2021 ANNUAL REPORT
+ FORM 10-K
BOARD OF DIRECTORS
MATTHEW J. COX, 60
Chairman of the Board and Chief
Executive Officer, Matson, Inc.
STANLEY M. KURIYAMA, 68 (b)(c)(d)
Former Chairman of the Board and
Chief Executive Officer, Alexander &
Baldwin, Inc.
MEREDITH J. CHING, 65 (b)
Executive Vice President,
External Affairs, Alexander &
Baldwin, Inc.
ADMIRAL THOMAS B. FARGO,
U.S. NAVY (RET.), 73 (a)
Former Commander of the
U.S. Pacific Command
MARK H. FUKUNAGA, 66 (b)(c)
Chairman and Chief Executive
Officer, Servco Pacific Inc.
CONSTANCE H. LAU, 69 (a)(c)
Former President, Chief Executive
Officer and Director, Hawaiian
Electric Industries, Inc.
JENAI S. WALL, 63 (a)(c)
Chairman and Chief Executive
Officer, Foodland Super Market, Ltd.
EXECUTIVE MANAGEMENT
RONALD J. FOREST, 66 (e)
President
PETER T. HEILMANN, 53
Executive Vice President, Chief
Administrative Officer and
General Counsel
JOHN P. LAUER, 61
Executive Vice President and
Chief Commercial Officer
RUSTY K. ROLFE, 64
Executive Vice President and
President, Matson Logistics
JOEL M. WINE, 50
Executive Vice President and
Chief Financial Officer
VICENTE S. ANGOCO, JR., 55
Senior Vice President, Pacific
GRACE M. CEROCKE, 43
Senior Vice President, Finance,
Matson Logistics
BRANTON B. DREYFUS, 68
Senior Vice President, Alaska
QIANG GAO, 58
Senior Vice President, Asia
RICHARD S. KINNEY, 58
Senior Vice President,
Network Operations
KU‛UHAKU T. PARK, 55
Senior Vice President, Government
and Community Relations
LAURA L. RASCON, 58
Senior Vice President,
Customer Experience
CHRISTOPHER A. SCOTT, 48
Senior Vice President,
Transpacific Services
JOHN W. SULLIVAN, 68
Senior Vice President, Vessel
Operations and Engineering
JASON L. TAYLOR, 48
Senior Vice President,
Human Resources
Notes: Ages as of March 1, 2022(a) Audit Committee Member(b) Compensation Committee Member(c) Nominating and Corporate Governance Committee Member(d) Lead Independent Director(e) Transitioned to Senior Advisor on February 1, 2022 2021 ANNUAL REPORT
CEO LETTER
In 2021, the global pandemic presented challenges
and opportunities for Matson’s ocean transportation
and logistics businesses as domestic consumption of
goods greatly increased and the transpacific supply
chain infrastructure strained to meet this sustained,
elevated level of demand.
Our experience and history in serving lifeline
communities prepared us well for these
challenges, but it is our long-standing
customer relationships in both Ocean
Transportation and Logistics as well as our
commitment to fast, reliable ocean services
that provided significant results throughout
the year as well as opportunities to drive
long-term future growth.
In 2021, we (i) invested $325.3 million in our
vessel and shoreside operations, (ii) reduced
debt by $131.1 million, and (iii) returned $246.0
million in capital to shareholders in the form of
share repurchases and dividends.
To grow shareholder value, we remain focused
on putting your cash to work and to achieving
In 2021, we
launched our
China-California
Express (CCX)
service to alleviate
some of the
congestion pressure
our customers faced,
providing them an
alternative to getting
their goods
to markets.
returns that are more than our cost of capital
over time, which is especially important to
long-cycle, asset-intensive businesses such
as ours. To achieve this goal, we view return
on invested capital (ROIC) and growth in
Since our company became
public in 2012, our focus on
capital allocation and ROIC
has produced a 6.3x increase
in the book value per share,
a compounded annual
growth rate of 21.4%.1
book value as essential barometers of our
success. In 2021, our ROIC increased
significantly to 47.1% due to extraordinary
financial results, meaningful debt reduction
and expanded return of capital. Since our
company became public in 2012, our
focus on capital allocation and ROIC has
produced a 6.3x increase in the book value
per share, a compounded annual growth
rate of 21.4%.1
Regarding the economic and market
climate, I don’t know yet what the “new
normal” will look like. I suspect it may take
longer for industry normalization to arrive
than others believe, but I believe that
1. Book value per share defined as shareholders’ equity divided by shares outstanding, and is based on the 2021 shareholders’ equity excluding the cumulative net positive adjustment of $154.0 million related to the 2017 Tax Cuts and Jobs Act. Including the adjustment, the compounded annual growth rate would be 22.7%. directly to consumers transformed the
economy forever, but the financial impact to
businesses has been uneven.
Some, like Matson, have disproportionately
thrived amid this uncertainty. This was due to
a combination of factors, some decades in
formation and others the result of opportune
adjustments we made throughout our ocean
and logistics network in the past few years. In
short, we were well-positioned to help
customers in all of their needs, from over-the-
ocean transport to overland transportation
brokerage, supply chain services and Alaska
freight forwarding. The foundation of this
recent success, however, are the very tenets
upon which Matson began operations 139
years ago — the delivery of vital goods, reliably
on-time and with exceptional customer
service to markets throughout the Pacific.
We have benefited from the decades-long
investments we have made — from vessels to
containers to chassis to cranes. And, unlike
most ocean carriers, we operate
independently, which means we directly
control much of our network. By owning most
of our ships, operating them at the fastest
speeds in the industry, owning our shoreside
equipment, having dedicated West Coast
terminals managed by the leading operator
SSAT, and having strategic access to off-dock
facilities at key chokepoints in the supply
chain, we serve our customers in ways that
other operators cannot. For example, for our
owned vessels arriving from China and
berthing at Oakland and Long Beach, we offer
first-in, first-off loading of customer cargo onto
our chassis, cargo availability within 24 hours
of arrival at berth, and reduction in truck turn
times to industry-leading levels at 23 minutes
or less.
More recently, in 2020 we expanded
operations and introduced our second
China-Long Beach Express service (CLX+) and
an Alaska-Asia Express (AAX) as a backhaul to
the CLX+ service utilizing chartered vessels to
meet growing demand. In 2021, we launched
our China-California Express service (CCX)
and the China-Auckland Express (CAX) with
our owned vessels. CCX calls Oakland,
California first, berthing at our dedicated
terminal. This opportunistic, short-term
addition alleviates some of the congestion
Matson Hawaii serves
in our Alaska-Asia
Express (AAX) as a
backhaul service, an
integral part of our
expanded network.
business and consumer consumption
patterns have been inexorably changed.
Furthermore, I do know that market
conditions will undoubtedly shift again, and
perhaps quite rapidly, in the coming year(s)
as supply chain congestion unwinds and
e-commerce becomes an increasingly larger
driver of our economy.
I do know too that your company is well
prepared for these changes. We have
delivered in a rapidly evolving environment,
and we will remain flexible to reposition
assets and allocate capital to its best and
highest use to drive more growth
opportunities. Above all, we will remain
steadfast in our mission — move freight
better than anyone.
THE FASTEST, MOST RELIABLE SERVICE –
A DIFFERENTIATED MODEL
The past 12 months have proven to be
increasingly uncertain, characterized by
global supply chains that have been
disrupted and reshuffled, especially in key
markets where we operate, the U.S. West
Coast and China. The adoption of
e-commerce significantly accelerated in the
pandemic, and the consumption of goods
pulled forward at an unprecedented rate.
Record import volume vastly exceeded
supply chain capacity (air cargo capacity,
vessel capacity, marine terminal space,
warehouse space, available labor,
intermodal capacity, truck chassis and
shoreside equipment), leading inevitably to
significantly higher freight rates in certain
critical routes. From factory floor to
household door, the delivery of goods
pressure our customers face in Long Beach
and provides them an alternative to getting
their goods to markets. The CAX provides
another gateway from China for us with direct
service to New Zealand as well as potential
growth opportunities in feeder markets and
communities throughout the South Pacific.
What we have re-learned over the past two
years is that especially during times of
uncertainty, when there can be equipment,
vessel, network and personnel shortages,
speed to market and reliability are critical to
our customers’ success. And with their success,
ultimately, we believe, will come ours.
CAPITAL ALLOCATION
Our expectations for cash generation were
vastly exceeded in 2021, driven by higher-
than-expected rates across all of our China
What we have re-learned
over the past two years
is that especially during
times of uncertainty, speed
to market and reliability are
critical to our customers’
success. And with their
success, ultimately, we
believe, will come ours.
ocean services, the addition of the CCX
opportunistically put our balance sheet to
service in July, and continuing efficiencies
work, as described below.
derived from our recent Hawaii re-fleeting.
This additional cash generation provided us
Expand Our Asset Base
new opportunities to return capital to our
Our priority for the use of cash is to maintain
shareholders, to make larger investments in
and grow our fleet and shoreside operations
essential assets, to lower our debt level and to
as well as our logistics businesses. In 2021,
To meet surging
demand from China and
ensure fluidity in our network,
we purchased dry and
refrigerated containers and
chassis throughout 2021.
capital allocated to this was $325.3 million,
which was a twofold increase from what we
anticipated at the start of the year. Of this
amount, $121.1 million was “growth capital,”
investments in equipment to support our new
tradelane services that capitalized on surging
demand out of China. Another $117.3 million
was related to the opportunistic termination
and buyout of vessel and equipment operating
leases, accretive transactions that also
provided greater operational control over
these assets. The balance of $86.9 million
was for maintenance expenditures across the
company, installation of our last scrubber and
construction of a new Hawaii neighbor island
barge. Details around these investments in
2021 and our expectations for 2022 are
provided below:
■ Growth Capital
As referenced above, we initiated four new
ocean services in the past two years: the
CLX+, AAX, CCX and CAX. We purchased
additional containers (dry and refrigerated)
and chassis in the second half of 2020 and
throughout 2021 to support this growth
and ensure fluidity in our network. In 2021,
we committed approximately $159 million
directly to consumers transformed the
economy forever, but the financial impact to
businesses has been uneven.
Some, like Matson, have disproportionately
thrived amid this uncertainty. This was due to
a combination of factors, some decades in
formation and others the result of opportune
adjustments we made throughout our ocean
and logistics network in the past few years. In
short, we were well-positioned to help
customers in all of their needs, from over-the-
ocean transport to overland transportation
brokerage, supply chain services and Alaska
freight forwarding. The foundation of this
recent success, however, are the very tenets
Matson Hawaii serves
in our Alaska-Asia
Express (AAX) as a
backhaul service, an
integral part of our
expanded network.
business and consumer consumption
upon which Matson began operations 139
patterns have been inexorably changed.
years ago — the delivery of vital goods, reliably
Furthermore, I do know that market
on-time and with exceptional customer
conditions will undoubtedly shift again, and
service to markets throughout the Pacific.
perhaps quite rapidly, in the coming year(s)
as supply chain congestion unwinds and
We have benefited from the decades-long
e-commerce becomes an increasingly larger
investments we have made — from vessels to
driver of our economy.
containers to chassis to cranes. And, unlike
most ocean carriers, we operate
I do know too that your company is well
independently, which means we directly
prepared for these changes. We have
control much of our network. By owning most
delivered in a rapidly evolving environment,
of our ships, operating them at the fastest
and we will remain flexible to reposition
speeds in the industry, owning our shoreside
assets and allocate capital to its best and
equipment, having dedicated West Coast
highest use to drive more growth
opportunities. Above all, we will remain
steadfast in our mission — move freight
better than anyone.
terminals managed by the leading operator
SSAT, and having strategic access to off-dock
facilities at key chokepoints in the supply
chain, we serve our customers in ways that
other operators cannot. For example, for our
THE FASTEST, MOST RELIABLE SERVICE –
owned vessels arriving from China and
A DIFFERENTIATED MODEL
berthing at Oakland and Long Beach, we offer
The past 12 months have proven to be
first-in, first-off loading of customer cargo onto
increasingly uncertain, characterized by
our chassis, cargo availability within 24 hours
global supply chains that have been
of arrival at berth, and reduction in truck turn
disrupted and reshuffled, especially in key
times to industry-leading levels at 23 minutes
markets where we operate, the U.S. West
or less.
Coast and China. The adoption of
e-commerce significantly accelerated in the
More recently, in 2020 we expanded
pandemic, and the consumption of goods
operations and introduced our second
pulled forward at an unprecedented rate.
China-Long Beach Express service (CLX+) and
Record import volume vastly exceeded
an Alaska-Asia Express (AAX) as a backhaul to
supply chain capacity (air cargo capacity,
the CLX+ service utilizing chartered vessels to
vessel capacity, marine terminal space,
meet growing demand. In 2021, we launched
warehouse space, available labor,
our China-California Express service (CCX)
intermodal capacity, truck chassis and
and the China-Auckland Express (CAX) with
shoreside equipment), leading inevitably to
our owned vessels. CCX calls Oakland,
significantly higher freight rates in certain
California first, berthing at our dedicated
critical routes. From factory floor to
terminal. This opportunistic, short-term
household door, the delivery of goods
addition alleviates some of the congestion
pressure our customers face in Long Beach
and provides them an alternative to getting
their goods to markets. The CAX provides
another gateway from China for us with direct
service to New Zealand as well as potential
growth opportunities in feeder markets and
communities throughout the South Pacific.
What we have re-learned over the past two
years is that especially during times of
uncertainty, when there can be equipment,
vessel, network and personnel shortages,
speed to market and reliability are critical to
our customers’ success. And with their success,
ultimately, we believe, will come ours.
CAPITAL ALLOCATION
Our expectations for cash generation were
vastly exceeded in 2021, driven by higher-
than-expected rates across all of our China
ocean services, the addition of the CCX
service in July, and continuing efficiencies
derived from our recent Hawaii re-fleeting.
This additional cash generation provided us
new opportunities to return capital to our
shareholders, to make larger investments in
essential assets, to lower our debt level and to
To meet surging
demand from China and
ensure fluidity in our network,
we purchased dry and
refrigerated containers and
chassis throughout 2021.
What we have re-learned
over the past two years
is that especially during
times of uncertainty, speed
to market and reliability are
critical to our customers’
success. And with their
success, ultimately, we
believe, will come ours.
opportunistically put our balance sheet to
work, as described below.
Expand Our Asset Base
Our priority for the use of cash is to maintain
and grow our fleet and shoreside operations
as well as our logistics businesses. In 2021,
capital allocated to this was $325.3 million,
which was a twofold increase from what we
anticipated at the start of the year. Of this
amount, $121.1 million was “growth capital,”
investments in equipment to support our new
tradelane services that capitalized on surging
demand out of China. Another $117.3 million
was related to the opportunistic termination
and buyout of vessel and equipment operating
leases, accretive transactions that also
provided greater operational control over
these assets. The balance of $86.9 million
was for maintenance expenditures across the
company, installation of our last scrubber and
construction of a new Hawaii neighbor island
barge. Details around these investments in
2021 and our expectations for 2022 are
provided below:
■ Growth Capital
As referenced above, we initiated four new
ocean services in the past two years: the
CLX+, AAX, CCX and CAX. We purchased
additional containers (dry and refrigerated)
and chassis in the second half of 2020 and
throughout 2021 to support this growth
and ensure fluidity in our network. In 2021,
we committed approximately $159 million
to purchase nearly 11,100 containers and over 3,100 chassis. The payback on these equipment purchases is measured in months given the present high-demand environment. We will continue to be focused on driving more organic growth opportunities as these tend to be relatively lower risk, high return. ■ Opportunistic Capital In 2021, we paid $95.8 million to terminate the operating lease on Maunalei and acquire the vessel. The lease termination resulted in approximately $6 million of lower cash operating costs in the second half of 2021 and was 10 cents accretive to 2021 EPS. Additionally, we terminated the operating lease on Mauna Loa early, thereby acquiring the barge, and bought out other equipment leases all to better control assets that are in high demand. ■ In 2022, capital expenditures are expected to range between $160 to $180 million; approximately (i) $80 to $90 million for maintenance of our expanded fleet and shoreside assets, (ii) $55 to $60 million for additional equipment to support the new tradelane services, (iii) $15 to $20 million for LNG equipment to be installed on vessels (as described below) and (iv) $10 million to complete our new flat-deck, inter-island barge for our Hawaii operations. Support Our Balance Sheet and Reduce DebtWe ended 2021 with $282.4 million of cash and cash equivalents, $131.1 million in less debt compared to year-end 2020 and a leverage level of 0.5x.2 As we have indicated before, we are committed to maintaining investment-grade credit metrics and preserving our low-cost balance sheet, which we view as a competitive advantage. We believe that our through-the-cycle leverage target of the “low 2s” provides appropriate financial leverage for our asset intensity. We know that during cycle peaks we may be below this level as we generate more cash, but we believe a continuing sound approach to supporting our balance sheet makes sense over the long term. For 2022, we expect to continue to reduce our outstanding debt through scheduled repayments of $65.0 million on our long-term debt.Return Capital to ShareholdersIn June 2021, we announced a 30.4% increase in our quarterly dividend to $0.30 per share and a share repurchase program of 3 million shares or approximately 7% of the then outstanding common shares. In 2021, we repurchased approximately 2.5 million shares for a total cost of $200.1 million and paid dividends of $45.9 million. Since the 2012 separation, we have returned $585.2 million to shareholders (approximately 19.3% of our cumulative cash flow from operations)3 in the form of dividends and share repurchases. We have raised the quarterly dividend annually and we plan to continue growing the dividend in line with growth in the long-term cash flows. In early 2022, the Board of Directors amended our share repurchase program to include an additional 3 million shares.Acquire BusinessesAlthough we evaluated several potential acquisitions in 2021, we did not execute on any of them. We continue to exercise discipline and not chase sizable acquisition opportunities near the top of a cycle with high valuations and increased risk of meeting financial projections. In the meantime, we remain vigilant in adhering to our core acquisition criteria, fortifying our balance sheet in preparation to move quickly when the cycle turns so we can flex our investment philosophy. Moving forward, I remain confident that the secular tailwind of e-commerce adoption and our unique positioning in the Pacific, a position bolstered by an expanded network and superior service offerings, will result in sustainable, higher levels of cash generation than anticipated a year ago, and meaningfully higher than our pre-pandemic 2019 base. With that as precedent, we now expect to (i) meet future re-fleeting initiatives and sustainability goals (outlined below) tax-efficiently, (ii) continue a robust return of capital, and (iii) be opportunistic in potential acquisitions while maintaining an investment-grade balance sheet without greatly surpassing our long-term financial leverage target. OUR SUSTAINABILITY STRATEGYIn February 2021, Matson published its first sustainability report. The report details our deep commitment to environmental stewardship, being a trusted and reliable employer and community partner, and operating our business with integrity. I strongly encourage all stakeholders to read the report in its entirety. In November 2021, we published a supplement to the report in which we announced medium- and long-term environmental goals that reflect Matson’s commitment and contribution to help the world decarbonize and limit climate change. These ambitious but achievable goals are to: ■ Reduce Scope 1 greenhouse gas (GHG) emissions from our owned fleet by 40% by 2030; and ■ Achieve net zero total Scope 1 GHG emissions from our fleet by 2050. To meet our 2030 target, we believe we will need to have eight of our vessels operate on liquefied natural gas (LNG). LNG is a cleaner, commercially available fuel alternative that produces lower nitrogen oxides and almost no sulfur oxides, and emits approximately 24% less CO2 on a per unit of energy basis than the very low sulfur fuel available today.4 It is however a “bridge” fuel only, instrumental to achieving our 2030 goal but not a solution to attaining net zero emissions by 2050. For that, new fuel alternatives will need to be developed.Since 2018, we have launched four new, LNG-capable, state-of-the-art vessels that have already helped us reduce our overall GHG emissions. Those vessels will be Matsonia, a 2020 LNG-capable new-build, added cargo, reefer and auto capacity into our Hawaii tradelane, shown departing from our dedicated Long Beach terminal.Moving forward, I remain confident that the secular tailwind of e-commerce adoption and our unique positioning in the Pacific, a position bolstered by an expanded network and superior service offerings, will result in sustainable, higher levels of cash generation than anticipated a year ago, and meaningfully higher than our pre-pandemic 2019 base. 2. Based on Total Debt of $629.0 million and EBITDA per our amended debt agreements of $1,373.2 million. Total Debt is presented before any reduction for deferred loan fees as required by GAAP.3. Based on cumulative cash flow from operations from July 1, 2012, through December 31, 2021, of $3,030.4 million. 4. Source: Marine Environment Protection Committee (MEPC), MEPC73/19/Add. 1 Annex 5, Resolution MEPC.308(73) adopted on October 26, 2018, “2018 Guidelines on the Method of Calculation of the Attained Energy Efficiency Design Index for New Ships.” Lower CO2 emissions based on information in section 2.2.1 after converting LNG and Heavy Fuel Oil to CO2 per unit of energy. to purchase nearly 11,100 containers and over 3,100 chassis. The payback on these equipment purchases is measured in months given the present high-demand environment. We will continue to be focused on driving more organic growth opportunities as these tend to be relatively lower risk, high return. ■ Opportunistic Capital In 2021, we paid $95.8 million to terminate the operating lease on Maunalei and acquire the vessel. The lease termination resulted in approximately $6 million of lower cash operating costs in the second half of 2021 and was 10 cents accretive to 2021 EPS. Additionally, we terminated the operating lease on Mauna Loa early, thereby acquiring the barge, and bought out other equipment leases all to better control assets that are in high demand. ■ In 2022, capital expenditures are expected to range between $160 to $180 million; approximately (i) $80 to $90 million for maintenance of our expanded fleet and shoreside assets, (ii) $55 to $60 million for additional equipment to support the new tradelane services, (iii) $15 to $20 million for LNG equipment to be installed on vessels (as described below) and (iv) $10 million to complete our new flat-deck, inter-island barge for our Hawaii operations. Support Our Balance Sheet and Reduce DebtWe ended 2021 with $282.4 million of cash and cash equivalents, $131.1 million in less debt compared to year-end 2020 and a leverage level of 0.5x.2 As we have indicated before, we are committed to maintaining investment-grade credit metrics and preserving our low-cost balance sheet, which we view as a competitive advantage. We believe that our through-the-cycle leverage target of the “low 2s” provides appropriate financial leverage for our asset intensity. We know that during cycle peaks we may be below this level as we generate more cash, but we believe a continuing sound approach to supporting our balance sheet makes sense over the long term. For 2022, we expect to continue to reduce our outstanding debt through scheduled repayments of $65.0 million on our long-term debt.Return Capital to ShareholdersIn June 2021, we announced a 30.4% increase in our quarterly dividend to $0.30 per share and a share repurchase program of 3 million shares or approximately 7% of the then outstanding common shares. In 2021, we repurchased approximately 2.5 million shares for a total cost of $200.1 million and paid dividends of $45.9 million. Since the 2012 separation, we have returned $585.2 million to shareholders (approximately 19.3% of our cumulative cash flow from operations)3 in the form of dividends and share repurchases. We have raised the quarterly dividend annually and we plan to continue growing the dividend in line with growth in the long-term cash flows. In early 2022, the Board of Directors amended our share repurchase program to include an additional 3 million shares.Acquire BusinessesAlthough we evaluated several potential acquisitions in 2021, we did not execute on any of them. We continue to exercise discipline and not chase sizable acquisition opportunities near the top of a cycle with high valuations and increased risk of meeting financial projections. In the meantime, we remain vigilant in adhering to our core acquisition criteria, fortifying our balance sheet in preparation to move quickly when the cycle turns so we can flex our investment philosophy. Moving forward, I remain confident that the secular tailwind of e-commerce adoption and our unique positioning in the Pacific, a position bolstered by an expanded network and superior service offerings, will result in sustainable, higher levels of cash generation than anticipated a year ago, and meaningfully higher than our pre-pandemic 2019 base. With that as precedent, we now expect to (i) meet future re-fleeting initiatives and sustainability goals (outlined below) tax-efficiently, (ii) continue a robust return of capital, and (iii) be opportunistic in potential acquisitions while maintaining an investment-grade balance sheet without greatly surpassing our long-term financial leverage target. OUR SUSTAINABILITY STRATEGYIn February 2021, Matson published its first sustainability report. The report details our deep commitment to environmental stewardship, being a trusted and reliable employer and community partner, and operating our business with integrity. I strongly encourage all stakeholders to read the report in its entirety. In November 2021, we published a supplement to the report in which we announced medium- and long-term environmental goals that reflect Matson’s commitment and contribution to help the world decarbonize and limit climate change. These ambitious but achievable goals are to: ■ Reduce Scope 1 greenhouse gas (GHG) emissions from our owned fleet by 40% by 2030; and ■ Achieve net zero total Scope 1 GHG emissions from our fleet by 2050. To meet our 2030 target, we believe we will need to have eight of our vessels operate on liquefied natural gas (LNG). LNG is a cleaner, commercially available fuel alternative that produces lower nitrogen oxides and almost no sulfur oxides, and emits approximately 24% less CO2 on a per unit of energy basis than the very low sulfur fuel available today.4 It is however a “bridge” fuel only, instrumental to achieving our 2030 goal but not a solution to attaining net zero emissions by 2050. For that, new fuel alternatives will need to be developed.Since 2018, we have launched four new, LNG-capable, state-of-the-art vessels that have already helped us reduce our overall GHG emissions. Those vessels will be Matsonia, a 2020 LNG-capable new-build, added cargo, reefer and auto capacity into our Hawaii tradelane, shown departing from our dedicated Long Beach terminal.Moving forward, I remain confident that the secular tailwind of e-commerce adoption and our unique positioning in the Pacific, a position bolstered by an expanded network and superior service offerings, will result in sustainable, higher levels of cash generation than anticipated a year ago, and meaningfully higher than our pre-pandemic 2019 base. 2. Based on Total Debt of $629.0 million and EBITDA per our amended debt agreements of $1,373.2 million. Total Debt is presented before any reduction for deferred loan fees as required by GAAP.3. Based on cumulative cash flow from operations from July 1, 2012, through December 31, 2021, of $3,030.4 million. 4. Source: Marine Environment Protection Committee (MEPC), MEPC73/19/Add. 1 Annex 5, Resolution MEPC.308(73) adopted on October 26, 2018, “2018 Guidelines on the Method of Calculation of the Attained Energy Efficiency Design Index for New Ships.” Lower CO2 emissions based on information in section 2.2.1 after converting LNG and Heavy Fuel Oil to CO2 per unit of energy. Finally, and most importantly, the strength of any organization begins and ends with its people. I am honored to serve beside the outstanding women and men of Matson, from those on the line to those behind the scenes, whose tireless work ensure that we move freight better than anyone. Though these past two years will be remembered as among the most difficult we have faced in our long history, we responded to the challenges like we have always done — with grit and humility.Sincerely, Matt Cox Chairman and Chief Executive Officer February 25, 2022among the first in our fleet to transition to operating on LNG after additional necessary equipment is installed. A fifth current vessel will be re-engined and we expect to build three LNG-ready vessels for delivery near the end of the decade as part of our original plan for the Alaska trade lane re-fleeting. The estimated cost to alter the five current vessels is approximately $210 million, and work is expected to begin as early as 2023 with the first LNG installation on Daniel K. Inouye, followed by LNG installations over the next several years on Manukai, Kaimana Hila, Lurline and Matsonia. IN CLOSINGWe remain focused on sustaining the confidence our customers place in us every day to move their goods in an expedited manner — it is the Matson way. And we know and deeply appreciate that with the strengthening of every customer relationship comes a new set of opportunities. To grow deeper into supply chains, to open new markets, to offer new services, and to continue to earn our customer’s trust. It is not a simple or ordinary bond. 0.0%5.0%10.0%15.0%20.0%25.0%30.0%35.0%$0$500$1,000$1,500$2,000$2,500$3,000$3,5002012201320142015201620172018201920202021Note: Return of Capital is defined as the sum of share repurchases and dividends.Cumulative Cash Flow from Operations and Cumulative Return of Capital ($ in millions)Cumulative Return of Capital as % of Cumulative Cash Flow from OperationsCUMULATIVE CASH FLOW FROM OPERATIONS AND RETURN OF CAPITAL5Cumulative Cash Flow from OperationsCumulative Return of CapitalCumulative Return of Capital as % of Cumulative CFFO5. Based on cash flow from operations from July 1, 2012, through December 31, 2021. UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from to
Commission file number 001-34187
Matson, Inc.
(Exact name of registrant as specified in its charter)
Hawaii
(State or other jurisdiction of
incorporation or organization)
99-0032630
(I.R.S. Employer
Identification No.)
1411 Sand Island Parkway
Honolulu, HI 96819
(Address of principal executive offices) (Zip code)
(808) 848-1211
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, without par value
Trading Symbol(s)
MATX
Name of each exchange on which registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of
the Exchange Act.
Large accelerated filer ☒
Non-accelerated filer ☐
Accelerated filer ☐
Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Aggregate market value of Common Stock held by non-affiliates at June 30, 2021:
$2,723,664,704
Number of shares of Common Stock outstanding at February 18, 2022:
40,878,795
Documents Incorporated By Reference
The following document is incorporated by reference in Part III of the Annual Report on Form 10-K to the extent described therein: Proxy statement for the
annual meeting of shareholders of Matson, Inc. to be held April 28, 2022.
TABLE OF CONTENTS
PART I
Page
Item 1.
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A.Company Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
B. Business Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) Ocean Transportation Segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2) Logistics Segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C. Employees and Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
D. Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 2.
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 3.
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 4.
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 6.
Removed and Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . .
Item 7A. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 8.
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . .
Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Conclusion Regarding Effectiveness of Disclosure Controls and Procedures . . . . . . . . . . . . . . . . . . . . . .
Internal Control over Financial Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART III
Item 10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A. Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
B. Information About Our Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C. Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
D. Code of Ethics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . . . . . . . .
Item 14. Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART IV
Item 15. Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
B. Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C. Exhibits Required by Item 601 of Regulation S-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 16. Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
1
2
2
9
10
13
13
24
24
25
25
26
27
28
38
40
75
75
75
75
75
75
76
76
76
76
76
76
76
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77
78
78
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78
82
83
i
MATSON, INC.
FORM 10-K
Annual Report for the Fiscal Year
Ended December 31, 2021
PART I
ITEM 1. BUSINESS
A.
COMPANY OVERVIEW
Matson, Inc., a holding company incorporated in the State of Hawaii, and its subsidiaries (“Matson” or the “Company”),
is a leading provider of ocean transportation and logistics services. The Company consists of two segments, Ocean
Transportation and Logistics.
Ocean Transportation: Matson’s Ocean Transportation business is conducted through Matson Navigation
Company, Inc. (“MatNav”), a wholly-owned subsidiary of Matson, Inc. Founded in 1882, MatNav provides a vital
lifeline of ocean freight transportation services to the domestic non-contiguous economies of Hawaii, Alaska and Guam,
and to other island economies in Micronesia. MatNav also operates premium, expedited services primarily from China
to Long Beach, California, and provides services to Okinawa, Japan and various islands in the South Pacific, and
operates an international export service from Dutch Harbor, Alaska to Asia. In addition, subsidiaries of MatNav provide
stevedoring, refrigerated cargo services, inland transportation and other terminal services for MatNav and other ocean
carriers on the Hawaiian islands of Oahu, Hawaii, Maui and Kauai, and in the Alaska locations of Anchorage, Kodiak
and Dutch Harbor.
Matson has a 35 percent ownership interest in SSA Terminals, LLC, a joint venture between Matson Ventures, Inc., a
wholly-owned subsidiary of MatNav, and SSA Ventures, Inc., a subsidiary of Carrix, Inc. (“SSAT”). SSAT currently
provides terminal and stevedoring services to various carriers at eight terminal facilities on the U.S. West Coast,
including three facilities dedicated for MatNav’s use. Matson records its share of income from SSAT in costs and
expenses in the Consolidated Statements of Income and Comprehensive Income, and within the Ocean Transportation
segment due to the nature of SSAT’s operations.
Logistics: Matson’s Logistics business is conducted through Matson Logistics, Inc. (“Matson Logistics”), a wholly-
owned subsidiary of MatNav. Established in 1987, Matson Logistics extends the geographic reach of Matson’s
transportation network throughout North America and Asia, and is an asset-light business that provides a variety of
logistics services to its customers including: (i) multimodal transportation brokerage of domestic and international rail
intermodal services, long-haul and regional highway trucking services, specialized hauling, flat-bed and project services,
less-than-truckload services, and expedited freight services (collectively, “Transportation Brokerage” services);
(ii) less - than-container load (“LCL”) consolidation and freight forwarding services (collectively, “Freight Forwarding”
services); (iii) warehousing, trans-loading, value-added packaging and distribution services (collectively, “Warehousing”
services); and (iv) supply chain management, non-vessel operating common carrier (“NVOCC”) freight forwarding and
other services.
Our Mission and Vision:
Our mission is to move freight better than anyone. Our vision is to create value for our shareholders by:
Being our customers’ first choice,
Leveraging our core strengths to drive growth and increase profitability,
Being an environmental leader in our industry, and
Being a great place to work.
Improving the communities in which we work and live,
1
B.
BUSINESS DESCRIPTION
(1)
OCEAN TRANSPORTATION SEGMENT
Ocean Transportation Services:
Matson’s Ocean Transportation segment provides the following services:
Hawaii Service: Matson’s Hawaii service provides ocean carriage (lift-on/lift-off, roll-on/roll-off and conventional
services) between the ports of Long Beach and Oakland, California; Tacoma, Washington; and Honolulu, Hawaii.
Matson also operates a network of inter-island barges that provide connecting services from its hub at Honolulu to other
major Hawaii ports on the islands of Hawaii, Maui and Kauai. Matson is the largest carrier of ocean cargo between the
U.S. West Coast and Hawaii.
Westbound cargo carried by Matson to Hawaii includes dry containers of mixed commodities, refrigerated commodities,
food and beverages, retail merchandise, building materials, automobiles and household goods. Matson’s eastbound
cargo from Hawaii includes automobiles, household goods, dry containers of mixed commodities and livestock. The
majority of Matson’s Hawaii service revenue is derived from the westbound carriage of containerized freight.
China Service: Matson’s expedited China-Long Beach Express (“CLX”) service is part of an integrated service that
carries cargo from Long Beach, California to Honolulu, Hawaii, to Guam, and then to Okinawa, Japan. The vessels
continue to Ningbo and Shanghai, China, where they are loaded with cargo to be discharged primarily in Long Beach,
California at a Matson-exclusive terminal operated by SSAT. These vessels also carry cargo destined for Hawaii which
originated in Guam, Micronesia, Okinawa, China and other Asian countries. Matson provides container transshipment
services from many locations in Asia including Hong Kong and Xiamen, China to the United States via the ports of
Ningbo and Shanghai, China.
In May 2020, as a result of increased market demand, Matson launched its second expedited service to the U.S. West
Coast with the China-Long Beach Express Plus (“CLX+”) service. The CLX+ service uses chartered vessels and
operates weekly from Ningbo and Shanghai, China where they are loaded with cargo to be discharged primarily at Long
Beach, California, calling at an SSAT operated terminal.
In July 2021, Matson launched a temporary, third expedited service to the U.S. West Coast with the China-California
Express (“CCX”) service to meet continued high market demand. The CCX service uses Matson-owned vessels and
departs Shanghai, China every three out of five weeks with direct service to Oakland, California and then to Long
Beach, California. Cargo at both Oakland and Long Beach, California, is discharged at Matson exclusive terminals
operated by SSAT. Matson expects the CCX service to operate through the October peak season of 2022. Matson’s
expedited China service currently consists of the CLX, CLX+ and the CCX services.
Eastbound cargo from China to Long Beach, California consists mainly of garments, e - commerce related goods,
consumer electronics, footwear and other merchandise.
Guam Service: Matson’s Guam service provides weekly carriage between the U.S. West Coast and Guam, as part of its
CLX service. Matson also provides weekly connecting service from Guam to the Commonwealth of the Northern
Mariana Islands. Cargo destined to these markets is similar to that described under “Hawaii Service” above.
Japan Service: Matson’s Japan service provides carriage to the port of Naha in Okinawa, Japan, as part of its CLX
service. This service mainly carries general sustenance cargo and household goods supporting the U.S. military.
Micronesia Service: Matson’s Micronesia service provides carriage between the U.S. West Coast and the islands of
Kwajalein, Ebeye and Majuro in the Republic of the Marshall Islands, the islands of Yap, Pohnpei, Chuuk and Kosrae in
the Federated States of Micronesia, and the Republic of Palau. Cargo destined for these locations is transshipped
through Guam and consists mainly of general sustenance cargo.
Alaska Service: Matson’s Alaska service provides ocean carriage between the port of Tacoma, Washington, and the
ports of Anchorage, Kodiak and Dutch Harbor, Alaska. Matson also provides a barge service between Dutch Harbor and
2
Akutan in Alaska, and transportation services to other locations in Alaska including the Kenai Peninsula, Fairbanks and
the North Slope.
Northbound cargo to Alaska consists mainly of dry containers of mixed commodities, refrigerated commodities, foods
and beverages, retail merchandise, household goods and automobiles. Southbound cargo from Alaska primarily consists
of seafood, household goods and automobiles.
In September 2020, Matson launched its Alaska-Asia Express (“AAX”) service that provides carriage of dry and frozen
seafood from Dutch Harbor, Alaska to Ningbo and Shanghai, China. The AAX service utilizes CLX+ vessels on their
westbound trip to China. Matson also provides transshipment services from Ningbo and Shanghai, China to other
locations in Asia.
South Pacific Service: Matson’s New Zealand Express (“NZX”) service provides carriage of general sustenance cargo
between Auckland, New Zealand and select islands in the South Pacific, including Fiji (Suva and Lautoka), Samoa
(Apia), American Samoa (Pago Pago), the Cook Islands (Rarotonga and Aitutaki), Tonga (Nukualofa and Vava’u), and
Niue. Matson’s NZX service also provides transshipment services to the islands of Nauru and the Solomon Islands
(Honiara). Additionally, Matson provides slot charter arrangements for the transportation of cargo from major ports on
the east coast of Australia to ports in the South Pacific islands. The NZX service also distributes and sells domestic bulk
fuel to a variety of these islands.
Matson’s South Pacific Express (“SPX”) service provides carriage of general sustenance cargo from the U.S. West Coast
to ports in the South Pacific islands using vessel sharing agreements with other carriers. The SPX service provides
direct calls to Tahiti (Papeete), American Samoa (Pago Pago) and Samoa (Apia) in the South Pacific. Cargo destined for
other ports including Tonga (Nukualofa) and the Cook Islands (Rarotonga and Aitutaki) is then transshipped in Apia,
Samoa to the NZX service for delivery to its final destination. Northbound SPX cargo originating in the South Pacific is
transshipped from the NZX service with other carriers to the U.S. West Coast. Cargo destined for Hawaii or
Washington is further transshipped in Oakland, California for delivery to its final destination.
In June 2021, Matson launched its new China-Auckland Express (“CAX”) service that operates from Shanghai, China to
Auckland, New Zealand to meet increased demand from China. The CAX service departs Shanghai every two out of
five weeks and transports cargo consisting mainly of garments, e - commerce related goods, consumer electronics,
footwear and other merchandise.
Terminal and Other Related Services:
Matson provides stevedoring, refrigerated cargo services, inland transportation, container equipment maintenance and
other terminal services (collectively, “terminal services”) at terminals located on the Hawaiian islands of Oahu, Hawaii,
Maui and Kauai; and in the Alaska terminal locations of Anchorage, Kodiak and Dutch Harbor.
SSAT currently provides terminal and stevedoring services to various carriers at eight terminal facilities on the U.S.
West Coast, including three facilities dedicated for MatNav’s use, in Long Beach and Oakland, California; and in
Tacoma, Washington.
Matson utilizes the services of other third-party terminal operators at all of the other ports served by its vessels.
Vessel Management Services:
Matson contracts with the U.S. Department of Transportation to provide vessel management services to manage and
maintain three Ready Reserve Force vessels on behalf of the U.S. Department of Transportation Maritime
Administration.
3
Vessel Information:
Vessels:
Matson’s fleet includes both owned and chartered vessels. Matson’s owned vessels represent an investment of
approximately $2.2 billion. The majority of Matson’s owned vessels are U.S. flagged and Jones Act qualified vessels,
and operate in the Hawaii, China, Guam, Japan, Micronesia and Alaska services. Details of Matson’s active and reserve
vessels as of December 31, 2021 are as follows:
Name of Vessels
Vessels-Owned:
Usable Cargo Capacity
Containers
Vehicles
Vessel
Design
Speed
Approximate
Deadweight Expiration
Charter
Year Official
Built Number TEUs (1)
Reefer
Slots Autos Length
(Knots) (2)
(Long Tons)
Date (3)
2018 1274136
DANIEL K. INOUYE (4)
2019 1274135
KAIMANA HILA (4)
1982 651627
MANOA (4)(9)
1982 653424
MAHIMAHI (4)(9)
2019 1274143
LURLINE (4)
2020 1274123
MATSONIA (4)
2005 1168529
MANULANI (4)(9)
2004 1153166
MAUNAWILI (4)(9)
2003 1141163
MANUKAI (4)(9)
1992 979814
R.J. PFEIFFER (4)(9)
1983 655397
MOKIHANA (4)
2006 1181627
MAUNALEI (4)(9)
MATSON KODIAK (4)(9)
1987 910308
MATSON ANCHORAGE (4)(9) 1987 910306
1987 910307
MATSON TACOMA (4)(9)
2000 9232979
KAMOKUIKI (5)
2004 9184225
OLOMANA (6)
2004 9184237
IMUA (6)
2006 9184249
LILOA II (6)
PAPA MAU (6)
1999 9141704
Vessels-Chartered:
MATSON HAWAII (6)
NAVIOS FELICITAS (6)(10)
MATSON LANAI (6)
MATSON MAUI (6)(10)
MATSON KAUAI (6)
MATSON OAHU (6)
MATSON MOLOKAI (6)
MATSON NIIHAU (6)
2009 9386471
2010 9395953
2007 9334143
2007 9340764
2008 9353278
2006 9308015
2007 9338084
2005 9294159
3,220
3,220
2,824
2,824
2,750
2,750
2,378
2,378
2,378
2,245
1,994
1,992
1,668
1,668
1,668
707
645
645
630
521
4,360
4,360
4,253
4,253
4,218
3,461
2,824
2,824
408
408
408
408
432
432
284
326
326
300
354
328
280
280
280
100
120
90
90
68
326
326
400
400
350
550
586
586
500
500
— 854’ 0”
—
854’ 0”
— 860’ 2”
— 860’ 2”
869’ 5”
869’ 5”
— 712’ 0”
— 711’ 9”
— 711’ 9”
— 713’ 6”
1,323 860’ 2”
— 681’ 1”
— 710’ 0”
— 710’ 0”
— 710’ 0”
— 433’ 9”
—
388’ 7”
— 388’ 6”
— 388’ 6”
— 381’ 5”
849’ 3”
—
849’ 0”
—
855’ 2”
—
854’ 8”
—
841’ 4”
—
—
783’ 8”
— 728’ 10”
— 728’ 10”
Barges-Owned:
MAUNA LOA (4)(7)
HALEAKALA (4)(8)
Barges-Chartered:
2013 1247426
1984 676972
500
335
78
78
— 362’ 6”
— 350’ 0”
ILIULIUK BAY (4)(8)
2013 1249384
178 —
— 250’ 0”
23.5
23.5
23.0
23.0
23.0
23.0
22.5
22.5
22.5
23.0
23.0
22.1
20.0
20.0
20.0
17.5
14.0
15.0
15.0
14.0
23.3
24.6
24.3
24.5
24.8
23.0
22.0
21.0
—
—
—
51,000
54,000
35,000
35,000
51,000
51,000
38,000
37,000
38,000
28,000
30,000
33,000
20,000
20,000
20,000
8,000
8,000
8,000
8,000
6,000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
July 2023
January 2022
June 2025
52,000
51,000
50,000
50,000 February 2026
January 2025
52,000
April 2023
42,000
39,000
May 2025
39,000 March 2023
13,000
5,000
—
—
4,000 December 2022
(1) Twenty-foot Equivalent Units (“TEU”) is a standard measure of cargo volume correlated to a standard 20-foot dry cargo container.
(2) Vessel Design Speed may vary from the operating speed of the vessel.
(3) Charter expiration date represents the approximate earliest month the vessel can be returned to its owner. Some vessel charter agreements
include options to further extend the charter period.
(4) U.S. flagged and Jones Act qualified vessel or barge.
(5) U.S. flagged vessel.
(6) Foreign flagged vessel.
(7) Flat-deck barge.
(8) Lift-on/lift-off barge equipped with a crane.
(9) Vessel installed with exhaust gas cleaning systems (commonly referred to as “scrubbers”).
(10) Navios Felicitas was returned to its owner in January 2022 and replaced by Matson Maui, which was placed into service in February 2022.
Matson is constructing a new U.S. flagged and Jones Act qualifying flat-deck barge at a cost of approximately
$25.0 million for operation within its Hawaii neighbor island service. The new barge is expected to be delivered in the
first half of 2022.
4
Vessel Emission Regulations:
Being a leader in environmental stewardship is one of Matson’s core values. Matson’s vessels transit through some of
the most environmentally sensitive areas in the United States including the Hawaiian Islands and the coasts of
California, Oregon, Washington and Alaska. Matson is focused in particular on reducing transportation emissions,
including carbon dioxide, nitrous oxide, particulate matter and sulfur dioxide through improvements in vessel fuel
consumption, choice of fuel types and the development of more fuel-efficient transportation solutions. Matson further
contributes positively to the environment by testing and deploying leading technologies as the fleet is modernized.
The International Maritime Organization (“IMO”), to which the U.S. and over 100 other countries are signatories, is a
specialized agency of the United Nations that sets international environmental standards applicable to vessels operating
under the flag of any signatory country. Effective January 1, 2020, the IMO imposed regulations that generally require
all vessels to burn fuel oil with a maximum sulfur content of ≤0.5 percent (“IMO 2020”). There are three main options
for a vessel to meet the IMO 2020 requirements: (1) burn low sulfur fuel oil (“LSFO”), (2) install exhaust gas cleaning
systems (commonly referred to as “scrubbers”) on vessels to reduce sulfur emissions from heavy fuel oil (“HFO”), or
(3) switch to lower emission fuels such as liquefied natural gas (“LNG”), which requires converting existing vessels or
constructing new vessels with LNG-capable engines and fuel tanks. With respect to North America, all waters, with
certain limited exceptions, within 200 nautical miles of U.S. and Canadian coastlines have been designated emission
control areas (“ECAs”). Since January 1, 2015, U.S. Environmental Protection Agency regulations have reduced the
fuel oil maximum sulfur content in designated ECAs to ≤0.1 percent or the equivalent emissions by the use of scrubbers.
In addition, since August 1, 2012, the California Air Resource Board and U.S. Environmental Protection Agency under
the Vessel General Permit regulations have reduced the fuel oil maximum sulfur content to ≤0.1 percent within 24 miles
of the California coastline and within Puget Sound.
All of Matson’s vessels in the Alaska and Hawaii services are designed to operate in compliance with IMO 2020 and
ECA regulations as applicable, and can use LSFO. In the Alaska and Hawaii services, Matson installed scrubbers on ten
diesel engine-powered vessels to allow them to use HFO and still comply with IMO 2020 and ECA regulations. Matson
also maintains vessels which may operate as dry-dock relief or for emergency activation purposes under an EPA
approved ECA permit enabling the use of fuel oil with a maximum sulfur content of ≤0.5 percent within the North
America ECA or at any time on IMO compliant fuels. Matson’s Aloha and Kanaloa Class vessels burn compliant
LSFO. These vessels are also equipped with dual - fuel engines and can be converted to run on LNG. All of Matson’s
other vessels use LSFO to meet IMO 2020 and ECA emission standards.
In June 2021, the IMO adopted new greenhouse gas (“GHG”) emission requirements applicable to ships. Beginning
with a company’s first annual, intermediate or renewal survey for an international air pollution prevention certificate on
or after January 1, 2023, all containerships with more than 10,000 dead weight tons will be required to meet specified
Energy Efficiency Existing Ship Index (“EEXI”) levels. EEXI is a one-time certification measuring a ship’s theoretical
carbon dioxide (CO2) emissions per transport work based on its design parameters. After 2023, containerships with over
5,000 gross tonnage (“GT”) will be required to meet annual Carbon Intensity Indicator (“CII”) requirements that become
increasingly stringent towards 2030. CII measures how efficiently a ship transports goods, and uses actual CO2
emissions to determine an annual rating from A to E. For ships that achieve a D rating for three consecutive years or an
E rating in a single year, a corrective action plan needs to be developed as part of the vessels’ Ship Energy Efficiency
Management Plan (“SEEMP”) and approved. For a discussion on the Company’s planned future capital expenditures to
comply with these regulations, see Part II, Item 7 of this Form 10-K. For more information on Matson’s environmental
stewardship initiatives, including GHG emission reduction goals, see Matson’s Sustainability Report and other
information available at www.matson.com/sustainability.
Hawaii Terminal Modernization and Expansion Program:
During 2020, Matson completed the first phase of its program to modernize and renovate its terminal facility at Sand
Island, Honolulu, Hawaii. As part of this phase, Matson completed the installation of three new 65 long - ton capacity
gantry cranes, upgraded and renovated three existing cranes, demolished four outdated cranes, and installed upgrades to
the electrical infrastructure at the terminal.
During 2021, as part of the second phase, Matson completed the installation, energization and transition to a new
redundant main switchgear. Additional projects for this phase relate to improvements to its existing backup power
5
generators, installation of new above ground fuel storage tanks, a battery energy storage system, and other upgrades at
the terminal, and are expected to be completed within the next three years.
The next phase represents a broader and long-term terminal expansion program at the Sand Island terminal facility.
Matson expects to expand into Pier 51A and portions of Pier 51B after Pasha Hawaii (“Pasha”) relocates to the newly
constructed Kapalama container terminal facility planned for 2024. From 2022 to 2024, Matson will be performing
surveying, planning and design work in preparation for this expansion.
Ocean Transportation Equipment:
As a complement to its fleet of vessels, Matson owns a variety of equipment including cranes, terminal equipment,
containers and chassis, which represents an investment of approximately $0.8 billion as of December 31, 2021. Matson
also leases containers, chassis and other equipment under various operating lease agreements.
Operating Costs:
Major components of Matson’s Ocean Transportation operating costs are as follows:
Direct Cargo Expense includes terminal handling costs including labor, purchased outside transportation and other
related costs.
Vessel Operating Expense includes crew wages and related costs; fuel, pilots, tugs and line related costs; vessel charter
expenses; and other vessel operating related expenses. Matson purchases fuel oil, lubricants and gasoline for its
operations and also pays fuel-related surcharges to other third party transportation providers.
Operating Overhead includes equipment repair costs, equipment lease and repositioning expenses, vessel repair and
maintenance costs, depreciation and dry-docking amortization, insurance, port engineers and other maintenance costs,
and other vessel and shoreside related overhead.
Competition:
The following is a summary of major competitors in Matson’s Ocean Transportation segment:
Hawaii Service: Matson’s Hawaii service has one major U.S. flagged Jones Act competitor, Pasha, which operates
container and roll-on/roll-off services between the ports of Long Beach, Oakland and San Diego, California to Hawaii.
A U.S. flagged Jones Act barge operator, Aloha Marine Lines, also offers barge service between the Pacific Northwest
and Hawaii.
Foreign-flagged vessels carrying cargo to Hawaii from non-U.S. locations also provide alternatives for companies
shipping to Hawaii. Other competitors in the Hawaii service include proprietary operators and contract carriers of bulk
cargo, and airfreight freight carriers.
Matson operates three strings of vessels to Hawaii. These strings provide customers an industry-leading five departures
from ports on the U.S. West Coast to Hawaii every week – two each from Long Beach and Oakland, California and one
from Tacoma, Washington. Each of these strings operates on a fixed day-of-the-week schedule. Two of the vessel
strings continue from Honolulu to China before returning to Long Beach. Matson’s frequent sailings and punctuality
permit customers to reduce inventory carrying costs. Matson also competes by offering one of the most comprehensive
services to customers, including: the only container service to and from the three largest U.S. West Coast ports; the most
efficient terminal network on the U.S. West Coast with three exclusive use terminals provided by SSAT; a dedicated
inter-island barge network which is integrated with Matson’s line haul schedule; roll-on/roll-off service from Long
Beach and Oakland; a world-class customer service team; and efficiency and experience in handling cargo of many
types.
Alaska Service: Matson’s Alaska service has one major U.S. flagged Jones Act competitor, Totem Ocean Trailer
Express, Inc., which operates a roll-on/roll off service between Tacoma, Washington and Anchorage, Alaska. There are
also two U.S. flagged Jones Act barge operators, Alaska Marine Lines, which mainly provides services from Seattle,
Washington to the ports of Anchorage and Dutch Harbor, and other locations in Alaska, and Samson Tug & Barge,
6
which mainly serves Western Alaska and other locations. The barge operators have historically shipped lower value
commodities that can accommodate a longer transit time, as well as construction materials and other cargo that are not
conducive to movement in containers. Foreign-flagged vessels provide alternatives for companies shipping cargo
(mainly seafood) from the Alaska ports of Kodiak and Dutch Harbor. Other competition includes air freight and over-
the-road trucking services. Matson’s AAX service has two major competitors, CMA CGM and Maersk Lines, which
provide services between Dutch Harbor, Alaska and Asia.
Matson offers customers twice weekly scheduled service from Tacoma, Washington to Anchorage and Kodiak, Alaska,
and a weekly service to Dutch Harbor, Alaska. The Company also provides a barge service between Dutch Harbor and
Akutan in Alaska. Matson is the only Jones Act containership operator providing service to Kodiak and Dutch Harbor in
Alaska, which are the primary loading ports for southbound seafood. Matson offers dedicated terminal services at the
Alaska ports of Anchorage, Kodiak and Dutch Harbor performed by Matson, and at the port of Tacoma, Washington
performed by SSAT. Matson’s AAX service also offers customers a service from Dutch Harbor, Alaska to Ningbo and
Shanghai, China, with transshipment services from those ports to other locations in Asia.
China Service: Major competitors to Matson’s China service include large international carriers such as CMA CGM,
OOCL, ZIM, Evergreen and Maersk. Other competition includes air freight carriers.
Matson’s China service competes by offering fast and reliable service from the ports of Ningbo and Shanghai in China,
and feeder services from other Asian ports of origin, to Long Beach and Oakland, California. Matson provides fixed
day-of-the-week arrivals and industry leading cargo availability. Matson’s service is further differentiated by best-in-
class stevedoring services provided by SSAT, Matson dedicated terminal space, access to Shippers Transport Express
off-dock container yards for faster truck turn times, Matson-dedicated equipment including chassis to speed cargo
availability, one-stop intermodal connections, and world-class customer service. Matson also provides intermodal
services in coordination with Matson Logistics. Matson has offices located in Shanghai, Shenzhen, Xiamen, Ningbo and
Hong Kong, and has contracted with terminal operators in Ningbo and Shanghai.
Guam Service: Matson’s Guam service has one major competitor, APL, a U.S. flagged subsidiary of CMA CGM, which
operates a weekly U.S. flagged container feeder service connecting the U.S. West Coast to Guam and Saipan, via
transshipments to U.S. flagged feeder vessels in Yokohama, Japan and Busan, South Korea. Waterman operates a roll-
on/roll-off service, which periodically calls at Guam. There are also several foreign carriers, including CMA CGM, that
call at Guam from foreign origin ports.
Matson offers customers a weekly service to Guam as part of the CLX service from three ports on the U.S. West Coast.
Matson’s ocean transit time, frequent sailing and reliable on-time performance provides an industry-leading service to its
customers.
Japan Service: Matson’s Japan service has one major competitor, APL, which operates a weekly U.S. flagged
containership service from the U.S. West Coast to the port of Naha in Okinawa, Japan.
Matson offers customers a weekly service to the port of Naha in Okinawa, Japan as part of the CLX service from three
ports on the U.S. West Coast.
Micronesia and South Pacific Services: Matson’s Micronesia and South Pacific services have competition from a
variety of local and international carriers that provide freight services to the area.
Customer Concentration:
Matson serves customers in numerous industries and carries a wide variety of cargo, mitigating its dependence upon any
single customer or single type of cargo. The Company’s 10 largest Ocean Transportation customers account for
approximately 15 percent of the Company’s Ocean Transportation revenue. For additional information on Ocean
Transportation revenues for the years ended December 31, 2021, 2020 and 2019, see Note 2 to the Consolidated
Financial Statements in Item 8 of Part II below.
7
Seasonality:
Historically, Matson’s Ocean Transportation services have typically experienced seasonality in volume, generally
following a pattern of increasing volume starting in the second quarter of each year, culminating in a peak season
throughout the third quarter, with subsequent decline in demand during the fourth and first quarters. This seasonality
trend is amplified in the Alaska service primarily due to winter weather and the timing of southbound seafood trade. As
a result, earnings have tended to follow a similar pattern, offset by periodic vessel dry-docking and other episodic cost
factors, which can lead to earnings variability. In addition, in the China trade, volume is typically driven primarily by
U.S. consumer demand for goods during key retail selling seasons. Freight rates are impacted mainly by macro supply
and demand variables.
Since 2020, Matson’s typical seasonal trends have been impacted by the global pandemic which has resulted in elevated
levels of demand experienced in our Ocean Transportation services. Matson’s expanded services in China and other
locations have resulted in significant increases in volume during the second half of 2020 and throughout 2021. Supply
chain congestion and elevated levels of demand are expected to impact the Company’s Ocean Transportation services
during 2022.
Maritime Laws and the Jones Act:
Maritime Laws: All interstate and intrastate marine commerce within the U.S. falls under the Merchant Marine Act of
1920 (commonly referred to as the Jones Act).
The Jones Act is a long-standing cornerstone of U.S. maritime policy. Under the Jones Act, all vessels transporting
cargo between covered U.S. ports must, subject to limited exceptions, be built in the U.S., registered under the U.S. flag,
be manned predominantly by U.S. crews, and owned and operated by U.S.-organized companies that are controlled and
75 percent owned by U.S. citizens. U.S. flagged vessels are generally required to be maintained at higher standards than
foreign flagged vessels and are subject to rigorous supervision and inspections by, or on behalf of, the U.S. Coast Guard,
which requires appropriate certifications and background checks of the crew members. Under Section 27 of the Jones
Act, the carriage of cargo between the U.S. West Coast, Hawaii and Alaska on foreign-built or foreign-documented
vessels is prohibited.
During the years ended December 31, 2021, 2020 and 2019, approximately 41 percent, 62 percent and 72 percent,
respectively, of Matson’s Ocean Transportation revenues came from the Hawaii and Alaska trades that were subject to
the Jones Act. Matson’s Hawaii and Alaska trade routes are included within the non-contiguous Jones Act market. The
commerce of both Hawaii, as an island economy, and Alaska, due to its geographical location, are dependent on ocean
transportation. The Jones Act ensures frequent, reliable, roundtrip service to these locations. Matson’s vessels operating
in these trade routes are Jones Act qualified and maintained in compliance with such requirements.
Matson is a member of the American Maritime Partnership (“AMP”), which supports the retention of the Jones Act and
similar cabotage laws. The Jones Act has broad support from both houses of Congress and the Executive Branch.
Matson believes that the geopolitical environment has further solidified political support for U.S. flagged vessels
because a vital and dedicated U.S. merchant marine is a cornerstone for a strong homeland defense, as well as a critical
source of trained U.S. mariners for wartime support. AMP seeks to inform elected officials and the public about the
economic, national security, commercial, safety and environmental benefits of the Jones Act and similar cabotage laws.
Repeal of the Jones Act would allow foreign-flagged vessel operators that do not have to abide by all U.S. laws and
regulations to sail between U.S. ports in direct competition with Matson and other U.S. domestic operators that must
comply with all such laws and regulations.
Other U.S. maritime laws require vessels operating between Guam, a U.S. territory, and U.S. ports to be U.S. flagged
and predominantly U.S. crewed, but not U.S. built.
Cabotage laws are not unique to the United States, and similar laws exist around the world in over 90 countries,
including regions in which Matson provides ocean transportation services. Any changes in such laws may have an
impact on the services provided by Matson in those regions.
8
Rate Regulations and Fuel-Related Surcharges:
Matson is subject to the jurisdiction of the Surface Transportation Board with respect to its domestic ocean rates. A rate
in the non-contiguous domestic trade is presumed reasonable and will not be subject to investigation if the aggregate of
increases and decreases is not more than 7.5 percent above, or more than 10 percent below, the rate in effect one year
before the effective date of the proposed rate, subject to increase or decrease by the percentage change in the U.S.
Producer Price Index. Matson generally seeks to provide a 30-day notice to customers of any increases in general rates
and other charges, and passes along decreases as soon as possible.
Matson’s Ocean Transportation services engaged in U.S.-foreign commerce are subject to the jurisdiction of the Federal
Maritime Commission (“FMC”). The FMC is a federal independent regulatory agency that is responsible for the
regulation of international ocean-borne transportation to and from the U.S.
Matson applies a fuel-related surcharge rate to its Ocean Transportation customers. Matson’s fuel-related surcharge is
correlated to market rates for fuel prices and other factors, and is intended to help Matson recover fuel-related expenses.
Other Environmental Regulations:
In addition to the vessel emission regulations discussed above, Matson’s operations are required to comply with other
environmental regulations and requirements including the Oil Pollution Act of 1990, the Comprehensive Environmental
Response Compensation & Liability Act of 1980, the Rivers and Harbors Act of 1899, the Clean Water Act, the Invasive
Species Act and the Clean Air Act. Matson is also subject to state regulations affecting terminal and vessel emissions,
such as the requirement to shut down vessel generator engines while at berth at California ports and switch to shore
electrical power. The Company actively monitors its operations for compliance with these and other regulations.
For more information on Matson’s environmental stewardship initiatives, including its environmental goals, see
Matson’s Sustainability Report and other information available at www.matson.com/sustainability.
(2)
LOGISTICS SEGMENT
Logistics Services:
Matson Logistics provides the following services:
Transportation Brokerage Services: Matson Logistics provides intermodal rail, highway, and other third-party logistics
services for North American customers and international ocean carrier customers, including MatNav. Matson Logistics
creates award winning benefits and value for its customers through volume purchases of rail, motor carrier and ocean
transportation services, augmented by services such as shipment tracking and tracing, accessibility to its private fleet of
53-foot intermodal containers and single-vendor invoicing. Matson Logistics operates customer service centers and has
sales offices throughout North America.
Freight Forwarding Services: Matson Logistics provides LCL consolidation and freight forwarding services primarily
to the Alaska market through its wholly-owned subsidiary, Span Intermediate, LLC (“Span Alaska”). Span Alaska’s
business aggregates LCL freight at its cross-dock facility in Auburn, Washington for consolidation and shipment to its
service center in Anchorage and a network of other facilities in Alaska. Span Alaska also provides trucking services to
its Auburn cross-dock facility and from its Alaska based cross-dock facilities to final customer destinations in Alaska.
Warehousing and Distribution Services: Matson Logistics operates two warehouses in Georgia and two warehouses in
Northern California providing warehousing, trans-loading, value-added packaging and distribution services.
Supply Chain Management and Other Services: Matson Logistics provides customers with a variety of logistics services
including purchase order management, customs brokerage, LCL and full container load NVOCC freight forwarding
services. Matson Logistics has supply chain operations in North America, China and other locations.
9
Operating Costs:
Matson Logistics’ operating costs primarily consist of the costs of purchased transportation, leases of warehouses, cross-
dock and other facility operating costs, salaries and benefits, and other operating overhead.
Competition:
Matson Logistics competes with hundreds of local, regional, national and international companies that provide
transportation and third-party logistics services. The industry is highly fragmented and, therefore, competition varies by
geography and areas of service.
Matson Logistics’ transportation brokerage services compete most directly with C.H. Robinson Worldwide, Hub Group,
XPO and other freight brokers and intermodal marketing companies, and asset-invested market leaders such as J.B.
Hunt. Competition is differentiated by the depth, scale and scope of customer relationships; vendor relationships and
rates; network capacity; real-time visibility into the movement of customers’ goods; and other technology solutions.
Additionally, while Matson Logistics primarily provides surface transportation brokerage, it also competes to a lesser
degree with other forms of transportation for the movement of cargo.
Matson Logistics’ freight forwarding services compete most directly with a variety of freight forwarding companies that
operate within Alaska including Carlile, Lynden, American Fast Freight and Alaska Traffic Company.
Customer Concentration:
Matson Logistics serves customers in numerous industries and geographical locations. The Company’s 10 largest
logistics customers account for approximately 25 percent of the Company’s Logistics revenue. For additional
information on Logistics revenues for the years ended December 31, 2021, 2020 and 2019, see Note 2 to the
Consolidated Financial Statements in Item 8 of Part II below.
Seasonality:
In general, Matson Logistics’ services are not significantly impacted by seasonality factors, with the exception of its
freight forwarding service to Alaska which may be affected by winter weather and the seasonal nature of the tourism
industry. However, Matson’s Logistics businesses are being impacted by the global pandemic which has resulted in
elevated levels of demand for our Logistics services that is expected to continue during 2022.
C.
EMPLOYEES AND LABOR RELATIONS
Human Capital Strategy:
In support of Matson’s vision to be a great place to work for all employees, the Company focuses on a variety of human
capital programs that have been developed to attract, retain and motivate its employee workforce. As a company that
operates in various global locations, the Company’s human capital programs are designed to reflect the unique market
practices in each geographic location. The Company’s success depends in part on employing a diverse, talented and
engaged workforce that reflects its local communities, supports an environment of high standards and performance, and
thrives in the Company’s collaborative and respectful culture.
10
During 2021, Matson had 4,259 employees worldwide, of which 147 employees were based in international locations
and 3,040 employees were covered by collective bargaining agreements with unions. These numbers include seagoing
personnel who rotate through billets (as described below) and temporary employees, but do not include employees of
SSAT or other non-employee affiliates such as agents and contractors. The composition of Matson’s workforce by
geography is as follows:
3%
97%
▪ U.S. ▪ International
Matson’s fleet of active vessels requires 392 billets to operate. Each billet corresponds to a position on a vessel that
typically is filled by two or more employees because seagoing personnel rotate between active sea-duty and time ashore.
These amounts exclude billets related to Matson’s foreign flagged chartered vessels where the vessel owner is
responsible for its seagoing personnel. Matson’s vessel management services also employed personnel in 32 billets to
manage three U.S. government vessels.
Diversity, Equity and Inclusion:
For many years, Matson has been committed to improving diversity, providing equal pay for equal work and creating an
inclusive culture. According to the U.S. Bureau of Labor Statistics, traditionally the shipping industry’s workforce has
been predominately represented by white males. While Matson’s workforce is representative of many of the
communities where it operates, the Company has taken steps to do more to change the status quo within the Company
and industry. In 2021, the Company continued to advance many of its diversity, equity and inclusion efforts. This
includes continuing its efforts to analyze pay among various employee groups to confirm pay equity across the
Company. Externally, the Company supports programs intended to help build a diverse talent pool for Matson and its
industry. In 2020, the Company committed $100,000 toward creation of new Matson scholarships to be offered in
conjunction with 16 higher education institutions and maritime academies in its communities with the goal of increasing
diversity among those pursuing studies in transportation and logistics. The first scholarships were granted in Fall 2021.
Separately, the Company committed more than $200,000 to fund paid internships with the goal of providing professional
work experience opportunities and promoting the Company and the industry to a diverse group of students in its various
regional locations. The first internships under this program are anticipated for Summer 2022.
The composition of Matson’s domestic shoreside workforce by gender and race in 2021 is as follows (data for seagoing
personnel is not available to the Company):
28%
72%
51%
49%
▪ Male ▪ Female
▪ White ▪ Minority
The composition of management positions within Matson’s domestic shoreside workforce by gender and race in 2021 is
as follows (data for seagoing personnel is not available to the Company):
34%
66%
42%
58%
▪ Male ▪ Female
▪ White ▪ Minority
11
“Minority” in these graphs refers to any employee who self-identifies as such under the categories established by the
Equal Employment Opportunity Commission.
Total Rewards Programs:
Matson provides a highly competitive and balanced total rewards program designed to attract, retain and motivate its
employees. While factors such as job, location and business unit ultimately determine which plans an employee may be
eligible for participation, the Company’s total rewards offering includes market competitive base salaries, cash and
equity incentives, recognition awards, health and welfare benefits, and employee and employer funded retirement plans.
The Company believes that management level positions should have a portion of pay aligned with its short- and long-
term business objectives. Accordingly, the Company’s total rewards program contains several pay-for-performance
components tied to individual, business unit and company performance, as well as Matson stock price performance.
Succession and Career Planning:
Matson’s workforce is characterized by uniquely skilled, long-tenured employees. To create career pathways for future
leaders while planning for the loss of retiring employees, the Company takes a proactive approach to succession and
career planning. The Company focuses on providing the next generation of promising talent with the tools they need to
build their own careers at Matson. In 2021, 46 percent of open positions were filled through internal promotions. The
Company also provided approximately 3,200 hours of employee training and development, while giving annual
performance reviews to its non-union workforce.
For more information on Matson’s human capital programs, see our Sustainability Report which is available
at www.matson.com/sustainability.
Bargaining Agreements:
Matson’s shoreside and seagoing employees are represented by a variety of unions. As shown in the chart below, union
employees comprise 71 percent of Matson’s global workforce.
29%
71%
▪ Union ▪ Non-Union
Matson has collective bargaining agreements with these unions that expire at various dates in the future, including as
early as 2022. While Matson believes that it will be able to renegotiate these collective bargaining agreements with its
various unions as they expire without any significant impact on its operations, no assurance can be given that such
agreements will be reached without slow-downs, strikes, lockouts or other disruptions that may adversely impact
Matson’s operations.
Additionally, Matson and SSAT are members of the Pacific Maritime Association (“PMA”), which on behalf of its
members negotiates collective bargaining agreements with the International Longshore and Warehouse Union (“ILWU”)
on the U.S. West Coast. The PMA/ILWU collective bargaining agreements cover substantially all U.S. West Coast
longshore labor. In August 2017, the ILWU agreed to extend its contract with the PMA to July 1, 2022. The Company
believes that the renegotiation of this contract will be completed during 2022.
Multi-employer Pension and Post-retirement Plans:
Matson contributes to a number of multi-employer pension and post-retirement plans. Matson has no present intention
of withdrawing from, and does not anticipate the termination of any of the multi-employer pension plans to which it
contributes (see Notes 11 and 12 to the Consolidated Financial Statements in Item 8 of Part II below for a discussion of
withdrawal liabilities under certain multi-employer pension plans).
12
D.
AVAILABLE INFORMATION
Matson makes available, free of charge on or through its Internet website, Matson’s annual reports on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after it
electronically files such material with, or furnishes them to, the U.S. Securities and Exchange Commission (“SEC”).
The address of Matson’s Internet website is www.matson.com. This website is provided for convenience only, and the
contents of our website do not constitute a part of and are not incorporated by reference into this Form 10-K.
The SEC maintains an Internet website that contains reports, proxy and information statements, and other information
regarding Matson and other issuers that file electronically with the SEC. The address of the SEC’s Internet website is
www.sec.gov.
ITEM 1A. RISK FACTORS
The following material factors, events and uncertainties may make an investment in the Company speculative or risky
and should be reviewed carefully. The Company’s business faces the material risks set forth below; however, these risk
factors do not identify all risks the Company faces, and additional risks or uncertainties that are currently unknown or
are not currently believed to be material may occur or become material. The occurrence of these or the events and
uncertainties described below may, in ways the Company may not be able to accurately predict, recognize or control,
adversely affect the Company’s business, financial condition, operating results, cash flows, liquidity, demand, revenue,
growth, prospects, reputation or stock price. All forward-looking statements made by the Company or on the
Company’s behalf are qualified by the risks described below.
Risks Related to the Jones Act
Repeal, substantial amendment, or waiver of the Jones Act or its application would have an adverse effect on the
Company’s business.
The Merchant Marine Act of 1920 (commonly referred to as the Jones Act) regulates all interstate and intrastate marine
commerce within the U.S. If the Jones Act were repealed, substantially amended or waived and, as a consequence,
competitors were to enter the Hawaii or Alaska markets with lower operating costs by utilizing their ability to acquire
and operate foreign-flagged and foreign - built vessels and/or being exempt from other U.S. regulations, the Company’s
business would be adversely affected. In addition, the Company’s position as a U.S. citizen operator of Jones Act
vessels would be negatively impacted if periodic efforts and attempts by foreign interests to circumvent certain aspects
of the Jones Act were successful. If maritime cabotage services were included in the General Agreement on Trade in
Services, the United States-Mexico-Canada Agreement, or other international trade agreements, or if the restrictions
contained in the Jones Act were otherwise altered, the shipping of cargo between covered U.S. ports could be opened to
foreign - flagged or foreign - built vessels and could have other adverse impacts to our business. In the past, the Prime
Minister of the United Kingdom has suggested that the Jones Act should be a topic of trade negotiations between the
U.S. and the United Kingdom.
The Company’s business would be adversely affected if the Company were determined not to be a U.S. citizen
under the Jones Act.
Certain provisions of the Company’s articles of incorporation protect the Company’s ability to maintain its status as a
U.S. citizen under the Jones Act. If non-U.S. citizens were able to defeat such articles of incorporation restrictions and
own in the aggregate more than 25 percent of the Company’s common stock, the Company would no longer be
considered a U.S. citizen under the Jones Act. Such an event could result in the Company’s ineligibility to engage in
coastwise trade and the imposition of substantial penalties against it, including seizure or forfeiture of its vessels.
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Risks Related to the Company’s Operations
Changes in economic conditions or governmental policies, including from the COVID-19 pandemic, have affected
and could in the future affect the Company.
The transportation industry in which the Company operates has been impacted by fluctuations, volatility, downturns,
inflation, recessions and other economic shifts or market instabilities, as well as the development of and changes in
governmental policies and relations, across the jurisdictions in which it operates. These adverse economic conditions
may also impact customers’ business levels and needs. Within the United States, a weakening of economic drivers in
Hawaii and Alaska, which include tourism, military spending, construction, personal income growth and employment,
the weakening of consumer confidence, market demand, and the economy in the U.S. Mainland, inflation, and the effect
of a change in the strength of the U.S. dollar against other foreign currencies may reduce the demand for goods,
adversely affecting inland and ocean transportation volumes or rates. In addition, overcapacity in the global or
transpacific ocean transportation markets, a change in the cost of goods or currency exchange rates, pressure from U.S.
or foreign governments, imposition of tariffs and uncertainties regarding tariff rates or a change in international trade
policies could adversely affect freight volumes and rates in the Company’s China service.
Since March 2020, the COVID - 19 pandemic has harmed the U.S. and global economies, shut down or limited many
business operations, led to port closures, and disrupted manufacturing, rail services, supply chains, travel, drayage of
containers and transportation of goods for extended periods of time. In the United States and in many other countries
worldwide, public health officials and state and local governments have recommended or mandated a range of
precautions to mitigate the spread of COVID - 19 and its variants as they evolve and fluctuate in their global impacts.
The full impact of such disruptions on the Company’s business remains uncertain.
The pandemic and related uncertainties and restrictions have previously reduced tourism in the markets the Company
serves, including Hawaii, Guam and Alaska, and led to increased unemployment and weakened consumer demand in
certain segments, including reduced demand for freight that the Company would otherwise carry in those tradelanes.
Fluctuations in the price of oil and reduced demand from the decline in air or car travel in response to COVID-19 could
further impact the Alaskan economy, which in turn could impact the Company’s business. In addition, the global
macroeconomic effects of the pandemic and related impacts on the Company’s customers’ business operations,
including financial difficulties or bankruptcies, may persist for an indefinite period, even after the pandemic has
subsided.
In the Company’s China service, as a result of the pandemic, the Company has experienced increased demand for its
expedited ocean services. As the pandemic subsides, supply and demand trends normalize and supply chain congestion
eases, the high volumes and rates the Company has experienced will eventually decline, but the Company cannot predict
the timing or size of such decline. These declines will reduce revenues, but certain fixed costs will remain. For
example, the Company cannot terminate leases early for chartered vessels in the CLX+ service.
The high volumes of freight from China and supply chain congestion at U.S. West Coast ports have contributed to an
industry-wide shortage of containers and chassis, resulting broadly in delays, backlog, limited throughput, cancelled
sailings, and service interruptions within tradelanes and supply chains, as well as long lead times for new equipment.
There have also been labor shortages at U.S. ports related to record cargo volume, the overall employment environment
and wage pressures, and outbreaks of COVID-19 which has also contributed to supply chain and port congestion. If the
Company cannot secure sufficient equipment or labor, or unload vessels on a timely basis to meet customers’ needs and
schedules, customers may seek to have their transportation and logistics needs met by others on a temporary or
permanent basis.
The Company’s operations have also been impacted by the pandemic. The Company’s employees are restricted in their
ability to travel. The Company may be further impacted if its employees, including mariners aboard our vessels, are
otherwise restricted from or unable to perform their duties, or if the Company’s or SSAT’s terminals are temporarily
closed due to a COVID-19 outbreak. Some vessel dry - dockings could also be delayed or become more expensive if
shipyards are unable to accommodate demand or obtain parts in a timely manner or if necessary personnel are not
allowed to travel to the shipyards.
Due to the continuing uncertainty around the duration, breadth and severity of the COVID - 19 pandemic, including
resurgences or mutations of the virus and the actions taken to contain the virus or treat its impact, including the
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availability, distribution, efficacy and public acceptance of vaccines, the ultimate impact on the Company’s business,
financial condition, operating results or cash flows are difficult to predict with certainty at this time. Additional or
unforeseen effects from the COVID-19 pandemic may give rise to additional risks or instigate or amplify the other risks
described throughout these Risk Factors.
The shipping industry is competitive, and the Company has been impacted by new or increased competition.
The Company may face new competition by established or start-up shipping operators that enter the Company’s markets.
The shipping industry is competitive with limited barriers to entry, especially in international tradelanes. Ocean carriers
can shift vessels in and out of tradelanes or charter vessels to manage capacity and meet customer demands. For
example, in 2020 and 2021, in response to rising demand, several new carriers entered the China tradelane in
competition with the Company’s China service. The entry of a new competitor or the addition of new vessels or
capacity by existing competition on any of the Company’s routes could result in a significant increase in available
shipping capacity that could have an adverse effect on the Company’s volumes and rates.
The loss of or damage to key customer or agent relationships may adversely affect the Company’s business.
The Company’s businesses are dependent on their relationships with customers and agents, and derive a significant
portion of their revenues from the Company’s largest customers. The Company’s business relies on its relationships
with the U.S. military, freight forwarders and non - vessel owning common carriers, large retailers and consumer goods
manufacturers, as well as other larger customers. For more information regarding the Company’s significant customers,
see the discussion in Part I, Item 1 of this Annual Report.
The Company could also be adversely affected by any changes in the services, or changes to the costs of services,
provided by third party vendors such as railroads, truckers, terminals, agents and shipping companies, including charter
vessel owners. Service structures and relationships with these parties are important in the Company’s intermodal
business, as well as in the China, Guam, Micronesia, Japan, Alaska export and South Pacific services.
The loss of or damage to any of these key relationships may adversely affect the Company’s business and revenue.
The Company is dependent upon key vendors and third-parties for equipment, capacity and services essential to
operate its business, and if the Company fails to secure sufficient third-party services, its business could be
adversely affected.
The Company’s businesses are dependent upon key vendors who provide terminal, rail, truck, and ocean transportation
services. If the Company cannot secure sufficient transportation equipment, capacity or services from these third-parties
at reasonable prices or rates to meet its or its customers’ needs and schedules, customers may seek to have their
transportation and logistics needs met by others on a temporary or permanent basis. If this were to occur, the
Company’s business, results of operations and financial condition could be adversely affected.
An increase in fuel prices, changes in the Company’s ability to collect fuel-related surcharges, and/or the cost or
limited availability of required fuels on the U.S. West Coast may adversely affect the Company’s profits.
Fuel is a significant operating expense for the Company’s Ocean Transportation business. The price and supply of fuel
are unpredictable and fluctuate based on events beyond the Company’s control. Increases in the price of fuel may
adversely affect the Company’s results of operations. Increases in fuel costs also can lead to increases in other expenses,
such as energy costs and costs to purchase outside transportation services. In the Company’s Ocean Transportation and
Logistics services segments, the Company utilizes fuel-related surcharges, although increases in the fuel-related
surcharge may adversely affect the Company’s competitive position and may not correspond exactly with the timing of
increases in fuel expense. Changes in the Company’s ability to collect fuel-related surcharges also may adversely affect
its results of operations.
Effective January 1, 2020, the IMO imposed a world-wide regulation generally requiring that all ships burn compliant
fuel oil with a maximum sulfur content of less than or equal to 0.5 percent. Currently, LSFO is typically priced higher
than HFO due to the need for further oil refinement. In some market instances, the prices between the two products
could be inverted. There is no guarantee that the Company’s contracts to secure LSFO or HFO on the U.S. West Coast
will secure quantities in sufficient amounts and at a reasonable cost. In addition, prolonged use of LSFO on some
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Matson vessels could degrade engine performance or lead to higher maintenance costs. The Company’s ability to
recover the higher costs of IMO 2020 compliant fuel through fuel - related surcharges, the availability of LSFO, and the
potential impact on vessel performance may adversely affect the Company’s operations, business and profit.
Evolving stakeholder expectations related to environmental, social and governance (“ESG”) matters exposes the
Company to heightened scrutiny, additional costs, operational challenges and a number of risks.
Investors, advisory firms, employees, customers, suppliers, governments and other stakeholders are increasingly focused
on, and establishing expectations for, ESG matters and related corporate practices, disclosures and initiatives. These
evolving expectations may impact the Company’s reputation, business and attractiveness as an investment, employer or
business partner to the extent the Company – including its initiatives, goals and reporting – meets or is perceived to meet
those expectations, including as a result of any third-party rating or assessment. The adoption and expansion of ESG-
related legislation and regulation have also resulted and may again result in increased capital expenditures and
compliance, operational and other costs to the Company.
The Company’s public disclosures on its climate, sustainability, human capital and other ESG initiatives include its
goals or expectations with respect to those matters, including greenhouse gas (“GHG”) emission reduction targets.
These disclosures are aspirational and based on standards and frameworks for presenting and measuring progress that are
not harmonized and are still developing, assumptions that may change, and disclosure controls and procedures that
continue to evolve. The Company’s initiatives and goals may not be favored by certain stakeholders and could impact
the attraction and retention of investors, customers and employees, as well as the Company’s willingness to do business
with other companies or customers. Efforts to achieve the Company’s initiatives and goals face numerous risks and may
be unsuccessful, result in additional costs or experience delays, and as a result may have a material negative impact on
the Company, including its brand, reputation and stock price.
The Company may not be timely or successful in completing its fleet upgrade initiatives, which may result in
significant costs and adversely impact the Company’s ability to meet its climate goals.
The Company’s four new Aloha and Kanaloa class vessels include dual fuel capable engines that can run on LSFO or
liquefied natural gas (“LNG”). In November 2021, the Company announced plans to install tanks, piping and cryogenic
equipment on Daniel K. Inouye and to re-engine Manukai to operate on LNG. The Company also expects to begin LNG
installations on Kaimana Hila, Lurline and Matsonia, and to build three new LNG-ready vessels. In addition, the
Company is in the process of building a new neighbor island flat-deck barge. The Company anticipates making
significant capital expenditures in connection with these fleet initiatives. These initiatives may be hindered by
substantial delays and long lead times for necessary equipment, including as a result of ongoing supply chain congestion,
other residual impacts from the COVID-19 pandemic, increased demand across the industry for LNG installations and
conversions, and new ship-building. Additional operating costs may be incurred to the extent additional ships are
needed to maintain schedule integrity while such updates and installations are performed. Once completed, operation of
these vessels may be slowed to the extent they present new maintenance requirements or unforeseen complications.
Use of LNG fuel may not result in anticipated GHG emission reductions, and the Company’s investments in LNG - ready
vessels may be insufficient to meet the Company’s previously announced GHG emission reduction goals on a timely
basis or at all. There is no guarantee that the Company will be able to secure LNG via bunker barges or other methods
on the U.S. West Coast in sufficient amounts to fuel its vessels or at a reasonable cost, as increased demand for LNG
could decrease available supply of LNG and increase prices. Governments have in the past and may again in the future
impose tariffs on LNG that also may increase supply costs. As a result of these risks, the Company may not fully realize
the benefits of these investments.
The Company’s operations are susceptible to weather, natural disasters, maritime accidents, spill events and
other physical and operating risks, including those arising from climate change.
As a maritime transportation company, the Company’s operations are vulnerable to disruption as a result of weather,
natural disasters and other climate-driven events, such as rising temperatures, sea levels and storm severity, bad weather
at sea, hurricanes, typhoons, tsunamis, floods and earthquakes, as well as a maritime accident, oil or other spill, or other
environmental mishap. Climate change has increased and may continue to increase the frequency, severity and
uncertainty of such events. Such events interfere with the Company’s ability to provide on-time scheduled service,
resulting in increased expenses and potential loss of business associated with such events. In addition, severe weather
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and natural disasters can result in interference with the Company’s terminal operations and may cause serious damage to
its vessels and cranes. These impacts could be particularly acute in certain ports in Alaska where the Company is
dependent on a single crane. The Company’s vessels and their cargoes are also subject to operating risks such as
mechanical failure, collisions and human error.
The occurrence of any of these events may result in damage to or loss of vessels, containers, cargo and other equipment,
increased maintenance expense, loss of life or physical injury to its employees or people, pollution, or the slow down or
suspension of operations. These events can expose the Company to reputational harm and liability for resulting damages
and possible penalties that, pursuant to typical maritime industry policies, it must pay and then seek reimbursement from
its insurer. Affected vessels may also be removed from service and thus would be unavailable for income - generating
activity.
The Company’s casualty and liability insurance policies are generally subject to large retentions and deductibles and
may not cover all losses the Company may incur. Some types of losses, such as losses resulting from a port blockage,
generally are not insured. In some cases, the Company retains the entire risk of loss because it is not economically
prudent to purchase insurance coverage or because of the perceived remoteness of the risk. Other risks are uninsured
because insurance coverage may not be commercially available. Finally, the Company retains all risk of loss that
exceeds the limits of its insurance.
The Company may be impacted by transitional and other risks arising from climate change.
The Company may be impacted by transitional and other risks arising from climate change and the global shift toward a
low carbon future. Organizational, industrial and governmental shifts in operations as well as legal and regulatory
requirements to reduce or eliminate emissions and/or increase efficiency may require the Company to increase
expenditures, make changes to existing infrastructure, vessels and equipment and shift its business model. For example,
the maritime industry is moving toward deployment of clean energy technologies and use of electricity powered by
renewable energy sources to power terminal operations as a way to reduce shoreside greenhouse gas emissions. As the
Company and SSAT increase their reliance on the power grid at terminals, including for cold-ironing and ground service
fleets, the Company may experience increased risks related to power outages, brown outs or black outs. The likelihood
of these risks is compounded by uncertainties regarding the reliability of renewable energy sources as well as any
increased frequency of extreme weather events that may disrupt the generation or transmission of electricity. In
addition, compliance with new climate change requirements or regulations such as the IMO’s requirements related to
EEXI and CII could require Matson’s fleet to slow down if efficiency improvements or transitions to alternative fuels
together are not enough to reduce GHG emissions sufficiently, thus impacting Matson’s expedited business model and
competitive advantage. New environmental requirements for vessel performance and operation could also require the
Company to accelerate the building of new vessels, increase the construction costs for new vessels and equipment to
accommodate even newer technology as it emerges while today’s technology becomes obsolete, initiate unexpected
retrofit projects for existing vessels, retire older vessels earlier than expected, or render reserve vessels unusable. If
these outcomes were to occur, the Company’s business, results of operations, cash flows and financial condition could
be adversely affected.
In addition to the COVID-19 pandemic, the Company faces risks related to actual or threatened health
epidemics, pandemics or other major health crises, which could significantly disrupt the Company’s business.
The Company’s business could be impacted adversely by the effects of public health epidemics, pandemics or other
major heath crises (which the Company refers to collectively as public health crises). Actual or threatened public health
crises may have a number of adverse impacts, including volatility in the global economy, impacts to the Company’s
customers’ business operations, reduced tourism in the markets the Company serves, or significant disruptions in ocean-
borne transportation of goods, logistics demand and supply chain activity, caused by a variety of factors such as
quarantines, factory and office closures, port closures, or other government-imposed restrictions, any of which could
adversely impact the Company’s business, financial condition, operating results and cash flows.
The Company’s significant operating agreements and leases could be replaced on less favorable terms or may not
be replaced when they expire.
The significant operating agreements and leases entered into by the Company in its businesses, including those related to
terminals, chartered vessels and warehouses as well as those with SSAT, expire at various points in the future and may
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not be replaced with comparable assets with the specifications necessary for the Company’s or SSAT’s businesses or
could be replaced on less favorable terms, thereby adversely affecting the Company’s future financial position, results of
operations and cash flows.
The Company may face unexpected dry-docking or repair costs for its vessels.
The Company routinely engage shipyards to dry-dock its vessels for regulatory compliance and to provide repair and
maintenance. Vessels may also have to be dry-docked or repaired at sea in the event of accidents or other unforeseen
damage. Unexpected dry-dockings or repairs could require the Company to activate a reserve vessel, purchase
additional fuel and operate a less-efficient, smaller vessel for a period of time. The Company also operates a number of
older active and reserve vessels that may require more frequent and extensive maintenance. The cost of repairs is
difficult to predict with certainty and can be substantial. In addition, the time when a vessel is out of service for
maintenance is determined by a number of factors, including regulatory deadlines, market conditions, shipyard
availability and customer requirements, and accordingly, the length of time that a vessel may be out of service may be
longer than anticipated, which could adversely affect the Company’s business, financial condition, results of operations
and cash flows.
The Company is involved in a joint venture and is subject to risks associated with joint venture relationships.
The Company is involved in a terminal joint venture with SSAT (and through SSAT, other joint ventures at various U.S.
West Coast terminals), and may initiate future joint venture projects. A joint venture involves certain risks for the
Company such as:
The Company’s lack of voting control over the joint venture, including the risk that the joint venture takes actions
resulting in reputational harm to the Company;
Misalignment or inconsistency of interests between the Company and the joint venture partner;
Reliance on the joint venture partner to fund its share of capital or fulfill its other commitments, including the risk
that the joint venture partner could become bankrupt; and
Operating difficulties and financial losses at the joint venture, which may lead to the Company writing down assets
or incurring impairment charges.
In addition, the Company relies on SSAT for its stevedoring services at the ports of Long Beach and Oakland, California
and Tacoma, Washington on the U.S. West Coast. The Company could be adversely affected by any changes in the
services provided or to the costs of such services provided by SSAT.
The Company is subject to risks associated with conducting business in foreign shipping markets.
Matson’s China, Alaska export, Micronesia, Japan and South Pacific services are subject to risks associated with
conducting business in a foreign shipping market, which include:
Challenges associated with operating in foreign countries and developing relationships with foreign companies,
business associates and governments, including as a result of cultural differences;
Difficulties in staffing and managing foreign operations, including dynamic employment and immigration laws;
The Company’s ability to comply with U.S. and foreign legal and regulatory restrictions, including anti - corruption
laws such as the Foreign Corrupt Practices Act;
Not having continued access to existing port facilities or feeder vessels;
The Company’s ability to manage changes in the cost of goods or currency exchange rate fluctuations;
Political and economic instability; and
Dynamics involving U.S. trade relations with other countries, including the imposition of or uncertainty associated
with the level of tariffs or other governmental actions.
The Company’s terminals in Hawaii and Alaska require modernization.
The Company has completed the first phase of renovating and modernizing its Sand Island terminal in Honolulu Harbor.
Significant additional upgrades and projects remain. The Company has also continued discussions with state and local
authorities in Anchorage, Alaska regarding upgrades to those terminal and port facilities. Regulatory, construction or
other delays or cost overruns related to the expansion and modernization of the terminals could have an adverse impact
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on the Company’s business plans, financial condition and results of operations. In addition, the terminal modernization
programs may not result in improved operational productivity or generate expected returns.
Heightened security measures, war, actual or threatened terrorist attacks, efforts to combat terrorism and other
acts of violence may adversely impact the Company’s operations and profitability.
War, terrorist attacks and other acts of violence may cause consumer confidence and spending to decrease, or may affect
the ability or willingness of tourists to travel to Hawaii, Guam or Alaska, thereby adversely affecting those economies
and the Company. Additionally, future terrorist attacks could increase volatility in the U.S. and worldwide financial
markets. Acts of war or terrorism may be directed at the Company’s shipping operations, or may cause the U.S.
government to take control of Matson’s vessels for military operation. Heightened security measures, including customs
inspections and related procedures in countries of origin and destination, potentially slow the movement and increase the
cost of freight through U.S. or foreign ports, across borders or on U.S. or foreign railroads or highways.
Acquisitions may have an adverse effect on the Company’s business.
The Company’s growth strategy includes expansion through acquisitions, including, for example, the Company’s
acquisitions of Horizon Lines, Inc. (“Horizon”) in 2015 and Span Intermediate, LLC (“Span Alaska”) in 2016. There is
no assurance that the Company will be successful in identifying, negotiating, or consummating any future acquisitions.
Even if suitable candidates are identified, such transactions may result in difficulties in assimilating acquired assets or
companies, and may result in the diversion of the Company’s capital and its management attention from other business
issues and opportunities. The Company may not be able to integrate companies that it acquires successfully, including
their personnel, financial systems, distribution, operations and general operating procedures. The Company may also
encounter challenges in achieving appropriate internal control over financial reporting in connection with the integration
of an acquired company. The Company may pay a premium for an acquisition, resulting in goodwill that may later be
determined to be impaired.
Risks Related to Employees
Work stoppages or other labor disruptions caused by the Company’s unionized workers and other workers or
their unions in related industries could adversely affect the Company’s operations.
A significant portion of Matson’s employees are covered by collective bargaining agreements. Furthermore, the
Company relies on the services of third - parties, including SSAT, which employ persons covered by collective
bargaining agreements. For additional information on collective bargaining agreements with unions, see Item 1.C.
Employees and Labor Relations of Part I of this Annual Report.
The Company has been adversely affected by actions taken by employees of the Company or other companies in related
industries against efforts by management of the Company or other companies to control labor costs, restrain wage or
benefit increases or modify work practices. Strikes, slow-downs and disruptions have occurred as a result of the failure
of Matson or other companies in its industry to negotiate collective bargaining agreements with such unions
successfully.
In addition, any slow-downs, strikes, lock-outs or other disruptions, including limits on the availability of labor through
trade union hiring halls, have had and in the future, particularly in years when collective bargaining agreements are
being negotiated, could have an adverse impact on Matson’s or SSAT’s operations.
Loss of the Company’s key personnel or failure to adequately manage human capital could adversely affect its
business.
The Company’s future success will depend, in significant part, upon the continued services of its key personnel and
skilled employees, including its senior management, as well as key personnel at its joint venture partners. The
permanent or temporary loss of the services of key personnel could adversely affect the Company’s future operating
results because of such employees’ experience with and knowledge of the Company’s business and customer
relationships. If key personnel and skilled employees depart or are unable to work, the Company’s ability to execute its
business model could be impaired to the extent it cannot replace such personnel or sufficiently train new personnel in a
timely manner. In addition, the Company may incur significant costs to replace these employees. Whether the
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Company can meet its labor needs is subject to a variety of pressures, including market compensation and benefit levels,
which may be impacted by pressure within the industry to increase wages, including due to the threat of a labor strike;
the availability of labor, which may be impacted by national and global labor trends including higher-than-normal levels
of individuals leaving the workforce during COVID-19 and industry trends including aging workforces that may reduce
the available pool of skilled workers; a mismatch of skills or experience to support the evolving needs of the Company’s
business; and employee expectations or desire for changes in the work environment. In addition, the Company’s
workforce is aging, and within the next few years an increasing number of employees will be eligible to retire, which
may result in a period of higher turnover rates than we have historically experienced and could amplify these challenges.
The Company does not maintain key person insurance on any of its key personnel.
The Company’s investments in and efforts to manage its human capital and maintain a desirable workplace culture,
including to create a safe and healthy work environment, improve diversity and create a respectful, responsive and
inclusive culture, and foster a rewarding workplace for employee development and advancement, may not be successful
in identifying, attracting, developing, motivating, retaining, competing for or replacing qualified personnel. These
efforts and the Company’s reputation may also be impacted by any failure or perceived failure to meet or timely progress
on publicly disclosed human capital-related goals and initiatives, including with respect to diversity, equity and
inclusion, or to compare favorably with the progress or goals of its industry or peers. In addition, the Company may be
subject to federal, state or local vaccine or other COVID-19 related mandates (including as a U.S. government
contractor) and enforcement of such mandates may result in reputational harm, labor disruption and increased operating
costs and impact the Company’s ability to attract and retain qualified talent, among other risks.
Risks Related to Information Technology
If the Company is not able to use its information technology and communications systems effectively, the
Company’s ability to conduct business might be negatively impacted.
The Company is highly dependent on the proper functioning of our information technology systems to enable operations
and compete effectively. The Company regularly updates its information technology systems or implements new
systems, which could cause substantial business interruption. There is no assurance that the systems upgrades or new
systems will meet the Company’s current or future business needs, or that they will operate as designed. For example,
the Company recently completed a multi-year process to implement a new enterprise resource planning, or ERP, system
intended to enhance operating efficiencies and provide more effective management of its business operations. System
enhancements are on-going.
The Company’s information technology systems also rely on third-party service providers for access to the Internet,
satellite-based communications systems, the electric grid, database storage facilities and telecommunications providers.
The Company has no control over the operations of these third-party service providers. In the past, disruptions in the
Company’s third-party service providers have impacted the Company’s operations, including the Company’s ability to
book and manage freight, stow vessels, and process customs declarations. During periods where government and health
officials recommended or required doing so in response to the COVID-19 pandemic, some of the Company’s employees
worked from home or remotely, increasing the Company’s dependence on its information technology systems and third-
party providers during that time. If the Company’s information technology and communications systems experience
reliability issues, integration or compatibility concerns or if the Company’s third-party providers are unable to perform
effectively or experience disruptions or failures, there could be an adverse impact on the availability and functioning of
the Company’s information technology and communications systems, which could lead to business disruption or
inefficiencies, reputational harm or loss of customers.
The Company’s information technology systems have in the past and may in the future be exposed to
cybersecurity risks and other disruptions that could impair the Company’s ability to operate and adversely affect
its business.
The shipping industry is a more frequent target of cyber attacks than some other industries because of the essential
nature of these services. The Company relies extensively on its information technology systems and third-party service
providers in many aspects of its business, including cloud services for accounting, billing, disbursement, cargo booking
and tracking, vessel scheduling and stowage, equipment tracking, customer service, banking, payroll and employee
communication systems. The Company also collects, stores and transmits sensitive data, including its proprietary
business information and that of its customers, and personally identifiable information of its customers and employees.
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Despite the Company’s continuous efforts to make investments in the Company’s information technology systems and
system-wide data security program, the implementation of security measures to protect the Company’s data and
infrastructure against breaches and other cyber threats, and the Company’s use of internal processes and controls
designed to protect the security and availability of the Company’s systems, the Company has in the past experienced and
may in the future experience cybersecurity risks, such as computer viruses, hacking, malware, denial of service attacks,
cyber terrorism, circumvention of security systems, malfeasance, breaches due to employee error, natural disasters,
telecommunications failure, or other catastrophic events at the Company’s facilities, aboard its vessels or at third-party
locations.
Any failure, breach or unauthorized access to the Company’s systems or those of third-parties on which the Company
relies could result in the loss of confidential, sensitive or proprietary information, interruptions in its service or
production or otherwise impact the Company’s ability to conduct business operations, and could result in potential
reductions in revenue and profits, damage to its reputation or liability.
Risks Related to Financial Matters
The Company may be required to record a significant charge to earnings if recorded intangible assets associated
with the Span Alaska acquisition become impaired.
The Company recorded significant intangible assets related to goodwill, customer relationships and trade name arising
from the Span Alaska acquisition. The Company is required to test goodwill for impairment annually, or whenever
events or changes in circumstances indicate that it is more likely than not that the fair value of a reporting unit is less
than its carrying amount. Factors that could lead to an impairment of goodwill or intangible customer relationships
include any significant adverse changes affecting the reporting segment’s financial condition, results of operations, and
future cash flows.
A deterioration of the Company’s credit profile, disruptions of the credit markets or higher interest rates could
restrict its ability to access the debt capital markets or increase the cost of debt.
Deterioration in the Company’s credit profile may have an adverse effect on the Company’s ability to access the private
or public debt markets and also may increase its borrowing costs. If the Company’s credit profile deteriorates
significantly, its access to the debt capital markets or its ability to renew its committed lines of credit may become
restricted, or the Company may not be able to refinance debt at the same levels or on the same terms. Because the
Company relies on its ability to draw on its revolving credit facilities to support its operations when required, any
volatility in the credit and financial markets that prevents the Company from accessing funds (for example, a lender that
does not fulfill its lending obligation) could have an adverse effect on the Company’s financial condition and cash flows.
Additionally, the Company’s credit agreements generally include an increase in borrowing rates if the Company’s credit
profile deteriorates. Furthermore, the Company incurs interest under its revolving credit facilities based on floating
rates. Floating rate debt creates higher debt service requirements if market interest rates increase, as may be the case in
connection with the U.S. Federal Reserve’s announced plans to increase interest rates in 2022, which would adversely
affect the Company’s cash flow and results of operations. In addition, the floating rate on certain borrowings under the
Company’s revolving credit facility is tied to LIBOR. Regulators in the United States and other countries have begun to
phase out the use of LIBOR, with a complete phase out of U.S. dollar LIBOR rates currently expected by June 2023.
Uncertainty regarding the transition from LIBOR to an alternate benchmark rate or rates could pose funding risks for the
Company and adversely affect the Company’s financing costs. Disruptions to the credit markets as a result of the
COVID-19 pandemic or other macroeconomic or financial market developments could increase the Company’s cost of
capital and limit the Company’s access to capital.
21
Failure to comply with certain restrictive financial covenants contained in the Company’s credit facilities could
preclude the payment of dividends, impose restrictions on the Company’s business segments, capital resources or
other activities or otherwise adversely affect the Company.
The Company’s credit facilities contain certain restrictive financial covenants, the most restrictive of which include a
maximum ratio of debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”), a minimum ratio
of EBITDA to interest expense, certain prohibitions on additional priority debt, certain prohibitions on sale and
leaseback transactions, and the maintenance of minimum shareholders’ equity. If the Company does not maintain these
and other required covenants, and a breach of such covenants is not cured timely or waived by the lenders, resulting in a
default, the Company’s access to credit may be limited or terminated, dividends may be suspended, and the lenders
could declare any outstanding amounts due and payable. The Company’s continued ability to borrow under its credit
facilities is subject to compliance with these financial and other non-financial covenants.
The Company’s effective income tax rate may vary.
Various internal and external factors may have favorable or unfavorable material or immaterial effects on the
Company’s effective income tax rate and, therefore, impact the Company’s net income and earnings per share. These
factors include, but are not limited to changes in tax rates; changes in tax laws, regulations, and rulings; changes in
interpretations of existing tax laws, regulations and rulings; changes in the evaluation of the Company’s ability to realize
deferred tax assets, and changes in uncertain tax positions; changes in accounting principles; changes in current pre-tax
income as well as changes in forecasted pre-tax income; changes in the level of Capital Construction Fund (“CCF”)
deductions, non-deductible expenses, and expenses eligible for tax credits; changes in the mix of earnings among
countries with varying tax rates; changes to the allowable amounts of foreign derived intangible income deductions; and
acquisitions and changes in the Company’s corporate structure. These factors may result in periodic revisions to the
Company’s effective income tax rate, which could affect the Company’s cash flow and results of operations.
Changes in the value of pension assets, or a change in pension law or key assumptions, may adversely affect the
Company’s financial performance.
The amount of the Company’s employee pension and post-retirement benefit costs and obligations is calculated on
assumptions used in the relevant actuarial calculations. Adverse changes in any of these assumptions due to economic or
other factors, changes in discount rates, higher health care costs, or lower actual or expected returns on plan assets, may
adversely affect the Company’s operating results, cash flows, and financial condition. In addition, a change in federal
law, including changes to the Employee Retirement Income Security Act or Pension Benefit Guaranty Corporation
premiums, may adversely affect the Company’s single-employer and multi-employer pension plans and plan funding.
These factors, as well as a decline in the fair value of pension plan assets, may put upward pressure on the cost of
providing pension and medical benefits and may increase future pension expense and required funding contributions.
There can be no assurance that the Company will be successful in limiting future cost and expense increases, and
continued upward pressure in costs and expenses could further reduce the profitability of the Company’s businesses.
The Company may have exposure under its multi-employer pension and post-retirement plans in which it
participates that extends beyond its funding obligation with respect to the Company’s employees.
The Company contributes to various multi-employer pension plans. In the event of a partial or complete withdrawal by
the Company from any plan that is underfunded, the Company would be liable for a proportionate share of such plan’s
unfunded vested benefits (see Note 11 to the Consolidated Financial Statements in Item 8 of Part II of this Annual
Report). Based on the limited information available from plan administrators, which the Company cannot independently
validate, the Company believes that its portion of the contingent liability in the case of a full withdrawal or termination
may be material to its financial position and results of operations. If any other contributing employer withdraws from
any plan that is underfunded, and such employer (or any member of its controlled group) cannot satisfy its obligations
under the plan at the time of withdrawal, then the Company, along with the other remaining contributing employers,
would be liable for its proportionate share of such plan’s unfunded vested benefits. In addition, if any of the multi-
employer plans to which the Company contributes fails to satisfy the minimum funding requirements, the Internal
Revenue Service will impose certain penalties and taxes on the Company and other contributing employers.
22
Risks Related to Legal, Regulatory and Compliance Matters
As an ocean transportation and logistics services company, the Company is subject to numerous safety,
environmental, and other laws and regulations that impact the Company’s operations, are costly to comply with
and expose us to liability.
The Company, including its vessels and terminals, is subject to numerous federal, state and local laws and regulations,
including those related to safety, cabotage, equipment standards and government rates. In addition, the Company is
subject to environmental laws and regulations, including those relating to air quality initiatives at port locations; air
emissions; use of shore power at California ports; wastewater discharges; management of storm water; the
transportation, handling and disposal of solid and hazardous materials, oil and oil - related products, hazardous substances
and wastes; the investigation and remediation of contamination; health, safety and the protection of the environment and
natural resources; and climate change, including any regulations, mandates or restrictions related to greenhouse gas
emissions, such as a “cap and trade” system of allowances and credits, and energy use. Any changes in applicable laws
and regulations, including their enforcement, interpretation or implementation that results in more stringent requirements
than currently anticipated, as well as any new laws and regulations that are adopted could impose significant additional
costs and limitations on the Company’s ability to operate. Mitigation strategies or contingency plans to remain in
compliance with applicable laws and regulations may be unsuccessful, result in additional costs or experience delays.
Such costs may not be recoverable through increased payments from customers. For a discussion of specific laws and
regulations, see Part I, Item 1, of this Annual Report.
Federal, state and local laws and regulations require us to obtain certificates of financial responsibility and to adopt
procedures for oil and hazardous substance spill prevention, response and clean up, among other requirements impacting
the Company’s business. In complying with applicable laws and regulations, the Company has incurred expenses and
may incur material future costs and expenses related to vessel and equipment modifications, new equipment, higher-
priced fuel, changes in operating practices and procedures, tracking emissions, changing routes, adopting or modifying
energy sources and undergoing additional oversight inspections, all of which could adversely affect the Company’s
business and financial condition. For example, Matson’s vessels operate within emissions control areas, and the
Company’s U.S. flagged vessels generally must be maintained “in class” and are subject to periodic inspections by the
American Bureau of Shipping or similar classification societies. They also must be periodically inspected by, or on
behalf of, the United States Coast Guard. The Company’s vessels’ operating certificates and licenses are renewed
periodically during the required annual surveys of the vessels, but there is no assurance that the Company’s programs
and policies will be sufficient to have such certificates and licenses renewed. The EPA also requires vessels to obtain
coverage under a general permit and to comply with inspection, monitoring, discharge, recordkeeping and reporting
requirements.
These laws and regulations provide for substantial fines, as well as criminal and civil penalties, in the event of any
violations of, or non-compliance with, their requirements (including any waivers, permits or recordkeeping and other
reporting requirements). Any vessel-generated pollution from incidents in U.S. waters within three nautical miles, and
in some cases, within the 200-mile exclusive economic zone, for example, could expose us to such fines or penalties.
The Company is subject to, and may in the future be subject to, disputes, legal or other proceedings, and
government inquiries or investigations that could have an adverse effect on the Company.
The nature of the Company’s business exposes it to the potential for disputes, legal or other proceedings, and
government inquiries or investigations relating to antitrust matters, labor and employment matters, personal injury and
property damage, environmental, shore power and other matters, as discussed in the other risk factors disclosed in this
section or in other Company filings with the SEC. For example, Matson is a common carrier, whose tariffs, rates, rules
and practices in dealing with its customers are governed by extensive and complex foreign, federal, state and local
regulations, which may be the subject of disputes or administrative or judicial proceedings. If these disputes develop
into proceedings, these proceedings, individually or collectively, could involve or result in significant expenditures or
losses by the Company, or result in significant changes to Matson’s tariffs, rates, rules and practices in dealing with its
customers.
23
The Company may continue to be exposed to risks and unknown liabilities related to the Horizon acquisition.
The Company acquired Horizon subject to all of the liabilities and obligations of its non-Hawaii business, including any
remaining liabilities and obligations associated with its Puerto Rico operations, which Horizon ceased during the first
quarter of 2015. The disposition of these liabilities, and any other obligations that are unknown to the Company,
including contingent liabilities, could have an adverse effect on the Company’s financial condition and results of
operations.
Pasha acquired Horizon’s former Hawaii business immediately before the Company acquired Horizon, and Pasha
assumed substantially all liabilities and obligations related to Horizon’s Hawaii business and agreed to perform various
covenants. In some cases, however, Horizon, as the original contracting party, may remain primarily responsible for
such assumed Hawaii liabilities and obligations. The Company may incur losses related to such assumed Hawaii
liabilities and obligations.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Matson leases terminal facilities including office and storage space. Material terminal facilities, which are used by the
Company’s Ocean Transportation segment, include the following locations:
Terminal Location
Honolulu, Hawaii
Anchorage, Alaska
Dutch Harbor, Alaska
Kodiak, Alaska
Tacoma, Washington
Polaris Point, Guam
Acreage
105
38
18
6
15
30
The Company’s other primary terminal facilities located at the ports of Oakland and Long Beach, California, and
Tacoma, Washington are leased by SSAT.
Other material facilities used in the Company’s operations by both of the Company’s segments include the following:
Other Material Facilities
Pooler, Georgia
Oakland, California
Pooler, Georgia
Oakland, California
Anchorage, Alaska
Auburn, Washington
Description of Facility
Warehouse
Warehouse
Warehouse
Warehouse
Office / Cross-dock
Office / Cross-dock
Square Footage
710,844
406,463
324,832
132,000
54,000
51,250
24
ITEM 3. LEGAL PROCEEDINGS
Environmental Matters: The Company’s Ocean Transportation segment has certain risks that could result in
expenditures for environmental remediation.
In accordance with SEC rules, with respect to administrative or judicial proceedings involving the environment, the
Company has determined that in future filings it will disclose any such proceeding if it reasonably believes such
proceeding will result in monetary sanctions, exclusive of interest and costs, at or in excess of $1 million. The Company
believes that such threshold is reasonably designed to result in disclosure of environmental proceedings that are material
to its business or financial condition.
On November 10, 2021, the California Air Resources Board (“CARB”) issued a Notice of Violation (the “NOV”) to
Matson for alleged violations of the Airborne Toxic Control Measure for Auxiliary Diesel Engines Operated on Ocean-
Going Vessels At-Berth in a California Port pursuant to California Code of Regulations, title 17, section 93118.3.
CARB regulations require that a company’s fleet plug into shore power for at least 80 percent of visits at California ports
and reduce auxiliary engine power generation by at least 80 percent. The NOV alleges that Matson’s fleet did not meet
the 80 percent thresholds during visits to the Port of Long Beach in 2020. The violations were alleged to have been
incurred by chartered vessels in the CLX+ service. These chartered vessels were not outfitted with alternative maritime
power (“AMP”) capability which would have allowed them to plug into the shore power grid and shut down the vessel
diesel generators when at dock. The Company has presented mitigating factors for consideration in settlement
discussions with CARB, as well as plans to achieve compliance in 2022. Although potential penalties for 2020 and 2021
violations could, in the aggregate, reasonably be expected to exceed $1 million, they are not expected to be material to
the Company’s business or financial condition.
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.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
25
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
General Information: Matson’s common stock is traded on the New York Stock Exchange under the ticker symbol
“MATX”. As of February 18, 2022, there were 2,018 shareholders of record of Matson common stock.
Stockholder Return Performance Graph and Trading Information: The following information in this Item 5 shall not be
deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by
reference in any filing under the Securities Act of 1933.
The cumulative total return listed below assumed an initial investment of $100 and reinvestment of dividends at each
fiscal end and measures the performance of this investment as of the last trading day in the month of December for each
of the five years ended December 31, 2021. The graph is a historical representation of past performance only and is not
necessarily indicative of future performance.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
Among Matson, Inc., the S&P 500 Index,
the S&P Midcap 400 Index, and the S&P Transportation Select Industry Index
$340
$290
$240
$190
$140
$90
$284
$233
$187
$185
$40
12/16
12/17
12/18
12/19
12/20
12/21
Matson, Inc.
S&P 500
S&P Midcap 400
S&P Transportation Select Industry
*
$100 invested on December 31, 2016 in stock or index, including reinvestment of dividends.
Trading volume averaged 291,899 shares a day in 2021, compared with 234,930 shares a day in 2020 and 155,804 shares
a day in 2019, as reported by the New York Stock Exchange.
26
Dividends: Dividends declared per share of common stock by the Company for each fiscal quarter during 2021, 2020
and 2019 were as follows:
Dividends Declared
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
2021
2020
2019
$
$
$
$
0.23 $
0.23 $
0.30 $
0.30 $
0.22 $
0.22 $
0.23 $
0.23 $
0.21
0.21
0.22
0.22
Matson’s Board of Directors also declared a cash dividend of $0.30 per share for the first quarter 2022, payable on
March 3, 2022 to shareholders of record on February 10, 2022. Although Matson expects to continue paying quarterly
cash dividends on its common stock, the declaration and payment of dividends are subject to the discretion of the Board
of Directors and will depend upon Matson’s financial condition, results of operations, cash requirements and other
factors deemed relevant by the Board of Directors.
Share Repurchases: The following is a summary of Matson common stock repurchased by the Company during the
three months ended December 31, 2021:
Period
October 1 – 31, 2021
November 1 – 30, 2021
December 1 – 31, 2021
Total
Total Number of
Shares
Purchased
368,259 $
220,000 $
416,520 $
1,004,779 $
Total Number of
Maximum Number
Shares Purchased of Shares that May
as Part of Publicly
Average Price Announced Plans or Under the Plans or
Paid Per Share
Programs (1)
83.10
87.13
83.27
84.05
Programs
1,152,317
932,317
515,797
368,259
220,000
416,520
1,004,779
Be Purchased
(1) On June 24, 2021, the Company announced that Matson’s Board of Directors had approved a share repurchase program of up to 3.0 million
shares of common stock through August 3, 2024. Shares will be repurchased in the open market from time to time, and may be made pursuant to
a trading plan in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934.
On January 27, 2022, the Company’s Board of Directors approved the addition of three million shares to the Company’s
existing share repurchase program.
ITEM 6. REMOVED AND RESERVED
27
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS AND RISK FACTORS
The Company, from time to time, may make or may have made certain forward-looking statements, whether orally or in
writing, such as forecasts and projections of the Company’s future performance or statements of management’s plans
and objectives. These statements are “forward-looking” statements as that term is defined in the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements may be contained in, among other things, SEC filings
such as Forms 10-K, 10-Q and 8-K, the Annual Report to Shareholders, press releases made by the Company, the
Company’s Internet websites (including websites of its subsidiaries), and oral statements made by the officers of the
Company. Except for historical information contained in these written or oral communications, such communications
contain forward-looking statements. These include, for example, all references to 2022 or future years. New risk factors
emerge from time to time and it is not possible for the Company to predict all such risk factors, nor can it assess the
impact of all such risk factors on the Company’s business or the extent to which any factor, or combination of factors,
may cause actual results to differ materially from those contained in any forward-looking statements. Accordingly,
forward-looking statements cannot be relied upon as a guarantee of future results and involve a number of risks and
uncertainties that could cause actual results to differ materially from those projected in the statements, including but not
limited to the factors that are described in Part I, Item 1A under the caption of “Risk Factors” of this Form 10-K, which
section is incorporated herein by reference. The Company is not required, and undertakes no obligation, to revise or
update forward-looking statements or any factors that may affect actual results, whether as a result of new information,
future events, or circumstances occurring after the date of this report.
OVERVIEW
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to
provide a discussion of the Company’s financial condition, results of operations, liquidity and certain other factors that
may affect its future results from the perspective of management. The discussion that follows is intended to provide
information that will assist in understanding the changes in the Company’s Consolidated Financial Statements from year
to year, the primary factors that accounted for those changes, and how certain accounting principles, policies and
estimates affect the Company’s Consolidated Financial Statements. MD&A is provided as a supplement to, and should
be read in conjunction with the Consolidated Financial Statements and the accompanying notes to the Consolidated
Financial Statements in Item 8 of Part II below. Discussion and analysis of the financial condition and results of
operations of Matson for the years ended December 31, 2020 and 2019 can be found in Part II, Item 7 of the Company’s
Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 26, 2021.
MD&A is presented in the following sections:
Historical Financial Information
Fourth Quarter 2021 Discussion and Update on Business Conditions
Consolidated Results of Operations
Analysis of Operating Revenue and Income by Segment
Liquidity and Capital Resources
Commitments, Contingencies and Off-Balance Sheet Arrangements
Critical Accounting Estimates
28
HISTORICAL FINANCIAL INFORMATION
The comparative selected financial information of the Company is presented for each of the five years in the period
ended December 31, 2021. The information should be read in conjunction with Item 8, “Financial Statements and
Supplementary Data.” All fiscal years include 52 weeks, except for the year ended December 31, 2021 which includes
53 weeks (a description of the Company’s fiscal year is included in Note 2 of the Consolidated Financial Statements in
Item 8 of Part II below):
(In millions, except per share amounts)
Operating Revenue:
Ocean Transportation
Logistics
Total Operating Revenue
Operating and Net Income:
Ocean Transportation (1)
Logistics
Total Operating Income
Interest expense
Other income (expense), net
Income before Income Taxes
Income taxes (2)
Net Income
Capital Expenditures:
Ocean Transportation
Logistics
Total Capital Expenditures
Depreciation and Amortization:
Ocean Transportation
Logistics
Deferred Dry-docking Amortization — Ocean Transportation
Total Depreciation and Amortization
2021
2020
2019
2018
2017
$ 3,132.8 $ 1,853.9 $ 1,666.6 $ 1,641.3 $ 1,571.8
475.1
$ 3,925.3 $ 2,383.3 $ 2,203.1 $ 2,222.8 $ 2,046.9
792.5
536.5
581.5
529.4
$ 1,137.7 $ 244.8 $
49.8
1,187.5
(22.6)
6.4
1,171.3
(243.9)
35.5
280.3
(27.4)
6.1
259.0
(65.9)
$ 927.4 $ 193.1 $
90.8 $ 131.1 $ 126.4
20.9
32.7
38.3
147.3
163.8
129.1
(24.2)
(18.7)
(22.5)
2.1
2.6
1.2
125.2
147.7
107.8
(25.1)
105.8
(38.7)
82.7 $ 109.0 $ 231.0
$ 322.4 $ 190.0 $ 294.5 $ 385.4 $ 305.3
1.7
$ 325.3 $ 192.3 $ 310.3 $ 401.2 $ 307.0
15.8
15.8
2.9
2.3
$ 128.6 $ 107.4 $
93.3
7.9
101.2
46.2
$ 160.2 $ 140.0 $ 134.7 $ 131.8 $ 147.4
93.6 $
6.8
100.4
34.3
87.0 $
7.4
94.4
37.4
7.3
135.9
24.3
7.5
114.9
25.1
Earnings Per Share in Net Income:
Basic
Diluted
$ 21.67 $
$ 21.47 $
4.48 $
4.44 $
1.93 $
1.91 $
2.55 $
2.53 $
5.38
5.35
Cash dividends per share declared
$
1.06 $
0.90 $
0.86 $
0.82 $
0.78
As of December 31:
Cash and cash equivalents
Total debt obligations — including current portion
Total Shareholders' equity
Shares outstanding
14.4 $
$ 282.4 $
19.8
$ 614.7 $ 744.8 $ 958.4 $ 856.4 $ 857.1
$ 1,667.4 $ 961.2 $ 805.7 $ 755.3 $ 677.2
42.5
21.2 $
19.6 $
41.0
43.2
42.7
42.9
(1) The Ocean Transportation segment includes $56.3 million, $26.3 million, $20.8 million, $36.8 million and $28.2 million of equity in income from the Company’s
(2)
investment in SSAT for 2021, 2020, 2019, 2018 and 2017, respectively.
Income taxes for the years ended December 31, 2019, 2018 and 2017 include a non-cash income tax (expense)/benefit of $2.9 million, $(2.9) million and
$154.0 million, respectively, related to the remeasurement of the Company’s deferred assets and liabilities and other discrete adjustments as a result of applying the
Tax Cut and Jobs Act of 2017.
29
FOURTH QUARTER 2021 DISCUSSION AND UPDATE ON BUSINESS CONDITIONS
Ocean Transportation: The Company’s container volume in the Hawaii service in the fourth quarter 2021 was
10.4 percent higher year-over-year. The increase was primarily due to (i) higher retail- and hospitality-related demand
due to the continued rebound in tourism and the Hawaii economy and (ii) the benefit of an extra week, compared to the
pandemic-reduced volume in the year ago period. Volume in the fourth quarter 2020 was negatively impacted by the
state’s COVID-19 mitigation efforts, including restrictions on tourism. Tourism and the Hawaii economy continued to
rebound in the fourth quarter 2021 despite a softening in airline passenger traffic early in the quarter due to the state’s
efforts to address the spread of the COVID-19 Delta variant. In the near-term, we are cautiously optimistic on further
economic recovery in Hawaii primarily due to improvement in the unemployment rate and increasing tourism traffic,
including international visitors later in the year, but incremental waves of COVID-19 variants present the possibility of
further economic slowdowns.
In China, the Company’s container volume in the fourth quarter 2021 increased 32.7 percent year-over-year. The
increase was primarily due to volume from the China-California Express (“CCX”) service and the benefit of an extra
week. The total number of eastbound voyages in the China service, including the impact of an extra week, increased by
nine year-over-year, of which eight were CCX voyages and one was a CLX voyage. Volume demand in the quarter was
driven by e-commerce, garments and other goods. Matson continued to realize a significant rate premium over the
Shanghai Containerized Freight Index in the fourth quarter 2021 and achieved average freight rates that were
considerably higher than in the year ago period. Supply chain congestion remains the current issue in the Transpacific
tradelane due to ongoing elevated consumption trends, U.S. domestic supply chain constraints, and inventory restocking.
For 2022, we expect these conditions to remain largely in place through at least the October peak season and expect
elevated demand for our China service for most of the year.
In Guam, the Company’s container volume in the fourth quarter 2021 increased 14.0 percent year-over-year primarily
due to higher retail-related demand compared to the pandemic-reduced volume in the year ago period. In the near-term,
we are cautiously optimistic on further economic growth in Guam as tourism traffic improves as the year progresses.
In Alaska, the Company’s container volume for the fourth quarter 2021 increased 10.2 percent year-over-year primarily
due to (i) the increase in volume from the Alaska-Asia Express (“AAX”), (ii) the benefit of an extra week, and
(iii) higher southbound volume. In the near-term, we expect improving economic trends in Alaska, but the recovery’s
trajectory continues to remain uncertain.
The contribution in the fourth quarter 2021 from the Company’s SSAT joint venture investment was $21.3 million, or
$10.4 million higher than the fourth quarter 2020. The increase was primarily driven by higher other terminal revenue
and higher revenue per lift.
Logistics: In the fourth quarter 2021, operating income for the Company’s Logistics segment was $14.8 million, or
$5.2 million higher compared to the level achieved in the fourth quarter 2020. The increase was due primarily to higher
contributions from supply chain management and transportation brokerage as a result of elevated goods consumption,
inventory restocking and favorable supply and demand fundamentals in our core markets.
30
CONSOLIDATED RESULTS OF OPERATIONS
The following analysis of the financial results of operations of Matson for the years ended December 31, 2021 and 2020
should be read in conjunction with the Consolidated Financial Statements in Item 8 of Part II below.
Consolidated Results: 2021 compared with 2020:
(Dollars in millions, except per share amounts)
Operating revenue
Operating costs and expenses
Operating income
Interest expense
Other income (expense), net
Income before income taxes
Income taxes
Net income
Basic earnings per share
Diluted earnings per share
Years Ended December 31,
2021
2020
Change
(634.8)
$ 3,925.3 $ 2,383.3 $ 1,542.0 64.7 %
30.2 %
907.2 323.7 %
(17.5)%
4.9 %
912.3 352.2 %
(178.0) 270.1 %
$ 734.3 380.3 %
$ 17.19 383.7 %
$ 17.03 383.6 %
(2,737.8)
1,187.5
(22.6)
6.4
1,171.3
(243.9)
927.4 $
21.67 $
21.47 $
(2,103.0)
280.3
(27.4)
6.1
259.0
(65.9)
193.1
4.48
4.44
$
$
$
4.8
0.3
Fiscal Year: Fiscal years ended December 31, 2021 and 2020 include 53 and 52 weeks, respectively.
Consolidated Operating Revenue for the year ended December 31, 2021 increased $1,542.0 million, or 64.7 percent,
compared to the prior year. The increase was due to an increase in Ocean Transportation revenue of $1,278.9 million
and an increase in Logistics revenue of $263.1 million.
Operating Costs and Expenses for the year ended December 31, 2021 increased $634.8 million, or 30.2 percent,
compared to the prior year. The increase was due to an increase in Ocean Transportation operating costs and expenses
of $386.0 million and an increase in Logistics operating costs and expenses of $248.8 million.
Operating Income for the year ended December 31, 2021 increased $907.2 million, or 323.7 percent, compared to the
prior year. The increase was due to an increase in Ocean Transportation operating income of $892.9 million and an
increase in Logistics operating income of $14.3 million.
The reasons for changes in operating revenue, operating costs and expenses, and operating income are described below,
by business segment, in the Analysis of Operating Revenue and Income by Segment.
Interest Expense was $22.6 million for the year ended December 31, 2021, compared to $27.4 million in the prior year.
The decrease in interest expense was due to lower outstanding debt during the year ended December 31, 2021, compared
to the prior year.
Other Income (Expense), net was $6.4 million for the year ended December 31, 2021, compared to $6.1 million in the
prior year, and relates to the amortization of certain components of net periodic benefit costs or gains related to the
Company’s pension and post-retirement plans, and interest income received from income tax refunds. The increase in
Other income (expense) was due to favorable adjustments reflected in the Company’s pension and post-retirement plan
liabilities during the year ended December 31, 2021.
Income Taxes for the year ended December 31, 2021 were $243.9 million, or 20.8 percent of income before income
taxes, compared to $65.9 million, or 25.4 percent of income before income taxes in the prior year. The 2021 income tax
rate benefited from a 2.5 percent deduction related to foreign-derived intangible income (“FDII”) under Section 250 of
the Internal Revenue Code. The Company benefits from a FDII deduction as it relates to a U.S. corporation that
generates income from services provided to foreign countries. The 2021 income tax rate also benefited from other
discrete adjustments that lowered the effective tax rate in the current year.
Net Income during the year ended December 31, 2021 increased $734.3 million, or 380.3 percent, compared to the prior
year.
31
ANALYSIS OF OPERATING REVENUE AND INCOME BY SEGMENT
The following analysis of operating revenue and income by segment for the years ended December 31, 2021 and 2020
should be read in conjunction with the Company’s reportable segments information included in Note 3 to the
Consolidated Financial Statements in Item 8 of Part II.
Ocean Transportation: 2021 compared with 2020:
(Dollars in millions)
Ocean Transportation revenue
Operating costs and expenses
Operating income
Operating income margin
Years Ended December 31,
2021
2020
Change
$ 3,132.8 $ 1,853.9 $ 1,278.9 69.0 %
(386.0) 24.0 %
244.8 $ 892.9 364.7 %
(1,609.1)
(1,995.1)
$ 1,137.7 $
36.3 %
13.2 %
Volume (Forty-foot equivalent units (FEU), except for automobiles) (1)
Hawaii containers
Hawaii automobiles
Alaska containers
China containers
Guam containers
Other containers (2)
157,600
46,600
78,200
184,800
21,900
20,200
145,700
46,600
72,600
118,900
18,900
17,500
11,900
—
5,600
65,900
3,000
2,700
8.2 %
0.0 %
7.7 %
55.4 %
15.9 %
15.4 %
(1) Approximate volumes included for the period are based on the voyage departure date, but revenue and operating income are adjusted to reflect
the percentage of revenue and operating income earned during the reporting period for voyages in transit at the end of each reporting period.
Includes containers from services in various islands in Micronesia and the South Pacific, and Okinawa, Japan.
(2)
Ocean Transportation revenue increased $1,278.9 million, or 69.0 percent, during the year ended December 31, 2021,
compared with the year ended December 31, 2020. The increase was primarily due to higher revenue in China and
Hawaii, higher fuel-related surcharge revenue, and higher revenue in Alaska. The higher revenue in China was
primarily due to considerably higher average freight rates and higher volume. The higher revenue in Hawaii and Alaska
was primarily the result of higher volume.
On a year-over-year FEU basis, Hawaii container volume increased 8.2 percent primarily due to (a) higher retail and
hospitality-related demand due to the reopening of the Hawaii economy compared to the negatively impacted volume in
the year ago period as a result of the pandemic and the state’s COVID-19 mitigation efforts and (b) the benefit of an
extra week, partially offset by volume associated with the dry-docking of a competitor’s vessel in the second quarter of
last year; Alaska volume increased by 7.7 percent due to (i) the increase in volume from the AAX, (ii) higher
northbound volume primarily due to higher retail-related demand compared to the negatively impacted volume in the
year ago period as a result of the pandemic and the state’s COVID-19 mitigation efforts, (iii) higher southbound volume,
and (iv) the benefit of an extra week; China volume was 55.4 percent higher primarily due to (A) incremental volume
from the CLX+ service, (B) the addition of volume from the CCX service, (C) higher volume on the CLX service as a
result of increased capacity in the tradelane, and (D) the benefit of an extra week; Guam volume was 15.9 percent higher
primarily due to higher retail-related demand compared to the negatively impacted volume in the year ago period as a
result of the pandemic and the island’s COVID-19 mitigation measures; and Other container volume increased
15.4 percent primarily due to higher volume in Okinawa and the addition of China-Auckland Express volume in the
South Pacific.
Ocean Transportation operating income increased $892.9 million during the year ended December 31, 2021, compared
with the year ended December 31, 2020. The increase was primarily due to considerably higher average freight rates
and higher volume in China, partially offset by higher operating costs and expenses primarily due to the CLX+ and CCX
services.
The Company’s SSAT terminal joint venture investment contributed $56.3 million during the year ended December 31,
2021, compared to a contribution of $26.3 million during the year ended December 31, 2020. The increase was
primarily driven by higher lift volume and higher other terminal revenue.
32
Logistics: 2021 compared with 2020:
(Dollars in millions)
Logistics revenue
Operating costs and expenses
Operating income
Operating income margin
Years Ended December 31,
2021
2020
Change
(742.7)
$ 792.5 $ 529.4 $ 263.1 49.7 %
(493.9) (248.8) 50.4 %
$ 49.8 $ 35.5 $ 14.3 40.3 %
6.7 %
6.3 %
Logistics revenue increased $263.1 million, or 49.7 percent, during the year ended December 31, 2021, compared with
the year ended December 31, 2020. The increase was primarily due to higher transportation brokerage and supply chain
management revenue.
Logistics operating income increased $14.3 million, or 40.3 percent, for the year ended December 31, 2021, compared
with the year ended December 31, 2020. The increase was due primarily to higher contributions from supply chain
management, transportation brokerage and freight forwarding.
LIQUIDITY AND CAPITAL RESOURCES
Sources of liquidity available to the Company at December 31, 2021 compared to December 31, 2020, were as follows:
Cash and Cash Equivalents, Restricted Cash and Accounts Receivable: Cash and cash equivalents, restricted cash and
accounts receivable, net, as of December 31, 2021 and 2020 were as follows:
(In millions)
Cash and cash equivalents
Restricted cash
Accounts receivable, net (1)
As of December 31,
2020
Change
2021
14.4 $ 268.0
$ 282.4 $
—
$
5.3 $
5.3 $
90.3
$ 343.7 $ 253.4 $
(1) Eligible accounts receivable of $9.8 million and $1.7 million at December 31, 2021 and 2020, respectively, were assigned to the CCF.
Changes in the Company’s cash, cash equivalents and restricted cash for the years ended December 31, 2021, 2020 and
2019 were as follows:
As of December 31,
Change
2021
2020
2019
2021-2020 2020-2019
$ 984.1 $ 429.8 $ 248.8 $ 554.3 $ 181.0
129.9
(323.5)
(12.6)
3.9
(8.7)
$ 287.7 $ 19.7 $ 28.4 $ 268.0 $
(146.4)
(131.2)
276.7
(8.7)
(177.0)
(261.5)
(8.7)
28.4
(323.4)
(392.7)
268.0
19.7
(306.9)
62.0
3.9
24.5
(In millions)
Net cash provided by operating activities (1)
Net cash used in investing activities (2)
Net cash (used in) provided by financing activities (3)
Net increase (decrease) in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash, beginning of the period
Cash, cash equivalents and restricted cash, end of the period
33
(1) Changes in Net Cash Provided by Operating Activities: Changes in net cash provided by operating activities for the
years ended December 31, 2021, 2020 and 2019 were as follows:
Change
(In millions)
Net income
Amortization of operating lease right of use assets
Depreciation and amortization
Non-cash deferred income taxes
Other non-cash related changes, net
Income and distributions from SSAT, net
Accounts receivable, net
Prepaid expenses and other assets
Accounts payable, accruals and other liabilities
Operating lease liabilities
Deferred dry-docking payments
Deferred dry-docking amortization
Other long-term liabilities
Total
2021-2020
$
734.3 $
28.5
21.0
(18.9)
(3.1)
(38.5)
(42.3)
(70.0)
(5.2)
(23.8)
(19.5)
(0.8)
(7.4)
2020-2019
110.4
14.1
14.5
28.5
11.7
24.7
(65.8)
(2.6)
58.7
(16.0)
9.1
(9.2)
2.9
181.0
$
554.3 $
Income from SSAT was $56.3 million for the year ended December 31, 2021, compared to $26.3 million in the prior
year. The increase in income from SSAT was primarily due to higher operating profits generated by SSAT during the
year ended December 31, 2021, compared to the prior year. Cash distributions from SSAT were $46.9 million for the
year ended December 31, 2021, compared to $55.4 million in the prior year. Cash distributions from SSAT are
dependent on the level of cash available for distribution after operational and capital needs of SSAT. Changes in
accounts receivable were primarily due to increased levels of revenue and the timing of collections associated with those
receivables. Changes in prepaid expenses and other assets were primarily due to increased prepaid fuel and other
operating related costs, primarily due to increased levels of operations, and prepaid income taxes primarily due to
increased levels of earnings for the year ended December 31, 2021, compared to the prior year. Changes in accounts
payable, accruals and other liabilities were primarily due to the increased level of operating costs and the timing of
payments associated with those liabilities. Changes in operating lease liabilities were primarily due to new operating
lease additions partially offset by operating lease terminations during the year ended December 31, 2021. Deferred dry-
docking payments were $36.3 million for the year ended December 31, 2021, compared to $16.8 million in the prior
year. The increase in deferred dry-docking payments was due to an increase in vessel dry-dock related activities during
the year ended December 31, 2021, compared to the prior year.
(2) Changes in Net Cash Used in Investing Activities: Changes in net cash used in investing activities for the years
ended December 31, 2021, 2020 and 2019 were as follows:
Change
(In millions)
Cash deposits into CCF
Withdrawals from CCF
Other capital expenditures
Capitalized vessel construction expenditures
Proceeds from disposal of property and equipment, net
Total
2021-2020 2020-2019
(36.2)
101.2 $
$
36.2
(13.3)
131.3
11.9
129.9
(101.2)
(205.9)
72.9
(13.4)
$ (146.4) $
Capitalized vessel construction expenditures was $14.9 million for the year ended December 31, 2021, compared to
$87.8 million in the prior year. The decrease in capitalized vessel construction expenditures (including cash deposited
into the CCF less cash withdrawals from the CCF which are used for vessel construction related payments) was due to
the completion of the Company’s fleet renewal program in 2020. Capitalized vessel construction expenditures incurred
in 2021 related to the construction of a new flat-deck barge. Other capital expenditures (excluding capitalized vessel
construction expenditures) was $310.4 million for the year ended December 31, 2021, compared to $104.5 million for
the prior year. During the year ended December 31, 2021, the Company increased its purchases of containers, chassis
and other terminal equipment, as compared to the prior year period, primarily driven by the increased level of operating
activities. The increase in other capital expenditures was also due to the repurchase of Maunalei for $95.8 million,
repurchase of other leased equipment, installation of scrubbers on certain vessels, and the timing of certain capital
project activities during 2021 as compared to 2020. The decrease in proceeds from the disposal of property and
34
equipment was primarily due to the sale and leaseback of chassis and container equipment for net proceeds of
$14.3 million during the year ended December 31, 2020. There were no sale and leaseback transactions during the year
ended December 31, 2021.
(3) Changes in Net Cash (Used in) Provided by Financing Activities: Changes in net cash (used in) provided by
financing activities for the years ended December 31, 2021, 2020 and 2019 were as follows:
Change
(In millions)
Proceeds received from issuance of fixed interest debt
Repayments of fixed interest debt
Repayments and borrowings under revolving credit facility, net
Repurchase of Matson common stock
Payment of financing costs
Tax withholding related to net share settlements of restricted stock units
Dividends paid
Change in other payments, net
Total
2021-2020
$ (325.5) $
157.2
235.5
(198.3)
15.5
(8.8)
(6.7)
(0.1)
2020-2019
325.5
(174.4)
(451.4)
—
(18.5)
(2.5)
(2.0)
(0.2)
(323.5)
$ (131.2) $
During the year ended December 31, 2020, the Company received $325.5 million of proceeds from two new Title XI
debt issuances. No new debt was issued during the year ended December 31, 2021. During the year ended
December 31, 2021, the Company paid $59.3 million of scheduled principal payments, compared to $47.0 million of
scheduled principal payments paid during the prior year. The Company prepaid $169.5 million of private debt at par in
the year ended December 31, 2020. There was no prepayment of debt during 2021. Net repayments of the Company’s
revolving credit facility totaled $71.8 million for the year ended December 31, 2021, compared to $307.3 million in the
prior year. Net repayments of Company’s revolving credit facility were driven by increased cash generated by the
Company’s operating activities. The Company’s revolving credit facility was fully repaid during the year ended
December 31, 2021. The Company paid $3.0 million in financing costs related to amendments of its debt facilities
during the year ended December 31, 2021, compared to $18.5 million in financing costs primarily related to the Title XI
debt issuance in the prior year. The Company paid $198.3 million to repurchase common stock during the year ended
December 31, 2021. No stock was repurchased in the prior year.
Debt: Total debt as of December 31, 2021 and 2020 is as follows:
(In millions)
Revolving credit facility
Fixed interest debt
Total Debt
2021
$
As of December 31,
2020
Change
71.8 $ (71.8)
(59.3)
$ 629.0 $ 760.1 $ (131.1)
— $
629.0
688.3
Total debt decreased by $131.1 million during the year ended December 31, 2021 compared to the prior year, and was
fully repaid as of December 31, 2021. The decrease in the Company’s revolving credit facility was primarily due to
increased cash generated by the Company’s operating activities. The decrease in fixed interest debt was due to
scheduled debt payments made during the year ended December 31, 2021.
As of December 31, 2021, the Company had $642.0 million of unused capacity under the revolving credit facility, which
matures on March 31, 2026. The leverage ratio under the debt agreements as of December 31, 2021 was approximately
0.5 times. The Company’s debt is described in Note 8 to the Consolidated Financial Statements in Item 8 of Part II.
Working Capital: The Company had a working capital surplus of $92.1 million at December 31, 2021, compared to a
working capital deficiency of $205.6 million at December 31, 2020. Working capital is impacted by the use of cash to
reduce the Company’s long-term revolving credit facility, capital expenditures, the amount and timing of collections
associated with accounts receivable and other assets, and by the amount and timing of payments associated with
accounts payable, accruals and other liabilities. The change in the Company’s working capital during the year ended
December 31, 2021 was primarily due to increased cash provided by operating activities.
35
Capital Expenditures: The Company expects to make the following capital expenditures during the years ending
December 31, 2022 and 2023:
Expected Capital Expenditures (in millions)
Maintenance and other capital expenditures
Equipment to support new Ocean Transportation tradelane services
Payments on new neighbor island flat-deck barge
LNG installations on existing vessels
Total Estimated Capital Expenditures
2022
$80 - $90
$55 - $60
~ $10
$15 - $20
2023
~ $75
—
—
$55 - $65
$160 - $180 $130 - $140
Maintenance and other capital expenditures includes amounts the Company expects to spend on the second phase of its
program to modernize and renovate its terminal facility at Sand Island, Honolulu, Hawaii, repurchases of leased
equipment, and annual equipment purchases to support the Company’s operations. LNG installations on existing vessels
includes capital expenditure costs of approximately $35 million to install tanks, pipes and cryogenic equipment on
Daniel K. Inouye, and approximately $60 million to re-engine Manukai to operate on LNG and conventional fuels. The
LNG installation on Daniel K. Inouye is expected to begin in the first quarter of 2023 and last approximately five
months. The twelve-month project to re-engine Manukai is expected to start after Daniel K. Inouye exits the dry-dock.
The Company expects to fund capital expenditure from cash flows generated by operating activities, cash and cash
equivalents and available borrowings under its revolving line of credit. Capital expenditures for other projects may arise
during the year in addition to the amounts presented in the table above.
The Company is also actively considering additional LNG installations on Kaimana Hila, at a cost of approximately
$35 million, and on the two Kanaloa Class vessels (Lurline and Matsonia), at a cost of approximately $40 million each.
The Company is also reviewing options for the replacement of three Jones Act qualifying vessels currently in use in the
Alaska service for delivery later this decade. Costs related to these projects have not been included in the table above.
Repurchase of Shares: During the year ended December 31, 2021, the Company repurchased approximately 2.5 million
shares for a total cost of $200.1 million. The maximum number of shares that may be purchased under the Company’s
stock repurchase program was 515,797 shares at December 31, 2021. From January 1, 2022 through February 16, 2022,
the Company repurchased approximately 0.3 million shares for a total cost of $30.5 million. On January 27, 2022, the
Company’s Board of Directors approved the addition of three million shares to the Company’s existing share repurchase
program.
COMMITMENTS, CONTINGENCIES AND OFF-BALANCE SHEET ARRANGEMENTS
Commitments and Contingencies: A description of other commitments and contingencies is set forth in Note 9, Note 11
and Note 17 to the Consolidated Financial Statements in Item 8 of Part II below, and is incorporated herein by reference.
Off-balance sheet Arrangements: The Company is not party to any off-balance sheet arrangements that have, or are
reasonably likely to have, a current or future material effect on the Company’s financial condition, results of operations
or cash flows.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The Company’s significant accounting policies are described in Note 2 to the Consolidated Financial Statements in
Item 8 of Part II below. The preparation of Consolidated Financial Statements in conformity with accounting principles
generally accepted in the United States of America, upon which the Company’s Management Discussion and Analysis of
Financial Condition and Results of Operations is based, requires that management exercise judgment when making
accounting estimates about future events that may affect the amounts reported in the Consolidated Financial Statements
and accompanying notes. Future events and their effects cannot be determined with certainty and actual results will,
inevitably, differ from those accounting estimates. These differences could be material.
The Company considers an accounting estimate to be critical if (i)(a) the accounting estimate requires the Company to
make assumptions that are difficult or subjective about matters that were highly uncertain at the time that the accounting
estimate was made, (b) changes in the estimate are reasonably likely to occur in periods after the period in which the
estimate was made, or (c) use of different estimates by the Company could have been used; and (ii) changes in those
36
accounting estimates would have had a material impact on the financial condition or results of operations of the
Company. The critical accounting policies and estimates inherent in the preparation of the Company’s Consolidated
Financial Statements are described below. Management has discussed the development and selection of these critical
accounting estimates with the Audit Committee of our Board of Directors.
Long-Lived Assets, Intangible Assets and Goodwill: The Company evaluates its long-lived assets, intangible assets
and goodwill for possible impairment in the fourth quarter, or whenever events or changes in circumstances indicate that
it is more likely than not that the fair value is less than its carrying amount. The Company has reporting units within the
Ocean Transportation and Logistics reportable segments.
Long-lived Assets and Finite-lived Intangible Assets: Long-lived assets and finite-lived intangible assets are grouped at
the lowest level reporting unit for which identifiable cash flows are available. In evaluating for impairment, the
estimated future undiscounted cash flows generated by each of these asset groups are compared with the carrying value
recorded for each asset group to determine if its carrying value is recoverable. If this review determines that the amount
recorded will not be recovered, the amount recorded for the asset group is reduced to its estimated fair value. These
asset impairment analyses are highly subjective because they require management to make assumptions and apply
considerable judgments to, among other things, estimates of the timing and amount of future cash flows, expected useful
lives of the assets, potential impact of future events, including changes in economic conditions and operating
performance, and future costs of maintenance and improvements of the assets. If management uses different
assumptions or if different conditions occur in future periods, the Company’s financial condition or its future operating
results could be materially impacted. The Company has evaluated its long-lived assets and finite-lived intangible assets
for impairment and determined that there was no impairment for the years ended December 31, 2021, 2020 and 2019.
Indefinite-life Intangible Assets and Goodwill: The Company’s intangible assets include goodwill, customer
relationships and a trade name, and are grouped at the lowest level reporting unit for which identifiable cash flows are
available. In estimating the fair value of a reporting unit, the Company uses a combination of a discounted cash flow
model and fair value based on market multiples of earnings before interest, income taxes, depreciation and amortization
(“EBITDA”). The discounted cash flow approach requires the Company to use a number of assumptions, including
market factors specific to the business, the amount and timing of estimated future cash flows generated by the business
over an extended period of time, long-term growth rates for the business, and a discount rate that considers the risks
related to the amount and timing of the cash flows. Although the assumptions used by the Company in its discounted
cash flow model are consistent with the assumptions the Company used to generate its internal strategic plans and
forecasts, significant judgment is required to estimate the amount and timing of future cash flows from the reporting unit
and the risk of achieving those cash flows. When using market multiples of EBITDA, the Company makes judgments
about the comparability of multiples in closed and proposed transactions. Accordingly, changes in assumptions and
estimates, including, but not limited to, changes driven by external factors, such as industry and economic trends, and
those driven by internal factors, such as changes in the Company’s business strategy and its internal forecasts, could
have a material effect on the Company’s financial condition or its future operating results. The Company has evaluated
its indefinite-life intangible assets and goodwill for impairment and determined that there was no impairment for the
years ended December 31, 2021, 2020 and 2019.
Insurance Related Liabilities: The Company is uninsured for certain risks but when feasible, many of these risks are
mitigated by insurance. The Company purchases insurance with deductibles or self-insured retentions. Such insurance
includes, but is not limited to, employee health, workers’ compensation, marine liability, cybersecurity, auto liability and
physical damage to property and equipment. For certain risks, the Company elects to not purchase insurance because of
the excessive cost of such insurance or the perceived remoteness of the risk. In addition, the Company retains all risk of
loss that exceeds the limits of the Company’s insurance policies, or for other risks where insurance is not commercially
available.
When estimating its reserves for retained risks and related liabilities, the Company considers a number of factors,
including historical claims experience, demographic factors, current trends, and analyses provided by independent third-
parties. Periodically, management reviews its assumptions and estimates used to determine the adequacy of the
Company’s reserves for retained risks and other related liabilities. The Company’s retained risks and other related
liabilities contain uncertainties because management is required to apply judgment and make long-term assumptions to
estimate the ultimate cost to settle reported claims, and of claims incurred but not reported, as of the balance sheet date.
Insurance related liabilities were $35.9 million and $32.4 million at December 31, 2021 and 2020, respectively. The
Company’s estimate of insurance related liabilities could change if management uses different assumptions or if
37
different conditions occur in future periods, however the Company does not expect any such change would have a
material impact on the Company’s financial condition and results of operations.
Pension and Post-Retirement Plans: The estimation of the Company’s pension and post-retirement benefit expenses
and liabilities requires the Company to make various assumptions. These assumptions include factors such as discount
rates, expected long-term rate of return on pension plan assets, salary growth, health care cost trend rates, inflation,
retirement rates, mortality rates and expected contributions. Actual results that differ from the assumptions made could
materially affect the Company’s financial condition or its future operating results. The effects of changing assumptions
are included in unamortized net gains and losses, which directly affect accumulated other comprehensive income (loss).
Additionally, these unamortized gains and losses are amortized and reclassified to income (loss) over future periods.
Additional information about the Company’s pension and post-retirement plans and assumptions used is included in
Note 11 to the Consolidated Financial Statements in Item 8 of Part II below.
Income Taxes: The Company’s income tax expense requires the Company to make various estimates and judgments.
These estimates and judgments are applied in the calculation of taxable income, tax credits, tax benefits and deductions,
and in the calculation of certain deferred tax assets and liabilities, which arise from differences in the timing of
recognition of revenue, costs and expenses for tax purposes. The calculation of deferred tax assets and liabilities may be
impacted by various factors including but not limited to changes in tax rates; changes in tax laws, regulations, and
rulings; changes in interpretations of existing tax laws, regulations and rulings; and changes in the evaluation of the
Company’s ability to realize deferred tax assets including operating loss and tax credit carryforwards. Deferred tax
assets and liabilities are adjusted to the extent necessary to reflect tax rates expected to be in effect when the temporary
differences reverse. Significant changes to these estimates may result in an increase or decrease to the Company’s
income taxes in a subsequent period.
The Company records a valuation allowance if, based on the weight of available evidence, management believes that it
is more likely than not that some portion or all of a recorded deferred tax asset would not be realized in future periods.
Additional information about the Company’s income taxes is included in Note 10 to the Consolidated Financial
Statements in Item 8 of Part II below.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Debt and Interest Rate Risks: The Company is exposed to changes in interest rates, primarily as a result of its borrowing
and investing activities used to maintain liquidity and to fund business operations, including borrowings under its
revolving credit facility and private placement term loans. In order to manage its exposure to changes in interest rates,
the Company utilizes a balanced mix of both fixed-rate and variable-rate debt with various maturity dates. The nature
and amount of the Company’s outstanding debt are expected to fluctuate as a result of future business requirements,
market conditions and other factors. The Company’s outstanding fixed rate debt was $629.0 million as of December 31,
2021. The Company did not have any borrowings outstanding on its revolving credit facility as of December 31, 2021.
Other than in certain events of default, the Company is not obligated to prepay its variable and fixed rate debt prior to
maturity. For fixed rate debt, changes in market interest rates would not affect the Company’s financial condition or
results of operations.
Interest on borrowings under the Company’s revolving credit facility is calculated using the London Interbank Offered
Rate (“LIBOR”). Current expectations are that the use of LIBOR will be discontinued as a benchmark interest rate by
mid-2023. The expected discontinuation of LIBOR will require the Company and its lenders to transition from a LIBOR
measurement to an alternative benchmark interest rate. The transition from LIBOR to another benchmark rate or rates
could have an adverse impact on the cost of borrowings by the Company under its revolving credit facility that currently
uses LIBOR as a benchmark rate. The potential effect of any such change in cost of borrowing under the Company’s
revolving credit facility cannot yet be determined, but the Company does not expect it to have a material impact on the
Company’s financial condition and results of operations. The Company does not expect any impact on the cost of
borrowings under its fixed interest debt as a result of an expected transition from a LIBOR measurement.
Additional information about the Company’s debt is included in Note 8 to the Consolidated Financial Statements in
Item 8 of Part II below.
38
Investment Risks: From time to time, the Company may invest its excess cash in short-term money market funds that
purchase government securities or corporate debt securities, or in other deposit products allowed under the Company’s
Cash Investment Policy. These money market funds and deposits maintain a weighted average maturity of less than
90 days, and accordingly, a one percent change in interest rates is not expected to have a material impact on the fair
value of these investments or on interest income. The Company had a nominal amount on deposit in money market
funds as of December 31, 2021 and 2020.
Through the CCF, the Company may, from time to time, invest in money market funds or other eligible investments.
The Company’s cash deposits in the CCF as of December 31, 2021 and 2020 were nominal.
Foreign Currency Risks: The Company has no material exposure to foreign currency risks, although it is indirectly
affected by changes in currency rates to the extent that changes in rates affect tourism in Hawaii, Guam, Alaska and
other locations. Transactions related to the Company’s China service are primarily denominated in U.S. dollars, and
therefore, a one percent change in the Chinese Yuan exchange rate would not have a material effect on the Company’s
results of operations. Transactions related to the Company’s South Pacific service are primarily denominated in New
Zealand dollars. However, a one percent change in the New Zealand dollar exchange rate is not expected to have a
material effect on the Company’s results of operations.
39
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Management’s Annual Report on Internal Control Over Financial Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Income and Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Shareholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Page
41
42
44
45
46
47
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.
Description of the Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.
Significant Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.
Reportable Segments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.
Investment in SSAT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.
Property and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.
Goodwill and Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.
Capital Construction Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.
Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.
Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.
Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11. Pension and Post-Retirement Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12. Multi-Employer Withdrawal Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13. Accumulated Other Comprehensive Income (Loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14. Earnings Per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15. Share-Based Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16. Fair Value of Financial Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17. Commitments and Contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
48
48
48
53
54
55
56
56
57
61
62
64
71
71
72
72
73
74
40
MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The management of Matson, Inc. and subsidiaries (the “Company”) has the responsibility for establishing and
maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in
Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as a process designed by, or under the
supervision of, the company’s principal executive and principal financial officers and effected by the company’s Board
of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with accounting principles
generally accepted in the United States of America and includes those policies and procedures that:
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of assets of the company;
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with accounting principles generally accepted in the United States of America, and that
receipts and expenditures of the company are being made only in accordance with authorizations of management
and directors of the company; and
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting only provides reasonable assurance with
respect to financial statement presentation and preparation. Projections of any evaluation of effectiveness to future
periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31,
2021. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on its assessment,
management believes that, as of December 31, 2021, the Company’s internal control over financial reporting is effective.
The Company’s independent registered public accounting firm, Deloitte & Touche LLP, has issued an attestation report
on the Company’s internal control over financial reporting.
/s/ Matthew J. Cox
Matthew J. Cox
Chairman and Chief Executive Officer
February 25, 2022
/s/ Joel M. Wine
Joel M. Wine
Executive Vice President and Chief Financial Officer
February 25, 2022
41
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and the shareholders of Matson, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Matson, Inc. and subsidiaries (the “Company”) as of
December 31, 2021 and 2020, the related consolidated statements of income and comprehensive income, shareholders' equity,
and cash flows, for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred
to as the “financial statements”). We also have audited the Company’s internal control over financial reporting as of
December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the
Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in
the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of
America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by
COSO.
Basis for Opinions
The Company’s management is responsible for these financial statements, for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the
accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an
opinion on these financial statements and an opinion on the Company’s internal control over financial reporting based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)
(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due
to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the
financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits
also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included
performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a
reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
42
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and
we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
Goodwill – Span Alaska Reporting Unit — Refer to Notes 2 and 6 to the financial statements
Critical Audit Matter Description
The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its
carrying value. In estimating the fair value of a reporting unit, the Company uses a combination of a discounted cash flow
model and fair value based on market multiples of earnings before interest, taxes, depreciation and amortization (“EBITDA”).
The discounted cash flow approach requires the Company to make several business assumptions related to discount rates and
forecasts of future revenues. Changes in assumptions and estimates, including, but not limited to, changes driven by external
factors, such as industry and economic trends, and those driven by internal factors, such as changes in the Company’s business
strategy and its internal forecasts, could have a material effect on either the fair value, the amount of any goodwill impairment
charge, or both. The goodwill balance was $327.8 million as of December 31, 2021, of which $78.6 million is allocated to a
reporting unit in the Logistics reportable segment, resulting from the acquisition of Span Intermediate, LLC (“Span Alaska”) in
fiscal year 2016. The Company has evaluated its goodwill for impairment as part of its annual assessment in fiscal year 2021
and determined that the fair value of the Span Alaska reporting unit exceeded the carrying amount as of the date of the
impairment review.
We identified goodwill related to Span Alaska as a critical audit matter because of the significant estimates and assumptions
management made to estimate the fair value of Span Alaska. Specifically, due to the sensitivity of Span Alaska’s operations to
changes in the Alaskan economy, performing audit procedures to evaluate the reasonableness of management’s estimates and
assumptions related to forecasts of future revenues and selection of the discount rate, required a high degree of auditor
judgment and an increased extent of effort, including the need to involve our fair value specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the forecasts of future revenue, specifically as they relate to Span Alaska, and the selection of
the discount rate for Span Alaska included the following, among others:
We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the
forecasts of future revenue and the selection of the discount rate.
We evaluated management’s ability to accurately forecast future revenue by comparing actual results to management’s
historical forecasts.
We evaluated the reasonableness of management’s revenue forecast by comparing the forecasts to (1) historical revenues
and operating margins, (2) internal communications to management and the Board of Directors, (3) external
communications made by management to analysts and investors, (4) trends in the logistics industry and (5) trends in the
Alaskan economy.
With the assistance of our fair value specialists, we evaluated the reasonableness of the discount rate, including testing the
source information underlying the determination of the discount rate, testing the mathematical accuracy of the calculation,
and developing a range of independent estimates and comparing those to the discount rate selected by management.
/s/ Deloitte & Touche LLP
San Francisco, California
February 25, 2022
We have served as the Company’s auditor since at least 1976; however, an earlier year could not be reliably determined.
43
MATSON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In millions, except per share amounts)
Operating Revenue:
Ocean Transportation
Logistics
Total Operating Revenue
Costs and Expenses:
Operating costs
Income from SSAT
Selling, general and administrative
Total Costs and Expenses
Operating Income
Interest expense
Other income (expense), net
Income before Income Taxes
Income taxes
Net Income
Other Comprehensive Income (Loss), Net of Income Taxes:
Net Income
Other Comprehensive Income (Loss):
Amortization of prior service cost
Amortization of net loss (gain)
Other adjustments
Total Other Comprehensive Income (Loss)
Comprehensive Income
Basic Earnings Per Share
Diluted Earnings Per Share
Weighted Average Number of Shares Outstanding:
Basic
Diluted
Years Ended December 31,
2020
2021
2019
$ 3,132.8 $ 1,853.9 $ 1,666.6
536.5
2,203.1
792.5
3,925.3
529.4
2,383.3
(2,557.6)
56.3
(236.5)
(2,737.8)
(1,904.3)
26.3
(225.0)
(2,103.0)
(1,878.0)
20.8
(216.8)
(2,074.0)
1,187.5
(22.6)
6.4
1,171.3
(243.9)
927.4 $
$
280.3
(27.4)
6.1
259.0
(65.9)
193.1 $
129.1
(22.5)
1.2
107.8
(25.1)
82.7
$
927.4 $
193.1 $
82.7
(4.6)
25.0
(0.5)
19.9
947.3 $
(4.7)
(9.4)
0.2
(13.9)
179.2 $
(4.5)
2.7
(0.6)
(2.4)
80.3
$
$
$
21.67 $
21.47 $
4.48 $
4.44 $
1.93
1.91
42.8
43.2
43.1
43.5
42.8
43.3
See Notes to Consolidated Financial Statements.
44
MATSON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions)
ASSETS
Current Assets:
Cash and cash equivalents
Accounts receivable, net of allowance for credit loss of $10.1 million and
$6.3 million, respectively
Prepaid expenses and other assets
Total current assets
Long-term Assets:
Investment in SSAT
Property and equipment, net
Operating lease right of use assets
Goodwill
Intangible assets, net
Deferred dry-docking costs, net
Other long-term assets
Total long-term assets
Total Assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Current portion of debt
Accounts payable and accruals
Operating lease liabilities
Other liabilities
Total current liabilities
Long-term Liabilities:
Long-term debt, net of deferred loan fees
Long-term operating lease liabilities
Deferred income taxes
Other long-term liabilities
Total long-term liabilities
Commitments and Contingencies (see Note 17)
Shareholders’ Equity:
As of December 31,
2021
2020
$
282.4
$
14.4
343.7
78.4
704.5
58.7
1,878.3
434.6
327.8
181.1
68.7
39.4
2,988.6
3,693.1
65.0
308.4
137.6
101.4
612.4
549.7
307.4
425.2
131.0
1,413.3
$
$
253.4
38.1
305.9
48.7
1,689.9
251.4
327.8
192.0
51.9
33.0
2,594.7
2,900.6
59.2
283.1
72.4
96.8
511.5
685.6
186.9
389.6
165.8
1,427.9
$
$
Common stock - common stock without par value; authorized, 150 million shares
($0.75 stated value per share); outstanding, 41.0 million shares in 2021 and
43.2 million shares in 2020
Additional paid in capital
Accumulated other comprehensive loss, net
Retained earnings
Total shareholders’ equity
Total Liabilities and Shareholders’ Equity
$
30.7
314.1
(30.9)
1,353.5
1,667.4
3,693.1
$
32.4
321.5
(50.8)
658.1
961.2
2,900.6
See Notes to Consolidated Financial Statements.
45
MATSON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Cash Flows From Operating Activities:
Net income
Reconciling adjustments:
Depreciation and amortization
Amortization of operating lease right of use assets
Deferred income taxes
(Gain) Loss on disposal of property and equipment
Share-based compensation expense
Income from SSAT
Distributions from SSAT
Changes in assets and liabilities:
Accounts receivable, net
Deferred dry-docking payments
Deferred dry-docking amortization
Prepaid expenses and other assets
Accounts payable, accruals and other liabilities
Operating lease liabilities
Other long-term liabilities
Net cash provided by operating activities
Cash Flows From Investing Activities:
Capitalized vessel construction expenditures
Other capital expenditures
Proceeds from disposal of property and equipment
Cash deposits into Capital Construction Fund
Withdrawals from Capital Construction Fund
Net cash used in investing activities
Cash Flows From Financing Activities:
Proceeds from issuance of debt
Repayments of debt
Proceeds from revolving credit facility
Repayments of revolving credit facility
Payment of financing costs
Proceeds from issuance of common stock
Dividends paid
Repurchase of Matson common stock
Tax withholding related to net share settlements of restricted stock units
Net cash (used in) provided by financing activities
Years Ended December 31,
2020
2021
2019
$
927.4 $
193.1 $
82.7
135.9
103.3
33.2
(0.8)
19.3
(56.3)
46.9
(90.3)
(36.3)
24.3
(48.1)
39.6
(99.7)
(14.3)
984.1
(14.9)
(310.4)
1.9
(31.2)
31.2
(323.4)
—
(59.3)
304.3
(376.1)
(3.0)
—
(45.9)
(198.3)
(14.4)
(392.7)
114.9
74.8
52.1
2.8
18.8
(26.3)
55.4
(48.0)
(16.8)
25.1
21.9
44.8
(75.9)
(6.9)
429.8
(87.8)
(104.5)
15.3
(132.4)
132.4
(177.0)
325.5
(216.5)
648.0
(955.3)
(18.5)
0.1
(39.2)
—
(5.6)
(261.5)
100.4
60.7
23.6
(1.4)
11.3
(20.8)
25.2
17.8
(25.9)
34.3
24.5
(13.9)
(59.9)
(9.8)
248.8
(219.1)
(91.2)
3.4
(96.2)
96.2
(306.9)
—
(42.1)
622.1
(478.0)
—
0.3
(37.2)
—
(3.1)
62.0
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash
Cash, Cash Equivalents and Restricted Cash, Beginning of the Year
Cash, Cash Equivalents and Restricted Cash, End of the Year
268.0
19.7
287.7 $
(8.7)
28.4
19.7 $
3.9
24.5
28.4
$
Reconciliation of Cash, Cash Equivalents, and Restricted Cash, at End of the Year:
Cash and Cash Equivalents
Restricted Cash
Total Cash, Cash Equivalents and Restricted Cash, End of the Year
$
$
282.4 $
5.3
287.7 $
14.4 $
5.3
19.7 $
21.2
7.2
28.4
Supplemental Cash Flow Information:
Interest paid, net of capitalized interest
Income tax paid, net of income tax refunds
Non-cash Information:
$
$
19.3 $
241.6 $
26.2 $
(16.1) $
22.0
(24.2)
Capital expenditures included in accounts payable, accruals and other liabilities
$
6.4 $
24.7 $
8.5
See Notes to Consolidated Financial Statements.
46
MATSON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
For the three years ended December 31, 2021
Common Stock Additional
Accumulated
Other
Stated
Paid In
Comprehensive Retained
(In millions, except per share amounts)
Balance at December 31, 2018
Net income
Adoption of new lease accounting standard
Other comprehensive income (loss), net of tax
Share-based compensation
Shares issued, net of shares withheld for employee taxes
Dividends ($0.86 per share)
SSAT’s adoption of new lease accounting standard
Balance at December 31, 2019
Net income
Other comprehensive income (loss), net of tax
Share-based compensation
Shares issued, net of shares withheld for employee taxes
Equity interest in SSAT
Dividends ($0.90 per share)
Balance at December 31, 2020
Net income
Other comprehensive income (loss), net of tax
Share-based compensation
Shares issued, net of shares withheld for employee taxes
Share repurchase
Dividends ($1.06 per share)
Balance at December 31, 2021
Total
—
Shares Value Capital Income (Loss) Earnings
42.7 $ 32.0 $ 297.8 $
— — —
— — —
— — —
11.3
— —
(2.9)
0.2 0.2
— — —
—
—
42.9 32.2
306.2
— — —
— — —
18.8
— —
(3.5)
0.2
— —
—
— — —
43.2 32.4
321.5
— — —
— — —
19.3
— —
0.2 (14.7)
(2.5) (1.9)
(12.0)
— — —
41.0 $ 30.7 $ 314.1 $
(34.5) $ 460.0 $ 755.3
82.7
82.7
4.4
4.4
(2.4)
—
11.3
—
(2.7)
—
(37.3)
(37.3)
(5.6)
(5.6)
805.7
504.2
193.1
193.1
(13.9)
—
18.8
—
(5.5)
(2.2)
2.2
2.2
(39.2)
(39.2)
961.2
658.1
927.4
927.4
19.9
—
19.3
—
(14.4)
0.1
(200.1)
(186.2)
(45.9)
(45.9)
(30.9) $ 1,353.5 $ 1,667.4
—
—
(2.4)
—
—
—
—
(36.9)
—
(13.9)
—
—
—
—
(50.8)
—
19.9
—
—
—
—
0.3
0.3
See Notes to Consolidated Financial Statements.
47
MATSON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.
DESCRIPTION OF THE BUSINESS
Matson, Inc., a holding company incorporated in the State of Hawaii, and its subsidiaries (“Matson” or the “Company”),
is a leading provider of ocean transportation and logistics services. The Company consists of two segments, Ocean
Transportation and Logistics. For financial information on the Company’s reportable segments for the three years ended
December 31, 2021, see Note 3.
Ocean Transportation: Matson’s Ocean Transportation business is conducted through Matson Navigation
Company, Inc. (“MatNav”), a wholly-owned subsidiary of Matson, Inc. Founded in 1882, MatNav provides a vital
lifeline of ocean freight transportation services to the domestic non-contiguous economies of Hawaii, Alaska and Guam,
and to other island economies in Micronesia. MatNav also operates premium, expedited services primarily from China
to Long Beach, California, and provides services to Okinawa, Japan and various islands in the South Pacific, and
operates an international export service from Dutch Harbor, Alaska to Asia. In addition, subsidiaries of MatNav provide
stevedoring, refrigerated cargo services, inland transportation and other terminal services for MatNav and other ocean
carriers on the Hawaiian islands of Oahu, Hawaii, Maui and Kauai, and in the Alaska locations of Anchorage, Kodiak
and Dutch Harbor.
Matson has a 35 percent ownership interest in SSA Terminals, LLC, a joint venture between Matson Ventures, Inc., a
wholly-owned subsidiary of MatNav, and SSA Ventures, Inc., a subsidiary of Carrix, Inc. (“SSAT”). SSAT currently
provides terminal and stevedoring services to various carriers at eight terminal facilities on the U.S. West Coast,
including three facilities dedicated for MatNav’s use. Matson records its share of income from SSAT in costs and
expenses in the Consolidated Statements of Income and Comprehensive Income, and within the Ocean Transportation
segment due to the nature of SSAT’s operations.
Logistics: Matson’s Logistics business is conducted through Matson Logistics, Inc. (“Matson Logistics”), a wholly-
owned subsidiary of MatNav. Established in 1987, Matson Logistics extends the geographic reach of Matson’s
transportation network throughout North America and Asia, and is an asset-light business that provides a variety of
logistics services to its customers including: (i) multimodal transportation brokerage of domestic and international rail
intermodal services, long-haul and regional highway trucking services, specialized hauling, flat-bed and project services,
less-than-truckload services, and expedited freight services (collectively, “Transportation Brokerage” services);
(ii) less - than-container load (“LCL”) consolidation and freight forwarding services (collectively, “Freight Forwarding”
services); (iii) warehousing, trans-loading, value-added packaging and distribution services (collectively, “Warehousing”
services); and (iv) supply chain management, non-vessel operating common carrier (“NVOCC”) freight forwarding and
other services.
2.
SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation: The Consolidated Financial Statements 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 (see Note 4).
Fiscal Year: The year end for Matson is December 31. The period end for MatNav occurred on the last Friday in
December, except for certain Company subsidiaries whose period closed on December 31. Included in these
Consolidated Financial Statements are 53 weeks in the 2021 and 52 weeks in the 2020 and 2019 fiscal years for MatNav.
Foreign Currency Transactions: The United States (U.S.) dollar is the functional currency for substantially all of the
financial statements of the Company’s foreign subsidiaries. Foreign currency denominated assets and liabilities of the
Company’s foreign subsidiaries are translated into U.S. dollars at exchange rates existing at the respective balance sheet
dates. Translation adjustments resulting from fluctuations in exchange rates are recorded as a component of
accumulated other comprehensive loss (gain) within shareholders’ equity. The Company translates the result of
operations of its foreign subsidiaries at the average exchange rate during the respective periods. Gains and losses
48
resulting from foreign currency transactions are included in Costs and Expenses in the Consolidated Statements of
Income and Comprehensive Income.
Use of Estimates: The preparation of the 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 and note receivables; 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.
Cash, Cash Equivalents and Restricted Cash: Cash equivalents consist of highly-liquid investments with original
maturities of three months or less. The Company carries these investments at cost, which approximates fair value.
There were no outstanding checks in excess of funds on deposit as of December 31, 2021. Outstanding checks in excess
of funds on deposit totaled $19.9 million as of December 31, 2020, and are included in current liabilities in the
Consolidated Balance Sheets. Restricted cash relates to amounts that are subject to contractual restrictions and are not
readily available. Restricted cash was $5.3 million at December 31, 2021 and 2020, and is included in prepaid expenses
and other assets in the Consolidated Balance Sheets.
Accounts Receivable, net: Accounts receivable represent amounts due from trade customers arising in the normal course
of business. Accounts receivable are shown net of allowance for doubtful accounts receivable in the Consolidated
Balance Sheets. Allowance for doubtful accounts receivable is established by management based on estimates of
collectability. Estimates of collectability are principally based on an evaluation of the current financial condition of the
customer and the potential risks to collection, the customer’s payment history, expected future credit losses and other
factors which are regularly monitored by the Company.
Changes in the allowance for doubtful accounts receivable for the three years ended December 31, 2021, 2020 and 2019
were as follows:
Year (in millions)
2021
2020
2019
Balance at
Beginning of Year Expense (1)
$
$
$
6.3 $
4.3 $
4.8 $
4.2 $
2.9 $
0.6 $
Write-offs
and Other
Balance at
End of Year
10.1
6.3
4.3
(0.4) $
(0.9) $
(1.1) $
(1) Expense is shown net of amounts recovered from previously reserved doubtful accounts.
Prepaid Expenses and Other Assets: Prepaid expenses and other assets consist of the following at December 31, 2021
and 2020:
Prepaid Expenses and Other Assets (in millions)
Income tax receivables
Prepaid fuel
Prepaid insurance and insurance related receivables
Restricted cash - vessel construction obligations
Other
Total
As of December 31,
2020
2021
$
$
23.1 $
22.6
10.1
5.3
17.3
78.4 $
0.3
10.8
7.5
5.3
14.2
38.1
Deferred Loan Fees: The Company records deferred loan fees, excluding those related to the revolving credit facility, as
a reduction to Total Debt in the Company’s Consolidated Balance Sheets in accordance with Accounting Standards
Update (“ASU”) 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt
Issuance Costs (“ASU 2015-03”). These costs are being amortized over the life of the related debt using the effective
interest method (see Note 8).
Deferred loan fees related to the Company’s revolving credit facility are recorded in other long-term assets in the
Company’s Consolidated Balance Sheets, and are amortized using the straight-line method as the difference between
that and the use of the effective interest method is not material.
49
Other Long-Term Assets: Other long-term assets consist of the following at December 31, 2021 and 2020:
Other Long-Term Assets (in millions)
Vessel and equipment spare parts
Insurance related receivables
Other
Total
As of December 31,
2020
2021
$
$
12.8 $
10.4
16.2
39.4 $
11.5
10.5
11.0
33.0
Property and Equipment: Property and equipment is stated at cost. Property and equipment is depreciated using the
straight-line method over the estimated useful lives of the assets. The estimated useful lives of property and equipment
range up to the following maximum life:
Classification
Vessels
Machinery and equipment
Terminal facilities
Life
40 years
30 years
35 years
Capitalized Interest: The Company capitalizes interest costs during the period the qualified assets are being readied for
their intended use. The Company determined that the vessel construction costs are considered qualifying assets for the
purposes of capitalizing interest on these assets. The amount of capitalized interest is calculated based on the amount of
payments incurred related to the construction of these vessels using a weighted average interest rate. The weighted
average interest rate is determined using the Company’s average borrowings outstanding during the period. Capitalized
interest is included in vessel construction in progress in property and equipment in the Company’s Consolidated Balance
Sheets (see Note 5). During the years ended December 31, 2021, 2020 and 2019, the Company capitalized $0.2 million,
$7.4 million and $15.6 million of interest related to the construction of new vessels, respectively.
Leases: The Company adopted Accounting Standards Codification (“ASC”) 842, Leases (“ASC 842”) on January 1,
2019. ASC 842 requires lessees to record leases on their balance sheets but recognize the expenses in their income
statements in a manner similar to pre-adoption practice. ASC 842 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. Refer to Note 9 for additional information on the Company’s lease related disclosures.
Deferred Dry-docking Costs: U.S. flagged vessels must meet specified seaworthiness standards established by U.S.
Coast Guard rules and classification society rules. These standards require U.S. flagged vessels to undergo two dry-
docking inspections within a five-year period, with a maximum of 36 months between them. However, U.S. flagged
vessels that are enrolled in the U.S. Coast Guard’s Underwater Survey in Lieu of Dry-docking (“UWILD”) program are
allowed to have their Intermediate Survey dry-docking requirement met with a less costly underwater inspection. Non-
U.S. flagged vessels are required to meet applicable classification society rules and their own local standards for
seaworthiness, which also mandate vessels to undergo two dry-docking inspections every five years.
The Company is responsible for maintaining its vessels in compliance with U.S. and international standards. As costs
associated with dry-docking inspections provide future economic benefits to the Company through continued operation
of the vessels, the costs are deferred and amortized until the scheduled date of the next required dry-docking, which is
usually over a two to five-year period. Amortization of deferred dry-docking costs are charged to operating expenses of
the Ocean Transportation segment in the Consolidated Statements of Income and Comprehensive Income. Routine
vessel maintenance and repairs are charged to expense as incurred.
Goodwill and Intangible Assets: Goodwill and intangible assets arise as a result of acquisitions made by the Company
(see Note 6). Intangible assets consist of customer relationships which are being amortized using the straight-line
method over the expected useful lives ranging up to 21 years, and a trade name that has an indefinite life.
Impairment Evaluation of Long-Lived Assets, Intangible Assets and Goodwill: The Company evaluates its long-lived
assets, intangible assets and goodwill for possible impairment in the fourth quarter, or whenever events or changes in
circumstances indicate that it is more likely than not that the fair value is less than its carrying amount. The Company
has reporting units within the Ocean Transportation and Logistics reportable segments.
Long-lived assets and finite-lived intangible assets are grouped at the lowest level reporting unit for which identifiable
cash flows are available. In evaluating for impairment, the estimated future undiscounted cash flows generated by each
50
of these asset groups are compared with the carrying value recorded for each asset group to determine if its carrying
value is recoverable. If this review determines that the amount recorded will not be recovered, the amount recorded for
the asset group is reduced to its estimated fair value. No impairment charges of long-lived assets and finite-lived
intangible assets were recorded for the years ended December 31, 2021, 2020 and 2019.
Indefinite-life intangible assets and goodwill are grouped at the lowest level reporting unit for which identifiable cash
flows are available. In estimating the fair value of a reporting unit, the Company uses a combination of a discounted
cash flow model and fair value based on market multiples of earnings before interest, taxes, depreciation and
amortization. Based upon the Company’s evaluation of its indefinite-life intangible assets and goodwill for impairment,
the Company determined that the fair value of each reporting unit exceeds book value. No impairment charges of
indefinite-life intangible assets and goodwill were recorded for the years ended December 31, 2021, 2020 and 2019.
Impairment Evaluation of SSAT: The Company’s investment in SSAT, a related party, is evaluated for impairment
whenever there is evidence of impairment during the reporting period. If any impairment is identified, the Company
evaluates if the decrease in the fair value of the investment below its carrying value is other-than-temporary. No
impairment was identified during the years ended December 31, 2021, 2020 and 2019.
Other Liabilities: Other liabilities consist of the following at December 31, 2021 and 2020:
Other Liabilities (in millions)
Payroll and vacation
Employee incentives and other benefits
Insurance reserves and other related liabilities - short term
Multi-employer withdrawal liabilities - short term (see Note 12)
Income tax and other tax related liabilities
Other short-term liabilities
Total
As of December 31,
2020
2021
$
35.8 $
32.2
9.0
4.1
3.1
17.2
$
101.4 $
29.2
25.9
7.0
10.6
11.7
12.4
96.8
Other Long-Term Liabilities: Other long-term liabilities consist of the following at December 31, 2021 and 2020:
Other Long-Term Liabilities (in millions)
Multi-employer withdrawal liability (see Note 12)
Pension and post-retirement liabilities (see Note 11)
Insurance reserves and other related liabilities
Other long-term liabilities
Total
As of December 31,
2020
2021
$
50.8 $
43.3
26.9
10.0
52.8
82.0
25.4
5.6
$ 131.0 $ 165.8
Pension and Post-Retirement Plans: The Company is a member of the Pacific Maritime Association (“PMA”) and the
Hawaii Stevedoring Industry Committee, which negotiate multi-employer pension plans covering certain shoreside
bargaining unit personnel. The Company directly negotiates multi-employer pension plans covering other bargaining
unit personnel. Pension costs are accrued in accordance with contribution rates established by the PMA, the parties to a
plan or the trustees of a plan. Several trusteed, non-contributory, single-employer defined benefit plans and defined
contribution plans cover substantially all other employees.
The estimation of the Company’s pension and post-retirement benefit expenses and liabilities requires that the Company
make various assumptions. These assumptions include factors such as discount rates, expected long-term rates of return
on pension plan assets, salary growth, health care cost trend rates, inflation, retirement rates, mortality rates, and
expected contributions. Actual results that differ from the assumptions made could materially affect the Company’s
financial condition or its future operating results. Additional information about the Company’s pension and post-
retirement plans is included in Note 11.
Insurance Related Liabilities: The Company is uninsured for certain risks but when feasible, many of these risks are
mitigated by insurance. The Company purchases insurance with deductibles or self-insured retentions. Such insurance
includes, but is not limited to, employee health, workers’ compensation, marine liability, cybersecurity, auto liability and
physical damage to property and equipment. For certain risks, the Company elects to not purchase insurance because of
the excessive cost of insurance or the perceived remoteness of the risk. In addition, the Company retains all risk of loss
51
that exceeds the limits of the Company’s insurance policies, or for other risks where insurance is not commercially
available.
When estimating its reserves for retained risks and related liabilities, the Company considers a number of factors,
including historical claims experience, demographic factors, current trends, and analyses provided by independent third-
parties. Periodically, management reviews its assumptions and estimates used to determine the adequacy of the
Company’s reserves for retained risks and other related liabilities.
Recognition of Revenues and Expenses: Revenue in the Company’s 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:
Ocean Transportation (in millions) (1)
Ocean Transportation services
Terminal and other related services
Fuel sales
Vessel management and related services
Total
Years Ended December 31,
2020
2021
2019
$ 3,101.9 $ 1,821.7 $ 1,625.8
24.8
10.1
5.9
$ 3,132.8 $ 1,853.9 $ 1,666.6
16.0
7.2
7.7
19.1
7.3
5.8
(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.
Logistics (in millions) (1)
Transportation Brokerage and Freight Forwarding services
Warehousing and distribution services
Supply chain management and other services
Total
$
$
Years Ended December 31,
2020
477.0 $
36.2
16.2
529.4 $
2021
707.4 $
44.7
40.4
792.5 $
2019
489.0
34.1
13.4
536.5
(1) Logistics revenue transactions are primarily denominated in U.S. dollars except for approximately 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.
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.
52
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 administration expenses in the Consolidated
Statements of Income and Comprehensive Income.
Customer Concentration: The Ocean Transportation segment serves customers in numerous industries and carries a
wide variety of cargo, mitigating its dependence upon any single customer or single type of cargo. In 2021, the
Company’s 10 largest Ocean Transportation customers accounted for approximately 15 percent of the Company’s Ocean
Transportation operating revenue.
The Logistics segment serves customers in numerous industries and geographical locations. In 2021, the Company’s
10 largest Logistics customers accounted for approximately 25 percent of the Company’s Logistics operating revenue.
Dividends: The Company recognizes dividends as a liability when approved by the Board of Directors.
Share-Based Compensation: The Company records compensation expense for all share-based awards made to
employees and directors. The Company’s various stock-based compensation plans are more fully described in Note 15.
Income Taxes: The estimate of the Company’s income tax expense requires the Company to make various estimates and
judgments. These estimates and judgments are applied in the calculation of taxable income, tax credits, tax benefits and
deductions, and in the calculation of certain deferred tax assets and liabilities, which arise from differences in the timing
of recognition of revenue, costs and expenses for tax purposes. Deferred tax assets and liabilities are adjusted to the
extent necessary to reflect tax rates expected to be in effect when the temporary differences reverse.
The Company records a valuation allowance if, based on the weight of available evidence, management believes that it
is more likely than not that some portion or all of a recorded deferred tax asset would not be realized in future periods.
The Company’s income taxes are more fully described in Note 10.
Rounding: Amounts in the Consolidated Financial Statements and Notes to the Consolidated Financial Statements are
rounded to millions, except for per share calculations and percentages which were determined based on amounts before
rounding. Accordingly, a recalculation of some per-share amounts and percentages, if based on the reported data, may
be slightly different.
3.
REPORTABLE SEGMENTS
Reportable segments are components of an enterprise that engage in business activities from which it may earn revenues
and incur expenses, whose operating results are regularly reviewed by the chief operating decision maker to make
decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial
information is available. The Company’s chief operating decision maker is its Chief Executive Officer.
The Company consists of two reportable segments, Ocean Transportation and Logistics, which are further described in
Note 1. Reportable segments are measured based on operating income. In arrangements where the customer purchases
ocean transportation and logistics services, the revenues are allocated to each reportable segment based upon the
contractual amounts for each type of service. The Company’s SSAT segment has been aggregated into the Company’s
Ocean Transportation segment due to the operations of SSAT being an integral part of the Company’s Ocean
Transportation business (see Note 4).
The Company’s Ocean Transportation segment provides ocean transportation services to the Logistics segment, and the
Logistics segment provides logistics services to the Ocean Transportation segment in certain transactions. Accordingly,
inter-segment revenue of $213.8 million, $115.5 million and $102.3 million for the years ended December 31, 2021,
2020 and 2019, respectively, have been eliminated from operating revenues in the table below.
53
Reportable segment financial information for the years ended December 31, 2021, 2020 and 2019, and identifiable asset
segment information at December 31, 2021 and 2020, are as follows:
(In millions)
Operating Revenue:
Ocean Transportation (1)
Logistics (2)
Total Operating Revenue
Operating Income:
Ocean Transportation (3)
Logistics
Total Operating Income
Interest expense, net
Other income (expense), net
Income before Income Taxes
Income taxes
Net Income
Capital Expenditures:
Ocean Transportation
Logistics
Total Capital Expenditures
Depreciation and Amortization:
Ocean Transportation
Logistics
Deferred dry-docking amortization - Ocean Transportation
Total Depreciation and Amortization
Years Ended December 31,
2020
2019
2021
$ 3,132.8 $ 1,853.9 $ 1,666.6
536.5
$ 3,925.3 $ 2,383.3 $ 2,203.1
792.5
529.4
$ 1,137.7 $
49.8
1,187.5
(22.6)
6.4
1,171.3
(243.9)
927.4 $
$
244.8 $
35.5
280.3
(27.4)
6.1
259.0
(65.9)
193.1 $
90.8
38.3
129.1
(22.5)
1.2
107.8
(25.1)
82.7
$
$
322.4 $
2.9
325.3 $
190.0 $
2.3
192.3 $
294.5
15.8
310.3
$
128.6 $
7.3
135.9
24.3
107.4 $
7.5
114.9
25.1
$
160.2 $
140.0 $
93.6
6.8
100.4
34.3
134.7
(1) Ocean Transportation operating revenue excludes inter-segment revenue of $81.0 million, $59.1 million and $52.8 million for the years ended
December 31, 2021, 2020 and 2019, respectively.
(2) Logistics operating revenue excludes inter-segment revenue of $132.8 million, $56.4 million and $49.5 million for the years ended December 31,
2021, 2020 and 2019, respectively.
(3) Ocean Transportation segment information includes $56.3 million, $26.3 million, and $20.8 million of equity in income from the Company’s
equity investment in SSAT for the years ended December 31, 2021, 2020 and 2019, respectively.
(In millions)
Identifiable Assets:
Ocean Transportation (1)
Logistics
Total Assets
As of December 31,
2021
2020
$ 3,096.6 $ 2,431.1
469.5
$ 3,693.1 $ 2,900.6
596.5
(1) The Ocean Transportation segment includes $58.7 million and $48.7 million related to the Company’s equity investment in SSAT as of
December 31, 2021 and 2020, respectively.
4.
INVESTMENT IN SSAT
The Company accounts for its 35 percent ownership interest in SSAT using the equity method of accounting. The
Company records its share of income from SSAT in costs and expenses within the Ocean Transportation segment due to
operations of SSAT being an integral part of the Company’s Ocean Transportation business. The Company’s investment
in SSAT was $58.7 million and $48.7 million at December 31, 2021 and 2020, respectively. During the year ended
December 31, 2020, the Company recorded an increase of $2.2 million in its investment in SSAT and a corresponding
increase in retained earnings related to the formation of a new subsidiary of SSAT, whose controlling interest is retained
by SSAT.
54
The Company’s share of income recorded in the Consolidated Statements of Income and Comprehensive Income and
dividends received by the Company during the years ended December 31, 2021, 2020 and 2019 are as follows:
(In millions)
Company's share of net income
Distributions received
Years Ended December 31,
2020
2021
2019
$ 56.3 $ 26.3 $ 20.8
$ 46.9 $ 55.4 $ 25.2
The Company’s Ocean Transportation segment operating costs include $284.9 million, $251.6 million and
$218.7 million for the years ended December 31, 2021, 2020 and 2019, respectively, for terminal services provided by
SSAT. Accounts payable and accrued liabilities in the Consolidated Balance Sheets include $38.8 million and
$29.8 million for terminal services payable to SSAT at December 31, 2021 and 2020, respectively.
A summary of the condensed balance sheets of SSAT at December 31, 2021 and 2020 is as follows:
Condensed Balance Sheets (in millions)
Current assets
Non-current assets
Total Assets
Current liabilities
Non-current liabilities
Equity
Total Liabilities and Equity
$
As of December 31,
2020
2021
294.3
343.4 $
1,249.5
$ 1,583.1 $ 1,543.8
1,239.7
$
302.7 $
238.2
1,179.9
125.7
$ 1,583.1 $ 1,543.8
1,125.5
154.9
A summary of the condensed statements of operating income and net income of SSAT for years ended December 31,
2021, 2020 and 2019 are as follows:
Condensed Statements of Operating Income and Net Income (in millions)
Operating revenue
Operating costs and expenses
Operating income
Net Income (1)
Years Ended December 31,
2020
2019
2021
$ 1,297.5 $ 1,091.6 $ 1,098.3
1,035.3
63.0
57.2
1,003.2
88.4
76.6 $
1,113.8
183.7
161.7 $
$
(1)
Includes earnings from equity method investments held by SSAT less earnings allocated to non-controlling interests.
5.
PROPERTY AND EQUIPMENT
Property and equipment at December 31, 2021 and 2020, and depreciation expense for the years ended December 31,
2021, 2020 and 2019 is as follows:
As of December 31, 2021
As of December 31, 2020
Accumulated
Depreciation Net Book Value
(In millions)
Vessels
Containers and equipment
Terminal facilities and other property
Vessel construction in progress
Other construction in progress
Cost
$ 2,243.8 $
680.9
128.3
14.9
19.5
760.5 $
399.4
49.2
—
—
Total
$ 3,087.4 $ 1,209.1 $
Cost
1,483.3 $ 2,191.6 $
Accumulated
Depreciation Net Book Value
1,406.1
180.5
74.7
—
28.6
1,689.9
785.5 $
391.8
45.1
—
—
281.5
79.1
14.9
19.5
572.3
119.8
—
28.6
1,878.3 $ 2,912.3 $ 1,222.4 $
(In millions)
Depreciation expense
$
55
Years Ended December 31,
2020
2019
2021
117.1 $
97.1 $
86.3
6.
GOODWILL AND INTANGIBLE ASSETS
Goodwill by segment as of December 31, 2021 and 2020 consists of the following:
Ocean
(In millions)
Goodwill
Transportation Logistics Total
$
105.2 $ 327.8
222.6 $
Logistics goodwill of $105.2 million includes $78.6 million acquired as part of the acquisition of Span Intermediate,
LLC (“Span Alaska”) in August 2016 that was allocated to the Span Alaska reporting unit, and $26.6 million relates to
other Logistics acquisitions that were allocated to the Logistics reporting unit.
Intangible assets by segment as of December 31, 2021 and 2020 consist of the following:
As of December 31, 2021
As of December 31, 2020
(In millions)
Ocean Transportation - Customer relationships $ 140.6 $
Logistics:
Gross Accumulated
Amount Amortization Net Book Value Amount Amortization Net Book Value
102.7
Gross Accumulated
96.0 $ 140.6 $
44.6 $
37.9 $
Customer relationships
Trade name
Total Logistics
Total
90.1
27.3
117.4
$ 258.0 $
32.3
—
32.3
76.9 $
57.8
27.3
85.1
181.1 $ 258.0 $
90.1
27.3
117.4
28.1
—
28.1
66.0 $
62.0
27.3
89.3
192.0
Ocean Transportation intangible assets of $140.6 million relate to customer relationships acquired as part of the
acquisition of Horizon Lines, Inc. (“Horizon”) on May 29, 2015, and are being amortized over 21 years. Logistics
intangible assets include $79.3 million of customer relationships which are being amortized over 20 years, and
$27.3 million of an indefinite life trade name, both acquired as part of the Span Alaska acquisition. The remaining
Logistics customer relationships of $10.8 million are being amortized over a period of approximately 13 years.
Intangible assets related amortization expense for 2021, 2020 and 2019, is as follows:
(In millions)
Amortization expense
Years Ended December 31,
2020
2019
2021
$
10.9 $
10.9 $
11.1
As of December 31, 2021, estimated amortization expense related to customer relationship intangible assets during the
next five years and thereafter is as follows:
Year (in millions)
2022
2023
2024
2025
2026
Thereafter
Total
Customer
Relationships
$
$
10.7
10.7
10.7
10.7
10.7
100.3
153.8
7.
CAPITAL CONSTRUCTION FUND
The Company is party to an agreement with the U.S. Department of Transportation, Maritime Administration
(“MARAD”) that established a Capital Construction Fund (“CCF”) program under provisions of the Merchant Marine
Act of 1936, as amended (the “Merchant Marine Act”). The CCF program was created to assist owners and operators of
U.S. flagged vessels in raising capital necessary for the modernization and expansion of the U.S. merchant marine fleet.
CCF funds may be used for the acquisition, construction, or reconstruction of vessels, and for repayment of existing
vessel indebtedness through the deferment of federal income taxes on certain deposits of monies and other property
placed into the CCF. Qualified withdrawals from the CCF must be used for investment in vessels built in the U.S. and
used between covered U.S. ports as described by the Merchant Marine Act, and for other qualifying expenditures (see
56
Item 1 of Part 1 for additional information on Maritime Laws and the Jones Act). Participants of the CCF must also
meet certain U.S. citizenship requirements.
Deposits into the CCF are limited by certain applicable earnings and other conditions. Such deposits, once made, are
available as tax deductions in the Company’s income tax provision. Qualified withdrawals from the CCF do not give
rise to a current income tax liability, but reduce the depreciable basis of the vessels or certain related equipment for
income tax purposes. However, if withdrawals are made from the CCF for general corporate purposes or other non-
qualified purposes, or upon termination of the agreement, they are taxable with interest payable from the year of deposit.
Deposits not committed for qualified purposes within 25 years from the date of deposit will be treated as non-qualified
withdrawals over the subsequent five years. Under the terms of the CCF agreement, the Company may designate certain
qualified earnings as “accrued deposits” or may designate, as obligations of the CCF, qualified withdrawals to reimburse
qualified expenditures initially made with operating funds. Such accrued deposits to, and withdrawals from, the CCF are
reflected in the Consolidated Balance Sheets either as obligations of the Company’s current assets or as receivables from
the CCF.
As of December 31, 2021 and 2020, $9.8 million and $1.7 million of eligible accounts receivable were 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 Consolidated Balance Sheets. At December 31, 2021 and
2020, the amounts on deposit in the CCF invested in a money market fund, which is classified as other long-term assets
in the Company’s Consolidated Balance Sheets, were nominal.
8.
DEBT
At December 31, 2021 and 2020, the Company’s debt consisted of the following:
(In millions)
Private Placement Term Loans:
3.66 %, payable through 2023
4.16 %, payable through 2027
3.37 %, payable through 2027
3.14 %, payable through 2031
4.31 %, payable through 2032
Title XI Debt:
5.34 %, payable through 2028
5.27 %, payable through 2029
1.22 %, payable through 2043
1.35 %, payable through 2044
Revolving credit facility, maturity date of March 31, 2026
Total Debt
Less: Current portion
Total Long-term Debt
Less: Deferred loan fees
Total Long-term Debt, net of deferred loan fees
The following is a description of the Company’s debt:
As of December 31,
2020
2021
$
13.7 $
28.8
69.2
151.2
25.4
22.8
34.0
75.0
169.6
27.9
15.4
17.6
174.1
133.6
—
629.0
(65.0)
564.0
(14.3)
17.6
19.8
182.0
139.6
71.8
760.1
(59.2)
700.9
(15.3)
$ 549.7 $ 685.6
Private Placement Term Loans: During 2012, the Company issued $170.0 million of unsecured notes, which were
funded in three tranches, $77.5 million at an interest rate of 3.66 percent, $55.0 million at an interest rate of 4.16 percent,
and $37.5 million at an interest rate of 4.31 percent (the “2012 Notes”). Principal and interest are payable semi-
annually. The 2012 Notes began to amortize in 2015 with aggregate semi-annual payments of $4.6 million which
continued through 2016, followed by $8.4 million in 2017 through mid-year 2023, $3.8 million from mid-year 2023
through mid-year 2027, and $1.2 million thereafter.
In September 2016, the Company issued $200.0 million of 15-year senior unsecured notes (the “Series D Notes”) at an
interest rate of 3.14 percent, payable semi-annually. The Series D Notes began to amortize in 2019, with semi-annual
57
principal payments of $6.0 million. During the years 2020 through 2023, semi-annual principal payments will be
$9.2 million. Starting in 2024, and in each year thereafter through maturity in 2031, the semi-annual principal payments
will be $7.15 million.
In December 2016, the Company issued $75 million of 11-year senior unsecured notes at an interest rate of 3.37 percent,
payable semi-annually (the “Series A Notes”). The Series A Notes will begin to amortize in 2021, with principal
payments of $5.8 million in 2021 and $11.5 million per year, paid semi-annually, from 2022 through 2027.
Existing and 2020 Title XI Bonds: In September 2003, MatNav issued $55.0 million in U.S. Government guaranteed
ship financing bonds (Title XI) to finance the delivery of Manukai (the “Manukai Title XI Bonds”). The Manukai Title
XI Bonds have a final maturity in September 2028 with a coupon rate of 5.34 percent. The Manukai Title XI Bonds are
amortized by semi-annual payments of $1.1 million plus interest. In August 2004, MatNav issued $55.0 million of U.S.
Government guaranteed ship financing bonds (Title XI) to finance the delivery of Maunawili (the “Maunawili Title XI
Bonds”, and together with the Manukai Title XI Bonds, the “Existing Title XI Bonds”). The Maunawili Title XI Bonds
have a final maturity in July 2029 with a coupon rate of 5.27 percent. The Maunawili Title XI Bonds are amortized by
semi-annual payments of $1.1 million plus interest.
On April 27, 2020, MatNav issued $185.9 million in U.S. Government guaranteed vessel financing bonds to partially
refinance debt incurred in connection with the construction of Daniel K. Inouye (the “DKI Title XI Debt”). A fee of
approximately $8.7 million was paid to MARAD out of the proceeds at closing. The secured DKI Title XI Debt matures
on October 15, 2043 and has a cash interest rate of 1.22 percent, payable semi-annually in arrears on April 15 and
October 15, commencing on October 15, 2020, together with a principal payment of approximately $4.0 million.
On June 22, 2020, MatNav issued $139.6 million in U.S. Government guaranteed vessel financing bonds to partially
refinance debt incurred in connection with the construction of Kaimana Hila (the “KMH Title XI Debt”, and together
with the DKI Title XI Debt, the “2020 Title XI Debt”). A fee of approximately $6.7 million was paid to MARAD out of
the proceeds at closing. The secured KMH Title XI Debt matures on March 15, 2044 and has a cash interest rate of
1.35 percent, payable semi-annually in arrears on March 15 and September 15, commencing on September 15, 2020,
together with a principal payment of approximately $3.0 million.
MatNav may prepay any amounts outstanding under the 2020 Title XI Debt agreements subject to a potential
prepayment premium or other adjustment, in accordance with the 2020 Title XI Debt agreements. Once amounts under
the 2020 Title XI Debt are repaid, they may not be reborrowed. Mandatory prepayments are required under certain
limited circumstances, including specified casualty events with respect to the vessels Daniel K. Inouye and Kaimana
Hila (the “Vessels”).
Revolving Credit Facility:
On March 31, 2021, the Company entered into the Second Amended and Restated Credit Agreement (the “Credit
Agreement”), which amended and restated that certain Amended and Restated Credit Agreement dated as of June 29,
2017. The Credit Agreement extended the maturity date to March 31, 2026, and retained the existing committed
aggregate borrowings of up to $650 million. The Credit Agreement amended certain covenants and other terms set forth
in the prior credit agreement, including (i) amending the pricing grid to provide for pricing ranging from, at the
Company’s election, LIBOR plus a margin between 1.00 percent and 1.75 percent depending on the Company’s
consolidated net leverage ratio, or base rate plus a margin between 0.00 percent and 0.75 percent depending on the
Company’s consolidated net leverage ratio; (ii) reducing the maximum permitted consolidated leverage ratio to 3.50 to
1.0, with an option for a one-time increase to 4.0 to 1.0 in connection with a material acquisition; and (iii) removing
certain additional limitations on stock redemptions and repurchases, sale and leaseback transactions and asset sales
during the period from March 31, 2020 through and including December 30, 2021 that were added in March 2020, and
(iv) removing certain additional limitations on incurrence of priority debt through December 21, 2027 that were added in
March 2020. The Company may prepay any amounts outstanding under the Credit Agreement without premium or
penalty. The Credit Agreement contains affirmative, negative and financial covenants customary for financings of this
type, including, among other things, limitations on certain other indebtedness, loans and investments, liens, mergers,
asset sales, and transactions with affiliates. The Credit Agreement also contains customary events of default. The
Company paid fees of approximately $2.2 million in connection with the closing of the Credit Agreement which is
included in other long-term assets in the Consolidated Balance Sheet as of December 31, 2021.
58
As of December 31, 2021, the Company had $642.0 million of remaining borrowing availability under the revolving
credit facility. The Company had $8.0 million of letters of credit outstanding as of December 31, 2021. Based on the
Company’s consolidated net leverage ratio, which stipulates borrowing margins, the interest rate applicable to the
revolving credit facility was approximately 1.10 percent at December 31, 2021. Borrowings under the revolving credit
facility are classified as long-term debt in the Consolidated Balance Sheet, as principal payments are not required until
the maturity date.
Amendments to Existing Private Placement Term Loan Facilities and New Shelf Facilities (“Private Loan
Facilities”):
On March 31, 2021, the Company and the holders of the notes party thereto entered into amendments (collectively, the
“2021 Note Amendments”) to each of (i) the Third Amended and Restated Note Purchase Agreement and Private Shelf
Agreement dated as of September 14, 2016, among the Company and the holders of the notes issued thereunder, as
amended; and (ii) the Note Purchase Agreement dated December 21, 2016 among the Company and the holders of the
notes issued thereunder, in each case as amended prior to such date.
The 2021 Note Amendments amended certain covenants and other terms, including (i) eliminating the Leverage Relief
Period and associated quarterly interest enhancement payments that were added in March 2020; (ii) removing certain
other fees and increases to interest rate through December 31, 2021 and thereafter that were added in March 2020;
(iii) reducing the maximum permitted consolidated leverage ratio to 3.50 to 1.0, with an option for a one-time increase to
4.0 to 1.0 in connection with a material acquisition, with potential interest enhancement payments if leverage is over
3.25 to 1.0; and (iv) removing certain additional limitations on stock redemptions and repurchases, sale and leaseback
transactions and asset sales during the period from March 31, 2020 through and including December 30, 2021 that were
added in March 2020, and (v) removing certain additional limitations on the incurrence of priority debt through
December 21, 2027 that were added in March 2020. The Company paid fees of approximately $0.8 million related to
the 2021 Note Amendments which is included in deferred loan fees in debt in the Consolidated Balance Sheet as of
December 31, 2021.
Debt Maturities: At December 31, 2021, debt maturities during the next five years and thereafter are as follows:
As of
Year (in millions)
2022
2023
2024
2025
2026
Thereafter
Total Debt
$
December 31, 2021
65.0
60.4
51.7
51.7
51.7
348.5
629.0
$
Deferred Loan Fees: Activity relating to deferred loan fees for the year ended December 31, 2021 are as follows:
Deferred Loan Fees (in millions)
Deferred financing costs related to Title XI bonds and private placement debt amendments
Deferred fees expensed related to the redemption of private placement debt
Amortization expense for the year ended December 31, 2021
Balance at December 31, 2021
Amount
16.0
(0.2)
(1.5)
14.3
$
$
59
As of December 31, 2021, amortization expense relating to deferred loan fees during the next five years and thereafter
are as follows:
Year (in millions)
2022
2023
2024
2025
2026
Thereafter
Total amortization expense of deferred loan fees
Amount
1.3
1.3
1.2
1.2
1.0
8.3
14.3
$
$
Debt Covenants in Existing Title XI Bonds and 2020 Title XI Debt Agreements: The Existing Title XI Bonds contain
customary representations and warranties as well as affirmative and negative covenants, defaults and other provisions
typical for MARAD-guaranteed financings of this type, with definitions and limitations as defined within the Existing
Title XI Bonds. These covenants include, among other things, minimum working capital and net worth requirements,
limitations on certain other indebtedness, loans and investments, liens, mergers, asset sales, sale and leaseback
transactions, and transactions with affiliates as defined within the Existing Title XI Bonds. Certain of the covenants in
the Existing Title XI Bonds are applicable only upon and during the continuance of either (i) an event of default or
(ii) the failure of MatNav to meet certain financial requirements.
The 2020 Title XI Debt agreements contain customary representations and warranties as well as affirmative and negative
covenants, defaults and other provisions typical for MARAD-guaranteed financings of this type, with definitions,
limitations and financial tests all as negotiated between MatNav and MARAD. As part of the 2020 Title XI Debt
agreements, certain covenants contained in the Existing Title XI Bonds were eliminated. The covenants in the 2020
Title XI Debt agreements include, among other things, limitations on certain other indebtedness, loans and investments,
liens, mergers, asset sales, sale and leasebacks, and transactions with affiliates as defined within the 2020 Title XI Debt
agreements. Certain of the covenants in the 2020 Title XI Debt agreements are applicable only upon and during the
continuance of either (i) an event of default or (ii) the failure of either the Company or MatNav to meet certain
supplemental financial tests.
The supplemental financial tests applicable to MatNav include maintenance of a working capital minimum of $1,
and maintenance of a long term debt to net worth ratio of greater than or equal to 2.0 to 1.0; and
The supplemental financial tests applicable to the Company include maintenance of a net worth greater than or
equal to 90% of the net worth of the Company as set forth in the most recent audited financial statements prior to
closing of the issuance of the 2020 Title XI Bonds and compliance with the leverage ratio set forth in the Credit
Agreement.
Debt Security and Guarantees: All of the debt of the Company and MatNav, including related guarantees, as of
December 31, 2021 was unsecured, except for the Existing Title XI Bonds and the 2020 Title XI Debt.
Under the 2020 Title XI Debt agreements, MARAD has guaranteed certain obligations of MatNav. MatNav has agreed
to reimburse MARAD for any payments it makes under the MARAD guaranty, and MatNav’s obligations to MARAD
with respect to the 2020 Title XI Debt are secured by a mortgage on the Vessels and certain other related assets (the
“Collateral”), as well as the Existing Vessels (as defined below). In addition, MatNav’s obligations to MARAD with
respect to the 2020 Title XI Debt are guaranteed by the Company under an Affiliate Guaranty (the “Guaranty”).
The 2020 Title XI Debt agreements also provide that the two vessels securing the Existing Title XI Bonds – Manukai
and Maunawili (the “Existing Vessels”) – also secure the 2020 Title XI Bonds until the Existing Title XI Debt are retired
in 2028 and 2029, respectively, subject to certain exceptions.
60
9.
LEASES
Description of Operating Leases: The Company has different types of operating leases, the specific terms and
conditions of which vary from lease to lease. Certain operating lease agreements include terms such as: (i) renewal and
early termination options; (ii) early buy-out and purchase options; and (iii) rent escalation clauses. The lease agreements
also include provisions for the maintenance of the leased asset and payment of lease related costs. The Company
reviews the specific terms and conditions of each lease and, as appropriate, notifies the lessor of any intent to exercise
any option in accordance with the terms of the lease. In the normal course of business, the Company expects to be able
to renew or replace most of its operating leases with other similar leases as they expire. The Company’s leases do not
contain any other residual value guarantees.
The Company’s sub-lease income was nominal to the Company’s Consolidated Statements of Income and
Comprehensive Income for the years ended December 31, 2021 and 2020. The Company did not have any finance
leases during the years ended December 31, 2021 and 2020. Certain of the Company’s lease agreements include rental
payments that may be adjusted in the future based on economic conditions and others include rental payments adjusted
periodically for inflation. Variable lease expense is disclosed for the adjusted portion of such payments.
The lease type by underlying asset class and maximum terms of the Company’s operating leases are as follows:
Lease Type:
Real estate and terminal leases
Vessel charter leases
Operations equipment and other leases
Term
65 years
10 years
8 years
Incremental Borrowing Rate: As most of the Company’s operating leases do not provide an implicit rate, the Company
uses an estimated incremental borrowing rate based on information available at the date of adoption and subsequent
lease commencement dates in calculating the present value of its operating lease liabilities. The incremental borrowing
rate is determined using the U.S. Treasury rate adjusted to account for the Company’s credit rating and the collateralized
nature of operating leases.
Components of Lease Cost: Components of lease cost recorded in the Company’s Consolidated Statement of Income
and Comprehensive Income for the years ended December 31, 2021 and 2020 consisted of the following:
(In millions)
Operating lease cost
Short-term lease cost
Variable lease cost
Total lease cost
Years Ended
December 31,
2021
2020
$
$
110.7 $
3.1
0.6
114.4 $
83.1
10.6
0.8
94.5
Other Lease Information: Other information related to the Company’s operating leases for the years ended
December 31, 2021 and 2020 are as follows:
Years Ended
December 31,
(In millions)
Cash paid for amounts included in operating lease liabilities
Right of use assets obtained in the exchange for new operating lease liabilities
2021
2020
$
$
107.9 $
321.7 $
83.6
70.1
Weighted average remaining operating lease term
Weighted average incremental borrowing rate
As of December 31,
2021
5.1 years
2.1%
2020
7.0 years
3.7%
61
Maturities of operating lease liabilities at December 31, 2021 are as follows:
Year (in millions)
2022
2023
2024
2025
2026
Thereafter
Total lease payments
Less: Interest
Present value of operating lease liabilities
Less: Short-term portion
Long-term operating lease liabilities
As of
December 31, 2021
145.1
$
118.5
98.3
48.7
20.0
52.7
483.3
(38.3)
445.0
(137.6)
307.4
$
Sale and Leaseback of Equipment: On March 25, 2020, the Company entered into an agreement for the sale and
leaseback of multiple tranches of chassis and container equipment. The net proceeds from the sales were $14.3 million,
and the gain on the disposal of the equipment was not material to the Company’s Consolidated Financial Statements.
The Company subsequently leased back the equipment under a five-year operating lease agreement, and the obligations
under the lease are included in the maturities of operating lease liabilities table above. There were no sale and leaseback
transactions during 2021 and 2019.
Termination of Vessel Charter: On November 26, 2018, MatNav entered into agreements whereby the MatNav owned
vessel Maunalei was sold for $106.0 million and subsequently leased back from the buyer-lessor under a Bareboat
Charter Agreement (the “Charter”). The transaction qualified for sale and leaseback treatment under ASC 840, Leases,
with the Charter treated as an operating lease for accounting purposes. Lease payments were approximately $3.0 million
per quarter, and the base term of the Charter was five years with a two year end-of-term renewal option.
On July 7, 2021, MatNav entered into an agreement to terminate the Charter for $95.8 million, thereby acquiring the
vessel. The Company paid for the termination with a combination of cash on hand and borrowing on the revolving
credit facility. The Company derecognized the related right-of-use (“ROU”) asset of $27.4 million and ROU liability of
$28.5 million, and increased property and equipment by $94.7 million, net. Concurrent with the termination of the
Charter, the Company was released from certain obligations under a guaranty related to the Charter.
10.
INCOME TAXES
Income Taxes:
Income taxes for the years ended December 31, 2021, 2020 and 2019 consisted of the following:
(In millions)
Current:
Federal
State
Foreign
Discrete adjustments related to the Tax Act (1)
Total
Deferred:
Deferred tax expense
Total income taxes
Years Ended December 31,
2020
2019
2021
$ 181.2 $
35.6
2.5
—
219.3
24.6
$ 243.9 $
— $
8.7
1.4
—
10.1
0.2
3.2
1.3
(2.9)
1.8
55.8
65.9 $
23.3
25.1
(1) Current income taxes for the year ended December 31, 2019 include a non-cash income tax benefit of $2.9 million, which relates to discrete
adjustments as a result of applying the provisions of the 2017 Tax Cuts and Jobs Act of 2017 (the “Tax Act”).
62
Income taxes for the years ended December 31, 2021, 2020 and 2019 differ from amounts computed by applying the
statutory federal rate to income before income taxes for the following reasons:
Computed federal income tax expense
State income tax
Foreign-derived intangible income (FDII)
Valuation allowance
Foreign taxes
Remeasurement and discrete adjustments related to the Tax Act (1)
Share-based payments
Other — net
Effective income tax rate
Years Ended December 31,
2019
2020
2021
21.0 % 21.0 % 21.0 %
4.1 %
3.5 %
3.1 %
— %
— %
(2.5)%
(0.3)%
(0.2)%
(0.3)%
1.2 %
0.6 %
0.2 %
(2.7)%
— %
— %
(0.1)%
(0.5)%
(0.2)%
(0.5)%
0.1 %
1.0 %
20.8 % 25.4 % 23.3 %
(1) Effective income tax rate for the year ended December 31, 2019 includes the impact of a non-cash income tax benefit of $2.9 million, or
2.7 percent, which related to certain discrete adjustments as a result of applying the provisions of the Tax Act.
The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax
liabilities at December 31, 2021 and 2020, were as follows:
(In millions)
Deferred tax assets:
Operating lease liabilities
Multi-employer withdrawal liabilities
Pension and post-retirement plans
Deferred compensation
Insurance reserves
State net operating losses
Other
Total deferred tax assets
Valuation allowance
Total deferred tax assets, net of valuation allowance
Deferred tax liabilities:
Basis differences for property and equipment
Operating lease right of use assets
Intangibles
Investment in SSAT
Capital Construction Fund
Lease financing
Other
Total deferred tax liabilities
Deferred tax liability, net
As of December 31,
2020
2021
$
111.7 $
13.8
11.1
10.4
6.0
5.4
17.8
176.2
(5.3)
170.9
63.5
15.6
21.7
8.2
5.3
7.5
15.7
137.5
(10.0)
127.5
423.5
372.4
109.3
61.5
41.3
40.5
12.4
7.4
1.3
6.7
—
22.0
6.0
6.6
517.1
593.8
422.9 $ 389.6
$
Valuation Allowance: Valuation allowances recorded against the Company’s foreign income tax net operating losses
(“NOLs”) and a portion of the state income tax NOLs were $5.3 million and $10.0 million as of December 31, 2021 and
2020, respectively. The Company believes that it is more likely than not that the benefit from these deferred assets will
not be realized. The Company recorded a decrease to its valuation allowance of $4.7 million, $0.6 million and
$0.9 million during the years ended December 31, 2021, 2020 and 2019, respectively.
63
Net Operating Losses and Tax Credit Carryforwards: The Company’s NOLs and tax credit carryforwards at
December 31, 2021 and 2020 were as follows:
(In millions)
U.S. Federal income tax NOLs
U.S. State income tax NOLs (1)
U.S. State alternative minimum tax credit
Foreign income tax NOLs
Expiration Date
Various dates beginning in 2027
Various dates beginning in 2032
No expiration date
No expiration date
2021
2020
2.4 $
159.8 $
4.4 $
8.8 $
7.6
185.9
4.0
11.9
$
$
$
$
(1) U.S. State income tax NOLs are presented on a gross tax basis. The Company does not expect to benefit from $157.9 million of U.S. State
income tax NOLs as of December 31, 2021 and 2020.
The U.S. federal and state income tax NOLs in the Company’s filed income tax returns include unrecognized tax
benefits. The deferred tax assets recognized for those NOLs are presented net of these unrecognized tax benefits. As a
result of changes in tax legislation, the use of a portion of the Company’s domestic NOL and tax credit carryforwards
may be limited in future periods. Further, a portion of the federal and state income tax NOLs and tax credit
carryforwards may expire before being applied to reduce future income tax liabilities.
Unrecognized Tax Benefits: Total unrecognized benefits represent the amount that, if recognized, would favorably
affect the Company’s incomes taxes and effective tax rate in future periods. The Company does not expect a material
change in gross unrecognized benefits in the next twelve months. A reconciliation of the beginning and ending amount
of gross unrecognized tax benefits is as follows:
Unrecognized Tax Benefits (in millions)
Balance at December 31, 2018
Changes in tax positions of prior years, net
Reductions for lapse of statute of limitations
Balance at December 31, 2019
Changes in tax positions of prior years, net
Reductions for lapse of statute of limitations
Balance at December 31, 2020
Changes in tax positions of prior years, net
Reductions for lapse of statute of limitations
Balance at December 31, 2021
$
Amount
15.1
2.1
(0.8)
16.4
2.1
(0.2)
18.3
1.1
(0.2)
19.2
$
Included in the balance of unrecognized tax benefits at December 31, 2021 are potential benefits of $19.2 million that, if
recognized, would affect the Company’s income taxes and effective tax rate. The Company recognizes potential accrued
interest and penalties related to unrecognized tax benefits in income taxes. To the extent interest and penalties are not
ultimately assessed with respect to the settlement of uncertain tax positions, amounts accrued will be reduced and
reflected as a reduction of the Company’s income taxes. Interest accrued related to the balance of unrecognized tax
benefits totaled $0.1 million as of December 31, 2021 and 2020.
The Company is no longer subject to U.S. federal income tax audits for years before 2015. The Company is routinely
involved in federal, state, local income and excise tax audits, and foreign tax audits.
11.
PENSION AND POST-RETIREMENT PLANS
Non-bargaining Plans:
The Company has two funded qualified single-employer defined benefit pension plans that cover certain non - bargaining
unit employees and bargaining unit employees. In addition, the Company has plans that provide certain retiree health
care and life insurance benefits to substantially all salaried, non-bargaining employees hired before 2008 and to certain
bargaining unit employees. Employees are generally eligible for such benefits upon retirement and completion of a
specified number of years of service. The Company does not pre-fund these health care and life insurance benefits, and
has the right to modify or terminate certain of these plans in the future. Most non-bargaining retirees pay a portion of the
benefit costs.
64
Plan Administration, Investments and Asset Allocations: The Company has a Benefits Investment Committee that meets
regularly with investment advisors to establish investment policies, direct investments and select investment options for
the qualified plans. The Benefits Investment Committee is also responsible for appointing investment managers and
monitoring their performance. The Company’s investment policy permits investments in marketable equity securities,
such as domestic and foreign stocks, domestic and foreign bonds, venture capital, real estate investments, and cash
equivalents. The Company’s investment policy does not permit direct investment in certain types of assets, such as
options or commodities, or the use of certain strategies, such as short selling or the purchase of securities on margin.
The Company’s investment strategy for its qualified pension plan assets is to achieve a diversified mix of investments
that provides for long-term growth at an acceptable level of risk, and to provide sufficient liquidity to fund ongoing
benefit payments. The Company has engaged a number of investment managers to implement various investment
strategies to achieve the desired asset class mix, liquidity and risk diversification objectives.
The Company’s target and actual asset allocations at December 31, 2021 and 2020 were as follows:
Asset Categories
Domestic equity securities
International equity securities
Debt securities
Real estate
Other and cash
Total
Target 2021 2020
53 % 61 % 60 %
15 % 16 % 17 %
22 % 15 % 17 %
5 %
6 %
1 %
2 %
100 % 100 % 100 %
5 %
5 %
The Company’s investments in equity securities primarily include domestic large-cap and mid-cap companies, but also
includes an allocation to small-cap and international equity securities. Equity investments do not include any direct
holdings of the Company’s stock but may include such holdings to the extent that the stock is included as part of certain
mutual fund holdings. Debt securities include investment-grade and high-yield corporate bonds from diversified
industries, mortgage-backed securities, and U.S. Treasuries. Other types of investments include funds that invest in
commercial real estate assets. All assets within specific funds are allocated to the target asset allocation of the fund.
The expected return on plan assets is principally based on the Company’s historical returns combined with the
Company’s long-term future expectations regarding asset class returns, the mix of plan assets, and inflation assumptions.
Actual return on plan assets for the periods presented are as follows:
Actual Return on Plan Assets
One-year return
Three-year return
Five-year return
Long-term average return (since plan inception in 1989)
Returns
14.9 %
16.4 %
11.1 %
8.7 %
The Company’s pension plan assets are held in a master trust and are stated at estimated fair values of the underlying
investments. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the
accrual basis. Dividends are recorded on the ex-dividend date.
Equity Securities: Domestic and international common stocks are valued by obtaining quoted prices on recognized and
highly liquid exchanges.
Fixed Income Securities: Corporate bonds and U.S. government treasury and agency securities are valued based upon
the closing price reported in the market in which the security is traded. U.S. government agency and corporate asset-
backed securities may utilize models, such as a matrix pricing model, that incorporate other observable inputs when
broker/dealer quotes are not available, such as cash flow, security structure, or market information.
Real Estate and Private Equity Funds: The fair value of real estate and private equity funds is determined by the issuer
based on their net asset value (“NAV”). NAV is determined by dividing the fund’s net assets, as recorded in the fund’s
audited financial statements, by the number of units outstanding at the valuation date. Fair value for underlying
investments in real estate is determined through independent property appraisals.
65
The fair values of the Company’s pension plan assets at December 31, 2021 and 2020 by asset category were as follows:
Fair Value Measurements at December 31, 2021
Asset Category (in millions)
Cash
Equity securities:
U.S. large-cap
U.S. mid- and small-cap
International large-cap
Fixed income securities:
Quoted Prices in Significant
Active Markets
Observable
(Level 1)
Significant
Unobservable
Inputs (Level 2) Inputs (Level 3)
—
— $
10.7 $
Total
$ 10.7 $
80.9
61.7
7.5
80.9
61.7
7.5
—
—
—
—
—
—
—
—
—
—
U.S. Treasuries
Investment grade U.S. corporate bonds
High-yield U.S. corporate bonds / Non-U.S. Bonds
Total
Investment measured at NAV (1)
Total plan assets
9.6
24.5
0.2
195.1 $
44.4
$ 239.5
—
—
—
160.8 $
9.6
24.5
0.2
34.3 $
Fair Value Measurements at December 31, 2020
Asset Category (in millions)
Cash
Equity securities:
U.S. large-cap
U.S. mid- and small-cap
International large-cap
Fixed income securities:
U.S. Treasuries
Investment grade U.S. corporate bonds
Total
Investment measured at NAV (1)
Total plan assets
Quoted Prices in Significant
Active Markets
Observable
(Level 1)
Significant
Unobservable
Inputs (Level 2) Inputs (Level 3)
—
— $
3.8 $
Total
$
3.8 $
71.3
54.3
7.0
28.9
36.2
—
42.4
18.1
7.0
12.0
22.5
170.9 $
41.9
$ 212.8
—
—
68.9 $
12.0
22.5
102.0 $
—
—
—
—
—
—
(1) Real estate and private equity funds for which fair value is measured using the NAV per share as a practical expedient are not leveled within the
fair value hierarchy and are included as a reconciling item to total plan assets.
Contributions to each of the qualified single-employer defined benefit pension plans are determined annually by the
Company’s pension administrative committee, based upon the actuarially determined minimum required contribution
under the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended, the Pension Protection Act of
2006, and the maximum deductible contribution allowed for tax purposes. The Company’s funding policy is to
contribute cash to its pension plans so that it meets at least the minimum contribution requirements. In 2021, 2020 and
2019, the Company contributed $9.0 million, $9.0 million and $10 million, respectively, in pension contributions in
these plans.
The benefit formulas for employees who are members of collective bargaining units are determined according to the
collective bargaining agreements, either using final average pay as the base or a flat dollar amount per year of service.
Effective December 31, 2011, the Company froze benefit accruals under the final average pay formula for salaried, non-
bargaining unit employees hired before January 1, 2008 and transitioned them to the same cash balance formula for
employees hired on or after January 1, 2008. Retirement benefits under the cash balance formula are based on a fixed
percentage of employee eligible compensation, plus interest. The plan interest credit rate will vary from year to year
based on the ten-year U.S. Treasury rate.
Benefit Plan Assets and Obligations: The measurement date for the Company’s benefit plan disclosures is December 31
of each year.
66
The status of the funded qualified defined benefit pension plans and the unfunded post-retirement benefit plans at
December 31, 2021 and 2020 are shown below:
(In millions)
Change in Benefit Obligation:
Benefit obligation at beginning of year
Service cost
Interest cost
Participant contributions
Actuarial (gain) loss
Benefits paid, net of subsidies received
Expenses paid
Benefit obligation at end of year
Change in Plan Assets:
Fair value of plan assets at beginning of year
Actual return on plan assets
Participant contributions
Employer contributions
Benefits paid, net of subsidies received
Expenses paid
Fair value of plan assets at end of year
Funded Status and Recognized Liability
Pension Benefits
December 31,
Post-retirement
Benefits
December 31,
2021
2020
2021
2020
$ 263.1 $ 239.9 $ 29.1 $ 26.0
0.5
0.8
0.8
2.7
(1.7)
—
29.1
5.1
7.9
—
23.9
(12.5)
(1.2)
263.1
4.8
6.4
—
(10.7)
(13.0)
(1.1)
249.5
0.7
0.7
0.8
0.1
(2.1)
—
29.3
212.8
31.2
—
9.0
(13.0)
(1.1)
238.9
—
—
0.8
0.9
(1.7)
—
—
$ (10.6) $ (50.3) $ (29.3) $ (29.1)
194.8
22.7
—
9.0
(12.5)
(1.2)
212.8
—
—
0.8
1.3
(2.1)
—
—
Qualified pension and post-retirement benefits plans liabilities recognized in the Consolidated Balance Sheets and
expenses recognized in accumulated other comprehensive income (loss) at December 31, 2021 and 2020 were as
follows:
Pension Benefits
December 31,
Post-retirement
Benefits
December 31,
(In millions)
Non-current assets
Current liabilities
Non-current liabilities, net
Total
Net loss, net of taxes
Prior service credit, net of taxes
Total
2021
$
2020
2021
2020
1.3 $
—
(11.9)
—
(1.0)
(28.1)
$ (10.6) $ (50.3) $ (29.3) $ (29.1)
1.0 $
—
(51.3)
(0.9)
(28.4)
— $
$ (39.9) $ (64.2) $ (3.7) $ (4.4)
16.6
$ (39.1) $ (61.7) $ 10.2 $ 12.2
13.9
0.8
2.5
The information for qualified defined benefit pension plans with an accumulated benefit obligation in excess of plan
assets at December 31, 2021 and 2020 are shown below:
(In millions)
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
2021
2020
$ 247.8 $ 261.4
$ 247.4 $ 260.9
$ 235.8 $ 210.0
Unrecognized gains and losses of the post-retirement benefit plans are amortized over five years. Although current
health care costs are expected to increase, the Company attempts to mitigate these increases by maintaining caps on
certain of its benefit plans, using lower cost health care plan options where possible, requiring that certain groups of
employees pay a portion of their benefit costs, self - insuring for certain insurance plans, encouraging wellness programs
for employees, and implementing measures to mitigate future benefit cost increases.
67
Components of the net periodic benefit cost and other amounts recognized in other comprehensive income (loss) for the
qualified pension plans and the post-retirement benefit plans during 2021, 2020 and 2019 were as follows:
(In millions)
Components of Net Periodic Benefit Cost (Benefit):
Service cost
Interest cost
Expected return on plan assets
Amortization of net loss (gain)
Amortization of prior service credit
Net periodic benefit cost
Pension Benefits
December 31,
2020
2019
2021
Post-retirement Benefits
December 31,
2020
2019
2021
$
4.8 $
6.4
(14.7)
5.2
(2.3)
(0.6)
5.1 $ 4.7 $
7.9
(14.0)
4.5
(2.3)
1.2
9.3
(11.9)
5.2
(2.3)
5.0
0.7 $
0.7
—
1.0
(3.7)
(1.3)
0.5 $ 0.4
0.9
0.8
—
—
(0.1)
0.5
(3.8)
(3.7)
(2.6)
(1.9)
Other Changes in Plan Assets and Benefit Obligations
Recognized in Other Comprehensive Income, net of tax:
Net (gain) loss
Amortization of net (loss) gain
Amortization of prior service credit
Total recognized in other comprehensive loss (income)
Total recognized in net periodic benefit cost and other
comprehensive loss (income)
(20.4)
(3.9)
1.7
(22.6)
11.4
(3.4)
1.7
9.7
(1.7)
(3.9)
1.7
(3.9)
—
(0.7)
2.8
2.1
2.0
(0.3)
2.8
4.5
2.5
0.2
2.8
5.5
$ (23.2) $ 10.9 $ 1.1 $
0.8 $
2.6 $ 2.9
The weighted average assumptions used to determine benefit information during 2021, 2020 and 2019 were as follows:
Discount rate (1)
Expected return on plan assets
Rate of compensation increase
Cash balance interest credit rate
Immediate health care cost trend rate:
Pension Benefits
December 31,
Post-retirement Benefits
December 31,
2021
2020
2019
2021 2020 2019
2.90 %
7.00 %
3.00 %
2.50 %
7.25 %
3.00 %
3.40 % 3.00 % 2.70 % 3.50 %
7.50 %
3.00 % 3.00 % 3.00 % 3.00 %
1.5 % - 3.25 % 0.75 % - 3.25 % 1.75 % - 3.75 %
Pre-65 group
Post-65 group
Ultimate health care cost trend rate
Year ultimate health care cost trend
rate is reached:
Pre-65 group
Post-65 group
5.70 % 5.30 % 5.70 %
5.80 % 5.40 % 5.90 %
4.00 % 4.40 % 4.40 %
2045
2045
2037
2036
2037
2036
(1) The Company derives a single equivalent rate utilizing a yield curve constructed from a portfolio of high-quality corporate bonds with various
maturities.
68
Non-qualified Pension Plans: The Company has non-qualified supplemental pension plans covering certain employees
and retirees, which provide for incremental pension payments from the Company’s general funds so that total pension
benefits would be substantially equal to amounts that would have been payable from the Company’s qualified pension
plans if it were not for limitations imposed by income tax law. A few employees and retirees receive additional
supplemental pension benefits. Non-qualified pension plan liabilities recognized in the Consolidated Balance Sheets and
expenses recognized in accumulated other comprehensive income (loss) at December 31, 2021 and 2020 are as follows:
(In millions)
Current liabilities
Non-current liabilities, net
Total
Net loss, net of taxes
Prior service credit, net of taxes
Total
Non-qualified
Pension Benefits
December 31,
2021
2020
$
$
$
$
(1.8) $
(3.0)
(4.8) $
(0.7) $
—
(0.7) $
(1.7)
(2.6)
(4.3)
(0.8)
0.1
(0.7)
Discount rates of 2.4 percent and 1.8 percent were used in determining the 2021 and 2020 non-qualified pension plan
obligations, respectively.
Estimated Benefit Payments: The estimated future benefit payments for the next ten years as of December 31, 2021
were as follows:
Year (in millions)
2022
2023
2024
2025
2026
2027-2031
Total
Non-qualified
Pension
Benefits
Pension
Benefits
Post-retirement
Benefits (1)
14.5 $
14.7
14.8
15.0
15.3
76.9
151.2 $
1.8 $
2.2
—
0.1
0.1
1.3
5.5 $
0.9
1.1
1.0
1.1
1.1
5.8
11.0
$
$
(1) Net of participant contributions and Medicare Part D subsidies.
Defined Contribution Plans: The Company sponsors defined contribution plans that qualify under Sections 401(a) and
401(k) of the Internal Revenue Code. The Company may make discretionary matching contributions equal to a specified
percentage of each participant’s 401(k) contributions and makes other non-discretionary contributions. For the year
ended December 31, 2021, the Company provided discretionary matching contributions of up to 3 percent of eligible
employee compensation. The Company’s matching contributions expensed in 2021, 2020 and 2019 were $3.2 million,
$3.0 million and $2.9 million, respectively.
The Company may also provide a discretionary profit sharing contribution under the qualified defined contribution
plans, to salaried, non-bargaining unit employees, if both a minimum threshold of Company performance is achieved
and the Board has approved the profit sharing contribution. For certain eligible employees, supplemental profit sharing
contributions are credited under a non-qualified plan to be paid after separation from service from the Company’s
general funds so that total profit sharing contributions would be substantially equal to amounts that would have been
contributed to the Company’s qualified defined contribution plans if it were not for limitations imposed by income tax
law. Discretionary profit sharing contributions expensed in 2021, 2020 and 2019 were $2.5 million, $2.2 million and
$0.5 million, respectively.
Multi-employer Bargaining Plans:
The Company contributes to multi-employer defined benefit pension plans under the terms of collective-bargaining
agreements that cover its bargaining unit employees. Contributions are generally based on amounts paid for union labor
or cargo volume. The risks of participating in multi-employer plans are different from single-employer plans because
assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees of other
69
participating employers. Additionally, if one employer stops contributing to the plan, the unfunded obligations of the
plan may be borne by the remaining participating employers.
The multi-employer pension plans are subject to the plan termination insurance provisions of ERISA and are paying
premiums to the Pension Benefit Guaranty Corporation (“PBGC”). The statutes provide that an employer who
withdraws from, or significantly reduces its contribution obligation to, a multi-employer plan generally will be required
to continue funding its proportional share of the plan’s unfunded vested benefits. As of December 31, 2021, the
Company’s estimated benefit plan withdrawal obligations were $202.9 million. Except as described in Note 12, no
withdrawal obligations have been recorded by the Company in the Consolidated Balance Sheets at December 31, 2021
and 2020, as the Company has no present intention of withdrawing from and does not anticipate termination of any of
these plans.
Information regarding the Company’s participation in multi-employer pension plans is outlined in the table below. The
“EIN/Pension Plan Number” column provides the Employer Identification Number (“EIN”) and the three-digit plan
number, if applicable. Unless otherwise noted, the most recent Pension Protection Act zone status available in 2021 and
2020 is for the plan’s year-end at December 31, 2021 and 2020, respectively. The zone status is based on information
that the Company received from the plan and is certified by the plan’s actuary. Among other factors, plans in the red
zone are generally less than 65 percent funded; plans in the orange zone are both a) less than 80 percent funded and
b) have an accumulated/expected funding deficiency in any of the next six plan years, net of any amortization
extensions; plans in the yellow zone meet either one of the criteria mentioned in the orange zone; and plans in the green
zone are at least 80 percent funded. The funding improvement plan (“FIP”) or rehabilitation plan (“RP”) column
indicates the status which is either pending or has been implemented. The last column lists the expiration dates of the
collective-bargaining agreements to which the plans are subject.
Pension
Protection Act
Zone as of
December 31,
FIP/RP Status
Pending/
5%
Contributions of Matson
(in millions)
Contributor
Surcharge Expiration
Pension Funds
American Radio Association Pension Fund
Hawaii Longshore Pension Plan
Hawaii Terminals Multiemployer Pension
Plan
Hawaii Stevedoring Multiemployer
Retirement Plan
Master, Mates and Pilots Pension Plan
EIN/Pension
Plan Number
13-6161999-001
99-0314293-001
Notes 2021 2020 Implemented
Green Green Implemented
(1) Green N/A Implemented
20-0389370-001
99-0314293-001
13-6372630-001
(1)
(1)
N/A Yellow
N/A
N/A Green
Green Green
N/A
No
Masters, Mates and Pilots Adjustable Pension
Plan
37-1719247-001
Green Green
MEBA Pension Trust - Defined Benefit Plan
51-6029896-001
Green Green
No
No
OCU Pension Trust Plan
MFOW Supplementary Pension Plan
SIU Pacific District Pension Plan
Alaska Teamster - Employer Pension Plan
26-1574440-001
94-6201677-001
94-6061923-001
92-6003463-024
Green Green
Yellow Yellow
Green Green
Red Red Implemented
No
No
No
All Alaska Longshore Pension Plan
Western Conference of Teamsters Pension
Plan
Western Conference of Teamsters
Supplemental Benefit Trust
OPEIU Local 153 Pension Plan
Seafarers Pension Plan
Total
91-6085352-001
Green Green
91-6145047-001
Green Green
95-3746907-001
Green
Green
No
No
No
13-2864289-001
13-6100329-001
Red Red Implemented
(3) Green Green
No
in 2021
Yes
Yes
N/A
N/A
Yes
Yes
Yes
No
Yes
Yes
Yes
2021 2020 2019 Imposed Date (2)
$ 1.1 $ 1.0 $ 1.1
—
6/15/2028
6/30/2022
No
No
11.1
—
—
5.8
5.7 N/A
N/A
—
3.5
4.6
3.2
4.4 N/A
No
3.4
2.0
1.8
1.9
No
4.3
4.1
4.3
No
0.3
0.1
1.4
3.6
0.2
0.1
1.3
3.3
0.2
0.1
1.5
1.9
No
No
No
Yes
N/A
6/15/2027,
6/15/2028
6/15/2027,
6/15/2028
6/15/2022,
6/15/2028
6/30/2023
6/30/2026
6/30/2026
6/30/2022,
6/30/2023,
6/30/2024
6/30/2025
6/30/2022
Yes
1.6
1.3
1.2
No
No
No
No
No
1.9
1.6
1.5
No
3/31/2023
—
0.1
—
—
0.1
—
$ 31.0 $ 28.4 $ 27.3
—
0.1
—
No
No
No
3/31/2023
11/9/2023
6/30/2022
(1) The Hawaii Terminals Multiemployer Pension Plan merged into the Hawaii Stevedoring Multiemployer Retirement Plan effective January 1, 2021 and is formally
known as the Hawaii Longshore Pension Plan.
(2) Represents the expiration date of the collective bargaining agreement.
(3) The Company does not make contributions directly to the Seafarers Pension Plan. Instead, contributions are made to the Seafarers Health and Benefits Plan, and are
subsequently re-allocated to the Seafarers Pension Plan at the discretion of the plan Trustee.
The Company also contributes to multi-employer plans that provide post-retirement health and other benefits other than
pensions under the terms of collective-bargaining agreements. Benefits provided to active and retired employees and
their eligible dependents under these plans include medical, dental, vision and prescription drug. These plans are not
subject to the PBGC plan termination and withdrawal liability provisions of ERISA applicable to multi-employer
70
defined benefit pension plans. Contributions for these multi-employer postretirement health and other benefits were
$34.7 million, $32.5 million and $32.8 million in 2021, 2020 and 2019, respectively.
Multi-employer Defined Contribution Plans: The Company contributes to six multi-employer defined contribution
pension plans. These plans are not subject to the withdrawal liability provisions of ERISA or the PBGC applicable to
multi-employer defined benefit pension plans. Contributions made to these plans by the Company were $5.6 million,
$5.1 million and $5.3 million in 2021, 2020 and 2019, respectively.
12.
MULTI-EMPLOYER WITHDRAWAL LIABILITIES
Horizon ceased all of its operations in Puerto Rico during the first quarter of 2015, which resulted in a mass withdrawal
from its multi-employer ILA-PRSSA pension fund. The Company assumed this liability as part of the acquisition of
Horizon on May 29, 2015. The Company estimated the mass withdrawal liability based upon the required undiscounted
quarterly payment of approximately $1.0 million to be paid to the ILA-PRSSA pension fund over a period which ends in
March 2040, discounted to present value using the Company’s incremental borrowing rate. Future estimated annual
payments to be paid to the ILA-PRSSA pension fund as of December 31, 2021 were as follows:
Year (in millions)
2022
2023
2024
2025
2026
Thereafter
Total
$
Total remaining future undiscounted payments due to the ILA-PRSSA pension fund
Less: amount representing interest
Present value of multi-employer withdrawal liability
Current portion of multi-employer withdrawal liability (see Note 2)
Long-term portion of multi-employer withdrawal liability (see Note 2)
$
4.1
4.1
4.1
4.1
4.1
55.5
76.0
(21.1)
54.9
(4.1)
50.8
Furthermore, the Company assumed a partial withdrawal liability related to the Local 153 Fund of the OPEIU. The
partial withdrawal liability resulted from a decline in the number of contribution base units related to the Local 153 Fund
caused by Horizon terminating all of its operations in Puerto Rico during the first quarter of 2015. The Company
included the partial withdrawal liability of $6.5 million within other current liabilities in the Consolidated Balance
Sheets as of December 31, 2020. The Company paid off this liability during 2021.
13.
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Changes in accumulated other comprehensive income (loss) by component, net of tax, are as follows:
(In millions)
Balance at December 31, 2019
Amortization of prior service cost
Amortization of net loss (gain)
Foreign currency exchange
Other adjustments
Balance at December 31, 2020
Amortization of prior service cost
Amortization of net loss (gain)
Foreign currency exchange
Other adjustments
Balance at December 31, 2021
Accumulated
Benefits Benefits Other
Non-
Qualified
Post-
Pension Retirement Pension
Benefits
$ (51.9) $
(1.8)
(8.0)
—
—
(61.7)
(1.7)
24.3
—
—
16.3 $ (0.4) $ (0.9) $
(0.1)
(2.8)
(0.1)
(1.3)
—
—
—
—
(0.6)
12.2
(0.1)
(2.8)
—
0.7
—
—
—
—
10.1 $ (0.7) $ (1.2) $
—
—
0.5
(0.3)
(0.7)
—
—
(0.9)
0.4
Other
Comprehensive
Income (Loss)
(36.9)
(4.7)
(9.4)
0.5
(0.3)
(50.8)
(4.6)
25.0
(0.9)
0.4
(30.9)
$ (39.1) $
71
Other comprehensive income (loss) in the Consolidated Statements of Income and Comprehensive Income is shown net
of tax benefit (expense) of $(8.1) million, $4.2 million and $(0.3) million for the years ended December 2021, 2020 and
2019, respectively.
14.
EARNINGS PER SHARE
Basic earnings per share are determined by dividing net income by the weighted-average common shares outstanding
during the year. The calculation of diluted earnings per share includes the dilutive effect of unexercised non-qualified
stock options and non-vested stock units. The computation of weighted average dilutive shares outstanding excluded a
nominal amount of anti-dilutive non-qualified stock options for each of the years 2021, 2020 and 2019.
The denominators used to compute basic and diluted earnings per share for the years ended December 31, 2021, 2020
and 2019 are as follows:
Year Ended December 31, 2021
Weighted
Average Common
Common
Share
Per
Year Ended December 31, 2020
Weighted
Average Common
Common
Share
Per
(In millions, except per share amounts)
Basic:
Effect of Dilutive Securities:
Diluted:
Net
Income
$ 927.4
$ 927.4
Net
Income
Shares Amount
42.8 $ 21.67 $ 193.1
(0.20)
43.2 $ 21.47 $ 193.1
0.4
Shares Amount
43.1 $
0.4
43.5 $
4.48 $
(0.04)
4.44 $
Net
Income
Year Ended December 31, 2019
Per
Weighted
Common
Average
Share
Common
Amount
Shares
1.93
42.8 $
(0.02)
1.91
43.3 $
82.7
82.7
0.5
15.
SHARE-BASED AWARDS
The Company has share-based compensation plans which are described as follows:
2016 Incentive Compensation Plan: The Amended and Restated Matson, Inc. 2016 Incentive Compensation Plan (the
“2016 Plan”) serves as a successor to the 2007 Incentive Compensation Plan and all other predecessor plans. No further
grants will be made under the predecessor stock option plans. Under the 2016 Plan, 4.35 million shares of common
stock were reserved for issuance.
The 2016 Plan consists of four separate incentive compensation programs: (i) the discretionary grant program, (ii) the
stock issuance program, (iii) the incentive bonus program, and (iv) the automatic grant program for the non - employee
members of the Company’s Board of Directors. Share-based compensation is generally awarded under three of the four
programs, as more fully described below.
Discretionary Grant Program — Under the Discretionary Grant Program, stock options may be granted with an exercise
price no less than 100 percent of the fair market value (defined as the closing market price) of the Company’s common
stock on the date of the grant. Options generally become exercisable ratably over three years and have a maximum
contractual term of 10 years.
Stock Issuance Program — Under the Stock Issuance Program, shares of common stock, restricted stock units or
performance shares may be granted. Time-based equity awards generally vest ratably over three years. Provided certain
three-year performance targets are achieved, performance-based equity awards generally vest on the three-year
anniversary date of the grant.
Automatic Grant Program — At each annual shareholder meeting, non-employee directors will receive an award of
restricted stock units that entitle the holder to an equivalent number of shares of common stock upon vesting, under the
Automatic Grant Program. Awards of restricted stock units granted under the program generally vest on the one-year
anniversary of the grant date.
The shares of common stock authorized to be issued under the 2016 Plan may be drawn from shares of the Company’s
authorized but unissued common stock or from shares of its common stock that the Company acquires, including shares
purchased on the open market or in private transactions.
72
Share-based compensation expense and other information related to share-based awards for the years ended
December 31, 2021, 2020 and 2019 are as follows:
Share-based compensation expense, net of estimated forfeitures (in millions)
Share-based compensation expense
Intrinsic value of options exercised
Tax benefit realized upon stock vesting
Fair value of stock vested
Years Ended December 31,
2019
2020
2021
$ 19.3 $ 18.8 $ 11.3
$
— $ 5.8 $ 0.5
$ 8.0 $ 3.3 $ 2.0
$ 33.5 $ 13.1 $ 8.2
As of December 31, 2021, there was no unrecognized compensation cost related to non-vested stock options. As of
December 31, 2021, unrecognized compensation cost related to non-vested restricted stock units and performance-based
equity awards was $20.8 million. Unrecognized compensation cost is expected to be recognized over a weighted
average period of approximately 1.7 years.
Stock option activity for the year ended December 31, 2021 was nominal and there were no stock options outstanding
and exercisable as of December 31, 2021.
The following table summarizes non-vested restricted stock unit activity through December 31, 2021 (in thousands,
except weighted average grant-date fair value amounts):
Outstanding at December 31, 2020
Granted
Vested
Canceled
Added by performance factor (1)
Outstanding at December 31, 2021
(1) Represents shares paid out above target.
Weighted
2007 Plan 2016 Plan Total
Restricted Restricted Restricted Average Grant-
Stock Units Stock Units Stock Units Date Fair Value
35.14
68.41
32.54
44.27
31.48
47.61
792 $
239
(509)
(3)
172
691 $
789
239
(507)
(3)
172
690
3
—
(2)
—
—
1
16.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company values its financial instruments based on the fair value hierarchy of valuation techniques for fair value
measurements. Level 1 inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the
measurement date. Level 2 inputs include quoted prices for similar assets and liabilities in active markets and inputs
other than quoted prices observable for the asset or liability. Level 3 inputs are unobservable inputs for the asset or
liability. If the technique used to measure fair value includes inputs from multiple levels of the fair value hierarchy, the
lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy.
The Company uses Level 1 inputs for the fair values of its cash, cash equivalents and restricted cash, and Level 2 inputs
for its variable and fixed rate debt. The fair values of cash, cash equivalents and restricted cash, and variable rate debt
approximate their carrying values due to the nature of the instruments. The fair value of fixed rate debt is calculated
based upon interest rates available for debt with terms and maturities similar to the Company’s existing debt
arrangements.
73
The carrying value and fair value of the Company’s financial instruments as of December 31, 2021 and 2020 are as
follows:
(In millions)
Cash and cash equivalents
Restricted cash
Variable rate debt
Fixed rate debt
(In millions)
Cash and cash equivalents
Restricted cash
Variable rate debt
Fixed rate debt
Total
Carrying Value Total
December 31, 2021
$
$
$
$
282.4 $
5.3 $
— $
629.0 $
282.4 $
5.3 $
— $
615.1 $
Quoted Prices in
Significant
Active Markets Observable
Significant
Unobservable
Inputs (Level 2) Inputs (Level 3)
(Level 1)
Fair Value Measurements at December 31, 2021
282.4 $
5.3 $
— $
— $
— $
— $
— $
615.1 $
—
—
—
—
December 31, 2020
$
$
$
$
14.4 $
5.3 $
71.8 $
688.3 $
Fair Value Measurements at December 31, 2020
14.4 $
5.3 $
71.8 $
686.7 $
14.4 $
5.3 $
— $
— $
— $
— $
71.8 $
686.7 $
—
—
—
—
17.
COMMITMENTS AND CONTINGENCIES
Commitments and contractual obligations, excluding debt obligations (see Note 8), lease commitments (see Note 9),
pension and post-retirement plan commitments, and multi-employer bargaining plan withdrawal obligations (see Note 11
and 12), are as follows as of December 31, 2021:
Commitments and Contractual Obligations (in millions)
Standby letters of credit (1)
Bonds (2)
Vendor and other obligations (3)
Total
$
$
$
8.0
33.3
38.4
(1) Standby letters of credit are required for the Company’s uninsured workers’ compensation and other insurance programs, and other needs.
(2) Bonds are required for U.S. Customs and other related matters.
(3) Vendor and other obligations include: (i) non-cancellable contractual capital project obligations; (ii) dry-docking related obligations; and (iii)
other contractual obligations. Amounts are considered obligations if a contract has been agreed to specifying significant terms of the contract,
and the amounts are not reflected in the Consolidated Balance Sheets.
These amounts are not recorded on the Company’s Consolidated Balance Sheets and it is not expected that the Company
or its subsidiaries will be called upon to advance funds under these commitments.
Contingencies: Contingencies and other litigation related matters are described as follows:
Environmental Matters: The Company’s Ocean Transportation segment has certain risks that could result in
expenditures for environmental remediation.
On November 10, 2021, the California Air Resources Board (“CARB”) issued a Notice of Violation (the “NOV”) to
Matson for alleged violations of the Airborne Toxic Control Measure for Auxiliary Diesel Engines Operated on Ocean-
Going Vessels At-Berth in a California Port pursuant to California Code of Regulations, title 17, section 93118.3.
CARB regulations require that a company’s fleet plug into shore power for at least 80 percent of visits at California ports
and reduce auxiliary engine power generation by at least 80 percent. The NOV alleges that Matson’s fleet did not meet
the 80 percent thresholds during visits to the Port of Long Beach in 2020. The violations were alleged to have been
incurred by chartered vessels in the CLX+ service. These chartered vessels were not outfitted with alternative maritime
power (“AMP”) capability which would have allowed them to plug into the shore power grid and shut down the vessel
diesel generators when at dock. The Company has presented mitigating factors for consideration in settlement
discussions with CARB, as well as plans to achieve compliance in 2022. Although potential penalties for 2020 and 2021
violations could, in the aggregate, reasonably be expected to exceed $1 million, they are not expected to be material to
the Company’s business or financial condition.
74
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.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Conclusion Regarding Effectiveness of Disclosure Controls and Procedures
The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial
Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the
period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial
Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are
effective.
Internal Control over Financial Reporting
See page 41 for management’s annual report on internal control over financial reporting, which is incorporated herein by
reference.
See page 42 for the attestation report of the independent registered public accounting firm on the Company’s internal
control over financial reporting, which is incorporated herein by reference.
Except as described below, there have not been any changes in the Company’s internal control over financial reporting
(as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the Company’s fiscal fourth
quarter ended December 31, 2021, that have materially affected, or are reasonably likely to materially affect, the
Company’s internal control over financial reporting.
The Company completed the implementation of the financial modules of a new enterprise resource planning (“ERP”)
system during the fiscal year ended December 31, 2021. The new ERP system is intended to enhance operating
efficiencies and provide more effective management of its business operations. As a result of this implementation,
certain internal controls over financial reporting have been automated, modified or implemented.
ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
75
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
A.
Directors
PART III
The information about the directors of Matson required under this item will be included under the section captioned
“Proposal 1 – Election of Directors” in Matson’s Proxy Statement for the 2022 Annual Meeting of Shareholders to be
filed with the SEC within 120 days of the fiscal year ended December 31, 2021 (“Matson’s 2022 Proxy Statement”),
which section is incorporated herein by reference.
B.
Information About Our Executive Officers
The information about the executive officers of Matson required under this item will be included under the subsection
captioned “Executive Officers” in Matson’s 2022 Proxy Statement, which subsection is incorporated herein by
reference.
C.
Corporate Governance
The information about the Audit Committee of the Matson Board of Directors and compliance with Section 16(a) of the
Exchange Act, will be included under the subsections captioned “Board of Directors and Committees of Board” and, if
applicable, “Delinquent Section 16(a) Reports” in Matson’s 2022 Proxy Statement, which subsections are incorporated
herein by reference.
D.
Code of Ethics
The information about Matson’s Code of Ethics required under this item will be included under the subsection captioned
“Code of Ethics” in Matson’s 2022 Proxy Statement, which subsection is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required under this item will be included under the section captioned “Executive Compensation” and
the subsections captioned “Compensation of Directors” and “Pay Risk Assessment” in Matson’s 2022 Proxy Statement,
which section and subsections are incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
Equity Compensation Plan Information: The following table sets forth, as of December 31, 2021, certain information
regarding Matson’s equity compensation plan:
Number of shares
Number of shares
remaining available for
future issuance under
to be issued
equity compensation
upon exercise of
outstanding options,
plans (excluding shares
warrants and rights warrants and rights reflected in column (a))
(b)
Weighted-average
exercise price of
outstanding options,
(a)
Plan Category
Equity compensation plans approved by shareholders
Equity compensation plans not approved by shareholders
Total
690,695 (1) $
—
690,695
$
— (2)
—
—
(c)
2,443,529 (3)
—
2,443,529
(1) This includes 349,712 shares subject to unvested restricted stock unit awards and 340,983 shares subject to unvested Performance Share awards.
(2) Restricted stock unit and Performance Share awards do not have exercise prices.
(3) These shares are available for issuance under the 2016 Plan.
Other information required under this item will be included under the section captioned “Security Ownership of Certain
Shareholders” and the subsection captioned “Security Ownership of Directors and Executive Officers” in Matson’s 2022
Proxy Statement, which section and subsection are incorporated herein by reference.
76
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The information required under this item will be included in the section captioned “Proposal 1 – Election of Directors”
and the subsection captioned “Certain Relationships and Transactions” in Matson’s 2022 Proxy Statement, which section
and subsection are incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information concerning principal accountant fees and services required under this item will be included under the
sections captioned “Audit Committee Report” and “Ratification of Appointment of Independent Registered Public
Accounting Firm” in Matson’s 2022 Proxy Statement, which sections are incorporated herein by reference.
77
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
A.
Financial Statements
The Consolidated Financial Statements are set forth in Item 8 of Part II above.
B.
Financial Statement Schedules
All schedules are omitted because of the absence of the conditions under which they are required or because the
information called for is included in the Consolidated Financial Statements or notes thereto.
C.
Exhibits Required by Item 601 of Regulation S-K
Exhibits not filed herewith are incorporated by reference to the exhibit number and previous filing shown in parentheses.
All previous exhibits were filed with the Securities and Exchange Commission in Washington, D.C.
Exhibits filed pursuant to the Securities Exchange Act of 1934 were filed under file number 001-34187. Shareholders
may obtain copies of exhibits for a copying and handling charge of $0.15 per page by writing to, Corporate Secretary,
Matson, Inc., 555 12th Street, Oakland, California 94607.
2
2.1
2.2
2.3
2.4
2.5
3
3.1
3.2
3.3
4
Plan of acquisition, reorganization, arrangement, liquidation or succession.
Agreement and Plan of Merger, dated as of November 11, 2014, by and among Matson Navigation
Company, Inc., Hogan Acquisition Inc. and Horizon Lines, Inc. (incorporated by reference to Exhibit 2.1
of Matson’s Form 8-K dated November 11, 2014).
Amendment No. 1 to Agreement and Plan of Merger, dated as of February 13, 2015, by and among
Matson Navigation Company, Inc., Hogan Acquisition Inc. and Horizon Lines, Inc. (incorporated by
reference to Exhibit 2.1 of Matson’s Form 8-K dated February 17, 2015).
Contribution, Assumption and Purchase Agreement, dated as of November 11, 2014, by and among The
Pasha Group, SR Holding LLC, Horizon Lines, Inc. and Sunrise Operations LLC (incorporated by
reference to Exhibit 2.2 of Horizon Lines, Inc.’s Form 8-K dated November 13, 2014).
Amendment No. 1 to the Contribution, Assumption and Purchase Agreement, dated as of May 29, 2015,
by and among The Pasha Group, SR Holding LLC, Horizon Lines, Inc. and Sunrise Operations LLC
(incorporated by reference to Exhibit 2.2 of Matson’s Form 10-Q for the quarter ended June 30, 2015).
Membership Interest Purchase Agreement, dated as of July 18, 2016, by and between Matson Logistics,
Inc. and Span Holdings, LLC (incorporated by reference to Exhibit 2.1 of Matson’s Form 8 - K dated
July 19, 2016).
Articles of incorporation and bylaws.
Amended and Restated Articles of Incorporation of Matson, Inc. (incorporated by reference to Exhibit 3.1
of Matson’s Form 10-Q for the quarter ended June 30, 2012).
Articles of Amendment to Change Corporate Name (incorporated by reference to Exhibit 4.2 of Matson’s
Form S-8 dated October 26, 2012).
Amended and Restated Bylaws of Matson, Inc. (as amended as of November 6, 2013) (incorporated by
reference to Exhibit 3.1 of Matson’s Form 10-Q for the quarter ended September 30, 2013).
Description of Registered Securities (incorporated by reference to Exhibit 4 of Matson’s Form 10-K for
the year ended December 31, 2019).
78
10
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12*
10.13*
Material contracts.
Second Amended and Restated Credit Agreement among Matson, Inc., Bank of America, N.A., as the
Agent, and the lenders thereto, dated as of March 31, 2021 (incorporated by reference to Exhibit 10.1 of
Matson’s Form 8-K dated April 5, 2021).
Amendment to Third Amended and Restated Note Purchase Agreement among Matson, Inc. and the
purchasers named therein, dated as of June 29, 2017 (incorporated by reference to Exhibit 10.4 of
Matson’s Form 8-K dated June 30, 2017).
Amendment to Note Purchase Agreement among Matson, Inc. and the purchasers named therein, dated as
of June 29, 2017 (incorporated by reference to Exhibit 10.5 of Matson’s Form 8-K dated June 30, 2017).
Note Purchase Agreement among Matson, Inc. and the purchasers party thereto, dated as of December 21,
2016 (incorporated by reference to Exhibit 10.1 of Matson’s Form 8-K dated December 22, 2016).
Third Amended and Restated Note Purchase and Private Shelf Agreement among Matson, Inc. and the
purchasers party thereto, dated as of September 14, 2016 (incorporated by reference to Exhibit 10.1 of
Matson’s Form 8-K dated September 14, 2016).
Amendment to Third Amended and Restated Note Purchase and Private Shelf Agreement among Matson,
Inc. and the purchasers named therein, dated as of March 31, 2020 (incorporated by reference to Exhibit
10.4 of Matson’s Form 8-K dated April 6, 2020).
Amendment to December 21, 2016 Note Purchase Agreement among Matson, Inc. and the purchasers
named therein, dated as of March 31, 2020 (incorporated by reference to Exhibit 10.5 of Matson’s
Form 8 - K dated April 6, 2020).
Amended and Restated Limited Liability Company Agreement of SSA Terminals, LLC by and between
SSA Ventures, Inc. and Matson Ventures, Inc., dated as of April 24, 2002 (certain portions of this exhibit
have been omitted pursuant to a confidential treatment request submitted to the Commission)
(incorporated by reference to Exhibit 10.1 of Matson’s Form 10-Q for the quarter ended June 30, 2012).
Parent Company Agreement, dated as of April 24, 2002, by and among SSA Pacific Terminals, Inc.,
formerly known as Stevedoring Services of America, Inc., SSA Ventures, Inc., Matson Navigation
Company, Inc. and Matson Ventures, Inc. (incorporated by reference to Exhibit 10.2 of Matson’s
Form 10-Q for the quarter ended June 30, 2012).
Security Agreement between Matson Navigation Company, Inc. and the United States of America, with
respect to $55 million of Title XI ship financing bonds, dated July 29, 2004 (incorporated by reference to
Exhibit 10.a.(xxvi) of Alexander & Baldwin, Inc.’s Form 10-Q for the quarter ended September 30, 2004).
Amendment No. 1 dated September 21, 2007, to Security Agreement between Matson Navigation
Company, Inc. and the United States of America, with respect to $55 million of Title XI ship financing
bonds, dated July 29, 2004 (incorporated by reference to Exhibit 10.a.(xxx) of Alexander & Baldwin,
Inc.’s Form 10-Q for the quarter ended September 30, 2007).
Matson, Inc. 2007 Incentive Compensation Plan, amended and restated, effective January 29, 2015
(incorporated by reference to Exhibit 10.13 of Matson’s Form 10-K for the year ended December 31,
2014).
Form of Amended and Restated Restricted Stock Unit Award Agreement for Non-Employee Directors
(Deferral Election) (incorporated by reference to Exhibit 10.21 of Matson’s Form 10-K for the year ended
December 31, 2013).
79
10.14*
10.15*
10.16
10.17
10.18
10.19
10.20
10.21
10.22*
10.23*
10.24*
10.25*
Form of Anti-Dilution Adjustment Amendment to Restricted Stock Unit Award Agreements (incorporated
by reference to Exhibit 99.10 of Matson’s Form S-8 dated October 26, 2012).
Matson, Inc. Deferred Compensation Plan for Outside Directors (incorporated by reference to
Exhibit 10.34 of Matson’s Form 10-K for the year ended December 31, 2012).
Consolidated Agreement, Contract No. MA-14454 dated as of April 27, 2020 among Matson Navigation
Company, Inc., the United States of America, represented by the Maritime Administrator of the Maritime
Administration and, with respect to certain provisions, Matson, Inc. (incorporated by reference to Exhibit
10.1 of Matson’s Form 8 - K dated April 30, 2020).
Note Purchase Agreement dated as of April 27, 2020 among Matson Navigation Company, Inc., the
United States of America, represented by the Maritime Administrator of the Maritime Administration and
the Federal Financing Bank (incorporated by reference to Exhibit 10.2 of Matson’s Form 8 - K dated
April 30, 2020).
Affiliate Guaranty dated as of April 27, 2020 executed by Matson, Inc. (incorporated by reference to
Exhibit 10.3 of Matson’s Form 8 - K dated April 30, 2020).
Amendment No. 1 dated June 22, 2020, to Consolidated Agreement, Contract No. MA-14454 dated as of
April 27, 2020 among Matson Navigation Company, Inc., the United States of America, represented by
the Maritime Administrator of the Maritime Administration and, with respect to certain provisions,
Matson, Inc. (incorporated by reference to Exhibit 10.1 of Matson’s Form 8 - K dated June 25, 2020).
Note Purchase Agreement dated as of June 22, 2020 among Matson Navigation Company, Inc., the United
States of America, represented by the Maritime Administrator of the Maritime Administration and the
Federal Financing Bank (incorporated by reference to Exhibit 10.2 of Matson’s Form 8 - K dated June 25,
2020).
Amendment dated June 22, 2020 to Affiliate Guaranty dated as of April 27, 2020 executed by
Matson, Inc. and consented to by MARAD (incorporated by reference to Exhibit 10.3 of Matson’s
Form 8 - K dated June 25, 2020).
Matson, Inc. Excess Benefits Plan, amended and restated effective August 27, 2014 (incorporated by
reference to Exhibit 10.1 of Matson’s Form 8-K dated August 28, 2014).
Form of Letter Agreement entered into with certain executive officers (incorporated by reference to
Exhibit 10.45 of Matson’s Form 10-K for the year ended December 31, 2012).
Schedule identifying executive officers who have entered into Form of Letter Agreement (incorporated by
reference to Exhibit 10.42 of Matson’s Form 10-K for the year ended December 31, 2014).
Form of Letter Agreement entered into with executive officer (incorporated by reference to Exhibit 10.1
of Matson’s Form 8-K dated October 24, 2014).
10.26*,**
Letter Agreement Counter Parties.
10.27*
10.28*
10.29*
10.30
Amended and Restated Matson, Inc. Executive Severance Plan (incorporated by reference to
Exhibit 10.28 of Matson’s Form 10-K for the year ended December 31, 2020).
Matson, Inc. Deferred Compensation Plan (incorporated by reference to Exhibit 10.51 of Matson’s
Form 10-K for the year ended December 31, 2012).
Amendment No. 1 to the Matson, Inc. Deferred Compensation Plan (incorporated by reference to
Exhibit 10.30 of Matson’s Form 10-K for the year ended December 31, 2020).
Shipbuilding Contract, by and between Aker Philadelphia Shipyard, Inc. and Matson Navigation
Company, Inc., dated as of November 6, 2013 (certain portions of this exhibit have been omitted pursuant
80
10.31
10.32
10.33
10.34
to a confidential treatment request submitted to the Commission) (incorporated by reference to
Exhibit 10.57 of Matson’s Form 10-K for the year ended December 31, 2013).
Guaranty Agreement by Aker Philadelphia Shipyard ASA, in favor of Matson Navigation Company, Inc.,
dated as of November 6, 2013 (incorporated by reference to Exhibit 10.58 of Matson’s Form 10 - K for the
year ended December 31, 2013).
Contract for Construction of Two Vessels, dated as of August 25, 2016, by and between Matson
Navigation Company, Inc. and National Steel and Shipbuilding Company (certain portions of this exhibit
have been omitted pursuant to a confidential treatment request submitted to the Commission)
(incorporated by reference to Exhibit 10.1 of Matson’s Form 10-Q for the quarter ended September 30,
2016).
Purchaser’s Corporate Guaranty Agreement, by Matson, Inc., dated as of August 25, 2016 (incorporated
by reference to Exhibit 10.2 of Matson’s Form 10-Q for the quarter ended September 30, 2016).
Contractor’s Corporate Guaranty Agreement, by General Dynamics Corporation, dated as of August 25,
2016 (incorporated by reference to Exhibit 10.3 of Matson’s Form 10-Q for the quarter ended
September 30, 2016).
10.35**
Form of Capital Construction Fund Agreement with Matson Navigation Company, as amended by
Addendums No. 2, No. 5, No. 18, No. 20, No. 31 and No. 33 thereto.
10.36
10.37*
10.38*
10.39*
10.40*
10.41*
10.42*
10.43*
10.44*
10.45*
Form of Voting Agreement, dated as of November 11, 2014, among Matson Navigation Company, Inc.
and certain holders of voting securities of Horizon Lines, Inc. (incorporated by reference to Exhibit 10.1
of Matson’s Form 8-K dated November 11, 2014).
Amended and Restated Matson, Inc. 2016 Incentive Compensation Plan (incorporated by reference to
Exhibit 99.1 of Matson’s Form S-8 date July 30, 2021).
Amended and Restated Matson, Inc. Cash Incentive Plan, effective January 1, 2016 (incorporated by
reference to Exhibit 10.63 of Matson’s Form 10-K for the year ended December 31, 2016).
Form of 2016 Plan Restricted Stock Unit Award Agreement for Non-Employee Directors (No Deferral)
(incorporated by reference to Exhibit 10.64 of Matson’s Form 10-K for the year ended December 31,
2016).
Form of 2016 Plan Restricted Stock Unit Award Agreement for Non-Employee Directors (Deferral
Election) (incorporated by reference to Exhibit 10.65 of Matson’s Form 10-K for the year ended
December 31, 2016).
Form of 2016 Plan Time-Based Restricted Stock Unit Agreement for Non-Executive Employees
(incorporated by reference to Exhibit 10.60 of Matson’s Form 10-K for the year ended December 31,
2017).
Form of 2016 Plan Time-Based Restricted Stock Unit Agreement for Executive Employees (incorporated
by reference to Exhibit 10.61 of Matson’s Form 10-K for the year ended December 31, 2017).
Form of 2016 Plan Performance Share Award Agreement for Non-Executive Employees (incorporated by
reference to Exhibit 10.62 of Matson’s Form 10-K for the year ended December 31, 2017).
Form of 2016 Plan Performance Share Award Agreement for Executive Employees (incorporated by
reference to Exhibit 10.63 of Matson’s Form 10-K for the year ended December 31, 2017).
Form of 2016 Plan Performance Share Award Agreement for Executive Employees (ROIC) (incorporated
by reference to Exhibit 10.47 of Matson’s Form 10-K for the year ended December 31, 2020).
81
10.46*
10.47*
10.48*
10.49*
10.50*
10.51*
10.52
10.53
21**
23**
31.1**
31.2**
32***
Form of 2016 Plan Performance Share Award Agreement for Executive Employees (TSR) (incorporated
by reference to Exhibit 10.48 of Matson’s Form 10-K for the year ended December 31, 2020).
Form of 2016 Plan Performance Share Award Agreement for Non-Executive Employees (incorporated by
reference to Exhibit 10.49 of Matson’s Form 10-K for the year ended December 31, 2020).
Form of 2016 Plan Time-Based Restricted Stock Unit Agreement for Executive Employees (incorporated
by reference to Exhibit 10.50 of Matson’s Form 10-K for the year ended December 31, 2020).
Form of 2016 Plan Time-Based Restricted Stock Unit Agreement for Non-Executive Employees
(incorporated by reference to Exhibit 10.51 of Matson’s Form 10-K for the year ended December 31,
2020).
Form of 2016 Plan Restricted Stock Unit Award Agreement for Non-Employee Directors (No Deferral)
(incorporated by reference to Exhibit 10.52 of Matson’s Form 10-K for the year ended December 31,
2020).
Form of 2016 Plan Restricted Stock Unit Award Agreement for Non-Employee Directors (Deferral
Election) (incorporated by reference to Exhibit 10.53 of Matson’s Form 10-K for the year ended
December 31, 2020).
Amendment to Third Amended and Restated Note Purchase and Private Shelf Agreement, dated as of
March 31, 2021 (incorporated by reference to Exhibit 10.2 of Matson’s Form 8-K dated April 5, 2021).
Amendment to Note Purchase Agreement dated December 21, 2016, dated as of March 31, 2021
(incorporated by reference to Exhibit 10.3 of Matson’s Form 8-K dated April 5, 2021).
Matson, Inc. Subsidiaries as of December 31, 2021.
Consent of Deloitte & Touche, LLP dated February 25, 2022.
Certification of Chief Executive Officer, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
Certification of Chief Financial Officer, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS**
101.SCH**
101.CAL**
101.DEF**
101.LAB**
101.PRE**
104**
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File
because its XBRL tags are embedded within the Inline XBRL document.
Inline XBRL Taxonomy Extension Schema Document
Inline XBRL Taxonomy Extension Calculation Linkbase Document
Inline XBRL Taxonomy Extension Definition Linkbase Document
Inline XBRL Taxonomy Extension Label Linkbase Document
Inline XBRL Taxonomy Extension Presentation Linkbase Document
Cover Page Interactive Data File – the cover page interactive data file does not appear in the
Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
* Indicates management contract or compensatory plan or arrangement.
** Filed herewith.
*** Furnished herewith.
ITEM 16. FORM 10-K SUMMARY
None.
82
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 25, 2022
MATSON, INC.
(Registrant)
/s/ Matthew J. Cox
Matthew J. Cox
Chairman and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant in the capacities and on the dates indicated.
Signature
Title
Date
Chairman and Chief Executive Officer
February 25, 2022
/s/ Stanley M. Kuriyama
Stanley M. Kuriyama
Director
Director
Director
Director
Director
Director
/s/ Matthew J. Cox
Matthew J. Cox
/s/ Meredith J. Ching
Meredith J. Ching
/s/ Thomas B. Fargo
Thomas B. Fargo
/s/ Mark H. Fukunaga
Mark H. Fukunaga
/s/ Constance H. Lau
Constance H. Lau
/s/ Jenai S. Wall
Jenai S. Wall
/s/ Joel M. Wine
Joel M. Wine
/s/ Kevin L. Stuck
Kevin L. Stuck
February 25, 2022
February 25, 2022
February 25, 2022
February 25, 2022
February 25, 2022
February 25, 2022
Executive Vice President and Chief Financial Officer
February 25, 2022
Vice President and Controller (principal accounting officer)
February 25, 2022
*****
83
INVESTOR INFORMATION Corporate news releases, SEC filings, the Company’s
annual report and other pertinent information about the Company are available at
www.matson.com.
TRANSFER AGENT & REGISTRAR | Computershare
For questions regarding stock certificates, dividends or other transfer-related matters,
representatives of the Transfer Agent may be reached at: 1-800-522-6645
Shareholders and institutional investors with questions about the Company may
Computershare, P.O. Box 30170, College Station, TX 77842-3170
correspond with: Investor Relations, email: investor-relations@matson.com
www.computershare.com/investor
AUDITORS | Deloitte & Touche LLP, San Francisco, CA
NON-GAAP MEASURES
Matson reports financial results in accordance with U.S. generally accepted accounting
may, or could, have a disproportional positive or negative impact on results in any particular
principles (“GAAP”). The Company also considers other non-GAAP measures
period. These non-GAAP measures include but are not limited to adjusted effective tax rate,
to evaluate performance, make day-to-day operating decisions, help investors
Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), Return on Invested
understand our ability to incur and service debt and to make capital expenditures, and
Capital (“ROIC”), and Return on Equity (“ROE”).
to understand period-over-period operating results separate and apart from items that
($ in millions, except ROIC and ROE)
2021
2020
2019
2018
2017
For the years ended December 31
Total debt
Less: total cash and cash equivalents
Less: cash on deposit in Capital Construction Fund
Net debt
Net income
Add: income taxes
Add: interest expense
Add: depreciation and amortization
EBITDA
Net income (A)
Add: interest expense (tax-effected) (4)
Total return (B)
Average total debt
Average shareholders' equity (C)
Total invested capital (D)
ROIC = (B)/(D)
ROE = (A)/(C)
629.0
(282.4)
–
346.6
927.4
243.9
22.6
156.4
1,350.3
927.4
17.9
945.3
760.1
(14.4)
–
958.4
(21.2)
–
856.4
(19.6)
–
745.7
937.2
836.8
193.1
65.9
27.4
137.3
423.7
193.1
20.4
213.5
1
82.7
25.1
22.5
134.0
264.3
1
82.7
16.7
99.4
2
109.0
38.7
18.7
130.9
297.3
2
109.0
14.2
123.2
694.6
1,314.3
2,008.9
859.3
883.5
907.4
780.5
1,742.8
1,687.9
856.8
716.3
1,573.1
857.1
(19.8)
(0.9)
836.4
3
231.0
(105.8)
24.2
146.6
296.0
3
231.0
14.9
245.9
798.0
586.1
1,384.1
47.1%
70.6%
12.3%
21.9%
5.9%
10.6%
7.8%
15.2%
17.8%
39.4%
Note: Total debt is presented before any reduction for deferred loan fees as required by GAAP.
1. Includes a non-cash tax benefit of $2.9 million or $0.07 per diluted share related to discrete adjustments as a result of applying the provisions of the Tax Cuts and Jobs Act.
2. Includes a non-cash tax expense of $2.9 million or $0.07 per diluted share related to discrete adjustments as a result of applying the provisions of the Tax Cuts and Jobs Act.
3. Includes the benefit of a one-time, non-cash adjustment of $154.0 million or $3.56 per diluted share related to the enactment of the Tax Cuts and Jobs Act.
4. The effective tax rates each year in the period 2017-2021 were (84.5%), 26.2%, 23.3%, 25.4% and 20.8%, respectively. The effective tax rates for 2017, 2018 and 2019, excluding adjustments
related to the Tax Cuts and Jobs Act, would have been 38.5%, 24.2% and 26.0%, respectively.
FORWARD-LOOKING STATEMENTS
Statements in this Annual Report that are not historical facts are “forward-looking
COVID-19; changes in significant operating agreements and leases; our ability to offer a
statements,” within the meaning of the Private Securities Litigation Reform Act of 1995,
differentiated service in China for which customers are willing to pay a significant premium;
including without limitation those statements regarding performance and financial results,
the imposition of tariffs or a change in international trade policies; any unanticipated
timing and level of industry normalization, business and consumer consumption patterns,
dry-dock or repair expenses; joint venture projects, including our relationship with SSAT;
supply chain congestion, e-commerce demand, organic growth opportunities, acquisitions,
conducting business in foreign shipping markets; any delays or cost overruns related to the
capital expenditures, debt reduction, debt leverage targets, cash flow expectations and
modernization of terminals; war, terrorist attacks or other acts of violence; consummating and
uses of cash and cash flows, return of capital, execution of our share repurchase program,
integrating acquisitions; competition and growth rates within the logistics industry; freight
maintaining an investment grade balance sheet, re-fleeting initiatives, sustainability goals,
levels and increasing costs and availability of truck and rail capacity or alternative means of
environmental goals, fuel strategy, and vessel deployments and operating efficiencies. These
transporting freight; relations with our unions; satisfactory negotiation and renewal of expired
statements involve a number of risks and uncertainties that could cause actual results to differ
materially from those contemplated by the relevant forward-looking statement, including
collective bargaining agreements without significant disruption to Matson’s operations; loss
of key personnel or failure to adequately manage human capital; the use of our information
but not limited to risks and uncertainties relating to repeal, substantial amendment or waiver
technology and communication systems and cybersecurity attacks; changes in our credit
of the Jones Act or its application, or our failure to maintain our status as a United States
profile and conditions in the financial markets; our ability to obtain future debt financings;
citizen under the Jones Act; changes in economic conditions or government policies; new or
our ability to comply with financial covenants in our credit facilities; our effective income tax
increased competition or improvements in competitors’ service levels; our relationship with
rate; changes in the value of pension assets and exposure under multi-employer pension
customers, agents, vendors, and third-parties and changes in related agreements; fuel prices,
plans; the impact of future and pending legislation, including environmental legislation;
the availability of required fuels, and our ability to collect fuel-related surcharges; evolving
and government regulations and investigations. These forward-looking statements are not
stakeholder expectations relating to environmental, social and governance matters; timing
guarantees of future performance. This Annual Report should be read in conjunction with
or success in completing fleet upgrade initiatives; the occurrence of marine accidents, poor
our Annual Report on Form 10-K and our other filings with the SEC through the date of this
weather or natural disasters, including from climate change; transitional or other risks arising
report, which identify important factors that could affect the forward-looking statements in
from climate change; the magnitude and timing of the impact of public health crises, including
this release. We do not undertake any obligation to update our forward-looking statements.
DESIGN & PHOTOGRAPHY John McNeil Studio, CA | ADDITIONAL PHOTOGRAPHY Tim Rue, CA | Luisito Sevilla, AK | PRINTED IN CALIFORNIA by Sprinkel Media