Document and Entity Information	9 Months Ended
Document and Entity Information	Sep. 30, 2016 shares
Document and Entity Information
Entity Registrant Name	Matson, Inc.
Entity Central Index Key	0000003453
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	42,840,461
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3

Condensed Consolidated Statements of Income and Comprehensive Income - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Operating Revenue:
Ocean Transportation	$ 398.0	$ 444.8	$ 1,135.0	$ 1,097.0
Logistics	102.4	99.5	287.3	293.1
Total Operating Revenue	500.4	544.3	1,422.3	1,390.1
Costs and Expenses:
Operating costs	411.4	424.8	1,177.7	1,107.5
Equity in income of related party Terminal Joint Venture	(3.6)	(4.5)	(9.2)	(13.1)
Selling, general and administrative	46.4	52.2	136.9	145.3
Total Costs and Expenses	454.2	472.5	1,305.4	1,239.7
Operating Income	46.2	71.8	116.9	150.4
Interest expense	(6.0)	(4.7)	(17.4)	(13.6)
Income before Income Taxes	40.2	67.1	99.5	136.8
Income tax expense	(15.2)	(25.6)	(38.4)	(60.4)
Net Income	25.0	41.5	61.1	76.4
Other Comprehensive Income (Loss), Net of Income Taxes:
Net Income	25.0	41.5	61.1	76.4
Other Comprehensive Income (Loss):
Net gain (loss) in prior service cost			0.7	(0.2)
Amortization of prior service cost included in net periodic pension cost	(0.3)	(0.4)	(0.9)	(1.0)
Amortization of net loss included in net periodic pension cost	0.9	1.1	3.0	3.4
Foreign currency translation and other adjustments	0.6	0.9	0.5	1.6
Total Other Comprehensive Income	1.2	1.6	3.3	3.8
Comprehensive Income	$ 26.2	$ 43.1	$ 64.4	$ 80.2
Basic Earnings Per-Share:
Basic Earnings Per-Share (in dollars per share)	$ 0.58	$ 0.95	$ 1.42	$ 1.76
Diluted Earnings Per-Share:
Diluted Earnings Per-Share (in dollars per share)	$ 0.58	$ 0.94	$ 1.40	$ 1.74
Weighted Average Number of Shares Outstanding:
Basic (in shares)	42.8	43.5	43.1	43.5
Diluted (in shares)	43.2	44.0	43.5	44.0
Dividends
Cash Dividends Per-Share	$ 0.19	$ 0.18	$ 0.55	$ 0.52

Condensed Consolidated Balance Sheets - USD ($) $ in Millions	Sep. 30, 2016	Dec. 31, 2015
Current Assets:
Cash and cash equivalents	$ 16.4	$ 25.5
Accounts receivable, net	225.6	214.3
Prepaid expenses and other assets	68.4	38.1
Total current assets	310.4	277.9
Long-term Assets:
Investment in related party Terminal Joint Venture	75.8	66.4
Property and equipment, net	908.1	860.3
Goodwill	324.1	241.6
Intangible assets, net	239.1	139.1
Capital Construction Fund - cash on deposit	110.9
Deferred dry-docking costs	76.6	57.6
Other long-term assets	28.1	26.9
Total assets	2,073.1	1,669.8
Current Liabilities:
Current portion of debt	26.3	22.0
Accounts payable	180.7	164.9
Payroll and vacation liabilities	23.9	23.1
Uninsured liabilities	20.0	27.1
Accrued and other liabilities	39.3	60.5
Total current liabilities	290.2	297.6
Long-term Liabilities:
Long-term debt	786.1	407.9
Deferred income taxes	335.2	310.5
Employee benefit plans	103.4	109.3
Uninsured and other liabilities	38.5	37.7
Multi-employer withdrawal liabilities	60.5	56.2
Total long-term liabilities	1,323.7	921.6
Commitments and Contingencies (Note 2)
Shareholders' Equity:
Capital stock	32.1	32.6
Additional paid in capital	286.0	287.9
Accumulated other comprehensive loss	(43.6)	(46.9)
Retained earnings	184.7	177.0
Total shareholders' equity	459.2	450.6
Total liabilities and shareholders' equity	$ 2,073.1	$ 1,669.8

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash Flows From Operating Activities:
Net income	$ 61.1	$ 76.4
Reconciling adjustments:
Depreciation and amortization	71.8	59.1
Deferred income taxes	24.7	31.9
Share-based compensation expense	9.2	9.6
Equity in income of related party Terminal Joint Venture	(9.2)	(13.1)
Distributions from Terminal Joint Venture		8.8
Other	2.4	1.4
Changes in assets and liabilities:
Accounts receivable	(0.1)	(11.6)
Deferred dry-docking payments	(43.7)	(14.0)
Deferred dry-docking amortization	27.8	16.8
Prepaid expenses and other assets	(34.6)	(15.2)
Accounts payable and accrued liabilities	10.7	(2.1)
Other liabilities	(32.6)	11.0
Net cash provided by operating activities	87.5	159.0
Cash Flows From Investing Activities:
Capital expenditures	(67.3)	(30.3)
Capitalized vessel construction expenditures	(39.2)
Proceeds from disposal of property and equipment	2.2	4.7
Cash deposits into Capital Construction Fund	(123.4)	(77.9)
Withdrawals from Capital Construction Fund	12.5	93.7
Payments for membership interests in Span Alaska, net of cash acquired	(112.8)
Payments for Horizon’s common stock, net of cash acquired, and other acquisitions		(29.0)
Net cash used in investing activities	(328.0)	(38.8)
Cash Flows From Financing Activities:
Repayments of debt and capital leases	(13.7)	(13.4)
Proceeds from revolving credit facility	1,275.0	557.0
Repayments of revolving credit facility	(1,080.0)	(439.0)
Payments of financing costs		(0.9)
Proceeds from issuance of debt	200.0
Repayments of Span Alaska debt	(81.9)
Repayments of Horizon debt and redemption of warrants		(467.5)
Proceeds from issuance of capital stock	0.6	1.4
Tax withholding related to net share settlements of restricted stock units	(6.8)	(2.9)
Dividends paid	(24.0)	(22.8)
Payments for shares repurchased	(37.8)
Net cash provided by (used in) financing activities	231.4	(388.1)
Net Decrease in Cash and Cash Equivalents	(9.1)	(267.9)
Cash and cash equivalents, beginning of the period	25.5	293.4
Cash and cash equivalents, end of the period	16.4	25.5
Supplemental Cash Flow Information:
Interest paid, net of capitalized interest	15.7	13.2
Income tax paid	16.2	34.2
Non-cash Information:
Capital expenditures included in accounts payable and accrued liabilities	$ 12.6	6.1
Capital lease obligations		$ 1.7

DESCRIPTION OF THE BUSINESS	9 Months Ended
DESCRIPTION OF THE BUSINESS	Sep. 30, 2016
DESCRIPTION OF THE BUSINESS
DESCRIPTION OF THE BUSINESS	1. DESCRIPTION OF THE BUSINESS Matson, Inc., a holding company incorporated in January 2012 in the State of Hawaii, and its subsidiaries (“Matson” or the “Company”), is a leading provider of ocean transportation and logistics services. The Company consists of two segments, Ocean Transportation and Logistics: Ocean Transportation: Matson’s Ocean Transportation business is conducted through Matson Navigation Company, Inc. (“MatNav”), a wholly-owned subsidiary of Matson, Inc. Founded in 1882, MatNav is an asset-based business that provides a vital lifeline of ocean freight transportation services to the domestic offshore economies of Hawaii, Alaska, and Guam, and to other island economies including Micronesia and various islands in the South Pacific. MatNav also operates a premium, expedited service from China to Long Beach, California. In addition, subsidiaries of MatNav provide container stevedoring, container equipment maintenance and other terminal services for MatNav and other ocean carriers on the Hawaiian islands of Oahu, Hawaii, Maui and Kauai, and in the Alaska locations of Anchorage, Kodiak, Dutch Harbor and Akutan. The Company's fleet of 22 owned vessels includes containerships, combination container and roll-on/roll-off ships and custom-designed barges. The Company has a 35 percent ownership interest in SSA Terminals, LLC (“SSAT”), a joint venture between Matson Ventures, Inc., a wholly-owned subsidiary of MatNav, and SSA Ventures, Inc., a subsidiary of Carrix, Inc. SSAT provides terminal and stevedoring services to various carriers at six terminal facilities on the West Coast of the United States of America (“U.S.”), including to MatNav at several of those facilities. Matson records its share of income or loss in the joint venture in operating costs in the Condensed Consolidated Statements of Income and Comprehensive Income, and within the Ocean Transportation segment due to the nature of SSAT’s operations. Logistics: The Company’s logistics business is conducted through Matson Logistics, Inc. (“Matson Logistics”), a wholly-owned subsidiary of MatNav. Established in 1987, Matson Logistics is an asset-light business that provides multimodal transportation services, including domestic and international rail intermodal service (“Intermodal”); long-haul and regional highway brokerage, specialized hauling, flat-bed and project services, less-than-truckload services, and expedited freight services (collectively "Highway"); less-than-container load consolidation and freight forwarding services (collectively “Freight Forwarding”); supply chain management; and warehousing and distribution services. On August 4, 2016, Matson Logistics completed the purchase of 100 percent of the membership interests of Span Intermediate, LLC (“Span Alaska”), a Freight Forwarding business (see Note 3, Business Combinations).

GENERAL AND SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2016

GENERAL AND SIGNIFICANT ACCOUNTING POLICIES

GENERAL AND SIGNIFICANT ACCOUNTING POLICIES

2. GENERAL AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation: The Condensed Consolidated Financial Statements are unaudited. The consolidated financial statements include the accounts of Matson, Inc. and all wholly-owned subsidiaries, after elimination of significant intercompany revenues, and costs and expenses. Significant investments in businesses, partnerships, and limited liability companies in which the Company does not have a controlling financial interest, but has the ability to exercise significant influence, are accounted for under the equity method. A controlling financial interest is one in which the Company has a majority voting interest or one in which the Company is the primary beneficiary of a variable interest entity.

Due to the nature of the Company’s operations and the Company’s acquisition of Horizon Lines, Inc. (“Horizon”) on May 29, 2015, and Span Alaska on August 4, 2016, the results for interim periods are not necessarily indicative of results to be expected for the year. These Condensed Consolidated Financial Statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim periods, and do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.

The Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report filed on Form 10-K for the year ended December 31, 2015, filed with the Securities and Exchange Commission (“SEC”) on February 26, 2016.

The Condensed Consolidated Statements of Income and Comprehensive Income include the operations of Horizon from May 29, 2015, and Span Alaska from August 4, 2016.

Fiscal Period: The period end for Matson, Inc. covered by this report is September 30, 2016. The period end for MatNav and its subsidiaries covered by this report occurred on the last Friday in September, or September 23, 2016.

Significant Accounting Policies: The Company’s significant accounting policies are described in Note 2 to the Consolidated Financial Statements included in Item 8 of the Company’s Annual Report filed on Form 10-K for the year ended December 31, 2015.

Property and Equipment: Property and equipment was $908.1 million and $860.3 million at September 30, 2016 and December 31, 2015, and is recorded net of accumulated depreciation of $1,183.8 million and $1,128.6 million, respectively. Property and equipment includes vessel construction expenditures of $67.3 million and $29.2 million, and capitalized interest of $1.9 million and $0.8 million at September 30, 2016 and December 31, 2015, respectively.

Goodwill: Changes in the Company’s goodwill for the three and nine months ended September 30, 2016 and 2015 consist of the following (in millions):


	Goodwill
	Ocean
	Transportation		Logistics		Total
Balance at December 31, 2015	$	215.0	$	26.6	$	241.6
Additions		—		—		—
Balance at March 31, 2016		215.0		26.6		241.6
Additions		3.5		—		3.5
Balance at June 30, 2016		218.5		26.6		245.1
Additions		—		79.0		79.0
Balance at September 30, 2016	$	218.5	$	105.6	$	324.1

	Goodwill
	Ocean
	Transportation		Logistics		Total
Balance at December 31, 2014	$	0.8	$	26.6	$	27.4
Additions		—		—		—
Balance at March 31, 2015		0.8		26.6		27.4
Additions		219.7		—		219.7
Balance at June 30, 2015		220.5		26.6		247.1
Additions		1.2		—		1.2
Balance at September 30, 2015	$	221.7	$	26.6	$	248.3

Additions to Ocean Transportation goodwill for the three and nine months ended September 30, 2016 and 2015, relate to the Horizon acquisition, and additions to Logistics goodwill for the three and nine months ended September 30, 2016, relate to the Span Alaska acquisition (see Note 3, Business Combinations).

Intangible Assets, Net: Intangible assets were $239.1 million and $139.1 million at September 30, 2016 and December 31, 2015, and were recorded net of accumulated amortization of $18.5 million and $12.3 million, respectively.

Capital Construction Fund: The Company’s Capital Construction Fund (“CCF”) is described in Note 7 to the Consolidated Financial Statements included in Item 8 of the Company’s Annual Report filed on Form 10-K for the year ended December 31, 2015. As of September 30, 2016 and December 31, 2015, the Company had $110.9 million and nominal amounts on deposit in the CCF, respectively. These amounts are held in a money market account and classified as long-term assets in the Company’s Condensed Consolidated Balance Sheets, as the Company intends to use qualified cash withdrawals to fund long-term investment in the construction of new vessels.

During the three months ended September 30, 2016, the Company made cash deposits of $110.8 million into the CCF. During the nine months ended September 30, 2016, the Company made cash deposits of $123.4 million into the CCF. Additionally, $12.5 million of qualified cash withdrawal was made from the CCF during the nine months ended September 30, 2016. On October 21, 2016, the Company withdrew $32.5 million from the CCF and paid a scheduled progress payment associated with the construction of the new vessels.

As of September 30, 2016 and December 31, 2015, $165.1 million and $176.6 million, respectively, of eligible accounts receivable were assigned to the CCF. Due to the nature of the assignment of eligible accounts receivable into the CCF, such assigned amounts are classified as part of accounts receivable in the Condensed Consolidated Balance Sheets.

Accumulated Other Comprehensive Loss: Changes in accumulated other comprehensive loss by component, net of tax, for the three and nine months ended September 30, 2016 and 2015 are as follows (in millions):


											Accumulated
					Non-		Foreign				Other
			Post		Qualified		Currency		Interest		Comprehensive
	Pensions		Retirement		Plans		Transaction		Hedge		Income (Loss)
Balance at December 31, 2015	$	(41.7)	$	(4.7)	$	(0.9)	$	1.0	$	(0.6)	$	(46.9)
Net gain in prior service costs		—		0.7		—		—		—		0.7
Amortization of prior service cost		(0.4)		—		—		—		—		(0.4)
Amortization of net loss		0.8		0.2		0.1		—		—		1.1
Foreign currency translation adjustment		—		—		—		(0.1)		—		(0.1)
Balance at March 31, 2016		(41.3)		(3.8)		(0.8)		0.9		(0.6)		(45.6)
Amortization of prior service cost		(0.3)		—		0.1		—		—		(0.2)
Amortization of net loss		0.8		0.2		—		—		—		1.0
Balance at June 30, 2016		(40.8)		(3.6)		(0.7)		0.9		(0.6)		(44.8)
Amortization of prior service cost		(0.3)		—		—		—		—		(0.3)
Amortization of net loss		0.8		0.2		(0.1)		—		—		0.9
Foreign currency translation adjustment		—		—		—		0.6		—		0.6
Balance at September 30, 2016	$	(40.3)	$	(3.4)	$	(0.8)	$	1.5	$	(0.6)	$	(43.6)

											Accumulated
					Non-		Foreign				Other
			Post		Qualified		Currency		Interest		Comprehensive
	Pensions		Retirement		Plans		Transaction		Hedge		Income (Loss)
Balance at December 31, 2014	$	(45.0)	$	(7.2)	$	(0.7)	$	0.3	$	(0.7)	$	(53.3)
Net loss in prior service costs		(0.2)		—		—		—		—		(0.2)
Amortization of prior service cost		(0.4)		—		—		—		—		(0.4)
Amortization of net loss		1.0		0.4		—		—		—		1.4
Foreign currency translation adjustment		—		—		—		0.1		—		0.1
Balance at March 31, 2015		(44.6)		(6.8)		(0.7)		0.4		(0.7)		(52.4)
Amortization of prior service cost		(0.2)		0.1		(0.1)		—		—		(0.2)
Amortization of net loss		0.9		0.2		(0.2)		—		—		0.9
Foreign currency translation adjustment		—		—		—		0.6		—		0.6
Balance at June 30, 2015		(43.9)		(6.5)		(1.0)		1.0		(0.7)		(51.1)
Amortization of prior service cost		(0.4)		—		—		—		—		(0.4)
Amortization of net loss		1.0		0.1		—		—		—		1.1
Foreign currency translation adjustment		—		—		—		0.8		—		0.8
Other		—		—		—		—		0.1		0.1
Balance at September 30, 2015	$	(43.3)	$	(6.4)	$	(1.0)	$	1.8	$	(0.6)	$	(49.5)

Contingencies: Environmental Matters: In September 2013, molasses was released into Honolulu Harbor from a pipeline system operated by a subsidiary of the Company. The Company cooperated with federal and state agencies involved in responding to and investigating the incident. The Hawaii Department of Health reported on September 20, 2013 that dissolved oxygen and pH levels in the harbor and nearby Keehi Lagoon had returned to normal target levels and that there was no longer discoloration of the water in those same areas attributable to the molasses release. Keehi Lagoon was reopened to the public on September 21, 2013.

The Company previously resolved all federal criminal claims, and all criminal, civil and administrative claims that the State of Hawaii may have had arising from the molasses release. On October 13, 2016, the United States Department of Justice delivered a letter to Company counsel stating that it is prepared to file a civil penalty action under the Clean Water Act but would be willing to discuss a potential resolution of those claims prior to filing an action. The Company believes it has defenses against those claims.

In addition to the molasses release discussed above, the Company’s ocean transportation business has certain other risks that could result in expenditures for environmental remediation. The Company believes that based on all information available to it, the Company is currently in compliance, in all material respects, with applicable environmental laws and regulations.

Other Matters: The Company and its subsidiaries are parties to, or may be contingently liable in connection with other legal actions arising in the normal course of their businesses, the outcomes of which, in the opinion of management after consultation with counsel, would not have a material effect on the Company’s financial condition, results of operations, or cash flows.

Subsequent Event: On October 27, 2016, the Company entered into a private placement commitment letter under which it expects to issue $75 million of 11-year senior unsecured notes (the “11-year Notes”) within 90 days, subject to entering into definitive documentation and satisfying other customary closing conditions. The 11-year Notes are expected to have a weighted average life of approximately 8 years, a fixed interest rate of 3.37 percent, and financial and other covenants that are substantially the same as the covenants in the Company’s existing outstanding senior unsecured notes. Proceeds of the 11-year Notes are expected to be used to pay down the Company’s revolving credit facility and for general corporate purposes.

New Accounting Pronouncements: Leases: In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which requires lessees to record most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. ASU 2016-02 states that a lessee would recognize a lease liability for the obligation to make lease payments, and a right-of-use asset for the underlying leased asset for the period of the lease term. The new standard is effective for interim and annual periods beginning after December 15, 2018 and early adoption is permitted. The Company is in the process of evaluating this guidance.

Share-Based Awards: In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” The amendments are effective for public companies for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. Early adoption is permitted. The Company is in the process of evaluating this guidance.

BUSINESS COMBINATION

9 Months Ended

Sep. 30, 2016

BUSINESS COMBINATION

BUSINESS COMBINATION

3. BUSINESS COMBINATION

Span Alaska Acquisition: On August 4, 2016 (the “Effective Date”), Matson Logistics completed the purchase of 100 percent of the membership interests of Span Alaska pursuant to the terms of the Membership Interest Purchase Agreement, dated July 18, 2016. At the Effective Date, Span Alaska became a wholly-owned subsidiary of Matson Logistics. Span Alaska is an asset-light logistics company providing freight forwarding services primarily to the Alaska market. Span Alaska consolidates freight in Auburn, Washington, for shipment to Alaska and distribution through a network of terminals in Anchorage, Fairbanks, Wasilla, Kenai, Juneau and Kodiak. Span Alaska’s operations are recorded within the Logistics segment of the Company.

Total consideration paid by the Company on the Effective Date for the membership interests in Span Alaska including the repayment of Span Alaska’s debt and accrued interest, is as follows:


(in millions)	Total Consideration
Membership interests in Span Alaska	$	117.2
Span Alaska’s debt (including accrued interest)		81.9
Total	$	199.1

The Span Alaska acquisition was accounted for as a business combination in accordance with ASC 805. The assets acquired and liabilities assumed in the Span Alaska acquisition were recorded based on fair value estimates as of the Effective Date, with the remaining unallocated purchase price recorded as goodwill. Such fair value estimates require significant judgement, and include estimates used in the valuation of property and equipment, and intangible assets. The Company’s fair value estimates are subject to revision pending the Company’s final fair value analysis and purchase price calculations. Final estimates of fair value may be significantly different from those reflected in the Company’s Condensed Consolidated Financial Statements as of September 30, 2016.

The following table summarizes the preliminary fair values assigned to Span Alaska’s assets acquired and liabilities assumed at the Effective Date:


Purchase Price Allocation (in millions)	Total
Cash and cash equivalents	$	4.4
Accounts receivable		11.1
Other current and long-term assets		1.0
Property and equipment		8.1
Intangibles – Customer relationships		79.0
Intangibles – Trade name		27.3
Accounts payable		(3.3)
Accruals and other current liabilities		(6.3)
Capital lease obligations		(1.2)
Span Alaska’s debt		(81.9)
Total identifiable assets less liabilities		38.2
Total consideration for membership interests in Span Alaska		(117.2)
Goodwill	$	79.0

Property and equipment: Property and equipment of $8.1 million includes the fair value of terminal and transportation equipment (trucks, forklifts, trailers, containers and other warehouse equipment), leasehold improvements and other office equipment.

Intangibles - The customer relationships and trade name intangible assets were recorded using preliminary information obtained from valuation specialists engaged by the Company to assist management with estimating the fair value of these intangible assets.

Customer relationships: Intangibles of $79.0 million related to customer relationships which are being amortized over 20 years. In determining the amortization period, the Company considered the historical trends of Span Alaska’s customers and related attrition rates. The Company also considered potential future attrition risks, existing competition, the costs associated with establishing a Freight Forwarding business including the need to develop a broad base of customer relationships over a period of time. Furthermore, the Company considered existing relationships with ocean transportation service providers in Alaska, and the potential impact on competition. As a result, the Company believes that Span Alaska’s customers are considered less vulnerable to attrition.

Trade name: Intangibles of $27.3 million related to the Span Alaska trade name, which was determined to have an indefinite life. Span Alaska has operated for a period in excess of 38 years, and its trade name is widely known in Alaska for high quality and reliable Freight Forwarding services. The Span Alaska operations will continue to be operated under the Span Alaska trade name, independent of Matson’s ocean transportation operation in Alaska.

Span Alaska’s debt: The Company repaid all of Span Alaska’s debt including accrued interest of $81.9 million, as of the Effective Date.

Goodwill: The Company recorded goodwill of $79.0 million from the Span Acquisition, which represents the excess of the fair value of consideration paid by the Company over the fair value of the underlying identifiable assets acquired and liabilities assumed. In accordance with Accounting Standards Codification (ASC) 805, Business Combination (“ASC 805”), goodwill will not be amortized, but instead will be tested for impairment at least annually, or whenever events or circumstances have occurred that may indicate a possible impairment.

Goodwill arises as a result of several factors: (i) The Span Alaska acquisition significantly expands Matson’s Logistics’ platform and Matson’s long-term commitment into the Alaska market; (ii) Span Alaska is a leading freight forwarding business and continues to be led by an experienced management team and assembled workforce with knowledge of the Alaska industry and of its customers; and (iii) the additional growth potential of Span Alaska.

The Company's Consolidated Statements of Income and Comprehensive Income for the three and nine months ended September 30, 2016 include operating revenue of $8.5 million (after elimination of intercompany revenue), and operating income of $1.3 million, respectively, from Span Alaska’s operations. One-time acquisition related costs of approximately $2.9 million incurred as a result of the Span Alaska acquisition, is included in selling, general and administrative costs in the Consolidated Statements of Income and Comprehensive Income.

Horizon Acquisition: On May 29, 2015, Matson completed its acquisition of Horizon whereby MatNav acquired Horizon’s Alaska operations and assumed all of Horizon’s non-Hawaii assets and liabilities (the “Horizon Acquisition”). Immediately before the completion of the Horizon Acquisition, Horizon sold certain of its subsidiaries to the Pasha Group (the “Pasha Transaction”) that: (i) conducted Horizon’s Hawaii operations (including owning the assets used to conduct such Hawaii operations and being responsible for the liabilities related thereto), and (ii) employed the Horizon employees who conducted its Hawaii operations. Horizon also completed the termination of its Puerto Rico operations during the first quarter of 2015. The Alaska operations are recorded within the Ocean Transportation segment of the Company.

Total consideration for the Horizon Acquisition was $495.4 million based on the fair value of common shares of $29.4 million, warrants of $37.1 million, and Horizon’s debt including accrued interest and breakage fees of $428.9 million. Immediately following the close of the Horizon Acquisition, the Company repaid the assumed debt and redeemed all of Horizon’s outstanding warrants.

The Horizon Acquisition was accounted for as a business combination in accordance with ASC 805. Assets acquired and liabilities assumed were recorded at estimated fair value at May 29, 2015, with the remaining unallocated purchase price of $217.7 million recorded as goodwill. As of June 30, 2016, the purchase price accounting for the Horizon Acquisition was considered final.

The Company's Consolidated Statements of Income and Comprehensive Income for the three and nine months ended September 30, 2016 include operating revenue of $74.0 million and $208.2 million, and operating income of $11.3 million and $21.6 million, respectively, from Horizon’s operations. One-time acquisition related costs incurred post December 31, 2015 were not material.

Pro Forma Financial Information (Unaudited): The following unaudited pro forma financial information presents the combined operating results of the Company, and those of Horizon (excluding its Hawaii operations) and Span Alaska, as if the Horizon and Span Alaska acquisitions had been completed at the beginning of each period presented below. The unaudited pro forma financial information includes the accounting effects of the business combination, including the amortization of intangible assets, depreciation of property and equipment, and interest expense. Unaudited pro forma operating revenue is presented after elimination of intercompany revenue.

The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the result of operations that would have been achieved if the Horizon and Span Alaska acquisitions had taken place at the beginning of the periods presented, nor should it be taken as an indication of our future consolidated results of operations.


		(Unaudited)				(Unaudited)
		Three Months Ended				Nine Months Ended
		September 30,				September 30,
(in millions, except per-share amount)	2016		2015		2016		2015
Pro Forma Combined:
Operating revenue	$	507.0	$	559.1	$	1,457.5	$	1,569.5
Net income	$	28.2	$	38.3	$	67.7	$	68.9

Basic Earnings Per-Share:	$	0.66	$	0.88	$	1.57	$	1.58
Diluted Earnings Per-Share:	$	0.66	$	0.87	$	1.56	$	1.57

Weighted-Average Number of Shares Outstanding:
Basic		42.8		43.5		43.1		43.5
Diluted		43.2		44.0		43.5		44.0

- Definition

The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=56956515&loc=d3e1497-128463

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=56956515&loc=d3e1490-128463

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=56956515&loc=d3e1392-128463

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 30
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e7008-128479

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=56956515&loc=d3e1486-128463

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 30
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e6927-128479

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 20
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=56956791&loc=d3e4845-128472

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=56956515&loc=d3e1500-128463

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=56956515&loc=d3e1524-128463

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 30
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e7000-128479

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 20
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=56956791&loc=d3e4922-128472

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 20
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=56956791&loc=d3e4934-128472

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 20
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=56956791&loc=d3e4926-128472

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=56956515&loc=d3e1383-128463

Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 30
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e6996-128479

+ Details

DEBT

9 Months Ended

Sep. 30, 2016

DEBT

DEBT

4. DEBT

At September 30, 2016 and December 31, 2015, the Company’s debt consisted of the following (in millions):


	September 30,		December 31,
	2016		2015
Term Loans:
5.79 %, payable through 2020	$	28.0	$	31.5
3.66 %, payable through 2023		63.8		68.4
4.16 %, payable through 2027		55.0		55.0
4.31 %, payable through 2032		37.5		37.5
3.14 %, payable through 2031		200.0		—
4.35 %, payable through 2044		100.0		100.0
3.92 %, payable through 2045		75.0		75.0
Title XI Bonds:
5.34 %, payable through 2028		26.4		28.6
5.27 %, payable through 2029		28.6		30.8
Revolving credit facility		195.0		—
Capital leases		3.1		3.1
Total Debt		812.4		429.9
Less: Current portion		(26.3)		(22.0)
Total Long-term Debt	$	786.1	$	407.9

The Company’s debt is described in Note 8 to the Consolidated Financial Statements included in Item 8 of the Company’s Annual Report filed on Form 10-K for the year ended December 31, 2015.

Term Loans: On September 14, 2016, the Company entered into an amended and restated private placement note purchase agreement (the “2016 Note Purchase Agreement”), pursuant to which Matson issued $200.0 million in 15-year final maturity senior unsecured notes (the “Series D Notes”). The Series D Notes have a weighted average life of approximately 8.5 years and bear interest at a rate of 3.14 percent, payable semi-annually. Proceeds from the Series D Notes were used to pay down the Company’s revolving credit facility and for general corporate purposes.

The Series D Notes will begin to amortize in March 2019, with semi-annual principal payments of $6.0 million in 2019. During the years 2020 to 2023, the semi-annual principal payments will be $9.2 million. Starting in March 2024, and in each year thereafter through maturity in September 2031, the semi-annual principal payments will be $7.15 million.

The 2016 Note Purchase Agreement amends and restates Matson’s Second Amended and Restated Note Agreement dated as of June 4, 2012, as amended prior to the date hereof, under which, in addition to the Series D Notes, an aggregate principal amount of approximately $184.3 million in Matson’s existing Series B and C senior unsecured notes is outstanding as of the date hereof. The 2016 Note Purchase Agreement also includes an uncommitted shelf facility pursuant to which Matson may, subject to the conditions and limitations specified in the 2016 Note Purchase Agreement, issue additional notes.

Matson’s obligations under the existing senior notes and the Series D Notes are guaranteed by Matson’s principal operating subsidiary MatNav and by certain other subsidiaries.

Principal covenants contained in the 2016 Note Purchase Agreement include, but are not limited to, the requirements that Matson:

Not permit the ratio of debt to consolidated EBITDA to exceed 3.25 to 1.00 for each fiscal four quarter period, except under certain pre-defined circumstances;

Not permit the ratio of consolidated EBITDA to interest expense as of the end of any fiscal four quarter period to be less than 3.50 to 1.00; and

Not permit the aggregate principal amount of Priority Debt at any time to exceed 20% (subject to reduction to 17.5% upon the earlier of December 31, 2017 and upon the occurrence of certain events) of Consolidated Tangible Assets; and not permit the aggregate principal amount of Priority Debt that is not Title XI Priority Debt at any time to exceed 10% of Consolidated Tangible Assets (all as defined in the 2016 Note Purchase Agreement).

Furthermore, the 2016 Note Purchase Agreement generally will restrict the incurrence of liens except for permitted liens, which include, without limitation, liens securing Title XI Debt (as defined in the 2016 Note Purchase Agreement) up to certain thresholds. Additionally, prepayment of amounts borrowed under the 2016 Note Purchase Agreement may be made in whole or in part at par plus a yield maintenance premium, as defined in the 2016 Note Purchase Agreement.

The Company was in compliance with these covenants as of September 30, 2016.

Revolving Credit Facility: Borrowings under the revolving credit facility are classified as long-term debt in the Condensed Consolidated Balance Sheet, as principal payments are not required until maturity date of July 30, 2020. As of September 30, 2016, the Company had $193.8 million of remaining availability under the revolving credit facility. The interest rate on borrowings under the revolving credit facility approximated 1.69 percent during the three months ended September 30, 2016.

PENSION AND OTHER POST-RETIREMENT PLANS

9 Months Ended

Sep. 30, 2016

PENSION AND OTHER POST-RETIREMENT PLANS

PENSION AND OTHER POST-RETIREMENT PLANS

5. PENSION AND OTHER POST-RETIREMENT PLANS

The Company sponsors qualified defined benefit pension and other post-retirement plans (collectively, the “Plans”). The following table provides the components of net periodic benefit cost (benefit) for the Plans for the nine months ended September 30, 2016 and 2015 (in millions):


	Pension Benefits				Other Post-retirement Benefits
	September 30,				September 30,
Components of Net Periodic Benefit Cost:	2016		2015		2016		2015
Service cost	$	3.0	$	2.6	$	1.1	$	1.2
Interest cost		7.3		7.1		2.0		1.9
Expected return on plan assets		(10.0)		(10.4)		—		—
Amortization of net loss		4.1		4.8		0.9		1.8
Amortization of prior service cost		(1.7)		(1.7)		—		—
Net periodic benefit cost	$	2.7	$	2.4	$	4.0	$	4.9

During the nine months ended September 30, 2016, the Company contributed $7.5 million to its defined benefit pension plans. No further contribution is expected to be paid in 2016.

SHARE-BASED COMPENSATION	9 Months Ended
SHARE-BASED COMPENSATION	Sep. 30, 2016
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION	6. SHARE-BASED COMPENSATION During the three and nine months ended September 30, 2016, the Company granted approximately 15,500 and 325,000 of time-based and performance-based shares to certain of its employees at a $36.95 and $37.64 weighted-average grant date fair value, respectively. Total stock-based compensation cost recognized in the Condensed Consolidated Statements of Income and Comprehensive Income as a component of selling, general and administrative expenses was $3.0 million and $2.0 million for the three months ended September 30, 2016 and 2015, respectively, and $9.2 million and $9.6 million for the nine months ended September 30, 2016 and 2015, respectively. Total unrecognized compensation cost related to unvested share-based compensation arrangements was $14.9 million at September 30, 2016, and is expected to be recognized over a weighted-average period of 1.9 years. Total unrecognized compensation cost may be adjusted for any unearned performance shares or forfeited shares.

EARNINGS PER-SHARE

9 Months Ended

Sep. 30, 2016

EARNINGS PER-SHARE

EARNINGS PER-SHARE

7. EARNINGS PER-SHARE

The number of shares used to compute basic and diluted earnings per-share for the three and nine months ended September 30, 2016 and 2015, is as follows (in millions, except per-share amounts):

Three Months Ended September 30, 2016

Nine Months Ended September 30, 2016

Weighted-

Per

Weighted-

Per

Average

Common

Average