3. EXIT ACTIVITIES

In the third quarter of 2011, the Company finalized a decision to terminate Matson's CLX2 service, due to the longer-term outlook for sustained high fuel prices and increasingly volatile Transpacific rates. As of the termination date, the Company had established and approved plans to (i) return to lessors or sub-charter the five vessels used in the service (ii) off-hire or dispose of certain excess container equipment and (iii) terminate office contracts and employees. These plans were substantially completed as of September 30, 2011; however, the off-hiring of excess leased containers is expected to continue through 2012 and two of the five ships are expected to be sub-chartered until they are returned to the lessors in July 2012. The remaining three ships were returned to the lessors as of September 30, 2011 pursuant to the terms of the one-year charter contacts for these vessels. As of December 31, 2011, the Company had recorded a liability of approximately $5.0 million in other current liabilities, representing the fair value of the obligations arising from exit activities associated with the termination of the service. The liability, which is principally related to future charter lease payments, net of sub-charter revenue, is expected to be substantially settled by July 31, 2012. There were no material assets owned by the Company that were associated with the CLX2 service at December 31, 2011. Overall, including charges incurred through December 31, 2011, the Company expects to incur total cash and non-cash charges of approximately $14.6 million by September 30, 2012 related to vessel charter obligations, the off-hiring or disposal of containers, and the termination of an office lease and employees.

The following table provides information regarding liabilities associated with the termination of CLX2 (in millions):

	Container and Charter Liabilities			Other Contractual Liabilities			Total

Balance at June 30, 2011	$	--		$	--		$	--
Expenses incurred		11.8			0.7			12.5
Amounts paid		(7.0	)		(0.6	)		(7.5	)
Balance at December 31, 2011	$	4.8		$	0.1		$	5.0