Document and Entity Information
Document and Entity Information | 9 Months Ended |
Sep. 30, 2018shares | |
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, 2018 |
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 | 42,704,592 |
Document Fiscal Year Focus | 2,018 |
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, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Operating Revenue: | ||||
Ocean Transportation | $ 437.3 | $ 419.2 | $ 1,223.2 | $ 1,181.9 |
Logistics | 152.1 | 124.7 | 434.7 | 348.9 |
Total Operating Revenue | 589.4 | 543.9 | 1,657.9 | 1,530.8 |
Costs and Expenses: | ||||
Operating costs | (485.5) | (439.9) | (1,390.7) | (1,274.1) |
Equity in income of Terminal Joint Venture | 9.2 | 7.5 | 28.8 | 19.3 |
Selling, general and administrative | (54.5) | (53.2) | (162.7) | (153.5) |
Total Costs and Expenses | (530.8) | (485.6) | (1,524.6) | (1,408.3) |
Operating Income | 58.6 | 58.3 | 133.3 | 122.5 |
Interest expense | (4.4) | (6.2) | (14.4) | (18.8) |
Other income (expense), net | 0.7 | 3.5 | 1.9 | 1.6 |
Income before Income Taxes | 54.9 | 55.6 | 120.8 | 105.3 |
Income taxes | (13.3) | (21.5) | (32.4) | (40.2) |
Net Income | 41.6 | 34.1 | 88.4 | 65.1 |
Other Comprehensive Income (Loss), Net of Income Taxes: | ||||
Net Income | 41.6 | 34.1 | 88.4 | 65.1 |
Other Comprehensive Income (Loss): | ||||
Net gain in prior service cost | 0.7 | 0.8 | ||
Amortization of prior service cost | (1.1) | (2.2) | (3.5) | (2.9) |
Amortization of net loss | 1.1 | 1 | 2.9 | 3.1 |
Other adjustments | 0.1 | 0.2 | ||
Total Other Comprehensive Income (Loss) | 0.1 | (0.5) | (0.6) | 1.2 |
Comprehensive Income | $ 41.7 | $ 33.6 | $ 87.8 | $ 66.3 |
Basic Earnings Per-Share: (in dollars per share) | $ 0.97 | $ 0.79 | $ 2.07 | $ 1.51 |
Diluted Earnings Per-Share: (in dollars per share) | $ 0.97 | $ 0.79 | $ 2.06 | $ 1.50 |
Weighted Average Number of Shares Outstanding: | ||||
Basic (in shares) | 42.7 | 42.9 | 42.7 | 43 |
Diluted (in shares) | 43.1 | 43.2 | 43 | 43.3 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Current Assets: | ||
Cash and cash equivalents | $ 12.1 | $ 19.8 |
Accounts receivable, net | 240.7 | 194.6 |
Prepaid expenses and other assets | 48.3 | 51.6 |
Total current assets | 301.1 | 266 |
Long-term Assets: | ||
Investment in Terminal Joint Venture | 79.1 | 93.2 |
Property and equipment, net | 1,347.2 | 1,165.7 |
Goodwill | 323.7 | 323.7 |
Intangible assets, net | 216.8 | 225.2 |
Deferred dry-docking costs, net | 77.7 | 89.2 |
Other long-term assets | 75.6 | 84.5 |
Total long-term assets | 2,120.1 | 1,981.5 |
Total Assets | 2,421.2 | 2,247.5 |
Current Liabilities: | ||
Current portion of debt | 42.1 | 30.8 |
Accounts payable | 203.4 | 175.1 |
Accruals and other liabilities | 80.2 | 80.4 |
Total current liabilities | 325.7 | 286.3 |
Long-term Liabilities: | ||
Long-term debt | 866 | 826.3 |
Deferred income taxes | 311.5 | 285.2 |
Other long-term liabilities | 174.3 | 171.5 |
Total long-term liabilities | 1,351.8 | 1,283 |
Commitments and Contingencies (Note 2) | ||
Shareholders' Equity: | ||
Common stock | 32 | 31.9 |
Additional paid in capital | 293.7 | 289.7 |
Accumulated other comprehensive loss, net | (31.5) | (24.9) |
Retained earnings | 449.5 | 381.5 |
Total shareholders' equity | 743.7 | 678.2 |
Total liabilities and shareholders' equity | $ 2,421.2 | $ 2,247.5 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash Flows From Operating Activities: | ||
Net income | $ 88.4 | $ 65.1 |
Reconciling adjustments: | ||
Depreciation and amortization | 70.8 | 74.3 |
Deferred income taxes | 26.5 | 22.3 |
Share-based compensation expense | 8.2 | 7.8 |
Equity in income of Terminal Joint Venture | (28.8) | (19.3) |
Distribution from Terminal Joint Venture | 42 | 14 |
Other | (2.1) | 2.1 |
Changes in assets and liabilities: | ||
Accounts receivable, net | (46.1) | (24.3) |
Deferred dry-docking payments | (10.5) | (45.1) |
Deferred dry-docking amortization | 27.5 | 35.7 |
Prepaid expenses and other assets | 3 | 4.3 |
Accounts payable, accruals and other liabilities | 24.8 | 14.5 |
Other long-term liabilities | (0.7) | (4.4) |
Net cash provided by operating activities | 203 | 147 |
Cash Flows From Investing Activities: | ||
Capitalized vessel construction expenditures | (222.6) | (172.2) |
Other capital expenditures | (44.7) | (43.3) |
Proceeds from (payments for) disposal of property and equipment | 31.3 | (0.3) |
Cash deposits into Capital Construction Fund | (246.6) | (64.6) |
Withdrawals from Capital Construction Fund | 247.5 | 95.8 |
Other | 3.7 | |
Net cash used in investing activities | (231.4) | (184.6) |
Cash Flows From Financing Activities: | ||
Repayments of debt and capital leases | (17) | (19.5) |
Proceeds from revolving credit facility | 389.4 | 341 |
Repayments of revolving credit facility | (321.4) | (221) |
Payment of financing costs | (1.7) | |
Proceeds from issuance of capital stock | 0.5 | 0.4 |
Dividends paid | (26.3) | (25.2) |
Repurchase of Matson common stock | (18.4) | |
Tax withholding related to net share settlements of restricted stock units | (4.5) | (7.2) |
Net cash provided by financing activities | 20.7 | 48.4 |
Net (Decrease) Increase in Cash and Cash Equivalents | (7.7) | 10.8 |
Cash and Cash Equivalents, Beginning of the Period | 19.8 | 13.9 |
Cash and Cash Equivalents, End of the Period | 12.1 | 24.7 |
Supplemental Cash Flow Information: | ||
Interest paid, net of capitalized interest | 14.5 | 20.5 |
Income tax paid, net of income tax refunds | 4.6 | (0.1) |
Non-cash Information: | ||
Capital expenditures included in accounts payable, accruals and other liabilities | $ 0.4 | $ 1.5 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) shares in Millions, $ in Millions | Common Stock | Additional Paid In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Total |
Balance at the beginning of the period at Dec. 31, 2016 | $ 32.1 | $ 289.8 | $ (23.6) | $ 196.6 | $ 494.9 |
Balance (in shares) at Dec. 31, 2016 | 42.9 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 7 | 7 | |||
Other comprehensive income (loss), net of tax | 0.7 | 0.7 | |||
Share-based compensation | 2.6 | 2.6 | |||
Shares issued | $ 0.2 | (6.9) | (6.7) | ||
Shares issued (in shares) | 0.3 | ||||
Shares repurchased | (0.3) | (0.5) | (0.8) | ||
Dividends | (8.3) | (8.3) | |||
Balance at the end of the period at Mar. 31, 2017 | $ 32.3 | 285.2 | (22.9) | 194.8 | 489.4 |
Balance (in shares) at Mar. 31, 2017 | 43.2 | ||||
Balance at the beginning of the period at Dec. 31, 2016 | $ 32.1 | 289.8 | (23.6) | 196.6 | 494.9 |
Balance (in shares) at Dec. 31, 2016 | 42.9 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 65.1 | ||||
Other comprehensive income (loss), net of tax | 1.2 | ||||
Balance at the end of the period at Sep. 30, 2017 | $ 31.8 | 285.8 | (22.4) | 223.4 | 518.6 |
Balance (in shares) at Sep. 30, 2017 | 42.5 | ||||
Balance at the beginning of the period at Mar. 31, 2017 | $ 32.3 | 285.2 | (22.9) | 194.8 | 489.4 |
Balance (in shares) at Mar. 31, 2017 | 43.2 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 24 | 24 | |||
Other comprehensive income (loss), net of tax | 1 | 1 | |||
Share-based compensation | 2.4 | (0.1) | 2.3 | ||
Shares issued | (0.1) | (0.1) | |||
Shares repurchased | (0.1) | (0.3) | (0.4) | ||
Dividends | (17) | (17) | |||
Balance at the end of the period at Jun. 30, 2017 | $ 32.3 | 287.4 | (21.9) | 201.4 | 499.2 |
Balance (in shares) at Jun. 30, 2017 | 43.2 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 34.1 | 34.1 | |||
Other comprehensive income (loss), net of tax | (0.5) | (0.5) | |||
Share-based compensation | 2.9 | 2.9 | |||
Shares repurchased | $ (0.5) | (4.5) | (12.1) | (17.1) | |
Shares repurchased (in shares) | (0.7) | ||||
Balance at the end of the period at Sep. 30, 2017 | $ 31.8 | 285.8 | (22.4) | 223.4 | 518.6 |
Balance (in shares) at Sep. 30, 2017 | 42.5 | ||||
Balance at the beginning of the period at Dec. 31, 2017 | $ 31.9 | 289.7 | (24.9) | 381.5 | 678.2 |
Balance (in shares) at Dec. 31, 2017 | 42.5 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 14.2 | 14.2 | |||
Other comprehensive income (loss), net of tax | 0.2 | 0.2 | |||
Reclassification resulting from adoption of new accounting pronouncements (see Note 2) | (6) | 6 | |||
Share-based compensation | 2.7 | 2.7 | |||
Shares issued | $ 0.1 | (4.3) | (4.2) | ||
Shares issued (in shares) | 0.2 | ||||
Dividends | (8.7) | (8.7) | |||
Balance at the end of the period at Mar. 31, 2018 | $ 32 | 288.1 | (30.7) | 393 | 682.4 |
Balance (in shares) at Mar. 31, 2018 | 42.7 | ||||
Balance at the beginning of the period at Dec. 31, 2017 | $ 31.9 | 289.7 | (24.9) | 381.5 | 678.2 |
Balance (in shares) at Dec. 31, 2017 | 42.5 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 88.4 | ||||
Other comprehensive income (loss), net of tax | (0.6) | ||||
Balance at the end of the period at Sep. 30, 2018 | $ 32 | 293.7 | (31.5) | 449.5 | 743.7 |
Balance (in shares) at Sep. 30, 2018 | 42.7 | ||||
Balance at the beginning of the period at Mar. 31, 2018 | $ 32 | 288.1 | (30.7) | 393 | 682.4 |
Balance (in shares) at Mar. 31, 2018 | 42.7 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 32.6 | 32.6 | |||
Other comprehensive income (loss), net of tax | (0.9) | (0.9) | |||
Share-based compensation | 2.8 | 2.8 | |||
Shares issued | 0.3 | 0.3 | |||
Dividends | (17.7) | (17.7) | |||
Balance at the end of the period at Jun. 30, 2018 | $ 32 | 291.2 | (31.6) | 407.9 | 699.5 |
Balance (in shares) at Jun. 30, 2018 | 42.7 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 41.6 | 41.6 | |||
Other comprehensive income (loss), net of tax | 0.1 | 0.1 | |||
Share-based compensation | 2.7 | 2.7 | |||
Shares issued | (0.2) | (0.2) | |||
Balance at the end of the period at Sep. 30, 2018 | $ 32 | $ 293.7 | $ (31.5) | $ 449.5 | $ 743.7 |
Balance (in shares) at Sep. 30, 2018 | 42.7 |
Consolidated Statements of St_2
Consolidated Statements of Stockholders' Equity (Parenthetical) - $ / shares | 3 Months Ended | |||||
Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | |
Consolidated Statement of Stockholders' Equity | ||||||
Dividends (per share) | $ 0.21 | $ 0.20 | $ 0.20 | $ 0.20 | $ 0.19 | $ 0.19 |
DESCRIPTION OF THE BUSINESS
DESCRIPTION OF THE BUSINESS | 9 Months Ended |
Sep. 30, 2018 | |
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 provides a vital lifeline of ocean freight transportation services to the domestic non-contiguous economies of Hawaii, Alaska, and Guam, and to other island economies in Micronesia. MatNav also operates a premium, expedited service from China to Long Beach, California, and also provides services to Okinawa, Japan and various islands in the South Pacific. In addition, subsidiaries of MatNav provide container stevedoring, refrigerated cargo services, inland transportation 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 and Dutch Harbor. Matson 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 seven terminal facilities on the U.S. West Coast, including four facilities which are used by MatNav (“Terminal Joint Venture”). Matson records its share of income in the Terminal 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: Matson’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 a variety of logistic services to its customers including: (i) multimodal transportation brokerage of domestic and international rail intermodal service, long-haul and regional highway trucking services, specialized hauling, flat-bed and project services, less-than-truckload services, and expedited freight services (collectively “Transportation Brokerage Services”); (ii) less-than-container load (“LCL”) consolidation and freight forwarding services (collectively “Freight Forwarding Services”); (iii) warehousing and distribution services; and (iv) supply chain management, non-vessel operating common carrier freight forwarding and other services. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2018 | |
SIGNIFICANT ACCOUNTING POLICIES | |
SIGNIFICANT ACCOUNTING POLICIES | 2. SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation: The Condensed Consolidated Financial Statements are unaudited, and include the accounts of Matson and all wholly-owned subsidiaries, after elimination of significant intercompany amounts and transactions. 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. The Company accounts for its investment in the Terminal Joint Venture using the equity method of accounting. Due to the nature of the Company’s operations, 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 consolidated 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 on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission (“SEC”) on February 23, 2018. Fiscal Period: The period end for Matson covered by this report is September 30, 2018. The period end for MatNav and its subsidiaries covered by this report occurred on the last Friday in September, or September 28, 2018, for the third quarter 2018. Significant Accounting Policies: The Company’s significant accounting policies are described in Note 2 to the Consolidated Financial Statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. Recognition of Revenues and Expenses: Revenue in the Company’s Condensed Consolidated Financial Statements is presented net of elimination of intercompany transactions. The following is a description of the Company’s principal revenue generating activities by segment, and the Company’s revenue recognition policy for each activity: Three Months Ended Nine Months Ended September 30, September 30, Ocean Transportation (in millions) (1) 2018 2017 2018 2017 Ocean Transportation services $ 431.4 $ 414.1 $ 1,207.3 $ 1,167.3 Terminal and other related services 0.7 0.6 2.0 2.2 Fuel sales 3.5 2.8 8.7 7.3 Ship management services and related costs 1.7 1.7 5.2 5.1 Total $ 437.3 $ 419.2 $ 1,223.2 $ 1,181.9 (1) Ocean Transportation revenue transactions are primarily denominated in U.S. dollars except for approximately 3 percent of Ocean Transportation revenues and fuel sales which are denominated in foreign currencies. § Ocean Transportation services are recognized ratably over the duration of a voyage based on the relative transit time completed in each reporting period. Vessel operating costs and other ocean transportation operating costs, such as terminal operating overhead and general and administrative expenses, are charged to operating costs as incurred. § Terminal and other related services to third parties are recognized as the services are performed. § Fuel sales are recognized when the Company has completed delivery of the product to the customer in accordance with the terms and conditions of the contract. § Ship management services and related costs are recognized in proportion to the services completed. Three Months Ended Nine Months Ended September 30, September 30, Logistics (in millions) (1) 2018 2017 2018 2017 Transportation Brokerage and Freight Forwarding Services $ 135.4 $ 110.1 $ 391.0 $ 309.3 Warehouse and distribution services 8.9 7.8 24.1 22.3 Supply chain management and other services 7.8 6.8 19.6 17.3 Total $ 152.1 $ 124.7 $ 434.7 $ 348.9 (1) Logistics revenue transactions are primarily denominated in U.S. dollars except for approximately 3 percent of transportation brokerage and freight forwarding services revenue, and supply chain management and other services revenue categories are denominated in foreign currencies. § Transportation Brokerage and Freight Forwarding Services consist of amounts billed to customers for services provided. The primary costs include third-party purchased transportation services, labor and equipment costs. Revenue and the related purchased third-party transportation costs are recognized over the duration of a delivery based upon the relative transit time completed in each reporting period. Labor and other operating costs are expensed as incurred. The Company reports revenue on a gross basis as the Company serves as the principal in these transactions because it is responsible for fulfilling the contractual arrangements with the customer and has latitude in establishing prices. § Warehousing and distribution services consist of amounts billed to customers for storage, handling, and value-added packaging of customer merchandise. Storage revenue is recognized in the month the service is provided to the customer. Storage expenses are recognized as incurred. Other warehousing and distribution services revenue and expense are recognized in proportion to the services performed. § Supply chain management and other services and related costs are recognized in proportion to the services performed. The Company generally invoices its customers at the commencement of the voyage or the transportation service being provided, or as other services are being performed. Revenue is deferred when services are invoiced in advance by the customer. The Company’s receivables are classified as short-term as collection terms are for periods of less than one year. The Company expenses sales commissions and contract acquisition costs as incurred because the amounts are generally immaterial. These expenses are included in selling, general and administration expenses in the Condensed Consolidated Statements of Income and Comprehensive Income. Capital Construction Fund: The Company’s Capital Construction Fund (“CCF”) is described in Note 7 to the Consolidated Financial Statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. As of September 30, 2018 and December 31, 2017, the following amounts related to the Company’s CCF: September 30, December 31, (In millions) 2018 2017 Capital Construction Fund: Cash on deposit $ — $ 0.9 Assigned accounts receivables $ 77.2 $ 134.8 Cash on deposit in the CCF is held in a money market account and classified as a long-term asset 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 nine months ended September 30, 2018 and 2017, the Company deposited $246.6 million and $64.6 million into the CCF, and made qualifying cash withdrawals of $247.5 million and $95.8 million from the CCF, respectively. Eligible accounts receivable that are assigned into the CCF are classified as part of accounts receivable in the Condensed Consolidated Financial Statements due to the nature of the assignment. Investment in Terminal Joint Venture: The Company’s investment in the Terminal Joint Venture was $79.1 million and $93.2 million at September 30, 2018 and December 31, 2017, respectively. Condensed income statement information (unaudited) for the Terminal Joint Venture for the three and nine months ended September 30, 2018 and 2017 consisted of the following: Three Months Ended Nine Months Ended September 30, September 30, (In millions) 2018 2017 2018 2017 Operating revenue $ 289.4 $ 227.4 $ 806.5 $ 638.2 Operating costs and expenses (259.5) (203.9) (719.7) (581.9) Operating income 29.9 23.5 86.8 56.3 Net Income (1) 27.7 23.7 82.7 57.5 Company Share of Net Income $ 9.2 $ 7.5 $ 28.8 $ 19.3 (1) Includes earnings from equity method investments held by the Terminal Joint Venture less earnings allocated to non-controlling interests. Income Taxes: In connection with the Tax Cuts and Jobs Act that was signed into law on December 22, 2017 (the “Tax Act”), the Company recorded a non-cash tax adjustment of $3.1 million that increased income taxes for the nine months ended September 30, 2018. No amount was recorded during the three months ended September 30, 2018. This adjustment related to the application of an estimated 6.2 percent sequestration on alternative minimum tax (AMT) refunds for the years 2018 to 2021, and was based on new guidance issued by the Internal Revenue Service and emerging interpretations of the Tax Act. The Company continues to assess the impact of the Tax Act and any related interpretations, when issued, on the Company’s income tax estimates. These and other factors could materially affect the Company’s financial condition or its future operating results. Contingencies: Environmental Matters: 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. 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. New Accounting Pronouncements: Revenues from Contracts with Customers (Topic 606) (“ASU 2014-09”): The Company adopted ASU 2014-09 during the three months ended March 31, 2018 using the modified retrospective method. This method allowed the Company to recognize the cumulative effect of initially applying ASU 2014-09 as an adjustment to retained earnings as of December 31, 2017. Prior to adopting ASU 2014-09, the Company performed a review of its revenue contracts and evaluated the Company’s current accounting policies and procedures for recognizing revenues in the Company’s Consolidated Financial Statements, and compared these to the new requirements of ASU 2014-09. In addition, the Company identified the performance obligations and consideration applicable under each contract. Based upon this evaluation, the Company determined that the impact of adopting ASU 2014-09 was immaterial because the analysis of the Company’s contracts under ASU 2014-09 supports the recognition of revenue over time as the service is performed, which is consistent with the Company’s current revenue recognition accounting policy. The majority of the Company’s contracts require the Company to provide ocean and logistics transportation services to its customers. Such services are provided by the Company over a period of time, generally, when cargo is being delivered from source to destination point, or as the service is being performed. Therefore, performance obligations are completed in a short period of time due to the nature of the services provided by the Company. Under the new standard, revenues from the majority of the Company’s contracts will continue to be recognized over time as the customer simultaneously receives and consumes the benefit of these services as described in ASU 2014-09. In addition, the identification of performance obligations and related consideration under the new standard is not materially different from our current accounting treatment. Income Statement – Reporting Comprehensive Income (Topic 220) (“ASU 2018-02”): ASU 2018-02 allows a reclassification from accumulated other comprehensive income (loss) to retained earnings for the remeasurement tax effects resulting from the Tax Act. The Company elected to early adopt ASU 2018-02 during the three months ended March 31, 2018, and recorded a reclassification adjustment of $6.0 million between accumulated other comprehensive income (loss) and retained earnings (see Note 7). Compensation – Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Benefit Cost (“ASU 2017-07”): ASU 2017-07 requires employers that sponsor defined benefit pension and post-retirement plans to present the service cost component of net benefit cost in the same income statement line item as other employee compensation costs arising from services rendered, and that only the service cost component will be eligible for capitalization. The other components of the net periodic benefit cost must be presented separately from the line item that includes the service cost component and outside of the income from operations subtotal. The Company adopted ASU 2017-07 during the three months ended March 31, 2018. To conform prior period amounts to current period presentation as required by ASU 2017-07, the Company recorded retrospective adjustments and reclassified $3.5 million and $1.6 million of expenses from operating costs to other income (expense) in the Condensed Consolidated Statement of Income and Comprehensive Income for the three and nine months ended September 30, 2017, respectively. There was no change to income before income taxes for all periods presented as a result of adopting ASU 2017-07. Leases (Topic 842) (“ASU 2016-02”): ASU 2016-02 requires lessees to record most leases on their balance sheets but recognize the expenses in 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 the implementation of this guidance. |
REPORTABLE SEGMENTS
REPORTABLE SEGMENTS | 9 Months Ended |
Sep. 30, 2018 | |
REPORTABLE SEGMENTS | |
REPORTABLE SEGMENTS | 3. 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 n 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 income, exclusive of interest expense and income taxes. In arrangements where the customer purchases ocean transportation and logistics services, the revenues are allocated to each reportable segment based upon the contractual amounts for each type of service. 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. The Company’s Ocean Transportation segment provides ocean transportation services to the Logistics segment, and the Logistics segment provides logistics services to the Ocean Transportation segment. Accordingly, inter-segment revenue of $27.6 million and $24.1 million for the three months ended September 30, 2018 and 2017, and $72.7 million and $62.7 million for the nine months ended September 30, 2018 and 2017, respectively, have been eliminated from operating revenue in the table below. Reportable segment results for the three and nine months ended September 30, 2018 and 2017 consisted of the following: Three Months Ended Nine Months Ended September 30, September 30, (In millions) 2018 2017 2018 2017 Operating Revenue: Ocean Transportation $ 437.3 $ 419.2 $ 1,223.2 $ 1,181.9 Logistics 152.1 124.7 434.7 348.9 Total Operating Revenue $ 589.4 $ 543.9 $ 1,657.9 $ 1,530.8 Operating Income: Ocean Transportation (1) $ 48.7 $ 51.0 $ 109.7 $ 106.3 Logistics 9.9 7.3 23.6 16.2 Total Operating Income 58.6 58.3 133.3 122.5 Interest expense, net (4.4) (6.2) (14.4) (18.8) Other income (expense), net 0.7 3.5 1.9 1.6 Income before Income Taxes 54.9 55.6 120.8 105.3 Income taxes (13.3) (21.5) (32.4) (40.2) Net Income $ 41.6 $ 34.1 $ 88.4 $ 65.1 (1) Ocean Transportation segment information includes $9.2 million and $7.5 million of equity in income from the Terminal Joint Venture for the three months ended September 30, 2018 and 2017, and $28.8 million and $19.3 million for the nine months ended September 30, 2018 and 2017, respectively. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 9 Months Ended |
Sep. 30, 2018 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | 4. PROPERTY AND EQUIPMENT Property and equipment at September 30, 2018 and December 31, 2017 consisted of the following: September 30, December 31, (In millions) 2018 2017 Cost: Vessels $ 1,414.5 $ 1,433.6 Containers and equipment 512.8 543.0 Terminal facilities and other property 65.9 64.8 Vessel construction in progress 599.2 376.6 Other construction in progress 49.0 26.2 Total Property and Equipment 2,641.4 2,444.2 Less: Accumulated Depreciation Total Property and Equipment, net $ 1,347.2 $ 1,165.7 Vessel construction in progress relates to progress payments for the construction of four new vessels to be used within the Hawaii service, capitalized owners’ items and capitalized interest. Capitalized interest included in vessel construction in progress was $23.8 million and $10.4 million at September 30, 2018 and December 31, 2017, respectively. |
GOODWILL AND INTANGIBLES
GOODWILL AND INTANGIBLES | 9 Months Ended |
Sep. 30, 2018 | |
GOODWILL AND INTANGIBLES ASSETS | |
GOODWILL AND INTANGIBLES ASSETS | 5. GOODWILL AND INTANGIBLES Goodwill by segment at both September 30, 2018 and December 31, 2017 consisted of the following: Ocean (In millions) Transportation Logistics Total Goodwill $ 218.5 $ 105.2 $ 323.7 Intangible assets at September 30, 2018 and December 31, 2017 consisted of the following: September 30, December 31, (In millions) 2018 2017 Customer Relationships: Ocean Transportation $ 140.6 $ 140.6 Logistics 90.1 90.1 Total 230.7 230.7 Less: Accumulated Amortization (41.2) (32.8) Total Customer Relationships, net 189.5 197.9 Trade name - Logistics 27.3 27.3 Total Intangible Assets, net $ 216.8 $ 225.2 |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2018 | |
DEBT | |
DEBT | 6. DEBT Debt at September 30, 2018 and December 31, 2017 consisted of the following: September 30, December 31, (In millions) 2018 2017 Private Placement Term Loans: 5.79 %, payable through 2020 $ $ 17.5 3.66 %, payable through 2023 50.1 4.16 %, payable through 2027 49.8 3.37 %, payable through 2027 75.0 3.14 %, payable through 2031 200.0 4.31 %, payable through 2032 35.1 4.35 %, payable through 2044 100.0 3.92 %, payable through 2045 73.2 Title XI Bonds: 5.34 %, payable through 2028 24.2 5.27 %, payable through 2029 26.4 Revolving credit facility 205.0 Capital leases 0.8 Total Debt 908.1 857.1 Less: Current portion (30.8) Total Long-term Debt $ 866.0 $ 826.3 The Company’s debt is described in Note 8 to the Consolidated Financial Statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. Borrowings under the revolving credit facility are classified as long-term debt in the Condensed Consolidated Balance Sheets, as principal payments are not required until the maturity date of June 29, 2022. As of September 30, 2018, the Company had $243.2 million of remaining availability under the revolving credit facility. The interest rate on borrowings under the revolving credit facility approximated 3.52 percent during the three months ended September 30, 2018. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 9 Months Ended |
Sep. 30, 2018 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS). | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 7. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Changes in accumulated other comprehensive income (loss) by component, net of tax, for the nine months ended September 30, 2018 consisted of the following: Accumulated Non- Other Post Qualified Comprehensive (In millions) Pensions Retirement Plans Other Income (Loss) Balance at December 31, 2017 $ (40.6) $ 15.6 $ (0.3) $ 0.4 $ (24.9) Reclassification adjustment related to the Tax Act (1) (9.2) 3.4 (0.2) — (6.0) Amortization of prior service cost (0.4) (0.9) — — (1.3) Amortization of net loss 0.9 0.3 0.1 — 1.3 Other adjustments — — — 0.2 0.2 Balance at March 31, 2018 (49.3) 18.4 (0.4) 0.6 (30.7) Amortization of prior service cost (0.5) (0.5) (0.1) — (1.1) Amortization of net loss 0.9 0.2 0.1 (0.7) 0.5 Other adjustments — — — (0.3) (0.3) Balance at June 30, 2018 (48.9) 18.1 (0.4) (0.4) (31.6) Amortization of prior service cost (0.4) (0.7) — — (1.1) Amortization of net loss 0.9 0.3 (0.1) — 1.1 Other adjustments — — — 0.1 0.1 Balance at September 30, 2018 $ (48.4) $ 17.7 $ (0.5) $ (0.3) $ (31.5) (1) Reclassification from accumulated other comprehensive income (loss) to retained earnings for the remeasurement tax effects resulting from the Tax Act in accordance with ASU 2018-02 . Changes in accumulated other comprehensive income (loss) by component, net of tax, for the nine months ended September 30, 2017 consisted of the following: Accumulated Non- Other Post Qualified Comprehensive (In millions) Pensions Retirement Plans Other Income (Loss) Balance at December 31, 2016 $ (41.4) $ 18.1 $ (0.4) $ 0.1 $ (23.6) Amortization of prior service cost (0.4) — — — (0.4) Amortization of net loss 0.8 0.1 — — 0.9 Other adjustments — — — 0.2 0.2 Balance at March 31, 2017 (41.0) 18.2 (0.4) 0.3 (22.9) Net gain in prior service cost — — — 0.1 0.1 Amortization of prior service cost (0.3) — — — (0.3) Amortization of net loss 0.8 0.3 0.1 — 1.2 Balance at June 30, 2017 (40.5) 18.5 (0.3) 0.4 (21.9) Net gain in prior service costs — 0.7 — — 0.7 Amortization of prior service cost (0.4) (1.7) (0.1) — (2.2) Amortization of net loss 0.8 0.2 — — 1.0 Balance at September 30, 2017 $ (40.1) $ 17.7 $ (0.4) $ 0.4 $ (22.4) |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2018 | |
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 CCF – cash on deposit, and variable and fixed rate debt. The fair values of cash and cash equivalents, CCF – cash on deposit, 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, 2018 and December 31, 2017 were as follows: Quoted Prices in Significant Significant Total Active Markets Observable Unobservable Carrying Value Total (Level 1) Inputs (Level 2) Inputs (Level 3) (In millions) September 30, 2018 Fair Value Measurements at September 30, 2018 Cash and cash equivalents $ 12.1 $ 12.1 $ 12.1 $ — $ — Variable rate debt 273.0 273.0 — 273.0 — Fixed rate debt 635.1 600.3 — 600.3 — (In millions) December 31, 2017 Fair Value Measurements at December 31, 2017 Cash and cash equivalents $ 19.8 $ 19.8 $ 19.8 $ — $ — CCF – cash on deposit 0.9 0.9 — 0.9 — Variable rate debt 205.0 205.0 — 205.0 — Fixed rate debt 652.1 651.4 — 651.4 — |
EARNINGS PER-SHARE
EARNINGS PER-SHARE | 9 Months Ended |
Sep. 30, 2018 | |
EARNINGS PER-SHARE | |
EARNINGS PER-SHARE | 9. 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, 2018 and 2017, were as follows: Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 Weighted Per Weighted Per Average Common Average Common Net Common Share Net Common Share (In millions, except per-share amounts) Income Shares Amount Income Shares Amount Basic: $ 41.6 42.7 $ 0.97 $ 88.4 42.7 $ 2.07 Effect of Dilutive Securities: 0.4 — 0.3 (0.01) Diluted: $ 41.6 43.1 $ 0.97 $ 88.4 43.0 $ 2.06 Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017 Weighted Per Weighted Per Average Common Average Common Net Common Share Net Common Share (In millions, except per-share amounts) Income Shares Amount Income Shares Amount Basic: $ 34.1 42.9 $ 0.79 $ 65.1 43.0 $ 1.51 Effect of Dilutive Securities: 0.3 — 0.3 (0.01) Diluted: $ 34.1 43.2 $ 0.79 $ 65.1 43.3 $ 1.50 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. |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2018 | |
SHARE-BASED COMPENSATION | |
SHARE-BASED COMPENSATION | 10. SHARE-BASED COMPENSATION During the three and nine months ended September 30, 2018, the Company granted approximately 2,700 and 383,700 in total of time-based restricted stock units and performance-based shares to certain of its employees at a weighted-average grant date fair value of $36.58 and $31.21, respectively. Total share-based compensation cost recognized in the Condensed Consolidated Statements of Income and Comprehensive Income as a component of selling, general and administrative expenses was $2.7 million and $2.9 million for the three months ended September 30, 2018 and 2017, and $8.2 million and $7.8 million for the nine months ended September 30, 2018 and 2017, respectively. Total unrecognized compensation cost related to unvested share-based compensation arrangements was $14.9 million at September 30, 2018, and is expected to be recognized over a weighted-average period of 1.8 years. Total unrecognized compensation cost may be adjusted for any unearned performance shares or forfeited shares. |
PENSION AND POST-RETIREMENT PLA
PENSION AND POST-RETIREMENT PLANS | 9 Months Ended |
Sep. 30, 2018 | |
PENSION AND POST-RETIREMENT PLANS | |
PENSION AND POST-RETIREMENT PLANS | 11. PENSION AND POST-RETIREMENT PLANS The Company’s pension and post-retirement plans are described in Note 11 to the Consolidated Financial Statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. The following tables provide the components of net periodic benefit cost for the Company’s qualified defined benefit pension and post-retirement plans for the three and nine months ended September 30, 2018 and 2017: Pension Benefits Post-retirement Benefits Three Months Ended September 30, Three Months Ended September 30, (In millions) 2018 2017 2018 2017 Components of net periodic benefit cost (benefit): Service cost $ 1.1 $ 1.1 $ 0.2 $ (0.4) Interest cost 2.1 2.5 0.3 (0.6) Expected return on plan assets (3.3) (3.3) — — Amortization of net loss 1.0 1.3 0.3 0.3 Amortization of prior service credit (0.5) (0.6) (1.0) (2.8) Other adjustments — 0.1 — — Net periodic benefit cost $ 0.4 $ 1.1 $ (0.2) $ (3.5) Pension Benefits Post-retirement Benefits Nine Months Ended September 30, Nine Months Ended September 30, (In millions) 2018 2017 2018 2017 Components of net periodic benefit cost (benefit): Service cost $ 3.3 $ 3.0 $ 0.5 $ 0.4 Interest cost 6.4 7.3 0.8 0.8 Expected return on plan assets (10.1) (10.1) — — Amortization of net loss 3.4 3.8 1.1 0.9 Amortization of prior service credit (1.7) (1.7) (2.8) (2.8) Other adjustments — 0.1 — — Net periodic benefit cost $ 1.3 $ 2.4 $ (0.4) $ (0.7) |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation: The Condensed Consolidated Financial Statements are unaudited, and include the accounts of Matson and all wholly-owned subsidiaries, after elimination of significant intercompany amounts and transactions. 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. The Company accounts for its investment in the Terminal Joint Venture using the equity method of accounting. Due to the nature of the Company’s operations, 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 consolidated 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 on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission (“SEC”) on February 23, 2018. |
Fiscal Period | Fiscal Period: The period end for Matson covered by this report is September 30, 2018. The period end for MatNav and its subsidiaries covered by this report occurred on the last Friday in September, or September 28, 2018, for the third quarter 2018. |
Significant Accounting Policies | Significant Accounting Policies: The Company’s significant accounting policies are described in Note 2 to the Consolidated Financial Statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. |
Recognition of Revenues and Expenses | Recognition of Revenues and Expenses: Revenue in the Company’s Condensed Consolidated Financial Statements is presented net of elimination of intercompany transactions. The following is a description of the Company’s principal revenue generating activities by segment, and the Company’s revenue recognition policy for each activity: Three Months Ended Nine Months Ended September 30, September 30, Ocean Transportation (in millions) (1) 2018 2017 2018 2017 Ocean Transportation services $ 431.4 $ 414.1 $ 1,207.3 $ 1,167.3 Terminal and other related services 0.7 0.6 2.0 2.2 Fuel sales 3.5 2.8 8.7 7.3 Ship management services and related costs 1.7 1.7 5.2 5.1 Total $ 437.3 $ 419.2 $ 1,223.2 $ 1,181.9 (1) Ocean Transportation revenue transactions are primarily denominated in U.S. dollars except for approximately 3 percent of Ocean Transportation revenues and fuel sales which are denominated in foreign currencies. § Ocean Transportation services are recognized ratably over the duration of a voyage based on the relative transit time completed in each reporting period. Vessel operating costs and other ocean transportation operating costs, such as terminal operating overhead and general and administrative expenses, are charged to operating costs as incurred. § Terminal and other related services to third parties are recognized as the services are performed. § Fuel sales are recognized when the Company has completed delivery of the product to the customer in accordance with the terms and conditions of the contract. § Ship management services and related costs are recognized in proportion to the services completed. Three Months Ended Nine Months Ended September 30, September 30, Logistics (in millions) (1) 2018 2017 2018 2017 Transportation Brokerage and Freight Forwarding Services $ 135.4 $ 110.1 $ 391.0 $ 309.3 Warehouse and distribution services 8.9 7.8 24.1 22.3 Supply chain management and other services 7.8 6.8 19.6 17.3 Total $ 152.1 $ 124.7 $ 434.7 $ 348.9 (1) Logistics revenue transactions are primarily denominated in U.S. dollars except for approximately 3 percent of transportation brokerage and freight forwarding services revenue, and supply chain management and other services revenue categories are denominated in foreign currencies. § Transportation Brokerage and Freight Forwarding Services consist of amounts billed to customers for services provided. The primary costs include third-party purchased transportation services, labor and equipment costs. Revenue and the related purchased third-party transportation costs are recognized over the duration of a delivery based upon the relative transit time completed in each reporting period. Labor and other operating costs are expensed as incurred. The Company reports revenue on a gross basis as the Company serves as the principal in these transactions because it is responsible for fulfilling the contractual arrangements with the customer and has latitude in establishing prices. § Warehousing and distribution services consist of amounts billed to customers for storage, handling, and value-added packaging of customer merchandise. Storage revenue is recognized in the month the service is provided to the customer. Storage expenses are recognized as incurred. Other warehousing and distribution services revenue and expense are recognized in proportion to the services performed. § Supply chain management and other services and related costs are recognized in proportion to the services performed. The Company generally invoices its customers at the commencement of the voyage or the transportation service being provided, or as other services are being performed. Revenue is deferred when services are invoiced in advance by the customer. The Company’s receivables are classified as short-term as collection terms are for periods of less than one year. The Company expenses sales commissions and contract acquisition costs as incurred because the amounts are generally immaterial. These expenses are included in selling, general and administration expenses in the Condensed Consolidated Statements of Income and Comprehensive Income. |
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 Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. As of September 30, 2018 and December 31, 2017, the following amounts related to the Company’s CCF: September 30, December 31, (In millions) 2018 2017 Capital Construction Fund: Cash on deposit $ — $ 0.9 Assigned accounts receivables $ 77.2 $ 134.8 Cash on deposit in the CCF is held in a money market account and classified as a long-term asset 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 nine months ended September 30, 2018 and 2017, the Company deposited $246.6 million and $64.6 million into the CCF, and made qualifying cash withdrawals of $247.5 million and $95.8 million from the CCF, respectively. Eligible accounts receivable that are assigned into the CCF are classified as part of accounts receivable in the Condensed Consolidated Financial Statements due to the nature of the assignment. |
Investment in Terminal Joint Venture | Investment in Terminal Joint Venture: The Company’s investment in the Terminal Joint Venture was $79.1 million and $93.2 million at September 30, 2018 and December 31, 2017, respectively. Condensed income statement information (unaudited) for the Terminal Joint Venture for the three and nine months ended September 30, 2018 and 2017 consisted of the following: Three Months Ended Nine Months Ended September 30, September 30, (In millions) 2018 2017 2018 2017 Operating revenue $ 289.4 $ 227.4 $ 806.5 $ 638.2 Operating costs and expenses (259.5) (203.9) (719.7) (581.9) Operating income 29.9 23.5 86.8 56.3 Net Income (1) 27.7 23.7 82.7 57.5 Company Share of Net Income $ 9.2 $ 7.5 $ 28.8 $ 19.3 (1) Includes earnings from equity method investments held by the Terminal Joint Venture less earnings allocated to non-controlling interests. |
Income Taxes | Income Taxes: In connection with the Tax Cuts and Jobs Act that was signed into law on December 22, 2017 (the “Tax Act”), the Company recorded a non-cash tax adjustment of $3.1 million that increased income taxes for the nine months ended September 30, 2018. No amount was recorded during the three months ended September 30, 2018. This adjustment related to the application of an estimated 6.2 percent sequestration on alternative minimum tax (AMT) refunds for the years 2018 to 2021, and was based on new guidance issued by the Internal Revenue Service and emerging interpretations of the Tax Act. The Company continues to assess the impact of the Tax Act and any related interpretations, when issued, on the Company’s income tax estimates. These and other factors could materially affect the Company’s financial condition or its future operating results. |
Contingencies | Contingencies: Environmental Matters: 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. 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. |
New Accounting Pronouncements | New Accounting Pronouncements: Revenues from Contracts with Customers (Topic 606) (“ASU 2014-09”): The Company adopted ASU 2014-09 during the three months ended March 31, 2018 using the modified retrospective method. This method allowed the Company to recognize the cumulative effect of initially applying ASU 2014-09 as an adjustment to retained earnings as of December 31, 2017. Prior to adopting ASU 2014-09, the Company performed a review of its revenue contracts and evaluated the Company’s current accounting policies and procedures for recognizing revenues in the Company’s Consolidated Financial Statements, and compared these to the new requirements of ASU 2014-09. In addition, the Company identified the performance obligations and consideration applicable under each contract. Based upon this evaluation, the Company determined that the impact of adopting ASU 2014-09 was immaterial because the analysis of the Company’s contracts under ASU 2014-09 supports the recognition of revenue over time as the service is performed, which is consistent with the Company’s current revenue recognition accounting policy. The majority of the Company’s contracts require the Company to provide ocean and logistics transportation services to its customers. Such services are provided by the Company over a period of time, generally, when cargo is being delivered from source to destination point, or as the service is being performed. Therefore, performance obligations are completed in a short period of time due to the nature of the services provided by the Company. Under the new standard, revenues from the majority of the Company’s contracts will continue to be recognized over time as the customer simultaneously receives and consumes the benefit of these services as described in ASU 2014-09. In addition, the identification of performance obligations and related consideration under the new standard is not materially different from our current accounting treatment. Income Statement – Reporting Comprehensive Income (Topic 220) (“ASU 2018-02”): ASU 2018-02 allows a reclassification from accumulated other comprehensive income (loss) to retained earnings for the remeasurement tax effects resulting from the Tax Act. The Company elected to early adopt ASU 2018-02 during the three months ended March 31, 2018, and recorded a reclassification adjustment of $6.0 million between accumulated other comprehensive income (loss) and retained earnings (see Note 7). Compensation – Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Benefit Cost (“ASU 2017-07”): ASU 2017-07 requires employers that sponsor defined benefit pension and post-retirement plans to present the service cost component of net benefit cost in the same income statement line item as other employee compensation costs arising from services rendered, and that only the service cost component will be eligible for capitalization. The other components of the net periodic benefit cost must be presented separately from the line item that includes the service cost component and outside of the income from operations subtotal. The Company adopted ASU 2017-07 during the three months ended March 31, 2018. To conform prior period amounts to current period presentation as required by ASU 2017-07, the Company recorded retrospective adjustments and reclassified $3.5 million and $1.6 million of expenses from operating costs to other income (expense) in the Condensed Consolidated Statement of Income and Comprehensive Income for the three and nine months ended September 30, 2017, respectively. There was no change to income before income taxes for all periods presented as a result of adopting ASU 2017-07. Leases (Topic 842) (“ASU 2016-02”): ASU 2016-02 requires lessees to record most leases on their balance sheets but recognize the expenses in 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 the implementation of this guidance. |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Schedule of assigned eligible accounts receivable, and on deposit to the Capital Construction Fund | September 30, December 31, (In millions) 2018 2017 Capital Construction Fund: Cash on deposit $ — $ 0.9 Assigned accounts receivables $ 77.2 $ 134.8 |
Schedule of condensed income statement information (unaudited) for Terminal Joint Venture | Three Months Ended Nine Months Ended September 30, September 30, (In millions) 2018 2017 2018 2017 Operating revenue $ 289.4 $ 227.4 $ 806.5 $ 638.2 Operating costs and expenses (259.5) (203.9) (719.7) (581.9) Operating income 29.9 23.5 86.8 56.3 Net Income (1) 27.7 23.7 82.7 57.5 Company Share of Net Income $ 9.2 $ 7.5 $ 28.8 $ 19.3 (1) Includes earnings from equity method investments held by the Terminal Joint Venture less earnings allocated to non-controlling interests. |
Ocean Transportation | |
Schedule of principal revenue generating activities by segment | Three Months Ended Nine Months Ended September 30, September 30, Ocean Transportation (in millions) (1) 2018 2017 2018 2017 Ocean Transportation services $ 431.4 $ 414.1 $ 1,207.3 $ 1,167.3 Terminal and other related services 0.7 0.6 2.0 2.2 Fuel sales 3.5 2.8 8.7 7.3 Ship management services and related costs 1.7 1.7 5.2 5.1 Total $ 437.3 $ 419.2 $ 1,223.2 $ 1,181.9 (1) Ocean Transportation revenue transactions are primarily denominated in U.S. dollars except for approximately 3 percent of Ocean Transportation revenues and fuel sales which are denominated in foreign currencies. § Ocean Transportation services are recognized ratably over the duration of a voyage based on the relative transit time completed in each reporting period. Vessel operating costs and other ocean transportation operating costs, such as terminal operating overhead and general and administrative expenses, are charged to operating costs as incurred. § Terminal and other related services to third parties are recognized as the services are performed. § Fuel sales are recognized when the Company has completed delivery of the product to the customer in accordance with the terms and conditions of the contract. Ship management services and related costs are recognized in proportion to the services completed. |
Logistics | |
Schedule of principal revenue generating activities by segment | Three Months Ended Nine Months Ended September 30, September 30, Logistics (in millions) (1) 2018 2017 2018 2017 Transportation Brokerage and Freight Forwarding Services $ 135.4 $ 110.1 $ 391.0 $ 309.3 Warehouse and distribution services 8.9 7.8 24.1 22.3 Supply chain management and other services 7.8 6.8 19.6 17.3 Total $ 152.1 $ 124.7 $ 434.7 $ 348.9 (1) Logistics revenue transactions are primarily denominated in U.S. dollars except for approximately 3 percent of transportation brokerage and freight forwarding services revenue, and supply chain management and other services revenue categories are denominated in foreign currencies. § Transportation Brokerage and Freight Forwarding Services consist of amounts billed to customers for services provided. The primary costs include third-party purchased transportation services, labor and equipment costs. Revenue and the related purchased third-party transportation costs are recognized over the duration of a delivery based upon the relative transit time completed in each reporting period. Labor and other operating costs are expensed as incurred. The Company reports revenue on a gross basis as the Company serves as the principal in these transactions because it is responsible for fulfilling the contractual arrangements with the customer and has latitude in establishing prices. § Warehousing and distribution services consist of amounts billed to customers for storage, handling, and value-added packaging of customer merchandise. Storage revenue is recognized in the month the service is provided to the customer. Storage expenses are recognized as incurred. Other warehousing and distribution services revenue and expense are recognized in proportion to the services performed. Supply chain management and other services and related costs are recognized in proportion to the services performed. |
REPORTABLE SEGMENTS (Tables)
REPORTABLE SEGMENTS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
REPORTABLE SEGMENTS | |
Schedule of reportable segment information | Three Months Ended Nine Months Ended September 30, September 30, (In millions) 2018 2017 2018 2017 Operating Revenue: Ocean Transportation $ 437.3 $ 419.2 $ 1,223.2 $ 1,181.9 Logistics 152.1 124.7 434.7 348.9 Total Operating Revenue $ 589.4 $ 543.9 $ 1,657.9 $ 1,530.8 Operating Income: Ocean Transportation (1) $ 48.7 $ 51.0 $ 109.7 $ 106.3 Logistics 9.9 7.3 23.6 16.2 Total Operating Income 58.6 58.3 133.3 122.5 Interest expense, net (4.4) (6.2) (14.4) (18.8) Other income (expense), net 0.7 3.5 1.9 1.6 Income before Income Taxes 54.9 55.6 120.8 105.3 Income taxes (13.3) (21.5) (32.4) (40.2) Net Income $ 41.6 $ 34.1 $ 88.4 $ 65.1 Ocean Transportation segment information includes $9.2 million and $7.5 million of equity in income from the Terminal Joint Venture for the three months ended September 30, 2018 and 2017, and $28.8 million and $19.3 million for the nine months ended September 30, 2018 and 2017, respectively. |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
PROPERTY AND EQUIPMENT | |
Schedule of property and equipment | September 30, December 31, (In millions) 2018 2017 Cost: Vessels $ 1,414.5 $ 1,433.6 Containers and equipment 512.8 543.0 Terminal facilities and other property 65.9 64.8 Vessel construction in progress 599.2 376.6 Other construction in progress 49.0 26.2 Total Property and Equipment 2,641.4 2,444.2 Less: Accumulated Depreciation Total Property and Equipment, net $ 1,347.2 $ 1,165.7 |
GOODWILL AND INTANGIBLES ASSETS
GOODWILL AND INTANGIBLES ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
GOODWILL AND INTANGIBLES ASSETS | |
Schedule of goodwill | Goodwill by segment at both September 30, 2018 and December 31, 2017 consisted of the following: Ocean (In millions) Transportation Logistics Total Goodwill $ 218.5 $ 105.2 $ 323.7 |
Schedule of intangible assets | September 30, December 31, (In millions) 2018 2017 Customer Relationships: Ocean Transportation $ 140.6 $ 140.6 Logistics 90.1 90.1 Total 230.7 230.7 Less: Accumulated Amortization (41.2) (32.8) Total Customer Relationships, net 189.5 197.9 Trade name - Logistics 27.3 27.3 Total Intangible Assets, net $ 216.8 $ 225.2 |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
DEBT | |
Schedule of debt | Debt at September 30, 2018 and December 31, 2017 consisted of the following: September 30, December 31, (In millions) 2018 2017 Private Placement Term Loans: 5.79 %, payable through 2020 $ $ 17.5 3.66 %, payable through 2023 50.1 4.16 %, payable through 2027 49.8 3.37 %, payable through 2027 75.0 3.14 %, payable through 2031 200.0 4.31 %, payable through 2032 35.1 4.35 %, payable through 2044 100.0 3.92 %, payable through 2045 73.2 Title XI Bonds: 5.34 %, payable through 2028 24.2 5.27 %, payable through 2029 26.4 Revolving credit facility 205.0 Capital leases 0.8 Total Debt 908.1 857.1 Less: Current portion (30.8) Total Long-term Debt $ 866.0 $ 826.3 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS). | |
Schedule of changes in accumulated other comprehensive income (loss) by component, net of tax | Changes in accumulated other comprehensive income (loss) by component, net of tax, for the nine months ended September 30, 2018 consisted of the following: Accumulated Non- Other Post Qualified Comprehensive (In millions) Pensions Retirement Plans Other Income (Loss) Balance at December 31, 2017 $ (40.6) $ 15.6 $ (0.3) $ 0.4 $ (24.9) Reclassification adjustment related to the Tax Act (1) (9.2) 3.4 (0.2) — (6.0) Amortization of prior service cost (0.4) (0.9) — — (1.3) Amortization of net loss 0.9 0.3 0.1 — 1.3 Other adjustments — — — 0.2 0.2 Balance at March 31, 2018 (49.3) 18.4 (0.4) 0.6 (30.7) Amortization of prior service cost (0.5) (0.5) (0.1) — (1.1) Amortization of net loss 0.9 0.2 0.1 (0.7) 0.5 Other adjustments — — — (0.3) (0.3) Balance at June 30, 2018 (48.9) 18.1 (0.4) (0.4) (31.6) Amortization of prior service cost (0.4) (0.7) — — (1.1) Amortization of net loss 0.9 0.3 (0.1) — 1.1 Other adjustments — — — 0.1 0.1 Balance at September 30, 2018 $ (48.4) $ 17.7 $ (0.5) $ (0.3) $ (31.5) (1) Reclassification from accumulated other comprehensive income (loss) to retained earnings for the remeasurement tax effects resulting from the Tax Act in accordance with ASU 2018-02 . Changes in accumulated other comprehensive income (loss) by component, net of tax, for the nine months ended September 30, 2017 consisted of the following: Accumulated Non- Other Post Qualified Comprehensive (In millions) Pensions Retirement Plans Other Income (Loss) Balance at December 31, 2016 $ (41.4) $ 18.1 $ (0.4) $ 0.1 $ (23.6) Amortization of prior service cost (0.4) — — — (0.4) Amortization of net loss 0.8 0.1 — — 0.9 Other adjustments — — — 0.2 0.2 Balance at March 31, 2017 (41.0) 18.2 (0.4) 0.3 (22.9) Net gain in prior service cost — — — 0.1 0.1 Amortization of prior service cost (0.3) — — — (0.3) Amortization of net loss 0.8 0.3 0.1 — 1.2 Balance at June 30, 2017 (40.5) 18.5 (0.3) 0.4 (21.9) Net gain in prior service costs — 0.7 — — 0.7 Amortization of prior service cost (0.4) (1.7) (0.1) — (2.2) Amortization of net loss 0.8 0.2 — — 1.0 Balance at September 30, 2017 $ (40.1) $ 17.7 $ (0.4) $ 0.4 $ (22.4) |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
FAIR VALUE MEASUREMENTS | |
Schedule of fair value measurement | The carrying value and fair value of the Company’s financial instruments as of September 30, 2018 and December 31, 2017 were as follows: Quoted Prices in Significant Significant Total Active Markets Observable Unobservable Carrying Value Total (Level 1) Inputs (Level 2) Inputs (Level 3) (In millions) September 30, 2018 Fair Value Measurements at September 30, 2018 Cash and cash equivalents $ 12.1 $ 12.1 $ 12.1 $ — $ — Variable rate debt 273.0 273.0 — 273.0 — Fixed rate debt 635.1 600.3 — 600.3 — (In millions) December 31, 2017 Fair Value Measurements at December 31, 2017 Cash and cash equivalents $ 19.8 $ 19.8 $ 19.8 $ — $ — CCF – cash on deposit 0.9 0.9 — 0.9 — Variable rate debt 205.0 205.0 — 205.0 — Fixed rate debt 652.1 651.4 — 651.4 — |
EARNINGS PER-SHARE (Tables)
EARNINGS PER-SHARE (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
EARNINGS PER-SHARE | |
Schedule of basic and diluted earnings per share | Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 Weighted Per Weighted Per Average Common Average Common Net Common Share Net Common Share (In millions, except per-share amounts) Income Shares Amount Income Shares Amount Basic: $ 41.6 42.7 $ 0.97 $ 88.4 42.7 $ 2.07 Effect of Dilutive Securities: 0.4 — 0.3 (0.01) Diluted: $ 41.6 43.1 $ 0.97 $ 88.4 43.0 $ 2.06 Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017 Weighted Per Weighted Per Average Common Average Common Net Common Share Net Common Share (In millions, except per-share amounts) Income Shares Amount Income Shares Amount Basic: $ 34.1 42.9 $ 0.79 $ 65.1 43.0 $ 1.51 Effect of Dilutive Securities: 0.3 — 0.3 (0.01) Diluted: $ 34.1 43.2 $ 0.79 $ 65.1 43.3 $ 1.50 |
PENSION AND POST-RETIREMENT P_2
PENSION AND POST-RETIREMENT PLANS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
PENSION AND POST-RETIREMENT PLANS | |
Components of net periodic benefit cost (benefit) | Pension Benefits Post-retirement Benefits Three Months Ended September 30, Three Months Ended September 30, (In millions) 2018 2017 2018 2017 Components of net periodic benefit cost (benefit): Service cost $ 1.1 $ 1.1 $ 0.2 $ (0.4) Interest cost 2.1 2.5 0.3 (0.6) Expected return on plan assets (3.3) (3.3) — — Amortization of net loss 1.0 1.3 0.3 0.3 Amortization of prior service credit (0.5) (0.6) (1.0) (2.8) Other adjustments — 0.1 — — Net periodic benefit cost $ 0.4 $ 1.1 $ (0.2) $ (3.5) Pension Benefits Post-retirement Benefits Nine Months Ended September 30, Nine Months Ended September 30, (In millions) 2018 2017 2018 2017 Components of net periodic benefit cost (benefit): Service cost $ 3.3 $ 3.0 $ 0.5 $ 0.4 Interest cost 6.4 7.3 0.8 0.8 Expected return on plan assets (10.1) (10.1) — — Amortization of net loss 3.4 3.8 1.1 0.9 Amortization of prior service credit (1.7) (1.7) (2.8) (2.8) Other adjustments — 0.1 — — Net periodic benefit cost $ 1.3 $ 2.4 $ (0.4) $ (0.7) |
DESCRIPTION OF THE BUSINESS (De
DESCRIPTION OF THE BUSINESS (Details) | 9 Months Ended |
Sep. 30, 2018segmentfacility | |
DESCRIPTION OF THE BUSINESS | |
Number of reportable segments | segment | 2 |
Ocean Transportation | SSAT | |
DESCRIPTION OF THE BUSINESS | |
Ownership interest in SSAT (as a percent) | 35.00% |
Number of terminal facilities on which SSAT provided terminal and stevedoring services on the U.S. West Coast | 7 |
MatNav | SSAT | |
DESCRIPTION OF THE BUSINESS | |
Number of terminal facilities on which SSAT provided terminal and stevedoring services on the U.S. West Coast | 4 |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES - RECOGNITION OF REVENUES AND EXPENSES (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Total | $ 437.3 | $ 419.2 | $ 1,223.2 | $ 1,181.9 |
Total | 152.1 | 124.7 | 434.7 | 348.9 |
Ocean Transportation | ||||
Ocean Transportation services | 431.4 | 414.1 | 1,207.3 | 1,167.3 |
Terminal and other related services | 0.7 | 0.6 | 2 | 2.2 |
Fuel sales | 3.5 | 2.8 | 8.7 | 7.3 |
Ship management services and related costs | 1.7 | 1.7 | 5.2 | 5.1 |
Total | 437.3 | 419.2 | $ 1,223.2 | $ 1,181.9 |
Percentage of ocean transportation revenues and fuel sales denominated in foreign currency | 3.00% | 3.00% | ||
Logistics | ||||
Transportation Brokerage and Freight Forwarding Services | 135.4 | 110.1 | $ 391 | $ 309.3 |
Warehouse and distribution services | 8.9 | 7.8 | 24.1 | 22.3 |
Supply chain management and other services | 7.8 | 6.8 | 19.6 | 17.3 |
Total | $ 152.1 | $ 124.7 | $ 434.7 | $ 348.9 |
Percentage of transportation brokerage and freight forwarding services revenue denominated in forgeign currency | 3.00% | 3.00% |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES - CAPITAL CONSTRUCTION FUND (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Accounts receivable, net | $ 240.7 | $ 194.6 | |
Cash Deposits Into CCF | 246.6 | $ 64.6 | |
Qualifying withdrawal from CCF | 247.5 | $ 95.8 | |
Eligible Accounts Receivable Assigned to CCF | |||
Accounts receivable, net | $ 77.2 | 134.8 | |
Long-term Assets | Cash | |||
Capital Construction Fund - cash on deposit | $ 0.9 |
SIGNIFICANT ACCOUNTING POLICI_6
SIGNIFICANT ACCOUNTING POLICIES - INVESTMENT IN TERMINAL JOINT VENTURE (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Investments in affiliates | |||||
Investment in Terminal Joint Venture | $ 79.1 | $ 79.1 | $ 93.2 | ||
Financial information for equity method investment | |||||
Company Share of Net Income | 9.2 | $ 7.5 | 28.8 | $ 19.3 | |
SSAT | |||||
Financial information for equity method investment | |||||
Operating revenue | 289.4 | 227.4 | 806.5 | 638.2 | |
Operating costs and expenses | (259.5) | (203.9) | (719.7) | (581.9) | |
Operating Income | 29.9 | 23.5 | 86.8 | 56.3 | |
Net Income | $ 27.7 | $ 23.7 | $ 82.7 | $ 57.5 |
SIGNIFICANT ACCOUNTING POLICI_7
SIGNIFICANT ACCOUNTING POLICIES - INCOME TAXES (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2018USD ($) | |
SIGNIFICANT ACCOUNTING POLICIES | |
Tax Act, income tax expense (benefit) | $ 3.1 |
Sequestration rate (as a percent) | 6.20% |
SIGNIFICANT ACCOUNTING POLICI_8
SIGNIFICANT ACCOUNTING POLICIES - NEW ACCOUNTING PRONOUNCEMENTS (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Mar. 31, 2018 | Dec. 31, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Accumulated other comprehensive loss, net | $ (31.5) | $ (31.5) | $ (24.9) | |||
Retained earnings | 449.5 | 449.5 | $ 381.5 | |||
Other income (expense), net | $ 0.7 | $ 3.5 | $ 1.9 | $ 1.6 | ||
Accounting Standards Update 2018-02 | Adjustments for New Accounting Principle, Early Adoption | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Accumulated other comprehensive loss, net | $ (6) | |||||
Retained earnings | $ 6 | |||||
Accounting Standards Update 2017-07 | Adjustments | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Other income (expense), net | $ (3.5) | $ (1.6) |
REPORTABLE SEGMENTS (Details)
REPORTABLE SEGMENTS (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Sep. 30, 2018USD ($)segment | Sep. 30, 2017USD ($) | |
Segment results | ||||||||
Number of segments | segment | 2 | |||||||
Operating Revenue | $ 589.4 | $ 543.9 | $ 1,657.9 | $ 1,530.8 | ||||
Operating Income | 58.6 | 58.3 | 133.3 | 122.5 | ||||
Interest expense, net | (4.4) | (6.2) | (14.4) | (18.8) | ||||
Other income (expense), net | 0.7 | 3.5 | 1.9 | 1.6 | ||||
Income before Income Taxes | 54.9 | 55.6 | 120.8 | 105.3 | ||||
Income taxes | (13.3) | (21.5) | (32.4) | (40.2) | ||||
Net Income | 41.6 | $ 32.6 | $ 14.2 | 34.1 | $ 24 | $ 7 | 88.4 | 65.1 |
Equity in income of Terminal Joint Venture | 9.2 | 7.5 | 28.8 | 19.3 | ||||
Operating segments | ||||||||
Segment results | ||||||||
Operating Income | 58.6 | 58.3 | 133.3 | 122.5 | ||||
Intersegment Eliminations | ||||||||
Segment results | ||||||||
Operating Revenue | 27.6 | 24.1 | 72.7 | 62.7 | ||||
Ocean Transportation | Operating segments | ||||||||
Segment results | ||||||||
Operating Revenue | 437.3 | 419.2 | 1,223.2 | 1,181.9 | ||||
Operating Income | 48.7 | 51 | 109.7 | 106.3 | ||||
Logistics | Operating segments | ||||||||
Segment results | ||||||||
Operating Revenue | 152.1 | 124.7 | 434.7 | 348.9 | ||||
Operating Income | $ 9.9 | $ 7.3 | $ 23.6 | $ 16.2 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018USD ($)item | Dec. 31, 2017USD ($) | |
Property and equipment | ||
Cost | $ 2,641.4 | $ 2,444.2 |
Less: Accumulated Depreciation | (1,294.2) | (1,278.5) |
Property and equipment, net | 1,347.2 | 1,165.7 |
Vessels | ||
Property and equipment | ||
Cost | 1,414.5 | 1,433.6 |
Containers and equipment | ||
Property and equipment | ||
Cost | 512.8 | 543 |
Terminal facilities and other property | ||
Property and equipment | ||
Cost | 65.9 | 64.8 |
Vessel construction in progress | ||
Property and equipment | ||
Cost | 599.2 | 376.6 |
Capitalized Interest | ||
Interest Costs Capitalized | $ 23.8 | 10.4 |
Number of vesels under agreements for contstruction | item | 4 | |
Other construction in progress | ||
Property and equipment | ||
Cost | $ 49 | $ 26.2 |
GOODWILL AND INTANGIBLES - CHAN
GOODWILL AND INTANGIBLES - CHANGES IN GOODWILL (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Goodwill [Line Items] | ||
Goodwill | $ 323.7 | $ 323.7 |
Ocean Transportation | ||
Goodwill [Line Items] | ||
Goodwill | 218.5 | |
Logistics | ||
Goodwill [Line Items] | ||
Goodwill | $ 105.2 |
GOODWILL AND INTANGIBLES - INTA
GOODWILL AND INTANGIBLES - INTANGIBLE ASSETS NET (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Finite-lived Intangible Assets | ||
Net Amount | $ 216.8 | $ 225.2 |
Trade Names | ||
Finite-lived Intangible Assets | ||
Indefinite-Lived intangible asset | 27.3 | 27.3 |
Customer Relationships. | ||
Finite-lived Intangible Assets | ||
Total | 230.7 | 230.7 |
Less: Accumulated Amortization | (41.2) | (32.8) |
Net Amount | 189.5 | 197.9 |
Estimated amortization expenses related to intangibles | ||
Net Amount | 189.5 | 197.9 |
Ocean Transportation | Customer Relationships. | ||
Finite-lived Intangible Assets | ||
Total | 140.6 | 140.6 |
Logistics | Customer Relationships. | ||
Finite-lived Intangible Assets | ||
Total | $ 90.1 | $ 90.1 |
DEBT - SUMMARY (Details)
DEBT - SUMMARY (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Debt | ||
Capital leases | $ 0.1 | $ 0.8 |
Total Debt | 908.1 | 857.1 |
Less current portion | (42.1) | (30.8) |
Total Long-term Debt | 866 | 826.3 |
5.79%, payable through 2020 | ||
Debt | ||
Total Debt | $ 14 | $ 17.5 |
Interest rate (as a percent) | 5.79% | 5.79% |
3.66%, payable through 2023 | ||
Debt | ||
Total Debt | $ 45.6 | $ 50.1 |
Interest rate (as a percent) | 3.66% | 3.66% |
4.16%, payable through 2027 | ||
Debt | ||
Total Debt | $ 47.1 | $ 49.8 |
Interest rate (as a percent) | 4.16% | 4.16% |
3.37 %, payable through 2027 | ||
Debt | ||
Total Debt | $ 75 | $ 75 |
Interest rate (as a percent) | 3.37% | 3.37% |
3.14%, payable through 2031 | ||
Debt | ||
Total Debt | $ 200 | $ 200 |
Interest rate (as a percent) | 3.14% | 3.14% |
4.31%, payable through 2032 | ||
Debt | ||
Total Debt | $ 33.9 | $ 35.1 |
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 | $ 73.2 | $ 73.2 |
Interest rate (as a percent) | 3.92% | 3.92% |
5.34%, payable through 2028 | ||
Debt | ||
Total Debt | $ 22 | $ 24.2 |
Interest rate (as a percent) | 5.34% | 5.34% |
5.27%, payable through 2029 | ||
Debt | ||
Total Debt | $ 24.2 | $ 26.4 |
Interest rate (as a percent) | 5.27% | 5.27% |
Revolving Credit Facility | ||
Debt | ||
Total Debt | $ 273 | $ 205 |
Funds available under the revolving credit facility | $ 243.2 | |
Interest rate during period (as a percent) | 3.52% |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Changes in accumulated other comprehensive loss by component, net of taxes | ||||||||
Balance at the beginning of the period | $ 699.5 | $ 682.4 | $ 678.2 | $ 499.2 | $ 489.4 | $ 494.9 | $ 678.2 | $ 494.9 |
Net gain in prior service cost | 0.7 | 0.8 | ||||||
Amortization of prior service cost | (1.1) | (2.2) | (3.5) | (2.9) | ||||
Amortization of net loss | 1.1 | 1 | 2.9 | 3.1 | ||||
Other adjustments | 0.1 | 0.2 | ||||||
Balance at the end of the period | 743.7 | 699.5 | 682.4 | 518.6 | 499.2 | 489.4 | 743.7 | 518.6 |
Pensions | ||||||||
Changes in accumulated other comprehensive loss by component, net of taxes | ||||||||
Balance at the beginning of the period | (48.9) | (49.3) | (40.6) | (40.5) | (41) | (41.4) | (40.6) | (41.4) |
Reclassification adjustment related to the Tax Act | (9.2) | |||||||
Amortization of prior service cost | (0.4) | (0.5) | (0.4) | (0.4) | (0.3) | (0.4) | ||
Amortization of net loss | 0.9 | 0.9 | 0.9 | 0.8 | 0.8 | 0.8 | ||
Balance at the end of the period | (48.4) | (48.9) | (49.3) | (40.1) | (40.5) | (41) | (48.4) | (40.1) |
Post Retirement | ||||||||
Changes in accumulated other comprehensive loss by component, net of taxes | ||||||||
Balance at the beginning of the period | 18.1 | 18.4 | 15.6 | 18.5 | 18.2 | 18.1 | 15.6 | 18.1 |
Reclassification adjustment related to the Tax Act | 3.4 | |||||||
Net gain in prior service cost | 0.7 | |||||||
Amortization of prior service cost | (0.7) | (0.5) | (0.9) | (1.7) | ||||
Amortization of net loss | 0.3 | 0.2 | 0.3 | 0.2 | 0.3 | 0.1 | ||
Balance at the end of the period | 17.7 | 18.1 | 18.4 | 17.7 | 18.5 | 18.2 | 17.7 | 17.7 |
Non-Qualified Plans | ||||||||
Changes in accumulated other comprehensive loss by component, net of taxes | ||||||||
Balance at the beginning of the period | (0.4) | (0.4) | (0.3) | (0.3) | (0.4) | (0.4) | (0.3) | (0.4) |
Reclassification adjustment related to the Tax Act | (0.2) | |||||||
Amortization of prior service cost | (0.1) | (0.1) | ||||||
Amortization of net loss | (0.1) | 0.1 | 0.1 | 0.1 | ||||
Balance at the end of the period | (0.5) | (0.4) | (0.4) | (0.4) | (0.3) | (0.4) | (0.5) | (0.4) |
Other | ||||||||
Changes in accumulated other comprehensive loss by component, net of taxes | ||||||||
Balance at the beginning of the period | (0.4) | 0.6 | 0.4 | 0.4 | 0.3 | 0.1 | 0.4 | 0.1 |
Net gain in prior service cost | 0.1 | |||||||
Amortization of net loss | (0.7) | |||||||
Other adjustments | 0.1 | (0.3) | 0.2 | 0.2 | ||||
Balance at the end of the period | (0.3) | (0.4) | 0.6 | 0.4 | 0.4 | 0.3 | (0.3) | 0.4 |
Accumulated Other Comprehensive Income (Loss) | ||||||||
Changes in accumulated other comprehensive loss by component, net of taxes | ||||||||
Balance at the beginning of the period | (31.6) | (30.7) | (24.9) | (21.9) | (22.9) | (23.6) | (24.9) | (23.6) |
Reclassification adjustment related to the Tax Act | (6) | |||||||
Net gain in prior service cost | 0.7 | 0.1 | ||||||
Amortization of prior service cost | (1.1) | (1.1) | (1.3) | (2.2) | (0.3) | (0.4) | ||
Amortization of net loss | 1.1 | 0.5 | 1.3 | 1 | 1.2 | 0.9 | ||
Other adjustments | 0.1 | (0.3) | 0.2 | 0.2 | ||||
Balance at the end of the period | $ (31.5) | $ (31.6) | $ (30.7) | $ (22.4) | $ (21.9) | $ (22.9) | $ (31.5) | $ (22.4) |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Carrying value | ||
Fair value of financial instruments | ||
Cash and cash equivalents | $ 12.1 | $ 19.8 |
CCF - cash on deposit | 0.9 | |
Variable rate debt | 273 | 205 |
Fixed rate debt | 635.1 | 652.1 |
Fair Value Measurement | ||
Fair value of financial instruments | ||
Cash and cash equivalents | 12.1 | 19.8 |
CCF - cash on deposit | 0.9 | |
Variable rate debt | 273 | 205 |
Fixed rate debt | 600.3 | 651.4 |
Fair Value Measurement | Quoted Prices in Active Markets (Level 1) | ||
Fair value of financial instruments | ||
Cash and cash equivalents | 12.1 | 19.8 |
Fair Value Measurement | Significant Observable Inputs (Level 2) | ||
Fair value of financial instruments | ||
CCF - cash on deposit | 0.9 | |
Variable rate debt | 273 | 205 |
Fixed rate debt | $ 600.3 | $ 651.4 |
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, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Net Income | ||||
Net Income, Basic | $ 41.6 | $ 34.1 | $ 88.4 | $ 65.1 |
Net Income, Diluted | $ 41.6 | $ 34.1 | $ 88.4 | $ 65.1 |
Weighted Average Common Shares | ||||
Basic (in shares) | 42.7 | 42.9 | 42.7 | 43 |
Effect of Dilutive Securities (in shares) | 0.4 | 0.3 | 0.3 | 0.3 |
Diluted (in shares) | 43.1 | 43.2 | 43 | 43.3 |
Per Common Share Amount | ||||
Net income, Basic (in dollars per share) | $ 0.97 | $ 0.79 | $ 2.07 | $ 1.51 |
Effect of Dilutive Securities (in dollars per shares) | (0.01) | (0.01) | ||
Net income, Diluted (in dollars per share) | $ 0.97 | $ 0.79 | $ 2.06 | $ 1.50 |
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, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Share-based compensation | ||||
Shares granted | 2,700 | 383,700 | ||
Weighted-average grant date fair value (in dollars per share) | $ 36.58 | $ 31.21 | ||
Total unrecognized compensation cost | $ 14.9 | $ 14.9 | ||
Unrecognized compensation cost over weighted-average period to be recognized | 1 year 9 months 18 days | |||
Selling, general and administrative expenses | ||||
Share-based compensation | ||||
Total stock-based compensation cost | $ 2.7 | $ 2.9 | $ 8.2 | $ 7.8 |
PENSION AND POST-RETIREMENT P_3
PENSION AND POST-RETIREMENT PLANS - COMPONENTS OF NET PERIODIC BENEFIT COST (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Pension Benefits | ||||
Components of Net Periodic Benefit Cost (Benefit): | ||||
Service cost | $ 1.1 | $ 1.1 | $ 3.3 | $ 3 |
Interest cost | 2.1 | 2.5 | 6.4 | 7.3 |
Expected return on plan assets | (3.3) | (3.3) | (10.1) | (10.1) |
Amortization of net loss | 1 | 1.3 | 3.4 | 3.8 |
Amortization of prior service credit | (0.5) | (0.6) | (1.7) | (1.7) |
Other adjustments | 0.1 | 0.1 | ||
Net periodic benefit cost | 0.4 | 1.1 | 1.3 | 2.4 |
Post-retirement Benefits | ||||
Components of Net Periodic Benefit Cost (Benefit): | ||||
Service cost | 0.2 | 0.5 | 0.4 | |
Service cost | (0.4) | |||
Interest cost | 0.3 | 0.8 | 0.8 | |
Interest cost | (0.6) | |||
Amortization of net loss | 0.3 | 0.3 | 1.1 | 0.9 |
Amortization of prior service credit | (1) | (2.8) | (2.8) | (2.8) |
Net periodic benefit cost | $ (0.2) | $ (3.5) | $ (0.4) | $ (0.7) |