Attached files
| file | filename |
|---|---|
| EX-99.1 - EX-99.1 - Alexander & Baldwin, Inc. | d664171dex991.htm |
| EX-10.1 - EX-10.1 - Alexander & Baldwin, Inc. | d664171dex101.htm |
| 8-K - FORM 8-K - Alexander & Baldwin, Inc. | d664171d8k.htm |
Exhibit 99.2
ALEXANDER & BALDWIN, INC.
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following unaudited pro forma financial information has been prepared to show the effect of the sale of certain assets and ownership interests by Alexander & Baldwin, LLC, Series R, Alexander & Baldwin, LLC, Series T, and A & B Properties Hawaii, LLC, Series R (collectively, “A&B”), all wholly-owned subsidiaries of Alexander & Baldwin, Inc. (the “Company”).
On December 17, 2018, A&B entered into a Purchase and Sale Agreement and Escrow Instructions (the “PSA”) with Mahi Pono Holdings, LLC (“Buyer”). Pursuant to the terms of the PSA, A&B will sell approximately 41,000 acres of agricultural land located on the island of Maui and 100% of the Company’s ownership interest in Central Maui Feedstocks LLC and Kulolio Ranch LLC (collectively, “Maui Diversified Agriculture”) in exchange for cash consideration of approximately $261.6 million, less customary closing costs and fees, to A&B, subject to certain contingencies and reserves further described in the PSA. The sale of Maui Diversified Agriculture closed on December 20, 2018.
The impact of the sale has been included in the pro forma statements under the “Sale of Maui Agricultural Land” column. Proceeds from the sale of Maui Diversified Agriculture qualify for potential tax-deferred like-kind exchange pursuant to Internal Revenue Code §1031 and are classified as Restricted Cash on the Pro Forma Balance Sheet.
In addition, A&B has also agreed to sell 50% of its ownership interest in East Maui Irrigation Company, LLC (“EMI”), which includes approximately 15,000 acres of land, no later than February 1, 2019 for approximately $2.7 million, and A&B’s remaining 50% ownership interest upon the occurrence of certain events in the future in exchange for $2.7 million. The entire impact of the future sale of EMI has been included in the pro forma statements under the “Probable Sale of EMI” column.
In the pro forma financial statements, unless noted otherwise, the term “Disposition” shall refer to the sale of both Maui Diversified Agriculture and EMI.
The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2017 is derived from the audited consolidated financial statements of the Company for the year ended December 31, 2017 and the adjustments and assumptions described below. The unaudited pro forma condensed consolidated statement of operations for the nine months ended September 30, 2018 and the unaudited pro forma condensed consolidated balance sheet as of September 30, 2018 are based on the Company’s unaudited consolidated financial statements as of and for the nine months ended September 30, 2018 and the adjustments and assumptions described below.
The unaudited pro forma information should be read in conjunction with the historical consolidated financial statements of the Company filed with the Securities and Exchange Commission in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2018.
The unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2017 and for the nine-month period ended September 30, 2018 have been prepared to give effect to the Disposition as if it occurred on January 1, 2017. Certain estimates and judgments were made in preparing the pro forma adjustments as discussed in the notes. With these adjustments, the pro forma condensed consolidated statements of operations represent only an estimate of the Company’s results excluding the disposed assets. The financial statement impact attributable to the Disposition itself is considered a one-time non-recurring item and is therefore excluded from the pro forma unaudited consolidated statement of operations. Additionally, as the Disposition is reflective of the execution of the Company’s ongoing strategy for the Land Operations segment, it is not considered discontinued operations.
The unaudited pro forma condensed consolidated balance sheet has been prepared to give effect to the Disposition as if it occurred on September 30, 2018, including an adjustment to retained earnings for the net gain on sale. The unaudited pro forma consolidated balance sheet does not purport to reflect the actual transaction or financial position of the Company.
Pro forma data are based on assumptions and include adjustments as explained in the notes to the unaudited pro forma condensed consolidated financial statements. Certain information (including substantial footnotes disclosures) included in the annual and quarterly historical financial statements has been excluded in these unaudited pro forma condensed consolidated financial statements. The unaudited pro forma financial information is for informational purposes only and is not necessarily indicative of future results or of the results of operations of the Company that would have occurred had the Disposition been consummated as of the dates indicated.
ALEXANDER & BALDWIN, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2017
(In millions, except per share amounts; unaudited)
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Pro Forma Adjustments | |||||||||||||||||||
| As Reported (A) |
Sale of Maui Agricultural Land |
Pro Forma after Sale of Maui Agricultural Land |
Probable Sale of EMI |
Pro Forma after Sale of Maui Agricultural Land & EMI |
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| Operating Revenue: |
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| Commercial Real Estate |
$ | 136.9 | $ | — | $ | 136.9 | $ | — | $ | 136.9 | ||||||||||
| Land Operations |
84.5 | (0.4 | ) (C) | 84.1 | (0.1 | ) (C) | 84.0 | |||||||||||||
| Materials & Construction |
204.1 | — | 204.1 | — | 204.1 | |||||||||||||||
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| Total operating revenue |
425.5 | (0.4 | ) | 425.1 | (0.1 | ) | 425.0 | |||||||||||||
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| Operating Costs and Expenses: |
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| Cost of Commercial Real Estate |
75.5 | — | 75.5 | — | 75.5 | |||||||||||||||
| Cost of Land Operations |
60.4 | (6.2 | ) (D) | 54.2 | (1.4 | ) (D) | 52.8 | |||||||||||||
| Cost of Materials & Construction |
166.1 | — | 166.1 | — | 166.1 | |||||||||||||||
| Selling, general and administrative |
66.4 | — | 66.4 | (0.1 | ) (D) | 66.3 | ||||||||||||||
| REIT evaluation/conversion costs |
15.2 | — | 15.2 | — | 15.2 | |||||||||||||||
| Impairment of real estate assets |
22.4 | — | 22.4 | — | 22.4 | |||||||||||||||
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| Total operating costs and expenses |
406.0 | (6.2 | ) | 399.8 | (1.5 | ) | 398.3 | |||||||||||||
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| Operating Income |
19.5 | 5.8 | 25.3 | 1.4 | 26.7 | |||||||||||||||
| Income (loss) related to joint ventures |
7.2 | — | 7.2 | — | 7.2 | |||||||||||||||
| Reductions in solar investments, net |
(2.6 | ) | — | (2.6 | ) | — | (2.6 | ) | ||||||||||||
| Interest and other income (expense), net |
2.1 | — | 2.1 | — | 2.1 | |||||||||||||||
| Interest expense |
(25.6 | ) | — | (25.6 | ) | — | (25.6 | ) | ||||||||||||
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| Income from Continuing Operations Before Income Taxes and Net Gain (Loss) on Sale of Improved Properties |
0.6 | 5.8 | 6.4 | 1.4 | 7.8 | |||||||||||||||
| Income tax benefit (expense) |
218.2 | — | 218.2 | (0.4 | ) (E) | 217.8 | ||||||||||||||
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| Income from Continuing Operations Before Net Gain (Loss) on Sale of Improved Properties |
218.8 | 5.8 | 224.6 | 1.0 | 225.6 | |||||||||||||||
| Net gain (loss) on the sale of improved properties, net of income taxes |
9.3 | — | 9.3 | — | 9.3 | |||||||||||||||
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| Income from Continuing Operations |
228.1 | 5.8 | 233.9 | 1.0 | 234.9 | |||||||||||||||
| Income (loss) from discontinued operations, net of income taxes |
2.4 | — | 2.4 | — | 2.4 | |||||||||||||||
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| Net Income (Loss) |
230.5 | 5.8 | 236.3 | 1.0 | 237.3 | |||||||||||||||
| Income attributable to noncontrolling interest |
(2.2 | ) | — | (2.2 | ) | — | (2.2 | ) | ||||||||||||
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| Net Income (Loss) Attributable to A&B Shareholders |
$ | 228.3 | $ | 5.8 | $ | 234.1 | $ | 1.0 | $ | 235.1 | ||||||||||
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| Basic Earnings (Loss) Per Share of Common Stock: |
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| Continuing operations available to A&B shareholders |
$ | 4.63 | $ | 0.11 | $ | 4.74 | $ | 0.03 | $ | 4.77 | ||||||||||
| Discontinued operations available to A&B shareholders |
0.05 | — | 0.05 | — | 0.05 | |||||||||||||||
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| Net income (loss) available to A&B shareholders |
$ | 4.68 | $ | 0.11 | $ | 4.79 | $ | 0.03 | $ | 4.82 | ||||||||||
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| Diluted Earnings (Loss) Per Share of Common Stock: |
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| Continuing operations available to A&B shareholders |
$ | 4.30 | $ | 0.11 | $ | 4.41 | $ | 0.02 | $ | 4.43 | ||||||||||
| Discontinued operations available to A&B shareholders |
0.04 | — | 0.04 | — | 0.04 | |||||||||||||||
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| Net income (loss) available to A&B shareholders |
$ | 4.34 | $ | 0.11 | $ | 4.45 | $ | 0.02 | $ | 4.47 | ||||||||||
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| Weighted-Average Number of Shares Outstanding: |
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| Basic |
49.2 | 49.2 | 49.2 | 49.2 | 49.2 | |||||||||||||||
| Diluted |
53.0 | 53.0 | 53.0 | 53.0 | 53.0 | |||||||||||||||
| Amounts Available to A&B Shareholders: |
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| Continuing operations available to A&B shareholders, net of income taxes |
$ | 227.7 | $ | 5.8 | $ | 233.5 | $ | 1.0 | $ | 234.5 | ||||||||||
| Discontinued operations available to A&B shareholders, net of income taxes |
2.4 | — | 2.4 | — | 2.4 | |||||||||||||||
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| Net income (loss) available to A&B shareholders |
$ | 230.1 | $ | 5.8 | $ | 235.9 | $ | 1.0 | $ | 236.9 | ||||||||||
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See accompanying notes to pro forma financial information
ALEXANDER & BALDWIN, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2018
(In millions, except per share amounts; unaudited)
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Pro Forma Adjustments | |||||||||||||||||||
| As Reported (B) |
Sale of Maui Agricultural Land |
Pro Forma after Sale of Maui Agricultural Land |
Probable Sale of EMI |
Pro Forma after Sale of Maui Agricultural Land & EMI |
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| Operating Revenue: |
||||||||||||||||||||
| Commercial Real Estate |
$ | 104.9 | $ | — | $ | 104.9 | $ | — | $ | 104.9 | ||||||||||
| Land Operations |
72.6 | (0.3 | ) (C) | 72.3 | (0.1 | ) (C) | 72.2 | |||||||||||||
| Materials & Construction |
167.3 | — | 167.3 | — | 167.3 | |||||||||||||||
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| Total operating revenue |
344.8 | (0.3 | ) | 344.5 | (0.1 | ) | 344.4 | |||||||||||||
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| Operating Costs and Expenses: |
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| Cost of Commercial Real Estate |
57.0 | — | 57.0 | — | 57.0 | |||||||||||||||
| Cost of Land Operations |
67.0 | (5.8 | ) (D) | 61.2 | (0.9 | ) (D) | 60.3 | |||||||||||||
| Cost of Materials & Construction |
143.5 | — | 143.5 | — | 143.5 | |||||||||||||||
| Selling, general and administrative |
44.7 | — | 44.7 | — | 44.7 | |||||||||||||||
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| Total operating costs and expenses |
312.2 | (5.8 | ) | 306.4 | (0.9 | ) | 305.5 | |||||||||||||
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| Operating Income |
32.6 | 5.5 | 38.1 | 0.8 | 38.9 | |||||||||||||||
| Income related to joint ventures |
6.3 | — | 6.3 | — | 6.3 | |||||||||||||||
| Reductions in solar investments, net |
(0.4 | ) | — | (0.4 | ) | — | (0.4 | ) | ||||||||||||
| Interest and other income (expense), net |
2.5 | — | 2.5 | (0.1 | ) | 2.4 | ||||||||||||||
| Interest expense |
(26.4 | ) | — | (26.4 | ) | — | (26.4 | ) | ||||||||||||
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| Income from Continuing Operations Before Income Taxes and Net Gain (Loss) on Sale of Improved Properties |
14.6 | 5.5 | 20.1 | 0.7 | 20.8 | |||||||||||||||
| Income tax benefit (expense) |
1.8 | — | 1.8 | (0.1 | ) (E) | 1.7 | ||||||||||||||
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| Income from Continuing Operations Before Net Gain (Loss) on Sale of Improved Properties |
16.4 | 5.5 | 21.9 | 0.6 | 22.5 | |||||||||||||||
| Net gain (loss) on the sale of improved properties, net of income taxes |
49.8 | — | 49.8 | — | 49.8 | |||||||||||||||
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| Income from Continuing Operations |
66.2 | 5.5 | 71.7 | 0.6 | 72.3 | |||||||||||||||
| Income (loss) from discontinued operations, net of income taxes |
(0.2 | ) | — | (0.2 | ) | — | (0.2 | ) | ||||||||||||
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| Net Income (Loss) |
66.0 | 5.5 | 71.5 | 0.6 | 72.1 | |||||||||||||||
| Income attributable to noncontrolling interest |
(1.4 | ) | — | (1.4 | ) | — | (1.4 | ) | ||||||||||||
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| Net Income (Loss) Attributable to A&B Shareholders |
$ | 64.6 | $ | 5.5 | $ | 70.1 | $ | 0.6 | $ | 70.7 | ||||||||||
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| Basic Earnings (Loss) Per Share of Common Stock: |
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| Continuing operations available to A&B shareholders |
$ | 0.92 | $ | 0.08 | $ | 1.00 | $ | 0.01 | $ | 1.01 | ||||||||||
| Discontinued operations available to A&B shareholders |
— | — | — | — | — | |||||||||||||||
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| Net income (loss) available to A&B shareholders |
$ | 0.92 | $ | 0.08 | $ | 1.00 | $ | 0.01 | $ | 1.01 | ||||||||||
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| Diluted Earnings (Loss) Per Share of Common Stock: |
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| Continuing operations available to A&B shareholders |
$ | 0.89 | $ | 0.08 | 0.97 | $ | 0.01 | $ | 0.98 | |||||||||||
| Discontinued operations available to A&B shareholders |
— | — | — | — | — | |||||||||||||||
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| Net income (loss) available to A&B shareholders |
$ | 0.89 | $ | 0.08 | $ | 0.97 | $ | 0.01 | $ | 0.98 | ||||||||||
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| Weighted-Average Number of Shares Outstanding: |
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| Basic |
70.2 | 70.2 | 70.2 | 70.2 | 70.2 | |||||||||||||||
| Diluted |
72.4 | 72.4 | 72.4 | 72.4 | 72.4 | |||||||||||||||
| Amounts Available to A&B Shareholders: |
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| Continuing operations available to A&B shareholders, net of income taxes |
$ | 64.8 | $ | 5.5 | $ | 70.3 | $ | 0.6 | $ | 70.9 | ||||||||||
| Discontinued operations available to A&B shareholders, net of income taxes |
(0.2 | ) | — | (0.2 | ) | — | (0.2 | ) | ||||||||||||
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| Net income (loss) available to A&B shareholders |
$ | 64.6 | $ | 5.5 | $ | 70.1 | $ | 0.6 | $ | 70.7 | ||||||||||
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See accompanying notes to pro forma financial information
ALEXANDER & BALDWIN, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2018
(In millions; unaudited)
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Pro Forma Adjustments | |||||||||||||||||||
| As Reported (B) |
Sale of Maui Agricultural Land |
Pro Forma after Sale of Maui Agricultural land |
Probable Sale of EMI |
Pro Forma after Sale of Maui Agricultural land & EMI |
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| ASSETS |
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| Current Assets: |
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| Cash and cash equivalents |
$ | 7.5 | $ | — | $ | 7.5 | $ | 5.3 | (F) | $ | 12.8 | |||||||||
| Accounts receivable, net |
60.3 | — | 60.3 | — | 60.3 | |||||||||||||||
| Costs and estimated earnings in excess of billings on uncompleted contracts |
9.6 | — | 9.6 | — | 9.6 | |||||||||||||||
| Inventories |
32.2 | — | 32.2 | — | 32.2 | |||||||||||||||
| Real estate held for sale |
23.7 | — | 23.7 | — | 23.7 | |||||||||||||||
| Prepaid expenses and other assets |
41.3 | (0.2 | ) (F) | 41.1 | (0.1 | ) (F) | 41.0 | |||||||||||||
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| Total current assets |
174.6 | (0.2 | ) | 174.4 | 5.2 | 179.6 | ||||||||||||||
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| Investments in Affiliates |
379.2 | — | 379.2 | — | 379.2 | |||||||||||||||
| Real Estate Developments |
141.9 | — | 141.9 | — | 141.9 | |||||||||||||||
| Property – Net |
1,322.3 | (9.0 | ) (F) | 1,313.3 | (1.1 | ) (F) | 1,312.2 | |||||||||||||
| Intangible Assets – Net |
75.9 | — | 75.9 | — | 75.9 | |||||||||||||||
| Deferred Tax Asset |
17.6 | — | 17.6 | — | 17.6 | |||||||||||||||
| Goodwill |
102.3 | — | 102.3 | — | 102.3 | |||||||||||||||
| Restricted Cash |
0.2 | 255.6 | (F) | 255.8 | — | 255.8 | ||||||||||||||
| Other Assets |
62.2 | — | 62.2 | (1.2 | ) (F) | 61.0 | ||||||||||||||
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| Total assets |
$ | 2,276.2 | $ | 246.4 | $ | 2,522.6 | $ | 2.9 | $ | 2,525.5 | ||||||||||
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| LIABILITIES AND EQUITY |
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| Current Liabilities: |
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| Notes payable and current portion of long-term debt |
$ | 37.1 | $ | — | $ | 37.1 | $ | — | $ | 37.1 | ||||||||||
| Accounts payable |
33.7 | — | 33.7 | — | 33.7 | |||||||||||||||
| Billings in excess of costs and estimated earnings on uncompleted contracts |
3.6 | — | 3.6 | — | 3.6 | |||||||||||||||
| Accrued and other liabilities |
46.3 | 3.5 | (F) | 49.8 | 0.5 | (F) | 50.3 | |||||||||||||
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| Total current liabilities |
120.7 | 3.5 | 124.2 | 0.5 | 124.7 | |||||||||||||||
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| Long-term Liabilities: |
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| Long-term debt |
741.3 | — | 741.3 | — | 741.3 | |||||||||||||||
| Accrued pension and post-retirement benefits |
23.1 | — | 23.1 | — | 23.1 | |||||||||||||||
| Other non-current liabilities |
34.5 | 77.5 | (F) | 112.0 | — | 112.0 | ||||||||||||||
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| Total long-term liabilities |
798.9 | 77.5 | 876.4 | — | 876.4 | |||||||||||||||
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| Total liabilities |
919.6 | 81.0 | 1,000.6 | 0.5 | 1,001.1 | |||||||||||||||
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| Redeemable Noncontrolling Interest |
8.0 | — | 8.0 | — | 8.0 | |||||||||||||||
| Equity: |
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| Common stock — no par value; authorized, 150 million shares; outstanding, 72 million |
1,792.1 | — | 1,792.1 | — | 1,792.1 | |||||||||||||||
| Accumulated other comprehensive loss |
(38.3 | ) | — | (38.3 | ) | — | (38.3 | ) | ||||||||||||
| Distributions in excess of accumulated earnings |
(410.5 | ) | 165.4 | (F) | (245.1 | ) | 2.4 | (F) | (242.7 | ) | ||||||||||
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| Total A&B shareholders’ equity |
1343.3 | 165.4 | 1508.7 | 2.4 | 1511.1 | |||||||||||||||
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| Noncontrolling interest |
5.3 | — | 5.3 | — | 5.3 | |||||||||||||||
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| Total equity |
1348.6 | 165.4 | 1514.0 | 2.4 | 1516.4 | |||||||||||||||
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| Total liabilities and equity |
$ | 2,276.2 | $ | 246.4 | $ | 2,522.6 | $ | 2.9 | $ | 2,525.5 | ||||||||||
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See accompanying notes to pro forma financial information
ALEXANDER & BALDWIN, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AND
STATEMENT OF OPERATIONS
(Unaudited)
The following is a summary of the pro forma adjustments reflected in the unaudited pro forma condensed consolidated financial statements based on preliminary estimates, which may change as additional information is obtained. Amounts are rounded to the nearest tenth of a million. Accordingly, a recalculation of some per-share amounts if based on the reported data, may result in differences.
(A) Derived from the Company’s condensed statement of operations for the year ended December 31, 2017.
(B) Derived from the Company’s condensed consolidated balance sheet and statement of operations as of and for the nine months ended September 30, 2018, respectively.
(C) Revenue
Adjustment reflects an elimination of historical Maui Diversified Agricultural and EMI revenue.
(D) Operating Costs
Adjustment reflects an elimination of historical Maui Diversified Agricultural and EMI operating costs. Not included in the pro forma results are anticipated savings due to costs that may be reduced or eliminated.
(E) Income Taxes
Adjustment reflects the elimination of the estimated tax impact.
(F) Gain on Sale and Contingencies
The following balance sheet adjustments were made to record the gain on the sale of Maui Diversified Agriculture and EMI as if the sale had occurred on September 30, 2018:
| (in millions) | Sale of Maui Agricultural Land |
Probable Sale of EMI |
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| Sales Price (net of closing costs) |
$ | 255.6 | (1) | $ | 5.3 | |||
| Contingencies and Reserves |
(62.0 | ) (3) | — | |||||
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| Net Sales Price |
193.6 | 5.3 | ||||||
| Assets sold |
(9.2 | ) (2) | (2.4 | ) (2) | ||||
| Contingent Liabilities |
(19.0 | ) (3) | (0.5 | ) (3) | ||||
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| Gain on Sale |
$ | 165.4 | $ | 2.4 | ||||
| (1) | - As the sale of the Maui Diversified Agriculture qualifies for potential deferred tax-deferral treatment under Internal Revenue Code Section 1031, the proceeds were classified as a restricted cash adjustment in the pro-forma balance sheet. Sales price is show net of estimated closing costs of $5.9 million. |
| (2) | - Represents the sum of total assets disposed of as part of the sale. |
| (3) | - The Company has recorded certain liabilities due to various clauses in the PSA related to the Company’s post closing obligations and purchase price contingencies to be resolved at a future date. The liabilities have been classified as current and long term based on the underlying terms included in the PSA. |