BUSINESS COMBINATION

3 Months Ended

Mar. 31, 2017

BUSINESS COMBINATION

BUSINESS COMBINATION

9.          BUSINESS COMBINATION

Span Alaska Acquisition:  On August 4, 2016 (the “Effective Date”), Matson Logistics completed the purchase of 100 percent of the membership interests of Span Alaska pursuant to the terms of the Membership Interest Purchase Agreement.  At the Effective Date, Span Alaska became a wholly-owned subsidiary of Matson Logistics.  Span Alaska is an asset-light logistics company providing freight forwarding services primarily to the Alaska market.  Span Alaska consolidates freight in Auburn, Washington, for shipment to Alaska and distribution through a network of terminals in Anchorage, Fairbanks, Wasilla, Kenai, Juneau and Kodiak.  Span Alaska’s operations are recorded within the Logistics segment of the Company.

Total consideration for the Span Alaska Acquisition was $198.9 million based on the fair value of membership interests of $117.0 million, and Span Alaska’s debt and accrued interest of $81.9 million.  Immediately following the close of the Span Alaska Acquisition, the Company paid the assumed debt.

The Span Alaska Acquisition was accounted for as a business combination in accordance with Accounting Standards Codification (ASC) 805, “Business Combination” (“ASC 805”).  The assets acquired and liabilities assumed in the Span Alaska Acquisition were recorded based on fair value estimates as of the Effective Date, with the remaining unallocated purchase price of $78.6 million recorded as goodwill.  As of December 31, 2016, the purchase price accounting for the Span Alaska Acquisition was considered final. 

The Company's Condensed Consolidated Statements of Income and Comprehensive Income for the three months ended March 31, 2017 include operating revenue of $9.0 million (after elimination of intercompany revenue of $6.1 million), and operating income of $1.0 million, from Span Alaska’s operations. One-time acquisition related costs incurred post December 31, 2016 were not material.  

Pro Forma Financial Information (Unaudited):The following unaudited pro forma financial information presents the combined operating results of the Company and Span Alaska, as if the Span Alaska Acquisition had been completed at the beginning of each period presented below.  The unaudited pro forma financial information includes the accounting effects of the business combination, including the amortization of intangible assets, depreciation of property and equipment, and interest expense.  Unaudited pro forma operating revenue is presented after elimination of intercompany revenue. 

The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the result of operations that would have been achieved if the Span Alaska Acquisition had taken place at the beginning of the periods presented, nor should it be taken as an indication of our future consolidated results of operations.

	(Unaudited)
	Three Months Ended March 31,
(In millions, except share amount)	2017		2016
Pro Forma Combined:
Operating revenue	$	474.4	$	466.6
Net income after income tax expense	$	7.0	$	18.8
Basic Earnings Per-Share:	$	0.16	$	0.43
Diluted Earnings Per-Share:	$	0.16	$	0.43
Weighted-Average Number of Shares Outstanding:
Basic		43.0		43.4
Diluted		43.4		43.8