Matson (MATX) 10-Q 5 Nov 15 2015 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information	9 Months Ended
	Sep. 30, 2015shares
Document and Entity Information
Entity Registrant Name	Matson, Inc.
Entity Central Index Key	3,453
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
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	43,552,347
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q3

Condensed Consolidated Statemen

Condensed Consolidated Statements of Income and Comprehensive Income - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Operating Revenue:
Ocean Transportation	$ 444.8	$ 329.5	$ 1,097	$ 945.2
Logistics	99.5	112.3	293.1	325.5
Total Operating Revenue	544.3	441.8	1,390.1	1,270.7
Costs and Expenses:
Operating costs	424.8	363.8	1,107.5	1,078.5
Equity in income of terminal joint venture	(4.5)	(3.1)	(13.1)	(5.4)
Selling, general and administrative	52.2	36.1	145.3	107
Total Costs and Expenses	472.5	396.8	1,239.7	1,180.1
Operating Income	71.8	45	150.4	90.6
Interest expense	(4.7)	(4.4)	(13.6)	(13)
Income before Income Taxes	67.1	40.6	136.8	77.6
Income tax expense	(25.6)	(19.1)	(60.4)	(34.6)
Net Income	41.5	21.5	76.4	43
Other Comprehensive Income (Loss), Net of Income Taxes:
Net Income	41.5	21.5	76.4	43
Other Comprehensive Income (Loss):
Net loss in prior service cost			(0.2)
Amortization of prior service cost included in net periodic pension cost	(0.4)	(0.3)	(1)	(0.8)
Amortization of net gain included in net periodic pension cost	1.2	0.7	3.5	2.1
Foreign currency translation adjustment	0.8	0.3	1.5	0.2
Total Other Comprehensive Income	1.6	0.7	3.8	1.5
Comprehensive Income	$ 43.1	$ 22.2	$ 80.2	$ 44.5
Basic Earnings Per Share:
Basic Earnings Per Share (in dollars per share)	$ 0.95	$ 0.50	$ 1.76	$ 1
Diluted Earnings Per Share:
Diluted Earnings Per Share (in dollars per share)	$ 0.94	$ 0.50	$ 1.74	$ 1
Weighted Average Number of Shares Outstanding:
Basic (in shares)	43.5	43	43.5	43
Diluted (in shares)	44	43.4	44	43.3
Dividends:
Cash Dividends Per Share (in dollars per share)	$ 0.18	$ 0.17	$ 0.52	$ 0.49

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Millions	Sep. 30, 2015	Dec. 31, 2014
Current Assets:
Cash and cash equivalents	$ 25.5	$ 293.4
Accounts receivable, net	239.5	197.6
Deferred income taxes	41.8	8
Prepaid expenses and other assets	41.5	20.5
Total current assets	348.3	519.5
Investment in terminal joint venture	68.2	64.4
Property and equipment, net	839.9	691.2
Intangible assets, net	140.9	2.5
Goodwill	248.3	27.4
Capital Construction Fund deposits	11.7	27.5
Other long-term assets	79.4	69.3
Total assets	1,736.7	1,401.8
Current Liabilities:
Current portion of debt	22.2	21.6
Accounts payable	164.1	133.2
Payroll and vacation benefits	22.1	17.3
Uninsured liabilities	31.1	24.5
Accrued and other liabilities	58.6	26.9
Total current liabilities	298.1	223.5
Long-term Liabilities:
Long-term debt	459.3	352
Deferred income taxes	336.7	308.4
Employee benefit plans	115.3	118.6
Uninsured and other liabilities	39.3	35.5
Multi-employer withdrawal liabilities	56.9
Total long-term liabilities	$ 1,007.5	$ 814.5
Commitments and Contingencies (Note 2)
Shareholders' Equity:
Capital stock	$ 32.4	$ 32.4
Additional paid in capital	284.9	274.9
Accumulated other comprehensive loss	(49.5)	(53.3)
Retained earnings	163.3	109.8
Total shareholders' equity	431.1	363.8
Total liabilities and shareholders' equity	$ 1,736.7	$ 1,401.8

Condensed Consolidated Stateme4

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash Flows From Operating Activities:
Net income	$ 76.4	$ 43
Reconciling adjustments:
Depreciation and amortization	59.1	52.5
Deferred income taxes	31.9	(2.9)
Share-based compensation expense	9.6	5.6
Equity in income from terminal joint venture	(13.1)	(5.4)
Distribution from terminal joint venture	8.8
Other	1.4	(6.7)
Changes in assets and liabilities:
Accounts receivable	(11.6)	(10.2)
Deferred dry-docking payments	(14)	(12.5)
Deferred dry-docking amortization	16.8	16
Prepaid expenses and other assets	(15.2)	9.6
Accounts payable and accrued liabilities	(2.1)	5.8
Other liabilities	11	1.3
Net cash provided by operating activities	159	96.1
Cash Flows From Investing Activities:
Capital expenditures	(30.3)	(25.6)
Proceeds from disposal of property and equipment	4.7	3.6
Deposits into Capital Construction Fund	(77.9)	(31.9)
Withdrawals from Capital Construction Fund	93.7	4.4
Payments for Horizon's common stock, net of cash acquired, and other acquisitions	(29)
Net cash used in investing activities	(38.8)	(49.5)
Cash Flows From Financing Activities:
Proceeds from issuance of debt		100
Repayments of debt and capital lease obligations	(13.4)	(8.6)
Proceeds from revolving credit facility	557
Repayments of revolving credit facility	(439)
Payment of financing costs	(0.9)
Proceeds from issuance of capital stock	1.4	1.6
Tax withholding related to net share settlements of restricted stock units	(2.9)	(1.9)
Dividends paid	(22.8)	(21.3)
Payments of Horizon debt and redeemed warrants	(467.5)
Net cash (used in) provided by financing activities	(388.1)	69.8
Net (decrease) increase in cash and cash equivalents	(267.9)	116.4
Cash and cash equivalents, beginning of the period	293.4	114.5
Cash and cash equivalents, end of the period	25.5	230.9
Supplemental Cash Flow Information:
Interest paid	13.2	10.6
Income tax paid	34.2	22.1
Non-cash Information:
Capital expenditures included in accounts payable and accrued liabilities	6.1	$ 0.5
Capital lease obligations	$ 1.7

DESCRIPTION OF THE BUSINESS

DESCRIPTION OF THE BUSINESS	9 Months Ended
	Sep. 30, 2015
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. 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 provides container stevedoring, container equipment maintenance and other terminal services for MatNav and other ocean carriers on the Hawaii islands of Oahu, Hawaii, Maui and Kauai, and in the Alaska locations of Anchorage, Kodiak, Dutch Harbor and Akutan. 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; and warehousing and distribution services.

GENERAL AND SIGNIFICANT ACCOUNT

GENERAL AND SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Sep. 30, 2015
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. Due to the nature of the Company’s operations and the Company’s acquisition of Horizon during 2015, 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, 2014, with the Securities and Exchange Commission (“SEC”) on February 27, 2015. Fiscal Period: The period end for Matson, Inc. covered by this report is September 30, 2015. The period end for MatNav and its subsidiaries covered by this report occurred on the last Friday in September, or September 25, 2015. 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, 2014. Property and Equipment: Property and equipment is stated at cost, net of accumulated depreciation of $1,153.8 million and $1,107.0 million at September 30, 2015 and December 31, 2014, respectively. Intangible Assets, Net: Intangible assets are recorded net of accumulated amortization of $14.2 million and $11.8 million at September 30, 2015 and December 31, 2014, respectively. Intangible assets as of September 30, 2015 includes additions of $140.0 million related to customer relationships recorded as a result of the Horizon acquisition (see Note 3). Goodwill: Goodwill of $248.3 million as of September 30, 2015 includes additions of $220.9 million related to the Horizon acquisition (see Note 3). Capital Construction Fund: The Company’s Capital Construction Fund (“CCF”) is described in Note 6 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, 2014. As of September 30, 2015 and December 31, 2014, the Company had $11.7 million and $27.5 million, respectively, on deposit in the CCF that is held in a money market account and classified as long-term assets in the Company’s Condensed Consolidated Balance Sheets. During the three and nine months ended September 30, 2015, the Company made cash deposits of $75.7 million and $77.9 million into the CCF, and made qualified cash withdrawals of $91.5 million and $93.7 million, respectively, from the CCF. Qualified cash withdrawals of $91.5 million for the three months ended September 30, 2015 related primarily to the Horizon vessels acquired that were processed through the CCF for income tax purposes. As of September 30, 2015 and December 31, 2014, $176.4 million and $150.7 million 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. Other Long-term Assets: As of September 30, 2015 and December 31, 2014, other long-term assets included deferred dry-docking costs of $52.9 million and $47.5 million, vessel and crane spare parts of $11.5 million and $7.7 million, and other assets of $15.0 million and $14.1 million, respectively. Contingencies: The Company’s ocean transportation business has certain 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. 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.

BUSINESS COMBINATION

BUSINESS COMBINATION	9 Months Ended
	Sep. 30, 2015
BUSINESS COMBINATION
BUSINESS COMBINATION	3. BUSINESS COMBINATION Acquisition: On November 11, 2014, MatNav entered into a definitive merger agreement with Horizon Lines, Inc. (“Horizon”) pursuant to which MatNav would acquire Horizon’s Alaska operations and assume all of Horizon’s non-Hawaii assets and liabilities (the “Acquisition”). Horizon’s Alaska operations include four Jones Act qualified containerships and related terminal operations at the Ports of Anchorage, Dutch Harbor, Kodiak and Akutan. Also on November 11, 2014, Horizon agreed to sell its Hawaii operations, and related assets and liabilities to The Pasha Group (“Pasha”) for $141.5 million (the “Pasha Transaction”), and announced the termination of its Puerto Rico operations which was completed during the first quarter of 2015. The Acquisition and the Pasha Transaction were completed on May 29, 2015 (the “Effective Date”). On the Effective Date, a subsidiary of the Company merged with Horizon and as a result, the Company acquired 100 percent of Horizon’s outstanding shares and warrants for a cash price of $0.72 per-share. The Company also acquired Horizon’s assets and assumed its liabilities including Horizon’s debt (net of proceeds from the Pasha Transaction). Immediately following the Acquisition, the Company repaid the assumed debt which included accrued interest and breakage fees, and redeemed all of Horizon’s outstanding warrants. Total consideration paid by the Company is as follows: (in millions) Total Consideration Common shares $ Warrants Horizon’s debt (including accrued interest and breakage fees) Total $ Horizon’s assets acquired and liabilities assumed 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 judgment including the valuation of property and equipment, intangible assets, debt and warrants, the assumptions used in calculating the multi-employer withdrawal pension liabilities, and the determination of net deferred tax assets. The Company’s fair value estimates are subject to revision pending the Company’s final fair value analysis and purchase price calculations. Consequently, the fair value amounts presented are preliminary and are subject to revision. Final estimates of fair value may be significantly different from those reflected in the Company’s Condensed Consolidated Financial Statements as of September 30, 2015. The following table summarizes the estimated fair values assigned to Horizon’s assets acquired and liabilities assumed at the Effective Date with purchase price allocation adjustments since the preliminary purchase price allocation as previously reported as of June 30, 2015. Purchase price allocation adjustments relate primarily to the receipt of additional information regarding the fair value of certain assets acquired and liabilities assumed, with the residual to goodwill: Purchase Price Allocation (in millions) As Previously Reported in 10-Q Adjustments As Retrospectively Adjusted Cash and cash equivalents $ $ — $ Accounts receivable — Other current assets Deferred tax assets, net — Property and equipment ) Intangibles - Customer relationships — Other long-term assets ) Accounts payable ) ) Accruals and other current liabilities ) — ) Multi-employer withdrawal liabilities ) — ) Capital lease obligations ) ) ) Horizon’s debt and warrants ) — ) Total identifiable assets less liabilities ) ) ) Total cash paid for common shares ) — ) Goodwill $ $ $ Deferred tax assets, net: The Company recorded Horizon’s deferred tax assets and liabilities, net of any change of ownership limitations. The Company also recorded a valuation allowance against the portions of deferred tax assets that the Company determined may not be realized in future periods. Property and equipment: Property and equipment of $170.4 million includes the acquisition of seven Jones Act qualified containerships, containers, chassis, and other property and terminal equipment. Intangibles - Customer relationships: The Company recorded intangible assets of $140.0 million related to customer relationships, which is being amortized over 21 years. Multi-employer withdrawal liabilities: Horizon ceased all of its operations in Puerto Rico during the first quarter of 2015 which resulted in a mass withdrawal from its multi-employer ILA-PRSSA Pension Fund. The Company has estimated the current and long-term liabilities related to the multi-employer pension plan of $60.6 million, included in assumed liabilities, that were based upon the expected future undiscounted payments of $73.9 million to be paid over approximately 18 years, discounted using the risk-free U.S. Treasury rate. Estimated annual cash outflows related to the multi-employer pension plan as of September 30, 2015 are as follows (in millions): Years ending September 30: Repayments (in millions) 2016 $ 2017 2018 2019 2020 Thereafter Total $ Debt and warrants: The Company recorded the fair value of debt and warrants of $467.5 million arising from the Acquisition, which included accrued interest and breakage fees. During the period ended June 30, 2015, the Company repaid all of Horizon’s outstanding debt and redeemed the warrants. Goodwill: The Company recorded goodwill of $220.9 million arising from the Acquisition, which represents the excess of the fair value of the consideration paid by the Company over the fair value of the underlying identifiable Horizon assets acquired and liabilities assumed. In accordance with ASC 805, Business Combination , goodwill will not be amortized, but instead will be tested for impairment at least annually, and whenever events or circumstances have occurred that may indicate a possible impairment. Goodwill arises as a result of several factors. The Acquisition extends the geographical reach of the Company’s ocean transportation services to Alaska, and represents an extension of the Company’s existing platform on the U.S. West Coast. The Acquisition also provides an assembled workforce of experienced personnel with knowledge of the Alaska shipping industry and of its customers. The Company expects to leverage its existing infrastructure and operations to integrate the Alaska operations and eliminate duplicative corporate overhead costs. The Company’s Condensed Consolidated Statements of Income and Comprehensive Income for the three and nine months ended September 30, 2015 include revenue of $90.0 million and $114.5 million, and net income before income taxes of $14.5 million and $11.9 million, respectively, from Horizon’s operations. 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, as if the Acquisition 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. 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 Acquisition 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. In addition, pro forma information excludes the impact of restructuring activities implemented by the Company since completion of the Acquisition. (unaudited) (unaudited) Three Months Ended Nine Months Ended September 30 September 30 (in millions, except per-share amount) 2015 2014 2015 2014 Pro forma combined: Operating Revenue $ $ $ $ Net income from continuing operations $ $ $ $ Basic Earnings per share: $ $ $ $ Diluted Earnings per share: $ $ $ $ Weighted Average Number of Shares Outstanding: Basic Diluted

DEBT

DEBT	9 Months Ended
	Sep. 30, 2015
DEBT
DEBT	4. DEBT At September 30, 2015 and December 31, 2014, the Company’s debt consisted of the following (in millions): September 30, December 31, 2015 2014 Term Loans: 5.79%, payable through 2020 $ $ 3.66%, payable through 2023 4.16%, payable through 2027 4.31%, payable through 2032 4.35%, payable through 2044 Title XI Bonds: 5.34%, payable through 2028 5.27%, payable through 2029 Revolving credit facility — Capital leases Total Debt Less current portion ) ) Total Long-term Debt $ $ The Company’s Debt 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, 2014. Revolving Credit Facility: Borrowings under the revolving credit facility are classified as long-term debt in the Condensed Consolidated Balance Sheet, as principal payments under the revolving credit facility are not required until maturity. As of September 30, 2015, the Company had $271.5 million of availability under the revolving credit facility. The interest rate on borrowings under the revolving credit facility approximated 1.25 percent during the three months ended September 30, 2015. 2015 Note Purchase Agreement: On July 30, 2015, the Company entered into a private placement note purchase agreement for the issuance of $75.0 million of 30-year senior unsecured notes (the “Notes”). The Notes were funded on October 1, 2015, have a weighted average life of approximately 13 years, and will bear interest at a rate of 3.92 percent, payable semi-annually. The proceeds of the Notes were used to pay down Matson’s revolving credit facility. The Notes will begin to amortize in 2017, with annual principal payments of approximately $1.8 million through 2019. During the years 2020 to 2026, the annual principal payments will range between approximately $1.3 million and $8.0 million. Starting in 2027, and in each year thereafter, the annual principal payments will be approximately $1.5 million.

PENSION AND POST-RETIREMENT PLA

PENSION AND POST-RETIREMENT PLANS	9 Months Ended
	Sep. 30, 2015
PENSION AND POST-RETIREMENT PLANS
PENSION AND POST-RETIREMENT PLANS	5. PENSION AND POST-RETIREMENT PLANS The Company sponsors qualified defined-benefit pension and 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, 2015 and 2014 (in millions): Pension Benefits Post-retirement Benefits September 30 September 30 2015 2014 2015 2014 Service cost $ $ $ $ Interest cost Expected return on plan assets ) ) — — Amortization of net gain Amortization of prior service cost ) ) — — Net periodic cost (benefit) $ $ ) $ $ During the nine months ended September 30, 2015, the Company contributed $4.7 million to its defined benefit pension plans, out of total expected contributions of $6.2 million for 2015.

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION	9 Months Ended
	Sep. 30, 2015
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION	6. SHARE-BASED COMPENSATION During the three months ended September 30, 2015, the Company granted approximately 3,300 in total of time-based and performance-based shares to certain of its employees at a weighted-average grant date fair value of $37.78. 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 $2.0 million and $1.9 million for the three months ended September 30, 2015 and 2014, respectively, and $9.6 million and $5.6 million for the nine months ended September 30, 2015 and 2014, respectively. Total unrecognized compensation cost related to unvested share-based compensation arrangements was $11.1 million at September 30, 2015, and is expected to be recognized over a weighted-average period of 1.83 years. Total unrecognized compensation cost may be adjusted for any unearned performance shares or forfeited shares.

EARNINGS PER-SHARE

EARNINGS PER-SHARE	9 Months Ended
	Sep. 30, 2015
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, 2015 and 2014, is as follows (in millions, except per-share amounts): Three Months Ended September 30, 2015 Nine Months Ended September 30, 2015 Weighted Per Weighted Per Average Common Average Common Net Common Share Net Common Share 2015 Income Shares Amount Income Shares Amount Basic: $ $ $ $ Effect of Dilutive Securities: — — Diluted: $ $ $ $ Three Months Ended September 30, 2014 Nine Months Ended September 30, 2014 Weighted Per Weighted Per Average Common Average Common Net Common Share Net Common Share 2014 Income Shares Amount Income Shares Amount Basic: $ $ $ $ Effect of Dilutive Securities: — — Diluted: $ $ $ $ Basic earnings per-share is determined by dividing net income by the weighted-average common shares outstanding during the period. The calculation of diluted earnings per-share includes the dilutive effect of unexercised non-qualified stock options and non-vested restricted stock units. The computation of weighted average dilutive shares outstanding excludes certain non-qualified stock options to purchase shares of common stock where the options’ exercise prices were greater than the average market price of the Company’s common stock for the periods presented and, therefore, the effect would be anti-dilutive.

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS	9 Months Ended
	Sep. 30, 2015
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS	8. FAIR VALUE MEASUREMENTS The Company values its financial instruments based on the fair value hierarchy of valuation techniques for fair value measurements. Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2 inputs include quoted prices for similar assets and liabilities in active markets and inputs other than quoted prices observable for the asset or liability. Level 3 inputs are unobservable inputs for the asset or liability. If the technique used to measure fair value includes inputs from multiple levels of the fair value hierarchy, the lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy. The Company uses Level 1 inputs for the fair values of its cash equivalents and variable rate debt, and Level 2 inputs for its accounts receivable and fixed rate debt. The fair values of cash and cash equivalents, accounts receivable and variable rate debt approximate their carrying values due to the nature of the instruments. The fair value of the Company’s fixed rate debt is calculated based upon interest rates available for debt with terms and maturities similar to the Company’s existing debt arrangements. The carrying value and fair value of the Company’s financial instruments as of September 30, 2015 and December 31, 2014 are as follows (in millions): Carrying Value at Quoted Prices in Active Markets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) September 30, 2015 Fair Value Measurements at September 30, 2015 Cash and cash equivalents $ $ $ — $ — Accounts receivable, net — — Variable rate debt — — Fixed rate debt — — Carrying Value at December 31, 2014 Fair Value Measurements at December 31, 2014 Cash and cash equivalents $ $ $ — $ — Accounts receivable, net — — Fixed rate debt — —

REPORTABLE SEGMENTS

REPORTABLE SEGMENTS	9 Months Ended
	Sep. 30, 2015
REPORTABLE SEGMENTS
REPORTABLE SEGMENTS	9. REPORTABLE SEGMENTS The Company consists of two segments, ocean transportation and logistics, which are further described in Note 1. Reportable segments are measured based on operating income, exclusive of interest expense and income taxes. In arrangements where the customer purchases ocean transportation and logistics services, the revenues are allocated to each reportable segment based upon the contractual amounts for each type of service. Segment results for the three and nine months ended September 30, 2015 and 2014 were as follows (in millions): Three Months Ended Nine Months Ended September 30 September 30 2015 2014 2015 2014 Revenue: Ocean Transportation $ $ $ $ Logistics Total Revenue $ $ $ $ Operating Income: Ocean Transportation $ $ $ $ Logistics Total Operating Income Interest expense, net ) ) ) ) Income before Income Taxes Income taxes ) ) ) ) Net Income $ $ $ $

GENERAL AND SIGNIFICANT ACCOU14

GENERAL AND SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Sep. 30, 2015
GENERAL AND SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation	Basis of Presentation: The Condensed Consolidated Financial Statements are unaudited. Due to the nature of the Company’s operations and the Company’s acquisition of Horizon during 2015, 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, 2014, with the Securities and Exchange Commission (“SEC”) on February 27, 2015.
Fiscal Period	Fiscal Period: The period end for Matson, Inc. covered by this report is September 30, 2015. The period end for MatNav and its subsidiaries covered by this report occurred on the last Friday in September, or September 25, 2015.
Significant Accounting Policies	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, 2014.
Property and Equipment	Property and Equipment: Property and equipment is stated at cost, net of accumulated depreciation of $1,153.8 million and $1,107.0 million at September 30, 2015 and December 31, 2014, respectively.
Intangible assets, net	Intangible Assets, Net: Intangible assets are recorded net of accumulated amortization of $14.2 million and $11.8 million at September 30, 2015 and December 31, 2014, respectively. Intangible assets as of September 30, 2015 includes additions of $140.0 million related to customer relationships recorded as a result of the Horizon acquisition (see Note 3).
Goodwill	Goodwill: Goodwill of $248.3 million as of September 30, 2015 includes additions of $220.9 million related to the Horizon acquisition (see Note 3).
Capital Construction Fund	Capital Construction Fund: The Company’s Capital Construction Fund (“CCF”) is described in Note 6 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, 2014. As of September 30, 2015 and December 31, 2014, the Company had $11.7 million and $27.5 million, respectively, on deposit in the CCF that is held in a money market account and classified as long-term assets in the Company’s Condensed Consolidated Balance Sheets. During the three and nine months ended September 30, 2015, the Company made cash deposits of $75.7 million and $77.9 million into the CCF, and made qualified cash withdrawals of $91.5 million and $93.7 million, respectively, from the CCF. Qualified cash withdrawals of $91.5 million for the three months ended September 30, 2015 related primarily to the Horizon vessels acquired that were processed through the CCF for income tax purposes. As of September 30, 2015 and December 31, 2014, $176.4 million and $150.7 million 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.
Other Long-term Assets	Other Long-term Assets: As of September 30, 2015 and December 31, 2014, other long-term assets included deferred dry-docking costs of $52.9 million and $47.5 million, vessel and crane spare parts of $11.5 million and $7.7 million, and other assets of $15.0 million and $14.1 million, respectively.
Contingencies	Contingencies: The Company’s ocean transportation business has certain 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. 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.

BUSINESS COMBINATION (Tables)

BUSINESS COMBINATION (Tables)	9 Months Ended
	Sep. 30, 2015
BUSINESS COMBINATION
Schedule of total consideration paid	(in millions) Total Consideration Common shares $ Warrants Horizon’s debt (including accrued interest and breakage fees) Total $
Summary of fair value of assets acquired and liabilities assumed at the acquisition date with purchase price allocation adjustments	Purchase Price Allocation (in millions) As Previously Reported in 10-Q Adjustments As Retrospectively Adjusted Cash and cash equivalents $ $ — $ Accounts receivable — Other current assets Deferred tax assets, net — Property and equipment ) Intangibles - Customer relationships — Other long-term assets ) Accounts payable ) ) Accruals and other current liabilities ) — ) Multi-employer withdrawal liabilities ) — ) Capital lease obligations ) ) ) Horizon’s debt and warrants ) — ) Total identifiable assets less liabilities ) ) ) Total cash paid for common shares ) — ) Goodwill $ $ $
Schedule of annual cash outflows related to the multi-employer pension plan	Estimated annual cash outflows related to the multi-employer pension plan as of September 30, 2015 are as follows (in millions): Years ending September 30: Repayments (in millions) 2016 $ 2017 2018 2019 2020 Thereafter Total $
Schedule of pro forma financial information	(unaudited) (unaudited) Three Months Ended Nine Months Ended September 30 September 30 (in millions, except per-share amount) 2015 2014 2015 2014 Pro forma combined: Operating Revenue $ $ $ $ Net income from continuing operations $ $ $ $ Basic Earnings per share: $ $ $ $ Diluted Earnings per share: $ $ $ $ Weighted Average Number of Shares Outstanding: Basic Diluted

DEBT (Tables)

DEBT (Tables)	9 Months Ended
	Sep. 30, 2015
DEBT
Schedule of debt	At September 30, 2015 and December 31, 2014, the Company’s debt consisted of the following (in millions): September 30, December 31, 2015 2014 Term Loans: 5.79%, payable through 2020 $ $ 3.66%, payable through 2023 4.16%, payable through 2027 4.31%, payable through 2032 4.35%, payable through 2044 Title XI Bonds: 5.34%, payable through 2028 5.27%, payable through 2029 Revolving credit facility — Capital leases Total Debt Less current portion ) ) Total Long-term Debt $ $

PENSION AND POST-RETIREMENT P17

PENSION AND POST-RETIREMENT PLANS (Tables)	9 Months Ended
	Sep. 30, 2015
PENSION AND POST-RETIREMENT PLANS
Components of net periodic cost ( benefit)	The following table provides the components of net periodic benefit cost (benefit) for the Plans for the nine months ended September 30, 2015 and 2014 (in millions): Pension Benefits Post-retirement Benefits September 30 September 30 2015 2014 2015 2014 Service cost $ $ $ $ Interest cost Expected return on plan assets ) ) — — Amortization of net gain Amortization of prior service cost ) ) — — Net periodic cost (benefit) $ $ ) $ $

EARNINGS PER-SHARE (Tables)

EARNINGS PER-SHARE (Tables)	9 Months Ended
	Sep. 30, 2015
EARNINGS PER-SHARE
Schedule of basic and diluted 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, 2015 and 2014, is as follows (in millions, except per-share amounts): Three Months Ended September 30, 2015 Nine Months Ended September 30, 2015 Weighted Per Weighted Per Average Common Average Common Net Common Share Net Common Share 2015 Income Shares Amount Income Shares Amount Basic: $ $ $ $ Effect of Dilutive Securities: — — Diluted: $ $ $ $ Three Months Ended September 30, 2014 Nine Months Ended September 30, 2014 Weighted Per Weighted Per Average Common Average Common Net Common Share Net Common Share 2014 Income Shares Amount Income Shares Amount Basic: $ $ $ $ Effect of Dilutive Securities: — — Diluted: $ $ $ $

FAIR VALUE MEASUREMENTS (Tables

FAIR VALUE MEASUREMENTS (Tables)	9 Months Ended
	Sep. 30, 2015
FAIR VALUE MEASUREMENTS
Schedule of fair value measurement	The carrying value and fair value of the Company’s financial instruments as of September 30, 2015 and December 31, 2014 are as follows (in millions): Carrying Value at Quoted Prices in Active Markets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) September 30, 2015 Fair Value Measurements at September 30, 2015 Cash and cash equivalents $ $ $ — $ — Accounts receivable, net — — Variable rate debt — — Fixed rate debt — — Carrying Value at December 31, 2014 Fair Value Measurements at December 31, 2014 Cash and cash equivalents $ $ $ — $ — Accounts receivable, net — — Fixed rate debt — —

REPORTABLE SEGMENTS (Tables)

REPORTABLE SEGMENTS (Tables)	9 Months Ended
	Sep. 30, 2015
REPORTABLE SEGMENTS
Schedule of reportable segment information	Segment results for the three and nine months ended September 30, 2015 and 2014 were as follows (in millions): Three Months Ended Nine Months Ended September 30 September 30 2015 2014 2015 2014 Revenue: Ocean Transportation $ $ $ $ Logistics Total Revenue $ $ $ $ Operating Income: Ocean Transportation $ $ $ $ Logistics Total Operating Income Interest expense, net ) ) ) ) Income before Income Taxes Income taxes ) ) ) ) Net Income $ $ $ $

DESCRIPTION OF THE BUSINESS (De

DESCRIPTION OF THE BUSINESS (Details) - Ocean Transportation - SSAT	9 Months Ended
	Sep. 30, 2015facility
DESCRIPTION OF THE BUSINESS
Ownership interest in SSAT (as a percent)	35.00%
Number of terminal facilities on which SSAT provides terminal and stevedoring services to Matnav and numerous carriers	6

GENERAL AND SIGNIFICANT ACCOU22

GENERAL AND SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2015	May. 29, 2015	Dec. 31, 2014
Accumulated depreciation of property and equipment	$ 1,153.8	$ 1,153.8		$ 1,107
Accumulated amortization of intangible assets	14.2	14.2		11.8
Goodwill	248.3	248.3		27.4
Long-term Assets
Qualified withdrawals from CCF	(91.5)	(93.7)
Long-term Assets | Horizon vessels
Qualified withdrawals from CCF	(91.5)	(91.5)
Long-term Assets | Eligible Accounts Receivable Assigned to CCF
CCF Balance	176.4	176.4		150.7
Long-term Assets | CCF Cash Deposits and Withdrawals
Cash Deposits Into CCF	75.7	77.9
CCF Balance	11.7	11.7		27.5
Other Long-term Assets
Other long term assets
Deferred dry-docking costs	52.9	52.9		47.5
Vessel and crane spare parts	11.5	11.5		7.7
Other assets	15	15		$ 14.1
Horizon
Intangibles - Customer relationships			$ 140
Goodwill	220.9	220.9	$ 220.9
Customer relationships | Horizon
Intangibles - Customer relationships	$ 140	$ 140

BUSINESS COMBINATION (Details)

BUSINESS COMBINATION (Details) $ / shares in Units, $ in Millions	May. 29, 2015USD ($)item$ / shares	Sep. 30, 2015USD ($)	Dec. 31, 2014USD ($)
Assets acquired and liabilities assumed
Multi-employer withdrawal liabilities		$ (56.9)
Goodwill		248.3	$ 27.4
Horizon
Business acquisition
Number of Jones Act qualified containerships operated in Alaska | item	4
Business Combination, Ownership Percentage	100.00%
Price of Warrant (in dollars per share) | $ / shares	$ 0.72
Number of ship acquired | item	7
Assets acquired and liabilities assumed
Cash and cash equivalent	$ 0.8
Accounts receivable	31.7
Other current assets	7.2
Deferred tax assets, net	38.9
Property and equipment	170.4
Intangibles - Customer relationships	140
Other long-term assets	4.1
Accounts payable	(22.8)
Accruals and other current liabilities	(32.1)
Multi-employer withdrawal liabilities	(60.6)
Capital lease obligations	(1.6)
Horizon's debt and warrants	(467.5)
Total identifiable assets less liabilities	(191.5)
Total cash paid for common shares	(29.4)
Goodwill	$ 220.9	220.9
Horizon | Customer relationships
Assets acquired and liabilities assumed
Intangibles - Customer relationships		$ 140
Expected useful lives	21 years
Horizon | Pasha | Horizon Hawaii Operations
Business acquisition
Pasha transaction proceeds	$ 141.5
Horizon | As previously Reported
Total cash consideration
Common shares	29.4
Warrants	37.1
Horizon's debt (including accrued interest and breakage fees)	428.9
Total	495.4
Assets acquired and liabilities assumed
Cash and cash equivalent	0.8
Accounts receivable	31.7
Other current assets	7.1
Deferred tax assets, net	38.9
Property and equipment	171
Intangibles - Customer relationships	140
Other long-term assets	5
Accounts payable	(23.2)
Accruals and other current liabilities	(32.1)
Multi-employer withdrawal liabilities	(60.6)
Capital lease obligations	(1.4)
Horizon's debt and warrants	(467.5)
Total identifiable assets less liabilities	(190.3)
Total cash paid for common shares	(29.4)
Goodwill	219.7
Horizon | Adjustments
Assets acquired and liabilities assumed
Other current assets	0.1
Property and equipment	(0.6)
Other long-term assets	(0.9)
Accounts payable	0.4
Capital lease obligations	(0.2)
Total identifiable assets less liabilities	(1.2)
Goodwill	$ 1.2

BUSINESS COMBINATION (Details 2

BUSINESS COMBINATION (Details 2) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Estimated future multi-employer pension benefit payments
Benefit payment period			18 years
Horizon
Estimated future multi-employer pension benefit payments
2,016	$ 4.1		$ 4.1
2,017	4.1		4.1
2,018	4.1		4.1
2,019	4.1		4.1
2,020	4.1		4.1
Thereafter	53.4		53.4
Total	73.9		73.9
Condensed Consolidated Statements of Income and Comprehensive Income
Revenue	90		114.5
Net income before income taxes	14.5		11.9
Pro-forma Financial Information
Operating Revenue	544.3	$ 535.8	1,524.9	$ 1,529.9
Net income from continuing operations	$ 36.6	$ 20.4	$ 64.4	$ 20.5
Basic Earnings Per Share (in dollars per share)	$ 0.84	$ 0.47	$ 1.48	$ 0.48
Diluted Earnings Per Share (in dollars per share)	$ 0.83	$ 0.47	$ 1.46	$ 0.47
Weighted Average Number of Shares Outstanding:
Basic	43.5	43	43.5	43
Diluted	44	43.4	44	43.3

DEBT (Details)

DEBT (Details) - USD ($) $ in Millions	Sep. 30, 2015	Dec. 31, 2014
Debt
Capital leases	$ 3.7	$ 1.3
Total Debt	481.5	373.6
Less current portion	(22.2)	(21.6)
Total Long-term debt	459.3	352
5.79%, payable through 2020
Debt
Total Debt	$ 35	$ 38.5
Interest rate (as a percent)	5.79%	5.79%
3.66%, payable through 2023
Debt
Total Debt	$ 72.9	$ 77.5
Interest rate (as a percent)	3.66%	3.66%
4.16%, payable through 2027
Debt
Total Debt	$ 55	$ 55
Interest rate (as a percent)	4.16%	4.16%
4.31%, payable through 2032
Debt
Total Debt	$ 37.5	$ 37.5
Interest rate (as a percent)	4.31%	4.31%
4.35%, payable through 2044
Debt
Total Debt	$ 100	$ 100
Interest rate (as a percent)	4.35%	4.35%
5.34%, payable through 2028
Debt
Total Debt	$ 28.6	$ 30.8
Interest rate (as a percent)	5.34%	5.34%
5.27%, payable through 2029
Debt
Total Debt	$ 30.8	$ 33
Interest rate (as a percent)	5.27%	5.27%
Revolving Credit Facility
Debt
Total Debt	$ 118

DEBT (Details 2)

DEBT (Details 2) - USD ($) $ in Millions	Jul. 30, 2015	Sep. 30, 2015	Sep. 30, 2015
Revolving Credit Facility
Debt
Funds available under the revolving credit facility		$ 271.5	$ 271.5
Interest rate (as a percent)		1.25%
Notes 30 years
Debt
Interest rate (as a percent)		3.92%	3.92%
Debt issued		$ 75	$ 75
Debt instrument term			30 years
Weighted average period	13 years
Notes 30 years | 2017 through 2019
Debt
Annual principal payments		1.8	$ 1.8
Notes 30 years | After 2026
Debt
Annual principal payments		1.5	1.5
Notes 30 years | Minimum | 2020 through 2026
Debt
Annual principal payments		1.3	1.3
Notes 30 years | Maximum | 2020 through 2026
Debt
Annual principal payments		$ 8	$ 8

PENSION AND POST-RETIREMENT P27

PENSION AND POST-RETIREMENT PLANS (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Pension Benefits
Components of Net Periodic (Benefit) Cost
Service cost	$ 2.6	$ 2.5
Interest cost	7.1	7.1
Expected return on plan assets	(10.4)	(10.5)
Amortization of net gain	4.8	2.3
Amortization of prior service cost	(1.7)	(1.7)
Net periodic cost (benefit)	2.4	(0.3)
Employer contribution	4.7
Full year expected cash contributions to pension plan	6.2
Post-retirement Benefits
Components of Net Periodic (Benefit) Cost
Service cost	1.2	0.8
Interest cost	1.9	1.9
Amortization of net gain	1.8	0.4
Net periodic cost (benefit)	$ 4.9	$ 3.1

SHARE-BASED COMPENSATION (Detai

SHARE-BASED COMPENSATION (Details) - Time Based And Performance Based Shares - Employee - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Share-based compensation
Shares granted	3,300
Weighted average grant date fair value (in dollars per share)	$ 37.78
Total stock-based compensation cost	$ 2	$ 1.9	$ 9.6	$ 5.6
Total unrecognized compensation cost	$ 11.1		$ 11.1
Unrecognized compensation cost over weighted-average period to be recognized			1 year 9 months 29 days

EARNING PER-SHARE (Details)

EARNING PER-SHARE (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Net Income
Net Income, Basic	$ 41.5	$ 21.5	$ 76.4	$ 43
Net Income, Diluted	$ 41.5	$ 21.5	$ 76.4	$ 43
Weighted Average Common Shares
Basic (in shares)	43.5	43	43.5	43
Effect of Dilutive Securities (in shares)	0.5	0.4	0.5	0.3
Diluted (in shares)	44	43.4	44	43.3
Per Common Share Amount, Basic
Net income (in dollars per share)	$ 0.95	$ 0.50	$ 1.76	$ 1
Per Common Share Amount, Diluted
Net income (in dollars per share)	$ 0.94	$ 0.50	$ 1.74	$ 1

FAIR VALUE MEASUREMENTS (Detail

FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Millions	Sep. 30, 2015	Dec. 31, 2014
Carrying value
Fair value of financial instruments
Cash and cash equivalents	$ 25.5	$ 293.4
Accounts receivable, net	239.5	197.6
Variable debt	118
Fixed rate debt	363.5	373.6
Fair Value Measurement | Quoted Prices in Active Markets (Level 1)
Fair value of financial instruments
Cash and cash equivalents	25.5	293.4
Variable debt	118
Fair Value Measurement | Significant Observable Inputs (Level 2)
Fair value of financial instruments
Accounts receivable, net	239.5	197.6
Fixed rate debt	$ 379.7	$ 395.7

REPORTABLE SEGMENTS (Details)

REPORTABLE SEGMENTS (Details) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015USD ($)	Sep. 30, 2014USD ($)	Sep. 30, 2015USD ($)segment	Sep. 30, 2014USD ($)	Dec. 31, 2014USD ($)
Segment results
Number of segments | segment			2
Revenue	$ 544.3	$ 441.8	$ 1,390.1	$ 1,270.7
Operating Income	71.8	45	150.4	90.6
Interest expense, net	(4.7)	(4.4)	(13.6)	(13)
Income before Income Taxes	67.1	40.6	136.8	77.6
Income tax expense	(25.6)	(19.1)	(60.4)	(34.6)
Net Income	41.5	21.5	76.4	43
Assets	1,736.7		1,736.7		$ 1,401.8
Capital expenditures			30.3	25.6
Depreciation and amortization			59.1	52.5
Operating segments
Segment results
Operating Income	71.8	45	150.4	90.6
Ocean Transportation | Operating segments
Segment results
Revenue	444.8	329.5	1,097	945.2
Operating Income	68.9	42.6	144.2	84.8
Logistics | Operating segments
Segment results
Revenue	99.5	112.3	293.1	325.5
Operating Income	$ 2.9	$ 2.4	$ 6.2	$ 5.8