A&B Reports 1st Quarter 2002 Earnings of $9.8 Million; Hawaii's Improving Outlook Not Yet Reflected In Results
HONOLULU, Apr 17, 2002 (BUSINESS WIRE) -- Alexander & Baldwin, Inc. (Nasdaq:ALEX) today reported first quarter 2002 net income of $9,807,000, or $0.24 per share. In the first quarter of 2001, the Company reported net income of $22,434,000, or $0.55 per share. Revenue in the first quarter of 2002 was $233,953,000, compared with $274,967,000 in the first quarter of 2001.
1st Quarter Likely the Low Point for `02
"As we anticipated, the first quarter results continued to reflect many of the unfavorable economic and operational factors that depressed A&B's performance in the fourth quarter of 2001," said Allen Doane, president and chief executive officer of A&B. "Matson's performance was very poor, due to the lingering effects of 9/11 on Hawaii's economy and internal operating shortfalls, principally at the Sand Island Terminal in Honolulu. However, our property results held up well in comparison with a strong first quarter last year. And, looking ahead, visitor trends in Hawaii, especially from the U.S. mainland, continue to improve.
"If recent economic projections prove correct, Hawaii soon will see tangible improvement in its economy, which would help support greater demand for ocean cargo. That could boost demand in the State for industrial and commercial properties, adding to the present good level of residential demand -- and benefiting our property results.
"At this point, with economic improvements becoming increasingly likely and various management initiatives gaining strength, we anticipate that our quarterly results will improve, particularly at Matson, as the economy and the year progress."
Matson's Operating Profit Considerably Lower Than in 1st Quarter `01
In the first quarter of 2002, operating profit from ocean transportation was $2.5 million. That was $15.0 million, or 86 percent, lower than the $17.5 million in the first quarter of 2001. Just as in the fourth quarter of 2001, this unusually low level of operating profit was primarily the result of lower cargo volume, caused principally by post-9/11 economic effects and from competitive losses, principally due to service difficulties. First-quarter 2002 Hawaii service container volume was three percent below that of the 2001 first quarter, and automobile volume was 23 percent lower.
Operating costs also were higher, due to ongoing, but moderating, transitional effects of the terminal improvement project in Honolulu, as well as costs incurred to accommodate the drydocking of certain vessels. Results also were lower due to comparatively weaker results from Matson's Guam service.
In anticipation of lower cargo demand, Matson reduced the number of vessels serving Hawaii from eight to seven in January 2002. Matson deferred, however, a general rate increase normally effective early in the year, due to post-9/11 concerns. Subsequently, a 2.75 percent increase was announced, becoming effective on April 14, 2002. Matson also announced earlier today that it would raise its bunker fuel surcharge from the present 3.25 percent level to 4.75 percent, due to recent increases in the prices of bunker fuel. Auto shipments also are expected to improve, as rental car fleets in Hawaii are renewed. Beneficial changes in Matson's stevedoring joint venture are being pursued and other events may improve operating conditions in the Puerto Rico trade, where Matson participates through an investment. Combined with anticipated growing demand in Hawaii, all of these factors should help boost Matson's results in subsequent quarters.
Property Leasing, Sales Hold Up Well
Prior to an accounting change (described below), property leasing operating profit was $8.2 million in the first quarter of 2002. This was $0.5 million, or six percent, lower than the $8.7 million earned in the first quarter of 2001. This small decrease was the net result of property acquisitions and sales, the timing of some expenses and marginally lower occupancies. For the respective first quarters, occupancy levels for U. S. mainland properties averaged 91 percent in 2002, versus 94 percent last year, and for Hawaii properties averaged 87 percent in 2002, versus 89 percent last year.
Prior to the accounting change, property sales revenue totaled $37.3 million in the first quarter of 2002, compared with $43.1 million in the first three months of 2001, and operating profit resulting from those sales was $8.9 million, which was $3.3 million lower than the first quarter 2001 results. Variations in sales activity of this nature reflect the normal episodic nature of real estate transactions. Sales in the first quarter of 2002 included a seven-building distribution complex in Texas, a number of smaller Hawaii properties and residential resort homes. This activity compared with sales of a shopping center and several smaller properties on Bainbridge Island, Wash., and a site for the development of a Wal-Mart store in Kahului, Maui, in the first quarter of 2001.
As a result of the adoption of SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," and additional guidance from the February 2002 meeting of the Financial Accounting Standards Board, the sales of certain income-producing assets--even individual buildings within a real estate portfolio--are reported as "discontinued operations" if their earnings and cash flows are separately identifiable and are material. This accounting standard requires A&B to segregate its property sales based on these criteria, which is a change from the Company's long-standing practice. During the first quarter, the sale of the seven-building distribution complex in Texas and the sale of a land parcel subject to a ground lease met the criteria for classification as discontinued operations, despite the fact that the proceeds from these sales were put in escrow for tax-deferred reinvestment in accordance with Section 1031 of the Federal tax code. The after-tax gain on the sales and the earnings of these properties are classified, therefore, under the caption "Discontinued Operations: Properties." As such, revenue and operating profit generated from these properties in prior quarters also are removed from continuing operations and the after-tax operating profit for prior quarters is reclassified as discontinued operations.
Food Products' Results Lower
In the first quarter of 2002, food products' operating profit was $2.1 million, compared with $5.8 million in the first quarter of 2001. In 2001, the segment had benefited from a one-time distribution of $5 million from the sugar transportation cooperative that handles the Hawaii growers' production.
Alexander & Baldwin, Inc., headquartered in Honolulu, is engaged in ocean transportation, through its subsidiary, Matson Navigation Company, Inc.; property development and management, through A&B Properties, Inc.; and 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 that involve a number of risks and uncertainties such as those described on page 19 of the Company's Annual Report on Form 10-K, which is incorporated in the Company's 2001 annual report to shareholders. These factors could cause actual results to differ materially from those projected in the statements.
ALEXANDER & BALDWIN, INC. 2002 and 2001 First-Quarter Results 2002 2001 Three Months Ended March 31: Revenue $233,953,000 $274,967,000 Income From Continuing Operations $5,517,000 $22,739,000 Discontinued Operations: Properties/1 $4,290,000 $141,000 Discontinued Operations: Agriculture/2 -- ($446,000) Net Income $9,807,000 $22,434,000 Basic Share Earnings From Continuing Operations $0.14 $0.56 Net Income $0.24 $0.55 Diluted Share Earnings From Continuing Operations $0.13 $0.56 Net Income $0.24 $0.55 Average Shares Outstanding 40,623,000 40,508,000 /1 Discontinued Operations: Properties consists of buildings and a leased parcel sold /2 Discontinued Operations: Agriculture consists of an abandoned panel board manufacturing business. Industry Segment Data, Net Income (In Thousands) Three Months Ended March 31, 2002 2001 --------- --------- Revenue: Ocean Transportation $ 192,744 $ 196,609 Property Development & Management Leasing 17,828 17,096 Sales 37,271 43,084 Less Amounts Reported In Discontinued Operations (30,318) (864) Food Products 16,428 18,185 Other -- 857 --------- --------- Total Revenue $ 233,953 $ 274,967 ========= ========= Operating Profit, Net Income: Ocean Transportation $ 2,507 $ 17,455 Property Development & Management Leasing 8,242 8,740 Sales 8,878 12,216 Less Amounts Reported In Discontinued Operations (6,920) (227) Food Products 2,095 5,802 Other -- 840 --------- --------- Total Operating Profit 14,802 44,826 Interest Expense (2,957) (5,779) Corporate Expenses (2,948) (3,791) --------- --------- Income From Continuing Operations Before Income Taxes 8,897 35,256 Income Taxes (3,380) (12,517) --------- --------- Income From Continuing Operations 5,517 22,739 Discontinued Operations: Properties 4,290 141 Discontinued Operations: Agriculture -- (446) --------- --------- Net Income $ 9,807 $ 22,434 ========= ========= Basic Earnings Per Share, Continuing Operations $ 0.14 $ 0.56 Basic Earnings Per Share, Net Income $ 0.24 $ 0.55 Diluted Earnings Per Share, Continuing Operations $ 0.13 $ 0.56 Diluted Earnings Per Share, Net Income $ 0.24 $ 0.55 Average Shares 40,623 40,508 Consolidated Balance Sheets (In Thousands) March 31, Dec. 31, 2002 2001 ---------- ---------- (Unaudited) ASSETS Current Assets $ 205,328 $ 220,014 Investments 36,324 33,021 Real Estate Developments 47,526 47,840 Property, Net 942,684 977,048 Capital Construction Fund 171,436 158,737 Other Assets 138,727 107,759 ---------- ---------- Total $1,542,025 $1,544,419 ========== ========== LIABILITIES & EQUITY Current Liabilities $ 151,463 $ 195,569 Long-Term Debt 240,417 207,378 Post-Retirement Benefit Obligs 43,045 42,915 Other Long-Term Liabilities 45,884 49,181 Deferred Income Taxes 343,017 338,709 Shareholders' Equity 718,199 710,667 ---------- ---------- Total $1,542,025 $1,544,419 ========== ========== Consolidated Statements of Cash Flows (In Thousands) Three Months Ended March 31, 2002 2001 -------- -------- (Unaudited) Operating Cash Flows $(38,281) $ 36,584 Capital Expenditures (8,239) (25,551) CCF Deposits, Net (12,991) (2,409) Proceeds From (Payment of) Debt, Net 44,456 (3,500) Dividends Paid (9,138) (9,123) All Other, Net 17,112 3,859 -------- -------- Increase (Decrease) In Cash $ (7,081) $ (140) ======== ======== Depreciation $ 17,926 $ 18,030 ======== ========
Alexander & Baldwin
John B. Kelley, 808/525-8422
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