Accounting for and Classification of Discontinued Operations:

9 Months Ended

Sep. 30, 2012

Accounting for and Classification of Discontinued Operations:

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. Discontinued operations includes the results for the business lines that were terminated through September 30, 2012. Operating results included in the Condensed Consolidated Statements of Income and the segment results (Note 12) for the three and nine months ended September 30, 2011, have been restated to reflect the termination of segments that were classified as discontinued operations subsequent to September 30, 2011.

On December 1, 2011, the Former Parent Company 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 on June 29, 2012.  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.  Immediately following the Separation, Alexander & Baldwin Holdings, Inc. changed its name to Matson, Inc.  Refer to Note (1) for further description of the Separation Transaction.

In the third quarter of 2011, the Company terminated its second China service (“CLX2”), 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 September 30, 2012, the Company had no future liability.  The liability, which was 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.

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

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2012		2011			2012			2011
Discontinued operations (net of tax)
Income from A&B	$	—	$	62.2		$	114.0		$	188.5
Expenses from A&B	—		(62.0		)	(118.1		)	(166.9		)
Tax (expense) benefit from A&B	—		(0.1		)	0.1			(9.3		)
(Loss) Income from continuing operations from A&B	—		0.1			(4.0		)	12.3
Discontinued operations from A&B, net of tax	—		4.3			2.4			14.3
Net (loss) income from A&B	—		4.4			(1.6		)	26.6
CLX2 operating and shutdown income (losses)	0.1		(14.1		)	(2.7		)	(33.1		)
Separation related tax expenses	—		—			(1.7		)	—
(Loss) income from discontinued operations (net of tax)	$	0.1	$	(9.7	)	$	(6.0	)	$	(6.5	)

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 $0.5 million for the nine months ended September 30, 2012.  There were no additional shutdown costs incurred in the third quarter 2012 that met the criteria to be classified as discontinued operations.  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.  Shutdown costs incurred during the three and nine months ended September 30, 2011 were $6.1 million.

Subsequent to the issuance of the June 30, 2012 interim condensed consolidated financial statements, the Company restated the presentation related to discontinued operations of CLX2 of  in the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Cash Flows. In presenting its cash flows from operations, the Company restated the cash flows related to CLX2 from “Cash Flows Provided by Operating Activities from Continuing Operations” to “Cash flows used in operating activities of discontinued operations” which increased “Cash Flows Provided by Operating Activities from Continuing Operations” and increased “Cash flow used in operating activities from discontinued operations” previously reported by $6.0 million and $15.6 million for the six months ending periods June 30, 2012 and June 30, 2011, respectively.  In presenting the accompanying unaudited December 31, 2011 condensed consolidated balance sheet, the Company restated assets and liabilities related to CLX2 which increased “Current assets related to discontinued operations” by $2.1 million and decreased “Prepaid expenses and other assets” by the same amount, and increased “Current liabilities related to discontinued operations” by $5.1 million which decreased “Uninsured claims” by $0.1 million and “Accrued and other liabilities” by $5.0 million.  The Company has determined that the foregoing restatements are not material to the previously issued condensed consolidated financial statements.