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SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended
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Sep. 30, 2021
SIGNIFICANT ACCOUNTING POLICIES |
SIGNIFICANT ACCOUNTING POLICIES | 2. SIGNIFICANT ACCOUNTING POLICIES ​ Basis of Presentation: The Condensed Consolidated Financial Statements are unaudited, and include the accounts of Matson, Inc. and all wholly-owned subsidiaries, after elimination of intercompany amounts and transactions. Significant investments in businesses, partnerships, and limited liability companies in which the Company does not have a controlling financial interest, but has the ability to exercise significant influence, are accounted for under the equity method. The Company accounts for its investment in SSAT using the equity method of accounting. ​ Due to the nature of the Company’s operations, the results for interim periods are not necessarily indicative of results to be expected for the year. These Condensed Consolidated Financial Statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim periods, and do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete consolidated financial statements. ​ The Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission (“SEC”) on February 26, 2021. ​ Fiscal Period: The period end for Matson covered by this report is September 30, 2021. The period end for MatNav and its subsidiaries covered by this report occurred on the last Friday in September, or September 24, 2021. ​ Significant Accounting Policies: The Company’s significant accounting policies are described in Note 2 to the Consolidated Financial Statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. ​ Use of Estimates: The preparation of the interim condensed consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the amounts reported. Estimates and assumptions are used for, but not limited to: impairment of investments; impairment of long-lived assets, intangible assets and goodwill; capitalized interest; allowance for doubtful accounts; legal contingencies; insurance reserves and other related liabilities; accrual estimates; pension and post-retirement estimates; multi-employer withdrawal liabilities; operating lease assets and liabilities; and income taxes. Future results could be materially affected if actual results differ from these estimates and assumptions. ​ Recognition of Revenues and Expenses: Revenue in the Company’s Condensed Consolidated Financial Statements is presented net of elimination of intercompany transactions. The following is a description of the Company’s principal revenue generating activities by segment, and the Company’s revenue recognition policy for each activity for the periods presented: ​
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​ | ​ | Three Months Ended |  | Nine Months Ended
​ | ​ | September 30, |  | September 30,
Ocean Transportation (in millions) (1) | ​ | 2021 |  | 2020 |  | 2021 |  | 2020
Ocean Transportation services | ​ | $ | 855.2 | ​ | $ | 490.8 | ​ | $ | 2,083.8 | ​ | $ | 1,284.5
Terminal and other related services | ​ | ​ | 4.8 | ​ | ​ | 5.1 | ​ | ​ | 12.5 | ​ | ​ | 15.5
Fuel sales | ​ | ​ | 1.9 | ​ | ​ | 1.3 | ​ | ​ | 5.1 | ​ | ​ | 6.0
Vessel management and related services | ​ | ​ | 1.6 | ​ | ​ | 1.1 | ​ | ​ | 5.5 | ​ | ​ | 4.0
Total | ​ | $ | 863.5 | ​ | $ | 498.3 | ​ | $ | 2,106.9 | ​ | $ | 1,310.0
(1) | Ocean Transportation revenue transactions are primarily denominated in U.S. dollars except for less than 3 percent of Ocean Transportation services revenue and fuel sales revenue categories which are denominated in foreign currencies.
​
◾ | Ocean Transportation services revenue is recognized ratably over the duration of a voyage based on the relative transit time completed in each reporting period. Vessel operating costs and other ocean transportation operating costs, such as terminal operating overhead and selling, general and administrative expenses, are charged to operating costs as incurred.
◾ | Terminal and other related services revenue is recognized as the services are performed. Related costs are recognized as incurred.
◾ | Fuel sales revenue and related costs are recognized when the Company has completed delivery of the product to the customer in accordance with the terms and conditions of the contract.
◾ | Vessel management and related services revenue is recognized in proportion to the services completed. Related costs are recognized as incurred.
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​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three Months Ended |  | Nine Months Ended
​ | ​ | September 30, |  | September 30,
Logistics (in millions) (1) | ​ | 2021 | ​ | 2020 | ​ | 2021 | ​ | 2020
Transportation Brokerage and Freight Forwarding services | ​ | $ | 186.1 | ​ | $ | 133.0 | ​ | $ | 495.9 | ​ | $ | 337.0
Warehouse and distribution services | ​ | ​ | 12.2 | ​ | ​ | 9.5 | ​ | ​ | 31.8 | ​ | ​ | 25.9
Supply chain management and other services | ​ |  | 9.8 | ​ |  | 4.4 | ​ |  | 23.7 | ​ |  | 10.3
Total | ​ | $ | 208.1 | ​ | $ | 146.9 | ​ | $ | 551.4 | ​ | $ | 373.2
(1) | Logistics revenue transactions are primarily denominated in U.S. dollars except for less than 5 percent of transportation brokerage and freight forwarding services revenue, and supply chain management and other services revenue categories which are denominated in foreign currencies.
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◾ | Transportation Brokerage and Freight Forwarding services revenue consists of amounts billed to customers for services provided. The primary costs include third-party purchased transportation services, agent commissions, labor and equipment. Revenue and the related purchased third-party transportation costs are recognized over the duration of a delivery based upon the relative transit time completed in each reporting period. Labor, agent commissions, and other operating costs are expensed as incurred. The Company reports revenue on a gross basis as
| the Company serves as the principal in these transactions because it is responsible for fulfilling the contractual arrangements with the customer and has latitude in establishing prices.
◾ | Warehousing and distribution services revenue consist of amounts billed to customers for storage, handling, and value-added packaging of customer merchandise. Storage revenue is recognized in the month the service is provided to the customer. Storage related costs are recognized as incurred. Other warehousing and distribution services revenue and related costs are recognized in proportion to the services performed.
◾ | Supply chain management and other services revenue, and related costs are recognized in proportion to the services performed.
​ The Company generally invoices its customers at the commencement of the voyage or the transportation service being provided, or as other services are being performed. Revenue is deferred when services are invoiced in advance to the customer. The Company’s receivables are classified as short-term as collection terms are for periods of less than one year. The Company expenses sales commissions and contract acquisition costs as incurred because the amounts are generally immaterial. These expenses are included in selling, general and administrative expenses in the Condensed Consolidated Statements of Income and Comprehensive Income. ​ Capital Construction Fund: The Company’s Capital Construction Fund (“CCF”) is described in Note 7 to the Consolidated Financial Statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. As of September 30, 2021 and December 31, 2020, $1.8 million and $1.7 million of eligible accounts receivable was assigned to the CCF, respectively. Due to the nature of the assignment of eligible accounts receivable into the CCF, such assigned amounts are classified as part of accounts receivable in the Condensed Consolidated Balance Sheets. Cash on deposit in the CCF is held in a money market account and classified as a long-term asset in the Company’s Condensed Consolidated Balance Sheets, as the Company intends to use qualified cash withdrawals to fund long-term investment in the construction of new vessels. During the nine months ended September 30, 2021, the Company deposited $31.2 million into the CCF and made qualifying cash withdrawals of $31.2 million from the CCF. The Company made no qualifying cash deposits or withdrawals during the three months ended September 30, 2021. The balance of cash on deposit at September 30, 2021 and December 31, 2020 was nominal. ​ Investment in SSAT: Condensed income statement information for SSAT for the three and nine months ended September 30, 2021 and 2020 consisted of the following: ​
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​ | ​ | Three Months Ended |  | Nine Months Ended |
​ | ​ | September 30, |  | September 30, |
(In millions) | ​ | 2021 |  | 2020 |  | 2021 |  | 2020 |
Operating revenue | ​ | $ | 316.3 | ​ | $ | 273.9 | ​ | $ | 944.6 | ​ | $ | 796.1 | ​
Operating costs and expenses | ​ | ​ | (274.2) | ​ | ​ | (243.1) | ​ | ​ | (831.3) | ​ | ​ | (738.4) | ​
Operating income | ​ | ​ | 42.1 | ​ | ​ | 30.8 | ​ | ​ | 113.3 | ​ | ​ | 57.7 | ​
Net Income (1) | ​ | $ | 37.3 | ​ | $ | 26.2 | ​ | $ | 100.5 | ​ | $ | 51.5 | ​
Company Share of SSAT’s Net Income (2) | ​ | $ | 13.0 | ​ | $ | 7.7 | ​ | $ | 35.0 | ​ | $ | 15.4 | ​
(1) | Includes earnings from equity method investments held by SSAT less earnings allocated to non-controlling interests.
(2) | The Company records its share of net income from SSAT in costs and expenses in the Condensed Consolidated Statement of Income and Comprehensive Income due to the nature of SSAT’s operations.
​ The Company’s investment in SSAT was $37.2 million and $48.7 million at September 30, 2021 and December 31, 2020, respectively. ​ Contingencies: Environmental Matters: The Company’s Ocean Transportation business has certain risks that could result in expenditures for environmental remediation. The Company believes that based on all information available to it, the Company is currently in compliance, in all material respects, with applicable environmental laws and regulations. ​ Other Matters: The Company and its subsidiaries are parties to, or may be contingently liable in connection with other legal actions arising in the normal course of their businesses, the outcomes of which, in the opinion of management after consultation with counsel, would not have a material effect on the Company’s financial condition, results of operations, or cash flows. ​ Dividends: The Company’s third quarter 2021 cash dividend of $0.30 per share was paid on September 2, 2021. On October 28, 2021, the Company’s Board of Directors declared a cash dividend of $0.30 per share payable on December 2, 2021.

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