A&B Reports 1st Quarter 2006 Net Income of $37.4 Million.HONOLULU Honolulu (hŏn'əl  `l, hōnō–), city (1990 pop. -- Alexander & Baldwin Baldwin, cities, United StatesBaldwin. 1 Uninc. city (1990 pop. 22,719), Nassau co., SE N.Y., on the south shore of Long Island, on Baldwin Bay; settled 1640s. A fishing center and summer resort, it has varied manufactures. , Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :ALEX) today reported that net income for the first quarter of 2006 was $37,400,000, or $0.84 per fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share. Net income in the first quarter of 2005 was $37,700,000, or $0.86 per fully diluted share. Revenue in the first quarter of 2006 was $362,200,000, compared with revenue of $364,600,000 in the first quarter of 2005. COMMENTS ON QUARTER & OUTLOOK "From both operating and financial perspectives, 2006 is off to a good start," said Allen Al·len , Edgar 1892-1943. American anatomist who is noted for his studies of hormones and for the discovery (1923) of estrogen. Doane Doane is a surname, and may refer to:
"Matson's financial performance was negatively impacted by the previously disclosed termination of our alliance with APL (A Programming Language) A high-level mathematical programming language noted for its brevity and matrix generation capabilities. Developed by Kenneth Iverson in the mid-1960s, it runs on micros to mainframes and is often used to develop mathematical models. . We expect the gap between the loss of APL-related earnings and earnings generated by our new Guam and China services to moderate toward the second half of the year. In the Hawaii Hawaii, island, United States Hawaii, island (1990 pop. 120,217), 4,037 sq mi (10,456 sq km), largest and southernmost island of the state of Hawaii and coextensive with Hawaii co.; known as the Big Island. trade, increases in container yields were offset by lower automobile volumes and yields and higher costs, especially fuel price increases that outpaced increases in our fuel surcharge An overcharge or additional cost. A surcharge is an added liability imposed on something that is already due, such as a tax on tax. It also refers to the penalty a court can impose on a fiduciary for breaching a duty. , as well as reduced contributions from a stevedoring joint venture. Our logistics services business, Matson Integrated Logistics, continued its significant growth in earnings, up 57 percent year over year. "The real estate segments continued their strong performance. Highlights of the quarter included a substantial contribution from the January January: see month. closing of all sales at our highly successful Hokua joint venture residential condominium condominium In modern property law, individual ownership of one dwelling unit within a multidwelling building. Unit owners have undivided ownership interest in the land and those portions of the building shared in common. development. In addition, the leased properties portfolio performed particularly well, reflecting extremely high occupancy rates Noun 1. occupancy rate - the percentage of all rental units (as in hotels) are occupied or rented at a given time pct, per centum, percent, percentage - a proportion in relation to a whole (which is usually the amount per hundred) . Based on the first quarter's accomplishments, we believe real estate is well positioned for another excellent year. "Food products segment operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. in first quarter 2006 was lower than the comparable quarter a year ago due to the receipt of a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. payment from the federal government in the year ago period. Recent inclement in·clem·ent adj. 1. Stormy: inclement weather. 2. Showing no clemency; unmerciful. in·clem weather delayed the start of the sugar harvest, but contributed to higher profits from power sales. Overall, A&B's Hawaii operations stood up well given the first quarter's unprecedented rainfall. "Hawaii's economy continues to perform at a high level. While home sales are slowing and the double digit Noun 1. double digit - a two-digit integer; from 10 to 99 integer, whole number - any of the natural numbers (positive or negative) or zero; "an integer is a number that is not a fraction" price increases experienced over the past few years are showing signs of moderating in the first quarter 2006, the absolute level of home prices remains high -- up 14 percent year over year on Maui Maui (mou`ē), island (1990 est. pop. 82,500), 728 sq mi (1,886 sq km), second largest island in the state of Hawaii, separated from the island of Hawaii by the Alenuihaha Channel and from Molokai by the Pailolo Channel. , 18 percent on Oahu Oahu (ōä`h ), island (1990 pop. 836,231), 593 sq mi (1,536 sq km), third largest and chief island of Hawaii, part of Honolulu co., between Molokai and Kauai. , and 27
percent on Kauai Kauai (kou'wī`), circular island (1990 pop. 51,177), 549 sq mi (1,422 sq km), 32 mi (52 km) in diameter, N Hawaii, separated from Oahu island to the southeast by Kauai Channel. Lihue (1990 pop. ."In summary, we are pleased with the first quarter results, and expect that real estate profitability for the year should meet or exceed our growth targets. Consistent with earlier guidance, we expect lower full-year consolidated earnings due to the termination of the APL Alliance and the launch of the new Guam and China services. However, we continue to benefit from strategies the Company has undertaken in the past several years that are materially reducing, on a consolidated basis, the 2006 impact of Guam and China. Our outlook for 2007, while still formative formative /for·ma·tive/ (for´mah-tiv) concerned in the origination and development of an organism, part, or tissue. , is positive."
TRANSPORTATION--OCEAN TRANSPORTATION
Quarter Ended March 31
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Dollars in Millions 2006 2005 Change
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Revenue $ 219.3 $ 206.2 6%
Operating Profit $ 18.3 $ 29.7 - 38%
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Volume (Units)
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Hawaii Containers 41,800 41,400 1%
Hawaii Automobiles 31,800 35,600 - 11%
Guam Containers 3,800 4,000 - 5%
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For the first quarter of 2006, Ocean Transportation revenue of $219.3 million was $13.1 million, or 6 percent, higher than the first quarter of 2005. This increase was due to China service revenue, improved yields, and increases in the bunker bunk, bunker large storage bin. bunk forage forage, usually ensilage stored in a large storage bunk and made available to cattle or other livestock along a face of the storage. fuel surcharge necessitated by higher fuel costs, offset by lower volumes of Hawaii automobiles. Total Hawaii container volume was slightly higher than the first quarter of 2005, while total Hawaii automobile volume was 11 percent lower. Operating profit of $18.3 million was $11.4 million, or 38 percent, lower than the first quarter of 2005. This decrease was primarily the result of the termination of the APL Alliance, lower profitability in the Hawaii trade, and lower equity in the earnings of SSA (Serial Storage Architecture) A fault tolerant peripheral interface from IBM that transfers data at 80 and 160 Mbytes/sec. SSA uses SCSI commands, allowing existing software to drive SSA peripherals, which are typically disk drives. Terminals, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , (SSAT SSAT Specialist Schools and Academies Trust (UK) SSAT Society for Surgery of the Alimentary Tract SSAT Social Security Appeals Tribunal SSAT Secondary School Admissions Test SSAT Spermidine/Spermine N(1) ) of which Matson is a minority owner, due primarily to a $3.2 million favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. adjustment in the 2005 quarter for 2004 performance. The decrease in profit was partially offset by a $3.3 million gain on the sale of two surplus and obsolete OBSOLETE. This term is applied to those laws which have lost their efficacy, without being repealed, 2. A positive statute, unrepealed, can never be repealed by non-user alone. 4 Yeates, Rep. 181; Id. 215; 1 Browne's Rep. Appx. 28; 13 Serg. & Rawle, 447. vessels during the quarter. The Guam and China services succeed the former 10-year APL Alliance in which Matson and APL shared vessel deployments. Following six weeks of operation during the first quarter, results for the Guam and China services have met expectations, with higher than anticipated volumes more than offsetting lower than planned yields. Revenue for the Guam and China services, however, was insufficient to offset decreases in revenue from the termination of the charter hire arrangement with APL and start up costs for the new services. Increased container yields in the Hawaii trade were more than offset by reductions in vehicle volume and yields and increases in vessel and other operating costs operating costs npl → gastos mpl operacionales . Competitive pressures from the entry of a dedicated car carrying vessel at the end of the first quarter 2005 contributed to the reduction in auto volumes during the 2006 first quarter. The financial impact of this reduction, however, was somewhat muted mut·ed adj. 1. a. Muffled; indistinct: a muted voice. b. Mute or subdued; softened: muted colors. 2. because it reduced the number of cars carried in containers, a more expensive mode of shipment than the Company's primary roll-on/roll-off roll-on/roll-off Adjective denoting a ship designed so that vehicles can be driven straight on and straight off mode. Fuel surcharge revenue in the first quarter did not fully offset a 64 percent increase in fuel prices. The average price per barrel of fuel consumed con·sume v. con·sumed, con·sum·ing, con·sumes v.tr. 1. To take in as food; eat or drink up. See Synonyms at eat. 2. a. in first quarter 2006 was $51.70, versus $31.52 in the first quarter of 2005. As noted, the decline in SSAT financial results is primarily attributable to a year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2004 closing adjustment at SSAT that positively impacted Matson's first quarter 2005 results. The outlook for this investment remains favorable, based on expected increases in West Coast port volumes at the terminals which SSAT operates.
TRANSPORTATION--LOGISTICS SERVICES
Quarter Ended March 31
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Dollars in Millions 2006 2005 Change
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Revenue $108.4 $ 96.1 13%
Operating Profit $ 4.7 $ 3.0 57%
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Logistics Services revenue of $108.4 million was $12.3 million, or 13 percent, higher than the first quarter of 2005. Operating profit of $4.7 million was 57 percent higher than the comparable period last year. Revenue and operating profit improvements were the result of improved yields in all business lines and increased customer volumes in the domestic, highway and expedited business lines, partially offset by lower international volumes. The operating profit margin Operating profit margin The ratio of operating profit to net sales. for the logistics services business was 4.3 percent in the first quarter of 2006, compared with 3.1 percent for the first quarter of 2005, due in part to the strategic shift toward the higher-margin highway brokerage business line.
REAL ESTATE--LEASING
Quarter Ended March 31
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Dollars in Millions 2006 2005 Change
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Revenue $ 24.6 $ 21.9 12%
Operating Profit $ 12.1 $ 10.7 13%
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Occupancy Rates
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Mainland 97% 96% 1%
Hawaii 98% 90% 8%
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Leasable Space (Million sq. ft.)
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Mainland 3.7 3.4 9%
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Hawaii 1.6 1.7 - 6%
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Real estate leasing revenue for the first quarter of 2006 (before removing amounts treated as discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. ) of $24.6 million was $2.7 million, or 12 percent, higher than the first quarter of 2005. Operating profit of $12.1 million was $1.4 million, or 13 percent, higher than the first quarter of 2005. The improved revenue and operating profit resulted from property acquired subsequent to the first quarter of 2005, as well as higher occupancy rates in both Hawaii and the Mainland. High occupancy rates of 98% and 97% for the Hawaii and Mainland properties, respectively, are a reflection of both the high quality of the Company's properties as well as the strong economic performance of the markets in which these properties are located. In the first quarter of 2006, the Company acquired a two-building office complex, Ninigret Ninigret was a sachem of the Niantic Native American tribe. He did not participate in King Philip's War. References
REAL ESTATE--SALES
Quarter Ended March 31
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Dollars in Millions 2006 2005 Change
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Revenue $ 23.8 $ 45.9 - 48%
Operating Profit $ 27.1 $ 16.5 64%
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Although real estate sales revenue in the first quarter of 2006 of $23.8 million was $22.1 million, or 48 percent, lower than the first quarter of 2005, operating profit from property sales of $27.1 million was $10.6 million, or 64 percent, higher than first quarter 2005. Operating profit for the quarter exceeds revenue due to income from investments in joint ventures, which is included in operating profit, but not in segment revenue. In the first quarter of 2006, sales included an office building in Wailuku, Maui, three commercial parcels totaling 4.6 acres on Maui, a commercial property on Oahu and a parcel on Kauai. In addition, in the first quarter of 2006, sales of all 247 residential condominium units and a commercial space at the Company's Hokua joint venture closed, as did the sale of a parcel of land in Valencia Valencia, region, Spain Valencia (välān`thēä), autonomous region (1990 pop. 3,902,429) and former kingdom, E Spain, on the Mediterranean. It now comprises the provinces of Alicante, Castellón, and Valencia. , California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). owned by a separate joint venture. Property sales during the first quarter of 2005 included two Mainland income properties; 5-1/2 floors at Alakea Corporate Tower, a Honolulu office condominium; a development parcel at Wailea; a commercial development parcel in Waikiki Waikiki (wīkēkē`), famous beach and resort center SE of Honolulu on SE Oahu island, Hawaii. Tourism is the economic mainstay; Waikiki is known the world over for its beach and recreational facilities, especially surfing. ; and multiple subdivision lot sales. Discontinued operations in the first quarter of 2006 included the office building and the fee interests in the three parcels on Maui. The amounts reported as continuing and discontinued operations in prior quarters are restated each time a property is designated as discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: .
FOOD PRODUCTS
Quarter Ended March 31
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Dollars in Millions 2006 2005 Change
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Revenue $ 15.5 $ 22.4 - 31%
Operating Profit $ 6.5 $ 9.0 - 28%
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Tons Sugar Produced 800 19,500 - 96%
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Food products revenue of $15.5 million decreased $6.9 million or 31 percent compared with the first quarter 2005 due mainly to a $5.5 million payment received last year as part of an agricultural disaster relief program and a $4.9 million reduction in sugar sales, partially offset by $1.3 million for higher power Higher power is a term used in a 12-step program, such as Alcoholics Anonymous, to describe "a power greater than yourself." Although many participants equate their higher power with God, a belief in God or in formal religion is not mandatory; the higher power is intended as a sales. These factors resulted in a $2.5 million decrease in operating profit as compared to the first quarter of 2005. Sugar production was substantially lower than 2005 because operations commenced one month later than the prior year, and adverse weather hindered field and factory operations. CORPORATE EXPENSE, STOCK OPTION EXPENSE, TAX RATE For the first quarter of 2006, corporate expenses of $5.2 million approximated the prior year quarter. First quarter 2006 earnings included $639,000 of expenses ($396,000 after tax) related to stock options as a result of adoption of FASB Statement FASB Statement A standard set by the Financial Accounting Standards Board regarding a financial accounting and reporting method. Essentially, FASB statements determine the acceptable accounting practices that Certified Public Accountants use in reporting No. 123 (revised), Share-Based Payment, on January 1, 2006. This equaled $0.01 per fully diluted share after tax. The tax rate was 38 percent for both the first quarter of 2006 and 2005. That rate approximates the Company's statutory combined federal and state tax rate. BALANCE SHEET, CASH FLOW COMMENTS Working capital increased by $26 million since year-end 2005, primarily the combined result of higher cash balances and inventories, partially offset by lower accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying . A portion of the cash balances, along with the $112 million capital construction fund balance, is expected to be used in connection with the purchase of a containership containership Oceangoing vessel designed to transport large, standard-sized containers of freight. Rail-and-road containers were used early in the 20th century; in the 1960s containerization became a major element in ocean shipping as well. later in the year. Additional cash will be invested in real estate development projects. Of note, and as disclosed in a Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. filing last week, the Company has entered into a ten-year term-financing agreement with Prudential Prudential is the name of two different companies and buildings named after them: Companies:
A piece, portion or slice of a deal or structured financing. This portion is one of several related securities that are offered at the same time but have different risks, rewards and/or maturities. "Tranche" is the French word for "slice". drawn between December, 2006 and June, 2007 at fixed rates of 5.53%, 5.55% and 5.56%, respectively. Comparing the cash flows in the first quarters of 2006 and 2005, cash flows from operating activities declined by $5 million. Capital expenditures for the quarter increased $38 million over the same period in 2005, primarily as a result of equipment purchases for the new China service. The net increase in cash and cash equivalents was $25 million in the first quarter of 2006, versus $27 million in the first quarter of 2005. Alexander & Baldwin, Inc., headquartered in Honolulu, is engaged in ocean transportation and intermodal in·ter·mod·al adj. Relating to transportation by more than one means of conveyance, as by truck and rail: intermodal transport. services, through its subsidiaries, Matson Navigation Company Matson Navigation Company, a subsidiary of Alexander & Baldwin, is a private ocean transportation company with roots extending into the late 19th century. It is credited with introducing mass tourism to Hawaii with the opening of the Moana Hotel (now known as the Moana Surfrider Hotel) , Inc. and Matson Integrated Logistics, Inc.; in real estate, through A&B Properties, Inc.; and in food products, through Hawaiian Commercial & Sugar Company and Kauai Coffee Company, Inc. Additional information about A&B may be found at its web site: www.alexanderbaldwin.com. Statements in this press release that are not historical facts are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. ," within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, that involve a number of risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. These forward-looking statements are not guarantees of future performance. This release should be read in conjunction with our Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and our other filings with the SEC through the date of this release, which identify important factors that could affect the forward-looking statements in this release.
ALEXANDER & BALDWIN, INC.
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2006 and 2005 First-Quarter Results (Condensed)
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2006 2005
------------ ------------
Three Months Ended March 31:
----------------------------
Revenue $362,200,000 $364,600,000
Income From Continuing Operations $ 27,900,000 $ 33,400,000
Discontinued Operations: Properties(1) $ 9,500,000 $ 4,300,000
Net Income $ 37,400,000 $ 37,700,000
Basic Share Earnings
Continuing Operations $ 0.64 $ 0.77
Net Income $ 0.85 $ 0.87
Diluted Share Earnings
Continuing Operations $ 0.63 $ 0.76
Net Income $ 0.84 $ 0.86
Average Shares Outstanding 43,900,000 43,400,000
Diluted Average Shares Outstanding 44,300,000 44,000,000
(1) "Discontinued Operations: Properties" consists of sales, or
intended sales, of certain lands and buildings that are material and
have separately identifiable earnings and cash flows.
Industry Segment Data, Net Income (Condensed)
(In Millions, Except Per Share Amounts, Unaudited)
Three Months Ended
-------------------------
March 31,
------------------------
2006 2005
----------- -----------
Revenue:
--------
Transportation
Ocean Transportation $ 219.3 $ 206.2
Logistics Services 108.4 96.1
Real Estate
Leasing 24.6 21.9
Sales 23.8 45.9
Less Amounts Reported In
Discontinued Operations (23.3) (26.4)
Food Products 15.5 22.4
Reconciling Items (6.1) (1.5)
----------- -----------
Total Revenue $ 362.2 $ 364.6
=========== ===========
Operating Profit, Net Income:
-----------------------------
Transportation
Ocean Transportation $ 18.3 $ 29.7
Logistics Services 4.7 3.0
Real Estate
Leasing 12.1 10.7
Sales 27.1 16.5
Less Amounts Reported In
Discontinued Operations (15.2) (7.0)
Food Products 6.5 9.0
----------- -----------
Total Operating Profit 53.5 61.9
Interest Expense (3.2) (2.8)
Corporate Expenses (5.2) (5.3)
----------- -----------
Income From Continuing Operations
Before Income Taxes 45.1 53.8
Income Taxes (17.2) (20.4)
----------- -----------
Income From Continuing Operations 27.9 33.4
Discontinued Operations: Properties 9.5 4.3
----------- -----------
Net Income $ 37.4 $ 37.7
=========== ===========
Basic Earnings Per Share, Continuing
Operations $ 0.64 $ 0.77
Basic Earnings Per Share, Net Income $ 0.85 $ 0.87
Diluted Earnings Per Share, Net Income $ 0.84 $ 0.86
Average Shares 43.9 43.4
Diluted Shares 44.3 44.0
Consolidated Balance Sheets (Condensed)
-----------------------------------------
(In Millions)
March 31, December 31,
-------------- ------------
2006 2005
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(Unaudited)
ASSETS
Current Assets $ 330 $ 303
Investments 115 154
Real Estate Developments 83 71
Property, Net 1,321 1,289
Capital Construction Fund 112 93
Other Assets 166 161
--------- ---------
Total $ 2,127 $ 2,071
========= =========
LIABILITIES & EQUITY
Current Liabilities $ 255 $ 254
Long-Term Debt 294 296
Post-Retirement Benefit Obligs. 48 47
Other Long-Term Liabilities 61 45
Deferred Income Taxes 421 415
Shareholders' Equity 1,048 1,014
--------- ---------
Total $ 2,127 $ 2,071
========= =========
Consolidated Statements of Cash Flows (Condensed)
--------------------------------------------------
(In Millions)
Three Months Ended
---------------------
March 31,
---------------------
2006 2005
-------- --------
(Unaudited)
Operating Cash Flows $ 41 $ 46
Capital Expenditures (47) (9)
CCF Withdrawals/(Deposits), Net (18) 2
Proceeds From Issuance of
(Payment of) Debt, Net (2) (7)
Dividends Paid (10) (10)
Disposal of Assets/Other, Net 61 5
-------- --------
Increase/(Decrease) In Cash $ 25 $ 27
======== ========
Depreciation $ (21) $ (20)
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