Matson (MATX) 10-Q 8 Nov 16 2016 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information	9 Months Ended
	Sep. 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	Sep. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	42,840,461
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q3

Condensed Consolidated Statemen

Condensed Consolidated Statements of Income and Comprehensive Income - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Operating Revenue:
Ocean Transportation	$ 398	$ 444.8	$ 1,135	$ 1,097
Logistics	102.4	99.5	287.3	293.1
Total Operating Revenue	500.4	544.3	1,422.3	1,390.1
Costs and Expenses:
Operating costs	411.4	424.8	1,177.7	1,107.5
Equity in income of related party Terminal Joint Venture	(3.6)	(4.5)	(9.2)	(13.1)
Selling, general and administrative	46.4	52.2	136.9	145.3
Total Costs and Expenses	454.2	472.5	1,305.4	1,239.7
Operating Income	46.2	71.8	116.9	150.4
Interest expense	(6)	(4.7)	(17.4)	(13.6)
Income before Income Taxes	40.2	67.1	99.5	136.8
Income tax expense	(15.2)	(25.6)	(38.4)	(60.4)
Net Income	25	41.5	61.1	76.4
Other Comprehensive Income (Loss), Net of Income Taxes:
Net Income	25	41.5	61.1	76.4
Other Comprehensive Income (Loss):
Net gain (loss) in prior service cost			0.7	(0.2)
Amortization of prior service cost included in net periodic pension cost	(0.3)	(0.4)	(0.9)	(1)
Amortization of net loss included in net periodic pension cost	0.9	1.1	3	3.4
Foreign currency translation and other adjustments	0.6	0.9	0.5	1.6
Total Other Comprehensive Income	1.2	1.6	3.3	3.8
Comprehensive Income	$ 26.2	$ 43.1	$ 64.4	$ 80.2
Basic Earnings Per-Share:
Basic Earnings Per-Share (in dollars per share)	$ 0.58	$ 0.95	$ 1.42	$ 1.76
Diluted Earnings Per-Share:
Diluted Earnings Per-Share (in dollars per share)	$ 0.58	$ 0.94	$ 1.40	$ 1.74
Weighted Average Number of Shares Outstanding:
Basic (in shares)	42.8	43.5	43.1	43.5
Diluted (in shares)	43.2	44	43.5	44
Dividends
Cash Dividends Per-Share	$ 0.19	$ 0.18	$ 0.55	$ 0.52

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Millions	Sep. 30, 2016	Dec. 31, 2015
Current Assets:
Cash and cash equivalents	$ 16.4	$ 25.5
Accounts receivable, net	225.6	214.3
Prepaid expenses and other assets	68.4	38.1
Total current assets	310.4	277.9
Long-term Assets:
Investment in related party Terminal Joint Venture	75.8	66.4
Property and equipment, net	908.1	860.3
Goodwill	324.1	241.6
Intangible assets, net	239.1	139.1
Capital Construction Fund - cash on deposit	110.9
Deferred dry-docking costs	76.6	57.6
Other long-term assets	28.1	26.9
Total assets	2,073.1	1,669.8
Current Liabilities:
Current portion of debt	26.3	22
Accounts payable	180.7	164.9
Payroll and vacation liabilities	23.9	23.1
Uninsured liabilities	20	27.1
Accrued and other liabilities	39.3	60.5
Total current liabilities	290.2	297.6
Long-term Liabilities:
Long-term debt	786.1	407.9
Deferred income taxes	335.2	310.5
Employee benefit plans	103.4	109.3
Uninsured and other liabilities	38.5	37.7
Multi-employer withdrawal liabilities	60.5	56.2
Total long-term liabilities	1,323.7	921.6
Commitments and Contingencies (Note 2)
Shareholders' Equity:
Capital stock	32.1	32.6
Additional paid in capital	286	287.9
Accumulated other comprehensive loss	(43.6)	(46.9)
Retained earnings	184.7	177
Total shareholders' equity	459.2	450.6
Total liabilities and shareholders' equity	$ 2,073.1	$ 1,669.8

Condensed Consolidated Stateme4

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash Flows From Operating Activities:
Net income	$ 61.1	$ 76.4
Reconciling adjustments:
Depreciation and amortization	71.8	59.1
Deferred income taxes	24.7	31.9
Share-based compensation expense	9.2	9.6
Equity in income of related party Terminal Joint Venture	(9.2)	(13.1)
Distributions from Terminal Joint Venture		8.8
Other	2.4	1.4
Changes in assets and liabilities:
Accounts receivable	(0.1)	(11.6)
Deferred dry-docking payments	(43.7)	(14)
Deferred dry-docking amortization	27.8	16.8
Prepaid expenses and other assets	(34.6)	(15.2)
Accounts payable and accrued liabilities	10.7	(2.1)
Other liabilities	(32.6)	11
Net cash provided by operating activities	87.5	159
Cash Flows From Investing Activities:
Capital expenditures	(67.3)	(30.3)
Capitalized vessel construction expenditures	(39.2)
Proceeds from disposal of property and equipment	2.2	4.7
Cash deposits into Capital Construction Fund	(123.4)	(77.9)
Withdrawals from Capital Construction Fund	12.5	93.7
Payments for membership interests in Span Alaska, net of cash acquired	(112.8)
Payments for Horizon’s common stock, net of cash acquired, and other acquisitions		(29)
Net cash used in investing activities	(328)	(38.8)
Cash Flows From Financing Activities:
Repayments of debt and capital leases	(13.7)	(13.4)
Proceeds from revolving credit facility	1,275	557
Repayments of revolving credit facility	(1,080)	(439)
Payments of financing costs		(0.9)
Proceeds from issuance of debt	200
Repayments of Span Alaska debt	(81.9)
Repayments of Horizon debt and redemption of warrants		(467.5)
Proceeds from issuance of capital stock	0.6	1.4
Tax withholding related to net share settlements of restricted stock units	(6.8)	(2.9)
Dividends paid	(24)	(22.8)
Payments for shares repurchased	(37.8)
Net cash provided by (used in) financing activities	231.4	(388.1)
Net Decrease in Cash and Cash Equivalents	(9.1)	(267.9)
Cash and cash equivalents, beginning of the period	25.5	293.4
Cash and cash equivalents, end of the period	16.4	25.5
Supplemental Cash Flow Information:
Interest paid, net of capitalized interest	15.7	13.2
Income tax paid	16.2	34.2
Non-cash Information:
Capital expenditures included in accounts payable and accrued liabilities	$ 12.6	6.1
Capital lease obligations		$ 1.7

DESCRIPTION OF THE BUSINESS

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

GENERAL AND SIGNIFICANT ACCOUNT

GENERAL AND SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Sep. 30, 2016
GENERAL AND SIGNIFICANT ACCOUNTING POLICIES
GENERAL AND SIGNIFICANT ACCOUNTING POLICIES	2. GENERAL AND SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation: The Condensed Consolidated Financial Statements are unaudited. The consolidated financial statements include the accounts of Matson, Inc. and all wholly-owned subsidiaries, after elimination of significant intercompany revenues, and costs and expenses. Significant investments in businesses, partnerships, and limited liability companies in which the Company does not have a controlling financial interest, but has the ability to exercise significant influence, are accounted for under the equity method. A controlling financial interest is one in which the Company has a majority voting interest or one in which the Company is the primary beneficiary of a variable interest entity. Due to the nature of the Company’s operations and the Company’s acquisition of Horizon Lines, Inc. (“Horizon”) on May 29, 2015, and Span Alaska on August 4, 2016, the results for interim periods are not necessarily indicative of results to be expected for the year. These Condensed Consolidated Financial Statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim periods, and do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. The Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report filed on Form 10-K for the year ended December 31, 2015, filed with the Securities and Exchange Commission (“SEC”) on February 26, 2016. The Condensed Consolidated Statements of Income and Comprehensive Income include the operations of Horizon from May 29, 2015, and Span Alaska from August 4, 2016. Fiscal Period: The period end for Matson, Inc. covered by this report is September 30, 2016. The period end for MatNav and its subsidiaries covered by this report occurred on the last Friday in September, or September 23, 2016. Significant Accounting Policies: The Company’s significant accounting policies are described in Note 2 to the Consolidated Financial Statements included in Item 8 of the Company’s Annual Report filed on Form 10-K for the year ended December 31, 2015. Property and Equipment: Property and equipment was $908.1 million and $860.3 million at September 30, 2016 and December 31, 2015, and is recorded net of accumulated depreciation of $1,183.8 million and $1,128.6 million, respectively. Property and equipment includes vessel construction expenditures of $67.3 million and $29.2 million, and capitalized interest of $1.9 million and $0.8 million at September 30, 2016 and December 31, 2015, respectively. Goodwill: Changes in the Company’s goodwill for the three and nine months ended September 30, 2016 and 2015 consist of the following (in millions): Goodwill Ocean Transportation Logistics Total Balance at December 31, 2015 $ $ $ Additions — — — Balance at March 31, 2016 Additions — Balance at June 30, 2016 Additions — Balance at September 30, 2016 $ $ $ Goodwill Ocean Transportation Logistics Total Balance at December 31, 2014 $ $ $ Additions — — — Balance at March 31, 2015 Additions — Balance at June 30, 2015 Additions — Balance at September 30, 2015 $ $ $ Additions to Ocean Transportation goodwill for the three and nine months ended September 30, 2016 and 2015, relate to the Horizon acquisition, and additions to Logistics goodwill for the three and nine months ended September 30, 2016, relate to the Span Alaska acquisition (see Note 3, Business Combinations ). Intangible Assets, Net: Intangible assets were $239.1 million and $139.1 million at September 30, 2016 and December 31, 2015, and were recorded net of accumulated amortization of $18.5 million and $12.3 million, respectively. Capital Construction Fund: The Company’s Capital Construction Fund (“CCF”) is described in Note 7 to the Consolidated Financial Statements included in Item 8 of the Company’s Annual Report filed on Form 10-K for the year ended December 31, 2015. As of September 30, 2016 and December 31, 2015, the Company had $110.9 million and nominal amounts on deposit in the CCF, respectively. These amounts are held in a money market account and classified as long-term assets in the Company’s Condensed Consolidated Balance Sheets, as the Company intends to use qualified cash withdrawals to fund long-term investment in the construction of new vessels. During the three months ended September 30, 2016, the Company made cash deposits of $110.8 million into the CCF. During the nine months ended September 30, 2016, the Company made cash deposits of $123.4 million into the CCF. Additionally, $12.5 million of qualified cash withdrawal was made from the CCF during the nine months ended September 30, 2016. On October 21, 2016, the Company withdrew $32.5 million from the CCF and paid a scheduled progress payment associated with the construction of the new vessels. As of September 30, 2016 and December 31, 2015, $165.1 million and $176.6 million, respectively, of eligible accounts receivable were assigned to the CCF. Due to the nature of the assignment of eligible accounts receivable into the CCF, such assigned amounts are classified as part of accounts receivable in the Condensed Consolidated Balance Sheets. Accumulated Other Comprehensive Loss: Changes in accumulated other comprehensive loss by component, net of tax, for the three and nine months ended September 30, 2016 and 2015 are as follows (in millions): Accumulated Non- Foreign Other Post Qualified Currency Interest Comprehensive Pensions Retirement Plans Transaction Hedge Income (Loss) Balance at December 31, 2015 $ $ $ $ $ $ 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 Amortization of prior service cost — — — — Amortization of net loss — — Foreign currency translation adjustment — — — — Balance at September 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 Amortization of prior service cost — — — — Amortization of net loss — — — Foreign currency translation adjustment — — — — Other — — — — Balance at September 30, 2015 $ $ $ $ $ $ Contingencies: Environmental Matters: In September 2013, molasses was released into Honolulu Harbor from a pipeline system operated by a subsidiary of the Company. The Company cooperated with federal and state agencies involved in responding to and investigating the incident. The Hawaii Department of Health reported on September 20, 2013 that dissolved oxygen and pH levels in the harbor and nearby Keehi Lagoon had returned to normal target levels and that there was no longer discoloration of the water in those same areas attributable to the molasses release. Keehi Lagoon was reopened to the public on September 21, 2013. The Company previously resolved all federal criminal claims, and all criminal, civil and administrative claims that the State of Hawaii may have had arising from the molasses release. On October 13, 2016, the United States Department of Justice delivered a letter to Company counsel stating that it is prepared to file a civil penalty action under the Clean Water Act but would be willing to discuss a potential resolution of those claims prior to filing an action. The Company believes it has defenses against those claims. In addition to the molasses release discussed above, the Company’s ocean transportation business has certain other risks that could result in expenditures for environmental remediation. The Company believes that based on all information available to it, the Company is currently in compliance, in all material respects, with applicable environmental laws and regulations. Other Matters: The Company and its subsidiaries are parties to, or may be contingently liable in connection with other legal actions arising in the normal course of their businesses, the outcomes of which, in the opinion of management after consultation with counsel, would not have a material effect on the Company’s financial condition, results of operations, or cash flows. Subsequent Event: On October 27, 2016, the Company entered into a private placement commitment letter under which it expects to issue $75 million of 11-year senior unsecured notes (the “11-year Notes”) within 90 days, subject to entering into definitive documentation and satisfying other customary closing conditions. The 11-year Notes are expected to have a weighted average life of approximately 8 years, a fixed interest rate of 3.37 percent, and financial and other covenants that are substantially the same as the covenants in the Company’s existing outstanding senior unsecured notes. Proceeds of the 11-year Notes are expected to be used to pay down the Company’s revolving credit facility and for general corporate purposes. New Accounting Pronouncements: Leases: In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “ Leases (Topic 842) ” (“ASU 2016-02”), which requires lessees to record most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. ASU 2016-02 states that a lessee would recognize a lease liability for the obligation to make lease payments, and a right-of-use asset for the underlying leased asset for the period of the lease term. The new standard is effective for interim and annual periods beginning after December 15, 2018 and early adoption is permitted. The Company is in the process of evaluating this guidance. Share-Based Awards: In March 2016, the FASB issued ASU 2016-09, “ Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. ” The amendments are effective for public companies for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. Early adoption is permitted. The Company is in the process of evaluating this guidance.

BUSINESS COMBINATION

BUSINESS COMBINATION	9 Months Ended
	Sep. 30, 2016
BUSINESS COMBINATION
BUSINESS COMBINATION	3. BUSINESS COMBINATION Span Alaska Acquisition: On August 4, 2016 (the “Effective Date”), Matson Logistics completed the purchase of 100 percent of the membership interests of Span Alaska pursuant to the terms of the Membership Interest Purchase Agreement, dated July 18, 2016. At the Effective Date, Span Alaska became a wholly-owned subsidiary of Matson Logistics. Span Alaska is an asset-light logistics company providing freight forwarding services primarily to the Alaska market. Span Alaska consolidates freight in Auburn, Washington, for shipment to Alaska and distribution through a network of terminals in Anchorage, Fairbanks, Wasilla, Kenai, Juneau and Kodiak. Span Alaska’s operations are recorded within the Logistics segment of the Company. Total consideration paid by the Company on the Effective Date for the membership interests in Span Alaska including the repayment of Span Alaska’s debt and accrued interest, is as follows: (in millions) Total Consideration Membership interests in Span Alaska $ Span Alaska’s debt (including accrued interest) Total $ The Span Alaska acquisition was accounted for as a business combination in accordance with ASC 805. The assets acquired and liabilities assumed in the Span Alaska acquisition were recorded based on fair value estimates as of the Effective Date, with the remaining unallocated purchase price recorded as goodwill. Such fair value estimates require significant judgement, and include estimates used in the valuation of property and equipment, and intangible assets. The Company’s fair value estimates are subject to revision pending the Company’s final fair value analysis and purchase price calculations. Final estimates of fair value may be significantly different from those reflected in the Company’s Condensed Consolidated Financial Statements as of September 30, 2016. The following table summarizes the preliminary fair values assigned to Span Alaska’s assets acquired and liabilities assumed at the Effective Date: Purchase Price Allocation (in millions) Total Cash and cash equivalents $ Accounts receivable Other current and long-term assets Property and equipment Intangibles – Customer relationships Intangibles – Trade name Accounts payable Accruals and other current liabilities Capital lease obligations Span Alaska’s debt Total identifiable assets less liabilities Total consideration for membership interests in Span Alaska Goodwill $ Property and equipment: Property and equipment of $8.1 million includes the fair value of terminal and transportation equipment (trucks, forklifts, trailers, containers and other warehouse equipment), leasehold improvements and other office equipment. Intangibles - The customer relationships and trade name intangible assets were recorded using preliminary information obtained from valuation specialists engaged by the Company to assist management with estimating the fair value of these intangible assets. Customer relationships: Intangibles of $79.0 million related to customer relationships which are being amortized over 20 years. In determining the amortization period, the Company considered the historical trends of Span Alaska’s customers and related attrition rates. The Company also considered potential future attrition risks, existing competition, the costs associated with establishing a Freight Forwarding business including the need to develop a broad base of customer relationships over a period of time. Furthermore, the Company considered existing relationships with ocean transportation service providers in Alaska, and the potential impact on competition. As a result, the Company believes that Span Alaska’s customers are considered less vulnerable to attrition. Trade name: Intangibles of $27.3 million related to the Span Alaska trade name, which was determined to have an indefinite life. Span Alaska has operated for a period in excess of 38 years, and its trade name is widely known in Alaska for high quality and reliable Freight Forwarding services. The Span Alaska operations will continue to be operated under the Span Alaska trade name, independent of Matson’s ocean transportation operation in Alaska. Span Alaska’s debt: The Company repaid all of Span Alaska’s debt including accrued interest of $81.9 million, as of the Effective Date. Goodwill: The Company recorded goodwill of $79.0 million from the Span Acquisition, which represents the excess of the fair value of consideration paid by the Company over the fair value of the underlying identifiable assets acquired and liabilities assumed. In accordance with Accounting Standards Codification (ASC) 805, Business Combination (“ASC 805”), goodwill will not be amortized, but instead will be tested for impairment at least annually, or whenever events or circumstances have occurred that may indicate a possible impairment. Goodwill arises as a result of several factors: (i) The Span Alaska acquisition significantly expands Matson’s Logistics’ platform and Matson’s long-term commitment into the Alaska market; (ii) Span Alaska is a leading freight forwarding business and continues to be led by an experienced management team and assembled workforce with knowledge of the Alaska industry and of its customers; and (iii) the additional growth potential of Span Alaska. The Company's Consolidated Statements of Income and Comprehensive Income for the three and nine months ended September 30, 2016 include operating revenue of $8.5 million (after elimination of intercompany revenue), and operating income of $1.3 million, respectively, from Span Alaska’s operations. One-time acquisition related costs of approximately $2.9 million incurred as a result of the Span Alaska acquisition, is included in selling, general and administrative costs in the Consolidated Statements of Income and Comprehensive Income. Horizon Acquisition: On May 29, 2015, Matson completed its acquisition of Horizon whereby MatNav acquired Horizon’s Alaska operations and assumed all of Horizon’s non-Hawaii assets and liabilities (the “Horizon Acquisition”). Immediately before the completion of the Horizon Acquisition, Horizon sold certain of its subsidiaries to the Pasha Group (the “Pasha Transaction”) that: (i) conducted Horizon’s Hawaii operations (including owning the assets used to conduct such Hawaii operations and being responsible for the liabilities related thereto), and (ii) employed the Horizon employees who conducted its Hawaii operations. Horizon also completed the termination of its Puerto Rico operations during the first quarter of 2015. The Alaska operations are recorded within the Ocean Transportation segment of the Company. Total consideration for the Horizon Acquisition was $495.4 million based on the fair value of common shares of $29.4 million, warrants of $37.1 million, and Horizon’s debt including accrued interest and breakage fees of $428.9 million. Immediately following the close of the Horizon Acquisition, the Company repaid the assumed debt and redeemed all of Horizon’s outstanding warrants. The Horizon Acquisition was accounted for as a business combination in accordance with ASC 805. Assets acquired and liabilities assumed were recorded at estimated fair value at May 29, 2015, with the remaining unallocated purchase price of $217.7 million recorded as goodwill. As of June 30, 2016, the purchase price accounting for the Horizon Acquisition was considered final. The Company's Consolidated Statements of Income and Comprehensive Income for the three and nine months ended September 30, 2016 include operating revenue of $74.0 million and $208.2 million, and operating income of $11.3 million and $21.6 million, respectively, from Horizon’s operations. One-time acquisition related costs incurred post December 31, 2015 were not material. Pro Forma Financial Information (Unaudited): The following unaudited pro forma financial information presents the combined operating results of the Company, and those of Horizon (excluding its Hawaii operations) and Span Alaska, as if the Horizon and Span Alaska acquisitions had been completed at the beginning of each period presented below. The unaudited pro forma financial information includes the accounting effects of the business combination, including the amortization of intangible assets, depreciation of property and equipment, and interest expense. Unaudited pro forma operating revenue is presented after elimination of intercompany revenue. The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the result of operations that would have been achieved if the Horizon and Span Alaska acquisitions had taken place at the beginning of the periods presented, nor should it be taken as an indication of our future consolidated results of operations. (Unaudited) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, (in millions, except per-share amount) 2016 2015 2016 2015 Pro Forma Combined: Operating revenue $ $ $ $ Net income $ $ $ $ Basic Earnings Per-Share: $ $ $ $ Diluted Earnings Per-Share: $ $ $ $ Weighted-Average Number of Shares Outstanding: Basic Diluted

DEBT

DEBT	9 Months Ended
	Sep. 30, 2016
DEBT
DEBT	4. DEBT At September 30, 2016 and December 31, 2015, the Company’s debt consisted of the following (in millions): September 30, December 31, 2016 2015 Term Loans: 5.79 %, payable through 2020 $ $ 3.66 %, payable through 2023 4.16 %, payable through 2027 4.31 %, payable through 2032 3.14 %, payable through 2031 — 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. Term Loans: On September 14, 2016, the Company entered into an amended and restated private placement note purchase agreement (the “2016 Note Purchase Agreement”), pursuant to which Matson issued $200.0 million in 15-year final maturity senior unsecured notes (the “Series D Notes”). The Series D Notes have a weighted average life of approximately 8.5 years and bear interest at a rate of 3.14 percent, payable semi-annually. Proceeds from the Series D Notes were used to pay down the Company’s revolving credit facility and for general corporate purposes. The Series D Notes will begin to amortize in March 2019, with semi-annual principal payments of $6.0 million in 2019. During the years 2020 to 2023, the semi-annual principal payments will be $9.2 million. Starting in March 2024, and in each year thereafter through maturity in September 2031, the semi-annual principal payments will be $7.15 million. The 2016 Note Purchase Agreement amends and restates Matson’s Second Amended and Restated Note Agreement dated as of June 4, 2012, as amended prior to the date hereof, under which, in addition to the Series D Notes, an aggregate principal amount of approximately $184.3 million in Matson’s existing Series B and C senior unsecured notes is outstanding as of the date hereof. The 2016 Note Purchase Agreement also includes an uncommitted shelf facility pursuant to which Matson may, subject to the conditions and limitations specified in the 2016 Note Purchase Agreement, issue additional notes. Matson’s obligations under the existing senior notes and the Series D Notes are guaranteed by Matson’s principal operating subsidiary MatNav and by certain other subsidiaries. Principal covenants contained in the 2016 Note Purchase Agreement include, but are not limited to, the requirements that Matson: a) Not permit the ratio of debt to consolidated EBITDA to exceed 3.25 to 1.00 for each fiscal four quarter period, except under certain pre-defined circumstances; b) Not permit the ratio of consolidated EBITDA to interest expense as of the end of any fiscal four quarter period to be less than 3.50 to 1.00; and c) Not permit the aggregate principal amount of Priority Debt at any time to exceed 20% (subject to reduction to 17.5% upon the earlier of December 31, 2017 and upon the occurrence of certain events) of Consolidated Tangible Assets; and not permit the aggregate principal amount of Priority Debt that is not Title XI Priority Debt at any time to exceed 10% of Consolidated Tangible Assets (all as defined in the 2016 Note Purchase Agreement). Furthermore, the 2016 Note Purchase Agreement generally will restrict the incurrence of liens except for permitted liens, which include, without limitation, liens securing Title XI Debt (as defined in the 2016 Note Purchase Agreement) up to certain thresholds. Additionally, prepayment of amounts borrowed under the 2016 Note Purchase Agreement may be made in whole or in part at par plus a yield maintenance premium, as defined in the 2016 Note Purchase Agreement. The Company was in compliance with these covenants as of September 30, 2016. Revolving Credit Facility: Borrowings under the revolving credit facility are classified as long-term debt in the Condensed Consolidated Balance Sheet, as principal payments are not required until maturity date of July 30, 2020. As of September 30, 2016, the Company had $193.8 million of remaining availability under the revolving credit facility. The interest rate on borrowings under the revolving credit facility approximated 1.69 percent during the three months ended September 30, 2016.

PENSION AND OTHER POST-RETIREME

PENSION AND OTHER POST-RETIREMENT PLANS	9 Months Ended
	Sep. 30, 2016
PENSION AND OTHER POST-RETIREMENT PLANS
PENSION AND OTHER POST-RETIREMENT PLANS	5. PENSION AND OTHER POST-RETIREMENT PLANS The Company sponsors qualified defined benefit pension and other post-retirement plans (collectively, the “Plans”). The following table provides the components of net periodic benefit cost (benefit) for the Plans for the nine months ended September 30, 2016 and 2015 (in millions): Pension Benefits Other Post-retirement Benefits September 30, September 30, Components of Net Periodic Benefit Cost: 2016 2015 2016 2015 Service cost $ $ $ $ Interest cost Expected return on plan assets — — Amortization of net loss Amortization of prior service cost — — Net periodic benefit cost $ $ $ $ During the nine months ended September 30, 2016, the Company contributed $7.5 million to its defined benefit pension plans. No further contribution is expected to be paid in 2016.

SHARE-BASED COMPENSATION

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

EARNINGS PER-SHARE

EARNINGS PER-SHARE	9 Months Ended
	Sep. 30, 2016
EARNINGS PER-SHARE
EARNINGS PER-SHARE	7. EARNINGS PER-SHARE The number of shares used to compute basic and diluted earnings per-share for the three and nine months ended September 30, 2016 and 2015, is as follows (in millions, except per-share amounts): Three Months Ended September 30, 2016 Nine Months Ended September 30, 2016 Weighted- Per Weighted- Per Average Common Average Common Net Common Share Net Common Share Income Shares Amount Income Shares Amount Basic: $ $ $ $ Effect of Dilutive Securities: — Diluted: $ $ $ $ Three Months Ended September 30, 2015 Nine Months Ended September 30, 2015 Weighted- Per Weighted- Per Average Common Average Common Net Common Share Net Common Share 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	9 Months Ended
	Sep. 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 September 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) September 30, 2016 Fair Value Measurements at September 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	9 Months Ended
	Sep. 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 Ocean Transportation segment provides ocean transportation services to the Logistics segment. Accordingly, intersegment revenue of $6.7 million and $10.3 million for the three months and nine months ended September 30, 2016, respectively, and $3.4 million and $8.9 million for the three months and nine months ended September 30, 2015, respectively, have been eliminated from the Logistics segment in the table below. 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 nine months ended September 30, 2016 and 2015 were as follows (in millions): Three Months Ended Nine Months Ended September 30, September 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 $ $ $ $

GENERAL AND SIGNIFICANT ACCOU14

GENERAL AND SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Sep. 30, 2016
GENERAL AND SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation	Basis of Presentation: The Condensed Consolidated Financial Statements are unaudited. The consolidated financial statements include the accounts of Matson, Inc. and all wholly-owned subsidiaries, after elimination of significant intercompany revenues, and costs and expenses. Significant investments in businesses, partnerships, and limited liability companies in which the Company does not have a controlling financial interest, but has the ability to exercise significant influence, are accounted for under the equity method. A controlling financial interest is one in which the Company has a majority voting interest or one in which the Company is the primary beneficiary of a variable interest entity. Due to the nature of the Company’s operations and the Company’s acquisition of Horizon Lines, Inc. (“Horizon”) on May 29, 2015, and Span Alaska on August 4, 2016, the results for interim periods are not necessarily indicative of results to be expected for the year. These Condensed Consolidated Financial Statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim periods, and do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. The Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report filed on Form 10-K for the year ended December 31, 2015, filed with the Securities and Exchange Commission (“SEC”) on February 26, 2016. The Condensed Consolidated Statements of Income and Comprehensive Income include the operations of Horizon from May 29, 2015, and Span Alaska from August 4, 2016.
Fiscal Period	Fiscal Period: The period end for Matson, Inc. covered by this report is September 30, 2016. The period end for MatNav and its subsidiaries covered by this report occurred on the last Friday in September, or September 23, 2016.
Significant Accounting Policies	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 was $908.1 million and $860.3 million at September 30, 2016 and December 31, 2015, and is recorded net of accumulated depreciation of $1,183.8 million and $1,128.6 million, respectively. Property and equipment includes vessel construction expenditures of $67.3 million and $29.2 million, and capitalized interest of $1.9 million and $0.8 million at September 30, 2016 and December 31, 2015, respectively.
Goodwill	Goodwill: Changes in the Company’s goodwill for the three and nine months ended September 30, 2016 and 2015 consist of the following (in millions): Goodwill Ocean Transportation Logistics Total Balance at December 31, 2015 $ $ $ Additions — — — Balance at March 31, 2016 Additions — Balance at June 30, 2016 Additions — Balance at September 30, 2016 $ $ $ Goodwill Ocean Transportation Logistics Total Balance at December 31, 2014 $ $ $ Additions — — — Balance at March 31, 2015 Additions — Balance at June 30, 2015 Additions — Balance at September 30, 2015 $ $ $ Additions to Ocean Transportation goodwill for the three and nine months ended September 30, 2016 and 2015, relate to the Horizon acquisition, and additions to Logistics goodwill for the three and nine months ended September 30, 2016, relate to the Span Alaska acquisition (see Note 3, Business Combinations ).
Intangible Assets, Net	Intangible Assets, Net: Intangible assets were $239.1 million and $139.1 million at September 30, 2016 and December 31, 2015, and were recorded net of accumulated amortization of $18.5 million and $12.3 million, respectively.
Capital Construction Fund	Capital Construction Fund: The Company’s Capital Construction Fund (“CCF”) is described in Note 7 to the Consolidated Financial Statements included in Item 8 of the Company’s Annual Report filed on Form 10-K for the year ended December 31, 2015. As of September 30, 2016 and December 31, 2015, the Company had $110.9 million and nominal amounts on deposit in the CCF, respectively. These amounts are held in a money market account and classified as long-term assets in the Company’s Condensed Consolidated Balance Sheets, as the Company intends to use qualified cash withdrawals to fund long-term investment in the construction of new vessels. During the three months ended September 30, 2016, the Company made cash deposits of $110.8 million into the CCF. During the nine months ended September 30, 2016, the Company made cash deposits of $123.4 million into the CCF. Additionally, $12.5 million of qualified cash withdrawal was made from the CCF during the nine months ended September 30, 2016. On October 21, 2016, the Company withdrew $32.5 million from the CCF and paid a scheduled progress payment associated with the construction of the new vessels. As of September 30, 2016 and December 31, 2015, $165.1 million and $176.6 million, respectively, of eligible accounts receivable were assigned to the CCF. Due to the nature of the assignment of eligible accounts receivable into the CCF, such assigned amounts are classified as part of accounts receivable in the Condensed Consolidated Balance Sheets.
Accumulated Other Comprehensive Loss	Accumulated Other Comprehensive Loss: Changes in accumulated other comprehensive loss by component, net of tax, for the three and nine months ended September 30, 2016 and 2015 are as follows (in millions): Accumulated Non- Foreign Other Post Qualified Currency Interest Comprehensive Pensions Retirement Plans Transaction Hedge Income (Loss) Balance at December 31, 2015 $ $ $ $ $ $ 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 Amortization of prior service cost — — — — Amortization of net loss — — Foreign currency translation adjustment — — — — Balance at September 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 Amortization of prior service cost — — — — Amortization of net loss — — — Foreign currency translation adjustment — — — — Other — — — — Balance at September 30, 2015 $ $ $ $ $ $
Contingencies	Contingencies: Environmental Matters: In September 2013, molasses was released into Honolulu Harbor from a pipeline system operated by a subsidiary of the Company. The Company cooperated with federal and state agencies involved in responding to and investigating the incident. The Hawaii Department of Health reported on September 20, 2013 that dissolved oxygen and pH levels in the harbor and nearby Keehi Lagoon had returned to normal target levels and that there was no longer discoloration of the water in those same areas attributable to the molasses release. Keehi Lagoon was reopened to the public on September 21, 2013. The Company previously resolved all federal criminal claims, and all criminal, civil and administrative claims that the State of Hawaii may have had arising from the molasses release. On October 13, 2016, the United States Department of Justice delivered a letter to Company counsel stating that it is prepared to file a civil penalty action under the Clean Water Act but would be willing to discuss a potential resolution of those claims prior to filing an action. The Company believes it has defenses against those claims. In addition to the molasses release discussed above, the Company’s ocean transportation business has certain other risks that could result in expenditures for environmental remediation. The Company believes that based on all information available to it, the Company is currently in compliance, in all material respects, with applicable environmental laws and regulations. Other Matters: The Company and its subsidiaries are parties to, or may be contingently liable in connection with other legal actions arising in the normal course of their businesses, the outcomes of which, in the opinion of management after consultation with counsel, would not have a material effect on the Company’s financial condition, results of operations, or cash flows.
Subsequent Event	Subsequent Event: On October 27, 2016, the Company entered into a private placement commitment letter under which it expects to issue $75 million of 11-year senior unsecured notes (the “11-year Notes”) within 90 days, subject to entering into definitive documentation and satisfying other customary closing conditions. The 11-year Notes are expected to have a weighted average life of approximately 8 years, a fixed interest rate of 3.37 percent, and financial and other covenants that are substantially the same as the covenants in the Company’s existing outstanding senior unsecured notes. Proceeds of the 11-year Notes are expected to be used to pay down the Company’s revolving credit facility and for general corporate purposes.
New Accounting Pronouncements: Leases	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 ACCOU15

GENERAL AND SIGNIFICANT ACCOUNTING POLICIES (Tables)	9 Months Ended
	Sep. 30, 2016
GENERAL AND SIGNIFICANT ACCOUNTING POLICIES
Schedule of goodwill	Changes in the Company’s goodwill for the three and nine months ended September 30, 2016 and 2015 consist of the following (in millions): Goodwill Ocean Transportation Logistics Total Balance at December 31, 2015 $ $ $ Additions — — — Balance at March 31, 2016 Additions — Balance at June 30, 2016 Additions — Balance at September 30, 2016 $ $ $ Goodwill Ocean Transportation Logistics Total Balance at December 31, 2014 $ $ $ Additions — — — Balance at March 31, 2015 Additions — Balance at June 30, 2015 Additions — Balance at September 30, 2015 $ $ $
Schedule of changes in accumulated other comprehensive loss by component, net of tax	Changes in accumulated other comprehensive loss by component, net of tax, for the three and nine months ended September 30, 2016 and 2015 are as follows (in millions): Accumulated Non- Foreign Other Post Qualified Currency Interest Comprehensive Pensions Retirement Plans Transaction Hedge Income (Loss) Balance at December 31, 2015 $ $ $ $ $ $ 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 Amortization of prior service cost — — — — Amortization of net loss — — Foreign currency translation adjustment — — — — Balance at September 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 Amortization of prior service cost — — — — Amortization of net loss — — — Foreign currency translation adjustment — — — — Other — — — — Balance at September 30, 2015 $ $ $ $ $ $

BUSINESS COMBINATION (Tables)

BUSINESS COMBINATION (Tables)	9 Months Ended
	Sep. 30, 2016
Schedule of pro forma financial information	(Unaudited) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, (in millions, except per-share amount) 2016 2015 2016 2015 Pro Forma Combined: Operating revenue $ $ $ $ Net income $ $ $ $ Basic Earnings Per-Share: $ $ $ $ Diluted Earnings Per-Share: $ $ $ $ Weighted-Average Number of Shares Outstanding: Basic Diluted
Span Alaska
Schedule of total consideration paid for the membership interests in Span Alaska	(in millions) Total Consideration Membership interests in Span Alaska $ Span Alaska’s debt (including accrued interest) Total $
Summary of estimated fair values assigned to Span Alaska’s assets acquired and liabilities assumed	Purchase Price Allocation (in millions) Total Cash and cash equivalents $ Accounts receivable Other current and long-term assets Property and equipment Intangibles – Customer relationships Intangibles – Trade name Accounts payable Accruals and other current liabilities Capital lease obligations Span Alaska’s debt Total identifiable assets less liabilities Total consideration for membership interests in Span Alaska Goodwill $

DEBT (Tables)

DEBT (Tables)	9 Months Ended
	Sep. 30, 2016
DEBT
Schedule of debt	At September 30, 2016 and December 31, 2015, the Company’s debt consisted of the following (in millions): September 30, December 31, 2016 2015 Term Loans: 5.79 %, payable through 2020 $ $ 3.66 %, payable through 2023 4.16 %, payable through 2027 4.31 %, payable through 2032 3.14 %, payable through 2031 — 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-RETIRE18

PENSION AND OTHER POST-RETIREMENT PLANS (Tables)	9 Months Ended
	Sep. 30, 2016
PENSION AND OTHER POST-RETIREMENT PLANS
Components of net periodic benefit costs (benefit)	The following table provides the components of net periodic benefit cost (benefit) for the Plans for the nine months ended September 30, 2016 and 2015 (in millions): Pension Benefits Other Post-retirement Benefits September 30, September 30, Components of Net Periodic Benefit Cost: 2016 2015 2016 2015 Service cost $ $ $ $ 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)	9 Months Ended
	Sep. 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 nine months ended September 30, 2016 and 2015, is as follows (in millions, except per-share amounts): Three Months Ended September 30, 2016 Nine Months Ended September 30, 2016 Weighted- Per Weighted- Per Average Common Average Common Net Common Share Net Common Share Income Shares Amount Income Shares Amount Basic: $ $ $ $ Effect of Dilutive Securities: — Diluted: $ $ $ $ Three Months Ended September 30, 2015 Nine Months Ended September 30, 2015 Weighted- Per Weighted- Per Average Common Average Common Net Common Share Net Common Share Income Shares Amount Income Shares Amount Basic: $ $ $ $ Effect of Dilutive Securities: Diluted: $ $ $ $

FAIR VALUE MEASUREMENTS (Tables

FAIR VALUE MEASUREMENTS (Tables)	9 Months Ended
	Sep. 30, 2016
FAIR VALUE MEASUREMENTS
Schedule of fair value measurement	The carrying value and fair value of the Company’s financial instruments as of September 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) September 30, 2016 Fair Value Measurements at September 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)	9 Months Ended
	Sep. 30, 2016
REPORTABLE SEGMENTS
Schedule of reportable segment information	Reportable segment results for the three and nine months ended September 30, 2016 and 2015 were as follows (in millions): Three Months Ended Nine Months Ended September 30, September 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)	9 Months Ended
	Sep. 30, 2016segmentfacilityitem	Aug. 04, 2016
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
Span Alaska
BUSINESS COMBINATION
Percentage interest acquired		100.00%

GENERAL AND SIGNIFICANT ACCOU23

GENERAL AND SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Millions	Sep. 30, 2016	Dec. 31, 2015
Property and equipment, net	$ 908.1	$ 860.3
Accumulated depreciation of property and equipment	1,183.8	1,128.6
Vessels
Vessel construction expenditures	67.3	29.2
Capitalized interest	$ 1.9	$ 0.8

GENERAL AND SIGNIFICANT ACCOU24

GENERAL AND SIGNIFICANT ACCOUNTING POLICIES - GOODWILL, INTANGIBLE ASSETS AND CAPITAL CONSTRUCTION FUND (Details) - USD ($) $ in Millions	Oct. 21, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Changes in the Company's goodwill
Balance at the beginning of the period		$ 245.1	$ 241.6	$ 241.6	$ 247.1	$ 27.4	$ 27.4	$ 241.6	$ 27.4
Additions		79	3.5		1.2	219.7
Balance at the end of the period		324.1	245.1	241.6	248.3	247.1	27.4	324.1	248.3
Intangible Assets, Net
Intangible assets, net		239.1						239.1		$ 139.1
Accumulated amortization of intangible assets		18.5						18.5		12.3
Capital Construction Fund
Capital Construction Fund - cash on deposit		110.9						110.9
Cash Deposits Into CCF								123.4	77.9
Withdrawals from Capital Construction Fund								12.5	93.7
Ocean Transportation
Changes in the Company's goodwill
Balance at the beginning of the period		218.5	215	215	220.5	0.8	0.8	215	0.8
Additions			3.5		1.2	219.7
Balance at the end of the period		218.5	218.5	215	221.7	220.5	0.8	218.5	221.7
Logistics
Changes in the Company's goodwill
Balance at the beginning of the period		26.6	26.6	26.6	26.6	26.6	26.6	26.6	26.6
Additions		79
Balance at the end of the period		105.6	$ 26.6	$ 26.6	$ 26.6	$ 26.6	$ 26.6	105.6	$ 26.6
Long-term Assets | CCF Cash Deposits and Withdrawals
Capital Construction Fund
Capital Construction Fund - cash on deposit		110.9						110.9		0
Cash Deposits Into CCF		110.8						123.4
Withdrawals from Capital Construction Fund	$ 32.5							12.5
Eligible Accounts Receivable Assigned to CCF
Capital Construction Fund
Eligible accounts receivable assigned to CCF		$ 165.1						$ 165.1		$ 176.6

GENERAL AND SIGNIFICANT ACCOU25

GENERAL AND SIGNIFICANT ACCOUNTING POLICIES - COMPREHENSIVE INCOME (LOSS) AND SUBSEQUENT EVENT (Details) - USD ($) $ in Millions	Oct. 27, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Sep. 30, 2016	Sep. 30, 2015
Changes in accumulated other comprehensive loss by component, net of taxes
Balance at the beginning of the period				$ 450.6				$ 450.6
Net gain (loss) in prior service cost								0.7	$ (0.2)
Amortization of prior service cost		$ (0.3)			$ (0.4)			(0.9)	(1)
Amortization of net loss		0.9			1.1			3	3.4
Foreign currency translation and other adjustments		0.6			0.9			0.5	1.6
Balance at the end of the period		459.2						459.2
Pension Benefits
Changes in accumulated other comprehensive loss by component, net of taxes
Balance at the beginning of the period		(40.8)	$ (41.3)	(41.7)	(43.9)	$ (44.6)	$ (45)	(41.7)	(45)
Net gain (loss) in prior service cost							(0.2)
Amortization of prior service cost		(0.3)	(0.3)	(0.4)	(0.4)	(0.2)	(0.4)
Amortization of net loss		0.8	0.8	0.8	1	0.9	1
Balance at the end of the period		(40.3)	(40.8)	(41.3)	(43.3)	(43.9)	(44.6)	(40.3)	(43.3)
Other Post-retirement Benefits
Changes in accumulated other comprehensive loss by component, net of taxes
Balance at the beginning of the period		(3.6)	(3.8)	(4.7)	(6.5)	(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	0.1	0.2	0.4
Balance at the end of the period		(3.4)	(3.6)	(3.8)	(6.4)	(6.5)	(6.8)	(3.4)	(6.4)
Non Qualified Plans
Changes in accumulated other comprehensive loss by component, net of taxes
Balance at the beginning of the period		(0.7)	(0.8)	(0.9)	(1)	(0.7)	(0.7)	(0.9)	(0.7)
Amortization of prior service cost			0.1			(0.1)
Amortization of net loss		(0.1)		0.1		(0.2)
Balance at the end of the period		(0.8)	(0.7)	(0.8)	(1)	(1)	(0.7)	(0.8)	(1)
Foreign Currency Transaction
Changes in accumulated other comprehensive loss by component, net of taxes
Balance at the beginning of the period		0.9	0.9	1	1	0.4	0.3	1	0.3
Foreign currency translation and other adjustments		0.6		(0.1)	0.8	0.6	0.1
Balance at the end of the period		1.5	0.9	0.9	1.8	1	0.4	1.5	1.8
Interest Hedge
Changes in accumulated other comprehensive loss by component, net of taxes
Balance at the beginning of the period		(0.6)	(0.6)	(0.6)	(0.7)	(0.7)	(0.7)	(0.6)	(0.7)
Other					0.1
Balance at the end of the period		(0.6)	(0.6)	(0.6)	(0.6)	(0.7)	(0.7)	(0.6)	(0.6)
Accumulated Other Comprehensive Income (Loss)
Changes in accumulated other comprehensive loss by component, net of taxes
Balance at the beginning of the period		(44.8)	(45.6)	(46.9)	(51.1)	(52.4)	(53.3)	(46.9)	(53.3)
Net gain (loss) in prior service cost				0.7			(0.2)
Amortization of prior service cost		(0.3)	(0.2)	(0.4)	(0.4)	(0.2)	(0.4)
Amortization of net loss		0.9	1	1.1	1.1	0.9	1.4
Foreign currency translation and other adjustments		0.6		(0.1)	0.8	0.6	0.1
Other					0.1
Balance at the end of the period		$ (43.6)	$ (44.8)	$ (45.6)	$ (49.5)	$ (51.1)	$ (52.4)	$ (43.6)	$ (49.5)
The Notes | Subsequent event
DEBT
Debt issued	$ 75
Interest rate (as a percent)	3.37%
Debt instrument term	11 years
Weighted average life	8 years
Number of days to issuance date	90 days

BUSINESS COMBINATION - CONSIDER

BUSINESS COMBINATION - CONSIDERATION PAID (Details) - USD ($) $ in Millions	Aug. 04, 2016	May 29, 2015	Sep. 30, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014
Assets acquired and liabilities assumed
Goodwill			$ 324.1	$ 324.1	$ 245.1	$ 241.6	$ 241.6	$ 248.3	$ 247.1	$ 27.4	$ 27.4
Repayments of Span Alaska debt				81.9
Span Alaska
Business acquisition
Percentage interest acquired	100.00%
Number of years in operation	38 years
Total cash consideration
Membership interests consideration	$ 117.2
Total debt assumed	81.9
Total payments	199.1
Assets acquired and liabilities assumed
Cash and cash equivalents	4.4
Accounts receivable	11.1
Other current and long-term assets	1
Property and equipment	8.1
Intangibles – Customer relationships	79
Intangibles – Trade name	27.3
Accounts payable	(3.3)
Accruals and other current liabilities	(6.3)
Capital lease obligations	(1.2)
Debt	(81.9)
Total identifiable assets less liabilities	38.2
Membership interests consideration	117.2
Goodwill	79
Repayments of Span Alaska debt	81.9
Total cash paid for common shares	(117.2)
Condensed Consolidated Statements of Income and Comprehensive Income
Operating revenue			8.5	8.5
Operating Income			1.3	1.3
One-time acquisition related costs			2.9	2.9
Span Alaska | Trade Names
Assets acquired and liabilities assumed
Intangibles – Trade name	27.3
Span Alaska | Customer relationships
Assets acquired and liabilities assumed
Intangibles – Customer relationships	$ 79
Expected useful lives	20 years
Horizon
Total cash consideration
Total debt assumed		$ 428.9
Total payments		495.4
Assets acquired and liabilities assumed
Goodwill		217.7
Common shares		29.4
Warrants		$ 37.1
Condensed Consolidated Statements of Income and Comprehensive Income
Operating revenue			74	208.2
Operating Income			$ 11.3	$ 21.6

BUSINESS COMBINATION - PROFORMA

BUSINESS COMBINATION - PROFORMA (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Pro-forma Combined
Operating revenue	$ 507	$ 559.1	$ 1,457.5	$ 1,569.5
Net income	$ 28.2	$ 38.3	$ 67.7	$ 68.9
Basic Earnings Per Share (in dollars per share)	$ 0.66	$ 0.88	$ 1.57	$ 1.58
Diluted Earnings Per Share (in dollars per share)	$ 0.66	$ 0.87	$ 1.56	$ 1.57
Weighted Average Number of Shares Outstanding:
Basic	42.8	43.5	43.1	43.5
Diluted	43.2	44	43.5	44

DEBT - SUMMARY (Details)

DEBT - SUMMARY (Details) - USD ($) $ in Millions	Sep. 30, 2016	Dec. 31, 2015
Debt
Capital leases	$ 3.1	$ 3.1
Total Debt	812.4	429.9
Less current portion	(26.3)	(22)
Total Long-term Debt	786.1	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%
3.14%, payable through 2031
Debt
Total Debt	$ 200
Interest rate (as a percent)	3.14%
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	$ 26.4	$ 28.6
Interest rate (as a percent)	5.34%	5.34%
5.27%, payable through 2029
Debt
Total Debt	$ 28.6	$ 30.8
Interest rate (as a percent)	5.27%	5.27%
Revolving Credit Facility
Debt
Total Debt	$ 195

DEBT - DESCRIPTION (Details)

DEBT - DESCRIPTION (Details) - USD ($) $ in Thousands	Sep. 14, 2016	Sep. 30, 2016	Sep. 30, 2016	Dec. 31, 2015
Debt
Total Long-term Debt		$ 786,100	$ 786,100	$ 407,900
Revolving Credit Facility
Debt
Funds available under the revolving credit facility		$ 193,800	193,800
Interest rate during period (as a percent)		1.69%
The Senior Unsecured Notes (The "Series D Notes")
Debt
Debt issued	$ 200,000	$ 200,000	$ 200,000
Interest rate (as a percent)	3.14%	3.14%	3.14%
Debt instrument term	15 years		15 years
Weighted average life	8 years 6 months		8 years 6 months
Frequency of periodic payment			semi-annual
Maximum ratio of debt to consolidated EBITDA	3.25	3.25	3.25
Maximum ratio of consolidated EBITDA to interest expense	3.50	3.50	3.50
Maximum ratio of aggregate principal amount of Priority Debt to Consolidated Tangible Assets	20.00%	20.00%	20.00%
Maximum ratio of aggregate principal amount of Priority Debt to Consolidated Tangible Assets upon certain events	17.50%	17.50%	17.50%
Maximum ratio of aggregate principal amount of priority debt not Title XI Priority Debt to Consolidated Tangible Assets	10.00%	10.00%	10.00%
Maturities of Long-term Debt
Semi-annual principal payments in 2019		$ 6,000	$ 6,000
Semi-annual principal payments in 2020 to 2023		9,200	9,200
Semi-annual principal payments in 2024 to 2031		7,150	7,150
The Senior Unsecured Notes (The "Series B And C Notes")
Debt
Total Long-term Debt		$ 184,300	$ 184,300

PENSION AND OTHER POST-RETIRE30

PENSION AND OTHER POST-RETIREMENT PLANS - COMPONENTS OF NET PERIODIC BENEFIT COST (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Pension Benefits
Components of Net Periodic Benefit Costs:
Service cost	$ 3	$ 2.6
Interest cost	7.3	7.1
Expected return on plan assets	(10)	(10.4)
Amortization of net loss	4.1	4.8
Amortization of prior service cost	(1.7)	(1.7)
Net periodic benefit cost	2.7	2.4
Defined Benefit Pension Plan Contributions
Employer contribution	7.5
Other Post-retirement Benefits
Components of Net Periodic Benefit Costs:
Service cost	1.1	1.2
Interest cost	2	1.9
Amortization of net loss	0.9	1.8
Net periodic benefit cost	$ 4	$ 4.9

SHARE-BASED COMPENSATION (Detai

SHARE-BASED COMPENSATION (Details) - Time-based and performance-based shares - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Share-based compensation
Shares granted	15,500		325,000
Weighted-average grant date fair value (in dollars per share)	$ 36.95		$ 37.64
Total unrecognized compensation cost	$ 14.9		$ 14.9
Unrecognized compensation cost over weighted-average period to be recognized			1 year 10 months 24 days
Selling, general and administrative expenses
Share-based compensation
Total stock-based compensation cost	$ 3	$ 2	$ 9.2	$ 9.6

EARNINGS PER-SHARE (Details)

EARNINGS PER-SHARE (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Net Income
Net Income, Basic	$ 25	$ 41.5	$ 61.1	$ 76.4
Net Income, Diluted	$ 25	$ 41.5	$ 61.1	$ 76.4
Weighted Average Common Shares
Basic (in shares)	42.8	43.5	43.1	43.5
Effect of Dilutive Securities (in shares)	0.4	0.5	0.4	0.5
Diluted (in shares)	43.2	44	43.5	44
Per Common Share Amount
Net income, Basic (in dollars per share)	$ 0.58	$ 0.95	$ 1.42	$ 1.76
Effect of Dilutive Securities (in dollars per shares)		(0.01)	(0.02)	(0.02)
Net income, Diluted (in dollars per share)	$ 0.58	$ 0.94	$ 1.40	$ 1.74

FAIR VALUE MEASUREMENTS (Detail

FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Millions	Sep. 30, 2016	Dec. 31, 2015
Carrying value
Fair value of financial instruments
Cash and cash equivalents	$ 16.4	$ 25.5
Accounts receivable, net	225.6	214.3
Variable rate debt	195
Fixed rate debt	617.4	429.9
Fair Value Measurement
Fair value of financial instruments
Cash and cash equivalents	16.4	25.5
Accounts receivable, net	225.6	214.3
Variable rate debt	195
Fixed rate debt	653.6	443.8
Fair Value Measurement | Quoted Prices in Active Markets (Level 1)
Fair value of financial instruments
Cash and cash equivalents	16.4	25.5
Fair Value Measurement | Significant Observable Inputs (Level 2)
Fair value of financial instruments
Accounts receivable, net	225.6	214.3
Variable rate debt	195
Fixed rate debt	$ 653.6	$ 443.8

REPORTABLE SEGMENTS (Details)

REPORTABLE SEGMENTS (Details) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2016USD ($)	Sep. 30, 2015USD ($)	Sep. 30, 2016USD ($)segment	Sep. 30, 2015USD ($)
Segment results
Number of segments | segment			2
Operating Revenue	$ 500.4	$ 544.3	$ 1,422.3	$ 1,390.1
Operating Income	46.2	71.8	116.9	150.4
Interest expense	(6)	(4.7)	(17.4)	(13.6)
Income before Income Taxes	40.2	67.1	99.5	136.8
Income taxes	(15.2)	(25.6)	(38.4)	(60.4)
Net Income	25	41.5	61.1	76.4
Operating segments
Segment results
Operating Income	46.2	71.8	116.9	150.4
Intersegment Eliminations
Segment results
Operating Revenue	6.7	3.4	10.3	8.9
Ocean Transportation | Operating segments
Segment results
Operating Revenue	398	444.8	1,135	1,097
Operating Income	42.7	68.9	109.6	144.2
Logistics | Operating segments
Segment results
Operating Revenue	102.4	99.5	287.3	293.1
Operating Income	$ 3.5	$ 2.9	$ 7.3	$ 6.2