GENERAL AND SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2016

GENERAL AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Basis of Presentation: The Condensed Consolidated Financial Statements are unaudited.  Due to the nature of the Company’s operations and the Company’s acquisition of Horizon Lines, Inc. (“Horizon”) on May 29, 2015, 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 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 filed on Form 10-K for the year ended December 31, 2015, filed with the Securities and Exchange Commission (“SEC”) on February 26, 2016.

The Condensed Consolidated Statements of Income and Comprehensive Income include the operations of Horizon from May 29, 2015.

Fiscal Period

Fiscal Period: The period end for Matson, Inc. covered by this report is June 30, 2016.  The period end for MatNav and its subsidiaries covered by this report occurred on the last Friday in June, or June 24, 2016.

Significant Accounting Policies

Significant Accounting Policies: The Company’s significant accounting policies are described in Note 2 to the Consolidated Financial Statements included in Item 8 of the Company’s Annual Report filed on Form 10-K for the year ended December 31, 2015.

Property and Equipment

Property and Equipment: Property and equipment is stated at cost, net of accumulated depreciation of $1,165.6 million and $1,128.6 million at June 30, 2016 and December 31, 2015, respectively.

Goodwill

Goodwill:Changes in the Company’s goodwill for the three and six months ended June 30, 2016 and 2015 consist of the following (in millions):

	Goodwill
	Ocean
	Transportation		Logistics		Total
Balance at December 31, 2015	$	215.0	$	26.6	$	241.6
Additions		—		—		—
Balance at March 31, 2016		215.0		26.6		241.6
Additions		3.5		—		3.5
Balance at June 30, 2016	$	218.5	$	26.6	$	245.1
	Goodwill
	Ocean
	Transportation		Logistics		Total
Balance at December 31, 2014	$	0.8	$	26.6	$	27.4
Additions		—		—		—
Balance at March 31, 2015		0.8		26.6		27.4
Additions		214.2		—		214.2
Balance at June 30, 2015	$	215.0	$	26.6	$	241.6

Ocean Transportation goodwill additions for the three and six months ended June 30, 2016 and 2015 are related to the Horizon Acquisition (see Note 3, Business Combinations).

Intangible Assets, Net

Intangible Assets, Net: Intangible assets are recorded net of accumulated amortization of $16.0 million and $12.3 million at June 30, 2016 and December 31, 2015, respectively.

Capital Construction Fund

Capital Construction Fund: The Company’s Capital Construction Fund (“CCF”) is described in Note 7 to the Consolidated Financial Statements included in Item 8 of the Company’s Annual Report filed on Form 10-K for the year ended December 31, 2015.  As of June 30, 2016 and December 31, 2015, the Company had nominal amounts on deposit in the CCF.  These amounts are held in a money market account and classified as long-term assets in the Company’s Condensed Consolidated Balance Sheets, as the Company intends to use qualified cash withdrawals to fund the vessel construction costs.  During the three months ended June 30, 2016, the Company did not make any cash deposits into the CCF.  During the six months ended June 30, 2016, the Company made cash deposits of $12.5 million into the CCF.  Additionally, $12.5 million of qualified cash withdrawals were made from the CCF during the three and six months ended June 30, 2016.

As of June 30, 2016 and December 31, 2015, $164.8 million and $176.6 million, respectively, of eligible accounts receivable were assigned to the CCF.  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.

Contingencies

Contingencies: 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.

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.

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss:Changes in accumulated other comprehensive loss by component, net of tax, for the three and six months ended June 30, 2016 and 2015 are as follows (in millions):

											Accumulated
					Non-		Foreign				Other
			Post		Qualified		Currency		Interest		Comprehensive
	Pensions		Retirement		Plans		Transaction		Hedge		Income (Loss)
Balance at December 31, 2015	$	(41.7)	$	(4.7)	$	(0.9)	$	1.0	$	(0.6)	$	(46.9)
Net gain in prior service costs		—		0.7		—		—		—		0.7
Amortization of prior service cost		(0.4)		—		—		—		—		(0.4)
Amortization of net loss		0.8		0.2		0.1		—		—		1.1
Foreign currency translation adjustment		—		—		—		(0.1)		—		(0.1)
Balance at March 31, 2016		(41.3)		(3.8)		(0.8)		0.9		(0.6)		(45.6)
Amortization of prior service cost		(0.3)		—		0.1		—		—		(0.2)
Amortization of net loss		0.8		0.2		—		—		—		1.0
Balance at June 30, 2016	$	(40.8)	$	(3.6)	$	(0.7)	$	0.9	$	(0.6)	$	(44.8)
											Accumulated
					Non-		Foreign				Other
			Post		Qualified		Currency		Interest		Comprehensive
	Pensions		Retirement		Plans		Transaction		Hedge		Income (Loss)
Balance at December 31, 2014	$	(45.0)	$	(7.2)	$	(0.7)	$	0.3	$	(0.7)	$	(53.3)
Net loss in prior service costs		(0.2)		—		—		—		—		(0.2)
Amortization of prior service cost		(0.4)		—		—		—		—		(0.4)
Amortization of net loss		1.0		0.4		—		—		—		1.4
Foreign currency translation adjustment		—		—		—		0.1		—		0.1
Balance at March 31, 2015		(44.6)		(6.8)		(0.7)		0.4		(0.7)		(52.4)
Amortization of prior service cost		(0.2)		0.1		(0.1)		—		—		(0.2)
Amortization of net loss		0.9		0.2		(0.2)		—		—		0.9
Foreign currency translation adjustment		—		—		—		0.6		—		0.6
Balance at June 30, 2015	$	(43.9)	$	(6.5)	$	(1.0)	$	1.0	$	(0.7)	$	(51.1)

New Accounting Pronouncements: Leases

New Accounting Pronouncements:Leases: In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which requires lessees to record most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice.  ASU 2016-02 states that a lessee would recognize a lease liability for the obligation to make lease payments, and a right-of-use asset for the underlying leased asset for the period of the lease term.  The new standard is effective for interim and annual periods beginning after December 15, 2018 and early adoption is permitted.  The Company is in the process of evaluating this guidance.

New Accounting Pronouncements: Share-Based Awards

Share-Based Awards: In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.”  The amendments are effective for public companies for annual periods beginning after December 15, 2016, and interim periods within those annual periods.  Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows.  Early adoption is permitted.  The Company is in the process of evaluating this guidance.