What changed in this filing

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Item 1. Financial Statements

2023-05-05 compared with 2022-11-03 · 96 added, 189 removed, 369 unchanged (44% of the section changed)

3 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(In millions, except per share amounts)

4 unchanged sentences

Operating costs

Income from SSAT

(Loss) Income from SSAT

Selling, general and administrative

8 unchanged sentences

Amortization of prior service cost

Amortization of net loss (gain)

Other adjustments

Total Other Comprehensive Income (Loss)

Amortization of net loss

Total Other Comprehensive Income (Loss), Net of Income Taxes

Comprehensive Income

5 unchanged sentences

Condensed Consolidated Balance Sheets

September 30,

(In millions)

36 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Nine Months Ended September 30,

Three Months Ended March 31,

(In millions)

5 unchanged sentences

Share-based compensation expense

Income from SSAT

Distributions from SSAT

Loss (income) from SSAT

Changes in assets and liabilities:

10 unchanged sentences

Other capital expenditures

Cash deposits into Capital Construction Fund

Proceeds from disposal of property and equipment

Payment for asset acquisition

Cash deposits and interest into the Capital Construction Fund

Withdrawals from Capital Construction Fund

2 unchanged sentences

Repayments of debt

Proceeds from revolving credit facility

Repayments of revolving credit facility

Payment of financing costs

Dividends paid

10 unchanged sentences

Supplemental Cash Flow Information:

Interest paid, net of capitalized interest

Income tax payments, net of refunds

Interest paid, net of capitalized interest (including debt prepaid fees)

Income tax payments (refunds), net

Non-cash Information:

Capital expenditures included in accounts payable, accruals and other liabilities

Non-cash payment for asset acquisition

See Notes to Condensed Consolidated Financial Statements.

11 unchanged sentences

Balance at March 31, 2023

Other comprehensive income (loss), net of tax

Share-based compensation

Shares issued, net of shares withheld for employee taxes

Shares repurchased

Dividends ( $ 0.30 per share and $ 0.31 per share)

Balance at June 30, 2022

Other comprehensive income (loss), net of tax

Share-based compensation

Equity interest in SSAT

Shares repurchased

Balance at September 30, 2022

Comprehensive

5 unchanged sentences

Shares issued, net of shares withheld for employee taxes

Shares repurchased

Dividends ( $ 0.30 per share)

Balance at March 31, 2022

Other comprehensive income (loss), net of tax

Share-based compensation

Shares issued, net of shares withheld for employee taxes

Dividends ( $ 0.23 per share and $ 0.30 per share)

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

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 premium, expedited services primarily 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, Alaska 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.

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

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

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.

20 unchanged sentences

Fiscal Period:

The period end for Matson covered by this report is September 30, 2022.

The period end for MatNav and its subsidiaries covered by this report is September 30, 2022.

The period end for Matson covered by this report is March 31, 2023.

The period end for MatNav and its subsidiaries covered by this report is March 31, 2023.

Significant Accounting Policies:

18 unchanged sentences

Prepaid Expenses and Other Assets:

Prepaid expenses and other assets consist of the following at September 30, 2022 and December 31, 2021:

September 30,

Prepaid expenses and other assets consist of the following at March 31, 2023 and December 31, 2022:

Prepaid Expenses and Other Assets (in millions)

2 unchanged sentences

Restricted cash - vessel construction obligations

Income tax receivables include a federal income tax refund related to the Company’s 2021 federal tax return, overpayments of federal and state taxes paid during the nine months ended September 30, 2022, and other income tax receivables.

Income tax receivables include an expected federal income tax refund related to the Company’s 2021 federal tax return and other income tax receivables.

Recognition of Revenues and Expenses:

1 unchanged sentence

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 services revenue and fuel sales revenue categories which are denominated in foreign currencies.

dollars except for less than 3 percent of Ocean Transportation revenues 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.

5 unchanged sentences

Related costs are recognized as incurred.

Three Months Ended

Nine Months Ended

September 30,

Logistics (in millions) (1)

3 unchanged sentences

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

dollars except for approximately 6.5 percent of transportation brokerage and freight forwarding services revenue, and supply chain management and other services revenue categories which are denominated in foreign currencies.

dollars except for less than 3 percent of Logistics revenues which are denominated in foreign currencies.

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

15 unchanged sentences

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, 2022.

As of September 30, 2022 and December 31, 2021, $ 9.8 million of eligible accounts receivable was assigned to the CCF.

A summary of the CCF cash account for the three months ended March 31, 2023 and 2022 is as follows:

Three Months Ended

(In millions)

CCF balance at beginning of period

Cash deposits

Interest earned

Qualifying cash withdrawal payments

CCF balance at end of period

Cash on deposit in the CCF is currently held in a U.S.

Treasury obligations fund with daily liquidity.

At March 31, 2023, securities held within the fund had a weighted average life of 35 days .

CCF cash is classified as a long-term asset on 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 months ended March 31, 2023, the Company pledged $ 200.0 million of accounts receivable into the CCF.

There were no pledges during the three months ended March 31, 2022.

As of March 31, 2023 and December 31, 2022, $ 209.9 million and $ 9.9 million of eligible accounts receivable were 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 short term U.S.

Treasury Obligation Funds 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 months ended September 30, 2022, the Company deposited $ 569.0 million into the CCF and made qualifying cash withdrawals of $ 4.0 million from the CCF.

No CCF deposits or withdrawals were made during the three months ended September 30, 2021.

During the nine months ended September 30, 2022 and 2021, the Company deposited $ 579.7 million and $ 31.2 million into the CCF and made qualifying cash withdrawals of $ 14.7 million and $ 31.2 million from the CCF, respectively.

The balance of cash on deposit at September 30, 2022 was $ 565.0 million and was nominal at December 31, 2021.

Investment in SSAT:

Condensed income statement information for SSAT for the three and nine months ended September 30, 2022 and 2021 consisted of the following:

Condensed income statement information for SSAT for the three months ended March 31, 2023 and 2022 consisted of the following:

Three Months Ended

Nine Months Ended

September 30,

(In millions)

1 unchanged sentence

Operating costs and expenses

Operating income

Net Income (1)

Company Share of SSAT’s Net Income (2)

Operating (loss) income

Net (Loss) Income (1)

Company Share of SSAT’s Net (Loss) Income (2)

(1) Includes earnings from equity method investments held by SSAT less earnings allocated to non-controlling interests.

(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 $ 87.2 million and $ 58.7 million at September 30, 2022 and December 31, 2021, respectively.

On September 16, 2022, SSAT completed the purchase of a 20 percent non-controlling equity interest in SSAT Terminals (Oakland), LLC (“SSAT Oakland”) from a third-party company.

After completion of this transaction, SSAT Oakland became a wholly-owned subsidiary of SSAT.

The operating results of SSAT Oakland continue to consolidate into the operating results of SSAT.

As a result of this transaction, the Company recorded a decrease of $ 15.5 million in its investment in SSAT and a corresponding decrease in retained earnings during the three months ended September 30, 2022 to reflect its proportionate share of this purchase.

The Company’s third quarter 2022 cash dividend of $ 0.31 per share was paid on September 1, 2022.

On October 27, 2022, the Company’s Board of Directors declared a cash dividend of $ 0.31 per share payable on December 1, 2022 to shareholders of record on November 10, 2022.

(2) The Company records its share of net (loss) 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 $ 81.5 million and $ 81.2 million at March 31, 2023 and December 31, 2022, respectively.

The Company’s first quarter 2023 cash dividend of $ 0.31 per share was paid on March 2, 2023.

On April 27, 2023, the Company’s Board of Directors declared a cash dividend of $ 0.31 per share payable on June 1, 2023 to shareholders of record on May 11, 2023.

Repurchase of Shares:

During the three months ended September 30, 2022, the Company repurchased approximately 1.1 million shares for a total cost of $ 88.0 million.

During the nine months ended September 30, 2022, the Company repurchased approximately 3.5 million shares for a total cost of $ 294.7 million.

As of September 30, 2022, the maximum number of remaining shares that may be repurchased under the Company’s share repurchase program was approximately 3.0 million shares.

Deferred Income Taxes:

During the three months ended September 30, 2022, the Company filed its 2021 federal income tax return.

As a result of the Company depositing $ 565.0 million into the Capital Construction Fund, the Company’s federal income tax return resulted in a federal income tax refund position as the deposit is allowed as a deduction in the 2021 taxable period.

The Company recorded the federal income tax refund receivable in Prepaid expenses and other assets, and a corresponding increase in Deferred income taxes in the Company’s Condensed Consolidated Balance Sheet at September 30, 2022.

Other changes in deferred income taxes related to the recording of the Company’s income tax provision for the nine months ended September 30, 2022.

Tax Legislation:

On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law in the United States.

The new provisions impose a one percent excise tax on the fair market value of share repurchases after December 31, 2022.

The provisions of the IRA also include a 15 percent alternative minimum tax rate that generally applies to U.S.

corporations with adjusted financial statement income in excess of $1 billion, and is effective in taxable years beginning after December 31, 2022.

The Company is reviewing the provisions of the IRA and monitoring any guidance with respect to having these provisions apply to the Company’s tax provision in future periods.

Subsequent Events:

On November 1, 2022, MatNav signed vessel construction agreements with Philly Shipyard, Inc.

for three new LNG-ready Aloha Class containerships.

Each of the new 3,600 TEU vessels is expected to provide 500 containers of additional capacity per voyage in the CLX service.

The contract cost of this new Jones Act vessel program is expected to be approximately $ 1 billion and delivery of the first vessel is currently anticipated to be in the fourth quarter of 2026 with subsequent deliveries in the second and fourth quarters of 2027.

Upon signing the agreements, the Company made its first milestone payment of $ 50 million from the CCF.

The Company expects to finance the remaining construction-related payments with cash currently on deposit in the CCF, cash and cash equivalents on the balance sheet and through cash flows from operations, borrowings available under the Company’s unsecured revolving credit facility and additional debt financings.

During the three months ended March 31, 2023, the Company repurchased approximately 0.7 million shares for a total cost of $ 42.1 million.

As of March 31, 2023, the maximum number of remaining shares that may be repurchased under the Company’s share repurchase program was approximately 0.9 million shares.

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 $ 78.2 million and $ 57.8 million for the three months ended September 30, 2022 and 2021, and $ 220.6 million and $ 140.5 million for the nine months ended September 30, 2022 and 2021, respectively, have been eliminated from operating revenues in the table below.

Reportable segment financial information for the three and nine months ended September 30, 2022 and 2021 are as follows:

Accordingly, inter-segment revenue of $ 40.1 million and $ 73.2 million for the three months ended March 31, 2023 and 2022, respectively, have been eliminated from operating revenues in the table below.

Reportable segment financial information for the three months ended March 31, 2023 and 2022 are as follows:

Three Months Ended

Nine Months Ended

September 30,

(In millions)

10 unchanged sentences

Income before Taxes

(1) Ocean Transportation operating revenue excludes inter-segment revenue of $ 28.0 million and $ 21.8 million for the three months ended September 30, 2022 and 2021, and $ 73.8 million and $ 55.6 million for the nine months ended September 30, 2022 and 2021, respectively.

(2) Logistics operating revenue excludes inter-segment revenue of $ 50.2 million and $ 36.0 million for the three months ended September 30, 2022 and 2021, and $ 146.8 million and $ 84.9 million for the nine months ended September 30, 2022 and 2021, respectively.

(3) Ocean Transportation segment information includes $ 23.4 million and $ 13.0 million of equity in income from the Company’s equity investment in SSAT for the three months ended September 30, 2022 and 2021, and $ 82.1 million and $ 35.0 million for the nine months ended September 30, 2022 and 2021, respectively.

(1) Ocean Transportation operating revenue excludes inter-segment revenue of $ 16.1 million and $ 21.8 million for the three months ended March 31, 2023 and 2022, respectively.

(2) Logistics operating revenue excludes inter-segment revenue of $ 24.0 million and $ 51.4 million for the three months ended March 31, 2023 and 2022, respectively.

(3) Ocean Transportation segment information includes $ ( 1.8 ) million and $ 34.0 million of equity in income from the Company’s equity investment in SSAT for the three months ended March 31, 2023 and 2022, respectively.

PROPERTY AND EQUIPMENT

Property and equipment as of September 30, 2022 and December 31, 2021 consisted of the following:

September 30,

Property and equipment as of March 31, 2023 and December 31, 2022 consisted of the following:

(In millions)

1 unchanged sentence

Terminal facilities and other property

Vessel construction in progress

New vessel construction in progress

Other construction in progress

2 unchanged sentences

Total Property and Equipment, net

New vessel construction in progress at March 31, 2023 and December 31, 2022 includes milestone progress payments and capitalized interest, and other costs related to the construction of three new Jones Act vessels.

GOODWILL AND INTANGIBLES

Goodwill by segment as of September 30, 2022 and December 31, 2021 consisted of the following:

Goodwill by segment as of March 31, 2023 and December 31, 2022 consisted of the following:

(In millions)

Transportation

Intangible assets as of September 30, 2022 and December 31, 2021 consisted of the following:

September 30,

Intangible assets as of March 31, 2023 and December 31, 2022 consisted of the following:

(In millions)

5 unchanged sentences

Total Intangible Assets, net

The change in customer relationships related to new customers acquired during the three months ended September 30, 2022.

During the three months ended March 31, 2023, the Company completed an asset acquisition consisting of customer relationship intangible assets for $ 16.5 million, which are being amortized over seven years .

The Company evaluates its goodwill and intangible assets for possible impairment in the fourth quarter, or whenever events or changes in circumstances indicate that it is more likely than not that the fair value is less than its carrying amount.

1 unchanged sentence

The Company considered the general economic and market conditions 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 2021 annual impairment tests, the Company concluded that an impairment triggering event did not occur during the three months ended September 30, 2022.

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 2022 annual impairment tests, the Company concluded that an impairment triggering event did not occur during the three months ended March 31, 2023.

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 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, 2022 and December 31, 2021, the Company’s debt consisted of the following:

September 30,

As of March 31, 2023 and December 31, 2022, the Company’s debt consisted of the following:

(In millions)

3 unchanged sentences

3.14 %, payable through 2031

4.31 %, payable through 2032

Title XI Debt:

10 unchanged sentences

The Company’s revolving credit facility has committed available borrowing of up to $ 650 million and matures on March 31, 2026.

As of September 30, 2022, the Company had $ 642.2 million of remaining borrowing availability under the revolving credit facility.

The Company used $ 7.8 million of the revolving credit facility for letters of credit outstanding as of September 30, 2022.

There were no outstanding borrowings under the revolving credit facility as of September 30, 2022 and December 31, 2021.

Private Placement Term Loans:

On September 15, 2022, the Company prepaid $ 26.2 million of outstanding principal on the 4.16 percent term loans due in 2027, and $ 24.2 million of outstanding principal on the 4.31 percent term loans due in 2032, which represented all of the remaining outstanding principal for both term loans.

As of March 31, 2023, the Company had $ 642.1 million of remaining borrowing availability under the revolving credit facility.

The Company used $ 7.9 million of the revolving credit facility

for letters of credit outstanding as of March 31, 2023.

There were no outstanding borrowings under the revolving credit facility as of March 31, 2023 and December 31, 2022.

On February 9, 2023, the Company amended the revolving credit facility to replace LIBOR with a new benchmark interest rate, the Secured Overnight Financing Rate (“SOFR”).

There were no other significant changes to the revolving credit facility as a result of this amendment.

Title XI Bonds:

On January 27, 2023, the Company prepaid $ 14.3 million of outstanding principal on the 5.27 percent Title XI Bond representing all of the remaining outstanding principal for this bond.

On March 3, 2023, the Company also prepaid $ 12.1 million of outstanding principal on the 5.34 percent Title XI Bond representing all of the outstanding principal for this bond.

Debt Security and Guarantees:

All of the debt of the Company and MatNav, including related guarantees, as of September 30, 2022 was unsecured, except for the Title XI debt.

All of the debt of the Company and MatNav, including related guarantees, as of March 31, 2023 was unsecured, except for the Title XI debt.

Debt Maturities:

As of September 30, 2022, debt maturities during the next five years and thereafter are as follows:

As of March 31, 2023, debt maturities during the next five years and thereafter are as follows:

Year (in millions)

September 30, 2022

March 31, 2023

Remainder of 2023

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 nine months ended September 30, 2022 and 2021 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, 2023 and 2022 consisted of the following:

Three Months Ended

Nine Months Ended

September 30,

(In millions)

3 unchanged sentences

Total lease cost

Maturities of operating lease liabilities at September 30, 2022 are as follows:

Maturities of operating lease liabilities at March 31, 2023 are as follows:

Year (in millions)

September 30, 2022

March 31, 2023

Remainder of 2023

4 unchanged sentences

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Changes in accumulated other comprehensive income (loss) by component, net of tax, for the nine months ended September 30, 2022 consisted of the following:

Changes in accumulated other comprehensive income (loss) by component, net of tax, for the three months ended March 31, 2023 consisted of the following:

Comprehensive

3 unchanged sentences

Amortization of prior service cost

Amortization of net loss

Amortization of net loss (gain)

Foreign currency exchange

Balance at March 31, 2023

Amortization of prior service cost

Amortization of net loss

Foreign currency exchange

Other adjustments

Balance at June 30, 2022

Amortization of prior service cost

Amortization of net loss

Foreign currency exchange

Other adjustments

Balance at September 30, 2022

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

Changes in accumulated other comprehensive income (loss) by component, net of tax, for the three months ended March 31, 2022 consisted of the following:

Comprehensive

6 unchanged sentences

Balance at March 31, 2022

Amortization of prior service cost

Amortization of net loss

Foreign currency exchange

Other adjustments

Balance at June 30, 2021

Amortization of prior service cost

Amortization of net loss (gain)

Foreign currency exchange

Balance at September 30, 2021

FAIR VALUE OF FINANCIAL INSTRUMENTS

4 unchanged sentences

If the technique used to measure fair value includes inputs from multiple levels of the fair value hierarchy, the lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy.

The Company uses Level 1 inputs for the fair values of its cash, cash equivalents, restricted cash and Capital Construction Fund, and Level 2 inputs for its variable and fixed rate debt.

The fair values of cash, cash equivalents, restricted cash and Capital Construction Fund, and variable rate debt approximate their carrying values due to the nature of the instruments.

The Company uses Level 1 inputs for the fair values of its cash, cash equivalents, restricted cash and cash in the CCF, and Level 2 inputs for its variable and fixed rate debt.

The fair values of cash, cash equivalents, restricted cash and cash in the CCF, and variable rate debt approximate their carrying values due to the nature of the instruments.

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, 2022 and December 31, 2021 are as follows:

The carrying value and fair value of the Company’s financial instruments as of March 31, 2023 and December 31, 2022 are as follows:

Quoted Prices in

4 unchanged sentences

(In millions)

September 30, 2022

Fair Value Measurements at September 30, 2022

March 31, 2023

Fair Value Measurements at March 31, 2023

Cash and cash equivalents

7 unchanged sentences

Restricted cash

Capital Construction Fund

Fixed rate debt

2 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, 2022 and 2021.

The computations for basic and diluted earnings per share for the three and nine months ended September 30, 2022 and 2021 are as follows:

Three Months Ended September 30, 2022

Nine Months Ended September 30, 2022

(In millions, except per share amounts)

Effect of Dilutive Securities

Three Months Ended September 30, 2021

Nine Months Ended September 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 March 31, 2023 and 2022.

The computations for basic and diluted earnings per share for the three months ended March 31, 2023 and 2022 are as follows:

Three Months Ended March 31, 2023

Three Months Ended March 31, 2022

(In millions, except per share amounts)

1 unchanged sentence

SHARE-BASED COMPENSATION

The Company granted time-based restricted stock units and performance-based shares to certain of its employees totaling approximately 2,400 shares with a weighted average grant date fair value of $ 80.36 per share during the three months ended September 30, 2022, and 182,900 shares with a weighted average grant date fair value of $ 100.55 per share during the nine months ended September 30, 2022.

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 $ 5.0 million and $ 4.7 million for the three months ended September 30, 2022 and 2021, and $ 15.5 million and $ 14.2 million for the nine months ended September 30, 2022 and 2021, respectively.

Total unrecognized compensation cost related to unvested share-based compensation arrangements was $ 28.1 million at September 30, 2022, and is expected to be recognized over a weighted average period of approximately 1.9 years.

The Company granted time-based restricted stock units and performance-based shares to certain of its employees totaling approximately 253,300 shares with a weighted average grant date fair value of $ 65.94 per share during the three months ended March 31, 2023.

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 $ 4.6 million and $ 4.7 million for the three months ended March 31, 2023 and 2022, respectively.

Total unrecognized compensation cost related to unvested share-based compensation arrangements was $ 31.4 million at March 31, 2023, and is expected to be recognized over a weighted average period of approximately 2.2 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, 2022 .

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, 2022 and 2021 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

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, 2023 and 2022 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

Amortization of net loss (gain)

Amortization of prior service credit

4 unchanged sentences

Except as described below, the Company believes that based on all information available to it, the Company is currently in compliance, in all material respects, with applicable environmental laws and regulations.

On November 10, 2021, the California Air Resources Board (“CARB”) issued a Notice of Violation (“NOV”) to Matson for alleged violations of the Airborne Toxic Control Measure for Auxiliary Diesel Engines Operated on Ocean-Going Vessels At-Berth in a California Port pursuant to California Code of Regulations, title 17, section 93118.3.

On November 10, 2021, the California Air Resources Board (“CARB”) issued a Notice of Violation (the “NOV”) to Matson for alleged violations of the Airborne Toxic Control Measure for Auxiliary Diesel Engines Operated on Ocean-Going Vessels At-Berth in a California Port pursuant to California Code of Regulations, title 17, section 93118.3.

CARB regulations require that a company’s fleet plug into shore power for at least 80 percent of visits at California ports and reduce auxiliary engine power generation by at least 80 percent.

1 unchanged sentence

The violations were alleged to have been incurred by chartered vessels in the CLX+ service.

These chartered vessels were not outfitted with alternative maritime power capability which would have allowed them to plug into the shore power grid and shut down the vessel diesel generators when at dock.

The Company has presented mitigating factors for consideration in settlement discussions with CARB, as well as plans to achieve compliance in 2022.

Although potential penalties for 2020, 2021 and 2022 violations could, in the aggregate, reasonably be expected to exceed $1 million, they are not expected to be material to the Company’s financial condition, results of operations, or cash flows.

These chartered vessels were not outfitted with alternative maritime power (“AMP”) capability which would have allowed them to plug into the shore power grid and shut down the vessel diesel generators when at dock.

On April 14, 2023, the Company and CARB entered into a settlement agreement pursuant to which the Company agreed to pay approximately $ 2.2 million in civil penalties for 2020, 2021 and 2022 violations.

Other Matters:

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