FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1998
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OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-565
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ALEXANDER & BALDWIN, INC.
-------------------------
(Exact name of registrant as specified in its charter)
HAWAII 99-0032630
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P. O. BOX 3440, HONOLULU, HAWAII 96801
822 BISHOP STREET, HONOLULU, HAWAII 96813
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(Address of principal executive (Zip Code)
offices)
(808) 525-6611
--------------
(Registrant's telephone number, including area code)
N/A
---
(Former name, former address and former
fiscal year, if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes /X/ No / /
Number of shares of common stock outstanding as of
September 30, 1998: 44,710,740
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- -----------------------------
The condensed financial statements and notes for the third quarter and first
nine months of 1998 are presented below with comparative figures from the 1997
financial statements.
<TABLE>
ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF INCOME
(In thousands, except per share amounts)
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
1998 1997 1998 1997
---- ---- ---- ----
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenue:
Net sales, revenue from services and rentals $322,204 $321,869 $967,973 $905,861
Interest, dividends and other 4,158 4,137 15,621 34,325
-------- -------- -------- --------
Total revenue 326,362 326,006 983,594 940,186
-------- -------- -------- --------
Costs and Expenses:
Costs of goods sold, services and rentals 271,563 258,414 810,724 740,546
Selling, general and administrative 26,520 26,260 79,830 79,353
Interest 6,229 6,770 18,602 22,515
Income taxes 8,270 12,690 27,914 36,396
-------- -------- -------- --------
Total costs and expenses 312,582 304,134 937,070 878,810
-------- -------- -------- --------
Net Income $ 13,780 $ 21,872 $ 46,524 $ 61,376
======== ======== ======== ========
Basic Earnings Per Share $ 0.31 $ 0.48 $ 1.04 $ 1.36
Diluted Earnings Per Share $ 0.31 $ 0.48 $ 1.03 $ 1.35
Dividends Per Share $ 0.225 $ 0.220 $ 0.675 $ 0.660
Average Number of Shares Outstanding 44,842 45,135 44,851 45,227
</TABLE>
<PAGE>
<TABLE>
ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES
INDUSTRY SEGMENT DATA
(In thousands)
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
1998 1997 1998 1997
---- ---- ---- ----
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenue:
Ocean Transportation $180,202 $179,106 $541,126 $535,231
Property Development and Management:
Leasing 9,576 9,320 28,009 28,045
Sales 6,246 4,080 74,819 22,671
Food Products 129,620 132,816 337,488 352,135
Other 718 684 2,152 2,104
-------- -------- -------- --------
Total $326,362 $326,006 $983,594 $940,186
======== ======== ======== ========
Operating Profit:(1)
Ocean Transportation $ 16,200 $ 24,405 $ 50,357 $ 81,262
Property Development and Management:
Leasing 5,786 6,105 17,274 18,772
Sales 1,633 1,257 20,269 5,917
Food Products 7,557 11,778 13,602 21,170
Other 642 652 2,005 1,986
-------- -------- -------- --------
Total $ 31,818 $ 44,197 $103,507 $129,107
======== ======== ======== ========
(1) Before interest expense, corporate expenses and income taxes
</TABLE>
<PAGE>
<TABLE>
ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES
CONDENSED BALANCE SHEETS
(In thousands)
<CAPTION>
SEPTEMBER 30 December 31
1998 1997
---- ----
(UNAUDITED) (audited)
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 7,966 $ 21,623
Accounts and notes receivable, net 176,526 176,165
Inventories 95,897 69,209
Real estate held for sale 10,485 12,563
Deferred income taxes 11,638 9,404
Prepaid expenses and other assets 12,918 9,977
Accrued deposits to Capital Construction Fund - (10,000)
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Total current assets 315,430 288,941
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Investments 83,894 102,813
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Real Estate Developments 68,532 68,056
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Property, at cost 1,929,087 1,975,023
Less accumulated depreciation and amortization 876,810 938,508
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Property - net 1,052,277 1,036,515
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Capital Construction Fund 141,410 148,610
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Other Assets 76,426 59,863
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Total $1,737,969 $1,704,798
========== ==========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 52,944 $ 34,485
Short-term commercial paper borrowings 60,000 17,000
Accounts payable 49,348 46,835
Other 85,327 75,815
---------- ----------
Total current liabilities 247,619 174,135
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Long-term Liabilities:
Long-term debt 264,028 290,885
Capital lease obligations 1,500 2,000
Post-retirement benefit obligations 109,163 112,125
Other 44,707 46,311
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Total long-term liabilities 419,398 451,321
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Deferred Income Taxes 351,485 359,754
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Shareholders' Equity:
Capital stock 36,611 36,769
Additional capital 51,898 49,437
Unrealized holding gains on securities 42,612 55,144
Retained earnings 600,897 591,135
Cost of treasury stock (12,551) (12,897)
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Total shareholders' equity 719,467 719,588
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Total $1,737,969 $1,704,798
========== ==========
</TABLE>
<PAGE>
<TABLE>
ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
<CAPTION>
Nine Months Ended
September 30
1998 1997
---- ----
(unaudited)
<S> <C> <C>
Cash Flows from Operating Activities $ 60,198 $103,908
-------- --------
Cash Flows from Investing Activities:
Capital expenditures (73,083) (32,262)
Proceeds from disposal of property, investments
and other assets 3,620 475
Deposits into Capital Construction Fund (10,000) (10,000)
Withdrawals from Capital Construction Fund 7,200 50,000
Increase in investments (600) (2,221)
Reduction in investments 136 1,798
-------- --------
Net cash provided by (used in)
investing activities (72,727) 7,790
-------- --------
Cash Flows from Financing Activities:
Proceeds from issuances of long-term debt 15,000 34,500
Payments of long-term debt (43,750) (119,680)
Proceeds from short-term borrowings, net 63,000 3,500
Proceeds from issuances of capital stock 1,575 1,645
Repurchases of capital stock (6,662) (10,721)
Dividends paid (30,291) (29,875)
-------- --------
Net cash used in financing activities (1,128) (120,631)
-------- --------
Net Decrease in Cash and Cash Equivalents $(13,657) $ (8,933)
======== ========
Other Cash Flow Information:
Interest paid, net of amounts capitalized $ 20,052 $ 23,961
Income taxes paid, net of refunds 24,006 11,731
Other Non-Cash Information:
Net accrued deposits to (withdrawals from)
Capital Construction Fund (10,000) 9,448
Depreciation 67,077 67,198
Tax-deferred property exchanges 64,349 9,589
Change in unrealized holding gains (12,532) 8,610
</TABLE>
<PAGE>
FINANCIAL NOTES
(Unaudited)
(a) The condensed balance sheet as of September 30, 1998, the condensed
statements of income for the three months and nine months ended September
30, 1998 and 1997, and the condensed statements of cash flows for the nine
months ended September 30, 1998 and 1997 are unaudited. Because of the
nature of the Company's operations, the results for interim periods are
not necessarily indicative of results to be expected for the year, but in
the opinion of management, all material adjustments necessary for the fair
presentation of interim period results have been included in the interim
financial statements.
(b) Estimated effective annual income tax rates differ from statutory rates,
primarily due to the dividends-received deduction and various tax credits.
(c) The Company's total non-owner changes in shareholders' equity consists of
net income plus unrealized holding gains on securities (comprehensive
income). On this basis, comprehensive income for the three months ended
September 30, 1998 and 1997 totaled $6 million and $31 million,
respectively. Comprehensive income for the nine months ended
September 30, 1998 and 1997 totaled $34 million and $71 million,
respectively.
(d) Results for the nine months ended September 30, 1997 for ocean
transportation include $20 million, pre-tax, from the settlement of a
lawsuit that involved insurance claims for earthquake damage to port
facilities in 1989.
(e) Certain amounts have been reclassified to conform with the current year's
presentation.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- ------------------------------------------------
THIRD QUARTER EVENTS:
OPERATING RESULTS: Net income for the third quarter of 1998 was $13,780,000,
or $0.31 per share. Net income for the comparable period of 1997 was
$21,872,000, or $0.48 per share. Revenue for the third quarter of 1998 was
$326,362,000, nearly the same as $326,006,000 in the third quarter of 1997.
Net income for the first nine months of 1998 was $46,524,000, or $1.04 per
share, versus $61,376,000, or $1.36 per share, in the first nine months of
1997. Net income for the first nine months of 1997 included $12,478,000,
or $0.28 per share, resulting from the favorable settlement of long-standing
insurance litigation. Excluding that insurance settlement from the 1997
results, income for the first nine months of 1998 decreased $2,374,000, or
five percent. Revenue for the first nine months of 1998 was $983,594,000,
compared with revenue of $940,186,000 in the first nine months of 1997.
Excluding the insurance settlement, nine-month 1998 revenue increased seven
percent.
FINANCIAL CONDITION AND LIQUIDITY
The Company's principal liquid resources, comprising cash and cash equivalents,
receivables, sugar and coffee inventories and unused lines of credit, less
accrued deposits to the Capital Construction Fund (CCF), totaled $424,475,000
at September 30, 1998, a decrease of $59,201,000 from December 31, 1997. This
decrease was due primarily to lower amounts available under lines of credit and
to a lower cash balance, partially offset by increased sugar and coffee
inventories and a decrease in accrued deposits to the CCF. Amounts available
under lines of credit decreased $85,500,000, primarily due to a decrease in
credit facilities and increased borrowing for the purchase of raw sugar and
container equipment. Cash decreased by $13,657,000, due primarily to normal
expenditures for container equipment, debt repayments and operating cash
requirements. Sugar and coffee inventories increased $29,595,000, due
principally to higher levels of raw sugar inventory.
Working capital was $67,811,000 at September 30, 1998, a decrease of
$46,995,000 from the amount at the end of 1997. This decrease was due
primarily to increases in short-term debt, commercial paper borrowings and
accounts payable, and lower cash balances, partially offset by an increase in
inventories and a decrease in accrued deposits to the CCF.
In August 1998, Matson Navigation Company, Inc. ("Matson") purchased a vessel
for $7,200,000. The vessel, built in 1973, has been leased by Matson for all
of its 25-year life.
RESULTS OF SEGMENT OPERATIONS -
THIRD QUARTER 1998 COMPARED WITH THE THIRD QUARTER 1997
OCEAN TRANSPORTATION revenue of $180,202,000 for the third quarter of 1998 was
one-percent higher than the 1997 third-quarter revenue. Operating profit of
$16,200,000, however, decreased 34 percent compared with the third quarter of
1997, primarily the result of lower cargo revenue in the Hawaii service because
of both lower volume and rates. The decline in cargo volume resulted primarily
from continued contraction in the Hawaii market and a barge competitor which
temporarily served Hawaii during the peak summer period of household-goods
movements. These factors more than offset the benefits of a revised operating
alliance with American President Lines, Ltd. Third quarter 1998 Hawaii service
container volume was eight-percent lower than in the 1997 third quarter, and
automobile volume was 13-percent lower.
In response to the continuing weakness in the Hawaii economy, Matson
implemented a new schedule in its service between Hawaii and the U.S. mainland
in mid-September. The new schedule, which utilizes six (rather than eight)
ships, is projected to reduce operating expenses by up to $10,000,000 annually,
while still maintaining a high level of service. Separately, negotiations were
completed in late-September to charter two idle Matson vessels to an ocean
carrier which will provide service between Florida and Puerto Rico.
PROPERTY DEVELOPMENT AND MANAGEMENT - LEASING revenue of $9,576,000 for the
third quarter of 1998 was three-percent higher than in the third quarter of
1997. However, operating profit of $5,786,000 was five-percent lower than in
the comparable period of 1997. The decrease was due primarily to lower
occupancy levels, which resulted, in turn, from both the relatively weak Hawaii
lease market and the timing of property sales and acquisitions on the Mainland.
PROPERTY DEVELOPMENT AND MANAGEMENT - SALES revenue of $6,246,000 for the third
quarter of 1998 was 53-percent higher than the $4,080,000 recorded in the third
quarter of 1997. Operating profit from property sales this quarter was
$1,633,000, versus $1,257,000 a year earlier. Sales in the third quarter of
1998 included a total of 30 lower-margin residential properties in several
developments on the island of Maui. Sales in the third quarter of 1997
included an undeveloped parcel, one developed business lot and 13 residential
properties on Maui.
The mix of property sales in any year can be diverse. Sales can include
property sold under threat of condemnation, developed residential real estate,
commercial properties, developable subdivision lots and undeveloped land. The
sale of undeveloped land generally provides a greater contribution margin than
does the sale of developed and commercial property, due to the low historical-
cost basis of the Company's Hawaii land, which averages approximately $150 per
acre. Consequently, property sales revenue trends and the amount of real
estate held for sale on the condensed balance sheets are not necessarily
indicative of future profitability for this segment.
FOOD PRODUCTS revenue of $129,620,000 for the third quarter of 1998 was two-
percent lower than the revenue reported for the comparable period of 1997.
Operating profit of $7,557,000 for the third quarter of 1998 decreased 36
percent, from $11,778,000 in the same period in 1997. The decrease was due
primarily to lower refined sugar prices, offset, in part, by greater volume and
lower costs of raw sugar production.
RESULTS OF SEGMENT OPERATIONS -
FIRST NINE MONTHS OF 1998 COMPARED WITH THE FIRST NINE MONTHS OF 1997
OCEAN TRANSPORTATION revenue of $541,126,000, for the first nine months of
1998, rose one percent and operating profit of $50,357,000 decreased 38
percent. One reason for the decrease was the favorable insurance settlement
in 1997. Excluding that factor ($19,965,000, pretax), 1998 first nine-months
operating profit was 18-percent lower than in 1997. This decrease was due to
the same reasons cited for the third quarter decline. Matson's Hawaii service
container volume in the first nine months of 1998 was four-percent lower than
in the first nine months of 1997, and automobile volume was five-percent lower.
PROPERTY DEVELOPMENT AND MANAGEMENT - LEASING revenue of $28,009,000, for the
first nine months of 1998, was virtually the same as in the comparable 1997
period. However, nine-months 1998 property leasing operating profit of
$17,274,000 was eight-percent lower than in the nine months of 1997. This
decrease was due to the same reasons cited for the third quarter decline. The
additional leased properties in the first nine months of 1998 included four
income properties on the U.S. Mainland, two in San Antonio, Texas and two in
Sacramento, California. The new properties were acquired using tax-deferred
funds from previous property sales. Year-to-date 1998 occupancy levels for
Mainland properties averaged 92 percent, versus 98 percent in the first nine
months of 1997. Occupancy levels for Hawaii properties averaged 68 percent,
versus 78 percent in the comparable period of 1997. The decreases were due
primarily to both the relatively weak Hawaii lease market and the timing of
property sales and acquisitions on the U.S. Mainland.
PROPERTY DEVELOPMENT AND MANAGEMENT - SALES revenue was $74,819,000 for the
first nine months of 1998, compared with $22,671,000 in sales recorded in the
first nine months of 1997. Operating profit of $20,269,000, from property
sales in the first nine months of 1998, was $14,352,000 higher than in the
comparable period of 1997. This large increase resulted from sales in the
second quarter of 1998, which included a large R&D and office complex in
Cupertino, Calif., and the Company's remaining interest in a 14-acre parcel
at Maui Business Park. Other sales in the first nine months of 1998 included
one business parcel and 44 residential properties. Sales in the comparable
period of 1997 included an undeveloped 29-acre parcel, a one-acre developed
lot, an industrial warehouse in California, and 40 residential and four
developed business lots.
FOOD PRODUCTS revenue of $337,488,000, for the first nine months of 1998, was
four-percent lower than the revenue reported for the comparable period of 1997.
For the first nine months of 1998, operating profit of $13,602,000 was 36-
percent lower than the $21,170,000 earned in the same period last year. This
decrease was due to the same reasons cited for the third quarter decline.
OTHER
INSURANCE LITIGATION: Matson received a favorable cash settlement of
$33,650,000 on February 13, 1997 for a contested insurance claim in connection
with repairing port facilities damaged by a 1989 earthquake. As noted
previously, this settlement resulted in additional net income of $12,478,000 in
the first nine months of 1997.
LEGISLATION: In 1997, the Secretary of Agriculture established, under the
Federal Agriculture Improvement and Reform Act and in accordance with the
Harmonized Tariff Schedule, the aggregate quantity of sugars and syrups that
can be imported into the United States. The maximum import quantity for fiscal
year 1998 is 1,600,000 metric tons raw value (mtrv). The maximum import
quantity for fiscal year 1999 was set at 1,614,937 mtrv, with an initial
release of 1,164,937 mtrv.
C&H RECAPITALIZATION AND PARTIAL SALE: In August 1998, the Company announced
plans to recapitalize its sugar refining and marketing unit, California and
Hawaiian Sugar Company, Inc. (C&H), and to sell a majority of its equity in
that company to an investor group led by Citicorp Venture Capital, Ltd.
Because of the current unsettled conditions in the financial markets, the
timing for closing of this transaction is uncertain.
TAX-DEFERRED REAL ESTATE EXCHANGES: In the first nine months of 1998, the
Company sold five parcels of land for $64,349,000. The proceeds from these
sales are reflected in the Condensed Statements of Cash Flows under the caption
"Other Non-Cash Information." During the first nine months of 1998, the
Company reinvested proceeds of $57,100,000 on a tax-deferred basis from sales
completed in 1998 and 1997.
SHARE REPURCHASES: During the first nine months of 1998, the Company
repurchased 284,200 shares of its common stock for an aggregate of $6,662,000
(average of $23.44 per share).
ENVIRONMENTAL MATTERS: As with most industrial and land-development companies
of its size, the Company'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 works proactively to identify potential environmental
concerns. Management believes that appropriate liabilities have been accrued
for environmental matters.
ECONOMIC CONDITIONS: Despite the well-publicized and widespread turmoil in
financial markets worldwide, and especially in the Far East, the economic
outlook for Hawaii remains largely unchanged. Real Gross State Product is
expected to grow less than one percent this year. The state's prominent
visitor industry continues to affect various areas in the state in different
ways. Neighbor island destinations, which are favored by U.S. travelers, have
done relatively better than Oahu, which attracts greater numbers of eastbound
visitors. Year-to-date through August, westbound visitors number 2.9 million,
up 3.6 percent from 1997. On the other hand, eastbound tourism, with 1.7
million visitors year-to-date, is down 8.8 percent. Spending by Asian visitors
also is down, because of exchange rates, which were highly unfavorable for
Japanese visitors until October, when U.S. interest rates were lowered and
legislative relief was approved for Japan's banking industry. In August,
retail revenue at major shopping areas in or close to Oahu's major visitor
destination, Waikiki, was down 25-30 percent, whereas statewide retail revenue
year-to-date was up about eight percent. Any beneficial effects of the
subsequent strengthening of the yen on Hawaii's retail markets have yet to be
reported. The outlook for construction remains poor. For the eight months
through August, total reported contracts for future Hawaii construction of
$1.03 billion were down 20 percent from the same period in 1997.
SUBSEQUENT EVENT: On October 22, 1998, the Board of Directors appointed W.
Allen Doane, president and CEO of A&B-Hawaii, Inc. (ABHI), to the additional
positions of president and CEO of Alexander & Baldwin, Inc. and elected him to
the Boards of Directors of A&B and Matson. R. J. Pfeiffer will continue as
Chairman of the Boards of A&B, Matson and ABHI.
YEAR 2000 INFORMATION AND READINESS DISCLOSURE ACT OF 1998
In 1995, the Company commenced an evaluation of its computer
systems and applications to prepare for the Year 2000. Following this
evaluation, implementation plans for all business segments were prepared and
are currently being executed. Programs that recognize "00" as a date other
than "2000" might result in data errors or system problems if not corrected
before December 31, 1999. Not all systems used by the Company are sensitive to
this issue. The work related to primary systems and applications, which have
the greatest risk of adversely affecting operations, should be substantially
complete by 1998 year-end. The Company is currently testing the corrected
systems for undetected program errors. In addition, the Company is continuing
work on correcting secondary support applications and applications in its
smaller business units to ensure that they will be Year 2000 compliant before
the end of 1999. The Company is working with primary vendors, customers,
lenders, suppliers and other appropriate third-parties to assess their
compliance efforts and the potential risks to the Company in the event that
they are not Year 2000 compliant. Staffing for the Year 2000 work is expected
to be adequate. Work on this project has not affected other systems-related
activities adversely. The implementation plans, which consist of upgrading,
modifying or replacing various systems, are expected to cost approximately
$6,000,000 to $8,000,000. During the first nine months of 1998, the Company
had expended approximately $3,000,000 for this work. The costs incurred in
connection with the Year 2000 compliance are being treated as an operating
expense, unless a system is being replaced for operating reasons as well as for
Year 2000 compliance, in which case costs are being capitalized. While the
Company believes that its systems and applications necessary to operate and
manage its businesses will be replaced, modified or upgraded in advance of
the Year 2000 and that the related costs will not have a material impact on
the operations, cash flows, financial condition or segment results of future
periods, it will not have certain knowledge of full compliance or adequacy of
contingency plans until the Year 2000.
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The Company, from time to time, may make or may have made certain forward-
looking statements, whether orally or in writing, such as forecasts and
projections of the Company's future performance or statements of management's
plans and objectives. Such forward-looking statements may be contained in,
among other things, Securities and Exchange Commission (SEC) filings, such as
the Forms 10-Q, press releases made by the Company and oral statements made by
the officers of the Company. Except for historical information contained in
these written or oral communications, such communications contain forward-
looking statements. These forward-looking statements involve a number of risks
and uncertainties that could cause actual results to differ materially from
those projected in the statements, including, but not limited to: (1) economic
conditions in Hawaii and elsewhere; (2) market demand; (3) competitive factors
and pricing pressures in the Company's primary markets; (4) legislative and
regulatory environment at the federal, state and local levels, such as
government rate regulations, land-use regulations, government administration of
the U.S. sugar program, and retention of cabotage laws; (5) dependence on raw
sugar suppliers and other third-party suppliers; (6) fuel prices; (7) labor
relations; (8) the ability to locate and correct, on a timely basis, all
relevant computer codes prior to the Year 2000; and (9) other risk factors
described elsewhere in these communications and from time to time in the
Company's filings with the SEC.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- ---------------------------
Matson Navigation Company, Inc. ("Matson") is subject to the jurisdiction
of the Surface Transportation Board ("Board"), an agency within the U.S.
Department of Transportation, with respect to its domestic rates. On
September 10, 1998, the government of the Territory of Guam filed a complaint
with the Board against Matson, Sea-Land Service, Inc. and American President
Lines, Ltd., alleging that the carriers charged unreasonable rates in the trade
between the U.S. mainland and Guam between January 1, 1991 and the present.
The complaint seeks in excess of $50 million in damages from the three
carriers. Matson did not enter the Guam trade until February of 1996 and, in
the two and a half years that it has served the trade, it has not filed a
general rate increase and has lowered many rates. All of Matson's rate
adjustments have been within the zone of reasonableness established by the
Interstate Commerce Commission Termination Act of 1995 and, therefore, are
deemed reasonable. Management believes that the ultimate outcome of this
litigation will not have a material adverse impact on A&B's financial
condition.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------------------------------------------
(a) Exhibits
--------
10. Material contracts.
10.b.1.(xli) Employment Agreement between Alexander & Baldwin,
Inc. and Robert J. Pfeiffer, dated as of July 27, 1998.
10.b.1.(xlii) Amendment No. 1 to the A&B Retirement Plan for
Outside Directors, dated August 27, 1998.
10.b.1.(xliii) Amendment No. 1 to the A&B 1985 Supplemental
Executive Retirement Plan, dated August 27, 1998.
10.b.1.(xliv) Amendment No. 5 to the A&B Excess Benefits Plan,
dated August 27, 1998.
11. Statement re computation of per share earnings.
27. Financial Data Schedule.
(b) Reports on Form 8-K
-------------------
A report on Form 8-K was filed on August 24, 1998 to report,
under Item 5 thereof, the execution by California and Hawaiian Sugar
Company, Inc. ("C&H"), A&B-Hawaii, Inc., and McBryde Sugar Company,
Limited, all wholly-owned direct or indirect subsidiaries of
Alexander & Baldwin, Inc. ("A&B"), of definitive agreements dated as
of August 5, 1998, which provide for a recapitalization of C&H
involving the participation of an investor group that includes
Citicorp Venture Capital, Ltd.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of l934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ALEXANDER & BALDWIN, INC.
-------------------------
(Registrant)
Date: November 13, 1998 /s/ Glenn R. Rogers
-------------------------
Glenn R. Rogers
Executive Vice President and
Chief Financial Officer
Date: November 13, 1998 /s/ Thomas A. Wellman
-------------------------
Thomas A. Wellman
Controller
<PAGE>
EXHIBIT INDEX
-------------
10. Material contracts.
10.b.1.(xli) Employment Agreement between Alexander & Baldwin, Inc. and
Robert J. Pfeiffer, dated as of July 27, 1998.
10.b.1.(xlii) Amendment No. 1 to the A&B Retirement Plan for Outside
Directors, dated August 27, 1998.
10.b.1.(xliii) Amendment No. 1 to the A&B 1985 Supplemental Executive
Retirement Plan, dated August 27, 1998.
10.b.1.(xliv) Amendment No. 5 to the A&B Excess Benefits Plan, dated
August 27, 1998.
11. Statement re computation of per share earnings.
27. Financial Data Schedule.
<PAGE>
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT (this "Agreement") by and between Alexander &
---------
Baldwin, Inc., a Hawaii corporation ("A&B"), and Robert J. Pfeiffer
---
(the "Executive"), dated as of July 27, 1998.
---------
WHEREAS, on July 27, 1998, John C. Couch, who was then serving as
Chairman of the Board, President and Chief Executive Officer of A&B, started an
extended leave of absence for reasons of personal health; and
WHEREAS, in light of (i) the Executive's long experience,
acknowledged leadership abilities, superior business acumen and sustained
excellence in serving for many years as Chairman of the Board, President and
Chief Executive Officer of A&B, and (ii) the high regard in which the Executive
is held by the Board of Directors (the "Board") and management of A&B, the
-----
Board has requested the Executive to assume Mr. Couch's positions and duties as
Chairman of the Board, President and Chief Executive Officer of A&B, and as
Chairman of the Boards of Directors of A&B's principal subsidiaries, Matson
Navigation Company, Inc. ("Matson"), A&B-Hawaii, Inc. ("ABHI"), California and
------ ----
Hawaiian Sugar Company, Inc. ("C&H") and A&B Properties, Inc. ("A&B
--- ---
Properties"); and
- ----------
WHEREAS, the Executive has agreed to accept the Board's request that
he return to A&B on a full-time basis to serve in such positions, and the Board
is highly appreciative of the Executive's willingness to do so; and
WHEREAS, among the Executive's goals will be the mentoring of senior
executives of A&B and its subsidiaries and working with the Board to identify a
successor Chief Executive Officer in the event that Mr. Couch should be unable
to return to his prior positions with A&B; and
WHEREAS, A&B and the Executive are parties to a Second Amended and
Restated Employment Agreement dated as of October 25, 1990 (the "1990
----
Agreement"), which, notwithstanding the execution of this Agreement and the
- ---------
performance by the Executive of his duties hereunder, is intended to and will
remain in full force and effect; and
WHEREAS, A&B and the Executive wish to set forth herein the terms
and conditions of the Executive's current employment by A&B, effective as of
July 27, 1998;
NOW, THEREFORE, A&B and the Executive agree as follows:
1. Employment Period. A&B hereby agrees to employ the Executive,
-----------------
and the Executive hereby agrees to be employed by A&B, subject to the
terms and conditions of this Agreement, for a period commencing on July 27,
1998 (the "Commencement Date") and ending on the 30th day following the date on
-----------------
which either party hereto gives a Notice of Termination to the other party
hereto, or on such other date as may be determined in accordance with Section 3
hereof (the "Term").
----
2. Terms of Employment.
-------------------
(a) 1990 Agreement. Notwithstanding the execution of this
--------------
Agreement, the Executive's employment hereunder, or the termination
of such employment however effected, the 1990 Agreement, and all of the
Executive's and A&B's rights and obligations thereunder, shall continue to
remain in full force and effect. Without limiting the generality of the fore-
going, during the Term and at all times thereafter A&B shall continue to
provide the Executive with all benefits and perquisites which he was entitled
to receive under the 1990 Agreement immediately prior to the Commencement Date
(including without limitation those benefits and perquisites provided for in
Section 11(d) of the 1990 Agreement). In addition, A&B shall reimburse the
Executive, on a fully tax grossed-up basis, to the extent that his employment
hereunder or his participation in any benefit plan of A&B diminishes or
otherwise adversely affects in any manner any benefits or perquisites which he
was entitled to receive from A&B immediately prior to the Commencement Date.
(b) Position and Duties. (i) During the Term, the Executive shall
-------------------
serve as Chairman of the Board, President and Chief Executive Officer
of A&B, and he shall have such duties and responsibilities consistent with such
positions as may be assigned to him from time to time by the Board. During the
Term, the Executive shall also serve as Chairman of the Boards of Directors of
Matson, ABHI, C&H (for so long as A&B shall hold a controlling interest in C&H)
and A&B Properties.
(ii) During the Term, and excluding any periods of vacation and
sick leave to which the Executive is entitled, the Executive agrees to devote
his full attention and time during normal business hours to the business and
affairs of A&B. Nothing contained herein shall prevent the Executive from (A)
serving on corporate, civic or charitable boards or committees, (B) delivering
lectures or fulfilling speaking engagements and (C) managing personal
investments, so long as such activities do not materially interfere with the
performance of the Executive's duties under this Agreement.
(iii) In connection with the Executive's employment
hereunder, the Executive shall be based at A&B's offices in San Francisco, and
the Executive may, in his discretion, perform his duties hereunder at A&B's
offices in San Francisco or Honolulu.
(c) Compensation. (i) Base Salary. During the Term, the Executive
------------ -----------
shall receive an annual base salary ("Annual Base Salary") of
------------------
$600,000. The Annual Base Salary may be increased from time to time
in the sole discretion of the Board, but may not be decreased. The Annual Base
Salary shall be payable in accordance with A&B's standard payroll practices.
(ii) Discretionary Bonus. During the Term, the Executive shall
-------------------
be eligible to receive discretionary bonuses as determined by the Board's
Compensation and Stock Option Committee (the "Compensation Committee"), in its
----------------------
sole discretion. The determination and payment of such bonuses, if any, shall
be made at the same time annual bonuses are determined for and paid to other
A&B executives or at such other time as the Compensation Committee may
determine. The Executive shall be ineligible to participate in A&B's formal
bonus plans, including but not limited to A&B's One-Year and Three-Year
Performance Improvement Incentive Plans.
(iii) Stock Options. The Executive shall be awarded an
-------------
option (the "Option") under A&B's 1998 Stock Option/Stock Incentive Plan
------
(the "Plan") to acquire 100,000 shares of A&B common stock pursuant to a
----
Stock Option Agreement substantially in the form annexed hereto as Exhibit A.
The Option shall (A) have a per share exercise price equal to the Fair Market
Value (as defined in the Plan) of a share of A&B common stock on the date on
which the Option is granted, (B) become fully exercisable at the earlier of
(x) six months after the Commencement Date or (y) termination of the
Executive's employment by reason of death or by A&B other than for Misconduct
(as defined in the Plan) or Cause (as defined in Section 3(b) below) and
(C) expire on the earliest of (w) ten years from the date of grant, (x) one
year from the date of the Executive's death, (y) termination of the
Executive's employment by A&B for Misconduct or Cause, or (z) three years
following termination of the Executive's employment for any other reason.
The Executive shall be eligible to receive such future stock option grants as
determined by the Compensation Committee, in its sole discretion.
(iv) Benefits and Perquisites. In addition to the benefits to
------------------------
which the Executive is entitled under the 1990 Agreement as described in
Section 2(a) above, during the Term, (A) the Executive shall participate in
A&B's Sick Leave and Sick Leave Pay Policy; (B) A&B shall provide the Executive
with (x) group life insurance coverage in the amount of $600,000 (or $1,000,000
of coverage if the Executive provides A&B with evidence of insurability),
(y) accidental death and dismemberment insurance coverage in the amount of
$500,000, and (z) business travel accident insurance coverage in the amount of
$500,000; and (C) except as otherwise provided in the 1990 Agreement or in this
Section 2(c)(iv), the Executive shall not participate in any other benefit or
perquisite plan or arrangement of A&B, including but not limited to the A&B
Executive Survivor/Retirement Benefit Plan, the A&B Retirement Plan for
Salaried Employees, the A&B Excess Benefits Plan or the Alexander & Baldwin,
Inc. Profit Sharing Retirement Plan.
(v) Expenses. During the Term, A&B shall promptly reimburse
--------
the Executive for all reasonable expenses incurred by the Executive in the
course of carrying out his duties hereunder, in accordance with A&B's policies
as in effect from time to time, including but not limited to (A) travel between
San Francisco and Hawaii and other business travel, and (B) living expenses in
Hawaii. In addition, A&B shall promptly reimburse the Executive, on a fully
tax grossed-up basis, for the incremental health care costs (net of any
reimbursable expenses through insurance or Medicare) incurred by the Executive
with respect to his spouse as a result of the Executive's performance of his
duties hereunder, including time spent by the Executive away from San Francisco
on business.
(vi) Car Allowance. During the Term, A&B shall provide the
-------------
Executive with a car allowance in accordance with A&B policies as in effect
from time to time with respect to the chief executive officer of A&B.
(vii) Vacation. During the Term, the Executive shall be
--------
entitled to four weeks' paid vacation each year at such times as may be
determined by the Executive in his reasonable discretion in accordance with
A&B's policies as in effect from time to time.
3. Termination of Employment.
-------------------------
(a) Death. The Executive's employment shall terminate automatically
-----
upon the Executive's death during the Term.
(b) Cause. A&B may terminate the Executive's employment during the
-----
Term for Cause. For purposes of this Agreement, "Cause" shall mean: (i) the
-----
willful failure by the Executive to substantially perform his duties hereunder,
(ii) the willful engaging by the Executive in conduct which is demonstrably
and materially injurious to A&B or its subsidiaries, monetarily or otherwise
or (iii) the Executive's conviction for the commission of a felony. Notwith-
standing the foregoing, for purposes of clauses (i) and (ii) of this Section
3(b), the Executive shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to the Executive a copy of a
resolution, duly adopted by the affirmative vote of three-quarters of the
entire membership of the Board at a meeting of the Board duly called and held
for that purpose (after reasonable notice to the Executive and an opportunity
for him, together with his counsel, to be heard before the Board), finding that
in the good faith opinion of the Board, the Executive was guilty of the conduct
set forth in clauses (i) or (ii) of this Section 3(b), and specifying the
particulars thereof in detail. For purposes of clauses (i) and (ii) of this
Section 3(b), no act, or failure to act, on the Executive's part shall be
deemed "willful" unless done, or omitted to be done, by the Executive not in
good faith and without reasonable belief that the Executive's act, or failure
to act, was in the best interest of A&B.
(c) Without Cause; Termination by the Executive. As set forth in
-------------------------------------------
Section 1 above, the Executive's employment may be terminated at any time
upon 30 days' prior written notice by A&B or by the Executive, in either
case, for any reason or no reason.
(d) Notice of Termination. Any termination of the Executive's
---------------------
employment hereunder by A&B or by the Executive shall be communicated
by written Notice of Termination to the other party hereto. For purposes of
this Agreement, a "Notice of Termination" means a written notice which (i)
---------------------
indicates the specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated and (iii) if the Date of Termina-
tion (as defined in Section 3(e) below) is other than the date of receipt of
such notice, specifies the termination date.
(e) Date of Termination. For purposes of this Agreement, "Date of
------------------- -------
Termination" means (i) if the Executive's employment is terminated by A&B for
- -----------
Cause, the date of receipt of the Notice of Termination or any later date
specified therein, as the case may be, (ii) if the Executive's employment is
terminated by A&B other than for Cause or by the Executive, the Date of
Termination shall be the date specified in this Notice of Termination and (iii)
if the Executive's employment is terminated by reason of death, the Date of
Termination shall be the date of death.
4. Obligations of A&B upon Termination.
------------------------------------
(a) Death; Other than for Cause. If, during the Term, A&B shall
---------------------------
terminate the Executive's employment other than for Cause or the
Executive's employment shall terminate by reason of the Executive's death, A&B
shall pay to the Executive (i) a lump sum cash payment equal to six months'
base salary (inclusive of accrued vacation pay, if any), (ii) the Executive's
salary to the Date of Termination ("Accrued Obligations") and (iii) all
-------------------
compensation and benefits payable to the Executive under the terms of any
compensation or benefit plan, program or arrangement maintained by A&B, to the
extent then unpaid ("Other Benefits").
--------------
(b) Cause; Termination by the Executive. If the Executive's
-----------------------------------
employment shall be terminated by the Company for Cause or by the Executive for
any reason during the Term, this Agreement shall terminate without further
obligations to the Executive, other than the obligation to pay or provide to
the Executive (i) the Accrued Obligations, (ii) the Other Benefits and (iii)
accrued vacation pay, if any.
5. Full Settlement. A&B's obligation to make the payments provided
---------------
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which A&B may have against the Executive or others. In
no event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and such amounts shall not be reduced
whether or not the Executive obtains other employment.
6. Successors.
----------
(a) This Agreement is personal to the Executive and without the
prior written consent of A&B shall not be assignable by the Executive otherwise
than by will or the laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
A&B and its successors and assigns.
(c) A&B will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of A&B to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that A&B would be required
to perform it if no such succession had taken place. As used in this
Agreement, "A&B" shall mean A&B as hereinbefore defined and any successor to
---
its business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
7. Miscellaneous.
-------------
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Hawaii, without reference to principles of
conflict of laws. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
-------------------
Robert J. Pfeiffer
535 Miner Road
Orinda, California 94563
If to A&B:
---------
Alexander & Baldwin, Inc.
822 Bishop Street
P.O. Box 3440
Honolulu, Hawaii 96801-3440
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) A&B may withhold from any amounts payable under this Agreement
such federal, state or local taxes as shall be required to be withheld pursuant
to any applicable law or regulation.
(e) Effective as of the Commencement Date, this Agreement shall
supersede any other agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof which have been made by
either party; provided, however, that this Agreement shall not in any way
supersede the 1990 Agreement, which shall continue to remain in full force and
effect.
(f) This Agreement may be executed in counterparts, each of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been duly executed by A&B and
the Executive on this 26th day of August, 1998, effective July 27, 1998.
ALEXANDER & BALDWIN, INC.
By /s/ Charles M. Stockholm
Name: Charles M. Stockholm
Title: Chairman, Compensation
and Stock Option Committee
/s/ R. J. Pfeiffer
ROBERT J. PFEIFFER
<PAGE>
A&B RETIREMENT PLAN FOR OUTSIDE DIRECTORS
----------------------------------------
AMENDMENT NO. 1
---------------
The A&B Retirement Plan for Outside Directors, as amended and restated
effective February 1, 1995, is hereby amended, effective July 1, 1998, as
follows:
1. Sections 2.03 through 2.14 are hereby renumbered as Sections 2.04
through 2.15, respectively.
2. A new Section 2.03 is hereby added, as follows:
"2.03. "Beneficiary" means the person or persons designated by
the Participant as such in accordance with the provisions of
Section 4.03 and to whom the benefit, if any, provided for in
Section 4.03 is payable."
3. Section 2.04 is hereby amended in its entirety, to read as follows:
"2.04. "Final Retainer" means the annual rate of cash retainer
payable to an Outside Director as of the last date served as an
Outside Director."
4. Section 2.10 is hereby amended in its entirety, to read as follows:
"2.10. "Retirement Date" means the later of the date the
Participant ceases to be a Director for reasons other than death and
the date the Participant attains age 65."
5. A new Section 4.03 is hereby added, to read as follows:
"4.03. DEATH BENEFIT. In the event that a Participant dies prior to
-------------
his/her Retirement Date, such Participant's Beneficiary shall be
entitled to a death benefit equal to the greater of the amounts
described in subsections (a) and (b) below, determined as of the day
immediately prior to his/her death:
(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 later
of the date the Participant attains age 65 and the date of the
Participant's death.
(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.
Payment of this death benefit shall be made in a lump sum payment to
the Beneficiary within thirty days after the death of the Participant.
Each Participant shall, at the time he/she becomes a Participant,
designate one or more persons as his/her Beneficiary for purposes of
this Section 4.03. The designation shall be made in the form
prescribed by the Administrator and shall become effective when filed
with the Administrator. A Participant may from time to time change
his/her Beneficiary by filing a new designation form with the
Administrator. Should the Participant die without having any
effectively-designated surviving Beneficiary, then the Beneficiary
shall be the spouse of the Participant, if then living. If there is
no surviving spouse, then the Beneficiary shall be the Participant's
children, then living. If there are no living children, then the
Beneficiary shall be the estate of the Participant."
6. Section 6.02 is hereby amended in its entirety, to read as follows:
"6.02. NO OTHER BENEFITS. Except as provided in Section 4.03,
-----------------
there are no death benefits under the 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."
7. Except as modified by this Amendment No. 1, 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 27th day of August,
1998.
ALEXANDER & BALDWIN, INC.
By /s/ Miles B. King
Its Vice President
By /s/ Alyson J. Nakamura
Its Assistant Secretary
A&B 1985 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
-----------------------------------------------
AMENDMENT NO. 1
---------------
The A&B 1985 Supplemental Executive Retirement Plan, as amended and
restated effective February 1, 1995, is hereby amended, effective as of July 1,
1998, as follows:
1. Sections 2.06 through 2.27 are hereby redesignated as Sections 2.07
through 2.28, respectively.
2. A new Section 2.06 is hereby added, as follows:
"2.06. "Beneficiary" means the person or persons designated by
the Participant as such in accordance with the provisions of
Section 4.07 and to whom the benefit, if any, provided for in
Section 4.07 is payable."
3. Section 4.07 is hereby amended in its entirety to read as follows:
"4.07. PRERETIREMENT DEATH BENEFIT.
---------------------------
(a) ELIGIBILITY. In the event that a Participant dies
-----------
prior to retirement, or prior to termination of employment, such
Participant's Beneficiary shall be entitled to a Preretirement Death
Benefit determined as provided in this Section in lieu of any other
benefit provided by this Plan.
(b) BENEFIT. The Preretirement Death Benefit provided by
-------
this Section shall equal the lump sum payment, if any, to which the
Participant would have been eligible under this Plan if he/she had
retired, or terminated employment, immediately prior to his/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. The Preretirement Death Benefit shall
be determined by assuming the Participant did not elect any optional
form of payment under the A&B Retirement Plan.
(c) BENEFICIARY DESIGNATION. Each Participant shall, at
-----------------------
the time he/she becomes a Participant, designate one or more persons
as his/her Beneficiary for purposes of this Section. The designation
shall be made in the form prescribed by the Company and shall become
effective when filed with the Company. A Participant may from time to
time change his/her Beneficiary by filing a new designation form with
the Company. Should the Participant die without having any
effectively-designated surviving Beneficiary, then the Beneficiary
shall be the spouse of the Participant, if then living. If there is
no surviving spouse, then the Beneficiary shall be the Participant's
children then living. If there are no living children, then the
Beneficiary shall be the estate of the Participant.
(d) LUMP SUM PAYMENT DATE. The lump sum payment of the
---------------------
Beneficiary's Preretirement Death Benefit shall be paid as soon as
practicable after the death of the Participant."
4. Except as modified by this Amendment No. 1, all terms and provisions
of the Plan shall continue in full force and effect.
IN WITNESS WHEREOF, Alexander & Baldwin, Inc. has caused this Amendment
No. 1 to be executed on its behalf by its duly authorized officers on this 27th
day of August, 1998.
ALEXANDER & BALDWIN, INC.
By /s/ Miles B. King
Its Vice President
By /s/ Alyson J. Nakamura
Its Assistant Secretary
A&B EXCESS BENEFITS PLAN
Amendment No. 5
---------------
The A&B Excess Benefits Plan (the "Plan"), as amended and restated effective
February 1, 1995, is hereby amended, effective as of and contingent upon the
closing of the transactions contemplated by the Asset Purchase Agreement dated
as of August 5, 1998, by and among California and Hawaiian Sugar Company, Inc.,
A&B-Hawaii, Inc., McBryde Sugar Company, Limited, and Sugar Acquisition
Corporation, and the Stock Sale Agreement dated as of August 5, 1998, by and
between California and Hawaiian Sugar Company, Inc. and Citicorp Venture
Capital, Ltd., as follows:
1. Section 4.01(d) is hereby amended in its entirety to read as follows:
"(d) SELECT BENEFITS PROVIDED TO RETIRED FORMER EMPLOYEES OF
-------------------------------------------------------
CALIFORNIA AND HAWAIIAN SUGAR COMPANY.
-------------------------------------
(1) Prior to the closing of the transactions contemplated
by the Asset Purchase Agreement by and among California and Hawaiian
Sugar Company, Inc., A&B-Hawaii, Inc., McBryde Sugar Company, Limited,
and Sugar Acquisition Corporation, and the Stock Sale Agreement by and
between California and Hawaiian Sugar Company, Inc. and Citicorp
Venture Capital, Ltd. (the "Closing Date"), all other provisions of
the 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
<PAGE>
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.
(2) As of the Closing Date, all other provisions of this
Plan notwithstanding, the obligation of this Plan to pay any benefit
shown in Appendix B to the retired former employees of California and
Hawaiian Sugar Company, Inc. listed in Appendix B shall cease, and the
obligation to pay such benefits, with respect to any period on and
after such date, is assumed by Sugar Acquisition Company."
IN WITNESS WHEREOF, Alexander & Baldwin, Inc. has caused this Amendment to
be executed on its behalf by its duly authorized officers on this 27th day of
August, 1998.
ALEXANDER & BALDWIN, INC.
By /s/ Miles B. King
Its Vice President
By /s/ Alyson J. Nakamura
Its Assistant Secretary
<TABLE> EXHIBIT 11
ALEXANDER & BALDWIN, INC.
COMPUTATION OF EARNINGS PER SHARE
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(In thousands, except per share amounts)
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
1998 1997 1998 1997
- -------------------------------------------------------------------------------
Basic Earnings Per Share
- ------------------------
<S> <C> <C> <C> <C>
Net income $13,780 $21,872 $46,524 $61,376
======= ======= ======= =======
Average number of shares outstanding 44,842 45,135 44,851 45,227
======= ======= ======= =======
Basic earnings per share $ 0.31 $ 0.48 $ 1.04 $ 1.36
======== ======= ======= =======
Diluted Earnings Per Share
- --------------------------
Net income $13,780 $21,872 $46,524 $61,376
======= ======= ======= =======
Average number of shares outstanding 44,842 45,135 44,851 45,227
Effect of assumed exercise of
outstanding stock options 37 124 132 121
------- ------- ------- -------
Average number of shares outstanding
after assumed exercise of
outstanding stock options 44,879 45,259 44,983 45,348
======= ======= ======= =======
Diluted earnings per share $ 0.31 $ 0.48 $ 1.03 $ 1.35
======= ======= ======= =======
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
condensed balance sheet as of September 30, 1998 and the condensed statement
of income for the nine months ended September 30, 1998 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> (3,834)
<SECURITIES> 11,800
<RECEIVABLES> 196,862
<ALLOWANCES> 20,336
<INVENTORY> 95,897
<CURRENT-ASSETS> 315,430
<PP&E> 1,929,087
<DEPRECIATION> 876,810
<TOTAL-ASSETS> 1,737,969
<CURRENT-LIABILITIES> 247,619
<BONDS> 264,028
0
0
<COMMON> 36,611
<OTHER-SE> 682,856
<TOTAL-LIABILITY-AND-EQUITY> 1,737,969
<SALES> 967,973
<TOTAL-REVENUES> 983,594
<CGS> 810,724
<TOTAL-COSTS> 810,724
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,602
<INCOME-PRETAX> 74,438
<INCOME-TAX> 27,914
<INCOME-CONTINUING> 46,524
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 46,524
<EPS-PRIMARY> 1.04
<EPS-DILUTED> 1.03
</TABLE>
