[Note: Page references in this electronic filing refer to the paper copy
of the Form 10-K.]
TABLE OF CONTENTS
PART I
Page
----
Items 1. & 2. Business and Properties .............................. 1
A. Ocean Transportation ....................................... 2
(1) Freight Services ..................................... 2
(2) Vessels .............................................. 3
(3) Terminals ............................................ 3
(4) Container Leasing..................................... 5
(5) Other Services ....................................... 5
(6) Competition .......................................... 6
(7) Labor Relations ...................................... 7
(8) Rate Regulation ...................................... 7
B. Property Development and Management ........................ 8
(1) General .............................................. 8
(2) Planning and Zoning .................................. 9
(3) Residential Projects ................................. 10
(4) Commercial and Industrial Properties ................. 11
C. Food Products .............................................. 14
(1) Production ........................................... 14
(2) Sugar Refining; Marketing of Sugar
and Coffee ........................................... 16
(3) Competition and Sugar Legislation .................... 17
(4) Properties and Water ................................. 19
D. Employees and Labor Relations .............................. 21
E. Energy ..................................................... 24
Item 3. Legal Proceedings .......................................... 25
Item 4. Submission of Matters to a Vote of
Security Holders ........................................... 26
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters ................................ 27
Item 6. Selected Financial Data .................................... 27
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations .............. 27
Item 8. Financial Statements and Supplementary Data ................ 28
Item 9. Changes in and Disagreements With
Accountants on Accounting and Financial
Disclosure ................................................. 28
PART III
Item 10. Directors and Executive Officers of
the Registrant ............................................. 28
A. Directors .................................................. 28
B. Executive Officers of the Registrant ....................... 28
Item 11. Executive Compensation ..................................... 30
Item 12. Security Ownership of Certain Beneficial
Owners and Management ...................................... 30
Item 13. Certain Relationships and Related
Transactions ............................................... 31
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K .................................... 31
A. Financial Statements ....................................... 31
B. Financial Statement Schedules .............................. 31
C. Exhibits Required by Item 601 of
Regulation S-K ............................................. 32
D. Reports on Form 8-K ........................................ 41
Signatures .......................................................... 42
Independent Auditors' Report ........................................ 44
Schedule III ........................................................ 45
Independent Auditors' Consent ....................................... 49
ALEXANDER & BALDWIN, INC.
-------------------------
FORM 10-K
---------
ANNUAL REPORT FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1995
PART I
------
ITEMS 1 AND 2. BUSINESS AND PROPERTIES
- ---------------------------------------
Alexander & Baldwin, Inc. ("A&B") is a diversified corporation with most
of its operations centered in Hawaii. It was founded in 1870 and incorporated
in 1900. Ocean transportation operations and related shoreside operations of
A&B are conducted by a wholly-owned subsidiary, Matson Navigation Company, Inc.
("Matson"), and several Matson subsidiaries, all of which are headquartered in
San Francisco. Real property and food products operations are conducted by a
wholly-owned subsidiary of A&B, A&B-Hawaii, Inc. ("ABHI"), and several ABHI
subsidiaries, including California and Hawaiian Sugar Company, Inc. ("C&H"),
all of which are headquartered in Hawaii or California.
The industry segments of A&B are as follows:
A. Ocean Transportation - carrying freight, primarily between various
--------------------
United States Pacific Coast ports, major Hawaii ports and Guam;
providing terminal, stevedoring, tugboat and container equipment
maintenance services in certain of those ports; and arranging United
States mainland intermodal transportation.
B. Property Development and Management - developing real property in
-----------------------------------
Hawaii and on the U.S. Mainland; selling residential properties in
Hawaii; and managing, leasing, selling and purchasing real property
in Hawaii and on the U.S. Mainland.
C. Food Products - growing sugar cane and coffee in Hawaii; producing
-------------
raw sugar, molasses and green coffee; refining raw sugar, and
marketing and distributing refined sugar products, primarily in the
western United States; marketing and distributing roasted coffee and
green coffee; providing sugar and molasses hauling and storage,
general freight and petroleum hauling and self-storage services in
Hawaii; and generating and selling electricity.
For information about the revenue, operating profits and identifiable
assets of A&B's industry segments for the three years ended December 31, 1995,
see "Industry Segment Information" on page 24 of the Alexander & Baldwin, Inc.
1995 Annual Report ("1995 Annual Report"), which information is incorporated
herein by reference.
DESCRIPTION OF BUSINESS AND PROPERTIES
A. OCEAN TRANSPORTATION
--------------------
(1) FREIGHT SERVICES
----------------
Matson's Hawaii Service offers containership freight services
between the ports of Los Angeles, Oakland, Seattle, and the major ports in
Hawaii, which are located on the islands of Oahu, Kauai, Maui and Hawaii.
Roll-on/roll-off service is provided between Los Angeles and the major ports in
Hawaii. Portland container cargo is moved overland between Portland and
Seattle at no extra charge.
Matson is the principal carrier of ocean cargo between the
United States Pacific Coast and Hawaii. In 1995, Matson carried 157,200
containers (compared with 173,300 containers in 1994) and 107,100 motor
vehicles (compared with 116,800 in 1994) between those destinations. Principal
westbound cargoes carried by Matson to Hawaii include dry containers of mixed
commodities, refrigerated cargoes, packaged foods, building materials and motor
vehicles. Principal eastbound cargoes carried by Matson from Hawaii include
household goods, canned pineapple, refrigerated containers of fresh pineapple,
motor vehicles and molasses. The preponderance of Matson's revenue is derived
from the westbound carriage of containerized freight and motor vehicles.
Matson's Pacific Coast Service provides containership freight
service between the ports of Los Angeles, Oakland, Seattle and Vancouver,
British Columbia. In 1995, its first full year of operation, Matson carried
26,278 containers in the Pacific Coast Service. Matson's Mid-Pacific Service
offers container and conventional freight service between the United States
Pacific Coast and the ports of Kwajalein, Ebeye and Majuro in the Republic of
the Marshall Islands and Johnston Island, all via Honolulu.
In February 1996, Matson inaugurated its Guam-Micronesia
Service, which complements Matson's Hawaii Service by providing westbound
containership freight service from the United States Pacific Coast and Hawaii
to Guam and Micronesia. The new service is a component of a strategic alliance
formed in 1995 between Matson and American President Lines, Ltd. ("APL"),
pursuant to which they commenced operating, beginning February 1996, a new
Pacific Alliance Service between the United States Pacific Coast and Hawaii,
Guam, Japan, and South Korea. Under the terms of the alliance, Matson
purchased from APL six containerships, shoreside spare parts and assets related
to APL's Guam service in December 1995 and early 1996 for $168 million, will
operate four of those vessels and one existing Matson vessel in the Pacific
Alliance Service, and will charter back to APL for 10 years cargo space for
APL's continuing ocean cargo service from Asian ports to the United States.
The new service is expected to improve Matson's vessel utilization on the
eastbound return trip of Matson's Hawaii Service, thereby resulting in cost
savings.
See "Rate Regulation" below with respect to Matson's freight
rates.
(2) VESSELS
-------
Matson's fleet consists of eleven containerships (including
the six containerships purchased from APL), four combination
container/trailerships, one roll-on/roll-off barge, two container barges
equipped with cranes which serve the neighbor islands of Hawaii and one con-
tainer barge equipped with cranes in the Mid-Pacific Service.
The nineteen vessels in Matson's fleet represent an invest-
ment of approximately $814,300,000 during the past 26 years. With four
exceptions, the current fleet has been acquired through the Matson Capital
Construction Fund, established under Section 607 of the Merchant Marine Act,
1936, as amended. The exceptions are three steam-powered containerships
purchased from APL in 1995 and 1996, and a combination container/trailership
which Matson continues to operate under a charter for a 25-year term ending in
1998, with options to renew the charter for a total of up to five years and to
purchase the vessel at the end of the charter at fair market value.
Matson's fleet units are described in the list on the
following page.
MATSON NAVIGATION COMPANY, INC.
-------------------------------
FLEET - 3/1/96
--------------
Usable Cargo Capacity
-----------------------------------------------------------
Containers Vehicles Molasses
Year Maximum Maximum ------------------------------- -------------- --------
Vessel Official Year Recon- Speed Deadweight Reefer
Name Number Built structed Length (Knots) (Long Tons) 20' 24' 40' Slots TEUs (1) Autos Trailers Short Tons
- -----------------------------------------------------------------------------------------------------------------------------------
Diesel-Powered
- --------------
R.J. PFEIFFER 979814 1992 713'6" 23.0 27,100 48 171 988 300 2,229 -- -- --
MOKIHANA 655397 1983 860'2" 23.0 30,167 182 312 1,134 400 2,824
MAHIMAHI 653424 1982 860'2" 23.0 30,167 182 312 1,134 400 2,824
MANOA 651627 1982 860'2" 23.0 30,187 182 312 1,134 400 2,824
Steam-Powered
- -------------
KAUAI 621042 1980 1994 720'5-1/2" 22.5 26,308 458 538 310 1,626 44 2,600
MAUI 591709 1978 1993 720'5-1/2" 22.5 26,623 458 538 310 1,626 2,600
KAIMOKU (2) 573223 1976 1990 790'9" 21.5 14,551 276 310 119 1,020 350 54 --
KAINALU (2) 557149 1974 1990 790'9" 21.5 14,976 276 310 119 1,020 350 54 --
MATSONIA 553090 1973 1987 760'0" 21.5 22,501 683 400 335 1,620 450 56 4,300
LURLINE 549900 1973 1982 826'6" 21.5 22,221 597 345 340 1,476 220 81 2,100
EWA 530148 1972 1978 787'8" 21.0 38,656 294 861 180 2,015
CHIEF GADAO 530138 1971 1978 787'8" 21.0 37,346 230 464 597 274 1,981
LIHUE 530137 1971 1978 787'8" 21.0 38,656 286 276 681 188 1,979
MANULANI 528400 1970 720'5-1/2" 22.5 27,165 537 416 251 1,476 5,300
MANUKAI 524219 1970 720'5-1/2" 22.5 27,107 537 416 251 1,476 5,300
Other
- -----
WAIALEALE (3) 978516 1991 345'0" -- 5,621 35 230 45
ISLANDER (4) 933804 1988 372'0" -- 6,837 276 24 70 380 --
MAUNA LOA (4) 676973 1984 350'0" -- 4,658 144 72 84 316 2,100
HALEAKALA (4) 676972 1984 350'0" -- 4,658 144 72 84 316 2,100
MAOI (5) 618705 1980 75'0" 10.0 --
JOE SEVIER (5) 500799 1965 80'0" 10.0 --
- ------------------------------------------------------
(1) "Twenty-foot Equivalent Units" (includes trailers)
(2) Reserve Status
(3) Roll-on/Roll-off Barge
(4) Container Barge
(5) Tug
As a complement to its fleet, Matson owns or has under
capital leases approximately 17,400 containers, 8,500 container chassis, 480
auto-frames and miscellaneous other equipment. After disposing of older
container equipment and adding equipment purchased for the new Guam-Micronesia
Service, Matson expects to have 18,500 containers and 8,960 chassis at the end
of 1996. Capital expenditures by Matson for vessels and equipment totaled
approximately $45,700,000 in 1995.
(3) TERMINALS
---------
Matson Terminals, Inc. ("Matson Terminals"), a wholly-owned
subsidiary of Matson, provides container stevedoring, container equipment
maintenance and other terminal services for Matson at the ports of Honolulu,
Los Angeles, Oakland and Seattle, as well as for other ocean carriers at its
Pacific Coast and Honolulu locations.
Matson Terminals is among the largest container stevedoring
and terminal operators on the United States Pacific Coast. An estimated total
of 1,236 vessel calls were served at all Matson Terminals container facilities
in 1995.
Matson Terminals owns or leases the shoreside cranes and
supporting container-handling equipment at its container facilities and owns
all of the maintenance equipment used in providing container equipment and
terminal maintenance services.
Matson Terminals has lease agreements with port authorities
for the use of publicly-owned container terminal properties at Honolulu, Los
Angeles, Oakland and Seattle. Matson Terminals does not anticipate any
difficulty in renewing its lease agreements as they expire or in finding
satisfactory alternative premises. Current terminal lease agreements expire as
follows:
Honolulu September 2016
Los Angeles January 1999
Oakland December 2008
Seattle December 1999, subject to an option to
renew for ten years
Capital expenditures for terminals and equipment totaled
approximately $1,700,000 in 1995.
(4) CONTAINER LEASING
-----------------
In June 1995, Matson Leasing Company, Inc. ("Matson Leasing")
sold substantially all of its assets for $362 million, thereby exiting the
international marine container leasing business. The proceeds from the sale of
the Matson Leasing business were used principally to repay debt, to pay tax
obligations and to fund the capital needs of Matson.
(5) OTHER SERVICES
--------------
Matson Intermodal System, Inc. ("Matson Intermodal"), a
wholly-owned subsidiary of Matson, was formed in 1987 to serve as an intermodal
marketing company which arranges United States Mainland rail and truck
transportation for shippers and carriers, frequently in conjunction with prior
or subsequent ocean transportation.
Matson Services Company, Inc. ("Matson Services"), a
wholly-owned subsidiary of Matson, owns two tugboats which are employed in
Hawaiian waters under operating agreements to provide harbor assistance for
vessels calling at the islands of Hawaii and Maui.
(6) COMPETITION
-----------
Matson's Hawaii and Guam-Micronesia Services have one major
containership competitor which serves Long Beach, Oakland, Tacoma, Honolulu and
Guam. Other competitors in the Hawaii Service include two common carrier barge
services, unregulated proprietary and contract carriers of bulk cargoes and air
cargo services.
Matson vessels are operated on schedules which make available
to shippers and consignees regular day-of-the-week sailings from the United
States Pacific Coast and day-of-the-week arrivals to Hawaii, a type of service
that is very attractive to customers because it decreases their overall
distribution costs. In addition, Matson competes by offering more comprehen-
sive service to customers, supported by its scope of equipment and its
efficiency and experience in the handling of containerized cargoes, and by
competitive pricing. Although air freight competition is intense for time-
sensitive or perishable cargoes, historic and projected inroads of such
competition in cargo volume are limited by the amount of cargo space available
in passenger aircraft and by generally higher air freight rates.
The carriage of cargo between the United States Pacific Coast
and Hawaii on foreign-built and foreign-documented vessels is prohibited by
Section 27 of the Merchant Marine Act, 1920, frequently referred to as the
Jones Act. However, foreign-flag vessels bringing cargo to Hawaii from foreign
sources provide indirect competition for Matson's container freight service
between the United States Pacific Coast and Hawaii. Far East countries,
Australia and New Zealand have direct foreign-flag services to Hawaii.
In response to coordinated efforts by various interests to
convince Congress to repeal the Jones Act, a coalition of more than 400
businesses and organizations, including Matson, have formed the Maritime
Cabotage Task Force to support the retention of the Jones Act and other
cabotage laws. Repeal of the Jones Act would allow all foreign-flag vessel
operators, who would not have to abide by U.S. laws and regulations, to sail
between American ports in direct competition with Matson and other U.S.
operators who must comply with such laws and regulations. The task force seeks
to inform elected officials and the public about the economic, national
security, commercial, safety and environmental benefits of the Jones Act and
similar cabotage laws.
Matson Terminals competes with numerous other companies which
perform the same or similar services. The container stevedoring and terminal
services business is extremely competitive. The primary considerations of
ocean carriers when selecting stevedore and terminal operators are rates,
quality of service, expertise and reputation. The industry is highly capital-
intensive because of the need for expensive container-handling equipment.
Matson Intermodal competes for freight with a number of large
and small companies engaged in intermodal transportation. Matson Services
competes with other large operators of tugboats in Hawaiian waters.
(7) LABOR RELATIONS
---------------
The absence of strikes and the availability of labor through
hiring halls are important to maintenance of profitable operations by Matson.
Matson's operations have not been disrupted significantly by strikes in the
past 24 years. See "Employees and Labor Relations" below for a description of
labor agreements and certain unfunded liabilities for multi-employer pension
plans to which Matson and Matson Terminals contribute.
(8) RATE REGULATION
---------------
In November 1995, Matson filed a 3.8 percent general rate
increase for the Hawaii Service that became effective on January 28, 1996.
The Interstate Commerce Commission Termination Act of 1995 (the
"Act"), which took effect on January 1, 1996, will substantially revise
regulation of water common carriers, like Matson, which operate between the
U.S. Mainland and domestic offshore states and territories.
Previously, Matson was regulated by the Federal Maritime
Commission ("FMC") with respect to port-to-port service rates, as well as by
the Interstate Commerce Commission ("ICC") to the extent of Matson's joint
rates with motor carriers.
The Act will end bifurcated regulation by the FMC and ICC of
water carriers providing service in the domestic offshore trades. The Act has
established within the United States Department of Transportation a new agency,
the Surface Transportation Board ("STB"). The STB will have jurisdiction over
both water carriers and motor carriers providing service in the domestic
offshore trades.
Carriers under STB jurisdiction must file rates with the STB and
charge only those rates. The Act establishes a Zone of Reasonableness ("ZOR")
which, as adjusted by reference to the Producer Price Index, will allow annual
increases not exceeding 7.5% and rate reductions not exceeding 10%, measured
against the rate in effect one year before the change. Rates which qualify for
ZOR treatment are deemed reasonable and are not subject to investigation or
suspension. Rates outside the ZOR also must be reasonable, but no regulations
have been proposed for determining reasonableness.
B. PROPERTY DEVELOPMENT AND MANAGEMENT
-----------------------------------
(1) GENERAL
-------
The property development and management operations of A&B are
conducted by ABHI, a wholly-owned subsidiary headquartered in Honolulu. A&B
and its subsidiaries own approximately 92,784 acres of land, consisting of
approximately 90,744 acres in Hawaii and approximately 2,040 acres elsewhere,
as follows:
LOCATION NO. OF ACRES
-------- ------------
Maui .................................. 68,840
Kauai ................................. 21,904
California ............................ 1,950
Colorado .............................. 5
Nevada ................................ 18
Texas ................................. 42
Washington ............................ 22
Florida ............................... 3
As described more fully in the table below, the bulk of this acreage currently
is used for agricultural and related activities, and includes pasture land
leased to ranchers, watershed and conservation reserves. The balance is used
or planned for development or other urban uses. An additional 19,000 acres on
Maui and Kauai are leased from third parties.
CURRENT USE NO. OF ACRES
----------- ------------
Sugarcane/coffee cultivation and
contributory purposes ........................... 44,377
Watershed and conservation ......................... 28,500
Other agricultural and pasture land ................ 16,678
Hawaii commercial and industrial land .............. 494
Hawaii residential, including land
zoned for hotel and apartment use ............... 695
------
Total in Hawaii ............................... 90,744
------
California ranch land............................... 1,901
U.S. Mainland commercial and
industrial land ................................. 139
------
TOTAL ......................................... 92,784
======
ABHI is actively involved in the entire spectrum of land
development, including planning, zoning, financing, constructing, purchasing,
managing and leasing, and selling and exchanging real property.
(2) PLANNING AND ZONING
-------------------
The entitlement process for development of property in Hawaii
is both time-consuming and costly, involving numerous State and County
regulatory approvals. For example, conversion of an agriculturally-zoned
parcel to residential zoning usually requires the following approvals:
- amendment of the County general plan to reflect the desired residential
use;
- approval by the State Land Use Commission to reclassify the parcel from
the "agricultural" district to the "urban" district;
- County approval to rezone the property to the precise residential use
desired; and,
- if the parcel is located in the Coastal Zone Management area, the
granting of a Special Management Area Permit by the County Planning Com-
mission.
The entitlement process is complicated by the conditions, restrictions and
exactions that are placed on these approvals, such as the construction of
infrastructure improvements, payment of impact fees, restrictions on the
permitted uses of the land, provision of affordable housing, and/or mandatory
fee sale of portions of the project.
ABHI actively works with regulatory agencies, commissions and
legislative bodies at various levels of government to obtain zoning
reclassification of land to its highest and best use. ABHI designates a parcel
as "fully-zoned" when all necessary government approvals have been obtained.
Approximately 1,189 acres of property currently are designated fully-zoned.
As described in more detail below, work to obtain entitle-
ments for urban use in 1995 focused on (i) the Kukui'ula residential develop-
ment on Kauai, (ii) the proposed master-planned community at Pilot Hill Ranch
in California, and (iii) obtaining Community Plan designations for various ABHI
lands on Maui. With regard to item (iii), ABHI continues to participate
actively in Maui County's decennial update of its Community Plans, a process
that began in 1992. The Community Plans serve to guide planning development
activity over the next decade. ABHI is seeking various urban designations for
its undeveloped lands within the following four Community Plans where most of
its Maui lands are located: Pa'ia-Haiku Community Plan, Kihei-Makena Community
Plan, Wailuku-Kahului Community Plan, and Makawao-Pukalani-Kula ("Upcountry")
Community Plan.
In 1994, the Maui County Council adopted the Pa'ia-Haiku
Community Plan. This Plan reflected the designation of approximately 190 acres
of ABHI lands for business and residential use, the conversion of approximately
80 acres of previously existing residential and business designations to
agricultural use, and the retention of approximately 45 acres of residential
and industrial designations. Adoption of the remaining three Community Plans
by the Maui County Council is expected in 1996 and 1997.
(3) RESIDENTIAL PROJECTS
--------------------
ABHI is pursuing a number of residential projects in Hawaii
and on the U.S. Mainland, in particular:
(A) KUKUI'ULA. On Kauai, construction activity at the
---------
1,000-acre Kukui'ula project continues to be suspended as a result of weak
economic conditions on Kauai. The Kukui'ula project is envisioned to be the
first planned residential community on the island of Kauai. It currently is
expected to include up to 3,000 dwelling units, as well as an 18-hole golf
course, a small boat marina, commercial areas, schools and parks. Construction
of the wastewater treatment plant, mass grading and drainage, and certain road-
way improvements were completed in 1993.
In 1995, ABHI continued its efforts to obtain revised
entitlements to the Kukui'ula project, consistent with ABHI's revisions to the
project's master plan to address hurricane inundation risks and market
considerations. In May 1995, the State Land Use Commission approved urban
classification for an additional 822 acres. As a result, the entire 1,045-acre
project is now classified as urban. The initial increment of 727 acres is
immediately available for development, while the remaining 318 acres is
conditionally designated urban, subject to a showing that substantial progress
has been made on providing infrastructure to the initial increment. In
December 1995, the County of Kauai approved an ordinance rezoning the initial
increment of 727 acres to provide a mix of residential, commercial, golf
course, park and other uses, consistent with ABHI's plans to develop a planned
residential community.
The approvals described above complete ABHI's program to
obtain revised entitlements to the Kukui'ula project. However, renewal of
construction activity awaits improvement of the current economic conditions,
especially housing demand, on Kauai.
(B) ELEELE NANI II. Also on Kauai, sales at ABHI's Eleele
--------------
Nani II development, consisting of 146 single-family lots on 27 acres,
continued during 1995. Sales of four lots closed in 1995, leaving only six
lots available for sale.
(C) KU'AU BAYVIEW SUBDIVISION (FKA MAKANA SUBDIVISION). In
--------------------------------------------------
1995, the construction plans for this 92-house-and-lot, single-family
subdivision in Pa'ia, Maui, were approved and sitework construction commenced.
The sitework and two model homes are expected to be completed in March 1996,
and construction of the first for-sale homes is expected to be completed by
mid-1996. ABHI's original joint venture for the development of this project
was terminated in 1995, and the project is being developed solely by ABHI.
(D) HAIKU MAUKA. Also on Maui, Haiku Mauka, a 92-acre, 39-
-----------
lot agricultural lot residential subdivision, experienced 22 lot sales in 1995.
A total of 32 lots have been sold since marketing of this project began in
September 1994.
(E) KAHULUI IKENA. Kahului Ikena, a 102-unit, market-
-------------
priced condominium project in Kahului, Maui, was completed in June 1995.
Marketing of the units began in July 1995, and 24 units have been sold since
then.
(F) PILOT HILL RANCH. On January 23, 1996, the El Dorado
----------------
County Board of Supervisors adopted the new General Plan for El Dorado County,
near Sacramento, California. The new General Plan incorporates ABHI's devel-
opment plan proposals for the Pilot Hill Ranch project. Pilot Hill Ranch is
intended to be developed as a 1,800-acre planned residential community,
consisting of approximately 980 single- and multi-family homes, a golf course,
parks and 20 acres of commercial development. In February 1996, a lawsuit was
filed to block implementation of the General Plan. The impact of this lawsuit
is uncertain at this time.
(4) COMMERCIAL AND INDUSTRIAL PROPERTIES
------------------------------------
An important source of property revenue is the lease rental
income A&B and its subsidiaries receive from various ground leases on
11,000 acres of land (including agricultural and pasture lands) and leases of
2,678,000 square feet of industrial and commercial building space.
(A) HAWAII COMMERCIAL/INDUSTRIAL PROPERTIES
---------------------------------------
In Hawaii, most of the income-producing commercial and indus-
trial properties owned by A&B and its subsidiaries are located in the central
Kahului area of Maui. These properties consist primarily of two shopping
centers and two office buildings, as well as several separate commercial and
industrial properties, as follows:
PROPERTY LOCATION TYPE LEASED AREA
-------- -------- ---- -----------
Maui Mall Kahului, Maui Retail shopping 190,800 sq. ft.
center
Kahului Shopping Kahului, Maui Retail shopping 112,100 sq. ft.
Center center
Kahului Office Kahului, Maui Office 29,800 sq. ft.
Center
Wakea Business Kahului, Maui Warehouse/ 61,500 sq. ft.
Center retail
Kahului Office Kahului, Maui Office 51,700 sq. ft.
Building
Apex Building Kahului, Maui Retail 28,000 sq. ft.
In addition to the above-described properties, a number of
other commercial and industrial projects are being developed on Maui and Kauai,
including:
(1) TRIANGLE SQUARE. Development continues at
---------------
Triangle Square, an 11-acre retail/commercial complex in Kahului, Maui. In
January 1995, the Apex Building, containing 28,000 square feet, was completed
and is currently being tenanted by retail users. Also, three lots have been
leased so far. Additional ground leases and construction are planned for the
balance of Triangle Square, with marketing activity in progress in 1996.
(2) MAUI BUSINESS PARK (FKA KAHULUI INDUSTRIAL PARK).
------------------------------------------------
Sitework construction at the 42-acre first subphase of the Maui Business Park,
a light industrial commercial subdivision located near Maui's primary airport
and harbor, commenced in the second quarter of 1995. By year-end, 75% of the
onsite construction work and 50% of the offsite work were completed, with final
completion scheduled for April and December 1996, respectively. In 1995, five
and one-half acres were sold and 14-1/2 acres were leased to a Hawaii-based
developer who will be constructing a 275,000-square-foot value retail shopping
center on the 20 acres. Some of the tenants that have signed leases for the
shopping center include Sports Authority, Border's Bookstore, Eagle Hardware
and Office Max. Marketing of the 32 lots comprising the 22-acre balance of
Maui Business Park's first subphase commenced in the last quarter of 1995.
The sale of three lots closed in December 1995, and in January 1996 three lots
were leased to a self-storage warehouse developer.
(3) PORT ALLEN INDUSTRIAL SUBDIVISION. On Kauai,
---------------------------------
sales of four industrial lots closed in 1995. One lot remains available for
sale.
(B) U.S. MAINLAND COMMERCIAL/INDUSTRIAL
-----------------------------------
PROPERTIES
----------
On the U.S. Mainland, A&B and its subsidiaries own a port-
folio of commercial and industrial properties comprising a total of approxi-
mately 2.2 million square feet of leasable area, as follows:
LEASED AREA
PROPERTY LOCATION TYPE (SQUARE FT.)
-------- -------- ---- ------------
DEC Facility Cupertino, CA Research and 246,000
development
LinPac Building City of Manufacturing 126,000
Industry,
CA
Moulton Plaza Laguna Hills, Retail 134,000
CA
Spinnaker II Fremont, CA Research and 98,500
development
Great Southwest Grand Prairie, Warehouse/ 901,400
Industrial TX Industrial
4225 Roosevelt Seattle, WA Office/Medical 106,500
Valley Freeway Kent, WA Warehouse/ 229,100
Corporate Park Industrial
Island Village Bainbridge Retail 97,200
Shopping Center Island, WA
Airport Square Reno, NV Retail 168,000
Market Square Greeley, CO Retail 43,300
The Great Southwest Industrial property in Dallas, Texas
benefited from a strong leasing market, achieving a 99% occupancy rate in 1995.
The resurgence of new construction in the area will increase the amount of com-
petitive space, but should have minimal impact on the property in 1996, due to
few lease expirations.
Washington State's stable economy is expected to continue to
benefit A&B's three Seattle-area properties. The 4225 Roosevelt Building and
Island Village Shopping Center (fka Winslow Village Shopping Center) are
operating at 100% occupancy. Strong interest is present for space which will
become available in the Valley Freeway Corporate Park in 1996.
In California, both the Cupertino and Fremont markets have
improved significantly. Digital Equipment Corporation ("DEC") has subleased the
146,000 square feet of available space in the DEC Facility to a major corporate
tenant through August 1997, which coincides with the end of DEC's lease term.
Negotiations currently are taking place with such tenant for a direct lease
that would expire in August 2000. Advance lease negotiations have been
initiated for the Spinnaker II property, located in Fremont. Moulton Plaza,
located in Laguna Hills, is being challenged by new retail developments in the
area. Reconfiguration and retenanting of this center are planned for 1996.
In June 1995, A&B acquired the Airport Square and Market Square
shopping centers. These acquisitions completed the tax-deferred exchange,
pursuant to Section 1031 of the Internal Revenue Code, that was initiated with
the sale of Arapahoe Marketplace in December 1994.
Overall occupancy rates for the U.S. Mainland leased property
portfolio averaged 97% in 1995, the same level as in 1994. Overall occupancy
rates for the Hawaii leased property portfolio averaged 90% in 1995, compared
with 92% in 1994.
C. FOOD PRODUCTS
-------------
(1) PRODUCTION
----------
A&B has been engaged in activities relating to the production
of cane sugar and molasses in Hawaii since 1870. A&B's present food products
operations are conducted by ABHI. ABHI operates two sugar plantations,
Hawaiian Commercial & Sugar Company ("HC&S") on the island of Maui and McBryde
Sugar Company, Limited ("McBryde") on the island of Kauai. Island Coffee
Company, Inc. ("Island Coffee"), a wholly-owned subsidiary of McBryde, grows
coffee on the island of Kauai.
In June 1995, ABHI announced the restructuring of its
agricultural operations in Hawaii, involving the phase-out of sugar production
operations at McBryde and the directing of sugar-growing resources and efforts
to HC&S. Sugar production at McBryde is expected to cease upon completion of
the 1996 harvest, which is anticipated to occur in September 1996. Continuing
losses in McBryde's sugar operations necessitated this decision.
ABHI is Hawaii's largest producer of raw sugar. In 1995,
ABHI produced 45% of the 492,346 tons of raw sugar produced in Hawaii. The
Hawaii sugar production, in turn, amounted to approximately seven percent of
total United States sugar production. ABHI's raw sugar production tonnage for
the years 1991 through 1995 is summarized in the following table:
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
HC&S 198,009 206,217 224,677 193,485 214,122
McBryde 23,952 17,273 14,493 22,941 38,455
------- ------ ------- ------- -------
Total 221,961 223,490 239,170 216,426 252,577
======= ======= ======= ======= =======
HC&S harvested 17,661 acres of sugar cane in 1995, compared
with 16,457 acres in 1994 and 16,726 acres in 1993. Yields averaged 11.2 tons
of sugar per acre in 1995, the lowest level in ten years, compared with 12.4 in
1994 and 13.4 in 1993. The reduction in yield in 1995 was due to a number of
factors, most significantly the unusual lack of rainfall in 1995. A number of
steps have been taken to deal with the situation, based upon the results of a
rigorous evaluation by HC&S and industry experts of HC&S's cultivation
practices and growing conditions. These steps are expected to provide some
benefit to the 1996 harvest, but the full impact is not expected to occur until
the 1997 harvest, since sugar cane is grown on a two-year cycle. As a by-
product of sugar production, HC&S also produced 63,339 tons of molasses in
1995, compared with 58,997 tons in 1994 and 61,954 tons in 1993.
An advanced ultrafiltration plant constructed by HC&S in 1994
should, when fully operational in 1996, increase sugar recovery at HC&S's
Puunene mill (the larger and more modern of HC&S's two mills) by 1.5%, thereby
increasing annual sugar production by more than 3,000 tons.
McBryde harvested 3,237 acres of sugar cane in 1995, compared
with 3,340 acres in 1994 and 2,893 acres in 1993. In addition to raw sugar,
9,219 tons of molasses were produced in 1995, compared with 7,774 tons in 1994
and 5,861 tons in 1993. The average yield in 1995 was 7.4 tons of sugar per
acre, up from 5.2 tons in 1994 and 5.0 tons in 1993. The relatively low sugar
and molasses production and sugar yields in 1993 and 1994 were due to damage to
the sugar crop by Hurricane Iniki in September 1992.
The average cost per ton of sugar produced at the two plan-
tations, including the cost of power production, was $432.59 in 1995, compared
with $428.56 in 1994 and $390.37 in 1993. The increases in cost per ton are
primarily the result of decreased yields per acre at HC&S, which more than
offset increased yields at McBryde, and modest increases in costs. Continuing
cost reduction programs at both plantations have been successful in minimizing
cost increases.
Both HC&S and McBryde produce electricity for their own use
and for sale to electric utility companies by burning bagasse (sugarcane
fiber), by hydroelectric power generation and, when necessary, by burning
fossil fuels. The price for the power sold is equal to the utility companies'
"avoided cost" of not producing the electricity supplied by the plantations.
In addition, HC&S receives a capacity payment to provide certain power to the
local utility. In 1995, HC&S sold 98,031 megawatt hours ("MWH") of electric
power, and McBryde sold 19,625 MWH. Revenue from the sale of electricity
depends on the amount of power produced and sold as well as the average price
of fuel. See "Energy" below.
During 1995, Island Coffee had approximately 4,000 acres of
coffee trees under cultivation. The harvest of the 1995 coffee crop is
expected to yield nearly 1.8 million pounds of green coffee, compared with 1.4
million pounds in 1994. Coffee production is expected to continue to increase
during the next few years.
Kahului Trucking & Storage, Inc., a subsidiary of ABHI,
provides sugar and molasses hauling and storage, petroleum hauling, mobile
equipment maintenance and repair services, and self-service storage facilities
on Maui. Kauai Commercial Company, Incorporated, another subsidiary of ABHI,
provides similar services on Kauai, as well as general trucking services.
(2) SUGAR REFINING; MARKETING OF SUGAR AND COFFEE
---------------------------------------------
Virtually all of the raw sugar produced in Hawaii is purchased
and refined by, and marketed through, C&H. C&H processes the raw cane sugar
into a full line of refined sugar products for the grocery market, and a full
range of industrial refined sugar products for industrial bakers, confectioners
and food processors. C&H is the leading sugar brand in the western United
States. Marketing of C&H's refined products is conducted by C&H's sales staff
and a network of brokers under exclusive representation agreements. The
refined products are marketed primarily in the western and central United
States.
C&H's profit margins continued to be hurt in 1995 by a
combination of high raw cane sugar prices and depressed prices for refined
sugar products, arising from the continuing ineffective governmental adminis-
tration of the domestic sugar support program and an excess supply of beet
sugar. In addition, C&H's performance was adversely impacted by a six-week
strike by workers at the Crockett refinery during September and October of
1995.
In response to the continuing financial hardship created by the
problems with the administration of the U.S. sugar program, and to the
uncertainty over the current review of the program by the U.S. Congress, in
December 1995 C&H announced a major restructuring involving the lay-off of
nearly one quarter of the work force. This restructuring is expected to yield
cost reductions of $8 million annually.
Consumer sugar sales are seasonal in nature and, as a result,
C&H's financial results are expected to be better in the third and fourth
quarters of each fiscal year, compared with the first two quarters.
C&H has a ten-year supply contract, ending in 2003, with
Hawaiian Sugar & Transportation Cooperative ("HS&TC"), a cooperative consisting
of the major sugarcane growers in Hawaii (including HC&S and McBryde), for C&H
to acquire substantially all raw sugar produced in Hawaii at a discount to the
New York Contract #14 price for domestic raw sugar. There are no minimum
supply guarantees on the part of HS&TC. During 1995, the supply contract with
HS&TC provided 72% of the raw sugar used by C&H. In recent years, a number of
Hawaii sugarcane growers have exited the business, have announced they will be
exiting the business or are considering such action. There is no certainty
that the companies now producing sugar cane in Hawaii will be doing so in the
future. In 1996, C&H will continue to purchase raw sugar from other than
Hawaiian sources to supplement its purchases under the supply contract with
HS&TC. The discontinuation of sugar growing operations at McBryde, anticipated
to occur in September 1996, is not expected to have any material impact on C&H.
At Island Coffee, coffee marketing efforts currently are being
directed toward developing a market for premium-priced, Kauai-grown green
coffee. Most of the 1995 coffee crop is being marketed on the U.S. Mainland in
green-bean (unroasted) form. Island Coffee has a supply agreement with Nestle
Beverage Company, ending in 1998, pursuant to which Nestle Beverage Company
will purchase 25% of Island Coffee's mid-grade coffee beans. In addition to
the sale of green coffee, in 1994 McBryde launched a roasted, packaged coffee
product in Hawaii under the "Kauai Coffee" trade name.
(3) COMPETITION AND SUGAR LEGISLATION
---------------------------------
Hawaiian sugar growers produce more sugar per acre than other
major producing areas of the world, but that advantage is partially offset by
Hawaii's high labor costs and the distance to the U.S. Mainland market.
Hawaiian refined sugar is marketed primarily west of Chicago. This is also the
largest beet sugar growing and processing area and, as a result, the only
market area in the United States which produces more sugar than it consumes.
Sugar from sugar beets is the greatest source of competition for the Hawaiian
cane sugar industry. In addition, competition from high fructose corn syrup
("HFCS") has increased substantially since 1974, but now has stabilized, as
sweetener markets in which the use of HFCS is economical have become saturated.
The use of non-caloric (artificial) sweeteners accounts for a small percentage
of the domestic sweetener market. Although the use of artificial sweeteners is
expected to grow, such increased use is not expected to affect sugar markets
significantly in the near future.
Worldwide, most sugar is consumed in the country of origin.
Only about a quarter of world sugar is involved in international trade. A much
smaller amount is traded at the world sugar market price (the other sugar
involved in international trade is traded at negotiated prices under bilateral
trade agreements). Due to protective legislation, raw cane sugar prices in the
U.S. generally are higher than the world price, and only limited amounts of
foreign sugar are allowed into the U.S. under import quotas. Such foreign
sugar sells at U.S. domestic prices. As a result, the world sugar price does
not have material relevance to U.S. sugar producers and refiners.
The U.S. Congress long has sought, through legislation, to
assure a reliable domestic supply of sugar at stable and reasonable prices.
Congress's most recent renewal of protective legislation for domestic sugar
is provided by the Food, Agriculture, Conservation and Trade Act of 1990, known
as the 1990 Farm Bill. The 1990 Farm Bill provides a sugar loan program for
the 1991 through 1995 crops, with a loan rate (support price) of 18 cents per
pound for raw sugar, the same as that provided by the 1985 Farm Act. The 1990
Farm Bill also provides minimum import quotas and a means of limiting domestic
production. In February 1996, the U.S. Senate and U.S. House of Representatives
separately passed versions of a farm bill which would extend the U.S. sugar
program for another seven years, through the 2002 crop, but which would, among
other things, eliminate non-recourse loans under certain restrictive circum-
stances, eliminate beet marketing allotments, and effectively reduce the loan
rate to sugar growers to 17 cents per pound. A final version of the farm bill
is pending.
The loan rate represents the value of sugar given as collateral
for government price-support loans. The government is required to administer
the sugar program at no net cost, and this is accomplished by adjusting fees
and quotas for imported sugar to maintain the domestic price at a level that
prevents producers from defaulting on loans. The target price established by
the government is known as the market stabilization price and is based on the
loan rate plus transportation costs, interest and an incentive factor. The
market stabilization price was 21.8 cents per pound in 1988-89 and 21.9 cents
per pound in 1990-91. No market stabilization price has been announced since
1990-91. The actual U.S. domestic sugar price averaged 21.31 cents per pound
in 1992, 21.62 cents per pound in 1993, 22.03 cents per pound in 1994, and
23.03 cents per pound in 1995 (reaching a high of 25.00 cents per pound in June
and July). The abnormally high average raw sugar price in 1995 was due to
flaws in the existing federal sugar legislation and in the administration of
the U.S. sugar program. The foregoing average prices are based on the average
daily New York Contract #14 price for raw sugar. A chronological chart of
these prices is shown below.
U.S. Raw Sugar Prices
(New York Contract #14)
(Average Cents per pound)
1993 1994 1995
---- ---- ----
January 20.76 22.00 22.66
February 21.07 21.94 22.67
March 21.57 21.95 22.46
April 21.70 22.04 22.78
May 21.36 22.18 23.10
June 21.39 22.45 23.50
July 21.89 22.72 24.47
August 21.94 21.90 23.37
September 21.97 21.78 23.21
October 21.88 21.52 22.92
November 21.87 21.57 22.60
December 22.00 22.31 22.70
The long-term raw sugar supply agreement between C&H and HS&TC
provides that the participating growers will sell all their raw sugar to C&H at
a price equal to the No. 14 Contract settlement price, less a discount and less
costs of sugar vessel discharge and stevedoring. This price becomes a cost to
C&H and, after deducting the marketing, operating, distribution, transportation
and interest costs of HS&TC, reflects the gross revenue to the Hawaii sugar
growers, including HC&S and McBryde. The No. 14 price is established by, among
other things, the supply of and demand for all forms of domestically-produced
sweeteners, government policies regarding the U.S. sugar import quota and, on
occasion, domestic market allocations, as well as by potential changes in
international trade programs which might affect the U.S. sugar program.
Liberalized international trade agreements, such as the General
Agreement on Tariff and Trade, include provisions relating to agriculture, but
these agreements will not affect the U.S. sugar or sweetener industries
materially. The "side" agreements that modified the North American Free Trade
Agreement ("NAFTA") alleviated sugar producers' concerns over NAFTA provisions
which could have allowed Mexico to export large quantities of sugar to the U.S.
starting in six years.
(4) PROPERTIES AND WATER
--------------------
C&H's main refining operations are located at Crockett,
California. The Crockett refinery is one of the largest in the world, and is
the only cane sugar refinery on the United States West Coast. It is ideally
located next to a deep-water port, a major rail line and an interstate highway.
The refinery and administrative offices occupy a complex of buildings that
contains approximately 1,310,000 square feet and is located on approximately
55 acres. C&H leases approximately 42 acres from the California State Lands
Commission under long-term ground leases, and owns the remaining area. The
Lease Agreement with the State of California covering the main refinery and
wharf facilities expires in 2022, and the Lease Agreement covering the area
where the secondary water treatment facility is located expires in 2024.
C&H also operates a smaller sugar refining and distribution
facility in Aiea, Hawaii that primarily produces liquid sugar for the local
beverage industry. This facility was completed in 1994 and replaced an older
refinery. C&H leases the refining equipment pursuant to leases that expire in
December 1996 and March 1997, with options to renew for up to an additional six
years. C&H also leases the facilities and the site pursuant to a lease that
expires in 2004. In late 1995, a major bottling plant switched from using
C&H's liquid sugar to using corn syrup in its soft drinks. The switch resulted
in the loss of 30% of the Aiea refinery's sales. Because of the relatively low
price of corn syrup, other bottling plants may switch from using C&H's liquid
sugar. In the City of Commerce, California, C&H owns and operates a bulk sugar
receiving and distribution facility. The facility is located on a four-acre
parcel owned by C&H.
The HC&S sugar plantation, the largest in Hawaii, consists of
approximately 42,000 acres of land, including 2,000 acres leased from the State
of Hawaii and 1,300 acres under lease from private parties. Approximately
36,200 acres are under cultivation and completely irrigated, and the balance
either is used for contributory purposes, such as roads and plant sites, or is
not suitable for cultivation.
The McBryde/Island Coffee plantation consists of approximately
15,000 acres of land. Approximately 7,500 acres currently are under
cultivation, 4,000 in coffee and 3,500 in sugar cane. About 7,000 acres are
held under leases. In furtherance to the cessation of McBryde's sugar opera-
tions expected in September 1996, these leased lands will be returned to their
owners. Substantially all of the fee-simple lands are irrigated. A comprehen-
sive land management plan is being implemented for the approximately 1,200
acres of land owned in fee that presently is cultivated in sugar.
Large quantities of water are necessary to grow sugar cane.
Because of the importance of water, both access to water and efficient
irrigation systems are crucial for the successful growing of sugar cane. A&B's
plantations use a "drip" irrigation system that distributes water to the cane
roots through small holes in plastic tubes. A total of 34,326 acres, 96% of
HC&S's cane lands, currently are drip irrigated. The drip method has improved
yields in the fields, has allowed increased mechanization of field operations,
has resulted in added acres under cultivation and helps mitigate the effects of
drought.
ABHI also owns 19,000 acres of watershed lands on Maui which
supply part of the irrigation water used by HC&S. ABHI also has held water
licenses to 38,000 acres owned by the State of Hawaii, which over the years
have supplied approximately one-third of the irrigation water used by HC&S.
The last of these four water license agreements expired in 1986, and all four
agreements have been extended as revocable permits. The State Board of Land
and Natural Resources has indicated its intention to replace these four
permits with long-term licenses. The issuance of such licenses currently is
pending a hearing before the State Board of Land and Natural Resources.
D. EMPLOYEES AND LABOR RELATIONS
-----------------------------
As of December 31, 1995, A&B and its subsidiaries had approximately
3,076 regular full-time employees, 14% fewer than at the start of 1995. About
1,236 regular full-time employees were engaged in the growing of sugar cane and
coffee and the production of raw sugar and green coffee, 592 were engaged in
the refining and marketing of sugar, 1,027 were engaged in ocean transporta-
tion, 40 were engaged in property development and management, and the balance
was in administration and miscellaneous operations. Approximately 61.6% were
covered by collective bargaining agreements with unions.
The reduction in A&B's work force in 1995 was one component of
Company-wide initiatives implemented to reduce general and administrative
expenses by $10 million per year. The work force reduction included the lay-
off at C&H, announced in late 1995, of approximately 201 regular full-time
employees, comprising 25% of the C&H work force. In addition, as a result of
the planned September 1996 shutdown of sugar operations at McBryde,
approximately 115 McBryde employees are anticipated to be laid off in 1996.
The remaining employees, approximately 65 in number, will be employed by Island
Coffee.
As of December 31, 1995, Matson and its subsidiaries had approxi-
mately 1,027 regular full-time employees, 266 seagoing employees and 302 casual
employees. Approximately 38% of the regular full-time employees, all of the
seagoing employees and all of the casual employees were covered by collective
bargaining agreements. The casual employees are United States Pacific Coast
longshoremen who are employed through hiring halls and are not full-time
employees of either Matson or Matson Terminals.
In connection with the inauguration of the new Guam-Micronesia
Service and the purchase of six additional vessels (see the discussion of
"Freight Services" above), Matson has added 34 employees in Guam and 142
seagoing employees.
Employees of Matson and Matson Terminals are represented by 10
different unions, and Matson and Matson Terminals are parties to 94 separate
collective bargaining agreements. Matson's seagoing employees are represented
by six unions. Matson and Matson Terminals are members of the Pacific Maritime
Association ("PMA"), and Matson Terminals is a member of the Hawaii Stevedoring
Industry Committee and the Hawaii Employers Council, through which various
collective bargaining agreements are negotiated. Matson is a member of the
Maritime Service Committee ("MSC") for collective bargaining with three unions
representing licensed deck, engineer and radio officers for Matson vessels.
Historically, collective bargaining with the longshore and seagoing
unions has been complex and difficult. However, Matson and Matson Terminals
consider their respective relations with the International Longshoremen's and
Warehousemen's Union ("ILWU"), other unions and their non-union employees to be
satisfactory. During 1995, collective bargaining agreements with the United
Brotherhood of Carpenters and Joiners of America in Oakland and the Interna-
tional Association of Machinists in Los Angeles and Oakland were renewed for
three-year, four-year, and 49-month terms, respectively. Additionally, Matson
renewed two three-year labor agreements covering deck and engine officers who
crew an integrated tug/barge managed by Matson on behalf of its owner, HS&TC.
Collective bargaining agreements with the ILWU in Hawaii and on the U.S.
Pacific Coast, clerical bargaining units in Oakland and Honolulu, and Teamsters
in Oakland are expected to be renewed in mid-1996 without service interruption.
Matson contributed during 1995 to multi-employer pension plans for
vessel crews. If Matson were to withdraw from or significantly reduce its
obligation to contribute to one of the plans, Matson would review and evaluate
data, actuarial assumptions, calculations and other factors used in determining
its withdrawal liability, if any, and, in the event of material disagreement
with such determination, would pursue the various means available to it under
federal law for the adjustment or removal of its withdrawal liability. Matson
Terminals participates in a multi-employer pension plan for its Hawaii
longshore employees. For a discussion of withdrawal liabilities under the
Hawaii longshore and seagoing plans, see Note 2 to A&B's financial statements
on pages 34 and 35 of the 1995 Annual Report, which is incorporated herein by
reference.
Matson pays, through Matson Terminals on the basis of cargo tons
carried, and Matson Terminals contributes as a direct employer, to a
multi-employer pension plan for Pacific Coast longshoremen. Under special
withdrawal liability rules in the plan, Matson Terminals could cease United
States Pacific Coast cargo handling operations permanently and stop making
contributions to the plan without any withdrawal liability.
As of December 31, 1995, HC&S and McBryde had approximately 873
employees and 152 employees, respectively, covered by collective bargaining
agreements with the ILWU. Production units of HC&S and McBryde, as well as an
HC&S clerks and technical employees unit, are represented by Local 142 of the
ILWU. Agreements with the ILWU for the HC&S and McBryde production units and
for the HC&S clerks and technical employees unit expired on January 31, 1996.
The agreements for the HC&S production unit and clerks and technical employees
unit were extended to March 31, 1996. The agreement for the McBryde production
unit was extended to September 30, 1996, to coincide with the anticipated
closure of sugar operations. Negotiations with the ILWU on a collective
bargaining agreement for production unit employees of Island Coffee are
expected to commence soon.
Kahului Trucking & Storage, Inc. had three Local 142 bargaining units
covering 40 employees. Six employees were covered by the Bulk Sugar Agreement,
and two were covered by the Tugboat Agreement. These agreements were renewed
for three-year periods expiring June 30, 1996. The other 32 employees are in
the production unit, and are covered by an agreement that will expire on
March 31, 1996. This latter agreement is in the process of being renegotiated.
Kauai Commercial Company, Incorporated had 43 employees represented
by Local 142. Of these, 39 employees were in the production unit, and four
were in the clerical unit. Both contracts were extended to April 30, 1996 and
are in the process of being renegotiated.
Of the 423 bargaining unit employees of C&H at Crockett, California
at year-end 1995 (reflecting the C&H lay-off announced in late 1995), 338 were
members of Sugar Workers Union No. 1, AFL-CIO Seafarers International Union of
North America and 77 employees were members of ILWU Local 6. Eight employees
of C&H at the Aiea, Hawaii refinery were members of ILWU Local 142. Contracts
covering these employees extend through May 31, 1998.
E. ENERGY
------
Matson and Matson Terminals purchase bunker fuel oil, lubricants,
gasoline and diesel fuel for their operations. Bunker fuel oil and diesel fuel
are the largest items of energy-related expense.
Bunker fuel prices started 1995 at $97.50 per metric ton and ended
the year at $116.00 per metric ton. A low of $70.00 per metric ton occurred in
October, and a high of $117.50 per metric ton occurred in August. Sufficient
fuel for Matson's requirements is expected to be available in 1996.
As is the practice throughout Hawaii, ABHI's sugar plantations use
bagasse, the residual fiber of the sugarcane plant, as a fuel to generate steam
for the production of most of the electrical power for sugar mill and irriga-
tion pumping operations. However, supplemental fuel is required to produce
power, principally for pumping irrigation water during the factory shutdown
period when bagasse is not being produced. No. 6 (heavy) oil and coal have
been the supplemental fuels most commonly used by the sugar factories.
However, in 1992, the suppliers of oil to the ABHI sugar plantations announced
they would discontinue regular heavy oil shipments as a result of unlimited
liability concerns arising from federal and state environmental laws.
Currently, heavy oil is being transported to HC&S on a space-available basis.
As a result of the oil-availability problem, HC&S began converting its fac-
tories to use diesel fuel and increased its use of coal. In 1995, HC&S
produced 253,985 MWH of electric power and sold 98,031 MWH, compared with
1994's power production of 224,883 MWH and sales of 101,994 MWH. HC&S's oil
use increased to 143,090 barrels in 1995 from the 126,568 barrels used in
1994. In November 1993, HC&S obtained a state permit that more than doubled
its capability for burning coal. Coal use for power generation increased
substantially, from 34,490 short tons in 1994 to 67,208 short tons in 1995.
McBryde uses very little oil and no coal because it normally produces
a large amount of hydroelectric power from two plants that supplement power
produced from bagasse. To deal with the discontinuance of heavy oil shipments
to Kauai, McBryde converted its factories to use diesel fuel in 1992. In 1995,
power production was 46,532 MWH, up from 43,494 MWH in 1994. Power sales in
1995 of 19,625 MWH were down slightly from 20,381 MWH in 1994. Following
cessation of McBryde's sugar operations, Island Coffee will continue to
generate and sell hydroelectric power which is excess to its internal needs.
Steam-generated power will no longer be produced by McBryde on Kauai.
Construction by a third party began in early 1994 on a 240 MW
cogeneration plant adjacent to C&H's Crockett refinery. Pursuant to an
agreement between C&H and the third party that expires in 2026, the steam
produced by the cogeneration plant will be used to power the C&H refinery,
thereby reducing C&H's energy costs. The cogeneration plant also will allow
C&H to shut down its own, less-efficient steam generating plant, and thereby
avoid required capital improvements to the existing plant. The cogeneration
plant is expected to be operational in May 1996.
ITEM 3. LEGAL PROCEEDINGS
- --------------------------
See "Business and Properties - Ocean Transportation - Rate Regulation"
above for a discussion of rate and other regulatory matters in which Matson is
routinely involved.
In June 1990, Matson Terminals filed a complaint in the Superior Court of
California against Home Insurance Company, Hobbs Group, Inc. and Arkwright-
Boston Insurance Company for breach of contract and negligence. The complaint
sought recovery of damages sustained at Matson Terminals' Oakland terminal as a
result of the October 1989 Loma Prieta earthquake. The court awarded Matson
Terminals $23,516,000, which included $11,250,000 in punitive damages.
Defendant Home Insurance Company has filed an appeal of the court's award.
In February 1992, Pan Ocean Shipping Co., Ltd. ("Pan Ocean") served on
Matson an amended complaint alleging that a Matson vessel negligently dis-
charged contaminated ballast water into Los Angeles harbor on January 9, 1991.
Pan Ocean admits that a vessel owned and operated by Pan Ocean discharged fuel
oil into Los Angeles harbor on January 8, 1991. Pan Ocean is seeking contri-
bution and indemnification for the in-harbor clean-up charges which it alleged
to be between $16,000,000 and $19,000,000. On April 12, 1993, Pan Ocean
amended its complaint to allege fraud and seek unspecified punitive damages.
The parties have stipulated to binding arbitration before a Special Master
appointed by the United States District Court for the Central District of
California. The Special Master's findings will be incorporated into a judgment
by the United States District Court, which judgment may be appealed to the
Ninth Circuit Court of Appeals only on the issues of punitive damages and mis-
conduct of the Special Master. Arbitration hearings, which commenced January
13, 1994, are ongoing. Management believes, after consultation with legal
counsel and given the Protection and Indemnity coverage under Matson's
insurance policy in effect at the time of the alleged conduct, that any
ultimate liability in connection with this action will not have a material
adverse effect on Matson's financial condition.
On November 1, 1994, the Division of Water Quality, Department of
Wastewater Management, City and County of Honolulu ("City and County") issued a
Cease and Desist Order to C&H, alleging violations of a City and County
ordinance arising out of C&H's discharge of industrial wastewater from its
liquid sugar refinery into the City and County's sewer system. Among other
things, the Cease and Desist Order ordered C&H to stop discharging wastewater
into the sewer system, ordered C&H to provide a corrective action plan, and
warned that the violation might carry civil and/or criminal penalties.
Subsequently, the City and County issued Amended Order No. 1 on November 9,
1994, and Amended Order No. 2 on December 2, 1994. All orders were con-
solidated under Docket No. 94-021 ("Amended Orders"). Amended Order No. 2,
among other things, permitted C&H to discharge wastewater into the sewer
system, provided C&H did not violate its permit, and imposed a fine on C&H in
the amount of $1,650,000, which was suspended, provided C&H comply with the
Amended Orders. C&H appealed the Amended Orders.
In May 1995, C&H presented a settlement proposal to the City and County
which provided, among other things, that both C&H and the City and County
agreed that certain modifications completed at the refinery have alleviated the
unanticipated operational difficulties that led to the issuance of the Amended
Orders. On March 4, 1996, the City and County accepted the terms and condi-
tions of C&H's proposal, which are contained in a Consent Agreement pursuant
to which the fine was rescinded. The Consent Agreement resolves all issues
raised in the Amended Orders and Docket No. 94-021, including the Petitions to
Appeal filed by C&H.
A&B and its subsidiaries are parties to, or may be contingently liable in
connection with, other legal actions arising in the normal conduct of their
businesses, the outcomes of which, in the opinion of management after consulta-
tion with counsel, would not have a material adverse effect on A&B's financial
position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------
For the information about executive officers of A&B required to be
included in this Part I, see paragraph B of "Directors and Executive Officers
of the Registrant" in Part III below, which is incorporated into Part I by
reference.
PART II
-------
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
- ----------------------------------------------------------
STOCKHOLDER MATTERS
-------------------
This information is contained in the sections captioned "Common Stock" and
"Dividends" on pages 19 and 20 of the 1995 Annual Report, which sections are
incorporated herein by reference.
At February 16, 1996, there were 6,270 record holders of A&B common stock.
ITEM 6. SELECTED FINANCIAL DATA
- --------------------------------
Information for the years 1985 through 1995 is contained in the compara-
tive table captioned "Eleven-Year Summary of Selected Financial Data" on pages
22 and 23 of the 1995 Annual Report, which information is incorporated herein
by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
- ----------------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
A&B's financial statements, including the results of operations discussed
herein, are based on the historical-cost method of accounting, in accordance
with generally accepted accounting principles. If estimated current costs of
property and inventory were applied to reflect the effects of inflation on
A&B's businesses, total assets would be higher and net income lower than shown
by the historical-cost financial statements. However, the carrying values of
current assets (other than inventories, real estate held for sale, deferred
income taxes and prepaid and other assets) and of debt instruments are reason-
able estimates of their fair values. Investments in marketable securities are
stated in the financial statements at market values in accordance with State-
ment of Financial Accounting Standards No. 115. Certain investments held in
the Capital Construction Fund at amortized cost exceeded their fair values at
December 31, 1995 and 1994. This matter is described more fully in Note 11 on
page 39 of the 1995 Annual Report, which Note is incorporated herein by
reference.
Additional information applicable to this Item 7 is contained in the
section captioned "Management's Discussion and Analysis" on pages 25 through 27
of the 1995 Annual Report, which section is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ----------------------------------------------------
This information is contained in the financial statements and accompanying
notes on pages 28 through 39 of the 1995 Annual Report, the Independent
Auditors' Report on page 21 of the 1995 Annual Report, and the Industry Segment
Information for the years ended December 31, 1995, 1994 and 1993 appearing on
page 24 of the 1995 Annual Report and incorporated into the financial state-
ments by Note 13 thereto, all of which are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
- ---------------------------------------------------------
ACCOUNTING AND FINANCIAL DISCLOSURE
-----------------------------------
Not applicable.
PART III
--------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------------------------------
A. DIRECTORS
---------
For information about the directors of A&B, see the section captioned
"Election of Directors" on pages 2 and 3 of A&B's proxy statement dated March
4, 1996 ("A&B's 1996 Proxy Statement"), which section is incorporated herein by
reference.
B. EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------
The name of each executive officer of A&B (in alphabetical order),
age (in parentheses) as of March 31, 1996, and present and prior positions with
A&B and business experience for the past five years are given below.
Generally, the term of office of executive officers is at the
pleasure of the Board of Directors. With regard to compliance with Section
16(a) of the Securities Exchange Act of 1934, A&B believes that during fiscal
1995 its directors and executive officers filed on a timely basis all reports
required to be filed under Section 16(a), except that Mr. Robert G. Reed III,
a director, was required to file a Form 4 on or before November 10, 1995 with
respect to a transfer of 1,000 shares, but such transfer was reported on a
Form 5 filed on February 12, 1996. For a discussion of severance agreements
between A&B and certain of A&B's executive officers, see the subsection cap-
tioned "Severance Agreements" on page 13 of A&B's 1996 Proxy Statement, which
subsection is incorporated herein by reference.
Meredith J. Ching (39)
- ----------------------
Vice President (Government & Community Relations) of A&B, 10/92-present;
Vice President of ABHI (Government & Community Relations), 10/92-present; Vice
President of ABHI (Natural Resources Development & Government Affairs), 4/89-
9/92; first joined A&B or a subsidiary in 1982.
John C. Couch (56)
- ------------------
Chairman of the Board of A&B, 4/95-present; President of A&B,
4/91-present; Chief Executive Officer of A&B, 4/92-present; Chief Operating
Officer of A&B, 4/91-4/92; Chairman of the Board of ABHI, 4/95-present; Chief
Executive Officer of ABHI, 4/89-present; President of ABHI, 4/89-4/95;
Chairman of the Board of Matson, 4/95-present; Vice Chairman of the Board of
Matson, 4/92-3/95; Chairman of the Board of C&H, 7/90-present; Director of A&B,
10/85-present; Director of Matson, 4/91-present; Director of ABHI,
4/89-present; prior to 4/89, held various executive positions with A&B, Matson
and Matson's subsidiaries; first joined A&B or a subsidiary in 1976.
W. Allen Doane (48)
- -------------------
President of ABHI, 4/95-present; Chief Operating Officer of ABHI, 4/91-
present; Executive Vice President of ABHI, 4/91-4/95; first joined A&B or a
subsidiary in 1991.
Raymond J. Donohue (59)
- -----------------------
Senior Vice President of Matson, 4/86-present; Chief Financial Officer of
Matson, 2/81-present; first joined Matson in 1980.
G. Stephen Holaday (51)
- -----------------------
Senior Vice President of ABHI, 4/89-present; Vice President and Controller
of A&B, 4/93-1/96; Vice President, Chief Financial Officer and Treasurer of
A&B, 4/89-4/93; Chief Financial Officer and Treasurer of ABHI, 4/89-1/96; first
joined A&B or a subsidiary in 1983.
John B. Kelley (50)
- -------------------
Vice President (Investor Relations) of A&B, 1/95-present; Vice President
(Corporate Planning & Development, Investor Relations) of A&B, 10/92-12/94;
Vice President (Community & Investor Relations) of A&B, 2/91-10/92; Vice Presi-
dent (Corporate & Investor Relations) of A&B, 8/88-1/91; Vice President of
ABHI, 8/89-present; first joined A&B or a subsidiary in 1979.
Miles B. King (48)
- ------------------
Vice President and Chief Administrative Officer of A&B, 4/93-present;
Senior Vice President (Industrial Relations) of ABHI, 4/93-present; Senior Vice
President (Human Resources) of Matson, 10/92-present; Executive Vice President
of The Hay Group, 1988-1992.
David G. Koncelik (54)
- ----------------------
Senior Vice President of ABHI, 1/94-present; President and Chief Executive
Officer of C&H, 1/94-present; Executive Vice President and Chief Operating
Officer of C&H, 1/91-12/93; Chief Financial Officer of C&H, 12/88-12/93; Senior
Vice President of C&H, 12/88-12/90.
Michael J. Marks (57)
- ---------------------
Vice President, General Counsel and Secretary of A&B, 4/89-present; Senior
Vice President and General Counsel of ABHI, 4/89-present; first joined A&B or a
subsidiary in 1975.
C. Bradley Mulholland (54)
- --------------------------
President of Matson, 5/90-present; Chief Executive Officer of Matson,
4/92-present; Chief Operating Officer of Matson, 7/89-4/92; Executive Vice
President of Matson, 9/87-5/90; Director of A&B, 4/91-present; Director of
Matson, 7/89-present; Director of ABHI, 4/91-present; first joined Matson in
1965.
Glenn R. Rogers (52)
- --------------------
Vice President, Chief Financial Officer and Treasurer of A&B, 4/93-
present; Senior Vice President, Chief Financial Officer and Treasurer of ABHI,
1/96-present; Senior Vice President, Marketing of Matson, 1/89-4/93; first
joined A&B or a subsidiary in 1975.
Robert K. Sasaki (55)
- ---------------------
Vice President of A&B, 7/90-present; Senior Vice President (Properties) of
ABHI, 4/89-present; first joined A&B or a subsidiary in 1965.
Thomas A. Wellman (37)
- ----------------------
Controller of A&B, 1/96-present; Assistant Controller of A&B, 4/93-1/96;
Vice President of ABHI, 1/96-present; Controller of ABHI, 11/91-present; Area
Controller (Hawaii), Matson, 9/90-10/91; Internal Auditor, A&B, 7/89-8/90;
first joined A&B or a subsidiary in 1989.
ITEM 11. EXECUTIVE COMPENSATION
- --------------------------------
See the section captioned "Executive Compensation" on pages 8 through 13
of A&B's 1996 Proxy Statement, which section is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
- ---------------------------------------------------------
AND MANAGEMENT
--------------
See the section titled "Security Ownership of Certain Shareholders" and
the subsection titled "Security Ownership of Directors and Executive Officers"
on page 5 and on pages 6 and 7, respectively, of A&B's 1996 Proxy Statement,
which section and subsection are incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------
See the subsection titled "Certain Relationships and Transactions" on
page 7 of A&B's 1996 Proxy Statement, the section titled "Compensation
Committee Interlocks and Insider Participation" on page 16 of A&B's 1996 Proxy
Statement, and the last paragraph of the subsection titled "Compensation of
Directors" on page 4 of A&B's 1996 Proxy Statement, which are incorporated
herein by reference.
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
- ------------------------------------------------------
REPORTS ON FORM 8-K
-------------------
A. FINANCIAL STATEMENTS
--------------------
Financial Statements of Alexander & Baldwin, Inc. and Subsidiaries
and Independent Auditors' Report (in-corporated by reference to the pages of
the 1995 Annual Report shown in parentheses below):
Balance Sheets, December 31, 1995 and 1994
(pages 30 and 31).
Statements of Income for the years ended
December 31, 1995, 1994 and 1993 (page 28).
Statements of Shareholders' Equity for the
years ended December 31, 1995, 1994 and
1993 (page 32).
Statements of Cash Flows for the years ended
December 31, 1995, 1994 and 1993 (page 29).
Notes to Financial Statements (pages 33 through
39 and page 24 to the extent incorporated by
Note 13).
Independent Auditors' Report (page 21).
B. FINANCIAL STATEMENT SCHEDULES
-----------------------------
Financial Schedules of Alexander & Baldwin, Inc. and Subsidiaries
as required by Rule 5-04 of Regulation S-X (filed herewith):
I - Condensed Financial Information of
Registrant - Balance Sheets, December 31,
1995 and 1994; Statements of Income and
Cash Flows for the years ended December 31,
1995, 1994 and 1993; Notes to Condensed
Financial Statements.
NOTE: All other schedules are omitted because of the absence of the condi-
tions under which they are required or because the information called for is
included in the financial statements or notes thereto.
C. EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K
-----------------------------------------------
Exhibits not filed herewith are incorporated by reference to the
exhibit number and previous filing shown in parentheses. All previous exhibits
were filed with the Securities and Exchange Commission in Washington, D.C.
Exhibits filed pursuant to the Securities Exchange Act of 1934 were filed under
file number 0-565. Shareholders may obtain copies of exhibits for a copying
and handling charge of $0.15 a page by writing to Michael J. Marks, Vice
President, General Counsel and Secretary, Alexander & Baldwin, Inc., P. O.
Box 3440, Honolulu, Hawaii 96801.
3. Articles of incorporation and bylaws.
3.a. Restated Articles of Association of A&B, as restated effective
May 5, 1986, together with Amendments dated April 28, 1988 and April 26,
1990 (Exhibits 3.a.(iii) and (iv) to A&B's Form 10-Q for the quarter ended
March 31, 1990).
3.b. Bylaws of A&B as amended effective October 24, 1991
(Exhibit 3.b.(i) to A&B's Form 10-Q for the quarter ended September 30,
1991).
4. Instruments defining rights of security holders, including indentures.
4.a. Equity.
4.a. Rights Agreement, dated as of December 8, 1988 between
Alexander & Baldwin, Inc. and Manufacturers Hanover Trust Company, Press
Release of Alexander & Baldwin, Inc. and Form of Letter to Shareholders of
Alexander & Baldwin, Inc. (Exhibits 4, 28(a) and 28(b) to A&B's Form 8-K
dated December 13, 1988).
4.b. Debt.
4.b. (i) Amended and Restated Revolving Credit and Term Loan
Agreement effective as of April 1, 1989 among Alexander & Baldwin, Inc.
and A&B-Hawaii, Inc. and Wells Fargo Bank, N.A., First Hawaiian Bank,
Chemical Bank, Bank of Hawaii, Chase Manhattan Bank, and The Bank of
California, N.A. (Exhibit 4.b.(xi) to A&B's Form 10-Q for the quarter
ended September 30, 1989).
(ii) First Amendment to Amended and Restated Revolving Credit
and Term Loan Agreement, dated as of December 21, 1989, among Alexander &
Baldwin, Inc. and A&B-Hawaii, Inc. and Wells Fargo Bank, N.A., First
Hawaiian Bank, Chemical Bank, Bank of Hawaii, Chase Manhattan Bank and
The Bank of California, N.A. (Exhibit 4.b.(ii) to A&B's Form 10-K for the
year ended December 31, 1989).
(iii) Second Amendment to Amended and Restated Revolving Credit
and Term Loan Agreement, dated as of May 4, 1990, among Alexander &
Baldwin, Inc. and A&B-Hawaii, Inc. and Wells Fargo Bank, N.A., First
Hawaiian Bank, Chemical Bank, Bank of Hawaii, Chase Manhattan Bank and
The Bank of California, N.A. (Exhibit 4.b.(iii) to A&B's Form 10-Q for
the quarter ended June 30, 1990).
(iv) Third Amendment to Amended and Restated Revolving Credit
and Term Loan Agreement, dated as of February 8, 1991, among Alexander &
Baldwin, Inc. and A&B-Hawaii, Inc. and Wells Fargo Bank, N.A., First
Hawaiian Bank, Bank of Hawaii, Bank of America National Trust & Savings
Association and The Bank of California, N.A. (Exhibit 4.b.(iv) to A&B's
Form 10-K for the year ended December 31, 1990).
(v) Fourth Amendment to Amended and Restated Revolving Credit
and Term Loan Agreement, dated as of November 26, 1991, among Alexander &
Baldwin, Inc. and A&B-Hawaii, Inc. and Wells Fargo Bank, N.A., First
Hawaiian Bank, Bank of America National Trust & Savings Association, Bank
of Hawaii, The Bank of California, N.A., and Credit Lyonnais San Francisco
Branch and Credit Lyonnais Cayman Island Branch (Exhibit 4.b.(vi) to A&B's
Form 10-K for the year ended December 31, 1991).
(vi) Fifth Amendment to Amended and Restated Revolving Credit
and Term Loan Agreement, dated as of December 29, 1992, among Alexander &
Baldwin, Inc. and A&B-Hawaii, Inc. and First Hawaiian Bank, Bank of
America National Trust & Savings Association, Bank of Hawaii, The Bank of
California, N.A., Credit Lyonnais San Francisco Branch and Credit
Lyonnais Cayman Island Branch (Exhibit 4.b.(vii) to A&B's Form 10-K for
the year ended December 31, 1992).
(vii) Sixth Amendment to Amended and Restated Revolving Credit
and Term Loan Agreement, dated as of December 30, 1993, among Alexander &
Baldwin, Inc. and A&B-Hawaii, Inc. and First Hawaiian Bank, Bank of
America National Trust & Savings Association, Bank of Hawaii, The Bank of
California, N.A., Credit Lyonnais Los Angeles Branch and Credit Lyonnais
Cayman Island Branch (Exhibit 4.b.(vii) to A&B's Form 10-K for the year
ended December 31, 1993).
(viii) Seventh Amendment to Amended and Restated Revolving Credit
and Term Loan Agreement, dated as of November 30, 1994, among Alexander &
Baldwin, Inc. and A&B-Hawaii, Inc. and First Hawaiian Bank, Bank of
America National Trust & Savings Association, Bank of Hawaii, The Bank of
California, N.A., Credit Lyonnais Los Angeles Branch and Credit Lyonnais
Cayman Island Branch (Exhibit 4.b.(viii) to A&B's Form 10-K for the year
ended December 31, 1994).
(ix) Eighth Amendment to Amended and Restated Revolving Credit
and Term Loan Agreement, dated as of November 30, 1995, among Alexander &
Baldwin, Inc. and A&B-Hawaii, Inc. and First Hawaiian Bank, Bank of
America National Trust & Savings Association, Bank of Hawaii, The Bank of
California, N.A., Credit Lyonnais Los Angeles Branch and Credit Lyonnais
Cayman Island Branch.
10. Material contracts.
10.a. (i) Purchase and Exchange Agreement, by and between Wailea
Development Company, Inc. and Wailea Resort Company, Ltd., dated as of
January 15, 1989; Letters of Guaranty of Alexander & Baldwin, Inc. and
Shinwa Golf Kabushiki Kaisha, respectively, dated as of January 15, 1989;
Press Release of Alexander & Baldwin, Inc., dated February 10, 1989; and
Pro Forma Financial Information relative to the transaction (Ex-
hibits 10.b.(vii)(a) through 10.b.(vii)(e) to A&B's Form 8-K dated
February 10, 1989).
(ii) Contract for the Construction of One Containership by and
between Matson Navigation Company, Inc. and National Steel and Ship-
building Company, dated January 31, 1990 (Exhibit 10.b.(vii) to A&B's Form
10-K for the year ended December 31, 1989).
(iii) Issuing and Paying Agent Agreement between Matson
Navigation Company, Inc. and Security Pacific National Trust (New York),
with respect to Matson Navigation Company, Inc.'s $150 million commercial
paper program dated September 18, 1992 (Exhibit 10.b.1.(xxviii) to A&B's
Form 10-Q for the quarter ended September 30, 1992).
(iv) Issuing and Paying Agent Agreement among Matson Leasing
Company, Inc., Matson Navigation Company, Inc. and Security Pacific
National Trust (New York), with respect to Matson Leasing Company, Inc.'s
$115 million commercial paper program dated September 18, 1992
(Exhibit 10.b.1.(xxix) to A&B's Form 10-Q for the quarter ended
September 30, 1992).
(v) Revolving Credit Agreement between Alexander & Baldwin,
Inc., A&B-Hawaii, Inc. and First Hawaiian Bank, dated July 9, 1991
(Exhibit 10.b.(xi) to A&B's Form 10-Q for the quarter ended September 30,
1991).
(vi) Note Agreement among Alexander & Baldwin, Inc. and
A&B-Hawaii, Inc. and The Prudential Insurance Company of America, effec-
tive as of December 20, 1990 (Exhibit 10.b.(ix) to A&B's Form 10-K for
the year ended December 31, 1990).
(vii) Note Agreement among Alexander & Baldwin, Inc. and
A&B-Hawaii, Inc. and The Prudential Insurance Company of America, dated as
of June 4, 1993 (Exhibit 10.a.(xiii) to A&B's Form 8-K dated June 4,
1993).
(viii) Amendment dated as of May 20, 1994 to the Note Agreements
among Alexander & Baldwin, Inc., A&B-Hawaii, Inc. and The Prudential
Insurance Company of America, dated as of December 20, 1990 and June 4,
1993 (Exhibit 10.a.(xviv) to A&B's Form 10-Q for the quarter ended June
30, 1994).
(ix) Amendment dated January 23, 1995 to the Note Agreement
among Alexander & Baldwin, Inc. and A&B-Hawaii, Inc. and The Prudential
Insurance Company of America, effective as of December 20, 1990 (Exhi-
bit 10.a.(xvi) to A&B's Form 10-K for the year ended December 31, 1994).
(x) General Lease between the State of California and
California and Hawaiian Sugar Company, dated September 24, 1992
(Exhibit 10.a.(xiv) to A&B's Form 10-Q for the quarter ended June 30,
1993).
(xi) Amendment to Lease and Reservation of Easements, between
the State of California and California and Hawaiian Sugar Company, dated
as of July 29, 1993 (Exhibit 10.a.(xv) to A&B's Form 10-Q for the quarter
ended September 30, 1993).
(xii)(a) Commercial Paper Dealer Agreement between California and
Hawaiian Sugar Company and First Chicago Capital Markets, Inc., dated
April 22, 1991, with respect to California and Hawaiian Sugar Company's
$100 million revolving credit facility (Exhibit 10.a.(xviii) to A&B's
Form 10-K for the year ended December 31, 1993).
(xii)(b) Depositary Agreement between California and Hawaiian Sugar
Company and the First National Bank of Chicago, dated as of April 6, 1989
(Exhibit 10.a.(xix)(b) to A&B's Form 10-K for the year ended December 31,
1994).
(xiii) Amendment dated as of February 10, 1995, to Depositary
Agreement between California and Hawaiian Sugar Company and The First
National Bank of Chicago, dated as of April 6, 1989 (Exhibit 10.a.(xx) to
A&B's Form 10-K for the year ended December 31, 1994).
(xiv) Revolving Credit Agreement between Alexander & Baldwin,
Inc., A&B-Hawaii, Inc., and First Hawaiian Bank, dated December 30, 1993
(Exhibit 10.a.(xx) to A&B's Form 10-Q for the quarter ended September 30,
1994).
(xv) Amendment dated August 31, 1994 to the Revolving Credit
Agreement between Alexander & Baldwin, Inc., A&B-Hawaii, Inc., and First
Hawaiian Bank dated December 30, 1993 (Exhibit 10.a.(xxi) to A&B's
Form 10-Q for the quarter ended September 30, 1994).
(xvi) Second Amendment dated March 29, 1995 to the Revolving
Credit Agreement between Alexander & Baldwin, Inc., A&B-Hawaii, Inc., and
First Hawaiian Bank, dated December 30, 1993 (Exhibit 10.a.(xxiii) to
A&B's Form 10-Q for the quarter ended March 31, 1995).
(xvii) Amendment dated November 29, 1995 to the Note Agreement
among Alexander & Baldwin, Inc., A&B-Hawaii, Inc., and The Prudential
Insurance Company of America, dated as of December 20, 1990 and June 4,
1993.
(xviii) Asset Purchase Agreement among XTRA, Inc., Matson
Navigation Company, Inc. and Matson Leasing Company, Inc., dated June 30,
1995 (Exhibit 10.a.(xxiv) to A&B's Form 8-K dated June 30, 1995).
(xix) Revised pro forma financial information relative to the
Asset Purchase Agreement among XTRA, Inc., Matson Navigation Company, Inc.
and Matson Leasing Company, Inc., dated June 30, 1995 (Exhibit 10.a.(xxv)
to A&B's Form 8-K/A dated June 30, 1995).
(xx) Balance sheets as of December 31, 1993 and 1994 and State-
ments of Income and Statements of Cash Flows for the years ended December
31, 1992, 1993 and 1994, relative to the Asset Purchase Agreement among
XTRA, Inc., Matson Navigation Company, Inc. and Matson Leasing Company,
Inc., dated June 30, 1995 (Exhibit 10.a.(xxvi) to A&B's Form 8-K/A dated
June 30, 1995).
(xxi) Commercial Paper Dealer Agreement among California and
Hawaiian Sugar Company, Inc., Alexander & Baldwin, Inc., A&B-Hawaii, Inc.
and Goldman Sachs Money Markets, L.P. dated June 20, 1995, with respect to
California and Hawaiian Sugar Company, Inc.'s $100 million revolving
credit facility (Exhibit 10.a.(xxvi) to A&B's Form 10-Q for the quarter
ended June 30, 1995).
(xxii) Amendment dated as of June 30, 1995 to the Note Agreements,
among Alexander & Baldwin, Inc., A&B-Hawaii, Inc. and The Prudential
Insurance Company of America, dated as of December 20, 1990 and June 4,
1993 (Exhibit 10.a.(xxvii) to A&B's Form 10-Q for the quarter ended
June 30, 1995).
(xxiii) Note Agreement between Matson Leasing Company, Inc. and The
Prudential Insurance Company of America, dated as of June 28, 1991
(Exhibit 10.b.(x) to A&B's Form 10-Q for the quarter ended June 30, 1991).
(xxiv) Amendment dated March 11, 1992 to the Note Agreement
between Matson Leasing Company, Inc. and The Prudential Insurance Company
of America, dated as of June 28, 1991 (Exhibit 10.a.(vii) to A&B's
Form 10-K for the year ended December 31, 1992).
(xxv) Second Amendment dated as of August 31, 1993 to the Note
Agreement between Matson Leasing Company, Inc. and The Prudential
Insurance Company of America, dated as of June 28, 1991 (Exhibit
10.a.(viii) to A&B's Form 10-K for the year ended December 31, 1993).
(xxvi) Note Agreement between Matson Leasing Company, Inc. and The
Prudential Insurance Company of America, dated as of March 11, 1992
(Exhibit 10.a.(x) to A&B's Form 10-Q for the quarter ended March 31,
1992).
(xxvii) First Amendment dated as of August 1, 1993 to the Note
Agreement between Matson Leasing Company, Inc. and The Prudential
Insurance Company of America, dated as of March 11, 1992 (Exhibit
10.a.(xi) to A&B's Form 10-K for the year ended December 31, 1993).
(xxviii)(a) Assignment and Assumption Agreement dated as of June 30,
1995, among Matson Leasing Company, Inc., Matson Navigation Company,
Inc. and The Prudential Insurance Company of America, with respect
to the Note Agreements between Matson Leasing Company, Inc. and The
Prudential Insurance Company of America dated as of June 28, 1991 and
March 11, 1992 (Exhibit 10.a.(xxviii)(a) to A&B's Form 10-Q for the
quarter ended June 30, 1995).
(xxviii)(b) Consent and Amendment Agreement dated as of June 30, 1995,
among Matson Leasing Company, Inc., Matson Navigation Company, Inc. and
The Prudential Insurance Company of America, with respect to the Note
Agreements between Matson Leasing Company, Inc. and The Prudential
Insurance Company of America dated as of June 28, 1991 and March 11, 1992
(Exhibit 10.a.(xxviii)(b) to A&B's Form 10-Q for the quarter ended June
30, 1995).
(xxix) Agreement to Implement the Execution and Closing of Vessel
Purchase, Purchase of Guam Assets and Alliance Slot Hire Agreement between
Matson Navigation Company, Inc. and American President Lines, Ltd., dated
as of September 22, 1995 (Exhibit 10.a.(xxix) to A&B's Form 10-Q for the
quarter ended September 30, 1995).
(xxx) Amendments Nos. 1 through 7, dated as of October 10, 1995,
October 30, 1995, November 30, 1995, December 8, 1995, December 15, 1995,
January 31, 1996 and February 8, 1996, respectively, to the Agreement to
Implement the Execution and Closing of Vessel Purchase, Purchase of Guam
Assets and Alliance Slot Hire Agreement between Matson Navigation Company,
Inc., and American President Lines, Ltd., dated as of September 22, 1995.
(xxxi) Vessel Purchase Agreement between Matson Navigation
Company, Inc., and American President Lines, Ltd., dated December 20,
1995.
(xxxii) Amendment No. 1 dated December 28, 1995 to the Vessel
Purchase Agreement between Matson Navigation Company, Inc., and American
President Lines, Ltd., dated December 20, 1995.
*10.b.1. (i) Alexander & Baldwin, Inc. Restricted Stock Bonus Plan, as
restated effective April 28, 1988 (Exhibit 10.c.1.(xi) to A&B's Form 10-Q
for the quarter ended June 30, 1988).
(ii) Alexander & Baldwin, Inc. 1983 Stock Option Plan
(Exhibit 10.c.1.(vii) to A&B's Form 10-K for the year ended December 31,
1982).
* All exhibits listed under 10.b.1. are management contracts or compensatory
plans or arrangements.
(iii) Amendment No. 1 to Alexander & Baldwin, Inc. 1983 Stock
Option Plan, effective December 14, 1983 (Exhibit 10.c.1.(viii) to A&B's
Form 10-K for the year ended December 31, 1983).
(iv) Amendment No. 2 to Alexander & Baldwin, Inc. 1983 Stock
Option Plan, effective January 1, 1987 (Exhibit 10.c.1.(xii) to A&B's
Form 10-K for the year ended December 31, 1986).
(v)Amendment No. 3 to the Alexander & Baldwin, Inc. 1983 Stock Option
Plan (Exhibit 10.b.1.(xxv) to A&B's Form 10-Q for the quarter ended June
30, 1992).
(vi) Alexander & Baldwin, Inc. 1989 Stock Option/ Stock
Incentive Plan (Exhibit 10.c.1.(ix) to A&B's Form 10-K for the year ended
December 31, 1988).
(vii) Amendment No. 1 to the Alexander & Baldwin, Inc. 1989 Stock
Option/Stock Incentive Plan (Exhibit 10.b.1.(xxvi) to A&B's Form 10-Q for
the quarter ended June 30, 1992).
(viii) Amendment No. 2 to the Alexander & Baldwin, Inc. 1989 Stock
Option/Stock Incentive Plan, effective as of January 27, 1994
(Exhibit 10.b.1.(iv) to A&B's Form 10-Q for the quarter ended March 31,
1994).
(ix) Amendment No. 3 to the Alexander & Baldwin, Inc. 1989 Stock
Option/Stock Incentive Plan, effective as of October 27, 1994
(Exhibit 10.b.1.(ix) to A&B's Form 10-K for the year ended December 31,
1994).
(x) Alexander & Baldwin, Inc. 1989 Non-Employee Director Stock
Option Plan (Exhibit 10.c.1.(x) to A&B's Form 10-K for the year ended
December 31, 1988).
(xi) Amendment No. 1 to the Alexander & Baldwin, Inc. 1989 Non-
Employee Director Stock Option Plan (Exhibit 10.b.1.(xxiv) to A&B's Form
10-K for the year ended December 31, 1991).
(xii) Amendment No. 2 to the Alexander & Baldwin, Inc. 1989 Non-
Employee Director Stock Option Plan (Exhibit 10.b.1.(xxvii) to A&B's Form
10-Q for the quarter ended June 30, 1992).
(xiii) Second Amended and Restated Employment Agreement between
Alexander & Baldwin, Inc. and R. J. Pfeiffer, effective as of October 25,
1990 (Ex-hibit 10.c.1.(xiii) to A&B's Form 10-K for the year ended
December 31, 1990).
(xiv) A&B Deferred Compensation Plan for Outside Directors
(Exhibit 10.c.1.(xviii) to A&B's Form 10-K for the year ended December 31,
1985).
(xv) Amendment No. 1 to A&B Deferred Compensation Plan for
Outside Directors, effective October 27, 1988 (Exhibit 10.c.1.(xxix) to
A&B's Form 10-Q for the quarter ended September 30, 1988).
(xvi) A&B Life Insurance Plan for Outside Directors
(Exhibit 10.c.1.(xix) to A&B's Form 10-K for the year ended December 31,
1985).
(xvii) A&B Excess Benefits Plan, Amended and Restated Effective
July 1, 1991 (Exhibit 10.b.1.(xvi) to A&B's Form 10-K for the year ended
December 31, 1992).
(xviii) Amendment No. 1 to the A&B Excess Benefits Plan, effective
January 1, 1994 (Exhibit 10.b.1.(xvii) to A&B's Form 10-K for the year
ended December 31, 1993).
(xix) Amendment No. 2 to the A&B Excess Benefits Plan, effective
August 24, 1994 (Exhibit 10.b.1.(xix) to A&B's Form 10-K for the year
ended December 31, 1994).
(xx) Amendment No. 3 to and Restatement of the A&B Excess
Benefits Plan, effective February 1, 1995 (Exhibit 10.b.1.(xx) to A&B's
Form 10-K for the year ended December 31, 1994).
(xxi) A&B Executive Survivor/Retirement Benefit Plan, Amended and
Restated Effective July 1, 1991 (Exhibit 10.b.1.(xvii) to A&B's Form 10-K
for the year ended December 31, 1992).
(xxii) Amendment No. 1 to and Restatement of the A&B Executive
Survivor/Retirement Benefit Plan, effective February 1, 1995
(Exhibit 10.b.1.(xxii) to A&B's Form 10-K for the year ended December 31,
1994).
(xxiii) A&B 1985 Supplemental Executive Retirement Plan, Amended
and Restated Effective July 1, 1991 (Exhibit 10.b.1.(xviii) to A&B's Form
10-K for the year ended December 31, 1992).
(xxiv) Amendment No. 1 to and Restatement of the A&B 1985 Supple-
mental Executive Retirement Plan, effective February 1, 1995 (Exhibit
10.b.1.(xxiv) to A&B's Form 10-K for the year ended December 31, 1994).
(xxv) A&B Retirement Plan for Outside Directors, Amended and
Restated Effective October 24, 1991 (Exhibit 10.b.1.(xix) to A&B's
Form 10-K for the year ended December 31, 1992).
(xxvi) Amendment No. 1 to and Restatement of the A&B Retirement
Plan for Outside Directors, effective February 1, 1995
(Exhibit 10.b.1.(xxvi) to A&B's Form 10-K for the year ended December 31,
1994).
(xxvii) Form of Severance Agreement entered into with certain
executive officers, as amended and restated effective August 22, 1991
(Exhibit 10.c.1.(xxiv) to A&B's Form 10-Q for the quarter ended
September 30, 1991).
(xxviii) Alexander & Baldwin, Inc. One-Year Performance Improvement
Incentive Plan, as restated effective October 22, 1992
(Exhibit 10.b.1.(xxi) to A&B's Form 10-K for the year ended December 31,
1992).
(xxix) Alexander & Baldwin, Inc. Three-Year Performance
Improvement Incentive Plan, as restated effective October 22, 1992
(Exhibit 10.b.1.(xxii) to A&B's Form 10-K for the year ended December 31,
1992).
(xxx) Alexander & Baldwin, Inc. Deferred Compensation Plan
effective August 25, 1994 (Exhi-bit 10.b.1.(xxv) to A&B's Form 10-Q for
the quarter ended September 30, 1994).
11. Statement re computation of per share earnings.
13. Annual report to security holders.
13. Alexander & Baldwin, Inc. 1995 Annual Report.
22. Subsidiaries.
22. Alexander & Baldwin, Inc. Subsidiaries as of February 29, 1996
24. Consent of Deloitte & Touche LLP dated March 27, 1996 (included as last
page of A&B's Form 10-K for the year ended December 31, 1995).
D. REPORTS ON FORM 8-K
-------------------
An amendment on Form 8-K/A, to a report on Form 8-K dated June 30,
1995, was filed on December 12, 1995, for the purpose of filing under Item 7
certain required pro forma financial information and financial statements
relative to the sale by Matson Leasing and Matson (collectively, the
"Sellers"), of Matson Leasing's container leasing business, through the sale
of certain assets and liabilities of the Sellers (primarily of Matson Leasing).
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
ALEXANDER & BALDWIN, INC.
(Registrant)
Date: March 27, 1996 By /s/ John C. Couch
--------------------------------
John C. Couch
Chairman of the Board,
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ John C. Couch Chairman of the March 27, 1996
- ------------------------- Board, President
John C. Couch and Chief Execu-
tive Officer and
Director
/s/ Glenn R. Rogers Vice President, March 27, 1996
- ------------------------- Chief Financial
Glenn R. Rogers Officer and
Treasurer
/s/ Thomas A. Wellman Controller March 27, 1996
- -------------------------
Thomas A. Wellman
/s/ Michael J. Chun Director March 27, 1996
- -------------------------
Michael J. Chun
/s/ Leo E. Denlea, Jr. Director March 27, 1996
- -------------------------
Leo E. Denlea, Jr.
/s/ Walter A. Dods, Jr. Director March 27, 1996
- --------------------------
Walter A. Dods, Jr.
/s/ Charles G. King Director March 27, 1996
- --------------------------
Charles G. King
/s/ Carson R. McKissick Director March 27, 1996
- --------------------------
Carson R. McKissick
/s/ C. Bradley Mulholland Director March 27, 1996
- --------------------------
C. Bradley Mulholland
/s/ Robert G. Reed III Director March 27, 1996
- --------------------------
Robert G. Reed III
/s/ Maryanna G. Shaw Director March 27, 1996
- --------------------------
Maryanna G. Shaw
/s/ Charles M. Stockholm Director March 27, 1996
- --------------------------
Charles M. Stockholm
INDEPENDENT AUDITORS' REPORT
Alexander & Baldwin, Inc.:
We have audited the financial statements of Alexander & Baldwin, Inc. and its
subsidiaries as of December 31, 1995 and 1994, and for each of the three years
in the period ended December 31, 1995, and have issued our report thereon dated
January 25, 1996; such financial statements and report are included in your
1995 Annual Report to Shareholders and are incorporated herein by reference.
Our audits also included the financial statement schedules of Alexander &
Baldwin, Inc. and its subsidiaries, listed in Item 14.B. These financial
statement schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In our opinion,
such financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information shown therein.
/s/ Deloitte & Touche LLP
Honolulu, Hawaii
January 25, 1996
INDEPENDENT AUDITORS' CONSENT
Alexander & Baldwin, Inc.:
We consent to the incorporation by reference in Registration Statements
No. 2-72008, 2-84179, 33-31922, 33-31923 and 33-54825 of Alexander & Baldwin,
Inc. and its subsidiaries on Form S-8 of our reports dated January 25, 1996,
appearing in and incorporated by reference in the Annual Report on Form 10-K of
Alexander & Baldwin, Inc. and its subsidiaries for the year ended December 31,
1995.
/s/ Deloitte & Touche LLP
Honolulu, Hawaii
March 27, 1996
SCHEDULE I
Page 1 of 4
ALEXANDER & BALDWIN, INC.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
ALEXANDER & BALDWIN, INC. (Parent Company)
CONDENSED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
(In thousands)
1995 1994
------ ------
ASSETS
Current Assets:
Cash and cash equivalents $44 $37
Accounts and notes receivable, net 75 1
Prepaid expenses and other 7,033 5,913
-------- --------
Total current assets 7,152 5,951
-------- --------
Investments:
Subsidiaries consolidated, at equity 584,151 596,070
Other 81,538 61,031
-------- --------
Total investments 665,689 657,101
-------- --------
Real Estate Developments - 8,196
-------- --------
Property, at cost 97,193 80,814
Less accumulated depreciation and amortization 10,512 7,595
-------- --------
Property -- net 86,681 73,219
-------- --------
Other Assets 1,234 1,232
-------- --------
Total $760,756 $745,699
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $319 $1,640
Due to subsidiaries 53,805 54,162
Other 4,361 9,188
-------- --------
Total current liabilities 58,485 64,990
-------- --------
Long-Term Liabilities 5,127 7,485
-------- --------
Deferred Income Taxes 43,818 40,610
-------- --------
Commitments and Contingencies
Shareholders' Equity:
Capital stock 37,133 37,493
Additional capital 40,138 38,862
Unrealized holding gains on securities 39,830 29,073
Retained earnings 550,042 541,910
Cost of treasury stock (13,817) (14,724)
-------- --------
Total shareholders' equity 653,326 632,614
-------- --------
Total $760,756 $745,699
======== ========
See accompanying notes.
SCHEDULE I
Page 2 of 4
ALEXANDER & BALDWIN, INC. (Parent Company)
CONDENSED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(In thousands)
1995 1994 1993
Revenue:
Net sales, revenue from services and rentals $10,287 $ 9,753 $12,362
Interest, dividends and other 3,798 3,753 2,683
------- ------- -------
Total revenue 14,085 13,506 15,045
------- ------- -------
Costs and Expenses:
Cost of goods sold, services and rentals 2,946 4,972 3,289
Selling, general and administrative 9,111 11,119 10,904
Interest and other 1,604 1,148 2,449
Income taxes 427 (4,339) (1,393)
------- ------- -------
Total costs and expenses 14,088 12,900 15,249
------- ------- -------
Income (Loss) Before Equity in Net Income
Subsidiaries Consolidated (3) 606 (204)
Equity in Net Income From Continuing Operations of
Subsidiaries Consolidated 32,422 63,373 58,940
Equity in Net Income From Discontinued Operations
of Subsidiaries Consolidated 23,336 * 10,629 8,253
------- ------- -------
Net Income $55,755 $74,608 $66,989
======= ======= =======
See accompanying notes.
* Includes an after-tax gain of $18 million on the sale of the net assets of Matson
Leasing Company, Inc.
SCHEDULE I
Page 3 of 4
ALEXANDER & BALDWIN, INC. (Parent Company)
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995,1994 AND 1993
(In thousands)
1995 1994 1993
------- ------- -------
Cash Flows from Operations ($9,405) ($6,341) $11,696
------- ------- -------
Cash Flows from Investing Activities:
Capital expenditures (678) (935) (800)
Proceeds from sale (purchase) of investments (1,514) 1,200 -
------- ------- -------
Net cash provided by (used in) investing activities (2,192) 265 (800)
------- ------- -------
Cash Flows from Financing Activities:
Increase (decrease) in intercompany payable (357) 5,066 (8,118)
Dividends received from subsidiaries 70,000 60,000 39,000
Payments of long-term debt (6,892) (935) (936)
Proceeds from issuances of capital stock 468 122 288
Repurchase of capital stock (11,580) (17,717) -
Dividends paid (40,035) (40,563) (40,777)
------- ------- -------
Net cash provided by (used in) financing activities 11,604 5,973 (10,543)
------- ------- -------
Cash and Cash Equivalents:
Net increase (decrease) for the year 7 (103) 353
Balance, beginning of year 37 140 (213)
------- ------- -------
Balance, end of year $44 $37 $140
======= ======= =======
Other Cash Flow Information:
Interest paid, net of amounts capitalized $479 $889 $690
Income taxes paid 53,014 18,391 15,123
See accompanying notes.
SCHEDULE I
Page 4 of 4
ALEXANDER & BALDWIN, INC. (Parent Company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(a) ORGANIZATION AND OPERATIONS
Alexander & Baldwin, Inc. is the parent company of A&B-Hawaii, Inc. (ABHI) and
Matson Navigation Company, Inc. (Matson). ABHI has principal business opera-
tions of Food Products and Property Development and Management. Matson has
principal business operations of Ocean Transportation and until June 1995, of
Container Leasing. The net assets of Matson Leasing Company, Inc., the
Company's container leasing subsidiary, were sold in June 1995 for $361.7
million in cash. Accordingly, the operating results and the gain on sale of
The container leasing segment have been separately reported.
(b) LONG-TERM LIABILITIES
At December 31, 1995 and 1994, long-term liabilities consisted of the following:
1995 1994
(In thousands)
Long-term debt:
Limited partnership subscription notes,
no interest, payable through 1996 $850 $1,700
Mortgage loans, collateralized by land and
buildings, 9% to 12.5%, repaid in 1995 - 6,041
Total 850 7,741
Less current portion 850 6,657
Long-term debt 0 1,084
Other--principally deferred compensation and
executive survivors 5,127 6,401
Total $5,127 $7,485
At December 31, 1995, maturities of long-term debt during 1996 will be
$850,000.
(c)COMMITMENTS AND CONTINGENCIES
The Company and certain subsidiaries are parties to various legal actions and
are contingently liable in connection with claims and contracts arising in the
normal course of business, the outcome of which, in the opinion of management
after consultation with legal counsel, will not have a material adverse effect
on the Company's financial position.
At December 31, 1995, the Company did not have any significant firm commitments.
(d)CASH DIVIDENDS FROM AFFILIATES
Cash dividends from a consolidated subsidiary were $70,000,000 in 1995,
$60,000,000 in 1994 and $39,000,000 in 1993.