2
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Act of 1934
For the quarter ended September 30, 1997 Commission File Number 33-24180
AMFAC/JMB HAWAII, INC.
(Exact name of registrant as specified in its charter)
Hawaii 99-0217738
(State of organization) (I.R.S. Employer Identification No.)
For the quarter ended September 30, 1997 Commission File Number 33-24180-01
AMFAC/JMB FINANCE, INC.
(Exact name of registrant as specified in its charter)
Illinois 36-3611183
(State of organization) (I.R.S. Employer Identification No.)
900 N. Michigan Ave., Chicago, Illinois 60611
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 312-440-4800
See Table of Additional Registrants Below.
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
As of November 14, 1997, each of Amfac/JMB Hawaii, Inc. and
Amfac/JMB Finance, Inc. had 1,000 shares of Common Stock
outstanding. All such Common Stock is owned by its respective
parent and not traded on a public market.
ADDITIONAL REGISTRANTS (1)
Address, including,
zip code,
Exact name of State or other IRS and telephone number,
registrant as jurisdiction of Employer including area code of
specified in its incorporation or Identification registrant's principal
Charter organization Number executive offices
Kaanapali Coffee Hawaii 99-0176334 900 North Michigan Avenue
Estates, Inc. Chicago, Illinois 60611
312/440-4800
Amfac Property Hawaii 99-0150751 900 North Michigan Avenue
Development Corp. Chicago, Illinois 60611
312/440-4800
Amfac Property Hawaii 99-0202331 900 North Michigan Avenue
Investment Chicago, Illinois 60611
Corp. 312/440-4800
Amfac Land Hawaii 99-0185633 900 North Michigan Avenue
Company, Ltd. Chicago, Illinois 60611
312/440-4800
Amfac Vacations Hawaii 94-3261831 900 North Michigan Avenue
Managers, Inc. Chicago, Illinois 60611
(312) 440-4800
Kaanapali Water Hawaii 99-0185634 900 North Michigan Avenue
Corporation Chicago, Illinois 60611
312/440-4800
Kekaha Sugar Hawaii 99-0044650 900 North Michigan Avenue
Company, Chicago, Illinois 60611
Limited 312/440-4800
H. Hackfeld Hawaii 99-0037425 900 North Michigan Avenue
& Co., Ltd. Chicago, Illinois 60611
312/440-4800
The Lihue Hawaii 99-0046535 900 North Michigan Avenue
Plantation Chicago, Illinois 60611
Company, 312/440-4800
Limited
Oahu Sugar Hawaii 99-0105277 900 North Michigan Avenue
Company, Chicago, Illinois 60611
Limited 312/440-4800
Pioneer Mill Hawaii 99-0105278 900 North Michigan Avenue
Company, Chicago, Illinois 60611
Limited 312/440-4800
Puna Sugar Hawaii 99-0051215 900 North Michigan Avenue
Company, Chicago, Illinois 60611
Limited 312/440-4800
Waiahole Hawaii 99-0144307 900 North Michigan Avenue
Irrigation Chicago, Illinois 60611
Company, 312/440-4800
Limited
Waikele Golf Hawaii 99-0304744 900 North Michigan Avenue
Club, Inc. Chicago, Illinois 60611
312/440-4800
1) The Additional Registrants listed are wholly-owned
subsidiaries of the registrant and are guarantors of the
registrant's Certificate of Land Appreciation Notes due
2008.
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 22
PART II OTHER INFORMATION
Item 1. Legal Proceedings 34
Item 6. Exhibits and Reports on Form 8-K 34
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
AMFAC/JMB HAWAII, INC.
Consolidated Balance Sheets
September 30, 1997 and December 31, 1996
(Dollars in Thousands)
(Unaudited)
A S S E T S
<CAPTION>
September 30, December 31,
1997 1996
-------------- --------------
<S> <C> <C>
A S S E T S
Current assets:
Cash and cash equivalents $18,561 8,736
Receivables-net 11,566 4,741
Inventories 41,704 56,808
Prepaid expenses 2,598 3,439
-------- --------
Total current assets 74,429 73,724
-------- --------
Investments 46,536 46,187
-------- --------
Property, plant and equipment:
Land and land improvements 282,071 289,294
Machinery and equipment 61,964 60,981
Construction in progress 2,200 1,365
-------- --------
346,235 351,640
Less accumulated depreciation
and amortization 38,001 33,856
-------- --------
308,234 317,784
Deferred expenses, net 12,197 12,975
Other assets 37,448 32,935
-------- --------
$ 478,844 483,605
========== ==========
L I A B I L I T I E S
Current liabilities:
Accounts payable $ 6,230 5,719
Accrued expenses 7,421 9,274
Current portion of
long-term debt 1,228 1,471
AMFAC/JMB HAWAII, INC.
Consolidated Balance Sheets - Continued
September 30, 1997 and December 31, 1996
(Dollars in Thousands)
(Unaudited)
September 30, December 31,
1997 1996
------------- -------------
Current portion of
deferred income taxes 4,761 5,422
Amounts due to affiliates 10,494 8,905
-------- --------
Total current liabilities 30,134 30,791
-------- --------
Amounts due to affiliates 128,836 103,579
Accumulated postretirement
benefit obligation 54,713 57,662
Long-term debt 105,037 100,606
Other long-term liabilities 35,117 35,501
Deferred income taxes 86,504 88,345
Certificate of Land
Appreciation Notes 220,692 220,692
-------- --------
Total liabilities 661,033 637,176
-------- --------
Commitments and contingencies
(notes 2, 3, 4, 6, 7 and 8)
S T O C K H O L D E R `S E Q U I T Y (D E F I C I T )
Common stock, no par value;
authorized, issued and
outstanding 1,000 shares 1 1
Additional paid-in capital (3,113) 6,278
Retained earnings (deficit) (179,077) (159,850)
--------- ---------
Total stockholder's equity
(deficit) (182,189) (153,571)
--------- ---------
$ 478,844 483,605
============ ===========
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<TABLE>
AMFAC/JMB HAWAII, INC.
Consolidated Statements of Operations
Three and Nine Months Ended September 30, 1997 and 1996
(Dollars in Thousands)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
-------------------- ---------------------
1997 1996 1997 1996
------- ------- ------ ------
<S> <C> <C> <C> <C>
Revenue:
Agriculture $17,508 19,081 25,774 41,513
Property 13,880 8,319 33,462 29,902
------- ------- ------- -------
31,388 27,400 59,236 71,415
------- ------- ------- -------
Cost of sales:
Agriculture 18,530 20,573 25,948 42,218
Property 12,117 4,547 28,330 18,271
------- ------- -------- -------
30,647 25,120 54,278 60,489
Selling, general
and administrative 2,754 3,018 9,332 8,960
Depreciation and
amortization 1,523 1,539 4,572 4,689
------- ------- ------- -------
Total costs and expenses 34,924 29,677 68,182 74,138
Operating loss (3,536) (2,277) (8,946) (2,723)
------- ------- ------- -------
Non-operating income
(expenses):
Amortization of
financing costs (301) (185) (1,022) (952)
Interest expense (7,431) (6,892) (21,438) (20,290)
Interest income 206 96 286 258
------- ------- ------- -------
(7,526) (6,981) (22,174) (20,984)
------- ------- ------- -------
Loss before taxes (11,062) (9,258) (31,120) (23,707)
Income tax benefit 4,202 3,327 11,893 8,720
------- ------- ------- -------
Net loss $(6,860) (5,931) (19,227) (14,987)
======== ======= ======= =======
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<TABLE>
AMFAC/JMB HAWAII, INC.
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1997 and 1996
(Dollars in Thousands)
(Unaudited)
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(19,227) (14,987)
Items not requiring (providing) cash:
Depreciation and amortization 4,572 4,689
Amortization of deferred costs 1,022 952
Equity in earnings of investments 10 23
Income tax benefit (11,893) (8,720)
Deferred interest 790 2,883
Changes in:
Receivables - net (6,825) (4,422)
Inventories 21,998 14,407
Prepaid expenses 841 (928)
Accounts payable 511 (1,901)
Accrued expenses (1,853) (7,29)
Amounts due to affiliates 1,589 5,052
Other long-term liabilities (3,540) (3,557)
-------- --------
Net cash used in
operating activities (12,005) (13,803)
-------- --------
Cash flows from investing activities:
Property additions (1,945) (1,940)
Property disposals and retirements -
net 29 29
Investments in joint ventures
and partnerships (359) (141)
Other assets (4,513) (2,721)
Other long-term liabilities (583) 815
-------- --------
Net cash used in
investing activities (7,371) (3,958)
-------- --------
AMFAC/JMB HAWAII, INC.
Consolidated Statements of Cash Flows - Continued
Nine Months Ended September 30, 1997 and 1996
(Dollars in Thousands)
(Unaudited)
1997 1996
------- --------
Cash flows from financing activities:
Deferred expenses (244) 21
Net borrowings (repayments) of
long-term debt 4,188 (1,425)
Amounts due to affiliates 25,257 18,746
--------- --------
Net cash provided by financing
activities 29,201 17,342
--------- --------
Net increase (decrease) in cash
and cash equivalents 9,825 (419)
Cash and cash equivalents,
beginning of year 8,736 11,745
--------- --------
Cash and cash equivalents,
end of period $18,561 11,326
========= ========
Supplemental disclosure of cash flow
information:
Cash paid for interest
(net of amount capitalized) $14,229 17,290
========= ========
Schedule of non-cash investing and
financing activities:
Transfer of property actively held
for sale to real estate inventories
and accrued costs relating to real
estate sales $ 6,894 2,654
========= ========
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements
September 30, 1997 and 1996
(Dollars in Thousands)
Readers of this quarterly report should refer to the Company's
audited financial statements for the fiscal year ended December
31, 1996, which are included in the Company's 1996 Annual Report,
as certain footnote disclosures which would substantially
duplicate those contained in such audited financial statements
have been omitted from this report.
(1) BASIS OF ACCOUNTING
On November 17, 1988, the stockholders of Amfac, Inc.
("Amfac") agreed to the merger ("Merger") of Amfac with an
affiliate of JMB Realty Corporation ("JMB"). The Merger was
consummated on November 18, 1988. Amfac/JMB Hawaii, Inc. (the
"Company") was wholly-owned by Amfac, a subsidiary of Northbrook
Corporation ("Northbrook"). In May 1995, Amfac was merged into
Northbrook, with Northbrook being the surviving corporation.
The Company has two primary business segments. The
agriculture segment ("Agriculture") is responsible for the
Company's activities related to the cultivation and processing of
sugar cane and other agricultural products. The real estate
segment ("Property") is responsible for development and sales
activities related to the Company's owned land, all of which is
in the State of Hawaii, and the management and operation of the
Company's golf course facilities.
The consolidated financial statements include the accounts
of the Company and its wholly-owned subsidiaries. All significant
intercompany balances and transactions have been eliminated in
consolidation.
The Company's policy is to consider all amounts held with
original maturities of three months or less in U.S. Government
obligations, certificates of deposit and money market funds
(approximately $15,743 and $4,900 at September 30, 1997 and
December 31, 1996, respectively) as cash equivalents, which
approximates market. These amounts include $2,502 and $1,552 at
September 30, 1997 and December 31, 1996, respectively, which
were restricted primarily to fund debt service on long-term debt
related to the acquisition of power generation equipment (see
note 4).
As part of the Company's agriculture operations, the Company
enters into commodities futures contracts and options in sugar as
deemed appropriate to reduce the risk of future price
fluctuations in sugar. These futures contracts and options are
accounted for as hedges and, accordingly, gains and losses are
deferred and recognized in cost of sales as part of the
production cost.
Investments in certain partnerships and joint ventures, if
any, over which the Company exercises significant influence are
accounted for by the equity method. Revenues include the
Company's equity in net income or loss from such investments. To
the extent the Company engages in such activities as a general
partner, the Company is contingently liable for the obligations
of its partnership and joint venture investments.
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
Project costs associated with the acquisition, development
and construction of real estate projects are capitalized and
classified as construction in progress. Such capitalized costs
are not in excess of the project's estimated fair value, as
reviewed periodically or as considered necessary.
Land actively held for sale and any related development
costs transferred from construction in progress are reported as
inventories in the accompanying consolidated balance sheets and
are stated at the lower of cost or fair value less costs to sell.
For financial reporting purposes, the Company uses the
effective interest rate method and accrued interest on the
Certificate of Land Appreciation Notes due 2008 ("COLAS") at 4%
per annum, which is the "Mandatory Base Interest" (see note 3).
Interest is capitalized to qualifying assets (principally
real estate under development) during the period that such assets
are undergoing activities necessary to prepare them for their
intended use. Such capitalized interest is charged to cost of
sales as revenue from the real estate development is recognized.
Interest costs of $1,235 and $0 have been capitalized for the
nine months ended September 30, 1997 and 1996, respectively.
Net interest received (paid) on contracts that qualify as
hedges is recognized over the life of the contract as an
adjustment to interest income (expense) of the hedged financial
instrument.
The Company and its subsidiaries report their taxes as part
of the consolidated tax return of the Company's parent,
Northbrook. The Company and its subsidiaries have entered into a
tax indemnification agreement with Northbrook that indemnifies
the Company and its subsidiaries for responsibility for all past,
present and future federal and state income tax liabilities
(other than income taxes which are directly attributable to
cancellation of indebtedness income caused by the repurchase or
redemption of securities as provided for in or contemplated by
the Repurchase Agreement).
Current and deferred taxes have been allocated to the
Company as if the Company were a separate taxpayer in accordance
with the provisions of SFAS No. 109-Accounting for Income Taxes.
However, to the extent the tax indemnification agreement does not
require the Company to actually pay income taxes, current taxes
payable or receivable have been reflected as deemed contributions
or distributions, respectively, to additional paid-in capital in
the accompanying consolidated financial statements.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported
in the financial statements and accompanying notes. Actual
results could differ from those estimates.
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
(2) AMOUNTS DUE TO AFFILIATES - FINANCING
The approximately $15,097 of remaining acquisition-related
financing owed to affiliates had a maturity date of June 1, 1998
and bore interest at a rate per annum based upon the prime
interest rate (8.5% at September 30, 1997), plus 1%.
On June 1, 1995, the Company borrowed $52,000 from
Northbrook to redeem Class A COLAS pursuant to the Redemption
Offer (see note 3). The Company has also borrowed approximately
$18,746 and $9,814 during 1996 and 1995, respectively, to fund
COLA Mandatory Base Interest payments and other operational
needs. The loans from Northbrook were payable interest only,
matured on June 1, 1998 and carried an interest rate per annum
equal to the prime interest rate plus 2%.
In February 1997 the above noted affiliate loans, along with
certain other amounts due Northbrook, were converted into a new
ten-year note payable. The new note is payable interest only and
accrues interest at the prime rate plus 2%. The Company borrowed
an additional $16,628 during the nine months ended September 30,
1997 to fund COLA Mandatory Base Interest payments and other
operational needs. The total amount due Northbrook as of
September 30, 1997 was $128,836, which includes accrued interest
of $8,629. In October 1997, the Company repaid $7,000 of the
amount due to Northbrook. Pursuant to the Indenture relating to
the COLAS, the amounts borrowed from Northbrook are considered
"Senior Indebtedness" to the COLAS.
(3) CERTIFICATE OF LAND APPRECIATION NOTES
The COLAS are unsecured debt obligations of the Company.
Interest on the COLAS is payable semi-annually on February 28 and
August 31 of each year. The COLAS mature on December 31, 2008,
and bear interest after the Final Issuance Date (August 31, 1989)
at a rate of 10% per annum ("Base Interest") of the outstanding
principal balance of the COLAS on a cumulative, non-compounded
basis, of which 6% per annum is contingent ("Contingent Base
Interest") and payable only to the extent of Net Cash Flow (Net
Cash Flow for any period is generally an amount equal to 90% of
the Company's net cash revenues, proceeds and receipts after
payment of cash expenditures, including the Qualified Allowance
(as defined) other than federal and state income taxes and after
the establishment by the Company of reserves) or Maturity Market
Value (as defined below). The Company has not generated a
sufficient level of Net Cash Flow to pay Contingent Base Interest
on the COLAS from 1990 through the current date. Approximately
$96,476 of the $104,100 cumulative deficiency of Contingent Base
Interest related to the period from August 31, 1989 (Final
Issuance Date) through September 30, 1997 has not been accrued in
the accompanying consolidated financial statements as the Company
believes that it is not probable at this time that a sufficient
level of Net Cash Flow will be generated in the future or that
there will be sufficient Maturity Market Value (as defined below)
as of December 31, 2008 (the COLA maturity date) to pay such
unaccrued Contingent Base Interest. The following table is a
summary of Mandatory Base Interest and Contingent Base Interest
for the nine months ended September 30, 1997 and the year ended
December 31, 1996:
1997 1996
Mandatory Base Interest paid $8,828 8,828
Contingent Base Interest paid -- --
Cumulative deficiency of Contingent
Base Interest at end of period $ 104,100 94,169
Net Cash Flow was $0 for 1996 and is expected to be $0 for 1997.
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
In each calendar year, principal reductions may be made from
remaining Net Cash Flow, if any, in excess of all current and
unpaid deferred Contingent Base Interest. The COLAS will bear
additional contingent interest in any year, after any principal
reduction, equal to 55% of remaining Net Cash Flow. Upon
maturity, holders of COLAS will be entitled to receive the
remaining outstanding principal balance of the COLAS plus unpaid
Mandatory Base Interest (4%) plus additional interest equal to
the unpaid Contingent Base Interest, to the extent of the
Maturity Market Value (Maturity Market Value generally means 90%
of the excess of the Fair Market Value (as defined) of the
Company's assets
at maturity over its liabilities (including Qualified Allowance,
but only to the extent earned and payable from Net Cash Flow
generated through maturity) at maturity, which liabilities have
been incurred in connection with its operations), plus 55% of the
remaining Maturity Market Value.
On March 14, 1989, Amfac/JMB Finance ("Finance"), a wholly-
owned subsidiary of Northbrook, and the Company entered into an
agreement (the "Repurchase Agreement") concerning Finance's
obligations to repurchase, on June 1, 1995 and 1999, the COLAS
upon request of the holders thereof. The COLAS were issued in
two units consisting of one Class A and one Class B COLA. As
specified in the Repurchase Agreement, the repurchase of the
Class A COLAS may have been requested by the holders of such
COLAS on June 1, 1995 at a price equal to the original principal
amount of such COLAS ($.5) minus all payments of principal and
interest allocated to such COLAS. The cumulative interest paid
per Class A COLA through June 1, 1995 was $.135. The repurchase
of the Class B COLAS may be requested of Finance by the holders
of such COLAS on June 1, 1999 at a price equal to 125% of the
original principal amount of such COLAS ($.5) minus all payments
of principal and interest allocated to such COLAS. Through the
date of this report, the cumulative interest paid per Class A and
Class B COLA is approximately $.185 and $.185, respectively.
On March 14, 1989, Northbrook entered into a keep-well
agreement with Finance, whereby it agreed to contribute
sufficient capital or make loans to Finance to enable Finance to
meet its COLA repurchase obligations described above.
Notwithstanding Finance's repurchase obligations, the Company may
elect to redeem any COLAS requested to be repurchased at the
specified price.
On March 15, 1995, pursuant to the indenture that governs
the terms of the COLAS (the "Indenture"), the Company elected to
offer to redeem (the "Redemption Offer") all Class A COLAS from
the registered holders at the same price as would be required of
Finance under the Repurchase Agreement, thereby eliminating
Finance's obligation to satisfy the Class A COLA repurchase
options requested by such holders as of June 1, 1995. Pursuant
to the Redemption Offer, and in accordance with the terms of the
Indenture, the Company was therefore obligated to purchase any
and all Class A COLAS submitted pursuant to the Redemption Offer
at a price of $.365 per Class A COLA. In conjunction with the
Company's Redemption Offer, the Company made a tender offer (the
"Tender Offer") to purchase up to approximately $68,000 principal
value of the Class B COLAS at a price of $.220 per Class B COLA
from COLA holders electing to have their Class A COLAS
repurchased. Approximately 229,000 Class A COLAS were submitted
for repurchase pursuant to the Redemption Offer and
approximately
99,000 Class B COLAS were submitted for repurchase pursuant to
the Tender Offer, requiring an aggregate payment by the Company
of approximately $105,450 on June 1, 1995. The Company used its
available cash to purchase Class B COLAS pursuant to the Tender
Offer and borrowed $52,000 from Northbrook to purchase Class A
COLAS pursuant to the Redemption Offer. As of September 30, 1997,
the Company had approximately 156,000 Class A COLAS and
approximately 286,000 Class
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
B COLAS outstanding, with a principal balance of approximately
$78,000 and $143,000, respectively.
As a result of the COLA repurchases in 1995, the Company
retired approximately $164,045 in face value of COLA debt and
recognized a financial statement gain in 1995 of approximately
$32,544 (net of income taxes of $20,807, the write-off of
deferred financing costs of $10,015, the write-off of accrued
Contingent Base Interest of $5,667 and expenses of $894). Such
gain was treated as cancellation of indebtedness income for tax
purposes and, accordingly, the income taxes related to the
Class A Redemption Offer (approximately $9,106) were not
indemnified by the tax agreement with Northbrook (see note 1).
The terms of the Indenture relating to the COLAS place
certain restrictions on the Company's declaration and payment of
dividends. Such restrictions generally relate to the source,
timing and amounts that may be declared and/or paid. The COLAS
also impose certain restrictions on, among other things, the
creation of additional indebtedness for certain purposes, the
Company's ability to consolidate or merge with or into other
entities, and the Company's transactions with affiliates.
(4) LONG-TERM DEBT
In June 1991, the Company obtained a five-year $66,000
nonrecourse loan from the Employees' Retirement System of the
State of Hawaii ("ERS"). The loan is secured by a first mortgage
on the Kaanapali Golf Courses, and is considered "Senior
Indebtedness" (as defined in the Indenture relating to the
COLAS). The loan bore interest at a rate per annum equal to the
greater of (i) the base interest rate announced by the Bank of
Hawaii on the first of July for each year or (ii) ten percent per
annum through September 30, 1993 and nine percent per annum
thereafter. The annual interest payments were in excess of the
cash flow generated by the Kaanapali Golf Courses.
In April 1996, the Company reached an agreement with the ERS
to amend the loan, extending the maturity date for five years.
In exchange for the loan extension, the ERS received the right to
participate in the "Net Disposition Proceeds" (as defined)
related to the sale or refinancing of the golf courses or at the
maturity of the loan. The ERS share of the Net Disposition
Proceeds increases from 30% through September 30, 1997, to 40%
for the period from July 1, 1997 to September 30, 1999 and to 50%
thereafter. The loan amendment effectively adjusted the interest
rate as of January 1, 1995 to 9.5% until September 30, 1996.
After September 30, 1996, the loan bears interest at a rate per
annum equal to 8.73%. The loan amendment requires the Company to
pay interest at the rate of 7% for the period from January 1,
1995 to September 30, 1996, 7.5% from July 1, 1996 to September
30, 1997, 7.75% from July 1, 1997 to September 30, 1998 and 8.5%
thereafter ("Minimum Interest"). Accrued Minimum Interest as of
September 30, 1997 was $1,289. The scheduled Minimum Interest
payments are paid quarterly on the principal balance of the
$66,000 loan. The difference between the accrued interest
expense and the Minimum Interest payment accrues interest and is
payable on an annual basis from excess cash flow, if any,
generated from the Kaanapali Golf Courses. The accrued interest
payable from excess cash flow was $3,940 as of September 30,
1997. Although the outstanding loan balance remains nonrecourse,
certain payments and obligations, such as the Minimum Interest
payments and the ERS's share of appreciation, if any, are
recourse to the Company. However, the Company's obligations to
make future Minimum Interest payments and to pay the ERS a share
of appreciation would be terminated if the Company tendered an
executed deed to the golf course property to the ERS in
accordance with the terms of the amendment.
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
In January 1993, The Lihue Plantation Company, Limited
("Lihue") obtained a ten-year $13,250 loan used to fund the
acquisition of Lihue's power generation equipment. The $13,250
loan, constituting "Senior Indebtedness" under the COLAS'
Indenture, consists of two ten-year amortizing term loans of
$10,000 and $3,250, respectively, payable in forty consecutive
installments commencing July 1, 1993 in the principal amount of
$250 and $81, respectively (plus interest). The remaining
balance of the $3,250 loan was fully repaid in January 1997. The
$10,000 loan has an outstanding balance of $5,418 as of September
30, 1997 and bears interest at a rate equal to prime rate (8.5%
at September 30, 1997) plus three and one half percent. Lihue has
purchased an interest rate agreement which protects against
fluctuations in interest rates and effectively caps the prime
rate at eight percent for the first seven years of the loan
agreement. The loan is secured by the Lihue power generation
equipment, sugar inventories and receivables, certain other
assets and real property of the Company and has limited recourse
to the Company and certain other subsidiaries.
In October 1993, Waikele Golf Club, Inc. ("WGCI"), a wholly-
owned subsidiary of the Company that owns and operates the
Waikele Golf Course, obtained a five year $20,000 loan facility
from two lenders. The loan consisted of two $10,000 amortizing
loans. Each loan bore interest only for the first two years and
interest and principal payments based upon an assumed 20 year
amortization period for the remaining three years. The loans bore
interest at prime plus 1/2% and LIBOR (5.6563% at September 30,
1997) plus 3%, respectively. In February 1997, WGCI entered into
an amended and restated loan agreement with the Bank of Hawaii,
whereby the outstanding principal amount of the loan was
increased to $25,000, the maturity date was extended to February
2007, the interest rate was changed to LIBOR plus 2% until the
fifth anniversary and LIBOR plus 2.25% thereafter and principal
is to be repaid based on a 30-year amortization schedule. As of
September 30, 1997, the outstanding principal balance was
$24,847, with scheduled remaining annual principal maturities of
$38 in 1997, $228 in 1998, 1999, 2000, 2001 and $23,897
thereafter. The loan is secured by WGCI's assets (the golf course
and related improvements and equipment), is guaranteed by the
Company, and is considered "Senior Indebtedness" (as defined in
the Indenture relating to the COLAS).
In December 1996, Amfac Property Development Corp., a wholly-
owned subsidiary of the Company, obtained a $10,000 loan facility
from a Hawaii bank. The loan is secured by a mortgage on property
under development at the mill-site of Oahu Sugar (the sugar
plantation was closed in 1995), and is considered "Senior
Indebtedness" (as defined in the Indenture relating to the
COLAS). The loan bears interest at the bank's base rate (8.5% at
September 30, 1997) plus .5% and matures on December 1, 1998.
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
(5) SEGMENT INFORMATION
Agriculture and Property comprise separate industry segments
of the Company. "Operating Income-Other" consists primarily of
unallocated overhead expenses and "Total Assets-Other" consists
primarily of cash and deferred expenses. Total assets at the
balance sheet dates and capital expenditures, operating income
(loss) and depreciation and amortization during the nine months
ended September 30, 1997 and 1996 are set forth below by each
industry segment:
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
--------- ---------
<S> <C> <C>
Total Assets:
Agriculture $228,375 239,222
Property 223,527 225,372
Other 26,942 19,011
--------- ---------
$478,844 483,605
========= =========
Nine Months Nine Months
Ended Ended
September 30, September 30, 1997 1996
----------- -----------
Capital Expenditures:
Agriculture $1,474 1,351
Property 458 589
Other 13 --
--------- ---------
$1,945 1,940
========= =========
Operating income (loss):
Agriculture $(3,562) (4,235)
Property (2,237) 3,257
Other (3,147) (1,745)
--------- ---------
$(8,946) (2,723)
========== =========
Depreciation and amortization:
Agriculture $2,953 3,095
Property 1,574 1,537
Other 45 57
--------- ---------
$4,572 4,689
========= =========
</TABLE>
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
(6) TRANSACTIONS WITH AFFILIATES
The Company incurred interest expense of approximately
$8,629 for the nine months ended September 30, 1997 and
approximately $6,520 for the nine months ended September 30, 1996
in connection with the acquisition and additional financing
obtained from an affiliate. Approximately $8,629 of such
interest was unpaid as of September 30, 1997.
With respect to any calendar year, JMB or its affiliates may
receive a Qualified Allowance in an amount equal to: (i)
approximately $6,200 during each of the calendar years 1989
through 1993, and (ii) thereafter, 1-1/2% per annum of the Fair
Market Value (as defined) of the gross assets of the Company and
its subsidiaries (other than cash and cash equivalents and
Excluded Assets (as defined)) for providing certain advisory
services for the Company. The aforementioned advisory services,
which are provided pursuant to a 30-year Services Agreement
entered into between the Company, certain of its subsidiaries and
JMB in November 1988, include making recommendations in the
following areas: (i) the construction and development of real
property; (ii) land use and zoning changes; (iii) the timing and
pricing of properties to be sold; (iv) the timing, type and
amount of financing to be incurred; (v) the agricultural
business; and, (vi) the uses (agricultural, residential,
recreational or commercial) for the land. However, the Qualified
Allowance shall be earned and paid for each year prior to
maturity of the COLAS only if the Company generates sufficient
Net Cash Flow to pay Base Interest to the holders of the COLAS
for such year of an amount equal to 8% of the average outstanding
principal balance of the COLAS for such year; any portion of the
Qualified Allowance not paid for any year shall cumulate without
interest and JMB or its affiliates shall be paid such amount with
respect to any succeeding year, after the payment of all
Contingent Base Interest for such year, to the extent of 100% of
remaining Net Cash Flow until an amount equal to 20% of the Base
Interest with respect to such year has been paid, and thereafter,
to the extent of the product of (a) remaining Net Cash Flow,
multiplied by (b) a fraction, the numerator of which is the
cumulative deficiency as of the end of such year in the Qualified
Allowance and the denominator of which is the sum of the
cumulative deficiencies as of the end of such year in the
Qualified Allowance and Base Interest. A Qualified Allowance for
1989 of approximately $6,200 was paid on February 28, 1990.
Approximately $54,400 of Qualified Allowance related to the
period from January 1, 1991 through December 31, 1996 has not
been earned and paid, and is payable only from future Net Cash
Flow. Accordingly, because the Company does not believe it is
probable at this time that a sufficient level of Net Cash Flow
will be generated in the future to pay Qualified Allowance, the
Company has not accrued for any Qualified Allowance in the
accompanying consolidated financial statements. JMB has informed
the Company that no incremental costs or expenses have been
incurred relating to the provision of these advisory services.
The Company believes that using an incremental cost methodology
is reasonable. The following table is a summary of the Qualified
Allowance for the year ended December 31, 1996:
1996
Qualified Allowance calculated $9,240
Qualified Allowance paid --
Cumulative deficiency of Qualified
Allowance at end of year $60,632
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
The Qualified Allowance for 1997, which will not be calculated
until the year is completed, is not expected to be paid. Net
Cash Flow was $0 for 1996 and is expected to be $0 for 1997.
After the maturity date of the COLAS, JMB will continue to
provide advisory services pursuant to the Services Agreement, the
Qualified Allowance for such years will continue to be 1-1/2% per
annum of the Fair Market Value of the gross assets of the Company
and its subsidiaries and the Qualified Allowance will continue to
be payable from the Company's Net Cash Flow. Upon the
termination of the Services Agreement, if there has not been
sufficient Net Cash Flow to pay the cumulative deficiency in the
Qualified Allowance, if any, such amount would not be due or
payable to JMB.
The Company, its subsidiaries, and their joint ventures
reimburse Northbrook, JMB and their affiliates for direct
expenses incurred on their behalf, including salaries and salary-
related expenses incurred in connection with the management of
the Company's or its subsidiaries' and the joint ventures'
operations. The total of such costs was approximately $600 for
the nine months ended September 30, 1997 and approximately $463
for the nine months ended September 30, 1996; approximately $600
of such costs were unpaid as of September 30, 1997. In addition,
as of September 30, 1997, the other amounts due to affiliates
includes $9,106 of income tax payable related to the Class A COLA
Redemption Offer (see note 3). Also, the Company pays a non-
accountable reimbursement of approximately $30 per month to JMB
or its affiliates in respect of general overhead expense, all of
which was paid as of September 30, 1997.
JMB Insurance Agency, Inc. earns insurance brokerage
commissions in connection with providing the placement of
insurance coverage for certain of the properties and operations
of the Company. Such commissions are comparable to those
available to the Company in similar dealings with unaffiliated
third parties. The total of such commissions for the nine months
ended September 30, 1996 was approximately $478 and approximately
$657 for the nine months ended September 30, 1997, all of which
was paid as of September 30, 1997.
Northbrook and its affiliates allocate certain charges for
services to the Company based upon the estimated level of
services. Such charges totaled $733 and $1,252 for the nine
months ended September 30, 1997 and September 30, 1996,
respectively. The affiliated charges for the third quarter of
1997 were offset by $212 of charges for services provided by the
Company for Northbrook or reimbursement of costs paid by the
Company on behalf of Northbrook. As of September 30, 1997, on a
net basis, the amount due Northbrook totaled approximately $547
related to these services. These services and costs are intended
to reflect the Company's separate costs of doing business and are
principally related to the inclusion of the Company's employees
in the Northbrook pension plan, payment of severance and
termination benefits and reimbursement for insurance claims paid
on behalf of the Company. All amounts described above, deferred
or currently payable, do not bear interest and are expected to be
paid in future periods.
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
(7) EMPLOYEE BENEFIT PLANS
The Company participates in benefit plans covering
substantially all of its employees, which provide benefits based
primarily on length of service and compensation levels. These
plans are administered by Northbrook in conjunction with other
plans providing benefits to employees of Northbrook and its
affiliates.
(8) COMMITMENTS AND CONTINGENCIES
The Company is involved in various matters of litigation and
other claims. Management, after consultation with legal counsel,
is of the opinion that the Company's liability (if any), when
ultimately determined, will not have a material adverse effect on
the Company's financial position.
The Company's Property segment had contractual commitments
(related to project costs) of approximately $4,508 as of
September 30, 1997. Additional development expenditures are
dependent upon the Company's ability to obtain financing for such
costs and on the timing and extent of property development and
sales.
As of September 30, 1997, certain portions of the Company's
land not currently under development or used in sugar operations
are mortgaged as security for approximately $6,297 of performance
bonds related to property development.
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Concluded
(Dollars in Thousands)
(9) INCOME TAXES
Deferred income taxes reflect the net tax effects of
temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used
for income tax purposes. Significant components of the Company's
deferred tax liabilities and assets
as of December 31, 1996 are as follows:
Deferred tax (assets):
Postretirement benefits $(22,488)
Interest accruals (2,975)
Other accruals (3,549)
---------
Total gross deferred tax assets (29,012)
---------
Deferred tax liabilities:
Accounts receivable, related to profit on sale of sugar 3,065
Inventories, principally due to sugar production
costs, capitalized costs, capitalized interest and
purchase accounting adjustments 258
Plant and equipment, principally due to depreciation
and purchase accounting adjustments 8,129
Land and land improvements, principally due
to purchase accounting adjustments 89,537
Deferred gains, due to installment sales for income
tax purposes 7,429
Investments in unconsolidated entities, principally
due to purchase accounting adjustments 14,361
--------
Total deferred tax liabilities 122,779
--------
Net deferred tax liability $93,767
=========
(10) ADJUSTMENTS
In the opinion of the Company, all adjustments (consisting
solely of normal recurring adjustments) necessary for a fair
presentation have been made to the accompanying figures as of
September 30, 1997 and for the three and nine months ended
September 30, 1997 and 1996.
<TABLE>
AMFAC/JMB FINANCE, INC.
Balance Sheets
September 30, 1997 and December 31, 1996
(Dollars in thousands, except per share information)
(Unaudited)
<CAPTION>
A s s e t s
September 30, December 31,
1997 1996
----------- -----------
<S> <C> <C>
Cash $ 1 1
========= ==========
L i a b i l i t y a n d S t o c k h o l d e r ` s E q u i t y
Repurchase obligation (note 2)
Common stock, $1 par value; authorized, issued
and outstanding - 1,000 shares $ 1 1
========== ==========
<FN>
The accompanying notes are an integral part of these balance
sheets.
</TABLE>
AMFAC/JMB FINANCE, INC.
Notes to the Balance Sheets
(Unaudited)
(Dollars in Thousands)
(1) ORGANIZATION AND ACCOUNTING POLICY
Amfac/JMB Finance, Inc. ("Finance") was incorporated
November 7, 1988 in the State of Illinois. Finance has had no
financial operations. All of the outstanding shares of Finance
are owned by Northbrook Corporation ("Northbrook").
(2) REPURCHASE OBLIGATIONS
On March 14, 1989, Finance and a subsidiary of Northbrook
(Amfac/JMB Hawaii, Inc.) entered into an agreement (the
"Repurchase Agreement") concerning Finance's obligation (on June
1, 1995 and 1999) to repurchase, upon request of the holders
thereof, the Certificate of Land Appreciation Notes due 2008
("COLAS"), to be issued by Amfac/JMB Hawaii, Inc. in conjunction
with the acquisition of Amfac/JMB Hawaii, Inc.. A total
aggregate principal amount of $384,737 of COLAS were issued
during the offering, which terminated on August 31, 1989. The
COLAS were issued in two units consisting of one Class A and one
Class B COLA. As specified in the Repurchase Agreement, the
repurchase of the Class A COLAS may have been requested of
Finance by the holders of such COLAS on June 1, 1995 at a price
equal to the original principal amount of such COLAS ($.500)
minus all payments of principal and interest allocated to such
COLAS. The cumulative interest paid per Class A COLA through June
1, 1995 was $.135. The repurchase of the Class B COLAS may be
requested of Finance by the holders of such COLAS on June 1, 1999
at a price equal to 125% of the original principal amount of such
COLAS ($.500) minus all payments of principal and interest
allocated to such COLAS. To date, the cumulative interest paid
per Class A and Class B COLA is approximately $.185 and $.185,
respectively.
On March 14, 1989, Northbrook entered into a keep-well
agreement with Finance, whereby it agreed to contribute
sufficient capital to Finance to enable Finance to meet the COLA
repurchase obligations described above. Notwithstanding Finance's
repurchase obligations, Amfac/JMB Hawaii, Inc. may elect to
redeem any COLAS requested to be repurchased at the specified
purchase price in accordance with the terms in the indenture that
governs the terms of the COLAS (the "Indenture").
On March 15, 1995, pursuant to the Indenture, Amfac/JMB
Hawaii, Inc. elected to exercise its right to redeem, and
therefore was obligated to repurchase, any and all Class A COLAS
submitted pursuant to the redemption offer at a price of $.365
per Class A COLA.
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
All references to "Notes" herein are to Notes to
Consolidated Financial Statements contained in this report.
LIQUIDITY AND CAPITAL RESOURCES
A significant portion of the Company's cash needs result
from the nature of the real estate development business, which
requires significant investment in preparing development plans,
seeking land urbanization and other governmental approvals, and
completing infrastructure improvements prior to the realization
of sales proceeds. The Company has funded its cash requirements
to date primarily through the use of short-term bank borrowings,
long-term financing secured by its golf courses on Maui and Oahu
and by a planned real estate project on Oahu, borrowings from
affiliates and revenues generated from the development and sale
of its properties and investments. Funding of the Company's
future cash requirements is dependent upon obtaining appropriate
financing and revenues generated from the development and sale of
its properties.
In order to generate additional cash flows for the Company,
management has identified certain land parcels that are not
included in the Company's long-term development plans. During the
nine months ended September 30, 1997, the Company generated
approximately $12.3 million from these non-strategic land sales.
During 1996, the Company generated approximately $18.9 million in
land sales, most of which related to non-strategic parcels.
At September 30, 1997, the Company had cash and cash
equivalents of approximately $18.6 million.
The Company intends to use its cash reserves, sales proceeds
and financing or joint venture arrangements to meet its short-
term (next 12 months) and long-term (beyond the next 12 months)
liquidity requirements, which include funding the development
costs remaining at Waikele and on West Maui, Oahu and Kauai,
agricultural deficits, payment of interest expense and the
repayment of principal on debt obligations, as necessary. The
Company's long-term remaining liquidity is dependent upon its
ability to obtain additional financing and the consummation of
certain property sales. There can be no assurance that additional
long-term financing can be obtained or property sales
consummated. The Company's land holdings on Maui and Kauai are
its primary sources of future land sale revenues. However, due
to current market conditions, the difficulty in obtaining land
use approvals and the high development costs of required
infrastructure, the planned development of these land holdings
and the ability to generate cash flow from these land holdings
are longer term in nature than the time frame experienced at
Waikele. Accordingly, if no such financing can be obtained or
additional property sales consummated, the Company will defer (to
the extent possible) development costs and capital expenditures
to meet liquidity requirements. Additionally, the Company's plans
for property sales may also be adversely impacted by the
inability of potential buyers to obtain financing.
The Company has placed a relatively large portion of its
land holdings on the market to generate cash to finance the
Company's operations, to meet debt service requirements and to
raise cash for the June 1999 Class B COLAS redemption option.
Pursuant to this option, investors can elect to sell back to the
Company their Class B COLAS at a specified price (currently
estimated to be $410 per $500 Class B COLAS).
The Company has approximately 12,000 acres of land listed
for sale with various brokers. These lands include approximately
8,600 acres on Kauai, 400 acres on Maui and 2,600 acres on the
Island of Hawaii. These lands consist primarily of large
agricultural and conservation parcels. They represent
approximately 25% of the Company's overall Hawaii land holdings.
Although these lands represent a significant portion of the
Company's overall land portfolio, these properties were not
planned for development for at least 15 to 20 years and,
therefore, is not expected to result in a material impact on the
Company's near or medium term real estate development operations.
There has been significant interest in many of these parcels
and several are under contract for sale. However, these contracts
have due diligence investigation periods which have not expired
and which allow the purchasers to terminate the agreements. It is
difficult to predict how successful the Company will be in
selling these lands at acceptable prices. However, in the past
the Company has achieved a reasonable level of success with its
bulk land sale activities selling almost 7,000 acres in large
parcels during the past four years.
During the first nine months of 1997, cash increased by $9.8
million. Net cash used in operating activities of $12.0 million
and in investing activities of $7.4 million was primarily
provided by $25.3 million of long-term financing from the
Company's parent and $5.0 million of additional long-term
financing primarily related to the refinancing of the WGCI loan
(see Note 4)partially offset by $.6 million of principal loan
repayment on long-term debt.
During the first nine months of 1997, net cash flow used in
operating activities was $12.0 million, as compared to net cash
used in operating activities of $13.8 million during the first
nine months of 1996. The $1.8 million increase in cash flow
related to operating activities was due to: (i) an increase in
1997 of the net loss (after adjusting for items not requiring or
providing cash) by $9.7 million partially offset by (ii) changes
in cash flow netting to an increase of $11.3 million, which
related primarily to working capital components.
During the first nine months of 1997, net cash flow used in
investing activities totaled $7.4 million, principally due to
property additions of $1.9 million and an increase in other
assets of $4.5 million comprised of approximately $2.7 million of
capitalizable costs related to future land developments and $2.2
million from a long-term receivable arising from a land sale in
1997. During the first nine months of 1996, investing activities
used net cash of $4.0 million, principally due to property
additions of $1.9 million and the incurrence of capitalizable
costs related to future land developments of $2.7 million.
During the first nine months of 1997, net cash flow provided
by financing activities totaled approximately $29.2 million, due
primarily to $25.3 million of long-term financing from the
Company's parent and $5.0 million of additional long-term
financing primarily related to the refinancing of the WGCI loan
(see Note 4) partially offest by $.6 million of principal loan
repayment on long-term debt. During the first nine months of
1996, net cash flow provided by financing activities totaled
$17.3 million, due primarily to $18.7 million of long-term
financing from the Company's parent, partially offset by $1.4
million of net repayments of long-term debt.
On December 5, 1988, the Company commenced an offering to
the public of COLAS pursuant to a Registration Statement on Form
S-1 under the Securities Act of 1933. A total of 384,737 COLAS
were issued prior to the termination of the offering on August
31, 1989. The net proceeds received from the sale of the COLAS
totaled approximately $352 million (after deduction of
organization and offering expenses of approximately $33 million).
Such net proceeds were used to repay a portion of the acquisition-
related financing, which was incurred to pay certain costs
associated with the Merger, including a portion of the Merger
consideration paid to shareholders of Amfac.
On March 14, 1989, Amfac/JMB Finance ("Finance"), a wholly-
owned subsidiary of Northbrook Corporation ("Northbrook"), and
the Company entered into an agreement (the "Repurchase
Agreement") concerning Finance's obligations (on June 1, 1995 and
1999) to repurchase the COLAS upon request of the holders
thereof. The COLAS were issued in two units consisting of one
Class A and one Class B COLA. As specified in the Repurchase
Agreement, the repurchase of the Class A COLAS may have been
requested by the holders of such COLAS on June 1, 1995 at a price
equal to the original principal amount of such COLAS ($500) minus
all payments of principal and interest allocated to such COLAS.
The cumulative interest paid per Class A COLA through June 1,
1995 was $135. The repurchase of the Class B COLAS may be
requested of Finance by the holders of such COLAS on June 1, 1999
at a price equal to 125% of the original principal amount of such
COLAS ($500) minus all payments of principal and interest
allocated to such COLAS. Through the date of this report, the
cumulative interest paid per Class A and Class B COLA is
approximately $185 and $185, respectively.
On March 14, 1989, Northbrook entered into a keep-well
agreement with Finance, whereby it agreed to contribute
sufficient capital or make loans to Finance to enable Finance to
meet its COLA repurchase obligations described above.
Notwithstanding Finance's repurchase obligations, the Company may
elect to redeem any COLAS requested to be repurchased at the
specified price.
On March 15, 1995, pursuant to the indenture that governs
the terms of the COLAS (the "Indenture"), the Company elected to
offer to redeem (the "Redemption Offer") all Class A COLAS from
its registered holders. Pursuant to the Redemption Offer, and in
accordance with the terms of the Indenture, the Company was
therefore obligated to purchase any and all Class A COLAS
submitted pursuant to the Redemption Offer at a price of $365 per
Class A COLA. In conjunction with the Company's Redemption
Offer, the Company made a tender offer (the "Tender Offer") to
purchase up to approximately $68 million principal value of the
Class B COLAS at a price of $220 per Class B COLA from COLA
holders electing to have their Class A COLAS repurchased.
Approximately 229,000 Class A COLAS were submitted for repurchase
pursuant to the Redemption Offer and approximately 99,000 Class B
COLAS were submitted for repurchase pursuant to the Tender Offer,
requiring an aggregate payment of the Company of approximately
$105 million on June 1, 1995. The Company used its available cash
to purchase Class B COLAS pursuant to the Tender Offer and
borrowed $52 million from Northbrook to purchase Class A COLAS
pursuant to the Redemption Offer. As of September 30, 1997, the
Company has approximately 156,000 Class A COLAS and approximately
286,000 Class B COLAS outstanding with a principal balance of
approximately $78 million and $143 million, respectively.
As a result of the COLA repurchases, the Company retired
approximately $164 million face value of debt and recognized a
financial statement gain in 1995 of approximately $32.5 million
(net of income taxes of $20.8 million, the write-off of deferred
financing costs of $10.0 million, the write-off of accrued
contingent base interest of $5.7 million and expenses of $.9
million). Such gain was treated as cancellation of indebtedness
income for tax purposes and, accordingly, the income taxes
related to the Class A Redemption Offer (approximately $9.1
million) were not indemnified by the tax agreement with
Northbrook (see Note 1).
In addition to the $52 million borrowed from Northbrook to
redeem Class A COLAS pursuant to the Redemption Offer (see Note
3), the Company also borrowed approximately $18.7 million and
$9.8 million during 1996 and 1995, respectively, to fund COLA
Base Interest payments and other operational needs. These loans
from Northbrook, which have been subsequently refinanced, were
payable interest only, had a maturity date of June 1, 1998 and
carried an interest rate per annum equal to the prime interest
rate plus two percent.
In February 1997 the above noted affiliate loans, along with
certain other amounts due Northbrook, were converted into a new
ten-year note payable. The new note is payable interest only and
accrues interest at the prime rate plus 2%. The Company borrowed
an additional $16.6 million during the nine months ended
September 30, 1997 to fund COLA Base Interest payments and other
operational needs. The total amount due Northbrook as of
September 30, 1997 was $128.8 million, which includes accrued
interest of $8.6 million. Pursuant to the Indenture relating to
the COLAS, the amounts borrowed from Northbrook are considered
"Senior Indebtedness" to the COLAS.
Pursuant to the terms of the Indenture relating to the
COLAS, the Company is required to maintain a Value Maintenance
Ratio of 1.05 to 1.00. Such ratio is equal to the relationship of
the Company's Net Asset Value (defined as the excess of (i) Fair
Market Value of the gross assets of the Company over (ii) the
amount of the liabilities (excluding liabilities resulting from
generally accepted accounting principles enacted subsequent to
the date of the Indenture) of the Company other than the
outstanding principal balance of the COLAS, any unpaid Mandatory
and Contingent Base Interest, and certain other liabilities, to
the sum of (x) the outstanding principal amount of the COLAS,
plus (y) any unpaid Base Interest, plus (z) the outstanding
principal balance of any Indebtedness incurred to redeem COLAS.
The COLA Indenture requires the Company to obtain independent
appraisals of the fair market value of the gross assets used to
calculate the Value Maintenance Ratio as of December 31 in each
even-numbered calendar year. Accordingly, the Company obtained
independent appraisals of substantially all of its gross real
estate assets as of December 31, 1996; the appraised values of
such assets were sufficient to meet the Value Maintenance Ratio.
In odd-numbered years (during which time appraisals are not
required), the Fair Market Value of the gross assets of the
Company used to compute the Value Maintenance Ratio is determined
by the Company's management. To the extent that management
believes that the aggregate Fair Market Value of the Company's
assets exceeds by more than 5% the Fair Market Value of such
assets included in the most recent appraisal, the Company must
obtain an updated appraisal supporting such increase. It should
be noted that the concept of Fair Market Value is intended to
represent the value that an independent arm's-length purchaser,
seeking to utilize such asset for its highest and best use would
pay, taking into consideration the risks and benefits associated
with such use or development, current restrictions on development
(including zoning limitations, permitted densities, environmental
restrictions, restrictive covenants, etc.) and the likelihood of
changes to such restrictions; provided, however, that with
respect to any Fair Market Value determination of all of the
assets of the Company, such assets shall not be valued as if sold
in bulk to a single purchaser. There can be no assurance that
the Company's properties can be ultimately sold at prices
equivalent to their appraised values.
In June 1991, the Company obtained a five-year $66 million
loan from the Employees' Retirement System of the State of Hawaii
("ERS"). The nonrecourse loan is secured by a first mortgage on
the Kaanapali Golf Courses, and is considered "Senior
Indebtedness" (as defined in the Indenture relating to the
COLAS). The loan bore interest at a rate per annum equal to the
greater of (i) the base interest rate announced by the Bank of
Hawaii on the first of July for each year or (ii) ten percent per
annum through September 30, 1993 and nine percent per annum
thereafter. The annual interest payments were in excess of the
cash flow generated by the Kaanapali Golf Courses.
In April 1996, the Company reached an agreement to amend the
loan with the ERS, extending the maturity date for five years.
In exchange for the loan extension, the ERS received the right to
participate in the "Net Disposition Proceeds" (as defined)
related to the sale or the refinancing of the golf courses or at
the maturity of the loan. The ERS share of the Net Disposition
Proceeds increases from 30% from April 1996 through September 30,
1997, to 40% for the period from July 1, 1997 to September 30,
1999 and to 50% thereafter. The loan amendment effectively
adjusted the interest rate as of January 1, 1995 to 9.5% until
September 30, 1996. After September 30, 1996, the loan bears
interest at a rate per annum equal to 8.73%. The loan amendment
requires the Company to pay interest at the rate of 7% for the
period from January 1, 1995 to September 30, 1996, 7.5% from July
1, 1996 to September 30, 1997, 7.75% from July 1, 1997 to
September 30, 1998 and 8.5% thereafter ("Minimum Interest").
Accrued Minimum Interest as of September 30, 1997 was $1.3
million. The scheduled Minimum Interest payments are paid
quarterly on the principal balance of the $66 million loan. The
difference between the accrued interest expense and the Minimum
Interest payment accrues interest and is payable on an annual
basis from excess cash flow, if any, generated from the Kaanapali
Golf Courses. The accrued interest payable from excess cash flow
was approximately $3.9 million as of September 30, 1997. Although
the outstanding loan balance remains nonrecourse, certain
payments and obligations such as the Minimum Interest payments
and the ERS's share of appreciation, if any, are recourse to the
Company. However, the Company's obligations to make future
Minimum Interest payments and to pay the ERS a share of
appreciation would be terminated if the Company tendered an
executed deed to the golf course property to the ERS in
accordance with the terms of the amendment.
In October 1993, Waikele Golf Club, Inc. ("WGCI"), a wholly-
owned subsidiary of the Company that owns and operates the
Waikele Golf Course, obtained a five year $20 million loan
facility from two lenders. The loan consisted of two $10 million
amortizing loans. Each loan bore interest only for the first two
years with interest and principal payments based upon a 20 year
amortization period for the remaining three years. The loans bore
interest at prime (8.5% at September 30, 1997) plus 1/2% and
LIBOR (5.6563% at September 30, 1997) plus 3%, respectively. In
February 1997, WGCI entered into an amended and restated loan
agreement with the Bank of Hawaii, (they bought out the other
lender's interest), whereby the outstanding principal amount of
the loan was increased to $25 million, the maturity date was
extended to February 2007, the interest rate was changed to LIBOR
plus 2% until the fifth anniversary and LIBOR plus 2.25%
thereafter and principal will be repaid based on a 30-year
amortization schedule. The loan is secured by WGCI's assets (see
Note 4), is guaranteed by the Company and is considered "Senior
Indebtedness" (as defined in the COLA Indenture).
Pursuant to an agreement entered into with the City of
Honolulu in 1991 relating to the development of the Company's
Waikele project, if the Company sells the Waikele golf course
land, depending on the price and certain other contingencies, a
payment of up to $15 million might be required to be made to the
City to be used to assist in the City's affordable housing
developments.
In December 1996, Amfac Property Development Corp., a wholly-
owned subsidiary of the Company, obtained a $10 million loan
facility from a Hawaii bank. The loan is secured by a mortgage on
property under development at the mill-site of Oahu Sugar (the
sugar plantation was closed in 1995), and is considered "Senior
Indebtedness" (as defined in the Indenture relating to the
COLAS). The loan bears interest at the bank's base rate (8.5% at
September 30, 1997) plus .5% and matures on December 1, 1998.
The Company uses the effective interest method and accrued
interest on the COLAS at 4% per annum ("Mandatory Base Interest")
for the nine months ended September 30, 1996 and 1997. The
Company has not generated a sufficient level of Net Cash Flow to
pay Base Interest on the COLAS (see Note 3) in excess of 4%
("Contingent Base Interest") from 1990 through the current date.
Contingent Base Interest is payable only to the extent of Net
Cash Flow (Net Cash Flow for any period is generally an amount
equal to 90% of the Company's net cash revenues, proceeds and
receipts after payment of cash expenditures, including the
Qualified Allowance, other than federal and state income taxes
and after the establishment by the Company of reserves) or
Maturity Market Value (Maturity Market Value generally means 90%
of the excess of the Fair Market Value (as defined below) of the
Company's assets at maturity over its liabilities (including
Qualified Allowance, but only to the extent earned and payable
from Net Cash Flow generated through maturity) at maturity, which
liabilities have been incurred in connection with its
operations). Approximately $96.5 million of the $104.1 million
cumulative deficiency of Contingent Base Interest related to the
period from August 31, 1989 (Final Issuance Date) through
September 30, 1997 has not been accrued in the accompanying
consolidated financial statements as the Company believes that
it is not probable at this time that a sufficient level of Net
Cash Flow will be generated in the future or that there will be
sufficient Maturity Market Value as of December 31, 2008 (the
COLA maturity date) to pay any such unaccrued Contingent Base
Interest. The following table is a summary of Mandatory Base
Interest and Contingent Base Interest for the nine months ended
September 30, 1997 and the year ended December 31, 1996 (dollars
are in millions):
1997 1996
Mandatory Base Interest paid $ 8.8 8.8
Contingent Base Interest paid -- --
Cumulative deficiency of Contingent
Base Interest at end of period $104.1 94.2
Net Cash Flow was $0 for 1996 and is expected to be $0 for 1997.
With respect to any calendar year, JMB or its affiliates may
receive a Qualified Allowance in an amount equal to: (i)
approximately $6.2 million during each of the calendar years 1989
through 1993, and (ii) thereafter, 1-1/2% per annum of the Fair
Market Value (Fair Market Value generally means the value which
an independent arm's-length purchaser, seeking to utilize the
asset for its highest and best use, would pay for such asset
taking into consideration the associated risks, benefits, current
restrictions and likelihood of changes to such restriction;
provided, however, that with respect to any Fair Market Value
determination of all of the Company's assets, such assets shall
not be valued as if sold in bulk to a single purchaser) of the
gross assets of the Company and its subsidiaries, other than cash
and cash equivalents and Excluded Assets (Excluded Assets
generally means assets acquired by the Company without the
expenditure of any amount included in revenues or receipts for
purposes of determining Net Cash Flow or assets designated as
Excluded Assets, as restricted by the Indenture; the Company has
not had any Excluded Assets), for providing certain advisory
services for the Company. The aforementioned advisory services,
which are provided pursuant to a 30-year Services Agreement
entered into between the Company, certain of its subsidiaries and
JMB in November 1988, include making recommendations in the
following areas: (i) the construction and development of real
property; (ii) land use and zoning changes; (iii) the timing and
pricing of properties to be sold; (iv) the timing, type and
amount of financing to be incurred; (v) the agricultural
business; and, (vi) the uses (agricultural, residential,
recreational or commercial) for the land. However, the Qualified
Allowance shall be earned and paid for each year prior to
maturity of the COLAS only if the Company generates sufficient
Net Cash Flow to pay Base Interest to the holders of the COLAS
for such year of an amount equal to 8% of the average outstanding
principal balance of the COLAS for such year; any portion of the
Qualified Allowance not paid for any year shall cumulate without
interest and JMB or its affiliates shall be paid such amount with
respect to any succeeding year, after the payment of all
Contingent Base Interest for such year, to the extent of 100% of
remaining Net Cash Flow until an amount equal to 20% of the Base
Interest with respect to such year has been paid, and thereafter,
to the extent of the product of (a) remaining Net Cash Flow,
multiplied by (b) a fraction, the numerator of which is the
cumulative deficiency as of the end of such year in the Qualified
Allowance and the denominator of which is the sum of the
cumulative deficiencies as of the end of such year in the
Qualified Allowance and Base Interest. A Qualified Allowance for
1989 of approximately $6.2 million was paid on February 28, 1990.
Approximately $54.4 million of Qualified Allowance related to the
period from January 1, 1991 through December 31, 1996 has not
been earned and paid, and is payable only from future Net Cash
Flow. Accordingly, because the Company does not believe it is
probable at this time that a sufficient level of Net Cash Flow
will be generated in the future to pay Qualified Allowance, the
Company has not accrued for any Qualified Allowance in the
accompanying consolidated financial statements. JMB has informed
the Company that no incremental costs or expenses have been
incurred relating to the provision of these advisory services.
The Company believes that using an incremental cost methodology
is reasonable. The following table is a summary of the Qualified
Allowance for the year ended December 31, 1996 (dollars are in
millions):
1996
Qualified Allowance calculated $ 9.2
Qualified Allowance paid --
Cumulative deficiency of Qualified
Allowance at end of year $ 60.6
The Qualified Allowance for 1997, which will not be calculated
until the year is completed, is not expected to be paid. Net
Cash Flow was $0 for 1996 and is expected to be $0 for 1997.
After the maturity date of the COLAS, JMB will continue to
provide advisory services pursuant to the Services Agreement, the
Qualified Allowance for such years will continue to be 1-1/2% per
annum of the Fair Market Value of the gross assets of the Company
and its subsidiaries and the Qualified Allowance will continue to
be payable from the Company's Net Cash Flow. Upon the
termination of the Services Agreement, if there has not been
sufficient Net Cash Flow to pay the cumulative deficiency in the
Qualified Allowance, if any, such amount would not be due or
payable to JMB.
Upon maturity, holders of COLAS will be entitled to receive
the remaining outstanding principal balance of the COLAS plus
unpaid Mandatory Base Interest plus additional interest equal to
the unpaid Contingent Base Interest, to the extent of the
Maturity Market Value, plus 55% of the remaining Maturity Market
Value.
The Company continues to implement certain cost savings
measures and to defer development project costs and capital
expenditures for longer-term projects. The Company's Property
segment is anticipated to expend an additional approximately $4.8
million in project costs during the remainder of 1997. As of
September 30, 1997, contractual commitments related to project
costs totaled approximately $4.5 million.
The price of raw sugar that the Company receives is based
upon the price of domestic sugar (less delivery and
administrative costs) as currently controlled by U.S. Government
price support legislation. On April 4, 1996, President Clinton
signed the Federal Agriculture Improvement and Reform Act of 1996
("the Act"). The Act, which expires in 2002, maintains the loan
rate for raw sugar at 18 cents per pound. The "loan rate" refers
to the minimum sugar price established by the government, which
is supported primarily by the setting of import quotas. In
addition, if prices fall below such minimum, the sugar grower is
able to receive a 18-cent-a-pound loan, using their crop as
collateral, and either repay the loan (with interest) or forfeit
the sugar. However, the Act includes certain other adjustments to
the sugar program including making crop loans recourse to the
producer and repealing marketing allotments which may over time
depress the domestic price of raw sugar. There can be no
assurance that, in the future, the government price support will
not be reduced or eliminated entirely. Such a reduction or an
elimination of price supports could have a material adverse
affect on the Company's agriculture operations, and possibly
could cause the Company to evaluate the cessation of its
remaining sugar cane operations.
The sugar industry in Hawaii has experienced significant
difficulties during the past several years. Growers in Hawaii
have struggled with the high costs of production, which have led
to the closure of several plantations, including the Company's
sugar operations on Oahu in 1995. The Company has tried to
address these challenges through a number of different measures,
including a restructuring in 1995, whereby its two Kauai
plantations were consolidated and all of its sugar operations
(including the Maui plantation) were changed to a seasonal mode.
Currently the Company is exploring modifications to the terms of
its agreement with the International Longshoreman's &
Warehouseman's Union ("ILWU"), which represents approximately 85%
of the Company's agricultural employees. The Company and the
ILWU have agreed to meet during the summer and fall of 1997 to
discuss various ideas on how to make operations profitable.
After these discussions are completed, negotiations for a new
labor contract will begin in late 1997 (the current labor
agreement expires on February 1, 1998). Although the Company is
hopeful that it will reach a consensus on operational changes
that can be reflected in a new labor agreement, there can be no
assurance that sufficient changes will be identified or agreed
upon. The absence of a new labor agreement with significant
modifications from the existing agreement would cause the Company
to evaluate the cessation of its sugar operations.
In early March 1997, the Company announced a restructuring
that has resulted in the creation of six separate operating
entities in the following businesses: Sugar, Golf, Coffee,
Water, Land Management and Real Estate Development. The Company
also formed a corporate services division to handle accounting,
MIS, human resources, tax and other administrative functions for
the six operating groups. The Company believes it will operate
more effectively as several smaller entrepreneurial-minded
entities, rather than as one large, diverse conglomerate.
Approximately four percent of the Company's total employees were
released as part of the restructuring, which is expected to
result in annual payroll savings of approximately $1.1 million.
The Company incurred termination costs of approximately $.6
million related to the restructuring during the first quarter of
1997.
RESULTS OF OPERATIONS
GENERAL:
The Company and its subsidiaries report their taxes as a
part of the consolidated tax return of the Company's parent,
Northbrook. The Company and its subsidiaries entered into a tax
indemnification agreement with Northbrook, which indemnifies the
Company and its subsidiaries for responsibility for all past,
present and future federal and state income tax liabilities
(other than income taxes which are directly attributable to
cancellation of indebtedness income caused by the repurchase or
redemption of securities as provided for in or contemplated by
the Repurchase Agreement).
Current and deferred taxes have been allocated to the
Company as if the Company were a separate taxpayer in accordance
with the provisions of SFAS No. 109 - Accounting for Income
Taxes. However, to the extent the tax indemnification agreement
does not require the Company to actually pay income taxes,
current taxes payable or receivable (excluding income taxes which
are directly attributable to cancellation of indebtedness income
caused by the repurchase or redemption of securities as provided
for in or contemplated by the Repurchase Agreement) have been
reflected as deemed contributions and distributions,
respectively, to additional paid-in capital in the accompanying
consolidated financial statements.
Long-term debt increased as of September 30, 1997 as
compared to December 31, 1996, due primarily to the approximately
$5.5 million of proceeds received related to the refinancing of
the WGCI loan (see Note 4) offset in part by principal payments
made on long-term debt.
The long-term portion of amounts due to affiliates increased
as of September 30, 1997 as compared to December 31, 1996, due
primarily to $16.6 million of financing provided by affiliates to
fund interest payments and other operational needs and the
deferral of approximately $5.4 million of interest on the
affiliate financing, which was added to the outstanding principal
(see Note 6).
AGRICULTURE:
The Company's Agriculture segment is responsible for
activities related to the cultivation, processing and sale of
sugar cane and other agricultural products. Agriculture's
revenues are primarily derived from the Company's sale of its raw
sugar.
The overall decrease in production for the year was offset
in part by an 10% increase in acres harvested for the three
months ended September 30, 1997 as compared to the three months
ended September 30, 1996.
Receivables increased as of September 30, 1997 as compared
to December 31, 1996 primarily due to the timing of the harvest
of sugar cane and the subsequent payment for the delivery of raw
sugar.
Agricultural revenues and cost of sales decreased for the
three and nine months ended September 30, 1997 as compared to the
three and nine months ended September 30, 1996 due to a decrease
in tons produced and to the timing of sugar production and
related sales. For the nine months ended September 30, 1997, the
Company sold approximately 66,400 tons of sugar, a 38% decrease
over the same period in 1996. The average price of sugar sold
for the nine months ended September 30, 1997 of approximately
$357 represents a 5% decrease over the average price for the nine
months ended September 30, 1996. The Company harvested
approximately 9,200 and 10,300 acres for the nine months ended
September 30, 1997 and 1996, respectively.
For the three months ended September 30, 1997, the Company
sold approximately 46,400 tons of sugar, a 3% decrease over the
same period in 1996. The average price of sugar sold for the
three months ended September 30, 1997 of approximately $356
represents a 5% decrease over the average price for the three
months ended September 30, 1996. The Company harvested
approximately 5,400 and 4,900 acres for the three months ended
September 30, 1997 and 1996, respectively.
The Company's sugar plantation subsidiaries sell their raw
sugar production to the Hawaiian Sugar and Transportation Company
("HSTC"), which is an agricultural cooperative owned by the major
Hawaii producers of raw sugar (including the Company), under a
marketing agreement. HSTC sells the raw sugar production to the
California and Hawaii Sugar Company ("C&H") pursuant to a long-
term supply contract. The terms of the supply contract do not
require a specified level of production by the Hawaii producers;
however, HSTC is obligated to sell and C&H is obligated to
purchase any raw sugar produced. HSTC returns to its raw sugar
suppliers proceeds based upon the domestic sugar price less
delivery and administrative charges. The Company recognizes
revenues and related cost of sales upon delivery of its raw sugar
to C&H.
Reference is made to the "Liquidity and Capital Resources"
section of "Management's Discussion and Analysis of Financial
Condition and Results of Operations" for a discussion of
potential uncertainties regarding the price of raw sugar and the
continuation of the Company's sugar cane operations.
As part of the Company's agriculture operations, the Company
enters into commodities futures contracts and options in sugar as
deemed appropriate to reduce the risk of future price
fluctuations in sugar. These futures contracts and options are
accounted for as hedges and, accordingly, gains and losses are
deferred and recognized in cost of sales as part of the
production cost.
PROPERTY:
The Company's Property segment is responsible for the
following: land planning and development activities; obtaining
land use, zoning and other governmental approvals; selling or
financing developed and undeveloped land parcels; and the
management and operation of the Company's golf course facilities.
For the nine months ended September 30, 1997 and 1996, the
Company generated approximately $16.3 million and $12.3 million
of land sales, respectively. Approximately $5.2 million of land
sales for the nine months ended September 30, 1997 related to the
remaining four ocean front lots in Kaanapali (see discussion
below), approximately $4.0 million of land sales related to
Kaanapali Golf Estates and the remaining $7.1 million was
primarily from the sale of non-strategic land parcels on Kauai
and Hawaii. For the nine months ended September 30, 1996,
approximately $5.5 million of land sales related to Kaanapali
Golf Estates and the remaining $6.5 million was primarily from
the sale of non-strategic land parcels on Kauai, Oahu and Hawaii.
Property revenues also include the operations of the three golf
courses owned by the Company, which accounted for total revenues
of $11.8 million and $11.7 million for the nine months ended
September 30, 1997 and 1996, respectively.
For the three months ended September 30, 1997, the Company
generated approximately $4.0 million of land sales related to its
development in Kaanapali Golf Estates and the remaining $2.7
million was primarily from the sale of non-strategic land parcels
on Kauai and Hawaii. For the three months ended September 30,
1996, the Company generated approximately $2.6 million of land
sales related to the sale of non-strategic land parcels on Kauai,
Oahu and Hawaii. The Company has entered into contracts to sell
bulk parcels of land on Maui and Kauai for approximately $30
million in aggregate. The closings are anticipated to take place
during the 1st quarter of 1998. There can be no assurance that
such sales will be consummated.
Land and inventory decreased as of September 30, 1997
compared to December 31, 1996 due primarily to land sales having
a cost basis of $14.3 million, offset in part by expenditures
related to the light industrial subdivision project on the former
mill site at Oahu Sugar Company.
Other assets increased as of September 30, 1997 as compared
to December 31, 1996 primarily due to a long-term receivable of
$2.2 million arising from a land sale in 1997 and deferred costs
of $2.3 million related to preliminary planning costs associated
with potential future development projects.
Property sales and cost of sales increased for the three and
nine months ended September 30, 1997 as compared to the three and
nine months ended September 30, 1996, however, operating income
deteriorated due to lower margins realized on property sold
during 1997.
MAUI ACTIVITY
The planned development of the Company's land on Maui is
expected to be longer term in nature. As Maui is less populated
than Oahu and more dependent on the resort/tourism industry, much
of the Company's land is intended for resort and resort-related
uses. Due to overall economic conditions and trends in tourism,
demand for these land uses has not been strong. The Company's
currently available homesite inventory on Maui, which is targeted
to the second home buyer, has experienced slower sales activity
to date than originally expected. The Company's competitors on
Maui have also experienced slow sales activity in the second home
market. The Company is continuing to evaluate its planned
products and the timing of development of its land holdings in
light of the current weak market demand and the capital resources
needed for future development.
The Company is marketing Kaanapali Golf Estates, a
residential community that is part of South Beach Mauka adjacent
to the Kaanapali Beach Resort in West Maui. The Company obtained
final subdivision approval for a 32 lot subdivision of a parcel
referred to as "17B" at Kaanapali Golf Estates in May 1997.
Fifteen of these lots closed in August and September 1997 for
sales prices of $.15 million to $.17 million per lot totaling
$2.5 million. The Company commenced onsite construction of the
subdivision improvements for parcel 17B in August 1997 and is
expected to be completed in March 1998, at a cost of
approximately $1.6 million. In addition, four lots in an
adjacent parcel (referred to as "Parcel 14") closed in August
1997 for sales prices ranging from $.25 million to $.6 million
totaling approximately $1.5 million. An additional 2 lots in
Parcel 14 are in escrow and expected to close by the end of 1997,
for sales prices ranging from approximately $.25 million to .6
million.
In 1995, the Company subdivided an ocean front parcel in
Kaanapali into six single family homesites of approximately one
acre each. Sales of two of the lots in the project closed in
December 1995, generating total sales proceeds of approximately
$4.1 million. The Company sold the four remaining lots to a
local builder in June 1997 for a price of $5.2 million.
In 1986, the Company entered into a joint venture agreement
with Tobishima Pacific Inc. ("Tobishima"), a wholly-owned
subsidiary of a Japanese company, the purpose of which is to
plan, manage and develop approximately 96 acres of beachfront
property at Kaanapali (known as "North Beach"). The joint
venture (in which the Company has a 50% interest) has State land
use and County zoning approvals for the subdivision and
development of the infrastructure improvements necessary to
accommodate up to 3,200 hotel and/or condominium units on this
site. This North Beach property constitutes nearly all of the
remaining developable beachfront acreage at Kaanapali. The
development of North Beach continues to be tied to the completion
of the Lahaina bypass highway or other traffic mitigation
measures satisfactory to the Maui County Planning Commission.
The Company is seeking final approvals to develop a time-
share resort on 14 acres of the North Beach property (the
"Site"). A land option/purchase agreement was entered into with
Tobishima in October 1996. This agreement gives the Company an
option to purchase Tobishima's 50% interest in the Site for $7
million. The Company does not expect to consummate the purchase
until all discretionary land use permits are received for
development of the time-share resort. In accordance with the
land option/purchase agreement, the Company has made
nonrefundable deposits of $.2 million (which may be applied to
the purchase price) to keep the option available through December
31, 1997. Additional nonrefundable deposits may be made to extend
the option through August 31, 2000. On March 12, 1997, the
Company filed an application for a special management area use
permit with the County of Maui ("SMA Permit") for the time-share
resort. A public hearing was held on the SMA Permit on July 10,
1997. Although there was a significant amount of testimony both
for and against the project, a final decision was not made on the
SMA Permit by the Maui Planning Commission at the public hearing.
Instead, "intervention status" was granted to several parties who
presented their specific objections to the SMA Permits in a
judicial process commentary known as a "contested case" hearing,
which was held in September and October 1997. Final Maui
Planning Commission action on the Company's SMA Permit
application is not anticipated until the first quarter of 1998.
Although there is no assurance that the SMA Permit will be
received (and that if such Permit is received, that its terms
will be acceptable to the Company), management is optimistic that
the Company will receive the necessary approvals to proceed with
the project.
In September 1997, the Company and Tobishima entered into an
agreement with Maui County providing the County with the option
to purchase 33 acres at North Beach (separate from the Site) for
$15 million. The County cannot exercise its option to purchase
unless and until the Company receives the SMA Permit. The
acquisition of the 33 acres by the County would reduce the
overall density of the North Beach development by approximately
one-third. The Mayor of Maui County and the County Council have
agreed that, assuming the reduction in density were to be
effected, the infrastructure upgrades proposed by the Company
would be sufficient for the development of the time-share resort.
The Company believes that the potential for a successful
time-share development at North Beach will be greatly enhanced by
the involvement of a company with past experience in time-share
development, and in the marketing and sale of time-share
intervals (one week ownership rights). In February 1997, the
Company formed a limited partnership with an affiliate of an
experienced time-share development and management company. Known
as Kaanapali Ownership Resorts L.P., the new limited partnership
is owned 85% by affiliates of the Company and 15% by Kaanapali
Partners Limited Partnership, an affiliate of the owners of The
Ridge Tahoe in Nevada. After receipt of the SMA permit, the
partnership will need to arrange project financing for the
development of the resort. In addition, the land option/purchase
agreement with Tobishima includes short-term seller financing,
which the partnership may decide to utilize.
In connection with certain of the Company's land use
approvals on Maui, the Company has agreed to provide additional
housing on Maui in the affordable price range, and to participate
in the funding of the design and construction of the planned
bypass highway extending from Lahaina to Kaanapali. The Company
has entered into a development agreement with the State
Department of Transportation covering the Company's participation
in the design and construction of the bypass highway development.
It is anticipated that, upon the receipt of government approvals,
the Company will expend up to $3.5 million (in the aggregate), of
which approximately $1.5 million has been spent as of September
30, 1997, toward the design of the bypass highway and/or the
widening of the existing highway. The Company has committed
another $6.7 million for the construction of the bypass highway,
subject obtaining future entitlements on Maui. The development
and construction of the bypass highway is expected to be a long-
term project that will not be completed until the year 2004 or
later.
OAHU ACTIVITY
The Company is currently developing the approximately 60
acres of fee simple land it owns at the mill-site of Oahu Sugar
Company (which was shut down in 1995). The Company has received
zoning for a light industrial subdivision on an approximately 37-
acre portion of the property, which excludes property containing
the sugar mill and adjacent buildings. In connection with the
development of this property, the Company has received state land
use urbanization for the entire 60-acre site. Marketing the first
twenty lots within the light industrial subdivision commenced in
August 1997. To date, the Company has received significant
interest from potential buyers, however, the Company has not
received any firm offers on these lots. The infrastructure for
these first twenty lots is expected to cost approximately $5.9
million, of which $2.1 million has been spent through September
30, 1997. In addition, the Company has begun the process of
seeking the necessary government approvals for the redevelopment
of the remainder of the mill-site parcels, including planned
commercial, public and quasi-public uses.
Waiahole Irrigation Company ("WIC") is a wholly-owned
subsidiary of the Company, which owns and operates a water
collection and transmission system. This system provided water
for the Company's sugar cane operations on Oahu from the early
1900's until 1995, when Oahu Sugar Company was closed. After the
closure of Oahu Sugar Company, WIC negotiated agreements with
several farmers and golf courses (the "Users") to deliver
irrigation water to them for a fee. However, to consummate these
agreements the Users' landlords are required by law to obtain
water permits from the State of Hawaii water commission (the
"Commission"). Therefore, the landowners and WIC applied to the
Commission for the appropriate approvals. There has been, and
continues to be, strong opposition to the water permit request.
The opposition consists primarily of environmental and native
Hawaiian groups who want the water to be used for stream
restoration purposes, rather than being transported by the
Waiahole System.
After several years of processing, including about nine
months of hearings, the Commission issued a draft decision in
July 1997. The decision was not favorable to the landowners and
WIC as it permits only a limited amount of water to be
transported through the Waiahole System (approximately one-third
of its capacity). At this low level and with the pricing
provided for in the agreement between WIC and the Users, it is
doubtful that WIC could generate enough revenues to cover its
annual operating and maintenance costs of approximately $1
million per year.
At this junction, the landowners and other supporting
parties, including the City and County of Honolulu and the State
Department of Agriculture, will work to have the Commission re-
consider their draft decision. In the interim, WIC has decided
to terminate the Users' agreement. After the Commission issues
its final decision, WIC will then decide whether to re-negotiate
the price for delivery of water through the system. Finally, if
improvements cannot be made in either the pricing or volume of
Waiahole System water, WIC will be forced to consider closing
down the system or operating the system on a very limited basis.
Such closing or limitation of the Waiahole System would not have
a material adverse effect on the Company's financial condition or
on its results of operations.
KAUAI ACTIVITY
In May 1996, Kauai County approved the Company's application
to zone 552 acres of land on Kauai for a mixed use, master
planned community which will include a variety of both affordable
and market rate residential units, commercial and industrial
projects and a number of community and public based facilities.
However, before construction can commence, the Company must
satisfy several conditions imposed during the approval process
and obtain additional administrative development permits for
requirements such as grading and subdivision. The Company does
not plan to pursue those final permits until the real estate
market on Kauai improves. Once construction commences, subject to
market conditions, the project is expected to span over 20 years.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not involved in any material pending legal
proceedings, other than ordinary routine litigation incidental to
its business. The Company and/or certain of its affiliates have
been named as defendants in several pending lawsuits. While it
is impossible to predict the outcome of the litigation that is
now pending (or threatened) and for which the potential liability
is not covered by insurance, the Company is of the opinion that
the ultimate liability from any of the litigation will not
materially adversely affect the Company's results of operations
or its financial condition.
<TABLE>
<CAPTION>
<S>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a)The following documents are included as an exhibits
to this report.
<C> <C>
4.1* Indenture, including the
form of COLAS, among Amfac/JMB Hawaii,
Inc., its subsidiaries as Guarantors
and Continental Bank National
Association, as Trustee (dated as of
March 14, 1989).
4.2** Amendment dated as
of January 17, 1990 to the Indenture
relating to the COLAS.
4.3*** $28,097,832
Promissory Note from Amfac, Inc. to
Amfac/JMB Hawaii, Inc. extended and
reissued effective December 31, 1993.
4.4**** The five year
$66,000,000 loan with the Employees'
Retirement System of the State of
Hawaii to Amfac/JMB Hawaii, Inc. as of
June 25, 1991.
4.5***** $13,250,000 Loan
Agreement among Heller, Financial,
Inc., as Lender, The Lihue Plantation
Company Limited, as Borrower, and
Amfac/JMB Hawaii, Inc., Kekaha Sugar
Company, Limited, Oahu Sugar Company
Limited and Pioneer Mill Company,
Limited, as Guarantors December 30,
1992.
4.6****** $10,000,000 loan
agreement between Waikele Golf Club,
Inc. and ORIX USA Corporation.
$10,000,000 loan
agreement between Waikele Golf Club,
Inc. and Bank of Hawaii.
4.7******* $52,000,000
Promissory Note to Northbrook
Corporation from Amfac/JMB Hawaii, Inc.
effective May 31, 1995 is filed
herewith.
4.8******** Agreement for
delivery and sale of raw sugar between
Hawaii Sugar Transportation
Corporation, as seller, and C&H, as
Buyer, dated June 4, 1993.
4.9********* Previously
filed as an exhibit to the Company's
Form 10-Q report under the Securities
Act of 1934 (File No. 33-24180) filed
May 13, 1996 and hereby incorporated by
reference. Standard Sugar Marketing
Contracts between Hawaiian Sugar
Transportation Company and Hawaii Sugar
Growers dated June 4, 1993.
4.10********* Amendment to
the $66,000,000 loan with the
Employees' Retirement System of the
State of Hawaii to Amfac/JMB Hawaii,
Inc. as of April 18, 1996.
4.11********** Amended and
Restated $52,000,000 Promissory Note to
Northbrook Corporation from Amfac/JMB
Hawaii, Inc. extended and reissued
effective June 1, 1996.
4.12********** Amended and
Restated $28,087,832 Promissory Note
from Amfac, Inc. to Amfac/JMB Hawaii,
Inc. extended and reissued effective
June 1, 1996.
4.13***********
$10,000,000 loan agreement between
Amfac Property Development Corp. and
City Bank at December 18, 1996
4.14***********
$104,759,324 Promissory Note between
Northbrook Corporation and Amfac/JMB
Hawaii, Inc. dated February 17, 1997
4.15************ Amended
and Restated $25,000,000 loan agreement
with the Bank of Hawaii dated February
4, 1997.
4.16************ Limited
Partnership Agreement for Kaanapali
Ownership Resorts, L.P. dated February
1, 1997 for development of time-share
resort on Kaanapali.
4.17 Revolving Credit Note
between Amfac/JMB Hawaii, Inc. and Fred
Harvey Transportation Company, Inc.
dated February 27, 1997.
10.1* General Lease S-
4222, dated January 1, 1969, by and
between the State of Hawaii and Kekaha
Sugar Company, Limited.
10.2* Grove Farm Haiku
Lease, dated January 25, 1974 by and
between Grove Farm Company,
Incorporated and The Lihue Plantation
Company, Limited.
10.3* General Lease S-
4412, dated October 31, 1974, by and
between the State of Hawaii and the
Lihue Plantation Company, Limited.
10.4* General Lease S-
4576, dated March 15, 1978, by and
between the State of Hawaii and The
Lihue Plantation Company, Limited.
10.5* General Lease S-
3827, dated July 8, 1964, by and
between the State of Hawaii and East
Kauai Water Company, Ltd.
10.6* Amended and
Restated Power Purchase Agreement,
dated as of June 15, 1992 by and
between The Lihue Plantation Company,
Limited and Citizens Utilities Company.
10.7* Amendment to the
Campbell Estate Lease, dated April 16,
1970, between Trustees under the Will
and of the Estate of James Campbell,
Deceased, and Oahu Sugar Company,
Limited amending and restating the
previous lease.
10.8* Bishop Estate Lease
No. 24,878, dated June 17, 1977, by and
between the Trustees of the Estate of
Bernice Pauahi Bishop and Pioneer Mill
Company, Limited.
10.9* General Lease S-
4229, dated February 25, 1969, by and
between the State of Hawaii, by its
Board of Land and Natural Resources and
Pioneer Mill Company, Limited.
10.10* Honokohau Water
License, dated December 22, 1980,
between Maui Pineapple Company Ltd. and
Pioneer Mill Company, Limited.
10.11* Water Licensing
Agreement, dated September 22, 1980, by
and between Maui Land & Pineapple
Company, Inc. and Amfac, Inc.
10.12* Joint Venture
Agreement, dated as of March 19, 1986,
by and between Amfac Property
Development Corp. and Tobishima
Properties of Hawaii, Inc.
10.13* Development
Agreement, dated March 19, 1986, by and
between Kaanapali North Beach Joint
Venture and Amfac Property Investment
Corp. and Tobishima Pacific, Inc.
10.14** Keep-Well Agreement
between Northbrook Corporation and
Amfac/JMB Finance, Inc.
10.15** Repurchase
Agreement, dated March 14, 1989, by and
between Amfac/JMB Hawaii, Inc. and
Amfac/JMB Finance, Inc.
10.16** Amfac Hawaii Tax
Agreement, dated November 21, 1988
between Amfac/JMB Hawaii, Inc., and
Amfac Property Development Corp.; Amfac
Property Investment Corp.; Amfac Sugar
and Agribusiness, Inc.; Kaanapali Water
Corporation; Amfac Agribusiness, Inc.;
Kekaha Sugar Company, Limited; The
Lihue Plantation Company, Limited; Oahu
Sugar Company, Limited; Pioneer Mill
Company, Limited; Puna Sugar Company,
Limited; H. Hackfeld & Co., Ltd.; and
Waiahole Irrigation Company, Limited.
10.17** Amfac-Amfac Hawaii
Tax Agreement, dated February 27, 1989
between Amfac, Inc. and Amfac/JMB
Hawaii, Inc.
10.18** Services Agreement,
dated November 18, 1988, between
Amfac/JMB Hawaii, Inc., and Amfac
Property Development Corp.; Amfac
Property Investment Corp.; Amfac Sugar
and Agribusiness, Inc.; Kaanapali Water
Corporation; Amfac Agribusiness, Inc.;
Kekaha Sugar Company, Limited; The
Lihue Plantation Company, Limited; Oahu
Sugar Company, Limited; Pioneer Mill
Company, Limited; Puna Sugar Company,
Limited; H. Hackfeld & Co., Ltd.; and
Waiahole Irrigation Company, Limited
and JMB Realty Corporation.
19.0******* $35,700,000
agreement for sale of C&H and certain
other C&H assets, to A&B Hawaii, Inc.
in June of 1993.
Pursuant to item 6.01
(b)(4) of Regulation SK, the registrant
hereby undertakes to provide the
commission upon its request a copy of
any agreement with respect to long-term
indebtedness of the registrant and its
consolidated subsidiaries that does not
exceed 10 percent of the total assets
of the registrant and its subsidiaries
on a consolidated basis.
</TABLE>
* Previously filed as exhibits to the Company's
Registration Statement of Form S-1 (as amended) under the
Securities Act of 1933 (File No. 33-24180) and hereby
incorporated by reference.
** Previously filed as exhibits to the Company's Form 10-K
report under the Securities Act of 1934 (File No. 33-24180) filed
on March 27, 1989 and hereby incorporated by reference.
*** Previously filed as exhibits to the Company's Form 10-K
report under the Securities Act of 1934 (File No. 33-24180) filed
on March 27, 1991 and hereby incorporated by reference.
**** Previously filed as exhibits to the Company's Form 10-Q
report under the Securities Act of 1934 (File No. 33-24180) filed
on August 13, 1991 and hereby incorporated by reference.
***** Previously filed as exhibit to the Company's Form 10-Q
report under the Securities Act of 1934 (File No. 33-24180) filed
on May 14, 1993 and hereby incorporated by reference.
****** Previously filed as exhibit to the Company's Form
10-Q report under the Securities Act of 1934 (File No. 33-24180)
filed November 11, 1993 and hereby incorporated by reference.
******* Previously filed as exhibit to the Company's Form
10-K report under the Securities Act of 1934 (File No. 33-24180)
filed March 27, 1994 and hereby incorporated by reference.
******** Previously filed as an exhibit to the Company's Form 10-
Q report under the Securities Act of 1934 (File No. 33-24180)
filed May 12, 1995 and hereby incorporated by reference.
********* Previously filed as exhibit to the Company's Form 10-Q
report under the Securities Act of 1934 (File No. 33-24180) filed
May 13, 1996 and hereby incorporated by reference.
********** Previously filed as exhibit to the Company's Form
10-Q report under the Securities Act of 1934 (File No. 33-24180)
filed on November 14August 13, 1996 and hereby incorporated by
reference.
*********** Previously filed as an exhibit to the Company's Form
10-K report under the Securities Act of 1934 (File No. 33-24180)
filed March 21, 1997 and hereby incorporated by reference.
************ Previously filed as exhibit to the Company's Form
10-Q report under the Securities Act of 1934 (File No. 33-24180)
filed May 15, 1997 and hereby incorporated by reference.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMFAC/JMB HAWAII, INC.
By: Edward J. Kroll
Vice President
Date: November 14, 1997
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following person in the capacity and on the date indicated.
Edward J. Kroll
Principal Accounting Officer
Date: November 14, 1997
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMFAC/JMB FINANCE, INC.
By: Edward J. Kroll
Vice President
Date: November 14, 1997
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following person in the capacity and on the date indicated.
Edward J. Kroll
Principal Accounting Officer
Date: November 14, 1997
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Kaanapali Coffee Estates, Inc.
By: Edward J. Kroll
Vice President
Date: November 14, 1997
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following person in the capacity and on the date indicated.
Edward J. Kroll
Principal Accounting Officer
Date: November 14, 1997
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMFAC PROPERTY DEVELOPMENT CORP.
By: Edward J. Kroll
Vice President
Date: November 14, 1997
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following person in the capacity and on the date indicated.
Edward J. Kroll
Principal Accounting Officer
Date: November 14, 1997
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMFAC PROPERTY INVESTMENT CORP.
By: Edward J. Kroll
Vice President
Date: November 14, 1997
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following person in the capacity and on the date indicated.
Edward J. Kroll
Principal Accounting Officer
Date: November 14, 1997
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMFAC LAND COMPANY, LTD.
By: Edward J. Kroll
Vice President
Date: November 14, 1997
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following person in the capacity and on the date indicated.
Edward J. Kroll
Principal Accounting Officer
Date: November 14, 1997
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMFAC VACATIONS MANAGERS, INC.
By: Edward J. Kroll
Vice President
Date: November 14, 1997
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following person in the capacity and on the date indicated.
Edward J. Kroll
Principal Accounting Officer
Date: November 14, 1997
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
KAANAPALI WATER CORPORATION
By: Edward J. Kroll
Vice President
Date: November 14, 1997
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following person in the capacity and on the date indicated.
Edward J. Kroll
Principal Accounting Officer
Date: November 14, 1997
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
KEKAHA SUGAR COMPANY, LIMITED
By: Edward J. Kroll
Vice President
Date: November 14, 1997
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following person in the capacity and on the date indicated.
Edward J. Kroll
Principal Accounting Officer
Date: November 14, 1997
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
H. HACKFELD & CO., LTD.
By: Edward J. Kroll
Vice President
Date: November 14, 1997
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following person in the capacity and on the date indicated.
Edward J. Kroll
Principal Accounting Officer
Date: November 14, 1997
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE LIHUE PLANTATION COMPANY, LIMITED
By: Edward J. Kroll
Vice President
Date: November 14, 1997
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following person in the capacity and on the date indicated.
Edward J. Kroll
Principal Accounting Officer
Date: November 14, 1997
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
OAHU SUGAR COMPANY, LIMITED
By: Edward J. Kroll
Vice President
Date: November 14, 1997
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following person in the capacity and on the date indicated.
Edward J. Kroll
Principal Accounting Officer
Date: November 14, 1997
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PIONEER MILL COMPANY, LIMITED
By: Edward J. Kroll
Vice President
Date: November 14, 1997
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following person in the capacity and on the date indicated.
Edward J. Kroll
Principal Accounting Officer
Date: November 14, 1997
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PUNA SUGAR COMPANY, LIMITED
By: Edward J. Kroll
Vice President
Date: November 14, 1997
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following person in the capacity and on the date indicated.
Edward J. Kroll
Principal Accounting Officer
Date: November 14, 1997
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WAIAHOLE IRRIGATION COMPANY, LIMITED
By: Edward J. Kroll
Vice President
Date: November 14, 1997
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following person in the capacity and on the date indicated.
Edward J. Kroll
Principal Accounting Officer
Date: November 14, 1997
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WAIKELE GOLF CLUB, INC.
By: Edward J. Kroll
Vice President
Date: November 14, 1997
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following person in the capacity and on the date indicated.
Edward J. Kroll
Principal Accounting Officer
Date: November 14, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENT INCLUDED IN SUCH REPORT
</LEGEND>
<CIK> 0000839437
<NAME> AMFAC/JMB HAWAII, INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 18,561
<SECURITIES> 0
<RECEIVABLES> 11,556
<ALLOWANCES> 0
<INVENTORY> 41,704
<CURRENT-ASSETS> 74,429
<PP&E> 346,235
<DEPRECIATION> 38,001
<TOTAL-ASSETS> 478,844
<CURRENT-LIABILITIES> 30,134
<BONDS> 325,729
0
0
<COMMON> 1
<OTHER-SE> (182,189)
<TOTAL-LIABILITY-AND-EQUITY> 478,844
<SALES> 59,236
<TOTAL-REVENUES> 59,522
<CGS> 54,278
<TOTAL-COSTS> 68,182
<OTHER-EXPENSES> 1,022
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,438
<INCOME-PRETAX> (22,174)
<INCOME-TAX> 11,893
<INCOME-CONTINUING> (19,227)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (19,227)
<EPS-PRIMARY> (19.2)
<EPS-DILUTED> (19.2)
</TABLE>
