|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|
|
SECURITIES EXCHANGE ACT OF 1934
|
|
For the quarterly period ended September 30, 2014
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|
|
SECURITIES EXCHANGE ACT OF 1934
|
|
For the transition period from ______________________ to _________________
|
Hawaii
|
45-4849780
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
|
|
P. O. Box 3440, Honolulu, Hawaii
822 Bishop Street, Honolulu, Hawaii
(Address of principal executive offices)
|
9680l
96813
(Zip Code)
|
Large accelerated filer
x
|
Accelerated filer
o
|
Non-accelerated filer
o
(Do not check if a smaller reporting company)
|
Smaller reporting company
o
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
||||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Operating Revenue:
|
|
|
|
|
|
|
|
||||||||
Real estate leasing
|
$
|
31.3
|
|
|
$
|
18.8
|
|
|
$
|
93.3
|
|
|
$
|
54.2
|
|
Real estate development and sales
|
18.2
|
|
|
10.1
|
|
|
40.5
|
|
|
12.0
|
|
||||
Construction and natural materials
|
58.4
|
|
|
—
|
|
|
173.1
|
|
|
—
|
|
||||
Agribusiness
|
45.5
|
|
|
35.9
|
|
|
88.2
|
|
|
94.1
|
|
||||
Total operating revenue
|
153.4
|
|
|
64.8
|
|
|
395.1
|
|
|
160.3
|
|
||||
Operating Costs and Expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of real estate leasing
|
19.6
|
|
|
11.3
|
|
|
58.6
|
|
|
31.8
|
|
||||
Cost of real estate development and sales
|
5.4
|
|
|
3.3
|
|
|
16.5
|
|
|
3.6
|
|
||||
Cost of construction contracts and natural materials
|
48.0
|
|
|
—
|
|
|
141.9
|
|
|
—
|
|
||||
Costs of agribusiness revenues
|
52.7
|
|
|
34.4
|
|
|
91.8
|
|
|
80.1
|
|
||||
Selling, general and administrative
|
12.1
|
|
|
9.6
|
|
|
37.9
|
|
|
24.4
|
|
||||
Grace acquisition costs
|
—
|
|
|
2.0
|
|
|
—
|
|
|
4.5
|
|
||||
Total operating costs and expenses
|
137.8
|
|
|
60.6
|
|
|
346.7
|
|
|
144.4
|
|
||||
Operating Income
|
15.6
|
|
|
4.2
|
|
|
48.4
|
|
|
15.9
|
|
||||
Other Income and (Expense):
|
|
|
|
|
|
|
|
||||||||
Income related to joint ventures
|
1.5
|
|
|
0.7
|
|
|
0.3
|
|
|
1.8
|
|
||||
Reduction in KRS II carrying value (Note 12)
|
(15.1
|
)
|
|
—
|
|
|
(15.1
|
)
|
|
—
|
|
||||
Gain on insurance
|
—
|
|
|
1.3
|
|
|
—
|
|
|
1.3
|
|
||||
Impairment and equity losses related to real estate joint ventures
|
—
|
|
|
(6.6
|
)
|
|
—
|
|
|
(6.6
|
)
|
||||
Interest income and other
|
1.1
|
|
|
1.2
|
|
|
2.6
|
|
|
1.6
|
|
||||
Interest expense
|
(7.2
|
)
|
|
(4.2
|
)
|
|
(21.6
|
)
|
|
(11.7
|
)
|
||||
Income (Loss) From Continuing Operations Before Income Taxes
|
(4.1
|
)
|
|
(3.4
|
)
|
|
14.6
|
|
|
2.3
|
|
||||
Income tax expense (benefit)
|
(14.9
|
)
|
|
(0.6
|
)
|
|
(5.9
|
)
|
|
2.1
|
|
||||
Income (Loss) From Continuing Operations
|
10.8
|
|
|
(2.8
|
)
|
|
20.5
|
|
|
0.2
|
|
||||
Income From Discontinued Operations (net of income taxes)
|
—
|
|
|
7.2
|
|
|
34.3
|
|
|
14.2
|
|
||||
Net Income
|
10.8
|
|
|
4.4
|
|
|
54.8
|
|
|
14.4
|
|
||||
Income attributable to noncontrolling interest
|
(0.6
|
)
|
|
—
|
|
|
(2.0
|
)
|
|
—
|
|
||||
Net Income Attributable to A&B Shareholders
|
$
|
10.2
|
|
|
$
|
4.4
|
|
|
$
|
52.8
|
|
|
$
|
14.4
|
|
|
|
|
|
|
|
|
|
||||||||
Basic Earnings Per Share:
|
|
|
|
|
|
|
|
||||||||
Continuing operations attributable to A&B shareholders
|
$
|
0.21
|
|
|
$
|
(0.06
|
)
|
|
$
|
0.38
|
|
|
$
|
—
|
|
Discontinued operations attributable to A&B shareholders
|
—
|
|
|
0.16
|
|
|
0.70
|
|
|
0.33
|
|
||||
Net income attributable to A&B shareholders
|
$
|
0.21
|
|
|
$
|
0.10
|
|
|
$
|
1.08
|
|
|
$
|
0.33
|
|
Diluted Earnings Per Share:
|
|
|
|
|
|
|
|
||||||||
Continuing operations attributable to A&B shareholders
|
$
|
0.21
|
|
|
$
|
(0.06
|
)
|
|
$
|
0.38
|
|
|
$
|
—
|
|
Discontinued operations attributable to A&B shareholders
|
—
|
|
|
0.16
|
|
|
0.69
|
|
|
0.33
|
|
||||
Net income attributable to A&B shareholders
|
$
|
0.21
|
|
|
$
|
0.10
|
|
|
$
|
1.07
|
|
|
$
|
0.33
|
|
Weighted Average Number of Shares Outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
48.8
|
|
|
43.1
|
|
|
48.7
|
|
|
43.1
|
|
||||
Diluted
|
49.3
|
|
|
43.8
|
|
|
49.2
|
|
|
43.7
|
|
||||
Amounts Attributable to A&B Shareholders:
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations, net of tax
|
$
|
10.2
|
|
|
$
|
(2.8
|
)
|
|
$
|
18.5
|
|
|
$
|
0.2
|
|
Discontinued operations, net of tax
|
—
|
|
|
7.2
|
|
|
34.3
|
|
|
14.2
|
|
||||
Net income
|
$
|
10.2
|
|
|
$
|
4.4
|
|
|
$
|
52.8
|
|
|
$
|
14.4
|
|
|
|
|
|
|
|
|
|
||||||||
Cash dividends declared per share
|
$
|
0.04
|
|
|
$
|
—
|
|
|
$
|
0.12
|
|
|
$
|
—
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
||||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Net Income
|
$
|
10.8
|
|
|
$
|
4.4
|
|
|
$
|
54.8
|
|
|
$
|
14.4
|
|
Other Comprehensive Income:
|
|
|
|
|
|
|
|
||||||||
Defined benefit pension plans:
|
|
|
|
|
|
|
|
||||||||
Net gain (loss) and prior service cost
|
—
|
|
|
—
|
|
|
1.2
|
|
|
(2.0
|
)
|
||||
Amortization of prior service credit included in net periodic pension cost
|
(0.4
|
)
|
|
(0.4
|
)
|
|
(1.0
|
)
|
|
(1.0
|
)
|
||||
Amortization of net loss included in net periodic pension cost
|
1.1
|
|
|
1.9
|
|
|
3.3
|
|
|
5.8
|
|
||||
Income taxes related to other comprehensive income
|
(0.3
|
)
|
|
(0.6
|
)
|
|
(1.4
|
)
|
|
(1.1
|
)
|
||||
Other Comprehensive Income
|
0.4
|
|
|
0.9
|
|
|
2.1
|
|
|
1.7
|
|
||||
Comprehensive Income
|
$
|
11.2
|
|
|
$
|
5.3
|
|
|
$
|
56.9
|
|
|
$
|
16.1
|
|
Comprehensive income attributable to noncontrolling interest
|
(0.6
|
)
|
|
—
|
|
|
(2.0
|
)
|
|
—
|
|
||||
Comprehensive income attributable to A&B
|
$
|
10.6
|
|
|
$
|
5.3
|
|
|
$
|
54.9
|
|
|
$
|
16.1
|
|
|
September 30,
2014 |
|
December 31, 2013
|
||||
ASSETS
|
|
|
|
||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
9.2
|
|
|
$
|
3.3
|
|
Accounts and other notes receivable, net
|
29.4
|
|
|
36.5
|
|
||
Contracts retention
|
9.2
|
|
|
9.3
|
|
||
Costs and estimated earnings in excess of billings on uncompleted contracts
|
13.5
|
|
|
10.5
|
|
||
Inventories
|
81.0
|
|
|
68.1
|
|
||
Real estate held for sale
|
—
|
|
|
15.9
|
|
||
Deferred income taxes
|
9.2
|
|
|
7.8
|
|
||
Income tax receivable
|
4.9
|
|
|
3.0
|
|
||
Prepaid expenses and other assets
|
18.6
|
|
|
17.0
|
|
||
Total current assets
|
175.0
|
|
|
171.4
|
|
||
Investments in Affiliates
|
348.6
|
|
|
341.4
|
|
||
Real Estate Developments
|
254.4
|
|
|
249.1
|
|
||
Property – net
|
1,263.6
|
|
|
1,273.7
|
|
||
Intangible Assets - net
|
64.3
|
|
|
74.1
|
|
||
Goodwill
|
102.9
|
|
|
99.6
|
|
||
Other Assets
|
86.4
|
|
|
75.9
|
|
||
Total assets
|
$
|
2,295.2
|
|
|
$
|
2,285.2
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Current Liabilities:
|
|
|
|
||||
Notes payable and current portion of long-term debt
|
$
|
46.9
|
|
|
$
|
105.2
|
|
Accounts payable
|
37.1
|
|
|
32.6
|
|
||
Billings in excess of costs and estimated earnings on uncompleted contracts
|
3.8
|
|
|
4.4
|
|
||
Accrued interest
|
3.3
|
|
|
5.9
|
|
||
Deferred revenue
|
1.7
|
|
|
17.8
|
|
||
Indemnity holdback related to Grace acquisition
|
23.5
|
|
|
18.8
|
|
||
Accrued and other liabilities
|
33.0
|
|
|
33.5
|
|
||
Total current liabilities
|
149.3
|
|
|
218.2
|
|
||
Long-term Liabilities:
|
|
|
|
||||
Long-term debt
|
637.9
|
|
|
605.5
|
|
||
Deferred income taxes
|
194.6
|
|
|
188.7
|
|
||
Accrued pension and postretirement benefits
|
31.0
|
|
|
37.3
|
|
||
Other non-current liabilities
|
52.8
|
|
|
60.7
|
|
||
Total long-term liabilities
|
916.3
|
|
|
892.2
|
|
||
Commitments and Contingencies (Note 3)
|
|
|
|
||||
Equity:
|
|
|
|
||||
Common stock
|
1,147.4
|
|
|
1,142.3
|
|
||
Accumulated other comprehensive loss
|
(28.0
|
)
|
|
(30.1
|
)
|
||
Retained earnings
|
99.3
|
|
|
53.7
|
|
||
Total A&B Shareholders' equity
|
1,218.7
|
|
|
1,165.9
|
|
||
Noncontrolling interest
|
10.9
|
|
|
8.9
|
|
||
Total equity
|
1,229.6
|
|
|
1,174.8
|
|
||
Total liabilities and equity
|
$
|
2,295.2
|
|
|
$
|
2,285.2
|
|
|
Nine Months Ended
|
||||||
|
September 30,
|
||||||
|
2014
|
|
2013
|
||||
Cash Flows from (used in) Operating Activities:
|
$
|
3.3
|
|
|
$
|
(109.4
|
)
|
Cash Flows from Investing Activities:
|
|
|
|
||||
Capital expenditures for property, plant and equipment
|
(27.3
|
)
|
|
(102.9
|
)
|
||
Capital expenditures related to 1031 commercial property transactions
|
—
|
|
|
(25.3
|
)
|
||
Proceeds from investment tax credits and grants related to Port Allen Solar Farm
|
4.5
|
|
|
—
|
|
||
Proceeds from disposal of property and other assets
|
8.5
|
|
|
2.3
|
|
||
Proceeds from disposals related to 1031 commercial property transactions
|
86.4
|
|
|
17.5
|
|
||
Payments for purchases of investments in affiliates
|
(37.9
|
)
|
|
(35.9
|
)
|
||
Proceeds from investments in affiliates
|
14.4
|
|
|
3.3
|
|
||
Change in restricted cash associated with 1031 transactions
|
(15.2
|
)
|
|
7.8
|
|
||
Cash acquired through consolidation of The Shops at Kukui'ula
|
—
|
|
|
0.3
|
|
||
Net cash provided by (used in) investing activities
|
33.4
|
|
|
(132.9
|
)
|
||
Cash Flows from Financing Activities:
|
|
|
|
||||
Proceeds from issuances of long-term debt
|
126.0
|
|
|
428.0
|
|
||
Payments of long-term debt and deferred financing costs
|
(86.5
|
)
|
|
(196.8
|
)
|
||
Proceeds (payments) from line-of-credit agreements, net
|
(64.5
|
)
|
|
13.5
|
|
||
Dividends paid
|
(5.9
|
)
|
|
—
|
|
||
Proceeds from issuance of capital stock and other, net
|
0.1
|
|
|
0.6
|
|
||
Net cash provided by (used in) financing activities
|
(30.8
|
)
|
|
245.3
|
|
||
Cash and Cash Equivalents:
|
|
|
|
||||
Net increase for the period
|
5.9
|
|
|
3.0
|
|
||
Balance, beginning of period
|
3.3
|
|
|
1.1
|
|
||
Balance, end of period
|
$
|
9.2
|
|
|
$
|
4.1
|
|
|
|
|
|
||||
Other Cash Flow Information:
|
|
|
|
||||
Interest paid
|
$
|
(24.7
|
)
|
|
$
|
(14.1
|
)
|
Income taxes paid
|
$
|
(12.6
|
)
|
|
$
|
(10.0
|
)
|
Other Non-cash Information:
|
|
|
|
||||
Real estate exchanged for note receivable
|
$
|
3.6
|
|
|
$
|
—
|
|
Note payable assumed in connection with acquisition of Waianae Mall
|
$
|
—
|
|
|
$
|
20.6
|
|
Note payable assumed in connection with acquisition of Pearl Highlands Center
|
$
|
—
|
|
|
$
|
62.3
|
|
Notes payable assumed in connection with the consolidation of The Shops at Kukui'ula
|
$
|
—
|
|
|
$
|
51.2
|
|
Note receivable received in connection with the sale of Issaquah Office Center
|
$
|
—
|
|
|
$
|
13.0
|
|
Property (net) acquired in connection with the consolidation of The Shops at Kukui'ula
|
$
|
—
|
|
|
$
|
39.0
|
|
Capital expenditures included in accounts payable and accrued expenses
|
$
|
—
|
|
|
$
|
7.7
|
|
|
|
September 30, 2014
|
|
September 30, 2013
|
||||||||||||||||||||
|
|
A&B Share-
holders' Equity
|
|
Non-
controlling interest
|
|
Total
|
|
A&B Share-
holders' Equity
|
|
Non-
controlling interest
|
|
Total
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Beginning balance
|
|
$
|
1,165.9
|
|
|
$
|
8.9
|
|
|
$
|
1,174.8
|
|
|
$
|
914.4
|
|
|
$
|
—
|
|
|
$
|
914.4
|
|
Net income
|
|
52.8
|
|
|
2.0
|
|
|
54.8
|
|
|
14.4
|
|
|
—
|
|
|
14.4
|
|
||||||
Other comprehensive income, net of tax
|
|
2.1
|
|
|
—
|
|
|
2.1
|
|
|
1.7
|
|
|
—
|
|
|
1.7
|
|
||||||
Dividends paid on common stock
|
|
(5.9
|
)
|
|
—
|
|
|
(5.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Share-based compensation
|
|
3.5
|
|
|
—
|
|
|
3.5
|
|
|
3.2
|
|
|
—
|
|
|
3.2
|
|
||||||
Shares issued or repurchased, net
|
|
(1.1
|
)
|
|
—
|
|
|
(1.1
|
)
|
|
(0.6
|
)
|
|
—
|
|
|
(0.6
|
)
|
||||||
Excess tax benefit from share-based awards
|
|
1.4
|
|
|
—
|
|
|
1.4
|
|
|
1.3
|
|
|
—
|
|
|
1.3
|
|
||||||
Ending balance
|
|
$
|
1,218.7
|
|
|
$
|
10.9
|
|
|
$
|
1,229.6
|
|
|
$
|
934.4
|
|
|
$
|
—
|
|
|
$
|
934.4
|
|
(1)
|
Description of Business.
A&B is headquartered in Honolulu and operates
four
segments: Real Estate Development and Sales; Real Estate Leasing; Agribusiness; and Natural Materials and Construction.
|
(2)
|
Basis of Presentation.
The condensed consolidated financial statements are unaudited. Because of the nature of the Company’s operations, the results for interim periods are not necessarily indicative of results to be expected for the year. While these condensed consolidated financial statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (GAAP) for complete financial statements. Therefore, the interim condensed consolidated financial statements should be read in conjunction with the consolidated balance sheets as of December 31,
2013
and
2012
, and the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the three years in the period ended December 31,
2013
and the notes thereto included in the Company’s Annual Report filed on Form 10-K for the year ended December 31,
2013
, and other subsequent filings with the SEC.
|
(3)
|
Commitments, Guarantees and Contingencies:
Commitments and financial arrangements not recorded on the Company's condensed consolidated balance sheet, excluding lease commitments that are disclosed in Note 10 of the Company’s Annual Report filed on Form 10-K for the year ended December 31,
2013
, included the following (in millions) as of
September 30, 2014
:
|
Standby letters of credit related to real estate projects
|
$
|
11.4
|
|
Bonds related to real estate and construction*
|
$
|
323.5
|
|
*
|
Represents bonds related to construction and real estate activities in Hawaii, and include construction bonds issued by third party sureties (bid, performance, and payment bonds) and commercial bonds issued by third party sureties (permit, subdivision, license, and notary bonds). In the event the bonds are drawn upon, the Company would be obligated to reimburse the surety that issued the bond. None of the bonds have been drawn upon to date, and the Company believes it is unlikely that any of these bonds will be drawn upon.
|
(4)
|
Earnings Per Share (“EPS”)
:
The following table provides a reconciliation of income from continuing operations to income from continuing operations attributable to A&B (in millions):
|
|
Quarter Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Income (loss) from continuing operations, net of tax
|
$
|
10.8
|
|
|
$
|
(2.8
|
)
|
|
$
|
20.5
|
|
|
$
|
0.2
|
|
Noncontrolling interest
|
(0.6
|
)
|
|
—
|
|
|
(2.0
|
)
|
|
—
|
|
||||
Income (loss) from continuing operations attributable to A&B shareholders, net of tax
|
$
|
10.2
|
|
|
$
|
(2.8
|
)
|
|
$
|
18.5
|
|
|
$
|
0.2
|
|
|
Quarter Ended
|
|
Nine Months Ended
|
||||||||
|
September 30,
|
|
September 30,
|
||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||
Denominator for basic EPS – weighted average shares
|
48.8
|
|
|
43.1
|
|
|
48.7
|
|
|
43.1
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|
Employee/director stock options and restricted stock units
|
0.5
|
|
|
0.7
|
|
|
0.5
|
|
|
0.6
|
|
Denominator for diluted EPS – weighted average shares
|
49.3
|
|
|
43.8
|
|
|
49.2
|
|
|
43.7
|
|
(5)
|
Fair Value of Financial Instruments.
The fair values of receivables and short-term borrowings approximate their carrying values due to the short-term nature of the instruments. The Company’s cash and cash equivalents, consisting
|
(6)
|
Inventories.
Sugar inventories are stated at the lower of cost (first-in, first-out basis) or market value. Materials and supplies and Natural Materials and Construction segment inventory are stated at the lower of cost (principally average cost, first-in, first-out basis) or market value.
|
|
September 30, 2014
|
|
December 31, 2013
|
||||
Sugar inventories
|
$
|
18.4
|
|
|
$
|
16.8
|
|
Work in process - sugar
|
8.8
|
|
|
—
|
|
||
Asphalt
|
22.3
|
|
|
17.9
|
|
||
Processed rock, Portland cement, and sand
|
14.2
|
|
|
12.9
|
|
||
Work in process - aggregate
|
3.1
|
|
|
2.7
|
|
||
Retail merchandise
|
1.6
|
|
|
1.8
|
|
||
Parts, materials and supplies inventories
|
12.6
|
|
|
16.0
|
|
||
Total
|
$
|
81.0
|
|
|
$
|
68.1
|
|
(7)
|
Share-Based Compensation.
Under the 2012 Plan, which provides for grants of equity-based incentive compensation,
4.3 million
shares of common stock were initially reserved for issuance, and as of
September 30, 2014
,
1,376,473
shares of the Company’s common stock remained available for future issuance, which is reflective of a
2.7 million
share reduction for outstanding equity awards replaced in the separation transaction from Matson, Inc. in 2012. The shares of common stock authorized to be issued under the 2012 Plan may be drawn from the shares of the Company’s authorized but unissued common stock or from shares of its common stock that the Company acquires, including shares purchased on the open market or in private transactions.
|
|
2012
Plan
Restricted
Stock
Units
|
|
Weighted
Average
Grant-Date
Fair Value
|
|||
Outstanding, January 1, 2014
|
242.3
|
|
|
$
|
27.92
|
|
Granted
|
123.0
|
|
|
$
|
39.38
|
|
Vested
|
(86.3
|
)
|
|
$
|
25.36
|
|
Outstanding, September 30, 2014
|
279.0
|
|
|
$
|
33.76
|
|
|
For the year ended December 31, 2014
|
For the year ended December 31, 2013
|
Volatility of A&B common stock
|
25.4%
|
31.8%
|
Average volatility of peer companies
|
27.3%
|
35.7%
|
Risk-free interest rate
|
0.4%
|
0.3%
|
|
Quarter Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Share-based expense (net of estimated forfeitures):
|
|
|
|
|
|
|
|
||||||||
Stock options
|
$
|
0.1
|
|
|
$
|
0.3
|
|
|
$
|
0.4
|
|
|
$
|
1.0
|
|
Restricted stock units
|
1.0
|
|
|
0.8
|
|
|
3.1
|
|
|
2.2
|
|
||||
Total share-based expense
|
1.1
|
|
|
1.1
|
|
|
3.5
|
|
|
3.2
|
|
||||
Total recognized tax benefit
|
(0.3
|
)
|
|
(0.3
|
)
|
|
(1.0
|
)
|
|
(1.0
|
)
|
||||
Share-based expense (net of tax)
|
$
|
0.8
|
|
|
$
|
0.8
|
|
|
$
|
2.5
|
|
|
$
|
2.2
|
|
(8)
|
Discontinued Operations.
The revenues and expenses related to the sale of Maui Mall, a retail property on Maui sold in January 2014, have been classified as discontinued operations. During 2013, the sales of
four
industrial properties,
three
retail properties and
two
office buildings were classified as discontinued operations.
|
|
Quarter Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Proceeds from the sale of income-producing properties
|
$
|
—
|
|
|
$
|
37.3
|
|
|
$
|
70.1
|
|
|
$
|
52.2
|
|
Real estate leasing revenue
|
—
|
|
|
8.7
|
|
|
0.2
|
|
|
25.8
|
|
||||
|
$
|
—
|
|
|
$
|
46.0
|
|
|
$
|
70.3
|
|
|
$
|
78.0
|
|
|
|
|
|
|
|
|
|
||||||||
Gain on sale of income-producing properties
|
$
|
—
|
|
|
$
|
7.7
|
|
|
$
|
55.9
|
|
|
$
|
12.0
|
|
Real estate leasing operating profit
|
—
|
|
|
4.1
|
|
|
0.2
|
|
|
11.3
|
|
||||
Total operating profit before taxes
|
—
|
|
|
11.8
|
|
|
56.1
|
|
|
23.3
|
|
||||
Income tax expense
|
—
|
|
|
4.6
|
|
|
21.8
|
|
|
9.1
|
|
||||
Income from discontinued operations
|
$
|
—
|
|
|
$
|
7.2
|
|
|
$
|
34.3
|
|
|
$
|
14.2
|
|
(9)
|
Pension and Post-retirement Plans.
The Company has defined benefit pension plans that cover substantially all non-bargaining unit and certain bargaining unit employees. The Company also has unfunded non-qualified plans that provide benefits in excess of the amounts permitted to be paid under the provisions of the tax law to participants in qualified plans. In 2007, the Company changed the traditional defined benefit pension plan formula for new non-bargaining unit employees hired after January 1, 2008 and replaced it with a cash balance defined benefit pension plan formula. Subsequently, effective January 1, 2012, the Company froze the benefits under its traditional defined benefit plans for non-bargaining unit employees hired before January 1, 2008 and replaced the benefit with the same cash balance defined benefit pension plan formula provided to those employees hired after January 1, 2008. Retirement benefits under the cash balance pension plan formula are based on a fixed percentage of employee eligible compensation, plus interest. The plan interest credit rate will vary from year-to-year based on the ten-year U.S. Treasury rate.
|
|
Pension Benefits
|
|
Post-retirement Benefits
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Service cost
|
$
|
0.7
|
|
|
$
|
0.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
2.1
|
|
|
1.9
|
|
|
0.2
|
|
|
0.1
|
|
||||
Expected return on plan assets
|
(2.7
|
)
|
|
(2.7
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of prior service credit
|
(0.2
|
)
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of net loss
|
1.0
|
|
|
1.9
|
|
|
0.1
|
|
|
(0.1
|
)
|
||||
Net periodic benefit cost
|
$
|
0.9
|
|
|
$
|
1.6
|
|
|
$
|
0.3
|
|
|
$
|
—
|
|
|
Pension Benefits
|
|
Post-retirement Benefits
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Service cost
|
$
|
1.9
|
|
|
$
|
1.9
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
Interest cost
|
6.2
|
|
|
5.7
|
|
|
0.4
|
|
|
0.3
|
|
||||
Expected return on plan assets
|
(8.0
|
)
|
|
(8.2
|
)
|
|
—
|
|
|
—
|
|
||||
Curtailment
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
||||
Amortization of prior service credit
|
(0.6
|
)
|
|
(0.6
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of net loss
|
3.0
|
|
|
5.8
|
|
|
0.2
|
|
|
(0.1
|
)
|
||||
Net periodic benefit cost
|
$
|
2.5
|
|
|
$
|
4.6
|
|
|
$
|
0.7
|
|
|
$
|
(0.2
|
)
|
(10)
|
New Accounting Pronouncements.
In April 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (ASU) 2014-08,
Presentation of Financial Statements
(Topic 205) and
Property, Plant, and Equipment
(Topic 360)
: Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity
(“ASU 2014-08”). This update changes the requirements for reporting discontinued operations under Subtopic 205-20. A disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when either (i) the component of an entity or group of components of an entity meets the criteria to be classified as held for sale, (ii) the component of an entity or group of components of an entity is disposed of by sale, or (iii) the component of an entity or group of components of an entity is disposed of other than by sale. The amendments in ASU 2014-08 improve the definition of discontinued operations by limiting discontinued operations reporting to disposals of components of an entity that represent strategic shifts that have (or will have) a major effect on an entity’s operations and financial results. The amendments in the update require additional disclosures about discontinued operations and disclosures related to the disposal of an individually significant component of an entity that does not qualify for discontinued operations presentation. The amendments in ASU 2014-08 are to be applied to all disposals (or classifications as held for sale) of components of an entity that occur within annual periods beginning on or after December 15, 2014, and interim periods within those years. Early adoption is permitted, but only for disposals (or classifications as held for sale) that have not been reported in financial statements previously issued or available for issuance. The Company has early adopted the provisions under ASU 2014-08.
|
(11)
|
Accumulated Other Comprehensive Income.
The changes in accumulated other comprehensive income by component for the
nine months
ended
September 30, 2014
were as follows (in millions, net of tax):
|
|
Pension and postretirement plans
|
||
|
nine months ended September 30, 2014
|
||
Beginning balance
|
$
|
30.1
|
|
Amounts reclassified from accumulated other comprehensive income, net of tax
|
(2.1
|
)
|
|
Ending balance
|
$
|
28.0
|
|
|
Quarter Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
Details about Accumulated Other Comprehensive Income Components
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Actuarial gain (loss)*
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1.2
|
|
|
$
|
(2.0
|
)
|
Amortization of defined benefit pension items reclassified to net periodic pension cost:
|
|
|
|
|
|
|
|
||||||||
Net loss*
|
$
|
1.1
|
|
|
1.9
|
|
|
$
|
3.3
|
|
|
5.8
|
|
||
Prior service credit*
|
(0.4
|
)
|
|
(0.4
|
)
|
|
(1.0
|
)
|
|
(1.0
|
)
|
||||
Total before income tax
|
0.7
|
|
|
1.5
|
|
|
3.5
|
|
|
2.8
|
|
||||
Income taxes
|
(0.3
|
)
|
|
(0.6
|
)
|
|
(1.4
|
)
|
|
(1.1
|
)
|
||||
Other comprehensive income net of tax
|
$
|
0.4
|
|
|
$
|
0.9
|
|
|
$
|
2.1
|
|
|
$
|
1.7
|
|
*
|
These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Note 9 for additional details).
|
(12)
|
Income Taxes.
The Company makes certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments are applied in the calculation of tax credits, tax benefits and deductions, and in the calculation of certain deferred tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes. Deferred tax assets and deferred tax liabilities are adjusted to the extent necessary to reflect tax rates expected to be in effect when the temporary differences reverse. Adjustments may be required to deferred tax assets and deferred tax liabilities due to changes in tax laws and audit adjustments by tax authorities. To the extent adjustments are required in any given period, the adjustments would be included within the tax provision in the condensed consolidated statements of income or balance sheet.
|
(13)
|
Notes Payable and Long-Term Debt.
On December 18, 2013, the Company entered into a short-term facility ("Bridge Loan"), by and among A&B LLC, Bank of America, N.A., and other lenders party thereto, to finance a portion of the Company's
$372.7 million
purchase of the Kailua Portfolio in 2013. On December 20, 2013, the Company consummated the acquisition and borrowed
$60 million
under the Bridge Loan, which bore interest at
LIBOR
plus
3
percent. The Bridge Loan was paid off on January 6, 2014 with reverse 1031 proceeds from the disposition of Maui Mall.
|
(14)
|
Derivative Instruments.
The Company is exposed to interest rate risk related to its floating rate debt. The Company balances its cost of debt and exposure to interest rates primarily through its mix of fixed and floating rate debt. From time to time, the Company may use interest rate swaps to manage its exposure to interest rate risk.
|
|
As of September 30,
|
|
As of December 31,
|
||||
|
2014
|
|
2013
|
||||
Interest rate swap liability - floating to fixed rate
|
$
|
2.8
|
|
|
$
|
2.8
|
|
(15)
|
Segment Results.
Segment results for the
three and nine months ended
September 30, 2014
and
2013
were as follows (in millions):
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
||||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Real Estate
1
:
|
|
|
|
|
|
|
|
||||||||
Leasing
|
$
|
31.3
|
|
|
$
|
27.5
|
|
|
$
|
93.5
|
|
|
$
|
80.0
|
|
Development and Sales
|
18.2
|
|
|
47.4
|
|
|
110.6
|
|
|
64.2
|
|
||||
Less amounts reported in discontinued operations
|
—
|
|
|
(46.0
|
)
|
|
(70.3
|
)
|
|
(78.0
|
)
|
||||
Natural Materials and Construction
|
58.4
|
|
|
—
|
|
|
173.1
|
|
|
—
|
|
||||
Agribusiness
|
45.5
|
|
|
35.9
|
|
|
88.2
|
|
|
94.1
|
|
||||
Total revenue
|
$
|
153.4
|
|
|
$
|
64.8
|
|
|
$
|
395.1
|
|
|
$
|
160.3
|
|
Operating Profit, Net Income:
|
|
|
|
|
|
|
|
||||||||
Real Estate
1
:
|
|
|
|
|
|
|
|
||||||||
Leasing
|
$
|
12.1
|
|
|
$
|
11.2
|
|
|
$
|
35.9
|
|
|
$
|
32.7
|
|
Development and Sales
|
11.4
|
|
|
4.6
|
|
|
71.5
|
|
|
6.3
|
|
||||
Less amounts reported in discontinued operations
|
—
|
|
|
(11.8
|
)
|
|
(56.1
|
)
|
|
(23.3
|
)
|
||||
Natural Materials and Construction
|
5.9
|
|
|
—
|
|
|
17.3
|
|
|
—
|
|
||||
Agribusiness
|
(7.3
|
)
|
|
2.2
|
|
|
(3.8
|
)
|
|
14.3
|
|
||||
Total operating profit
|
22.1
|
|
|
6.2
|
|
|
64.8
|
|
|
30.0
|
|
||||
Interest expense
|
(7.2
|
)
|
|
(4.2
|
)
|
|
(21.6
|
)
|
|
(11.7
|
)
|
||||
General corporate expenses
|
(3.9
|
)
|
|
(3.4
|
)
|
|
(13.5
|
)
|
|
(11.5
|
)
|
||||
Grace acquisition costs
|
—
|
|
|
(2.0
|
)
|
|
—
|
|
|
(4.5
|
)
|
||||
Reduction in KRS II carrying value (Note 12)
|
(15.1
|
)
|
|
—
|
|
|
(15.1
|
)
|
|
—
|
|
||||
Income (loss) from continuing operations before income taxes
|
(4.1
|
)
|
|
(3.4
|
)
|
|
14.6
|
|
|
2.3
|
|
||||
Income tax expense (benefit)
|
(14.9
|
)
|
|
(0.6
|
)
|
|
(5.9
|
)
|
|
2.1
|
|
||||
Income (loss) from continuing operations
|
10.8
|
|
|
(2.8
|
)
|
|
20.5
|
|
|
0.2
|
|
||||
Income from discontinued operations (net of income taxes)
|
—
|
|
|
7.2
|
|
|
34.3
|
|
|
14.2
|
|
||||
Net income
|
10.8
|
|
|
4.4
|
|
|
54.8
|
|
|
14.4
|
|
||||
Income attributable to noncontrolling interest
|
(0.6
|
)
|
|
—
|
|
|
(2.0
|
)
|
|
—
|
|
||||
Net income attributable to A&B
|
$
|
10.2
|
|
|
$
|
4.4
|
|
|
$
|
52.8
|
|
|
$
|
14.4
|
|
1
|
Prior year amounts recast for amounts treated as discontinued operations.
|
|
Preliminary Valuation
October 1, 2013
|
|
Adjustments/reclassifications
|
|
Adjusted Valuation
September 30, 2014
|
||||||
Fair value of consideration transferred
|
$
|
240.7
|
|
|
$
|
—
|
|
|
$
|
240.7
|
|
|
|
|
|
|
|
||||||
Cash
|
5.7
|
|
|
—
|
|
|
5.7
|
|
|||
Intangible assets
|
5.8
|
|
|
(1.0
|
)
|
|
4.8
|
|
|||
All other assets
|
277.4
|
|
|
0.9
|
|
|
278.3
|
|
|||
Total assets acquired
|
288.9
|
|
|
(0.1
|
)
|
|
288.8
|
|
|||
Liabilities assumed
|
138.5
|
|
|
3.2
|
|
|
141.7
|
|
|||
Total net assets acquired
|
150.4
|
|
|
(3.3
|
)
|
|
147.1
|
|
|||
Excess of purchase price over net assets acquired
|
$
|
90.3
|
|
|
$
|
3.3
|
|
|
$
|
93.6
|
|
•
|
Business Overview:
This section provides a general description of A&B’s business, as well as recent developments that the Company believes are important in understanding its results of operations and financial condition or in understanding anticipated future trends.
|
•
|
Consolidated
Results of Operations:
This section provides an analysis of A&B’s consolidated results of operations for the
three and nine months ended
September 30, 2014
and
2013
.
|
•
|
Analysis of Operating Revenue and Profit by Segment:
This section provides an analysis of A&B’s results of operations by business segment.
|
•
|
Liquidity and Capital Resources:
This section provides a discussion of A&B’s financial condition and an analysis of A&B’s cash flows for the
nine months
ended
September 30, 2014
and
2013
, as well as a discussion of A&B’s ability to fund its future commitments and ongoing operating activities through internal and external sources of capital.
|
•
|
Outlook:
This section provides a discussion of management’s general outlook about the Hawaii economy and the Company’s markets.
|
•
|
Other Matters:
This section provides a summary of other matters, such as officer and management changes.
|
|
Quarter Ended September 30,
|
|
|
|||||||
(dollars in millions)
|
2014
|
|
2013
|
|
Change
|
|||||
Operating revenue
|
$
|
153.4
|
|
|
$
|
64.8
|
|
|
136.7
|
%
|
Operating costs and expenses
|
137.8
|
|
|
60.6
|
|
|
127.4
|
%
|
||
Operating income
|
15.6
|
|
|
4.2
|
|
|
4X
|
|
||
Other income and (expense)
|
(19.7
|
)
|
|
(7.6
|
)
|
|
159.2
|
%
|
||
Income (loss) from continuing operations before income taxes
|
(4.1
|
)
|
|
(3.4
|
)
|
|
20.6
|
%
|
||
Income tax expense (benefit)
|
(14.9
|
)
|
|
(0.6
|
)
|
|
25X
|
|
||
Discontinued operations (net of income taxes)
|
—
|
|
|
7.2
|
|
|
(100.0
|
)%
|
||
Net income
|
10.8
|
|
|
4.4
|
|
|
145.5
|
%
|
||
Income attributable to noncontrolling interest
|
(0.6
|
)
|
|
—
|
|
|
NM
|
|
||
Net income attributable to A&B
|
$
|
10.2
|
|
|
$
|
4.4
|
|
|
131.8
|
%
|
|
|
|
|
|
|
|||||
Basic earnings per share attributable to A&B
|
$
|
0.21
|
|
|
$
|
0.10
|
|
|
110.0
|
%
|
Diluted earnings per share attributable to A&B
|
$
|
0.21
|
|
|
$
|
0.10
|
|
|
110.0
|
%
|
|
Nine Months Ended September 30,
|
|||||||||
(dollars in millions)
|
2014
|
|
2013
|
|
Change
|
|||||
Operating revenue
|
$
|
395.1
|
|
|
$
|
160.3
|
|
|
146.5
|
%
|
Operating costs and expenses
|
346.7
|
|
|
144.4
|
|
|
140.1
|
%
|
||
Operating income
|
48.4
|
|
|
15.9
|
|
|
3X
|
|
||
Other income and (expense)
|
(33.8
|
)
|
|
(13.6
|
)
|
|
148.5
|
%
|
||
Income from continuing operations before income taxes
|
14.6
|
|
|
2.3
|
|
|
6X
|
|
||
Income tax expense (benefit)
|
(5.9
|
)
|
|
2.1
|
|
|
NM
|
|
||
Discontinued operations (net of income taxes)
|
34.3
|
|
|
14.2
|
|
|
141.5
|
%
|
||
Net income
|
54.8
|
|
|
14.4
|
|
|
4X
|
|
||
Income attributable to noncontrolling interest
|
(2.0
|
)
|
|
—
|
|
|
NM
|
|
||
Net income attributable to A&B
|
$
|
52.8
|
|
|
$
|
14.4
|
|
|
4X
|
|
|
|
|
|
|
|
|||||
Basic earnings per share attributable to A&B
|
$
|
1.08
|
|
|
0.33
|
|
|
3X
|
|
|
Diluted earnings per share attributable to A&B
|
$
|
1.07
|
|
|
0.33
|
|
|
3X
|
|
|
Quarter Ended September 30,
|
|||||||||
(dollars in millions)
|
2014
|
|
2013
|
|
Change
|
|||||
Real estate leasing segment revenue
|
$
|
31.3
|
|
|
$
|
27.5
|
|
|
13.8
|
%
|
Real estate leasing segment operating costs and expenses
|
(19.0
|
)
|
|
(15.9
|
)
|
|
19.5
|
%
|
||
Selling, general and administrative
|
(0.3
|
)
|
|
(0.5
|
)
|
|
(40.0
|
)%
|
||
Other income
|
0.1
|
|
|
0.1
|
|
|
—
|
%
|
||
Real estate leasing operating profit
|
$
|
12.1
|
|
|
$
|
11.2
|
|
|
8.0
|
%
|
Operating profit margin
|
38.7
|
%
|
|
40.7
|
%
|
|
|
|||
Net Operating Income*
|
19.1
|
|
|
17.5
|
|
|
9.1
|
%
|
||
Leasable Space (million sq. ft.)
|
|
|
|
|
|
|||||
Hawaii - improved
|
2.4
|
|
|
2.2
|
|
|
|
|||
Mainland - improved
|
2.5
|
|
|
5.9
|
|
|
|
|||
Total improved
|
4.9
|
|
|
8.1
|
|
|
|
|||
Hawaii urban ground leases (acres)
|
116.3
|
|
|
65.2
|
|
|
|
*
|
Refer to page 24 for a discussion of management's use of a non-GAAP financial measure and the required reconciliation of non-GAAP measures to GAAP measures.
|
Dispositions
|
|
Acquisitions
|
||||||||||
Date
|
|
Property
|
|
Leasable sq. ft
|
|
Date
|
|
Property
|
|
Leasable sq. ft
|
||
9-13
|
|
Centennial Plaza
|
|
244,000
|
|
|
9-13
|
|
Pearl Highlands
|
|
415,400
|
|
9-13
|
|
Issaquah Office Center
|
|
146,900
|
|
|
9-13
|
|
Shops at Kukui’ula
|
|
78,900
|
|
10-13
|
|
Republic Distribution Center
|
|
312,500
|
|
|
12-13
|
|
Kailua Improved Portfolio
|
|
386,200
|
|
12-13
|
|
Activity Distribution Center
|
|
252,300
|
|
|
12-13
|
|
Kailua Ground Leases*
|
|
51 acres
|
|
12-13
|
|
Heritage Business Park
|
|
1,316,400
|
|
|
|
|
|
|
|
|
12-13
|
|
Savannah Logistics Park
|
|
1,035,700
|
|
|
|
|
|
|
|
|
12-13
|
|
Broadlands Marketplace
|
|
103,900
|
|
|
|
|
|
|
|
|
12-13
|
|
Meadows on the Parkway
|
|
216,400
|
|
|
|
|
|
|
|
|
12-13
|
|
Rancho Temecula Town Ctr.
|
|
165,500
|
|
|
|
|
|
|
|
|
1-14
|
|
Maui Mall
|
|
185,700
|
|
|
|
|
Total Improved Acquisitions
|
|
880,500
|
|
|
|
Total Dispositions
|
|
3,979,300
|
|
|
|
|
Total Ground Lease Acq.
|
|
51 acres
|
|
|
Nine Months Ended September 30,
|
|||||||||
(dollars in millions)
|
2014
|
|
2013
|
|
Change
|
|||||
Real estate leasing segment revenue
|
$
|
93.5
|
|
|
$
|
80.0
|
|
|
16.9
|
%
|
Real estate leasing segment operating costs and expenses
|
(57.0
|
)
|
|
(46.1
|
)
|
|
23.6
|
%
|
||
Selling, general and administrative
|
(0.9
|
)
|
|
(1.4
|
)
|
|
(35.7
|
)%
|
||
Other income
|
0.3
|
|
|
0.2
|
|
|
50.0
|
%
|
||
Real estate leasing operating profit
|
$
|
35.9
|
|
|
$
|
32.7
|
|
|
9.8
|
%
|
Operating profit margin
|
38.4
|
%
|
|
40.9
|
%
|
|
|
|||
Net Operating Income*
|
58.3
|
|
|
50.6
|
|
|
15.2
|
%
|
||
Leasable Space (million sq. ft.)
|
|
|
|
|
|
|
||||
Hawaii - improved
|
2.4
|
|
|
2.2
|
|
|
|
|
||
Mainland - improved
|
2.5
|
|
|
5.9
|
|
|
|
|
||
Total Improved
|
4.9
|
|
|
8.1
|
|
|
|
|||
Hawaii urban ground leases (acres)
|
116.3
|
|
|
65.2
|
|
|
|
*
|
Refer to page 24 for a discussion of management's use of a non-GAAP financial measure and the required reconciliation of non-GAAP measures to GAAP measures.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Real Estate Leasing segment operating profit before discontinued operations
|
$
|
12.1
|
|
|
$
|
11.2
|
|
|
$
|
35.9
|
|
|
$
|
32.7
|
|
Less amounts reported in discontinued operations (pre-tax)
|
—
|
|
|
(4.1
|
)
|
|
(0.2
|
)
|
|
(11.3
|
)
|
||||
Real Estate Leasing segment operating profit after subtracting discontinued operations
|
12.1
|
|
|
7.1
|
|
|
35.7
|
|
|
21.4
|
|
||||
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization
|
6.8
|
|
|
6.0
|
|
|
21.0
|
|
|
17.8
|
|
||||
Straight-line lease adjustments
|
(0.7
|
)
|
|
(0.5
|
)
|
|
(1.8
|
)
|
|
(2.2
|
)
|
||||
General and administrative expenses
|
0.9
|
|
|
0.8
|
|
|
3.2
|
|
|
2.3
|
|
||||
Discontinued operations
|
—
|
|
|
4.1
|
|
|
0.2
|
|
|
11.3
|
|
||||
Real Estate Leasing segment NOI
|
$
|
19.1
|
|
|
$
|
17.5
|
|
|
$
|
58.3
|
|
|
$
|
50.6
|
|
|
Quarter Ended September 30,
|
|||||||||
(dollars in millions)
|
2014
|
|
2013
|
|
Change
|
|||||
Improved property sales revenue
|
$
|
—
|
|
|
$
|
37.3
|
|
|
(100.0
|
)%
|
Development sales revenue
|
2.7
|
|
|
4.4
|
|
|
(38.6
|
)%
|
||
Unimproved/other property sales revenue
|
15.5
|
|
|
5.7
|
|
|
171.9
|
%
|
||
Total Real Estate Development and Sales segment revenue
|
18.2
|
|
|
47.4
|
|
|
(61.6
|
)%
|
||
Cost of Real Estate Development and Sales
|
(5.3
|
)
|
|
(33.1
|
)
|
|
(84.0
|
)%
|
||
Operating expenses
|
(4.0
|
)
|
|
(4.8
|
)
|
|
(16.7
|
)%
|
||
Write down of The Shops at Kukui'ula joint venture investment
|
—
|
|
|
(6.3
|
)
|
|
(100.0
|
)%
|
||
Earnings from joint ventures
|
1.5
|
|
|
0.7
|
|
|
114.3
|
%
|
||
Other income
|
1.0
|
|
|
0.7
|
|
|
42.9
|
%
|
||
Total Real Estate Development and Sales operating profit
|
$
|
11.4
|
|
|
$
|
4.6
|
|
|
147.8
|
%
|
Real Estate Development and Sales operating profit margin
|
62.6
|
%
|
|
9.7
|
%
|
|
|
|
Nine Months Ended September 30,
|
|||||||||
(dollars in millions)
|
2014
|
|
2013
|
|
Change
|
|||||
Improved property sales revenue
|
$
|
64.1
|
|
|
$
|
52.2
|
|
|
22.8
|
%
|
Development sales revenue
|
19.0
|
|
|
4.4
|
|
|
4X
|
|
||
Unimproved/other property sales revenue
|
27.5
|
|
|
7.6
|
|
|
4X
|
|
||
Total Real Estate Development and Sales segment revenue
|
110.6
|
|
|
64.2
|
|
|
72.3
|
%
|
||
Cost of Real Estate Development and Sales
|
(31.0
|
)
|
|
(44.1
|
)
|
|
(29.7
|
)%
|
||
Operating expenses
|
(11.5
|
)
|
|
(10.4
|
)
|
|
10.6
|
%
|
||
Impairment and equity loss related to joint venture investments
|
—
|
|
|
(6.3
|
)
|
|
(100.0
|
)%
|
||
Earnings from joint ventures
|
1.0
|
|
|
1.8
|
|
|
(44.4
|
)%
|
||
Other income
|
2.4
|
|
|
1.1
|
|
|
118.2
|
%
|
||
Total Real Estate Development and Sales operating profit
|
$
|
71.5
|
|
|
$
|
6.3
|
|
|
11X
|
|
Real Estate Development and Sales operating profit margin
|
64.6
|
%
|
|
9.8
|
%
|
|
|
|
Quarter Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Proceeds from the sale of income-producing properties
|
$
|
—
|
|
|
$
|
37.3
|
|
|
$
|
70.1
|
|
|
$
|
52.2
|
|
Real Estate Leasing revenue
|
—
|
|
|
8.7
|
|
|
0.2
|
|
|
25.8
|
|
||||
Total
|
—
|
|
|
46.0
|
|
|
70.3
|
|
|
78.0
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Gain on sale of income-producing properties
|
—
|
|
|
7.7
|
|
|
55.9
|
|
|
12.0
|
|
||||
Real Estate Leasing operating profit
|
—
|
|
|
4.1
|
|
|
0.2
|
|
|
11.3
|
|
||||
Total operating profit before taxes
|
—
|
|
|
11.8
|
|
|
56.1
|
|
|
23.3
|
|
||||
Income tax expense
|
—
|
|
|
4.6
|
|
|
21.8
|
|
|
9.1
|
|
||||
Income from discontinued operations
|
$
|
—
|
|
|
$
|
7.2
|
|
|
$
|
34.3
|
|
|
$
|
14.2
|
|
|
Quarter Ended September 30,
|
|||||||||
(dollars in millions)
|
2014
|
|
2013
|
|
Change
|
|||||
Revenue
|
$
|
45.5
|
|
|
$
|
35.9
|
|
|
26.7
|
%
|
Operating profit
|
$
|
(7.3
|
)
|
|
$
|
2.2
|
|
|
NM
|
|
Operating profit margin
|
(16.0
|
)%
|
|
6.1
|
%
|
|
|
|||
Tons sugar produced
|
67,000
|
|
|
64,000
|
|
|
4.7
|
%
|
||
Tons sugar sold (raw and specialty sugar)
|
75,200
|
|
|
35,800
|
|
|
110.1
|
%
|
|
Nine Months Ended September 30,
|
|||||||||
(dollars in millions)
|
2014
|
|
2013
|
|
Change
|
|||||
Revenue
|
$
|
88.2
|
|
|
$
|
94.1
|
|
|
(6.3
|
)%
|
Operating profit
|
$
|
(3.8
|
)
|
|
$
|
14.3
|
|
|
NM
|
|
Operating profit margin
|
(4.3
|
)%
|
|
15.2
|
%
|
|
|
|||
Tons sugar produced
|
115,200
|
|
|
138,600
|
|
|
(16.9
|
)%
|
||
Tons sugar sold (raw and specialty sugar)
|
116,400
|
|
|
72,200
|
|
|
61.2
|
%
|
|
2014
|
||||||
(dollars in millions)
|
Quarter Ended September 30,
|
|
Nine Months Ended September 30,
|
||||
Revenue
|
$
|
58.4
|
|
|
$
|
173.1
|
|
Operating profit
|
$
|
5.9
|
|
|
$
|
17.3
|
|
Operating profit margin
|
10.1
|
%
|
|
10.0
|
%
|
||
Depreciation and amortization
|
$
|
3.7
|
|
|
$
|
12.3
|
|
Aggregate used and sold (tons in thousands)
|
166.0
|
|
|
479.0
|
|
||
Asphaltic concrete placed (tons in thousands)
|
98.7
|
|
|
357.0
|
|
||
Backlog at period end
|
$
|
235.7
|
|
|
$
|
235.7
|
|
|
Nine Months Ended September 30,
|
|||||||||
(dollars in millions)
|
2014
|
|
2013
|
|
Change
|
|||||
Acquisition of property
|
$
|
8.6
|
|
|
$
|
82.4
|
|
|
(89.6
|
)%
|
Real estate redevelopment/renovations
|
6.7
|
|
|
8.6
|
|
|
(22.1
|
)%
|
||
Tenant improvements
|
3.2
|
|
|
3.6
|
|
|
(11.1
|
)%
|
||
Agribusiness and other
|
8.8
|
|
|
8.3
|
|
|
6.0
|
%
|
||
Total capital expenditures*
|
$
|
27.3
|
|
|
$
|
102.9
|
|
|
(73.5
|
)%
|
*
|
Capital expenditures for real estate developments to be held and sold as real estate development inventory are classified in condensed consolidated statement of cash flows as operating activities.
|
*
|
Refer to page 24 for a discussion of management's use of a non-GAAP financial measure and the required reconciliation of non-GAAP measures to GAAP measures.
|
(a)
|
Disclosure Controls and Procedures. The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective.
|
(b)
|
Internal Control Over Financial Reporting. There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
|
Period
|
Total Number of
Shares Purchased
|
Average Price
Paid per Share
|
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans
or Programs
|
Maximum Number
of Shares that
May Yet Be Purchased
Under the Plans
or Programs
|
Jul 1 - 31, 2014
|
—
|
$—
|
—
|
—
|
Aug 1 - 31, 2014
|
1,225 (1)
|
$41.06
|
—
|
—
|
Sep 1 - 30, 2014
|
913 (1)
|
$41.60
|
—
|
—
|
10.b.1.(xxii)
|
Amendement No. 1 to Alexander & Baldwin, Inc. One-Year Performance Improvement Incentive Plan, dated July 29, 2014.
|
31.1
|
Certification of Chief Executive Officer, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
|
Certification of Chief Financial Officer, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32
|
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101
|
The following information from Alexander & Baldwin, Inc.’s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2014
, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Income for the three and
nine months
ended
September 30, 2014
and
September 30, 2013
, (ii) Condensed Consolidated Statement of Comprehensive Income for the
three and nine months ended
September 30, 2014
and
September 30, 2013
, (iii) Condensed Consolidated Balance Sheets at
September 30, 2014
and
December 31, 2013
, (iv) Condensed Consolidated Statement of Cash Flows for the
nine months
ended
September 30, 2014
and
September 30, 2013
, (v) Condensed Consolidated Statements of Equity for the
nine months
ended
September 30, 2014
and
September 30, 2013
, and (vi) the Notes to the Condensed Consolidated Financial Statements.
|
95.
|
Mine Safety Disclosure
|
Pursuant to the requirements 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:
|
November 6, 2014
|
|
/s/ Paul K. Ito
|
|
|
|
Paul K. Ito
|
|
|
|
Senior Vice President,
|
|
|
|
Chief Financial Officer, Treasurer
|
|
|
|
and Controller
|
|
|
|
|
|
|
|
|
10.b.1.(xxii)
|
Amendment No. 1 to Alexander & Baldwin, Inc. One-Year Performance Improvement Incentive Plan, dated July 29, 2014.
|
31.1
|
Certification of Chief Executive Officer, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
|
Certification of Chief Financial Officer, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32
|
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101
|
The following information from Alexander & Baldwin, Inc.’s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2014
, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Income for the
three and nine months ended
September 30, 2014
and
September 30, 2013
, (ii) Condensed Consolidated Statement of Comprehensive Income for the
three and nine months ended
September 30, 2014
and
September 30, 2013
, (iii) Condensed Consolidated Balance Sheets at
September 30, 2014
and
December 31, 2013
, (iv) Condensed Consolidated Statement of Cash Flows for the
nine months
ended
September 30, 2014
and
September 30, 2013
, (v) Condensed Consolidated Statements of Equity for the
nine months ended September 30, 2014
and
September 30, 2013
and (vi) the Notes to the Condensed Consolidated Financial Statements.
|
95.
|
Mine Safety Disclosure
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Alexander & Baldwin, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
|
By /s/ Stanley M. Kuriyama
|
|
|
Stanley M. Kuriyama, President and
|
|
|
Chief Executive Officer
|
Date:
|
November 6, 2014
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Alexander & Baldwin, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
|
By /s/ Paul K. Ito
|
|
|
Paul K. Ito, Senior Vice President,
|
|
|
Chief Financial Officer, Treasurer
|
|
|
And Controller
|
Date:
|
November 6, 2014
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/
s/ Stanley M. Kuriyama
|
|
Name:
|
Stanley M. Kuriyama
|
Title:
|
President and Chief Executive Officer
|
Date:
|
November 6, 2014
|
/
s/ Paul K. Ito
|
|
Name:
|
Paul K. Ito
|
Title:
|
Senior Vice President, Chief Financial Officer, Controller and Treasurer
|
Date:
|
November 6, 2014
|
Total Number of S&S Citations
|
0
|
Mine Act § 104(b) Orders
|
0
|
Mine Act § 104(d) Citations and Orders
|
0
|
Mine Act § 110(b)(2) Violations
|
0
|
Mine Act § 107(a) Orders
|
0
|
Total Dollar Value of Proposed MSHA Assessments
|
0
|
Total Number of Mining Related Fatalities
|
0
|
Received Written Notice of Pattern of Violation under Mine Act §104(e) (yes/no)
|
No
|
Received Written Notice of Potential to Have Pattern under Mine Act §104(e) (yes/no)
|
No
|