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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):
July 24, 2003
ALEXANDER & BALDWIN, INC.
(Exact name of registrant as specified in its charter)
Hawaii 0-565 99-0032630
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(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
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(Registrant's telephone number,
including area code)
Item 12. Disclosure of Results of Operations and Financial Condition
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Alexander & Baldwin, Inc. issued a press release on July 24, 2003,
announcing its 2003 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 2003 second quarter
consolidated earnings issued on July 24, 2003.
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 24, 2003
ALEXANDER & BALDWIN, INC.
By: /s/ James S. Andrasick
----------------------
James S. Andrasick
Executive Vice President, Chief Financial
Officer and Treasurer
For further information, contact:
John B. Kelley, Vice President
Phone 808-525-8422
E-mail: invrel@abinc.com
FOR IMMEDIATE RELEASE
Thursday, July 24, 2003
A&B REPORTS 2ND QUARTER 2003 EARNINGS OF $23.2 MILLION
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Strong Improvement Over 2002 Continued
Honolulu (July 24, 2003) -- Alexander & Baldwin, Inc. (NASDAQ:ALEX)
today reported second quarter 2003 net income of $23,200,000, or $0.56 per
share. Net income in the second quarter of 2002 was $13,200,000, or $0.32 per
share. Revenue in the second quarter of 2003 was $314,700,000, compared with
revenue of $278,600,000 in the second quarter of 2002.
Net income for the first half of 2003 was $40,800,000, or $0.99 per
share. For the first half of 2002, the Company reported net income of
$23,000,000, or $0.56 per share. Revenue in the first half of 2003 was
$588,100,000, compared with $513,600,000 in the first half of 2002.
COMMENTS ON QUARTER, OUTLOOK
"The second quarter reflected solid, improved performance by all of our
businesses," said Allen Doane, president and chief executive officer of A&B.
"That is significant, as it follows results over the past two years that were
uneven and driven largely by external events.
"As positive as this improvement is, bettering 2002's results to date
is just a start. With tougher quarterly comparisons coming up in the second
half, it will be a challenge to sustain favorable year-to-year comparisons and
to get us back to earnings levels that the Company attained previously.
"Hawaii's economy continues to perform well, with growth in Mainland
visitors and in construction offsetting lower international visitor counts. In
addition, productivity improved at our Sand Island terminal; we soon will take
delivery of an efficient, new replacement container ship for the Hawaii service;
and our real estate acquisition program has accelerated, especially with the
just-announced acquisition of property at Wailea on Maui.
"We noted previously that pension costs in 2003 would be about a $0.25
a share drag on earnings. Through the first half of the year, they are 11 cents
a share above the same period in 2002, so we have been able to grow earnings in
spite of that burden."
TRANSPORTATION--OCEAN TRANSPORTATION
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Quarter Ended June 30
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Dollars in Millions 2003 2002 Change
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Revenue $ 199.3 $ 175.7 13%
Operating Profit $ 23.2 $ 13.9 67%
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Volume (Units)
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Hawaii Containers 39,900 40,100 --
Hawaii Automobiles 41,600 35,600 17%
Higher revenue and operating profit in the second quarter of 2003 were
due mainly to rate actions, an improved mix of freight, a 17-percent increase in
Hawaii auto carriage, improved results from the operations of joint ventures and
productivity improvements at the Sand Island container terminal. These favorable
factors were partially offset by increased operating costs, including the
expense of operating an eighth vessel in the Hawaii service, and higher pension
costs.
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Six Months Ended June 30
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Dollars in Millions 2003 2002 Change
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Revenue $ 385.4 $ 331.0 16%
Operating Profit $ 35.3 $ 16.3 2.2x
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Volume (Units)
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Hawaii Containers 78,900 75,800 4%
Hawaii Automobiles 79,100 60,100 32%
In addition to the factors affecting the second quarter, first-half
2003 Hawaii service container volume was four-percent higher than in the first
half of 2002. The improvement in container volume was due mainly to higher
demand during the first quarter, as compared with year-earlier demand weakness
following the events of 9/11.
TRANSPORTATION--INTERMODAL SERVICES
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Quarter Ended June 30
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Dollars in Millions 2003 2002 Change
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Revenue $ 57.4 $ 48.6 18%
Operating Profit $ 1.4 $ 0.9 56%
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Higher revenue and operating profit for Matson Intermodal System, Inc.
in the second quarter of 2003 were due mainly to continuing increases in
customer volume, especially in international and highway activity.
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Six Months Ended June 30
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Dollars in Millions 2003 2002 Change
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Revenue $ 108.4 $ 88.9 22%
Operating Profit $ 1.9 $ 1.0 90%
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In the first half of 2003, higher intermodal revenue and operating
profit also was due mainly to increased customer volume.
PROPERTY DEVELOPMENT & MANAGEMENT--LEASING
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Quarter Ended June 30
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Dollars in Millions 2003 2002 Change
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Revenue $ 20.6 $ 17.4 18%
Operating Profit $ 9.5 $ 7.7 23%
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Occupancy Rates
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Mainland 96% 91% 5%
Hawaii 90% 87% 3%
Second quarter 2003 revenue and operating profit growth, before
removing amounts treated as discontinued operations, was the result of higher
occupancies for both the Mainland and Hawaii commercial properties, and the
purchases of income-producing property during 2002 and earlier in 2003. The
comparison also benefited from a relatively low level of occupancies during the
second quarter of 2002. In contrast, this year's second quarter represents a
record high in our property leasing activity for both revenue and operating
profit.
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Six Months Ended June 30
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Dollars in Millions 2003 2002 Change
- -------------------------------------------------- ----------------
Revenue $ 39.7 $ 35.2 13%
Operating Profit $ 18.1 $ 15.9 14%
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Occupancy Rates
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Mainland 92% 91% 1%
Hawaii 90% 87% 3%
Similarly, for the first half of 2003, revenue and operating profit
growth, before removing amounts treated as discontinued operations, was the
result of higher occupancies and purchases of income-producing properties both
on the Mainland and in Hawaii.
PROPERTY DEVELOPMENT & MANAGEMENT--SALES
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Quarter Ended June 30
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Dollars in Millions 2003 2002 Change
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Revenue $ 26.4 $ 16.6 59%
Operating Profit $ 6.9 $ 2.9 2.4x
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Sales during the second quarter of 2003 included Airport Square, a
Reno, Nev., shopping center; one industrial lot on Oahu; and three residential
properties. Among the sale transactions in the second quarter of 2002 were a
small shopping center in Greeley, Colo., an 85-acre parcel in upcountry Maui,
seven residential properties and four industrial lots.
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Six Months Ended June 30
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Dollars in Millions 2003 2002 Change
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Revenue $ 43.1 $ 53.9 - 20%
Operating Profit $ 18.5 $ 11.8 57%
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Property sales revenue decreased in the first half of 2003, compared
with the first half of 2002. Operating profit, however, rose, due to the mix of
properties that were sold. In addition to the properties described above, 2003
sales included five commercial properties, three lots at Maui Business Park and
residential resort homes and house lots on Maui. The balance of the sales in
2002 included a seven-building distribution complex in Texas, a number of
smaller Hawaii commercial properties and residential sales on Maui.
The sales of certain income-producing assets--even individual buildings
within a real estate portfolio--are reported as "discontinued operations" if
their earnings and cash flows are separately identifiable and material. The
after-tax gains on those sales, and the current and historical earnings of all
of these properties, are classified in the financial statements under the
caption "Discontinued Operations: Properties."
FOOD PRODUCTS
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Quarter Ended June 30
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Dollars in Millions 2003 2002 Change
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Revenue $ 35.1 $ 27.6 27%
Operating Profit $ 2.3 $ 1.0 2.3x
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In the second quarter of 2003, greater food products revenue and
operating profit resulted from higher production and sales of raw sugar, and
higher raw sugar prices.
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Six Months Ended June 30
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Dollars in Millions 2003 2002 Change
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Revenue $ 50.0 $ 44.2 13%
Operating Profit $ 4.2 $ 3.1 35%
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In the first half of 2003, greater food products revenue and operating
profit resulted from the same factors cited for the second quarter offset, in
part, by higher costs due to a late startup of the sugar factory and wet harvest
conditions early in the year.
In spite of the strong performance in the first half, the outlook for
food products for all of 2003 remains lower than the unusually good results in
full-year 2002.
BALANCE SHEET COMMENTS
The most prominent change on the balance sheet since year-end 2002 was
the previously described first quarter conveyance of land and improvements with
a carrying cost of $27.7 million to the Kukui'Ula joint venture. This reduced
real estate developments and raised investments. Other changes on the balance
sheet were normal, and largely seasonal in nature.
CASH FLOW COMMENTS
Comparing the first half of 2003 with that of 2002, operating cash
flows increased by a net $69.0 million. The increase was due principally to
better operating results, the timing of sales and expenditures for real estate
developments that are classified as real estate held for sale, fluctuations in
other working capital balances and the effects of the timing of tax payments
made in 2002 resulting from the sale of securities in late 2001.
Alexander & Baldwin, Inc., headquartered in Honolulu, is engaged in ocean
transportation and intermodal services, through its subsidiaries, Matson
Navigation Company, Inc. and Matson Intermodal System, 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 on page 19 of the Company's Annual Report on
Form 10-K, which is included in the Company's 2002 annual report to
shareholders. These factors could cause actual results to differ materially
from those projected in the statements.
ALEXANDER & BALDWIN, INC.
-------------------------
2003 and 2002 Second-Quarter and First-Half Results
---------------------------------------------------
2003 2002
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Three Months Ended June 30:
- ---------------------------
Revenue $314,700,000 $278,600,000
Income From Continuing Operations $18,800,000 $11,800,000
Discontinued Operations: Properties1 $4,400,000 $1,400,000
Net Income $23,200,000 $13,200,000
Basic Share Earnings
Continuing Operations $0.45 $0.29
Net Income $0.56 $0.32
Diluted Share Earnings
Continuing Operations $0.45 $0.29
Net Income $0.56 $0.32
Average Shares Outstanding 41,400,000 41,000,000
Six Months Ended June 30:
- -------------------------
Revenue $588,100,000 $513,600,000
Income From Continuing Operations $29,500,000 $16,400,000
Discontinued Operations: Properties1 $11,300,000 $6,600,000
Net Income $40,800,000 $23,000,000
Basic Share Earnings
Continuing Operations $0.71 $0.40
Net Income $0.99 $0.56
Diluted Share Earnings
Continuing Operations $0.71 $0.40
Net Income $0.98 $0.56
Average Shares Outstanding 41,400,000 40,800,000
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
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2003 2002 2003 2002
---- ---- ---- ----
Revenue:
- --------
Transportation
Ocean Transportation $ 199.3 $ 175.7 $ 385.4 $ 331.0
Intermodal Services 57.4 48.6 108.4 88.9
Property Development & Management
Leasing 20.6 17.4 39.7 35.2
Sales 26.4 16.6 43.1 53.9
Less Amounts Reported In
Discontinued Operations (24.1) (7.3) (38.5) (39.6)
Food Products 35.1 27.6 50.0 44.2
-------- -------- -------- --------
Total Revenue $ 314.7 $ 278.6 $ 588.1 $ 513.6
======== ======== ======== ========
Operating Profit, Net Income:
- -----------------------------
Transportation
Ocean Transportation $ 23.2 $ 13.9 $ 35.3 $ 16.3
Intermodal Services 1.4 0.9 1.9 1.0
Property Development & Management
Leasing 9.5 7.7 18.1 15.9
Sales 6.9 2.9 18.5 11.8
Less Amounts Reported In
Discontinued Operations (7.0) (2.2) (18.2) (10.4)
Food Products 2.3 1.0 4.2 3.1
-------- -------- -------- --------
Total Operating Profit 36.3 24.2 59.8 37.7
Interest Expense (2.4) (3.0) (5.0) (6.0)
Corporate Expenses (4.1) (3.3) (8.2) (6.2)
-------- -------- -------- --------
Income From Continuing Operations .
Before Income Taxes 29.8 17.9 46.6 25.5
Income Taxes (11.0) (6.1) (17.1) (9.1)
-------- -------- -------- --------
Income From Continuing Operations 18.8 11.8 29.5 16.4
Discontinued Operations: Properties 4.4 1.4 11.3 6.6
-------- -------- -------- --------
Net Income $ 23.2 $ 13.2 $ 40.8 $ 23.0
======== ======== ======== ========
Basic Earnings Per Share, Continuing Operations $ 0.45 $ 0.29 $ 0.71 $ 0.40
Basic Earnings Per Share, Net Income $ 0.56 $ 0.32 $ 0.99 $ 0.56
Average Shares 41.4 41.0 41.4 40.8
Consolidated Balance Sheets
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(In Millions)
June 30, December 31,
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2003 2002
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(Unaudited)
ASSETS
Current Assets $ 252.9 $ 233.7
Investments 58.0 32.9
Real Estate Developments 22.9 42.0
Property, Net 948.9 942.6
Capital Construction Fund 210.7 208.4
Other Assets 147.8 138.0
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Total $ 1,641.2 $ 1,597.6
========= =========
LIABILITIES & EQUITY
Current Liabilities $ 180.4 $ 151.1
Long-Term Debt 249.4 247.8
Post-Retirement Benefit Obligs. 43.1 42.6
Other Long-Term Liabilities 98.9 94.6
Deferred Income Taxes 339.4 337.8
Shareholders' Equity 730.0 723.7
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Total $ 1,641.2 $ 1,597.6
========= =========
Consolidated Statements of Cash Flows
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(In Millions)
Six Months Ended
----------------
June 30,
-------
2003 2002
---- ----
(Unaudited)
Operating Cash Flows $ 61.5 $ (7.5)
Capital Expenditures (19.2) (26.3)
CCF Deposits, Net (2.3) (16.6)
Proceeds From Issuance of
(Payment of) Debt, Net (13.0) 33.7
Dividends Paid (18.6) (18.4)
All Other, Net 5.7 24.6
-------- --------
Increase/(Decrease) In Cash $ 14.1 $ (10.5)
======== ========
Depreciation $ (35.2) $ (35.5)
======== ========
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