What changed in this filing

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Item 1. Financial Statements

2021-04-28 compared with 2020-11-02 · 85 added, 194 removed, 360 unchanged (44% of the section changed)

3 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(In millions, except per share amounts)

24 unchanged sentences

Condensed Consolidated Balance Sheets

September 30,

(In millions)

35 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Nine Months Ended September 30,

Three Months Ended March 31,

(In millions)

24 unchanged sentences

Cash Flows From Financing Activities:

Proceeds from issuance of debt

Repayments of debt

2 unchanged sentences

Payment of financing costs

Proceeds from issuance of capital stock

Dividends paid

1 unchanged sentence

Net cash used in financing activities

Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash

Net Decrease in Cash, Cash Equivalents and Restricted Cash

Cash, Cash Equivalents and Restricted Cash, Beginning of the Period

19 unchanged sentences

Shares issued, net of shares withheld for employee taxes

Equity interest in SSAT

Dividends ( $ 0.23 per share)

Balance at March 31, 2021

Other comprehensive income, net of tax

Share-based compensation

Shares issued, net of shares withheld for employee taxes

Dividends ($ 0.22 per share and $ 0.23 per share)

Balance at June 30, 2020

Other comprehensive loss, net of tax

Share-based compensation

Shares issued, net of shares withheld for employee taxes

Balance at September 30, 2020

Comprehensive

2 unchanged sentences

Balance at December 31, 2019

Adoption of new lease accounting standard

Other comprehensive loss, net of tax

1 unchanged sentence

Shares issued, net of shares withheld for employee taxes

Equity interest in SSAT

Dividends ( $ 0.22 per share)

Balance at March 31, 2020

Other comprehensive loss, net of tax

Share-based compensation

Shares issued, net of shares withheld for employee taxes

Dividends ($ 0.21 per share and $ 0.22 per share)

Balance at June 30, 2019

Other comprehensive loss, net of tax

Share-based compensation

Shares issued, net of shares withheld for employee taxes

SSAT̕s adoption of new lease accounting standard

Balance at September 30, 2019

See Notes to Condensed Consolidated Financial Statements.

8 unchanged sentences

Founded in 1882, MatNav provides a vital lifeline of ocean freight transportation services to the domestic non-contiguous economies of Hawaii, Alaska and Guam, and to other island economies in Micronesia.

MatNav also operates two premium, expedited services from China to Long Beach, California, provides service to Okinawa, Japan and various islands in the South Pacific, and operates an international export service from Dutch Harbor to Asia.

In addition, subsidiaries of MatNav provide container stevedoring, refrigerated cargo services, inland transportation and other terminal services for MatNav and other ocean carriers on the Hawaiian islands of Oahu, Hawaii, Maui and Kauai, and in the Alaska locations of Anchorage, Kodiak and Dutch Harbor.

MatNav also operates two premium, expedited services from China to Long Beach, California, and provides services to Okinawa, Japan and various islands in the South Pacific, and operates an international export service from Dutch Harbor to Asia.

In addition, subsidiaries of MatNav provide stevedoring, refrigerated cargo services, inland transportation and other terminal services for MatNav and other ocean carriers on the Hawaiian islands of Oahu, Hawaii, Maui and Kauai, and in the Alaska locations of Anchorage, Kodiak and Dutch Harbor.

Matson has a 35 percent ownership interest in SSA Terminals, LLC, a joint venture between Matson Ventures, Inc., a wholly-owned subsidiary of MatNav, and SSA Ventures, Inc., a subsidiary of Carrix, Inc.

SSAT provides terminal and stevedoring services to various carriers at seven terminal facilities on the U.S.

SSAT currently provides terminal and stevedoring services to various carriers at seven terminal facilities on the U.S.

West Coast, including three facilities dedicated for MatNav’s use.

18 unchanged sentences

Fiscal Period:

The period end for Matson covered by this report is September 30, 2020.

The period end for MatNav and its subsidiaries covered by this report occurred on the last Friday in September, or September 25, 2020.

The period end for Matson covered by this report is March 31, 2021.

The period end for MatNav and its subsidiaries covered by this report occurred on the last Friday in March, or March 26, 2021.

Significant Accounting Policies:

9 unchanged sentences

legal contingencies;

uninsured risks and related liabilities;

insurance reserves and other related liabilities;

accrual estimates;

4 unchanged sentences

Future results could be materially affected if actual results differ from these estimates and assumptions.

Allowance for Doubtful Accounts Receivable:

Allowance for doubtful accounts receivable is established by management based on estimates of collectability.

Estimates of collectability are principally based on an evaluation of the current financial condition of the customer and the potential risks to collection, the customers’ payment history, expected future credit losses and other factors which are regularly monitored by the Company.

Recognition of Revenues and Related Expenses:

Recognition of Revenues and Expenses:

Revenue in the Company’s Condensed Consolidated Financial Statements is presented net of elimination of intercompany transactions.

The following is a description of the Company’s principal revenue generating activities by segment, and the Company’s revenue recognition policy for each activity for the periods presented:

Three Months Ended

Nine Months Ended

September 30,

Ocean Transportation (in millions) (1)

3 unchanged sentences

(1) Ocean Transportation revenue transactions are primarily denominated in U.S.

dollars except for less than 3 percent of Ocean Transportation revenues and fuel sales revenue categories which are denominated in foreign currencies.

dollars except for less than 3 percent of Ocean Transportation services revenue and fuel sales revenue categories which are denominated in foreign currencies.

◾ Ocean Transportation services revenue is recognized ratably over the duration of a voyage based on the relative transit time completed in each reporting period.

Vessel operating costs and other ocean transportation operating costs, such as terminal operating overhead and general and administrative expenses, are charged to operating costs as incurred.

Vessel operating costs and other ocean transportation operating costs, such as terminal operating overhead and selling, general and administrative expenses, are charged to operating costs as incurred.

◾ Terminal and other related services revenue is recognized as the services are performed.

3 unchanged sentences

Related costs are recognized as incurred.

Three Months Ended

Nine Months Ended

September 30,

Logistics (in millions) (1)

4 unchanged sentences

dollars except for less than 5 percent of transportation brokerage and freight forwarding services revenue, and supply chain management and other services revenue categories which are denominated in foreign currencies.

(2) The Company has reclassified $ 3.9 million and $ 10.0 million from transportation brokerage and freight forwarding services to warehouse and distribution services for the three and nine months ended September 30, 2019, respectively, to be consistent with its current period presentation.

There was no change in total Logistics revenue for the three and nine months ended September 30, 2019.

◾ Transportation Brokerage and Freight Forwarding services revenue consists of amounts billed to customers for services provided.

The primary costs include third-party purchased transportation services, labor and equipment.

The primary costs include third-party purchased transportation services, agent commissions, labor and equipment.

Revenue and the related purchased third-party transportation costs are recognized over the duration of a delivery based upon the relative transit time completed in each reporting period.

Labor and other operating costs are expensed as incurred.

Labor, agent commissions, and other operating costs are expensed as incurred.

The Company reports revenue on a gross basis as the Company serves as the principal in these transactions because it is responsible for fulfilling the contractual arrangements with the customer and has latitude in establishing prices.

◾ Warehousing and distribution services revenue consist of amounts billed to customers for storage, handling, and value-added packaging of customer merchandise.

Storage revenue is recognized in the month the service is provided to the customer.

Storage revenue is recognized in the month the service is

provided to the customer.

Storage related costs are recognized as incurred.

5 unchanged sentences

The Company expenses sales commissions and contract acquisition costs as incurred because the amounts are generally immaterial.

These expenses are included in selling, general and administrative expenses in the Condensed Consolidated Statements of Income and Comprehensive Income.

These expenses are included in selling, general and administration expenses in the Condensed Consolidated Statements of Income and Comprehensive Income.

Capital Construction Fund:

The Company’s Capital Construction Fund (“CCF”) is described in Note 7 to the Consolidated Financial Statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

As of September 30, 2020 and December 31, 2019, $ 1.7 million of eligible accounts receivable was assigned to the CCF.

As of March 31, 2021 and December 31, 2020, $ 1.7 million of eligible accounts receivable was assigned to the CCF.

Due to the nature of the assignment of eligible accounts receivable into the CCF, such assigned amounts are classified as part of accounts receivable in the Condensed Consolidated Balance Sheets.

Cash on deposit in the CCF is held in a money market account and classified as a long-term asset in the Company’s Condensed Consolidated Balance Sheets, as the Company intends to use qualified cash withdrawals to fund long-term investment in the construction of new vessels.

During the nine months ended September 30, 2020, the Company deposited $ 97.1 million into the CCF, and made qualifying cash withdrawals of $ 97.1 million from the CCF, respectively.

The Company made no qualifying cash deposits or withdrawals during the three months ended September 30, 2020.

The balance of cash on deposit at September 30, 2020 and December 31, 2019 was nominal.

The Company made no qualifying cash deposits into or withdrawals from the CCF during the three months ended March 31, 2021.

The balance of cash on deposit at March 31, 2021 and December 31, 2020 was nominal.

Investment in SSAT:

Condensed income statement information for SSAT for the three and nine months ended September 30, 2020 and 2019 consisted of the following:

Condensed income statement information for SSAT for the three months ended March 31, 2021 and 2020 consisted of the following:

Three Months Ended

Nine Months Ended

September 30,

(In millions)

6 unchanged sentences

(2) The Company records its share of net income from SSAT in costs and expenses in the Condensed Consolidated Statement of Income and Comprehensive Income due to the nature of SSAT’s operations.

The Company’s investment in SSAT was $ 55.2 million and $ 76.2 million at September 30, 2020 and December 31, 2019, respectively.

During the nine months ended September 30, 2020, the Company recorded an increase of $ 2.2 million in its investment in SSAT and a corresponding increase in retained earnings related to the formation of a new subsidiary of SSAT, whose controlling interest is retained by SSAT.

Deferred Loan Fees:

The Company records deferred loan fees, excluding those related to the revolving credit facility, as a reduction to Total Debt in the Company’s Condensed Consolidated Balance Sheets in accordance with Accounting Standards Update (“ASU”) 2015-03, Interest-Imputation of Interest (Subtopic 835-30):

Simplifying the Presentation of Debt Issuance Costs .

These costs are being amortized over the life of the related debt using the effective interest method (see Note 6).

Deferred loan fees related to the Company’s revolving credit facility are recorded in other long-term assets in the Company’s Condensed Consolidated Balance Sheets.

These deferred loan fees are being amortized using the straight-line method as the difference between that and the use of the effective interest method is not material.

These deferred loan fees were $ 2.5 million and $ 1.3 million at September 30, 2020 and December 31, 2019, respectively.

The Company’s investment in SSAT was $ 47.5 million and $ 48.7 million at March 31, 2021 and December 31, 2020, respectively.

Contingencies:

4 unchanged sentences

The Company and its subsidiaries are parties to, or may be contingently liable in connection with other legal actions arising in the normal course of their businesses, the outcomes of which, in the opinion of management after consultation with counsel, would not have a material effect on the Company’s financial condition, results of operations, or cash flows.

The Company’s third quarter 2020 cash dividend of $ 0.23 per share was paid on September 3, 2020.

On October 29, 2020, the Company’s Board of Directors declared a cash dividend of $ 0.23 per share payable on December 3, 2020.

New Accounting Pronouncements:

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”):

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016- 13 which amends the current approach to estimate credit losses on certain financial assets, including trade and other receivables, available-for-sale securities and other financial instruments.

ASU 2016- 13 requires entities to establish a valuation allowance for the expected lifetime losses of certain financial instruments.

Subsequent changes in the valuation allowance are recorded in current earnings and reversal of previous losses is permitted.

The new standard is effective for interim and annual periods beginning on or after December 15, 2019.

The Company adopted ASU 2016- 13 effective January 1, 2020 using the modified retrospective approach.

Upon adoption, the Company included an evaluation of expected future credit losses as part of its estimate for determining the allowance for doubtful accounts.

The impact of this change was not material to the Company’s allowance for doubtful accounts receivable in the Condensed Consolidated Financial Statements.

The Company will continue to monitor the impact of COVID-19 pandemic on expected future credit losses.

The Company’s accounting policy related to allowance for doubtful accounts receivable is described above.

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract (“ASU 2018-15”):

In August 2018, FASB issued ASU 2018-15 which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing costs incurred to develop or obtain internal-use software.

The Company adopted ASU 2018-15 on a prospective basis effective January 1, 2020.

During the nine months ended September 30, 2020, the Company capitalized costs of $ 1.9 million related to cloud computing arrangements and which were included in other long-term assets on the Company’s Condensed Consolidated Balance Sheets as of September 30, 2020.

The Company’s first quarter 2021 cash dividend of $ 0.23 per share was paid on March 4, 2021.

On April 22, 2021, the Company’s Board of Directors declared a cash dividend of $ 0.23 per share payable on June 3, 2021.

REPORTABLE SEGMENTS

2 unchanged sentences

The Company consists of two reportable segments, Ocean Transportation and Logistics, which are further described in Note 1.

Reportable segments are measured based on operating income, exclusive of interest expense and income taxes.

Reportable segments are measured based on operating income.

In arrangements where the customer purchases ocean transportation and logistics services, the revenues are allocated to each reportable segment based upon the contractual amounts for each type of service.

1 unchanged sentence

The Company’s Ocean Transportation segment provides ocean transportation services to the Logistics segment, and the Logistics segment provides logistics services to the Ocean Transportation segment in certain transactions.

Accordingly, inter-segment revenue of $ 40.2 million and $ 28.2 million for the three months ended September 30, 2020 and 2019, and $ 83.8 million and $ 75.3 million for the nine months ended September 30, 2020 and 2019, respectively, have been eliminated from operating revenues in the table below.

Reportable segment financial information for the three and nine months ended September 30, 2020 and 2019 are as follows:

Accordingly, inter-segment revenue of $ 33.7 million and $ 19.4 million for the three months ended March 31, 2021 and 2020, respectively, have been eliminated from operating revenues in the table below.

Reportable segment financial information for the three months ended March 31, 2021 and 2020 are as follows:

Three Months Ended

Nine Months Ended

September 30,

(In millions)

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Income before Income Taxes

(1) Ocean Transportation operating revenue excludes inter-segment revenue of $ 22.4 million and $ 14.0 million for the three months ended September 30, 2020 and 2019, and $ 43.7 million and $ 39.2 million for the nine months ended September 30, 2020 and 2019, respectively.

(2) Logistics operating revenue excludes inter-segment revenue of $ 17.8 million and $ 14.2 million for the three months ended September 30, 2020 and 2019, and $ 40.1 million and $ 36.1 million for the nine months ended September 30, 2020 and 2019, respectively.

(3) Ocean Transportation segment information includes $ 7.7 million and $ 8.4 million of equity in income from the Company’s equity investment in SSAT for the three months ended September 30, 2020 and 2019, and $ 15.4 million and $ 17.8 million for the nine months ended September 30, 2020 and 2019, respectively.

(1) Ocean Transportation operating revenue excludes inter-segment revenue of $ 15.1 million and $ 9.4 million for the three months ended March 31, 2021 and 2020, respectively.

(2) Logistics operating revenue excludes inter-segment revenue of $ 18.6 million and $ 10.0 million for the three months ended March 31, 2021 and 2020, respectively.

(3) Ocean Transportation segment information includes $ 9.2 million and $ 4.0 million of equity in income from the Company’s equity investment in SSAT for the three months ended March 31, 2021 and 2020, respectively.

PROPERTY AND EQUIPMENT

Property and equipment as of September 30, 2020 and December 31, 2019 consisted of the following:

September 30,

Property and equipment as of March 31, 2021 and December 31, 2020 consisted of the following:

(In millions)

1 unchanged sentence

Terminal facilities and other property

Vessel construction in progress

Other construction in progress

Construction in progress

Total Property and Equipment

1 unchanged sentence

Total Property and Equipment, net

Vessel construction in progress relates to progress payments for the construction of new vessels, capitalized owner’s items and capitalized interest.

During the nine months ended September 30, 2020, the newly constructed vessel Lurline was placed into service resulting in $ 308.2 million, including $ 16.5 million of capitalized interest, being transferred from the Vessel construction in progress category to the Vessels category within Property and Equipment.

Capitalized interest included in Vessel construction in progress was $ 11.0 million and $ 22.0 million at September 30, 2020 and December 31, 2019, respectively.

GOODWILL AND INTANGIBLES

Goodwill by segment as of September 30, 2020 and December 31, 2019 consisted of the following:

Goodwill by segment as of March 31, 2021 and December 31, 2020 consisted of the following:

(In millions)

Transportation

Intangible assets as of September 30, 2020 and December 31, 2019 consisted of the following:

September 30,

Intangible assets as of March 31, 2021 and December 31, 2020 consisted of the following:

(In millions)

7 unchanged sentences

The Company has reporting units within the Ocean Transportation and Logistics reportable segments.

The Company considered the deterioration in general economic and market conditions due to the COVID-19 pandemic and its impact on the performance of each of the Company’s reporting units.

Based on the Company’s assessment of its market capitalization, future forecasts and the amount of excess of fair value over the carrying value of the reporting units in the 2019 annual impairment tests, the Company concluded that an impairment triggering event did not occur during the quarter ended September 30, 2020.

The Company considered the general economic and market conditions due to the COVID-19 pandemic and its impact on the performance of each of the Company’s reporting units.

Based on the Company’s assessment of its market capitalization, future forecasts and the amount of excess of fair value over the carrying value of the reporting units in the 2020 annual impairment tests, the Company concluded that an impairment triggering event did not occur during the quarter ended March 31, 2021.

The Company will monitor events and changes in circumstances that could negatively impact the key assumptions used in determining the fair value, including the amount and timing of estimated future cash flows generated by the reporting units, long-term growth and discount rates, comparable company market valuations, and industry and economic trends.

It is possible that future changes in such circumstances, including a more prolonged and/or severe COVID-19 pandemic,

or future changes in the assumptions and estimates used in assessing the fair value of the reporting unit, could require the Company to record a non-cash impairment charge.

As of September 30, 2020 and December 31, 2019, the Company’s debt consisted of the following:

September 30,

It is possible that future changes in such circumstances, including a more prolonged and/or severe COVID-19 pandemic, or future changes in the assumptions and estimates used in assessing the fair value of the reporting unit, could require the Company to record a non-cash impairment charge.

As of March 31, 2021 and December 31, 2020, the Company’s debt consisted of the following:

(In millions)

5 unchanged sentences

4.31 %, payable through 2032

4.35 %, payable through 2044

3.92 %, payable through 2045

Title XI Debt:

3 unchanged sentences

1.35 %, payable through 2044

Revolving credit facility, maturity date of June 29, 2022

Revolving credit facility, maturity date of March 31, 2026

Current portion

2 unchanged sentences

Total Long-term Debt, net of deferred loan fees

The Company’s debt is described in Note 6 to the Condensed Consolidated Financial Statements included in the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2020 and in the Company’s Quarterly Report on Form 10-Q for the three months ended June 30, 2020.

Revolving Credit Facility:

As of September 30, 2020, the Company had $ 518.9 million of remaining borrowing availability under the revolving credit facility.

The Company used $ 8.1 million of the sublimit for letters of credit outstanding as of September 30, 2020.

Based on the Company’s consolidated net leverage ratio, which stipulates borrowing margins, the interest rate applicable to revolving credit facility was approximately 3.25 percent at September 30, 2020.

Borrowings under the revolving credit facility are classified as long-term debt in the Condensed Consolidated Balance Sheets, as principal payments are not required until the maturity date of June 29, 2022.

Except as described below, the Company’s debt is described in Note 8 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

Revolving Credit Facility Amendment:

On March 31, 2021, the Company entered into the Second Amended and Restated Credit Agreement (the “Credit Agreement”).

The Credit Agreement extends the maturity date to March 31, 2026, and retains the existing committed aggregate borrowings of up to $ 650 million, with an uncommitted option to increase the aggregate borrowings by up to $ 250 million.

The Credit Agreement amended certain covenants and other terms set forth in the prior credit agreement, including (i) amending the pricing grid to provide for pricing ranging from, at the Company’s election, LIBOR plus a margin between 1.00 percent and 1.75 percent depending on the Company’s consolidated net leverage ratio, or base rate plus a margin between 0.00 percent and 0.75 percent depending on the Company’s consolidated net leverage ratio;

(ii) reducing the maximum permitted consolidated leverage ratio to 3.50 to 1.0, with an option for a one-time increase to 4.0 to 1.0 in connection with a material acquisition;

and (iii) removing certain limitations on stock redemptions and repurchases, sale leaseback transactions and asset sales, and the incurrence of priority debt.

The Company may prepay any amounts outstanding under the Credit Agreement without premium or penalty.

The Credit Agreement contains affirmative, negative and financial covenants customary for financings of this type, including, among other things, limitations on certain other indebtedness, loans and investments, liens, mergers, asset sales, and transactions with affiliates.

The Credit Agreement also contains customary events of default.

The Company paid fees of approximately $ 2.2 million in connection with the closing of the Credit Agreement which is included in other long-term assets in the Condensed Consolidated Balance Sheet as of March 31, 2021.

As of March 31, 2021, the Company had $ 616.9 million of remaining borrowing availability under the revolving credit facility.

The Company used $ 8.1 million of the sublimit for letters of credit outstanding as of March 31, 2021.

Based on the Company’s consolidated net leverage ratio, which stipulates borrowing margins, the interest rate applicable to revolving credit facility was approximately 1.58 percent at March 31, 2021.

Borrowings under the revolving credit facility are classified as long-term debt in the Condensed Consolidated Balance Sheets, as principal payments are not required until the maturity date.

Private Placement Term Loans Amendments:

On March 31, 2021, the Company and the holders of the private placement term loans entered into amendments (collectively, the “2021 Note Amendments”) to each of (i) the Third Amended and Restated Note Purchase Agreement and Private Shelf Agreement dated as of September 14, 2016, among the Company and the holders of the notes issued thereunder, as amended;

and (ii) the Note Purchase Agreement dated December 21, 2016 among the Company and the holders of the notes issued thereunder, in each case as amended prior to such date.

The 2021 Note Amendments amended certain covenants and other terms, including (i) eliminating the Leverage Relief Period and associated quarterly interest enhancement payments;

(ii) removing certain other fees and increases to interest rate;

(iii) reducing the maximum permitted consolidated leverage ratio to 3.50 to 1.0, with an option for a one-time increase to 4.0 to 1.0 in connection with a material acquisition, with potential interest enhancement payments if leverage is over 3.25 to 1.0;

and (iv) removing certain additional limitations on stock redemptions and repurchases, sale leaseback transactions and asset sales, and the incurrence of priority debt.

The Company paid fees of approximately $ 0.8 million related to the 2021 Note Amendments which is included in deferred loan fees in debt in the Condensed Consolidated Balance Sheet as of March 31, 2021.

Debt Security and Guarantees:

All of the debt of the Company and MatNav, including related guarantees, as of September 30, 2020 was unsecured, except for the Title XI debt.

All of the debt of the Company and MatNav, including related guarantees, as of March 31, 2021 was unsecured, except for the Title XI debt.

Debt Maturities:

As of September 30, 2020, debt maturities during the next five years and thereafter are as follows:

Year (in millions)

September 30, 2020

Remainder of 2020

Deferred Loan Fees:

Deferred loan fees are recorded as a reduction of Total Debt in the Condensed Consolidated Balance Sheets in accordance with Accounting Standards Codification (“ASC”) 835, Imputation of Interest (“ASC 835”) .

Activity relating to deferred loan fees for the nine months ended September 30, 2020 are as follows:

Deferred Loan Fees (in millions)

Deferred financing costs related to Title XI bonds and private placement debt amendments

Deferred fees expensed related to the redemption of private placement debt

Amortization expense for the nine months ended September 30, 2020

Balance at September 30, 2020

As of September 30, 2020, amortization expense relating to deferred loan fees during the next five years and thereafter are as follows:

As of March 31, 2021, debt maturities during the next five years and thereafter are as follows:

Year (in millions)

March 31, 2021

Remainder of 2021

Total amortization expense of deferred loan fees

The Company’s leases are described in Note 9 to the Consolidated Financial Statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

Components of Lease Cost:

Components of lease cost recorded in the Company’s Condensed Consolidated Statement of Income and Comprehensive Income for the three and nine months ended September 30, 2020 and 2019 consisted of the following:

Components of lease cost recorded in the Company’s Condensed Consolidated Statement of Income and Comprehensive Income for the three months ended March 31, 2021 and 2020 consisted of the following:

Three Months Ended

Nine Months Ended

September 30,

(In millions)

4 unchanged sentences

Sale and Leaseback of Equipment:

There were no sale and leaseback transactions during the three months ended March 31, 2021.

On March 25, 2020, the Company entered into an agreement for the sale and leaseback of multiple tranches of chassis and container equipment.

1 unchanged sentence

The Company subsequently leased back the equipment under a five-year operating lease agreement that includes purchase options exercisable at fair market value.

There were no sale and leaseback transactions during the second and third quarter of 2020, and during the nine months ended September 30, 2019.

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Changes in accumulated other comprehensive income (loss) by component, net of tax, for the nine months ended September 30, 2020 are as follows:

Changes in accumulated other comprehensive income (loss) by component, net of tax, for the three months ended March 31, 2021 are as follows:

Comprehensive

5 unchanged sentences

Foreign currency exchange

Other adjustments

Balance at March 31, 2021

Amortization of prior service cost

Amortization of net loss

Foreign currency exchange

Other adjustments

Balance at June 30, 2020

Amortization of prior service cost

Amortization of net loss (gain)

Foreign currency exchange

Other adjustments

Balance at September 30, 2020

Changes in accumulated other comprehensive income (loss) by component, net of tax, for the nine months ended September 30, 2019 consisted of the following:

Changes in accumulated other comprehensive income (loss) by component, net of tax, for the three months ended March 31, 2020 consisted of the following:

Comprehensive

4 unchanged sentences

Amortization of net loss

Balance at March 31, 2019

Amortization of prior service cost

Amortization of net loss

Other adjustments

Balance at June 30, 2019

Amortization of prior service cost

Amortization of net loss (gain)

Foreign currency exchange

Other adjustments

Balance at September 30, 2019

Balance at March 31, 2020

FAIR VALUE OF FINANCIAL INSTRUMENTS

7 unchanged sentences

The fair value of fixed rate debt is calculated based upon interest rates available for debt with terms and maturities similar to the Company’s existing debt arrangements.

The carrying value and fair value of the Company’s financial instruments as of September 30, 2020 and December 31, 2019 are as follows:

The carrying value and fair value of the Company’s financial instruments as of March 31, 2021 and December 31, 2020 are as follows:

Quoted Prices in

4 unchanged sentences

(In millions)

September 30, 2020

Fair Value Measurements at September 30, 2020

March 31, 2021

Fair Value Measurements at March 31, 2021

Cash and cash equivalents

12 unchanged sentences

The calculation of diluted earnings per share includes the dilutive effect of unexercised non-qualified stock options and non-vested restricted stock units.

The computation of weighted average common shares outstanding excluded a nominal amount of anti-dilutive non-qualified stock options for each period ended September 30, 2020 and 2019.

The denominators used to compute basic and diluted earnings per share for the three and nine months ended September 30, 2020 and 2019 are as follows:

Three Months Ended September 30, 2020

Nine Months Ended September 30, 2020

(In millions, except per share amounts)

Effect of Dilutive Securities

Three Months Ended September 30, 2019

Nine Months Ended September 30, 2019

The computation of weighted average common shares outstanding excluded a nominal amount of anti-dilutive non-qualified stock options for each period ended March 31, 2021 and 2020.

The denominators used to compute basic and diluted earnings per share for the three months ended March 31, 2021 and 2020 are as follows:

Three Months Ended March 31, 2021

Three Months Ended March 31, 2020

(In millions, except per share amounts)

1 unchanged sentence

SHARE-BASED COMPENSATION

During the three and nine months ended September 30, 2020, the Company granted approximately 3,000 and 341,200 in total of time-based restricted stock units and performance-based shares to certain of its employees at a weighted average grant date fair value of $ 41.82 and $ 38.67 , respectively.

Total share-based compensation cost recognized in the Condensed Consolidated Statements of Income and Comprehensive Income as a component of selling, general and administrative expenses was $ 5.9 million and $ 2.5 million for the three months ended September 30, 2020 and 2019, and $ 12.0 million and $ 8.7 million for the nine months ended September 30, 2020 and 2019, respectively.

Total unrecognized compensation cost related to unvested share-based compensation arrangements was $ 17.3 million at September 30, 2020, and is expected to be recognized over a weighted average period of approximately 1.9 years.

During the three months ended March 31, 2021, the Company granted approximately 225,600 in total of time-based restricted stock units and performance-based shares to certain of its employees at a weighted average grant date fair value of $ 68.41 .

Total share-based compensation cost recognized in the Condensed Consolidated Statements of Income and Comprehensive Income as a component of selling, general and administrative expenses was $ 4.8 million and $ 3.1 million for the three months ended March 31, 2021 and 2020, respectively.

Total unrecognized compensation cost related to unvested share-based compensation arrangements was $ 35.7 million at March 31, 2021, and is expected to be recognized over a weighted average period of approximately 2.3 years.

Total unrecognized compensation cost may be adjusted for any unearned performance shares or forfeited shares.

1 unchanged sentence

The Company’s pension and post-retirement plans are described in Note 11 to the Consolidated Financial Statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 .

Components of net periodic benefit cost and other amounts recognized in Other Comprehensive Income (Loss) for the qualified pension plans and the post-retirement benefit plans for the three and nine months ended September 30, 2020 and 2019 consisted of the following:

Pension Benefits

Post-retirement Benefits

Three Months Ended September 30,

(In millions)

Components of net periodic benefit cost (benefit):

Interest cost

Expected return on plan assets

Amortization of net loss (gain)

Amortization of prior service credit

Net periodic benefit cost (benefit)

Components of net periodic benefit cost and other amounts recognized in Other Comprehensive Income (Loss) for the qualified pension plans and the post-retirement benefit plans for the three months ended March 31, 2021 and 2020 consisted of the following:

Pension Benefits

Post-retirement Benefits

Nine Months Ended September 30,

Three Months Ended March 31,

(In millions)

2 unchanged sentences

Expected return on plan assets

Amortization of net loss (gain)

Amortization of net loss

Amortization of prior service credit

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements