A&B Reports 2006 Net Income of $122.5 Million, $2.81 Per Share.4th Quarter Net Income of $27.0 Million, up 15% HONOLULU -- Alexander & Baldwin, 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 full year 2006 was $122,500,000, or $2.81 per 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 for the full year 2005 was $126,000,000, or $2.86 per diluted share. Revenue for the full year 2006 was $1,607,000,000 compared with revenue of $1,602,800,000 for the full year 2005. Net income for the fourth quarter of 2006 was $27,000,000, or $0.63 per diluted share. Net income in the fourth quarter of 2005 was $23,400,000, or $0.53 per diluted share. Revenue for the fourth quarter of 2006 was $406,000,000, compared with revenue of $397,100, 000 for the fourth quarter of 2005. COMMENTS ON QUARTER, 2006 FULL YEAR AND OUTLOOK "2006 was a good year for Alexander & Baldwin, and it ended on a particularly positive note, providing momentum and a firm foundation for growth in the coming year," 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, chairman and chief executive officer of Alexander & Baldwin, Inc. (A&B). "Our integrated logistics unit achieved a year-over-year increase of 44 percent in operating profits Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. , while our real estate sales and leasing segments also posted solid, double-digit gains. Matson earned its stripes once again with the successful launch of its Guam and China service. Net income, which was only marginally below last year's, was gratifying grat·i·fy tr.v. grat·i·fied, grat·i·fy·ing, grat·i·fies 1. To please or satisfy: His achievement gratified his father. See Synonyms at please. 2. , especially in light of the significant gap in earnings created by the expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created of the 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. Alliance. In short, we exceeded our expectations for the year and are confident in our opportunities for continued success in 2007 and beyond." "In the fourth quarter, Matson's Ocean Transportation operating profit bested its prior year performance by $5.9 million, due principally to the profitable, expedited ocean transport service from China. The momentum of this service affirms our belief that Matson has established a superior reputation in China less than a year after its entry into that burgeoning marketplace. Not surprisingly, others are taking note. Drewry Shipping Consultants recently monitored vessel calls for 65 carriers for the period from April to September 2006 and identified Matson as the world's best on-time carrier, thanks in part to its 100% on-time transpacific trans·pa·cif·ic adj. 1. Situated on or coming from the other side of the Pacific Ocean. 2. Spanning or crossing the Pacific Ocean. service performance. In Hawaii and Guam, challenging market conditions led to a fall in volume for the quarter and the year, most notably in construction materials and automobile carriage. Despite the decline in volume, however, cargo mix and underlying yields were favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. and portend por·tend tr.v. por·tend·ed, por·tend·ing, por·tends 1. To serve as an omen or a warning of; presage: black clouds that portend a storm. 2. moderate earnings growth in 2007." "Matson Integrated Logistics (MIL) again produced an extraordinary quarter and year, realizing increases in operating profit of $1.4 million and $6.4 million, respectively, in those periods. We attribute this success to improved yields and margins, and strong volume growth in the highway and expedited segments. In 2007, we expect MIL to extend its national footprint The amount of geographic space covered by an object. A computer footprint is the desk or floor surface it occupies. A satellite's footprint is the earth area covered by its downlink. See form factor. 1. , expand its expedited service offerings, and deliver continued earnings growth." "The real estate leasing segment continues to grow through acquisition, superior occupancy levels and increases in lease rents. These factors led to a 22 percent increase in operating profit for the quarter and a 15 percent increase for the year. Our portfolio occupancy now stands at 98 percent, and additions made to the portfolio in growing markets such as Sacramento, California “Sacramento” redirects here. For other uses, see Sacramento (disambiguation). Sacramento is the capital of the State of California and the county seat of Sacramento County. enhance the value of this business segment." "Fourth quarter 2006 real estate sales operating profit was $10.5 million, driven primarily by the sale of the Lanihau Shopping Center shopping center, a concentration of retail, service, and entertainment enterprises designed to serve the surrounding region. The modern shopping center differs from its antecedents—bazaars and marketplaces—in that the shops are usually amalgamated into in Kailua-Kona, Hawaii For the town in Oahu, see . “Kona” redirects here. For other uses, see Kona (disambiguation). Kailua-Kona is a census-designated place located in Hawaiʻ and sales at our joint venture Kai kai Noun NZ informal food [Maori] kai noun N.Z. (informal) food, grub (slang) provisions, fare, board, commons, eats (slang Malu residential development in Wailea, Maui. Full-year operating profit increased by 13 percent in 2006. While we are encouraged by sales at Kai Malu in particular, and in the progress of other development projects such as Keola La'i, we also acknowledge that a changing residential real estate environment in Hawaii may affect the timing of sales at certain projects in our pipeline. Nevertheless, we expect a solid 2007." "In 2006, our Agribusiness agribusiness Agriculture operated by business; specifically, that part of a modern national economy devoted to the production, processing, and distribution of food and fibre products and byproducts. group was negatively impacted by a production shortfall Shortfall The amount by which the capital required to fulfill a financial obligation exceeds available capital. Notes: Shortfall risk is often combated with an efficient hedging strategy created by a fund, group, institution, or individual. that caused a fourth quarter loss and reduced full-year earnings. However, on a comparable basis and absent a favorable federal government relief payment in 2005, operating profits grew modestly in 2006. Looking forward, we expect further, modest profitability in 2007." Detailed segment analyses of A&B's operations are offered below: TRANSPORTATION--OCEAN TRANSPORTATION [TABLE OMITTED] For the fourth quarter of 2006, Ocean Transportation revenue of $239.7 million was $16.1 million, or 7 percent, higher than the fourth quarter of 2005. This increase was due to the establishment of the China service in early 2006, increases in 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. revenues, and favorable revenue yields from our cargo mix, which were partially offset by lower volumes in the Hawaii and Guam services and the loss of charter revenue due to the expiration of the APL Alliance. Total Hawaii container volume was down 5 percent from the fourth quarter of 2005 due to moderation in general economic growth. Total Hawaii automobile volume was down 30 percent for the quarter due to a reduction in auto retail sales and a reduction in auto manufacturer incentives for rental car fleet sales, which resulted in reduced auto volume to Hawaii. Operating profit of $28.7 million was $5.9 million, or 26 percent, higher than in the fourth quarter of 2005. This increase is explained primarily by gains from the China service and improved yields in the Hawaii service, which were offset by the loss of charter profits due to the expiration of the APL Alliance, lower Hawaii volume, increases in fuel consumption, equipment control and leasing expenses, and increased terminal handling costs. [TABLE OMITTED] For the full year 2006, Ocean Transportation revenue of $945.8 million was $67.5 million, or 8 percent, higher than for the full year 2005, due to a number of factors including introduction of the China service, increases in fuel surcharge revenues and improvements in revenue yields and cargo mix in the Hawaii market, partially offset by the loss of APL charter revenue and Hawaii volume. Total Hawaii container volume decreased by 1 percent, while Hawaii automobile volume was 20 percent lower, for the same reasons cited for the quarter. For the full year 2006, Ocean Transportation operating profit of $105.6 million was $22.4 million, or 18 percent, lower than for the full year 2005. This reduction is explained primarily by expense increases that more than offset higher revenues. The primary expense increases include higher direct and indirect fuel costs and higher terminal handling and equipment costs. TRANSPORTATION--LOGISTICS SERVICES [TABLE OMITTED] Logistics Services revenue in the fourth quarter of 2006 was $106.3 million, which was $14.1 million, or 12%, lower than the fourth quarter of 2005. The revenue decline resulted from declines in rail volumes and lower rail incentives by major carriers, partially offset by improved trucking and expedited service sales. Fourth quarter 2006 Logistics Services operating profit of $5.7 million was $1.4 million, or 33 percent, higher than in the comparable period last year. Gross margins per container were higher in all service lines, led by improvements in international rail and freight transported by truck, but were offset, in part, by higher general and administrative expenses. The operating profit margin Operating profit margin The ratio of operating profit to net sales. for Logistics Services was 5.4 percent in the fourth quarter of 2006, an improvement of 50% from the margin of 3.6 percent from the fourth quarter of 2005. [TABLE OMITTED] 2006 Logistics Services revenue of $444.2 million was $12.6 million, or 3 percent, higher than full-year revenue of 2005, as higher yields and increases in freight transported by truck were partially offset by declines in freight transported by rail. 2006 Logistics Services operating profit of $20.8 million was $6.4 million, or 44 percent, higher than in the comparable period last year. Similar to the quarter, gross margins were higher in all lines but were offset, in part, by higher operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. . It should be noted that the margins achieved in 2006 were significantly higher than in preceding periods and may not be indicative of future results. REAL ESTATE--LEASING [TABLE OMITTED] Real Estate Leasing revenue (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. ) in the fourth quarter of 2006 was $26.1 million, which was $2.9 million, or 13 percent, higher than the fourth quarter of 2005. Leasing operating profit of $13.5 million was $2.4 million, or 22 percent, higher. The improved revenue and operating profit resulted primarily from property acquisitions, higher 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) in both the mainland and Hawaii, and a favorable construction claim settlement at our Pacific Guardian Life property. [TABLE OMITTED] 2006 Leasing revenue (before removing amounts treated as discontinued operations) of $100.6 million was $10.9 million, or 12 percent, higher than revenues from the same period in 2005. The increase was due primarily to higher occupancies and lease rates, the addition of five properties that were acquired during or subsequent to 2005 and full year results from the Kunia Shopping Center which was completed in November 2005. Leasing operating profit of $50.3 million was $6.6 million, or 15 percent, higher than the same period in 2005. The improved operating profit resulted from the same factors listed above. REAL ESTATE--SALES [TABLE OMITTED] Fourth quarter 2006 Real Estate Sales revenue (before removing amounts treated as discontinued operations) of $31.7 million was $5.0 million higher than the fourth quarter of 2005. It is important to note that direct, year-over-year comparison may not provide a consistent, measurable barometer of real estate sales performance for the future. Sales, by virtue of the type of asset class, geography and timing, are inherently episodic episodic sporadic; occurring in episodes. e. falling a paroxymal disorder described in Cavalier King Charles spaniels in which affected dogs, starting at an early age, experience episodes of extensor rigidity, possibly brought on by stress. e. . Key sales, and thus operating profit and margin, for the quarter were derived from the disposition of a retail center in Kailua-Kona, Hawaii and initial closings at the company's joint venture Kai Malu residential development in Wailea. Real Estate Sales operating profit of $10.5 million was $3.3 million higher than the fourth quarter of 2005. The improved margin for the quarter reflects the profits associated with the joint venture, as joint ventures results are included in operating profit but are not included in revenue. [TABLE OMITTED] 2006 Real Estate Sales revenue of $97.3 million was 35 percent lower than the $148.9 million of revenue recorded in 2005. The decrease in revenue is primarily attributable to the strong sales at Lanikea in Waikiki in 2005. Other sales in 2005 included the sale of two mainland commercial properties, two development parcels at Wailea, Alakea Corporate Tower, and various other land and subdivision sales in Hawaii. In 2006, the company sold two retail centers in Arizona Arizona (âr'əzō`nə), state in the southwestern United States. It is bordered by Utah (N), New Mexico (E), Mexico (S), and, across the Colorado R., Nevada and California (W). , a commercial property on the island of Hawaii, an office building on Maui, several commercial properties on Maui and Oahu, and agricultural and vacant parcels on the island of Kauai. Real Estate Sales operating profit of $49.7 million was $5.6 million, or 13 percent, higher than for the corresponding period in 2005. The 2005 results benefited from a $5.2 million fire insurance gain. Excluding this gain, 2006 operating profit increased 28% from the year earlier period. Operating profit was significantly higher as a percentage of revenue because operating profit also includes the Company's earnings from its real estate joint ventures. The joint venture earnings in 2006 principally relate to the Hokua 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. project in which sales of all 247 units were completed in the first quarter and earnings from the Company's Kai Malu project in Wailea, Maui. AGRIBUSINESS (formerly Food Products) [TABLE OMITTED] Fourth quarter 2006 Agribusiness revenue of $32.3 million was $1.7 million, or 5 percent, lower than in the same period of 2005. The decrease reflects lower bulk raw sugar sales volume and prices, as well as lower power sales volume. These decreases were partially offset by slight increases in Maui Brand Sugar sales. The fourth quarter 2006 Agribusiness operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. was $3.3 million compared to a $2.0 million operating profit in 2005. The significant decrease in profitability was primarily the result of year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. increases made in the quarter to the standard cost per sugar ton as a result of lower production levels and to lower sugar prices in the quarter. The performance additionally reflects expenditures related to repairs to an irrigation irrigation, in agriculture, artificial watering of the land. Although used chiefly in regions with annual rainfall of less than 20 in. (51 cm), it is also used in wetter areas to grow certain crops, e.g., rice. reservoir, offset partially by better performance at Kauai Coffee Company. [TABLE OMITTED] 2006 Agribusiness revenue of $127.4 million was $4.2 million, or 3 percent, higher than in 2005. It should be noted that the company benefited from a $5.5 million disaster relief payment in 2005. Excluding this relief, revenue increased 8% for the year. The increase is attributable to increased sales in: repair services and trucking revenue, power sales, equipment rentals, Maui Brand Sugar and molasses molasses, sugar byproduct, the brownish liquid residue left after heat crystallization of sucrose (commercial sugar) in the process of refining. Molasses contains chiefly the uncrystallizable sugars as well as some remnant sucrose. , partially offset by lower bulk raw sugar sales. 2006 Agribusiness operating profit of $6.9 million was $4.3 million less than 2005. Excluding the $5.5 million disaster relief payment received in 2005, operating profit increased 21%. The increase in operating profit includes the effect of higher operating costs operating costs npl → gastos mpl operacionales and repair costs for irrigation reservoirs. Also, 2006 included one additional week compared to 2005 (53 weeks in 2006 vs. 52 weeks in 2005). CORPORATE EXPENSE, OTHER Fourth quarter 2006 corporate expenses of $7.0 million were $0.8 million, or 10 percent, lower than the fourth quarter of 2005. For the full year, corporate expenses of $22.3 million were $1.9 million, or 8 percent lower, than in 2005. Various reductions in general and administrative expenses more than offset expenses associated with the adoption in 2006 of stock option expense accounting. BALANCE SHEET, CASH FLOW COMMENTS Working capital was $28 million at December 31, 2006, a decrease of $21 million from the balance carried at the end of 2005. The decrease in working capital was due primarily to higher balances on short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. borrowings and trade payables and lower cash balances. Cash and cash equivalents totaled $45 million at the end of the fourth quarter compared with $57 million at the beginning of the year. Cash Flows from Operating Activities totaled $98 million for 2006, compared with $278 million 2005. This decrease was principally the result of higher 2005 proceeds from the sale of units in the Company's Lanikea residential high-rise project in Waikiki, higher 2006 income tax payments, higher development expenditures for real estate inventory, and lower 2006 Matson earnings, partially offset by proceeds received from the Company's Hokua joint venture in 2006. Cash Flows used in Investing Activities related to capital expenditures were $281 million in 2006, compared with $231 million for 2005. These figures include $147 million and $144 million in 2006 and 2005, respectively, for vessel acquisitions. The balance of capital expenditures was related to real estate activities and the purchase of transportation equipment for the new China service. Cash Flows from Financing Activities totaled $6 million for 2006 as cash used for payments of dividends and share repurchases Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. was offset by long-term borrowings. During the fourth quarter, the Company completed its $63.2 million accelerated share repurchase (ASR (Automatic Speech Recognition) Using voice recognition to replace keypad entry for telephone voice menus. Typically used to speak the digits 0 through 9 insted of keying them, ASR systems may be able to recognize a limited vocabulary. See voice recognition and AVSR. ), receiving an additional 108,000 shares and bringing the total number of shares received through the ASR to 1,454,000 for an average price of $43.48 per share. In total, the company repurchased 1,654,000 shares in 2006 for an average price of $43.34 per share. 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 agribusiness, 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. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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