A&B Reports 2nd Quarter 2001 Earnings of $24.5 Million; Property Acquisitions, Sale of Pacific Century Stock Highlight Quarter

July 18, 2001

HONOLULU--(BUSINESS WIRE)--July 18, 2001--Alexander & Baldwin, Inc. (Nasdaq:ALEX) today reported second quarter 2001 net income of $24,514,000, or $0.61 per share. Net income in the second quarter of 2000 was $28,243,000, or $0.69 per share. Revenue in the second quarter of 2001 was $294,163,000, compared with revenue of $289,160,000 in the second quarter of 2000. Results were in line with the Company's earnings guidance, indicating 10- to 15-percent lower income per share for the quarter compared with the prior year period.

Net income for the first half of 2001 was $46,948,000, or $1.16 per share. For the first half of 2000, the Company reported net income of $54,674,000, or $1.32 per share, after an accounting change that resulted in a one-time, non-cash increase in income of $12,250,000, or $0.29 per share. Excluding that change, income rose by $ 4.5 million, or 11 percent. Revenue in the first half of 2001 was $570,007,000, compared with $521,385,000 in the first half of 2000.

Second Quarter Results, Outlook Mixed

"As we anticipated in our outlook announcement in early June, income in this year's second quarter was lower than last year's," said W. Allen Doane, president and chief executive officer of A&B. "Although there were several large real estate sales in the first quarter of this year, second quarter sales were lower than the first quarter and also below last year's second quarter. Offsetting that reduction was the sale during the second quarter of the balance of A&B's holdings in Pacific Century Financial Corporation (NYSE:BOH). Income from the leased property portfolio continued to exceed that of the prior year. Importantly, two additional properties were acquired late in the second quarter.

"A large factor in the quarter was the reduced level of profit contribution from Matson. This decline resulted from a slowdown in both the U. S. mainland's and Hawaii's rates of economic growth, and from increased competitive activity and associated cost pressures in several of Matson's services. Matson has taken immediate actions to improve its performance in the second half of the year, including comprehensive operating cost reductions and improvements in productivity. Matson's actions already have begun to take hold, and we expect operating cost benefits will be realized as the year progresses.

"In addition, we anticipate that the previously announced sale to BNP Paribas SA of shareholdings in BancWest Corporation (NYSE:BWE) will close in the third quarter. This transaction will result in an after-tax gain on our BancWest shareholdings of about $68 million, or $1.68 per share.

"Looking ahead, the economic outlook continues to be uncertain, so our expectations regarding earnings have to be tempered with caution. Broad measures of Hawaii's economy continue to indicate a steady rate of growth. Prospective measures, however, show weakening, especially in the leading economic indicators, Japanese visitor counts and large-scale construction projects."

Consolidated Operating Profit Lower in 2nd Quarter, Up in 1st Half

In the second quarter of 2001, A&B's consolidated operating profit was $47.8 million, 10-percent lower than the $53.1 million operating profit in the second quarter of 2000. For the first half, operating profit was $92.2 million, an increase of $8.5 million, or 10 percent, versus $83.7 million in the first half of 2000. In both the second quarter and first half of 2001, the sale of Pacific Century stock, and the results for property leasing and food products added to gains in operating profit, but results for the ocean transportation segment and property sales were lower.

Interest expense in both periods of 2001 was lower than in the corresponding periods in 2000, reflecting both lower rates and lower debt balances.

Ocean Transportation Segment Lower

In the second quarter of 2001, ocean transportation operating profit was $18.7 million. That was a decrease of $9.2 million, or 33 percent, from $27.9 million in the second quarter of 2000. The decrease in operating profit resulted primarily from modestly lower cargo volume, higher fleet costs, higher information technology expenses, and lower results from a stevedoring joint venture, offset, only partially, by rate actions taken in 2001. Second quarter 2001 Hawaii service container volume was two-percent lower than in the second quarter of 2000; automobile volume was two-percent higher.

In the first half of 2001, ocean transportation operating profit was $36.2 million. This was a decrease of $11.6 million, or 24 percent, from $47.8 million in the first half of 2000. Matson's first half 2001 Hawaii service container volume was virtually the same as in the 2000 first half; automobile volume was one-percent higher.

Property Leasing Grows, Large Lot Sales Lower in 2nd Quarter

A&B Properties, Inc., total operating profit in the second quarter of 2001 was $12.2 million, a decrease of $14.3 million, or 54 percent, from the unusually large $26.5 million a year earlier. For the first half of 2001, operating profit of $33.2 million was $1.2 million, or four-percent, lower than the $34.4 million a year earlier.

In the second quarter, operating profit from property leasing activities was $8.7 million. This was $1.1 million, or 14-percent, higher than the $7.6 million in the second quarter of 2000. The increase was due primarily to additions to the property portfolio in the latter part of 2000 and higher occupancy levels, especially in Hawaii.

In the first half of 2001, property leasing operating profit was $17.4 million. This was $2.6 million, or 18-percent, higher than the $14.8 million earned in the first half of 2000. Year-to-date 2001 occupancy levels for Mainland properties averaged 93 percent, versus 96 percent in the first half of 2000. Average occupancy levels for Hawaii properties improved to 90 percent, versus 85 percent in the comparable period of 2000. In early June, two new commercial properties were acquired, the 125,000 square-foot Kaneohe Bay Shopping Center on Oahu, Hawaii, and the 85,000 square-foot Carefree Shopping Center in Carefree, Ariz., north of Phoenix.

Property sales revenue totaled $29.2 million in the second quarter of 2001, compared with $25.0 million in the second quarter of 2000. In the second quarter of 2001, however, the operating profit resulting from those property sales was $3.6 million, versus operating profit of $18.9 million in the second quarter of 2000. Results for the second quarter of 2000 included the sale of a ground lease under a Costco store in Kahului, Maui, whereas, in the second quarter of this year, most of the sales were homes in residential developments, transactions that generally have lower profit margins. Variability in sales revenue and operating profit is an inherent characteristic of property sales activity.

Property sales revenue totaled $72.2 million in the first half of 2001, compared with $28.0 million in the first half of 2000. In the first half of 2001, operating profit resulting from property sales was $15.8 million. This was $3.9 million, or 20-percent, lower than the $19.6 million in the first half of 2000.

Food Products Results Improved

In the second quarter of 2001, the food products segment had an operating profit of $747,000, compared with an operating loss of $2.1 million in the second quarter of 2000. The improvement was due primarily to domestic raw sugar prices that were higher on a year-to-year basis, partially offset by losses from A&B's residual 36 percent investment in C&H Sugar Company, Inc. and from a panelboard manufacturing business. In the first half of 2001, food products had an operating profit of $5.9 million, compared with breakeven results in the first half of 2000.

Alexander & Baldwin, Inc., headquartered in Honolulu, is engaged in ocean transportation, through its subsidiary, Matson Navigation Company, Inc.; property development and management, through A&B Properties, Inc.; and in food products, through Hawaiian Commercial & Sugar Company and Kauai Coffee Company, Inc. Additional information about A&B may be found at its web site: www.alexanderbaldwin.com. Statements in this press release that are not historical facts are "forward-looking" statements that involve a number of risks and uncertainties described on page 31 of the Company's 2000 annual report to shareholders. These factors could cause actual results to differ materially from those projected in the statements.

                      ALEXANDER & BALDWIN, INC.
         2001 and 2000 Second-Quarter And First-Half Results

                                           2001            2000
Three Months Ended June 30:

Revenue                               $294,163,000     $289,160,000
Net Income                             $24,514,000      $28,243,000
Basic Share Earnings                         $0.61            $0.69
Diluted Share Earnings                       $0.60            $0.69
Average Shares Outstanding              40,568,000       40,722,000

Six Months Ended June 30:

Revenue                               $570,007,000     $521,385,000
Income Before Accounting Change        $46,948,000      $42,424,000
Net Income                             $46,948,000      $54,674,000
Basic Share Earnings:
  Income Before Accounting Change            $1.16            $1.03
  Net Income                                 $1.16            $1.32
Diluted Share Earnings:
  Income Before Accounting Change            $1.15            $1.03
  Net Income                                 $1.15            $1.32
Average Shares Outstanding              40,538,000       41,427,000


                     Industry Segment Data, Net Income
                               (In Thousands)

                            Three Months Ended      Six Months Ended
                                  June 30,              June 30,
                              2001       2000       2001       2000
                           ---------  ---------  ---------  ---------
Revenue:
 Ocean Transportation      $ 203,212  $ 213,584  $ 399,821  $ 413,809
 Property Devel. & Mgmt 
   Leasing                    17,490     15,287     34,586     29,805
   Sales                      29,155     24,987     72,239     28,039
 Food Products                28,118     34,504     46,316     48,170
 Other                        16,188        798     17,045      1,562
                           ---------  ---------  ---------  ---------
    Total Revenue          $ 294,163  $ 289,160  $ 570,007  $ 521,385
                           =========  =========  =========  =========

Operating Profit, Net Income:
 Ocean Transportation      $  18,713  $  27,914  $  36,168  $  47,807
 Property Devel. & Mgmt 
   Leasing                     8,679      7,606     17,419     14,790
   Sales                       3,551     18,917     15,767     19,618
 Food Products                   747     (2,060)     5,852          8
 Other                        16,107        764     16,947      1,473
                           ---------  ---------  ---------  ---------
   Total Operating 
    Profit                    47,797     53,141     92,153     83,696
 Interest Expense             (4,870)    (5,959)   (10,649)   (11,306)
 Corporate Expenses           (3,191)    (2,706)    (6,982)    (6,208)
                           ---------  ---------  ---------  ---------
 Income Before Taxes
  & Accounting Change         39,736     44,476     74,522     66,182
 Income Taxes                (15,222)   (16,233)   (27,574)   (23,758)
                           ---------  ---------  ---------  ---------
 Income Before
  Accounting Change           24,514     28,243     46,948     42,424
 Cumulative Effect
  of Acctg. Change              --         --         --       12,250
                           ---------  ---------  ---------  ---------
 Net Income                $  24,514  $  28,243  $  46,948  $  54,674
                           =========  =========  =========  =========


                      Consolidated Balance Sheets
                            (In Thousands)

                                   June 30,        December 31,
                                     2001             2000
                                 -----------       ----------
                                 (unaudited)
ASSETS
Current Assets                   $  190,466       $  208,867
Investments                         181,055          183,141
Real Estate Developments             59,419           62,628
Property, Net                     1,002,326          954,692
Capital Construction Fund           151,322          150,405
Other Assets                        102,494          106,279
                                 -----------      -----------
  Total                          $1,687,082       $1,666,012
                                 ===========      ===========

LIABILITIES & EQUITY
Current Liabilities              $  157,285       $  153,006
Long-Term Debt                      311,823          330,766
Post-Retirement Benefit Obligs.      44,363           44,752
Other Long-Term Liabilities          57,074           56,698
Deferred Income Taxes               391,935          387,139
Shareholders' Equity                724,602          693,651
                                 -----------      -----------
  Total                          $1,687,082       $1,666,012
                                 ===========      ===========


                 Consolidated Statements of Cash Flows
                       (In Thousands, Unaudited)

                                               Six Months Ended
                                                    June 30,
                                                2001         2000
                                             ---------    ---------
Operating Cash Flows                         $ 77,714     $ 43,318
Capital Expenditures                          (63,363)     (45,706)
CCF Withdrawals, Net                              358        1,807
Proceeds From Sale Of Bank Stock               16,217          --
Proceeds From/(Payment of) Debt, Net          (20,000)      56,500
Repurchases Of Capital Stock                      --       (43,294)
Dividends Paid                                (18,252)     (18,625)
All Other, Net                                  4,183        1,697
                                             ---------    ---------
Decrease In Cash                             $ (3,143)    $ (4,303)
                                             =========    =========
Depreciation                                 $ 36,310     $ 34,478
                                             =========    =========

CONTACT: Alexander & Baldwin, Inc.
John B. Kelley, 808/525-8422
invrel@abinc.com