Exhibit 10.a.(xxv)
ALEXANDER & BALDWIN, INC. / SALE OF MATSON LEASING COMPANY, INC.
PRO FORMA CONDENSED STATEMENT OF INCOME (UNAUDITED)
YEAR ENDED DECEMBER 31, 1994
(In thousands, except per share amounts)
Historical Pro Forma
Basis Adjustments Pro Forma
A&B MLC (1) Amount Ref Basis
(i) (ii) (iii) (i)-(ii)+(iii)
------------ ---------- ----------- --- -------------
Revenue:
Net sales, revenue from sales and rentals $ 1,185,210 $ 62,895 $ 1,122,315
Interest, dividends and other 22,955 1,072 21,883
------------ ---------- ----------- --- -------------
Total revenue 1,208,165 63,967 1,144,198
------------ ---------- ----------- --- -------------
Costs and Expenses:
Cost of goods sold, services and rentals 939,766 5,356 934,410
Selling, general and administrative 127,462 29,353 98,109
Interest 27,702 12,654 15,048
Income Taxes 38,627 5,975 32,652
------------ ---------- ----------- --- -------------
Total costs and expenses 1,133,557 53,338 1,080,219
------------ ---------- ----------- --- -------------
Net Income from Continuing Operations $ 74,608 $ 10,629 $ 63,979
============ =========== =========== =============
Earnings per Share - Continuing Operations $ 1.62 $ 1.39
============ =============
Average Number of Shares Outstanding 46,059 46,059
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(1) Historical MLC amounts, adjusted for previously-eliminated intercompany transactions, have been
deducted in the preparation of these pro forma financial statements.
ALEXANDER & BALDWIN, INC. / SALE OF MATSON LEASING COMPANY, INC.
PRO FORMA CONDENSED STATEMENT OF INCOME (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1995
(In thousands, except per share amounts)
Historical Pro Forma
Basis Adjustments Pro Forma
A&B MLC (1) Amount Ref. Basis
(i) (ii) (iii) (i)-(ii)+(iii)
------------ ---------- ----------- --- -------------
Revenue:
Net sales, revenue from sales and rentals $ 256,595 $ 16,868 $ 239,727
Interest, dividends and other 6,377 124 6,253
------------ ---------- ----------- --- -------------
Total revenue 262,972 16,992 245,980
------------ ---------- ----------- --- -------------
Costs and Expenses:
Cost of goods sold, services and rentals 210,610 1,012 209,598
Selling, general and administrative 31,501 8,021 23,480
Interest 7,452 3,775 3,677
Income Taxes 4,849 1,578 3,271
------------ ---------- ----------- --- -------------
Total costs and expenses 254,412 14,386 240,026
------------ ---------- ----------- --- -------------
Net Income from Continuing Operations $ 8,560 $ 2,606 $ 5,954
============ =========== =========== =============
Earnings per Share - Continuing Operations $ 0.19 $ 0.13
============ =============
Average Number of Shares Outstanding 45,643 45,643
============ =============
(1) Historical MLC amounts, adjusted for previously-eliminated intercompany transactions, have been
deducted in the preparation of these pro forma financial statements.
ALEXANDER & BALDWIN, INC. / SALE OF MATSON LEASING COMPANY, INC.
PRO FORMA CONDENSED BALANCE SHEET (UNAUDITED)
MARCH 31, 1995 (In thousands)
Historical Pro Forma
Basis Adjustments Pro Forma
A&B MLC (1) Amount Ref. Basis
(i) (ii) (iii) (i)-(ii)+(iii)
------------ ---------- ----------- --- -------------
ASSETS
Current Assets:
Cash and cash equivalents $ 21,827 $ 582 $ 21,245
Accounts and notes receivable, net 145,864 26,101 $ 11,930 C 131,693
Inventories 110,023 110,023
Property held for sale 3,451 3,451
Deferred income taxes 15,451 1,678 13,773
Prepaid expenses and other 13,315 469 12,846
Accrued withdrawals from CCF (725) (725)
------------ ---------- ----------- --- -------------
Total current assets 309,206 28,830 11,930 292,306
Investments 69,166 69,166
Real Estate Developments 69,360 69,360
Property, Plant & Equipment - Net 1,277,640 313,348 964,292
Capital Construction Fund 178,580 112,564 D 291,144
Other Assets 70,369 156 70,213
------------ ---------- ----------- --- -------------
Total $ 1,974,321 $ 342,334 $ 124,494 $ 1,756,481
============ =========== =========== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term liabilities $ 37,155 $ 15,000 $ 22,155
Short-term commercial paper borrowing 78,884 78,884
Accounts payable 42,486 1,444 41,042
Other 65,981 1,978 64,003
------------ ---------- ----------- --- -------------
Total current liabilities 224,506 18,422 206,084
------------ ---------- ----------- --- -------------
Long-Term Liabilities:
Long-term debt 552,083 185,187 366,896
Capital lease obligations 32,439 32,439
Post-retirement benefit obligations 117,728 379 117,349
Other 62,030 5,940 56,090
------------ ---------- ----------- --- -------------
Total long-term liabilities 764,280 191,506 572,774
------------ ---------- ----------- --- -------------
Deferred Income Taxes 356,252 63,113 $ 55,201 D,E 348,340
------------ ---------- ----------- --- -------------
Shareholders' Equity:
Capital stock 37,307 1 1 B 37,307
Additional capital 39,503 34,300 34,300 B 39,503
Unrealized holding gains on securities 31,016 31,016
Retained earnings 535,274 34,992 34,992 A,B,D 535,274
Cost of treasury stock (13,817) (13,817)
------------ ---------- ----------- --- -------------
Total shareholders' equity 629,283 69,293 69,293 629,283
------------ ---------- ----------- --- -------------
Total $ 1,974,321 $ 342,334 $ 124,494 $ 1,756,481
============ ========== =========== =============
(1) Historical MLC amounts have been deducted in the preparation of these pro forma financial statements.
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying pro forma condensed financial statements present the
financial position of Alexander & Baldwin, Inc. (A&B) following the sale of
substantially all of the operating assets and certain liabilities of Matson
Leasing Company, Inc. (MLC), a wholly-owned subsidiary of Matson Navigation
Company, Inc. (Matson), which is wholly-owned by A&B, as of March 31, 1995,
for the year ended December 31, 1994 and for the quarter ended March 31,
1995.
On June 30, 1995, A&B sold the marine containers and substantially all of
the remaining assets of MLC to XTRA Inc.(XTRA) and XTRA assumed certain of
the liabilities of MLC. A description of the transaction is included in
Item 2 of the Form 8-K. The assets sold to XTRA and the liabilities
assumed by XTRA were specifically identified in the Asset Purchase
Agreement which was included as Exhibit 10.a.(xxiv) to the Form 8-K. The
net sales price was approximately $360 million, subject to the completion
and acceptance of an audit. Specifically excluded from the sale were the
debt and United States tax obligations of MLC.
The pro forma condensed balance sheet assumed that the transaction
occurred on March 31, 1995. The pro forma condensed statements of income
assumed that the transaction occurred on January 1, 1994. The pro forma
condensed financial statements are not necessarily indicative of the
financial condition or the results of operations of A&B had this
transaction been consummated on such dates and may not necessarily be
indicative of future performance of A&B.
The pro forma financial statements assume the repayment of all of MLC's
debt, the settlement of United States tax obligations of MLC (including
any additional obligations incurred as a result of the transaction) and the
investment of the residual cash remaining from the transaction into
Matson's Capital Construction Fund (CCF). The interest earnings that might
have been earned from the additional investment in the CCF have not been
included in the pro forma statements. A&B estimates that these amounts,
had they been included in the pro forma statements, would have been
approximately $6.7 million for the year ended December 31, 1994 and $1.8
million for the quarter ended March 31, 1995, based upon the rates of
return on investments held by the CCF during those periods. Possible uses
of the proceeds other than the retirement of debt, payment of tax
obligations and increases in investments, such as using a portion of the
proceeds to purchase additional operating assets, were not included in the
pro forma financial statements.
The condensed pro forma income statements do not include the gain from the
sale of MLC's net assets. This gain was approximately $17.2 million, after
deducting taxes of approximately $9.1 million.
2. PRO FORMA ADJUSTMENTS
In preparing the condensed pro forma income statements for the year ended
December 31, 1994 and for the quarter ended March 31, 1995, the primary
assumption was that the historical income statements of MLC for those
periods included the full operations of the business as a stand-alone
entity. A&B accounts for each of its subsidiaries in this manner.
Intercompany transactions were not included in the historical MLC income
statements. These amounts were not material. No pro forma adjustments
were required for the pro forma income statements other than subtracting
the historical revenue and expenses of MLC from those of A&B.
In preparing the condensed pro forma balance sheet as of March 31, 1995,
the total historical assets and liabilities of MLC were deducted from the
historical consolidated financial statements of A&B. The underlying
assumption was that the residual assets and liabilities retained by Matson
following the transaction, subsequently would be liquidated, settled or
retired at their historical cost basis. The market or settlement values of
such assets and liabilities were estimated to be approximately equal to
their historical accounting costs.
The following reflects the pro forma balance sheet adjustments, referenced
A - E, which are necessary to reflect the transaction described above on a
pro forma basis.
A. The actual sales price has been adjusted for changes in the net assets
of MLC that occurred from the March 31, 1995 transaction date that was
assumed in the preparation of the condensed pro forma balance sheet
through the actual closing date of June 30, 1995.
Since the sales price was based, in large part, on the value of MLC's
net operating assets at June 30, 1995, and since MLC consistently
added container assets to its leasing fleet up to such date, the sales
price was adjusted downward from the final negotiated sales price so
as not to overstate the proceeds from the sale. The adjusted sales
price yielded a pre-tax gain of approximately $26.3 million ($17.2
after tax), subject to audit. This gain has not been reflected in the
pro forma income statements.
B. MLC's historical capital stock, additional paid-in capital and
retained earnings that were subtracted from A&B's historical basis
shareholders' equity (in column (ii) of the pro forma balance sheet),
were restored to the pro forma balance sheet to reflect properly A&B's
shareholders' equity. The A&B shareholders' equity did not change as
a result of the transaction.
C. The intercompany receivable balance which resulted from cumulative
arms-length transactions between MLC and Matson that had been
eliminated in preparing the historical basis MLC balance sheet was
restored since the amount was not included in the sale of assets to
XTRA.
D. Proceeds from the sale which were not used to repay MLC's indebtedness
were assumed to be deposited into Matson's CCF to the extent that
previously undeposited earnings were available for deposit. Such
amount was estimated to be $112.6 million at March 31, 1995.
As discussed previously, no interest was assumed to have been earned
on the residual sales proceeds that were deposited into the CCF.
Using interest rates earned by the Company on its CCF investments
during the periods presented, interest earnings likely would have been
approximately $6.7 million ($4.2 million after tax) for 1994 and $1.8
million ($1.15 million after tax) for the first quarter of 1995.
E. Income tax accounts have been adjusted to reflect the tax
ramifications of the pro forma adjustments. The currently-payable
income taxes associated with the transaction were assumed to have been
paid on the assumed transaction closing date.