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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________________ to _________________
Commission file number 001-35492
ALEXANDER & BALDWIN, INC.
(Exact name of registrant as specified in its charter)
Hawaii45-4849780
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
  
P. O. Box 3440,Honolulu,Hawaii96801
(Address of principal executive offices)(Zip Code)
(808) 525-6611
(Registrant's telephone number, including area code)
N/A
(Former name, former address, and former
fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, without par valueALEXNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No
Number of shares of common stock outstanding as of March 31, 2020: 72,306,508




ALEXANDER & BALDWIN, INC.
FORM 10-Q
For the Quarterly Period Ended March 31, 2020

TABLE OF CONTENTS

Page
PART I. FINANCIAL INFORMATION
Item 1.
Condensed Consolidated Balance Sheets - As of March 31, 2020 and December 31, 2019
Condensed Consolidated Statements of Operations - Three Months Ended March 31, 2020 and 2019
Condensed Consolidated Statements of Comprehensive Income (Loss) - Three Months Ended March 31, 2020 and 2019
Condensed Consolidated Statements of Cash Flows - Three Months Ended March 31, 2020 and 2019
Condensed Consolidated Statements of Equity - Three Months Ended March 31, 2020 and 2019
Item 2.
Item 3.
Item 4.
PART II. OTHER INFORMATION
Item 1.
Item 2.
Item 4.
Item 6.




PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ALEXANDER & BALDWIN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions) (Unaudited)
March 31,December 31,
20202019
ASSETS
Real estate investments
Real estate property$1,537.7  $1,540.2  
Accumulated depreciation(133.9) (127.5) 
Real estate property, net1,403.8  1,412.7  
Real estate developments81.9  79.1  
Investments in real estate joint ventures and partnerships133.4  133.4  
Real estate intangible assets, net71.2  74.9  
Real estate investments, net1,690.3  1,700.1  
Cash and cash equivalents131.6  15.2  
Restricted cash6.1  0.2  
Accounts receivable and retention, net of allowance for credit losses and allowance for doubtful accounts of $1.5 million and $0.4 million as of March 31, 2020 and December 31, 2019, respectively44.3  51.6  
Inventories20.7  20.7  
Other property, net122.4  124.4  
Operating lease right-of-use assets20.9  21.8  
Goodwill15.4  15.4  
Other receivables, net of allowance for credit losses and allowance for doubtful accounts of $4.6 million and $1.6 million as of March 31, 2020 and December 31, 2019, respectively15.0  27.8  
Prepaid expenses and other assets, net of allowance for credit losses and allowance for doubtful accounts of $0.1 million and $0 million as of March 31, 2020 and December 31, 2019, respectively107.9  107.1  
Total assets$2,174.6  $2,084.3  
LIABILITIES AND EQUITY
Liabilities:
Notes payable and other debt$819.6  $704.6  
Accounts payable12.3  17.8  
Operating lease liabilities21.1  21.6  
Accrued pension and post-retirement benefits26.8  26.8  
Indemnity holdbacks7.5  7.5  
Deferred revenue67.4  67.6  
Accrued and other liabilities102.9  103.4  
Total liabilities1,057.6  949.3  
Commitments and Contingencies (Note 10)
Redeemable Noncontrolling Interest6.2  6.3  
Equity:
Common stock - no par value; authorized, 150 million shares; outstanding, 72.3 million shares at March 31, 2020 and December 31, 2019, respectively1,801.6  1,800.1  
Accumulated other comprehensive income (loss)(55.1) (48.8) 
Distributions in excess of accumulated earnings(638.7) (626.2) 
Total A&B shareholders' equity1,107.8  1,125.1  
Noncontrolling interest3.0  3.6  
Total equity1,110.8  1,128.7  
Total liabilities and equity$2,174.6  $2,084.3  
See Notes to Condensed Consolidated Financial Statements.
1


ALEXANDER & BALDWIN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share amounts) (Unaudited)
Three Months Ended March 31,
20202019
Operating Revenue:
Commercial Real Estate$43.4  $36.8  
Land Operations11.5  49.0  
Materials & Construction25.9  43.6  
Total operating revenue80.8  129.4  
Operating Costs and Expenses:   
Cost of Commercial Real Estate24.3  19.2  
Cost of Land Operations8.0  39.4  
Cost of Materials & Construction25.0  42.1  
Selling, general and administrative13.8  15.5  
Total operating costs and expenses71.1  116.2  
Gain (loss) on the sale of commercial real estate properties0.5    
Operating Income (Loss)10.2  13.2  
Other Income and (Expenses):
Income (loss) related to joint ventures3.2  2.7  
Interest and other income (expense), net (Note 2)0.2  1.6  
Interest expense(7.8) (9.1) 
Income (Loss) from Continuing Operations Before Income Taxes5.8  8.4  
Income tax benefit (expense)  1.1  
Income (Loss) from Continuing Operations5.8  9.5  
Income (loss) from discontinued operations, net of income taxes(0.2) (0.8) 
Net Income (Loss)5.6  8.7  
Loss (income) attributable to noncontrolling interest0.6  0.3  
Net Income (Loss) Attributable to A&B Shareholders$6.2  $9.0  
Earnings (Loss) Per Share Available to A&B Shareholders:
Basic Earnings (Loss) Per Share of Common Stock:   
Continuing operations available to A&B shareholders$0.09  $0.13  
Discontinued operations available to A&B shareholders  (0.01) 
Net income (loss) available to A&B shareholders$0.09  $0.12  
Diluted Earnings (Loss) Per Share of Common Stock:
Continuing operations available to A&B shareholders$0.09  $0.13  
Discontinued operations available to A&B shareholders  (0.01) 
Net income (loss) available to A&B shareholders$0.09  $0.12  
Weighted-Average Number of Shares Outstanding:
Basic72.372.1  
Diluted72.572.5  
Amounts Available to A&B Common Shareholders (Note 17):
Continuing operations available to A&B common shareholders$6.4  $9.8  
Discontinued operations available to A&B common shareholders(0.2) (0.8) 
Net income (loss) available to A&B common shareholders$6.2  $9.0  
See Notes to Condensed Consolidated Financial Statements.
2


ALEXANDER & BALDWIN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In millions) (Unaudited)
Three Months Ended March 31,
 20202019
Net Income (Loss) $5.6  $8.7  
Other Comprehensive Income (Loss), net of tax: 
Unrealized interest rate hedging gain (loss) (6.9) (1.5) 
Impact of reclassification adjustment to interest expense included in Net Income (Loss)   (0.1) 
Defined benefit pension plans:  
Amortization of net loss included in net periodic benefit cost  0.6  1.0  
Amortization of prior service credit included in net periodic benefit cost    (0.1) 
Income taxes related to other comprehensive income (loss)     
Other comprehensive income (loss), net of tax (6.3) (0.7) 
Comprehensive Income (Loss) (0.7) 8.0  
Comprehensive income (loss) attributable to noncontrolling interest 0.6  0.3  
Comprehensive Income (Loss) Attributable to A&B Shareholders $(0.1) $8.3  
See Notes to Condensed Consolidated Financial Statements.
3


ALEXANDER & BALDWIN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions) (Unaudited)
Three Months Ended March 31,
 20202019
Cash Flows from Operating Activities:
Net income (loss)$5.6  $8.7  
Adjustments to reconcile net income (loss) to net cash provided by (used in) operations:
Depreciation and amortization13.6  10.9  
Loss (gain) on asset transactions, net(0.5) (2.6) 
Share-based compensation expense1.5  1.4  
(Income) loss from affiliates, net of distributions of income(2.9) (0.8) 
Changes in operating assets and liabilities:
Trade, contracts retention, and other contract receivables7.0  (11.0) 
Inventories  (2.5) 
Prepaid expenses, income tax receivable and other assets2.4  (4.5) 
Development/other property inventory(3.2) 27.1  
Accrued pension and post-retirement benefits0.6  1.6  
Accounts payable(3.5) (4.8) 
Accrued and other liabilities(1.7) 1.1  
Net cash provided by (used in) operations18.9  24.6  
Cash Flows from Investing Activities:      
Capital expenditures for acquisitions  (42.4) 
Capital expenditures for property, plant and equipment(6.2) (16.6) 
Proceeds from disposal of property, investments and other assets5.9  2.7  
Payments for purchases of investments in affiliates and other investments  (2.5) 
Distributions of capital from investments in affiliates and other investments3.2  6.6  
Net cash provided by (used in) investing activities2.9  (52.2) 
Cash Flows from Financing Activities:      
Proceeds from issuance of notes payable and other debt108.0  41.4  
Payments of notes payable and other debt and deferred financing costs(44.2) (49.2) 
Borrowings (payments) on line-of-credit agreement, net51.4  3.6  
Cash dividends paid(13.8) (10.5) 
Proceeds from issuance (repurchase) of capital stock and other, net(0.9) (1.7) 
Net cash provided by (used in) financing activities100.5  (16.4) 
Cash, Cash Equivalents and Restricted Cash      
Net increase (decrease) in cash, cash equivalents and restricted cash122.3  (44.0) 
Balance, beginning of period15.4  234.9  
Balance, end of period$137.7  $190.9  

4


Other Cash Flow Information:
Interest paid, net of capitalized interest$(7.0) $(8.4) 
Income tax (payments)/refunds, net$0.5  $2.6  
Noncash Investing and Financing Activities:
Capital expenditures included in accounts payable and accrued and other liabilities2.6  1.2  
Right-of-use ("ROU") assets and corresponding lease liability recorded upon ASC 842 adoption  31.0  
Reconciliation of cash, cash equivalents and restricted cash:
Beginning of the period:
Cash and cash equivalents$15.2  $11.4  
Restricted cash0.2  223.5  
Cash, cash equivalents and restricted cash$15.4  $234.9  
End of the period:
Cash and cash equivalents$131.6  $3.0  
Restricted cash6.1  187.9  
Cash, cash equivalents and restricted cash$137.7  $190.9  
See Notes to Condensed Consolidated Financial Statements.
5


ALEXANDER & BALDWIN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
For the Three Months Ended March 31, 2020 and 2019
(In millions) (Unaudited)
Total Equity
Common StockAccumulated
Other
Compre-
hensive Income (Loss)
(Distribution
in Excess
of Accumulated Earnings)
Earnings Surplus
Non-Controlling
Interest
TotalRedeem-
able
Non-
Controlling
Interest
SharesStated Value
Balance, January 1, 201972.0  $1,793.4  $(51.9) $(538.9) $5.7  $1,208.3  $7.9  
Net income (loss) —  —  —  9.0  (0.3) 8.7    
Other comprehensive income (loss), net of tax —  —  (0.7) —  —  (0.7) —  
Dividend on common stock ($0.145 per share) —  —  —  (10.5) —  (10.5) —  
Share-based compensation  —  1.4  —  —  —  1.4  —  
Shares issued or repurchased, net  0.1  (0.8) —  (0.9) —  (1.7) —  
Balance, March 31, 201972.1  $1,794.0  $(52.6) $(541.3) $5.4  $1,205.5  $7.9  
Total Equity
Common StockAccumulated
Other
Compre-
hensive Income (Loss)
(Distribution
in Excess
of Accumulated Earnings)
Earnings Surplus
Non-Controlling
Interest
TotalRedeem-
able
Non-
Controlling
Interest
SharesStated Value
Balance, January 1, 202072.3  $1,800.1  $(48.8) $(626.2) $3.6  $1,128.7  $6.3  
Cumulative impact of adoption of ASC 326  —  —  —  (4.0) (0.1) (4.1) —  
Net income (loss) —  —  —  6.2  (0.5) 5.7  (0.1) 
Other comprehensive income (loss), net of tax —  —  (6.3) —  —  (6.3) —  
Dividend on common stock ($0.19 per share) —  —  —  (13.8) —  (13.8) —  
Share-based compensation  —  1.5  —  —  —  1.5  —  
Shares issued or repurchased, net    —  —  (0.9) —  (0.9) —  
Balance, March 31, 202072.3  $1,801.6  $(55.1) $(638.7) $3.0  $1,110.8  $6.2  
See Notes to Condensed Consolidated Financial Statements

6


Alexander & Baldwin, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. BACKGROUND AND BASIS OF PRESENTATION
Description of Business: Alexander & Baldwin, Inc. ("A&B" or the "Company") is a real estate investment trust ("REIT") headquartered in Honolulu, Hawai‘i. The Company operates three segments: Commercial Real Estate ("CRE"); Land Operations; and Materials & Construction ("M&C").  As of March 31, 2020, the Company owns a portfolio of commercial real estate improved properties in Hawai‘i consisting of 22 retail centers, ten industrial assets and four office properties, representing a total of 3.9 million square feet of gross leasable area; it also owns a portfolio of ground leases in Hawai‘i representing 153.7 acres as of March 31, 2020. Throughout this quarterly report on Form 10-Q, references to "we," "our," "us" and "our Company" refer to Alexander & Baldwin, Inc., together with its consolidated subsidiaries.
Basis of Presentation: The interim 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 accounting principles generally accepted in the United States of America ("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, 2019 and 2018, and the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows for each of the three years ended December 31, 2019, 2018 and 2017, respectively, and the notes thereto included in the Company's Annual Report filed on Form 10-K for the year ended December 31, 2019 ("2019 Form 10-K"), and other subsequent filings with the U.S. Securities and Exchange Commission ("SEC").
Rounding: Amounts in the condensed consolidated financial statements and notes are rounded to the nearest tenth of a million. Accordingly, a recalculation of some per-share amounts and percentages, if based on the reported data, may result in differences.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company's significant accounting policies are described in Note 2 to the consolidated financial statements included in Item 8 of the Company's 2019 Form 10-K. Changes to significant accounting policies are included herein.
Recently adopted accounting pronouncements
In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13, Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"), which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost and available for sale debt securities, and amended the guidance thereafter. The guidance in ASU 2016-13 and related amendments was codified into Accounting Standards Codification Topic 326, Financial Instruments - Credit Losses ("ASC 326"). ASC 326 amended prior guidance on the impairment of financial instruments by adding an impairment model based on expected losses rather than incurred losses that would be recognized through an allowance for credit losses. Amendments included in ASC 326 further clarified that operating lease receivables are not within the scope of ASC 326 and are to remain governed by lease guidance.
The Company completed its adoption of the provisions of ASU 2016-13, as amended, with an effective date of January 1, 2020, using a modified retrospective approach for its financial assets in the scope of ASC 326, which consisted of all financial assets held at amortized cost (presented as part of the Company's accounts and retention receivables, other receivables and other contract assets). As a result of the guidance, the Company is required to estimate and record non-cash credit losses related to these financial assets and expand its credit quality disclosures. Results for reporting periods beginning after January 1, 2020 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable guidance. The Company recorded a net increase of $4.0 million to Distributions in excess of accumulated earnings as of January 1, 2020, with a corresponding increase to previously recorded valuation accounts for its financial assets held at amortized cost for the cumulative effect of adopting ASC 326. The new standard did not have a material impact to any of the Company's other financial assets or instruments presented on its condensed consolidated balance sheet.
7


The following table illustrates the impact of the Company's adoption of ASC 326 (in millions):
January 1, 2020
As Reported under ASC 326Prior to ASC 326 AdoptionImpact of ASC 326 Adoption
Assets:
Allowance for credit losses on accounts receivable and retention$1.6  $0.3  $1.3  
Allowance for credit losses on other receivables4.2  1.6  2.6  
Allowance for credit losses on costs and estimated earnings in excess of billings on uncompleted contracts0.1    0.1  
Total$4.0  
In August 2018, the FASB issued ASU 2018-13, Changes to the Disclosure Requirements for Fair Value Measurement. The guidance amends and removes several disclosure requirements, including the valuation processes for Level 3 fair value measurements. This ASU also modifies some disclosure requirements and requires additional disclosures for changes in unrealized gains and losses included in other comprehensive income for recurring Level 3 fair value measurements and requires the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements or footnote disclosures.
In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other: Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. The guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). Accordingly, the amendments require an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The amendments also require the entity (customer) to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement, which includes reasonably certain renewals. The adoption of this standard did not have a material impact on the Company's financial position or results of operations.
Reclassifications: In conjunction with its adoption of ASC 326, during the first quarter of 2020, the Company made certain immaterial reclassifications to its consolidated balance sheet to present interest receivables in the same line as the related financing receivables (affecting Accounts receivable, net and Other receivables). Additionally, the Company aggregated Accounts receivable, net and Contracts retention into a single line item in the accompanying condensed consolidated balance sheets (refer to Note 11 where such balances will continue to be presented separately).
Recently issued accounting pronouncements
In August 2018, the FASB issued ASU 2018-14, Changes to the Disclosure Requirements for Defined Benefit Plans. The guidance clarifies current disclosures and removes several disclosure requirements including accumulated other comprehensive income expected to be recognized over the next fiscal year and amount and timing of plan assets expected to be returned to the employer. This ASU also requires additional disclosures as well as explanations for significant gains and losses related to changes in the benefit plan obligation. This ASU is effective for fiscal years beginning after December 15, 2020. The Company is currently assessing the impact that adopting this new standard will have on its condensed consolidated financial statements and footnote disclosures.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform. The new guidance provides practical expedients and exceptions for reference rate reform related activities that impact debt, leases, derivatives and other contracts if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The Company is currently assessing its contracts and the optional expedients provided by the new standard.
Allowance for Credit Losses
The Company estimates its allowance for credit losses for financial assets within the scope of ASC 326 at portfolio levels which include the CRE segment, the Land Operations segment and individual components of the M&C segment (e.g., "GPC," "GPRM" and "GPRS," further described in Note 1 to the consolidated financial statements included in Item 8 of the
8


Company's 2019 Form 10-K). Within these portfolio levels, the Company develops expected credit loss estimates by security type (which may include financing receivables or contract assets recognized in contracts with customers) by factoring historical loss information; information on both current conditions and reasonable and supportable forecasts of future conditions that may not be reflected in historical loss information; and other relevant credit quality information for the respective securities. As part of this process, the Company analyzes relevant information on a collective (pool) basis for securities with similar risk characteristics or separately on an individual basis when a financial asset does not share risk characteristics with its other financial assets.
The portfolios relating to the CRE and Land Operations segments are primarily composed of financing receivables (i.e., notes receivable) generally related to historical development and other land-related transactions. The assets in these portfolios are analyzed on an individual basis, in which the Company considers certain, available information specific to the counterparties to the transactions (e.g., liquidity and solvency of the counterparties) and environmental factors that are relevant in the assessment of the expected collectability of the future cash flows for these assets (e.g., changes and expected changes in the general economic environment in which the counterparty operates). For these assets, the Company uses a discounted cash flow method to calculate the allowance for credit losses using the asset's effective interest rate.
The portfolios relating to the M&C segment represent discrete business components and are composed of contract assets from its contracts with customers. The differing nature of the products and services provided by these components drive differences in historical and expected credit loss patterns and, as such, the Company tracks historical loss information at this portfolio level as part of information it uses to develop its estimate of expected credit losses. Further, as the Company believes its contract assets have different default risk expectations based on customer/project type, in addition to the historical loss information at the portfolio level, the Company also pools the respective portfolio's contract receivables by these different categories to make adjustments to its historical loss experience. Other information the Company analyzes and uses in its development of its allowance for credit losses include known customer information and environmental factors surrounding the customers' current and future ability to pay (i.e., changes and expected changes in the general economic environment in which the customers operate).
Interest and other income (expense), net
Interest and other income (expense), net for the three months ended March 31, 2020 and 2019 included the following (in millions):
Three Months Ended March 31,
20202019
Interest income$0.6  $0.2  
Pension and postretirement benefit (expense)(0.7) (1.2) 
Gain (loss) on sale of joint venture interest  2.6  
Other income (expense)0.3    
Interest and other income (expense), net0.2  $1.6  

3. REAL ESTATE ASSET ACQUISITIONS
The Company did not execute any acquisitions during the three months ended March 31, 2020. During the year ended December 31, 2019, the Company acquired five commercial real estate assets for $218.4 million.
9


The allocation of purchase price to assets acquired and liabilities assumed is as follows (in millions):
Fair value of assets acquired and liabilities assumed
Assets acquired:
Land$106.9  
Property and improvements91.3  
In-place leases23.2  
Favorable leases4.3  
Total assets acquired$225.7  
Liabilities assumed:
Unfavorable leases$7.3  
Total liabilities assumed7.3  
Net assets acquired$218.4  
As of the acquisition date, the weighted-average amortization periods of the in-place and favorable leases were approximately 8.2 years and 4.7 years, respectively. The weighted-average amortization period of the unfavorable leases was approximately 18.6 years.
4. INVESTMENTS IN AFFILIATES
The Company's investments in affiliates principally consist of equity investments in limited liability companies in which the Company has the ability to exercise significant influence over the operating and financial policies of these investments. Accordingly, the Company accounts for its investments using the equity method of accounting.
Operating results include the Company's proportionate share of net income (loss) from its equity method investments. Summarized financial information of entities accounted for by the equity method on a combined basis for the quarters ended March 31, 2020 and 2019 is as follows (in millions):
Three Months Ended March 31,
20202019
Revenues$52.0  $40.8  
Operating costs and expenses39.9  37.3  
Gross Profit (Loss)$12.1  $3.5  
Income (Loss) from Continuing Operations1
$7.6  $0.9  
Net Income (Loss)1
$7.6  $0.6  
1 Includes earnings from equity method investments held by the investee.

10


5. ALLOWANCE FOR CREDIT LOSSES
The following table presents the activity in the allowance for credit losses related to the Company's financing receivables and contract assets for the three months ended March 31, 2020 (in millions):
CRELand OperationsM&C
Financing ReceivablesFinancing ReceivablesContract AssetsTotal
Allowance for credit losses:
Beginning balance, prior to adoption of ASC 326$  $1.6  $0.3  $1.9  
Impact of adoption of ASC 3260.4  2.3  1.3  4.0  
Provision for expected credit losses  0.3    0.3  
Ending allowance balance as of March 31, 2020$0.4  $4.2  $1.6  $6.2  
The credit quality of the Company's financing receivables is monitored each reporting period on an individual asset basis using specific information on the counterparties in these transactions. The following represents qualitative and quantitative information on each financing receivable within the applicable portfolios.
The CRE portfolio of financing receivables consists of one asset that originated in 2019 and had an amortized cost basis of $0.4 million as of both the adoption date of January 1, 2020 and March 31, 2020. Based on individual credit quality indicators of the counterparty as of the adoption date and March 31, 2020, the most likely outcome of expected cash flows for the asset in a range of possible outcomes (i.e., the single best estimate) was zero and, as a result, the Company recorded a full allowance for credit losses for the financing receivable on adoption of ASC 326 as of January 1, 2020 and as of March 31, 2020.
The Land Operations financing receivables consist of three assets. The first originated in 2008 and had an amortized cost basis of $1.6 million as of both the adoption date of January 1, 2020 and March 31, 2020. Based on individual credit quality indicators of the counterparty as of the adoption date and March 31, 2020, the most likely outcome of expected cash flows for the asset in a range of possible outcomes (i.e., the single best estimate) was zero and, as a result, the Company recorded a full allowance for credit losses for the financing receivable on adoption of ASC 326 as of January 1, 2020 and as of March 31, 2020. The second financing receivable within Land Operations was generated in 2016 and had an amortized cost basis of $13.1 million and $11.2 million as of the adoption date of January 1, 2020 and March 31, 2020, respectively. The third financing receivable within Land Operations was generated in 2016 and had an amortized cost basis of $2.6 million as of both the adoption date of January 1, 2020 and March 31, 2020. The second and third financing receivables were evaluated based on the credit quality indicators of the respective counterparties (as well as reasonable and supportable forecasts of future conditions that are relevant to determining the expected collectability of the receivable) as of the adoption date and March 31, 2020 and the estimated allowance for credit losses was calculated using a discounted cash flow method (with changes in present value attributable to either changes in expected credit losses on future payments or the passage of time reported as an adjustment to credit loss expense).
The Company's contract assets represent trade receivables that are due in one year or less that result from revenue transactions from contracts with customers or other related balances that do not meet the definition of financing receivables.
6. INVENTORIES
Inventories are stated at the lower of cost (principally first-in, first-out basis) or net realizable value. Inventories as of March 31, 2020 and December 31, 2019 were as follows (in millions):
March 31,December 31,