Matson (MATX) 10-Q 5 May 16 2016 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information	3 Months Ended
	Mar. 31, 2016shares
Document and Entity Information
Entity Registrant Name	Matson, Inc.
Entity Central Index Key	3,453
Document Type	10-Q
Document Period End Date	Mar. 31, 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	43,258,098
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q1

Condensed Consolidated Statemen

Condensed Consolidated Statements of Income and Comprehensive Income - USD ($) shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Operating Revenue:
Ocean Transportation	$ 366.1	$ 305.5
Logistics	88.1	92.7
Total Operating Revenue	454.2	398.2
Costs and Expenses:
Operating costs	376.4	318.2
Equity in income of related party Terminal Joint Venture	(2.6)	(3.4)
Selling, general and administrative	45.8	38.5
Total Costs and Expenses	419.6	353.3
Operating Income	34.6	44.9
Interest expense	(4.9)	(4.3)
Income before Income Taxes	29.7	40.6
Income tax expense	(11.6)	(15.6)
Net Income	18.1	25
Other Comprehensive Income (Loss), Net of Income Taxes:
Net Income	18.1	25
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	(0.4)	(0.4)
Amortization of net loss included in net periodic pension cost	1.1	1.4
Foreign currency translation adjustment	(0.1)	0.1
Total Other Comprehensive Income	1.3	0.9
Comprehensive Income	$ 19.4	$ 25.9
Basic Earnings Per Share:
Basic Earnings Per Share (in dollars per share)	$ 0.42	$ 0.58
Diluted Earnings Per Share:
Diluted Earnings Per Share (in dollars per share)	$ 0.41	$ 0.57
Weighted Average Number of Shares Outstanding:
Basic (in shares)	43.4	43.4
Diluted (in shares)	43.8	43.9
Dividends
Cash Dividends Per Share	$ 0.18	$ 0.17

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Millions	Mar. 31, 2016	Dec. 31, 2015
Current Assets:
Cash and cash equivalents	$ 20.1	$ 25.5
Accounts receivable, net	210.4	214.3
Prepaid expenses and other assets	28.4	38.1
Total current assets	258.9	277.9
Long-term Assets:
Investment in related party Terminal Joint Venture	69	66.4
Property and equipment, net	857.4	860.3
Goodwill	241.6	241.6
Intangible assets, net	137.2	139.1
Capital Construction Fund - cash on deposit	12.5
Deferred dry-docking costs	68.1	57.6
Other long-term assets	29.6	26.9
Total assets	1,674.3	1,669.8
Current Liabilities:
Current portion of debt	21.7	22
Accounts payable	150.7	164.9
Payroll and vacation benefits	20.2	23.1
Uninsured liabilities	24.6	27.1
Accrued and other liabilities	44	60.5
Total current liabilities	261.2	297.6
Long-term Liabilities:
Long-term debt	459.5	407.9
Deferred income taxes	313.3	310.5
Employee benefit plans	106.7	109.3
Uninsured and other liabilities	38.4	37.7
Multi-employer withdrawal liabilities	55.5	56.2
Total long-term liabilities	$ 973.4	$ 921.6
Commitments and Contingencies (Note 2)
Shareholders' Equity:
Capital stock	$ 32.4	$ 32.6
Additional paid in capital	282	287.9
Accumulated other comprehensive loss	(45.6)	(46.9)
Retained earnings	170.9	177
Total shareholders' equity	439.7	450.6
Total liabilities and shareholders' equity	$ 1,674.3	$ 1,669.8

Condensed Consolidated Stateme4

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Cash Flows From Operating Activities:
Net income	$ 18.1	$ 25
Reconciling adjustments:
Depreciation and amortization	23.8	16.8
Deferred income taxes	3	4.5
Share-based compensation expense	2.8	2.8
Equity in income of related party Terminal Joint Venture	(2.6)	(3.4)
Other	(1.6)	3.3
Changes in assets and liabilities:
Accounts receivable	3.9	(4.2)
Deferred dry-docking payments	(13.2)	(5.1)
Deferred dry-docking amortization	8.1	5.5
Prepaid expenses and other assets	6.4	0.7
Accounts payable and accrued liabilities	(9.9)	7.4
Other liabilities	(19)	(7)
Net cash provided by operating activities	19.8	46.3
Cash Flows From Investing Activities:
Capital expenditures	(30.6)	(3.3)
Proceeds from disposal of property and equipment	0.5	0.3
Cash deposits into Capital Construction Fund	(12.5)	(2.2)
Withdrawals from Capital Construction Fund		2.2
Net cash used in investing activities	(42.6)	(3)
Cash Flows From Financing Activities:
Excess tax benefit from stock-based compensation	0.1
Repayments of debt and capital leases	(2.7)	(2.4)
Proceeds from revolving credit facility	97
Repayments of revolving credit facility	(43)
Proceeds from issuance of capital stock	0.8	1.9
Tax withholding related to net share settlements of restricted stock units	(6.1)	(2.9)
Dividends paid	(7.9)	(7.5)
Payments for shares repurchased	(20.8)
Net cash provided by (used in) financing activities	17.4	(10.9)
Net (Decrease) Increase in Cash and Cash Equivalents	(5.4)	32.4
Cash and cash equivalents, beginning of the period	25.5	293.4
Cash and cash equivalents, end of the period	20.1	325.8
Supplemental Cash Flow Information:
Interest paid	4.2	3.9
Income tax (refund) paid	(0.1)	4.2
Non-cash Information:
Capital expenditures included in accounts payable and accrued liabilities	$ 2.1	$ 1

DESCRIPTION OF THE BUSINESS

DESCRIPTION OF THE BUSINESS	3 Months Ended
	Mar. 31, 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 provides 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 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”); supply chain management, and warehousing and distribution services.

GENERAL AND SIGNIFICANT ACCOUNT

GENERAL AND SIGNIFICANT ACCOUNTING POLICIES	3 Months Ended
	Mar. 31, 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. Due to the nature of the Company’s operations and the Company’s acquisition of Horizon Lines, Inc. (“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, 2015, filed with the Securities and Exchange Commission (“SEC”) on February 26, 2016. Fiscal Period: The period end for Matson, Inc. covered by this report is March 31, 2016. The period end for MatNav and its subsidiaries covered by this report occurred on the last Friday in March, or March 25, 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 is stated at cost, net of accumulated depreciation of $1,147.9 million and $1,128.6 million at March 31, 2016 and December 31, 2015, respectively. Intangible Assets, Net: Intangible assets are recorded net of accumulated amortization of $14.2 million and $12.3 million at March 31, 2016 and December 31, 2015, 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 March 31, 2016 and December 31, 2015, the Company had $12.5 million and a nominal amount, respectively, on deposit in the CCF. 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 the vessel construction costs. During the three months ended March 31, 2016, the Company made cash deposits of $12.5 million into the CCF, and there were no qualified cash withdrawals from the CCF. As of March 31, 2016 and December 31, 2015, $164.4 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. 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. 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-to-use asset for the right to use the underlying asset for 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

BUSINESS COMBINATION	3 Months Ended
	Mar. 31, 2016
BUSINESS COMBINATION
BUSINESS COMBINATION	3. BUSINESS COMBINATION Horizon Acquisition: On May 29, 2015 (the “Effective Date”), Matson completed its acquisition of Horizon pursuant to which MatNav acquired Horizon’s Alaska operations and assumed all of Horizon’s non-Hawaii assets and liabilities. Immediately before the completion of the Horizon Acquisition, Horizon sold certain of its subsidiaries to the Pasha Group 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) that employed the Horizon employees who conducted its Hawaii operations (the “Pasha Transaction”). 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. 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. As a result of the Horizon Acquisition the Company thereby acquired Horizon’s assets and thereby assumed its liabilities including Horizon’s debt (net of proceeds from the Pasha Transaction). Immediately following the Horizon Acquisition, the Company repaid the assumed debt which included accrued interest and breakage fees, and redeemed all of Horizon’s outstanding warrants. Total consideration including debt paid and warrants redeemed 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 and liabilities acquired pursuant to the Horizon Acquisition were recorded based on fair value estimates as of the Effective Date, with the remaining unallocated purchase price recorded as goodwill. The following table summarizes the estimated fair values assigned to Horizon’s assets acquired and liabilities assumed as a result of the Horizon Acquisition as of March 31, 2016 and December 31, 2015: (in millions) Total 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 $ 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, including the estimated fair value of multi-employer withdrawal liability may be significantly different from those reflected in the Company’s Consolidated Financial Statements as of March 31, 2016, and December 31, 2015. The Company’s Consolidated Statements of Income and Comprehensive Income for the quarter ended March 31, 2016, include operating revenue of $70.7 million, and net income before income taxes of $4.2 million, respectively, from Horizon’s operations. There were no one-time acquisition related costs incurred post December 31, 2015. 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 Horizon 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 Horizon 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. (Unaudited) Three Months Ended March 31, Pro Forma Combined: (in millions, except per-share amount) 2016 2015 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	3 Months Ended
	Mar. 31, 2016
DEBT
DEBT	4. DEBT At March 31, 2016 and December 31, 2015, the Company’s debt consisted of the following (in millions): March 31, December 31, 2016 2015 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 3.92%, payable through 2045 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 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. 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 March 31, 2016, the Company had $335.0 million of availability under the revolving credit facility. The interest rate on borrowings under the revolving credit facility approximated 1.73 percent during the three months ended March 31, 2016.

PENSION AND POST-RETIREMENT PLA

PENSION AND POST-RETIREMENT PLANS	3 Months Ended
	Mar. 31, 2016
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 three months ended March 31, 2016 and 2015 (in millions): Pension Benefits Post-retirement Benefits March 31, March 31, Components of Net Periodic Benefit Costs: 2016 2015 2016 2015 Service cost $ $ $ $ Interest cost Expected return on plan assets ) ) — — Amortization of net loss Amortization of prior service cost ) ) — — Net periodic benefit cost $ $ $ $ During the three months ended March 31, 2016, the Company contributed $3.1 million to its defined benefit pension plans, out of total expected contributions of $7.5 million for 2016.

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION	3 Months Ended
	Mar. 31, 2016
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION	6. SHARE-BASED COMPENSATION During the three months ended March 31, 2016, the Company granted approximately 289,802 in total of time-based and performance-based shares to certain of its employees at a $37.64 weighted-average grant date fair value. 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 $2.8 million for both the three months ended March 31, 2016 and 2015. Total unrecognized compensation cost related to unvested share-based compensation arrangements was $17.3 million at March 31, 2016, and is expected to be recognized over a weighted-average period of 2.3 years. Total unrecognized compensation cost may be adjusted for any unearned performance shares or forfeited shares.

EARNINGS PER-SHARE

EARNINGS PER-SHARE	3 Months Ended
	Mar. 31, 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 months ended March 31, 2016 and 2015, is as follows (in millions, except per-share amounts): Three Months Ended March 31, 2016 Three Months Ended March 31, 2015 Weighted Per Weighted Per Average Common Average Common Net Common Share Net Common Share 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	3 Months Ended
	Mar. 31, 2016
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 Level 2 inputs for its accounts receivable, variable rate debt 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 March 31, 2016 and December 31, 2015 are as follows (in millions): Total Carrying Value at Total Quoted Prices in Active Markets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) March 31, 2016 Fair Value Measurements at March 31, 2016 Cash and cash equivalents $ $ $ $ — $ — Accounts receivable, net — — Variable rate debt — — Fixed rate debt — — December 31, 2015 Fair Value Measurements at December 31, 2015 Cash and cash equivalents $ $ $ — $ — Accounts receivable, net — — Fixed rate debt — —

REPORTABLE SEGMENTS

REPORTABLE SEGMENTS	3 Months Ended
	Mar. 31, 2016
REPORTABLE SEGMENTS
REPORTABLE SEGMENTS	9. REPORTABLE SEGMENTS Reportable segments are components of an enterprise that engage in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. The Company’s chief operating decision maker is its Chief Executive Officer. The Company consists of two reportable segments, Ocean Transportation and Logistics, which are further described in Note 1. Reportable segments are measured based on operating profit, exclusive of interest expense, general corporate expenses, 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. The Company’s Terminal Joint Venture segment has been aggregated into the Company’s Ocean Transportation segment due to the operations of the Terminal Joint Venture being an integral part of the Company’s Ocean Transportation business and has similar economic characteristics. Reportable segment results for the three months ended March 31, 2016 and 2015 were as follows (in millions): Three Months Ended March 31, 2016 2015 Operating Revenue: Ocean Transportation $ $ Logistics Total Operating Revenue $ $ Operating Income: Ocean Transportation $ $ Logistics Total Operating Income Interest expense ) ) Income before Income Taxes Income taxes ) ) Net Income $ $

GENERAL AND SIGNIFICANT ACCOU14

GENERAL AND SIGNIFICANT ACCOUNTING POLICIES (Policies)	3 Months Ended
	Mar. 31, 2016
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 Lines, Inc. (“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, 2015, filed with the Securities and Exchange Commission (“SEC”) on February 26, 2016.
Fiscal Period	Fiscal Period: The period end for Matson, Inc. covered by this report is March 31, 2016. The period end for MatNav and its subsidiaries covered by this report occurred on the last Friday in March, or March 25, 2016.
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, 2015.
Property and Equipment	Property and Equipment: Property and equipment is stated at cost, net of accumulated depreciation of $1,147.9 million and $1,128.6 million at March 31, 2016 and December 31, 2015, respectively.
Intangible Assets, Net	Intangible Assets, Net: Intangible assets are recorded net of accumulated amortization of $14.2 million and $12.3 million at March 31, 2016 and December 31, 2015, respectively.
Capital Construction Fund	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 March 31, 2016 and December 31, 2015, the Company had $12.5 million and a nominal amount, respectively, on deposit in the CCF. 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 the vessel construction costs. During the three months ended March 31, 2016, the Company made cash deposits of $12.5 million into the CCF, and there were no qualified cash withdrawals from the CCF. As of March 31, 2016 and December 31, 2015, $164.4 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.
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.
New Accounting Pronouncements: Leases	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-to-use asset for the right to use the underlying asset for 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.
New Accounting Pronouncements: Share-Based Awards	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 (Tables)

BUSINESS COMBINATION (Tables)	3 Months Ended
	Mar. 31, 2016
BUSINESS COMBINATION
Schedule of total consideration paid for the Horizon Acquisition on effective date of May 29, 2015	(in millions) Total Consideration Common shares $ Warrants Horizon’s debt (including accrued interest and breakage fees) Total $
Summary of estimated fair values assigned to Horizon's assets acquired and liabilities assumed as a result of the Horizon Acquisition as of March 31, 2016 and December 31, 2015	(in millions) Total 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 pro forma financial information	(Unaudited) Three Months Ended March 31, Pro Forma Combined: (in millions, except per-share amount) 2016 2015 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)	3 Months Ended
	Mar. 31, 2016
DEBT
Schedule of debt	At March 31, 2016 and December 31, 2015, the Company’s debt consisted of the following (in millions): March 31, December 31, 2016 2015 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 3.92%, payable through 2045 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)	3 Months Ended
	Mar. 31, 2016
PENSION AND POST-RETIREMENT PLANS
Components of net periodic benefit costs	The following table provides the components of net periodic benefit cost (benefit) for the Plans for the three months ended March 31, 2016 and 2015 (in millions): Pension Benefits Post-retirement Benefits March 31, March 31, Components of Net Periodic Benefit Costs: 2016 2015 2016 2015 Service cost $ $ $ $ Interest cost Expected return on plan assets ) ) — — Amortization of net loss Amortization of prior service cost ) ) — — Net periodic benefit cost $ $ $ $

EARNINGS PER-SHARE (Tables)

EARNINGS PER-SHARE (Tables)	3 Months Ended
	Mar. 31, 2016
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 months ended March 31, 2016 and 2015, is as follows (in millions, except per-share amounts): Three Months Ended March 31, 2016 Three Months Ended March 31, 2015 Weighted Per Weighted Per Average Common Average Common Net Common Share Net Common Share Income Shares Amount Income Shares Amount Basic: $ $ $ $ Effect of Dilutive Securities: ) ) Diluted: $ $ $ $

FAIR VALUE MEASUREMENTS (Tables

FAIR VALUE MEASUREMENTS (Tables)	3 Months Ended
	Mar. 31, 2016
FAIR VALUE MEASUREMENTS
Schedule of fair value measurement	The carrying value and fair value of the Company’s financial instruments as of March 31, 2016 and December 31, 2015 are as follows (in millions): Total Carrying Value at Total Quoted Prices in Active Markets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) March 31, 2016 Fair Value Measurements at March 31, 2016 Cash and cash equivalents $ $ $ $ — $ — Accounts receivable, net — — Variable rate debt — — Fixed rate debt — — December 31, 2015 Fair Value Measurements at December 31, 2015 Cash and cash equivalents $ $ $ — $ — Accounts receivable, net — — Fixed rate debt — —

REPORTABLE SEGMENTS (Tables)

REPORTABLE SEGMENTS (Tables)	3 Months Ended
	Mar. 31, 2016
REPORTABLE SEGMENTS
Schedule of reportable segment information	Reportable segment results for the three months ended March 31, 2016 and 2015 were as follows (in millions): Three Months Ended March 31, 2016 2015 Operating Revenue: Ocean Transportation $ $ Logistics Total Operating Revenue $ $ Operating Income: Ocean Transportation $ $ Logistics Total Operating Income Interest expense ) ) Income before Income Taxes Income taxes ) ) Net Income $ $

DESCRIPTION OF THE BUSINESS (De

DESCRIPTION OF THE BUSINESS (Details)	3 Months Ended
	Mar. 31, 2016segmentfacility
DESCRIPTION OF THE BUSINESS
Number of reportable segments | segment	2
Ocean Transportation | SSAT
DESCRIPTION OF THE BUSINESS
Ownership interest in SSAT (as a percent)	35.00%
Number of terminal facilities on which SSAT provided terminal and stevedoring services on the U.S. West Coast | facility	6

GENERAL AND SIGNIFICANT ACCOU22

GENERAL AND SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Accumulated depreciation of property and equipment	$ 1,147.9	$ 1,128.6
Accumulated amortization of intangible assets	14.2	12.3
Long-term Assets | Eligible Accounts Receivable Assigned to CCF
CCF Balance	164.4	$ 176.6
Long-term Assets | CCF Cash Deposits and Withdrawals
CCF Balance	12.5
Cash Deposits Into CCF	12.5
Qualified withdrawals from CCF	$ 0

BUSINESS COMBINATION - CONSIDER

BUSINESS COMBINATION - CONSIDERATION PAID (Details) - USD ($) $ / shares in Units, $ in Millions	May. 29, 2015	Mar. 31, 2016	Dec. 31, 2015
Assets acquired and liabilities assumed
Multi-employer withdrawal liabilities		$ (55.5)	$ (56.2)
Goodwill		241.6	241.6
Horizon
Business acquisition
Business Combination, Ownership Percentage	100.00%
Cash price (in dollars per share)	$ 0.72
Assets acquired and liabilities assumed
Cash and cash equivalents		0.8	0.8
Accounts receivable		31.7	31.7
Other current assets		7.2	7.2
Deferred tax assets, net		45.6	45.6
Property and equipment		170.4	170.4
Intangibles - Customer relationships		140	140
Other long-term assets		4.1	4.1
Accounts payable		(22.8)	(22.8)
Accruals and other current liabilities		(32.1)	(32.1)
Multi-employer withdrawal liabilities		(60.6)	(60.6)
Capital lease obligations		(1.6)	(1.6)
Horizon's debt and warrants		(467.5)	(467.5)
Total identifiable assets less liabilities		(184.8)	(184.8)
Total cash paid for common shares		(29.4)	(29.4)
Goodwill		$ 214.2	$ 214.2
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

BUSINESS COMBINATION - PROFORMA

BUSINESS COMBINATION - PROFORMA (Details) - Horizon - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Condensed Consolidated Statements of Income and Comprehensive Income
Revenue	$ 70.7
Net income before income taxes	4.2
One-time acquisition related costs	0
Pro-forma Combined
Operating revenue	454.2	$ 473.4
Net income from continuing operations	$ 18.1	$ 9.9
Basic Earnings Per Share (in dollars per share)	$ 0.42	$ 0.23
Diluted Earnings Per Share (in dollars per share)	$ 0.41	$ 0.23
Weighted Average Number of Shares Outstanding:
Basic	43.4	43.4
Diluted	43.8	43.9

DEBT - SUMMARY (Details)

DEBT - SUMMARY (Details) - USD ($) $ in Millions	Mar. 31, 2016	Dec. 31, 2015
Debt
Capital leases	$ 2.6	$ 3.1
Total Debt	481.2	429.9
Less current portion	(21.7)	(22)
Total Long-term Debt	459.5	407.9
5.79%, payable through 2020
Debt
Total Debt	$ 31.5	$ 31.5
Interest rate (as a percent)	5.79%	5.79%
3.66%, payable through 2023
Debt
Total Debt	$ 68.4	$ 68.4
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%
3.92%, payable through 2045
Debt
Total Debt	$ 75	$ 75
Interest rate (as a percent)	3.92%	3.92%
5.34%, payable through 2028
Debt
Total Debt	$ 27.5	$ 28.6
Interest rate (as a percent)	5.34%	5.34%
5.27%, payable through 2029
Debt
Total Debt	$ 29.7	$ 30.8
Interest rate (as a percent)	5.27%	5.27%
Revolving Credit Facility
Debt
Total Debt	$ 54

DEBT - DESCRIPTION (Details)

DEBT - DESCRIPTION (Details) - Revolving Credit Facility $ in Millions	3 Months Ended
	Mar. 31, 2016USD ($)
Debt
Funds available under the revolving credit facility	$ 335
Interest rate during period (as a percent)	1.73%

PENSION AND POST-RETIREMENT P27

PENSION AND POST-RETIREMENT PLANS - COMPONENTS OF NET PERIODIC BENEFIT COST (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Pension Benefits
Components of Net Periodic Benefit Costs:
Service cost	$ 1	$ 0.9
Interest cost	2.4	2.4
Expected return on plan assets	(3.3)	(3.5)
Amortization of net loss	1.3	1.6
Amortization of prior service cost	(0.6)	(0.6)
Net periodic benefit cost	0.8	0.8
Defined Benefit Pension Plan Contributions
Employer contribution	3.1
Full year expected cash contributions to pension plan	7.5
Post-retirement Benefits
Components of Net Periodic Benefit Costs:
Service cost	0.4	0.4
Interest cost	0.7	0.6
Amortization of net loss	0.3	0.6
Net periodic benefit cost	$ 1.4	$ 1.6

SHARE-BASED COMPENSATION (Detai

SHARE-BASED COMPENSATION (Details) - Time-based and performance-based shares - Employee - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Share-based compensation
Shares granted	289,802
Weighted average grant date fair value (in dollars per share)	$ 37.64
Total unrecognized compensation cost	$ 17.3
Unrecognized compensation cost over weighted-average period to be recognized	2 years 3 months 18 days
Selling, general and administrative expenses
Share-based compensation
Total stock-based compensation cost	$ 2.8	$ 2.8

EARNING PER-SHARE (Details)

EARNING PER-SHARE (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Net Income
Net Income, Basic	$ 18.1	$ 25
Net Income, Diluted	$ 18.1	$ 25
Weighted Average Common Shares
Basic (in shares)	43.4	43.4
Effect of Dilutive Securities (in shares)	0.4	0.5
Diluted (in shares)	43.8	43.9
Per Common Share Amount
Net income, Basic (in dollars per share)	$ 0.42	$ 0.58
Effect of Dilutive Securities (in dollars per shares)	(0.01)	(0.01)
Net income, Diluted (in dollars per share)	$ 0.41	$ 0.57

FAIR VALUE MEASUREMENTS (Detail

FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Millions	Mar. 31, 2016	Dec. 31, 2015
Carrying value
Fair value of financial instruments
Cash and cash equivalents	$ 20.1	$ 25.5
Accounts receivable, net	210.4	214.3
Variable rate debt	54
Fixed rate debt	427.2	429.9
Fair Value Measurement
Fair value of financial instruments
Cash and cash equivalents	20.1	25.5
Accounts receivable, net	210.4	214.3
Variable rate debt	54
Fixed rate debt	447.6	443.8
Fair Value Measurement | Quoted Prices in Active Markets (Level 1)
Fair value of financial instruments
Cash and cash equivalents	20.1	25.5
Fair Value Measurement | Significant Observable Inputs (Level 2)
Fair value of financial instruments
Accounts receivable, net	210.4	214.3
Variable rate debt	54
Fixed rate debt	$ 447.6	$ 443.8

REPORTABLE SEGMENTS (Details)

REPORTABLE SEGMENTS (Details) $ in Millions	3 Months Ended
	Mar. 31, 2016USD ($)segment	Mar. 31, 2015USD ($)
Segment results
Number of segments | segment	2
Revenue	$ 454.2	$ 398.2
Operating Income	34.6	44.9
Interest expense	(4.9)	(4.3)
Income before Income Taxes	29.7	40.6
Income taxes	(11.6)	(15.6)
Net Income	18.1	25
Operating segments
Segment results
Operating Income	34.6	44.9
Ocean Transportation | Operating segments
Segment results
Revenue	366.1	305.5
Operating Income	33	43.9
Logistics | Operating segments
Segment results
Revenue	88.1	92.7
Operating Income	$ 1.6	$ 1