ALEXANDER & BALDWIN INC - 10-K Annual Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1997
Commission file number 0-565

ALEXANDER & BALDWIN, INC.
(Exact name of registrant as specified in its charter)

HAWAII 99-0032630
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)

822 BISHOP STREET
POST OFFICE BOX 3440, HONOLULU, HAWAII 96801
(Address of principal executive offices and zip code)

808-525-6611
(Registrant's telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, WITHOUT PAR VALUE
(Title of Class)

NUMBER OF SHARES OF COMMON STOCK OUTSTANDING AT FEBRUARY 13, 1998:
44,853,282

AGGREGATE MARKET VALUE OF COMMON STOCK HELD BY NON-AFFILIATES AT FEBRUARY 13,
1998:
$1,117,966,743

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 x No
----- -----

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]

DOCUMENTS INCORPORATED BY REFERENCE
PORTIONS OF REGISTRANT'S PROXY STATEMENT DATED MARCH 9, 1998 (PART III OF FORM
10-K).
PORTIONS OF REGISTRANT'S ANNUAL REPORT TO SHAREHOLDERS FOR THE YEAR ENDED
DECEMBER 31, 1997 (PARTS I, II AND IV OF FORM 10-K).

TABLE OF CONTENTS

PART I
Page
----

Items 1. & 2. Business and Properties .............................. 1

A. Ocean Transportation ....................................... 2
(1) Freight Services ..................................... 2
(2) Vessels .............................................. 3
(3) Terminals ............................................ 3
(4) Other Services ....................................... 5
(5) Competition .......................................... 6
(6) Labor Relations ...................................... 7
(7) Rate Regulation ...................................... 8

B. Property Development and Management ........................ 8
(1) General .............................................. 8
(2) Planning and Zoning .................................. 9
(3) Residential Projects ................................. 10
(4) Commercial and Industrial Properties ................. 12

C. Food Products .............................................. 16
(1) Production ........................................... 16
(2) Sugar Refining; Marketing of Sugar
and Coffee ........................................... 17
(3) Competition and Sugar Legislation .................... 18
(4) Properties and Water ................................. 21

D. Employees and Labor Relations .............................. 22

E. Energy ..................................................... 24

Item 3. Legal Proceedings .......................................... 25

Item 4. Submission of Matters to a Vote of
Security Holders ........................................... 26

PART II

Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters ................................ 26

Item 6. Selected Financial Data .................................... 27

Item 7. Management's Discussion and Analysis
of Financial Condition and Results of
Operations ................................................. 27

Item 8. Financial Statements and Supplementary Data ................ 27

Item 9. Changes in and Disagreements With
Accountants on Accounting and Financial
Disclosure ................................................. 28

PART III

Item 10. Directors and Executive Officers of
the Registrant ............................................. 28

A. Directors ............................................... 28

B. Executive Officers of the Registrant ....................... 28

Item 11. Executive Compensation ..................................... 30

Item 12. Security Ownership of Certain Beneficial
Owners and Management ...................................... 30

Item 13. Certain Relationships and Related
Transactions ...............................................30

PART IV

Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K .................................... 30

A. Financial Statements ....................................... 30

B. Financial Statement Schedules .............................. 31

C. Exhibits Required by Item 601 of
Regulation S-K ............................................. 31

D. Reports on Form 8-K ........................................ 40

Signatures ....................................................... 41

Independent Auditors' Report ........................................ 43

Schedule I ....................................................... 44

Independent Auditors' Consent ....................................... 48

[Note: Page references refer to printed document rather than
electronic version.]

ALEXANDER & BALDWIN, INC.
-------------------------

FORM 10-K
---------

ANNUAL REPORT FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1997

PART I
------

ITEMS 1 AND 2. BUSINESS AND PROPERTIES
- ---------------------------------------

Alexander & Baldwin, Inc. ("A&B") is a diversified corporation with most
of its operations centered in Hawaii. It was founded in 1870 and incorporated
in 1900. Ocean transportation operations and related shoreside operations of
A&B are conducted by a wholly-owned subsidiary, Matson Navigation Company, Inc.
("Matson"), and several Matson subsidiaries, all of which are headquartered in
San Francisco. Real property and food products operations are conducted by a
wholly-owned subsidiary of A&B, A&B-Hawaii, Inc. ("ABHI"), and several ABHI
subsidiaries, including California and Hawaiian Sugar Company, Inc. ("C&H"),
all of which are headquartered in Hawaii or California.

The industry segments of A&B are as follows:

A. Ocean Transportation - carrying freight, primarily between various
--------------------
United States Pacific Coast ports, major Hawaii ports and Guam;
providing terminal, stevedoring, tugboat and container equipment
maintenance services in certain of those ports; chartering its
vessels to third parties; and arranging United States Mainland
intermodal transportation.

B. Property Development and Management - developing real property in
-----------------------------------
Hawaii and on the U.S. Mainland; selling residential properties in
Hawaii and on the U.S. Mainland; and managing, leasing, selling and
purchasing commercial/industrial properties in Hawaii and on the U.S.
Mainland.

C. Food Products - growing sugar cane and coffee in Hawaii; producing
-------------
raw sugar, molasses and green coffee; refining raw sugar, and
marketing and distributing refined sugar products, primarily in the
western United States; marketing and distributing roasted coffee and
green coffee; providing sugar and molasses hauling and storage,
general freight and petroleum hauling in Hawaii; and generating and
selling electricity.

For information about the revenue, operating profits and identifiable
assets of A&B's industry segments for the three years ended December 31, 1997,
see "Industry Segment Information" on page 24 of the Alexander & Baldwin, Inc.
1997 Annual Report ("1997 Annual Report"), which information is incorporated
herein by reference.

DESCRIPTION OF BUSINESS AND PROPERTIES

A. OCEAN TRANSPORTATION
--------------------

(1) FREIGHT SERVICES
----------------

Matson's Hawaii Service offers containership freight services
between the ports of Los Angeles, Oakland, Seattle, and the major ports in
Hawaii, which are located on the islands of Oahu, Kauai, Maui and Hawaii.
Roll-on/roll-off service is provided between Los Angeles and the major ports in
Hawaii. Container cargo also is received at and delivered to Portland, Oregon,
and moved overland between Portland and Seattle at no extra charge.

Matson is the principal carrier of ocean cargo between the
United States Pacific Coast and Hawaii. In 1997, Matson carried 149,734
containers (compared with 152,109 in 1996) and 78,641 motor vehicles (compared
with 83,097 in 1996) between those destinations. Principal westbound cargoes
carried by Matson to Hawaii include dry containers of mixed commodities,
refrigerated cargoes, packaged foods, building materials and motor vehicles.
Principal eastbound cargoes carried by Matson from Hawaii include household
goods, canned pineapple, refrigerated containers of fresh pineapple, motor
vehicles and molasses. The preponderance of Matson's Hawaii Service revenue
is derived from the westbound carriage of containerized freight and motor
vehicles.

Matson's Guam Service provides containership freight service
between the United States Pacific Coast and Guam and Micronesia. Matson's Guam
Service is a component of the Pacific Alliance Service, a strategic alliance
established in 1996 by Matson and American President Lines, Ltd. ("APL") to
provide freight service between the United States Pacific Coast and Hawaii,
Guam, Japan, and South Korea. In 1997, Matson carried 19,122 containers
(compared with 15,249 in 1996) and 3,595 automobiles (compared with 3,729 in
1996) in the Guam Service. Modifications to the strategic alliance were
implemented in January 1998 to provide better service and reduce operating
costs. The restructured alliance now utilizes six vessels (three Matson
vessels and three APL vessels) rather than five, in a schedule which provides
service from the United States Pacific Coast to Guam and Micronesia, continuing
through Far East ports, and returning to California.

Matson's Pacific Coast Service provides containership freight
service between Los Angeles, Oakland, Seattle and Vancouver, Canada. In 1997,
Matson carried 39,390 containers (compared with 38,237 in 1996) in the Pacific
Coast Service. The Pacific Coast Service has benefited from the startup, in
August 1997, of a relationship with Canadian National Railway, which enables
Matson to provide the railway and its customers with reliable, fixed-day
service that reduces overall transit time between western Canada and southern
California.

Matson's Mid-Pacific Service offers container and conventional
freight service between the United States Pacific Coast and the ports of
Kwajalein, Ebeye and Majuro in the Republic of the Marshall Islands and
Johnston Island, all via Honolulu.

See "Rate Regulation" below with respect to Matson's freight
rates.

(2) VESSELS
-------

Matson's cargo fleet consists of eleven containerships, four
combination container/trailerships, one roll-on/roll-off barge, two container
barges equipped with cranes which serve the neighbor islands of Hawaii and one
container barge equipped with cranes in the Mid-Pacific Service. These
nineteen vessels represent an investment of approximately $836,800,000 during
the past 28 years. The majority of vessels in the Matson cargo fleet has been
acquired with the assistance of withdrawals from a Capital Construction Fund
established under Section 607 of the Merchant Marine Act, 1936, as amended.

Matson's fleet units are described in the list on the following
page.

As a complement to its fleet, Matson owns approximately 16,800
containers, 9,300 container chassis, 450 auto-frames and miscellaneous other
equipment. Capital expenditures by Matson in 1997 for vessels and equipment
totaled approximately $19,200,000.

MATSON NAVIGATION COMPANY, INC.
-------------------------------

FLEET - 3/1/98
--------------

Usable Cargo Capacity
-----------------------------------------------------------
Containers Vehicles Molasses
Year Maximum Maximum ------------------------------- -------------- --------
Vessel Official Year Recon- Speed Deadweight Reefer
Name Number Built structed Length (Knots) (Long Tons) 20' 24' 40' Slots TEUs (1) Autos Trailers Short Tons
- -----------------------------------------------------------------------------------------------------------------------------------

Diesel-Powered Ships
- --------------------
R.J. PFEIFFER 979814 1992 713'6" 23.0 27,100 48 171 988 300 2,229 -- -- --
MOKIHANA (2) 655397 1983 860'2" 23.0 30,167 182 312 1,134 408 2,824
MAHIMAHI (2) 653424 1982 860'2" 23.0 30,167 182 312 1,134 408 2,824
MANOA (2) 651627 1982 860'2" 23.0 30,187 182 312 1,134 408 2,824

Steam-Powered Ships
- -------------------
KAUAI 621042 1980 1994 720'5-1/2" 22.5 26,308 458 538 300 1,626 44 2,600
MAUI 591709 1978 1993 720'5-1/2" 22.5 26,623 458 538 300 1,626 2,600
KAIMOKU (3) 573223 1976 1990 790'9" 21.5 14,551 276 310 121 1,020 350 54 --
KAINALU (3) 557149 1974 1990 790'9" 21.5 14,976 276 310 121 1,020 350 54 --
MATSONIA 553090 1973 1987 760'0" 21.5 22,501 683 400 329 1,620 450 56 4,300
LURLINE (3) 549900 1973 1982 826'6" 21.5 22,221 597 345 340 1,476 220 81 2,100
EWA 530140 1972 1978 787'8" 21.0 38,656 294 861 180 2,015
CHIEF GADAO 530138 1971 1978 787'8" 21.0 37,346 230 464 597 274 1,981
LIHUE 530137 1971 1978 787'8" 21.0 38,656 286 276 681 188 1,979
MANULANI 528400 1970 720'5-1/2" 22.5 27,165 537 416 251 1,476 5,300
MANUKAI 524219 1970 720'5-1/2" 22.5 27,107 537 416 251 1,476 5,300

Tugs and Barges
- ---------------
WAIALEALE (4) 978516 1991 345'0" -- 5,621 35 230 45
ISLANDER (5) 933804 1988 372'0" -- 6,837 276 24 70 380 --
MAUNA LOA (5) 676973 1984 350'0" -- 4,658 144 72 84 316 2,100
HALEAKALA (5) 676972 1984 350'0" -- 4,658 144 72 84 316 2,100
MAOI (6) 618705 1980 75'0" 10.0 --
JOE SEVIER (6) 500799 1965 80'0" 10.0 --
- ------------------------------------------------------
(1) "Twenty-foot Equivalent Units" (including trailers). TEU is a standard measure of cargo volume correlated to the volume of a
standard 20-foot dry cargo container.
(2) Time-chartered to APL to February 2006.
(3) Reserve Status
(4) Roll-on/Roll-off Barge
(5) Container Barge
(6) Tug

(3) TERMINALS
---------

Matson Terminals, Inc. ("Matson Terminals"), a wholly-owned
subsidiary of Matson, provides container stevedoring, container equipment
maintenance and other terminal services for Matson and other ocean carriers at
the ports of Honolulu, Los Angeles, Oakland and Seattle.

Matson Terminals is among the largest container stevedoring
and terminal operators on the United States Pacific Coast. A total of 858
vessel calls were served at all Matson Terminals container facilities in 1997.
The four terminals operated by Matson Terminals are as follows:

TERMINAL EXPIRATION OF 1997 USABLE
TERMINAL SIZE TERMINAL THROUGHPUT CONTAINER CRANE SHIP
LOCATION (ACRES) LEASE (# CONTAINERS) CRANES (#) OWNERSHIP BERTHS (#)
-------- -------- ------------- -------------- ---------- --------- ----------

Honolulu, HI 108 Sept 2016 390,137 7 Matson 3
Terminals

Los Angeles, CA 95 Jan 1999 232,670 4 Matson 3
Terminals

Oakland, CA 74 Dec 2008 131,893 3 Matson 3
Terminals

Seattle, WA 35 Dec 1999 93,851 3 Port of 2
Seattle

Matson Terminals has lease agreements with the port authorities
for the use of the publicly-owned container terminal properties at these
locations and does not anticipate any difficulty in renewing such agreements as
they expire or in finding satisfactory alternative premises. In particular,
Matson Terminals anticipates it will reach a satisfactory agreement with the
Port of Los Angeles for the terminal space needed for its southern California
operations. In addition, at the Port of Seattle, Matson Terminals is scheduled
to relocate in the year 2000 to a larger facility, under a 30-year lease with
options to expand from the initial 48 acres up to 85 acres. Besides owning or
leasing the shoreside cranes identified in the above table, Matson Terminals
owns or leases supporting container-handling equipment at its container
facilities and owns all of the maintenance equipment used in providing
container equipment and terminal maintenance services.

Capital expenditures for terminals and equipment totaled
approximately $1,400,000 in 1997.

(4) OTHER SERVICES
-------------

Matson Intermodal System, Inc. ("Matson Intermodal"), a
wholly-owned subsidiary of Matson, is an intermodal marketing company which
arranges North American rail and truck transportation for shippers and
carriers, frequently in conjunction with ocean transportation. Through volume
purchases of rail and motor carrier transportation services, augmented by such
services as shipment tracing and single-vendor invoicing, Matson Intermodal is
able to reduce transportation costs for customers. Matson Intermodal currently
has 11 offices and manages 30 equipment depots across the United States
Mainland.

Matson Services Company, Inc. ("Matson Services"), a
wholly-owned subsidiary of Matson, owns two tugboats, which are employed in
Hawaiian waters under operating agreements to provide harbor assistance for
vessels calling at the islands of Hawaii and Maui.

(5) COMPETITION
-----------

Matson's Hawaii and Guam Services have one major containership
competitor which serves Long Beach, Oakland, Tacoma, Honolulu and Guam. In an
administrative proceeding in 1997, the purpose of which was to determine the
historic service levels to which that competitor would be limited as a condi-
tion to its participation in the Maritime Security Program, the U.S. Maritime
Administration limited the initial annual capacity which the competitor may
offer in the Hawaii trade to 162,378 TEUs (see footnote (1) on page 4 for an
explanation of "TEU"). Other competitors in the Hawaii Service include two
common carrier barge services, unregulated proprietary and contract carriers of
bulk cargoes and air cargo services. Competitors in the Pacific Coast Service
include truck, rail and ocean carrier services.

Matson vessels are operated on schedules which make available
to shippers and consignees regular day-of-the-week sailings from the United
States Pacific Coast and day-of-the-week arrivals in Hawaii. This service is
attractive to customers because it decreases their overall distribution costs.
In addition, Matson competes by offering more comprehensive service to
customers, supported by its scope of equipment and its efficiency and
experience in the handling of containerized cargoes, and by competitive
pricing. Although air freight competition is intense for time-sensitive or
perishable cargoes, historic and projected inroads of such competition in cargo
volume are limited by the amount of cargo space available in passenger aircraft
and by generally higher air freight rates.

The carriage of cargo between the United States Pacific Coast
and Hawaii on foreign-built or foreign-documented vessels is prohibited by
Section 27 of the Merchant Marine Act, 1920, frequently referred to as the
Jones Act. However, foreign-flag vessels carrying cargo to Hawaii from foreign
sources provide indirect competition for Matson's container freight service
between the United States Pacific Coast and Hawaii. Far East countries,
Australia and New Zealand have direct foreign-flag services to Hawaii.

In response to coordinated efforts by various interests to
convince Congress to repeal the Jones Act, in 1995 a coalition of more than 400
businesses and organizations, including Matson, formed the Maritime Cabotage
Task Force to support the retention of the Jones Act and other cabotage laws.
Repeal of the Jones Act would allow all foreign-flag vessel operators, who
would not have to abide by U.S. laws and regulations, to sail between American
ports in direct competition with Matson and other U.S. operators who must
comply with such laws and regulations. The Task Force 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.
Bills introduced in Congress in 1997 to repeal the Jones Act received
substantial media attention, but were not voted upon. On the other hand, the
Task Force succeeded in promoting adoption of Concurrent Resolution 65 by the
House of Representatives. The resolution expresses "the sense of the
Congress . . . that the Jones Act and related statutes are critically important
components of our Nation's economic and military security and should be fully
and strongly supported."

Matson Terminals competes with numerous other companies which
perform the same or similar services. The container stevedoring and terminal
services business is extremely competitive. The primary considerations of
ocean carriers, when selecting stevedore and terminal operators, are rates,
quality of service, expertise and reputation. The industry is highly capital-
intensive because of the need for expensive container-handling equipment.

Matson Intermodal competes for freight with a number of large
and small companies engaged in intermodal transportation. Matson Services
competes with several larger operators of tugboats in Hawaiian waters.

(6) LABOR RELATIONS
---------------

The absence of strikes and the availability of labor through
hiring halls are important to maintenance of profitable operations by Matson.
Although Matson's operations have not been disrupted significantly by strikes
in the past 26 years, recent labor disruptions at some United States Pacific
Coast ports by longshore bargaining units of the International Longshore and
Warehouse Union ("ILWU"), which are attributed to dissatisfaction with
collective bargaining agreements negotiated with the Pacific Maritime
Association in 1996, have adversely affected the operations and operating costs
of Matson and other ocean carriers calling at those ports. In addition, a
strike against the Port of Los Angeles by ILWU ship pilots and a severe
shortage of ILWU longshore workers in southern California, both of which
occurred in the second half of 1997, contributed further to these adverse
affects on Matson and other ocean carriers. See "Employees and Labor
Relations" below for a description of labor agreements and certain unfunded
liabilities for multi-employer pension plans to which Matson and Matson
Terminals contribute.

(7) RATE REGULATION
---------------

Matson is subject to the jurisdiction of the Surface
Transportation Board ("Board"), an agency within the U.S. Department of
Transportation, with respect to its domestic rates. The Interstate Commerce
Commission Termination Act of 1995 ("Act") establishes a "Zone of
Reasonableness," as defined in the Act, within which rate adjustments are
deemed reasonable. Rate adjustments outside of the Zone of Reasonableness are
subject to investigation and/or suspension by the Board. In December 1997,
Matson announced it would defer an across-the-board increase in its Hawaii
Service rates in recognition of the weak Hawaii economy.

B. PROPERTY DEVELOPMENT AND MANAGEMENT
-----------------------------------

(1) GENERAL
-------

The property development and management operations of A&B are
conducted by ABHI, a wholly-owned subsidiary headquartered in Honolulu. A&B
and its subsidiaries own approximately 93,000 acres of land, consisting of
approximately 91,000 acres in Hawaii and approximately 2,000 acres elsewhere,
as follows:

LOCATION NO. OF ACRES
-------- ------------

Maui ................................... 69,060
Kauai .................................. 21,910
California ............................. 1,952
Texas .................................. 43
Washington ............................. 24
Nevada ................................. 18
Colorado ............................... 10
Florida ................................ 3
------
TOTAL ................................ 93,020
======

As described more fully in the table below, the bulk of this acreage currently
is used for agricultural and related activities, and includes pasture land
leased to ranchers, watershed and conservation reserves. The balance is used
or planned for development or other urban uses. An additional 3,200 acres on
Maui and Kauai are leased from third parties.

CURRENT USE NO. OF ACRES
----------- ------------

HAWAII
Fully-entitled urban (defined below) ............... 1,170
Agricultural, pasture and
miscellaneous .................................... 60,900
Watershed land/conservation ........................ 28,900
U.S. MAINLAND
California ranch land............................... 1,900
Fully-entitled urban ............................... 150
------
TOTAL .......................................... 93,020
======

ABHI is actively involved in the entire spectrum of land
development, including planning, zoning, financing, constructing, purchasing,
managing and leasing, and selling and exchanging real property.

(2) PLANNING AND ZONING
-------------------

The entitlement process for development of property in Hawaii
is both time-consuming and costly, involving numerous State and County
regulatory approvals. For example, conversion of an agriculturally-zoned
parcel to residential zoning usually requires the following approvals:

- amendment of the County general plan to reflect the desired residential
use;

- approval by the State Land Use Commission to reclassify the parcel from
the "Agricultural" district to the "Urban" district;

- County approval to rezone the property to the precise residential use
desired; and,

- if the parcel is located in the Coastal Zone Management area, the
granting of a Special Management Area Permit by the County Planning Com-
mission.

The entitlement process is complicated by the conditions, restrictions and
exactions that are placed on these approvals, such as the construction of
infrastructure improvements, payment of impact fees, restrictions on the
permitted uses of the land, provision of affordable housing, and/or mandatory
fee sale of portions of the project.

ABHI actively works with regulatory agencies, commissions and
legislative bodies at various levels of government to obtain zoning
reclassification of land to its highest and best use. ABHI designates a parcel
as "fully-entitled" or "fully-zoned" when all necessary government approvals
have been obtained.

As described in more detail below, in 1997 work to obtain
entitlements for urban use focused on (i) the Kukui'ula residential development
on Kauai, (ii) the proposed master-planned community at Pilot Hill Ranch in
California, (iii) obtaining Community Plan designations for various ABHI lands
on Maui, and (iv) obtaining State "Urban" designation for two proposed single-
family subdivisions on Maui.

With regard to item (iii) in the preceding paragraph, ABHI
continues to participate actively in Maui County's decennial update of its
Community Plans, a process that began in 1992. The Community Plans serve to
guide planning and development activity over the next decade. ABHI has
obtained and continues to seek various urban designations for its undeveloped
lands within the following four Community Plans, where most of its Maui lands
are located: Pa'ia-Haiku Community Plan, Kihei-Makena Community Plan,
Wailuku-Kahului Community Plan, and Makawao-Pukalani-Kula ("Upcountry")
Community Plan. The Maui County Council adopted the Pa'ia-Haiku and Upcountry
Community Plans in 1995 and 1996, respectively. Adoption of the remaining two
Community Plans by the County Council is expected in 1998 and 1999.

(3) RESIDENTIAL PROJECTS
--------------------

ABHI is pursuing a number of residential projects in Hawaii
and on the U.S. Mainland, in particular:

(a) KUKUI'ULA. The 1,045-acre Kukui'ula project is envi-
---------
sioned to be a planned residential community on the island of Kauai, comprised
of up to 3,000 dwelling units, as well as an 18-hole golf course, hotels,
commercial areas, schools and parks. Construction of the wastewater treatment
plant, mass grading and drainage, and certain roadway improvements were
completed in 1993. The initial increment of 727 acres currently is available
for development, while the remaining 318 acres are conditionally designated
"Urban," subject to a showing that substantial progress has been made on
providing infrastructure to the initial increment.

Since 1993, construction activity at the Kukui'ula project had
been suspended because of weak economic conditions on Kauai. However, in
December 1997, the County of Kauai Planning Commission granted tentative
subdivision approval for a 32-lot residential subdivision known as "Koloa
Estates," located at the northeast corner of the Kukui'ula project.
Construction plans for this subdivision are being prepared, and it is
anticipated that construction could commence by mid-1998, with sales to follow
the completion of construction in early 1999.

Preliminary planning and design work also has commenced to
complete the entitlement process for the resort component of the project. It
is anticipated that this process will require approximately 18 months, and
will entail action by the State Land Use Commission and the County of Kauai.

(b) ELEELE NANI II. Also on Kauai, only two lots remain
--------------
available for sale at ABHI's Eleele Nani II development, consisting of 146
single-family lots on 27 acres. Sales of two lots closed in 1997.

(c) KU'AU BAYVIEW AT PA'IA. Since the completion and
----------------------
opening of the model complex in April 1996, 69 homes in this 92-lot single-
family subdivision (75% of the total) on Maui have been sold. As of February
1998, five contracts were in escrow. Despite continuing soft market
conditions, Ku'au Bayview has performed well compared to competing projects,
managing to attract buyers without having to reduce prices or provide
across-the-board sales incentives.

(d) KAHULUI IKENA. Since the completion of the 102-unit
-------------
Maui condominium project in June 1995, a total of 69 units have been sold to
date (21 units in 1995, 31 units in 1996, and 17 units in 1997). As of
February 1998, an additional seven units were in escrow.

(e) OTHER MAUI SUBDIVISIONS. Four agricultural subdivisions,
-----------------------
which consist of a minimum lot size of two acres per lot, were in various
stages of design and development in 1997. Final County subdivision approval
was issued in September 1997 for the nine-lot Kauhikoa Hill Ranch subdivision
(located in Haiku), and the sale of one lot closed in December. Site work
construction for the 28-lot Haiku Makai subdivision (also located in Haiku)
commenced in October 1997, and is expected to be substantially completed
in April 1998. Marketing activities began in February 1998, and the first
closings are projected for mid-1998. The construction plans for the 38-lot
Maunaolu subdivision (located in Haliimaile) continue to be processed by the
County, and are expected to receive County approval in the second quarter of
1998. However, construction will not begin until a potable water source has
been secured for the project. Finally, three lots at the 10-acre Ku'au Beach
Estates subdivision (located in Pa'ia) were sold last year, leaving one lot
available for sale.

In addition, ABHI is seeking to obtain State "Urban" designation
for two single-family subdivisions on Maui: (i) an approximately 200-unit
subdivision on 45 acres in Haliimaile, and (ii) an approximately 400-unit
subdivision on 110 acres in Spreckelsville. The latter project also involves
the possible development of nine holes of golf to expand the nearby nine-hole
Maui Country Club golf course into an 18-hole course. Petitions seeking
"Urban" designations for both subdivisions were substantially completed in
1997, and are expected to be filed with the State in the first quarter of 1998.

(f) PILOT HILL RANCH. Pilot Hill Ranch, located in El
----------------
Dorado County, near Sacramento, California, is intended to be developed as an
1,800-acre planned residential community, consisting of approximately 975
single- and multi-family homes, a golf course, parks and 15 acres of commercial
development. A lawsuit filed in 1996 to block implementation of the General
Plan for El Dorado County, which incorporates ABHI's development plan proposals
for the Pilot Hill Ranch project, is still pending.

A Specific Plan for the development of Pilot Hill Ranch
(equivalent to a zoning application) was submitted to the El Dorado County
Planning Department in March 1997. The approval process for a Specific Plan
requires the preparation of an Environmental Impact Report ("EIR"), under the
direction of the Planning Department. Work on the EIR by a consultant under
contract to the County commenced in July 1997, and the administrative draft was
substantially completed in December 1997. It is anticipated that the draft EIR
will be made public by April 1998, and that the acceptance process for the EIR
and the approval process for the Specific Plan can be completed by mid-1998.

(4) COMMERCIAL AND INDUSTRIAL PROPERTIES
------------------------------------

An important source of property revenue is the lease rental
income A&B and its subsidiaries receive from nearly 3.1 million leasable square
feet of industrial and commercial building space, ground leases on 270 acres
for commercial/industrial use, and leases on 11,500 acres for agricultural/
pasture use.

(a) HAWAII COMMERCIAL/INDUSTRIAL PROPERTIES
---------------------------------------

In Hawaii, most of the nearly 850,000 square feet of income-
producing commercial and industrial properties owned by A&B and its sub-
sidiaries are located in the central Kahului/Wailuku area of Maui. They
consist primarily of two shopping centers and four office buildings, as well as
several improved commercial and industrial properties. In 1997, A&B acquired
One Main Plaza, an 85,300-square-foot, six-story office building in downtown
Wailuku, pursuant to a tax-deferred exchange under Section 1031 of the Internal
Revenue Code ("IRC").

The primary Hawaii commercial/industrial properties are as
follows:

LEASABLE AREA
PROPERTY LOCATION TYPE (SQUARE FT.)
-------- -------- ---- -------------

Maui Mall Kahului, Maui Retail shopping 190,800
center

Kahului Shopping Kahului, Maui Retail shopping 108,200
Center center

One Main Plaza Wailuku, Maui Office 85,300

Wakea Business Kahului, Maui Warehouse/Retail 61,500
Center

Kahului Office Kahului, Maui Office 51,700
Building

Kahului Office Kahului, Maui Office 29,800
Center

Apex Building Kahului, Maui Retail 28,000

Stangenwald Building Honolulu, Oahu Office 28,000

In addition to the above-described properties, a number of
other commercial and industrial projects are being developed on Maui and Kauai,
including:

(1) TRIANGLE SQUARE. Marketing continues at this 11-
---------------
acre retail/commercial site in Kahului, Maui. Three lots have been leased so
far, and the Apex Building is currently 95% occupied by retail users. Addi-
tional ground leases and construction are planned for the balance of Triangle
Square, with marketing and leasing activity continuing in 1998.

(2) MAUI BUSINESS PARK. In 1997, the initial phase
------------------
(Phase IA) of the 42-acre Maui Business Park saw the opening of the Maui
Marketplace, a 300,000-square-foot retail center owned by a third party, which
occupies 20.3 acres of Phase IA's 37.4 salable acres. Anchor tenants for the
Maui Marketplace include Eagle Hardware, Office Max, Sports Authority, Bank of
Hawaii, Starbuck's, Burger King and Border's Bookstore and Music. In addition,
13 Maui Business Park lots have been sold or leased so far to various
commercial and retail businesses. These 13 lots, along with Maui Marketplace's
20.3 acres, represent an absorption of 70% of Phase IA's salable acres. There
remain 19 lots available for sale or lease.

The next phase of the Maui Business Park slated for
development is the 34-acre Phase IB. Offsite improvements are now in place,
and onsite improvements will commence as market conditions warrant. Maui
Business Park is planned eventually to comprise a total of four phases,
aggregating about 240 acres, to be developed over the next 20 years.

(3) PORT ALLEN INDUSTRIAL SUBDIVISION. On Kauai, one
---------------------------------
industrial lot remains available for sale.

Overall occupancy for the Hawaii commercial and industrial
properties owned by A&B and its subsidiaries averaged 78% in 1997, compared
with 86% in 1996, reflecting the weak Hawaii economy and the addition of new
properties with large amounts of untenanted space. The performance of the
Hawaii leased property portfolio is expected to continue to be affected in 1998
by weak demand, due to the economy. On Maui, the absorption of new retail
space constructed over the past three years, coupled with the termination of a
major lease at Maui Mall, are expected to result in a lower overall occupancy
rate. A&B is continuing its program of upgrading its Hawaii properties, with
major improvements being completed to the Kahului Office Building and One Main
Plaza.

(b) U.S. MAINLAND COMMERCIAL/INDUSTRIAL PROPERTIES
----------------------------------------------

On the U.S. Mainland, A&B and its subsidiaries own a portfolio
of commercial and industrial properties, acquired primarily by way of tax-
deferred exchanges under IRC Section 1031, comprising a total of approximately
2.24 million square feet of leasable area, as follows:

LEASABLE AREA
PROPERTY LOCATION TYPE (SQUARE FT.)
-------- -------- ---- -------------

Great Southwest Dallas, TX Industrial 901,402
Industrial

10500 Ridgeview Cupertino, CA Research and 246,000
Court development

Valley Freeway Kent, WA Industrial 229,099
Corporate Park

Airport Square Reno, NV Retail 168,071

Moulton Plaza Laguna Hills, CA Retail 133,999

LinPac Building City of Industrial 126,048
Industry, CA

4225 Roosevelt Seattle, WA Office 106,456
Building

Island Village Bainbridge Retail 106,212
Commercial Center Island, WA

Village at Indian Indian Wells, CA Retail 104,589
Wells

Wilshire Shopping Greeley, CO Retail 46,728
Center

Market Square Greeley, CO Retail 43,295

Professional Gainesville, FL Office 24,243
Center
Office Plaza
---------
TOTAL: 2,236,142
=========

A&B took advantage of California's strengthening economy by
selling its Spinnaker II research and development property in Fremont, CA in
May 1997 for $8.4 million. Proceeds from the sale were invested in October
1997, by way of an IRC Section 1031 exchange, in the Village at Indian Wells
shopping center, located in Indian Wells, CA. A&B also finalized a sales
agreement for its 10500 Ridgeview Court property, located in Cupertino, CA.
This sale is scheduled to close in June 1998. The strengthening California
economy also is expected to increase rental rates at Moulton Plaza shopping
center in Laguna Hills, CA, and to assist in the re-tenanting of the LinPac
Building in the City of Industry, CA (lease expired in February 1998).

In March 1997, the Wilshire Shopping Center was acquired in
Greeley, CO. This shopping center is near Market Square, a shopping center
purchased by A&B in 1995. Consistent, above average growth is expected for
this northern Colorado community.

A&B's Seattle-area properties realized significant benefits
from the area's expanding economy. The major tenant at the 4225 Roosevelt
office building renewed its lease for an additional five years with a rent
increase in excess of 50%. Valley Freeway Corporate Park and Island Village
Commercial Center maintained 100% occupancy levels. The Island Village Commer-
cial Center consists of the 97,153-square-foot Island Village Shopping Center,
which A&B has owned since 1990, as well as a nearby 9,059-square-foot office
building acquired in August 1997 with tax-deferred funds. In addition, an
8,400-square-foot retail building is under construction and is expected to be
completed by May 1998.

The Great Southwest Industrial property in Dallas, TX maintained
100% occupancy with the successful lease extensions of several major tenants.
This portfolio of industrial/warehouse properties continues to perform well,
despite the increase in the number of new, speculatively constructed buildings
in the area.

In Reno, NV, the Airport Square shopping center benefited from
the continued economic expansion of the northern Nevada market. Although there
was a significant increase in new retail space in 1997, the majority of the new
developments contained large retail spaces that did not directly compete with
Airport Square's tenant base.

The U.S. Mainland leased property portfolio had an average
overall occupancy rate of 98%, one percent higher than the prior year.

C. FOOD PRODUCTS
-------------

(1) PRODUCTION
----------

A&B has been engaged in activities relating to the production
of cane sugar and molasses in Hawaii since 1870. A&B's food products opera-
tions are conducted by ABHI. ABHI operates a sugar plantation on the island of
Maui, through its Hawaiian Commercial & Sugar Company ("HC&S") division, and a
coffee farm on the island of Kauai, through its Kauai Coffee Company, Inc.
("Kauai Coffee") subsidiary. Kauai Coffee formerly was known as Island Coffee
Company, Inc.

HC&S is Hawaii's largest producer of raw sugar, producing
198,037 tons of raw sugar in 1997, or 55% of the raw sugar produced in Hawaii.
Total Hawaii sugar production, in turn, amounted to approximately five percent
of total United States sugar production. HC&S harvested 17,005 acres of sugar
cane in 1997, compared with 17,183 acres in 1996. Yields averaged 11.6 tons of
sugar per acre in 1997, compared with 11.7 tons per acre in 1996. The average
cost per ton of sugar produced at HC&S, including the cost of power production,
was $446.92 in 1997, compared with $410.31 in 1996. The increase in cost per
ton is attributable in part to decreased sugar production. An aggressive cost
reduction effort, including personnel reductions, has been undertaken, and is
expected to improve performance in 1998. As a by-product of sugar production,
HC&S also produced 77,960 tons of molasses in 1997, compared with 65,525 tons
in 1996.

During 1997, Kauai Coffee had approximately 3,800 acres of
coffee trees under cultivation. The harvest of the 1997 coffee crop is
expected to yield approximately 4.4 million pounds of green coffee, compared
with 2.5 million pounds in 1996.

HC&S and McBryde Sugar Company, Limited ("McBryde"), the parent
company of Kauai Coffee, produce electricity for use by HC&S and Kauai Coffee,
respectively, and for sale to the local electric utility companies. HC&S's
power is produced by burning bagasse (sugarcane fiber), by hydroelectric power
generation and, when necessary, by burning fossil fuels, whereas McBryde
produces power solely by hydroelectric generation. The price for the power
sold by HC&S and McBryde is equal to the utility companies' "avoided cost" of
not producing such power themselves. In addition, HC&S receives a capacity
payment to provide a guaranteed power generation capacity to the local utility.
In 1997, HC&S sold 85,680 megawatt hours ("MWH") of electric power, and McBryde
sold 23,712 MWH. Revenue from the sale of electricity depends on the amount of
power produced and sold, as well as the average price of fuel. (See "Energy"
below.)

Kahului Trucking & Storage, Inc., a subsidiary of ABHI, provides
sugar and molasses hauling and storage, petroleum hauling, mobile equipment
maintenance and repair services, and self-service storage facilities on Maui.
Kauai Commercial Company, Incorporated, another subsidiary of ABHI, provides
similar services on Kauai, as well as general trucking services.

(2) SUGAR REFINING; MARKETING OF SUGAR AND COFFEE
---------------------------------------------

Virtually all of the raw sugar produced in Hawaii is purchased,
refined and marketed by C&H. C&H processes the raw cane sugar into a full line
of refined sugar products for the grocery market, and a full range of
industrial refined sugar products for industrial bakers, confectioners and food
processors. C&H is the leading sugar brand in the western United States.
Marketing of C&H's refined products is conducted by C&H's sales staff and a
network of brokers under exclusive representation agreements. The refined
products are marketed primarily in the western and central United States.

C&H's profit margins remained strong in 1997, as a result of the
comprehensive restructuring implemented in 1996 and stable refined sugar
selling prices in both the retail and industrial markets. A continuation of
appropriate balances between domestic production and consumption of refined
sugar, and between supplies of cane and beet sugar available in the U.S.
domestic market, allowed refined sugar prices to remain stable.

Problems still persist in the manner in which the U.S.
Department of Agriculture administers the domestic sugar support program, to
the continuing detriment of U.S. cane refiners. The program was renewed in
early 1996 with little change. Absent reforms in the administration of the
sugar program, the financial hardships experienced by the cane refining
industry prior to 1996, as a result of the sugar program, could occur again.
Insufficient supplies of raw cane sugar resulting from inadequate administra-
tion of the sugar program, for example, would affect cane refiners adversely.

Consumer sugar sales are seasonal in nature and, as a result,
C&H's financial results are expected to be better in the third and fourth
quarters of each fiscal year, compared with the first two quarters.

C&H has a ten-year supply contract, ending in 2003, with
Hawaiian Sugar & Transportation Cooperative ("HS&TC"), a cooperative consisting
of the major sugarcane growers in Hawaii (including HC&S), for C&H to acquire
substantially all raw sugar produced in Hawaii. There are no minimum supply
guarantees on the part of HS&TC. During 1997, the supply contract with HS&TC
provided 59% of the raw sugar sold by C&H. In recent years, a number of Hawaii
sugarcane growers have exited the business. There is no certainty that the
companies now producing sugar cane in Hawaii will be doing so in the future.
In 1998, C&H will continue to purchase significant amounts of raw sugar from
foreign sources, including Australia, Central and South America, the
Philippines and Taiwan, to supplement its purchases under the supply contract
with HS&TC.

At Kauai Coffee, coffee marketing efforts currently are being
directed toward developing a market for premium-priced, estate-grown Kauai
green coffee. Most of the 1997 coffee crop is being marketed on the U.S.
Mainland and in Asia as green (unroasted) coffee. Kauai Coffee has a supply
agreement with Nestle Beverage Company, ending with the 1997 crop, pursuant to
which Nestle Beverage Company purchases 25% of Kauai Coffee's annual green
coffee production. Sales of green coffee from the 1997 crop to Nestle are
proceeding, and there are no plans to extend or renew the supply agreement.
In addition to the sale of green coffee, Kauai Coffee produces and sells a
roasted, packaged coffee product in Hawaii under the "Kauai Coffee" trademark.

(3) COMPETITION AND SUGAR LEGISLATION
---------------------------------

Hawaiian sugar growers produce more sugar per acre than other
major producing areas of the world, but that advantage is partially offset by
Hawaii's high labor costs and the distance to the U.S. Mainland market. C&H's
refined sugar is marketed primarily west of Chicago. This is also the largest
beet sugar growing and processing area and, as a result, the only market area
in the United States which produces more sugar than it consumes. Sugar from
sugar beets is the greatest source of competition for C&H.

The overall U.S. sweetener market continues to grow. In 1997,
domestic consumption of caloric sweeteners comprised the following:

Refined sugar . . . . . . . 43%
High fructose corn syrup. . 40%
Other corn sweeteners . . . 16%
Other . . . . . . . . . . . 1%
----
TOTAL 100%
====

The use of non-caloric (artificial) sweeteners accounts for a relatively small
percentage of the domestic sweetener market. Although the use of high fructose
corn syrup and artificial sweeteners is expected to continue to grow, such in-
creased use is not expected to affect sugar markets significantly in the near
future.

Worldwide, most sugar is consumed in the country of origin.
Only about a quarter of world sugar is involved in international trade. A much
smaller amount is traded at the world sugar market price (the other sugar
involved in international trade is traded at negotiated prices under bilateral
trade agreements). Due to protective legislation, raw cane sugar prices in the
U.S. generally are substantially higher than the world price, and the amount of
foreign sugar allowed into the U.S. under import quotas is regulated by the
U.S. government. Such foreign sugar sells at U.S. domestic prices. As a
result, the world sugar price does not have material relevance to U.S. sugar
producers and refiners.

The U.S. Congress historically has sought, through legislation,
to assure a reliable domestic supply of sugar at stable and reasonable prices.
Congress's most recent renewal of protective legislation for domestic sugar is
provided by the Federal Agriculture Improvement and Reform Act, which was
signed into law in the first quarter of 1996 (the "1996 Act"). The 1996 Act
provides a sugar loan program for the 1996 through 2002 crops, with a loan rate
(support price) of 18 cents per pound for raw sugar. When the import quota is
1.5 million tons or less, the loans are recourse, meaning the producer is
liable for any losses the government incurs in remarketing any sugar forfeited
by the producer. When the import quota is greater than 1.5 million tons, the
loans are non-recourse, but in the event of forfeiture the producer must pay a
one-cent-per-pound penalty for the sugar forfeited to the government. The 1996
Act also eliminated marketing allotments, thereby removing the means of
limiting domestic production. The 1.25-million-ton minimum import quota set
under the General Agreement on Tariff and Trade ("GATT") is retained in the
1996 Act.

The loan rate represents the value of sugar given as collateral
for government price-support loans. The government is required to administer
the sugar program at no net cost, and this is accomplished by adjusting fees
and quotas for imported sugar to maintain the domestic price at a level that
prevents producers from defaulting on loans. The target price established by
the government is known as the market stabilization price and is based on the
loan rate plus transportation costs, interest and an incentive factor. The
market stabilization price was 21.8 cents per pound in 1988-89 and 21.9 cents
per pound in 1990-91. No market stabilization price has been announced since
1990-91. The actual U.S. domestic sugar price (measured by the closing price
of the quoted spot contract) averaged 21.62 cents per pound in 1993, 22.03
cents per pound in 1994, 23.03 cents per pound in 1995 (reaching a high of
25.00 cents per pound in June and July), 22.36 cents per pound in 1996, and
21.94 cents per pound in 1997. The abnormally high average raw sugar price in
1995 was due to flaws in the existing federal sugar legislation and in the
administration of the U.S. sugar program. The foregoing average prices are
based on the average daily New York Contract #14 price for domestic raw sugar.
A chronological chart of these prices is shown below.

[The printed document includes a graph of the prices; the data points for this
graph are shown below.]

U.S. Raw Sugar Prices
(New York Contract #14)
(Average cents per pound)

1995 1996 1997
---- ---- ----

January 22.66 22.39 21.88

February 22.67 22.58 21.87

March 22.46 22.57 21.81

April 22.78 22.59 21.73

May 23.10 22.59 21.70

June 23.50 22.49 21.63

July 24.47 21.80 22.04

August 23.37 22.35 22.26

September 23.21 22.38 22.30

October 22.92 22.36 22.25

November 22.60 22.12 21.90

December 22.70 22.10 21.89

Under the long-term raw sugar supply agreement between C&H and
HS&TC, the participating growers sell their raw sugar to C&H at a price equal
to the No. 14 Contract settlement price, less a discount and less costs of
sugar vessel discharge and stevedoring. This price becomes a cost to C&H and,
after deducting the marketing, operating, distribution, transportation and
interest costs of HS&TC, reflects the gross revenue to the Hawaii sugar
growers, including HC&S. The No. 14 price is established by, among other
things, the supply of and demand for all forms of domestically-produced
sweeteners, government policies regarding the U.S. sugar import quota, and
potential changes in international trade programs which might affect the U.S.
sugar program.

Liberalized international trade agreements, such as the GATT,
include provisions relating to agriculture, but these agreements will not
affect the U.S. sugar or sweetener industries materially. A "side" agreement
that modified the North American Free Trade Agreement ("NAFTA") alleviated some
of the cane refiners' and sugar producers' concerns over NAFTA provisions which
could have allowed Mexico to export large quantities of sugar to the U.S.
starting in four years. Under the side agreement, if Mexico is projected to be
a net surplus producer of sugar, i.e., its production of sugar is expected to
exceed its consumption of both sugar and high fructose corn syrup, then it is
limited to 25,000 tons of sugar exports, in any form, to the U.S. This export
ceiling increases to 250,000 tons of sugar in the year 2000, and is eliminated
in the year 2007.

(4) PROPERTIES AND WATER
--------------------

C&H's refining operations are located at Crockett, California.
The Crockett refinery is one of the largest in the world, and is the only cane
sugar refinery on the U.S. West Coast. It is ideally located next to a deep-
water port, a major rail line and an interstate highway. The refinery and
administrative offices occupy a complex of buildings that contains approxi-
mately 1,310,000 square feet and is located on approximately 55 acres. C&H
leases approximately 42 acres from the California State Lands Commission under
long-term ground leases, and owns the remaining area. The Lease Agreement with
the State of California covering the main refinery and wharf facilities expires
in 2022, and the Lease Agreement covering the area where the secondary
wastewater treatment facility is located expires in 2024.

The HC&S sugar plantation, the largest in Hawaii, consists of
approximately 41,000 acres of land, including 2,000 acres leased from the State
of Hawaii and 1,300 acres under lease from private parties. Approximately
36,700 acres are under cultivation, and the balance either is used for
contributory purposes, such as roads and plant sites, or is not suitable for
cultivation.

McBryde owns approximately 9,500 acres of land on Kauai, of
which approximately 2,400 acres are used for watershed and other conservation
uses, approximately 4,000 acres are used by Kauai Coffee, and the remaining
acreage is leased to various agriculture enterprises for cultivation of a
variety of crops and for pasturage.

Large quantities of water are necessary to grow sugar cane and
coffee. Because of the importance of water, access to water, reliable sources
of supply and efficient irrigation systems are crucial for the successful
growing of sugar cane and coffee. A&B's plantations use a "drip" irrigation
system that distributes water to the roots through small holes in plastic
tubes. A total of 35,686 acres, 97% of HC&S's cane lands, currently are drip
irrigated. All of Kauai Coffee's fields are drip irrigated.

ABHI owns 16,000 acres of watershed lands on Maui which supply a
portion of the irrigation water used by HC&S. ABHI also held four water
licenses to 38,000 acres owned by the State of Hawaii, which over the years
supplied approximately one-third of the irrigation water used by HC&S. The
last of these water license agreements expired in 1986, and all four agreements
have been extended as revocable permits that are renewable annually. The State
Board of Land and Natural Resources has indicated its intention to replace
these four permits with long-term licenses. The issuance of such licenses
currently is pending a hearing before the Board.

D. EMPLOYEES AND LABOR RELATIONS
-----------------------------

As of December 31, 1997, A&B and its subsidiaries had approximately
2,930 regular full-time employees. About 1,099 regular full-time employees
were engaged in the growing of sugar cane and coffee and the production of raw
sugar and green coffee, 529 were engaged in the refining and marketing of
sugar, 1,086 were engaged in ocean transportation, 42 were engaged in property
development and management, and the balance was in administration and
miscellaneous operations. Approximately 61% were covered by collective
bargaining agreements with unions.

As of December 31, 1997, Matson and its subsidiaries had approxi-
mately 1,086 regular full-time employees, 344 seagoing employees and 368 casual
employees. Approximately 37% of the regular full-time employees, all of the
seagoing employees and all of the casual employees were covered by collective
bargaining agreements. The casual employees are U.S. Pacific Coast longshore
workers who are employed through hiring halls and are not full-time employees
of either Matson or Matson Terminals.

Bargaining unit employees of Matson and Matson Terminals, other than
seagoing employees, are represented by 10 different unions, and Matson and
Matson Terminals are parties to 95 separate collective bargaining agreements.
Matson's seagoing employees are represented by six unions. Matson and Matson
Terminals are members of the Pacific Maritime Association ("PMA"), and Matson
Terminals also is a member of the Hawaii Stevedoring Industry Committee and the
Hawaii Employers Council, through which organizations various collective
bargaining agreements are negotiated. Matson also is a member of the Maritime
Service Committee ("MSC"), which engages in collective bargaining with three
unions representing licensed deck, engineer, and radio officers for Matson
vessels.

Historically, collective bargaining with the longshore and seagoing
unions has been complex and difficult. However, Matson and Matson Terminals
consider their respective relations with the International Longshore and
Warehouse Union ("ILWU"), other unions, and their non-union employees generally
to be satisfactory.

During 1997, collective bargaining agreements with two Hawaii units
of the ILWU and two Oakland units of the International Brotherhood of Teamsters
were renewed for three-year terms, retroactive to 1996. The collective
bargaining agreement with the Los Angeles International Association of
Machinists, covering mechanics at Los Angeles, was extended for two years, from
1999 to 2001. A collective bargaining agreement with the Los Angeles office
clerical employees, represented by the ILWU, was entered into for a one-year
term. In February 1998, negotiations were completed on a supplemental agree-
ment to the ILWU Pacific Coast agreement, which covers vessel planners employed
by Matson and other companies in Los Angeles.

Collective bargaining agreements with the American Radio
Association, the United Brotherhood of Carpenters and Joiners of America in
Oakland, and the ILWU office clerical union in Los Angeles are expected to be
renewed in 1998 without service interruption.

In January 1997, the Acting Regional Director of the National Labor
Relations Board ("NLRB"), in response to the ILWU's petition requesting that it
be certified as the bargaining agent for employees who plan and supervise the
loading of ships at Seattle, ruled that these Seattle employees are supervisors
who are not subject to the National Labor Relations Act. The union's appeal of
that ruling to the NLRB in Washington, D.C. is pending.

Matson contributed during 1997 to multi-employer pension plans for
vessel crews. If Matson were to withdraw from or significantly reduce its
obligation to contribute to one of the plans, Matson would review and evaluate
data, actuarial assumptions, calculations and other factors used in determining
its withdrawal liability, if any, and, in the event of material disagreement
with such determination, would pursue the various means available to it under
federal law for the adjustment or removal of its withdrawal liability. Matson
Terminals participates in a multi-employer pension plan for its Hawaii
longshore employees. For a discussion of withdrawal liabilities under the
Hawaii longshore and seagoing plans, see Note 5 to A&B's financial statements
on page 35 of the 1997 Annual Report, which Note is incorporated herein by
reference.

Matson pays, through Matson Terminals on the basis of cargo tons
carried, and Matson Terminals contributes as a direct employer, to a
multi-employer pension plan for Pacific Coast longshore workers. Under special
withdrawal liability rules in the plan, Matson Terminals could cease United
States Pacific Coast cargo handling operations permanently and stop making
contributions to the plan, without any withdrawal liability.

Bargaining unit employees of HC&S are covered by two collective bar-
gaining agreements with the ILWU. These agreements have been renegotiated and
expire January 31, 2000. The collective bargaining agreements covering the
three ILWU bargaining units at Kahului Trucking & Storage, Inc. have been
renegotiated, with two expiring June 30, 1999 and the third expiring March 31,
2001. The two collective bargaining agreements with Kauai Commercial Company,
Incorporated employees represented by the ILWU are in the process of being
renegotiated. The collective bargaining agreement with the ILWU for the
production unit employees of Kauai Coffee expires January 31, 1999.

The bargaining unit employees of C&H at Crockett, California are
represented by the Sugar Workers Union and the ILWU. Contracts covering these
employees extend through May 31, 1998. Negotiations for new contracts are
expected to commence soon.

E. ENERGY
------

Matson and Matson Terminals purchase residual fuel oil, lubricants,
gasoline and diesel fuel for their operations. Residual fuel oil is by far
Matson's largest energy-related expense. In 1997, Matson vessels consumed
approximately 2.8 million barrels of residual fuel oil, compared with
2.25 million barrels in 1996.

Residual fuel oil prices started 1997 at $125.00 per metric ton and
ended the year at $86.00 per metric ton. A high of $125.90 per metric ton
occurred in January, and a low of $84.50 per metric ton occurred in December.
Sufficient fuel for Matson's requirements is expected to be available in 1998.

As is the practice with sugar plantations throughout Hawaii, HC&S
uses bagasse, the residual fiber of the sugarcane plant, as a fuel to generate
steam for the production of most of the electrical power for sugar milling and
irrigation pumping operations. In addition to bagasse, supplemental fuel is
required to produce power, principally for pumping irrigation water during the
factory shutdown period when bagasse is not being produced. No. 6 (heavy) oil
and coal are the primary supplemental fuels used by HC&S. Since 1992, when
suppliers of oil to HC&S discontinued regular heavy oil shipments as a result
of unlimited liability concerns arising from federal and state environmental
laws, heavy oil has been provided to HC&S on a space-available basis. In 1997,
HC&S produced 228,279 MWH of electric power and sold 85,680 MWH, compared with
239,498 MWH produced and 82,447 MWH sold in 1996. HC&S's oil use increased to
215,389 barrels in 1997 from the 189,938 barrels used in 1996. Coal use for
power generation also increased, from 42,534 short tons in 1996 to 50,946 short
tons in 1997. The increased use of oil and coal was due primarily to a
reduction in the quality (in terms of fuel value) of the bagasse and an
increase in the steam energy requirements for raw sugar production.

In 1997, McBryde produced 34,676 MWH of hydroelectric power, compared
with 33,723 MWH of hydroelectric power produced in 1996. Power sales in 1997
amounted to 23,712 MWH, compared with 25,227 MWH sold in 1996. The 1996 figure
included steam-generated power that was produced by McBryde during the last
year of operation of its sugar plantation. McBryde's steam-power generation
ceased with the closing of its sugar operations in 1996.

C&H relies primarily on steam to power its Crockett refinery.
Natural gas and electricity also are used, to a lesser extent, for refinery
operations. C&H obtains its steam from a 240 MW cogeneration plant, located
adjacent to its refinery, that was placed into operation by a third party in
May 1996. Pursuant to an agreement between C&H and the third party that
expires in 2026, C&H purchases the steam at prices that reflect a discount to
the prevailing market price for natural gas, thereby reducing C&H's total
energy costs. The cogeneration plant also allowed C&H to shut down its own,
less efficient, steam-generating plant, thereby avoiding certain material
capital improvements to that plant. In 1997, C&H purchased 23,654,519 therms
of steam from the cogeneration plant, compared with 19,181,420 therms of steam
in 1996.

ITEM 3. LEGAL PROCEEDINGS
- --------------------------

See "Business and Properties - Ocean Transportation - Rate Regulation"
above for a discussion of rate and other regulatory matters in which Matson is
routinely involved.

In February 1992, Pan Ocean Shipping Co., Ltd. ("Pan Ocean") served on
Matson an amended complaint alleging that a Matson vessel negligently dis-
charged contaminated ballast water into Los Angeles harbor on January 9, 1991.
Pan Ocean admits that a vessel owned and operated by Pan Ocean discharged fuel
oil into Los Angeles harbor on January 8, 1991. Pan Ocean is seeking contri-
bution and indemnification for the in-harbor clean-up charges, which it alleged
to be between $16,000,000 and $19,000,000. On April 12, 1993, Pan Ocean
amended its complaint to allege fraud and seek unspecified punitive damages.
The parties have stipulated to binding arbitration before a Special Master
appointed by the United States District Court for the Central District of
California. The Special Master's findings will be incorporated into a judgment
by the United States District Court, which judgment may be appealed to the
Ninth Circuit Court of Appeals only on the issues of punitive damages and
misconduct of the Special Master. Arbitration hearings, which commenced
January 13, 1994, are ongoing. Management continues to believe, after consul-
tation with legal counsel and given the Protection and Indemnity coverage under
Matson's insurance policy in effect at the time of the alleged conduct, that
any ultimate liability in connection with this action will not have a material
adverse effect on Matson's financial condition.

A&B and its subsidiaries are parties to, or may be contingently liable in
connection with, other legal actions arising in the normal conduct of their
businesses, the outcomes of which, in the opinion of management after consulta-
tion with counsel, would not have a material adverse effect on A&B's financial
position.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------

Not applicable.

EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------

For the information about executive officers of A&B required to be
included in this Part I, see paragraph B of "Directors and Executive Officers
of the Registrant" in Part III below, which is incorporated into Part I by
reference.

PART II
-------

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
- ------------------------------------------------------------------------------

This information is contained in the sections captioned "Common Stock"
and "Dividends" on the inside back cover of the 1997 Annual Report, which
sections are incorporated herein by reference.

At February 13, 1998, there were 5,431 record holders of A&B common
stock. In addition, Cede & Co., which appears as a single record holder,
represents the holdings of thousands of beneficial owners of A&B common stock.

ITEM 6. SELECTED FINANCIAL DATA
- --------------------------------

Information for the years 1987 through 1997 is contained in the
comparative table captioned "Eleven-Year Summary of Selected Financial Data" on
pages 22 and 23 of the 1997 Annual Report, which information is incorporated
herein by reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
- ----------------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------

A&B's financial statements, including the results of operations discussed
herein, are based on the historical-cost method of accounting, in accordance
with generally accepted accounting principles. If estimated current costs of
property and inventory were applied to reflect the effects of inflation on
A&B's businesses, total assets would be higher and net income lower than shown
by the historical-cost financial statements. However, the carrying values of
current assets (other than inventories, real estate held for sale, deferred
income taxes and prepaid and other assets) and of debt instruments are
reasonable estimates of their fair values. Investments in marketable
securities are stated in the financial statements at market values, in
accordance with Statement of Financial Accounting Standards No. 115. Certain
investments held in the Capital Construction Fund at amortized cost exceeded
their fair values at December 31, 1997 and 1996. This matter is described more
fully in Note 4 on pages 34 and 35 of the 1997 Annual Report, which Note is
incorporated herein by reference.

Additional information applicable to this Item 7 is contained in the
section captioned "Management's Discussion and Analysis" on pages 25 through 27
of the 1997 Annual Report, which section is incorporated herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ----------------------------------------------------

This information is contained in the financial statements and
accompanying notes on pages 28 through 40 of the 1997 Annual Report, the
Independent Auditors' Report on page 21 of the 1997 Annual Report, the Industry
Segment Information for the years ended December 31, 1997, 1996 and 1995
appearing on page 24 of the 1997 Annual Report and incorporated into the
financial statements by Note 12 thereto, and the section captioned "Quarterly
Results (Unaudited)" on page 41 of the 1997 Annual Report, all of which are
incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
- ---------------------------------------------------------
ACCOUNTING AND FINANCIAL DISCLOSURE
-----------------------------------

Not applicable.

PART III
--------

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------------------------------

A. DIRECTORS
---------

For information about the directors of A&B, see the section captioned
"Election of Directors" on pages 2 and 3 of A&B's proxy statement dated March
9, 1998 ("A&B's 1998 Proxy Statement"), which section is incorporated herein by
reference.

B. EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------

The name of each executive officer of A&B (in alphabetical order),
age (in parentheses) as of March 31, 1998, and present and prior positions with
A&B and business experience for the past five years are given below.

Generally, the term of office of executive officers is at the
pleasure of the Board of Directors. For a discussion of compliance with
Section 16(a) of the Securities Exchange Act of 1934 by A&B's directors and
executive officers, see the subsection captioned "Section 16(a) Beneficial
Ownership Reporting Compliance" on page 7 of A&B's 1998 Proxy Statement, which
subsection is incorporated herein by reference. For a discussion of severance
agreements between A&B and certain of A&B's executive officers, see the sub-
section captioned "Severance Agreements" on pages 13 and 14 of A&B's 1998 Proxy
Statement, which subsection is incorporated herein by reference.

Meredith J. Ching (41)
- ----------------------
Vice President (Government & Community Relations) of A&B, 10/92-present;
Vice President of ABHI (Government & Community Relations), 10/92-present; first
joined A&B or a subsidiary in 1982.

John C. Couch (58)
- ------------------
Chairman of the Board (4/95-present), Chief Executive Officer (4/92-
present) and President (4/91-present) of A&B; Chairman of the Boards (4/95-
present) of ABHI and Matson; Chief Executive Officer (4/89-12/96) and President
(4/89-4/95) of ABHI; previously held various executive officer positions with
A&B and Matson; first joined A&B or a subsidiary in 1976.

W. Allen Doane (50)
- -------------------
Director of ABHI, 4/97-present; Chief Executive Officer of ABHI, 1/97-
present; President of ABHI, 4/95-present; Chief Operating Officer of ABHI,
4/91-12/96; Executive Vice President of ABHI, 4/91-4/95; first joined A&B or a
subsidiary in 1991.

Raymond J. Donohue (61)
- -----------------------
Senior Vice President of Matson, 4/86-present; Chief Financial Officer of
Matson, 2/81-present; first joined Matson in 1980.

John B. Kelley (52)
- -------------------
Vice President (Investor Relations) of A&B, 1/95-present; Vice President
(Corporate Planning & Development, Investor Relations) of A&B, 10/92-12/94;
Vice President (Community & Investor Relations) of A&B, 2/91-10/92; Vice
President of ABHI, 9/89-present; first joined A&B or a subsidiary in 1979.

Miles B. King (50)
- ------------------
Vice President and Chief Administrative Officer of A&B, 4/93-present;
Senior Vice President (Industrial Relations) of ABHI, 4/93-present; Senior Vice
President (Human Resources) of Matson, 10/92-present; first joined A&B or a
subsidiary in 1992.

David G. Koncelik (56)
- ----------------------
Senior Vice President of ABHI, 1/94-present; President and Chief
Executive Officer of C&H, 1/94-present; Executive Vice President and Chief
Operating Officer of C&H, 1/91-12/93; Chief Financial Officer of C&H, 12/88-
12/93; first joined C&H in 1988.

Michael J. Marks (59)
- ---------------------
Vice President, General Counsel and Secretary of A&B, 4/89-present;
Senior Vice President and General Counsel of ABHI, 4/89-present; first joined
A&B or a subsidiary in 1975.

C. Bradley Mulholland (56)
- --------------------------
President of Matson, 5/90-present; Chief Executive Officer of Matson,
4/92-present; Chief Operating Officer of Matson, 7/89-4/92; Director of A&B,
4/91-present; Director of Matson, 7/89-present; Director of ABHI, 4/91-present;
first joined Matson in 1965.

Glenn R. Rogers (54)
- --------------------
Executive Vice President of A&B, 7/97-present; Vice President of A&B,
4/93-7/97; Chief Financial Officer and Treasurer of A&B, 4/93-present; Senior
Vice President, Chief Financial Officer and Treasurer of ABHI, 1/96-present;
first joined A&B or a subsidiary in 1975.

Robert K. Sasaki (57)
- ---------------------
Vice President of A&B, 7/90-present; Senior Vice President (Properties)
of ABHI, 4/89-present; first joined A&B or a subsidiary in 1965.

Thomas A. Wellman (39)
- ----------------------
Controller of A&B, 1/96-present; Assistant Controller of A&B, 4/93-1/96;
Vice President of ABHI, 1/96-present; Controller of ABHI, 11/91-present; first
joined A&B or a subsidiary in 1989.

Judith A. Williams (54)
- -----------------------
Vice President (Corporate Planning) of A&B, 8/96-present and 10/87-4/89;
Vice President of ABHI, 4/89-present; first joined A&B in 1979.

ITEM 11. EXECUTIVE COMPENSATION
- --------------------------------

See the section captioned "Executive Compensation" on pages 8 through 14
of A&B's 1998 Proxy Statement, which section is incorporated herein by
reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- ------------------------------------------------------------------------

See the section titled "Security Ownership of Certain Shareholders" and
the subsection titled "Security Ownership of Directors and Executive Officers"
on pages 5 and 6, and on pages 6 and 7, respectively, of A&B's 1998 Proxy
Statement, which section and subsection are incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------

See the section titled "Compensation Committee Interlocks and Insider
Participation" on page 16 of A&B's 1998 Proxy Statement, which section is
incorporated herein by reference.

PART IV
-------

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
- --------------------------------------------------------------------------

A. FINANCIAL STATEMENTS
--------------------

Financial Statements of Alexander & Baldwin, Inc. and Subsidiaries
and Independent Auditors' Report (incorporated by reference to the pages of
the 1997 Annual Report shown in parentheses below):

Balance Sheets, December 31, 1997 and 1996
(pages 30 and 31).
Statements of Income for the years ended
December 31, 1997, 1996 and 1995 (page 28).
Statements of Shareholders' Equity for the
years ended December 31, 1997, 1996 and
1995 (page 32).
Statements of Cash Flows for the years ended
December 31, 1997, 1996 and 1995 (page 29).
Notes to Financial Statements (pages 33 through
40 and page 24 to the extent incorporated by
Note 12).
Independent Auditors' Report (page 21).

B. FINANCIAL STATEMENT SCHEDULES
-----------------------------

Financial Schedules of Alexander & Baldwin, Inc. and Subsidiaries as
required by Rule 5-04 of Regulation S-X (filed herewith):

I - Condensed Financial Information of
Registrant - Balance Sheets, December 31,
1997 and 1996; Statements of Income and
Cash Flows for the years ended December 31,
1997, 1996 and 1995; Notes to Condensed
Financial Statements.

NOTE: All other 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 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 0-565. Shareholders may obtain copies of exhibits for a copying
and handling charge of $0.15 a page by writing to Michael J. Marks, Vice
President, General Counsel and Secretary, Alexander & Baldwin, Inc., P. O. Box
3440, Honolulu, Hawaii 96801.

3. Articles of incorporation and bylaws.

3.a. Restated Articles of Association of A&B, as restated effective
May 5, 1986, together with Amendments dated April 28, 1988 and April 26,
1990 (Exhibits 3.a.(iii) and (iv) to A&B's Form 10-Q for the quarter ended
March 31, 1990).

3.b. Bylaws of A&B as amended effective October 24, 1991
(Exhibit 3.b.(i) to A&B's Form 10-Q for the quarter ended September 30,
1991).

4. Instruments defining rights of security holders, including indentures.

4.a. Equity.

4.a. Rights Agreement, dated as of December 8, 1988 between Alexander &
Baldwin, Inc. and Manufacturers Hanover Trust Company, Press Release of
Alexander & Baldwin, Inc. and Form of Letter to Shareholders of Alexander
& Baldwin, Inc. (Exhibits 4, 28(a) and 28(b) to A&B's Form 8-K dated
December 13, 1988).

4.b. Debt.

4.b. (i) Second Amended and Restated Revolving Credit and Term Loan
Agreement, effective as of December 31, 1996, among Alexander & Baldwin,
Inc. and A&B-Hawaii, Inc. and First Hawaiian Bank, Bank of America
National Trust & Savings Association, Credit Lyonnais Los Angeles Branch,
Bank of Hawaii and The Union Bank of California, N.A. (Exhibit 4.b to
A&B's Form 10-K for the year ended December 31, 1996).

(ii) First Amendment to Second Amended and Restated Revolving
Credit and Term Loan Agreement, effective as of December 10, 1997, among
Alexander & Baldwin, Inc. and A&B-Hawaii, Inc. and First Hawaiian Bank,
Bank of America National Trust & Savings Association, Credit Lyonnais Los
Angeles Branch, Bank of Hawaii, The Union Bank of California, N.A. and The
Bank of New York.

10. Material contracts.

10.a. (i) Purchase and Exchange Agreement, by and between Wailea
Development Company, Inc. and Wailea Resort Company, Ltd., dated as of
January 15, 1989; Letters of Guaranty of Alexander & Baldwin, Inc. and
Shinwa Golf Kabushiki Kaisha, respectively, dated as of January 15, 1989;
Press Release of Alexander & Baldwin, Inc., dated February 10, 1989; and
Pro Forma Financial Information relative to the transaction (Ex-
hibits 10.b.(vii)(a) through 10.b.(vii)(e) to A&B's Form 8-K dated
February 10, 1989).

(ii) Contract for the Construction of One Containership by and
between Matson Navigation Company, Inc. and National Steel and Ship-
building Company, dated January 31, 1990 (Exhibit 10.b.(vii) to A&B's Form
10-K for the year ended December 31, 1989).

(iii) Issuing and Paying Agent Agreement between Matson Navigation
Company, Inc. and Security Pacific National Trust (New York), with respect
to Matson Navigation Company, Inc.'s $150 million commercial
paper program dated September 18, 1992 (Exhibit 10.b.1.(xxviii) to A&B's
Form 10-Q for the quarter ended September 30, 1992).

(iv) Note Agreement among Alexander & Baldwin, Inc. and A&B-Hawaii,
Inc. and The Prudential Insurance Company of America, effective as of
December 20, 1990 (Exhibit 10.b.(ix) to A&B's Form 10-K for the year
ended December 31, 1990).

(v) Note Agreement among Alexander & Baldwin, Inc. and A&B-Hawaii,
Inc. and The Prudential Insurance Company of America, dated as of June 4,
1993 (Exhibit 10.a.(xiii) to A&B's Form 8-K dated June 4, 1993).

(vi) Amendment dated as of May 20, 1994 to the Note Agreements
among Alexander & Baldwin, Inc., A&B-Hawaii, Inc. and The Prudential
Insurance Company of America, dated as of December 20, 1990 and June 4,
1993 (Exhibit 10.a.(xviv) to A&B's Form 10-Q for the quarter ended June
30, 1994).

(vii) Amendment dated January 23, 1995 to the Note Agreement among
Alexander & Baldwin, Inc. and A&B-Hawaii, Inc. and The Prudential
Insurance Company of America, effective as of December 20, 1990 (Exhibit
10.a.(xvi) to A&B's Form 10-K for the year ended December 31, 1994).

(viii) Amendment dated as of June 30, 1995 to the Note Agreements,
among Alexander & Baldwin, Inc., A&B-Hawaii, Inc. and The Prudential
Insurance Company of America, dated as of December 20, 1990 and June 4,
1993 (Exhibit 10.a.(xxvii) to A&B's Form 10-Q for the quarter ended
June 30, 1995).

(ix) Amendment dated as of November 29, 1995 to the Note
Agreements among Alexander & Baldwin, Inc., A&B-Hawaii, Inc., and The
Prudential Insurance Company of America, dated as of December 20, 1990 and
June 4, 1993 (Exhibit 10.a.(xvii) to A&B's Form 10-K for the year ended
December 31, 1995).

(x) General Lease between the State of California and California
and Hawaiian Sugar Company, dated September 24, 1992 (Exhibit 10.a.(xiv)
to A&B's Form 10-Q for the quarter ended June 30, 1993).

(xi) Amendment to Lease and Reservation of Easements, between the
State of California and California and Hawaiian Sugar Company, dated as of
July 29, 1993 (Exhibit 10.a.(xv) to A&B's Form 10-Q for the quarter ended
September 30, 1993).

(xii)(a) Commercial Paper Dealer Agreement between California and
Hawaiian Sugar Company and First Chicago Capital Markets, Inc., dated
April 22, 1991, with respect to California and Hawaiian Sugar Company's
$100 million revolving credit facility (Exhibit 10.a.(xviii) to A&B's
Form 10-K for the year ended December 31, 1993).

(xii)(b) Depositary Agreement between California and Hawaiian Sugar
Company and The First National Bank of Chicago, dated as of April 6, 1989
(Exhibit 10.a.(xix)(b) to A&B's Form 10-K for the year ended December 31,
1994).

(xiii) Amendment dated as of February 10, 1995, to Depositary
Agreement between California and Hawaiian Sugar Company and The First
National Bank of Chicago, dated as of April 6, 1989 (Exhibit 10.a.(xx) to
A&B's Form 10-K for the year ended December 31, 1994).

(xiv) Revolving Credit Agreement between Alexander & Baldwin,
Inc., A&B-Hawaii, Inc., and First Hawaiian Bank, dated December 30, 1993
(Exhibit 10.a.(xx) to A&B's Form 10-Q for the quarter ended September 30,
1994).

(xv) Amendment dated August 31, 1994 to the Revolving Credit
Agreement between Alexander & Baldwin, Inc., A&B-Hawaii, Inc., and First
Hawaiian Bank dated December 30, 1993 (Exhibit 10.a.(xxi) to A&B's
Form 10-Q for the quarter ended September 30, 1994).

(xvi) Second Amendment dated March 29, 1995 to the Revolving
Credit Agreement between Alexander & Baldwin, Inc., A&B-Hawaii, Inc., and
First Hawaiian Bank, dated December 30, 1993 (Exhibit 10.a.(xxiii) to
A&B's Form 10-Q for the quarter ended March 31, 1995).

(xvii) Third Amendment dated November 30, 1995 to the Revolving
Credit Agreement between Alexander & Baldwin, Inc., A&B-Hawaii, Inc., and
First Hawaiian Bank, dated December 30, 1993 (Exhibit 10.a.(xvii) to A&B's
Form 10-K for the year ended December 31, 1996).

(xviii) Fourth Amendment dated November 25, 1996 to the Revolving
Credit Agreement between Alexander & Baldwin, Inc., A&B-Hawaii, Inc., and
First Hawaiian Bank, dated December 30, 1993 (Exhibit 10.a.(xviii) to
A&B's Form 10-K for the year ended December 31, 1996).

(xix) Fifth Amendment dated November 28, 1997 to the Revolving
Credit Agreement between Alexander & Baldwin, Inc., A&B-Hawaii, Inc., and
First Hawaiian Bank, dated December 30, 1993.

(xx) Asset Purchase Agreement among XTRA, Inc., Matson Navigation
Company, Inc. and Matson Leasing Company, Inc., dated June 30, 1995
(Exhibit 10.a.(xxiv) to A&B's Form 8-K dated June 30, 1995).

(xxi) Revised pro forma financial information relative to the
Asset Purchase Agreement among XTRA, Inc., Matson Navigation Company, Inc.
and Matson Leasing Company, Inc., dated June 30, 1995 (Exhibit 10.a.(xxv)
to A&B's Form 8-K/A dated June 30, 1995).

(xxii) Balance sheets as of December 31, 1993 and 1994 and Statements
of Income and Statements of Cash Flows for the years ended December 31,
1992, 1993 and 1994, relative to the Asset Purchase Agreement among XTRA,
Inc., Matson Navigation Company, Inc. and Matson Leasing Company, Inc.,
dated June 30, 1995 (Exhibit 10.a.(xxvi) to A&B's Form 8-K/A dated June
30, 1995).

(xxiii) Commercial Paper Dealer Agreement among California and
Hawaiian Sugar Company, Inc., Alexander & Baldwin, Inc., A&B-Hawaii, Inc.
and Goldman Sachs Money Markets, L.P. dated June 20, 1995, with respect to
California and Hawaiian Sugar Company, Inc.'s $100 million revolving
credit facility (Exhibit 10.a.(xxvi) to A&B's Form 10-Q for the quarter
ended June 30, 1995).

(xxiv) Note Agreement between Matson Leasing Company, Inc. and The
Prudential Insurance Company of America, dated as of June 28, 1991
(Exhibit 10.b.(x) to A&B's Form 10-Q for the quarter ended June 30, 1991).

(xxv) Amendment dated March 11, 1992 to the Note Agreement between
Matson Leasing Company, Inc. and The Prudential Insurance Company of
America, dated as of June 28, 1991 (Exhibit 10.a.(vii) to A&B's Form 10-K
for the year ended December 31, 1992).

(xxvi) Second Amendment dated as of August 31, 1993 to the Note
Agreement between Matson Leasing Company, Inc. and The Prudential
Insurance Company of America, dated as of June 28, 1991 (Exhibit
10.a.(viii) to A&B's Form 10-K for the year ended December 31, 1993).

(xxvii) Note Agreement between Matson Leasing Company, Inc. and The
Prudential Insurance Company of America, dated as of March 11, 1992
(Exhibit 10.a.(x) to A&B's Form 10-Q for the quarter ended March 31,
1992).

(xxviii) First Amendment dated as of August 1, 1993 to the Note
Agreement between Matson Leasing Company, Inc. and The Prudential
Insurance Company of America, dated as of March 11, 1992 (Exhibit
10.a.(xi) to A&B's Form 10-K for the year ended December 31, 1993).

(xxix)(a) Assignment and Assumption Agreement dated as of June 30, 1995,
among Matson Leasing Company, Inc., Matson Navigation Company, Inc. and
The Prudential Insurance Company of America, with respect to the Note
Agreements between Matson Leasing Company, Inc. and The Prudential
Insurance Company of America dated as of June 28, 1991 and March 11, 1992
(Exhibit 10.a.(xxviii)(a) to A&B's Form 10-Q for the quarter ended June
30, 1995).

(xxix)(b) Consent and Amendment Agreement dated as of June 30, 1995,
among Matson Leasing Company, Inc., Matson Navigation Company, Inc. and
The Prudential Insurance Company of America, with respect to the Note
Agreements between Matson Leasing Company, Inc. and The Prudential
Insurance Company of America dated as of June 28, 1991 and March 11, 1992
(Exhibit 10.a.(xxviii)(b) to A&B's Form 10-Q for the quarter ended June
30, 1995).

(xxx) Agreement to Implement the Execution and Closing of Vessel
Purchase, Purchase of Guam Assets and Alliance Slot Hire Agreement between
Matson Navigation Company, Inc. and American President Lines, Ltd., dated
as of September 22, 1995 (Exhibit 10.a.(xxix) to A&B's Form 10-Q for the
quarter ended September 30, 1995).

(xxxi) Amendments Nos. 1 through 7, dated as of October 10, 1995,
October 30, 1995, November 30, 1995, December 8, 1995, December 15, 1995,
January 31, 1996 and February 8, 1996, respectively, to the Agreement to
Implement the Execution and Closing of Vessel Purchase, Purchase of Guam
Assets and Alliance Slot Hire Agreement between Matson Navigation Company,
Inc., and American President Lines, Ltd., dated as of September 22, 1995
(Exhibit 10.a.(xxx) to A&B's Form 10-K for the year ended December 31,
1995).

(xxxii) Vessel Purchase Agreement between Matson Navigation Company,
Inc., and American President Lines, Ltd., dated December 20, 1995
(Exhibit 10.a.(xxxi) to A&B's Form 10-K for the year ended December 31,
1995).

(xxxiii) Amendment No. 1 dated December 28, 1995 to the Vessel
Purchase Agreement between Matson Navigation Company, Inc., and American
President Lines, Ltd., dated December 20, 1995 (Exhibit 10.a.(xxxii) to
A&B's Form 10-K for the year ended December 31, 1995).

(xxxiv) Private Shelf Agreement between Alexander & Baldwin, Inc.,
A&B-Hawaii, Inc., and Prudential Insurance Company of America, dated as of
August 2, 1996 (Exhibit 10.a.(xxxiii) to A&B's Form 10-Q for the quarter
ended September 30, 1996).

*10.b.1. (i) Alexander & Baldwin, Inc. Restricted Stock Bonus Plan, as
restated effective April 28, 1988 (Exhibit 10.c.1.(xi) to A&B's Form 10-Q
for the quarter ended June 30, 1988).

(ii) Amendment No. 1 to the Alexander & Baldwin, Inc. Restricted
Stock Bonus Plan, effective December 11, 1997.

(iii) Alexander & Baldwin, Inc. 1983 Stock Option Plan
(Exhibit 10.c.1.(vii) to A&B's Form 10-K for the year ended December 31,
1982).

(iv) Amendment No. 1 to the Alexander & Baldwin, Inc. 1983 Stock
Option Plan, effective December 14, 1983 (Exhibit 10.c.1.(viii) to A&B's
Form 10-K for the year ended December 31, 1983).

(v) Amendment No. 2 to the Alexander & Baldwin, Inc. 1983 Stock
Option Plan, effective January 1, 1987 (Exhibit 10.c.1.(xii) to A&B's
Form 10-K for the year ended December 31, 1986).

(vi) Amendment No. 3 to the Alexander & Baldwin, Inc. 1983 Stock
Option Plan (Exhibit 10.b.1.(xxv) to A&B's Form 10-Q for the quarter ended
June 30, 1992).

(vii) Alexander & Baldwin, Inc. 1989 Stock Option/ Stock Incentive
Plan (Exhibit 10.c.1.(ix) to A&B's Form 10-K for the year ended
December 31, 1988).

(viii) Amendment No. 1 to the Alexander & Baldwin, Inc. 1989 Stock
Option/Stock Incentive Plan (Exhibit 10.b.1.(xxvi) to A&B's Form 10-Q for
the quarter ended June 30, 1992).

______________

* All exhibits listed under 10.b.1. are management contracts or compensatory
plans or arrangements.

(ix) Amendment No. 2 to the Alexander & Baldwin, Inc. 1989 Stock
Option/Stock Incentive Plan, effective as of January 27, 1994
(Exhibit 10.b.1.(iv) to A&B's Form 10-Q for the quarter ended March 31,
1994).

(x) Amendment No. 3 to the Alexander & Baldwin, Inc. 1989 Stock
Option/Stock Incentive Plan, effective as of October 27, 1994
(Exhibit 10.b.1.(ix) to A&B's Form 10-K for the year ended December 31,
1994).

(xi) Alexander & Baldwin, Inc. 1989 Non-Employee Director Stock
Option Plan (Exhibit 10.c.1.(x) to A&B's Form 10-K for the year ended
December 31, 1988).

(xii) Amendment No. 1 to the Alexander & Baldwin, Inc. 1989 Non-
Employee Director Stock Option Plan (Exhibit 10.b.1.(xxiv) to A&B's Form
10-K for the year ended December 31, 1991).

(xiii) Amendment No. 2 to the Alexander & Baldwin, Inc. 1989 Non-
Employee Director Stock Option Plan (Exhibit 10.b.1.(xxvii) to A&B's Form
10-Q for the quarter ended June 30, 1992).

(xiv) Second Amended and Restated Employment Agreement between
Alexander & Baldwin, Inc. and R. J. Pfeiffer, effective as of October 25,
1990 (Ex-hibit 10.c.1.(xiii) to A&B's Form 10-K for the year ended
December 31, 1990).

(xv) A&B Deferred Compensation Plan for Outside Directors
(Exhibit 10.c.1.(xviii) to A&B's Form 10-K for the year ended December 31,
1985).

(xvi) Amendment No. 1 to A&B Deferred Compensation Plan for
Outside Directors, effective October 27, 1988 (Exhibit 10.c.1.(xxix) to
A&B's Form 10-Q for the quarter ended September 30, 1988).

(xvii) A&B Life Insurance Plan for Outside Directors
(Exhibit 10.c.1.(xix) to A&B's Form 10-K for the year ended December 31,
1985).

(xviii) A&B Excess Benefits Plan, Amended and Restated effective
February 1, 1995 (Exhibit 10.b.1.(xx) to A&B's Form 10-K for the year
ended December 31, 1994).

(xix) Amendment No. 1 to the A&B Excess Benefits Plan, dated
June 26, 1997 (Exhibit 10.b.1.(xxxi) to A&B's Form 10-Q for the quarter
ended June 30, 1997).

(xx) Amendment No. 2 to the A&B Excess Benefits Plan, dated
December 10, 1997.

(xxi) A&B Executive Survivor/Retirement Benefit Plan, Amended and
Restated Effective July 1, 1991 (Exhibit 10.b.1.(xvii) to A&B's Form 10-K
for the year ended December 31, 1992).

(xxii) Amendment No. 1 to and Restatement of the A&B Executive
Survivor/Retirement Benefit Plan, effective February 1, 1995
(Exhibit 10.b.1.(xxii) to A&B's Form 10-K for the year ended December 31,
1994).

(xxiii) A&B 1985 Supplemental Executive Retirement Plan, Amended and
Restated Effective July 1, 1991 (Exhibit 10.b.1.(xviii) to A&B's Form 10-K
for the year ended December 31, 1992).

(xxiv) Amendment No. 1 to and Restatement of the A&B 1985 Supple-
mental Executive Retirement Plan, effective February 1, 1995 (Exhibit
10.b.1.(xxiv) to A&B's Form 10-K for the year ended December 31, 1994).

(xxv) A&B Retirement Plan for Outside Directors, Amended and
Restated Effective October 24, 1991 (Exhibit 10.b.1.(xix) to A&B's
Form 10-K for the year ended December 31, 1992).

(xxvi) Amendment No. 1 to and Restatement of the A&B Retirement
Plan for Outside Directors, effective February 1, 1995
(Exhibit 10.b.1.(xxvi) to A&B's Form 10-K for the year ended December 31,
1994).

(xxvii) Form of Severance Agreement entered into with certain
executive officers, as amended and restated effective August 22, 1991
(Exhibit 10.c.1.(xxiv) to A&B's Form 10-Q for the quarter ended
September 30, 1991).

(xxviii) Alexander & Baldwin, Inc. One-Year Performance Improvement
Incentive Plan, as restated effective October 22, 1992
(Exhibit 10.b.1.(xxi) to A&B's Form 10-K for the year ended December 31,
1992).

(xxix) Alexander & Baldwin, Inc. Three-Year Performance Improvement
Incentive Plan, as restated effective October 22, 1992
(Exhibit 10.b.1.(xxii) to A&B's Form 10-K for the year ended December 31,
1992).

(xxx) Alexander & Baldwin, Inc. Deferred Compensation Plan
effective August 25, 1994 (Exhi-bit 10.b.1.(xxv) to A&B's Form 10-Q for
the quarter ended September 30, 1994).

(xxxi) Amendment No. 1 to the Alexander & Baldwin, Inc. Deferred
Compensation Plan, effective July 1, 1997 (Exhibit 10.b.1.(xxxii) to A&B's
Form 10-Q for the quarter ended June 30, 1997).

11. Statement re computation of per share earnings.

13. Annual report to security holders.

13. Alexander & Baldwin, Inc. 1997 Annual Report.

21. Subsidiaries.

21. Alexander & Baldwin, Inc. Subsidiaries as of February 28, 1998.

23. Consent of Deloitte & Touche LLP dated March 27, 1998 (included as last
page of A&B's Form 10-K for the year ended December 31, 1997).

27. Financial data schedule.

D. REPORTS ON FORM 8-K
-------------------

No reports were filed during the quarter ended December 31, 1997.

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.

ALEXANDER & BALDWIN, INC.
(Registrant)

Date: March 27, 1998 By /s/ John C. Couch
--------------------
John C. Couch
Chairman of the Board,
President 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
--------- ----- ----

/s/ John C. Couch Chairman of the March 27, 1998
- -------------------------
John C. Couch Board, President
and Chief Execu-
tive Officer and
Director

/s/ Glenn R. Rogers Executive March 27, 1998
- -------------------------
Glenn R. Rogers Vice President,
Chief Financial
Officer and
Treasurer

/s/ Thomas A. Wellman Controller March 27, 1998
- -------------------------
Thomas A. Wellman

/s/ Michael J. Chun Director March 27, 1998
- -------------------------
Michael J. Chun

/s/ Leo E. Denlea, Jr. Director March 27, 1998
- -------------------------
Leo E. Denlea, Jr.

/s/ Walter A. Dods, Jr. Director March 27, 1998
- -------------------------
Walter A. Dods, Jr.

/s/ Charles G. King Director March 27, 1998
- -------------------------
Charles G. King

/s/ Carson R. McKissick Director March 27, 1998
- -------------------------
Carson R. McKissick

/s/ C. Bradley Mulholland Director March 27, 1998
- -------------------------
C. Bradley Mulholland

/s/ Maryanna G. Shaw Director March 27, 1998
- -------------------------
Maryanna G. Shaw

/s/ Charles M. Stockholm Director March 27, 1998
- -------------------------
Charles M. Stockholm

INDEPENDENT AUDITORS' REPORT

Alexander & Baldwin, Inc.:

We have audited the financial statements of Alexander & Baldwin, Inc. and its
subsidiaries as of December 31, 1997 and 1996, and for each of the three years
in the period ended December 31, 1997, and have issued our report thereon dated
January 22, 1998; such financial statements and report are included in your
1997 Annual Report to Shareholders and are incorporated herein by reference.
Our audits also included the financial statement schedules of Alexander &
Baldwin, Inc. and its subsidiaries, listed in Item 14.B. These financial
statement schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In our opinion,
such financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.

/s/ Deloitte & Touche LLP

January 22, 1998

SCHEDULE I

ALEXANDER & BALDWIN, INC.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT

ALEXANDER & BALDWIN, INC. (Parent Company)
CONDENSED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
(In thousands)

1997 1996
---- ----

ASSETS
Current Assets:
Income tax receivable $ 2,480 $ 18,292
Accounts and notes receivable, net 760 1,909
Prepaid expenses and other 1,090 1,050
--------- ---------
Total current assets 4,330 21,251
--------- ---------

Investments:
Subsidiaries consolidated, at equity 619,963 592,691
Other 101,624 90,796
--------- ---------
Total investments 721,587 683,487
--------- ---------

Property, at cost 91,873 78,581
Less accumulated depreciation and amortization 10,629 9,610
--------- ---------
Property -- net 81,244 68,971
--------- ---------

Other Assets 701 10,324
--------- ---------

Total $ 807,862 $ 784,033
========= =========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Bank overdraft $ 936 $ 16
Accounts payable 359 239
Other 4,123 3,829
--------- ---------
Total current liabilities 5,418 4,084
--------- ---------

Long-term Liabilities 6,355 5,740
--------- ---------

Due to Subsidiaries 22,306 40,477
--------- ---------

Deferred Income Taxes 54,195 49,404
--------- ---------

Commitments and Contingencies

Shareholders' Equity:
Capital stock 36,769 37,150
Additional capital 49,437 43,377
Unrealized holding gains on securities 55,144 48,205
Retained earnings 591,135 568,969
Cost of treasury stock (12,897) (13,373)
--------- ---------
Total shareholders' equity 719,588 684,328
--------- ---------

Total $ 807,862 $ 784,033
========= =========

See accompanying notes.

ALEXANDER & BALDWIN, INC. (Parent Company)
CONDENSED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(In thousands)

1997 1996 1995
---- ---- ----

Revenue:
Net sales, revenue from services and rentals $ 17,784 $ 18,449 $ 10,287
Interest, dividends and other 4,510 3,961 3,798
--------- --------- ---------
Total revenue 22,294 22,410 14,085
--------- --------- ---------

Costs and Expenses:
Cost of goods sold, services and rentals 10,013 4,331 2,946
Selling, general and administrative 7,055 7,331 9,111
Interest and other 872 1,019 1,604
Income taxes 239 3,008 427
--------- --------- ---------
Total costs and expenses 18,179 15,689 14,088
--------- --------- ---------

Income (Loss) Before Equity in Net Income
of Subsidiaries Consolidated 4,115 6,721 (3)

Equity in Net Income From Continuing Operations
of Subsidiaries Consolidated 77,272 58,564 32,422

Equity in Net Income From Discontinued Operations
of Subsidiaries Consolidated - - 23,336*
--------- --------- ---------

Net Income $ 81,387 $ 65,285 $ 55,755
========= ========= =========

*Includes an after-tax gain of $18 million on the sale of the net assets of
Matson Leasing Company, Inc.

See accompanying notes.

ALEXANDER & BALDWIN, INC. (Parent Company)
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(In thousands)

1997 1996 1995
---- ---- ----

Cash Flows from Operations $ 25,495 $ (5,892) $ (9,405)
-------- -------- --------

Cash Flows from Investing Activities:
Capital expenditures (4,002) (353) (678)
Proceeds from sale (purchase) of
investments - 10,182 (1,514)
Dividends received from subsidiaries 50,000 50,000 70,000
-------- -------- --------
Net cash provided by investing activities 45,998 59,829 67,808
-------- -------- --------
Cash Flows from Financing Activities:
Decrease in due to subsidiaries (18,171) (13,328) (357)
Payments of long-term debt - (850) (6,892)
Proceeds from issuances of capital stock 2,132 1,291 468
Repurchases of capital stock (16,585) (1,250) (11,580)
Dividends paid (39,789) (39,860) (40,035)
-------- -------- --------
Net cash used in financing activities (72,413) (53,997) (58,396)
-------- -------- --------

Cash and Cash Equivalents:
Net increase (decrease) for the year (920) (60) 7
Balance, beginning of year (16) 44 37
-------- -------- --------
Balance, end of year $ (936) $ (16) $ 44
======== ======== ========

Other Cash Flow Information:
Interest paid, net of amounts capitalized $ 197 $ 152 $ 479
Income taxes paid, net of refunds 29,775 26,360 53,014

Other Non-cash Information:
Depreciation 1,019 2,604 3,049

See accompanying notes.

ALEXANDER & BALDWIN, INC. (Parent Company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
- ---------------------------------------

(a) ORGANIZATION AND OPERATIONS

Alexander & Baldwin, Inc. is the parent company of A&B-Hawaii, Inc. (ABHI) and
Matson Navigation Company, Inc. (Matson). ABHI has principal business
operations of Food Products and Property Development and Management. Matson
has principal business operations of Ocean Transportation and until June 1995,
of Container Leasing. The net assets of Matson Leasing Company, Inc., the
Company's container leasing subsidiary, were sold in June 1995 for $361.7
million in cash. Accordingly, the operating results and the gain on sale of
the container leasing segment have been separately reported.

(b) LONG-TERM LIABILITIES

At December 31, 1997 and 1996, long-term liabilities of $6,355,000 and
$5,740,000, respectively, consisted principally of deferred compensation and
executive benefit plans.

(c) COMMITMENTS AND CONTINGENCIES

The Company and certain subsidiaries are parties to various legal actions and
are contingently liable in connection with claims and contracts arising in the
normal course of business, the outcome of which, in the opinion of management
after consultation with legal counsel, will not have a material adverse effect
on the Company's financial position or results of operations.

At December 31, 1997, the Company did not have any significant firm
commitments.

(d) CASH DIVIDENDS FROM AFFILIATES

Cash dividends from a consolidated subsidiary were $50,000,000 in each of 1997
and 1996 and $70,000,000 in 1995.