What changed in this filing

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Item 1. Financial Statements

2021-11-04 compared with 2021-07-30 · 97 added, 61 removed, 418 unchanged (27% of the section changed)

3 unchanged sentences

Three Months Ended

Six 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

Six Months Ended June 30,

Nine Months Ended September 30,

(In millions)

31 unchanged sentences

Dividends paid

Repurchase of Matson common stock

Tax withholding related to net share settlements of restricted stock units

12 unchanged sentences

Capital expenditures included in accounts payable, accruals and other liabilities

Accrued dividends

See Notes to Condensed Consolidated Financial Statements.

5 unchanged sentences

Balance at December 31, 2020

Other comprehensive loss, net of tax

Other comprehensive income (loss), net of tax

Share-based compensation

2 unchanged sentences

Balance at March 31, 2021

Other comprehensive income, net of tax

Other comprehensive income (loss), net of tax

Share-based compensation

2 unchanged sentences

Balance at June 30, 2021

Other comprehensive income (loss), net of tax

Share-based compensation

Shares issued, net of shares withheld for employee taxes

Shares repurchased

Balance at September 30, 2021

Comprehensive

2 unchanged sentences

Balance at December 31, 2019

Other comprehensive loss, net of tax

Other comprehensive income (loss), net of tax

Share-based compensation

3 unchanged sentences

Balance at March 31, 2020

Other comprehensive loss, net of tax

Other comprehensive income (loss), net of tax

Share-based compensation

2 unchanged sentences

Balance at June 30, 2020

Other comprehensive income (loss), net of tax

Share-based compensation

Shares issued, net of shares withheld for employee taxes

Balance at September 30, 2020

See Notes to Condensed Consolidated Financial Statements.

32 unchanged sentences

Fiscal Period:

The period end for Matson covered by this report is June 30, 2021.

The period end for MatNav and its subsidiaries covered by this report occurred on the last Friday in June, or June 25, 2021.

The period end for Matson covered by this report is September 30, 2021.

The period end for MatNav and its subsidiaries covered by this report occurred on the last Friday in September, or September 24, 2021.

Significant Accounting Policies:

20 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Ocean Transportation (in millions) (1)

12 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Logistics (in millions) (1)

19 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 administration expenses in the Condensed Consolidated Statements of Income and Comprehensive Income.

These expenses are included in selling, general and administrative 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 June 30, 2021 and December 31, 2020, $ 1.7 million of eligible accounts receivable was assigned to the CCF.

As of September 30, 2021 and December 31, 2020, $ 1.8 million and $ 1.7 million of eligible accounts receivable was assigned to the CCF, respectively.

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 three and six months ended June 30, 2021, the Company deposited $ 31.2 million into the CCF and made qualifying cash withdrawals of $ 31.2 million from the CCF.

The balance of cash on deposit at June 30, 2021 and December 31, 2020 was nominal.

During the nine months ended September 30, 2021, the Company deposited $ 31.2 million into the CCF and made qualifying cash withdrawals of $ 31.2 million from the CCF.

The Company made no qualifying cash deposits or withdrawals during the three months ended September 30, 2021.

The balance of cash on deposit at September 30, 2021 and December 31, 2020 was nominal.

Investment in SSAT:

Condensed income statement information for SSAT for the three and six months ended June 30, 2021 and 2020 consisted of the following:

Condensed income statement information for SSAT for the three and nine months ended September 30, 2021 and 2020 consisted of the following:

Three Months Ended

Six 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 $ 50.1 million and $ 48.7 million at June 30, 2021 and December 31, 2020, respectively.

The Company’s investment in SSAT was $ 37.2 million and $ 48.7 million at September 30, 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 second quarter 2021 cash dividend of $ 0.23 per share was paid on June 3, 2021.

On June 24, 2021, the Company’s Board of Directors declared a cash dividend of $ 0.30 per share payable on September 2, 2021.

The Company’s third quarter 2021 cash dividend of $ 0.30 per share was paid on September 2, 2021.

On October 28, 2021, the Company’s Board of Directors declared a cash dividend of $ 0.30 per share payable on December 2, 2021.

REPORTABLE SEGMENTS

6 unchanged sentences

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 $ 49.0 million and $ 24.2 million for the three months ended June 30, 2021 and 2020, and $ 82.7 million and $ 43.6 million for the six months ended June 30, 2021 and 2020, respectively, have been eliminated from operating revenues in the table below.

Reportable segment financial information for the three and six months ended June 30, 2021 and 2020 are as follows:

Accordingly, inter-segment revenue of $ 57.8 million and $ 40.2 million for the three months ended September 30, 2021 and 2020, and $ 140.5 million and $ 83.8 million for the nine months ended September 30, 2021 and 2020, respectively, have been eliminated from operating revenues in the table below.

Reportable segment financial information for the three and nine months ended September 30, 2021 and 2020 are as follows:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In millions)

9 unchanged sentences

Income before Income Taxes

(1) Ocean Transportation operating revenue excludes inter-segment revenue of $ 18.7 million and $ 11.9 million for the three months ended June 30, 2021 and 2020, and $ 33.8 million and $ 21.3 million for the six months ended June 30, 2021 and 2020, respectively.

(2) Logistics operating revenue excludes inter-segment revenue of $ 30.3 million and $ 12.3 million for the three months ended June 30, 2021 and 2020, and $ 48.9 million and $ 22.3 million for the six months ended June 30, 2021 and 2020, respectively.

(3) Ocean Transportation segment information includes $ 12.8 million and $ 3.7 million of equity in income from the Company’s equity investment in SSAT for the three months ended June 30, 2021 and 2020, and $ 22.0 million and $ 7.7 million for the six months ended June 30, 2021 and 2020, respectively.

(1) Ocean Transportation operating revenue excludes inter-segment revenue of $ 21.8 million and $ 22.4 million for the three months ended September 30, 2021 and 2020, and $ 55.6 million and $ 43.7 million for the nine months ended September 30, 2021 and 2020, respectively.

(2) Logistics operating revenue excludes inter-segment revenue of $ 36.0 million and $ 17.8 million for the three months ended September 30, 2021 and 2020, and $ 84.9 million and $ 40.1 million for the nine months ended September 30, 2021 and 2020, respectively.

(3) Ocean Transportation segment information includes $ 13.0 million and $ 7.7 million of equity in income from the Company’s equity investment in SSAT for the three months ended September 30, 2021 and 2020, and $ 35.0 million and $ 15.4 million for the nine months ended September 30, 2021 and 2020, respectively.

PROPERTY AND EQUIPMENT

Property and equipment as of June 30, 2021 and December 31, 2020 consisted of the following:

Property and equipment as of September 30, 2021 and December 31, 2020 consisted of the following:

September 30,

(In millions)

6 unchanged sentences

GOODWILL AND INTANGIBLES

Goodwill by segment as of June 30, 2021 and December 31, 2020 consisted of the following:

Goodwill by segment as of September 30, 2021 and December 31, 2020 consisted of the following:

(In millions)

Transportation

Intangible assets as of June 30, 2021 and December 31, 2020 consisted of the following:

Intangible assets as of September 30, 2021 and December 31, 2020 consisted of the following:

September 30,

(In millions)

8 unchanged sentences

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 June 30, 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 June 30, 2021 and December 31, 2020, the Company’s debt consisted of the following:

As of September 30, 2021 and December 31, 2020, the Company’s debt consisted of the following:

September 30,

(In millions)

17 unchanged sentences

Revolving Credit Facility:

As of June 30, 2021, the Company had $ 641.9 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 June 30, 2021.

Although there were no outstanding borrowings under the facility at June 30, 2021, based on the Company’s consolidated net leverage ratio, which stipulates borrowing margins, the interest rate applicable to the revolving credit facility would have been approximately 1.10 percent at June 30, 2021.

As of September 30, 2021, the Company had $ 641.9 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, 2021.

Although there were no outstanding borrowings under the facility at September 30, 2021, based on the Company’s consolidated net leverage ratio, which stipulates borrowing margins, the interest rate applicable to the revolving credit facility would have been approximately 1.10 percent at September 30, 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.

Debt Security and Guarantees:

All of the debt of the Company and MatNav, including related guarantees, as of June 30, 2021 was unsecured, except for the Title XI debt.

All of the debt of the Company and MatNav, including related guarantees, as of September 30, 2021 was unsecured, except for the Title XI debt.

Debt Maturities:

As of June 30, 2021, debt maturities during the next five years and thereafter are as follows:

As of September 30, 2021, debt maturities during the next five years and thereafter are as follows:

Year (in millions)

June 30, 2021

September 30, 2021

Remainder of 2021

1 unchanged sentence

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 six months ended June 30, 2021 and 2020 consisted of the following:

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, 2021 and 2020 consisted of the following:

Three Months Ended

Six 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 and six months ended June 30, 2021.

There were no sale and leaseback transactions during the three and nine months ended September 30, 2021.

During the three months ended March 31, 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 three months ended June 30, 2020.

There were no sale and leaseback transactions during the three months ended June 30, 2020 and September 30, 2020.

Termination of Vessel Charter:

On July 7, 2021, a wholly-owned subsidiary of the Company entered into an agreement to terminate a Bareboat Charter Agreement (the “Charter”) on the vessel, Maunalei, for approximately $ 95.8 million thereby acquiring the vessel.

On July 7, 2021, a wholly-owned subsidiary of the Company entered into an agreement to terminate a Bareboat Charter Agreement (the “Charter”) on the vessel, Maunalei, for $ 95.8 million thereby acquiring the vessel.

The Company paid the termination payment with a combination of cash on hand and borrowing on the revolving credit facility.

The Company derecognized the related right-of-use (“ROU”) asset of $ 27.4 million and ROU liability of $ 28.5 million, and increased property and equipment by $ 94.7 million, net.

Concurrent with the termination of the Charter, the Company was released from obligations under a Guaranty related to the Charter.

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Changes in accumulated other comprehensive income (loss) by component, net of tax, for the six months ended June 30, 2021 consisted of the following:

Changes in accumulated other comprehensive income (loss) by component, net of tax, for the nine months ended September 30, 2021 consisted of the following:

Comprehensive

11 unchanged sentences

Balance at June 30, 2021

Changes in accumulated other comprehensive income (loss) by component, net of tax, for the six months ended June 30, 2020 consisted of the following:

Amortization of prior service cost

Amortization of net loss

Foreign currency exchange

Balance at September 30, 2021

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

Comprehensive

12 unchanged sentences

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

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 June 30, 2021 and December 31, 2020 are as follows:

The carrying value and fair value of the Company’s financial instruments as of September 30, 2021 and December 31, 2020 are as follows:

Quoted Prices in

4 unchanged sentences

(In millions)

June 30, 2021

Fair Value Measurements at June 30, 2021

September 30, 2021

Fair Value Measurements at September 30, 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 June 30, 2021 and 2020.

The computations for basic and diluted earnings per share for the three and six months ended June 30, 2021 and 2020 are as follows:

Three Months Ended June 30, 2021

Six Months Ended June 30, 2021

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, 2021 and 2020.

The computations for basic and diluted earnings per share for the three and nine months ended September 30, 2021 and 2020 are as follows:

Three Months Ended September 30, 2021

Nine Months Ended September 30, 2021

(In millions, except per share amounts)

Effect of Dilutive Securities

Three Months Ended June 30, 2020

Six Months Ended June 30, 2020

Three Months Ended September 30, 2020

Nine Months Ended September 30, 2020

(In millions, except per share amounts)

1 unchanged sentence

SHARE-BASED COMPENSATION

During the three and six months ended June 30, 2021, the Company granted approximately 11,900 and 237,500 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 $ 67.47 and $ 68.36 , 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 $ 4.7 million and $ 3.0 million for the three months ended June 30, 2021 and 2020, and $ 9.5 million and $ 6.1 million for the six months ended June 30, 2021 and 2020, respectively.

Total unrecognized compensation cost related to unvested share-based compensation arrangements was $ 30.6 million at June 30, 2021, and is expected to be recognized over a weighted average period of approximately 1.7 years.

During the three and nine months ended September 30, 2021, the Company granted approximately 900 and 238,400 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 $ 75.07 and $ 68.39 per share, 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 $ 4.7 million and $ 5.9 million for the three months ended September 30, 2021 and 2020, and $ 14.2 million and $ 12.0 million for the nine months ended September 30, 2021 and 2020, respectively.

Total unrecognized compensation cost related to unvested share-based compensation arrangements was $ 25.8 million at September 30, 2021, and is expected to be recognized over a weighted average period of approximately 1.7 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 six months ended June 30, 2021 and 2020 consisted of the following:

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, 2021 and 2020 consisted of the following:

Pension Benefits

Post-retirement Benefits

Three Months Ended June 30,

Three Months Ended September 30,

(In millions)

7 unchanged sentences

Post-retirement Benefits

Six Months Ended June 30,

Nine Months Ended September 30,

(In millions)

6 unchanged sentences

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