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Segment Results
 12 Months Ended
Dec. 31, 2014
Segment Reporting [Abstract]  
Segment Results
SEGMENT RESULTS
Operating 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 Chief Executive Officer regularly reviews the results of four segments: Real Estate Development and Sales, Real Estate Leasing, Materials and Construction, and Agribusiness.
The Real Estate Development and Sales segment generates its revenues and creates value through an active and comprehensive program of land stewardship, planning, entitlement, development, real estate investment and sale of land and commercial and residential properties, principally in Hawaii.
The Real Estate Leasing segment owns, operates, and manages a portfolio of 60 retail, office and industrial properties in Hawaii and on the Mainland totaling 5.1 million square feet of GLA. The Company also leases urban land in Hawaii to third-party lessees, including 51 acres on Oahu (improved with 760,000 square feet of commercial space owned by the lessees) and 64 acres on the neighbor islands. When property that was previously leased is sold, the sales revenue and operating profit are included with the Real Estate Development and Sales segment.
The Materials and Construction segment performs asphalt paving as prime contractor and subcontractor; imports and sells liquid asphalt; mines, processes and sells basalt aggregate; produces and sells asphaltic concrete; provides and sells various construction- and traffic-control-related products and manufactures and sells precast concrete products.
The Agribusiness segment produces bulk raw sugar, specialty food grade sugars, and molasses; produces and sells specialty food-grade sugars; provides general trucking services, mobile equipment maintenance and repair services; leases agricultural land to third parties; and generates and sells electricity to the extent not used in segment operations.
The accounting policies of the operating segments are described in the summary of significant accounting policies. Reportable segments are measured based on operating profit, exclusive of interest expense, general corporate expenses and income taxes. Revenues related to transactions between reportable segments have been eliminated. Transactions between reportable segments are accounted for on the same basis as transactions with unrelated third parties.
Raw sugar revenues from the Company’s largest customer, C&H Sugar Company, Inc., exceeded 10 percent of total consolidated revenues and totaled $65.5 million, $87.6 million, and $117.5 million in 2014, 2013, and 2012, respectively.
Operating segment information for 2014, 2013 and 2012 is summarized as below (in millions):
 
 
For the Year Ended December 31,
2014
 
2013
 
2012
Revenue:
 
 
 
 
 
Real Estate:
 
 
 
 
 
Leasing
$
125.6

 
$
110.4

 
$
100.6

Development and Sales
150.0

 
423.0

 
32.2

Less amounts reported in discontinued operations1
(70.4
)
 
(369.2
)
 
(45.3
)
Materials and Construction2
234.3

 
54.9

 
—

Agribusiness
120.5

 
146.1

 
182.3

Reconciling items3
—

 
—

 
(8.3
)
Total revenue
$
560.0

 
$
365.2

 
$
261.5

Operating profit (loss)
 
 
 
 
 
Real Estate:
 
 
 
 
 
Leasing
$
47.5

 
$
43.4

 
$
41.6

Development and Sales4
85.7

 
44.4

 
(4.4
)
Less amounts reported in discontinued operations1
(56.2
)
 
(36.7
)
 
(21.1
)
Materials and Construction2
25.9

 
2.9

 
—

Agribusiness
(11.8
)
 
10.7

 
20.8

Total operating profit
91.1

 
64.7

 
36.9

Interest expense
(29.0
)
 
(19.1
)
 
(14.9
)
General corporate expenses
(18.6
)
 
(17.4
)
 
(15.1
)
Reduction in KRS II carrying value, net (Note 6, 13)
(14.7
)
 
—

 
—

Separation/Acquisition Costs
—

 
(4.6
)
 
(6.8
)
Income from continuing operations before income taxes
28.8

 
23.6

 
0.1

Income tax expense (benefit)
(1.4
)
 
11.1

 
(5.9
)
Income from continuing operations
30.2

 
12.5

 
6.0

Income from discontinued operations (net of income taxes)
34.3

 
22.3

 
12.8

Net income
64.5

 
34.8

 
18.8

Income attributable to non-controlling interest
(3.1
)
 
(0.5
)
 
—

Net income attributable to A&B
$
61.4

 
$
34.3

 
$
18.8

1 
Amounts recast to reflect discontinued operations.

2 
2013 includes the results, capital expenditures, and depreciation and amortization of Grace from the acquisition date of October 1, 2013 through December 31, 2013.
3 
Represents the sale of a 286-acre agricultural parcel in 2012 classified as "Gain on sale of agricultural parcel" in the Consolidated Statements of Income, but reflected as revenue for segment reporting purposes.
4 
The Real Estate Development and Sales segment includes approximately $2.0 million, $4.2 million, and ($8.3) million in equity in earnings (losses) from its various real estate joint ventures for 2014, 2013, and 2012, respectively. Included in operating profit are non-cash impairment and equity losses of $0.3 million related to the sale of Crossroads in 2014, $6.3 million related to the consolidation of The Shops at Kukui'ula in 2013, and $9.8 million related to the Bakersfield joint venture and Santa Barbara real estate project in 2012.







As of December 31,
2014
 
2013
 
2012
Identifiable Assets:
 
 
 
 
 
Real Estate:
 
 
 
 
 
Leasing
$
1,121.6

 
$
1,113.4

 
$
771.3

Development and Sales5
634.3

 
640.9

 
504.8

Agribusiness
162.8

 
160.0

 
149.9

Materials and Construction
385.9

 
358.7

 
—

Other
25.3

 
10.6

 
11.3

Total assets
$
2,329.9

 
$
2,283.6

 
$
1,437.3

 
 
 
 
 
 
Capital Expenditures:
 
 
 
 
 
Real Estate:
 
 
 
 
 
Leasing6
$
51.8

 
$
488.5

 
$
23.1

Development and Sales7
—

 
0.1

 
—

Agribusiness8
10.8

 
11.8

 
31.7

Materials and Construction2
10.7

 
4.8

 
—

Other
1.8

 
0.1

 
—

Total capital expenditures
$
75.1

 
$
505.3

 
$
54.8

 
 
 
 
 
 
Depreciation and Amortization:
 
 
 
 
 
Real Estate:
 
 
 
 
 
Leasing1
$
26.9

 
$
24.3

 
$
22.0

Development and Sales
0.2

 
0.2

 
0.2

Agribusiness
11.5

 
11.7

 
11.6

Materials and Construction2
15.2

 
4.4

 
—

Other
1.2

 
1.1

 
1.3

Total depreciation and amortization
$
55.0

 
$
41.7

 
$
35.1

5 
The Real Estate Development and Sales segment includes approximately $383.8 million, $335.0 million, and $319.7 million related to its investment in various real estate joint ventures as of December 31, 2014, 2013, and 2012, respectively.
6 
Represents gross capital additions to the leasing portfolio, including gross tax-deferred property purchases, but excluding the assumption of debt, that are reflected as non-cash transactions in the Consolidated Statements of Cash Flows.
7 
Excludes expenditures for real estate developments held for sale which are classified as Cash Flows from Operating Activities within the Consolidated Statements of Cash Flows and excludes investment in joint ventures classified as Cash Flows from Investing Activities. Operating cash flows for expenditures related to real estate developments were $41.7 million, $150.6 million, and $37.2 million for 2014, 2013, and 2012, respectively. Investments in real estate joint ventures were $28.7 million, $22.2 million, and $17.4 million in 2014, 2013, and 2012, respectively.
8  
Includes $21.8 million of capital in 2012 related to the Company’s Port Allen solar project before tax credits.
Unaudited quarterly segment results for the years ended December 31, 2014 and 2013 were as follows (in millions):

2014
(Unaudited)
Q1

Q2

Q3

Q4
Revenue:







Real Estate:







Leasing
$
31.2


$
31.0


$
31.3


$
32.1

Development and Sales
71.0


21.4


18.2


39.4

Less amounts reported in discontinued operations1
(70.4
)

—


—


—

Materials and Construction
50.1


64.5


58.4


61.3

Agribusiness
12.9


29.8


45.5


32.3

Total revenue
$
94.8

 
$
146.7

 
$
153.4

 
$
165.1

Operating profit (loss)







Real Estate:







Leasing
$
11.8


$
12.0


$
12.1


$
11.6

Development and Sales2
52.3


7.8


11.4


14.2

Less amounts reported in discontinued operations1
(56.2
)

—


—


—

Materials and Construction
3.4


8.0


5.9


8.6

Agribusiness
3.0


0.4


(7.3
)

(7.9
)
Total operating profit
14.3

 
28.2

 
22.1

 
26.5

Interest expense
(7.2
)

(7.2
)

(7.2
)

(7.4
)
General corporate expenses
(5.2
)

(4.3
)

(3.9
)

(5.2
)
Reduction in KRS II carrying value (Note 6, 13)
—

 
—

 
(15.1
)
 
0.4

Income (loss) from continuing operations before income taxes
1.9

 
16.7

 
(4.1
)
 
14.3

Income tax expense (benefit)3
0.8


6.5


(14.9
)

6.2

Income (loss) from continuing operations
1.1

 
10.2

 
10.8

 
8.1

Income from discontinued operations (net of income taxes)
34.3


—


—


—

Net income
35.4

 
10.2

 
10.8

 
8.1

Income attributable to non-controlling interest
(0.4
)

(1.0
)

(0.6
)

(1.1
)
Net income attributable to A&B
$
35.0

 
$
9.2

 
$
10.2

 
$
7.0

Earnings per share attributable to A&B:

 

 

 


Basic
$
0.72

 
$
0.19

 
$
0.21

 
$
0.14


Diluted
$
0.71

 
$
0.19

 
$
0.21

 
$
0.14

Weighted average shares:
 
 
 
 
 
 
 
 
Basic
48.7

 
48.7

 
48.8

 
48.8

 
Diluted
49.2

 
49.3

 
49.3

 
49.3



 
2013
(Unaudited)
Q1
 
Q2
 
Q3
 
Q4
Revenue:
 
 
 
 
 
 
 
Real Estate:
 
 
 
 
 
 
 
Leasing
$
26.3

 
$
26.2

 
$
27.5

 
$
30.4

Development and Sales
15.4

 
1.4

 
47.4

 
358.8

Less amounts reported in discontinued operations1
(23.6
)
 
(8.4
)
 
(45.9
)
 
(291.3
)
Materials and Construction4
—

 
—

 
—

 
54.9

Agribusiness
14.7

 
43.5

 
35.9

 
52.0

Total revenue
$
32.8

 
$
62.7

 
$
64.9

 
$
204.8

Operating profit (loss)

 

 

 

Real Estate:

 

 

 

Leasing
$
10.9

 
$
10.6

 
$
11.2

 
$
10.7

Development and Sales2
2.4

 
(0.7
)
 
4.6

 
38.1

Less amounts reported in discontinued operations1
(8.2
)
 
(3.8
)
 
(11.8
)
 
(12.9
)
Materials and Construction4
—

 
—

 
—

 
2.9

Agribusiness
3.8

 
8.3

 
2.2

 
(3.6
)
Total operating profit
8.9

 
14.4

 
6.2

 
35.2

Interest expense
(3.6
)
 
(3.9
)
 
(4.2
)
 
(7.4
)
General corporate expenses
(4.4
)
 
(3.7
)
 
(3.4
)
 
(5.9
)
Grace acquisition costs
(1.0
)
 
(1.5
)
 
(2.0
)
 
(0.1
)
Income (loss) from continuing operations before income taxes
(0.1
)
 
5.3

 
(3.4
)
 
21.8

Income tax expense (benefit)3
0.1

 
2.8

 
(0.3
)
 
8.5

Income (loss) from continuing operations3
(0.2
)
 
2.5

 
(3.1
)
 
13.3

Income from discontinued operations (net of income taxes)
5.0

 
2.3

 
7.2

 
7.8

Net income (loss)3
4.8

 
4.8

 
4.1

 
21.1

Income attributable to non-controlling interest
—

 
—

 
—

 
(0.5
)
Net income (loss) attributable to A&B3
$
4.8

 
$
4.8

 
$
4.1

 
$
20.6

Earnings per share attributable to A&B:3
 
 
 
 
 
 
 
 
Basic
$
0.11

 
$
0.11

 
$
0.10

 
$
0.42

 
Diluted
$
0.11

 
$
0.11

 
$
0.09

 
$
0.42

Weighted average shares:
 
 
 
 
 
 
 
 
Basic
43.0

 
43.1

 
43.1

 
48.6

 
Diluted
43.6

 
43.7

 
43.8

 
49.2

1 
Amounts recast to reflect discontinued operations.
2 
The Real Estate Development and Sales segment operating profit includes a non-cash impairment loss of $6.3 million in the third quarter of 2013 related to the consolidation of The Shops at Kukui'ula.
3  
Income tax expense (benefit) for the first quarter of 2014 was revised to remove an out-of-period tax adjustment of $1.6 million related to 2013. Income tax expense (benefit) for the quarterly periods in 2013 were increased by $0.2 million, $0.2 million, $0.3 million, and $1.9 million related to the immaterial revisions (see Note 1).
4 
Grace results are included from its acquisition date, October 1, 2013.