A&B Reports 2nd Quarter 2002 Earnings of $13.2 Million; Quarter-To-Quarter Improvement in 2002

July 17, 2002

HONOLULU, Jul 17, 2002 (BUSINESS WIRE) -- Alexander & Baldwin, Inc. (Nasdaq:ALEX) today reported second quarter 2002 net income of $13,197,000, or $0.32 per share. Net income in the second quarter of 2001 was $24,514,000, or $0.61 per share, including a one-time gain of $0.23 per share on the sale of marketable bank securities. Revenue in the second quarter of 2002 was $279,185,000, compared with revenue of $293,012,000 in the second quarter of 2001.

Net income for the first half of 2002 was $23,004,000, or $0.56 per share. For the first half of 2001, the Company reported net income of $46,948,000, or $1.16 per share. Revenue in the first half of 2002 was $512,972,000, compared with $567,793,000 in the first half of 2001.

Second Quarter Results

"We were pleased to see the second quarter results above the first, as we had anticipated," said Allen Doane, president and chief executive officer of A&B. "Year-to-date operating comparisons with 2001 are, however, unfavorable, mostly as a result of economic conditions precipitated by the events of September 11, 2001 and lower productivity at Matson's Sand Island container terminal.

"In the second quarter of 2001, the Company sold 749,000 shares of stock in Pacific Century Financial Corp. (NYSE:BOH) for a gain of $9.4 million, or $0.23 a share. We had no comparable transaction this year.

"Recently, domestic travelers have helped to boost total visitor arrivals to Hawaii close to those of comparable periods in 2001. Also aiding the local economy, the strength of the yen versus the U.S. dollar has raised the purchasing power of visitors to Hawaii from Japan. Low interest rates continue to stimulate an active market in the state for residential properties.

"Challenges to earnings growth include the present contract negotiations with longshore labor now taking place on the West Coast and in Hawaii, our continuing efforts to reach target levels of productivity at our container terminal in Hawaii, as well as broader concerns over the effects on consumer spending and travel that might result from the recent slump in the U.S. financial markets.

"Among the highlights of the second quarter were: the first quarterly increase in Matson's westbound Hawaii container volume since the events of 9/11; the announced decision to proceed with a $220 million commitment to construct two replacement vessels for Matson's fleet; the restructuring of minority investments in two Matson affiliates; an announced joint venture partnership with DMB Associates, Inc. for the development of our 1,045 acre project, Kukui'Ula, in the Poipu resort area of Kauai; and the purchase of shopping centers in Long Beach, California, and in Mililani, here on Oahu, for an aggregate investment of $50 million."

Ocean Transportation Segment Results Improve Versus 1st Quarter

In the second quarter of 2002, ocean transportation operating profit was $14.8 million. That was a decrease of $3.9 million, or 21 percent, from $18.7 million in the second quarter of 2001. The decrease in operating profit resulted primarily from continuing unfavorable year-to-year comparisons in stevedoring performance at the Sand Island terminal in Honolulu, offset to some extent by lower expenses from operating seven ships in the Hawaii trade, versus eight a year ago. The quarter's results, however, were substantially better than Matson's operating profit in the first quarter of this year, which were just $2.5 million.

Second quarter 2002 Hawaii service container volume was seven-percent higher than in the second quarter of 2001; automobile volume was eight-percent lower. The improvement in container volume was due to a combination of contract-carriage volume and apparent strengthening in some segments of Hawaii's economy. Some portion of that freight increase also is attributable to shipments in advance of the June 30 expiration date of the West Coast longshore contract.

In the first half of 2002, ocean transportation operating profit was $17.3 million. This was a decrease of $18.9 million, or 52 percent, from $36.2 million in the first half of 2001. The decrease resulted primarily from post 9/11 economic effects and from lower productivity at Sand Island.

Real Estate Results Lower in 2nd Quarter

Prior to excluding a real estate sale that was treated as a discontinued operation (described further below), operating profit from property leasing activities in the second quarter of 2002 was $7.6 million. This was $1.1 million, or 13-percent, lower than the $8.7 million in the second quarter of 2001. The decrease was due primarily to modestly lower occupancy levels.

In the first half of 2002, and prior to excluding several real estate sales that were treated as discontinued operations, property leasing operating profit was $15.9 million. This was $1.5 million, or nine-percent, lower than the $17.4 million earned in the first half of 2001. Year-to-date 2002 occupancy levels for Mainland properties averaged 91 percent, versus 93 percent in the first half of 2001. Average occupancy levels for Hawaii properties eased to 87 percent, versus 90 percent in the comparable period of 2001.

Prior to treating one sale as a discontinued operation, property sales revenue totaled $16.6 million in the second quarter of 2002, compared with $29.2 million in the second quarter of 2001. In the second quarter of 2002, operating profit resulting from property sales was $3.0 million, versus operating profit of $3.6 million in the second quarter of 2001. Results for the second quarter of 2001 included a larger number of home sales in residential developments, transactions that generally have lower profit margins. Among the sale transactions in the second quarter of 2002 were a small shopping center in Greeley, Colorado, and an 85-acre parcel in upcountry Maui. Variability in sales revenue and operating profit is an inherent characteristic of property sales activity.

Property sales revenue totaled $53.9 million in the first half of 2002, compared with $72.2 million in the first half of 2001. In the first half of 2002, operating profit resulting from property sales was $11.9 million. This was $3.9 million, or 25-percent, lower than the $15.8 million in the first half of 2001.

As a result of the adoption by A&B of SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" in 2001, and additional guidance from the February 2002 meeting of the Financial Accounting Standards Board, the sales of certain income-producing assets--even individual buildings within a real estate portfolio--are now reported as "discontinued operations" if their earnings and cash flows are separately identifiable and are material.

During the second quarter, the sale of a shopping center met the criteria for classification as a discontinued operation and, in the first quarter of 2002, the sale of several buildings in Texas and of a land parcel subject to a ground lease also met these criteria. The after-tax gains on the sales, and the current and historical earnings of all of these properties are classified, therefore, in the financial statements under the caption "Discontinued Operations: Properties."

Sugar Harvest Volume, Prices Trim Food Products Results

In the second quarter of 2002, the food products segment had an operating profit of $1.0 million, compared with an operating profit of $1.5 million in the second quarter of 2001. The decline was due to lower production volumes of sugar and molasses, and lower sugar prices.

In the first half of 2002, food products had an operating profit of $3.1 million, compared with operating profit of $7.3 million in the first half of 2001. The latter profit was buoyed by a one-time distribution of $5 million from the sugar transportation cooperative that handles Hawaii growers' production.

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 19 of the Company's Annual Report on Form 10-K, which is included in the Company's 2001 annual report to shareholders. These factors could cause actual results to differ materially from those projected in the statements.

                      ALEXANDER & BALDWIN, INC.
         2002 and 2001 Second-Quarter And First-Half Results
                             (Unaudited)
                                      2002               2001
                                  ------------       ------------
Three Months Ended June 30:
Revenue                           $279,185,000       $293,012,000
Income From Continuing
 Operations                        $12,524,000        $24,635,000
Discontinued Operations:
 Properties/1                         $673,000           $367,000
Discontinued Operations:
 Agriculture/2                            --            ($488,000)
Net Income                         $13,197,000        $24,514,000
Basic Share Earnings
  Continuing Operations                  $0.31              $0.61
  Net Income                             $0.32              $0.61
Diluted Share Earnings
  Continuing Operations                  $0.30              $0.61
  Net Income                             $0.32              $0.60
Average Shares Outstanding          41,033,000         40,568,000
Six Months Ended June 30:
Revenue                           $512,972,000       $567,793,000
Income From Continuing
 Operations                        $17,838,000        $47,279,000
Discontinued Operations:
 Properties/1                       $5,166,000           $603,000
Discontinued Operations:
 Agriculture/2                            --            ($934,000)
Net Income                         $23,004,000        $46,948,000
Basic Share Earnings
  Continuing Operations                  $0.44              $1.17
  Net Income                             $0.56              $1.16
Diluted Share Earnings
  Continuing Operations                  $0.43              $1.16
  Net Income                             $0.56              $1.15
Average Shares Outstanding          40,829,000         40,538,000
/1  "Discontinued Operations: Properties" consists of sales of certain
    lands and buildings that are material and have separately
    identifiable earnings and cash flows.
/2  "Discontinued Operations: Agriculture" consists of an abandoned
    panel board manufacturing business.
                   Industry Segment Data, Net Income
                       (In Thousands, Unaudited)
                        Three Months Ended       Six Months Ended
                             June 30,                June 30,
                          2002        2001        2002        2001
                       ---------   ---------   ---------   ---------
Revenue:
Ocean Transportation   $ 223,074   $ 203,212   $ 415,818   $ 399,821
Property Development
 & Management
  Leasing                 17,392      17,490      35,220      34,586
  Sales                   16,636      29,155      53,907      72,239
  Less Amounts Reported
   In Discontinued
   Operations             (5,440)     (1,109)    (35,924)     (2,159)
Food Products             27,523      28,076      43,951      46,261
Other                       --        16,188        --        17,045
                       ---------   ---------   ---------   ---------
  Total Revenue        $ 279,185   $ 293,012   $ 512,972   $ 567,793
                       =========   =========   =========   =========
Operating Profit, Net Income:
Ocean Transportation   $  14,818   $  18,713   $  17,325   $  36,168
Property Development
 & Management
  Leasing                  7,616       8,679      15,858      17,419
  Sales                    2,974       3,551      11,852      15,767
  Less Amounts Reported
   In Discontinued
   Operations             (1,051)       (573)     (8,075)       (943)
Food Products              1,033       1,509       3,128       7,311
Other                       --        16,107        --        16,947
                       ---------   ---------   ---------   ---------
  Total Operating
   Profit                 25,390      47,986      40,088      92,669
Interest Expense          (3,060)     (4,870)     (6,017)    (10,649)
Corporate Expenses        (3,256)     (3,191)     (6,204)     (6,982)
                       ---------   ---------   ---------   ---------
  Income From Continuing
   Operations Before
   Income Taxes           19,074      39,925      27,867      75,038
Income Taxes              (6,550)    (15,290)    (10,029)    (27,759)
                       ---------   ---------   ---------   ---------
Income From Continuing
 Operations               12,524      24,635      17,838      47,279
 Discontinued Operations:
  Properties                 673         367       5,166         603
 Discontinued Operations:
  Agriculture               --          (488)       --          (934)
                       ---------   ---------   ---------   ---------
Net Income             $  13,197   $  24,514   $  23,004   $  46,948
                       =========   =========   =========   =========
Basic Earnings Per
 Share, Continuing
 Operations            $    0.31   $    0.61   $    0.44   $    1.17
Basic Earnings Per
 Share, Net Income     $    0.32   $    0.61   $    0.56   $    1.16
Average Shares            41,033      40,568      40,829      40,538
                      Consolidated Balance Sheets
                            (In Thousands)
                                      June 30,      December 31,
                                        2002            2001
                                     ----------      ----------
                                     (Unaudited)
ASSETS
Current Assets                       $  206,563      $  220,014
Investments                              35,033          33,021
Real Estate Developments                 51,545          47,840
Property, Net                           975,999         977,048
Capital Construction Fund               175,335         158,737
Other Assets                            114,021         107,759
                                     ----------      ----------
          Total                      $1,558,496      $1,544,419
                                     ==========      ==========
LIABILITIES & EQUITY
Current Liabilities                  $  171,662      $  195,569
Long-Term Debt                          233,378         207,378
Post-Retirement Benefit Obligs           42,696          42,915
Other Long-Term Liabilities              46,667          49,181
Deferred Income Taxes                   344,094         338,709
Shareholders' Equity                    719,999         710,667
                                     ----------      ----------
          Total                      $1,558,496      $1,544,419
                                     ==========      ==========
                 Consolidated Statements of Cash Flows
                            (In Thousands)
                                          Six Months Ended
                                              June 30,
                                        2002            2001
                                     ----------      ----------
                                            (Unaudited)
Operating Cash Flows                 $   (7,496)     $   76,929
Capital Expenditures                    (26,340)        (63,363)
CCF Withdrawals (Deposits), Net         (16,598)            358
Proceeds From Sale of Bank Stock           --            16,217
Proceeds From
 (Payment of) Debt, Net                  33,700         (20,000)
Dividends Paid                          (18,365)        (18,252)
All Other, Net                           24,636           4,968
                                     ----------      ----------
Increase (Decrease) In Cash            $(10,463)     $   (3,143)
                                     ==========      ==========
Depreciation                         $   35,457      $   36,310
                                     ==========      ==========
CONTACT:
Alexander & Baldwin, Inc.
John B. Kelley, 808/525-8422 (VP)
invrel@abinc.com

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