Alexander & Baldwin, Inc. (NYSE:AXB) (�Company�) today
reported that net income for the full year 2008 was $132.4 million,
or $3.19 per diluted share. Net income for the full year 2007 was
$142.2 million, or $3.30 per diluted share. Revenue for the full
year 2008 was $1,898.3 million, compared with revenue of $1,669.2
million for the full year 2007.
Net income for the fourth quarter of 2008 was $23.9 million, or
$0.58 per diluted share. Net income in the fourth quarter of 2007
was $36.4 million, or $0.85 per diluted share. Revenue for the
fourth quarter of 2008 was $400.0 million, compared with revenue of
$433.0 million in the same period of 2007.
COMMENTS ON QUARTER & OUTLOOK
�While many of the markets served by Alexander & Baldwin
experienced an economic slowdown in 2008, our strong first half
performance in development sales, strong property sales throughout
the year and increased efficiency measures in our transportation
segment enabled the Company to post a favorable full-year result,
representing a modest 7 percent year-over-year decline in net
income and 3 percent decline in diluted earnings per share,� said
Allen Doane, chairman and chief executive officer.
�We are pleased by this performance, but we recognize that our
2009 earnings prospects have been diminished. As a result, we will
continue to take all necessary measures � cost containment and
expense reduction, deferral of non-essential capital projects,
preservation of cash, shoring up of our liquidity sources � to
preserve our financial strength. The actions we are taking will
give us the flexibility to capitalize on attractive opportunities
as they arise, while remaining committed to a strong financial
footing.�
�The Ocean Transportation segment posted a 16 percent decline in
operating profit in 2008 as compared to 2007, reflecting a
considerable decline in container and auto volume, in line with the
accelerated contraction of the Hawaii, Guam and China markets. In
all of our trade lanes, vigorous focus on cargo mix, yield
enhancement, fleet optimization and cost containment initiatives
throughout the year partially offset the unexpectedly precipitous
volume decline. Earnings from Matson Navigation�s stevedoring joint
venture, which are a barometer for Asia-Pacific trade activity,
were off significantly. In the fourth quarter, as the full thrust
of the economic contraction took hold, volume dropped sharply,
resulting in a 30 percent decline in Ocean Transportation operating
profit.�
�The Logistics Services segment, like Ocean Transportation,
experienced lower volume levels in its service lines that
negatively impacted operating profit by 15 percent for the year,
although higher yields offset the lower volume to some degree. As
well, higher expenses related to the ramp-up of Matson Global
Distribution Services (�Matson Global�), including an acquisition,
modestly impacted earnings but provide a solid foundation for
growth in 2009. Matson Integrated Logistics� fourth quarter
operating profit was off from the prior year due to these same
volume declines.�
�Historically low sugar production levels resulting from a
two-year drought led to a considerable loss of nearly $13 million
in our Agribusiness segment. 2008 was the driest year on record
with water deliveries to the fields at 50 percent of the previous
60-year average.�
�Our Real Estate Leasing segment posted operating profit of
approximately $48 million, a decline of 7 percent from the prior
year, due primarily to higher depreciation expenses attributable to
the net addition of 1.3 million square feet to our portfolio,
mostly in industrial assets, and to modestly lower U.S. Mainland
occupancy late in the year related to softened higher-margin office
and retail demand. Fourth quarter results were 16 percent below
2007 levels. Still, average occupancy rates at our properties were
at high levels, 98 and 95 percent in the Hawaii and mainland
portfolios, respectively.�
�Our Real Estate Sales operating profit in 2008 was very strong,
28 percent higher than 2007, resulting from a diversified mix of
residential condominium sales (Oahu), commercial property sales
(U.S. Mainland), and land/ground lease sales (Maui). That noted, in
the latter half of the year there was a significant drop in
development sales activity as consumer demand for primary and
resort residential units abated. Fourth quarter operating profit of
$19.3 million was 17 percent lower than 2007, comprising a mix of
commercial property and land sales.�
�In addition to the financial results achieved, we repurchased
nearly 1.5 million shares of the Company�s common stock through
open market purchases in 2008 and raised our dividend for the third
straight year. These initiatives underscore our commitment to
returning cash to shareholders while concurrently making
investments that create value over time.�
TRANSPORTATION�OCEAN TRANSPORTATION
� � Quarter Ended December 31, (dollars in millions) �
2008
� � 2007 � � Change Revenue �
$ 239.5 � $ 262.3 � -9
% Operating profit
$ 21.1 $ 30.1 -30 % Operating
profit margin � �
8.8 % � � 11.5 % � � � Volume
(Units) Hawaii containers
35,900 41,500 -13 % Hawaii
automobiles
15,300 33,200 -54 % China containers
11,100 13,200 -16 % Guam containers � �
3,300 � � �
3,900 � � -15 % �
For the fourth quarter of 2008, lower container volume in all
trade lanes resulted in lower revenue and $9.0 million lower
operating profit. Ongoing yield and cost containment initiatives,
including fleet rationalization, partially offset the impact of
reduced volume and higher maintenance and repair expenses. Hawaii
container and automobile volume declines (13 and 54 percent,
respectively) reflect a broad-based weakness in the economy. China
container volume decreased 16 percent compared with the fourth
quarter of 2007, due to significantly lower Asian import
demand.
� � Year Ended December 31, (dollars in millions) �
2008 � �
2007 � � Change Revenue �
$ 1,023.7 � $ 1,006.9 � 2 %
Operating profit
$ 105.8 $ 126.5 -16 % Operating
profit margin � �
10.3 % � � 12.6 % � � � Volume
(units): Hawaii containers
152,700 167,500 -9 % Hawaii
automobiles
86,300 110,100 -22 % China containers
47,800 51,200 -7 % Guam containers � �
13,900 � � �
14,600 � � -5 % �
For the full year 2008, Ocean Transportation revenue increased
by 2 percent due to higher revenue from fuel surcharges, including
a bunker adjustment factor introduced into our China trade lane in
May, favorable yields, and improved cargo mix that were partially
offset by reduced container volume in all trades, principally in
Hawaii. Container and auto volume changes were due to the same
factors cited for the quarter. Operating profit for 2008 decreased
by 16 percent, primarily from the net volume changes, increases in
fuel costs, increases in vessel and terminal handling costs due to
higher stevedoring rates and lower earnings from Matson�s SSAT
joint venture, partially offset by lower voyage costs arising from
optimization of fleet deployment, and lower transportation and
general and administrative expenses.
TRANSPORTATION�LOGISTICS SERVICES
� � Quarter Ended December 31, (dollars in millions) �
2008
� � 2007 � � Change Intermodal revenue �
$ 58.8 � $
70.4 � -16 % Highway revenue �
41.0 � 37.4 10 % Total
Revenue �
$ 99.8 � � $ 107.8 � � -7 % Operating
profit
$ 4.1 $ 4.7 -13 % Operating profit margin � �
4.1 % � � 4.4 % � � � �
Fourth quarter 2008 Logistics services revenue of $99.8 million
was $8.0 million, or 7 percent, lower than the fourth quarter of
2007, as a 16 percent decline in intermodal revenue was partially
offset by a 10 percent increase in highway revenue and by revenues
generated by Matson Global. Operating profit of $4.1 million was
$0.6 million, or 13 percent, lower than in the comparable period
last year. The decrease was due principally to lower volume levels,
partially offset by higher yields in intermodal lines.
� � Year Ended December 31, (dollars in millions) �
2008 � �
2007 � � Change Intermodal revenue �
$ 271.0 � $
280.2 � -3 % Highway revenue �
165.0 � 153.3 8 % Total
Revenue �
$ 436.0 � � $ 433.5 � � 1 % Operating
profit
$ 18.5 $ 21.8 -15 % Operating profit margin �
�
4.2 % � � 5.0 % � � � �
Logistics revenue increased $2.5 million, or 1 percent, in 2008
compared with 2007, due primarily to revenue related to the
commencement of Matson Global�s warehousing operations and the
acquisition of PACAM, a regional warehousing and distribution
company, in the third quarter. The increase was partially offset by
revenue loss from lower volume in intermodal markets, and to the
loss of agents and softness in certain agents� markets in the
highway business. The decrease in operating profit was primarily
the result of lower volumes, exacerbated by non-recurring items
that positively impacted income in the third quarter of 2007, and
higher general and administrative expenses from the commencement of
Matson Global�s operations.
REAL ESTATE�INDUSTRY
Real estate leasing and sales revenue and operating profit are
analyzed before discontinued operations are removed. This is
consistent with how the Company evaluates segment results and makes
decisions.
REAL ESTATE�LEASING
The Company regularly makes dispositions of commercial
properties from its leasing portfolio and land under ground leases
and subsequently reinvests proceeds, on a tax-deferred basis, in
new properties. As a result, the Company often incurs higher
depreciation expenses attributable to the replacement of formerly
non-depreciable property with depreciable property, or a step-up in
the cost basis of its properties. Further, due to the inherent
timing lag between disposition and reinvestment, the Company incurs
modest loss of revenue and income in these interim periods.
� � Quarter Ended December 31, (dollars in millions) �
2008
� 2007 � Change Revenue �
$ 25.5 � $
27.0
� -6 % Operating profit
$ 10.2 $
12.1
-16 % Operating profit margin � �
40.0 % � �
44.8
%
� � � �
Real Estate Leasing revenue for the fourth quarter of 2008 was
$25.5 million, a decrease of 6 percent, and operating profit
decreased 16 percent compared to the fourth quarter of 2007.
Earnings were primarily impacted by lower mainland occupancy at
higher-margin office properties and higher depreciation and
amortization expenses resulting from increased acquisition activity
throughout the year, offset by the net earnings improvement
resulting from increased acquisition activity and lower general and
administrative costs.
During the quarter, the company sold its Venture Oaks office
building (California) and several improved and unimproved parcels
in Maui, and acquired the Midstate 99 Distribution Center
(California).
� � Year Ended December 31, (dollars in millions) �
2008 �
2007 � Change Revenue �
$ 107.8 � $ 108.5 � -1 %
Operating profit
$ 47.8 $ 51.6 -7 % Operating profit
margin � �
44.3 % � � 47.6 % � � � Average Occupancy
Rate: Mainland
95 % 97 % Hawaii � �
98
% � � 98 % � � � Leasable Space (million sq. ft.): Mainland
6.6 5.2 27 % Hawaii � �
1.3 � � � 1.4 � � -7 % �
For the full year 2008, Real Estate Leasing revenue decreased
slightly, due to lower mainland occupancy and to the net effect of
nonrecurring items recorded in the first quarter of 2008 and in
2007, partially offset by net increases from acquisition and
disposition activity. Operating profit was 7 percent lower in 2008
than compared to 2007, a result of higher depreciation and
amortization expenses and lower mainland occupancy, partially
offset by lower general and administrative expenses.
Leasable space increased by a net 1.3 million square feet in
2008 compared with 2007, due to the net effect of four acquisitions
of warehouse and distribution facilities and the disposition of two
retail centers and one office building.
REAL ESTATE�SALES
� � Quarter Ended December 31, (dollars in millions) �
2008
� 2007 Change Improved property sales �
$ 30.3 � $
16.6 83 % Development sales
5.6 10.7 -48 % Unimproved/other
property sales �
18.5 � 5.1 4 X Total revenue �
$
54.4 � � $ 32.4 � 68 % Operating profit before joint
ventures
$ 20.6 $ 16.2 27 % Earnings/(loss) from
joint ventures �
(1.3 ) � 7.0 NM Total operating profit �
$ 19.3 � � $ 23.2 � -17 % �
In the fourth quarter of 2008, Real Estate Sales revenue
increased by $22.0 million as compared to the fourth quarter of
2007. The increase was primarily due to the sales of the Venture
Oaks office building (California) and several improved properties
and unimproved parcels on Maui. Operating profit decreased by 17
percent during the fourth quarter of 2008, as compared to the same
period in 2007, due principally to joint venture sales at the
Company�s Kai Malu joint venture that occurred in the fourth
quarter of 2007, partially offset by higher improved property sales
in the fourth quarter of 2008. In addition, the Company recorded a
$3.0 million impairment loss from its Santa Barbara Ranch joint
venture in the fourth quarter of 2008.
� � Year Ended December 31, (dollars in millions) �
2008 �
2007 Change Improved property sales �
$ 103.6 � $
90.2 15 % Development sales
217.4 14.9 15 X Unimproved/other
property sales �
29.2 � 12.7 130 % Total revenue �
$
350.2 � � $ 117.8 � 197 % Operating profit before joint
ventures
$ 86.6 $ 51.8 67 % Earnings from joint
ventures �
9.0 � 22.6 -60 % Total operating profit �
$ 95.6 � � $ 74.4 � 28 % �
Real Estate Sales revenue in 2008 was $350.2 million and
operating profit was $95.6 million, which represent increases of
197 percent and 28 percent, respectively, versus 2007. Full year
revenue and operating profit include the sale of residential and
commercial units at the Keola La�i high-rise development in
Honolulu, two shopping centers and one office building in the U.S.
Mainland, single-family homes at Keala�ula on Kauai, a residential
apartment building on Maui, three improved Maui properties, and
several leased fee parcels and other land parcels on Maui. Full
year revenue and operating profit from joint ventures were
primarily attributable to sales activity at Kai Malu and several
Valencia projects, partially offset by the Company�s share of
marketing and other operating expenses at the Company�s Kukui�ula
joint venture, and an impairment loss at the Company�s Santa
Barbara Ranch joint venture. In 2008, operating profit also
included a final insurance settlement payment.
AGRIBUSINESS
The operating results of the Agribusiness segment are dependent
on a number of factors, particularly weather conditions, which
affect yields, volume of hydro-electric generation, planting,
harvesting, and factory operations. Consequently, operating results
from the Agribusiness segment will vary from period to period.
� � Quarter Ended December 31, (dollars in millions) �
2008
� 2007 � Change Revenue �
$ 28.1 � $ 30.7 � -8 %
Operating loss �
$ (6.1 ) � $ (0.7 ) � -9 X
Tons sugar produced � �
30,400 � � � 34,000 � � -11 % �
Agribusiness revenue for the fourth quarter of 2008 decreased 8
percent primarily due to lower raw sugar sales, lower coffee sales
and lower power sales, partially offset by an increase in sales of
specialty sugars. Operating loss increased significantly due
principally to the decrease in raw sugar production and higher
fuel-related operating costs and to lower power sales volume
stemming from a lack of hydro-power associated with prolonged
drought conditions.
� � Year Ended December 31, (dollars in millions) �
2008 �
2007 � Change Revenue �
$ 124.3 � $ 123.7 � --
Operating profit (loss)
$ (12.9 ) $ 0.2 NM
Operating profit margin � �
NM � � � 0.2 % � � � Tons sugar
produced � �
145,200 � � � 164,500 � � -12 % �
Full year revenues for Agribusiness were essentially flat as
compared to the prior year, as higher power sales prices and
specialty sugar sales volume were offset by lower volume of raw
sugar and soil sales and lower molasses sales prices. Operating
losses were significant and are due to the 12 percent reduction in
sugar volume and higher fuel-related operating costs, partially
offset by higher power prices.
CORPORATE EXPENSE
Fourth quarter 2008 corporate expenses of $4.6 million were $3.2
million lower than the fourth quarter of 2007. For the year,
corporate expenses were $21.0 million, or $6.3 million lower than
full year 2007. The decrease in the quarter and the year are due
principally to lower expenses related to performance-based
incentive programs, and to cost containment initiatives related to
corporate overhead.
CONDENSED CASH FLOW TABLE �
� � Year Ended December 31, (dollars in millions, unaudited) �
2008 � 2007 � Change Cash Flow from Operating Activities �
$ 275 � $ 124 � 2 X � Capital Expenditures (1)
Transportation
(38 ) (68 ) -44 % Real Estate
(55 ) (34 ) 62 % Agribusiness and other �
(16
) � (20 ) -20 % Total Capital Expenditures
(109
) (122 ) -11 % � Other Investing Activities, Net �
(40 ) � (23 ) 74 % Cash Used in Investing Activities
$ (149 ) $ (145 ) 3 % � Net Debt
Proceeds/(Payments)
(16 ) 66 NM Repurchase of Capital
Stock
(59 ) (33 ) 79 % Dividends Paid
(51
) (48 ) 6 % Other Financing Activities, Net �
2 � 8
-75 % Cash Used in Financing Activities
$ (124
) $ (7 ) 18 X � Net Increase/(Decrease) in Cash �
$
2 � �
$ (28 ) � NM � �
(1) Excludes non-cash 1031
transactions and real estate development activity.
�
Alexander & Baldwin, Inc., headquartered in Honolulu, is
engaged in ocean transportation and logistics services, through its
subsidiaries, Matson Navigation Company, Inc. and Matson Integrated
Logistics, Inc.; in real estate, through A&B Properties, Inc.;
and in agribusiness, through Hawaiian Commercial & Sugar
Company and Kauai Coffee Company, Inc. Additional information about
A&B may be found at its web site: www.alexanderbaldwin.com.
Statements in this press release that are not historical facts
are �forward-looking statements,� within the meaning of the Private
Securities Litigation Reform Act of 1995, that involve a number of
risks and uncertainties that could cause actual results to differ
materially from those contemplated by the relevant forward-looking
statement. These forward-looking statements are not guarantees of
future performance. This release should be read in conjunction with
our Annual Report on Form 10-K and our other filings with the SEC
through the date of this release, which identify important factors
that could affect the forward-looking statements in this
release.
ALEXANDER & BALDWIN, INC.
2008 and 2007 Fourth-Quarter and
Full-Year Results (Condensed)
(In Millions, Except Per Share
Amounts, Unaudited)
� �
2008
2007
Three Months Ended December 31:
Revenue $ 400.0 $ 433.0 Income From Continuing Operations $ 10.9 $
25.6 Discontinued Operations: Properties1 $ 13.0 $ 10.8 Net Income
$ 23.9 $ 36.4 Basic Share Earnings Continuing Operations $ 0.26 $
0.61 Discontinued Operations $ 0.32 $ 0.25 Net Income $ 0.58 $ 0.86
Diluted Share Earnings Continuing Operations $ 0.26 $ 0.59
Discontinued Operations $ 0.32 $ 0.26 Net Income $ 0.58 $ 0.85
Basic Average Shares Outstanding 41.1 42.3 Diluted Average Shares
Outstanding 41.2 42.9 � �
2008
2007
Years Ended December 31:
Revenue $ 1,898.3 $ 1,669.2 Income From Continuing Operations $
95.9 $ 104.2 Discontinued Operations: Properties1 $ 36.5 $ 38.0 Net
Income $ 132.4 $ 142.2 Basic Share Earnings Continuing Operations $
2.32 $ 2.45 Discontinued Operations $ 0.89 $ 0.89 Net Income $ 3.21
$ 3.34 Diluted Share Earnings Continuing Operations $ 2.31 $ 2.42
Discontinued Operations $ 0.88 $ 0.88 Net Income $ 3.19 $ 3.30
Basic Average Shares Outstanding 41.2 42.5 Diluted Average Shares
Outstanding 41.5 43.1 �
1 �Discontinued Operations:
Properties� consists of sales, or intended sales, of certain
landsand buildings that are material and have separately
identifiable earnings and cash flows.
�
Industry Segment Data, Net Income
(Condensed)
(In Millions, Except Per Share
Amounts, Unaudited)
� �
Three Months Ended
Year Ended
December 31,
December 31,
2008
�
2007
2008
�
2007
Revenue:
Transportation Ocean Transportation $ 239.5 $ 262.3 $ 1,023.7 $
1,006.9 Logistics Services 99.8 107.8 436.0 433.5 Real Estate
Leasing 25.5 27.0 107.8 108.5 Sales 54.4 32.4 350.2 117.8 Less
Amounts Reported In Discontinued Operations (43.7 ) (24.2 ) (133.0
) (112.0 ) Agribusiness 28.1 30.7 124.3 123.7 Reconciling Items �
(3.6 ) � (3.0 ) � (10.7 ) � (9.2 ) Total Revenue $ 400.0 $ 433.0 $
1,898.3 $ 1,669.2 �
Operating Profit, Net Income:
Transportation Ocean Transportation $ 21.1 $ 30.1 $ 105.8 $ 126.5
Logistics Services 4.1 4.7 18.5 21.8 Real Estate Leasing 10.2 12.1
47.8 51.6 Sales 19.3 23.2 95.6 74.4 Less Amounts Reported In
Discontinued Operations (21.0 ) (17.4 ) (59.1 ) (61.0 )
Agribusiness � (6.1 ) � (0.7 ) � (12.9 ) � 0.2 Total Operating
Profit 27.6 52.0 195.7 213.5 Interest Expense (6.2 ) (5.6 ) (23.7 )
(18.8 ) General Corporate Expenses � (4.6 ) � (7.8 ) � (21.0 ) �
(27.3 ) Income From Continuing Operations Before Income Taxes 16.8
38.6 151.0 167.4 Income Taxes � (5.9 ) � (13.0 ) � (55.1 ) � (63.2
) Income From Continuing Operations 10.9 25.6 95.9 104.2
Discontinued Operations � 13.0 � 10.8 � 36.5 � 38.0 Net Income $
23.9 $ 36.4 $ 132.4 $ 142.2 � Basic Earnings Per Share, Continuing
Operations $ 0.26 $ 0.61 $ 2.32 $ 2.45 Basic Earnings Per Share,
Discontinued Operations $ 0.32 $ 0.25 $ 0.89 $ 0.89 Basic Earnings
Per Share, Net Income $ 0.58 $ 0.86 $ 3.21 $ 3.34 � Diluted
Earnings Per Share, Continuing Operations $ 0.26 $ 0.59 $ 2.31 $
2.42 Diluted Earnings Per Share, Discontinued Operations $ 0.32 $
0.26 $ 0.88 $ 0.88 Diluted Earnings Per Share, Net Income $ 0.58 $
0.85 $ 3.19 $ 3.30 � Basic Average Shares Outstanding 41.1 42.3
41.2 42.5 Diluted Average Shares Outstanding 41.2 42.9 41.5 43.1 �
Consolidated Balance Sheets
(Condensed)
(In
Millions, Unaudited)
� �
December 31,
December 31,
2008
2007
� ASSETS Current Assets $ 284 $ 421 Investments in Affiliates 208
184 Real Estate Developments 78 99 Property, Net 1,590 1,582 Other
Long-Term Assets � 190 � 193 Total $ 2,350 $ 2,479 � LIABILITIES
& EQUITY Current Liabilities $ 238 $ 322 Long-Term Debt 452 452
Employee Benefit Plans 122 50 Other Long-Term Liabilities 52 57
Deferred Income Taxes 414 468 Shareholders� Equity � 1,072 � 1,130
Total $ 2,350 $ 2,479
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