Securities and Exchange Commission on May 14, 2001 or to the
exhibits included with that Form 10-Q.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- -----------------------------
The condensed financial statements and notes for the first quarter of 2001 and
2000 are presented below:
ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF INCOME
(In thousands except per share amounts)
Three Months Ended
March 31,
2001 2000
---- ----
(unaudited)
Revenue:
Operating revenue $ 272,786 $ 228,565
Interest and dividends 3,058 3,660
--------- ---------
Total revenue 275,844 232,225
--------- ---------
Costs and Expenses:
Costs of goods sold, services and rentals 210,335 183,379
Selling, general and administrative 24,944 21,793
Interest 5,779 5,347
Income taxes 12,352 7,525
--------- ---------
Total costs and expenses 253,410 218,044
--------- ---------
Income Before Cumulative Effect of Change in 22,434 14,181
Accounting Method
Cumulative Effect of Change in Accounting Method
for Drydocking Costs (net of income taxes
of $7,668, Note d) -- 12,250
--------- ---------
Net Income $ 22,434 $ 26,431
========= =========
Basic and Diluted Earnings Per Share:
Before cumulative effect of accounting change $ 0.55 $ 0.34
Accounting change (Note d) -- 0.29
--------- ---------
Net income $ 0.55 $ 0.63
========= =========
Dividends Per Share $ 0.225 $ 0.225
Average Number of Shares Outstanding 40,508 42,131
ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES
INDUSTRY SEGMENT DATA, NET INCOME
(In thousands)
Three Months Ended
March 31,
2001 2000
---- ----
(unaudited)
Revenue:
Ocean Transportation $ 196,609 $ 200,225
Property Development and Management:
Leasing 17,096 14,518
Sales 43,084 3,052
Food Products 18,198 13,666
Other 857 764
--------- ---------
Total revenue $ 275,844 $ 232,225
========= =========
Operating Profit, Net Income:
Ocean Transportation $ 17,455 $ 19,893
Property Development and Management:
Leasing 8,740 7,184
Sales 12,216 701
Food Products 5,105 2,068
Other 840 709
--------- ---------
Total operating profit 44,356 30,555
Interest Expense (5,779) (5,347)
Corporate Expenses (3,791) (3,502)
--------- ---------
Income Before Taxes and Accounting Change 34,786 21,706
Income Taxes (12,352) (7,525)
--------- ---------
Income Before Accounting Change 22,434 14,181
Cumulative Effect of Accounting Change -- 12,250
--------- ---------
Net Income $ 22,434 $ 26,431
========= =========
ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES
CONDENSED BALANCE SHEETS
(In thousands)
March 31, December 31,
2001 2000
---- ----
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 3,311 $ 3,451
Accounts and notes receivable, net 127,380 141,553
Inventories 27,929 17,137
Real estate held for sale 23,756 19,324
Deferred income taxes 13,211 13,186
Prepaid expenses and other assets 12,547 18,736
Accrued deposits to Capital Construction Fund (4,795) (4,520)
---------- ----------
Total current assets 203,339 208,867
---------- ----------
Investments 164,743 183,141
---------- ----------
Real Estate Developments 52,347 62,628
---------- ----------
Property, at cost 1,841,929 1,808,194
Less accumulated depreciation and amortization 867,092 853,502
---------- ----------
Property - net 974,837 954,692
---------- ----------
Capital Construction Fund 152,814 150,405
---------- ----------
Other Assets 110,199 106,279
---------- ----------
Total $1,658,279 $1,666,012
========== ==========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable and current portion of long-term debt $ 22,500 $ 30,500
Accounts payable 54,728 63,075
Other 55,228 59,431
---------- ----------
Total current liabilities 132,456 153,006
---------- ----------
Long-term Liabilities:
Long-term debt 335,288 330,766
Post-retirement benefit obligations 44,449 44,752
Other 57,035 56,698
---------- ----------
Total long-term liabilities 436,772 432,216
---------- ----------
Deferred Income Taxes 384,661 387,139
---------- ----------
Shareholders' Equity:
Capital stock 33,367 33,248
Additional capital 64,678 58,007
Unrealized holding gains on securities 54,339 61,937
Retained earnings 563,976 552,637
Cost of treasury stock (11,970) (12,178)
---------- ----------
Total shareholders' equity 704,390 693,651
---------- ----------
Total $1,658,279 $1,666,012
========== ==========
ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended
March 31,
2001 2000
---- ----
(unaudited)
Cash Flows from Operating Activities $ 36,860 $ 22,101
--------- ---------
Cash Flows from Investing Activities:
Capital expenditures (25,551) (19,034)
Capital Construction Fund, net (2,409) 1,113
Other 174 1,076
--------- ---------
Net cash used in investing activities (27,786) (16,845)
--------- ---------
Cash Flows from Financing Activities:
Proceeds from issuances of long-term debt 4,500 34,500
Payments of debt, net (8,000) (7,500)
Proceeds from issuances of capital stock 3,409 --
Repurchases of capital stock -- (20,260)
Dividends paid (9,123) (9,529)
--------- ---------
Net cash used in financing activities (9,214) (2,789)
--------- ---------
Net Increase (Decrease) in Cash and Cash Equivalents $ (140) $ 2,467
========= =========
Other Cash Flow Information:
Interest paid, net of amounts capitalized $ 6,095 $ 5,197
Income taxes paid, net of refunds 24 821
Other Non-cash Information:
Accrued deposits to (withdrawals from) Capital
Construction Fund, net 275 (351)
Depreciation 18,030 17,111
Tax-deferred property sales 30,470 --
Tax-deferred property purchases 26,784 --
Change in unrealized holding gains (7,598) 711
FINANCIAL NOTES
(Unaudited)
(a) The condensed balance sheet as of March 31, 2001 and the condensed
statements of income and of cash flows for the three months ended March
31, 2001 and 2000 are unaudited. Because of the nature of the Company's
operations, the results for interim periods are not necessarily indicative
of results to be expected for the year, but in the opinion of management,
all material adjustments necessary for the fair presentation of interim
period results have been included in the interim financial statements.
(b) Estimated effective annual income tax rates differ from statutory rates,
primarily due to the dividends-received deduction, various tax credits and
the charitable donation of appreciated stock.
(c) The Company's total non-owner changes in shareholders' equity consist of
net income, adjusted for unrealized holding gains (losses) on securities
(other comprehensive income). On this basis, comprehensive income for the
three months ended March 31, 2001 and 2000 was $14,836,000 and
$27,142,000, respectively.
(d) The cumulative effect of an accounting change in the first quarter of 2000
related to the treatment of vessel drydocking costs. The Company changed
its method of accounting for these costs 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. Under the deferral method, actual drydocking costs are
capitalized when incurred and amortized over the period benefited. 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 condensed statements of income and resulted in
income of $12,250,000 (net of income tax expense of $7,668,000), or $0.29
per share.
The effect of this change in accounting method as of January 1, 2000, on
the condensed 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.
(e) Investments and Subsequent Events: As of May 10, 2001, the Company had
divested its holdings in Pacific Century Financial Corporation ("Pacific
Century") (NYSE:BOH). This was completed through the sales, in April and
May, of 749,000 shares of the stock for $16,200,000 and the donations, in
January and March, of 360,000 shares to the Company's charitable
foundation. The fair value of the donated stock was $7.5 million and the
historical cost basis of the donated shares was approvimately $500,000.
The net expense related to this contribution of $500,000 is included in
the 2001 first quarter financial statements (Selling, General and
Administrative Expense in the Condensed Statements of Income, and in
Corporate Expenses in the Industry Segment Data.) The after-tax gain on
the sale of the Pacific Century stock was approximately $9.4 million, or
$0.23 per share. This gain will be reflected in the Company's 2001 second
quarter financial results.
On May 7, 2001, BNP Paribas SA, France's largest bank, announced that,
subject to regulatory, shareholder and other approvals, it would purchase
the remaining 55 percent of BancWest Corporation ("BancWest") (NYSE:BWE)
which it doesn't already own. This offer was 40 percent higher than the
market price of BancWest's stock at the time of the offer. The timing of
the transaction is not currently known. The sale of the Company's holdings
in BancWest, at $35 per share, would result in an after-tax realized gain
of approximately $68 million, or $1.68 per share.
(f) Certain amounts have been reclassified to conform with the current year's
presentation.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- ------------------------------------------------
FIRST QUARTER EVENTS:
OPERATING RESULTS: Net income for the first quarter of 2001 was $22,434,000,
or $0.55 per share. In the first quarter of 2000, income was $26,431,000, or
$0.63 per share, after an accounting change. The accounting change resulted in
a one-time, non-cash increase to first-quarter 2000 earnings of $12,250,000, or
$0.29 per share. Excluding this change, first-quarter 2000 income was
$14,181,000, or $0.34 per share. Revenue in the first quarter of 2001 was
$275,844,000 compared with revenue of $232,225,000 in the first quarter of
2000.
FINANCIAL CONDITION AND LIQUIDITY
The Company's principal liquid resources, comprising cash and cash equivalents,
receivables, sugar and coffee inventories and unused lines of credit, less
accrued deposits to the Capital Construction Fund, totaled $278,369,000 at
March 31, 2001, an increase of $33,297,000 from December 31, 2000. This net
increase was due primarily to the addition of a new $40,000,000 revolving
credit facility and higher raw sugar inventories, partially offset by lower
receivable balances.
Working capital was $70,883,000 at March 31, 2001, an increase of $15,022,000
from the amount at the end of 2000. The higher working capital was due
primarily to higher sugar inventories due to seasonality, an increase in the
amount of real estate inventory held for sale, a decrease in the current
portion of long-term debt and lower trade payables, partially offset by lower
accounts receivable balances at Matson.
RESULTS OF SEGMENT OPERATIONS -
FIRST-QUARTER 2001 COMPARED WITH THE FIRST-QUARTER 2000
OCEAN TRANSPORTATION revenue of $196,609,000 for the first quarter of 2001
decreased two percent from that in the comparable period in 2000 and operating
profit of $17,455,000 decreased 12 percent. Although Hawaii container volume
for the first quarter of 2001 was two percent higher than in the first quarter
of 2000 and a general rate increase was effected in the Hawaii service in
February 2001, the lower revenue and operating profit resulted primarily from
the return to an 8 vessel fleet for the Hawaii service, transfer of the
operations of the former Pacific Coast Shuttle to a subsidiary and lower
contributions from investments in a shipping operation in Puerto Rico and a
stevedoring joint venture. Automobile volume was level on a
year-over-year basis.
PROPERTY DEVELOPMENT AND MANAGEMENT - LEASING revenue of $17,096,000 for the
first quarter of 2001 was 18 percent higher than in the first quarter of 2000
and operating profit of $8,740,000 was 22 percent higher. The increase in
revenue and operating profit was due primarily to the contribution of recently
acquired properties, higher occupancy levels and higher lease rates. The
January 2001 sale of several properties on Bainbridge Island, Washington
reduced rental income slightly. First-quarter 2001 occupancy levels for
Mainland properties averaged 94 percent, versus 95 percent in the first quarter
of 2000. Occupancy levels for Hawaii properties averaged 89 percent in the
first quarter of 2001, versus 84 percent in the comparable period of 2000.
The increase in Hawaii occupancy was due primarily to higher tenancy in retail
and warehouse properties.
PROPERTY DEVELOPMENT AND MANAGEMENT - SALES revenue of $43,084,000 and
operating profit of $12,216,000 for the first quarter of 2001 were the result
of the sales of the previously-mentioned Washington properties, comprised of
a shopping center, office building and a retail building, a 14-acre industrial
lot on Maui for a planned Wal-Mart store, two commercial lots and 22
residential properties. Sales revenue of $3,052,000 and operating profit of
$701,000 for the first quarter of 2000 were the result of the sales of two
commercial lots and nine residential properties.
FOOD PRODUCTS revenue of $18,198,000 for the first quarter of 2001 was
$4,532,000 higher than that in the comparable period of 2000. Operating profit
for the first quarter of 2001 was $5,105,000, compared with $2,068,000 for the
first quarter of 2000. Both of these increases were due primarily to a
one-time distribution from the sugar marketing and transportation cooperative
that handles the Hawaii sugar growers' production and from higher raw sugar
prices. Higher California energy costs reduced investment results from
C&H Sugar Company, Inc., in which A&B has a 36% ownership interest.
OTHER MATTERS
PROPERTY SALES: The mix of property sales in any year or quarter 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
subdivision lots 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 trends for this segment.
NEW ACCOUNTING STANDARDS: Statement of Financial Accounting Standards (SFAS)
No. 133, "Accounting for Derivative Instruments and Hedging Activities," as
amended, was adopted by the Company in January 2001 with no impact on the
financial statements. SFAS No. 140, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishment of Liabilities," was adopted in 2000 with
no significant changes to the Company's accounting practices.
ACCOUNTING CHANGE: In January 2000, the Company changed its method of
accounting for vessel drydocking costs from the accrual method to the deferral
method. The cumulative effect of this accounting change increased first
quarter 2000 net income by $12,250,000. (See Note (d) to the Company's
condensed financial statements.)
TAX-DEFERRED REAL ESTATE EXCHANGES: During the first quarter of 2001, the
Company recorded tax-deferred sales of $30,470,000 and reinvested, on a tax-
deferred basis, $26,784,000 in new real estate assets. These amounts are
reported under Other Non-cash Information in the Condensed Statements of Cash
Flows.
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.
ECONOMIC CONDITIONS: Measures of the current economic performance for the
state of Hawaii continue to reflect the momentum of the improvement in 2000.
However, eight consecutive monthly declines to the index of leading economic
indicators, published by the State of Hawaii's Department of Business, Economic
Development & Tourism (DBEDT), indicate that a slowdown is likely in the second
half of 2001 as the U. S. Mainland economy decelerates and Japan's economy
remains weak.
In its March 2001 outlook, DBEDT projected growth in real gross state product
for the year 2001 of 2.8% (from 3.0% in 2000), for 2002 of 2.7%, and for 2003
of 2.5%. The external factors cited for the decline from 2000 were the slower
economic growth of the U.S. Mainland economy and uncertainties in the Asian
economies. Rising growth in visitor arrivals was anticipated, with the
projection for growth in 2001 at 2.9%. One indication of the rapid pace of the
changing outlook is that, at nearly the same time, the Hawaii Tourism Authority
(HTA) dropped its visitor spending growth projection for 2001 from 10.3% to
0.4%, based on a 2.2% growth in arrivals. The new targets were characterized
by the HTA as being ambitious.
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-Q, press releases made by the Company 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 such communications and from
time to time in the Company's filings with the SEC.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- -------------------------------------------------------------------
Information concerning market risk is incorporated herein by reference to Item
7A of the Company's Form 10-K for the fiscal year ended December 31, 2000.
There has been no material change in the quantitative and qualitative
disclosure about market risk since December 31, 2000.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
(a) Exhibits
11. Statement re Computation of Per Share Earnings.
(b) Reports on Form 8-K
A report on Form 8-K, dated January 11, 2001, was filed on
January 11, 2001 to report, under Item 5 thereof, a plea agreement
between Matson Navigation Company, Inc. and U.S. Attorneys for the
Central District of California, the Northern District of California,
and the Western District of Washington.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of l934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ALEXANDER & BALDWIN, INC.
-------------------------------
(Registrant)
Date: May 14, 2001 /s/ James S. Andrasick
-------------------------------
James S. Andrasick
Sr. Vice President, Chief
Financial Officer and Treasurer
Date: May 14, 2001 /s/ Thomas A. Wellman
-------------------------
Thomas A. Wellman
Controller
EXHIBIT INDEX
11. Statement re Computation of Per Share Earnings.
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
--------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------------- ---------------
Commission file number 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.)
P. O. BOX 3440, HONOLULU, HAWAII 96801
822 BISHOP STREET, HONOLULU, HAWAII 96813
----------------------------------- -----
(Address of principal executive (Zip Code)
offices)
(808) 525-6611
--------------
(Registrant's telephone number, including area code)
N/A
---
(Former name, former address and former
fiscal year, if changed since last report)
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 / /
Number of shares of common stock outstanding as of
March 31, 2001: 40,567,420
EXHIBIT 11
ALEXANDER & BALDWIN, INC.
COMPUTATION OF EARNINGS PER SHARE
(In thousands, except per share amounts)
- -------------------------------------------------------------------------------
Three Months Ended
March 31
2001 2000
---- ----
Basic Earnings Per Share
- ------------------------
Net income $ 22,434 $ 26,431
======== ========
Average number of shares outstanding 40,508 42,131
======== ========
Basic earnings per share $ 0.55 $ 0.63
======== ========
Diluted Earnings Per Share
- --------------------------
Net income $ 22,434 $ 26,431
======== ========
Average number of shares outstanding 40,508 42,131
Effect of assumed exercise of
outstanding stock options 302 --
-------- --------
Average number of shares outstanding
after assumed exercise of
outstanding stock options 40,810 42,131
======== ========
Diluted earnings per share $ 0.55 $ 0.63
======== ========