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Accounting for and Classification of Discontinued Operations
 6 Months Ended
Jun. 30, 2012
Accounting for and Classification of Discontinued Operations [Abstract]  
Accounting for and Classification of Discontinued Operations

(6)          Accounting for and Classification of Discontinued Operations: As required by the Financial Accounting Standards Board (“FASB”) ASC Subtopic 205-20, Discontinued Operations, the termination of certain income-producing assets are classified as discontinued operations if (i) the operations and cash flows of the component have been, or will be, eliminated from the ongoing operations of the Company as a result of the disposal transaction and (ii) the Company will not have any significant continuing involvement in the operations of the component after the disposal transaction.  Certain income-producing properties that are classified as “held for sale” under the requirements of FASB ASC Subtopic 205-20, are also treated as discontinued operations. Depreciation on these assets ceases upon their classification as “held for sale.” Discontinued operations includes the results for the business lines that were terminated through June 30, 2012 and, if applicable, the operating results of properties still owned, but meeting the definition of “discontinued operations” under FASB ASC Subtopic 205-20.  Operating results included in the Condensed Consolidated Statements of Income and the segment results (Note 12) for the three and six months ended June 30, 2011 have been restated to reflect the termination of segments that were classified as discontinued operations subsequent to June 30, 2011.

 

On December 1, 2011, The Former Parent Company of MatNav, announced that its Board of Directors unanimously approved a plan to pursue the Separation of the Former Parent Company to create two independent, publicly traded companies:

 

·                  Matson, a Hawaii-based ocean transportation company serving the U.S. Pacific Coast, Hawaii, Guam, Micronesia and China, and a domestic logistics company; and

 

·                  A&B, a Hawaii-based land company with interests in real estate development, commercial real estate and agriculture.

 

The Separation was completed June 29, 2012.  Immediately following the Separation, the Company changed its name from Alexander & Baldwin Holdings, Inc. to Matson, Inc.  In the Separation, the shareholders of Holdings received one share of common stock of A&B for every share of Holdings held of record as of the record date, June 18, 2012.  Refer to Note (1) for further description of the Separation Transaction.

 

In the third quarter of 2011, the Company terminated its CLX2 service, due to the longer-term outlook for sustained high fuel prices and increasingly volatile Transpacific rates. As of the termination date, the Company had established and approved plans to (i) return to the lessors or sub-charter the five vessels used in the service (ii) off-hire or dispose of certain excess container equipment and (iii) terminate office contracts and employees. These plans were substantially completed as of September 30, 2011; however, the off-hiring of excess leased containers is expected to continue through 2012 and two of the five ships were offered for sub-charter until they were returned to the lessors in July 2012. The remaining three ships were returned to the lessors as of September 30, 2011 pursuant to the terms of the one-year charter contracts for these vessels. As of June 30, 2012, the Company had a liability of approximately $1.8 million in other current liabilities, representing the fair value of the obligations arising from exit activities associated with the termination of the service. The liability, which is principally related to future charter lease payments, was substantially settled by July 31, 2012.  The Company does not expect to incur any additional material losses from the discontinued operations of CLX2.  The following table provides information regarding liabilities associated with the termination of CLX2 (in millions):

 

 

 

Container and
Charter
Liabilities

 

Other
Contractual
Liabilities

 

Total

 

 

 

 

 

 

 

 

 

Balance at December 31, 2011

 

$

4.9

 

$

0.1

 

$

5.0

 

Expenses incurred

 

4.5

 

—

 

4.5

 

Amounts paid

 

(7.6

)

(0.1

)

(7.7

)

Balance at June 30, 2012

 

$

1.8

 

$

—

 

$

1.8

 

 

Income (losses) from discontinued operations consisted of the following (in millions):

 

 

 

Three months ended

 

Six months ended

 

 

 

June 30,

 

June 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

Discontinued operations (net of tax)

 

 

 

 

 

 

 

 

 

Income from A&B

 

$

72.4

 

$

75.9

 

$

114.0

 

$

127.3

 

Expenses from A&B

 

(77.2

)

(64.0

)

(118.1

)

(106.0

)

Tax (expense) benefit from A&B

 

0.4

 

(5.2

)

0.1

 

(9.2

)

(Loss) income from continuing operations from A&B

 

(4.4

)

6.7

 

(4.0

)

12.1

 

Discontinued operations from A&B, net of tax

 

—

 

5.6

 

2.4

 

10.0

 

Net (loss) income from A&B

 

(4.4

)

12.3

 

(1.6

)

22.1

 

CLX2 operating and shutdown losses

 

(1.4

)

(11.3

)

(2.8

)

(18.9

)

Separation related tax expenses

 

(1.7

)

—

 

(1.7

)

—

 

(Loss) income from discontinued operations (net of tax)

 

$

(7.5

)

$

1.0

 

$

(6.1

)

$

3.2

 

 

In addition to the above losses classified as discontinued operations, the Company incurred additional costs, net of tax, related to the CLX2 shutdown that did not meet the criteria to be classified as discontinued operations of approximately $0.1 million and $0.5 million for the three and six months ended June 30, 2012, respectively.  These costs were primarily related to the repositioning of excess containers that will continue to be used in the Company’s ongoing operations and fuel costs.  There were no shutdown costs incurred during the three and six months ended June 30, 2011.