Document and Entity Information
Document and Entity Information | 6 Months Ended |
Jun. 30, 2016shares | |
Document and Entity Information | |
Entity Registrant Name | Matson, Inc. |
Entity Central Index Key | 3,453 |
Document Type | 10-Q |
Document Period End Date | Jun. 30, 2016 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Current Reporting Status | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 42,959,274 |
Document Fiscal Year Focus | 2,016 |
Document Fiscal Period Focus | Q2 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income and Comprehensive Income - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Operating Revenue: | ||||
Ocean Transportation | $ 370.9 | $ 346.7 | $ 737 | $ 652.2 |
Logistics | 96.8 | 100.9 | 184.9 | 193.6 |
Total Operating Revenue | 467.7 | 447.6 | 921.9 | 845.8 |
Costs and Expenses: | ||||
Operating costs | 389.9 | 364.5 | 766.3 | 682.7 |
Equity in income of related party Terminal Joint Venture | (3) | (5.2) | (5.6) | (8.6) |
Selling, general and administrative | 44.7 | 54.6 | 90.5 | 93.1 |
Total Costs and Expenses | 431.6 | 413.9 | 851.2 | 767.2 |
Operating Income | 36.1 | 33.7 | 70.7 | 78.6 |
Interest expense | (6.5) | (4.6) | (11.4) | (8.9) |
Income before Income Taxes | 29.6 | 29.1 | 59.3 | 69.7 |
Income tax expense | (11.6) | (19.2) | (23.2) | (34.8) |
Net Income | 18 | 9.9 | 36.1 | 34.9 |
Other Comprehensive Income (Loss), Net of Income Taxes: | ||||
Net Income | 18 | 9.9 | 36.1 | 34.9 |
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 | (0.2) | (0.2) | (0.6) | (0.6) |
Amortization of net loss included in net periodic pension cost | 1 | 0.9 | 2.1 | 2.3 |
Foreign currency translation adjustment | 0.6 | (0.1) | 0.7 | |
Total Other Comprehensive Income | 0.8 | 1.3 | 2.1 | 2.2 |
Comprehensive Income | $ 18.8 | $ 11.2 | $ 38.2 | $ 37.1 |
Basic Earnings Per-Share: | ||||
Basic Earnings Per-Share (in dollars per share) | $ 0.42 | $ 0.23 | $ 0.83 | $ 0.80 |
Diluted Earnings Per-Share: | ||||
Diluted Earnings Per-Share (in dollars per share) | $ 0.42 | $ 0.23 | $ 0.83 | $ 0.79 |
Weighted Average Number of Shares Outstanding: | ||||
Basic (in shares) | 43.1 | 43.5 | 43.3 | 43.4 |
Diluted (in shares) | 43.4 | 44 | 43.7 | 43.9 |
Dividends | ||||
Cash Dividends Per-Share | $ 0.18 | $ 0.17 | $ 0.36 | $ 0.34 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Jun. 30, 2016 | Dec. 31, 2015 |
Current Assets: | ||
Cash and cash equivalents | $ 19.2 | $ 25.5 |
Accounts receivable, net | 206.4 | 214.3 |
Prepaid expenses and other assets | 28.2 | 38.1 |
Total current assets | 253.8 | 277.9 |
Long-term Assets: | ||
Investment in related party Terminal Joint Venture | 72.2 | 66.4 |
Property and equipment, net | 873.3 | 860.3 |
Goodwill | 245.1 | 241.6 |
Intangible assets, net | 135.4 | 139.1 |
Deferred dry-docking costs | 79.3 | 57.6 |
Other long-term assets | 29.1 | 26.9 |
Total assets | 1,688.2 | 1,669.8 |
Current Liabilities: | ||
Current portion of debt | 21.8 | 22 |
Accounts payable | 178.3 | 164.9 |
Payroll and vacation benefits | 22.3 | 23.1 |
Uninsured liabilities | 21.9 | 27.1 |
Accrued and other liabilities | 45.4 | 60.5 |
Total current liabilities | 289.7 | 297.6 |
Long-term Liabilities: | ||
Long-term debt | 441 | 407.9 |
Deferred income taxes | 317.5 | 310.5 |
Employee benefit plans | 107.2 | 109.3 |
Uninsured and other liabilities | 37.5 | 37.7 |
Multi-employer withdrawal liabilities | 60.9 | 56.2 |
Total long-term liabilities | 964.1 | 921.6 |
Commitments and Contingencies (Note 2) | ||
Shareholders' Equity: | ||
Capital stock | 32.2 | 32.6 |
Additional paid in capital | 283.5 | 287.9 |
Accumulated other comprehensive loss | (44.8) | (46.9) |
Retained earnings | 163.5 | 177 |
Total shareholders' equity | 434.4 | 450.6 |
Total liabilities and shareholders' equity | $ 1,688.2 | $ 1,669.8 |
Condensed Consolidated Stateme4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Cash Flows From Operating Activities: | ||
Net income | $ 36.1 | $ 34.9 |
Reconciling adjustments: | ||
Depreciation and amortization | 47.6 | 35.6 |
Deferred income taxes | 7.4 | 20.7 |
Share-based compensation expense | 6.2 | 7.6 |
Equity in income of related party Terminal Joint Venture | (5.6) | (8.6) |
Distributions from Terminal Joint Venture | 3.5 | |
Other | 1.1 | 3 |
Changes in assets and liabilities: | ||
Accounts receivable | 7.9 | 5.8 |
Deferred dry-docking payments | (28.5) | (12.3) |
Deferred dry-docking amortization | 17.2 | 11.1 |
Prepaid expenses and other assets | 7.3 | (12.6) |
Accounts payable and accrued liabilities | 11.2 | (1.9) |
Other liabilities | (29.1) | 16.1 |
Net cash provided by operating activities | 78.8 | 102.9 |
Cash Flows From Investing Activities: | ||
Capital expenditures | (65.8) | (12.2) |
Proceeds from disposal of property and equipment | 1.7 | 1.6 |
Cash deposits into Capital Construction Fund | (12.5) | (2.2) |
Withdrawals from Capital Construction Fund | 12.5 | 2.2 |
Payments for Horizon's common stock, net of cash acquired, and other acquisitions | (28.7) | |
Net cash used in investing activities | (64.1) | (39.3) |
Cash Flows From Financing Activities: | ||
Excess tax benefit from stock-based compensation | 0.1 | |
Repayments of debt and capital leases | (11.1) | (33.4) |
Proceeds from revolving credit facility | 159 | 175 |
Repayments of revolving credit facility | (115) | |
Payments of Horizon debt and redemption of warrants | (467.5) | |
Proceeds from issuance of capital stock | 0.4 | 2.5 |
Tax withholding related to net share settlements of restricted stock units | (6.3) | (2.9) |
Dividends paid | (15.8) | (14.9) |
Payments for shares repurchased | (32.3) | |
Net cash used in financing activities | (21) | (341.2) |
Net Decrease in Cash and Cash Equivalents | (6.3) | (277.6) |
Cash and cash equivalents, beginning of the period | 25.5 | 293.4 |
Cash and cash equivalents, end of the period | 19.2 | 15.8 |
Supplemental Cash Flow Information: | ||
Interest paid | 11.6 | 8.6 |
Income tax paid | 5.4 | 27 |
Non-cash Information: | ||
Capital expenditures included in accounts payable and accrued liabilities | 4.9 | 2.9 |
Accrued dividend | $ 8.2 | $ 7.9 |
DESCRIPTION OF THE BUSINESS
DESCRIPTION OF THE BUSINESS | 6 Months Ended |
Jun. 30, 2016 | |
DESCRIPTION OF THE BUSINESS | |
DESCRIPTION OF THE BUSINESS | 1. DESCRIPTION OF THE BUSINESS Matson, Inc., a holding company incorporated in January 2012 in the State of Hawaii, and its subsidiaries (“Matson” or the “Company”), is a leading provider of ocean transportation and logistics services. The Company consists of two segments, Ocean Transportation and Logistics: Ocean Transportation: Matson’s Ocean Transportation business is conducted through Matson Navigation Company, Inc. (“MatNav”), a wholly-owned subsidiary of Matson, Inc. Founded in 1882, MatNav is an asset-based business that provides a vital lifeline of ocean freight transportation services to the domestic offshore economies of Hawaii, Alaska, and Guam, and to other island economies including Micronesia and various islands in the South Pacific. MatNav also operates a premium, expedited service from China to Long Beach, California. In addition, subsidiaries of MatNav provide container stevedoring, container equipment maintenance and other terminal services for MatNav and other ocean carriers on the Hawaiian islands of Oahu, Hawaii, Maui and Kauai, and in the Alaska locations of Anchorage, Kodiak, Dutch Harbor and Akutan. The Company's fleet of 22 owned vessels includes containerships, combination container and roll-on/roll-off ships and custom-designed barges. The Company has a 35 percent ownership interest in SSA Terminals, LLC (“SSAT”), a joint venture between Matson Ventures, Inc., a wholly-owned subsidiary of MatNav, and SSA Ventures, Inc., a subsidiary of Carrix, Inc. SSAT provides terminal and stevedoring services to various carriers at six terminal facilities on the West Coast of the United States of America (“U.S.”), including to MatNav at several of those facilities. Matson records its share of income or loss in the joint venture in operating costs in the Condensed Consolidated Statements of Income and Comprehensive Income, and within the Ocean Transportation segment due to the nature of SSAT’s operations. Logistics: The Company’s logistics business is conducted through Matson Logistics, Inc. (“Matson Logistics”), a wholly-owned subsidiary of MatNav. Established in 1987, Matson Logistics is an asset-light business that provides multimodal transportation services, including domestic and international rail intermodal service (“Intermodal”); long-haul and regional highway brokerage, specialized hauling, flat-bed and project services, less-than-truckload services, and expedited freight services (collectively "Highway"); supply chain management, and warehousing and distribution services. |
GENERAL AND SIGNIFICANT ACCOUNT
GENERAL AND SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2016 | |
GENERAL AND SIGNIFICANT ACCOUNTING POLICIES | |
GENERAL AND SIGNIFICANT ACCOUNTING POLICIES | 2. GENERAL AND SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation: The Condensed Consolidated Financial Statements are unaudited. Due to the nature of the Company’s operations and the Company’s acquisition of Horizon Lines, Inc. (“Horizon”) on May 29, 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. The Condensed Consolidated Statements of Income and Comprehensive Income include the operations of Horizon from May 29, 2015. Fiscal Period: The period end for Matson, Inc. covered by this report is June 30, 2016. The period end for MatNav and its subsidiaries covered by this report occurred on the last Friday in June, or June 24, 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 $1,165.6 million and $1,128.6 million at June 30, 2016 and December 31, 2015, respectively. Goodwill: Changes in the Company’s goodwill for the three and six months ended June 30, 2016 and 2015 consist of the following (in millions): Goodwill Ocean Transportation Logistics Total Balance at December 31, 2015 $ $ $ Additions — — — Balance at March 31, 2016 Additions — Balance at June 30, 2016 $ $ $ Goodwill Ocean Transportation Logistics Total Balance at December 31, 2014 $ $ $ Additions — — — Balance at March 31, 2015 Additions — Balance at June 30, 2015 $ $ $ Ocean Transportation goodwill additions for the three and six months ended June 30, 2016 and 2015 are related to the Horizon Acquisition (see Note 3, Business Combinations). Intangible Assets, Net: Intangible assets are recorded net of accumulated amortization of $16.0 million and $12.3 million at June 30, 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 June 30, 2016 and December 31, 2015, the Company had nominal amounts 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 June 30, 2016, the Company did not make any cash deposits into the CCF. During the six months ended June 30, 2016, the Company made cash deposits of $12.5 million into the CCF. Additionally, $12.5 million of qualified cash withdrawals were made from the CCF during the three and six months ended June 30, 2016. As of June 30, 2016 and December 31, 2015, $164.8 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. Accumulated Other Comprehensive Loss: Changes in accumulated other comprehensive loss by component, net of tax, for the three and six months ended June 30, 2016 and 2015 are as follows (in millions): Accumulated Non- Foreign Other Post Qualified Currency Interest Comprehensive Pensions Retirement Plans Transaction Hedge Income (Loss) Balance at December 31, 2015 $ $ $ $ $ $ Net gain in prior service costs — — — — Amortization of prior service cost — — — — Amortization of net loss — — Foreign currency translation adjustment — — — — Balance at March 31, 2016 Amortization of prior service cost — — — Amortization of net loss — — — Balance at June 30, 2016 $ $ $ $ $ $ Accumulated Non- Foreign Other Post Qualified Currency Interest Comprehensive Pensions Retirement Plans Transaction Hedge Income (Loss) Balance at December 31, 2014 $ $ $ $ $ $ Net loss in prior service costs — — — — Amortization of prior service cost — — — — Amortization of net loss — — — Foreign currency translation adjustment — — — — Balance at March 31, 2015 Amortization of prior service cost — — Amortization of net loss — — Foreign currency translation adjustment — — — — Balance at June 30, 2015 $ $ $ $ $ $ New Accounting Pronouncements: Leases: In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “ Leases (Topic 842) ” (“ASU 2016-02”), which requires lessees to record most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. ASU 2016-02 states that a lessee would recognize a lease liability for the obligation to make lease payments, and a right-of-use asset for the underlying leased asset for the period of the lease term. The new standard is effective for interim and annual periods beginning after December 15, 2018 and early adoption is permitted. The Company is in the process of evaluating this guidance. Share-Based Awards: In March 2016, the FASB issued ASU 2016-09, “ Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. ” The amendments are effective for public companies for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. Early adoption is permitted. The Company is in the process of evaluating this guidance. |
BUSINESS COMBINATION
BUSINESS COMBINATION | 6 Months Ended |
Jun. 30, 2016 | |
BUSINESS COMBINATION | |
BUSINESS COMBINATION | 3. BUSINESS COMBINATION Horizon Acquisition: On May 29, 2015 (the “Effective Date”), Matson completed its acquisition of Horizon whereby MatNav acquired Horizon’s Alaska operations and assumed all of Horizon’s non-Hawaii assets and liabilities (the “Horizon Acquisition”). Immediately before the completion of the Horizon Acquisition, Horizon sold certain of its subsidiaries to the Pasha Group (the “Pasha Transaction”) that: (i) conducted Horizon’s Hawaii operations (including owning the assets used to conduct such Hawaii operations and being responsible for the liabilities related thereto), and (ii) employed the Horizon employees who conducted its Hawaii operations. Horizon also completed the termination of its Puerto Rico operations during the first quarter of 2015. The Alaska operations are recorded within the Ocean Transportation segment of the Company. 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 $ As of June 30, 2016, the Company has finalized the purchase accounting for the Horizon Acquisition. Horizon’s assets and liabilities acquired pursuant to the Horizon Acquisition were recorded based on the fair value estimates as of the Effective Date, with the remaining unallocated purchase price recorded as goodwill. The following table summarizes the fair values assigned to Horizon’s assets acquired and liabilities assumed as a result of the Horizon Acquisition as of June 30, 2016: Purchase Price Allocation (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 liability Capital lease obligations Horizon’s debt and warrants Total identifiable assets less liabilities Total cash paid for common shares Goodwill $ The amounts above include $2.0 million of purchase price adjustments recorded to the preliminary purchase price allocation initially reported in the Company’s interim Condensed Consolidated Financial Statements for the three and six months ended June 30, 2015. Purchase price adjustments relate primarily to the receipt of additional information regarding the fair value of certain assets acquired and liabilities assumed. These adjustments include a $4.9 million adjustment to increase the Puerto Rico multi-employer withdrawal liability, offset by a $0.7 million adjustment to increase deferred tax assets and a $0.7 million adjustment to decrease accruals and other current liabilities, in the three and six months ended June 30, 2016 , and a corresponding increase in goodwill of $3.5 million as a result of the Company receiving the final calculation of the required payments from the Trustees of the Puerto Rico Pension Fund on May 27, 2016. The final Puerto Rico multi-employer withdrawal liability was determined to be approximately $102.0 million, payable in 98 quarterly installments of $1,036,647 , and a remainder payment. Based upon the Company’s incremental borrowing rate of 3.87 percent, the Company determined the final fair value of the multi-employer withdrawal payments to be $65.5 million at May 29, 2015 compared to the preliminary allocation of $60.6 million. The Company also recorded a $1.1 million adjustment to increase interest expense in the Consolidated Statements of Income and Comprehensive Income, with a corresponding increase to multi-employer withdrawal liability in the three and six months ended June 30, 2016, as a result of these purchase accounting changes and the accretion of the fair value of the multi-employer withdrawal liability. The Company's Consolidated Statements of Income and Comprehensive Income for the three and six months ended June 30, 2016 include revenue of $63.5 million and $134.2 million, and operating income of $3.4 million and $10.4 million, respectively, from Horizon’s operations. One-time acquisition related costs incurred post December 31, 2015 were not material. Pro Forma Financial Information (Unaudited): The following unaudited pro forma financial information presents the combined operating results of the Company, and those of Horizon excluding its Hawaii operations, 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) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, (in millions, except per-share amount) 2015 2015 Pro Forma Combined: Operating revenue $ $ Net income $ $ Basic Earnings Per-Share: $ $ Diluted Earnings Per-Share: $ $ Weighted-Average Number of Shares Outstanding: Basic Diluted |
DEBT
DEBT | 6 Months Ended |
Jun. 30, 2016 | |
DEBT | |
DEBT | 4. DEBT At June 30, 2016 and December 31, 2015, the Company’s debt consisted of the following (in millions): June 30, 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 June 30, 2016, the Company had $345.1 million of availability under the revolving credit facility. The interest rate on borrowings under the revolving credit facility approximated 1.84 percent during the three months ended June 30, 2016. |
PENSION AND OTHER POST-RETIREME
PENSION AND OTHER POST-RETIREMENT PLANS | 6 Months Ended |
Jun. 30, 2016 | |
PENSION AND OTHER POST-RETIREMENT PLANS | |
PENSION AND OTHER POST-RETIREMENT PLANS | 5. PENSION AND OTHER POST-RETIREMENT PLANS The Company sponsors qualified defined benefit pension and other post-retirement plans (collectively, the “Plans”). The following table provides the components of net periodic benefit cost (benefit) for the Plans for the six months ended June 30, 2016 and 2015 (in millions): Pension Benefits Other Post-retirement Benefits June 30, June 30, Components of Net Periodic Benefit Cost: 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 six months ended June 30, 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 | 6 Months Ended |
Jun. 30, 2016 | |
SHARE-BASED COMPENSATION | |
SHARE-BASED COMPENSATION | 6. SHARE-BASED COMPENSATION During the three months ended June 30, 2016, the Company granted approximately 19,700 of time-based shares to certain of its employees at a $38.11 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 $3.4 million and $4.8 million for the three months ended June 30, 2016 and 2015, respectively, and $6.2 million and $7.6 million for the six months ended June 30, 2016 and 2015, respectively. Total unrecognized compensation cost related to unvested share-based compensation arrangements was $15.7 million at June 30, 2016, and is expected to be recognized over a weighted-average period of 2.1 years. Total unrecognized compensation cost may be adjusted for any unearned performance shares or forfeited shares |
EARNINGS PER-SHARE
EARNINGS PER-SHARE | 6 Months Ended |
Jun. 30, 2016 | |
EARNINGS PER-SHARE | |
EARNINGS PER-SHARE | 7. EARNINGS PER-SHARE The number of shares used to compute basic and diluted earnings per-share for the three and six months ended June 30, 2016 and 2015, is as follows (in millions, except per-share amounts): Three Months Ended June 30, 2016 Six Months Ended June 30, 2016 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: $ $ $ $ Three Months Ended June 30, 2015 Six Months Ended June 30, 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. The number of such shares excluded was nominal. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jun. 30, 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 June 30, 2016 and December 31, 2015 are as follows (in millions): Quoted Prices in Significant Significant Total Active Markets Observable Unobservable Carrying Value Total (Level 1) Inputs (Level 2) Inputs (Level 3) June 30, 2016 Fair Value Measurements at June 30, 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 | 6 Months Ended |
Jun. 30, 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 and six months ended June 30, 2016 and 2015 were as follows (in millions): Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Operating Revenue: Ocean Transportation $ $ $ $ Logistics Total Operating Revenue $ $ $ $ Operating Income: Ocean Transportation $ $ $ $ Logistics Total Operating Income Interest expense, net Income before Income Taxes Income taxes Net Income $ $ $ $ |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2016 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 10. SUBSEQUENT EVENTS Span Alaska Acquisition: On July 18, 2016, Matson Logistics entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with Span Holdings, LLC (“Holdings”). As a result, Matson Logistics will acquire 100 percent of the membership interests of Span Intermediate, LLC (the “Span Alaska”), with Span Alaska becoming a wholly-owned subsidiary of Matson Logistics (the “Transaction”). On July 29, 2016, Matson received notice of early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. Matson expects the Transaction to close in early August after satisfaction of other customary closing conditions. The total consideration for the Transaction is $197.6 million (before transaction costs) on a debt free, cash free basis, and is subject to working capital and other closing adjustments (the “Purchase Price”). Holdings will pay all debt and its transaction expenses from the proceeds of the Purchase Price. Matson expects to fund the Transaction at closing from available borrowings under its $400 million revolving credit facility. Notes Financing: On July 18, 2016, Matson entered into a commitment letter under which it expects to issue $200 million of 15 -year senior unsecured notes (the “Notes”). Proceeds of the Notes are expected to be used to pay down the Company’s revolving credit facility and for general corporate purposes. The Notes are expected to have a weighted-average life of approximately 8.5 years and will bear interest at a rate of 3.14 percent, payable semi-annually. The Notes are expected to be issued in September 2016, subject to satisfying customary closing conditions. The Notes are expected to have financial and other covenants that are substantially the same as the covenants in the Company’s existing outstanding senior unsecured notes. |
GENERAL AND SIGNIFICANT ACCOU15
GENERAL AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 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”) on May 29, 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. The Condensed Consolidated Statements of Income and Comprehensive Income include the operations of Horizon from May 29, 2015. |
Fiscal Period | Fiscal Period: The period end for Matson, Inc. covered by this report is June 30, 2016. The period end for MatNav and its subsidiaries covered by this report occurred on the last Friday in June, or June 24, 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 $1,165.6 million and $1,128.6 million at June 30, 2016 and December 31, 2015, respectively. |
Goodwill | Goodwill: Changes in the Company’s goodwill for the three and six months ended June 30, 2016 and 2015 consist of the following (in millions): Goodwill Ocean Transportation Logistics Total Balance at December 31, 2015 $ $ $ Additions — — — Balance at March 31, 2016 Additions — Balance at June 30, 2016 $ $ $ Goodwill Ocean Transportation Logistics Total Balance at December 31, 2014 $ $ $ Additions — — — Balance at March 31, 2015 Additions — Balance at June 30, 2015 $ $ $ Ocean Transportation goodwill additions for the three and six months ended June 30, 2016 and 2015 are related to the Horizon Acquisition (see Note 3, Business Combinations). |
Intangible Assets, Net | Intangible Assets, Net: Intangible assets are recorded net of accumulated amortization of $16.0 million and $12.3 million at June 30, 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 June 30, 2016 and December 31, 2015, the Company had nominal amounts 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 June 30, 2016, the Company did not make any cash deposits into the CCF. During the six months ended June 30, 2016, the Company made cash deposits of $12.5 million into the CCF. Additionally, $12.5 million of qualified cash withdrawals were made from the CCF during the three and six months ended June 30, 2016. As of June 30, 2016 and December 31, 2015, $164.8 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. |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss: Changes in accumulated other comprehensive loss by component, net of tax, for the three and six months ended June 30, 2016 and 2015 are as follows (in millions): Accumulated Non- Foreign Other Post Qualified Currency Interest Comprehensive Pensions Retirement Plans Transaction Hedge Income (Loss) Balance at December 31, 2015 $ $ $ $ $ $ Net gain in prior service costs — — — — Amortization of prior service cost — — — — Amortization of net loss — — Foreign currency translation adjustment — — — — Balance at March 31, 2016 Amortization of prior service cost — — — Amortization of net loss — — — Balance at June 30, 2016 $ $ $ $ $ $ Accumulated Non- Foreign Other Post Qualified Currency Interest Comprehensive Pensions Retirement Plans Transaction Hedge Income (Loss) Balance at December 31, 2014 $ $ $ $ $ $ Net loss in prior service costs — — — — Amortization of prior service cost — — — — Amortization of net loss — — — Foreign currency translation adjustment — — — — Balance at March 31, 2015 Amortization of prior service cost — — Amortization of net loss — — Foreign currency translation adjustment — — — — Balance at June 30, 2015 $ $ $ $ $ $ |
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-of-use asset for the underlying leased asset for the period of the lease term. The new standard is effective for interim and annual periods beginning after December 15, 2018 and early adoption is permitted. The Company is in the process of evaluating this guidance. |
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. |
GENERAL AND SIGNIFICANT ACCOU16
GENERAL AND SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
GENERAL AND SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of goodwill | Changes in the Company’s goodwill for the three and six months ended June 30, 2016 and 2015 consist of the following (in millions): Goodwill Ocean Transportation Logistics Total Balance at December 31, 2015 $ $ $ Additions — — — Balance at March 31, 2016 Additions — Balance at June 30, 2016 $ $ $ Goodwill Ocean Transportation Logistics Total Balance at December 31, 2014 $ $ $ Additions — — — Balance at March 31, 2015 Additions — Balance at June 30, 2015 $ $ $ |
Schedule of changes in accumulated other comprehensive income (loss) by component, net of tax | Changes in accumulated other comprehensive loss by component, net of tax, for the three and six months ended June 30, 2016 and 2015 are as follows (in millions): Accumulated Non- Foreign Other Post Qualified Currency Interest Comprehensive Pensions Retirement Plans Transaction Hedge Income (Loss) Balance at December 31, 2015 $ $ $ $ $ $ Net gain in prior service costs — — — — Amortization of prior service cost — — — — Amortization of net loss — — Foreign currency translation adjustment — — — — Balance at March 31, 2016 Amortization of prior service cost — — — Amortization of net loss — — — Balance at June 30, 2016 $ $ $ $ $ $ Accumulated Non- Foreign Other Post Qualified Currency Interest Comprehensive Pensions Retirement Plans Transaction Hedge Income (Loss) Balance at December 31, 2014 $ $ $ $ $ $ Net loss in prior service costs — — — — Amortization of prior service cost — — — — Amortization of net loss — — — Foreign currency translation adjustment — — — — Balance at March 31, 2015 Amortization of prior service cost — — Amortization of net loss — — Foreign currency translation adjustment — — — — Balance at June 30, 2015 $ $ $ $ $ $ |
BUSINESS COMBINATION (Tables)
BUSINESS COMBINATION (Tables) | 6 Months Ended |
Jun. 30, 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 June 30, 2016 | Purchase Price Allocation (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 liability 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) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, (in millions, except per-share amount) 2015 2015 Pro Forma Combined: Operating revenue $ $ Net income $ $ Basic Earnings Per-Share: $ $ Diluted Earnings Per-Share: $ $ Weighted-Average Number of Shares Outstanding: Basic Diluted |
DEBT (Tables)
DEBT (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
DEBT | |
Schedule of debt | At June 30, 2016 and December 31, 2015, the Company’s debt consisted of the following (in millions): June 30, 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 OTHER POST-RETIRE19
PENSION AND OTHER POST-RETIREMENT PLANS (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
PENSION AND OTHER 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 six months ended June 30, 2016 and 2015 (in millions): Pension Benefits Other Post-retirement Benefits June 30, June 30, Components of Net Periodic Benefit Cost: 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) | 6 Months Ended |
Jun. 30, 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 and six months ended June 30, 2016 and 2015, is as follows (in millions, except per-share amounts): Three Months Ended June 30, 2016 Six Months Ended June 30, 2016 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: $ $ $ $ Three Months Ended June 30, 2015 Six Months Ended June 30, 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) | 6 Months Ended |
Jun. 30, 2016 | |
FAIR VALUE MEASUREMENTS | |
Schedule of fair value measurement | The carrying value and fair value of the Company’s financial instruments as of June 30, 2016 and December 31, 2015 are as follows (in millions): Quoted Prices in Significant Significant Total Active Markets Observable Unobservable Carrying Value Total (Level 1) Inputs (Level 2) Inputs (Level 3) June 30, 2016 Fair Value Measurements at June 30, 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) | 6 Months Ended |
Jun. 30, 2016 | |
REPORTABLE SEGMENTS | |
Schedule of reportable segment information | Reportable segment results for the three and six months ended June 30, 2016 and 2015 were as follows (in millions): Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Operating Revenue: Ocean Transportation $ $ $ $ Logistics Total Operating 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) | 6 Months Ended |
Jun. 30, 2016segmentfacilityitem | |
DESCRIPTION OF THE BUSINESS | |
Number of reportable segments | segment | 2 |
Number of owned vessels in fleet | item | 22 |
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 ACCOU24
GENERAL AND SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2016 | Dec. 31, 2015 | |
Accumulated depreciation of property and equipment | $ 1,165.6 | $ 1,165.6 | $ 1,128.6 |
Long-term Assets | Eligible Accounts Receivable Assigned to CCF | |||
CCF Balance | 164.8 | 164.8 | $ 176.6 |
Long-term Assets | CCF Cash Deposits and Withdrawals | |||
Cash Deposits Into CCF | 12.5 | ||
Qualified withdrawals from CCF | $ 12.5 | $ 12.5 |
GENERAL AND SIGNIFICANT ACCOU25
GENERAL AND SIGNIFICANT ACCOUNTING POLICIES - GOODWILL AND INTANGIBLE ASSETS (Details) - USD ($) $ in Millions | 3 Months Ended | ||||
Jun. 30, 2016 | Mar. 31, 2016 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2015 | |
Changes in the Company's goodwill | |||||
Balance at the beginning of the period | $ 241.6 | $ 241.6 | $ 27.4 | $ 27.4 | |
Additions | 3.5 | 214.2 | |||
Balance at the end of the period | 245.1 | 241.6 | 241.6 | 27.4 | |
Intangible Assets, Net | |||||
Accumulated amortization of intangible assets | 16 | $ 12.3 | |||
Ocean Transportation | |||||
Changes in the Company's goodwill | |||||
Balance at the beginning of the period | 215 | 215 | 0.8 | 0.8 | |
Additions | 3.5 | 214.2 | |||
Balance at the end of the period | 218.5 | 215 | 215 | 0.8 | |
Logistics | |||||
Changes in the Company's goodwill | |||||
Balance at the beginning of the period | 26.6 | 26.6 | 26.6 | 26.6 | |
Additions | |||||
Balance at the end of the period | $ 26.6 | $ 26.6 | $ 26.6 | $ 26.6 |
GENERAL AND SIGNIFICANT ACCOU26
GENERAL AND SIGNIFICANT ACCOUNTING POLICIES - COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2016 | Mar. 31, 2016 | Jun. 30, 2015 | Mar. 31, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Changes in accumulated other comprehensive loss by component, net of taxes | ||||||
Balance | $ 450.6 | $ 450.6 | ||||
Net gain (loss) in prior service cost | 0.7 | $ (0.2) | ||||
Amortization of prior service cost | $ (0.2) | $ (0.2) | (0.6) | (0.6) | ||
Amortization of net loss | 1 | 0.9 | 2.1 | 2.3 | ||
Foreign currency translation adjustment | 0.6 | (0.1) | 0.7 | |||
Balance | 434.4 | 434.4 | ||||
Pensions | ||||||
Changes in accumulated other comprehensive loss by component, net of taxes | ||||||
Balance | (41.3) | (41.7) | (44.6) | $ (45) | (41.7) | (45) |
Net gain (loss) in prior service cost | (0.2) | |||||
Amortization of prior service cost | (0.3) | (0.4) | (0.2) | (0.4) | ||
Amortization of net loss | 0.8 | 0.8 | 0.9 | 1 | ||
Balance | (40.8) | (41.3) | (43.9) | (44.6) | (40.8) | (43.9) |
Post Retirement | ||||||
Changes in accumulated other comprehensive loss by component, net of taxes | ||||||
Balance | (3.8) | (4.7) | (6.8) | (7.2) | (4.7) | (7.2) |
Net gain (loss) in prior service cost | 0.7 | |||||
Amortization of prior service cost | 0.1 | |||||
Amortization of net loss | 0.2 | 0.2 | 0.2 | 0.4 | ||
Balance | (3.6) | (3.8) | (6.5) | (6.8) | (3.6) | (6.5) |
Non-Qualified Plans | ||||||
Changes in accumulated other comprehensive loss by component, net of taxes | ||||||
Balance | (0.8) | (0.9) | (0.7) | (0.7) | (0.9) | (0.7) |
Amortization of prior service cost | 0.1 | (0.1) | ||||
Amortization of net loss | 0.1 | (0.2) | ||||
Balance | (0.7) | (0.8) | (1) | (0.7) | (0.7) | (1) |
Foreign Currency Transaction | ||||||
Changes in accumulated other comprehensive loss by component, net of taxes | ||||||
Balance | 0.9 | 1 | 0.4 | 0.3 | 1 | 0.3 |
Foreign currency translation adjustment | (0.1) | 0.6 | 0.1 | |||
Balance | 0.9 | 0.9 | 1 | 0.4 | 0.9 | 1 |
Interest Hedge | ||||||
Changes in accumulated other comprehensive loss by component, net of taxes | ||||||
Balance | (0.6) | (0.6) | (0.7) | (0.7) | (0.6) | (0.7) |
Balance | (0.6) | (0.6) | (0.7) | (0.7) | (0.6) | (0.7) |
Accumulated Other Comprehensive Income (Loss) | ||||||
Changes in accumulated other comprehensive loss by component, net of taxes | ||||||
Balance | (45.6) | (46.9) | (52.4) | (53.3) | (46.9) | (53.3) |
Net gain (loss) in prior service cost | 0.7 | (0.2) | ||||
Amortization of prior service cost | (0.2) | (0.4) | (0.2) | (0.4) | ||
Amortization of net loss | 1 | 1.1 | 0.9 | 1.4 | ||
Foreign currency translation adjustment | (0.1) | 0.6 | 0.1 | |||
Balance | $ (44.8) | $ (45.6) | $ (51.1) | $ (52.4) | $ (44.8) | $ (51.1) |
BUSINESS COMBINATION - CONSIDER
BUSINESS COMBINATION - CONSIDERATION PAID (Details) | May 29, 2015USD ($)$ / shares | Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($)payment | Jun. 30, 2015USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2014USD ($) |
Assets acquired and liabilities assumed | |||||||||
Multi-employer withdrawal liabilities | $ (60,900,000) | $ (60,900,000) | $ (56,200,000) | ||||||
Goodwill | 245,100,000 | $ 241,600,000 | 245,100,000 | $ 241,600,000 | $ 241,600,000 | $ 241,600,000 | $ 27,400,000 | $ 27,400,000 | |
Interest Expense | 6,500,000 | 4,600,000 | 11,400,000 | 8,900,000 | |||||
Horizon | |||||||||
Business acquisition | |||||||||
Business Combination, Ownership Percentage | 100.00% | ||||||||
Cash price (in dollars per share) | $ / shares | $ 0.72 | ||||||||
Assets acquired and liabilities assumed | |||||||||
Cash and cash equivalents | 800,000 | 800,000 | |||||||
Accounts receivable | 31,700,000 | 31,700,000 | |||||||
Other current assets | 7,200,000 | 7,200,000 | |||||||
Deferred tax assets, net | 46,300,000 | 46,300,000 | |||||||
Property and equipment | 170,400,000 | 170,400,000 | |||||||
Intangibles - Customer relationships | 140,000,000 | 140,000,000 | |||||||
Other long-term assets | 4,100,000 | 4,100,000 | |||||||
Accounts payable | (22,800,000) | (22,800,000) | |||||||
Accruals and other current liabilities | (31,400,000) | (31,400,000) | |||||||
Multi-employer withdrawal liabilities | $ (60,600,000) | (65,500,000) | (65,500,000) | ||||||
Capital lease obligations | (1,600,000) | (1,600,000) | |||||||
Horizon's debt and warrants | (467,500,000) | (467,500,000) | |||||||
Total identifiable assets less liabilities | (188,300,000) | (188,300,000) | |||||||
Total cash paid for common shares | (29,400,000) | ||||||||
Goodwill | 217,700,000 | 217,700,000 | |||||||
Estimated future benefit payments | |||||||||
Mass withdrawal liability undiscounted payments | 102,000,000 | $ 102,000,000 | |||||||
Benefit payment period (in quarters) | payment | 98 | ||||||||
Quarterly payments to ILA-PRSSA over an estimated period | 1,036,647 | $ 1,036,647 | |||||||
Incremental borrowing rate | 3.87% | ||||||||
Horizon | As previously Reported | |||||||||
Total cash consideration | |||||||||
Common shares | 29,400,000 | ||||||||
Warrants | 37,100,000 | ||||||||
Horizon's debt (including accrued interest and breakage fees) | 428,900,000 | ||||||||
Total | $ 495,400,000 | ||||||||
Horizon | Adjustments | |||||||||
Assets acquired and liabilities assumed | |||||||||
Deferred tax assets, net | 700,000 | $ 700,000 | |||||||
Accruals and other current liabilities | 700,000 | 700,000 | |||||||
Multi-employer withdrawal liabilities | (4,900,000) | (4,900,000) | |||||||
Total identifiable assets less liabilities | $ 2,000,000 | $ 2,000,000 | |||||||
Goodwill | 3,500,000 | 3,500,000 | |||||||
Interest Expense | $ 1,100,000 | $ 1,100,000 |
BUSINESS COMBINATION - PROFORMA
BUSINESS COMBINATION - PROFORMA (Details) - Horizon - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Condensed Consolidated Statements of Income and Comprehensive Income | ||||
Revenue | $ 63.5 | $ 134.2 | ||
Operating Income | $ 3.4 | $ 10.4 | ||
Pro-forma Combined | ||||
Operating revenue | $ 507.2 | $ 980.6 | ||
Net income | $ 7.6 | $ 25.1 | ||
Basic Earnings Per Share (in dollars per share) | $ 0.17 | $ 0.58 | ||
Diluted Earnings Per Share (in dollars per share) | $ 0.17 | $ 0.57 | ||
Weighted Average Number of Shares Outstanding: | ||||
Basic | 43.5 | 43.4 | ||
Diluted | 44 | 43.9 |
DEBT - SUMMARY (Details)
DEBT - SUMMARY (Details) - USD ($) $ in Millions | Jun. 30, 2016 | Dec. 31, 2015 |
Debt | ||
Capital leases | $ 2.3 | $ 3.1 |
Total Debt | 462.8 | 429.9 |
Less current portion | (21.8) | (22) |
Total Long-term Debt | 441 | 407.9 |
5.79%, payable through 2020 | ||
Debt | ||
Total Debt | $ 28 | $ 31.5 |
Interest rate (as a percent) | 5.79% | 5.79% |
3.66%, payable through 2023 | ||
Debt | ||
Total Debt | $ 63.8 | $ 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 | $ 44 |
DEBT - DESCRIPTION (Details)
DEBT - DESCRIPTION (Details) - Revolving Credit Facility $ in Millions | 3 Months Ended |
Jun. 30, 2016USD ($) | |
Debt | |
Funds available under the revolving credit facility | $ 345.1 |
Interest rate during period (as a percent) | 1.84% |
PENSION AND OTHER POST-RETIRE31
PENSION AND OTHER POST-RETIREMENT PLANS - COMPONENTS OF NET PERIODIC BENEFIT COST (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Pensions | ||
Components of Net Periodic Benefit Costs: | ||
Service cost | $ 2 | $ 1.7 |
Interest cost | 4.8 | 4.8 |
Expected return on plan assets | (6.7) | (6.9) |
Amortization of net loss | 2.6 | 3.2 |
Amortization of prior service cost | (1.1) | (1.2) |
Net periodic benefit cost | 1.6 | 1.6 |
Defined Benefit Pension Plan Contributions | ||
Employer contribution | 3.1 | |
Full year expected cash contributions to pension plan | 7.5 | |
Post Retirement | ||
Components of Net Periodic Benefit Costs: | ||
Service cost | 0.8 | 0.8 |
Interest cost | 1.4 | 1.3 |
Amortization of net loss | 0.6 | 1.2 |
Net periodic benefit cost | $ 2.8 | $ 3.3 |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details) - Time-based shares - Employee - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Share-based compensation | ||||
Shares granted | 19,700 | |||
Weighted average grant date fair value (in dollars per share) | $ 38.11 | |||
Total unrecognized compensation cost | $ 15.7 | $ 15.7 | ||
Unrecognized compensation cost over weighted-average period to be recognized | 2 years 1 month 6 days | |||
Selling, general and administrative expenses | ||||
Share-based compensation | ||||
Total stock-based compensation cost | $ 3.4 | $ 4.8 | $ 6.2 | $ 7.6 |
EARNINGS PER-SHARE (Details)
EARNINGS PER-SHARE (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Net Income | ||||
Net Income, Basic | $ 18 | $ 9.9 | $ 36.1 | $ 34.9 |
Net Income, Diluted | $ 18 | $ 9.9 | $ 36.1 | $ 34.9 |
Weighted Average Common Shares | ||||
Basic (in shares) | 43.1 | 43.5 | 43.3 | 43.4 |
Effect of Dilutive Securities (in shares) | 0.3 | 0.5 | 0.4 | 0.5 |
Diluted (in shares) | 43.4 | 44 | 43.7 | 43.9 |
Per Common Share Amount | ||||
Net income, Basic (in dollars per share) | $ 0.42 | $ 0.23 | $ 0.83 | $ 0.80 |
Effect of Dilutive Securities (in dollars per shares) | (0.01) | |||
Net income, Diluted (in dollars per share) | $ 0.42 | $ 0.23 | $ 0.83 | $ 0.79 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Millions | Jun. 30, 2016 | Dec. 31, 2015 |
Carrying value | ||
Fair value of financial instruments | ||
Cash and cash equivalents | $ 19.2 | $ 25.5 |
Accounts receivable, net | 206.4 | 214.3 |
Variable rate debt | 44 | |
Fixed rate debt | 418.8 | 429.9 |
Fair Value Measurement | ||
Fair value of financial instruments | ||
Cash and cash equivalents | 19.2 | 25.5 |
Accounts receivable, net | 206.4 | 214.3 |
Variable rate debt | 44 | |
Fixed rate debt | 443.5 | 443.8 |
Fair Value Measurement | Quoted Prices in Active Markets (Level 1) | ||
Fair value of financial instruments | ||
Cash and cash equivalents | 19.2 | 25.5 |
Fair Value Measurement | Significant Observable Inputs (Level 2) | ||
Fair value of financial instruments | ||
Accounts receivable, net | 206.4 | 214.3 |
Variable rate debt | 44 | |
Fixed rate debt | $ 443.5 | $ 443.8 |
REPORTABLE SEGMENTS (Details)
REPORTABLE SEGMENTS (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($)segment | Jun. 30, 2015USD ($) | |
Segment results | ||||
Number of segments | segment | 2 | |||
Operating Revenue | $ 467.7 | $ 447.6 | $ 921.9 | $ 845.8 |
Operating Income | 36.1 | 33.7 | 70.7 | 78.6 |
Interest expense | (6.5) | (4.6) | (11.4) | (8.9) |
Income before Income Taxes | 29.6 | 29.1 | 59.3 | 69.7 |
Income taxes | (11.6) | (19.2) | (23.2) | (34.8) |
Net Income | 18 | 9.9 | 36.1 | 34.9 |
Operating segments | ||||
Segment results | ||||
Operating Income | 36.1 | 33.7 | 70.7 | 78.6 |
Ocean Transportation | Operating segments | ||||
Segment results | ||||
Operating Revenue | 370.9 | 346.7 | 737 | 652.2 |
Operating Income | 33.9 | 31.4 | 66.9 | 75.3 |
Logistics | Operating segments | ||||
Segment results | ||||
Operating Revenue | 96.8 | 100.9 | 184.9 | 193.6 |
Operating Income | $ 2.2 | $ 2.3 | $ 3.8 | $ 3.3 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Subsequent event - Forecast - USD ($) $ in Millions | 1 Months Ended | 2 Months Ended |
Aug. 31, 2016 | Sep. 30, 2016 | |
Subsequent events | ||
Commitment letter to issue debt | $ 200 | |
Debt instrument term | 15 years | |
Weighted average life | 8 years 6 months | |
Interest rate (as a percent) | 3.14% | |
Span Holdings | ||
Subsequent events | ||
Business Combination, Ownership Percentage | 100.00% | |
Total consideration to acquire business before transaction costs | $ 197.6 | |
Span Holdings | Revolving Credit Facility | ||
Subsequent events | ||
Maximum borrowing capacity under revolving credit facility | $ 400 |