ALEXANDER & BALDWIN, INC.
FORM 10-K
ANNUAL REPORT FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1994
PART I
ITEMS 1 AND 2. BUSINESS AND PROPERTIES
Alexander & Baldwin, Inc. ("A&B") is a diversified corporation with most of
its operations centered in Hawaii. It was founded in 1870 and incorporated in
1900. Ocean transportation operations and related shoreside operations of A&B
are conducted by a wholly-owned subsidiary, Matson Navigation Company, Inc.
("Matson"), and several Matson subsidiaries, all of which are headquartered in
San Francisco. Container leasing operations are conducted by a wholly-owned
subsidiary of Matson, Matson Leasing Company, Inc. ("Matson Leasing"), which is
headquartered in San Francisco. Real property and food products operations are
conducted by a wholly-owned subsidiary of A&B, A&B-Hawaii, Inc. ("ABHI"), and
several ABHI subsidiaries, including California and Hawaiian Sugar Company, Inc.
("C&H"), all of which are headquartered in Hawaii or California.
The industry segments of A&B are as follows:
A. Ocean Transportation - carrying freight primarily between various
United States Pacific Coast and Hawaii ports; providing terminal,
stevedoring, tugboat and container equipment maintenance services in
certain of those ports; and arranging United States Mainland
intermodal transportation.
B. Container Leasing - leasing marine cargo containers in standard 20-
foot and 40-foot lengths to transportation companies, primarily ocean
carriers in the liner trades.
C. Property Development and Management - developing real property in
Hawaii and on the U.S. Mainland; selling residential properties; and
managing, leasing, selling and purchasing commercial and industrial
properties.
D. Food Products - growing sugarcane and coffee in Hawaii; producing raw
sugar, molasses and green coffee; refining raw sugar, and marketing
and distributing refined sugar products in the western United States;
marketing and distributing roasted coffee and green coffee; providing
sugar and molasses hauling and storage, general freight and petroleum
hauling and self-storage services in Hawaii; and generating and
selling electricity.
For information about the revenue, operating profits and identifiable
assets of A&B's industry segments for the three years ended December 31, 1994,
see "Industry Segment Information" on page 28 of the Alexander & Baldwin, Inc.
1994 Annual Report ("1994 Annual Report"), which information is incorporated
herein by reference.
DESCRIPTION OF BUSINESS AND PROPERTIES
A. OCEAN TRANSPORTATION
(1) FREIGHT SERVICES
Matson offers containership freight services between ports at Los
Angeles, Oakland and Seattle and the major ports in Hawaii, which are located on
the islands of Hawaii, Kauai, Maui and Oahu. Roll-on/roll-off service is
provided between Los Angeles and Oakland and the major ports in Hawaii.
Portland container cargo is moved overland between Portland and Seattle at no
extra charge. Principal westbound cargoes carried by Matson to Hawaii include
dry containers of mixed commodities, refrigerated cargoes, packaged foods,
building materials and motor vehicles. Principal eastbound cargoes carried by
Matson from Hawaii include household goods, canned pineapple, refrigerated con
tainers of fresh pineapple, motor vehicles and molasses. The preponderance of
Matson's revenue is derived from westbound carriage of containers and motor
vehicles.
Matson is the principal carrier of ocean cargo between the United
States Pacific Coast and Hawaii. In 1994, Matson carried 240,612 twenty-four
foot equivalent units of container cargo and 116,762 motor vehicles between
these destinations. Matson also offers container and conventional freight
service between the United States Pacific Coast and the ports of Kwajalein,
Ebeye and Majuro in the Republic of the Marshall Islands and Johnston Island,
all via Honolulu.
In July 1994, Matson inaugurated its Pacific Coast Shuttle
Service, which provides containership freight service among ports at Los
Angeles, Oakland, Seattle, and Vancouver, British Columbia.
See "Rate Regulation" below with respect to Matson's freight
rates.
(2) VESSELS
Matson has been a leader in the containerization of freight in
the Pacific Basin since 1958. Matson's fleet consists of five containerships,
four combination container/trailerships, one roll-on/roll-off barge, two con
tainer barges equipped with cranes which serve the neighbor islands of Hawaii,
and one container barge equipped with cranes in the mid-Pacific service.
During 1994, Matson completed a life-extension and "open top"
conversion program for two containerships. Conversion of some holds to "open
top" design permits containers to be stacked higher without the need for lashing
or hatch covers. The life-extension program is expected to add 10 to 15 years
to the service life of each ship.
The thirteen vessels in Matson's fleet represent an investment of
approximately $648,000,000 during the past 25 years. With one exception, the
current fleet has been acquired through withdrawals from the Matson Capital
Construction Fund, established under Section 607 of the Merchant Marine Act,
1936, as amended. The exception is a combination container/trailership which
Matson continues to operate under a charter for a 25-year term ending in 1998,
with options to renew the charter for a total of up to five years and to
purchase the vessel at the end of the charter at fair market value.
Matson's fleet units are described in the list on the following
page.[Table inserted below in electronic Edgar filing.]
<PAGE>
<TABLE>
<CAPTION>
MATSON NAVIGATION COMPANY, INC.
-------------------------------
FLEET - 12/31/94
----------------
Usable Cargo Capacity
--------------------------------------------------------
Containers Vehicles Molasses
Year Maximum Maximum --------------------------- --------------- ---------
Vessel Official Year Recon- Speed Deadweight Reefer
Name Number Built structed Length (Knots) (Long Tons) 24' 40' Slots TEUs (1) Autos Trailers Short Tons
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
R.J. PFEIFFER 979814 1992 713'6" 23.0 27,100 625 610 300 1,970 -- -- --
KAIMOKU 573223 1976 1990 790'9" 21.5 14,551 276 310 119 1,020 350 54 --
KAINALU 557149 1974 1990 790'9" 21.5 14,976 276 310 119 1,020 350 54 --
KAUAI 621042 1980 1994 720'5-1/2" 22.5 26,308 458 538 310 1,626 44 2,600
LURLINE 549900 1973 1982 826'6" 21.5 22,221 597 345 340 1,476 220 81 2,100
MANUKAI 524219 1970 720'5-1/2" 22.5 27,107 537 416 251 1,476 5,300
MANULANI 528400 1970 720'5-1/2" 22.5 27,165 537 416 251 1,476 5,300
MATSONIA 553090 1973 1987 760'0" 21.5 22,501 683 400 335 1,620 450 56 4,300
MAUI 591709 1978 1993 720'5-1/2" 22.5 26,623 458 538 310 1,626 2,600
HALEAKALA (2) 676972 1984 350'0" -- 4,658 144 72 84 316 2,100
ISLANDER (2) 933804 1988 372'0" -- 6,837 276 24 70 380 --
MAUNA LOA (2) 676973 1984 350'0" -- 4,658 144 72 84 316 2,100
WAIALEALE (3) 978516 1991 345'0" -- 5,621 35 230 45
JOE SEVIER (4) 500799 1965 80'0" 10.0 --
MAOI (4) 618705 1980 75'0" 10.0 --
</TABLE>
____________________________________
(1) "Twenty-foot Equivalent Units" (includes trailers)
(2) Container Barge
(3) Roll-on/Roll-off Barge
(4) Tug
<PAGE>
As a complement to its fleet, Matson owns or has under capital
leases approximately 17,900 containers, 6,800 container chassis, 500 auto-frames
and miscellaneous other equipment. In addition, 280 20-foot chassis, 600
40-foot chassis, 300 45-foot chassis, 500 40-foot dry containers, 100 45-foot
dry containers, and 480 40-foot refrigerated containers are being manufactured
and are scheduled for delivery during 1995. After disposing of older container
equipment, Matson expects to have 18,500 containers and 7,800 chassis on hand at
the end of 1995. Capital expenditures by Matson for vessels and equipment
totaled approximately $24,600,000 in 1994.
(3) TERMINALS
Matson Terminals, Inc. ("Matson Terminals"), a wholly-owned
subsidiary of Matson, provides container stevedoring, container equipment
maintenance, and other terminal services for Matson at the ports of Honolulu,
Los Angeles, Oakland and Seattle, as well as for other ocean carriers at its
Pacific Coast and Honolulu locations.
Matson Terminals is among the largest container stevedoring and
terminal operators on the United States Pacific Coast. An estimated total of
1,159 vessel calls were served at all Matson Terminals container facilities in
1994.
Matson Terminals owns or leases the shoreside cranes and
supporting container-handling equipment at its container facilities and owns all
of the maintenance equipment used in providing container equipment and terminal
maintenance services.
Matson Terminals has lease agreements with port authorities for
the use of publicly-owned container terminal properties at Honolulu, Los
Angeles, Oakland and Seattle. Matson Terminals does not anticipate any
difficulty in renewing its lease agreements as they expire or in finding
satisfactory alternative premises. Current terminal lease agreements expire as
follows:
Honolulu September 2016
Los Angeles January 1996
Oakland December 2008
Seattle December 1999, subject to an option to renew for
ten years
Capital expenditures for terminals and equipment totaled
approximately $5,100,000 in 1994.
(4) OTHER SERVICES
Matson Intermodal System, Inc. ("Matson Intermodal"), a
wholly-owned subsidiary of Matson, was formed in 1987 to serve as an intermodal
marketing company which arranges United States Mainland rail and truck
transportation for shippers and carriers, frequently in conjunction with prior
or subsequent ocean transportation.
Matson Services Company, Inc. ("Matson Services"), a wholly-owned
subsidiary of Matson, owns two tugboats which are employed in Hawaiian waters
under operating agreements to provide harbor assistance for vessels calling at
the islands of Hawaii and Maui.
Matson manages the Moku Pahu, an integrated tug/barge which
transports raw sugar from Hawaii to the Crockett, California sugar refinery
owned by C&H, a wholly-owned subsidiary of ABHI. The Moku Pahu is owned by the
Hawaiian Sugar & Transportation Cooperative, of which ABHI's two sugar
plantations are members.
(5) COMPETITION
Matson's freight service between the United States Pacific Coast
and Hawaii has one major containership competitor which serves Long Beach,
Oakland, Tacoma and Honolulu, employing vessels destined for Guam and the Far
East. Other competitors include two common carrier barge services, unregulated
proprietary and contract carriers of bulk cargoes and air cargo services.
Matson vessels are operated on schedules which make available to
shippers and consignees regular day-of-the-week sailings from the United States
Pacific Coast and day-of-the-week arrivals to Hawaii, a type of service that is
very attractive to customers because it decreases their warehousing costs. In
addition, Matson competes by offering more comprehensive service to customers,
supported by its scope of equipment and its efficiency and experience in the
handling of containerized cargoes, and by competitive pricing. Although air
freight competition is intense for time-sensitive or perishable cargoes,
historic and projected inroads of such competition in cargo volume are limited
by the amount of cargo space available in passenger aircraft and by generally
higher air freight rates.
The carriage of cargo between the United States Pacific Coast and
Hawaii on foreign-built and foreign-documented vessels is prohibited by
Section 27 of the Merchant Marine Act, 1920, frequently referred to as the Jones
Act. However, foreign-flag vessels bringing cargo to Hawaii from foreign
sources provide indirect competition for Matson's container freight service
between the United States Pacific Coast and Hawaii. Far East countries,
Australia and New Zealand have direct foreign-flag services to Hawaii.
Matson Terminals competes with numerous other companies which
perform the same or similar services. The container stevedoring and terminal
services business is extremely competitive. The primary considerations of ocean
carriers when selecting stevedore and terminal operators are rates, quality of
service, expertise and reputation. The industry is highly capital-intensive
because of the need for expensive container-handling equipment.
Matson Intermodal competes for freight with a number of large and
small companies engaged in intermodal transportation. Matson Services competes
with other large operators of tugboats in Hawaiian waters.
(6) LABOR RELATIONS
The absence of strikes and the availability of labor through
hiring halls are important to maintenance of profitable operations by Matson.
Matson's operations have been disrupted significantly by strikes in only two of
the last 39 years, most recently in 1972. See "Employees and Labor Relations"
below for a description of labor agreements and certain unfunded liabilities for
multi-employer pension plans to which Matson and Matson Terminals contribute.
(7) RATE REGULATION
Matson is regulated by the Federal Maritime Commission ("FMC")
with respect to rates, carrier agreements, shipping practices and other matters
relating to its carriage of cargo in the domestic and foreign commerce of the
United States. Matson Terminals is regulated by the FMC with respect to
terminal lease agreements and its practices in providing terminal services at
United States ports.
Matson is regulated by the Interstate Commerce Commission to the
extent of its joint rates with motor carriers for the carriage of commodities
subject to regulation under the Interstate Commerce Act. Matson's carriage of
exempt agricultural commodities under joint rates with motor carriers, and
carriage of containerized cargoes in trailer-on-flatcar/container-on-flatcar
service under joint tariff circulars with railroads, are unregulated. Mail is
carried under contracts with the U.S. Postal Service. Approximately 46% of
Matson's revenue is derived under arrangements not subject to regulation by the
FMC.
The FMC has promulgated guidelines under the Intercoastal
Shipping Act, 1933, for the determination of a just and reasonable rate of
return or profit for domestic offshore ocean common carriers. Under the
guidelines, as revised to date, and FMC decisions implementing and interpreting
them, rate of return on rate base is the criterion used in determining a just
and reasonable rate of return. Rate base includes net book value of vessels,
other property and equipment and assets of related companies, to the extent they
are devoted to the domestic common carrier service regulated by the FMC. Also
included in rate base are working capital and capitalized leases. The FMC
guidelines do not specify a just and reasonable rate of return on rate base, but
merely the procedure for determining it. The FMC applies a "comparable
earnings" test in determining a just and reasonable rate of return. The
"comparable earnings" test equates the rate of return of domestic common
carriers on rate base with the earnings of American industry generally on total
capital, with appropriate adjustments for current trends in interest rates and
the costs of capital. The FMC also considers the relative riskiness of
individual domestic common carriers in relation to the riskiness of American
industrial companies generally.
In April 1994, the FMC announced proposed revisions to its
guidelines for determining a just and reasonable rate of return. It is not
known whether, when, or to what extent the FMC will implement this proposal.
B. CONTAINER LEASING
Matson Leasing, which began operations in 1989, leases marine cargo
containers worldwide to the transportation industry, primarily to ocean carriers
in the liner trades.
Headquartered in San Francisco, Matson Leasing currently has offices
in New York, London, Paris, Bremen, Tokyo, Singapore, Hong Kong, Seoul, Sydney,
Rio de Janeiro and Bombay. It has 67 employees and utilizes 92 container depots
world-wide.
The Matson Leasing container fleet consists entirely of standard
20-foot and 40-foot steel dry freight containers, the principal types of
containers used in world trade. At the end of 1994, the fleet consisted of
112,000 containers, including 11,000 units delivered in 1994. Additional
containers are planned for delivery in 1995. In 1994, Matson Leasing's capital
expenditures for new containers totaled approximately $32,000,000. All
container leases are operating leases, with approximately 98% consisting of
long-term or master lease agreements.
With its fleet of approximately 160,000 TEUs (twenty-foot equivalent
units, a standard measure of container capacity), Matson Leasing competes on a
world-wide basis and ranks eighth in terms of fleet size among lessors of marine
containers. The ten largest lessors have fleets ranging from 45,000 to
1,300,000 TEUs. Lessors currently control approximately half of all marine
containers in service. Matson Leasing's average fleet utilization rate was 88%
in 1994, compared with 83% in 1993.
C. PROPERTY DEVELOPMENT AND MANAGEMENT
(1) GENERAL
The property development and management operations of A&B are
conducted by ABHI, a wholly-owned subsidiary headquartered in Honolulu. A&B and
its subsidiaries own approximately 92,854 acres of land, consisting of approxi
mately 90,786 acres in Hawaii and approximately 2,068 acres elsewhere, as
follows:
LOCATION NUMBER OF ACRES
Maui 68,852
Kauai 21,933
Oahu 1
California 2,000
Texas 42
Washington 23
Florida 3
The bulk of this acreage currently is used for agricultural and related acti
vities, and includes pasture land leased to ranchers, watersheds and con
servation reserves. The balance is used or planned for development or other
urban uses. An additional 17,900 acres on Maui and Kauai are leased from third
parties.
ABHI is actively involved in the entire spectrum of land
development, including planning, zoning, financing, constructing, purchasing,
managing and leasing, and selling and exchanging real property.
(2) PLANNING AND ZONING
The entitlement process for development of property in Hawaii is
both time-consuming and costly, involving numerous State and County regulatory
approvals. For example, conversion of an agriculturally-zoned parcel to
residential zoning usually requires the following approvals: amendment of the
County general plan to reflect the desired residential use; approval by the
State Land Use Commission to reclassify the parcel from the "agricultural"
district to the "urban" district; County approval to rezone the property to the
precise residential use desired; and, if the parcel is located in the Coastal
Zone Management area, the granting of a Special Management Area Permit by the
County Planning Commission. The entitlement process is complicated by the
conditions, restrictions and exactions that are placed on these approvals, such
as the construction of infrastructure improvements, payment of impact fees,
restrictions on the permitted uses of the land, provision of affordable housing,
and/or mandatory fee sale of portions of the project.
ABHI actively works with regulatory agencies, commissions and
legislative bodies at various levels of government to obtain zoning
reclassification of land to its highest and best use. ABHI designates a parcel
as "fully-zoned" when all necessary government approvals have been obtained.
Approximately 810 acres of property currently are designated fully-zoned.
As described in more detail below, work to obtain entitlements
for urban use in 1994 focused on (i) ABHI's Kukui'ula development on Kauai,
(ii) ABHI's proposed master-planned community at Pilot Hill Ranch in California,
and (iii) obtaining Community Plan designations for various ABHI lands on Maui.
With regard to item (iii) in the previous paragraph, ABHI
continues to participate actively in Maui County's decennial update of its
Community Plans, a process that began in 1992. The Community Plans serve to
guide planning development activity over the next decade. ABHI is seeking
various urban designations for its undeveloped lands within the following four
Community Plans, where most of its Maui lands are located: Paia-Haiku Community
Plan, Kihei-Makena Community Plan, Wailuku-Kahului Community Plan, and Makawao-
Pukalani-Kula ("Upcountry") Community Plan.
In 1994, the Maui County Planning Commission recommended urban
residential designations for approximately 110 acres, and industrial and light
industrial designations for approximately 230 acres, on ABHI-owned lands in
Central Maui covered by the Wailuku-Kahului Community Plan. Also, the Planning
Commission disagreed with the Upcountry Citizens' Advisory Committee's
recommendation of single-family residential designation for 165 acres of ABHI
land covered by the Upcountry Community Plan, conditioned on ABHI's contribution
of another 100 acres for the establishment of an institution of higher education
in the Upcountry region. The Planning Commission did not, however, make any
recommendations regarding single-family residential designations.
Adoption of the Community Plans by the Maui County Council is
expected in 1995 or 1996.
(3) RESIDENTIAL PROJECTS
ABHI is pursuing a number of residential projects in Hawaii and
on the U.S. Mainland, in particular:
(a) Kukui'ula. On Kauai, construction activity at the Kukui'ula
project has been suspended as a result of the effects of Hurricane Iniki, which
struck Kauai in September 1992. The 1,000-acre Kukui'ula project, envisioned to
be the first planned residential community on the island of Kauai, currently is
expected to include up to 3,000 dwelling units, as well as an 18-hole golf
course, a small boat marina, commercial areas, schools and parks. Construction
of the wastewater treatment plant, mass grading and drainage, and certain
roadway improvements were completed in 1993.
ABHI's current efforts with regard to the Kukui'ula project are
directed toward re-entitlement of the project to obtain State urban district
classification of an additional 822 acres. Urban district classification of an
initial 213 acres was obtained in 1985. This re-entitlement is associated with
ABHI's revisions to the project's master plan to address hurricane inundation
risks and market considerations. Implementation of this revised master plan
will require amendments to existing State of Hawaii and County of Kauai land use
classifications, and currently is expected to delay initial sales of dwelling
units until late 1997.
A petition to amend the State urban district, the first step in
the revision of Kukui'ula's master plan, was submitted to the State Land Use
Commission in October 1993. Public hearings on this petition commenced in
February 1994 and were completed in January 1995. The State Land Use Commission
is expected to take final action on the petition by April 1995. In addition, an
application to amend the County zoning, consistent with the revised master plan,
was submitted to the County Planning Commission in February 1995. Public
hearings before the County Planning Commission on this application are expected
to commence in the second quarter of 1995.
(b) Eleele Nani II. Also on Kauai, sales at ABHI's Eleele
Nani II development, consisting of 146 single-family lots on 27 acres, continued
during 1994. To date, sales have closed on all 58 "affordable" (as established
by State of Hawaii income and affordability guidelines) homes and all 58 of the
affordable lots, including 20 lots pursuant to the County of Kauai's self-help
housing program. Twenty-one of the market-priced lots have closed.
Nine market-priced lots remain available for sale.
(c) Makana Subdivision. On Maui's north shore, Makana
Subdivision, a joint venture with Gentry Homes, Ltd., will consist of
approximately 93 single-family homes on a 23-acre parcel. Subdivision
construction plans were submitted for County approval in July 1994. Assuming
County approval is obtained, construction is expected to commence in the second
quarter of 1995, with sales expected to commence by early 1996.
(d) Haiku Mauka. Also on Maui, sales of lots at Haiku Mauka, a
93-acre, 39-lot agricultural lot residential subdivision, commenced in September
1994. A total of 16 lots have been sold.
(e) Haiku Hill. At Haiku Hill, an 89-acre, 37-lot agricultural
lot residential subdivision on Maui's North Shore, the last five lots were sold
in early 1994.
(f) Kahului Ikena. Kahului Ikena, a 102-unit, market-priced
townhouse project in Kahului, is expected to be completed in mid-1995. The
project will be marketed either as rental units or as condominiums for sale.
(g) Pilot Hill Ranch. At Pilot Hill Ranch in El Dorado County,
near Sacramento, California, ABHI's efforts continue to focus on having the
project's development plan proposals designated in El Dorado County's General
Plan. Pilot Hill Ranch is intended to be developed as an 1,800-acre planned
residential community, consisting of approximately 980 single- and multi-family
homes, a golf course, parks and 20 acres of commercial development. A draft
environmental impact report was issued by the County in December 1994. Hearings
on the draft report are expected to be concluded by the middle of 1995. The
County is expected to take final action on its General Plan in 1995.
(4) COMMERCIAL AND INDUSTRIAL PROPERTIES
An important source of property revenue is the lease rental
income A&B and its subsidiaries receive from various ground leases on
11,000 acres of land (including agricultural and pasture lands) and leases of
2,550,000 square feet of industrial and commercial building space.
In Hawaii, most of the income-producing commercial and industrial
properties owned by A&B and its subsidiaries are located in the central Kahului
area of Maui. These properties consist primarily of two shopping centers and
two office buildings, as well as several separate commercial and industrial
properties, as follows:
<TABLE>
<CAPTION>
PROPERTY LOCATION TYPE LEASED AREA
<S> <C> <C> <C>
Maui Mall Kahului, Maui Retail shopping center 192,000 sq. ft.
Kahului Shopping Kahului, Maui Retail shopping center 112,000 sq. ft.
Center
Kahului Office Kahului, Maui Office 30,000 sq. ft.
Center
Wakea Business Kahului, Maui Warehouse/retail 61,500 sq. ft.
Center
Kmart Kahului, Maui Ground lease 7.41 acres
Kahului Office Kahului, Maui Office 52,000 sq. ft.
Building
</TABLE>
In addition to the above-described properties, a number of other
commercial and industrial projects are being developed on Maui and Kauai,
including:
(a) Triangle Square. Development continues at Triangle Square,
an 11-acre retail/commercial complex and factory outlet center in Kahului, Maui.
Three lots have been leased and the balance of the project is being developed in
two phases as a 108,000-square-foot factory outlet center. Construction of
Phase I of the factory outlet center, consisting of the 28,000-square-foot Apex
building, was completed in January 1995. It currently is being tenanted and
scheduled for opening in 1995. Construction of Phase II, consisting of five
buildings with a total of 80,000 square feet, is expected to commence in 1995.
(b) Costco. On a nearby 13-acre parcel owned by A&B, Price
Costco, Inc. has commenced construction of a 134,000-square-foot retail
facility, scheduled for completion in 1995.
(c) Kamehameha Parkway. Also located in Kahului is ABHI's
Kamehameha Parkway, a 22-acre, light industrial park subdivision. Of the
Parkway's 35 lots, 32 have been sold in fee and two have been leased. Sale of
the remaining lot is expected to be completed in 1995.
(d) Kahului Industrial Park. Site work construction at the 76-
acre first phase of the Kahului Industrial Park, a light industrial subdivision
located near Maui's primary airport and harbor, is projected to commence in the
second quarter of 1995. Sales and leasing may begin late in the year.
(e) Port Allen Industrial Subdivision. On Kauai, work on five
additional industrial lots and a multi-tenant warehouse complex on six acres at
the Port Allen Industrial Subdivision was completed in 1994. The 13,800-square-
foot warehouse is approximately 65% occupied and four of the five lots are under
contract of sale.
In November 1994, a subsidiary of ABHI sold a 19.4-acre
industrial parcel in Aiea, Hawaii for $17.8 million. This parcel originally was
acquired from C&H in 1993.
On the U.S. Mainland, A&B and its subsidiaries own a portfolio of
commercial and industrial properties comprising a total of 1.9 million square
feet of leasable area, as follows:
LEASED AREA
PROPERTY LOCATION TYPE (SQUARE FT.)
--------------- ------------- ------------ -----------
DEC Building Cupertino, CA Research and 246,742
development
LinPac Building City of Manufacturing 126,048
Industry, CA
Moulton Plaza Laguna Hills, Retail 134,000
CA
Spinnaker II Fremont, CA Research and 98,500
development
Great Southwest Grand Warehouse/ 901,000
Industrial Prairie,TX Industrial
4225 Roosevelt Seattle, WA Office/Medical 106,000
Valley Freeway Kent, WA Warehouse/ 229,245
Corporate Park Industrial
Winslow Village Bainbridge Retail 97,908
Shopping Center Island, WA
The Great Southwest Industrial property in Texas has maintained
an above-market average occupancy of 97%. In 1995, relatively few leases will
expire.
A&B's three Washington State properties continue to benefit from
the economic stability in the Pacific Northwest. The 4225 Roosevelt office
building and Winslow Village Shopping Center remain 100% leased, while strong
leasing activity in 1994 has increased occupancy at the Valley Freeway Corporate
Park warehouse complex to 95%.
Digital Equipment Corporation ("DEC"), the sole tenant of the DEC
Building in Cupertino, California, has continued its efforts to sublease
available space in the facility. DEC ceased manufacturing operations at the
facility in 1992, but continues to meet the obligations under its lease with
A&B, which expires in 1997. Rental activity in both Cupertino and nearby
Fremont, California, the location of Spinnaker II, increased in the latter half
of 1994, with continued improvement expected in 1995. At the Moulton Plaza
shopping center in Laguna Hills, California, the conversion of a 11,500-square-
foot former Lincoln Savings branch to retail space was completed in 1994, with
60% of the space leased prior to completion. This shopping center is expected
to benefit from an improving California economy.
In December 1994, the Arapahoe Marketplace Shopping Center,
located in Denver, Colorado, was sold by A&B. The $21 million proceeds of this
sale are planned to be reinvested in other income-producing property on the U.S.
Mainland pursuant to the tax-deferred exchange provisions of Section 1031 of the
Internal Revenue Code.
Overall occupancy rates for the U.S. Mainland leased property
portfolio averaged 97% in 1994, compared with 93% in 1993. Overall occupancy
rates for the Hawaii leased property portfolio averaged 92% in 1994, compared
with 94% in 1993.
D. FOOD PRODUCTS
(1) PRODUCTION
A&B has been engaged in activities relating to the production of
cane sugar and molasses in Hawaii since 1870. A&B's present food products
operations are conducted by ABHI. ABHI operates two sugar plantations, Hawaiian
Commercial & Sugar Company ("HC&S") on the island of Maui and McBryde Sugar
Company, Limited ("McBryde") on the island of Kauai.
ABHI is Hawaii's largest producer of raw sugar. In 1994, ABHI
produced 34% of the 658,539 tons of raw sugar produced in Hawaii. The Hawaii
sugar production, in turn, amounted to approximately 9% of total United States
sugar production, and accounted for about 8% of the sugar consumed in the United
States. ABHI's raw sugar production tonnage for the years 1990 through 1994 is
summarized in the following table:
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
HC&S 206,217 224,677 193,485 214,122 225,555
McBryde 17,273 14,493 22,941 38,455 46,851
Total 223,490 239,170 216,426 252,577 272,406
</TABLE>
HC&S harvested 16,457 acres of sugarcane in 1994, compared with
16,726 acres in 1993 and 15,715 acres in 1992. Yields averaged 12.4 tons of
sugar per acre in 1994, compared with 13.4 in 1993 and 12.3 in 1992. As a
by-product of sugar production, HC&S also produced 58,997 tons of molasses in
1994, compared with 61,954 tons in 1993, and 49,189 tons in 1992.
An advanced ultrafiltration plant constructed by HC&S in 1994
should, when fully operational, increase sugar recovery at HC&S' Puunene mill
(the larger and more modern of HC&S' two mills) by 1.5%, thereby increasing
sugar production by more than 3,000 tons. HC&S currently is evaluating a second
phase of the project, which could result in an additional 4.5% increase in sugar
recovery.
McBryde harvested 3,340 acres of sugarcane in 1994, compared with
2,893 acres in 1993 and 3,365 acres in 1992. In addition, 7,774 tons of
molasses were produced in 1994, compared with 5,861 tons in 1993 and 8,233 tons
in 1992. The average yield in 1994 was 5.2 tons of sugar per acre, up from 5.0
in 1993, but down from 6.8 in 1992. The reduction, from 1992 to 1993 and 1994,
in raw sugar production, molasses production and sugar yields is due to damage
to the sugar crop by Hurricane Iniki in September 1992.
The average cost per ton of sugar produced at the two plan
tations, including the cost of power production, was $428.56 in 1994, compared
with $390.37 in 1993 and $425.55 in 1992. The increase in cost per ton from
1993 to 1994 is primarily the result of lower production at HC&S (more than
offsetting higher production at McBryde) and modest increases in costs at both
plantations. Continuing cost reduction programs at both plantations have been
successful in minimizing cost increases.
Both HC&S and McBryde produce electricity for their own use and
for sale to electric utility companies by burning bagasse (sugarcane fiber), by
hydroelectric power generation and, when necessary, by burning fossil fuels.
The price for power sold is equal to the utility companies' "avoided cost" of
not producing the electricity supplied by the plantations. In 1994, HC&S sold
101,994 megawatt hours ("MWH") of electric power, and McBryde sold 20,381 MWH.
Revenue from the sale of electricity depends on the amount of power produced and
sold as well as the average price of fuel. See "Energy" below.
During 1994, McBryde cultivated 7,117 acres in sugar and about
4,000 acres in coffee. The harvest of the 1994 coffee crop is expected to yield
1,365,000 pounds of green coffee, compared with 550,000 pounds in 1993.
Although the long-term effects of the 1992 Hurricane Iniki on the coffee crop
are still uncertain, the young coffee trees are recovering from the storm
effects. Coffee production is expected to continue to increase during the next
few years.
Kahului Trucking & Storage, Inc. and Kauai Commercial Company,
Incorporated, both of which are subsidiaries of ABHI, provide sugar and molasses
hauling and storage, petroleum hauling, and mobile equipment maintenance and
repair services on Maui and Kauai, self-service storage facilities on Maui and
Kauai and general trucking services on Kauai.
(2) SUGAR REFINING; MARKETING OF SUGAR AND COFFEE
Virtually all of the raw sugar produced in Hawaii is purchased
and refined by, and marketed through, C&H. C&H processes the raw cane sugar
into a full line of refined sugar products for the grocery market, and a full
range of industrial refined sugar products for industrial bakers, confectioners
and food processors. C&H is the leading sugar brand in the western United
States. Marketing of C&H's refined products is conducted by C&H's sales staff
and a network of brokers under exclusive representation agreements. The refined
products are marketed primarily in the western and central United States.
C&H's profit margins in 1994 were hurt by a combination of
relatively high raw cane sugar prices and depressed prices for refined sugar
products. Contributing to this situation was ineffective governmental
administration of the domestic sugar support program and an excess supply of
beet sugar. The current domestic sugar support program will be reviewed for
renewal later in 1995 in conjunction with Congress' five-year review of U.S.
farm programs. Long-term prospects for the business are expected to be more
favorable. Consumer sugar sales are seasonal in nature and, as a result, C&H's
financial results are expected to be better in the third and fourth quarters of
each fiscal year, compared with the first two quarters.
C&H has a ten-year supply contract, ending in 2003, with Hawaiian
Sugar & Transportation Cooperative ("HSTC"), a cooperative consisting of the
major sugarcane growers in Hawaii (including HC&S and McBryde), for C&H to
acquire substantially all raw sugar produced in Hawaii at a discount to the New
York Contract #14 price for domestic raw sugar. There are no minimum supply
guarantees on the part of HSTC. During 1994, the supply contract with HSTC
provided all the raw sugar used by C&H. In recent years, a number of Hawaii
sugarcane growers have exited the business or have announced they will be
exiting the business or are considering such action. There is no certainty that
the companies now producing sugarcane in Hawaii will be doing so in the future.
In 1995, C&H will purchase raw sugar from other than Hawaiian sources to
supplement its purchases under the supply contract with HSTC.
At McBryde, coffee marketing efforts currently are being directed
toward developing a market for premium-priced, Kauai-grown green coffee. Most
of the 1994 coffee crop is being marketed primarily on the U.S. Mainland in
whole-bean form. McBryde has a supply agreement with Nestle Beverage Company,
ending in 1998, pursuant to which Nestle Beverage Company will purchase up to
25 percent of McBryde's mid-grade coffee beans over the next five years. In
addition to the sale of green coffee, in 1994 McBryde launched a roasted,
packaged coffee product in Hawaii under the "Kauai Coffee" name.
(3) COMPETITION AND SUGAR LEGISLATION
Hawaiian sugar growers produce more sugar per acre than other
major producing areas of the world, but that advantage is partially offset by
Hawaii's high labor costs and the distance to the U.S. Mainland market.
Hawaiian refined sugar is marketed primarily west of Chicago. This is also the
largest beet sugar growing and refining area and, as a result, the only market
area in the United States which produces more sugar than it consumes. Sugar
from sugar beets is the greatest source of competition for the Hawaiian cane
sugar industry. In addition, competition from high fructose corn syrup ("HFCS")
has increased substantially since 1974, but now has stabilized, as sweetener
markets in which the use of HFCS is economical have become saturated. The use
of non-caloric (artificial) sweeteners accounts for a small percentage of the
domestic sweetener market. Although the use of artificial sweeteners is ex
pected to grow, such increased use is not expected to affect sugar markets
significantly in the near future.
Worldwide, most sugar is consumed in the country of origin. Only
about a quarter of world sugar is involved in international trade. A much
smaller amount is traded at the world sugar market price (the other sugar
involved in international trade is traded at negotiated prices under bilateral
trade agreements). Due to protective legislation, raw cane sugar prices in the
U.S. generally are higher than the world price, and only limited amounts of
foreign sugar are allowed into the U.S. under import quotas. Such foreign sugar
sells at U.S. domestic prices. As a result, the world sugar price does not have
material relevance to U.S. sugar producers and refiners.
The United States government price supports are important to the
economic viability of the domestic sugar growing industry, and the U.S. Congress
long has sought, through legislation, to assure a reliable domestic supply of
sugar at stable and reasonable prices. Congress' most recent renewal of pro
tective legislation for domestic sugar is provided by the Food, Agriculture,
Conservation and Trade Act of 1990, known as the 1990 Farm Bill. The 1990 Farm
Bill provides a sugar loan program for the 1991 through 1995 crops, with a loan
rate (support price) of 18 cents per pound for raw sugar, the same as that
provided by the 1985 Farm Act. The 1990 Farm Bill also provides minimum import
quotas and a means of limiting domestic production.
The loan rate represents the value of sugar given as collateral
for government price-support loans. The government is required to administer
the sugar program at no net cost, and this is accomplished by adjusting fees and
quotas for imported sugar to maintain the domestic price at a level that
prevents producers from defaulting on loans. The target price established by
the government is known as the market stabilization price and is based on the
loan rate plus transportation costs, interest, and an incentive factor. The
market stabilization price was 21.8 cents per pound in 1988-89 and 21.9 cents
per pound in 1990-91. No market stabilization price has been announced since
1990-91. The actual U.S. domestic sugar price averaged 21.31 cents per pound in
1992, 21.62 cents per pound in 1993, and 22.03 cents per pound in 1994. This
average is based on the average daily New York Contract #14 price for raw sugar.
A chronological chart of these prices is shown on the next page.
The long-term raw sugar supply agreement between C&H and HSTC
provides that the participating growers will sell all their raw sugar to C&H at
a price equal to the No. 14 Contract settlement price, less a discount and less
costs of sugar vessel discharge and stevedoring. This price becomes a cost to
C&H and, after deducting marketing, operating, distribution, transportation and
interest costs of HSTC, reflects the gross revenue to the Hawaii sugar growers,
including HC&S and McBryde. The No. 14 price is established by, among other
things, the supply of and demand for all forms of domestically-produced
sweeteners, government policies regarding the U.S. sugar import quota and, on
occasion, domestic market allocations, as well as by potential changes to inter
national trade matters which might affect the U.S. sugar program.
Liberalized international trade agreements, such as the General
Agreement on Tariff and Trade ("GATT"), include provisions relating to
agriculture, but these agreements will not affect the U.S. sugar or sweetener
industries materially. The "side" agreements that modified the North American
Free Trade Agreement ("NAFTA") alleviated sugar producers' concerns over NAFTA
provisions which could have allowed Mexico to export large quantities of sugar
to the U.S. starting in seven years.
(4) PROPERTIES AND WATER
C&H's main refining operations are located at Crockett,
California. The Crockett refinery is among the largest in the world, and is the
only cane sugar refinery on the United States West Coast. It is ideally located
next to a deep-water port, a major rail line and an interstate highway. The
refinery and administrative offices occupy a complex of buildings that contains
approximately 1,310,000 square feet and is located on approximately 55 acres.
C&H leases approximately 42 acres from the California State Lands Commission
under long-term ground leases, and owns the remaining area. The Lease Agreement
with the State of California covering the main refinery and wharf facilities
expires in 2022, and the Lease Agreement covering the area where the secondary
water treatment facility is located expires in 2024.
Construction by a third party began in early 1994 on a 240 MW
cogeneration plant adjacent to the C&H refinery at Crockett, California.
Pursuant to an agreement between C&H and the third party that expires in 2026,
the steam produced by the cogeneration plant will be used to power the C&H
refinery, thereby reducing C&H's energy costs. The cogeneration plant also will
allow C&H to shut down its own, less-efficient steam generating plant, and
thereby avoid required capital improvements to the existing plant. The
cogeneration plant is expected to be operational in 1996.
C&H also operates a smaller sugar refining and distribution
facility in Aiea, Hawaii that primarily produces liquid sweeteners for the local
beverage industry. This facility was completed in 1994 and replaced an older
refinery. C&H leases the refining equipment pursuant to a lease that expires in
December 1996, with options to renew for up to an additional six years, and
leases the facilities and the site pursuant to a lease that expires in 2004. In
the City of Commerce, California, C&H owns and operates a bulk sugar receiving
and distribution facility. The facility is located on a four-acre parcel owned
by C&H.
The HC&S sugar plantation, the largest in Hawaii, consists of
approximately 36,000 acres of land, including 2,000 acres leased from the State
of Hawaii. Approximately 35,900 acres are under cultivation and completely
irrigated, and the balance either is used for contributory purposes, such as
roads and plant sites, or is not suitable for cultivation. In December 1994,
HC&S reached an agreement to lease an additional 1,300 acres of sugar land.
This is expected eventually to add more than 7,000 tons to HC&S' annual
production and to reduce the average cost per ton of sugar produced.
The McBryde plantation consists of approximately 15,000 acres of
land, of which about 11,100 are under cultivation. About 7,000 acres under
cultivation are held under long-term leases. Two-thirds of McBryde's fields are
irrigated, and the remainder depends upon rainfall.
Large quantities of water are necessary to grow sugarcane.
Because of the importance of water, both access to water and efficient
irrigation systems are crucial for the successful growing of sugarcane. A&B's
plantations use a "drip" irrigation system that distributes water to the cane
roots through small holes in plastic tubes. In 1983, McBryde completed its con
version of 6,715 acres to drip irrigation. HC&S completed its conversion
program in January 1987, and 34,326 acres, 96% of its cane lands, now are drip
irrigated. Conversion to the drip method has improved yields in the converted
fields, has allowed increased mechanization of field operations, has resulted in
added acres under cultivation and helps mitigate the effects of drought.
ABHI also owns 19,000 acres of watershed lands on Maui which
supply part of the irrigation water used by HC&S. ABHI also has held water
licenses to 38,000 acres owned by the State of Hawaii, which over the years have
supplied approximately one-third of the irrigation water used by HC&S. The last
of these four water license agreements expired in 1986, and all four agreements
have been extended as revocable permits. The State Board of Land and Natural
Resources has indicated its intention to replace these four permits with
long-term licenses. The issuance of such licenses currently is pending a
hearing before the State Board of Land and Natural Resources.
E. EMPLOYEES AND LABOR RELATIONS
As of December 31, 1994, A&B and its subsidiaries had approximately
3,581 regular full-time employees. About 1,383 were engaged in the growing of
sugarcane and manufacturing of raw sugar, 812 were engaged in the refining and
marketing of sugar, 1,068 were engaged in ocean transportation, 67 were engaged
in container leasing, 54 were engaged in property development and management,
and the balance was in administration and miscellaneous operations. Approxi
mately 58% were covered by collective bargaining agreements with unions.
As of December 31, 1994, Matson and its subsidiaries had approximately
1,135 regular full-time employees and 594 casual employees. Approximately 36%
of the regular full-time employees, and all of the casual employees, were
covered by collective bargaining agreements. The casual employees consist of
seagoing employees and United States Pacific Coast longshoremen who are employed
through hiring halls and are not full-time employees of Matson or Matson
Terminals.
Employees of Matson and Matson Terminals are represented by 10
different unions, and Matson and Matson Terminals are parties to 92 separate
collective bargaining agreements. Matson's seagoing employees are represented
by six unions. Matson and Matson Terminals are members of the Pacific Maritime
Association ("PMA"), and Matson Terminals is a member of the Hawaii Stevedoring
Industry Committee and the Hawaii Employers Council, through which various
collective bargaining agreements are negotiated. Matson is a member of the
Maritime Service Committee ("MSC") for collective bargaining with three unions
representing licensed deck, engineer and radio officers for Matson vessels.
Historically, collective bargaining with the longshore and seagoing
unions has been complex and difficult. However, Matson and Matson Terminals
consider their respective relations with the International Longshoremen's and
Warehousemen's Union ("ILWU"), other unions and their non-union employees to be
satisfactory. During 1994, collective bargaining agreements with the three
unions representing Matson's licensed officers were renewed for terms ranging
from four to six and a half years. Agreements with three ILWU units in Hawaii
also were renewed in 1994, for three-year terms effective mid-1993. Expiring
agreements with the International Association of Machinists in Oakland and Los
Angeles and with the United Brotherhood of Carpenters and Joiners of America in
Oakland are expected to be renewed in 1995 without service interruption.
Matson contributed during 1994 to multi-employer pension plans for
vessel crews. If Matson were to withdraw from or significantly reduce its
obligation to contribute to one of the plans, Matson would review and evaluate
data, actuarial assumptions, calculations and other factors used in determining
its withdrawal liability, if any, and, in the event of material disagreement
with such determination, would pursue the various means available to it under
federal law for the adjustment or removal of its withdrawal liability. In 1994,
Matson Terminals began participating in a multi-employer pension plan for its
Hawaii longshore employees. For a discussion of withdrawal liabilities under
the Hawaii longshore and seagoing plans, see Note 3 to A&B's financial
statements on pages 38 and 39 of the 1994 Annual Report, which is incorporated
herein by reference.
Matson pays through Matson Terminals on the basis of cargo tons
carried, and Matson Terminals contributes as a direct employer, to a
multi-employer pension plan for Pacific Coast longshoremen. Under special
withdrawal liability rules in the plan, Matson Terminals could cease United
States Pacific Coast cargo handling operations permanently and stop making
contributions to the plan without any withdrawal liability.
HC&S and McBryde have approximately 923 employees and 232 employees,
respectively, covered by collective bargaining agreements with the ILWU.
Production units of HC&S and McBryde, as well as an HC&S clerks and technical
employees unit, are represented by Local 142 of the ILWU. Agreements with the
ILWU for the HC&S and McBryde production units and for the HC&S clerks and
technical employees unit expired on January 31, 1995. The agreement with the
HC&S production unit has been renegotiated for a one-year period expiring on
January 31, 1996. The other agreements are in the process of being
renegotiated.
Kahului Trucking & Storage, Inc. has three Local 142 bargaining units
covering 40 employees. Six employees are covered by the Bulk Sugar Agreement,
and two are covered by the Tugboat Agreement. These agreements were renewed for
three-year periods expiring June 30, 1996. The other 32 employees are in the
production unit, and are covered by an agreement that will expire on March 31,
1995. This agreement is in the process of being renegotiated.
Kauai Commercial Company, Incorporated has 53 employees represented by
Local 142. Of these, 46 employees are in the production unit, and seven are in
the clerical unit. Both contracts were extended to April 30, 1995 and are in
the process of being renegotiated.
Of the 615 bargaining unit employees of C&H at Crockett, California,
506 are members of Sugar Workers Union No. 1, AFL-CIO Seafarers International
Union of North America and 101 employees are members of ILWU Local 6. Eight
employees of C&H at the Aiea, Hawaii refinery are members of ILWU Local 142.
Contracts covering these employees extend through May 31, 1995 and are in the
process of being renegotiated.
F. ENERGY
Matson and Matson Terminals purchase bunker fuel oil, lubricants,
gasoline and diesel fuel for their operations. Bunker fuel oil and diesel fuel
are the largest items of energy-related expense.
Bunker fuel prices started 1994 at $59 per metric ton and ended the
year at $87 per metric ton. A low of $55 per metric ton occurred in January,
and a high of $119 per metric ton occurred in August. Sufficient fuel for
Matson's requirements is expected to be available in 1995.
As is the practice throughout Hawaii, ABHI's sugar plantations use
bagasse, the residual fiber of the sugarcane plant, as a fuel to generate steam
for the production of most of the electrical power for sugar mill and irrigation
pumping operations. However, supplemental fuel is required to produce power,
principally for pumping irrigation water during the factory shutdown period when
bagasse is not being produced. No. 6 (heavy) oil and coal have been the
supplemental fuels most commonly used by the sugar factories. However, in 1992,
the suppliers of oil to the ABHI sugar plantations announced they would
discontinue regular heavy oil shipments as a result of unlimited liability
concerns arising from federal and state environmental laws. Currently, heavy
oil is being transported to HC&S on a space-available basis. As a result of the
oil-availability problem, HC&S reduced its 1992 power production, began
converting its factories to use diesel fuel, and increased its use of coal. In
1994, HC&S produced 224,883 MWH of electric power and sold 101,994 MWH, compared
with 1993's power production of 226,924 MWH and sales of 101,346 MWH. HC&S' oil
use decreased to 126,568 barrels in 1994 from the 216,158 barrels used in 1993.
In November 1993, HC&S obtained a state permit that more than doubled its
capability for burning coal. Coal use for power generation increased
substantially, from 25,786 short tons in 1993 to 34,490 short tons in 1994.
McBryde uses very little oil and no coal because it normally produces
a large amount of hydroelectric power from two plants that supplement power
produced from bagasse. Both of these plants were out of service in the first
half of 1993 during repairs of hurricane damage. To deal with the discon
tinuance of heavy oil shipments to Kauai, McBryde converted its factories to use
diesel fuel. In 1994, power production was 43,494 MWH, up substantially from
20,772 MWH in 1993. Power sales in 1994 of 20,381 MWH were up from 16,520 MWH
in 1993. The lower power production in 1993 was due primarily to the 1992
hurricane-related damage to the two hydroelectric plants and the lower sugar
harvest in 1993. The two hydroelectric plants were put back in service in June
and in July 1993, respectively.
ITEM 3. LEGAL PROCEEDINGS
See "Business and Properties - Ocean Transportation - Rate Regulation"
above for a discussion of rate and other regulatory matters in which Matson is
routinely involved.
In June 1990, Matson Terminals filed a complaint in the Superior Court of
California against Home Insurance Company, Hobbs Group, Inc. and Arkwright-
Boston Insurance Company for breach of contract and negligence. The complaint
sought recovery of damages sustained at Matson Terminals' Oakland terminal as a
result of the October 1989 Loma Prieta earthquake. The court awarded Matson
Terminals $23,516,000, which included $11,250,000 in punitive damages.
Defendant Home Insurance Company has filed an appeal of the court's award.
On February 11, 1992, Pan Ocean Shipping Co., Ltd. ("Pan Ocean") served an
amended complaint on Matson, alleging that a Matson vessel negligently
discharged contaminated ballast water into Los Angeles harbor on January 9,
1991. Pan Ocean admits that a vessel owned and operated by Pan Ocean discharged
fuel oil into Los Angeles harbor on January 8, 1991. Pan Ocean is seeking
contribution and indemnification for the in-harbor clean-up charges which it
alleged to be between $16,000,000 and $19,000,000. On April 12, 1993, Pan Ocean
amended its complaint to allege fraud and seek unspecified punitive damages.
On September 13, 1993, the parties stipulated to binding arbitration before
a Special Master appointed by the United States District Court for the Central
District of California. The Special Master's findings will be incorporated into
a judgment by the United States District Court, which judgment may be appealed
to the Ninth Circuit Court of Appeals only on the issues of punitive damages and
misconduct of the Special Master. The arbitration hearing commenced on
January 13, 1994. Management believes, after consultation with legal counsel and
given the Protection and Indemnity coverage under Matson's insurance policy in
effect at the time of the alleged conduct, that any ultimate liability in
connection with this action will not have a material adverse effect on Matson's
financial condition.
On November 1, 1994, the Division of Water Quality, Department of
Wastewater Management, City and County of Honolulu ("City and County") issued a
Cease and Desist Order to C&H, alleging violations of a City and County
ordinance arising out of C&H's discharge of industrial wastewater from C&H's
liquid sugar refinery into the City and County's sewer system. Among other
things, the Cease and Desist Order ordered C&H to stop discharging wastewater
into the sewer system, ordered C&H to provide a corrective action plan and
warned that the violations might carry civil and/or criminal penalties. Sub
sequently, the City and County issued Amended Order No. 1, on November 9, 1994,
and Amended Order No. 2, on December 2, 1994, which, among other things,
permitted C&H to discharge wastewater into the sewer system, provided C&H did
not violate its permit, and imposed a fine on C&H in the amount of $1,650,000,
which fine was suspended provided C&H comply with the Amended Orders. A hearing
on Amended Order No. 2 was held on January 9, 1995. No decision has been issued
yet.
Modifications have been completed to the refinery that C&H believes will
allow the refinery to operate without violating the original Cease and Desist
Order or the Amended Orders. C&H has appealed all Orders and will be responding
to the charges brought by the City and County.
A&B and its subsidiaries are parties to, or may be contingently liable in
connection with, other legal actions arising in the normal conduct of their
businesses, the outcomes of which, in the opinion of management after consulta
tion with counsel, would not have a material adverse effect on A&B's financial
position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
For the information about executive officers of A&B required to be included
in this Part I, see paragraph B of "Directors and Executive Officers of the
Registrant" in Part III below, which is incorporated into Part I by reference.
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
This information is contained in the sections captioned "Common Stock" and
"Dividends" on pages 23 and 24 of the 1994 Annual Report, which sections are
incorporated herein by reference.
At February 17, 1995, there were 6,729 record holders of A&B common stock.
ITEM 6. SELECTED FINANCIAL DATA
Information for the years 1990 through 1994 is contained in the comparative
table captioned "Eleven-Year Summary of Selected Financial Data" on pages 26 and
27 of the 1994 Annual Report, which information is incorporated herein by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
A&B's financial statements, including the results of operations discussed
herein, are based on the historical-cost method of accounting, in accordance
with generally accepted accounting principles. If estimated current costs of
property and inventory were applied to reflect the effects of inflation on A&B's
businesses, total assets would be higher and net income lower than shown by the
historical-cost financial statements. However, the carrying values of current
assets (other than inventories, real estate held for sale, deferred income taxes
and prepaid and other assets) and of debt instruments are reasonable estimates
of their fair values. Investments in marketable securities are stated in the
financial statements at market values in accordance with Statement of Financial
Accounting Standards No. 115. Certain investments held in the Capital
Construction Fund at amortized cost exceeded their fair values at December 31,
1994. This matter is described more fully in Note 9 on pages 42 and 43 of the
1994 Annual Report, which Note is incorporated herein by reference.
Additional information applicable to this Item 7 is contained in the
section captioned "Management's Discussion and Analysis" on pages 29 through 31
of the 1994 Annual Report, which section is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
This information is contained in the financial statements and accompanying
notes on pages 32 through 43 of the 1994 Annual Report, the Independent
Auditors' Report on page 25 of the 1994 Annual Report, and the Industry Segment
Information for the years ended December 31, 1994, 1993 and 1992 appearing on
page 28 of the 1994 Annual Report and incorporated into the financial statements
by Note 11 thereto, all of which are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
A. DIRECTORS
For information about the directors of A&B, see the section captioned
"Election of Directors" on pages 2 and 3 of A&B's proxy statement dated March 6,
1995 ("A&B's 1995 Proxy Statement"), which section is incorporated herein by
reference.
B. EXECUTIVE OFFICERS OF THE REGISTRANT
The name of each executive officer of A&B (in alphabetical order), age
(in parentheses) as of March 31, 1995, present and prior positions with A&B and
year appointed as such, and business experience for the past five years are
given below.
Generally, the term of office of executive officers is at the pleasure
of the Board of Directors. With regard to compliance with Section 16(a) of the
Securities Exchange Act of 1934, A&B believes that during fiscal 1994 its
directors and executive officers filed on a timely basis all reports required to
be filed under Section 16(a). For a discussion of severance agreements between
A&B and certain of A&B's executive officers, see the subsection captioned
"Severance Agreements" on page 13 of A&B's 1995 Proxy Statement, which subsec
tion is incorporated herein by reference.
Meredith J. Ching (38)
Vice President (Government & Community Relations) of A&B, 10/92-present;
Vice President of ABHI (Government & Community Relations), 10/92-present; Vice
President of ABHI (Natural Resources Development & Government Affairs), 4/89-
9/92; Vice President of ABHI (Natural Resources Development), 4/88-3/89.
John C. Couch (55)
Chairman of the Board of A&B, effective 4/95; President of A&B, 10/85-4/89,
4/91-present; Chief Executive Officer of A&B, 4/92-present; Chief Operating
Officer of A&B, 10/85-4/89, 4/91-4/92; Executive Vice President of A&B, 1/85-
10/85; Chairman of the Board of ABHI, effective 4/95; President and Chief
Executive Officer of ABHI, 4/89-present; Chairman of the Board of Matson,
effective 4/95; Vice Chairman of the Board of Matson, 4/92-3/95; President and
Chief Operating Officer of Matson, 1/85-10/85; Executive Vice President and
Chief Operating Officer of Matson, 1984; Chairman of the Board of C&H, 7/90-
present; Director of A&B, 10/85-present; Director of Matson, 10/85-4/89, 4/91-
present; Director of ABHI, 4/89-present.
W. Allen Doane (47)
Executive Vice President and Chief Operating Officer of ABHI, 4/91-present;
Managing Partner and Chief Operating Officer of The Shidler Group, 1988-1990.
Raymond J. Donohue (58)
Senior Vice President and Chief Financial Officer of Matson, 1/87-present;
Vice President (Finance) of Matson, 10/80-12/86.
Frederick M. Gutterson (52)
Senior Vice President of Matson, 4/94-present; Vice President of Matson,
4/89-4/94; President and Chief Executive Officer of Matson Leasing Company,
Inc., 4/89-present.
G. Stephen Holaday (50)
Vice President and Controller of A&B, 4/93-present; Vice President, Chief
Financial Officer and Treasurer of A&B, 4/89-4/93; Senior Vice President, Chief
Financial Officer and Treasurer of ABHI, 4/89-present; Senior Vice President and
Chief Financial Officer of A&B, 10/87-3/89; Vice President and Chief Financial
Officer of A&B, 2/87-9/87; Vice President, Treasurer and Controller of A&B,
1984-1987.
John B. Kelley (49)
Vice President (Investor Relations) of A&B, 1/95-present; Vice President
(Corporate Planning & Development, Investor Relations) of A&B, 10/92-12/94; Vice
President (Community & Investor Relations) of A&B, 2/91-10/92; Vice President
(Corporate & Investor Relations) of A&B, 8/88-1/91; Vice President (Project De
velopment) of ABHI, 8/89-1/91; Vice President of Matson, 7/87-7/88; Vice
President (Public Relations) of A&B, 8/85-7/87.
Miles B. King (47)
Vice President and Chief Administrative Officer of A&B, 4/93-present;
Senior Vice President (Industrial Relations) of ABHI, 4/93-present; Senior Vice
President (Human Resources) of Matson, 10/92-present; Executive Vice President
of The Hay Group, 1988-1992.
David G. Koncelik (53)
Senior Vice President of ABHI, 1/94-present; President and Chief Executive
Officer of C&H, 1/94-present; Executive Vice President and Chief Operating
Officer of C&H, 1/91-12/93; Chief Financial Officer of C&H, 12/88-12/93; Senior
Vice President of C&H, 12/88-12/90.
Michael J. Marks (56)
Vice President, General Counsel and Secretary of A&B, 4/89-present; Senior
Vice President and General Counsel of ABHI, 4/89-present; Senior Vice President,
General Counsel and Secretary of A&B, 1985-3/89; Vice President and General
Counsel of A&B, 1980-1985.
C. Bradley Mulholland (53)
President of Matson, 5/90-present; Chief Executive Officer of Matson, 4/92-
present; Chief Operating Officer of Matson, 7/89-4/92; Executive Vice President
of Matson, 9/87-5/90; Director of A&B, 4/91-present; Director of Matson,
7/89-present; Director of ABHI, 4/91-present.
Glenn R. Rogers (51)
Vice President, Chief Financial Officer and Treasurer of A&B, 4/93-present;
Senior Vice President, Marketing of Matson, 1/89-4/93; Vice President, Freight
Division, of Matson, 9/87-1/89; Vice President, Area Manager, Hawaii, of Matson,
4/86-9/87.
Robert K. Sasaki (54)
Vice President of A&B, 7/90-present; Senior Vice President (Properties) of
ABHI, 4/89-present; Senior Vice President (Properties) of A&B, 1986-3/89; Vice
President (Properties) of A&B, 1974-1986.
Thomas A. Wellman (36)
Assistant Controller of A&B, 4/93-present; Controller of A&B, 11/91-4/93;
Controller of ABHI, 11/91-present; Area Controller (Hawaii), Matson, 9/90-10/91,
Internal Auditor, A&B, 7/89-8/90.
ITEM 11. EXECUTIVE COMPENSATION
See the section captioned "Executive Compensation" on pages 8 through 13 of
A&B's 1995 Proxy Statement, which section is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
See the section titled "Security Ownership of Certain Shareholders" and the
subsection titled "Security Ownership of Directors and Executive Officers" on
page 5 and on pages 6 and 7, respectively, of A&B's 1995 Proxy Statement, which
section and subsection are incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See the subsection titled "Certain Relationships and Transactions" on
page 7 of A&B's 1995 Proxy Statement, and the last two paragraphs of the
subsection titled "Compensation of Directors" on pages 4 and 5 of A&B's 1995
Proxy Statement, which are incorporated herein by reference.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K
A. FINANCIAL STATEMENTS
Financial Statements of Alexander & Baldwin, Inc. and Subsidiaries and
Independent Auditors' Report (incorporated by reference to the pages of the 1994
Annual Report shown in parentheses below):
Balance Sheets, December 31, 1994 and 1993
(pages 34 and 35).
Statements of Income for the years ended
December 31, 1994, 1993 and 1992 (page 32).
Statements of Shareholders' Equity for the
years ended December 31, 1994, 1993 and
1992 (page 36).
Statements of Cash Flows for the years ended
December 31, 1994, 1993 and 1992 (page 33).
Notes to Financial Statements (pages 37 through
43 and page 28 to the extent incorporated by
Note 11)
Independent Auditors' Report (page 25).
B. FINANCIAL STATEMENT SCHEDULES
Financial Schedules of Alexander & Baldwin, Inc. and Subsidiaries as
required by Rule 5-04 of Regulation S-X (filed herewith):
III - Condensed Financial Information of
Registrant - Balance Sheets, December 31,
1994 and 1993; Statements of Income and
Cash Flows for the years ended December 31,
1994, 1993 and 1992; Notes to Condensed
Financial Statements.
NOTE: All other schedules are omitted because of the absence of the conditions
under which they are required or because the information called for is included
in the financial statements or notes thereto.
C. EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K
Exhibits not filed herewith are incorporated by reference to the
exhibit number and previous filing shown in parentheses. All previous exhibits
were filed with the Securities and Exchange Commission in Washington, D.C.
Exhibits filed pursuant to the Securities Exchange Act of 1934 were filed under
file number 0-565. Shareholders may obtain copies of exhibits for a copying and
handling charge of $0.15 a page by writing to Michael J. Marks, Vice President,
General Counsel and Secretary, Alexander & Baldwin, Inc., P. O. Box 3440,
Honolulu, Hawaii 96801.
3. Articles of incorporation and bylaws.
3.a. Restated Articles of Association of A&B, as restated effective May
5, 1986, together with Amendments dated April 28, 1988 and April 26, 1990
(Exhibits 3.a.(iii) and (iv) to A&B's Form 10-Q for the quarter ended
March 31, 1990).
3.b. Bylaws of A&B as amended effective October 24, 1991 (Exhibit 3.b.(i)
to A&B's Form 10-Q for the quarter ended September 30, 1991).
4. Instruments defining rights of security holders, including indentures.
4.a. Equity.
4.a. Rights Agreement, dated as of December 8, 1988 between Alexander &
Baldwin, Inc. and Manufacturers Hanover Trust Company, Press Release of
Alexander & Baldwin, Inc. and Form of Letter to Shareholders of Alexander &
Baldwin, Inc. (Exhibits 4, 28(a) and 28(b) to A&B's Form 8-K dated
December 13, 1988).
4.b. Debt.
4.b. (i) Amended and Restated Revolving Credit and Term Loan Agreement
effective as of April 1, 1989 among Alexander & Baldwin, Inc. and
A&B-Hawaii, Inc. and Wells Fargo Bank, N.A., First Hawaiian Bank, Chemical
Bank, Bank of Hawaii, Chase Manhattan Bank, and The Bank of California,
N.A. (Exhibit 4.b.(xi) to A&B's Form 10-Q for the quarter ended
September 30, 1989).
(ii) First Amendment to Amended and Restated Revolving Credit and
Term Loan Agreement, dated as of December 21, 1989, among Alexander &
Baldwin, Inc. and A&B-Hawaii, Inc. and Wells Fargo Bank, N.A., First
Hawaiian Bank, Chemical Bank, Bank of Hawaii, Chase Manhattan Bank and The
Bank of California, N.A. (Exhibit 4.b.(ii) to A&B's Form 10-K for the year
ended December 31, 1989).
(iii) Second Amendment to Amended and Restated Revolving Credit and
Term Loan Agreement, dated as of May 4, 1990, among Alexander & Baldwin,
Inc. and A&B-Hawaii, Inc. and Wells Fargo Bank, N.A., First Hawaiian Bank,
Chemical Bank, Bank of Hawaii, Chase Manhattan Bank and The Bank of
California, N.A. (Exhibit 4.b.(iii) to A&B's Form 10-Q for the quarter
ended June 30, 1990).
(iv) Third Amendment to Amended and Restated Revolving Credit and
Term Loan Agreement, dated as of February 8, 1991, among Alexander &
Baldwin, Inc. and A&B-Hawaii, Inc. and Wells Fargo Bank, N.A., First
Hawaiian Bank, Bank of Hawaii, Bank of America National Trust & Savings
Association and The Bank of California, N.A. (Exhibit 4.b.(iv) to A&B's
Form 10-K for the year ended December 31, 1990).
(v) Fourth Amendment to Amended and Restated Revolving Credit and
Term Loan Agreement, dated as of November 26, 1991, among Alexander &
Baldwin, Inc. and A&B-Hawaii, Inc. and Wells Fargo Bank, N.A., First
Hawaiian Bank, Bank of America National Trust & Savings Association, Bank
of Hawaii, The Bank of California, N.A., and Credit Lyonnais San Francisco
Branch and Credit Lyonnais Cayman Island Branch (Exhibit 4.b.(vi) to A&B's
Form 10-K for the year ended December 31, 1991).
(vi) Fifth Amendment to Amended and Restated Revolving Credit and
Term Loan Agreement, dated as of December 29, 1992, among Alexander &
Baldwin, Inc. and A&B-Hawaii, Inc. and First Hawaiian Bank, Bank of America
National Trust & Savings Association, Bank of Hawaii, The Bank of
California, N.A., Credit Lyonnais San Francisco Branch and Credit Lyonnais
Cayman Island Branch (Exhibit 4.b.(vii) to A&B's Form 10-K for the year
ended December 31, 1992).
(vii) Sixth Amendment to Amended and Restated Revolving Credit and
Term Loan Agreement, dated as of December 30, 1993, among Alexander &
Baldwin, Inc. and A&B-Hawaii, Inc. and First Hawaiian Bank, Bank of America
National Trust & Savings Association, Bank of Hawaii, The Bank of
California, N.A., Credit Lyonnais Los Angeles Branch and Credit Lyonnais
Cayman Island Branch (Exhibit 4.b.(vii) to A&B's Form 10-K for the year
ended December 31, 1993).
(viii) Seventh Amendment to Amended and Restated Revolving Credit and
Term Loan Agreement, dated as of November 30, 1994, among Alexander &
Baldwin, Inc. and A&B-Hawaii, Inc. and First Hawaiian Bank, Bank of America
National Trust & Savings Association, Bank of Hawaii, The Bank of
California, N.A., Credit Lyonnais Los Angeles Branch and Credit Lyonnais
Cayman Island Branch.
10. Material contracts.
10.a. (i) Agreement, by and between Alexander & Baldwin, Inc. and The
Harry and Jeanette Weinberg Foundation, dated January 26, 1989; Agreement,
by and among Alexander & Baldwin, Inc., Mr. Harry Weinberg, 3900 Corp., 300
Corporation and HRT, Ltd., dated January 26, 1989; and Press Release of
Alexander & Baldwin, Inc., dated January 27, 1989 (Exhibits 28.1, 28.2 and
28.3 to A&B's Form 8-K dated January 31, 1989).
(ii) Purchase and Exchange Agreement, by and between Wailea
Development Company, Inc. and Wailea Resort Company, Ltd., dated as of
January 15, 1989; Letters of Guaranty of Alexander & Baldwin, Inc. and
Shinwa Golf Kabushiki Kaisha, respectively, dated as of January 15, 1989;
Press Release of Alexander & Baldwin, Inc., dated February 10, 1989; and
Pro Forma Financial Information relative to the transaction (Ex-
hibits 10.b.(vii)(a) through 10.b.(vii)(e) to A&B's Form 8-K dated
February 10, 1989).
(iii) Contract for the Construction of One Containership by and
between Matson Navigation Company, Inc. and National Steel and Shipbuilding
Company, dated January 31, 1990 (Exhibit 10.b.(vii) to A&B's Form 10-K for
the year ended December 31, 1989).
(iv) Note Agreement between Matson Leasing Company, Inc. and The
Prudential Insurance Company of America, dated as of June 28, 1991
(Exhibit 10.b.(x) to A&B's Form 10-Q for the quarter ended June 30, 1991).
(v) Amendment dated March 11, 1992 to the Note Agreement between
Matson Leasing Company, Inc. and The Prudential Insurance Company of
America, dated as of June 28, 1991 (Exhibit 10.a.(vii) to A&B's Form 10-K
for the year ended December 31, 1992).
(vi) Second Amendment dated as of August 31, 1993 to the Note
Agreement between Matson Leasing Company, Inc. and The Prudential Insurance
Company of America, dated as of June 28, 1991 (Exhibit 10.a.(viii) to A&B's
Form 10-K for the year ended December 31, 1993).
(vii) Note Agreement between Matson Leasing Company, Inc. and The
Prudential Insurance Company of America, dated as of March 11, 1992
(Exhibit 10.a.(x) to A&B's Form 10-Q for the quarter ended March 31, 1992).
(viii) First Amendment dated as of August 1, 1993 to the Note Agreement
between Matson Leasing Company, Inc. and The Prudential Insurance Company
of America, dated as of March 11, 1992 (Exhibit 10.a.(xi) to A&B's
Form 10-K for the year ended December 31, 1993).
(ix) Issuing and Paying Agent Agreement between Matson Navigation
Company, Inc. and Security Pacific National Trust (New York), with respect
to Matson Navigation Company, Inc.'s $150 million commercial paper program
dated September 18, 1992 (Exhibit 10.b.1.(xxviii) to A&B's Form 10-Q for
the quarter ended September 30, 1992).
(x) Issuing and Paying Agent Agreement among Matson Leasing Company,
Inc., Matson Navigation Company, Inc. and Security Pacific National Trust
(New York), with respect to Matson Leasing Company, Inc.'s $115 million
commercial paper program dated September 18, 1992 (Exhibit 10.b.1.(xxix) to
A&B's Form 10-Q for the quarter ended September 30, 1992).
(xi)(a) Purchase Agreement, by and between A&B-Hawaii, Inc., California
and Hawaiian Sugar Company, Kekaha Sugar Company, Limited, The Lihue
Plantation Company, Limited, Oahu Sugar Company, Limited, Pioneer Mill
Company, Limited, Amfac/JMB Hawaii, Inc., Ka'u Agribusiness Co., Inc.,
Mauna Kea Agribusiness Co., Inc., Olokele Sugar Company, Ltd., C. Brewer
and Company, Limited, Waialua Sugar Company, Inc., Dole Food Company, Inc.
and Gay & Robinson, Inc., dated as of May 30, 1993 (Exhibit 10.a.(xii)(a)
to A&B's Form 8-K dated June 4, 1993).
(xi)(b) Purchase Agreement, by and between A&B-Hawaii, Inc., California
and Hawaiian Sugar Company, and John Goss, as Trustee in Bankruptcy for
Hamakua Sugar Company, Inc., dated as of June 1, 1993
(Exhibit 10.a.(xii)(b) to A&B's Form 8-K dated June 4, 1993).
(xii) Revolving Credit Agreement between Alexander & Baldwin, Inc.,
A&B-Hawaii, Inc. and First Hawaiian Bank, dated July 9, 1991
(Exhibit 10.b.(xi) to A&B's Form 10-Q for the quarter ended September 30,
1991).
(xiii) Note Agreement among Alexander & Baldwin, Inc. and A&B-Hawaii,
Inc. and The Prudential Insurance Company of America, effective as of
December 20, 1990 (Exhibit 10.b.(ix) to A&B's Form 10-K for the year ended
December 31, 1990).
(xiv) Note Agreement among Alexander & Baldwin, Inc. and A&B-Hawaii,
Inc. and The Prudential Insurance Company of America, dated as of June 4,
1993 (Exhibit 10.a.(xiii) to A&B's Form 8-K dated June 4, 1993).
(xv) Amendment dated as of May 20, 1994 to the Note Agreements among
Alexander & Baldwin, Inc., A&B-Hawaii, Inc. and The Prudential Insurance
Company of America, dated as of December 20, 1990 and June 4, 1993
(Exhibit 10.a.(xviv) to A&B's Form 10-Q for the quarter ended June 30,
1994).
(xvi) Amendment dated January 23, 1995 to the Note Agreement among
Alexander & Baldwin, Inc. and A&B-Hawaii, Inc. and The Prudential Insurance
Company of America, effective as of December 20, 1990.
(xvii) General Lease between the State of California and California and
Hawaiian Sugar Company, dated September 24, 1992 (Exhibit 10.a.(xiv) to
A&B's Form 10-Q for the quarter ended June 30, 1993).
(xviii) Amendment to Lease and Reservation of Easements, between the
State of California and California and Hawaiian Sugar Company, dated as of
July 29, 1993 (Exhibit 10.a.(xv) to A&B's Form 10-Q for the quarter ended
September 30, 1993).
(xix)(a) Commercial Paper Dealer Agreement between California and
Hawaiian Sugar Company and First Chicago Capital Markets, Inc., dated April
22, 1991, with respect to California and Hawaiian Sugar Company's
$100 million revolving credit facility (Ex-hibit 10.a.(xviii) to A&B's
Form 10-K for the year ended December 31, 1993).
(xix)(b) Depositary Agreement between California and Hawaiian Sugar
Company and the First National Bank of Chicago, dated as of April 6, 1989.
(xx) Amendment dated as of February 10, 1995, to Depositary Agreement
between California and Hawaiian Sugar Company and The First National Bank
of Chicago, dated as of April 6, 1989.
(xxi) Revolving Credit Agreement between Alexander & Baldwin, Inc.,
A&B-Hawaii, Inc., and First Hawaiian Bank, dated December 30, 1993 (Ex-
hibit 10.a.(xx) to A&B's Form 10-Q for the quarter ended September 30,
1994).
(xxii) Amendment dated August 31, 1994 to the Revolving Credit
Agreement between Alexander & Baldwin, Inc., A&B-Hawaii, Inc., and First
Hawaiian Bank dated December 30, 1993 (Exhibit 10.a.(xxi) to A&B's
Form 10-Q for the quarter ended September 30, 1994).
*10.b.1.(i) Alexander & Baldwin, Inc. Restricted Stock Bonus Plan, as
restated effective April 28, 1988 (Exhibit 10.c.1.(xi) to A&B's Form 10-Q
for the quarter ended June 30, 1988).
_______________
* All exhibits listed under 10.b.1. are management contracts or compensatory
plans or arrangements.
________________
(ii) Alexander & Baldwin, Inc. 1983 Stock Option Plan
(Exhibit 10.c.1.(vii) to A&B's Form 10-K for the year ended December 31,
1982).
(iii) Amendment No. 1 to Alexander & Baldwin, Inc. 1983 Stock Option
Plan, effective December 14, 1983 (Exhibit 10.c.1.(viii) to A&B's Form 10-K
for the year ended December 31, 1983).
(iv) Amendment No. 2 to Alexander & Baldwin, Inc. 1983 Stock Option
Plan, effective January 1, 1987 (Exhibit 10.c.1.(xii) to A&B's Form 10-K
for the year ended December 31, 1986).
(v) Amendment No. 3 to the Alexander & Baldwin, Inc. 1983 Stock
Option Plan (Exhibit 10.b.1.(xxv) to A&B's Form 10-Q for the quarter ended
June 30, 1992).
(vi) Alexander & Baldwin, Inc. 1989 Stock Option/ Stock Incentive
Plan (Exhibit 10.c.1.(ix) to A&B's Form 10-K for the year ended
December 31, 1988).
(vii) Amendment No. 1 to the Alexander & Baldwin, Inc. 1989 Stock
Option/Stock Incentive Plan (Exhibit 10.b.1.(xxvi) to A&B's Form 10-Q for
the quarter ended June 30, 1992).
(viii) Amendment No. 2 to the Alexander & Baldwin, Inc. 1989 Stock
Option/Stock Incentive Plan, effective as of January 27, 1994
(Exhibit 10.b.1.(iv) to A&B's Form 10-Q for the quarter ended March 31,
1994).
(ix) Amendment No. 3 to the Alexander & Baldwin, Inc. 1989 Stock
Option/Stock Incentive Plan, effective as of October 27, 1994.
(x) Alexander & Baldwin, Inc. 1989 Non-Employee Director Stock
Option Plan (Exhibit 10.c.1.(x) to A&B's Form 10-K for the year ended
December 31, 1988).
(xi) Amendment No. 1 to the Alexander & Baldwin, Inc. 1989
Non-Employee Director Stock Option Plan (Exhibit 10.b.1.(xxiv) to A&B's
Form 10-K for the year ended December 31, 1991).
(xii) Amendment No. 2 to the Alexander & Baldwin, Inc. 1989 Non-
Employee Director Stock Option Plan (Exhibit 10.b.1.(xxvii) to A&B's
Form 10-Q for the quarter ended June 30, 1992).
(xiii) Second Amended and Restated Employment Agreement between
Alexander & Baldwin, Inc. and R. J. Pfeiffer, effective as of October 25,
1990 (Ex-hibit 10.c.1.(xiii) to A&B's Form 10-K for the year ended
December 31, 1990).
(xiv) A&B Deferred Compensation Plan for Outside Directors
(Exhibit 10.c.1.(xviii) to A&B's Form 10-K for the year ended December 31,
1985).
(xv) Amendment No. 1 to A&B Deferred Compensation Plan for Outside
Directors, effective October 27, 1988 (Exhibit 10.c.1.(xxix) to A&B's
Form 10-Q for the quarter ended September 30, 1988).
(xvi) A&B Life Insurance Plan for Outside Directors
(Exhibit 10.c.1.(xix) to A&B's Form 10-K for the year ended December 31,
1985).
(xvii) A&B Excess Benefits Plan, Amended and Restated Effective July 1,
1991 (Exhibit 10.b.1.(xvi) to A&B's Form 10-K for the year ended
December 31, 1992).
(xviii) Amendment No. 1 to the A&B Excess Benefits Plan, effective
January 1, 1994 (Exhibit 10.b.1.(xvii) to A&B's Form 10-K for the year
ended December 31, 1993).
(xix) Amendment No. 2 to the A&B Excess Benefits Plan, effective
August 24, 1994.
(xx) Amendment No. 3 to and Restatement of the A&B Excess Benefits
Plan, effective February 1, 1995.
(xxi) A&B Executive Survivor/Retirement Benefit Plan, Amended and
Restated Effective July 1, 1991 (Exhibit 10.b.1.(xvii) to A&B's Form 10-K
for the year ended December 31, 1992).
(xxii) Amendment No. 1 to and Restatement of the A&B Executive
Survivor/Retirement Benefit Plan, effective February 1, 1995.
(xxiii) A&B 1985 Supplemental Executive Retirement Plan, Amended and
Restated Effective July 1, 1991 (Exhibit 10.b.1.(xviii) to A&B's Form 10-K
for the year ended December 31, 1992).
(xxiv) Amendment No. 1 to and Restatement of the A&B 1985 Supplemental
Executive Retirement Plan, effective February 1, 1995.
(xxv) A&B Retirement Plan for Outside Directors, Amended and Restated
Effective October 24, 1991 (Exhibit 10.b.1.(xix) to A&B's Form 10-K for the
year ended December 31, 1992).
(xxvi) Amendment No. 1 to and Restatement of the A&B Retirement Plan
for Outside Directors, effective February 1, 1995.
(xxvii) Form of Severance Agreement entered into with certain executive
officers, as amended and restated effective August 22, 1991
(Exhibit 10.c.1.(xxiv) to A&B's Form 10-Q for the quarter ended
September 30, 1991).
(xxviii) Alexander & Baldwin, Inc. One-Year Performance Improvement
Incentive Plan, as restated effective October 22, 1992
(Exhibit 10.b.1.(xxi) to A&B's Form 10-K for the year ended December 31,
1992).
(xxix) Alexander & Baldwin, Inc. Three-Year Performance Improvement
Incentive Plan, as restated effective October 22, 1992
(Exhibit 10.b.1.(xxii) to A&B's Form 10-K for the year ended December 31,
1992).
(xxx) Alexander & Baldwin, Inc. Deferred Compensation Plan effective
August 25, 1994 (Exhi-bit 10.b.1.(xxv) to A&B's Form 10-Q for the quarter
ended September 30, 1994).
11. Statement re computation of per share earnings.
13. Annual report to security holders.
13. Alexander & Baldwin, Inc. 1994 Annual Report.
22. Subsidiaries.
22. Alexander & Baldwin, Inc. Subsidiaries as of February 28, 1995
24. Consent of Deloitte & Touche LLP dated March 27, 1995 (included as last
page of A&B's Form 10-K for the year ended December 31, 1994).
D. REPORTS ON FORM 8-K
No Reports on Form 8-K were filed during the quarter ended
December 31, 1994.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ALEXANDER & BALDWIN, INC.
(Registrant)
Date: March 27, 1995 By /s/ John C. Couch
John C. Couch
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ John C. Couch President and March 27, 1995
John C. Couch Chief Executive
Officer and
Director
/s/ Glenn R. Rogers Vice President, March 27, 1995
Glenn R. Rogers Chief Financial
Officer and
Treasurer
/s/ G. Stephen Holaday Vice President March 27, 1995
G. Stephen Holaday and Controller
/s/ R. J. Pfeiffer Chairman of March 27, 1995
R. J. Pfeiffer the Board and
Director
/s/ Michael J. Chun Director March 27, 1995
Michael J. Chun
Leo E. Denlea, Jr.* Director March 27, 1995
Leo E. Denlea, Jr.
/s/ Walter A. Dods, Jr. Director March 27, 1995
Walter A. Dods, Jr.
/s/ Charles G. King Director March 27, 1995
Charles G. King
/s/ Carson R. McKissick Director March 27, 1995
Carson R. McKissick
/s/ C. Bradley Mulholland Director March 27, 1995
C. Bradley Mulholland
/s/ Robert G. Reed III Director March 27, 1995
Robert G. Reed III
/s/ Maryanna G. Shaw Director March 27, 1995
Maryanna G. Shaw
/s/ Charles M. Stockholm Director March 27, 1995
Charles M. Stockholm
*By /s/ John C. Couch
John C. Couch
Attorney-in-Fact
<PAGE>
INDEPENDENT AUDITORS' REPORT
Alexander & Baldwin, Inc.:
We have audited the financial statements of Alexander & Baldwin, Inc. and its
subsidiaries as of December 31, 1994 and 1993, and for each of the three years
in the period ended December 31, 1994, and have issued our report thereon dated
January 27, 1995; such financial statements and report are included in your 1994
Annual Report to Shareholders and are incorporated herein by reference. Our
audits also included the financial statement schedules of Alexander & Baldwin,
Inc. and its subsidiaries, listed in Item 14.B. These financial statement
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In our opinion,
such financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information shown therein.
/s/ Deloitte & Touche LLP
January 27, 1995
<PAGE>
SCHEDULE I
Page 1 of 4
<TABLE>
<CAPTION>
ALEXANDER & BALDWIN, INC.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
ALEXANDER & BALDWIN, INC. (Parent Company)
CONDENSED BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
(In thousands)
__________________________________________________________________________
1994 1993
-------- --------
<S> <C> <C> ASSETS
Current Assets:
Cash and cash equivalents $37 $140
Accounts and notes receivable, net 1 62
Prepaid expenses and other 5,913 6,193
-------- --------
Total current assets 5,951 6,395
-------- --------
Investments:
Subsidiaries consolidated, at equity 596,070 582,067
Other 61,031 15,204
-------- --------
Total investments 657,101 597,271
-------- --------
Real Estate Developments 8,196 -
-------- --------
Property, at cost 80,814 81,019
Less accumulated depreciation and
amortization 7,595 5,999
-------- --------
Property -- net 73,219 75,020
-------- --------
Other Assets 1,232 676
-------- --------
Total $745,699 $679,362
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $1,640 $1,647
Due to subsidiaries 54,162 49,096
Other 9,188 4,126
-------- --------
Total current liabilities 64,990 54,869
-------- --------
Long-Term Liabilities 7,485 13,223
-------- --------
Deferred Income Taxes 40,610 24,264
-------- --------
Commitments and Contingencies
Shareholders' Equity:
Capital stock 37,493 38,028
Additional capital 38,862 38,510
Unrealized holding gains on securities 29,073 -
Retained earnings 541,910 525,192
Cost of treasury stock (14,724) (14,724)
-------- --------
Total shareholders' equity 632,614 587,006
-------- --------
Total $745,699 $679,362
See accompanying notes. ======== ========
</TABLE>
<PAGE>
SCHEDULE III
Page 2 of 4
<TABLE>
<CAPTION>
ALEXANDER & BALDWIN, INC. (Parent Company)
CONDENSED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(In thousands)
1994 1993 1992
---------- ---------- ---------
<S> <C> <C> <C>
Revenue:
Net sales, revenue from services and rentals $9,753 $12,362 $11,584
Interest, dividends and other 3,753 2,683 4,588
Total revenue 13,506 15,045 16,172
---------- ---------- ---------
Costs and Expenses:
Cost of goods sold, services and rentals 4,972 3,289 2,092
Selling, general and administrative 11,119 10,904 10,583
Interest and other 1,148 2,449 1,774
Total costs and expenses 12,900 15,249 12,895
---------- ---------- ---------
Income (Loss) Before Cumulative Effect of Change in
Accounting for Post-retirement Benefits and
Equity in Net Income of Subsidiaries Consolidated 606 (204) 3,277
Cumulative Effect of Change in Accounting for
Post-retirement Benefits - - (2,230)
Income (Loss) Before Equity in Net Income
of Subsidiaries Consolidated 606 (204) 1,047
Equity in Net Income of Subsidiaries Consolidated* 74,002 67,193 17,907
Net Income $74,608 $66,989 $18,954
See accompanying notes.
* Equity in Net Income of Subsidiaries Consolidated for 1992 is net of the cumulative
effect of the change in accounting for post-retirement benefits of $39,321,000.
</TABLE>
<PAGE>
SCHEDULE III
Page 3 of 4
<TABLE>
<CAPTION>
ALEXANDER & BALDWIN, INC. (Parent Company)
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994,1993 AND 1992
(In thousands)
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Cash Flows from Operations ($6,341) $11,696 ($7,030)
---------- ---------- ----------
Cash Flows from Investing Activities:
Capital expenditures (935) (800) (3,484)
Proceeds from sale of property and investments 1,200 - -
---------- ---------- ----------
Net cash provided by (used in) investing activities 265 (800) (3,484)
---------- ---------- ----------
Cash Flows from Financing Activities:
Increase (decrease) in intercompany payable 5,066 (8,118) 21,980
Dividends received from subsidiaries 60,000 39,000 29,000
Payments of long-term debt (935) (936) (917)
Proceeds from issuances of capital stock 122 288 924
Repurchase of capital stock (17,717) - -
Dividends paid (40,563) (40,777) (40,744)
---------- ---------- ----------
Net cash provided by (used in) financing activities 5,973 (10,543) 10,243
---------- ---------- ----------
Cash and Cash Equivalents:
Net increase (decrease) for the year (103) 353 (271)
Balance, beginning of year 140 (213) 58
---------- ---------- ----------
Balance, end of year $37 $140 ($213)
========== =========== ==========
Other Cash Flow Information:
Interest paid, net of amounts capitalized $889 $690 $699
Income taxes paid 18,391 15,123 21,295
See accompanying notes.
</TABLE>
<PAGE>
ALEXANDER & BALDWIN, INC. (Parent Company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(a) ORGANIZATION AND OPERATIONS
OAlexander & Baldwin, Inc. is the parent company of A&B-Hawaii, Inc. (ABHI) and
Matson Navigation Company, Inc. (Matson). ABHI has principal business oper-
ations of Food Products and Property Development and Management. Matson has
principal business operations of Ocean Transportation and Marine Container
Leasing.
(b) LONG-TERM LIABILITIES
At December 31, 1994 and 1993, long-term liabilities consisted of the following:
<TABLE>
<CAPTION>
1994 1993
------- -------
(In thousands)
<S> <C> <C>
Long-term debt:
Limited partnership subscription notes,
no interest, payable through 1996 $1,700 $2,550
Mortgage loans, collateralized by land and
buildings, 9% to 12.5%, payable through 2000 6,041 5,856
------ -------
Total 7,741 8,406
Less current portion 6,657 936
------ -------
Long-term debt 1,084 7,470
Other--principally deferred compensation and
executive survivors 6,401 5,753
------ -------
Total $7,485 $13,223
====== =======
</TABLE>
At December 31, 1994, maturities of long-term debt during the next two years
(1995 and 1996) totalled $6,657,000 and $892,000, respectively.
(c) COMMITMENTS AND CONTINGENCIES
The Company and certain subsidiaries are parties to various legal actions and
are contingently liable in connection with claims and contracts arising in the
normal course of business, the outcome of which, in the opinion of management
after consultation with legal counsel, will not have a material adverse effect
on the Company's financial position.
At December 31, 1994, the Company did not have any significant firm commitments.
(d) CASH DIVIDENDS FROM AFFILIATES
Cash dividends from a consolidated subsidiary were $60,000,000 in 1994, $39,000,
1993 and $29,000,000 in 1992.<PAGE>
<PAGE>
Exhibit 4.b.(viii)
SEVENTH AMENDMENT TO
REVOLVING CREDIT AND TERM LOAN AGREEMENT
This Seventh Amendment (the "Seventh Amendment") dated as of
November 30, 1994 (the "Effective Date"), by and among ALEXANDER & BALDWIN,
INC., a Hawaii corporation (the "Parent"), A&B-HAWAII, INC., a Hawaii
corporation ("A&B-Hawaii"), the undersigned banks (individually a "Bank" and
collectively the "Banks"), and FIRST HAWAIIAN BANK, a Bank and as Agent for the
Banks, amends the Amended and Restated Revolving Credit and Term Loan Agreement
(as previously amended, the "Agreement") effective as of April 1, 1989, among
the Parent, A&B-Hawaii, the Agent, and the banks that are parties thereto.
RECITALS
A. The Parent, A&B-Hawaii, the Banks and the Agent have entered into
the Agreement.
B. The parties hereto wish to amend the Agreement to extend the
Termination Date, to reduce the Commitment Fee, to amend the Interest Rate, to
amend certain financial covenants and to make certain other modifications, all
as set forth in greater detail below.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows:
1. Definitions. All terms defined in the Agreement shall have such
defined meanings when used herein, unless otherwise defined herein.
2. Amendment. The Agreement shall be amended as follows:
a. Section 9.1 is hereby amended to include the following
defined terms and the respective meanings of such defined terms:
"Consolidated Cumulative Net Income": shall mean, as to any
Borrower, the aggregate Consolidated Net Income of that Borrower for the
fiscal period(s) in question.
"Consolidated Interest Expense": shall mean the sum of all
amounts that would, in accordance with GAAP, be deducted in computing
Consolidated Net Income for such period on account of interest, including
without limitation, imputed interest in respect of capitalized lease
obligations, fees in respect of letters of credit and bankers' acceptance
financing and amortization of debt discount and expense.
"Consolidated Net Income": shall mean, as to any Borrower, such
Borrower's and its Subsidiaries' gross revenues, less all operating and
non-operating expenses of such Borrower and its Subsidiaries, including all
charges of a proper character (including current and deferred taxes on
income, provision for taxes on unremitted foreign earnings which are
included in gross revenues, and current additions to reserves), but not
including in gross revenues any (i) gains (net of expenses and taxes
applicable thereto) in excess of losses resulting from the sale,
conversion, exchange or other disposition of capital assets (i.e., assets
other than current assets) other than real property sold for cash, cash
equivalents or other property or tangible assets by any Subsidiary engaged
in property development activities in the ordinary course of its property
development activities, (ii) gains resulting from the write-up of assets,
(iii) equity of such Borrower or its Subsidiaries in the unremitted
earnings of any company (other than of such Borrower or its Subsidiaries),
(iv) any goodwill, or (v) net income, gain or loss during such period from
any change in accounting, from any discontinued operations or the
disposition thereof, from any extraordinary events or from any prior period
adjustments, all determined in accordance with GAAP.
"Consolidated Net Income Before Taxes": shall mean Consolidated
Net Income plus the sum of all deferred and current federal, state, local
and foreign taxes that are deducted in accordance with GAAP in computing
Consolidated Net Income for such period.
"Consolidated Tangible Net Worth": shall mean, as to any
Borrower, the consolidated net worth of such Borrower, and its
Subsidiaries, determined in accordance with GAAP, less all Intangibles.
"Consolidated Total Assets": shall mean, as to any Borrower, that
Borrower's consolidated total assets, determined in accordance with GAAP.
"GAAP": shall mean generally accepted accounting principles
applied on a basis consistent with those followed in the preparation of the
financial statements referred to in Section 6.1 unless otherwise indicated.
"Indebtedness": shall mean, as to any Borrower, all items of
indebtedness which, in accordance with GAAP, would be included in
determining liabilities as shown on the liability side of a balance sheet
of such Borrower as of the date as of which indebtedness is to be
determined and shall also include all indebtedness and liabilities of
others (other than the Borrowers or any of their respective Subsidiaries)
assumed or guaranteed by such Borrower or in respect of which such Borrower
is secondarily or contingently liable (other than by endorsement of
instruments in the course of collection) whether by reason of any agreement
to acquire such indebtedness or to supply or advance sums or otherwise,
excluding, however, Contingent Liabilities and Excluded Liabilities.
"Intangibles": shall mean any intellectual properties, goodwill
(including any amounts, however designated, representing the cost of
acquisition of business and investments in excess of underlying tangible
assets), unamortized debt discount and expense, deferred research and
development costs, any write-up of asset value after December 15, 1989 and
other assets treated as intangible assets under GAAP.
"Interest Coverage Ratio": for any fiscal quarter shall mean, as
to any Borrower, the sum of (i) such Borrower's Consolidated Net Income
Before Taxes for the four immediately preceding fiscal quarters, and
(ii) such Borrower's Consolidated Interest Expense for the four immediately
preceding fiscal quarters, divided by such Borrower's Consolidated Interest
Expense for the four immediately preceding fiscal quarters.
"Restricted Payments": shall have the meaning specified in
Section 7.8A.
b. In the definition of "Termination Date" set forth in
Section 9.1, the date "November 30, 1995" shall be deleted, and the date
"November 30, 1996" shall be inserted in its place.
c. Section 1.3 is hereby amended in its entirety to state as
follows:
Section 1.3 Fee for Revolving Credit Commitment. The Borrowers
agree to pay the Agent, for distribution to the Banks ratably according to
their respective Commitments, a single commitment fee, computed on the
basis of the actual number of days elapsed and a 365-day year, payable from
time to time at the rate of three-twentieths of one percent (3/20%) per
annum on the average daily unused portion of the Total Commitment. The
commitment fee shall be determined at the aforesaid rate from the Effective
Date, to and including the Termination Date. Except as otherwise provided
in Section 1.4 below, the commitment fee will be payable quarterly in
arrears not later than the fifteenth day of each January, April, July and
October, for the quarter ending on the last day of the previous month
commencing January 15, 1995.
d. Section 1.7C is hereby amended in its entirety to read as
follows:
C. Interest Rates on Revolving Loans. Except as otherwise
provided in Section 1.7F:
(i) The Interest Rate in respect of each Prime Loan shall
be the Prime Rate;
(ii) For each Revolving Loan that is a Eurodollar Loan, the
Interest Rate in respect of each Eurodollar Loan during its related
Eurodollar Interest Period shall be the Eurodollar Rate for such Eurodollar
Interest Period plus three-eighths on one percent (3/8%);
(iii) For each Revolving Loan that is a CD Loan, the Interest
Rate in respect of each CD Loan during its related CD Interest Period shall
be the CD Rate for such CD Interest Period plus one-half of one percent
(1/2%).
e. Section 1.7D is hereby amended in its entirety to read as
follows:
D. Interest Rates on Term Loans. Except as otherwise provided
in Section 1.7F:
(i) The Interest Rate in respect of each Term Loan that is
a Prime Loan shall be the Prime Rate plus, (x) from the Termination Date to
and including the last day before the second anniversary of the Termination
Date, one-quarter of one percent (1/4%), and (y) from the second
anniversary of the Termination Date to and including the Final Maturity
Date, three-eighths of one percent (3/8%);
(ii) The Interest Rate in respect of each Term Loan that is
a Eurodollar Loan during its related Eurodollar Interest Period shall be
the Eurodollar Rate for such Eurodollar Interest Period plus, (x) from the
Termination Date to and including the last day before the second
anniversary of the Termination Date, five-eighths of one percent (5/8%),
and (y) from the second anniversary of the Termination Date to and
including the Final Maturity Date, three-fourths of one percent (3/4%); and
(iii) The Interest Rate in respect of each Term Loan that is
a CD Loan during its related CD Interest Period shall be the CD Rate for
such CD Interest Period plus, (x) from the Termination Date to and
including the last day before the second anniversary of the Termination
Date, three-fourths of one percent (3/4%), and (y) from the second
anniversary of the Termination Date to and including the Final Maturity
Date, seven-eighths of one percent (7/8%).
f. Section 7.1A(i) is hereby amended in its entirety to state
as follows:
A. (i) Commencing with the fiscal year beginning January 1,
1993, permit the Parent's Consolidated Tangible Net Worth to be less than
the sum of (x) $475,000,000 plus (y) 35% of the Parent's Consolidated
Cumulative Net Income after December 31, 1992 (such required minimum net
worth not to be reduced by any consolidated net loss during any such
period) or permit the Consolidated Tangible Net Worth of A&B-Hawaii during
any fiscal year to be less than $150,000,000;
g. Section 7.1 is hereby amended to include a new subsection E
to state as follows:
D. Permit the Parent's Interest Coverage Ratio for any fiscal
quarter (measured at the end of such fiscal quarter) to be less than 2.0 to
1.0.
h. Section 7.8A is hereby amended in its entirety to state as
follows:
A. Declare or pay any dividend or other distribution on any
class of its capital stock or other equity interests, redeem or repurchase
any such interests or make any other distribution on account of any such
interests (all of the foregoing being "Restricted Payments"), except that
either Borrower may make Restricted Payments in any amount so long as
(i) no Event of Default or Unmatured Event of Default shall then be
existing or be existing after giving effect to any such Restricted Payment,
and (ii) any such Restricted Payment will not violate any applicable law or
regulation, including Regulation U of the Board of Governors of the Federal
Reserve System.
3. Miscellaneous.
a. Except as otherwise expressly amended by this Seventh
Amendment, the Agreement shall continue to be in full force and effect in
accordance with its terms. All references to the Agreement shall mean the
Agreement as amended by this Seventh Amendment.
b. This Seventh Amendment may be executed by one or more of the
parties hereto in any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
c. This Seventh Amendment shall be governed by, and construed
and interpreted in accordance with, the laws of the State of California.
d. Each party hereby represents to the others that each of the
individuals executing this Seventh Amendment on its behalf is a duly appointed
signatory of the respective party to this Seventh Amendment and that each is
duly authorized to execute this Seventh Amendment by or on behalf of the
respective party for whom he or she is signing and duly authorized to take any
and all action required by the terms of this Seventh Amendment.
e. The Borrowers represent and warrant that on and as of the
Effective Date of this Seventh Amendment, the material representations and
warranties contained in the Agreement or made in any writing delivered or
furnished pursuant to this Seventh Amendment are true and correct, and no Event
of Default or Unmatured Event of Default shall have occurred and be continuing.
f. All of the terms of this Seventh Amendment shall be
effective as of the Effective Date.
IN WITNESS WHEREOF, the parties hereto have executed this Seventh
Amendment as of the Effective Date.
ALEXANDER & BALDWIN, INC. A&B-HAWAII, INC.
By /s/ G. S. Holaday By /s/ G. S. Holaday
Its Vice President Its Senior Vice President
By /s/ Thomas A. Wellman By /s/ Thomas A. Wellman
Its Asst. Controller Its Controller
FIRST HAWAIIAN BANK, BANK OF AMERICA NATIONAL
as a Bank and as Agent TRUST AND SAVINGS ASSOCIATION,
individually and as Co-Agent
By /s/ Adolph F. Chang By /s/ Richard E. Bryson
Its Vice President Its Vice President
BANK OF HAWAII THE BANK OF CALIFORNIA, N.A.
By /s/ Marcy Fleming By /s/ Wanda Headrick
Its Vice President Its Vice President
CREDIT LYONNAIS LOS ANGELES CREDIT LYONNAIS CAYMAN ISLAND
BRANCH BRANCH
By /s/ Thierry Vincent By /s/ Thierry Vincent
Its Vice President/Manager Its Authorized Signatory
Exhibit 10.a.(xvi)
January 23, 1995
Alexander & Baldwin, Inc.
A&B-Hawaii, Inc.
822 Bishop Street
Honolulu, Hawaii 96801
Ladies and Gentlemen:
Reference is made to the note agreement dated as of (i) December 20, 1990,
(the "1990 Agreement") among Alexander & Baldwin, Inc., A&B-Hawaii, Inc.
(together, the "Issuers") and The Prudential Insurance Company of America
("Prudential"), pursuant to which the Issuers issued and sold, and Prudential
purchased, the Issuers' 9.05% Senior Notes due December 15, 1999 in original
principal amount of $50,000,000 and (ii) June 4, 1993 (the "1993 Agreement;" the
1990 Agreement and the 1993 Agreement are together referred to as the
"Agreements") among the Issuers and Prudential, pursuant to which the Issuers
issued and sold, and Prudential purchased, the Issuers' 6.23% Senior Notes due
December 15, 1997 and Serial Senior Notes due June 30, 1999-2007 in the
aggregate original principal amount of $75,000,000. All capitalized terms not
otherwise defined herein shall have the respective meanings ascribed to them in
the applicable Agreement.
At the request of the Issuers and pursuant to paragraph 11C of each
Agreement, Prudential agrees to amend each Agreement as follows:
1. Amend subclause clause (vi) of Section 6B(l) in its entirety as
follows:
"(vi) Liens securing Debt of a type other than as set forth in the
foregoing clauses (i) - (v); provided, however, that at no time shall
(A) the aggregate principal amount of all Debt outstanding that is
secured by such Liens, together with the aggregate amount of all Debt
Guaranteed as described in clause (i)(B) of Section 6B(9), exceed the
sum of (1) $15,000,000 plus (2) 20% of A&B-Hawaii's Consolidated
Tangible Net Worth and (B) there exist any Lien of any kind on more
than a majority of the issued and outstanding shares of the Voting
Stock of either Matson or C&H or their respective Subsidiaries;"
2. Amend clause (i) of Section 6B(9) in its entirety as follows:
"(i) either Company or both Companies or any of their respective
Subsidiaries (except Matson and its Subsidiaries) may Guarantee Debt
of (A) C&H under either its commercial paper program and/or its
unsecured revolving credit facility with First Hawaiian Bank, Bank of
America, Bank of New York and other banks (or any replacement or
successor facility on substantially the same terms and conditions)
that support such commercial paper program in an aggregate amount not
to exceed $100,000,000 at any time; and (B) any third party; provided,
however, that Guarantees of third party Debt shall be deemed Liens
subject to Section 6B(l)(vi) above and shall be permitted only to the
extent that the principal amount of the third party Debt so
Guaranteed, together with the principal amount of Debt then
outstanding that is secured by Liens then permitted by
Section 6B(l)(vi), do not exceed the amount permitted by such
Section 6B(l)(vi),"
The Issuers represent and warrant that (i) after giving effect hereto, no
Default or Event of Default shall exist and (ii) all consents, notices, waivers
and other actions by, to or of the Issuers' other lenders that are necessary in
connection with the foregoing matter have been made or obtained.
This letter supersedes Prudential's letter to you regarding this subject
matter dated November 1, 1994, which earlier letter is null and void. Other
than as expressly amended herein, the Agreement continues unmodified and in full
force and effect. Please sign a counterpart hereof and return it to the
undersigned, whereupon it shall become an amendment to each of the Agreements,
amending, effective November 1, 1994, each of the 1990 Agreement and the 1993
Agreement in the manner and to the extent set forth herein.
Very truly yours,
The Prudential Insurance Company of America
By /s/ Raymond G. Kennedy
Second Vice President
Acknowledged and Agreed to:
Alexander & Baldwin, Inc.
By /s/ G. S. Holaday
Its Vice President
A&B-Hawaii, Inc.
By /s/ G. S. Holaday
Its Sr. Vice President
Exhibit 10.a.(xix)(b)
DEPOSITARY AGREEMENT
Dated as of April 6, 1989
The First National Bank of Chicago
One First National Plaza
Suite 0129, l-L2
Chicago, Illinois 60670-0129
Attention: Commercial Paper Product Manager
Re: California and Hawaiian Sugar Company
Gentlemen:
The undersigned, California and Hawaiian Sugar Company, a corporation
organized under the laws of the state of California (the "Issuer"), hereby
appoints you its agent to facilitate the delivery and payment of certain
commercial paper notes issued by the Issuer as herein set forth. You have
advised the undersigned that you have arranged for First Chicago Trust Company
of New York (the "Sub-Agent") to act as your sub-agent for certain purposes of
this Agreement. We hereby agree with you as follows:
1. Deposit of Notes.
(a) From time to time the Issuer will deposit in custody with you or the
Sub-Agent, to such locations as you may direct, for safekeeping commercial paper
notes of the Issuer (a "Note" or, collectively and severally, the "Notes")
substantially in the form of Exhibit A hereto. The Notes will have been duly
executed manually or by facsimile by the Issuer and will be consecutively
numbered. Each transmittal of Notes to you or the Sub-Agent will be accompanied
by a letter from the Issuer identifying the Notes transmitted therewith. You or
the Sub-Agent, as the case may be, will acknowledge receipt of such by signing
and returning a copy of such transmittal letter.
(b) Enclosed herewith is an incumbency certificate (the "Incumbency
Certificate") of the Secretary or an Assistant Secretary of the Issuer,
certifying the incumbency and specimen signatures of officers, employees and
other agents of the Issuer authorized to execute Notes, to act and to give
instructions and notice, on behalf of the Issuer (hereinafter "Issuer Agents").
Until you receive a subsequent Incumbency Certificate of the Issuer sent to you
by the Issuer, you shall be entitled to rely on the last such Certificate
delivered to you for purposes of determining which persons are Issuer Agents.
Any Note bearing the signature of an Issuer Agent on the date such signature is
affixed thereto shall bind the Issuer after the authentication and delivery of
such Note notwithstanding that such person shall have otherwise ceased to hold
his or her office on the date such Note is authenticated and delivered.
(c) The Issuer shall bear the sole risk of wastage of Notes as a result of
administrative or operational errors during the process of their completion
pursuant to this Agreement, other than errors attributable to your or the Sub-
Agent's gross negligence or willful misconduct. The Issuer shall maintain with
you and the Sub-Agent at all times a supply of Notes sufficient to enable you
and the Sub-Agent to perform the operations contemplated by this Agreement. You
or the Sub-Agent, as the case may be, shall forward to the Issuer the original
and all copies of any spoiled, mutilated, or incorrectly completed Note,
properly cancelled.
2. Completion, Authentication and Delivery of Notes.
(a) You and the Sub-Agent are each authorized and directed to complete and
authenticate any Note deposited with you or the Sub-Agent upon receipt from an
Issuer Agent, no later than 12:00 noon Chicago time on the proposed issuance
date, of instructions made in writing or otherwise pursuant to paragraph 3 below
(all such instructions being referred to herein as "Issuance Instructions"),
specifying issue date, maturity date, maturity amount, face amount and payee of
each Note and instructions for the delivery of each Note.
Each Note shall have a face amount of not less than $100,000 and will
mature no later than 270 days from the date of issuance thereof.
You or the Sub-Agent shall, in accordance with Issuance Instructions,
(i) complete each Note, and (ii) manually authenticate each Note. The place of
payment shall be your address for the time being in Chicago or, where you are
instructed to deliver a Note in the Borough of Manhattan, the Sub-Agent's
address for the time being in New York City. Unless otherwise agreed, you will
only be instructed to deliver Notes by hand within the financial district of
either the Borough of Manhattan or Chicago or by mail.
If you are instructed to deliver a Note by mail, you or the Sub-Agent
shall, unless otherwise instructed, insert as payee the name of the purchaser or
otherwise as advised to you by an Issuer Agent, and effect delivery by
registered mail, postage prepaid, insured. If you are instructed to register a
Note other than to "BEARER", in accordance with the preceding sentences or
otherwise, an Issuer Agent shall provide you with the name and address of the
registered holder of such Note.
(b) Following completion and authentication by you, or on your behalf, of
any Note, you or the Sub-Agent, as the case may be, are directed to hold such
Note in safekeeping and to deliver such Note to, and only to such person or
entity (the "Purchaser") as an Issuer Agent may instruct you, against payment.
The Issuer understands that, when you are instructed to deliver against payment,
delivery of the Notes and the receipt of payment may not be completed
simultaneously and you shall have no responsibility or liability for the credit
risks involved in your or the Sub-Agent's so delivering of such Notes.
Accordingly, you and the Sub-Agent are each hereby authorized to receive the
Purchaser's receipt for the delivery and at a later time, but on the same day,
after the Purchaser has verified the delivery against its purchase agreement
with the Issuer, to receive payment from the Purchaser by a wire transfer of
immediately available funds to the Note Account (as that term is defined below)
and the Issuer will bear the risk that the Purchaser fails to remit payment.
(c) It is understood that, as a matter of bookkeeping convenience, you may
credit the Note Account with the proceeds of Notes prior to your actual receipt
of final payment therefor and that such bookkeeping credits may be reflected on
your books, and otherwise, as "immediately available funds" or "same day funds"
or by some other similar characterization. Notwithstanding any such credit or
characterization, all such credits shall be conditional upon your actual receipt
of final payment and may be reversed by you to the extent that such final
payment is not received. The Issuer agrees to indemnify and hold you harmless
from any loss which you may suffer and any expense which you may incur as a
result of the failure of any Purchaser to remit payment in full for any Note,
and, without limiting the generality of the foregoing, the Issuer agrees that,
immediately, upon notification from you of any such failure, the Issuer shall
reimburse you in immediately available funds any amount credited to the Issuer
in anticipation of receipt of such payment plus interest thereon for each day
such proceeds remain unreimbursed. The rate of interest payable by the Issuer
to you shall be that provided for under arrangements with respect to overdraft
advances in effect at the time between the Issuer and you or, if no such
arrangements are then in effect, at 2-1/2 percent over the federal funds rate of
interest prevailing in Chicago at 11:00 a.m. daily Chicago time (as such rate is
determined by you)
For purposes of this subparagraph (c), payment for any Note shall not
be "final" until you shall have received from or for the account of the
Purchaser of such Note immediately available funds which under applicable law
and rule are irreversible, which are not subject to any security interest, levy
or other encumbrance enforceable against you or the Issuer, and which are
specifically applicable or determined by you to be applicable to the payment of
such Note. A debit by you to any account of a person to whom or for whose
account a Note shall have been delivered shall not constitute final payment to
the extent that such debit creates an overdraft or does not otherwise result in
the receipt by you of immediately available, irreversible and unencumbered
funds.
3. Instructions.
(a) In addition to, and not by way of limiting your authority, or the
authority of any person acting on your behalf, to act on receipt of and in
accordance with written instructions, the Issuer hereby authorizes you, and any
person acting on your behalf, from time to time to act on receipt of and in
accordance with Issuance Instructions received by you or such person either
electronically or telephonically from an Issuer Agent, as provided in the
following paragraphs (b) and (c) respectively.
(b) The Issuer may initiate Issuance Instructions electronically if it
enters into a nonexclusive, nontransferable license to use certain software
products and the associated printed documentation pursuant to a separate license
agreement in a form specified by you. You shall be entitled to rely on the
Issuance Instructions received electronically hereunder and may assume that all
such Issuance Instructions were transmitted by the Issuer or on the Issuer's
behalf, regardless of by whom it was actually transmitted.
(c) Telephonic Issuance Instructions shall be made to you at the telephone
number specified by you from time to time for such purpose, shall be made by an
Issuer Agent and shall (in any case) be expressed to be for the attention of any
of your or the Sub-Agent's officers or employees whose name has been specified
for the time being for such purpose by you to the Issuer. Telephonic Issuance
Instructions to you by an Issuer Agent shall be confirmed in writing by an
Issuer Agent within 24 hours of the time such instruction is received by you or
on your behalf; provided that, in the event a discrepancy exists between the
telephonic instructions and the subsequent confirmation, or in the absence of
receiving a written confirmation, the telephonic instructions shall be deemed
the proper and controlling instructions and you shall incur no liability for
acting in accordance with any such telephonic instructions reasonably believed
by you in good faith to have been given by an Issuer Agent. A "written
confirmation" may be effected by means of a tested telex or communications
directly between electro-mechanical or electronic devices or systems, including
transmission by telecopier, provided, that you and the Issuer agree to the use
of such device or system.
4. Note Account.
(a) For purposes of the transactions contemplated herein and concurrently
with the execution and delivery of this Agreement, the Issuer shall open and
maintain with you a demand deposit account (No. 58-16939 (the "Note Account").
(b) Deposits will be made in the Note Account from time to time by or on
behalf of the Issuer by delivery to you of funds to be deposited therein. All
proceeds from the issuance and delivery of the Notes shall be credited to the
Note Account. Withdrawals or other uses of the funds from the Note Account
shall be made in accordance with instructions from an Issuer Agent or to repay
amounts payable under paragraphs 2(c) or 5(e) hereof. Notwithstanding anything
in this Agreement to the contrary, you shall be entitled not to permit any
withdrawal or other use of funds from the Note Account, or honor any
instructions to those effects, if you, in your sole discretion, shall determine
that as a result thereof there would be created any overdraft or negative
balance in respect of final credits (whether in the course of any day, overnight
or otherwise) in the Note Account.
5. Payment of Notes.
(a) You hereby agree to serve as paying agent of the Issuer with respect
to each Note presented to you or the Sub-Agent. The Issuer shall on the stated
maturity date of such Note, or, if such maturity date is not a Business Day (as
hereinafter defined), on the next succeeding Business Day (such maturity date or
next succeeding Business Day, as the case may be, being hereinafter referred to
as the "Maturity Date"), deposit or cause to be deposited in the Note Account an
amount in immediately available funds equal to the face principal amount of such
Note plus interest payable thereon, if any. As used herein "Business Day" means
any day excluding Saturday, Sunday and any day which is a legal holiday under
the laws of the States of Illinois or New York or is a day on which banking
institutions located in either of such states are authorized by law or other
governmental action to close.
(b) You are hereby authorized and instructed by the Issuer, to the extent
that funds sufficient to effect such payment are available in the Note Account,
to pay, and shall pay, each Note on presentation thereof, in immediately
available funds at or before your close of business on the relevant Maturity
Date provided that presentation of the such Note is made at or prior to
3:00 p.m. New York time on the Maturity Date of such Note. You are further
hereby authorized and instructed by the Issuer to charge the Note Account in the
amount of each such payment.
(c) If any Note is presented to you or the Sub-Agent after 3:00 p.m. New
York time on the Maturity Date of such Note, you may make payment thereof if the
Issuer shall have provided you with funds for the making of such payment or to
the extent you choose in your sole discretion to extend credit to the Issuer on
terms and conditions to be agreed by you and the Issuer. You are hereby
authorized and instructed by the Issuer to charge the Note Account in the amount
of each such payment.
(d) If at any time funds in the Note Account are insufficient to cover
payment of any matured Note presented to you or the Sub-Agent prior to 3:00 p.m.
New York time on the Maturity Date of such Note, you may, at your option, either
(i) request (and subsequently confirm receipt of) an immediate wire transfer of
immediately available funds from the Issuer in an amount which will enable you
to fully pay such Note and retain such Note pending receipt of funds or (ii) pay
the Note, thus creating an overdraft for the account of the Issuer, which
overdraft shall be charged to the Note Account but in neither case shall you be
obligated to pay any Note unless and until there are sufficient collected funds
in the Note Account for that purpose or to extend any credit to the Issuer.
(e) The amount of any resulting overdraft shall represent an overdraft
advance by you to the Issuer to be promptly repaid by the Issuer with interest
thereon for each day such overdraft advance remains outstanding. The rate of
interest payable by the Issuer to you shall be that provided for under
arrangements with respect to overdraft advances in effect at the time between
the Issuer and you or, if no such arrangements are then in effect, at 2-1/2
percent over the federal funds rate of interest prevailing in Chicago at
11:00 a.m. daily Chicago time (as such rate is determined by you). To the
extent that any such overdraft advance is outstanding at any time, you may apply
funds credited to the Note Account from the proceeds of issuance of Notes or
otherwise to repay such overdraft advance. Notwithstanding anything to the
contrary herein, the Issuer undertakes to maintain sufficient immediately
available funds with you on the date any payment of Notes is due to permit you
to pay Notes on time.
(f) Notwithstanding anything to the contrary herein, if at any time funds
in the Note Account are insufficient to cover payment of all matured Notes
presented for payment and awaiting payment, you may apply such funds to the
extent available to pay whichever of the Notes, either fully or in part, as you
deem appropriate.
6. Representations and Warranties.
Each day on which an Issuance Instruction is given to you, the Issuer
shall be deemed to represent and warrant to you that (a) the issuance and
delivery of the designated Notes will not violate any state or federal
securities law, (b) the Notes have been duly and validly authorized by the
Issuer and (c) the Notes, when completed, countersigned and delivered pursuant
hereto, will constitute the legal, valid, and binding obligations of the Issuer.
7. Indemnification; Liabilities.
(a) The Issuer shall indemnify you, the Sub-Agent and your and its
respective officers, employees and agents, and hold you, the Sub-Agent and your
and its respective officers, employees and agents, harmless from and against any
and all costs, expenses, claims or liabilities (including, without limitation,
reasonable lawyers' fees) arising out of or connected with the performance of
your, the Sub-Agent's or your or its respective officers', employees' and
agents' duties hereunder, except for costs, expenses, claims or liabilities
arising out of the gross negligence or willful misconduct of you, the Sub-Agent
or any of your or its respective officers, employees, agents or representatives.
You may rely and shall be protected, as agent for the Issuer, in acting upon any
resolution, certificate, opinion, instructions (whether oral or otherwise),
receipt, or other document reasonably believed by you to be (i) genuine and
(ii) to have been signed or given by the proper party or parties.
(b) In acting with respect to the Notes, and generally in acting under the
provisions hereof, you will be required by the Issuer to perform only such
duties as are specifically set forth herein and this Agreement shall not be
construed to subject you to any implied covenants or obligations. Except in the
case of your gross negligence or willful misconduct, you shall not be liable to
the Issuer for any action taken or omitted by you and reasonably believed by you
to be authorized or within the powers conferred upon you hereby and in no event
shall you be liable for consequential, indirect or special damages, even if you
have been advised of the possibility of such damages. You shall also not be
liable for any action taken, or any failure to take any action in connection
with this Agreement or the services provided hereunder or otherwise to fulfill
your obligations in connection with this Agreement, in the event and to the
extent that the taking of such action or such failure arises out of or is caused
by mechanical breakdown, computer or system failure or other failure of
equipment, failure or malfunctioning of any communications media for whatever
reason, provided that you undertake to use reasonable efforts to cure any such
failure or breakdown of equipment. It is understood by the Issuer that
provision of services under this Agreement is dependent upon the availability to
you and the Issuer of telecommunication facilities provided by third party
vendors and that you cannot warrant such availability.
8. Miscellaneous.
(a) You or the Issuer may terminate this Agreement upon ten (10) days'
prior written notice to the other party; provided, however, that to the extent
there are then outstanding any Notes, they shall notwithstanding such
termination, remain valid obligations of the Issuer and shall continue to be
subject to the provisions of this Agreement and, provided further, that no
termination of this Agreement shall affect the rights and obligations of the
parties hereto with respect to transactions initiated prior to such termination.
In the event that you shall give the Issuer such notice of termination, the
Issuer shall not issue on or after the date of such notice any Notes having a
maturity in excess of thirty (30) days. Upon receipt of a termination notice,
you will promptly return to the Issuer all blank Notes held by you, properly
cancelled.
(b) The fee for your services hereunder shall be as mutually agreed upon
between you and the Issuer, and shall be payable by the Issuer in accordance
with such agreement.
(c) No amendment or modification of this Agreement shall be effective
unless the same shall be in writing and signed by both of the parties hereto.
No waiver of, nor any consent to any departure from, any provision of this
Agreement shall be effective unless signed by the party intended to be bound.
No such amendment, modification, waiver or consent shall adversely affect the
rights of a holder, from time to time, of a Note outstanding at the time of such
amendment, modification, waiver or consent.
(d) Except as otherwise provided herein, you may execute any of the powers
hereunder or perform any duties hereunder either directly or by or through
agents, including, without limitation, the Sub-Agent, or attorneys and shall not
be responsible for the acts of such agents (other than the Sub-Agent or
attorneys appointed with due care hereunder.
(e) You may consult with legal counsel regarding matters arising under
this Agreement and shall not be liable for any action taken in good faith in
reliance upon the legal advice of such counsel.
(f) You, in your individual or any other capacity, may become the owner or
pledgee of Notes with the same rights you would have if you were not acting
hereunder.
(g) You shall be under no liability for interest on any moneys received by
you hereunder except such as you may agree with the Issuer to pay thereon.
(h) Except as otherwise expressly provided herein, whenever, in the
administration of this Agreement, you shall deem it necessary that a matter be
proved or established prior to taking, suffering or omitting any action
hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate or instructions of an Issuer Agent and such certificate or
instructions shall be full warranty to you for any action taken, suffered or
omitted under the provisions of this Agreement upon the faith thereof.
(i) Any corporation into which you may be merged, converted or with which
you may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which you shall be a party, shall succeed to all
your rights, obligations and immunities hereunder without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
(j) Your countersignature of a Note shall be for authentication purposes
only and neither you nor anyone countersigning on your behalf shall have any
liability on a Note. Except with respect to your own actions in completing and
authenticating the Notes pursuant to Issuance Instructions, you shall not be
liable for the authorization, validity or legality of any Note delivered by you
in accordance with Issuance Instructions.
9. Notices.
(a) Any notices, demands, instructions and other communications required
or permitted to be given or made upon either party shall be in writing and shall
be personally delivered or sent by first class mail, postage prepaid, or by
prepaid telex or telegram (or telecopier, as permitted hereunder), and shall be
effective for purposes of this Agreement upon receipt by the intended recipient
thereof at the address designated by such recipient, or on the next succeeding
Business Day if received on other than a Business Day. Unless otherwise
specified in a notice sent or delivered in accordance with the foregoing
provisions of this paragraph (or with respect to Issuance Instructions, as
permitted hereunder), notices, demands, instructions and other communications in
writing shall be addressed to the addresses indicated below:
If to you in your capacity The First National Bank of Chicago
as agent hereunder: One First National Plaza
Suite 0129, l-L3
Chicago, Illinois 60670-0129
Attn: Commercial Paper
Product Manager
Telephone: (312) 732-7672
Telex: 4330253
Answbck: FNBCUI
Telecopier: (312) 732-6014
If to the Issuer: California and Hawaiian Sugar Company
1390 Willow Pass Road
Concord, California 94520
Attn: Beth Abercrombie
Telephone: (415) 356-6043
Telex: (415) 356-6037
Answbck: None
Telecopier: None
(b) Where any provision of this Agreement specifically contemplates
telephone communication made by one person to another, such communication shall
be made to that other person at the telephone number specified by it from time
to time for the purpose. Each such telephone communication to you by or on
behalf of the Issuer shall be made by an Issuer Agent and shall (in any case) be
expressed to be for the attention of the officer whose name has been specified
for the time being for such purpose by you to the Issuer. Each such telephone
communication to the Issuer shall be expressed to be for the attention of the
Issuer Agent whose name has been specified for the time being for such purpose
by the Issuer. Each of you and the Issuer Agent shall promptly confirm by
telex, telecopier or otherwise in writing any telephone communication made by it
to the other pursuant to this Agreement, but the absence of such confirmation
shall not affect the validity of such communication.
10. Assignment. Neither party hereto may assign any of its rights or
obligations hereunder without the consent of the other party hereto.
11. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois.
12. Counterparts. This Agreement may be executed in any number of counterparts
and by each party hereto on separate counterparts, each of which counterparts,
when so executed and delivered, shall be deemed to be an original and all of
which counterparts taken together shall constitute one and the same Agreement.
If the foregoing is acceptable to you, please sign and return the
enclosed copy.
CALIFORNIA AND HAWAIIAN SUGAR COMPANY
By: /s/ David G. Koncelik
Title: Chief Financial Officer
ACCEPTED AND AGREED TO as of the
day of _________, 1988:
THE FIRST NATIONAL BANK OF CHICAGO
By:
Title:
EXHIBIT A
FORM OF NOTE
CALIFORNIA AND HAWAIIAN SUGAR COMPANY
NOTE NUMBER ISSUE DATE MATURITY DATE MATURITY AMOUNT
PAY TO THE ORDER OF:
THE SUM OF:
PAYABLE AT:
CALIFORNIA AND HAWAIIAN AUTHENTICATED (without recourse,
SUGAR COMPANY warranty or liability) by
The First National Bank of Chicago,
By: /s/ David G. Koncelik as Issuing Agent
Authorized Signature
By:
Authorized Signature
OR
By: First Chicago Trust Company of
New York, ON BEHALF OF THE
ISSUING AGENT
By:
Authorized Signature
Exhibit 10.a.(xx)
AMENDMENT TO DEPOSITARY AGREEMENT
This Amendment to Depositary Agreement (as hereinafter defined) is dated as
February 10, 1995, and is by and between California and Hawaiian Sugar Company,
Inc., a Hawaii corporation (the "Issuer" formerly known as California and
Hawaiian Sugar Company, a California Cooperative Corporation), and The First
National Bank of Chicago, a national banking association (the "Depositary").
W I T N E S S E T H
WHEREAS, the Issuer and Depositary entered into that certain Depositary
Agreement dated as of April 6, 1989 providing for the delivery and payment of
certain commercial paper notes issued by the Issuer (such Depositary Agreement
shall be referred to herein as the "Depositary Agreement");
WHEREAS, the Issuer and Depositary desire to amend the Depositary Agreement
as provided herein;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
AMENDMENT
The Depositary Agreement is hereby amended and revised as follows:
1.1 All references to "California and Hawaiian Sugar Company" and
"California and Hawaiian Sugar Company, a California Cooperative Corporation"
shall be replaced with references to "California and Hawaiian Sugar Company,
Inc." and "California and Hawaiian Sugar Company, Inc., a Hawaii corporation",
respectively.
1.2 Exhibit A to the Depositary Agreement shall be deleted in its entirety
and inserted in place thereof shall be Exhibit A to the amendment to Depositary
Agreement attached hereto.
ARTICLE II
GENERAL PROVISION
2.1 Capitalized Terms. Terms that are capitalized herein and not
otherwise defined shall have the meanings ascribed to such terms in the
Depositary Agreement.
2.2 Continuation Depositary Agreement. Except as aforesaid, the terms and
conditions of the Depositary Agreement are hereby confirmed, ratified and
approved in their entirety and shall continue in full force and effect.
2.3 References to Depositary Agreement. All references in the Depositary
Agreement to "this Agreement", "hereunder" or "hereof" or words of like import
referring to the Depositary Agreement shall mean the Depositary Agreement as
amended hereby.
2.4 Counterparts. This Amendment may be executed in counterparts which
taken together shall constitute one and the same instrument.
CALIFORNIA AND HAWAIIAN
SUGAR COMPANY, INC.
By: /s/ Jerrold D. Dotson
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Barry G. Mokate
EXHIBIT A
FORM OF COMMERCIAL PAPER MASTER NOTE
DISCOUNT NOTES
COMMERCIAL PAPER MASTER NOTE
________________
(Date of Issuance)
______________________________ (the "Issuer"), a corporation organized and
existing under the laws of the State of ____________, for value received, hereby
promises to pay to Cede & Co. or registered assigns on the maturity date of each
obligation identified on the records of the Issuer (which records are maintained
by ______________________ (the "Paying Agent")) the principal amount for each
such obligation. Payment shall be made by wire transfer to the registered owner
from the Paying Agent without the necessity of presentation and surrender of
this Master Note.
REFERENCE IS MADE TO THE FURTHER PROVISIONS
OF THIS MASTER NOTE SET FORTH ON THE REVERSE HEREOF.
This Master Note is a valid and binding obligation of the Issuer.
__________________________ __________________________
(As Guarantor) (As Issuer)
By: ______________________ By: ______________________
(Authorized Officer's (Authorized Officer's
Signature) Signature)
__________________________ __________________________
(Print Name and Title) (Print Name and Title)
At the request of the registered owner, the Issuer shall promptly issue and
deliver one or more separate note certificates evidencing each obligation
evidenced by this Master Note. As of the date any such note certificate or
certificates are issued, the obligations which are evidenced thereby shall no
longer be evidenced by this Master Note.
_________________________________________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto
______________________________________ (Name, Address and Taxpayer
Identification Number of Assignee) the Master Note and all rights thereunder,
hereby irrevocably constituting and appointing _________________ Attorney to
transfer said Master Note on the books of the Issuer with full power of
substitution in the premises.
Dated: _________________________________
(Signature)
Signature(s) Guaranteed:
NOTICE: The signatures on this assignment must
correspond with the name as written upon the face of
this Master Note, in every particular, without
alteration or enlargement or any change whatsoever.
_________________________________________________________________
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT
IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
EXHIBIT 10.b.1.(ix)
ALEXANDER & BALDWIN, INC.
1989 STOCK OPTION/STOCK INCENTIVE PLAN
AMENDMENT NO. 3
The Alexander & Baldwin, Inc. 1989 Stock Option/Stock Incentive Plan (the
"Plan"), as previously amended by Amendment No. 1 executed July 2, 1992 and
Amendment No. 2 executed January 27, 1994, is hereby further amended, effective
as of October 27, 1994, as follows:
1. Article V of the Plan is hereby redesignated as Article VI.
2. A new Article V is hereby added to the Plan to read as follows:
"ARTICLE V
RELOAD OPTION GRANT PROGRAM
TERMS AND CONDITIONS OF RELOAD OPTIONS
A. The Committee shall have full power and authority,
exercisable in its sole discretion either at the time an option is
granted under the Regular Option Grant Program (Article II) or the
Discounted Option Grant Program (Article III), or at any time while
such option remains outstanding, to incorporate into that option the
reload feature described in this Article V. To the extent an option
with such a reload feature is subsequently exercised through the
delivery of previously-acquired shares of Common Stock in payment of
the option price for the shares purchased under that option, and/or
through the delivery of such shares (or the withholding of a portion
of the shares of Common Stock otherwise issuable under that option) in
satisfaction of the withholding tax liability incurred in connection
with such exercise, the Optionee shall automatically be granted, at
the time of such exercise (the "Reload Grant Date"), a new option (the
"Reload Option") to purchase the number of shares of Common Stock so
delivered and/or withheld. The Committee shall have the discretion,
however, to specify in the instrument evidencing the Reload Option
that a Reload Option will not be granted in the event the Optionee
delivers previously-acquired shares or has option shares withheld in
satisfaction of a withholding tax liability. For purposes of this
Article V, the underlying option with such a reload feature shall be
referred to as the "Original Option," and an Original Option may
include any option outstanding under the Plan at the time this
Article V program becomes effective or any option granted under the
Plan after such time.
B. The Committee may, in its sole discretion, provide in the
instrument evidencing the reload feature that no Reload Option shall
be granted in the event the Original Option with such feature is not
exercised before a specified period of time has elapsed after the
grant date of that Original Option.
C. The reload feature and each Reload Option shall each be
evidenced by instruments in such form as the Committee shall from time
to time deem appropriate. However, the terms and provisions of each
Reload Option shall be exactly the same as the terms and provisions of
the Original Option to which such Reload Option relates, except to the
extent otherwise indicated below.
1. Option Price.
a. Unless the Committee specifies otherwise in the
instrument evidencing the reload feature, the option price per share
of the Common Stock purchasable under the Reload Option shall be equal
to the Fair Market Value per share of Common Stock on the Reload Grant
Date. The Committee shall have full power and authority under this
Article V to provide in the instrument evidencing the reload feature
that the Reload Option shall have an exercise price per share that is
up to one hundred fifty percent (150%) of the option price per share
in effect at the time under the Original Option, in the event said
exercise price is greater than the Fair Market Value per share of
Common Stock on the Reload Grant Date.
b. The option price shall become immediately due upon
exercise of the Reload Option and shall be payable in the same form or
forms in which the option price may be paid under the Original Option.
2. No Additional Reload Option. In no event shall any
additional Reload Option be granted in connection with the subsequent
exercise of a Reload Option granted with respect to an Original
Option, whether or not shares of Common Stock are delivered or
withheld in connection with the payment of the option price of that
Reload Option or in satisfaction of the withholding tax liability
incurred in connection with the exercise of that Reload Option.
Accordingly, not more than one Reload Option will be granted per
Original Option.
3. Term of Reload Option. The Reload Option shall have
the same maximum option term and expiration date as the Original
Option to which it relates, subject to earlier termination in
accordance with paragraph 5 of this Section C of Article V.
4. Exercise of Reload Option.
a. The Committee shall specify in the instrument
evidencing the reload feature the period of time which must elapse
following the exercise of the Original Option and other conditions
that must be met before the Reload Option shall become exercisable.
In no event shall the Reload Option become exercisable in whole or in
part within the first six (6) months following the Reload Grant Date,
unless the Committee provides for earlier exercise in the event of the
Optionee's death or disability. Once the period specified by the
Committee has elapsed, the Reload Option shall become immediately
exercisable for all of the shares of Common Stock at the time subject
to the Reload Option.
b. During the lifetime of the Optionee, the Reload
Option shall be exercisable only by the Optionee and shall not be
assignable or transferable by the Optionee otherwise than by will or
by the laws of descent and distribution.
5. Termination of Service. Upon the Optionee's cessation
of Service for any reason while holding one or more outstanding Reload
Options under this Article V, each such Reload Option shall terminate
and cease to be outstanding at the same time the Original Option to
which that Reload Option terminates in connection with such cessation
of Service.
6. Stockholder Rights. The holder of the Reload Option
shall have none of the rights of a stockholder with respect to any
shares covered by the Reload Option until such individual shall have
exercised the Reload Option, paid the option price and satisfied all
other conditions precedent to the issuance of certificates for the
purchased shares.
D. Corporate Transaction/Change in Control.
1. Should a Corporate Transaction or Change in Control (as
such terms are defined in Article II) occur after the Reload Option
has been outstanding for a period of more than six (6) months, then
the Reload Option granted shall immediately become exercisable for one
or more shares of Common Stock at the time subject to that Reload
Option, to the same extent (if any) to which the exercisability of the
Original Option to which the Reload Option relates is accelerated in
connection with such Corporate Transaction or Change in Control.
2. Upon the consummation of the Corporate Transaction,
each outstanding Reload Option shall, to the extent not previously
exercised or assumed by the successor corporation or its parent com
pany, terminate and cease to be outstanding.
3. If the Company is the surviving entity in any merger or
other business combination which does not result in the termination of
outstanding Reload Options under this Article V, then each such
continuing Reload Option shall be appropriately adjusted to apply and
pertain to the number and class of securities which would be issuable,
in consummation of such merger or business combination, to an actual
holder of Common Stock for the same number of shares as are subject to
such Reload Option immediately prior to such merger or business
combination. Appropriate adjustments shall also be made to the option
price per share payable under the Reload Option, provided the
aggregate option price shall remain the same.
4. The grant of Reload Options under this Article V shall
in no way affect the right of the Company to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to
merge, consolidate, dissolve, liquidate or sell or transfer all or any
part of its business or assets.
E. Miscellaneous Provisions.
1. No stock appreciation rights shall be granted in
connection with any Reload Option.
2. The Company's obligation to deliver shares of Common
Stock upon the exercise of Reload Options granted under this Article V
shall be subject to the satisfaction of all applicable Federal, State
and local income and employment tax withholding requirements.
3. To the extent the Optionee has the right to have a
portion of the shares purchased under the Original Option withheld by
the Company in satisfaction of the applicable withholding taxes
incurred in connection with the exercise of the Original Option (or
otherwise to deliver existing shares of Common Stock in satisfaction
of such tax liability), the Optionee shall have the similar right with
respect to the withholding tax liability incurred in connection with
the exercise of the Reload Option, unless the Committee specifies
otherwise in the instrument evidencing the reload feature."
3. Except as modified by this Amendment, all the terms and provisions of
the Alexander & Baldwin, Inc. 1989 Stock Option/Stock Incentive Plan, as
previously modified by Amendments No. 1 and 2, shall continue in full force and
effect.
IN WITNESS WHEREOF, Alexander & Baldwin, Inc. has caused this Amendment
No. 3 to be executed on its behalf by its duly-authorized officers on this 27th
day of October, 1994.
ALEXANDER & BALDWIN, INC.
By /s/ Miles B. King
Its Vice President
By /s/ Alyson J. Nakamura
Its Assistant Secretary
Exhibit 10.b.1.(xix)
A&B EXCESS BENEFITS PLAN
Amendment No. 2
The A&B Excess Benefits Plan, as amended and restated effective July 1, 1991, is
hereby amended, effective August 24, 1994, as follows:
1. Section 3.02 is hereby amended in its entirety to read as follows:
"3.02 PARTICIPATION. Participants in this Plan shall be any
eligible employees who are participants in the One-Year Performance
Improvement Incentive Plan ("One-Year PIIP") who meet the eligibility
requirements set forth in Section III.A. of the One-Year PIIP. In
addition, the Administrator shall have the exclusive and unfettered
discretion to select additional Plan Participants from among eligible
employees. A Participant in this Plan shall remain as such until the
date he/she ceases to satisfy the participation requirements in the
first sentence of this Section 3.02, until the date upon which the
Participant's employment terminates for any reason or until such
earlier time as may be specified by the Administrator."
2. Except as modified by this Amendment, all terms and provisions of the A&B
Excess Benefits Plan shall continue in full force and effect.
IN WITNESS WHEREOF, Alexander & Baldwin, Inc. has caused its authorized
officers to affix the corporate name and seal hereto this 24th day of August,
1994.
ALEXANDER & BALDWIN
By /s/ Miles B. King
Its Vice President
By /s/ Alyson J. Nakamura
Its Assistant Secretary
Exhibit 10.b.1.(xx)
A&B EXCESS BENEFITS PLAN
AMENDMENT NO. 3
The A&B Excess Benefits Plan, as amended and restated effective July 1,
1991, is hereby amended, effective February 1, 1995, as follows:
1. A new Section 2.00 is hereby added, as follows:
"2.00. 'Actuarial Equivalent' means a form of benefit differing
in time period, or manner of payment from a specified benefit provided
in the Plan, but having the same present value when determined in
accordance with generally accepted actuarial practice and the rules
contained in Appendix C of this Plan."
2. Section 4.01(c) is hereby amended in its entirety to read as follows:
"4.01(c). Payment of Pension Benefits. A Participant's pension
benefit under this Plan, other than a benefit described in subsection
(d), shall be a lump sum payment payable upon the earlier of
termination of employment or retirement, which equals the greater of
the amounts determined under paragraph (1) and paragraph (2):
(1) An amount which is the Actuarial Equivalent of the benefit
described in paragraphs (a) and (b) above.
(2) An amount which is the before-tax equivalent of the lower of
two quotations obtained by the Administrator from insurance companies
for the cost of a lifetime annuity that provides after-tax monthly
benefits equivalent to those that a Participant would receive under
this Plan if this Plan allowed monthly payments of the pension
benefits hereunder."
3. Section 6.02(a) is hereby amended by adding the phrase "as described
in Section 4.02 and 4.03" after the phrase "the balance of his or her individual
account" in the third sentence, and replacing the phrase "the actuarial
equivalent, as defined in section 6.02(c)" with the phrase "an amount which is
the Actuarial Equivalent", also in the third sentence.
4. Section 6.02(c) is hereby deleted in its entirety.
5. A new Appendix C is hereby added, as follows:
"APPENDIX C
RULES FOR DETERMINING LUMP SUM BENEFITS
When the terms of this Plan require the determination of a lump sum
payment which is the Actuarial Equivalent of any other benefit
provided by this Plan, the following rules shall apply to the
calculation of such lump sum payment:
1. The mortality table used shall be the mortality table then in use
by the A&B Retirement Plan for the purpose of determining lump
sum payments to participants of such plan who are entitled to
such payments.
2. The discount rate shall be the after-tax equivalent of the
discount rate then in use by the A&B Retirement Plan for the
purpose of determining lump sum payments to participants of such
plan who are entitled to such payments. The after-tax equivalent
rate shall be determined by multiplying discount rate in use by
the A&B Retirement Plan by the excess of 100% over the tax
effected marginal tax rate declared by the Committee.
3. The Committee shall declare the tax effected marginal tax rate at
the beginning of each calendar year.
4. The tax effected marginal tax rate shall apply to lump sum
payments made at any time during such calendar year and may not
be changed during the year.
5. The value of the benefit to a Surviving Spouse which is included
in a Participant's Retirement Income shall be included in the
calculation of the lump sum payment to which the Participant is
entitled. Unless stated otherwise, the benefit to the Surviving
Spouse shall be deemed to apply only if the death of the
Participant occurs on or after the date the Retirement Income is
deemed to commence under the terms of the provision giving rise
to the Participant's right to a lump sum payment.
6. If the terms of the Plan provide for a benefit such that if it
were paid as a monthly benefit it could have commenced at more
that one future date, then for purposes of calculating the lump
sum that is the Actuarial Equivalent of such benefit, it shall be
deemed that the benefit would have commenced at the earliest
possible date.
7. The early retirement reduction factors, if any, used to calculate
the lump sum which is the Actuarial Equivalent of the benefit
provided by the provisions of paragraph 6.02(a) as a result of a
Change of Control, shall be the factors applicable to
Participants of the A&B Retirement Plan who terminate employment
after attaining eligibility for early retirement regardless of
the Participant's age as of the Change of Control date."
6. Except as modified by this Amendment, all terms and provisions of the
A&B Excess Benefits Plan shall continue in full force and effect.
IN WITNESS WHEREOF, Alexander & Baldwin, Inc. has caused its authorized
officers to affix the corporate name and seal hereto this 22nd day of February,
1995.
ALEXANDER & BALDWIN, INC.
By /s/ Miles B. King
Its Vice President
By /s/ Alyson J. Nakamura
Its Assistant Secretary
<PAGE>
A&B EXCESS BENEFITS PLAN
AMENDED AND RESTATED EFFECTIVE FEBRUARY 1, 1995
ARTICLE I
ESTABLISHMENT AND PURPOSE
1.01. ESTABLISHMENT OF PLAN. Alexander & Baldwin, Inc. hereby
establishes an excess benefits/top hat plan for certain eligible executives.
1.02. PURPOSE OF PLAN. It is the purpose of this Plan to provide
certain eligible executives with benefits equal to the benefits they would
receive under the A&B Retirement Plan and the A&B Profit Sharing Plan if certain
changes had been made to those plans. The Plan is intended to be exempt from
the participation, vesting, funding, and fiduciary requirements of Title I of
the Employee Retirement Income Security Act of 1974, pursuant to
Sections 201(2), 301(3) and 401(1) of that Act.
ARTICLE II
DEFINITIONS
The following terms have the meanings indicated:
2.00. "Actuarial Equivalent" means a form of benefit differing in
time period, or manner of payment from a specified benefit provided in the Plan,
but having the same present value when determined in accordance with generally
accepted actuarial practice and the rules contained in Appendix C of this Plan.
2.01. "A&B" means Alexander & Baldwin, Inc. and its affiliates and
their successors.
2.02. "A&B Master Trust Agreement" means the Alexander & Baldwin,
Inc. Retirement and Pension Trust Agreement, as amended from time to time.
2.03. "A&B Retirement Plan" means the A&B Retirement Plan for
Salaried Employees.
2.04. "A&B Profit Sharing Plan" means the Alexander & Baldwin,
Inc. Profit Sharing Retirement Plan, as amended from time to time.
2.05. "Administrator" means the person specified in Section 5.01.
2.06. "Board of Directors" means the Board of Directors of
Alexander & Baldwin, Inc.
2.07. "Participant" means an eligible employee selected by the
Administrator pursuant to Section 3.02.
2.08. "Plan" means the plan set forth in this document, as amended
from time to time.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.01. ELIGIBILITY. Any employee of A&B who is a participant in
either the A&B Retirement Plan or the A&B Profit Sharing Plan and who is highly
compensated or who is one of a select group of management employees shall be
eligible to participate in this Plan.
3.02 PARTICIPATION. Participants in this Plan shall be any eligible
employees who are participants in the One-Year Performance Improvement Incentive
Plan ("One-Year PIIP") who meet the eligibility requirements set forth in
Section III.A. of the One-Year PIIP. In addition, the Administrator shall have
the exclusive and unfettered discretion to select additional Plan Participants
from among eligible employees. A Participant in this Plan shall remain as such
until the date he/she ceases to satisfy the participation requirements in the
first sentence of this Section 3.02, until the date upon which the Participant's
employment terminates for any reason or until such earlier time as may be
specified by the Administrator.
3.03. TRANSFERS OF EMPLOYMENT TO AND FROM A&B SUBSIDIARIES. The
following transfers of employment shall not be deemed terminations of employment
under Section 3.02 if the A&B subsidiary or subsidiaries involved have adopted
this Plan and either the A&B Retirement Plan or the A&B Profit Sharing Plan, or
both such plans:
(a) transfer from Alexander & Baldwin, Inc. to a subsidiary of
Alexander & Baldwin, Inc.;
(b) transfer from a subsidiary of Alexander & Baldwin, Inc. to
Alexander & Baldwin, Inc.; and
(c) transfer from one subsidiary of Alexander & Baldwin, Inc. to
another subsidiary of Alexander & Baldwin, Inc. Beginning with such transfer,
and for the period of employment with the new employer, the new employer shall
be obligated for all payments to the Participant required by Article IV of this
Plan. The prior employer shall remain responsible for any payments to be made
that pertain to the period of the Participant's participation while employed by
that prior employer.
ARTICLE IV
BENEFITS
4.01. PENSION BENEFITS.
(a) ENTITLEMENT TO PENSION BENEFITS. A Participant's pension
benefit under this Plan shall equal one hundred percent of the difference
between the benefit to which the Participant is entitled under the A&B Retire
ment Plan determined without regard to limitations imposed by the Internal
Revenue Code (and, with respect to Participants listed in Appendix A to this
Plan, without regard to amendments in the benefit formula after December 31,
1988, unless such amendments would produce a higher benefit) and the benefit to
which the Participant is entitled under such plan determined after giving effect
to those limitations. For the purpose of this Plan, the benefit to which the
Participant is entitled under the A&B Retirement Plan shall be determined by
including as part of the Participant's monthly compensation all deferred base
salary and all deferred incentive awards under A&B's One-Year Performance
Improvement Incentive Plan.
(b) FORMER EMPLOYEES OF CALIFORNIA AND HAWAIIAN SUGAR COMPANY.
Notwithstanding the terms of Section 4.01(a) above, the benefit payable to a
Participant (or Participant's spouse) under this Plan shall be reduced by the
amount of any benefit payable to such Participant (or spouse) under the
California and Hawaiian Sugar Company Supplemental Retirement Plan.
(c) PAYMENT OF PENSION BENEFITS. A Participant's pension
benefit under this Plan, other than a benefit described in subsection (d), shall
be a lump sum payment, payable upon the earlier of termination of employment or
retirement, which equals the greater of the amounts determined under
paragraph (1) and paragraph (2):
(1) An amount which is the Actuarial Equivalent of the
benefit described in paragraphs (a) and (b) above.
(2) An amount which is the before-tax equivalent of the
lower of two quotations obtained by the Administrator from insurance companies
for the cost of a lifetime annuity that provides after-tax monthly benefits
equivalent to those that a Participant would receive under this Plan if this
Plan allowed monthly payments of the pension benefits hereunder.
(d) SELECT BENEFITS PROVIDED TO RETIRED FORMER EMPLOYEES OF
CALIFORNIA AND HAWAIIAN SUGAR COMPANY. All other provisions of this Plan
notwithstanding, the retired former employees of California and Hawaiian Sugar
Company who are listed in Appendix B of this Plan shall be eligible to receive
the benefits shown in Appendix B, and no other benefits shall be paid to such
retired former employees under the provisions of this Plan. Payment of these
benefits shall be according to the terms shown in Appendix B, and no other
provisions of this Plan shall affect the amount or the form of payment of these
benefits.
4.02. DEFINED CONTRIBUTION BENEFITS.
(a) ENTITLEMENT TO DEFINED CONTRIBUTION BENEFITS. A
Participant's defined contribution benefit under this Plan shall equal the
balance to the Participant's credit in the account maintained under
Section 4.03.
No amount shall be credited to a Participant's account for a
year unless the Participant is a participant in the A&B Profit Sharing Plan for
that year.
(b) PAYMENT OF DEFINED CONTRIBUTION BENEFITS. At the time that
the Administrator selects an eligible employee to be a Participant, the employee
shall elect the form, time, and manner in which any defined contribution
benefits to which he or she may become entitled under this Plan shall be paid.
A Participant may elect any of the payment methods provided in the A&B Profit
Sharing Plan, except that all elections must be made at the time the employee
becomes a Participant in this Plan, and not at such other times as may be
specified in the A&B Profit Sharing Plan. Such elections, once made, cannot be
changed. The distribution of Defined Contribution Benefits shall commence
within 30 days of the Participant's termination of employment.
4.03. MAINTENANCE OF ACCOUNTS. The Administrator shall establish
and maintain an individual account for each Participant. The Administrator
shall annually credit to a Participant's account as of the end of each year an
amount equal to the difference between (i) the employer contribution and for
feitures that would have been allocated to such Participant's account under the
A&B Profit Sharing Plan with respect to such year were such allocation to be
made without regard to the limitations of the Internal Revenue Code and (ii) the
amount actually allocated to such Participant's account after having taken such
limitations into account. For the purposes of this Plan, the benefit to which
the Participant is entitled under the A&B Profit Sharing Plan shall be
determined by including as part of the Participant's compensation all deferred
base salary. Each Participant's account shall be credited with interest, com
pounded annually, at an annual rate equal to 1% above the New York Federal
Reserve Bank discount rate in effect as of the date interest is computed and
credited. Interest shall be computed and credited as of such date and on such
account balance as specified by the Administrator. In the absence of such speci
fications, interest shall be credited and computed as of January 1 of each year
on the balance of the account on the preceding January 1 or, if payments have
been made out of an account during the preceding year, on the average balance of
that account during the preceding year.
The account of each Participant shall be entered on the employer's
books as a liability, payable when due out of general assets. Participant
accounts shall not be funded by any trust or insurance contract; nor shall any
assets be segregated or identified with any such account; nor shall any property
or assets be pledged, encumbered, or otherwise subjected to a lien or security
interest for payment of benefits.
4.04. VESTING OF BENEFITS. Except as otherwise provided in
Section 6.02(a), all pension benefits under this Plan shall be contingent and
forfeitable unless and until they vest in accordance with the vesting provisions
of the A&B Retirement Plan, and all defined contribution benefits under this
Plan shall be contingent and forfeitable unless and until they vest in
accordance with the vesting provisions of the A&B Profit Sharing Plan that are
applicable to the Participant's profit sharing account.
ARTICLE V
ADMINISTRATION OF THE PLAN
5.01. ADMINISTRATOR. The plan administrator of the A&B Retirement
Plan shall be the Administrator of this Plan. The Administrator shall have full
authority to administer the Plan. The Administrator shall have all of the
powers granted by the A&B Retirement Plan or the A&B Master Trust Agreement to
the plan administrator of the A&B Retirement Plan, and shall be subject to the
same selection procedures and limitations of authority.
5.02. CLAIMS PROCEDURES. The Administrator shall employ the
claims procedures applicable under the A&B Retirement Plan.
ARTICLE VI
AMENDMENT AND TERMINATION
6.01. AUTHORITY OF COMPENSATION AND STOCK OPTION COMMITTEE. The
right to amend, modify, partially terminate, or completely terminate this Plan
shall be reserved to the Compensation and Stock Option Committee of the Board of
Directors. However, no amendment, modification or termination shall reduce
retroactively the benefits of any Participant under this Plan.
6.02. CHANGE IN CONTROL.
(a) TERMINATION, VESTING AND PAYMENT. Upon the occurrence of a
Change in Control, as defined in Section 6.02(b), with respect to the company
employing a Participant, the Plan shall immediately and automatically terminate
with respect to such company. Upon such a termination, the interest of each
Participant employed by the company or companies with respect to which the Plan
has been terminated shall become non-forfeitable and immediately due and
payable. Each such Participant shall receive, within thirty days of such termi
nation, a lump sum payment in an amount equal to the sum of (i) the balance of
his or her individual account as described in Sections 4.02 and 4.03 and (ii) an
amount which is the Actuarial Equivalent of the benefits defined in
Sections 4.01 of this Plan determined as of the date of the Change in Control.
If the terms of such Change in Control provide, as a prerequisite to the
consummation of the Change in Control, that the employer responsibilities under
this Plan are to be assumed by the successor organization, then the Plan shall
not terminate and no lump sum payment shall be made to any Participant. In any
such case, however, the interest of each Participant employed by the company or
companies with respect to which the Change in Control occurs shall become
non-forfeitable at the date of such Change in Control.
(b) DEFINITION OF CHANGE IN CONTROL. For purposes of this
Section 6.02, a "Change in Control" of Alexander & Baldwin, Inc. shall mean a
change in control of a nature that would be required to be reported in response
to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), whether or not
Alexander & Baldwin, Inc. in fact is required to comply with Regulation 14A
thereunder; provided that, without limitation, such a change in control shall be
deemed to have occurred if (i) any "person" (defined, for purposes of this
Section 6.02, as such term is used in Sections 13(d) and 14(d) of the Exchange
Act) is or becomes the "beneficial owner" (defined, for purposes of this
Section 6.02, as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of Alexander & Baldwin, Inc. representing 35% or more
of the combined voting power of its then outstanding securities; or (ii) during
any period of twenty-four (24) consecutive months, at least a majority of the
Board of Directors ceases to consist of individuals who have served continuously
on such Board since the beginning of such period or whose election, or
nomination for election by shareholders, was approved by a vote of at least
two-thirds of the directors then still in office who have served continuously on
such Board since the beginning of the period. A "Change in Control" of a
subsidiary of Alexander & Baldwin, Inc. shall be deemed to have occurred if any
"person" is or becomes the "beneficial owner," directly or indirectly, of
securities of such subsidiary representing 35% or more of the combined voting
power of its then outstanding securities. If a Change in Control shall take
place with respect to any company, a Change in Control shall be deemed to have
taken place with respect to any subsidiary of such company.
ARTICLE VII
MISCELLANEOUS PROVISIONS
7.01. BENEFITS NON-ASSIGNABLE. No right or interest of a
Participant in this Plan shall be assignable or transferable, in whole or in
part, either directly or by operation of law or otherwise, including but not by
way of limitation, execution, levy, garnishment, attachment, pledge, bankruptcy,
assignments for the benefit or creditors, receiverships, or in any other manner,
excluding transfer by operation of law as a result solely of mental
incompetency.
7.02. CONTROLLING LAW. This Plan shall be construed,
administered, and governed in all respects in accordance with the laws of the
State of Hawaii.
7.03. NOT AN EMPLOYMENT CONTRACT. The adoption and maintenance of
this Plan shall not be deemed to confer on any Participant any right to continue
in the employ of A&B, and shall not be deemed to interfere with the right of A&B
to discharge any person or treat any person without regard to the effect that
such treatment might have on the person as a Plan Participant.
7.04. GENDER AND NUMBER. Any masculine pronouns used herein shall
refer to both men and women, and the use of any term herein in the singular may
also include the plural unless otherwise indicated by context.
7.05. SEVERABILITY. If any provision of this Plan is held invalid
or unenforceable by a court of competent jurisdiction, all remaining provisions
shall continue to be fully effective.
ARTICLE VIII
ADOPTION BY SUBSIDIARIES
Any subsidiary of Alexander & Baldwin, Inc. that has adopted either the A&B
Retirement Plan or the A&B Profit Sharing Plan may adopt this Plan for the
benefit of its employees when one of its employees has been selected as a
participant by the Administrator. Such adoption shall be authorized by a
resolution of the Board of Directors of such subsidiary. In the event of such
adoption of the Plan by a subsidiary of Alexander & Baldwin, Inc., the
Administrator shall serve as agent of the subsidiary in administering the Plan.
All power to amend, modify, or terminate the Plan shall continue as the
unfettered prerogative of the Compensation and Stock Option Committee of the
Board of Directors.
IN WITNESS WHEREOF, Alexander & Baldwin, Inc. has caused this Restatement to be
executed on its behalf by its duly authorized officers this 22nd day of
February, 1995.
ALEXANDER & BALDWIN, INC.
By /s/ Miles B. King
Its Vice President
By /s/ Alyson J. Nakamura
Its Secretary
<PAGE>
APPENDIX A
PARTICIPANTS REFERRED TO IN
SECTION 4.01(A) _
l. R. F. Cameron
2. J. C. Couch
3. R. J. Donohue
4. F. L. Fleischmann
5. A. J. Haskell
6. G. S. Holaday
7. J. B. Kelley
8. M. J. Marks
9. C. B. Mulholland
10. G. Y. Nakamatsu
11. G. J. North
12. R. J. Pfeiffer
13. G. R. Rogers
14. R. H. Rothman
15. R. K. Sasaki
16. D. P. Scott
<PAGE>
<TABLE>
<CAPTION>
APPENDIX B
Participant's Name Fixed Spouse's Name
----------------------- Date of Monthly Variable -------------------- Date of Monthly
First MI Last Birth Benefit* Units First MI Last Birth Benefit**
----- -- --- ------- -------- -------- ----- -- ---- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Paul A. Cooper 7/15/05 437.67 None
Edwin R. Duncan 4/08/20 396.36 Jean K. Duncan 4/02/19 66 2/3%
Harry J. Fitzgerald 10/26/19 358.58 Kathryn T. Fitzgerald 5/16/26 50%
Donald W. Hare 5/14/19 748.20 Dorothy P. Hare 5/21/19 66 2/3%
Lawrence A. Lindsay 2/25/25 786.04 Rita A. Lindsay 4/05/25 66 2/3%
Neil L. Pennington 5/12/23 613.16 Frances M. Pennington 5/28/25 66 2/3%
Frederick W. Schwer 4/26/19 228.40 Christine W. Schwer 8/14/18 66 2/3%
Lawson U. Williams 1/01/19 350.33 Mildred A. Williams 7/03/20 66 2/3%
Emmett V. Donovan (d) 11/06/18 304.05 June Donovan 6/10/22 66 2/3%
Edward F. Harder (d) 1/07/19 605.28 Bette Harder 3/02/20 66 2/3%
Robert O. Nagle (Note 1) 2/10/29 1333.50 658.85 Louise H. Nagle 2/06/28 100%
Robert O. Nagle (Note 2) 2/10/29 711.64 351.60 Louise H. Nagle 2/06/28 100%
</TABLE>
* The fixed monthly benefit payable plus the current value of the variable
units are payable to the participant during the participant's lifetime
except if payment option is a 66-2/3% (last survivor). In such case, if
either participant or spouse dies, the survivor will receive 66-2/3% of
the fixed monthly benefit or the current value of the variable units. The
current value of the variable units shall be determined in the same way
such value is determined under the provisions of the C and H Pension Plan
for Salaried Employees.
** The monthly benefit equal to the percentage shown multiplied times the
participant's monthly benefit is payable to the spouse named above after
the death of the participant during the spouse's lifetime.
(d) Deceased.
Note 1: The preceding footnotes notwithstanding, this benefit shall not be
payable to Mr. Nagle or his surviving spouse on or after March 1, 1994.
Note 2: The preceding footnotes notwithstanding, this benefit shall only be
payable to Mr. Nagle or his surviving spouse on or after March 1, 1994.
<PAGE>
APPENDIX C
RULES FOR DETERMINING LUMP SUM BENEFITS
When the terms of this Plan require the determination of a lump sum payment
which is the Actuarial Equivalent of any other benefit provided by this Plan,
the following rules shall apply to the calculation of such lump sum payment:
1. The mortality table used shall be the mortality table then in use by the
A&B Retirement Plan for the purpose of determining lump sum payments to
participants of such plan who are entitled to such payments.
2. The discount rate shall be the after-tax equivalent of the discount rate
then in use by the A&B Retirement Plan for the purpose of determining lump
sum payments to participants of such plan who are entitled to such
payments. The after-tax equivalent rate shall be determined by
multiplying discount rate in use by the A&B Retirement Plan by the excess
of 100% over the tax effected marginal tax rate declared by the Committee.
3. The Committee shall declare the tax effected marginal tax rate at the
beginning of each calendar year.
4. The tax effected marginal tax rate shall apply to lump sum payments made
at any time during such calendar year and may not be changed during the
year.
5. The value of the benefit to a Surviving Spouse which is included in a
Participant's Retirement Income shall be included in the calculation of
the lump sum payment to which the Participant is entitled. Unless stated
otherwise, the benefit to the Surviving Spouse shall be deemed to apply
only if the death of the Participant occurs on or after the date the
Retirement Income is deemed to commence under the terms of the provision
giving rise to the Participant's right to a lump sum payment.
6. If the terms of the Plan provide for a benefit such that if it were paid
as a monthly benefit it could have commenced at more that one future date,
then for purposes of calculating the lump sum that is the Actuarial
Equivalent of such benefit, it shall be deemed that the benefit would have
commenced at the earliest possible date.
7. The early retirement reduction factors, if any, used to calculate the lump
sum which is the Actuarial Equivalent of the benefit provided by the
provisions of paragraph 6.02(a) as a result of a Change of Control, shall
be the factors applicable to Participants of the A&B Retirement Plan who
terminate employment after attaining eligibility for early retirement
regardless of the Participant's age as of the Change of Control date.
Exhibit 10.b.1.(xxii)
A&B EXECUTIVE SURVIVOR/RETIREMENT BENEFIT PLAN
AMENDMENT NO. 1
The A&B Executive Survivor/Retirement Benefit Plan, as amended and restated
effective July 1, 1991, is hereby amended, effective February 1, 1995, as
follows:
1. Section 2.04 is hereby revised in its entirety to read as follows:
"2.04. 'Approved Early Retirement Date' means a date which meets
each of the following requirements:
(a) The Participant has attained age 55,
(b) The Participant has at least five Years of Service,
(c) The date has been approved by the Chief Executive
Officer of A&B."
2. Section 2.06 is hereby revised by replacing the reference to
"Section 4.04" with "Section 4.10."
3. Sections 2.08 and 2.09 are hereby renumbered as Sections 2.09 and
2.10, respectively.
4. A new Section 2.08 is hereby added, as follows:
"2.08 'Change in Control' of Alexander & Baldwin, Inc. shall
mean a change in control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), whether or not Alexander & Baldwin, Inc. in fact is
required to comply with Regulation 14A thereunder; provided that,
without limitation, such a change in control shall be deemed to have
occurred if (i) any "person" (defined, for purposes of this
Section 2.08, as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the "beneficial owner" (defined, for
purposes of this Section 2.08, as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of Alexander &
Baldwin, Inc. representing 35% or more of the combined voting power of
its then outstanding securities; or (ii) during any period of
twenty-four (24) consecutive months, at least a majority of the Board
of Directors ceases to consist of individuals who have served
continuously on such Board since the beginning of such period or whose
election, or nomination for election by shareholders, was approved by
a vote of at least two-thirds of the directors then still in office
who have served continuously on such Board since the beginning of the
period. A 'Change in Control' of a subsidiary of Alexander & Baldwin,
Inc. shall be deemed to have occurred if any 'person' is or becomes
the 'beneficial owner,' directly or indirectly, of securities of such
subsidiary representing 35% or more of the combined voting power of
its then outstanding securities. If a Change in Control shall take
place with respect to any company, a Change in Control shall be deemed
to have taken place with respect to any subsidiary of such company."
5. A new Section 2.12 is hereby added, as follows:
"2.12 'Early Retirement Factor' means the reduction factors used
to calculate early retirement benefits under the A&B Retirement Plan
for participants of such plan who retire from active service at or
after attaining age 55."
6. The existing Section 2.10 is hereby renumbered as Section 2.13, and
revised in its entirety to read as follows:
"2.13 'Final Base Compensation' means a Participant's Base
Compensation in effect at the time of the Participant's retirement,
termination of employment, termination of participation, death or
disability, whichever is applicable, computed as an annual amount by
multiplying the then applicable monthly Base Compensation in effect by
12."
7. Section 2.11 is hereby renumbered as Section 2.17, and revised in its
entirety to read as follows:
"2.17 'Normal Retirement Date' means the first day of the month
coincident with or next following the date the Participant attains age
65."
8. A new Section 2.11 is hereby added, as follows:
"2.11 'Disabled Participant.' 'Disabled' means a Participant
who is unable to perform substantially all of the material and
substantial duties of her or his regular position because of
accidental bodily injury sustained or disease originating after the
date of such person's designation as a Participant under this Plan.
Notwithstanding the foregoing:
(i) if a Participant has been Disabled for a continuous
period of 24 months, the Participant will cease to be considered
Disabled unless he or she is unable to perform any occupation for
which the Participant is or becomes reasonably qualified by education,
training or experience because of such bodily injury or sickness; and
(ii) a Participant is not Disabled at any time that the
Participant is working for pay or profit at any occupation."
9. Sections 2.12 and 2.13 are hereby renumbered as Sections 2.19 and
2.21, respectively.
10. Section 2.14 is hereby replaced with the following:
"2.14 'Immediate Change in Control Benefit' means the benefit
described in subsection 4.08(a)."
11. Section 2.15 is hereby renumbered as Section 2.23, and revised by
replacing the reference to "Section 4.01" with "Section 4.02."
12. A new Section 2.15 is hereby added, as follows:
"2.15 'Involuntary Termination Benefit' means the benefit
described in Section 4.05."
13. Section 2.16 is hereby replaced with the following:
"2.16 'Normal Retirement Benefit' means ten annual amounts, each
equal to the percentage (which shall be not less than 5% nor greater
than 35%) of the Participant's Final Base Compensation as specified in
such Participant's individual Participating Agreement, payable in
monthly installments."
14. A new Section 2.18 is hereby added, as follows:
"2.18 'Normal Survivor Benefit' means ten annual amounts, each
equal to 50% of the Participant's Final Base Compensation, payable in
monthly installments."
15. A new Section 2.20 is hereby added, as follows:
"2.20 'Participation Termination Benefit' means the benefit
described in Section 4.06."
16. A new Section 2.22 is hereby added, as follows:
"2.22 'Plan Termination Benefit' means the benefit described in
Section 4.07."
17. A new Section 2.24 is hereby added, as follows:
"2.24 'Prorated Retirement Benefit' means Normal Retirement
Benefit multiplied by the Proration Factor."
18. A new Section 2.25 is hereby added, as follows:
"2.25 'Prorated Survivor Benefit' means Normal Survivor Benefit
multiplied by the Proration Factor."
19. A new Section 2.26 is hereby added, as follows:
"2.26 'Proration Factor' means:
(a) In the case of a Participant who is a Participant in
the A&B 1985 Supplemental Executive Retirement Plan, or who was a
former Participant in such plan, the ratio of (i) 300 minus the number
of completed months between the date of calculation and the
Participant's Normal Retirement Date, to (ii) 300.
(b) In the case of all other Participants, the ratio of
(i) the Participant's Years of Service as of the calculation date, to
(ii) the Years of Service the Participant would have earned at his or
her Normal Retirement Date had he or she remained in employment status
until such date."
20. A new Section 2.27 is hereby added, as follows:
"2.27 'Vested Change in Control Benefit' means the benefit
described in Section 4.08(b)."
21. Section 4.01 is hereby renumbered as Section 4.02, as revised in its
entirety to read as follows:
"4.02. Pre-Retirement Survivor Benefit. The Beneficiary of a
Participant who dies before termination of employment shall be
entitled to receive a Pre-Retirement Survivor Benefit consisting of
the Normal Survivor Benefit commencing as soon as practicable after
the Participant's death."
22. A new Section 4.01 is hereby added, as follows:
"4.01. Plan Benefits. A Participant shall be entitled to
whichever of the benefits provided by Sections 4.02 to 4.09 provides
the greatest benefit. Under no circumstance shall a Participant be
entitled to benefits provided by more than one such Section."
23. Sections 4.02 and 4.03 are hereby deleted in their entirety.
24. A new Section 4.03 is hereby added, as follows:
"4.03 Normal Retirement Benefit.
(a) Eligibility. A Participant who meets the following
requirements shall be entitled to the Normal Retirement Benefit
described in subsection (b) below:
(1) The Participant has completed three years of
participation in the Plan; and
(2) The Participant retires from employment on or after his
or her Normal Retirement Date.
(b) Benefit. A Participant's Normal Retirement Benefit shall be
the benefit in paragraph (1) below unless within 90 days prior to
retirement, the Participant has applied in writing to receive the
benefit in paragraph (2) below in lieu of the benefit in paragraph (1)
and the Committee has approved such request. In the latter case, a
Participant's Normal Retirement Benefit shall be the benefit in
paragraph (2) below.
(1) The Participant's Normal Survivor Benefit commencing as
soon as practicable after the Participant's death.
(2) The Participant's Normal Retirement Benefit commencing
on the first day of the month following his or her retirement."
25. Sections 4.04, 4.05 and 4.06 are hereby renumbered as Sections 4.10,
4.11 and 4.12.
26. Section 4.05 is hereby renumbered as Section 4.11, and subsection (d)
thereof is revised in its entirety to read as follows:
(d) "Disability. A Disabled Participant shall continue to be
eligible for retirement benefits under the Plan, regardless of the
nonperformance of services for A&B. Failure to return to employee
status at the termination of the Participant's disabled status shall
be deemed a voluntary termination of employment if the Participant is
offered employment in a position substantially equivalent to the
position held by the Participant at the time his or her disabled
status began. Otherwise, such failure to return to employee status
shall be deemed an involuntary termination of employment."
27. A new Section 4.04 is hereby added, as follows:
"4.04 Approved Early Retirement Benefit.
(a) Eligibility. A Participant who meets the following
requirements shall be entitled to the Approved Early Retirement
Benefit described in subsection (b) below:
(1) The Participant has completed three years of
participation in the Plan, and
(2) The Participant retires from employment on or
after his or her Approved Early Retirement Date and before his or her
Normal Retirement Date.
(b) Benefit. A Participant's Approved Early Retirement
Benefit shall be the benefit in paragraph (1) below unless within 90
days prior to retirement, the Participant has applied in writing to
receive the benefit in paragraph (2) below in lieu of the benefit in
paragraph (1) below and the Committee has approved such request. In
the latter case, a Participant's Approved Early Retirement Benefit
shall be the benefit in paragraph (2) below.
(1) The Participant's Normal Survivor Benefit
commencing as soon as practicable after the Participant's death.
(2) The Participant's Normal Retirement Benefit
multiplied by the Early Retirement Factor applicable at the
Participant's age as of his or her Approved Early Retirement Date and
commencing on the first day of the month following his or her retire
ment."
28. A new Section 4.05 is hereby added, as follows:
"4.05 Involuntary Termination Benefit.
(a) Eligibility. A Participant who meets the requirements
in paragraph (1) and paragraph (2) shall be entitled to the
Involuntary Termination Benefit described in subsection (b) below:
(1) The Participant has completed three years of
participation in the Plan, and
(2) The Participant's employment is terminated
involuntarily.
(b) Benefit. A Participant's Involuntary Termination
Benefit shall be a lump sum payment which is the greater of the Actu
arial Equivalent of the benefits defined in paragraph (1) below or the
Actuarial Equivalent of the benefits defined in paragraph (2) below.
The Involuntary Termination Benefit shall be paid as soon as
practicable after the date of the Participant's involuntary
termination.
(1) The Participant's Prorated Survivor Benefit
determined as of the involuntary termination date and commencing as
soon as practicable after the Participant's death.
(2) The Participant's Prorated Retirement Benefit
commencing on the Participant's Normal Retirement Date."
29. A new Section 4.06 is hereby added, as follows:
"4.06 Participation Termination Benefit.
(a) Eligibility. A Participant who meets the following
requirements shall be entitled to the Participation Termination
Benefit described in subsection (b) below:
(1) The Participant has completed three years of
participation in the Plan, and
(2) The Participant's participation in the Plan is
terminated prior to the Participant's termination of employment or
retirement as a result of the determination by the Chief Executive
Officer that the Participant is no longer eligible to participate in
the Plan.
(b) Benefit. A Participant's Participation Termination
Benefit shall be the benefit in paragraph (1) below during the
continuation of the Participant's employment. Upon the Participant's
subsequent termination (voluntary or involuntary) of employment or
retirement, it shall be the benefit in paragraph (1) below unless the
Participant has applied in writing to receive the benefit in
paragraph (2) below in lieu of the benefit in paragraph (1) below and
the Committee has approved such request. In the latter case, a
Participant's Participation Termination Benefit shall be the benefit
in paragraph (2) below. In the event of the Participant's death
following such termination or retirement and prior to the approval of
the Participant's written request for the benefit in paragraph (2)
below, the benefit in paragraph (1) below shall be deemed in effect.
(1) The Participant's Prorated Survivor Benefit
determined as of the participation termination date and commencing as
soon as practicable after the Participant's death.
(2) The Participant's Prorated Retirement Benefit
commencing on the Participant's Normal Retirement Date or Approved
Early Retirement Date, provided that if the benefit commences on an
Approved Early Retirement Date it shall be reduced by the Early
Retirement Factor applicable to the Participant's age as of his or her
Approved Early Retirement Date."
30. A new Section 4.07 is hereby added, as follows:
"4.07 Plan Termination Benefit.
(a) Eligibility. A Participant of the Plan as of the date
the Plan is terminated by the Committee shall be entitled to the Plan
Termination Benefit described in subsection (b) below.
(b) Benefit. A Participant's Plan Termination Benefit
shall be the benefit in paragraph (1) below during the continuation of
employment. Upon the Participant's termination of employment or
retirement, it shall be the benefit in paragraph (1) below unless
within 90 days prior to voluntary termination or retirement, or within
90 days following ratification of involuntary employment, the Par
ticipant has applied in writing to receive the benefit in
paragraph (2) below in lieu of the benefit in paragraph (1) below and
the Committee has approved such request. In the latter case, a
Participant's Plan Termination Benefit shall be the benefit in
paragraph (2) below.
(1) The Participant's Prorated Survivor Benefit
commencing as soon as practicable after the Participant's death.
(2) The Participant's Prorated Retirement Benefit
commencing on the first day of the first month that would have
qualified as the Participant's Approved Early Retirement Date if he or
she had remained employed as a Participant until such date and then
received approval from the CEO for such early retirement reduced by
the Early Retirement Factor Applicable to the Participant's age as of
such Approved Early Retirement Date."
31. A new Section 4.08 is hereby added, as follows:
"4.08 Change in Control Benefits.
(a) Change in Control of Alexander & Baldwin, Inc. Upon
the occurrence of a Change in Control, as defined in Section 2.08,
with respect to Alexander & Baldwin, Inc., the provisions of para
graph (1) below shall apply unless the terms of such Change in Control
provide, as a prerequisite to the consummation of the Change in Con
trol, that the employer responsibilities under this Plan are to be
assumed by the successor organization. In such later case, the
provisions of paragraph (2) below shall apply.
(1) The Plan shall immediately and automatically
terminate and each Participant shall become entitled to an Immediate
Change in Control Benefit. The Immediate Change in Control Benefit
shall be a lump sum payment which is the greater of the Actuarial
Equivalent of the benefits defined in paragraph (b)(1) below or the
Actuarial Equivalent of the benefits defined in (b)(2). The Immediate
Change in Control Benefit shall be immediately due and shall be paid
within thirty days of such Plan termination.
(2) Each Participant, as defined in this paragraph
(2), shall become entitled to a Vested Change in Control Benefit.
Upon future termination of employment or retirement, the Participant
shall be entitled to the greater of his or her Vested Change in
Control Benefit or the benefits otherwise provided by any other
benefit section of this Plan. During the Participant's continuation
of employment, a Participant's Vested Change in Control Benefit shall
be the benefit in paragraph (b)(1) below. Upon the Participant's
termination (voluntary or involuntary) of employment or retirement,
however, the Participant's Vested Change in Control Benefit shall be a
lump sum payment which is the greater of the Actuarial Equivalent of
benefits defined in paragraph (b)(1) below, the Actuarial Equivalent
of the benefits defined in paragraph (b)(2) below, and the Actuarial
Equivalent of the benefits defined in paragraph (b)(3) below.
(b) Benefits.
(1) The Participant's Normal Survivor Benefit
determined as of the date of the Change in Control commencing as soon
as practicable after the Participant's death.
(2) The Participant's Normal Retirement Benefit
determined as of the date of the Change in Control:
(i) commencing on the first day of the first
month that would have qualified as the Participant's Approved Early
Retirement Date if he or she had remained employed as a Participant
until such date and then received approval from the CEO for such early
retirement, and
(ii) reduced by the Early Retirement Factor
Applicable to the Participant's age at the date the benefit commences.
(3) Benefits provided by any other Section of this
Plan."
32. A new Section 4.09 is hereby added, as follows:
"4.09 Benefits Upon Change in Control of a Subsidiary. Upon the
occurrence of a Change in Control, as defined in Section 2.08, with
respect to a subsidiary of Alexander & Baldwin, Inc., a Participant
who is an employee of such subsidiary shall be entitled to a Plan
Termination Benefit determined as if the Plan terminated as of date of
the Change in Control."
33. Section 7.01 is hereby revised in its entirety to read as follows:
"7.01. The right to amend, modify, partially terminate, or
completely terminate this Plan is reserved to the Committee. However,
no amendment, modification or termination shall adversely affect the
right of any Participant or Beneficiary who is receiving benefits
under the Plan at the time of such amendment, modification or
termination or who is entitled to benefits under the provisions of
Section 4.06 as a former Participant of the Plan. The right of other
Participants as of the date the Plan is terminated shall be determined
under the provisions of Section 4.07."
34. Except as modified by this Amendment, all terms and provisions of the
A&B Executive Survivor/Retirement Benefit Plan shall continue in full force and
effect.
IN WITNESS WHEREOF, Alexander & Baldwin, Inc. has caused its authorized
officers to affix the corporate name and seal hereto this 23rd day of February,
1995.
ALEXANDER & BALDWIN, INC.
By /s/ Miles B. King
Its Vice President
By /s/ Alyson J. Nakamura
Its Assistant Secretary
<PAGE>
A&B EXECUTIVE SURVIVOR/RETIREMENT BENEFIT PLAN
AMENDED AND RESTATED EFFECTIVE FEBRUARY 1, 1995
ARTICLE I
ESTABLISHMENT AND PURPOSE
l.0l ESTABLISHMENT OF PLAN. Alexander & Baldwin, Inc. hereby establishes the
A&B Executive Survivor/Retirement Benefit Plan (the "Plan"), effective
January 1, 1986.
l.02 PURPOSE OF PLAN. It is the purpose of the Plan to provide supplemental
death benefits and an optional supplemental retirement benefit for certain
designated executives of A&B. The Plan is intended to be exempt from the
participation, vesting, funding and fiduciary requirements of Title I of
the Employee Retirement Income Security Act of 1974 because it provides
benefits for a select group of highly compensated management employees.
ARTICLE II
DEFINITIONS
2.0l "ACTUARIAL EQUIVALENT" means a form of benefit differing in time, period,
or manner of payment from a specified benefit provided in the Plan, but
having the same present value when determined in accordance with generally
accepted actuarial practices, as more particularly specified by the defi
nition of the same term in the A&B Retirement Plan.
2.02 "A&B" means Alexander & Baldwin, Inc., its affiliates, and their
successors.
2.03 "A&B RETIREMENT PLAN" means the A&B Retirement Plan for Salaried Employees,
as amended from time to time.
2.04 "APPROVED EARLY RETIREMENT DATE" means a date which meets each of the
following requirements:
(a) The Participant has attained age 55,
(b) The Participant has at least five Years of Service,
(c) The date has been approved by the Chief Executive Officer of A&B.
2.05 "BASE COMPENSATION" means base salary, including amounts deferred under any
deferral plan or arrangement with A&B, but excluding incentive compensation
and all other plans or forms of remuneration.
2.06 "BENEFICIARY" means the person, persons or entity designated pursuant to
Section 4.10.
2.07 "BOARD" means the Board of Directors of A&B.
2.08 "CHANGE IN CONTROL" of Alexander & Baldwin, Inc. shall mean a change in
control of a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), whether
or not Alexander & Baldwin, Inc. in fact is required to comply with
Regulation 14A thereunder; provided that, without limitation, such a change
in control shall be deemed to have occurred if (i) any "person" (defined,
for purposes of this Section 2.08, as such term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner"
(defined, for purposes of this Section 2.08, as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of Alexander &
Baldwin, Inc. representing 35% or more of the combined voting power of its
then outstanding securities; or (ii) during any period of twenty-four (24)
consecutive months, at least a majority of the Board of Directors ceases to
consist of individuals who have served continuously on such Board since the
beginning of such period or whose election, or nomination for election by
shareholders, was approved by a vote of at least two-thirds of the
directors then still in office who have served continuously on such Board
since the beginning of the period. A "Change in Control" of a subsidiary
of Alexander & Baldwin, Inc. shall be deemed to have occurred if any
"person" is or becomes the "beneficial owner," directly or indirectly, of
securities of such subsidiary representing 35% or more of the combined
voting power of its then outstanding securities. If a Change in Control
shall take place with respect to any company, a Change in Control shall be
deemed to have taken place with respect to any subsidiary of such company.
2.09 "CODE" means the Internal Revenue Code of 1954, as amended.
2.10 "COMMITTEE" means the Compensation and Stock Option Committee of the Board.
2.11 "DISABLED PARTICIPANT." "Disabled" means a Participant who is unable to
perform substantially all of the material and substantial duties of her or
his regular position because of accidental bodily injury sustained or
disease originating after the date of such person's designation as a
Participant under this Plan. Notwithstanding the foregoing:
(i) if a Participant has been Disabled for a continuous period of 24
months, the Participant will cease to be considered Disabled unless he
or she is unable to perform any occupation for which the Participant
is or becomes reasonably qualified by education, training or
experience because of such bodily injury or sickness; and
(ii) a Participant is not Disabled at any time that the Participant is
working for pay or profit at any occupation.
2.12 "EARLY RETIREMENT FACTOR" means the reduction factors used to calculate
early retirement benefits under the A&B Retirement Plan for participants of
such plan who retire from active service at or after attaining age 55.
2.13 "FINAL BASE COMPENSATION" means a Participant's Base Compensation in effect
at the time of the Participant's retirement, termination of employment,
termination of participation, death or disability, whichever is applicable,
computed as an annual amount by multiplying the then applicable monthly
Base Compensation in effect by 12.
2.14 "IMMEDIATE CHANGE IN CONTROL BENEFIT" means the benefit described in
subsection 4.08(a).
2.15 "INVOLUNTARY TERMINATION BENEFIT" means the benefit described in
Section 4.05.
2.16 "NORMAL RETIREMENT BENEFIT" means ten annual amounts, each equal to the
percentage (which shall be not less than 5% nor greater than 35%) of the
Participant's Final Base Compensation as specified in such Participant's
individual Participating Agreement, payable in monthly installments.
2.l7 "NORMAL RETIREMENT DATE" means the first day of the month coincident with
or next following the date the Participant attains age 65.
2.18 "NORMAL SURVIVOR BENEFIT" means ten annual amounts, each equal to 50% of
the Participant's Final Base Compensation, payable in monthly installments.
2.19 "PARTICIPANT" means an employee who meets the conditions set forth in
Section 3.0l.
2.20 "PARTICIPATION TERMINATION BENEFIT" means the benefit described in
Section 4.06.
2.21 "PLAN" means the plan set forth in this document, as amended from time to
time.
2.22 "PLAN TERMINATION BENEFIT" means the benefit described in Section 4.07.
2.23 "PRE-RETIREMENT SURVIVOR BENEFIT" means the benefit described in
Section 4.02 .
2.24 "PRORATED RETIREMENT BENEFIT" means Normal Retirement Benefit multiplied by
the Proration Factor.
2.25 "PRORATED SURVIVOR BENEFIT" means Normal Survivor Benefit multiplied by the
Proration Factor.
2.26 "PRORATION FACTOR" means:
(a) In the case of a Participant who is a Participant in the A&B 1985
Supplemental Executive Retirement Plan, or who was a former
Participant in such plan, the ratio of (i) 300 minus the number of
completed months between the date of calculation and the Participant's
Normal Retirement Date, to (ii) 300.
(b) In the case of all other Participants, the ratio of (i) the
Participant's Years of Service as of the calculation date, to (ii) the
Years of Service the Participant would have earned at his or her
Normal Retirement Date had he or she remained in employment status
until such date.
2.27 "VESTED CHANGE IN CONTROL BENEFIT" means the benefit described in
Section 4.08(b).
2.28 "YEARS OF SERVICE" means the number of years and fractions of years which
qualify as Years of Credited Vesting Service as that term is defined in the
A&B Retirement Plan.
ARTICLE III
PARTICIPATION
3.0l PARTICIPATION. Participants shall be management or highly compensated
employees who have been specifically designated as Participants by the
Chief Executive Officer of A&B, who have demonstrated insurability to the
satisfaction of A&B, and who have executed a Participation Agreement
(including a waiver of group life insurance coverage over $50,000).
Participation will begin on the date specified in the Participation Agree
ment and shall continue until the earlier of termination of the Par
ticipant's employee status or until a determination by the Chief Executive
Officer of A&B that the Participant no longer is eligible to participate.
ARTICLE IV
BENEFITS
4.01 PLAN BENEFITS. A Participant shall be entitled to whichever of the
benefits provided by Sections 4.02 to 4.09 provides the greatest benefit.
Under no circumstance shall a Participant be entitled to benefits provided
by more than one such Section.
4.02 PRE-RETIREMENT SURVIVOR BENEFIT. The Beneficiary of a Participant who dies
before termination of employment shall be entitled to receive a
Pre-Retirement Survivor Benefit consisting of the Normal Survivor Benefit
commencing as soon as practicable after the Participant's death.
4.03 NORMAL RETIREMENT BENEFIT.
(a) ELIGIBILITY. A Participant who meets the following requirements shall
be entitled to the Normal Retirement Benefit described in
subsection (b) below:
(1) The Participant has completed three years of participation in the
Plan; and
(2) The Participant retires from employment on or after his or her
Normal Retirement Date.
(b) BENEFIT. A Participant's Normal Retirement Benefit shall be the
benefit in paragraph (1) below unless within 90 days prior to
retirement, the Participant has applied in writing to receive the
benefit in paragraph (2) below in lieu of the benefit in paragraph (1)
and the Committee has approved such request. In the latter case, a
Participant's Normal Retirement Benefit shall be the benefit in
paragraph (2) below.
(1) The Participant's Normal Survivor Benefit commencing as soon as
practicable after the Participant's death.
(2) The Participant's Normal Retirement Benefit commencing on the
first day of the month following his or her retirement.
4.04 APPROVED EARLY RETIREMENT BENEFIT.
(a) ELIGIBILITY. A Participant who meets the following requirements shall
be entitled to the Approved Early Retirement Benefit described in
subsection (b) below:
(1) The Participant has completed three years of participation in the
Plan, and
(2) The Participant retires from employment on or after his or her
Approved Early Retirement Date and before his or her Normal
Retirement Date.
(b) BENEFIT. A Participant's Approved Early Retirement Benefit shall be
the benefit in paragraph (1) below unless within 90 days prior to
retirement, the Participant has applied in writing to receive the
benefit in paragraph (2) below in lieu of the benefit in paragraph (1)
below and the Committee has approved such request. In the latter
case, a Participant's Approved Early Retirement Benefit shall be the
benefit in paragraph (2) below.
(1) The Participant's Normal Survivor Benefit commencing as soon as
practicable after the Participant's death.
(2) The Participant's Normal Retirement Benefit multiplied by the
Early Retirement Factor applicable at the Participant's age as of
his or her Approved Early Retirement Date and commencing on the
first day of the month following his or her retirement.
4.05 INVOLUNTARY TERMINATION BENEFIT.
(a) ELIGIBILITY. A Participant who meets the requirements in
paragraph (1) and paragraph (2) shall be entitled to the Involuntary
Termination Benefit described in subsection (b) below:
(1) The Participant has completed three years of participation in the
Plan, and
(2) The Participant's employment is terminated involuntarily.
(b) BENEFIT. A Participant's Involuntary Termination Benefit shall be a
lump sum payment which is the greater of the Actuarial Equivalent of
the benefits defined in paragraph (1) below or the Actuarial
Equivalent of the benefits defined in paragraph (2) below. The
Involuntary Termination Benefit shall be paid as soon as practicable
after the date of the Participant's involuntary termination.
(1) The Participant's Prorated Survivor Benefit determined as of the
involuntary termination date and commencing as soon as
practicable after the Participant's death.
(2) The Participant's Prorated Retirement Benefit commencing on the
Participant's Normal Retirement Date.
4.06 PARTICIPATION TERMINATION BENEFIT.
(a) ELIGIBILITY. A Participant who meets the following requirements shall
be entitled to the Participation Termination Benefit described in
subsection (b) below:
(1) The Participant has completed three years of participation in the
Plan, and
(2) The Participant's participation in the Plan is terminated prior
to the Participant's termination of employment or retirement as a
result of the determination by the Chief Executive Officer that
the Participant is no longer eligible to participate in the Plan.
(b) BENEFIT. A Participant's Participation Termination Benefit shall be
the benefit in paragraph (1) below during the continuation of the
Participant's employment. Upon the Participant's subsequent
termination (voluntary or involuntary) of employment or retirement, it
shall be the benefit in paragraph (1) below unless the Participant has
applied in writing to receive the benefit in paragraph (2) below in
lieu of the benefit in paragraph (1) below and the Committee has
approved such request. In the latter case, a Participant's
Participation Termination Benefit shall be the benefit in
paragraph (2) below. In the event of the Participant's death
following such termination or retirement and prior to the approval of
the Participant's written request for the benefit in paragraph (2)
below, the benefit in paragraph (1) below shall be deemed in effect.
(1) The Participant's Prorated Survivor Benefit determined as of the
participation termination date and commencing as soon as
practicable after the Participant's death.
(2) The Participant's Prorated Retirement Benefit commencing on the
Participant's Normal Retirement Date or Approved Early Retirement
Date, provided that if the benefit commences on an Approved Early
Retirement Date it shall be reduced by the Early Retirement
Factor applicable to the Participant's age as of his or her
Approved Early Retirement Date.
4.07 PLAN TERMINATION BENEFIT.
(a) ELIGIBILITY. A Participant of the Plan as of the date the Plan is
terminated by the Committee shall be entitled to the Plan Termination
Benefit described in subsection (b) below.
(b) BENEFIT. A Participant's Plan Termination Benefit shall be the
benefit in paragraph (1) below during the continuation of employment.
Upon the Participant's termination of employment or retirement, it
shall be the benefit in paragraph (1) below unless within 90 days
prior to voluntary termination or retirement, or within 90 days
following ratification of involuntary employment, the Participant has
applied in writing to receive the benefit in paragraph (2) below in
lieu of the benefit in paragraph (1) below and the Committee has
approved such request. In the latter case, a Participant's Plan
Termination Benefit shall be the benefit in paragraph (2) below.
(1) The Participant's Prorated Survivor Benefit commencing as soon as
practicable after the Participant's death.
(2) The Participant's Prorated Retirement Benefit commencing on the
first day of the first month that would have qualified as the
Participant's Approved Early Retirement Date if he or she had
remained employed as a Participant until such date and then
received approval from the CEO for such early retirement reduced
by the Early Retirement Factor Applicable to the Participant's
age as of such Approved Early Retirement Date.
4.08 CHANGE IN CONTROL BENEFITS.
(a) CHANGE IN CONTROL OF ALEXANDER & BALDWIN, INC. Upon the occurrence of
a Change in Control, as defined in Section 2.08, with respect to
Alexander & Baldwin, Inc., the provisions of paragraph (1) below shall
apply unless the terms of such Change in Control provide, as a
prerequisite to the consummation of the Change in Control, that the
employer responsibilities under this Plan are to be assumed by the
successor organization. In such later case, the provisions of
paragraph (2) below shall apply.
(1) The Plan shall immediately and automatically terminate and each
Participant shall become entitled to an Immediate Change in
Control Benefit. The Immediate Change in Control Benefit shall
be a lump sum payment which is the greater of the Actuarial
Equivalent of the benefits defined in paragraph (b)(1) below or
the Actuarial Equivalent of the benefits defined in (b)(2). The
Immediate Change in Control Benefit shall be immediately due and
shall be paid within thirty days of such Plan termination.
(2) Each Participant, as defined in this paragraph (2), shall become
entitled to a Vested Change in Control Benefit. Upon future
termination of employment or retirement, the Participant shall be
entitled to the greater of his or her Vested Change in Control
Benefit or the benefits otherwise provided by any other benefit
section of this Plan. During the Participant's continuation of
employment, a Participant's Vested Change in Control Benefit
shall be the benefit in paragraph (b)(1) below. Upon the
Participant's termination (voluntary or involuntary) of
employment or retirement, however, the Participant's Vested
Change in Control Benefit shall be a lump sum payment which is
the greater of the Actuarial Equivalent of benefits defined in
paragraph (b)(1) below, the Actuarial Equivalent of the benefits
defined in paragraph (b)(2) below, and the Actuarial Equivalent
of the benefits defined in paragraph (b)(3) below.
(b) BENEFITS.
(1) The Participant's Normal Survivor Benefit determined as of the
date of the Change in Control commencing as soon as practicable
after the Participant's death.
(2) The Participant's Normal Retirement Benefit determined as of the
date of the Change in Control:
(i) commencing on the first day of the first month that would
have qualified as the Participant's Approved Early
Retirement Date if he or she had remained employed as a
Participant until such date and then received approval from
the CEO for such early retirement, and
(ii) reduced by the Early Retirement Factor Applicable to the
Participant's age at the date the benefit commences.
(3) Benefits provided by any other Section of this Plan.
4.09 BENEFITS UPON CHANGE IN CONTROL OF A SUBSIDIARY. Upon the occurrence of a
Change in Control, as defined in Section 2.08, with respect to a subsidiary
of Alexander & Baldwin, Inc., a Participant who is an employee of such
subsidiary shall be entitled to a Plan Termination Benefit determined as if
the Plan terminated as of date of the Change in Control.
4.10 DESIGNATION OF BENEFICIARIES. A Participant may file with the Admin
istrator on forms provided by the Administrator a written designation of
one or more primary beneficiaries and one or more contingent beneficiaries
to whom benefits otherwise due the Participant shall be made after the
death of the Participant. Such payments will be divided among the primary
beneficiaries who survive the Participant in such proportion as directed in
the written designation. If no primary beneficiary survives the
Participant for 30 days, such payment will be divided among the contingent
beneficiaries who survive the Participant for 30 days in such proportion as
directed in the written designation. If no primary or contingent
beneficiary survives the Participant for 30 days, or if no beneficiary has
been designated by the Participant, such payments will be made to the
estate of the Participant.
4.11 ADDITIONAL BENEFITS PROVISIONS
(a) BENEFIT AGREEMENT. The Administrator shall provide to each Partici
pant a form of Participation Agreement which shall set forth the
Participant's acceptance of the benefits provided under the Plan and
the Participant's agreement to be bound by the terms of the Plan.
(b) EXCLUSION FOR SUICIDE OR SELF-INFLICTED INJURY. Not-withstanding any
other provision of the Plan, no benefits shall be paid to any Parti
cipant or Beneficiary in the event of the death of the Participant as
the result of suicide or self-inflicted injury within two years of the
later of the date he or she first became a Participant or the date the
Participant executed the Participation Agreement referred to in
subsection 4.05(a).
(c) LEAVE OF ABSENCE. A Participant who is on an approved leave of
absence with salary, or on an approved leave of absence without salary
for a period of not more than 90 days, shall be deemed to be a
Participant employed by A&B during such leave of absence. A Parti
cipant who is on an approved leave of absence without salary for a
period in excess of 90 days shall be deemed to have voluntarily ter
minated his or her employment as of the end of such 90-day period.
(d) DISABILITY. A Disabled Participant shall continue to be eligible for
retirement benefits under the Plan, regardless of the nonperformance
of services for A&B. Failure to return to employee status at the
termination of the Participant's disabled status shall be deemed a
voluntary termination of employment if the Participant is offered
employment in a position substantially equivalent to the position held
by the Participant at the time his or her disabled status began.
Otherwise, such failure to return to employee status shall be deemed
an involuntary termination of employment.
(e) TERMINATION FOR GOOD CAUSE. Notwithstanding any other provision of
this Plan, all rights of the Participant, any Beneficiary, or the
rights of their executors or administrators, or any other person, to
receive benefits under this Plan shall be forfeited if the Partici
pant's employment with A&B is terminated for Good Cause. For purposes
of this subsection, "Good Cause" means (a) the willful and continued
failure by a Participant to substantially perform his or her duties
with A&B (other than any such failure resulting from a Participant's
incapacity due to physical or mental illness) or (b) the willful
engaging by the Participant in conduct which is demonstrably and
materially injurious to A&B, monetarily or otherwise. For purposes of
this definition, no act, or failure to act, shall be considered
"willful" unless done, or omitted to be done, not in good faith and
without reasonable belief that the action or omission was in the best
interest of A&B.
(f) ALTERNATIVE FORMS OF BENEFIT. The Board of Directors or the Committee
in its sole discretion may elect to pay the Participant, spouse or
Beneficiary a lump-sum Actuarial Equivalent or other form of benefit
that it deems appropriate in lieu of the benefit form otherwise
provided.
(g) WITHHOLDING. Benefit payments hereunder shall be subject to
applicable federal, state and local withholding for taxes.
4.12 GROUP LIFE INSURANCE. A&B will maintain for each Participant, throughout
each Participant's lifetime, group life insurance coverage in the amount of
$50,000. The life insurance benefits payable under such group life
insurance will be in addition to the benefits payable under the provisions
of this plan, and will be in lieu of any life insurance benefits to which a
Participant may otherwise be entitled under the Alexander & Baldwin, Inc.
Retiree Health and Welfare Benefit Plan.
ARTICLE V
SOURCE OF PAYMENTS
5.0l SOURCE OF PAYMENTS. All benefits payable under this Plan shall be paid in
cash from the general funds of A&B, and no trust account, escrow, fiduciary
relationship or other security arrangement shall be established to assure
payment. No Participant or Beneficiary shall have any right, title or
interest whatsoever in any investments which A&B may make to aid it in
meeting its obligations hereunder. Nothing contained in this Plan, and no
action taken pursuant to its provisions, shall create or be construed to
create a trust of any kind, or a fiduciary relationship, between A&B and
any Participant, any Beneficiary or a Participant, or any other person.
Any amounts payable under the Plan shall continue for all purposes to be
part of the general assets of A&B and, thus, subject to the claims of A&B's
creditors. A&B shall in no way be restricted with regard to the control,
investment and use of such amounts. To the extent that any person acquires
a right to receive benefits from A&B under this Plan, such right shall be
no greater than, nor different from, the right of an unsecured general
creditor of A&B.
ARTICLE VI
ADMINISTRATION OF THE PLAN
6.0l ADMINISTRATOR. The Administrator of the A&B Retirement Plan shall be the
Administrator of this Plan. The Administrator shall have full authority to
administer the Plan. The Administrator shall have all of the powers
granted by the A&B Retirement Plan to the Administrator of such plan and
shall be subject to the same procedures and limitations of authority.
6.02 CLAIMS PROCEDURE. The Administrator shall employ the claims procedures as
are applicable under the A&B Retirement Plan.
ARTICLE VII
AMENDMENT AND TERMINATION
7.0l The right to amend, modify, partially terminate, or completely terminate
this Plan is reserved to the Committee. However, no amendment,
modification or termination shall adversely affect the right of any
Participant or Beneficiary who is receiving benefits under the Plan at the
time of such amendment, modification or termination or who is entitled to
benefits under the provisions of Section 4.06 as a former Participant of
the Plan. The rights of other Participants as of the date the Plan is
terminated shall be determined under the provisions of Section 4.07.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.01 BENEFITS NOT ASSIGNABLE. No Participant or Beneficiary, or any other
person having or claiming to have any interest of any kind or character in
or under this Plan or in any payment therefrom shall have the right to
sell, assign, transfer, convey, hypothecate, anticipate, pledge or other
wise dispose of such interest; and to the extent permitted by law, such
interest shall not be subject to any liabilities or obligations of the
Participant or to any bankruptcy proceedings, creditor claims, attachment,
garnishments, execution, levy or other legal process against such Parti
cipant or his or her property.
8.02 CONTROLLING LAW. This Plan shall be construed, administered, and governed
in all respects in accordance with the laws of the State of Hawaii.
8.03 NOT AN EMPLOYMENT CONTRACT. The adoption and maintenance of this Plan
shall not be deemed to confer on any Participant any right to continue in
the employ of A&B, and shall not be deemed to interfere with the right of
A&B to discharge any person with or without cause or treat any person
without regard to the effect that such treatment might have on the person
as a Participant.
8.04 BINDING AGREEMENT. This Plan shall be binding upon and inure to the
benefit of A&B, its successors and assigns, and the Participants and their
Beneficiaries, heirs, executors, administrators and legal representatives.
IN WITNESS WHEREOF, Alexander & Baldwin, Inc. has caused this Restatement to be
executed on its behalf by its duly authorized officers this 23rd day of
February, 1995.
ALEXANDER & BALDWIN, INC.
By /s/ Miles B. King
Its Vice President
By /s/ Alyson J. Nakamura
Its Assistant Secretary
Exhibit 10.b.1.(xxiv)
A&B 1985 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
AMENDMENT NO. 1
The A&B 1985 Supplemental Executive Retirement Plan, as amended and
restated effective July 1, 1991, is hereby amended, effective February 1, 1995,
as follows:
1. Section 1.02 is hereby amended by replacing the phrase "this plan"
with the phrase "this Plan" throughout.
2. Sections 2.01 through 2.03 are hereby renumbered as Sections 2.03
through 2.05.
3. A new Section 2.01 is hereby added, as follows:
"2.01. 'Actuarial Equivalent' means a form of benefit differing
in time period, or manner of payment from a specified benefit provided
in the Plan, but having the same present value when determined in
accordance with generally accepted actuarial practice and the rules
contained in Appendix B of this Plan."
4. A new Section 2.02 is hereby added, as follows:
"2.02. 'Approved Early Retirement Date' means the first day of
any month after the Participant has attained age 55 and prior to his
or her Normal Retirement Date on which the Participant retires with
the approval of the Committee."
5. Section 2.04 is hereby renumbered as Section 2.07.
6. Section 2.05 is hereby renumbered as Section 2.09.
7. Section 2.06 is hereby renumbered as Section 2.11.
8. Section 2.07 is hereby renumbered as Section 2.12, and revised by
deleting the words "Health and Welfare."
9. A new Section 2.06 is hereby added, as follows:
"'Benefit Commencement Age' means the greater of age 55 and the
Participant's age at the date of determination."
10. Section 2.08 is hereby renumbered as Section 2.18.
11. A new Section 2.08 is hereby added, as follows:
"2.08. 'Change in Control' of Alexander & Baldwin, Inc. shall
mean a change in control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended (the
'Exchange Act'), whether or not Alexander & Baldwin, Inc. in fact is
required to comply with Regulation 14A thereunder; provided that,
without limitation, such a change in control shall be deemed to have
occurred if (i) any 'person' (defined, for purposes of this sec
tion 2.08, as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the 'beneficial owner' (defined, for
purposes of this section 2.08, as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of Alexander &
Baldwin, Inc. representing 35% or more of the combined voting power of
its then outstanding securities; or (ii) during any period of
twenty-four (24) consecutive months, at least a majority of the Board
of Directors ceases to consist of individuals who have served
continuously on such Board since the beginning of such period or whose
election, or nomination for election by shareholders, was approved by
a vote of at least two-thirds of the directors then still in office
who have served continuously on such Board since the beginning of the
period. A 'Change in Control' of a subsidiary of Alexander & Baldwin,
Inc. shall be deemed to have occurred if any 'person' is or becomes
the 'beneficial owner,' directly or indirectly, of securities of such
subsidiary representing 35% or more of the combined voting power of
its then outstanding securities. If a Change in Control shall take
place with respect to any company, a Change in Control shall be deemed
to have taken place with respect to any subsidiary of such company."
12. Section 2.09 is hereby renumbered as Section 2.20.
13. Section 2.10 is hereby deleted in its entirety.
14. A new Section 2.10 is hereby added, as follows:
"2.10 'Early Retirement Factor' means the reduction defined in
Section 4.02(e)."
15. Section 2.11 is hereby renumbered as Section 2.24, and revised in its
entirety as follows:
"2.24. 'Retirement Income' means the amount determined in (a)
below paid in accordance with the provisions of (b) or (c), whichever
is applicable below:
(a) The amount of Retirement Income shall equal the amount
to which the Participant would be entitled as a single life annuity at
his or her Normal Retirement Date under the A&B Retirement Plan deter
mined (i) without regard to limitations imposed by the Internal
Revenue Code, (ii) as if the Participant had 25 years of credited
benefit service, (iii) as if 'Monthly Compensation' as defined in
section 1.20 of the A&B Retirement Plan included in the year earned
the deferred portion of base salary and each bonus awarded under the
Company's One-Year Performance Improvement Incentive Plan and
(iv) with respect to Participants listed in Appendix A to this Plan,
as if the benefit formula in effect on December 31, 1988 under the A&B
Retirement Plan for Salaried Employees had continued in effect
(provided such benefit formula produces a higher benefit than the
formula subsequently in effect).
(b) In the case of a Participant who is not married at the
time a lump sum payment described in Article IV is paid, Retirement
Income shall be deemed payable for the life of the Participant.
(c) In the case of a Participant who is married at the time
a lump sum payment described in Article IV is paid, 100% of Retirement
Income shall be deemed payable for the life of the Participant and 50%
of Retirement Income shall be deemed payable to his or her Surviving
Spouse for life following the death of the Participant."
16. Section 2.12 is hereby renumbered as Section 2.25.
17. A new Section 2.13 is hereby added, as follows:
"2.13 'Immediate Change in Control Benefit' means the benefit
described in subsection 4.06(a)."
18. A new Section 2.14 is hereby added, as follows:
"2.14 'Involuntary Termination Benefit' means the benefit
described in Section 4.03."
19. A new Section 2.15 is hereby added, as follows:
"2.15 'Normal Retirement Benefit' means the benefit described in
Section 4.01."
20. A new Section 2.16 is hereby added, as follows:
"2.16 'Normal Retirement Date' means the first day of the month
coincident with or next following the date the Participant attains age
65."
21. A new Section 2.17 is hereby added, as follows:
"2.17 'Other Benefits' means the sum of:
(1) The benefit payable under the A&B Retirement Plan;
(2) The benefit payable under the defined benefit provisions of
the A&B Excess Benefits Plan; and
(3) Any benefit which the Participant is eligible to receive or
has received from the qualified defined benefit pension plan of
another employer excluding benefits attributable to the Participant's
own contributions."
22. A new Section 2.19 is hereby added, as follows:
"2.19 'Participation Termination Benefit' means the benefit
described in Section 4.04."
23. A new Section 2.21 is hereby added, as follows:
"2.21 'Plan Termination Benefit' means the benefit described in
Section 4.05."
24. A new Section 2.22 is hereby added, as follows:
"2.22 'Preretirement Death Benefit' means the benefit described
in Section 4.07."
25. A new Section 2.23 is hereby added, as follows:
"2.23 'Prorated Retirement Income' means Retirement Income, as
defined in Section 2.24 multiplied by a fraction, the numerator of
which shall be 300 minus the number of months between the date of
determination and the Participant's Normal Retirement Date, and the
denominator of which shall be 300."
26. A new Section 2.26 is hereby added, as follows:
"2.26 'Vested Change in Control Benefit' means the benefit
described in subsection 4.06(b)."
27. A new Section 2.27 is hereby added, as follows:
"2.27 'Years of Service' means the number of years and fractions
of years which qualify as Years of Credited Vesting Service as that
term is defined in the A&B Retirement Plan."
28. Section 4.00 is hereby revised in its entirety to read as follows:
"4.00. Payment of Benefits. All benefits provided by
Sections 4.01 to 4.07 shall be paid in the form of a lump sum payment
which is the greater of the amounts determined under paragraph (1) and
paragraph (2) below:
(1) An amount which is the Actuarial Equivalent of the
benefit otherwise defined by such Sections.
(2) An amount which is the before-tax equivalent of
the lower of two quotations obtained by the Company from insurance
companies for the cost of a lifetime annuity that provides after-tax
monthly benefits equivalent to those that a Participant would receive
under the Plan if the Plan allowed monthly payments of the benefits
hereunder.
A Participant shall be entitled to whichever of the
benefits provided by Sections 4.01 to 4.06 provides the greatest
benefit, and under no circumstances shall a Participant be entitled to
benefits provided by more than one such Section."
29. Section 4.01 is hereby revised in its entirety to read as follows:
"4.01. Normal Retirement.
(a) Eligibility. A Participant who retires from employment
(i) after completing three years of participation in the Plan and
(ii) on or after his or her Normal Retirement Date shall be entitled
to a Normal Retirement Benefit as described in (b) below.
(b) Amount of Benefit. A Participant's Normal Retirement
Benefit shall equal his or her Retirement Income, reduced by the
Participant's Other Benefits in accordance with rules contained in
Appendix C.
(c) Monthly Benefit Commencement Date. A Participant's
Normal Retirement Benefit shall be deemed to commence as of the
Participant's retirement date.
(d) Lump Sum Payment Date. The lump sum payment of the
Normal Retirement Benefit shall be paid as soon as practicable after
the Participant's retirement date."
30. Section 4.02 is hereby revised in its entirety to read as follows:
"4.02. Approved Early Retirement
(a) Eligibility. A Participant who retires from active
service (i) after completing at least three years of participation in
the Plan and (ii) on his or her Approved Early Retirement Date shall
be entitled to an Approved Early Retirement Benefit as described in
(b) below.
(b) Benefit. A Participant's Approved Early Retirement
Benefit shall equal his or her Prorated Retirement Income as of the
Participant's Approved Early Retirement Date reduced by (i) the Early
Retirement Factor applicable at the Participants age at his or her
Approved Early Retirement Date and (ii) further reduced by Other
Benefits as provided in Appendix C.
(c) Monthly Benefit Commencement Date. A Participant's
Approved Early Retirement Benefit shall be deemed to commence as of
the Participant's Approved Early Retirement Date.
(d) Lump Sum Payment Date. The lump sum payment of the
Approved Early Retirement Benefit shall be paid as soon as practicable
after the Participant's Approved Early Retirement Date.
(e) Early Retirement Factor. The 'Early Retirement Factor'
shall be a reduction of .25% for each of the first 24 months between
the date of determination and the first day of the month coincident
with or next following the Participant's 62nd birthday, and an
additional reduction of .50% for each such month in excess of 24
months between such dates."
31. Section 4.03 is hereby renumbered as Section 4.07, and revised in its
entirety to read as follows:
"4.07. Preretirement Death Benefit.
(a) Eligibility. The Surviving Spouse of a Participant or
former Participant described in (A), (B), (C) or (D) below who dies
prior to terminating employment or retiring on or after attaining age
55 shall be entitled to a Preretirement Death Benefit as described in
(b) below.
(A) A Participant.
(B) A former Participant who is entitled to a
Participation Termination Benefit.
(C) a former Participant who is entitled to a Plan
Termination Benefit.
(D) a former Participant who is entitled to a Vested
Change in Control Benefit.
(b) Benefit. A Surviving Spouse's Preretirement Death
Benefit shall equal 50% of the benefit to which the Participant would
have been entitled under whichever of Sections 4.01, 4.02, 4.03, 4.04,
4.05, or 4.06 would have applied if the Participant or former Par
ticipant had terminated employment or retired on the day immediately
prior to his or her death, determined without regard to (i) any
requirement for Committee approval of an Approved Early Retirement
Date, or (ii) any requirement for 3 years of participation. Such
benefit shall be reduced by Other Benefits as provided in Appendix C.
(c) Monthly Benefit Commencement Date. A Surviving
Spouse's Preretirement Death Benefit shall be deemed to commence as of
the first day of the later of (i) the month following the death of the
Participant and (ii) the month following the month in which the
Participant or former Participant would have attained age 55 and
completed 5-years of service had he or she continued in employment
until such date, and to continue for the life of the Surviving Spouse.
(d) Lump Sum Payment Date. The lump sum payment of the
Surviving Spouse's Preretirement Death Benefit shall be paid as soon
as practicable after the death of the Participant."
32. Section 4.04 is hereby renumbered as Section 4.08, and revised in its
entirety to read as follows:
"4.08. Retiree Health and Welfare Benefits. For purposes of the
A&B Retiree Plan:
(a) Normal Retirement Date. A Participant who is entitled
to a Normal Retirement Benefit shall be deemed to have the greater of
(i) his or her actual Completed Years of Service, and (ii) twenty-five
(25) Completed Years of Service.
(b) Early Retirement Date. A Participant or former
Participant who is entitled to one of the benefits described in
paragraph (1) below shall be deemed to have the rights described in
paragraph (2) below.
(1) The benefits described by this paragraph are:
(A) an Approved Early Retirement Benefit,
(B) a Participation Termination Benefit if such
termination occurs at of after the Participant attained age 55,
(C) a Plan Termination Benefit if such
termination occurs at or after the Participant attained age 55,
(D) a Vested Change in Control Benefit or a prior
Immediate Change in Control Benefit if such Change in Control occurred
at or after the Participant attained age 55.
(2) A Participant who is subject to the provisions of
this paragraph shall automatically become a Participant under the A&B
Retiree Plan, without regard to the age and service requirements in
Article III of the A&B Retiree Plan. For purposes of determining such
Participant's Health Care Contributions under the A&B Retiree Plan,
the number of Completed Years of Service of such Participant shall be
deemed to be equal to 25 years multiplied by the fraction used to
determine such Participant's or former Participant's Prorated
Retirement Income, provided however, that on or after such
Participant's Normal Retirement Date he or she shall be deemed to have
twenty-five (25) Completed Years of Service."
33. A new Section 4.03 is hereby added, as follows:
"4.03. Involuntary Termination of Employment.
(a) Eligibility. A Participant whose employment is
terminated involuntarily after completing at least three years of
participation in the Plan shall be entitled to a Involuntary
Termination Benefit.
(b) Benefit. A Participant's Involuntary Termination
Benefit shall equal his or her Prorated Retirement Income determined
as of the date of the Participant's involuntary termination reduced by
(i) the Early Retirement Factor applicable at the Participant's age
determined as of monthly benefit commencement date determined under
the provisions of subsection (c) below and (ii) further reduced by
Other Benefits as provided in Appendix C.
(c) Monthly Benefit Commencement Date. A Participant's
Involuntary Termination Benefit shall be deemed to commence as of his
or her Normal Retirement Date unless an Approved Early Retirement
Date is approved by the Committee. In such latter case, it shall be
deemed to commence as of the Approved Early Retirement Date.
(d) Lump Sum Payment Date. The lump sum payment of the
Involuntary Termination Benefit shall be paid as soon as practicable
after the involuntary termination of the Participant's employment."
34. A new Section 4.04 is hereby added, as follows:
"4.04. Termination of Participation.
(a) Eligibility. A Participant, with at least three years
of participation, whose position ceases to qualify as an Eligible
Position shall be entitled to a Participation Termination Benefit
described in (b) below.
(b) Benefit. A Participant's Participation Termination
Benefit shall equal his or her Prorated Retirement Income determined
as of the date his or her participation terminates reduced by (i) the
Early Retirement Factor applicable at the Participant's age determined
as of the monthly benefit commencement date determined under the
provisions of subsection (c) below and (ii) further reduced by Other
Benefits as provided in Appendix C.
(c) Monthly Benefit Commencement Date. A Participant's
Participation Termination Benefit shall be deemed to commence as of
his or her Normal Retirement Date unless an Approved Early Retirement
Date is approved by the Committee. In such latter case, it shall be
deemed to commence as of the Approved Early Retirement Date.
(d) Lump Sum Payment Date. The lump sum payment of the
Participation Termination Benefit shall be paid as soon as practicable
after the Participant subsequently terminates employment or retires."
35. A new Section 4.05 is hereby added, as follows:
"4.05. Termination of the Plan.
(a) Eligibility. A Participant of the Plan at the time it
is terminated shall be entitled to a Plan Termination Benefit.
(b) Benefit. A Participant's Plan Termination Benefit
shall equal his or her Prorated Retirement Income determined as of the
date the Plan is terminated reduced by (i) the Early Retirement Factor
applicable at the Participant's age determined as of the monthly
benefit commencement date determined under the provisions of
subsection (c) below and (ii) further reduced by Other Benefits as
provided in Appendix C.
(c) Monthly Benefit Commencement Date. A Participant's
Plan Termination Benefit shall be deemed to commence as of his or her
Benefit Commencement Age determined as of the date the Participant
subsequently terminates employment or retires.
(d) Lump Sum Payment Date. The lump sum payment of the Plan
Termination Benefit shall be paid as soon as practicable after the
Participant terminates employment or retires."
36. A new Section 4.06 is hereby added, as follows:
"4.06. Change in Control. Upon the occurrence of a Change in
Control, as defined in Section 2.08, the provisions of subsection (a)
below shall apply unless the terms of such Change in Control provide,
as a prerequisite to the consummation of the Change in Control, that
the employer responsibilities under this Plan are to be assumed by the
successor organization. In the latter case, the provisions of
subsection (b) below shall apply:
(a) Immediate Change in Control Benefit.
(1) Eligibility. The Plan shall immediately and
automatically terminate and each Participant shall be entitled to an
Immediate Change in Control Benefit as described in (2) below.
(2) Benefit. A Participant's Immediate Change in
Control Benefit shall equal his or her Prorated Retirement Income
determined as of the Change in Control date, reduced by (i) the Early
Retirement Factor applicable at the Participant's age determined as of
the monthly benefit commencement date determined under the provisions
of paragraph (3) below, and (ii) further reduced by Other Benefits as
provided in Appendix C.
(3) Monthly Benefit Commencement Date. A
Participant's Immediate Change in Control Benefit shall be deemed to
commence as of his or her Benefit Commencement Age determined as of
the Change in Control Date.
(4) Lump Sum Payment Date. The lump sum payment of the
Immediate Change in Control Benefit shall be immediately due and shall
be paid within thirty days of such Plan termination.
(b) Vested Change in Control Benefit.
(1) Eligibility. Each Participant as of the Change in
Control date shall be entitled to a Vested Change in Control Benefit
as described in (2) below.
(2) Benefit. A Participant's Vested Change in Control
Benefit shall equal his or her Prorated Retirement Income determined
as of the Change in Control date, reduced by (i) the Early Retirement
Factor applicable at the Participant's age determined as of the
monthly benefit commencement date determined under the provisions of
paragraph (3) below, and (ii) further reduced by Other Benefits as
provided in Appendix C.
(3) Monthly Benefit Commencement Date. A
Participant's Vested Change in Control Benefit shall be deemed to
commence as of his or her Benefit Commencement Age determined as of
the date the Participant subsequently terminates employment or
retires.
(4) Lump Sum Payment Date. The lump sum payment of the
Vested Change in Control Benefit shall be paid as soon as practicable after
the Participant terminates employment or retires."
37. Section 6.01 is hereby amended by adding the phrase "voluntarily or"
before the phrase "for Cause" in the first sentence.
38. Section 6.02 is hereby deleted in its entirety.
39. A new Appendix B is hereby added, as follows:
<PAGE>
"APPENDIX B
RULES FOR DETERMINING ACTUARIAL EQUIVALENT
When the terms of this Plan require the determination of a lump sum
payment which is the Actuarial Equivalent of any other benefit
provided by this Plan, the following rules shall apply to the
calculation of such lump sum payment:
1. The mortality table used shall be the mortality table then in use
by the A&B Retirement Plan for the purpose of determining lump
sum payments to participants of such plan who are entitled to
such payments.
2. The discount rate shall be the after-tax equivalent of the
discount rate then in use by the A&B Retirement Plan for the
purpose of determining lump sum payments to participants of such
plan who are entitled to such payments. The after-tax equivalent
rate shall be determined by multiplying discount rate in use by
the A&B Retirement Plan by the excess of 100% over the tax
effected marginal tax rate declared by the Committee.
3. The Committee shall declare the tax effected marginal tax rate at
the beginning of each calendar year.
4. The tax effected marginal tax rate shall apply to lump sum
payments made at any time during such calendar year and may not
be changed during the year.
5. The value of the benefit to a Surviving Spouse which is included
in a Participant's Retirement Income shall be included in the
calculation of the lump sum payment to which the Participant is
entitled. Unless stated otherwise, the benefit to the Surviving
Spouse shall be deemed to apply only if the death of the
Participant occurs on or after the date the Retirement Income is
deemed to commence under the terms of the provision giving rise
to the Participant's right to a lump sum payment.
6. If the terms of the Plan provide for a benefit such that if it
were paid as a monthly benefit it could have commenced at more
that one future date, then for purposes of calculating the lump
sum that is the Actuarial Equivalent of such benefit, it shall be
deemed that the benefit would have commenced at the earliest
possible date.
7. The early retirement reduction factors, if any, used to calculate
the lump sum which is the Actuarial Equivalent of the benefit
provided by the provisions of Section 4.06 as a result of a
Change of Control, shall be the factors applicable to
Participants of the A&B Retirement Plan who terminate employment
after attaining eligibility for early retirement regardless of
the Participant's age as of the Change of Control date."
40. A new Appendix C is hereby added, as follows:
<PAGE>
"APPENDIX C
RULES FOR THE OFFSET OF BENEFITS
DESCRIBED IN ARTICLE IV
1. Any increase in Other Benefits which occur after termination of
employment or retirement shall not be taken into account.
2. In the case of a Participant who is not married at the time
benefits are deemed to commence under this Plan, Other Benefits
shall be determined as though such payments were made in the form
of a straight life annuity.
3. In the case of a Participant who is married at the time a lump
sum benefit is payable under this Plan, Other Benefits shall be
determined as though such payments were made in the form of joint
and 50% survivor form of payment with his or her spouse
designated as the contingent annuitant.
4. It shall be assumed that Other Benefit payments (whether or not
in payment status) commence under such other plans of the same
date benefits commence under this Plan. In all cases, the
provisions of the A&B Retirement Plan shall be used to determine
the adjustment made to the Other Benefits for commencement prior
to a Participant' Normal Retirement Date or to determine the
equivalent joint and 50% survivor amount."
41. Except as modified by this Amendment, all terms and provisions of the
A&B 1985 Supplemental Executive Retirement Plan shall continue in full force and
effect.
IN WITNESS WHEREOF, Alexander & Baldwin, Inc. has caused its authorized
officers to affix the corporate name and seal hereto this 23rd day of February,
1995.
ALEXANDER & BALDWIN, INC.
By /s/ Miles B. King
Its Vice President
By /s/ Alyson J. Nakamura
Its Assistant Secretary
<PAGE>
A&B 1985 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
AMENDED AND RESTATED EFFECTIVE FEBRUARY 1, 1995
ARTICLE I
ESTABLISHMENT AND PURPOSE
1.01. ESTABLISHMENT OF PLAN. Alexander & Baldwin, Inc. hereby
establishes, effective January 1, 1986, the A&B 1985 Supplemental Executive
Retirement Plan (the "Plan").
1.02. PURPOSE OF PLAN. It is the purpose of this Plan to enhance
the Company's ability to hire and retain executives by providing a means for the
Company to provide executives selected as participants with retirement benefits
and health and welfare benefits equal to the benefits which they would receive
under the Alexander & Baldwin, Inc. Retirement Plan for Salaried Employees and
the Alexander & Baldwin, Inc. Retiree Health and Welfare Benefit Plan, if
certain changes had been made to those plans. This Plan is intended to be a
nonqualified supplemental retirement plan for a select group of highly
compensated management executives and is exempt from the participation, vesting,
funding and fiduciary requirements of Title I of the Employee Retirement Income
Security Act of 1974.
ARTICLE II
DEFINITIONS
2.01. "Actuarial Equivalent" means a form of benefit differing in
time period, or manner of payment from a specified benefit provided in the Plan,
but having the same present value when determined in accordance with generally
accepted actuarial practice and the rules contained in Appendix B of this Plan.
2.02. "Approved Early Retirement Date" means the first day of any
month after the Participant has attained age 55 and prior to his or her Normal
Retirement Date on which the Participant retires with the approval of the
Committee.
2.03. "A&B" and "Company" mean Alexander & Baldwin, Inc. and its
affiliates and their successors.
2.04. "A&B Retiree Plan" means the Alexander & Baldwin, Inc.
Retiree Health and Welfare Benefit Plan, as amended from time to time.
2.05. "A&B Retirement Plan" means the A&B Retirement Plan for
Salaried Employees, as amended from time to time.
2.06. "Benefit Commencement Age" means the greater of age 55 and
the Participant's age at the date of determination.
2.07. "Board" means the Board of Directors of Alexander & Baldwin,
Inc.
2.08. "Change in Control" of Alexander & Baldwin, Inc. shall mean
a change in control of a nature that would be required to be reported in re
sponse to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), whether or not
Alexander & Baldwin, Inc. in fact is required to comply with Regulation 14A
thereunder; provided that, without limitation, such a change in control shall be
deemed to have occurred if (i) any "person" (defined, for purposes of this
Section 2.08, as such term is used in Sections 13(d) and 14(d) of the Exchange
Act) is or becomes the "beneficial owner" (defined, for purposes of this
Section 2.08, as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of Alexander & Baldwin, Inc. representing 35% or more
of the combined voting power of its then outstanding securities; or (ii) during
any period of twenty-four (24) consecutive months, at least a majority of the
Board of Directors ceases to consist of individuals who have served continuously
on such Board since the beginning of such period or whose election, or nomi
nation for election by shareholders, was approved by a vote of at least
two-thirds of the directors then still in office who have served continuously on
such Board since the beginning of the period. A "Change in Control" of a
subsidiary of Alexander & Baldwin, Inc. shall be deemed to have occurred if any
"person" is or becomes the "beneficial owner," directly or indirectly, of
securities of such subsidiary representing 35% or more of the combined voting
power of its then outstanding securities. If a Change in Control shall take
place with respect to any company, a Change in Control shall be deemed to have
taken place with respect to any subsidiary of such company.
2.09. "Committee" means the Compensation and Stock Option
Committee of the Board.
2.10. "Early Retirement Factor" means the reduction defined in
Section 4.02(e).
2.11. "Eligible Position" means an executive position assigned at
least 1,600 points under the Company's job evaluation program. Exceptions to
the eligibility requirements of this section may be made by the Chief Executive
Officer of Alexander & Baldwin, Inc., with the approval of the Committee.
2.12. "Health Care Contributions" means the contributions paid by
the Company, under Article IV of the A&B Retiree Plan, towards the cost of
premiums for health care insurance coverage.
2.13. "Immediate Change in Control Benefit" means the benefit
described in subsection 4.06(a).
2.14. "Involuntary Termination Benefit" means the benefit
described in Section 4.03.
2.15. "Normal Retirement Benefit" means the benefit described in
Section 4.01.
2.16. "Normal Retirement Date" means the first day of the month
coincident with or next following the date the Participant attains age 65.
2.17. "Other Benefits" means the sum of:
(1) The benefit payable under the A&B Retirement Plan;
(2) The benefit payable under the defined benefit
provisions of the A&B Excess Benefits Plan; and
(3) Any benefit which the Participant is eligible to
receive or has received from the qualified defined benefit pension plan of
another employer excluding benefits attributable to the Participant's own
contributions.
2.18. "Participant" means an executive in an Eligible Position
selected by the Committee pursuant to Section 3.01.
2.19. "Participation Termination Benefit" means the benefit
described in Section 4.04.
2.20. "Plan" means the plan set forth in this document, as amended
from time to time.
2.21. "Plan Termination Benefit" means the benefit described in
Section 4.05.
2.22. "Preretirement Death Benefit" means the benefit described in
Section 4.07.
2.23. "Prorated Retirement Income" means Retirement Income, as
defined in Section 2.24 multiplied by a fraction, the numerator of which shall
be 300 minus the number of months between the date of determination and the
Participant's Normal Retirement Date, and the denominator of which shall be 300.
2.24. "Retirement Income" means the amount determined in (a) below
paid in accordance with the provisions of (b) or (c), whichever is applicable
below:
(a) The amount of Retirement Income shall equal the amount to
which the Participant would be entitled as a single life annuity at his or her
Normal Retirement Date under the A&B Retirement Plan determined (i) without
regard to limitations imposed by the Internal Revenue Code, (ii) as if the Parti
cipant had 25 years of credited benefit service, (iii) as if "Monthly
Compensation" as defined in Section 1.20 of the A&B Retirement Plan included in
the year earned the deferred portion of base salary and each bonus awarded under
the Company's One-Year Performance Improvement Incentive Plan and (iv) with
respect to Participants listed in Appendix A to this Plan, as if the benefit
formula in effect on December 31, 1988 under the A&B Retirement Plan for
Salaried Employees had continued in effect (provided such benefit formula
produces a higher benefit than the formula subsequently in effect).
(b) In the case of a Participant who is not married at the time
a lump sum payment described in Article IV is paid, Retirement Income shall be
deemed payable for the life of the Participant.
(c) In the case of a Participant who is married at the time a
lump sum payment described in Article IV is paid, 100% of Retirement Income
shall be deemed payable for the life of the Participant and 50% of Retirement
Income shall be deemed payable to his or her Surviving Spouse for life following
the death of the Participant.
2.25. "Surviving Spouse" means the spouse of a Participant who
survives the Participant and to whom the Participant was married on the Par
ticipant's retirement date or (if earlier) date of death.
2.26. "Vested Change in Control Benefit" means the benefit
described in subsection 4.06(b).
2.27. "Years of Service" means the number of years and fractions
of years which qualify as Years of Credited Vesting Service as that term is
defined in the A&B Retirement Plan.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.01. PARTICIPATION. A Participant is an executive who holds an
Eligible Position or who is being hired or promoted into an Eligible Position
and who is selected by the Committee to be a Participant. An executive selected
by the Committee shall become a Participant as of the date specified by the Com
mittee and shall remain a Participant until the date upon which the
Participant's employment in an Eligible Position terminates for any reason.
ARTICLE IV
BENEFITS
4.00. PAYMENT OF BENEFITS. All benefits provided by Sections 4.01
to 4.07 shall be paid in the form of a lump sum payment which is the greater of
the amounts determined under paragraph (1) and paragraph (2) below:
(1) An amount which is the Actuarial Equivalent of the
benefit otherwise defined by such Sections.
(2) An amount which is the before-tax equivalent of the
lower of two quotations obtained by the Company from insurance companies for the
cost of a lifetime annuity that provides after-tax monthly benefits equivalent
to those that a Participant would receive under the Plan if the Plan allowed
monthly payments of the benefits hereunder.
A Participant shall be entitled to whichever of the benefits
provided by Sections 4.01 to 4.06 provides the greatest benefit, and under no
circumstances shall a Participant be entitled to benefits provided by more than
one such Section.
4.01. NORMAL RETIREMENT.
(a) ELIGIBILITY. A Participant who retires from employment
(i) after completing three years of participation in the Plan and (ii) on or
after his or her Normal Retirement Date shall be entitled to a Normal Retirement
Benefit as described in (b) below.
(b) AMOUNT OF BENEFIT. A Participant's Normal Retirement
Benefit shall equal his or her Retirement Income, reduced by the Participant's
Other Benefits in accordance with rules contained in Appendix C.
(c) MONTHLY BENEFIT COMMENCEMENT DATE. A Participant's Normal
Retirement Benefit shall be deemed to commence as of the Participant's
retirement date.
(d) LUMP SUM PAYMENT DATE. The lump sum payment of the Normal
Retirement Benefit shall be paid as soon as practicable after the Participant's
retirement date.
4.02. APPROVED EARLY RETIREMENT
(a) ELIGIBILITY. A Participant who retires from active service
(i) after completing at least three years of participation in the Plan and
(ii) on his or her Approved Early Retirement Date shall be entitled to an
Approved Early Retirement Benefit as described in (b) below.
(b) BENEFIT. A Participant's Approved Early Retirement Benefit
shall equal his or her Prorated Retirement Income as of the Participant's
Approved Early Retirement Date reduced by (i) the Early Retirement Factor
applicable at the Participant's age at his or her Approved Early Retirement Date
and (ii) further reduced by Other Benefits as provided in Appendix C.
(c) MONTHLY BENEFIT COMMENCEMENT DATE. A Participant's Approved
Early Retirement Benefit shall be deemed to commence as of the Participant's
Approved Early Retirement Date.
(d) LUMP SUM PAYMENT DATE. The lump sum payment of the
Approved Early Retirement Benefit shall be paid as soon as practicable after the
Participant's Approved Early Retirement Date.
(e) EARLY RETIREMENT FACTOR. The "Early Retirement Factor"
shall be a reduction of .25% for each of the first 24 months between the date of
determination and the first day of the month coincident with or next following
the Participant's 62nd birthday, and an additional reduction of .50% for each
such month in excess of 24 months between such dates.
4.03. INVOLUNTARY TERMINATION OF EMPLOYMENT.
(a) ELIGIBILITY. A Participant whose employment is terminated
involuntarily after completing at least three years of participation in the Plan
shall be entitled to a Involuntary Termination Benefit.
(b) BENEFIT. A Participant's Involuntary Termination Benefit
shall equal his or her Prorated Retirement Income determined as of the date of
the Participant's involuntary termination reduced by (i) the Early Retirement
Factor applicable at the Participant's age determined as of monthly benefit
commencement date determined under the provisions of subsection (c) below and
(ii) further reduced by Other Benefits as provided in Appendix C.
(c) MONTHLY BENEFIT COMMENCEMENT DATE. A Participant's
Involuntary Termination Benefit shall be deemed to commence as of his or her
Normal Retirement Date unless an Approved Early Retirement Date is approved by
the Committee. In such latter case, it shall be deemed to commence as of the
Approved Early Retirement Date.
(d) LUMP SUM PAYMENT DATE. The lump sum payment of the Involun-
tary Termination Benefit shall be paid as soon as practicable after the involun-
tary termination of the Participant's employment.
4.04. TERMINATION OF PARTICIPATION.
(a) ELIGIBILITY. A Participant, with at least three years of
participation, whose position ceases to qualify as an Eligible Position shall be
entitled to a Participation Termination Benefit described in (b) below.
(b) BENEFIT. A Participant's Participation Termination Benefit
shall equal his or her Prorated Retirement Income determined as of the date his
or her participation terminates reduced by (i) the Early Retirement Factor
applicable at the Participant's age determined as of the monthly benefit
commencement date determined under the provisions of subsection (c) below and
(ii) further reduced by Other Benefits as provided in Appendix C.
(c) MONTHLY BENEFIT COMMENCEMENT DATE. A Participant's
Participation Termination Benefit shall be deemed to commence as of his or her
Normal Retirement Date unless an Approved Early Retirement Date is approved by
the Committee. In such latter case, it shall be deemed to commence as of the
Approved Early Retirement Date.
(d) LUMP SUM PAYMENT DATE. The lump sum payment of the Partici-
pation Termination Benefit shall be paid as soon as practicable after the Parti-
cipant subsequently terminates employment or retires.
4.05. TERMINATION OF THE PLAN.
(a) ELIGIBILITY. A Participant of the Plan at the time it is
terminated shall be entitled to a Plan Termination Benefit.
(b) BENEFIT. A Participant's Plan Termination Benefit shall
equal his or her Prorated Retirement Income determined as of the date the Plan
is terminated reduced by (i) the Early Retirement Factor applicable at the
Participant's age determined as of the monthly benefit commencement date
determined under the provisions of subsection (c) below and (ii) further reduced
by Other Benefits as provided in Appendix C.
(c) MONTHLY BENEFIT COMMENCEMENT DATE. A Participant's Plan
Termination Benefit shall be deemed to commence as of his or her Benefit
Commencement Age determined as of the date the Participant subsequently
terminates employment or retires.
(d) LUMP SUM PAYMENT DATE. The lump sum payment of the Plan
Termination Benefit shall be paid as soon as practicable after the Participant
terminates employment or retires.
4.06. CHANGE IN CONTROL. Upon the occurrence of a Change in
Control, as defined in Section 2.08, the provisions of subsection (a) below
shall apply unless the terms of such Change in Control provide, as a
prerequisite to the consummation of the Change in Con
trol, that the employer responsibilities under this Plan are to be assumed by
the successor organization. In the latter case, the provisions of
subsection (b) below shall apply:
(a) IMMEDIATE CHANGE IN CONTROL BENEFIT.
(1) ELIGIBILITY. The Plan shall immediately and
automatically terminate and each Participant shall be entitled to an Immediate
Change in Control Benefit as described in (2) below.
(2) BENEFIT. A Participant's Immediate Change in Control
Benefit shall equal his or her Prorated Retirement Income determined as of the
Change in Control date, reduced by (i) the Early Retirement Factor applicable at
the Participant's age determined as of the monthly benefit commencement date
determined under the provisions of paragraph (3) below, and (ii) further reduced
by Other Benefits as provided in Appendix C.
(3) MONTHLY BENEFIT COMMENCEMENT DATE. A Participant's
Immediate Change in Control Benefit shall be deemed to commence as of his or her
Benefit Commencement Age determined as of the Change in Control Date.
(4) LUMP SUM PAYMENT DATE. The lump sum payment of the
Immediate Change in Control Benefit shall be immediately due and shall be paid
within thirty days of such Plan termination.
(b) VESTED CHANGE IN CONTROL BENEFIT.
(1) ELIGIBILITY. Each Participant as of the Change in
Control date shall be entitled to a Vested Change in Control Benefit as
described in (2) below.
(2) BENEFIT. A Participant's Vested Change in Control
Benefit shall equal his or her Prorated Retirement Income determined as of the
Change in Control date, reduced by (i) the Early Retirement Factor applicable at
the Participant's age determined as of the monthly benefit commencement date
determined under the provisions of paragraph (3) below, and (ii) further reduced
by Other Benefits as provided in Appendix C.
(3) MONTHLY BENEFIT COMMENCEMENT DATE. A Participant's
Vested Change in Control Benefit shall be deemed to commence as of his or her
Benefit Commencement Age determined as of the date the Participant subsequently
terminates employment or retires.
(4) LUMP SUM PAYMENT DATE. The lump sum payment of the
Vested Change in Control Benefit shall be paid as soon as practicable after the
Participant terminates employment or retires.
4.07. PRERETIREMENT DEATH BENEFIT.
(a) ELIGIBILITY. The Surviving Spouse of a Participant or
former Participant described in (A), (B), (C) or (D) below who dies prior to
terminating employment or retiring on or after attaining age 55 shall be
entitled to a Preretirement Death Benefit as described in (b) below.
(A) A Participant.
(B) A former Participant who is entitled to a Participation
Termination Benefit.
(C) a former Participant who is entitled to a Plan
Termination Benefit.
(D) a former Participant who is entitled to a Vested Change
in Control Benefit.
(b) BENEFIT. A Surviving Spouse's Preretirement Death Benefit
shall equal 50% of the benefit to which the Participant would have been entitled
under whichever of Sections 4.01, 4.02, 4.03, 4.04, 4.05, or 4.06 would have
applied if the Participant or former Participant had terminated employment or
retired on the day immediately prior to his or her death, determined without
regard to (i) any requirement for Committee approval of an Approved Early
Retirement Date, or (ii) any requirement for 3 years of participation. Such
benefit shall be reduced by Other Benefits as provided in Appendix C.
(c) MONTHLY BENEFIT COMMENCEMENT DATE. A Surviving Spouse's
Preretirement Death Benefit shall be deemed to commence as of the first day of
the later of (i) the month following the death of the Participant and (ii) the
month following the month in which the Participant or former Participant would
have attained age 55 and completed 5 years of service had he or she continued in
employment until such date, and to continue for the life of the Surviving
Spouse.
(d) LUMP SUM PAYMENT DATE. The lump sum payment of the Survi-
ving Spouse's Preretirement Death Benefit shall be paid as soon as practicable
after the death of the Participant.
4.08. RETIREE HEALTH AND WELFARE BENEFITS. For purposes of the
A&B Retiree Plan:
(a) NORMAL RETIREMENT DATE. A Participant who is entitled to a
Normal Retirement Benefit shall be deemed to have the greater of (i) his or her
actual Completed Years of Service, and (ii) twenty-five (25) Completed Years of
Service.
(b) EARLY RETIREMENT DATE. A Participant or former Participant
who is entitled to one of the benefits described in paragraph (1) below shall be
deemed to have the rights described in paragraph (2) below.
(1) The benefits described by this paragraph are:
(A) an Approved Early Retirement Benefit,
(B) a Participation Termination Benefit if such
termination occurs at of after the Participant attained age 55,
(C) a Plan Termination Benefit if such termination
occurs at or after the Participant attained age 55,
(D) a Vested Change in Control Benefit or a prior
Immediate Change in Control Benefit if such Change in Control occurred at or
after the Participant attained age 55.
(2) A Participant who is subject to the provisions of this
paragraph shall automatically become a Participant under the A&B Retiree Plan,
without regard to the age and service requirements in Article III of the A&B
Retiree Plan. For purposes of determining such Participant's Health Care
Contributions under the A&B Retiree Plan, the number of Completed Years of
Service of such Participant shall be deemed to be equal to 25 years multiplied
by the fraction used to determine such Participant's or former Participant's
Prorated Retirement Income, provided however, that on or after such
Participant's Normal Retirement Date he or she shall be deemed to have twenty-
five (25) Completed Years of Service.
ARTICLE V
SOURCE OF PAYMENTS
5.01. SOURCE OF PAYMENTS. All benefits payable under this Plan
shall be paid in cash from the general funds of the Company, and no trust
account, escrow, fiduciary relationship or other security arrangement shall be
established to assure payment, other than, at the option of the Company, an
escrow account the amounts in which remain subject to the claims of the
Company's general creditors in the event of insolvency or bankruptcy. No
Participant or Participant's Surviving Spouse shall have any right, title or
interest whatsoever in any investments which the Company may make to aid the
Company in meeting its obligations hereunder. Nothing contained in this Plan,
and no action taken pursuant to its provisions, shall create or be construed to
create a trust of any kind, or a fiduciary relationship, between the Company and
any Participant, any Surviving Spouse, or any other person. To the extent that
any person acquires a right to receive benefits from the Company under this
Plan, such right shall be no greater than, nor different from the right of an
unsecured general creditor of the Company.
ARTICLE VI
FORFEITABILITY
6.01. FORFEITABILITY OF BENEFITS. Notwithstanding any other pro
vision of this Plan, no payment of unpaid benefits shall be made, and all rights
under the Plan of the Participant, Surviving Spouse, the Participant's executors
or administrators, or any other person, to receive benefits under this Plan
shall be forfeited if the Participant's employment with the Company is
terminated voluntarily or for Cause. For the purpose of this Plan, termination
for Cause shall mean termination upon (a) the willful and continued failure by a
Participant to substantially perform his or her duties with the Company (other
than any such failure resulting from a Participant's incapacity due to physical
or mental illness) or (b) the willful engaging by the Participant in conduct
which is demonstrably and materially injurious to the Company, monetarily or
otherwise. For purposes of this paragraph, no act, or failure to act, shall be
considered "willful" unless done, or omitted to be done, not in good faith and
without reasonable belief that the action or omission was in the best interest
of the Company.
ARTICLE VII
AMENDMENT AND TERMINATION
7.01. AMENDMENT AND TERMINATION. The Committee reserves the right
to amend, modify, partially terminate, or completely terminate the Plan.
However, no amendment, modification or termination shall reduce retroactively
the benefits of any Participant or any Surviving Spouse under the Plan.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.01. BENEFITS NOT ASSIGNABLE. No Participant or Surviving
Spouse, or any other person having or claiming to have any interest of any kind
or character in or under this Plan or in any payment therefrom shall have the
right to sell, assign, transfer, convey, hypothecate, anticipate, pledge or
otherwise dispose of such interest; and to the extent permitted by law, such
interest shall not be subject to any liabilities or obligations of the Partici
pant or to any bankruptcy proceedings, creditor claims, attachment,
garnishments, execution, levy or other legal process against such Participant or
his or her property.
8.02. CONTROLLING LAW. This Plan shall be construed,
administered, and governed in all respects in accordance with the laws of the
State of Hawaii.
8.03. NOT AN EMPLOYMENT CONTRACT. The adoption and maintenance of
this Plan shall not be deemed to confer on any Participant any right to continue
in the employ of A&B, and shall not be deemed to interfere with the right of A&B
to discharge any person with or without cause or treat any person without regard
to the effect that such treatment might have on the person as a Participant.
8.04. SEVERABILITY. If any provision of this Plan is held invalid
or unenforceable by a court of competent jurisdiction, all remaining provisions
shall continue to be fully effective.
8.05. BINDING AGREEMENT. This Plan shall be binding upon and
inure to the benefit of the Company, its successors and assigns, and the
Participants and their heirs, executors, administrators and legal
representatives.
8.06. ADMINISTRATION OF THE PLAN. The Plan shall be administered
by the Committee, under the authority of the Board. Subject to the express pro
visions of the Plan, the Committee shall have complete authority to interpret
the Plan, to prescribe, amend and rescind regulations relating to its
administration, and to make all other determinations that are necessary in the
course of its administration. All decisions made by the Committee with respect
to the administration of the Plan shall be final and binding on all persons
having an interest in the Plan. The Committee may from time to time delegate
any right, power or duty concerning the operation or administration of the Plan
to one or more committees, individuals or entities.
8.07. ADOPTION BY SUBSIDIARIES. Any subsidiary of Alexander &
Baldwin, Inc. that has adopted the A&B Retirement Plan may adopt this Plan for
the benefit of its employees when one of its employees has been selected as a
Participant by the Committee. Such adoption shall be authorized by a resolution
of the Board of Directors of such subsidiary. In the event of such adoption of
the Plan by a subsidiary of Alexander & Baldwin, Inc. the Committee shall serve
as agent of the subsidiary in administering the Plan. All power to amend,
modify, or terminate the Plan shall continue as the unfettered prerogative of
the Committee.
IN WITNESS WHEREOF, Alexander & Baldwin, Inc. has caused this Restatement to be
executed on its behalf by its duly authorized officers this 23rd day of
February, 1995.
ALEXANDER & BALDWIN, INC.
By /s/ Miles B. King
Its Vice President
By /s/ Alyson J. Nakamura
Its Assistant Secretary
<PAGE>
APPENDIX A
PARTICIPANTS REFERRED TO IN
SECTION 2.24
l. R. F. Cameron
2. R. J. Donohue
3. F. L. Fleischmann
4. G. Y. Nakamatsu
5. R. H. Rothman
<PAGE>
APPENDIX B
RULES FOR DETERMINING ACTUARIAL EQUIVALENT
When the terms of this Plan require the determination of a lump sum payment
which is the Actuarial Equivalent of any other benefit provided by this Plan,
the following rules shall apply to the calculation of such lump sum payment:
1. The mortality table used shall be the mortality table then in use by the
A&B Retirement Plan for the purpose of determining lump sum payments to
participants of such plan who are entitled to such payments.
2. The discount rate shall be the after-tax equivalent of the discount rate
then in use by the A&B Retirement Plan for the purpose of determining lump
sum payments to participants of such plan who are entitled to such
payments. The after-tax equivalent rate shall be determined by multiplying
discount rate in use by the A&B Retirement Plan by the excess of 100% over
the tax effected marginal tax rate declared by the Committee.
3. The Committee shall declare the tax effected marginal tax rate at the
beginning of each calendar year.
4. The tax effected marginal tax rate shall apply to lump sum payments made at
any time during such calendar year and may not be changed during the year.
5. The value of the benefit to a Surviving Spouse which is included in a
Participant's Retirement Income shall be included in the calculation of the
lump sum payment to which the Participant is entitled. Unless stated
otherwise, the benefit to the Surviving Spouse shall be deemed to apply
only if the death of the Participant occurs on or after the date the
Retirement Income is deemed to commence under the terms of the provision
giving rise to the Participant's right to a lump sum payment.
6. If the terms of the Plan provide for a benefit such that if it were paid as
a monthly benefit it could have commenced at more that one future date,
then for purposes of calculating the lump sum that is the Actuarial
Equivalent of such benefit, it shall be deemed that the benefit would have
commenced at the earliest possible date.
7. The early retirement reduction factors, if any, used to calculate the lump
sum which is the Actuarial Equivalent of the benefit provided by the
provisions of Section 4.06 as a result of a Change of Control, shall be the
factors applicable to Participants of the A&B Retirement Plan who terminate
employment after attaining eligibility for early retirement regardless of
the Participant's age as of the Change of Control date.
APPENDIX C
RULES FOR THE OFFSET OF BENEFITS DESCRIBED IN ARTICLE IV
1. Any increase in Other Benefits which occur after termination of employment
or retirement shall not be taken into account.
2. In the case of a Participant who is not married at the time benefits are
deemed to commence under this Plan, Other Benefits shall be determined as
though such payments were made in the form of a straight life annuity.
3. In the case of a Participant who is married at the time a lump sum benefit
is payable under this Plan, Other Benefits shall be determined as though
such payments were made in the form of joint and 50% survivor form of
payment with his or her spouse designated as the contingent annuitant.
4. It shall be assumed that Other Benefit payments (whether or not in payment
status) commence under such other plans of the same date benefits commence
under this Plan. In all cases, the provisions of the A&B Retirement Plan
shall be used to determine the adjustment made to the Other Benefits for
commencement prior to a Participant' Normal Retirement Date or to determine
the equivalent joint and 50% survivor amount.
Exhibit 10.b.1.(xxvi)
A&B RETIREMENT PLAN FOR OUTSIDE DIRECTORS
AMENDMENT NO. 1
The A&B Retirement Plan for Outside Directors, as amended and restated
effective October 24, 1991, is hereby amended, effective February 1, 1995, as
follows:
1. A new Section 2.00 is hereby added, as follows:
"2.00. 'Actuarial Equivalent' means a form of benefit differing
in time period, or manner of payment from a specified benefit provided
in the Plan, but having the same present value when determined in
accordance with generally accepted actuarial practice and the rules
contained in Appendix C of this Plan."
2. Sections 2.10 and 2.11 are hereby renumbered as Sections 2.13 and
2.14, respectively.
3. A new Section 2.10 is hereby added, as follows:
"2.10. 'Retirement Date' means the latter of the date the
Participant ceases to be a Director or attains age 65."
4. A new Section 2.11 is hereby added, as follows:
"2.11. 'Retirement Income' means fifty percent (50%) of the
Participant's Final Retainer plus ten percent (10%) of the
Participant's Final Retainer for each Year of Service in excess of
five (5), but not in excess of one hundred percent (100%) of the
Participant's Final Retainer after ten (10) Years of Service."
5. A new Section 2.12 is hereby added, as follows:
"2.12. 'Retirement Income Benefit' means the benefit defined in
Section 4.01."
6. Section 3.02(a) is hereby amended in its entirety to read as follows:
"(a) Retirement Income Benefits. Upon a Plan termination
resulting from a Change in Control, each Participant shall be paid his
or her Retirement Income Benefit within thirty (30) days of such
termination. The Retirement Income Benefit shall be calculated as
indicated in Section 4.02., and further provided that it shall (i) be
based on Years of Service determined as of the date the Change in
Control occurs and (ii) determined as though the Participant ceased to
be a Director as of the date of such Plan termination."
7. Section 3.02(b) is hereby amended by replacing "Section 5.03" with
"Section 5.02."
8. Section 4.01 is hereby replaced in its entirety with the following:
"4.01. Retirement Income Benefit. A Participant's Retirement
Income Benefit shall be the greater of the amounts described in
subsections (a) and (b) below, and shall be paid within thirty (30)
days of the Participant's Retirement Date.
(a) A lump sum payment which is the Actuarial Equivalent of
the Participant's Retirement Income paid one twelfth monthly for the
life of the Participant with the first payment commencing on the
Participant's Retirement Date."
9. A new Appendix A is hereby added, as follows:
"APPENDIX A
Rules For Determining Lump Sum Benefits
When the terms of this Plan require the determination of a lump sum
payment which is the Actuarial Equivalent of any other benefit
provided by this Plan, the following rules shall apply to the
calculation of such lump sum payment:
1. The mortality table used shall be the mortality table then in use
by the A&B Retirement Plan for the purpose of determining lump
sum payments to participants of such plan who are entitled to
such payments.
2. The discount rate shall be the after-tax equivalent of the
discount rate then in use by the A&B Retirement Plan for the
purpose of determining lump sum payments to participants of such
plan who are entitled to such payments. The after-tax equivalent
rate shall be determined by multiplying the discount rate in use
by the A&B Retirement Plan by the excess of 100% over the tax
effected marginal tax rate declared by the Committee.
3. The Committee shall declare the tax effected marginal tax rate at
the beginning of each calendar year.
4. The tax effected marginal tax rate shall apply to lump sum
payments made at any time during such calendar year and may not
be changed during the year."
10. Except as modified by this Amendment, all terms and provisions of the
A&B Retirement Plan for Outside Directors shall continue in full force and
effect.
IN WITNESS WHEREOF, Alexander & Baldwin, Inc. has caused its authorized
officers to affix the corporate name and seal hereto this 22nd day of February,
1995.
ALEXANDER & BALDWIN, INC.
By /s/ Miles B. King
Its Vice President
By /s/ Alyson J. Nakamura
Its Assistant Secretary
<PAGE>
A&B RETIREMENT PLAN FOR OUTSIDE DIRECTORS
AMENDED AND RESTATED EFFECTIVE FEBRUARY 1, 1995
ARTICLE I
ESTABLISHMENT AND PURPOSE
1.01. ESTABLISHMENT OF PLAN. Alexander & Baldwin, Inc., hereby
establishes the A&B Retirement Plan for Outside Directors, effective January 1,
1986.
1.02. PURPOSE OF PLAN. It is the purpose of this Plan to provide eligible
Directors with (a) retirement income benefits, and (b) certain post-retirement
health care insurance benefits for themselves and their eligible spouses at
group premium rates. The Plan is intended to be exempt from the participation,
vesting, funding and fiduciary requirements of Title I of the Employee
Retirement Income Security Act of 1974 because it does not cover any "employee"
within the meaning of Section 3(6) of such Act.
ARTICLE II
DEFINITIONS
2.00. "Actuarial Equivalent" means a form of benefit differing in time
period, or manner of payment from a specified benefit provided in the Plan, but
having the same present value when determined in accordance with generally
accepted actuarial practice and the rules contained in Appendix A of this Plan.
2.01. "A&B" means Alexander & Baldwin, Inc., or any successor.
2.02. "Administrator" means the person described in Section 7.01.
2.03. "Director" means a member of the Board of Directors of A&B.
2.04. "Final Retainer" means the annual rate of retainer payable to an
Outside Director as of the last date served as an Outside Director.
2.05. "Fixed Dollar Amount" for each Participant shall be the amount shown
on Exhibit A for the area in which the Participant resides as of the date the
Participant commences health care insurance coverage under Section 5.02.
2.06. "Outside Director" means a Director who is not an employee of A&B or
any subsidiary of A&B.
2.07. "Participant" means an Outside Director who is eligible to
participate in the Plan under the conditions of Section 3.01.
2.08. "Plan" means the plan set forth in this document, as amended from
time to time.
2.09. "Retirement Benefits" means the Retirement Income Benefits described
in Article IV and the Health Care Benefits described in Article V.
2.10. "Retirement Date" means the latter of the date the Participant
ceases to be a Director and the date the Participant attains age 65.
2.11. "Retirement Income" means fifty percent (50%) of the Participant's
Final Retainer plus ten percent (10%) of the Participant's Final Retainer for
each Year of Service in excess of five (5), but not in excess of one hundred
percent (100%) of the Participant's Final Retainer after ten (10) Years of
Service.
2.12. "Retirement Income Benefit" means the benefit defined in
Section 4.02
2.13. "Spouse" means any individual who is legally married to a
Participant, except an individual separated from the Participant under a legal
separation decree.
2.14. "Years of Service" means a 365-day period (or a fraction thereof) as
an Outside Director, whether or not consecutive.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.01. ELIGIBILITY. A person who is an Outside Director at any time after
December 31, 1985 shall be eligible for the Retirement Benefits under this Plan,
as follows:
(a) He or she shall be eligible for Retirement Income Benefits under
Article IV if he or she has at least five (5) Years of Service.
(b) He or she shall be eligible for Health Care Benefits under
Article V if he or she has at least ten (10) Years of Service, retires on or
after January 1, 1992, and enrolls in Medicare Part B coverage upon reaching age
sixty-five (65).
3.02. CHANGE IN CONTROL. Upon the occurrence of a "Change in Control," as
defined hereafter, the Plan shall immediately and automatically terminate. Upon
such a termination, the interest of each Participant shall become due and
payable as described in Sections 3.02(a) and 3.02(b) below; provided, however,
that, if the terms of the Change in Control provide, as a prerequisite to the
consummation of the Change in Control, that A&B's responsibilities under this
Plan are to be assumed by the successor organization, then the Plan shall not
terminate and no lump-sum payment shall be made to any Participant. For
purposes of this provision, a "Change in Control" shall mean a Change in Control
of A&B of a nature that would be required to be reported in response to
Item 6(e) of Schedule l4A of Regulation l4A promulgated under the Securities
Exchange Act of l934, as amended (the "Exchange Act"), whether or not A&B in
fact is required to comply with Regulation l4A thereunder; provided that,
without limitation, such a Change in Control shall be deemed to have occurred if
(i) any "person" (defined, for purposes of this Section 3.02, as such term is
used in Sections l3(d) and l4(d) of the Exchange Act) is or becomes the
"beneficial owner" (defined, for purposes of this Section 3.02, as defined in
Rule l3d-3 under the Exchange Act), directly or indirectly, of securities of A&B
representing thirty-five percent (35%) or more of the combined voting power of
A&B's then outstanding securities; or (ii) during any period of twenty-four (24)
consecutive months, at least a majority of the Board ceases to consist of
individuals who have served continuously on the Board since the beginning of
such period or whose election, or nomination for election by A&B's shareholders,
was approved by a vote of at least two-thirds of the directors then still in
office who have served continuously on the Board since the beginning of the
period.
(a) Retirement Income Benefits. Upon a Plan termination resulting
from a Change in Control, each Participant shall be paid his or her Retirement
Income Benefit within thirty (30) days of such termination. The Retirement
Income Benefit shall be calculated as indicated in Section 4.02., and further
provided that it shall (i) be based on Years of Service determined as of the
date the Change in Control occurs and (ii) determined as though the Participant
ceased to be a Director as of the date of such Plan termination.
(b) Health Care Benefits. Upon a Plan termination resulting from a
Change in Control, the successor organization shall continue to provide Health
Care Benefits under Article V to the following Outside Directors: (i) Outside
Directors who were Outside Directors immediately prior to the Change in Control,
beginning with the applicable starting date under Section 5.02, and (ii) Outside
Directors for whom health care insurance coverage under the Plan had commenced
prior to the Change in Control. The Health Care Benefits payable to the
foregoing Outside Directors shall be no less than the applicable percentages of
the Fixed Dollar Amount under Section 5.01 under the terms of the Plan that
existed immediately prior to the Change in Control, plus the income tax offset
benefits described in Section 5.03.
3.03. VESTING. All Retirement Benefits payable under this Plan shall be
fully vested at all times.
ARTICLE IV
RETIREMENT INCOME BENEFIT
4.01. RETIREMENT. A Participant shall be entitled to the Retirement
Income Benefit described in Section 4.02 upon the Participant's Retirement Date.
The Retirement Income Benefit shall be paid within thirty days of the
Participant's Retirement Date.
4.02. RETIREMENT INCOME BENEFIT. A Participant's Retirement Income
Benefit shall be the greater of the amounts described in subsections (a) and (b)
below.
(a) A lump sum payment which is the Actuarial Equivalent of the
Participant's Retirement Income paid one twelfth monthly for the life of the
Participant with the first payment commencing on the Participant's Retirement
Date.
(b) The before-tax equivalent of the lower of two quotations obtained
by the Administrator from insurance companies for the cost of a lifetime annuity
that provides after-tax monthly benefits equivalent to those that a Participant
would receive under this Plan if this Plan allowed monthly payments of the
retirement benefits hereunder.
ARTICLE V
HEALTH CARE BENEFITS
5.01. BENEFIT LEVEL. A Participant who is eligible under Section 3.01(b)
shall have the right to elect health care insurance coverage for himself or
herself and for his or her Spouse. The amount paid by A&B toward the cost of
premiums on behalf of the Participant shall be a percentage of the Fixed Dollar
Amount based on the Participant's Years of Service in accordance with the
following schedule:
Percentage of
Years of Service Fixed Dollar Amount
less than 10 (not eligible)
10 50%
11 60%
12 70%
13 80%
14 90%
15 or more 100%
A Participant who elects to obtain health care insurance coverage for
himself/herself in accordance with Section 5.04 shall have the right to elect
health care insurance coverage for his or her Spouse through the same health
care provider, provided the Participant or Spouse pays the full cost of the
additional premiums for such Spouse's coverage and provided further that the
Spouse elects Medicare Part B coverage upon reaching age sixty-five (65).
5.02. COVERAGE AND PAYMENT CONDITIONS. Health care insurance coverage for
a Participant who has made the required election under Section 5.04 shall begin
on the first day of the month coinciding with or next following the later of
(a) the date the Participant attains age 65, or (b) the date the Participant
ceases to be an Outside Director. If the Participant elects coverage for his or
her Spouse, then such Spouse's coverage shall begin on the later of (i) the date
the Spouse attains age 65, or (ii) the date the Participant's applicable
coverage begins. A Participant's health care insurance shall continue until the
earlier of the Participant's death or the date upon which the Participant ceases
to pay any required premiums. Health care insurance coverage for the
Participant's Spouse shall continue until the earlier of (i) the death of the
covered Spouse, or (ii) the date on which the Participant or the Participant's
Spouse fails to pay the required premiums.
5.03. INCOME TAX OFFSET BENEFIT. In an effort to offset approximately the
Federal and State income taxes payable by reason of the payments of health care
insurance premiums herein by A&B, a Participant who elects coverage under
Section 5.01 shall also receive a lump sum, payable annually, equal to sixty-
five percent (65%) of the portion of annual premiums paid by A&B.
5.04. REQUIRED ELECTIONS. Each Participant shall have the right to elect
to obtain health care insurance coverage through one or more health care
provider(s) selected by A&B. Details of each of the health care insurance
coverages depend on the health care provider(s) selected and may vary from year
to year. A Participant's election to obtain health care insurance coverage
under this Plan, whether for himself or herself or for the Participant and his
or her Spouse, shall be made in writing in the manner prescribed by the
Administrator. Such election must be made not later than forty-five (45) days
following the Participant's applicable benefit commencement date under
Section 5.02. If the Participant fails to make such election as required
herein, he or she shall be deemed to have waived health care benefits under the
Plan. If the Participant fails to pay any required premiums, whether for
himself or herself or for his or her Spouse, such Participant or Spouse
coverage, as applicable, shall be terminated.
5.05. FUNDING POLICY. A&B retains the right to enter into contracts with
one or more health care providers to provide any health care benefits under this
Plan and to replace such providers at any time. Overages will be in the form of
Medicare supplements and may vary from year to year at A&B's sole discretion.
Overages provided under this Plan are secondary to Medicare and to benefits
provided through any other plans.
ARTICLE VI
PAYMENTS FROM THE PLAN
6.01. SOURCE OF PAYMENTS. All benefits payable under this Plan shall be
paid in cash from the general funds of A&B, and no trust account, escrow,
fiduciary relationship, or other security arrangement shall be established to
assure payment other than, at the option of A&B, an escrow account the amounts
in which remain subject to the claims of A&B's general creditors in the event of
insolvency or bankruptcy.
6.02. NO OTHER BENEFITS. There are no death benefits under this Plan, and
no benefits are provided under this Plan to anyone other than a Participant and,
in the case of health care insurance coverage, an eligible Spouse.
6.03. INALIENABILITY. No Participant or beneficiary, or any other person
having or claiming to have any interest of any kind or character in or under
this Plan or in any of the deferred accounts or any part thereof or payment
therefrom shall have the right to sell, assign, transfer, convey, hypothecate,
anticipate, pledge or otherwise dispose of such interest; and to the extent
permitted by law, such interest shall not be subject to any liabilities or
obligations of the participant or to any bankruptcy proceedings, creditor
claims, attachment, garnishments, execution, levy or other legal process against
such Participant or his/her property.
ARTICLE VII
ADMINISTRATION OF THE PLAN
7.01. ADMINISTRATOR. The Administrator of the A&B Retirement Plan for
Salaried Employees shall be the Administrator of this Plan. The Administrator
shall have full authority to administer the Plan. The Administrator shall have
all of the powers granted by the A&B Retirement Plan for Salaried Employees to
the Administrator of such Plan, and shall be subject to the same procedures and
limitations of authority.
7.02. CLAIMS PROCEDURE. The Administrator shall employ the claim
procedures as are applicable under the A&B Retirement Plan for Salaried
Employees.
ARTICLE VIII
AMENDMENT AND TERMINATION
8.01. The Board of Directors of A&B reserves the right to amend, modify,
partially terminate, or completely terminate this Plan. However, no amendment,
modification or termination shall reduce retroactively the benefits of any
Participant under this Plan below the level to which the Participant would have
been entitled if the Participant had ceased to be a Director on the date of such
amendment, modification or termination.
IN WITNESS WHEREOF, Alexander & Baldwin, Inc. has caused this Restatement to be
executed on its behalf by its duly authorized officers this 22nd day of
February, 1995.
ALEXANDER & BALDWIN, INC.
By /s/ Miles B. King
Its Vice President
By /s/ Alyson J. Nakamura
Its Secretary
<PAGE>
APPENDIX A
RULES FOR DETERMINING LUMP SUM BENEFITS
When the terms of this Plan require the determination of a lump sum payment
which is the Actuarial Equivalent of any other benefit provided by this Plan,
the following rules shall apply to the calculation of such lump sum payment:
1. The mortality table used shall be the mortality table then in use by the
A&B Retirement Plan for the purpose of determining lump sum payments to
participants of such plan who are entitled to such payments.
2. The discount rate shall be the after-tax equivalent of the discount rate
then in use by the A&B Retirement Plan for the purpose of determining lump
sum payments to participants of such plan who are entitled to such
payments. The after-tax equivalent rate shall be determined by multiplying
the discount rate in use by the A&B Retirement Plan by the excess of 100%
over the tax effected marginal tax rate declared by the Committee.
3. The Committee shall declare the tax effected marginal tax rate at the
beginning of each calendar year.
4. The tax effected marginal tax rate shall apply to lump sum payments made at
any time during such calendar year and may not be changed during the year.
EXHIBIT 11
<TABLE>
<CAPTION>
ALEXANDER & BALDWIN, INC.
COMPUTATION OF EARNINGS PER SHARE
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(In thousands, except per share amounts)
------------------------------------------------------------------------------------
<S> <C> <C> <C>
1994 1993 1992
-------- -------- --------
Primary Earnings Per Share (a)
-----------------------------------------
Net income $74,608 $66,989 $18,954
Average number of shares outstanding 46,059 46,338 46,294
Primary earnings per share $1.62 $1.45 $0.41
Fully Diluted Earnings Per Share
-----------------------------------------
Net income $74,608 $66,989 $18,954
Average number of shares outstanding 46,059 46,338 46,294
Effect of assumed exercise of
outstanding stock options 51 31 39
------- ------- -------
Average number of shares outstanding
after assumed exercise of
outstanding stock options 46,110 46,369 46,333
======= ======= =======
Fully diluted earnings per share $1.62 $1.44 $0.41
======= ======= =======
(a) The computations of primary earnings per share do not include the effects
of assumed exercises of employee stock options because such effects were
immaterial for all years.
</TABLE>
1994 FORM 10-K EXHIBIT 13
ALEXANDER & BALDWIN, INC.
1994 ANNUAL REPORT TO SHAREHOLDERS
ELECTRONIC FILE FORMAT FOR SEC TRANSMISSION
NOTE:
Page numbers referenced in this report refer to the
published document.
Photo captions and descriptions of graphs which are
included in the published document are noted in brackets
in this electronic file format.
-------------------------------------------------------------------
[Four photos - caption: Representing A&B's business segments are (from top to
bottom): Matson's S.S. Maui, the first American vessel to be converted to a
technologically advanced "open top" design; Kahului Ikena, a residential deve-
lopment on Maui, one of many A&B Properties' projects underway on that island;
Matson Leasing containers in Bangkok exemplifying the five-year-old company's
growing international presence; and Kauai coffee trees growing at McBryde,
where value was added to the food products segment with the successful launch
in 1994 of a roasted, packaged coffee.]
[Cover photo caption: An aerial view of Maui's North Shore with the world famous
wind surfing spot, Ho'okipa Beach Park, in the foreground. The vast expanse of
land pictured is practically all property owned by A&B.]
<TABLE>
<CAPTION>
Financial Highlights
1994 1993 Change
-------------- ------------ ------
<S> <C> <C> <C>
Revenue $1,208,165,000 $979,466,000 + 23%
Net Income $74,608,000 $66,989,000 + 11%
Per Share $1.62 $1.45 + 12%
Cash Dividends $40,563,000 $40,777,000 - 1%
Per Share $0.88 $0.88 --
Average Shares
Outstanding 46,059,000 46,338,000 - 1%
Total Assets $ 1,932,788,000 $1,912,375,000 + 1%
Shareholders' Equity $632,614,000 $587,006,000 + 8%
Per Share $13.85 $12.65 + 9%
Return on Beginning
Shareholders' Equity 12.7% 12.0% --
Current Ratio 1.4 to 1 1.3 to 1 --
Ratio: Long-term Debt and
Capital Leases to .32 to 1 .37 to 1 --
Total Capital
Employees 3,581 3,709 - 3%
</TABLE>
Amounts reflect the results of California and Hawaiian Sugar Company, Inc.
subsequent to acquisition in June 1993.
[Photo caption: The 4-story Alexander & Baldwin Building in the heart of down-
town Honolulu has been a city landmark and the Company's headquarters for 66
years.]
<PAGE>
A Tribute to R.J. Pfeiffer
Robert J. Pfeiffer will retire from Alexander & Baldwin, Inc. (A&B) on March
31, 1995 after 37 and one-half years of distinguished service to the Company,
nearly 15 of which he has spent as Chairman of the Board and over 12 as
Chief Executive Officer ---- more than any other individual in A&B's 125-year
history, except John Waterhouse, son-in-law of Company co-founder, Samuel T.
Alexander.
The officers and employees of A&B wish to recognize and express their
appreciation for Mr. Pfeiffer's extraordinary record of leadership and
contributions to the Company. In his nearly four decades of service, a period of
significant growth and prosperity, he left an enduring mark on A&B. Under his
direction, the Company grew in strength and capability and, as a result, is
better equipped to face the future.
Mr. Pfeiffer began his A&B career at a Matson Navigation Company, Inc.
(Matson) subsidiary in 1956. He was appointed Matson President and CEO in 1973,
and he has served as Matson's chairman continuously from 1979 until his
retirement from A&B this year. The year 1973 also saw Mr. Pfeiffer assume his
first corporate office at A&B, when he was named Senior Vice President. In 1979
he was appointed President of A&B. He became CEO and Chairman of the Board in
1980. Under his stewardship, A&B has grown, modernized, diversified and estab-
lished a reputation as a leader in each of the areas in which it does business.
Here are a few indicators of the Company's progress during the Pfeiffer years:
<TABLE>
<CAPTION>
1973 1980 1994
------------ ------------ -------------
<S> <C> <C> <C>
Total Revenue $170,247,000 $461,278,000 $1,208,165,000
Shareholders' Equity 159,014,000 328,066,000 632,614,000
Total Assets 241,168,000 655,492,000 1,932,788,000
</TABLE>
With Mr. Pfeiffer at the helm, Matson steered a course through a period of
tremendous growth, change and success and, in the process, was transformed into
one of the world's most efficient, modern ocean transportation companies.
Under Mr. Pfeiffer's leadership, A&B also modernized and diversified the
agribusiness activities in which the Company has its roots. The pioneering
investments made in drip irrigation of A&B's sugar plantations and automation of
its mills during this time ensured that the Company would maintain its leading
position in Hawaii sugar production.
Mr. Pfeiffer also directed the revitalization of the Company's property
development and management activities, thoughtfully pursuing the development of
commercial, industrial and residential properties on Maui and Kauai, while
continuing to uphold A&B's tradition of responsible stewardship of its
landholdings. He oversaw the key, final phases of development and sale of the
Wailea Resort on Maui, and then astutely employed the proceeds of the sale
to acquire a variety of Mainland properties in order to diversify the Company's
substantial real estate portfolio.
The Pfeiffer years also witnessed the birth of a major new area of enterprise
for the Company ---- worldwide marine container leasing, which has developed
into a growing profit center.
No summation of Mr. Pfeiffer's tenure at A&B would be complete without
mention of the care, concern and energy he devoted to building on the tradition
of Company involvement in the communities in which it operates. While Mr.
Pfeiffer took on a leadership role in numerous professional and community
groups, perhaps one of his most notable achievements was the creation of the
Alexander & Baldwin Foundation, which has become a leading supporter of
educational, cultural and human services organizations throughout Hawaii and on
the West Coast.
Bob Pfeiffer adopted as his watchword the Hawaiian "imua," which means "to
progress, to go forward." There is no word, in any language, better suited to
describe his attitude, his life, his legacy. We will miss him, and we extend to
him and his family our aloha and mahalo upon his retirement.
<PAGE>
[Photo caption: John C. Couch, President and Chief Executive Officer, and
R. J. Pfeiffer, Chairman of the Board, on the balcony of the historic Alexander
& Baldwin Building]
To Our Shareholders
Fellow Shareholders
While Alexander & Baldwin, Inc. (A&B) continued to make satisfactory progress
in a number of key areas in 1994, overall financial results were not as good as
we had hoped. Accomplishments during the year, however, did demonstrate the
Company's financial and operating strength. Strong cash flow permitted the
Company to proceed with important capital expenditures, while concurrently
reducing debt, repurchasing shares and continuing regular cash dividend
payments.
Freight volume in our ocean transportation business was the highest since
that business began 112 years ago. Growing world trade propelled our
international marine container leasing business to record earnings. The
increasing pace of our property development and management business created
important opportunities to realize significant added value from our real
property assets. There even were some heartening developments in our food
products business, although the results of those operations were disappointing.
Looking ahead, although the food products segment faces some major challenges,
in general we are encouraged by more favorable local, national and international
economic trends than we have seen in recent years.
A&B's 1994 net income was $74.6 million, up 11 percent from $67.0 million in
1993. Earnings per share rose to $1.62, up 12 percent from $1.45 in 1993. Cash
flow from operations, before expenditures for real estate developments, was $194
million in 1994, just slightly below the record $195 million in 1993.
Repurchase Program Reflects Long-term Commitment
A&B's strong operating cash flow enabled the Company to proceed with its
current stock repurchase program. In December 1993, the Board of Directors
authorized the Company to repurchase up to two million shares during 1994 and
1995. The purchase authorization provides a means of improving overall returns
to shareholders without jeopardizing financial flexibility or missing attractive
growth opportunities. In 1994, A&B repurchased 722,500 shares at a total cost of
$17.7 million. As a result, each remaining shareholder has a larger ownership
stake. At the same time, cash flow was sufficient for the Company to fund $102
million in capital investments, to retire $53 million of outstanding debt, and
to pay dividends of $40.6 million.
Matson Meets Cargo Surges
During 1994, Matson Navigation Company, Inc. (Matson) demonstrated its
capability to handle efficiently significant increases in freight volume on
short notice. During the 24-day labor strike that shut down its major
competitor, Matson's newest vessel, the MV R. J. Pfeiffer, carried a record
cargo lift. In addition, the newly converted "open top" vessels, SSs Maui and
Kauai, fully utilized the ten-percent capacity increase provided by their recent
conversions.
In 1994, Matson successfully completed the largest computer software system
development effort in its history. This project encompassed the complete rewrite
of Matson's most critical business applications: customer service, booking,
billing and equipment control. The ramifications for improved customer service
are significant.
In addition, Matson increased its focus on building strategic alliances with
international carriers by offering them a wider variety of services, which now
include stevedoring and terminal services, intermodal services, coastwise feeder
vessel operations and container leasing. Matson's intermodal container shipping
subsidiary, Matson Intermodal System, Inc. (MIS), continued to grow in 1994,
largely because of this strategy. MIS now is the exclusive east-west intermodal
agent for both Columbus Line and Blue Star Line.
In July 1994, Matson launched its newest business venture, the Pacific Coast
Shuttle, by employing the former reserve vessel, S.S. Manulani, in a service
which operates between Los Angeles and the Pacific Northwest ports of Seattle
and Vancouver, British Columbia. This new service has attracted major
international carriers as customers.
Container Leasing
Matson Leasing Company, Inc. (Matson Leasing) continued to strengthen its
international presence by opening a new office in Rio de Janeiro. Matson Leasing
now has direct representation in every major trading area in the world. The
fleet size grew by about 11 percent to 160,000 twenty-foot equivalent units
(TEUs). A larger fleet, higher utilization and rate stability resulted in a 15-
percent increase in revenue.
A&B Properties, Inc. Leads Maui Development
A&B Properties' performance improved again in 1994, a noteworthy step in a
difficult period for real estate. A&B's property operations continue to build an
impressive inventory of development projects, especially in Hawaii. At the same
time, they continue to benefit from geographic diversity, with about half of all
leasing income received from properties outside Hawaii.
On Maui, A&B Properties has led the way in promoting the growth and
revitalization of retail activity. Maui's first Kmart store opened in 1993 on a
site leased from A&B Properties and since has become one of Kmart Corporation's
top performers. Progress continues at Triangle Square, with the first phase of
a new factory outlet mall, Maui Factory Stores, nearing completion. Ground was
broken in January 1995 for a new, 134,000 square-foot Costco store on A&B
property in Kahului. Also, plans have been initiated for the redevelopment of a
20-acre site, now occupied by the 44-year-old Kahului Shopping Center.
Kahului Industrial Park represents the Company's continued expansion of its
valuable light industrial and commercial holdings on Maui. This new development
is located in close proximity to the airport, harbor and the Kahului/Wailuku
urban core of Maui. Phase I consists of 76 acres and its addition will increase
A&B Properties' light industrial lands on Maui by approximately one-third. Sales
and leasing activity is expected to begin in late 1995 or early 1996.
Arapahoe Marketplace shopping center near Denver was sold for $21 million in
December. The sale demonstrates another way A&B Properties adds value to the
Company's real property investments. The Colorado property had been purchased
for $17 million, with tax-deferred proceeds from prior land sales. Since
acquisition of the property just after it was constructed in 1989, average rents
increased 16 percent, while operating costs remained constant. A&B Properties
intends to reinvest the sale proceeds in other income-producing properties,
utilizing tax-deferred property exchanges.
In 1994, A&B Properties also sold two parcels of land that were among
properties purchased from California and Hawaiian Sugar Company, Inc. (C&H) in
June 1993. Although acquired in connection with the purchase of C&H, those
properties were surplus to C&H's needs. The most valuable of the two parcels was
19.4 acres in Aiea on Oahu, which was sold for $17.8 million.
Low Food Products Margins
Operating in an extremely volatile market and one negatively impacted by
ineffective administration of the domestic sugar support program, A&B's food
products segment struggled in 1994. Hawaiian Commercial & Sugar Company on Maui
suffered because of relatively low yields. McBryde Sugar Company, Limited, on
Kauai, faced even greater challenges due to its higher sugar production costs,
and startup costs associated with its efforts to pioneer the large-scale growing
and marketing of coffee.
As discussed in last year's annual report, the decision to buy C&H in 1993
allowed A&B to integrate its sugar-growing activities with those of sugar
refining and marketing. Unfortunately, refined sugar prices have been depressed,
while raw sugar costs remained relatively high and volatile. The price decline
has been most significant in the western markets. Falling refined sugar prices
were primarily due to problems with administration of the sugar support program.
These problems, as well as flaws in the current legislation, are among issues to
be addressed when the various domestic agricultural commodity support programs
are reviewed for renewal later this year.
Outlook for 1995
As your Company begins its 125th year of progress, economic indicators signal
modest growth opportunities ahead. A&B continues to grow beyond Hawaii, but
about 80 percent of the Company's operating profit still depends primarily on
economic activity in the State. The visitor industry remains the largest single
component of Hawaii's Gross State Product. After three down years, visitor
arrivals and visitor days improved steadily during 1994 and the Hawaii Visitors
Bureau projects continued growth during 1995. The construction industry,
however, remains at a cyclical low.
Looking beyond Hawaii, growing international trade and stronger fundamentals
in the marine container leasing industry bode well for Matson Leasing. Worldwide
container trade is estimated to have increased about eight percent in 1994,
compared with less than four percent in 1993. In addition, the economic recovery
on the U.S. Mainland has had a positive impact on A&B Properties, with its
Mainland property portfolio realizing an average occupancy rate of 97 percent.
Each of the Company's business segments will continue to focus on achieving
greater operating efficiencies and exploring growth opportunities. At Matson,
the Company looks forward to the growth of the new Pacific Coast Shuttle
service, as well as continued implementation of programs that will improve the
efficiency of current operations and enhance the level of customer service.
Matson Leasing will continue to expand its container fleet in response to
customers' needs. A&B Properties will proceed with land entitlement efforts, as
well as continue to build on its success in development and redevelopment of
property for which entitlements have been granted and zoning is approved. With
labor negotiations scheduled during 1995 for C&H and for both Hawaii
plantations, and with the expiration of current federal agriculture support
programs, the food products segment, however, faces an unusual degree of
uncertainty.
The current sugar support program has disadvantaged the sugarcane sector of
the sweetener industry, which includes sugar beet growers and processors, corn
growers and processors, as well as sugarcane growers and refiners. A&B will
continue to work with these industry groups, congressional representatives and
Administration personnel to help structure a new program that will represent a
better balancing of all sweetener interests, including those of producers as
well as consumers.
Application of Economic Value Added (EVA)
A&B is highly diversified, with businesses that have varied financial
characteristics. Because the Company's overall returns on invested capital have
been inadequate during the past few years, the Company in 1994 began the
evaluation of a new financial management framework called Economic Value Added,
or EVA(R).
EVA combines traditional measures of operating profit with measurement of
capital returns to create a single, easily understood measure. It allows that
same measure to be used for corporate and unit planning, for capital investment
analysis, for period reporting and, potentially, for measurement of management
performance. Calculated from existing accounting measures, EVA promises to help
operating managers at all levels take greater responsibility for the stewardship
of capital invested in their respective operations. The Company will be applying
EVA techniques during 1995 on a trial basis to assess their utility and to help
focus attention throughout the organization on returns being generated on
capital employed.
Management Share Ownership
Over the past few years, there has been increased attention given to the
importance of share ownership by corporate officers as a means of promoting goal
congruence with shareholders in general. In that regard, in 1994 the Board of
Directors established share ownership guidelines for corporate officers of A&B.
The response has been reassuring. The number of officers who elected to take a
portion of their incentive compensation in stock rather than cash increased
dramatically in 1993 and 1994. At this point, the top 15 officers own outright
(i.e., separate from beneficial ownership through stock option grants)
approximately 640,000 shares or 1.4 percent of the total shares outstanding. We
believe increasing share ownership by key A&B officers is a healthy trend.
As shareholders, we would like to thank the employees of A&B and its
subsidiaries for their diligent efforts and hard work in 1994. As officers, we
pledge to our Board of Directors and fellow shareholders our continued efforts
to make A&B a superior investment.
/s/ John C. Couch
John C. Couch
President and
Chief Executive Officer
/s/ R. J. Pfeiffer
R. J. Pfeiffer
Chairman of the Board
February 17, 1995
[Photo caption: Matson continues to build strategic alliances with international
carriers by offering them a variety of services. The Company's new Pacific
Coast Shuttle service has attracted major international carriers as customers
since it was launched in mid-1994.]
[Photo caption: Top: A&B Properties has successfully led the development of new
retail markets on Maui. The island's first Kmart opened in 1993 and already
has become one of the retailer's top performers.
Bottom: By applying the latest technology to existing operations, C&H now is
able to supply high quality liquid sweetners more efficiently to industrial cus-
tomers in Hawaii, utilizing a new liquid sugar plant at Aiea on Oahu.]
[Photo caption: Matson's newly converted S.S. Kauai sails under the Golden Gate
Bridge in San Francisco, where the ocean transportation company has its head-
quarters. Benefits of conversion work completed on this vessel in 1994 include
the industry-leading "open top" design and life-extension work that will add ten
to 15 years to the vessel's service life.]
<PAGE>
Review of Operations
The following table shows the operating profit for each segment for the last
three years. Results and prospects for each segment are discussed in the
following pages.
<TABLE>
<CAPTION>
PERCENT Percent Percent
OF of of
(Dollars in thousands) 1994 TOTAL 1993 Total 1992 Total
------ -- ------- -- ------- --
<S> <C> <C> <C> <C> <C> <C>
Ocean Transportation $97,319 61 $91,194 57 $97,195 77
Container Leasing 16,604 10 13,047 8 12,509 10
Property Development
and Management:
Leasing 23,163 15 22,975 14 21,357 17
Sales 18,522 12 18,570 12 16,820 13
Food Products (418) 0 12,692 8 (26,175) (21)
Other 3,143 2 2,357 1 4,263 4
</TABLE>
[Graph entitled "A&B Operating Profit by Source 1984-1994": Graph shows the
contribution to total operating profit of each business segment. Data points
for the most recent 5 years of the graph are contained in the Industry Segment
Information.]
<PAGE>
Matson
The ocean transportation operations of Alexander & Baldwin, Inc. (A&B) are
conducted by Matson Navigation Company, Inc. (Matson), a wholly owned subsidiary
headquartered in San Francisco. Matson is the principal carrier of containerized
cargo and automobiles between the U.S. Pacific Coast and Hawaii, with a fleet of
four container ships and four combination container/trailer ships in regularly
scheduled service between Hawaii and Los Angeles, Oakland and the U.S. Pacific
Northwest. The service includes transshipment of cargo by three barges operating
between Honolulu and the islands of Hawaii, Maui and Kauai. Matson also
operates a container barge between Honolulu and several mid-Pacific islands. In
1994, Matson launched a new coastwise service using one container ship that
operates along the West Coast. Matson's other ocean transportation subsidiaries
offer stevedoring and terminal services, intermodal services and harbor tug-boat
services.
Matson's mission is to be a customer's preferred provider of cargo
transportation services by offering a high-value service characterized by
reliability, frequency and ease-of-use.
Operating Results
In 1994, ocean transportation operations provided 50 percent of A&B's revenue
and 61 percent of its operating profit. For explanations of year-to-year
changes in results, please refer to Management's Discussion and Analysis
beginning on page 29.
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
(in thousands)
<S> <C> <C> <C>
Revenue $604,754 $551,687 $537,669
Operating
Profit* 97,319 91,194 97,195
</TABLE>
* Before interest expense, corporate expense and income taxes
Hawaii Cargo Volume
In 1994, total containerized freight reached a record level for Matson, up
four percent from 1993. Over the past ten years, Matson's containerized freight
carriage has grown at an annual compound rate of five percent.
Total Hawaii cargo carriage for the past three years was:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- --------
(in thousands)
<S> <C> <C> <C>
Freight
(TFEUs*) 241,000 232,000 236,000
Automobiles 117,000 109,000 111,000
</TABLE>
* Twenty-four foot equivalent units
Westbound container volume surpassed 1993's record high by two percent.
1994's record numbers were primarily due to the April Teamster's strike that
shut down the operations of Matson's major competitor for 24 days. Eastbound
container volume rose nine percent over 1993, due in part to increases in
household goods shipments and the return of other carriers' empty containers.
Automobile volume increased seven percent in 1994, marking a notable gain,
but nevertheless was lower than the record years of 1990 and 1991. The decrease
from those years is attributable to the curtailment of manufacturers' incentives
for rental-car fleet purchases in late 1991.
[Graphs: Ten year freight (TFEUs) showing growth from slightly more than 150,000
TFEUs in 1985 to the 1994 level of 241,000 TFEUs; Ten year automobile volume
showing growth from approximately 69,000 units in 1985 to 117,000 in 1994.]
1994 Progress
The April Teamster's strike required Matson to meet virtually all of Hawaii's
ocean transportation needs and resulted in record or near-record freight volumes
on Matson vessels for nearly six weeks. Freight capacity was greatly enhanced by
recent fleet improvements. Matson's newest container ship, the MV R. J.
Pfeiffer, built in 1992, carried a record for the Company's fleet: 1,369
containers. The newly converted "open top" (i.e., without hatch covers)
vessels, SSs Maui and Kauai, sailed with maximum loads, with container capacity
that was more than ten-percent greater than it had been before their conversion.
In some cases, containers were stacked 11 high. Matson's ability to handle the
surge in freight efficiently also benefited from its terminal and intermodal
subsidiaries; in many instances, freight was moved by rail or truck to alternate
Matson West Coast facilities in order to make the earliest departure for Hawaii.
In August 1994, the State of Hawaii's Senate and House of Representatives issued
two separate proclamations commending Matson for its success in carrying the
wide range of commodities needed by the State without any disruption to the
regular flow of goods.
In 1994, Matson completed the largest computer software system development
that the Company has ever undertaken. The project exemplifies Matson's ongoing
commitment to applying technological innovations to improve its operations and
provide better service to its customers.
In the past decade, information systems, transportation technology and the
growth of intermodalism have allowed Matson to create a transportation network
that can pace the flow of freight effectively to meet customers' precise
distribution needs. Today, Matson provides many of its customers with fully
integrated logistics services that involve the Company in the entire
transportation process, from point of origin to destination. Matson's
centralized Customer Service Center in Los Angeles dramatically simplifies for
customers the task of making arrangements for ocean, truck and rail services,
and for equipment needs.
Matson was distinguished with two honors in 1994 that ranked its Hawaii
service among the best in the industry by logistics professionals. Matson
received a Transportation Quality Award from Traffic Management magazine for the
second straight year, obtaining the highest overall rating for ocean carriers.
This rating was based on results from a national quality survey that asked
readers to rate carriers in five key performance areas: price, on-time
delivery, customer service, damage/claim record and financial stability. Matson
also was named a 1994 Quality Carrier by Distribution magazine, based on
responses from a survey conducted by the publication.
Matson subsidiaries continued to grow in 1994 and benefit from new customer
accounts. Matson's contract stevedoring subsidiary, Matson Terminals, Inc.
(MTI), experienced gains in both earnings and asset utilization in 1994. Matson
Intermodal System, Inc. (MIS) increased its contribution to operating profit,
largely by combining its intermodal services with MTI's stevedoring services to
provide customers with an attractive strategic partner. These customer accounts
represent Matson's increased focus on building strategic alliances with
international carriers by offering a variety of services.
Consistent with this strategy, Matson launched its new Pacific Coast Shuttle
service in July 1994. With the completion of Matson's two-ship "open top"
modification project, the reserve vessel, S.S. Manulani, could be employed in a
service that operates between Los Angeles and the Pacific Northwest ports of
Seattle and Vancouver, British Columbia. The three primary markets the Pacific
Coast Shuttle targets are: feeder service for other ocean carriers under
connecting carrier agreements, domestic cargo moving between California and
Washington, and U.S. foreign commerce (primarily moving between Vancouver, B.C.
and Southern California).
Matson currently has 28 connecting carrier agreements signed. Eleven of these
are with companies that are among the world's largest ocean carriers. Both
transit times and freight rates for the service are competitive with rail and
truck transportation alternatives. At year end, the new service was approaching
break-even.
New labor contracts were signed in 1994 with the unlicensed offshore unions,
Marine Engineers and Beneficial Association, American Radio Association and
Masters, Mates & Pilots. International Longshoremen's and Warehousemen's Union
bargaining-unit agreements in Hawaii also were ratified in 1994.
In 1995, negotiations commence for machinists unions in Northern and Southern
California. Matson feels confident that the upcoming negotiations will result in
a satisfactory outcome and does not anticipate any disruption of service.
Shipping Rates
On November 17, 1994, Matson filed a 3.8-percent general rate increase that
became effective on January 22, 1995, as scheduled. In the ten-year period
ending in 1994, Honolulu's Consumer Price Index has risen 59 percent, the U.S.
CPI has risen 43 percent, while Matson's rates have increased just 21 percent.
Issues, Plans to Address Them
o Maritime Reform Legislation -- Congress adjourned on October 8, 1994
without passage of maritime reform legislation. The proposed maritime
reform bill provided for a new system of subsidy payments for American
ships sailing in international commerce and included specific protections
to ensure that domestic carriers, like Matson, would not be put at a
competitive disadvantage by subsidy recipients. The House passed the
Administration-sponsored bill, but it was never subjected to a vote in the
Senate. It is expected that maritime reform legislation will be
reintroduced in 1995, but identifying an acceptable funding source for the
program will remain a major obstacle to enactment. Matson continues to
support efforts to develop a new, comprehensive maritime policy, and will
remain actively involved in these efforts.
o Competition -- Matson remains the premier carrier in the trade, principally
due to its commitment to customer service. This is evidenced by Matson's
competitive advantages in number of sailings, on-time arrivals, capacity,
variety of container equipment and other unique services.
Operating Profit Outlook
In 1995, Matson expects freight volume to be comparable to 1994. Though
1994's container volume was inflated by a non-recurring surge that resulted from
the Teamster's strike, other factors such as an improving Hawaii economy should
result in Matson performing close to 1994's record highs. Earnings also should
benefit from the continued growth of the Pacific Coast Shuttle service and
improved subsidiary performance due to growth of customer accounts at MTI and
expansion of MIS' business.
[Ocean Transportation section photo captions: (1) C. Bradley Mulholland, Presi-
dent and Chief Executive Officer, Matson Navigation Company, Inc. (2) Opposite
page: Matson's flagship, MV R.J. Pfeiffer, carried record cargo during the April
Teamster's strike. The strike resulted in record or near-record freight volumes
on Matson vessels for nearly six weeks. (3) Matson Intermodal System, Inc. pro-
vides Matson with the most efficient and economical truck and rail services
available. MIS continues to expand its business, particularly with shipping
companies already utilizing other services of Matson or its subsidiaries.
(4) Top & Bottom Left: Matson's Hawaii service is distinguished by the diversi-
fied commodities it carries, ranging from large rolling stock, such as the city
of Honolulu's "The Bus," to eastbound goods, such as the growing market of
floriculture and nursery products. (5) Above: Matson's Pacific Coast Shuttle
service underscores the Company's ongoing focus on seeking ways to improve asset
utilization and to expand its earnings base. The new service required little
capital investment because it utilizes existing personnel, information systems,
West Coast terminals and the former reserve vessel, S.S. Manulani.]
<PAGE>
MATSON LEASING
Segment Description
Marine container leasing operations of A&B are conducted by Matson Leasing
Company, Inc. (Matson Leasing), a wholly owned subsidiary of Matson.
Headquartered in San Francisco, Matson Leasing has established itself as one of
the premier marine container lessors in the world since beginning operations in
1989. Matson Leasing has 12 offices in North and South America, Europe, Asia,
and Australia, utilizing 92 depot locations worldwide.
Matson Leasing leases standard, dry cargo twenty-foot and forty-foot steel
containers, the predominant type of containers in use worldwide. At year-end
1994, approximately 112,000 containers were employed by Matson Leasing.
Expressed in twenty-foot equivalent units (TEUs), the fleet numbered
approximately 160,000 TEUs.
Matson Leasing's long-range goal is to be a mid-sized container lessor, which
will allow a balance of economies of scale with flexibility. It has and will
continue to differentiate itself from competitors by providing superior,
technologically-enhanced service and by remaining selective about which
customers and markets to serve. Matson Leasing is one of the industry's most
efficient leasing companies, which is important in the scale-driven container
leasing industry. When coupled with A&B's corporate strengths, Matson Leasing's
reputation for reliability and a service-driven culture make it an attractive
long-term partner for its customers.
Matson Leasing's customers are primarily international ocean carriers. By
year-end 1994, Matson Leasing had long-term and master leases with over 170
companies. Matson Leasing's top-ten customers accounted for approximately 42
percent of the Company's revenue, with no customer representing more than ten
percent of Matson Leasing's revenue.
With lessees frequently searching for alternatives in the container leasing
industry, Matson Leasing seeks to be the lessor of choice. Matson Leasing
provides a highly responsive and consistent service that reinforces its
commitment to be a long-term partner with its customers. Matson Leasing also
offers considerable value by providing additional services, such as management
informationproducts and maintenance cost containment programs that lower its
customers' overall cost of doing business.
Operating Results
In 1994, container leasing operations provided five percent of A&B's revenue
and ten percent of its operating profit. For explanations of year-to-year
changes in results, please refer to Management's Discussion and Analysis
beginning on page 29.
<TABLE>
<CAPTION>
1994 1993 1992
------- -------- -------
(in thousands)
<S> <C> <C> <C>
Revenue $64,132 $55,662 $50,468
Operating Profit* 16,604 13,047 12,509
</TABLE>
* After interest expense, before corporate expense and income taxes
1994 Progress
Demand for leased containers improved in 1994. Part of this positive shift
was due to the increase in worldwide containerized trade of an estimated eight
percent, compared with just a four percent growth rate between 1992 and 1993.
Containerized trade in 1995 is expected to grow at seven percent, as the world's
major trading economies continue to improve modestly overall.
The upward trend in demand was reflected in Matson Leasing's utilization
rate, which averaged 88 percent in 1994, posting significant gains from 1993's
83 percent. Uncertain market conditions pushed rates lower early in 1994 but, by
year-end, rates had stabilized and demand had strengthened.
Matson Leasing added over 11,000 new containers to its fleet in 1994,
representing over 15,000 TEUs. These acquisitions increased fleet size in 1994
by 11 percent over 1993. A significant fleet expansion program also is planned
for 1995.
In only five years, Matson Leasing has established a worldwide network of
area offices. In 1994, a new office was opened in Rio de Janeiro, Brazil and an
agent was appointed in South Africa. Matson Leasing now has direct
representation in virtually every major trading area in the world.
Matson Leasing continues to develop value-added information systems, which
will provide a platform for improving overall customer service. Since it was
formed in 1989, Matson Leasing has been at the forefront in implementing
Electronic Data Interchange (EDI) for both fleet management and customer service
purposes. Matson Leasing is a founding member of the Concord EDI Group, a trade
association of leasing companies, steamship lines, depot operators, survey
companies and industry- related service providers. The Concord EDI Group's
objective is to provide a forum for the international intermodal transportation
industry to discuss and develop EDI guidelines.
The proprietary Mat-Flex system, introduced in 1993, allows customers to
design the manner in which billing information is displayed, making coordination
with customers' data systems much easier. A new Customer Access system provides
comprehensive information about Matson Leasing containers on lease to customers.
These innovations have helped Matson Leasing further its goal of becoming the
leader in the use of technology to enhance customer service.
Matson Leasing continues to strive to be the most efficient lessor in the
industry by maintaining a highly automated, streamlined organization. In the
container leasing industry, a key measure of efficiency is TEUs per employee.
Matson Leasing continues to outperform its counterparts in this measure, with
only 67 employees at year-end.
Issue, Plans to Address It
o Global Trade Imbalances -- Despite the assumptions of continued reasonable
growth in demand, Matson Leasing and the industry will be challenged to manage
changing global imbalances in trade successfully. A number of economies are
emerging from recessions. The resulting shifts in trade patterns and container
flows require careful inventory management. Japan, for example, is currently
emerging from a recession and expectations are that the container trade
imbalance into Japan will grow.
Operating Profit Outlook
Stronger container leasing fundamentals bode well for Matson Leasing in 1995.
Utilization rates should continue to rise, although moderately. Lease rates also
are expected to rise in 1995, as they traditionally lag increases in
utilization. Similary, fleet expansion planned for 1995 should result in
further gains in Matson Leasing's market share. Mitigating the above positive
factors will be the impact of increased interest rates. Considering all these
factors, Matson Leasing expects modest gains in operating profit in 1995.
[Container Leasing section photo captions: (1) Matson Leasing's reputation in
the international containerized trade has contributed greatly to Matson's
ability to build strategic alliances with international carriers. Blue Star
Line is an example of a carrier that is a customer of Matson Leasing, as well
as of Matson Terminals and Matson Intermodal System. (2) Left: Frederick M.
Gutterson, President and Chief Executive Officer, Matson Leasing Company, Inc.
(3) Right: Matson Leasing's international presence extends to even remote loca-
tions such as Ayutthaya, the capital of ancient Siam. (4) Left: Matson Leasing,
which celebrated its fifth anniversary in 1994, has established itself as one of
the premier container lessors in the world. Matson Leasing containers today are
seen in all major international trading areas, such as Hong Kong.
(5) Right: Matson Leasing's new Customer Access system is the Company's latest
technological innovation to improve customer service. Matson Leasing remains an
industry leader in information systems, particularly in the development of
Electronic Data Interchange (EDI).]
<PAGE>
ABHI
The property development and management and the food products operations of
Alexander & Baldwin, Inc. (A&B) are conducted by A&B-Hawaii, Inc. (ABHI). ABHI's
operations extend from the cultivation of sugar cane in the fertile central
valley of Maui to refining and distributing sugar throughout the Western United
States, and from the development of master-planned communities in Hawaii to the
management of prime commercial, light industrial and retail properties on the
Mainland.
ABHI is responsible for the stewardship of some of A&B's most valuable
assets, its extensive landholdings in Hawaii. In all of its property-related
activities, both in Hawaii and elsewhere, A&B strives to be a responsible
steward of the land, employing its landholdings at their highest and best use,
consistent with community needs.
The extent and nature of the Company's landholdings dictate that, for the
foreseeable future, the highest and best use of the vast majority of its land is
for agriculture and conservation. ABHI's own agribusiness operations utilize
47,000 acres of land for sugarcane and coffee cultivation. Because sugar cane
currently is the best crop for a large percentage of the cultivatable land, A&B
is committed to improving the efficiency of those operations.
In 1993, A&B purchased, through ABHI, the portion of California and Hawaiian
Sugar Company, Inc. (C&H) that it did not already own. C&H refines raw cane
sugar in the San Francisco Bay Area and in Hawaii, and distributes industrial
and grocery products throughout the Western United States. This purchase
allowed ABHI to move closer to consumers, with the potential for creating and
capturing additional value for shareholders.
Property Development and Management
Segment Description
The property development and management activities of A&B are conducted by
ABHI and its subsidiary, A&B Properties, Inc. At year-end 1994, A&B owned
approximately 92,900 acres of land, including 68,900 acres on Maui, 21,900 acres
on Kauai, and 2,100 acres elsewhere. An additional 17,900 acres on Maui and
Kauai were leased from others. Approximately 92,100 acres of land owned by A&B
are planted in sugar cane and coffee or employed in other agricultural,
conservation or related uses. Currently, about 810 acres are fully zoned for
urban use. Of the 92,100 acres now zoned for agriculture or conservation, 1,350
acres are designated for urban use, and an estimated 9,800 acres in Hawaii and
1,800 acres on the Mainland have foreseeable development potential.
The combination of the large amount of land that the Company owns and the
location of that land provides A&B the opportunity to serve growing residential,
commercial and industrial markets on Maui and Kauai. Current uses of A&B land
vary from watershed and conservation areas to master-planned communities, and
from shopping malls and traditional residential developments to leased
commercial properties.
Four directional statements guide the activities of A&B Properties:
o Maintain an appropriate, market-oriented pace of entitlements, and related
development activity;
o Provide new sources of recurring income and cash flow through leasing;
o Redevelop existing properties in the Company's portfolio, when appropriate,
to ensure they are maintained at their highest and best use; and
o Develop and maintain a geographically diversified portfolio of commercial,
industrial and residential properties.
Operating Results
In 1994, property development and management operations provided eight
percent of A&B's revenue and 27 percent of its operating profit. For
explanations of year-to-year changes in results, please refer to Management's
Discussion and Analysis beginning on page 29.
<TABLE>
<CAPTION>
1994 1993 1992
------ ------- -------
(in thousands)
<S> <C> <C> <C>
Revenue:
Leasing $33,387 $32,606 $30,386
Sales 60,767 32,559 27,529
------- ------- -------
Total $94,154 $65,165 $57,915
======= ======= =======
Operating Profit:*
Leasing $23,163 $22,975 $21,357
Sales 18,522 18,570 16,820
------- ------- -------
Total $41,685 $41,545 $38,177
======= ======= =======
</TABLE>
* Before interest expense, corporate expense and income taxes;
after Hurricane loss in 1992
1994 Progress
Entitlements
Work to obtain entitlements for urban use in 1994 focused on: A&B's
Kukui'ula development on Kauai, the proposed master-planned community at Pilot
Hill Ranch in California and the Company's continued participation in the update
of Maui's Community Plans.
In late 1993, a petition was filed for reclassification to urban use of 822
additional acres at Kukui'ula. Public hearings on the petition held by the State
Land Use Commission concluded in early 1995. During these hearings, both the
State of Hawaii and the County of Kauai testified in support of the Kukui'ula
project. A decision by the State Land Use Commission is expected by the end of
April. Should the petition be granted, County-level zoning of approximately 500
of these acres will be pursued. This acreage would be added to the approximately
220 acres for which State and County approvals already have been received, to
comprise the first phase of residential development of Kukui'ula.
Pilot Hill Ranch, an 1,800-acre parcel in El Dorado County, California,
approximately 40 miles northeast of Sacramento, is intended to be developed as a
master-planned residential community. El Dorado County currently is updating its
General Plan. The immediate entitlement objective is to have the project's
proposed land uses designated in the General Plan. The County is expected to act
on the Plan during 1995.
The Company also continues to pursue numerous projects as part of the current
ten-year update of the County of Maui's Community Plans. Community Plans in
Hawaii generally are the first step in the lengthy governmental land-approval
process, and they are intended to create a "blueprint" for planned development
activity over the following decade. A&B is seeking various urban designations
for its undeveloped lands within the four of nine County Plan regions where the
Company's lands are located. It is not yet known, however, which or how many of
these new designations will be approved.
Development
A&B development activity in 1994 centered around the Company's efforts in
Kahului, Maui.
The cornerstone of this activity is the 76-acre first phase of Kahului
Industrial Park, a light industrial/commercial business park ideally located
near Maui's primary airport and harbor. Construction bids have been received
and will be evaluated during the first quarter of 1995. Construction should
commence in mid-1995 and is expected to be completed by year-end 1996. Initial
sales activity will commence in late 1995 or early 1996, with a seven- to ten-
year absorption period for the first phase.
The Company is pursuing exciting retail opportunities in Kahului as well. A
13-acre, A&B-owned site, originally leased to Sam's Club, has been transferred
to PriceCostco, Inc. Costco plans to open a 134,000 square-foot retail facility
in mid-1995. Across the street, construction of the 28,000 square-foot first
phase of a factory outlet center at Triangle Square will be completed in early
1995. Construction of Triangle Square's second phase, comprising five buildings
totaling 80,000 square feet, should commence in mid-1995.
Residential developments on Maui include Kahului Ikena, a 102-unit market-
priced townhouse project in Kahului, and various Maui agricultural lot
subdivisions. Completion of Kahului Ikena should occur in mid-1995. ABHI is
examining whether to market this residential project on a rental basis or as
condominiums. Other residential sales activity in 1995 will come from Haiku
Mauka, a 39-lot agricultural subdivision.
Development activity also continued on the Company's five-lot industrial
subdivision at Port Allen on Kauai. Sales of these lots are expected in 1995.
Sales Activity
Large Parcel and Improved Property Sales
1994 sales included a number of key properties in the Company's development
and leasing portfolios. In November, the Company sold to a sports apparel
retailer, for $17.8 million, a 19.4-acre industrial parcel in Aiea on Oahu, that
it originally acquired from C&H. In December, ABHI sold Crockett Ranch, a large
California parcel also acquired from C&H, to the East (San Francisco) Bay
Regional Park District for $3.2 million. Finally, in December 1994, ABHI sold
Arapahoe Marketplace, a 192,000 square-foot retail shopping center located in
Greenwood Village, Colorado, to an institutional investor for approximately $21
million.
Improved Lot Sales
Also in Kahului, in 1994, ten lots in the Kamehameha Parkway Industrial
Subdivision, encompassing 4.4 acres, were sold for $6.1 million. Three of the
remaining four lots were sold in January 1995.
Subdivision Sales
In 1994, seven lot sales in Haiku Mauka were closed, at an average price of
about $182,000. Six lot sales were made in January 1995, with 24 lots remaining
to be sold.
In addition, the last five lots at Haiku Hill, a 37-lot agricultural
subdivision, were sold early in 1994.
On Kauai, sales activity continued at Eleele Nani II, the Company's mixed use
housing project. In 1994, eight of 17 market-priced lots were sold. In addition,
20 lots were sold to the County of Kauai for inclusion in its affordable housing
program.
Leased Property Portfolio
Hawaii Portfolio
The Hawaii leased property portfolio continued to perform according to
expectations. Occupancy remained high, averaging 92 percent over the course of
the year, despite significant vacancies at Kahului Shopping Center in
anticipation of its planned redevelopment.
Mainland Portfolio
Arapahoe Marketplace was the first property sold since the Company's
significant Mainland property investments were made in 1989-90. During the five
years in which A&B owned Arapahoe, the property's tenant mix was upgraded
significantly. The value created in this process was recognized both through
higher lease rents and a significant profit on the sale of the property.
The Mainland portfolio continued its strong overall performance. Occupancy
averaged 97 percent during the year, reaching an all-time high of 99 percent by
October 1994. Lease rents firmed in practically all markets.
Issues, Plans to Address Them
o Kukui'ula -- The Kauai economy has yet to recover from Hurricane Iniki's
effects. Some major hotels remain closed. Unemployment is in excess of 12
percent. The physical effects of the storm have required revisions to
Kukui'ula's master plan and to the existing zoning for the project's
original 220-acre first phase. The most prudent course of action is to wait
for some signs of economic recovery while completing the rezoning process.
Consequently, construction activity at Kukui'ula will remain suspended
during 1995.
o Replacement of Arapahoe -- Arapahoe Marketplace contributed over 13
percent of Mainland leasing operating profit. Management plans to replace
the property in the portfolio, using a tax-deferred real property exchange.
Potential replacement sites across the Western United States have been
visited, and a number of attractive opportunities have been
identified.Replacement property is expected to be acquired by mid-1995.
Operating Profit Outlook
Property leasing revenue and operating profit are both expected to be
modestly higher in 1995 than in 1994. A portion of the leased property portfolio
will post lower results, due to the sale of Arapahoe Marketplace and the
redevelopment of Kahului Shopping Center. Higher lease rates elsewhere and the
planned opening of Costco and Triangle Square, however, should more than offset
these decreases. Property sales in 1995 are expected to be lower because it will
be difficult to replicate the major sales in the fourth quarter of 1994, given
the current inventory of salable properties.
The importance of 1995 property development and management activities to the
Company's future, however, should not be underestimated. During the year,
important groundwork will be completed for revenue to be generated during the
next ten years. Kahului Industrial Park's initial sales, the Kukui'ula rezoning,
the entitlement of Pilot Hill Ranch and progress on the Maui Community Plans all
represent near-term actions with the potential for creating significant long-
term value.
[Property Development and Management section photo captions: (1) W. Allen Doane,
Executive Vice President and Chief Operating Officer, A&B-Hawaii, Inc.
(2)Opposite page: Although Maui's beauty is known to many who arrive via
Kahului Airport (upper right) to vacation there, the economic heart of the
island is the town of Kahului. A&B land and developments in and around that
area are used for a wide, and growing, variety of agricultural, industrial,
commercial and residential purposes. (3) Property development and sales in
Hawaii during 1994 included construction on Maui of Phase I of a factory outlet
center (left) and sale on Oahu of an old C&H refinery and surrounding land
(right). (4) A&B Properties' Mainland portfolio contributes about half of all
leasing income. The Company's Great Southwest property in the Dallas area (top)
benefited in 1994 from the region's growth as a major distribution center.
Arapahoe Marketplace near Denver (bottom) exemplifies A&B Properties' ability to
add value to an existing asset by upgrading the tenant mix, and then realizing
the added value by selling the property.]
<PAGE>
Food Products
Segment Description
ABHI's food products segment includes the agribusiness operations of Hawaiian
Commerical & Sugar Company (HC&S) on Maui and McBryde Sugar Company, Limited
(McBryde) on Kauai, as well as the sugar refining and marketing operations of
C&H. A&B remains the largest sugar producer in Hawaii, producing about 34
percent of the State's total crop in 1994. ABHI's plantations produce raw sugar,
molasses, coffee and salable electric power. C&H, the largest sugar refiner in
the Western United States, supplies about ten percent of the refined sugar
produced in the country to consumer and industrial markets.
A&B remains committed to a healthy and efficient agricultural industry in
Hawaii. The company has adopted a three-part strategy to guide its food products
operations:
o Lay the ground work for long-term operating success at C&H through capital
improvements to the refinery, investments in and extension of the C&H
brand, and examination of marketing opportunities throughout North America,
while taking other initiatives to reduce operating costs and increase
efficiency;
o Invest in Hawaii's sugar industry through the expansion of cultivated
acreage, and improvements in operating technology and agronomy at HC&S; and
o Achieve long-term, large scale diversification of agricultural operations
through the coffee initiative at McBryde.
Operating Results
In 1994, food products operations provided 37 percent of A&B's revenue. The
operating loss in the segment totaled $418,000. For explanations of year-to-year
changes in results, please refer to Management's Discussion and Analysis
beginning on page 29.
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- --------
(in thousands)
<S> <C> <C> <C>
Revenue $441,209 $304,007 $104,053
Operating Profit:*
Before Hurricane
Loss (418) 12,692 (2,272)
After Hurricane
Loss (418) 12,692 (26,175)
</TABLE>
* Before interest expense, corporate expense and income taxes
1994 Progress
C&H
1994 was a difficult year for C&H. Ineffective administration of sugar price
supports and an excess supply of beet sugar created a challenging operating
environment for the sugarcane refiner. Relatively high raw cane sugar prices
combined with low prices for refined sugar products to destroy normal margins.
During the year, however, a number of initiatives were undertaken which should
lead to short-term improvements in operating results and enhancement of long-
term profitability.
Work began early in the year on the construction, by a third party, of a 240
megawatt cogeneration plant adjacent to the C&H refinery at Crockett,
California. When operational, the plant will use natural gas to produce steam
and electricity. The steam will be used to power the C&H refinery, significantly
reducing energy costs. Construction progressed throughout 1994, and the facility
is expected to begin operations in mid-1996.
C&H's new liquid sugar refinery at Aiea, Oahu started operations in 1994. The
plant supplies liquid sweeteners to industrial customers in Hawaii.
Introduction of this high-tech plant allowed for the closure, and subsequent
sale, of the old C&H refinery and surrounding land, and for substantial cost
savings.
Improvements also were started on C&H's Crockett refinery. Additional
capacity to handle foreign raw sugar was installed, while several packaging
lines are being upgraded to adjust to changing consumer demand. Opportunities
for both geographic expansion and product-line extensions were identified and
pursued in 1994. Aggressive cost-cutting and staff reductions were
accomplished. These and other initiatives will be pursued further in 1995.
Agribusiness
Sugar - Sugar production at HC&S was 12.5 tons sugar per acre (TSA), higher
than the 12.3 TSA attained for the same fields in 1992, but lower than the 13.4
TSA achieved in 1993. In an effort to improve yields further, HC&S is
evaluating its agronomic practices, including a critical review of
fertilization, cultivation and irrigation practices. In addition, planting of
new higher-yielding cane varieties is being accelerated. At McBryde, sugar
operations struggled. An anticipated recovery in yields from the relatively low
levels of the hurricane-damaged 1993 crop did not materialize.
At HC&S, a technologically advanced ultrafiltration plant was developed,
constructed and then initially tested during the latter part of 1994. When fully
operational, this new process should increase sugar recovery at the Puunene mill
by one and one-half percent, increasing production by more than 3,000 tons. A
second phase, which could quadruple the increase, currently is being evaluated.
The Puunene mill is the larger and more modern of two mills at HC&S, and
processes about two-thirds of the cane grown on the plantation.
In December, an agreement was reached to lease 1,300 additional acres of
land. Cultivation of about 500 of these acres in sugar cane will begin
immediately, with the first harvest expected for late 1996. This and subsequent
plantings eventually will add over 7,000 tons to HC&S' production, further
reducing unit costs.
Coffee - While progress was made on several fronts in coffee operations at
McBryde, the overall results of the year reflected the developmental nature of
the coffee crop. The amount of green coffee produced was significantly higher,
and the quality of the crop improved, but per-acre recovery rates remained
relatively low. The launch of a roasted and packaged product in Hawaii was
successful. The Company is marketing the remainder of the crop on the Mainland
and in Japan in whole bean form. The larger crop and better quality have
attracted buyers' interest. Production is expected nearly to double during the
1995 season.
Agribusiness operating statistics for the past three years were:
<TABLE>
<CAPTION>
1994 1993 1992
---------- ------- -------
<S> <C> <C> <C>
Raw sugar produced (tons) 223,000 240,000 216,000
Molasses produced (tons) 67,000 68,000 57,000
Electricity sold
(megawatt hours) 122,000 118,000 114,000
Green coffee produced
(pounds) 1,365,000 550,000 450,000
Cultivated acreage:
Sugar 43,000 43,000 43,000
Coffee 4,000 4,300 4,850
</TABLE>
Issues, Plans to Address Them
o Farm Bill -- An effective domestic sugar program must ensure a fair price
to consumers and fair returns to producers. A&B is working with sweetener
industry groups to ensure that such a program is included in the upcoming
renewal of U.S. agricultural programs.
o Labor Contract Renegotiations -- On January 31, the collective bargaining
agreement between the Hawaii sugar growers and the International Longshore-
men's and Warehousemen's Union (ILWU) Local 142 expired. In addition, C&H's
agreements with the Sugar Workers Union and the ILWU expire on May 31,
1995. The uncertain market outlook and the currently weak financial
situation of the businesses that make up the food products seg-ment,
combined with less than robust economies in both Hawaii and California, all
point to a difficult negotiating environment.
o McBryde Operations -- On Kauai, the McBryde plantation continues to
struggle. Sugar operations at this plantation are hindered by their small
size and historically poor yields, while coffee has yet to prove its
potential. During 1994, a number of operating alternatives for McBryde were
being evaluated to improve the plantation's outlook. This work continues in
1995.
Operating Profit Outlook
It appears that 1995 will be another year which presents a challenging
operating environment for the food products segment. At C&H, short-term margin
pressure, which subsided only slightly with the implementation of marketing
allotments by the U.S. Department of Agriculture in late 1994, is expected to
continue. While HC&S is taking steps to remain cost competitive, McBryde's
future success undoubtably will require significant changes in its operations.
The challenges posed by currently unfavorable market conditions, labor
negotiations and reconsideration of the farm bill could make 1995 another
difficult year for ABHI's food products operations.
[Food Products section photo captions: (1) Top: HC&S' technologically advanced
ultrafiltration plant utilizes a new process that will increase sugar recovery
and, concurrently, increase the quality of sugar produced. (2) Bottom: Infor-
mation systems improve the efficiency of C&H's refinery operations at Crockett.
In the pan control room, all functions are monitored centrally. (3) Top: C&H's
Crockett sugar refinery is ideally located for distribution purposes, as it is
part of a deep water port, and next to a major rail line and an interstate high-
way. (4) Bottom: David G. Koncelik, President and Chief Executive Officer,
California and Hawaii Sugar Company, Inc. and Jon A. Wolthuis, Vice President,
Refinery Operations, at C&H's Crockett facility, where a new 240 megawatt
cogeneration plant is under construction. Steam from the new plant will reduce
significantly C&H's energy costs. (5) A display of ABHI's food products (top)
includes C&H refined sugar, Kauai Coffee and Maui brand washed raw sugar. Pack-
aging (bottom) of ABHI's newest food product, Kauai Coffee, which was marketed
for the first time during 1994.]
<PAGE>
General Information
[Photo caption: A&B's Board of Directors (clockwise) John C. Couch, Maryanna G.
Shaw, Walter A. Dods Jr., Carson R. McKissick, Charles M. Stockholm, Charles G.
King, Alexander C. Waterhouse, Michael J. Chun, Leo E. Denlea Jr., Robert G.
Reed III, C. Bradley Mulholland, R. J. Pfeiffer.]
Board of Directors
Members of the current Board of Directors, including one advisory director,
beneficially own approximately ten percent of A&B shares.
At the Annual Meeting of Shareholders on April 28, 1994, shareholders elected
a total of 11 directors, all of whom were nominated by the Board. Re-elected
were Michael J. Chun, John C. Couch, Leo E. Denlea Jr., Walter A. Dods Jr.,
Charles G. King, Carson R. McKissick, C. Bradley Mulholland, R.J. Pfeiffer,
Robert G. Reed III, Maryanna G. Shaw and Charles M. Stockholm. Alexander C.
Waterhouse serves as an advisory director at the pleasure of the Board.
Management, Organization
Frederick M. Gutterson, vice president of Matson, became senior vice
president of Matson on April 28, 1994. He remains president and chief executive
officer of Matson Leasing Company, Inc.
Joseph G. LeClair, senior vice president of Matson, retired, effective August
1, 1994.
Norbert M. Buelsing was named vice president, property management, of ABHI,
effective August 25, 1994.
Branton B. Dreyfus was named vice president and area manager, Southern
California, of Matson, effective December 15, 1994.
Alyson J. Nakamura became secretary of ABHI, on June 22, 1994.
Common Stock
A&B common shares trade under the symbol ALEX on The NASDAQ Stock MarketSM. A
summary of daily stock transactions is listed in the NASDAQ National Market
Issues section of major newspapers. Trading volume averaged 85,594 shares a day
in 1994, compared with 99,569 shares a day in 1993 and 94,461 in 1992.
Currently, 15 firms make a market in ALEX.
High and low sales prices per share, by quarter, for 1994 and 1993 were:
<TABLE>
<CAPTION>
Quarter 1994 1993
------- ----------------- -----------------
<S> <C> <C>
First $ 28 1/4 - 24 5/8 $ 24 3/4 - 22 1/2
Second 26 1/4 - 23 3/4 28 - 23 3/4
Third 26 3/4 - 24 3/4 27 1/4 - 23
Fourth 26 - 21 1/4 26 3/4 - 23
</TABLE>
Dividends
A&B strives to pay the highest possible dividends commensurate with operating
and capital needs. The Company has paid cash dividends in every quarter since
1903. The quarterly dividend rate last was increased in the second quarter of
1990, from 20 cents a share to 22 cents.
Credit Ratings
As discussed in Note 6 to the financial statements, Matson has outstanding
commercial paper notes and revenue bonds aggregating approximately $239 million.
The issues are rated by the major credit rating agencies. The long-term bonds
are rated A+ by Standard & Poor's, and the commercial paper notes are rated A-
1/P-1/D-1 by Standard & Poor's, Moody's, and Duff & Phelps, respectively.
C&H has outstanding commercial paper aggregating approximately $72 million.
The commercial paper notes are rated A-1/P-2 by Standard & Poor's and Moody's,
respectively.
[Graphs: (1) "Year-End Stock Price Plus Dividends Per Share," 1984 through 1994,
data included in the "Eleven-Year Summary of Selected Financial Data."
(2) "Stock Price Range by Quarter," 1993 and 1994 data shown above.]
Quarterly Results (Unaudited)
<TABLE>
<CAPTION>
Segment results by quarter for 1994 and 1993 are listed below
(in thousands, except per-share amounts)
1994 1993
--------------------------------------- -------------------------------------
4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr. 2nd Qtr. 1st Qtr.
------- ------- ------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Ocean transportation $154,318 $154,542 $159,403 $136,491 $142,627 $137,915 $139,255 $131,890
Container leasing 17,623 16,430 15,466 14,613 14,862 13,977 13,488 13,335
Property development
& management:
Leasing 8,322 8,298 8,315 8,452 7,989 8,198 8,118 8,301
Sales 45,940 2,136 4,082 8,609 11,072 1,772 7,612 12,103
Food products 133,569 118,983 103,209 85,448 120,315 120,188 43,470 20,034
Other 1,748 697 666 805 772 707 715 751
------- ------- ------- ------- ------- ------- ------- -------
Total revenue $361,520 $301,086 $291,141 $254,418 $297,637 $282,757 $212,658 $186,414
======= ======= ======= ======= ======= ======= ======= =======
Operating Profit:
Ocean transportation $23,322 $22,114 $29,591 $22,292 $22,795 $21,317 $24,858 $22,224
Container leasing 4,719 4,478 4,294 3,113 3,686 3,276 3,070 3,015
Property development
& management:
Leasing 5,382 5,709 5,896 6,176 4,974 5,999 5,897 6,105
Sales 9,115 748 3,124 5,535 8,458 12 2,940 7,160
Food products 1,036 (1,404) 14 (64) 7,606 4,973 1,073 (960)
Other 1,146 636 733 628 583 420 611 743
------- ------- ------- ------- ------- ------- ------- -------
Total operating profit 44,720 32,281 43,652 37,680 48,102 35,997 38,449 38,287
Interest expense 7,300 6,457 7,102 6,843 9,203 6,699 6,742 6,158
General corporate expenses 3,941 4,653 4,143 4,659 5,220 4,526 4,685 4,433
------- ------- ------- ------- ------- ------- ------- -------
Income before income taxes 33,479 21,171 32,407 26,178 33,679 24,772 27,022 27,696
Income taxes 10,528 7,359 11,473 9,267 9,958 16,910 9,661 9,651
------- ------- ------- ------- ------- ------- ------- -------
Net income $22,951 $13,812 $20,934 $16,911 $23,721 $7,862 $17,361 $18,045
======= ======= ======= ======= ======= ======= ======= =======
Earnings per share $0.50 $0.30 $0.45 $0.37 $0.52 $0.17 $0.37 $0.39
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
<PAGE>
FINANCIAL REPORT
25 Independent Auditors' Report
26 Eleven-Year Summary of Selected Financial Data
28 Industry Segment Information
29 Management's Discussion and Analysis
32 Statements of Income
33 Statements of Cash Flows
34 Balance Sheets
36 Statements of Shareholders' Equity
37 Notes to Financial Statements
INDEPENDENT AUDITORS' REPORT
TO THE SHAREHOLDERS OF ALEXANDER & BALDWIN, INC.:
We have audited the accompanying balance sheets of Alexander & Baldwin, Inc. and
its subsidiaries as of December 31, 1994 and 1993, and the related statements of
income, shareholders' equity, and cash flows for each of the three years in the
period ended December 31, 1994 (pages 28 and 32 to 43). These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Alexander & Baldwin, Inc. and its
subsidiaries at December 31, 1994 and 1993, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1994 in conformity with generally accepted accounting principles.
As discussed in Note 4 to the financial statements, in 1994 the Company changed
its method of accounting for investments to conform with Statement of Financial
Accounting Standards No. 115.
As discussed in Note 2 to the financial statements, in 1992 the Company changed
its method of accounting for postretirement benefits other than pensions to
conform with Statement of Financial Accounting Standards No. 106.
DELOITTE & TOUCHE LLP
Honolulu, Hawaii
January 27, 1995
<PAGE>
<TABLE>
<CAPTION>
Eleven-Year Summary of Selected Financial Data
(Dollars and shares in thousands except per-share amounts)
Alexander & Baldwin, Inc. and Subsidiaries
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984
---------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annual Operations:
Net sales and other
operating revenue $1,208,165 $979,466 $754,416 $748,454 $757,960 $846,318 $701,908 $655,276 $536,668 $506,311 $485,964
Deduct:
Cost of goods sold
and operating
expenses 1,067,228 837,495 621,552 590,867 561,979 513,434 495,234 470,928 409,563 399,362 388,959
Interest expense 27,702 28,802 23,881 24,575 29,602 26,965 27,406 21,104 16,042 18,453 21,449
Hurricane loss 24,803
Income taxes 38,627 46,180 23,675 44,206 58,412 107,218 61,535 62,167 575 37,051 31,926
---------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Income from
continuing
operations 74,608 66,989 60,505 88,806 107,967 198,701 117,733 101,077 110,488 51,445 43,630
Cumulative effect
of change in
accounting principle (41,551)
---------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net income $74,608 $66,989 $18,954 $88,806 $107,967 $198,701 $117,733 $101,077 $110,488 $51,445 $43,630
========== ======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Earnings per share:
Income from
continuing operations $1.62 $1.45 $1.31 $1.92 $2.34 $4.29 $2.35 $1.93 $1.97 $0.92 $0.79
Cumulative effect of
change in accounting
principle (0.90)
---------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net income $1.62 $1.45 $0.41 $1.92 $2.34 $4.29 $2.35 $1.93 $1.97 $0.92 $0.79
========== ======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Return on beginning
equity 12.7% 12.0% 3.30% 16.70% 23.50% 45.20% 31.70% 21.40% 27.90% 13.90% 12.60%
Cash dividends per
share $0.88 $0.88 $0.88 $0.88 $0.86 $0.80 $0.77 $0.68 $0.66 $0.47 $0.40
Average number of
shares outstanding 46,059 46,338 46,294 46,213 46,133 46,326 50,079 52,444 55,990 55,750 55,561
Gross profit
percentage 22.2% 25.6% 29.8% 32.4% 36.0% 48.5% 38.8% 37.2% 35.2% 33.3% 31.1%
Effective income
tax rate 34.1% 40.8% 28.1% 33.2% 35.1% 35.0% 34.3% 38.1% 0.5% 41.9% 42.3%
Market price range
per share:
High $28.250 $28.000 $30.500 $29.500 $38.000 $39.500 $36.750 $32.000 $24.500 $14.750 $13.125
Low 21.250 22.500 21.500 21.000 19.000 31.250 20.875 16.000 14.000 10.875 8.125
Close 22.250 26.750 24.750 28.250 22.250 37.500 31.500 21.625 22.500 14.250 11.917
At Year End:
Shareholders of
record 6,729 7,056 7,507 7,749 7,860 7,650 7,201 6,859 6,749 6,662 6,731
Shares outstanding 45,691 46,404 46,333 46,229 46,201 46,096 50,099 50,347 56,095 55,789 55,618
Shareholders' equity $632,614 $587,006 $559,099 $578,669 $530,298 $459,712 $439,729 $371,007 $473,283 $396,718 $370,225
Per share 13.85 12.65 12.07 12.52 11.48 9.97 8.78 7.37 8.44 7.11 6.66
Total assets 1,932,788 1,912,375 1,685,928 1,554,959 1,371,170 1,142,143 1,070,483 981,737 934,032 863,836 786,569
Working capital 71,716 72,713 45,907 26,031 51,626 34,460 35,974 42,262 67,533 87,418 86,908
Cash and cash
equivalents 9,557 32,691 21,118 18,888 47,460 23,556 22,794 26,695 34,507 56,121 65,396
Property-net 1,281,546 1,326,936 1,173,709 1,072,753 891,503 711,872 548,066 520,124 489,076 480,345 465,615
Real estate devel-
opments-noncurrent 66,371 54,919 50,977 36,362 14,156
Long-term debt-
noncurrent 526,231 582,473 555,497 457,257 320,271 200,816 178,019 174,759 96,698 99,606 102,001
Capital lease
obligations-
noncurrent 35,274 44,495 59,816 69,717 86,392 95,241 100,306 106,935 90,818 96,337 81,049
Current ratio 1.4 to 1 1.3 to 1 1.4 to 1 1.2 to 1 1.4 to 1 1.4 to 1 1.4 to 1 1.5 to 1 1.9 to 1 2.3 to 1 2.1 to 1
Capital stock
price/earnings
ratio at
December 31 13.7 to 1 18.5 to 1 60.4 to 1 14.7 to 1 9.5 to 1 8.7 to 1 13.4 to 1 11.2 to 1 11.4 to 1 15.5 to 1 15.0 to 1
</TABLE>
All share and per-share amounts reflect the stock
splits of 2-for-1 in 1988, 3-for-2 in 1986
and 2-for-1 in 1984.
<TABLE>
<CAPTION>
INDUSTRY SEGMENT INFORMATION
(In thousands)
ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES
1994 1993 1992 1991 1990
---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
REVENUE:
Ocean transportation $ 604,754 $ 551,687 $ 537,669 $ 550,423 $ 543,137
Container leasing 64,132 55,662 50,468 32,470 10,410
Property development
and management:
Leasing 33,387 32,606 30,386 27,702 24,077
Sales 60,767 32,559 27,529 24,634 57,900
Food products 441,209 304,007 104,053 110,947 119,777
Other 3,916 2,945 4,311 2,278 2,659
---------- ---------- ---------- --------- ----------
Total revenue $1,208,165 $ 979,466 $ 754,416 $ 748,454 $ 757,960
========== ========== ========== ========== ==========
OPERATING PROFIT:
Ocean transportation $ 97,319 $ 91,194 $ 97,195 $ 109,792 $ 124,408
---------- ---------- ---------- ---------- ----------
Container leasing 16,604 13,047 12,509 6,708 667
---------- ---------- ---------- ---------- ----------
Property development
and management:
Leasing 23,163 22,975 21,357 19,953 15,387
Sales 18,522 18,570 17,720 20,852 51,969
Hurricane loss - - (900) - -
---------- ---------- ---------- ---------- ----------
41,685 41,545 38,177 40,805 67,356
---------- ---------- ---------- ---------- ----------
Food products:
Before Hurricane loss (418) 12,692 (2,272) 16,123 18,473
Hurricane loss - - (23,903) - -
---------- ---------- ---------- ---------- ----------
(418) 12,692 (26,175) 16,123 18,473
---------- ---------- ---------- ---------- ----------
Other 3,143 2,357 4,263 1,957 2,884
---------- ---------- ---------- ---------- ----------
Total operating
profit 158,333 160,835 125,969 175,385 213,788
Interest expense (27,702) (28,802) (23,881) (24,575) (29,602)
General corporate
expenses (17,396) (18,864) (17,908) (17,798) (17,807)
---------- ---------- ---------- ---------- ----------
Income before
income taxes $ 113,235 $ 113,169 $ 84,180 $ 133,012 $ 166,379
========== ========== ========== ========== ==========
IDENTIFIABLE ASSETS:
Ocean transportation $ 850,487 $ 880,110 $ 958,419 $ 944,092 $ 879,900
Container leasing 324,149 305,866 295,348 197,400 94,945
Property development
and management 271,073 268,581 258,653 234,955 211,962
Food products 399,717 418,724 135,071 146,925 144,607
Other 87,362 39,094 38,437 31,587 39,756
---------- ---------- ---------- ---------- ----------
Total assets $1,932,788 $1,912,375 $1,685,928 $1,554,959 $1,371,170
========== ========== ========== ========== ==========
CAPITAL EXPENDITURES:
Ocean transportation $ 29,676 $ 53,745 $ 64,333 $ 141,157 $ 102,357
Container leasing 33,932 28,913 111,002 107,678 73,911
Property development
and management 21,193 34,772 37,819 34,728 73,397
Food products 18,665 26,637 8,589 17,496 11,162
DEPRECIATION AND AMORTIZATION:
Ocean transportation $ 55,663 $ 55,738 $ 52,829 $ 51,381 $ 44,887
Container leasing 21,113 19,432 15,601 8,730 2,976
Property development
and management 5,246 4,860 4,523 4,338 4,305
Food products 21,340 15,974 10,665 10,716 10,297
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
Alexander & Baldwin, Inc. and Subsidiaries
RESULTS OF OPERATIONS
CONSOLIDATED EARNINGS
Net income for 1994 was $74,608,000, or $1.62 per share. Net income for
1993 was $66,989,000, or $1.45 per share, after recording the effect of a
Federal tax rate change that increased the 1993 income tax expense by
$8,827,000. In 1994, improved results for ocean transportation, container
leasing and property leasing were offset by lower results for food products.
Operating profit from property sales was virtually unchanged.
Amounts for 1994 include the results of California and Hawaiian Sugar
Company (C&H), for the entire year. 1993 amounts include the results of C&H
subsequent to its acquisition in June 1993.
1994 COMPARED WITH 1993
OCEAN TRANSPORTATION revenue increased ten percent in 1994 compared with 1993,
primarily due to increased cargo (a portion of which was the result of a
competitor's labor strike), higher rates and new customers served by Matson
Navigation Company's (Matson) stevedoring and intermodal subsidiaries.
Operating profit rose seven percent as a result of increased revenue, partially
offset by higher fuel costs and costs associated with the start-up of Matson's
new Pacific Coast Shuttle service. Hawaii container volume and automobile
carriage increased four and seven percent, respectively, from 1993 levels.
CONTAINER LEASING revenue rose 15 percent and operating profit increased 27
percent, due to larger container inventories, improved utilization levels and a
stabilizing of lease rates. Fleet size increased to 160,000 twenty-foot
equivalent units (TEUs) at the end of 1994, from 145,000 TEUs at the end of
December 1993. The 1994 average utilization was 88 percent, versus 83 percent
in 1993.
PROPERTY DEVELOPMENT AND MANAGEMENT - LEASING revenue and operating profit
increased slightly. In 1994, the occupancy rates for the U. S. mainland
property and Hawaii property portfolios averaged 97 percent and 92 percent,
respectively. In comparison, 1993 occupancy rates for the U. S. mainland
property and Hawaii property portfolios averaged 93 percent and 94 percent,
respectively. Hawaii property occupancy levels declined primarily because of
vacancies to permit the redevelopment of certain properties and the availability
of additional competitive space. Overall, the leased-property portfolios
continued to benefit from high occupancy levels and favorable lease rates.
PROPERTY DEVELOPMENT AND MANAGEMENT - SALES revenue of $60,767,000 during the
year was nearly double 1993's revenue of $32,559,000. Due to the mix of
properties sold, however, operating profit remained virtually the same. Sales
in 1994 included a Mainland shopping center, five developed industrial lots, one
large industrial site acquired in connection with the C&H acquisition, four
undeveloped parcels, and 40 residential lots. In 1993 sales included one
developed industrial lot, four undeveloped parcels and 101 residential lots.
FOOD PRODUCTS revenue increased 45 percent, primarily due to the full-year
effect of the acquisition of C&H. The operating loss in 1994 of $418,000
represents a decline from 1993's operating profit of $12,692,000. The decrease
was due to poorer plantation yields, higher raw sugar costs and lower selling
prices for refined sugar.
Early in the fourth quarter of 1994, the U. S. Department of Agriculture
adjusted the quota for imports of foreign raw cane sugar into the U. S. and also
imposed domestic marketing allotments. These actions were intended to provide a
more stable supply of both refined sugar products and raw sugar available for
processors. As the effects of these actions began to be reflected in the
marketplace, refiner margins improved modestly. Unfortunately, raw cane sugar
prices again have risen in early 1995 and expanded beet sugar production
continues to put pressure on refiner margins. The inequities among different
segments of the domestic sweetener industry, caused by the current sugar
legislation, are an issue that will be of central concern during debate on
renewal of domestic agricultural programs in this session of Congress.
OTHER operating profit increased 33 percent, due to the gain from the sale of a
corporate aircraft in 1994.
1993 COMPARED WITH 1992
OCEAN TRANSPORTATION revenue increased three percent in 1993 compared with 1992,
due principally to a 3.5-percent general rate increase in early 1993. Total
freight volume declined slightly in 1993 compared with the 1992 volume,
primarily reflecting fewer eastbound shipments.
1993 operating profit fell six percent from 1992, due to lower interest
income and increased labor and depreciation expenses, partially offset by
freight revenue gains.
CONTAINER LEASING revenue increased ten percent and operating profit increased
four percent in 1993 compared with 1992. The revenue increase was due to the
increased container units in service, partially offset by lower utilization and
lease rental rates. At December 31, 1993, 145,000 TEUs were in service,
compared with 133,000 TEUs a year earlier.
Expenses increased 12 percent in 1993 compared with 1992, due to increased
interest, depreciation and container repositioning and storage expenses, as well
as costs associated with the opening of new depots and offices.
PROPERTY DEVELOPMENT AND MANAGEMENT - LEASING revenue increased seven percent
and operating profit increased eight percent in 1993 compared with 1992,
reflecting increased occupancy and rents.
PROPERTY DEVELOPMENT AND MANAGEMENT - SALES revenue increased 18 percent in 1993
compared with 1992, but operating profit increased only five percent compared
with the pre-Hurricane results of 1992. The increased revenue was due
principally to sales of 101 residential subdivision units for $13,402,000 in
1993, compared with sales of 50 units in 1992 for $8,714,000. Most of the 1993
sales were lower-margin affordable units. In 1993, the Company had higher-margin
large-parcel sales totaling $19,157,000, compared with $18,815,000 in 1992.
FOOD PRODUCTS revenue increased from approximately $104 million in 1992 to $304
million in 1993, reflecting the addition of C&H for nearly seven months in 1993.
Operating profit was $12,692,000 for 1993 compared with a pre-Hurricane
operating loss of $2,272,000 in 1992. This improvement in operating profit was
due primarily to the inclusion of C&H in operating results and to a lower cost
per ton of sugar at A&B's sugar plantations. Favorable plantation yields,
operating efficiencies and cost reduction initiatives contributed to the lower
cost per ton.
OTHER income and operating profit for 1993 declined from 1992 and returned to
1991 levels, due to the gain from a sale, in 1992, of a corporate aircraft.
Investment income increased slightly.
FOURTH-QUARTER RESULTS - 1994 COMPARED WITH 1993
A&B reported fourth-quarter net income of $22,951,000, or $0.50 per share,
versus $23,721,000, or $0.52 per share in 1993. Revenue for the fourth quarter
of 1994 was $361,520,000, compared with $297,637,000 a year earlier.
For the fourth quarter of 1994, consolidated operating profit of
$44,720,000 was seven percent less than in the comparable period of 1993.
Higher results for ocean transportation, container leasing, property sales and
property leasing were more than offset by lower results for food products.
OCEAN TRANSPORTATION revenue and operating profit increased eight and two
percent, respectively, compared with 1993 fourth quarter levels. These
increases were due primarily to higher eastbound Hawaii cargo volume, favorable
pension expenses and the benefits of the new customers served by Matson's
stevedoring and intermodal subsidiaries, partially offset by higher fuel costs,
the costs of an early retirement program, vessel repairs and costs associated
with operations of the Pacific Coast Shuttle. Fourth-quarter 1994 total Hawaii
container volume rose two percent and total Hawaii automobile volume rose 25
percent.
CONTAINER LEASING revenue rose 19 percent compared with the fourth quarter of
1993. Operating profit rose a strong 28 percent. These increases were the
results of the same factors that resulted in an increase based on year-to-year
comparisons. An average utilization rate of more than 89 percent in the fourth
quarter of 1994 compared favorably with 85 percent in the year-earlier period.
PROPERTY DEVELOPMENT AND MANAGEMENT - LEASING revenue and operating profit
increased four and eight percent, respectively, compared with 1993 fourth
quarter levels. Overall, the leased-property portfolio continues to benefit
from high occupancy levels and favorable lease rates. Hawaii occupancy rates
were affected adversely by the planned relocation of tenants from an older
shopping center in Kahului, Maui that is being prepared for redevelopment.
PROPERTY DEVELOPMENT AND MANAGEMENT - SALES revenue was $45,940,000, versus
$11,072,000 in the 1993 fourth quarter. Operating profit from property sales
was $9,115,000, eight-percent higher than in the fourth quarter of 1993. Sales
in the fourth quarter of 1994 included a Mainland shopping center, two former
C&H properties (an industrial site on Oahu and 1,320 acres of undeveloped land
in California) and eight residential lots.
FOOD PRODUCTS revenue increased 11 percent from 1993 levels. Operating profit,
however, decreased to $1,036,000 from $7,606,000 in the 1993 fourth quarter, due
primarily to lower selling prices for refined sugar.
FINANCIAL CONDITION AND LIQUIDITY
Principal liquid resources, which consist of cash and cash equivalents,
trade receivables, sugar inventories and unused lines of credit, less
outstanding commercial paper guaranteed by lines of credit and accrued deposits
to the Capital Construction Fund (CCF), totaled $442,382,000 at December 31,
1994, compared with $371,370,000 at December 31, 1993, an increase of
$71,012,000 (19 percent). An $89,732,000 increase in unused lines of credit was
partially offset by a $23,134,000 decrease in cash and cash equivalents. The
increase in available lines of credit resulted from the combination of the
establishment of new revolving credit facilities as well as decreased borrowings
from existing credit facilities.
Working capital of $71,716,000 at December 31, 1994 remained relatively
stable, compared with working capital at December 31, 1993 of $72,713,000, a
decrease of $997,000, or approximately one percent. The Company's current ratio
of 1.4:1 was virtually unchanged from 1.3:1 at year-end 1993.
In 1994, the Company repurchased 722,500 shares for $17,717,000. Selective
purchases are expected to continue as funds are available and attractive
purchase opportunities arise. These purchases are being made in accordance with
a program to purchase up to two million shares of the Company's stock in 1994
and 1995, which was approved by the Board of Directors in December 1993.
Net cash provided by operating activities, before all capital expenditures,
in 1994 was $193,578,000, representing a $1,002,000 decrease from 1993 levels.
The decrease was the result of liquidating an unusually high level of sugar
inventory at the time of the acquisition of C&H and income taxes, partially
offset by proceeds from real estate sales. In 1994, operating cash flows were
used principally for capital expenditures, payments of long-term borrowings,
payment of regular quarterly dividends and the previously noted stock
repurchases. In 1993, operating cash flows were used in a similar pattern,
except that there were no repurchases of stock and capital expenditures were
significantly higher. In addition, withdrawals in 1993 of $87,495,000 from the
CCF were used to prepay long-term debt, purchase a previously leased vessel and
make payments toward the reconstruction of vessels.
During 1995, internal cash flows are expected to be sufficient to finance
working capital needs, dividends, capital expenditures and debt service. The
Company maintains numerous bank credit lines and also can issue additional
commercial paper.
CAPITAL EXPENDITURES
In 1994, capital expenditures were $102,183,000, compared with $154,167,000
in 1993. The decrease was primarily due to reduced expenditures for vessel
life-extension work and open top vessel conversions. Capital expenditures
approved, but not yet spent, at December 31, 1994 were $104,677,000. Ocean
transportation capital expenditures in 1994 of $29,676,000 were for vessel life-
extension work and open top conversions of selected vessels, as well as for
computer systems. Container leasing capital expenditures in 1994 of $33,932,000
primarily resulted from the addition of containers. Property development and
management capital expenditures in 1994 of $21,193,000 were the result of
various ongoing commercial and residential developments. Food products
capital expenditures in 1994 of $18,665,000 were primarily for the continuation
of the Company's liquid sugar refinery, coffee project, and for the cane juice
ultrafiltration and softening project.
ENVIRONMENTAL MATTERS
As with most industrial and land-development companies of our size, A&B's
operations have certain risks which could result in expenditures for
environmental remediation. The Company believes that it is in compliance, in
all material respects, with applicable environmental laws and regulations and
takes a proactive role in identifying potential environmental concerns. The
Company currently is involved in two proceedings related to environmental
matters that are described in its Forms 10-K for 1993 and 1994. While it is not
feasible to predict or determine the ultimate outcome of these proceedings,
management does not believe that they ultimately would result in a materially
adverse effect on the Company's financial position, results of operations,
liquidity or capital resources. Management believes that appropriate
liabilities have been accrued for these matters.
OUTLOOK FOR 1995
Earnings are expected to remain stable in 1995, compared with 1994, and
operating cash flow is expected to increase modestly. The important tourism
component of the Hawaii economy has recovered steadily since the start of 1994,
although the impact from recent international events could impact this recovery
in 1995 adversely. Although the construction industry still has not reversed
the steady decline since its cyclical peak in 1991, the Federal government has
announced plans for additional construction in Hawaii in 1995 and 1996.
The ocean transportation segment is well-positioned to take advantage of a
strengthening Hawaii economy and to benefit from significant operating leverage
available in the Hawaii freight system. Improved organizational efficiency
being gained through technology should help improve profitability and
implementation of the Pacific Coast Shuttle service should contribute to growth
in 1995.
The container leasing segment will benefit from strengthening international
economic conditions. It should maintain the higher utilization levels achieved
in the fourth quarter of 1994, while marketing new fleet units and benefiting
from firming lease rates.
The property leasing segment will continue to encounter competitive
pressures in most markets. The leasing segment should benefit, however. from
its diversified portfolio, as lease rates in Mainland markets continue to
recover. The property development segment will focus primarily on the
entitlement phase of various long-term projects. Proceeds from the 1994 sale of
a Mainland property are expected to be reinvested, on a tax-deferred basis, in
other Mainland properties in markets with strong underlying economic
fundamentals to support future growth. Other property sales will be evaluated
to maximize the Company's return on capital invested.
For food products, which currently is the Company's weakest operating
segment, the focus will be on improving the basic business operations, working
to influence new agricultural legislation, enhancing margins and seeking new
sources of earnings. Also, key labor contracts for plantation and sugar
refinery workers expire in January and May 1995, respectively. The segment's
challenges pertain both to concluding these separate negotiations without work
stoppages and attaining cost-savings, productivity and efficiency goals.
Improved coffee yields and margins, as well as expanded coffee marketing
efforts, should help improve results.
MANAGEMENT'S REPORT ON FINANCIAL STATEMENTS
Management has prepared and is responsible for the Company's consolidated
financial statements and related notes. They have been prepared in accordance
with generally accepted accounting principles and necessarily include amounts
based on judgments and estimates made by management. All financial information
in this Annual Report is consistent with these financial statements.
The Company maintains internal accounting control systems and related policies
and procedures designed to provide reasonable assurance that assets are
safeguarded, that transactions are properly executed and recorded in accordance
with management's authorization, and that underlying accounting records may be
relied upon for the accurate preparation of financial statements and other
financial information. The design, monitoring and revision of internal
accounting control systems involve, among other things, management's judgment
with respect to the relative cost and expected benefits of specific control
measures. The Company maintains an internal auditing function that evaluates
and formally reports on the adequacy and effectiveness of internal accounting
controls, policies and procedures.
The Company's financial statements have been audited by independent auditors who
have expressed their opinion with respect to the fairness, in all material
aspects, of the presentation of financial position, results of operations and
cash flows under generally accepted accounting principles (see Independent
Auditors' Report on page 25).
The Board of Directors, through its Audit Committee (composed of non-employee
directors), oversees management's responsibilities in the preparation of the
financial statements and nominates the independent auditors, subject to
shareholder election. The Audit Committee meets regularly with the external and
internal auditors to evaluate the effectiveness of the work performed by them in
discharging their respective responsibilities and to assure their independent
and free access to the Committee.
/s/ R. J. Pfeiffer /s/ John C. Couch
------------------------ ------------------------
R. J. Pfeiffer John C. Couch
Chairman of the Board President and
Chief Executive
Officer
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF INCOME
(In thousands except per-share amounts)
ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES
Year Ended December 31, 1994 1993 1992
-------------------------------------------------------------------
<S> <C> <C> <C>
REVENUE:
Net sales, food products $ 427,524 $ 281,816 $ 95,818
Net sales, property
development and other 59,412 43,764 27,526
Transportation and
terminal services 536,510 500,986 484,532
Rentals and other services 161,764 135,394 122,016
Gain on sale of property
and other 8,486 4,362 4,801
Interest 11,678 10,487 17,241
Dividends 2,791 2,657 2,482
---------- --------- --------
Total revenue 1,208,165 979,466 754,416
---------- --------- --------
COSTS AND EXPENSES:
Cost of goods sold 422,444 267,730 108,094
Cost of services 517,322 461,136 421,675
Selling, general
and administrative 127,462 108,629 91,783
Interest 31,427 31,382 31,643
Interest capitalized (3,725) (2,580) (7,762)
Hurricane loss - - 24,803
---------- --------- --------
Total costs and expenses 1,094,930 866,297 670,236
---------- --------- --------
Income Before Income Taxes
and Cumulative
Effect of Change in Accounting
for Post-retirement Benefits 113,235 113,169 84,180
Income Taxes 38,627 46,180 23,675
---------- --------- --------
Income Before Cumulative Effect
of Change in Accounting for
Post-retirement Benefits 74,608 66,989 60,505
Cumulative Effect of Change in
Accounting for Post-retirement
Benefits (net of income taxes
of $23,734) - - (41,551)
---------- --------- --------
Net Income $ 74,608 $ 66,989 $ 18,954
========== ========= =========
EARNINGS PER SHARE OF COMMON STOCK:
Income Before Cumulative Effect
of Change in Accounting for
Post-retirement Benefits $ 1.62 $ 1.45 $ 1.31
Cumulative Effect of Change in
Accounting for Post-retirement
Benefits - - (0.90)
---------- --------- ---------
Net Income $ 1.62 $ 1.45 $ 0.41
========== ========= =========
Average Common Shares Outstanding 46,059 46,338 46,294
---------- --------- ---------
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS (In thousands)
ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES
Year Ended December 31, 1994 1993 1992
---------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATIONS:
Net income $ 74,608 $ 66,989 $ 18,954
Adjustments to reconcile net
income to net cash provided by
operations:
Depreciation 105,150 97,750 85,370
Hurricane loss - - 24,803
Post-retirement benefits - - 41,551
Equity in undistributed loss
of affiliate - 291 988
Gain on disposal of property,
investments and
other assets (5,847) (701) (2,318)
Changes in assets and
liabilities:
Accounts and notes
receivable (5,478) (7,250) (4,477)
Sugar inventory 1,331 21,918 4,245
Other inventories (220) (7,422) (967)
Prepaid expenses and
other assets 21,404 9,978 7,172
Accounts payable (3,623) (4,985) (457)
Income taxes payable (6,210) 13 (8,455)
Deferred income taxes
payable 23,178 30,738 13,332
Other liabilities (10,715) (12,739) 309
--------- -------- ---------
Cash provided by operations
before expenditures for real
estate developments 193,578 194,580 180,050
Capital expenditures for real
estate developments held
for sale (6,817) (1,703) (22,517)
--------- -------- ---------
Net cash provided
by operations 186,761 192,877 157,533
--------- -------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for
property (82,723) (139,589) (190,675)
Capital expenditures for real
estate developments
held for investment (12,643) (12,875) (12,778)
Acquisition of California and
Hawaiian Sugar Company, Inc. - (62,564) -
Receipts from disposal of
income producing property,
investments and
other assets 2,492 10,977 3,882
Deposits into Capital
Construction Fund (8,900) - (31,025)
Withdrawals from
Capital Construction Fund 9,383 87,495 27,335
Increase in investments (32) (1,108) (2,625)
--------- -------- ---------
Net cash used in
investing activities (92,423) (117,664) (205,886)
--------- -------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuances of
long-term debt 31,000 89,500 267,205
Payments of long-term
liabilities (84,314) (112,651) (176,802)
Payments of short-term
commercial paper borrowings
- net (6,000) - -
Repurchases of capital stock (17,717) - -
Proceeds from issuances of
capital stock 122 288 924
Dividends paid (40,563) (40,777) (40,744)
--------- -------- ---------
Net cash provided by (used
in) financing activities (117,472) (63,640) 50,583
--------- -------- ---------
CASH AND CASH EQUIVALENTS:
Net increase (decrease) for
the year (23,134) 11,573 2,230
Balance, beginning of year 32,691 21,118 18,888
--------- -------- ---------
Balance, end of year $ 9,557 $ 32,691 $ 21,118
========= ======== =========
OTHER CASH FLOW INFORMATION:
Interest paid, net of amounts
capitalized $ 44,064 $ 43,682 $ 32,499
Income taxes paid 18,391 15,123 22,259
NON-CASH INVESTING AND FINANCING
ACTIVITIES:
Tax-deferred property
exchanges 22,200 - -
Accrued deposits to Capital
Construction Fund,
net of accrued withdrawals 1,333 (1,746) (11,129)
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS
(In thousands except per-share amounts)
ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES
December 31, 1994 1993
---------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 9,557 $ 32,691
Accounts and notes receivable:
Trade, less allowances
of $10,133 and $9,538 124,050 120,069
Other 18,908 15,811
Inventories:
Sugar 52,648 53,979
Materials and supplies 38,029 37,178
Real estate held for sale 4,014 10,504
Deferred income taxes 15,366 2,042
Prepaid expenses and other assets 14,525 11,906
Accrued withdrawals from (deposits
to) Capital Construction Fund (550) 783
---------- ----------
Total current assets 276,547 284,963
---------- ----------
INVESTMENTS 64,913 17,449
---------- ----------
REAL ESTATE DEVELOPMENTS 66,371 54,919
---------- ----------
PROPERTY:
Land 52,202 65,403
Buildings 190,852 202,643
Vessels 651,435 631,896
Machinery and equipment 1,024,398 955,942
Water, power and sewer systems 86,254 84,530
Other property improvements 88,688 105,459
---------- ----------
Total 2,093,829 2,045,873
Less accumulated depreciation
and amortization 812,283 718,937
---------- ----------
Property -- net 1,281,546 1,326,936
---------- ----------
CAPITAL CONSTRUCTION FUND 176,044 175,194
---------- ----------
OTHER ASSETS -- NET 67,367 52,914
---------- ----------
Total $1,932,788 $1,912,375
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 27,239 $ 13,089
Current portion of capital
lease obligations 7,938 9,732
Short-term commercial paper
borrowings 58,000 64,000
Accounts payable 36,545 39,175
Payrolls and vacation pay 19,847 20,291
Uninsured claims 12,110 9,336
Post-retirement benefit obligations
- current portion 6,582 6,676
Taxes other than income 5,390 4,802
Accrued interest payable 4,611 8,060
Promotional programs 4,563 8,322
Income taxes - 3,506
Accrued and other liabilities 22,006 25,261
---------- ----------
Total current liabilities 204,831 212,250
---------- ----------
LONG-TERM LIABILITIES:
Long-term debt 526,231 582,473
Capital lease obligations 35,274 44,495
Post-retirement benefit obligations 116,610 112,898
Pension obligations 21,933 26,138
Uninsured claims 12,337 15,180
Other 32,997 33,486
---------- ----------
Total long-term liabilities 745,382 814,670
---------- ----------
DEFERRED INCOME TAXES 349,961 298,449
---------- ----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Capital stock -- common stock without
par value; authorized, 150,000
shares ($.75 stated value per share);
outstanding, 45,691 shares in 1994
and 46,404 shares in 1993 37,493 38,028
Additional capital 38,862 38,510
Unrealized holding gains on
securities 29,073 -
Retained earnings 541,910 525,192
Cost of treasury stock (14,724) (14,724)
---------- ----------
Total shareholders' equity 632,614 587,006
---------- ----------
Total $1,932,788 $1,912,375
========== ==========
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands except per-share amounts)
ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES
Three Years Ended December 31, 1994
Capital Stock
------------------------------------
Issued In Treasury
---------------- ----------------- Unrealized
Additional Holding Retained
Shares Stated Shares Cost Capital Gains Earnings
Value
------- ------- ------ -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE,
DECEMBER 31, 1991 50,660 $37,995 4,431 $(17,201) $ 34,144 $ 523,731
CHANGES IN 1992:
Stock options
exercised 126 95 3,010
Acquired in payment
of options (101) (76) (2,734)
Issued -- incentive
plan 2 2 (77) 1,709 214
Net income 18,954
Cash dividends --
$.88 per share (40,744)
------- ------- ------ -------- --------- ---------
BALANCE,
DECEMBER 31, 1992 50,687 38,016 4,354 (15,492) 37,368 499,207
CHANGES IN 1993:
Stock options
exercised 23 17 572
Acquired in payment
of options (7) (6) (227)
Issued -- incentive
plan 1 1 (54) 768 570
Net income 66,989
Cash dividends --
$.88 per share (40,777)
------- ------- ------ -------- --------- ---------
BALANCE,
DECEMBER 31, 1993 50,704 38,028 4,300 (14,724) 38,510 525,192
CHANGES IN 1994:
Shares repurchased
and retired (723) (542) (17,175)
Stock options
exercised 12 9 352
Acquired in payment
of options (6) (5) (152)
Issued--incentive
plan 4 3
Unrealized holding
gains on
securities $ 29,073
Net income 74,608
Cash dividends --
$.88 per share (40,563)
------- ------- ------ -------- --------- --------- ---------
BALANCE,
DECEMBER 31, 1994 49,991 $37,493 4,300 $(14,724) $ 38,862 $ 29,073 $ 541,910
======= ======= ====== ======== ========= ========= =========
</TABLE>
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF CONSOLIDATION: The consolidated financial statements include the
accounts of Alexander & Baldwin, Inc. and all subsidiaries, after elimination
of significant intercompany amounts.
OCEAN TRANSPORTATION: Voyage revenue and variable costs and expenses are
included in income at the time each voyage commences.
Vessel depreciation, charter hire, terminal operating overhead and general and
administrative expenses are charged to expense as incurred. Expected costs of
regularly-scheduled dry docking of vessels and planned major vessel repairs
performed during dry docking are accrued.
CONTAINER LEASING: Revenue and maintenance and repair costs are recorded
ratably over the terms of specific lease and rental agreements. Container
depreciation and general and administrative expenses are charged to expense as
incurred. Interest expense is included in cost of services.
PROPERTY DEVELOPMENT AND MANAGEMENT: Sales are recorded when the risks and
benefits of ownership have passed to the buyers (generally at closing dates),
adequate down payments have been received and collection of remaining balances
is reasonably assured.
Expenditures for real estate developments are capitalized during construction
and are classified either as Property or as Real Estate Held For Sale when
construction is complete, based upon the Company's intent. Cash flows related
to real estate developments are classified as operating or investing
activities, based upon the Company's intention either to sell the property or
to retain ownership of the property as an investment following completion of
construction.
FOOD PRODUCTS: Revenue is recorded when refined sugar products and coffee are
sold to third parties.
Costs of growing sugar cane are charged to the cost of production in the year
incurred and to cost of sales as refined products are sold. The cost of raw
cane sugar purchased from third parties is recorded as inventory at the
purchase price.
Costs of developing coffee are capitalized during the development period and
depreciated over the estimated productive lives of the orchards. Costs of
growing coffee are charged to inventory in the year incurred and to cost of
sales as coffee is sold.
CASH AND CASH EQUIVALENTS: The Company considers highly liquid investments
purchased with original maturities of three months or less, which have no
significant risk of change in value, to be cash equivalents.
INVENTORIES: Sugar inventory, consisting of raw and refined sugar, is stated
at the lower of cost (first-in, first-out basis) or market. Other
inventories, composed principally of materials and supplies, are stated at the
lower of cost (principally average cost) or market.
PROPERTY: Property is stated at cost. Major renewals and betterments are
capitalized. Replacements, maintenance and repairs which do not improve or
extend asset lives are charged to expense as incurred. Assets held under
capital leases are included with property owned. Gains or losses from
property disposal are included in income.
CAPITALIZED INTEREST: Interest costs incurred in connection with significant
expenditures for real estate developments or the construction of assets are
capitalized.
DEPRECIATION: Depreciation is computed using the straight-line method.
Depreciation expense includes amortization of assets under capital leases and
vessel spare parts.
Estimated useful lives of property are as follows:
Buildings 10 to 50 years
Vessels 14 to 40 years
Marine containers 15 years
Machinery and equipment 3 to 35 years
Utility systems and other
depreciable property 5 to 60 years
OTHER NON-CURRENT ASSETS: Other non-current assets consist principally of
supply contracts and other intangible assets. These assets are being
amortized using the straight-line method over periods not exceeding 30 years.
PENSION PLANS: Certain ocean transportation subsidiaries are members of the
Pacific Maritime Association (PMA), the Maritime Service Committee or the
Hawaii Stevedore Committee, which negotiate multi-employer pension plans
covering certain seagoing and shoreside bargaining unit personnel. The
subsidiaries negotiate multi-employer pension plans covering other bargaining-
unit personnel. Pension costs are accrued in accordance with contribution
rates established by the PMA, the parties to a plan or the trustees of a plan.
Several trusteed, noncontributory, single-employer defined benefit plans cover
substantially all other employees.
INCOME TAXES: Current income tax expense is based on revenue and expenses in
the Statements of Income. Deferred income tax liabilities and assets are
computed at current tax rates for temporary differences between the financial
statements and income tax returns.
FAIR VALUES: The carrying values of current assets (other than inventories,
real estate held for sale, deferred income taxes and prepaid and other assets)
and of debt instruments are reasonable estimates of their fair values.
FUTURES CONTRACTS: Realized and unrealized gains and losses on commodity
futures contracts are deferred and recorded in inventory in the period in
which the related inventory purchases occur. These amounts are not
significant.
ENVIRONMENTAL COSTS: Environmental expenditures that relate to current
operations are expensed or capitalized as appropriate. Expenditures that
relate to an existing condition caused by past operations or events and which
do not contribute to current or future revenue generation, are charged to
expense. Liabilities are recorded when environmental assessments or remedial
efforts are probable and the costs can be reasonably estimated.
RECLASSIFICATION: Certain amounts in the 1993 and 1992 financial statements
have been reclassified to conform with the 1994 presentation.
2. POST-RETIREMENT BENEFIT PLANS
The Company has plans that provide certain retiree health care and life
insurance benefits to substantially all salaried and to certain hourly
employees. Employees are generally eligible for such benefits upon retirement
and completion of a specified number of years of credited service. The
Company does not pre-fund these benefits and has the right to modify or
terminate certain of these plans in the future. Certain groups of retirees
pay a portion of the benefit costs.
In 1992, the Company adopted the provisions of Statement of Financial
Accounting Standards (SFAS) No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions," which require the accrual of post-retirement
benefits during the years an employee provides services to the Company. Prior
to 1992, the costs of such benefits (principally medical and group life
insurance premiums) were charged to expense on a pay-as-you-go basis. The
Company elected to immediately recognize the accumulated post-retirement
benefit obligation upon adoption of the Standard. The cumulative effect of
this accounting change as of January 1, 1992, resulted in a decrease in net
income of $41,551,000, or $0.90 per share, in 1992.
The net periodic cost for post-retirement health care and life insurance
benefits during 1994, 1993 and 1992 included the following:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
(In thousands)
<S> <C> <C> <C>
Service cost $2,149 $1,524 $1,420
Interest cost 7,825 4,742 4,598
Net amortization (216) - -
------ ------ ------
Post-retirement
benefit cost $9,758 $6,266 $6,018
====== ====== ======
</TABLE>
The unfunded accumulated post-retirement benefit obligation at December 31,
1994 and 1993 is summarized below:
<TABLE>
<CAPTION>
1994 1993
-------- --------
(In thousands)
<S> <C> <C>
Accumulated post-retirement
benefit obligation:
Retirees $ 64,619 $ 70,246
Fully-eligible active
plan participants 10,577 10,924
Other active plan
participants 30,359 33,668
Unrecognized prior
service cost 3,215 2,810
Unrecognized net gain 14,422 1,926
-------- --------
Total 123,192 119,574
Current obligation 6,582 6,676
-------- --------
Non-current obligation $116,610 $112,898
======== ========
</TABLE>
For 1994 and 1993, the weighted average discount rates used in determining the
accumulated post-retirement benefit obligation were 8% and 7%, respectively,
and the assumed health care cost trend rate used in measuring the accumulated
post-retirement benefit obligation for both years was 10% for 1993 through
2001, decreasing to 5% thereafter. If the assumed health care cost trend rate
were increased by one percentage point, the accumulated post-retirement
benefit obligation as of December 31, 1994 and 1993 would have increased by
approximately $12,235,000 and $13,386,000, respectively, and the net periodic
post-retirement benefit cost for 1994 and 1993 would have increased by
approximately $2,153,000 and $989,000, respectively.
3. EMPLOYEE BENEFIT PLANS
Total contributions to the multi-employer pension plans covering personnel in
shoreside and seagoing bargaining units were $8,216,000 in 1994, $8,626,000 in
1993 and $7,638,000 in 1992. Union collective bargaining agreements provide
that total employer contributions during the terms of the agreements be
sufficient to meet the normal costs and amortization payments required to be
funded during those periods. Contributions are generally based on union labor
used or cargo handled or carried. A portion of such contributions is for
unfunded accrued actuarial liabilities of the plans being funded over periods
of 25 to 40 years, which began between 1967 and 1976.
The multi-employer plans are subject to the plan termination insurance
provisions of the Employee Retirement Income Security Act of 1974, as amended,
and are paying premiums to the Pension Benefit Guarantee Corporation (PBGC).
The statutes provide that an employer which withdraws from or significantly
reduces its contribution obligation to a multi-employer plan generally will be
required to continue funding its proportional share of the plan's unfunded
vested benefits.
In 1994, a subsidiary terminated a single-employer defined benefit pension
plan covering longshore personnel in Hawaii. Concurrently, the subsidiary
joined a multi-employer pension plan with the other major stevedoring
companies in Hawaii. As a result of this action, the previously-recorded
unfunded pension obligation of the terminated single-employer plan of
$2,348,000 was eliminated. This elimination was recorded as a reduction of
expenses in the Statements of Income. All employees previously covered under
the single-employer plan are now covered under the multi-employer plan without
loss of vesting or benefits.
Under special rules approved by the PBGC and adopted by the longshore plan in
1984, the Company could cease Pacific Coast cargo-handling operations
permanently and stop contributing to the plan without any withdrawal
liability, provided that the plan meets certain funding obligations as defined
in the plan. The estimated withdrawal liabilities under the Hawaii longshore
plan and the seagoing plans aggregated approximately $7,378,000 for various
plan years ended December 1994 and 1993, and July 1994, based on estimates by
plan actuaries. Management has no present intention of withdrawing from and
does not anticipate termination of any of the aforementioned plans.
The net cost (benefit) of single-employer defined benefit pension plans,
covering substantially all other employees, was $3,816,000 in 1994, $4,318,000
in 1993 and $(510,000) in 1992. Expense components for all single-employer
plans for the three years were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
(In thousands)
<S> <C> <C> <C>
Service cost--benefits
earned during the year $ 7,317 $ 5,907 $ 4,528
Interest cost on
projected benefit
obligations 20,542 17,584 11,755
Actual return on plan
assets (24,122) (18,776) (14,252)
Net amortization and
deferral (1,221) (2,514) (2,541)
Curtailment and
termination benefits 1,300 2,117 -
------- ------- -------
Net pension cost
(benefit) $ 3,816 $ 4,318 $ (510)
======= ======= =======
</TABLE>
The funded status of the single-employer plans at December 31, 1994 and 1993
was as follows:
<TABLE>
<CAPTION>
1994 1993
---------------------- -------------------
(In thousands)
ASSETS ACCUMULATED Assets Accumulated
EXCEED BENEFITS Exceed Benefits
ACCUMULATED EXCEED Accumulated Exceed
BENEFITS ASSETS Benefits Assets
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Actuarial present value
of benefit obligation:
Vested benefits $122,153 $112,925 $138,110 $113,585
Non-vested benefits 3,830 4,297 6,853 3,102
-------- -------- -------- --------
Accumulated benefit
obligation 125,983 117,222 144,963 116,687
Additional amounts
related to projected
compensation levels 22,927 11,277 29,180 15,707
-------- -------- -------- --------
Projected benefit
obligation 148,910 128,499 174,143 132,394
Plan assets at
fair value 178,118 104,867 202,071 102,527
-------- -------- -------- --------
(Excess) Deficiency of
plan assets over
projected benefit
obligation. (29,208) 23,632 (27,928) 29,867
Prior service costs to
be recognized in future
years (2,121) (1,656) (2,551) (1,576)
Unrecognized actuarial
net gain (loss) 27,468 (1,227) 25,517 (3,326)
Unrecognized net asset
(obligation) at
January 1, 1987
(being amortized over
periods of 4 to 15
years) 4,660 385 6,428 (293)
-------- -------- -------- --------
Accrued pension liability $ 799 $ 21,134 $ 1,466 $ 24,672
======== ======== ======== ========
</TABLE>
For 1994 and 1993, projected benefit obligations were determined using
discount rates of 8% and 7%, respectively, and assumed increases in future
compensation levels of 5% for both years. The expected long-term rate of
return on assets for both years was 8 1/4%. The assets of the plans consist
principally of listed stocks and bonds.
The Company has non-qualified supplemental pension plans covering certain
employees and retirees, which provide for incremental pension payments from
the Company's general funds, so that total pension benefits would be
substantially equal to amounts that would have been payable from the Company's
qualified pension plans if it were not for limitations imposed by income tax
regulations. The projected benefit obligation, included with other non-
current liabilities, relating to these unfunded plans, totaled $7,661,000 and
$7,285,000 at December 31, 1994 and 1993, respectively.
4. INVESTMENTS
At December 31, 1994 and 1993, investments principally consisted of marketable
equity securities, limited partnership interests and purchase-money mortgages.
Effective January 1, 1994, the Company adopted SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." The marketable equity
securities are classified as "available for sale" and are, at December 31,
1994, stated at quoted market values totaling $56,312,000 (cost basis
$9,966,000). The unrealized holding gain on these securities as of December
31, 1994 amounted to $29,073,000, net of deferred income taxes, and has been
recorded as a separate component of shareholders' equity.
At December 31, 1993, these securities were stated at their historical cost
basis of $10,486,000 (quoted market value was $64,129,000).
The remaining investments are recorded at cost, which approximated market
values, of $8,601,000 and $6,963,000 at December 31, 1994 and 1993,
respectively.
See Note 9 for a discussion of market values of investments in the Capital
Construction Fund.
5. LEASES
THE COMPANY AS LESSEE: Various subsidiaries of the Company lease a vessel
and certain land, buildings and equipment under both capital and operating
leases. Capital leases include one vessel leased for a term of 25 years
ending in 1998; containers, machinery and equipment for terms of 5 to 12 years
expiring through 1997; and a wastewater treatment facility in California, the
title of which will revert to a subsidiary in 2002. Principal operating
leases cover office and terminal facilities for periods which expire between
1995 and 2026. Management expects that in the normal course of business, most
operating leases will be renewed or replaced by other leases.
Rental expense under operating leases for the three years ended December 31,
1994 is shown below:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
(In thousands)
<S> <C> <C> <C>
Minimum rentals $47,500 $43,050 $43,212
Contingent rentals 669 220 330
------- ------- -------
Total $48,169 $43,270 $43,542
======= ======= =======
</TABLE>
Contingent rentals are based principally on the use of certain terminal and
port facilities and the use of agricultural water and land. Payments for
certain leased terminal and port facilities are compensated by charges under
tariffs paid by others. Income from sublease rentals is not significant.
Assets recorded under capital lease obligations and included in property at
December 31, 1994 and 1993 were as follows:
<TABLE>
<CAPTION>
1994 1993
-------- --------
(In thousands)
<S> <C> <C>
Vessels $ 55,253 $ 55,253
Machinery and equipment 42,870 50,056
-------- --------
Total 98,123 105,309
Less accumulated amortization 86,115 80,021
-------- --------
Property under capital
leases--net $ 12,008 $ 25,288
======== ========
</TABLE>
Future minimum payments under all leases and the present value of minimum
capital lease payments as of December 31, 1994 were as follows:
<TABLE>
<CAPTION>
Capital Operating
Leases Leases
------- --------
(In thousands)
<S> <C> <C>
1995 $11,935 $ 27,120
1996 14,759 17,654
1997 15,026 15,223
1998 10,703 14,849
1999 609 14,870
Thereafter 1,641 121,405
------- --------
Total minimum lease
payments 54,673 $211,121
========
Less amount representing
interest 11,461
-------
Present value of future
minimum payments 43,212
Less current portion 7,938
-------
Long-term obligations at
December 31, 1994 $35,274
=======
</TABLE>
As described in Note 6, a subsidiary is obligated to pay principal of and
interest on Special Facility Revenue Bonds issued by the Department of
Transportation of the State of Hawaii to finance construction of terminal
facilities which are leased by a subsidiary. Rent expense for the facilities
includes bond interest. An accrual, included in long-term debt, provides for
a pro-rata portion of the principal due on these bonds.
THE COMPANY AS LESSOR: Various Company subsidiaries lease land, buildings,
land improvements and marine containers under operating leases. The
historical cost of and accumulated depreciation on leased property at December
31, 1994 and 1993 were as follows:
<TABLE>
<CAPTION>
1994 1993
-------- --------
(In thousands)
<S> <C> <C>
Leased property $578,190 $568,280
Less accumulated
amortization 97,793 74,621
-------- --------
Property under operating
leases--net $480,397 $493,659
======== ========
</TABLE>
Total rental income under these operating leases for the three years ended
December 31, 1994 was as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
(In thousands)
<S> <C> <C> <C>
Minimum rentals $57,864 $58,838 $55,358
Contingent rentals
(based on sales volume) 1,515 1,111 1,160
------- ------- -------
Total $59,379 $59,949 $56,518
======= ======= =======
</TABLE>
Future minimum rental income on non-cancelable leases at December 31, 1994 was
as follows:
Operating
Leases
--------
(In thousands)
1995 $ 48,234
1996 42,160
1997 33,554
1998 20,832
1999 15,674
Thereafter 164,777
--------
Total $325,231
========
6. LONG-TERM DEBT, CREDIT AGREEMENTS
At December 31, 1994 and 1993, long-term debt consisted of the following:
<TABLE>
<CAPTION>
1994 1993
-------- --------
(In thousands)
<S> <C> <C>
Commercial paper, 3.2% - 6.3%,
due 1995 $304,301 $310,908
Bank revolving credit
loans (1994 high 6.63%,
low 3.63%)
due after 1994 52,500 61,000
Term loans:
7.19%, payable through 2007 75,000 75,000
9%, payable through 1999 50,000 50,000
8%, payable through 2000 50,000 50,000
9.05%, payable through 1999 32,611 37,558
9.8%, payable through 2004 20,833 22,917
7.65%, payable through 2001 10,000 10,000
11.78%, payable through 1997 1,848 2,361
9.1%, repaid in 1994 - 22,000
10.03%, repaid in 1994 - 3,300
Mortgage loans, collateralized by
land and buildings:
11%, payable through 1995 3,046 3,091
12.5%, payable through 1995 2,724 2,765
Other 281 29
Limited partnership subscription
notes, no interest,
payable through 1996 1,700 2,550
Special facility revenue bonds,
5.75%, payable 2013 6,626 6,083
-------- --------
Total 611,470 659,562
Less current portion 27,239 13,089
Commercial paper
classified as current 58,000 64,000
-------- --------
Long-term debt $526,231 $582,473
======== ========
</TABLE>
REVOLVING CREDIT FACILITIES: The Company and a subsidiary have a revolving
credit and term loan agreement with five commercial banks, whereby they may
borrow up to $155,000,000 under revolving loans to November 30, 1996 at
varying rates of interest. Any revolving loan outstanding on that date may be
converted into a term loan, which would be payable in 16 equal quarterly
installments. The agreement contains certain restrictive covenants, the most
significant of which requires the maintenance of an interest coverage ratio of
2:1. At December 31, 1994 and 1993, $20,000,000 and $55,000,000,
respectively, were outstanding under this agreement.
The Company and a subsidiary have an uncommitted $65,000,000 short-term
revolving credit agreement with a commercial bank. The agreement extends to
November 30, 1995, but may be canceled by the bank at any time. At December
31, 1994 and 1993, $12,500,000 and $6,000,000, respectively, were outstanding
under this agreement.
In 1994, the Company and a subsidiary entered into an uncommitted $25,000,000
revolving credit agreement with a commercial bank. The agreement extends to
July 18, 1997. At December 31, 1994, $20,000,000 was outstanding under this
agreement.
A subsidiary has a $25,000,000 two-year revolving credit agreement with a
financial institution to provide general corporate funds. At December 31,
1994 and 1993, no balances were outstanding under this agreement.
A subsidiary has a $25,000,000 revolving credit agreement maturing April 1995.
This agreement serves as a commercial paper liquidity back-up line. The
Company intends to renew this agreement upon maturity. At December 31, 1994
and 1993, no balances were outstanding under this agreement.
TERM LOANS: In 1993, an unsecured series of 19 notes, which aggregated
$75,000,000, with varying maturity dates ranging from 1997 through 2007, and
with interest rates ranging from 6.23% to 7.46% (average 7.19%), were entered
into in connection with the acquisition of California and Hawaiian Sugar
Company, Inc. (C&H).
As a result of the purchase of C&H, a subsidiary has a term loan with
outstanding balances of $20,833,000 and $22,917,000 at December 31, 1994 and
1993, respectively. Annual principal payments of $2,083,000 are payable
through 2004. Interest, at 9.8%, is payable quarterly. The loan is
guaranteed by the subsidiary's parent and the Company.
COMMERCIAL PAPER: There are three commercial paper programs.
The first program was used by a subsidiary to finance the construction of a
vessel, which was completed in 1992. At December 31, 1994, $149,570,000 of
commercial paper notes was outstanding under this program. Maturities ranged
from 3 to 41 days. The borrowings outstanding under this program are
classified as long-term since the subsidiary intends to continue the program
indefinitely, and eventually to repay the program with qualified withdrawals
from the Capital Construction Fund.
The second commercial paper program, which commenced in 1992, was used to
finance the acquisition of marine containers. At December 31, 1994,
$82,731,000 of commercial paper notes was outstanding under this program.
Maturities ranged from 4 to 37 days. The commercial paper borrowings
outstanding under this program are classified as long-term since the
subsidiary intends to continue this program on a long-term basis and has
established the necessary credit facilities to do so. At December 31, 1994,
$100,000,000 of long-term revolving credit facilities was available to support
these outstanding notes.
The third commercial paper program is used by a subsidiary to fund the
purchases of sugar inventory from Hawaii sugar growers and to provide working
capital for sugar refining and marketing operations. At December 31, 1994,
$72,000,000 of commercial paper notes was outstanding under this program. The
interest cost and certain fees on the borrowings relating to sugar inventory
advances to growers are paid by the growers rather than by the subsidiary. At
December 31, 1994, no amounts were outstanding as advances to growers under
this program. Maturities ranged from 4 to 34 days. Of the total commercial
paper borrowing, $58,000,000 was classified as current. The commercial paper
is supported by a $100,000,000 backup revolving credit facility with six
commercial banks. Both the commercial paper program and the backup facility
are guaranteed by the subsidiary's parent and the Company.
SPECIAL FACILITY REVENUE BONDS: A subsidiary is obligated to pay principal of
and interest on $16,500,000 of 5.75% Special Facility Revenue Bonds issued in
1993 and due in 2013. An accrual is included in long-term debt for the pro-
rata portion of the principal due on these bonds (see Note 5).
LONG-TERM DEBT MATURITIES: At December 31, 1994, maturities and planned
prepayments of all long-term debt during the next five years totaled
$27,239,000 for 1995, $36,542,000 for 1996, $36,718,000 for 1997, $29,210,000
for 1998 and $37,377,000 for 1999.
7. INCOME TAXES
The provision for income taxes for the three years ended December 31, 1994
consisted of the following:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
(In thousands)
<S> <C> <C> <C>
Current:
Federal $15,189 $13,275 $ 9,908
State 260 2,167 435
------- ------- -------
Total 15,449 15,442 10,343
Deferred 23,178 30,738 13,332
------- ------- -------
Provision for income taxes $38,627 $46,180 $23,675
======= ======= =======
</TABLE>
Total income tax expense for the three years ended December 31, 1994 differs
from amounts computed by applying the statutory Federal rate to pre-tax
income, for the following reasons:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
(In thousands)
<S> <C> <C> <C>
Computed income tax
expense $39,632 $39,609 $28,621
Increase (decrease) resulting
from:
Tax rate increases - 7,741 -
State tax on income, less
applicable Federal tax 1,542 1,417 2,106
Resolution of tax audits - - (2,506)
Fair market value over
cost of donations (2,138) - (1,927)
Low-income housing credits (1,219) (1,214) (1,214)
Other-net 810 (1,373) (1,405)
------- ------- -------
Provision for income
taxes $38,627 $46,180 $23,675
======= ======= =======
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the net deferred tax liability at December 31, 1994 and 1993 were
as follows:
<TABLE>
<CAPTION>
1994 1993
-------- --------
(In thousands)
<S> <C> <C>
Deposits to the CCF $201,963 $198,414
Accelerated depreciation 111,253 101,252
Tax-deferred gains on real
estate transactions 68,488 64,469
Unrealized holding gains on
securities 17,273 -
Post-retirement benefits (45,209) (45,041)
Alternative minimum tax
benefits (6,531) (5,893)
Capitalized leases 2,409 (6,328)
Insurance reserves (1,759) (4,813)
Other-net (13,292) (5,653)
-------- --------
Total $334,595 $296,407
======== ========
</TABLE>
The Internal Revenue Service has completed audits of the Company's tax returns
through 1988 and, with one exception, has tentatively settled all issues
raised during such audits. The settlements had no material effect on the
Company's financial position or results of operations. The Company is
contesting the remaining issue, which relates to the timing of certain
deductions for tax purposes. Management believes that the ultimate resolution
of this issue will not have a material effect on the Company's financial
position.
8. CAPITAL STOCK AND STOCK OPTIONS
A&B has a stock option plan ("1989 Plan") under which key employees may be
granted stock purchase options and stock appreciation rights. A second stock
option plan for key employees terminated in 1993, but shares previously
granted under the plan are still exercisable. Under the 1989 Plan, option
prices may not be less than the fair market value of a share of the Company's
common stock on the dates of grant, and each option generally becomes
exercisable in-full one year after the date granted. Payment for options
exercised, to the extent not reduced by the application or surrender of stock
appreciation rights, may be made in cash or in shares of the Company's stock.
If payment is made in shares of the Company's stock, the option holder may
receive, under a reload feature of the 1989 Plan, a new stock option for the
number of shares equal to that surrendered, with an option price not less than
at the fair market value of the Company's stock on the date of exercise.
During 1994, 448,200 new options were granted under the 1989 Plan.
The 1989 Plan also permits issuance of shares of the Company's common stock as
a reward for past service rendered to the Company or one of its subsidiaries
or as an incentive for future service with such entities. The recipients'
interest in such shares may be fully vested upon issuance or may vest in one
or more installments, upon such terms and conditions as are determined by the
committee which administers the plan.
The Company also has a Directors' stock option plan, under which each non-
employee Director of the Company, elected at an Annual Meeting of
Shareholders, is automatically granted, on the date of each such Annual
Meeting, an option to purchase 3,000 shares of the Company's common stock at
the average fair market value of the shares for the five consecutive trading
days prior to the grant date. Each option becomes exercisable six months
after the date granted. At December 31, 1994, a total of 150,000 options have
been granted under the plan, 3,000 options have been cancelled and no options
have been exercised.
Changes in shares under all option plans for the three years ended December
31, 1994, were as follows:
<TABLE>
<CAPTION>
Price Range
Shares Per Share
--------- --------------
<S> <C> <C>
1992:
Outstanding, January 1 1,383,205 $17.375-37.875
Granted 495,665 24.250-28.250
Exercised (126,266) 17.375-24.250
Canceled (41,700) 24.250-36.250
Outstanding, ---------
December 31 1,710,904 17.375-37.875
1993:
Granted 423,200 24.250-24.500
Exercised (23,576) 17.375-24.750
Canceled (73,400) 24.250-36.250
Outstanding, ---------
December 31 2,037,128 17.375-37.875
1994:
Granted 475,200 24.700-27.000
Exercised (12,300) 17.375-24.750
Canceled (55,996) 24.250-36.250
Outstanding,
December 31 ---------
(1,996,051 exercisable) 2,444,032 $17.375-37.875
=========
</TABLE>
Options outstanding at December 31, 1994 include 60,166 shares which carry
stock appreciation rights. The outstanding options do not have a material
dilutive effect in the calculation of earnings per share of common stock.
The Company has a Shareholder Rights Plan, designed to protect the interests
of shareholders in the event an attempt is made to acquire the Company. The
rights initially will trade with the Company's outstanding common stock and
will not be exercisable absent certain acquisitions or attempted acquisitions
of specified percentages of such stock. If exercisable, the rights generally
entitle shareholders to purchase additional shares of the Company's stock or
shares of an acquiring company's stock at prices below market value.
9. CAPITAL CONSTRUCTION FUND
A subsidiary is party to an agreement with the United States Government which
established a Capital Construction Fund (CCF) under provisions of the Merchant
Marine Act, 1936, as amended. The agreement has program objectives for the
acquisition, construction or reconstruction of vessels and for repayment of
existing vessel indebtedness. Deposits to the CCF are limited by certain
applicable earnings. Such deposits are not subject to Federal income taxes in
the year earned, but are taxable, with interest payable from the year of
deposit, if withdrawn for general corporate purposes or other non-qualified
purposes, or upon termination of the agreement. Qualified withdrawals for
investment in vessels having adequate tax bases do not give rise to a current
tax liability, but reduce the depreciable bases of the vessels or other assets
for income tax purposes. Amounts deposited into the CCF are preference items
for inclusion in Federal alternative minimum taxable income. Deposits not
committed for qualified purposes within 25 years from December 31, 1986, or
later date of deposit, will be treated as non-qualified withdrawals.
As discussed in Note 4, in 1994 the Company adopted the provisions of SFAS No.
115. The subsidiary has classified its investments in the CCF as "held-to-
maturity" and, accordingly, has not reflected temporary unrealized market
gains and losses in the Balance Sheets or Statements of Income. The long-term
nature of the CCF program supports the subsidiary's intention to hold these
investments to maturity.
At December 31, 1994 and 1993, the balances on deposit in the CCF consisted of
the following (in thousands):
<TABLE>
<CAPTION>
1994 1993
------------------------------ --------
AMORTIZED FAIR UNREALIZED Amortized
COST VALUE LOSS Cost
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Mortgage-backed
securities $108,247 $ 96,678 $(11,569) $127,871
Cash and cash
equivalents 64,263 64,263 - 48,106
Treasury notes 2,984 2,984 - -
Accrued deposits
(withdrawals) 550 550 - (783)
-------- -------- -------- --------
Total $176,044 $164,475 $(11,569) $175,194
======== ======== ======== ========
</TABLE>
Fair value of the mortgage-backed securities ("MBS") was determined by an
outside investment management company, based on the experience of trading
identical or substantially similar securities. No central exchange exists for
these securities; they are traded over-the-counter.
During 1994, the fair value of the subsidiary's investments in MBS declined in
relation to amortized cost, due to interest rate sensitivity inherent in the
fair value determination of such securities. While a temporary unrealized
market loss exists, the subsidiary intends to hold these investments to
maturity, which ranges from 1995 through 2024. The MBS have a weighted
average life of 4.5 years. The Company had earnings of $8,292,000 in 1994,
$7,218,000 in 1993 and $11,293,000 in 1992 from its MBS investment account.
Fair values of the remaining CCF investments were based on quoted market
prices, if available. If a quoted market price was not available, fair value
was estimated, using quoted market prices of similar securities and
investments. These remaining investments mature in 1995.
During 1994, there were no sales of securities classified as "held-to-
maturity" included in the CCF.
10. RELATED PARTY TRANSACTIONS, COMMITMENTS AND CONTINGENCIES
At December 31, 1994, the Company and its subsidiaries had an unspent balance
of total appropriations for capital expenditures of approximately
$104,677,000. However, there is no contractual obligation to spend this
entire amount.
A subsidiary has arranged for standby letters of credit of approximately
$15,800,000, necessary to qualify as a self-insurer for state and federal
workers' compensation liabilities.
Bank letters of credit have been issued on behalf of a subsidiary in favor of
certain container manufacturers. When presented, these letters may be paid,
at the subsidiary's option, by a back-up line of credit. At December 31,
1994, $1,585,000 was outstanding under these letters of credit.
A subsidiary is party to a five-year agreement with a computer processing
service, expiring in 1996, to provide off-site mainframe processing. The
annual average cost of this agreement is $4,150,000.
A subsidiary has received a favorable court judgment resulting from a
contested insurance claim. The claim was for reimbursement of certain
expenses incurred by the subsidiary in connection with repairing port
facilities damaged by a 1989 earthquake. Although the award has been
appealed, management and its outside counsel believe that the ultimate outcome
of this litigation will be an award at least equal to the claim recorded in
the financial statements.
A subsidiary is a party, acting as the steam host, to a Steam Purchase
Agreement with a developer who has received regulatory authority approval to
construct and operate a cogeneration facility contiguous to the subsidiary's
California refinery. The agreement provides that, during the 30-year period
of the agreement, the subsidiary will receive steam necessary for refinery
operations at a reduced price, compared to the market price of fuel which
presently must be purchased to generate its steam requirements.
A subsidiary is party to a long-term sugar supply contract with Hawaiian Sugar
& Transportation Cooperative (HSTC), a raw sugar marketing and transportation
cooperative owned by two other subsidiaries and by the other Hawaii sugar
growers. Under the terms of this contract, the subsidiary is obligated to
purchase, and HSTC is obligated to sell, all of the raw sugar delivered to
HSTC by the Hawaii sugar growers, at prices determined by the quoted domestic
sugar market. The subsidiary made purchases of raw sugar totaling
$271,212,000 and $134,700,000 under the contract during 1994 and 1993,
respectively. The contract also requires that the subsidiary provide cash
advances to HSTC prior to the physical receipt of the sugar at its refineries
(see Note 6). Such advances are determined by the estimated raw sugar market
prices. Amounts due to HSTC upon delivery of raw sugar to the subsidiary's
refineries are offset against outstanding advances to HSTC.
The Company and certain subsidiaries are parties to various legal actions and
are contingently liable in connection with claims and contracts arising in the
normal course of business, the outcome of which, in the opinion of management
after consultation with legal counsel, will not have a material adverse effect
on the Company's financial position.
11. INDUSTRY SEGMENTS
Industry segment information for 1994, 1993 and 1992, on page 28, is
incorporated herein by reference. Segments are:
Ocean transportation -- carrying freight between various U.S. and Canadian
West Coast, Hawaii and Western Pacific ports, and providing terminal services.
Container leasing -- leasing marine containers in international markets.
Property development and management -- developing, managing and selling
residential, commercial and industrial properties.
Food products -- growing, processing and marketing sugar, molasses and coffee,
and generating and selling electricity.
<PAGE>
Directors And Officers
Alexander & Baldwin, Inc.
DIRECTORS
MICHAEL J. CHUN (51)*
President, The Kamehameha Schools (educational institution)
JOHN C. COUCH (55)
President and Chief Executive Officer, Alexander & Baldwin, Inc.
President and Chief Executive Officer, A&B-Hawaii, Inc.
Vice Chairman of the Board, Matson Navigation Company, Inc.
LEO E. DENLEA JR. (63)*
Chairman of the Board, President and Chief Executive Officer,
Farmers Group, Inc. (insurance)
WALTER A. DODS JR. (53)*
Chairman of the Board and Chief Executive Officer, First Hawaiian, Inc.
Chairman of the Board and Chief Executive Officer, First Hawaiian Bank
(banking)
CHARLES G. KING (49)**
Vice President, Kuhio Motors, Inc. (automobile dealership)
CARSON R. McKISSICK (62)*
Managing Director, The Corporate Development Company (financial advisory
services)
C. BRADLEY MULHOLLAND (53)
President and Chief Executive Officer, Matson Navigation Company, Inc.
R. J. PFEIFFER (75)*
Chairman of the Board, Alexander & Baldwin, Inc.
Chairman of the Board, A&B-Hawaii, Inc.
Chairman of the Board, Matson Navigation Company, Inc.
ROBERT G. REED III (67)**
Independent Business Consultant
MARYANNA G. SHAW (56)*
Private Investor
CHARLES M. STOCKHOLM (62)**
Managing Director, Trust Company of the West (investment management services)
ADVISORY DIRECTOR
ALEXANDER C. WATERHOUSE (83)
Vice Chairman, Waterhouse Properties, Inc. (private investments)
* Audit Committee Members
** Compensation and Stock Option Committee Members
All ages as of March 31, 1995
<PAGE>
Alexander & Baldwin, Inc.
Officers
R. J. PFEIFFER (75)
Chairman of the Board
JOHN C. COUCH (55)
President and Chief Executive Officer
MEREDITH J. CHING (38)
Vice President (Government & Community Relations)
G. STEPHEN HOLADAY (50)
Vice President and Controller
JOHN B. KELLEY (49)
Vice President (Corporate Planning & Development, Investor Relations)
MILES B. KING (47)
Vice President and Chief Administrative Officer
MICHAEL J. MARKS (56)
Vice President, General Counsel and Secretary
GLENN R. ROGERS (51)
Vice President, Chief Financial Officer and Treasurer
ROBERT K. SASAKI (54)
Vice President (Properties)
<PAGE>
A&B-Hawaii, Inc.
Officers
R. J. PFEIFFER (75)
Chairman of the Board
JOHN C. COUCH (55)
President and Chief Executive Officer
W. ALLEN DOANE (47)
Executive Vice President and Chief Operating Officer
RICHARD F. CAMERON (62)
Senior Vice President (Agribusiness)
G. STEPHEN HOLADAY (50)
Senior Vice President, Chief Financial Officer and Treasurer
MILES B. KING (47)
Senior Vice President (Industrial Relations)
DAVID G. KONCELIK (53)
Senior Vice President (President and Chief Executive Officer, California and
Hawaiian Sugar Company, Inc.)
MICHAEL J. MARKS (56)
Senior Vice President and General Counsel
ROBERT K. SASAKI (54)
Senior Vice President (Properties)
NORBERT M. BUELSING (44)
Vice President (Property Leasing)
MEREDITH J. CHING (38)
Vice President (Government & Community Relations)
KEITH A. GOTO (51)
Vice President (Labor Relations)
JOHN B. KELLEY (49)
Vice President (Corporate Planning & Development)
STANLEY M. KURIYAMA (41)
Vice President (Land Planning & Entitlements)
JUDITH A. WILLIAMS (51)
Vice President (Assistant Manager, McBryde)
THOMAS A. WELLMAN (36)
Controller
ALYSON J. NAKAMURA (29)
Secretary
<PAGE>
Matson Navigation Company, Inc.
Officers
R. J. PFEIFFER (75)
Chairman of the Board
JOHN C. COUCH (55)
Vice-Chairman of the Board
C. BRADLEY MULHOLLAND (53)
President and Chief Executive Officer
RAYMOND J. DONOHUE (58)
Senior Vice President and Chief Financial Officer
FREDERICK M. GUTTERSON (52)
Senior Vice President (President and Chief Executive Officer,
Matson Leasing Company, Inc.)
MILES B. KING (47)
Senior Vice President (Human Resources)
GARY J. NORTH (50)
Senior Vice President (Operations) (President and Chief Operating Officer,
Matson Terminals, Inc.)
RICHARD S. BLISS (56)
Vice President (Area Manager, Hawaii)
ROBERT L. DAWDY (50)
Vice President ( West Coast Operations)
BRANTON B. DREYFUS (41)
Vice President (Area Manager, Southern California)
JOHN C. GOSLING (58)
Vice President (General Manager, Engineering)
PHILIP M. GRILL (47)
Vice President (Government Relations)
DALE B. HENDLER (41)
Vice President (Information Services)
MERLE A. K. KELAI (63)
Vice President (Community Relations)
KEVIN C. O'ROURKE (48)
Vice President and General Counsel
RONALD H. ROTHMAN (53)
Vice President (Industrial Relations)
PAUL E. STEVENS (42)
Vice President (Marketing)
MICHAEL J. MARKS (56)
Secretary
TIMOTHY H. REID (48)
Treasurer
JOSEPH A. PALAZZOLO (46)
Controller
<PAGE>
Principal Subsidiaries
And Affiliates (1)
A&B-HAWAII, INC. Honolulu
Division:
Hawaiian Commercial & Sugar Company Puunene, Maui
Subsidiaries:
A&B Development Company (California) San Francisco
A&B Properties, Inc. Honolulu
California and Hawaiian Sugar
Company, Inc. Crockett, CA
East Maui Irrigation Company, Limited Puunene, Maui
Kahului Trucking & Storage, Inc. Kahului, Maui
Kauai Commercial Company, Incorporated Puhi, Kauai
Kukui'ula Development Company, Inc. Poipu, Kauai
McBryde Sugar Company, Limited Eleele, Kauai
Subsidiary: Island Coffee
Company, Inc. Eleele, Kauai
South Shore Community Services, Inc. Poipu, Kauai
South Shore Resources, Inc. Poipu, Kauai
WDCI, INC. Honolulu
HAWAIIAN SUGAR & TRANSPORTATION COOPERATIVE (2) Crockett, CA
MATSON NAVIGATION COMPANY, INC. San Francisco
Subsidiaries:
Matson Intermodal System, Inc. San Francisco
Matson Leasing Company, Inc. San Francisco
Matson Services Company, Inc. San Francisco
Matson Terminals, Inc. San Francisco
----------------------------------------------------------
(1) Wholly owned unless otherwise indicated.
(2) A cooperative owned with other Hawaii sugar companies.
----------------------------------------------------------
<PAGE>
INVESTOR INFORMATION
ANNUAL MEETING
The Annual Meeting of Shareholders will be held in the Plaza Meeting Room on
the ground floor of Amfac Center, 745 Fort Street, Honolulu, Hawaii at 10 a.m.
on Thursday, April 27, 1995.
INVESTOR INQUIRIES
Shareholders having questions about A&B are encouraged to write to R. J.
Pfeiffer, Chairman of the Board; John C. Couch, President and Chief Executive
Officer; or Michael J. Marks, Vice President, General Counsel and Secretary.
Inquiries from professional investors may be directed to John B. Kelley, Vice
President, Investor Relations. Phone (808) 525-8422.
FORM 10-K
Shareholders may obtain a copy of the Company's Annual Report on Form 10-K, as
filed with the Securities and Exchange Commission, without charge, by writing
to Michael J. Marks, Vice President, General Counsel and Secretary, Alexander &
Baldwin, Inc., P. O. Box 3440, Honolulu, HI 96801-3440.
TRANSFER AGENTS
CHEMICAL TRUST COMPANY OF CALIFORNIA
San Francisco, California
CHEMICAL BANK
New York, New York
REGISTRARS
CHEMICAL TRUST COMPANY OF CALIFORNIA
San Francisco, California
CHEMICAL BANK
New York, New York
AUDITORS
DELOITTE & TOUCHE LLP
Honolulu, Hawaii
EXHIBIT 22
ALEXANDER & BALDWIN, INC.
SUBSIDIARIES AS OF FEBRUARY 28, 1995
State or Other
Jurisdiction Under
Name of Subsidiary Which Organized
A&B-Hawaii, Inc. Hawaii
Subsidiaries:
A & B Development Company (California) California
A & B Properties, Inc. Hawaii
California and Hawaiian Sugar
Company, Inc. Hawaii
East Maui Irrigation Company, Limited Hawaii
Kahului Trucking & Storage, Inc. Hawaii
Kauai Commercial Company, Incorporated Hawaii
Kukui'ula Development Company, Inc. Hawaii
McBryde Sugar Company, Limited Hawaii
Subsidiary: Island Coffee
Company, Inc. Hawaii
South Shore Community Services, Inc. Hawaii
South Shore Resources, Inc. Hawaii
WDCI, INC. Hawaii
Matson Navigation Company, Inc. Hawaii
Subsidiaries:
Matson Intermodal System, Inc. Hawaii
Matson Leasing Company, Inc. Hawaii
Subsidiaries:
Matson Leasing Company GmbH Germany
Matson Leasing Company (HK) Limited Hong Kong
Matson Leasing Company Limited United Kingdom
Matson Leasing Company
(Singapore) Pte Ltd Singapore
Matson Leasing Company S.A.R.L. France
Matson Leasing Company (Europe)
(S.A.R.L.) France
Matson Leasing Company Servicos Ltda. Brazil
Pacific International Container
Corporation Hawaii
Matson Services Company, Inc. Hawaii
Matson Terminals, Inc. Hawaii
NOTE: Certain A&B subsidiaries, which considered in the aggregate do not
constitute a significant subsidiary, have been omitted.
INDEPENDENT AUDITORS' CONSENT
Alexander & Baldwin, Inc.:
We consent to the incorporation by reference in Registration Statements No. 2-
72008, 2-84179, 33-31922, 33-31923 and 33-54825 of Alexander & Baldwin, Inc. and
its subsidiaries on Form S-8 of our reports dated January 27, 1995, appearing in
and incorporated by reference in the Annual Report on Form 10-K of Alexander &
Baldwin, Inc. and its subsidiaries for the year ended December 31, 1994.
/s/ Deloitte & Touche LLP
March 27, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information exacted from the
balance sheet as of December 31, 1994 and the statement of income for
the year ended December 31, 1994, included in the 1994 Annual Report
(1994 10K Exhibit 13) and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 9,557
<SECURITIES> 0
<RECEIVABLES> 153,091
<ALLOWANCES> 10,133
<INVENTORY> 90,677
<CURRENT-ASSETS> 276,547
<PP&E> 2,093,829
<DEPRECIATION> 812,283
<TOTAL-ASSETS> 1,932,788
<CURRENT-LIABILITIES> 204,831
<BONDS> 526,231
<COMMON> 37,493
0
0
<OTHER-SE> 595,121
<TOTAL-LIABILITY-AND-EQUITY> 1,932,788
<SALES> 1,185,210
<TOTAL-REVENUES> 1,208,165
<CGS> 939,766
<TOTAL-COSTS> 939,766
<OTHER-EXPENSES> 127,462
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27,702
<INCOME-PRETAX> 113,235
<INCOME-TAX> 38,627
<INCOME-CONTINUING> 74,608
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 74,608
<EPS-PRIMARY> 1.62
<EPS-DILUTED> 1.62
</TABLE>
