1
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 March 31, 1998 Commission File Number 33-24180
AMFAC/JMB HAWAII, L.L.C.
(Exact name of registrant as specified in its charter)
Hawaii 36-3109397
(State of organization) (I.R.S. Employer Identification No.)
For the quarter ended March 31, 1998 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 May 12, 1998, all of Amfac/JMB Hawaii L.L.C.'s membership
interest is solely owned by Northbrook Corporation, an Illinois
corporation, and not traded on a public market.
As of May 12, 1998, 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
Amfac Land Hawaii 99-0185633 900 North Michigan Avenue
Company, Limited. 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
H. Hackfeld Hawaii 99-0037425 900 North Michigan Avenue
& Co., Ltd. Chicago, Illinois 60611
312/440-4800
Kaanapali Estate Hawaii 99-0176334 900 North Michigan Avenue
Coffee, 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
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 24
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
AMFAC/JMB HAWAII, L.L.C.
Consolidated Balance Sheets
March 31, 1998 and December 31, 1997
(Dollars in Thousands)
(Unaudited)
A S S E T S
<CAPTION>
March 31, December 31,
1998 1997
-------------- --------------
<S> <C> <C>
A S S E T S
Current assets:
Cash and cash equivalents $11,341 9,115
Receivables-net 5,333 6,743
Inventories 69,206 61,469
Prepaid expenses 2,736 2,648
-------- --------
Total current assets 88,616 79,975
-------- --------
Investments 46,721 46,496
-------- --------
Property, plant and equipment:
Land and land improvements 262,094 262,233
Machinery and equipment 63,594 63,497
Construction in progress 1,370 1,035
-------- --------
327,058 326,765
Less accumulated depreciation
and amortization 40,256 38,726
-------- --------
286,802 288,039
-------- --------
Deferred expenses, net 11,564 11,872
Other assets 37,866 37,863
-------- --------
$ 471,569 464,245
========== ==========
L I A B I L I T I E S
Current liabilities:
Accounts payable $ 6,567 6,289
Accrued expenses 7,395 9,213
Current portion of
long-term debt 11,246 11,243
AMFAC/JMB HAWAII, L.L.C.
Consolidated Balance Sheets - Continued
March 31, 1998 and December 31, 1997
(Dollars in Thousands)
(Unaudited)
March 31, December 31,
1998 1997
------------- -------------
Current portion of
deferred income taxes 6,824 4,325
Amounts due to affiliates 11,019 10,719
-------- --------
Total current liabilities 43,051 41,789
-------- --------
Amounts due to affiliates 143,566 125,290
Accumulated postretirement
benefit obligation 53,495 54,375
Long-term debt 93,846 94,312
Other long-term liabilities 34,863 34,525
Deferred income taxes 81,148 84,151
Certificate of Land
Appreciation Notes 220,692 220,692
-------- --------
Total liabilities 670,661 655,134
-------- --------
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 (8,307) 14,384
Retained earnings (deficit) (190,786) (205,274)
--------- ---------
Total stockholder's equity
(deficit) (199,092) (190,889)
--------- ---------
$ 471,569 464,245
============ ===========
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<TABLE>
AMFAC/JMB HAWAII, L.L.C.
Consolidated Statements of Operations
Three Months Ended March 31, 1998 and 1997
(Dollars in Thousands)
(Unaudited)
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Revenue:
Agriculture $ 917 675
Property 8,309 8,808
------- -------
9,226 9,483
------- -------
Cost of sales:
Agriculture 1,559 769
Property 4,352 5,738
------- -------
5,911 6,507
Operating expenses:
Selling, general
and administrative 2,264 3,066
Depreciation and
amortization 1,659 1,515
------- -------
Total costs and expenses 9,834 11,088
Operating income(loss) (608) (1,605)
------- -------
Non-operating income
(expenses):
Amortization of
deferred costs (308) (419)
Interest expense (7,882) (6,676)
Interest income 91 41
------- -------
(8,099) (7,054)
------- -------
Loss before taxes (8,707) (8,659)
------- -------
Income tax benefit (3,343) (3,314)
------- -------
Net loss $(5,364) (5,345)
======== ========
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<TABLE>
AMFAC/JMB HAWAII, L.L.C.
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1998 and 1997
(Dollars in Thousands)
(Unaudited)
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(5,364) (5,345)
Items not requiring (providing) cash:
Depreciation and amortization 1,659 1,515
Amortization of deferred costs 308 419
Equity in earnings of investments 14 10
Income tax benefit (3,343) (3,314)
Deferred interest 250 268
Interest on advances from affiliates 3,362 2,469
Changes in:
Receivables - net 1,410 772
Inventories (7,409) (4,073)
Prepaid expenses (88) (400)
Accounts payable 278 618
Accrued expenses (1,818) (1,339)
Amounts due to affiliates 300 677
Other long-term liabilities (880) (1,427)
-------- --------
Net cash used in
operating activities (11,321) (9,150)
-------- --------
Cash flows from investing activities:
Property additions (759) (116)
Property sales, disposals and
retirements - net 9 --
Investments in joint ventures
and partnerships (239) (110)
Other assets (3) (3,432)
Other long-term liabilities 88 (505)
-------- --------
AMFAC/JMB HAWAII, L.L.C.
Consolidated Statement of Cash Flows - Continued
Three Months Ended March 31, 1998 and 1997
(Dollars in Thousands)
(Unaudited)
1998 1997
------- -------
Net cash used in investing activities (904) (4,163)
-------- --------
Cash flows from financing activities:
Deferred expenses -- (216)
Net (repayments)proceeds of
long-term debt (463) 4,987
Net amounts due to affiliates 14,914 7,714
--------- --------
Net cash provided by financing activities 14,451 12,485
--------- --------
Net decrease in cash and cash
equivalents 2,226 (828)
Cash and cash equivalents,
beginning of year 9,115 8,736
--------- --------
Cash and cash equivalents,
end of period $11,341 7,908
========= ========
Supplemental disclosure of cash flow
information:
Cash paid for interest
(net of amount capitalized) $ 7,773 6,543
========= ========
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 $ 328 2,873
========= ========
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
AMFAC/JMB HAWAII, L.L.C.
Notes to Consolidated Financial Statements
March 31, 1998 and 1997
(Dollars in Thousands)
Readers of this quarterly report should refer to the Company's
audited financial statements for the fiscal year ended December
31, 1997, which are included in the Company's 1997 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
Amfac/JMB Hawaii, L.L.C. (the "Company") is a Hawaii limited
liability company. The Company is wholly-owned by Northbrook
Corporation. The primary business activities of the Company are
land development and sales, golf course management and
agriculture. The Company owns approximately 43,000 acres of land
located on the islands of Oahu, Maui, Kauai and Hawaii in the
State of Hawaii. All of this land is held by the Company's
wholly-owned subsidiaries. In addition to its owned lands, the
Company leases approximately 55,000 acres of land used primarily
in conjunction with its agricultural operations. The Company's
operations are subject to significant government regulation.
The Company is the successor to Amfac/JMB Hawaii, Inc. ("A/J
Hawaii"). On March 3, 1998, A/J Hawaii was merged (the "Merger")
with and into the Company pursuant to an Agreement and Plan of
Merger dated February 27, 1998 (the "Merger Agreement") by and
between A/J Hawaii and the Company (which was then named
Amfac/JMB Mergerco, L.L.C.). The Merger was consummated to change
the Company's form of entity from a corporation to a limited
liability company. The Company was a nominally capitalized
limited liability company which was formed on December 24, 1997,
solely for the purpose of effecting the Merger. The Company
succeeded to all the assets and liabilities of A/J Hawaii in
accordance with the Hawaii Business Corporation Act and the
Hawaii Uniform Limited Liability Company Act. In addition, A/J
Hawaii, the Company, The First National Bank of Chicago (the
"Trustee") and various guarantors entered into a Second
Supplemental Indenture dated as of March 1, 1998, pursuant to
which the Company expressly assumed all obligations of A/J Hawaii
under the Indenture dated as of March 14, 1989, as amended (the
"Indenture") by and among A/J Hawaii, the Trustee and the
guarantors named therein and the Certificates of Land
Appreciation Notes due 2008 Class A (the "Class A COLAS") and the
Certificates of Land Appreciation Notes Class B (the "Class B
COLAS" and, collectively, with the Class A COLAS the "COLAS").
The Merger did not require the consent of the holders of the
COLAS under the terms of the Indenture. The Company has
succeeded to A/J Hawaii's reporting obligations under the
Securities Exchange Act of 1934, as amended. Unless otherwise
indicated, references to the Company prior to March 3, 1998 shall
mean A/J Hawaii and A/J Hawaii's subsidiaries.
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.
AMFAC/JMB HAWAII, L.L.C.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
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 $8,963 and $5,400 at March 31, 1998 and December
31, 1997, respectively) as cash equivalents, which approximates
market. These amounts include $1,476 and $2,067 at March 31,
1998 and December 31, 1997, 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. The sugar futures contracts obligate the
Company to make or receive a payment equal to the net change in
value of the contracts at its maturity. The sugar option
contracts permit, but do not require, the Company to purchase
specified numbers of futures contracts at specified prices until
the expiration dates of the contracts. The sugar futures and
options contracts are designated as hedges of the Company's firm
sales commitments, are short-term in nature to correspond to the
commitment period, and are effective in hedging the Company's
exposure to changes in sugar prices during that cycle.
Investments in certain partnerships and joint ventures, if
any, over which the Company exercises significant influence are
accounted for by the equity method. 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.
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 cots of $152 and $358 have been capitalized for the
three months ended March 31, 1998 and 1997, 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.
AMFAC/JMB HAWAII, L.L.C.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
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 or
distributions to retained earnings (deficit) 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.
Certain amounts in the 1997 financial statements have been
reclassified to conform to the 1998 presentation.
(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 March 31, 1998), 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
$104,759 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 1997 and $14,914 during the
three months ended March 31, 1998 to fund COLA Mandatory Base
Interest payments and other operational needs from a subsidiary
of Northbrook under a separate note which is payable interest
only and accrues at the prime rate plus 2%. The total amount due
Northbrook and its subsidiary as of March 31, 1998 was $143,566,
which includes accrued interest of $1,702. Pursuant to the
Indenture relating to the COLAS, the amounts borrowed from
Northbrook are considered "Senior Indebtedness" to the COLAS.
AMFAC/JMB HAWAII, L.L.C.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
(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
$103,097 of the $110,721 cumulative deficiency of Contingent Base
Interest related to the period from August 31, 1989 (Final
Issuance Date) through March 31, 1998 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 three months ended March 31, 1998 and the year ended
December 31, 1997:
1998 1997
----- ------
Mandatory Base Interest paid $ 4,414 8,828
Contingent Base Interest paid -- --
Cumulative deficiency of Contingent
Base Interest at end of period $ 110,721 107,411
Net Cash Flow was $0 for 1997 and is expected to be $0 for 1998.
In each calendar year, principal reductions may be made from
remaining Net Cash Flow, if any, in excess of all current and
unpaid deferred Contingent Base Interest and will be made at the
election of the Company (subject to certain restrictions). The
COLAS will bear additional contingent interest in any year, after
any principal reduction, equal to 55% of remaining Net Cash Flow.
Upon maturity, holders of COLAS will be entitled to receive the
remaining outstanding principal balance of the COLAS plus unpaid
Mandatory Base Interest (4%) plus additional interest equal to
the unpaid Contingent Base Interest, to the extent of the
Maturity Market Value (Maturity Market Value generally means 90%
of the excess of the Fair Market Value (as defined) of the
Company's assets at maturity over its liabilities (including
Qualified Allowance, but only to the extent earned and payable
from Net Cash Flow generated through maturity) at maturity, which
liabilities have been incurred in connection with its
operations), plus 55% of the remaining Maturity Market Value.
AMFAC/JMB HAWAII, L.L.C.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
On March 14, 1989, Amfac/JMB Finance, Inc. ("AJF"), a wholly-
owned subsidiary of Northbrook, and the Company entered into an
agreement (the "Repurchase Agreement") concerning AJF's
obligations to repurchase, on June 1, 1995 and 1999, the COLAS
upon request of the holders thereof. The COLAS were issued in
two units consisting of one Class A and one Class B COLA. As
specified in the Repurchase Agreement, the repurchase of the
Class A COLAS may have been requested by the holders of such
COLAS on June 1, 1995 at a price equal to the original principal
amount of such COLAS ($.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 $.135. The repurchase
of the Class B COLAS may be requested of AJF by the holders of
such COLAS on June 1, 1999 at a price equal to 125% of the
original principal amount of such COLAS ($.5) minus all payments
of principal and interest allocated to such COLAS. Although there
can be no assurances that any or all of these plans will be
successfully completed, the Company is optimistic that the funds
necessary to meet the repurchase obligations will be raised if
these plans are completed. Failure to meet the repurchase
obligations could lead to a claim against AJF and, in turn,
Northbrook. As of March 31, 1998, the cumulative interest paid
per Class A and Class B COLA was approximately $.195 and $.195,
respectively.
On March 14, 1989, Northbrook entered into a keep-well
agreement with AJF, whereby it agreed to contribute sufficient
capital or make loans to AJF to enable AJF to meet its COLA
repurchase obligations described above. Notwithstanding AJF'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 March 31, 1998, the Company had approximately 156,000 Class A
COLAS and approximately 286,000 Class B COLAS outstanding, with a
principal balance of approximately $78,000 and $143,000,
respectively.
AMFAC/JMB HAWAII, L.L.C.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
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).
On January 30, 1998, Amfac Finance Limited Partnership
("Amfac Finance"), an Illinois limited partnership and an
affiliate of the Company extended a Tender Offer to Purchase (the
"Tender Offer") up to approximately $65,421 Principal amount of
Separately Certificated Class B COLAS ("Separate Class B COLAS")
for cash at a unit price of $.375 to be paid by Amfac Finance on
each Separate Class B COLA on or about March 24, 1998. The
maximum cash to be paid under the Tender Offer was approximately
$49,066 (130,842 Separate Class B COLAS at a unit price of $.375
for each separate Class B COLA). Approximately 62,800 Separate
Class B COLAs were submitted to Amfac Finance for repurchase
pursuant to the Tender Offer requiring an aggregate payment by
Amfac Finance of approximately $23,542 on March 31, 1998. The
Tender Offer did not reduce the outstanding indebtedness of the
Company. The Separate Class B COLAS purchased by Amfac Finance
pursuant to Tender Offer remain outstanding pursuant to the terms
of the Indenture that governs the terms of the COLAS (the
"Indenture"). Except as provided in the last sentence of this
paragraph, Amfac Finance will be entitled to the same rights and
benefits of any other holder of Separate Class B COLAS, including
having the ability to have AJF to repurchase on June 1, 1999, the
Separate Class B COLAS that it owns. Amfac Finance has not yet
determined whether it will require AJF to so repurchase the
Separate Class B COLAS which it will own on such date. Since
Amfac Finance is an affiliate of the Company, Amfac Finance will
not be able to participate in determining whether the holders of
the required principal amount of debt under the Indenture have
concurred in any direction, waiver or consent under the terms of
the Indenture.
As a result of the Tender Offer, the Company recognized
$7,850 of taxable gain in accordance with income tax regulations
for certain transactions with affiliates. Such gain is treated
as cancellation of indebtedness income for income tax purposes
only, and accordingly, the income taxes related to the Tender
Offer (approximately $3,062) will be indemnified by Northbrook
through the tax agreement (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.
AMFAC/JMB HAWAII, L.L.C.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
(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 June 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 refinancing of the golf courses or at the
maturity of the loan. The ERS share of the Net Disposition
Proceeds increases from 30% through June 30, 1997, to 40% for the
period from July 1, 1997 to June 30, 1999 and to 50% thereafter.
The loan amendment effectively adjusted the interest rate as of
January 1, 1995 to 9.5% until June 30, 1996. After June 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 June 30, 1996, 7.5%
from July 1, 1996 to June 30, 1997, 7.75% from July 1, 1997 to
June 30, 1998 and 8.5% thereafter ("Minimum Interest"). The
Company made payments through March 31, 1998 and 1997 totaling
$1,289 and $1,244, respectively, which represents the Minimum
Interest due. Accrued Minimum Interest as of March 31, 1998 was
$1,261. 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 $4,439 as of March 31, 1998. 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 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 $4,362 as of March 31,
1998 and bears interest at a rate equal to prime rate (8.5% at
March 31, 1998) 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.
AMFAC/JMB HAWAII, L.L.C.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
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 (5.625% at March 31, 1998)
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 2.5% thereafter and principal is
to be repaid based on a 30-year amortization schedule. 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). As of March 31, 1998, the outstanding
principal balance was $24,730, with scheduled remaining annual
principal maturities of $183 in 1998, $248 in 1999 through 2006
and the balance of $22,563 in 2007.
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
March 31, 1998) plus .5% and matures on December 1, 1998.
AMFAC/JMB HAWAII, L.L.C.
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 three months
ended March 31, 1998 and 1997 are set forth below by each
industry segment:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
--------- ---------
<S> <C> <C>
Total Assets:
Agriculture $226,164 222,693
Property 224,114 222,745
Other 21,291 18,807
--------- ---------
$471,569 464,245
========= =========
Three Months Three Months
Ended Ended
March 31, March 31,
1998 1997
----------- -----------
Capital Expenditures:
Agriculture $ 417 23
Property 342 93
--------- ---------
$ 759 116
========= =========
Operating income (loss):
Agriculture $(1,924) (1,216)
Property 1,739 33
Other (423) (422)
--------- ---------
$ (608) (1,605)
========== =========
Depreciation and amortization:
Agriculture $ 1,131 971
Property 524 533
Other 4 11
--------- ---------
$ 1,659 1,515
========= =========
</TABLE>
AMFAC/JMB HAWAII, L.L.C.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
(6) TRANSACTIONS WITH AFFILIATES
With respect to any calendar year, JMB Realty Corporation
("JMB"), an affiliate of the Company, 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 $64,489 of Qualified Allowance related to the
period from January 1, 1991 through December 31, 1997 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, 1997:
1997
------
Qualified Allowance calculated $10,082
Qualified Allowance paid --
Cumulative deficiency of Qualified
Allowance at end of year $64,489
AMFAC/JMB HAWAII, L.L.C.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
The Qualified Allowance for 1998, which will not be calculated
until the year is completed, is not expected to be paid. Net Cash
Flow was $0 for 1997 and is expected to be $0 for 1998.
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 $165 for
the three months ended March 31, 1998 and approximately $163 for
the three months ended March 31, 1997; approximately $165 of such
costs were unpaid as of March 31, 1998. In addition, as of March
31, 1998, the current portion of 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 March 31, 1998.
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 three
months ended March 31, 1997 was approximately $250 and
approximately $255 for the three months ended March 31, 1998, all
of which was paid as of March 31, 1998.
Northbrook and its affiliates allocate certain charges for
services to the Company based upon the estimated level of
services. Such charges totaled $140 and $254 for the three months
ended March 31, 1998 and March 31, 1997, respectively. The
affiliated charges for the first quarter of 1998 were offset by
$115 of charges for services provided by the Company for
Northbrook. As of March 31, 1998, on a net basis, the amount due
Northbrook totaled approximately $135 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, L.L.C.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
In February 1997 the affiliate loans (see Note 2), along
with certain other amounts due Northbrook, were converted into a
new $104,759 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 1997 and $14,914
during the three months ended March 31, 1998 to fund COLA
Mandatory Base Interest payments and other operational needs from
a subsidiary of Northbrook under a separate note which is payable
interest only and accrues at the prime rate plus 2%. In
connection with such affiliated loans, the Company incurred
interest expense of approximately $2,469 for the three months
ended March 31, 1997 and approximately $3,362 for the three
months ended March 31, 1998. The total amount due Northbrook and
its subsidiary as of March 31, 1998 was $143,566, which includes
accrued interest of $1,702. Pursuant to the Indenture relating to
the COLAS, the amounts borrowed from Northbrook are considered
"Senior Indebtedness" to the COLAS.
(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 $3,300 as of March
31, 1998. 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 March 31, 1998, certain portions of the Company's land
not currently under development or used in sugar operations are
mortgaged as security for approximately $7,300 of performance
bonds related to property development.
AMFAC/JMB HAWAII, L.L.C.
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, 1997 are as follows:
Deferred tax (assets):
Postretirement benefits $(21,206)
Interest accruals (3,021)
Other accruals (3,274)
---------
Total gross deferred tax assets (27,501)
---------
Deferred tax liabilities:
Accounts receivable, related to profit on sales of sugar 3,960
Inventories, principally due to sugar production
costs, capitalized costs, capitalized interest and
purchase accounting adjustments (1,422)
Plant and equipment, principally due to depreciation
and purchase accounting adjustments 8,759
Land and land improvements, principally due
to purchase accounting adjustments 84,004
Deferred gains, due to installment sales for income
tax purposes 7,456
Investments in unconsolidated entities, principally
due to purchase accounting adjustments 13,220
--------
Total deferred tax liabilities 115,977
--------
Net deferred tax liability $88,476
=========
(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
March 31, 1998 and for the three months ended March 31, 1998 and
1996.
<TABLE>
AMFAC/JMB FINANCE, INC.
Balance Sheets
March 31, 1998 and December 31, 1997
(Dollars in thousands, except per share information)
(Unaudited)
<CAPTION>
A s s e t s
March 31, December 31,
1998 1997
----------- -----------
<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. ("AJF") was incorporated November
7, 1988 in the State of Illinois. AJF has had no financial
operations. All of the outstanding shares of AJF are owned by
Northbrook Corporation ("Northbrook").
(2) KEEP-WELL AGREEMENT
On March 14, 1989, Northbrook entered into a keep-well
agreement with AJF, whereby it agreed to contribute sufficient
capital or make loans to AJF to enable AJF to meet the COLA
repurchase obligations described below in note 3.
On March 15, 1995, pursuant to the indenture that governs
the terms of the COLAS (the "Indenture"), Amfac/JMB Hawaii,
L.L.C. elected to exercise its right to redeem, and therefore
was obligated to purchase, any and all Class A COLAS submitted
pursuant to the June 1, 1995 Redemption Offer at a price of
$.365 per Class A COLA. Pursuant to Amfac/JMB Hawaii,
L.L.C.'s election to redeem the Class A COLAS for repurchase,
Amfac/JMB Hawaii, L.L.C. assumed AJF's maximum amount of its
liability from the June 1, 1995 COLA repurchase obligation of
$140,425.
(3) REPURCHASE OBLIGATION
On March 14, 1989, AJF and a subsidiary of Northbrook
(Amfac/JMB Hawaii, L.L.C.) entered into an agreement (the
"Repurchase Agreement") concerning AJF'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, L.L.C. in
conjunction with the acquisition of Amfac/JMB Hawaii, L.L.C.
A total aggregate principal amount of $384,737 of COLAS were
issued during the offering, which terminated on August 31,
1989. The COLAS were issued in two units consisting of one
Class A and one Class B COLA. As specified in the Repurchase
Agreement, the repurchase of the Class A COLAS may have been
requested of AJF by the holders of such COLAS on June 1, 1995
at a price equal to the original principal amount of such
COLAS ($.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 $.135. The repurchase
of the Class B COLAS may be requested of AJF by the holders of
such COLAS on June 1, 1999 at a price equal to 125% of the
original principal amount of such COLAS ($.500) minus all
payments of principal and interest allocated to such COLAS.
Northbrook Corporation, the ultimate parent of the Company, is
currently implementing plans intended to generate sufficient
funds to meet the maximum potential repurchase obligation.
Although there can be no assurances that any or all of these
plans will be successfully completed, the Company is
optimistic that the funds necessary to meet the repurchase
obligations will be raised if these plans are completed.
Failure to meet the repurchase obligation could lead to a
claim against Finance and, in turn, Northbrook. To date, the
cumulative interest paid per Class A and Class B COLA is
approximately $.195 and $.195, respectively.
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
A significant portion of the Company's cash needs result
from the nature of the real estate development business, which
requires a substantial investment in preparing development
plans, seeking land urbanization and other governmental
approvals and completing infrastructure improvements prior to
sale. Additionally, the Company's sugar operations incur a
large cash deficit during the first half of the year ranging
from $10 to $20 million. This seasonal cash need is due to
the sugar plantation's operating costs being incurred fairly
ratably during the year, while most of the revenues are
received between May and December concurrent with raw sugar
deliveries to C&H. In addition to seasonal cash needs, in
many years cash flow from sugar operations has been negative
requiring a net cash investment to fund the operating deficits
and any capital costs. Other significant cash needs include
overhead expenses, debt service and the obligation to
repurchase Class B COLAS on June 1, 1999.
The Company believes that additional borrowings from
Northbrook Corporation ("Northbrook") will be necessary to
meet its short-term and long-term liquidity needs. Northbrook
has made such borrowings available to the Company in the past
and intends to make such borrowings available, at least in the
short-term. However, there is no assurance that Northbrook
will have sufficient funds, or that Northbrook will continue
to make such funds available to the Company.
In recent years, the Company has funded its cash
requirements primarily through the use of long-term
financings, borrowings from Northbrook and revenues generated
from the development and sale of its properties. Significant
short-term cash requirements relate to the funding of
agricultural deficits, interest expenses, costs to process the
SMA permit for North Beach, development costs on Oahu and Maui
and overhead expenses. At March 31, 1998 the Company had cash
and cash equivalents of approximately $11.3 million. The
Company intends to use its cash reserves, land sales proceeds
and proceeds from new financings or joint venture arrangements
to meet its short-term liquidity requirements. However, there
can be no assurance that new financings 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 Company does
not believe that it will be able to generate significant
amounts of cash in the short-term from the development of
these lands. As a result, the Company is marketing for sale
certain unentitled, agricultural and conservation parcels.
The Company has placed a relatively large portion of its
land holdings (approximately 25%) on the market to generate
cash to finance the Company's operations, to meet debt service
requirements and to raise cash should the holders exercise
their right to sell back to the Company their Class B COLAS on
June 1, 1999. The Company has approximately 740 acres of land
listed for sale on Maui, approximately 8,700 acres on Kauai
and 700 acres on the Big Island of Hawaii. These lands consist
primarily of unentitled, agricultural and conservation
parcels. Significant interest has been expressed in many of
these parcels and several are under contract for sale for
aggregate sales prices exceeding $15 million. However, these
contracts often have due diligence investigation periods 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. Although the lands
currently for sale represent a large portion of the Company's
overall land portfolio, these properties were not planned for
development during the next 15 to 20 years. Therefore, their
possible sale is not expected to result in a material impact
on the Company's real estate development operations for at
least the next ten years.
During the first three months of 1998, the Company
generated approximately $1.7 million of land sales. During all
of 1997, the Company generated approximately $21.2 million of
land sales, of which $4.8 million came from land related to
Kaanapali Golf Estates on Maui, $5.2 million from the four
remaining oceanfront residential lots at Kai Ala Place and
$7.4 million was from the sale of unentitled, agricultural and
conservation land parcels on Kauai and the Big Island of
Hawaii.
The Company continues to implement certain cost savings
measures and to defer certain development costs and capital
expenditures for longer-term projects. The Company's Property
segment expended approximately $10.1 million in project costs
during 1997 and anticipates expending approximately $13.8
million in project costs during 1998. As of March 31, 1998,
contractual commitments related to project costs totaled
approximately $3.3 million.
In early March 1997, the Company restructured its
operations into the following six separate operating
divisions: Sugar, Golf, Coffee, Water, Land Management and
Real Estate Development. The Company also formed a corporate
services division to provide accounting, MIS, human resources,
tax and other administrative services for the six operating
groups. The Company believes it will operate more effectively
as several smaller entrepreneurial-minded divisions.
Approximately four percent(4%) of the Company's total
employees were released as part of the restructuring, which
has resulted in annual payroll savings of approximately $1.1
million. The Company incurred termination costs of
approximately $0.6 million related to the restructuring during
the first quarter of 1997. At December 31, 1997, the Company
and its subsidiaries employed 845 persons.
In February 1998, the Company announced the relocation of
the headquarters for its real estate development division from
Honolulu to Kaanapali, Maui. Due to poor market conditions on
Kauai and a shortage of land inventory on Oahu, the focus of
the Company's land development operations is expected to be on
Maui. In connection with the office re-location, four
executives and one administrative person resigned their
positions with the Company. The Company is currently
organizing a management team for the Maui development office,
which will be smaller in number than the staff was on Oahu.
At the request of the Company, two of the resigning executives
have agreed to assist with the move and transition of the
headquarters to Maui. These changes are expected to result in
one-time termination and relocation costs of $.5 million
during 1998. Annual recurring cost savings are expected to be
approximately $.7 million from lower compensation, rent and
other employee-related costs.
The sugar industry in Hawaii has experienced significant
difficulties for a number of years. Growers in Hawaii have
long struggled with high costs of production, which have led
to the closure of many plantations, including Oahu Sugar
Company. Transportation costs of raw sugar to the C&H refinery
are also significant. During 1996 and 1997, the Company
conducted a series of meetings and discussions aimed at
developing a plan to return its sugar operations on Kauai to
profitability. Participants in this process included rank-and-
file workers, supervisors, union officials and Company
management. The plan developed by this group was named
"Imua," which is the Hawaiian word meaning "to move forward."
Imua included significant changes in how the Company's
plantations would be operated and how employees would be
compensated. Imua was the subject of formal negotiations with
the union in late 1997 and early 1998. These negotiations were
recently completed and the union leadership supported the Imua
plan. However, in February 1998, Imua failed by a large margin
in a ratification vote by the union membership at the Kauai
plantations.
The contract covering employees at the Kauai and Maui
plantations expired on January 31, 1998 and was extended on a
day-to-day basis. The extension agreements which cover 88% of
the Kauai plantation workers and 70% of the Maui plantation
employees, has a provision which allowed either party to
cancel the extension upon three days' notice.
In early April 1998, the Company sent the union a new
proposal, which was different from Imua but still contained
substantial wage and other concessions which were critical to
the survival of the Company's sugar plantations. After lengthy
negotiations with the union in March and April 1998, the union
membership at the Kauai plantation ratified a two year
contract which included a 10% reduction in wages as well as
other concessions.
In early May 1998, the Company provided the union a
contract proposal for Pioneer Mill on Maui. Negotiations with
the union are scheduled to begin in mid-May with the hope to
have a new labor agreement before the start of the harvest
season in late May. The absence of a new labor agreement with
significant modifications from the existing agreement would
cause the Company to consider the possible shutdown of its
sugar operations at Pioneer Mill. There can be no assurance
that necessary modifications to existing labor agreement will
be obtained.
Company management cannot accurately predict the actual
cost of a potential shutdown as there are a significant number
of factors that would impact the actual cost including the
exact timing of the shutdown, potential environmental issues,
the market and pricing for the sale of the plantation's field
and mill equipment and employee termination costs which are
subject to negotiation with the union. Other significant
unknowns relate to the costs associated with terminating the
power sale agreements with the local utility companies.
Changes in the price of raw sugar impact the level of
agricultural deficits, and as a result the annual cash needs
of the Company. Although government legislation is currently
in place (through 2002) that sets a target price range for raw
sugar, it is possible that such legislation could be amended
or repealed resulting in a reduction in the price of raw
sugar. Such a reduction could also cause the Company to
evaluate the shutdown of its sugar plantations.
If the Company's sugar production decreases, the
Company's water needs will also decrease. Subject to
significant regulatory restrictions, excess water may be used
for other purposes and the Company is exploring alternative
uses for such water. Waiahole Irrigation Company, Limited
("WIC") is a wholly-owned subsidiary of the Company and owns
and operates a water collection and transmission system
commonly referred to as the "Waiahole Ditch" (a series of
tunnels and ditches constructed in the early 1900's). The
Waiahole Ditch has the capacity to transport approximately 27
million gallons of water per day from the windward part of
Oahu to the central Oahu plain leeward of the Ko'olau mountain
range. This water was used by the Company's Oahu Sugar
operations from the early 1900s until 1995, when the
plantation was closed.
After the closure of Oahu Sugar, WIC negotiated a
collective agreement with several farms and golf courses (the
"Users") to deliver irrigation water to them for a fee.
However, to consummate these agreements, water permits (the
"Water Permits") were applied for from the State of Hawaii
Water Commission (the "Water Commission"). The Water
Commission issued a final decision in December 1997 relating
to the Water Permits which allowed only about one-half of the
capacity of the Waiahole Ditch to be transported through the
system. The continued operation of the Waiahole Ditch and
receipt of the delivery fees (from the agreement with the
Users) were predicated upon an allocation (from the Water
Commission) at or near the capacity of the Waiahole Ditch.
When the lower allocation was received, WIC terminated the
agreement with the Users. Currently, water is delivered to
the Users on a month-to-month basis at the fees originally
included in the agreement.
After several months of discussions with prospective
purchasers, the Company reached an agreement with the State of
Hawaii pursuant to which the State will purchase the stock or
substantially all of the assets of WIC for $8.5 million (which
includes 450 acres of conservation land). The purchase is
subject to state legislative approval of which there can be no
assurance that such approval will be obtained. If the sale is
not consummated, WIC will then decide whether to re-negotiate
the fee for delivery of water through the system. Finally, if
improvements cannot be made in either the pricing or volume of
Waiahole Ditch water, WIC will consider reducing or
terminating the operations of the Waiahole Ditch. Such a
closure or limitation of the Waiahole Ditch would not have a
material adverse effect on the Company's financial condition
or on its results of operations.
During the first three months of 1998, cash increased by
$2.2 million from December 31, 1997. Net cash used in
operating activities of $11.3 million and in investing
activities of $.9 million was primarily provided by $14.9
million of long-term financing proceeds from Northbrook
partially offset by principal loan repayments on long-term
debt of approximately $.5 million.
During the first three months of 1998, net cash flow used
in operating activities was $11.3 million, as compared to net
cash used in operating activities of $9.1 million during the
first three months of 1997. The $2.2 million increase in cash
flow used in operating activities was due primarily to a $3.0
million increase in working capital resulting from a $3.3
million increase in inventories (resulting in less cash flow),
of which $2.4 million related to sales of land classified as
inventory and $.9 million related to agricultural inventory.
During the first three months of 1998, net cash flow used
in investing activities was $.9 million as compared to $4.2
million during the first three months of 1997. The $3.3
million decrease in net cash used in investing activities was
principally due to an increase of $2.2 million in other assets
during the first three months of 1997 primarily due to a note
receivable recorded in connection with a land sale.
During the first three months of 1998, net cash flow
provided by financing activities increased to $14.5 million
from $12.5 million during the first three months of 1997. The
$2.0 million increase is due primarily to (i) an increase in
net advances by affiliates totaling $14.9 million during the
first three months of 1998 as compared to $7.7 million during
the first three months of 1997 (see Note 4) offset in part by
(ii) $5.0 million of additional long-term financing primarily
related to the loan secured by the golf course owned by WGCI
in the first three months of 1997. These amounts were also
partially offset by $.5 million and $.2 million of principal
loan repayment on long-term debt in the first three months of
1998 and 1997, respectively.
COLA Related Obligations. AJF and the Company are
parties to the Repurchase Agreement pursuant to which AJF is
obligated to repurchase the Class B COLAS tendered by the
holders thereof on June 1, 1999. Northbrook agreed pursuant
to the Keep-Well Agreement to contribute sufficient capital
or make loans to AJF to enable AJF to meet the COLA repurchase
obligations, if any, described above. Notwithstanding AJF's
repurchase obligations, the Company may elect to redeem any
COLAS requested to be repurchased at the specified price.
Northbrook Corporation, the ultimate parent of the
Company, is currently implementing plans intended to generate
sufficient funds to meet the maximum potential repurchase
obligation. Although there can be no assurances that any or
all of these plans will be successfully completed, the Company
is optimistic that the funds necessary to meet the repurchase
obligations will be raised if these plans are completed.
Failure to meet the repurchase obligations could lead to a
claim against AJF and, in turn, Northbrook.
The COLAS were issued in units consisting of one Class A
COLA and one Class B COLA. The repurchase of the Class B
COLAS on June 1, 1999 may be required of AJF by the holders of
such COLAS 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. As of December 31,
1997, the Company had approximately 156,000 Class A COLAS
units and approximately 286,000 Class B COLAS units
outstanding, with a principal balance of approximately $78
million and $143 million, respectively. The Company estimates
that assuming only 4% per annum interest payments ("Mandatory
Base Interest") is paid that the redemption price for the
Class B COLAS at June 1, 1999 would be approximately $410 per
unit. Therefore, the maximum potential repurchase obligation
would be $117.3 million. At March 31, 1998, the cumulative
interest paid per Class A COLA unit and Class B COLA unit was
approximately $195 and $195, respectively.
On January 30, 1998, Amfac Finance Limited Partnership
("Amfac Finance"), an Illinois limited partnership and an
affiliate of the Company extended a tender offer to purchase
(the "Tender Offer") up to $65.4 million principal amount of
separately Certificated Class B COLAs ("Separate Class B
COLAs") for cash at a unit price of $375 to be paid by Amfac
Finance on each Separate Class B COLA on or about March 24,
1998. The maximum cash to be paid under the Tender Offer is
$49.0 million (130,842 Separate Class B COLAs at a unit price
of $375 each). Approximately 62,800 Separate Class B COLAs
were submitted to Amfac Finance for repurchase pursuant to the
Tender Offer requiring an aggregate payment by Amfac Finance
of approximately $23.5 million on March 31, 1998. The Tender
Offer will not reduce the outstanding indebtedness of the
Company. The Separate Class B COLAS to be purchased by Amfac
Finance pursuant to the Tender Offer will remain outstanding
pursuant to the terms of the Indenture. Except as provided in
the last sentence of this paragraph, Amfac Finance will be
entitled to the same rights and benefits of any other holder
of Class B COLAS, including having the right to have AJF
repurchase on June 1, 1999, the separate Class B COLAS that it
owns. Amfac Finance has not yet determined whether it will
require AJF to repurchase its separate Class B COLAS. Because
Amfac Finance is an affiliate of the Company, Amfac Finance
will not be able to participate in determining whether the
holders of the required principal amount of debt under the
Indenture have concurred in any direction, waiver or consent
under the terms of the Indenture.
As a result of the Tender Offer, the Company recognized
$7.9 million of taxable gain in accordance with income tax
regulations for certain transactions with affiliates. Such
gain is treated as cancellation of indebtedness income for
income tax purposes only, and accordingly, the income taxes
related to the Tender Offer (approximately $3.1 million) will
be indemnified by Northbrook through the tax agreement (note
1).
Pursuant to the terms of the Indenture relating to the
COLAS, the Company is required to maintain a Value Maintenance
Ratio (defined in the Indenture) of 1.05 to 1.00. Such ratio
is equal to the relationship of the Company's Net Asset Value
to the sum of: (i) the outstanding principal amount of the
COLAS, (ii) any unpaid Base Interest, and (iii) the
outstanding principal balance of any Indebtedness incurred to
redeem COLAS (the "COLA Obligation"). Net Asset value
represents the excess of the Fair Market Value (as defined in
the Indenture) of the gross assets of the Company over the
liabilities of the Company other than the COLA obligations and
certain other liabilities. 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.
The Company has received independent appraisals
indicating that the appraised value of substantially all of
its gross assets as of December 31, 1996, was approximately
$653 million. Based upon the appraisals, the Company was able
to meet the Value Maintenance Ratio as of December 31, 1996.
As of December 31, 1997, the Fair Market Value of the gross
assets of the Company is determined by Company 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 pursuant to
the Indenture 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. Although the Company believes the value of
certain of its assets as of December 31, 1997, may be lower
than their value one year earlier, the Company believes that
the values were sufficient to be in compliance with the Value
Maintenance Ratio. There can be no assurance that the Company
will be able to sell its real estate assets for their
aggregate appraised value. Because of the size and diversity
of the real estate holdings of the Company and the uncertainty
of the Hawaii real estate market, it is likely that it would
take a considerable period of time for the Company to sell its
assets. In recent years, the Company has sold some of its
real estate for less than their appraised value to meet cash
needs. In addition, the aggregate value of the Company's
assets could be negatively affected by the recent financial
difficulties in Southeast Asia and Japan.
The Company uses the effective interest method and as
such interest on the COLAS is accrued at the Mandatory Base
Interest rate (4% per annum). The Company has not generated a
sufficient level of Net Cash Flow to pay Contingent Base
Interest (interest in excess of 4%) on the COLAS (see Note 3)
from 1990 through 1997. Contingent Base Interest through 2008
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, excluding federal and state
income taxes and after the establishment by the Company of
reserves. At December 31, 2008, Contingent Base Interest may
also be payable to the extent of Maturity Market Value.
Maturity Market Value generally means 90% of the excess of the
Fair Market Value of the Company's assets at maturity over its
liabilities (including Qualified Allowance (described in the
next paragraph), but only to the extent earned and payable
from Net Cash Flow generated through maturity) at maturity.
Approximately $103.1 million of the $110.7 million cumulative
deficiency of Contingent Base Interest related to the period
from August 31, 1989 (Final Issuance Date) through March 31,
1998 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 three months
ended and the year ended December 31, 1997 (dollars are in
millions):
1998 1997
----- -----
Mandatory Base Interest paid $ 4.4 8.8
Contingent Base Interest paid -- --
Cumulative deficiency of Contingent
Base Interest at end of year $ 110.7 107.4
Net Cash Flow was $0 for 1997 is expected to be $0 for 1998.
With respect to any calendar year, JMB or its affiliates
may receive a Qualified Allowance in an amount equal to 1.5%
per annum of the Fair Market Value of the gross assets of the
Company (other than cash and cash equivalents and certain
other types of assets as provided for in the Indenture) for
providing certain advisory services to the Company. The
aforementioned advisory services, which are provided pursuant
to a 30-year Services Agreement entered into between the
Company and JMB Realty Corporation ("JMB"), an affiliate of
the Company, 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 Mandatory and
Contingent Base Interest for such year in an amount equal to
8% . Any portion of the Qualified Allowance not paid for any
year shall cumulate without interest and JMB or its affiliates
shall be paid such deferred amount in succeeding years, only
after the payment of all Contingent Base Interest for such
succeeding year and then, only to the extent that Net Cash
Flow exceeds levels specified in the Indenture.
A Qualified Allowance for 1989 of approximately $6.2 million
was paid on February 28, 1990. Approximately $64.5 million of
Qualified Allowance related to the period from January 1, 1990
through December 31, 1997 has not been earned and paid, and is
payable only to the extent that future Net Cash Flow is
sufficient. 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 the Qualified
Allowance, the Company has not accrued for any Qualified
Allowance payments 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, 1997 (dollars are in millions):
1997
-----
Qualified Allowance calculated $ 10.1
Qualified Allowance paid --
Cumulative deficiency of Qualified
Allowance at end of year $ 64.5
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 1.5% 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 (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.
RESULTS OF OPERATIONS
GENERAL:
The Company and its subsidiaries report its taxes as a
part of the consolidated tax return for Northbrook. The
Company and its subsidiaries have 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 to additional paid-in capital or distributions
from retained earnings (deficit) in the accompanying
consolidated financial statements. As such, the deferred
income tax liabilities reflected on the Company's consolidated
balance sheet are not expected to result in cash payments by
the Company.
The Company is assessing the modifications or replacement
of its software that may be necessary for its computer systems
to function properly with respect to dates in the year 2000
and thereafter. The Company does not believe that the cost of
either modifying existing software or converting to new
software will have a material adverse impact on the financial
condition of the Company and the Company's management is
taking action to insure that that the year 2000 issue will not
pose significant operational problems for its computer
systems. The Company is initiating discussions with parties
with whom it does business to ensure that those parties have
appropriate plans to remediate year 2000 issues where their
systems impact the Company's operations. There is no
assurance that the systems of those parties will function
properly and would not have an adverse effect on the Company's
operations.
Selling, general and administrative costs deceased for
the three months ended March 31, 1998 as compared to the three
months ended March 31, 1997 due primarily to payroll savings
associated with the Company's restructuring in early 1997.
Interest expense increased for the three months ended
March 31, 1998 as compared to the three months ended March 31,
1997 due to additional affiliated financing.
AGRICULTURE SEGMENT:
The Company's Agriculture segment is responsible for
activities related to the cultivation, processing and sale of
sugar cane and coffee. Agriculture's revenues are primarily
derived from the Company's sale of its raw sugar. 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.
The Company's sugar plantations sell all 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).
Pursuant to a long term supply contract, HSTC is required to
sell, and the California and Hawaiian Sugar Company ("C&H") is
required to purchase, all raw sugar produced by the HSTC's
cooperative members. HSTC remits to its cooperative members
the remaining proceeds from its sugar sales after storage,
delivery and administrative costs. The Company recognizes
revenues and related cost of sales upon delivery of its raw
sugar by HSTC to C&H.
As part of the Company's agriculture operations, the
Company enters into commodities futures contracts and options
in raw sugar as deemed appropriate to reduce the risk of
future price fluctuations. 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.
During the first three months of 1998, agriculture
revenues were $.9 million as compared to $.7 million in the
first three months of 1997. During the first three months of
1998 and 1997, the Company did not harvest or sell any of its
sugar cane and accordingly such revenues related primarily to
proceeds from molasses sales and land rents.
During the first three months of 1998, cost of sales were
$1.6 million as compared to $.8 million in the first three
months of 1997. The $.8 million increase was due primarily to
an increase in cost of sales primarily from the timing of
certain costs attributable to the Company's coffee operations.
The operating loss of $1.9 million in the first three
months of 1998 as compared to $1.2 million in the first three
months of 1997 was due primarily to the increase in cost of
sales related to coffee operations (as discussed above).
PROPERTY SEGMENT:
The Company's Property segment is responsible for 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.
Revenues decreased slightly to $8.3 million during the
first three months of 1998 from $8.8 million during the first
three months of 1997. Property revenues include revenues from
land sales of approximately $1.7 million and $2.9 million for
the first three months of 1998 and 1997, respectively, and
revenues from the operations of the three golf courses owned
by the Company of approximately $4.4 million and $4.5 million
for the first three months of 1998 and 1997. Land sales
included revenues for the three months ended March 31, 1998 of
approximately $.7 million of land sales related to Kaanapali
Golf Estates and $1.0 million primarily from the sale of
unentitled agricultural and conservation land parcels on Kauai
and Hawaii.
During the first three months of 1998, property cost of
sales were $4.4 million as compared to $5.7 million in the
first three months of 1997. The $1.3 million decrease was due
primarily to a decrease in costs associated with land parcels
sold (as discussed above).
Property sales and cost of sales decreased for the first
three months of 1998 as compared to the first three months of
1997 due to lower sales volume, however, operating income
improved primarily due to slightly improved margins realized
on property sold during 1998.
(a) Maui
In general, the development of the Company's land on Maui
is expected to be long-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 been
weak. The Company's homesite inventory on Maui, which is
targeted to the second home buyer, has experienced slower
sales activity over the past five years than originally
expected. The Company's competitors on Maui have also
experienced slow sales activity. The Company is continuing to
evaluate its plans 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 has determined that the focus of its
development efforts should be on its Kaanapali/Honokowai land
holdings (approximately 3,200 acres) on Maui. Although
additional governmental approvals are required for most of
these lands, approximately 900 acres of the Company's
Kaanapali/Honokowai land holdings already have some form of
entitlements. Due to the strong market appeal of the
Kaanapali Beach Resort, the Company believes its development
efforts are best concentrated in this area where it has
certain development approvals already secured.
The Company's Kahoma, Launiupoko and Olowalu properties
(in total approximately 9,000 acres) are considered to be
better suited in the near term for agricultural uses and
possibly for lower density, more rural developments. To
generate cash, the Company has decided to sell certain
portions of these land holdings as unentitled parcels, and may
consider selling additional portions of these lands based upon
market conditions and the cash needs of the Company.
Kaanapali Golf Estates. The Company is marketing
Kaanapali Golf Estates, a residential community that is part
of the Kaanapali Beach Resort on West Maui. During 1997, the
Company generated approximately $4.8 million in land sales
from Kaanapali Golf Estates. Kaanapali Golf Estates is
approved for 340 homesites, of which approximately 90 lots
have been sold by the Company. The residential property is
divided into numerous parcels. In May 1997, the Company
obtained final subdivision approval for a 32 lot subdivision
of one such parcel (referred to as "Parcel 17B"). Fifteen of
these lots closed in August and September 1997 for sales
prices of approximately $150,000 per lot. The Company
commenced on-site construction of the subdivision improvements
for Parcel 17B in August 1997. Construction of the
improvements was completed in March 1998, at a cost of
approximately $1.7 million. For the three months ended March
31, 1998, the Company generated .7 million from the sale of 4
lots of parcel 17B. In April 1998, three additional lots were
sold for an aggregate of $.5 million. As of the date of this
report, six lots remain available at an average price of
$170,000. In addition, the six remaining lots in an adjacent
parcel (referred to as "Parcel 14") closed in 1997 for sales
prices totaling $2.0 million.
Kai Ala Place. In 1995, the Company subdivided an
oceanfront parcel commonly known as Kai Ala Place into six
single family homesites of approximately one acre each. Two of
the lots were sold in 1995 generating sales proceeds of
approximately $4.1 million. The remaining four lots were sold
in 1997 as a package to a local developer for a "package"
price of $5.2 million.
North Beach. The Company is part of a joint venture 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
governmental approvals, subject to receiving a Project SMA
permit, for the development of up to 3,200 hotel or
condominium units on four separate sites. The 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 ("MPC").
Although the joint venture has state urbanization, county
zoning and a Master SMA permit, a Project SMA permit is
required for each of the four sites as development plans are
completed.
The Company filed for a Project SMA in March 1997 to
develop a time-share resort on 14 acres of the North Beach
property (the "Site"). A land option/purchase agreement was
entered into by the Company with Tobishima in October 1996,
giving the Company an option to purchase Tobishima's 50%
interest in the Site for $7 million. The Company does not
expect to consummate this 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 $0.4
million, which may be applied to the purchase price, to keep
the option available through March 31, 1998. However, the
Company has decided not to make any additional nonrefundable
deposits at this time. The Company is currently re-
negotiating the purchase site option/purchase agreement with
Tobishima.
A public hearing was held on the Project SMA permit on
July 10, 1997. Although there was a significant amount of
testimony both for and against the project, the MPC did not
make a final decision at the public hearing. Instead,
"intervention status" was granted to several parties who
presented their specific objections to the SMA permit in a
quasi-judicial process (known as a "contested case" hearing).
The hearing officer for the contested case issued his proposed
Decision and Order (the "D&O") in December 1997. Although the
proposed D&O recommended granting the Project SMA permit,
there were a significant number of new conditions with respect
to the development. The Company plans to object to many of
these conditions and to request that the MPC modify or delete
these conditions. Final MPC action on the Company's Project
SMA permit application is not anticipated until later in 1998.
Although there can be no assurance that the Project SMA permit
will be received (and that if such permit is approved, that
its terms and conditions will be acceptable to the Company),
Company management is hopeful that the Company will receive
the necessary approvals to proceed with the time-share
development of the Site.
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.
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 resort in Nevada. The partnership is in the
process of arranging project financing for the development of
the time share resort.
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. Maui County cannot exercise its option
to purchase unless and until the Company receives the Project
SMA permit in a form acceptable to the Company for development
of the Site. The acquisition of the 33 acres by Maui County
would reduce the overall density of the North Beach
development by approximately one-third. The Mayor of Maui
County and the County administration have agreed that,
assuming the reduction in density were to be effected, the
infrastructure upgrades proposed by the Company for the time-
share resort would be sufficient for the development of the
Site.
North Beach Mauka. The Company has plans for an
additional 18-hole golf course, condominiums,
commercial/retail and residential uses. The Company also
plans to evaluate adding a significant time-share component to
the development plans for this 318-acre parcel. Currently,
the Company has Community Plan approvals and R-3 zoning
(residential, minimum 10,000 square foot lots) for North Beach
Mauka. State urbanization is required, along with final
zoning and subdivision.
Puukolii Village. The Company has regulatory approval to
develop a project known as "Puukolii Village", on
approximately 249 acres which is also located near Kaanapali
Beach Resort. A significant portion of this project will be
affordable housing. Development of most of Puukolii Village
cannot commence until after completion of the planned
Lahaina/Kaanapali bypass highway. The proposed development
of Puukolii Village is anticipated to satisfy the Company's
affordable housing requirements in connection with its
Kaanapali/Honokowai land use entitlements. For the portion of
Puukolii Village that is not dependent upon completion of the
Lahaina/Kaanapali bypass highway, the Company has
unsuccessfully attempted to sell several residential parcels
to home builders and multi-family residential developers.
Until such time that an acceptable agreement can be reached
with a housing developer, limited funds will be expended on
infrastructure (including an access road) for Puukolii
Village.
In connection with certain of the Company's land use
approvals on Maui, the Company has agreed to provide employee
and affordable housing and to participate in the funding of
the design and construction of the planned Lahaina/Kaanapali
bypass highway. The Company has entered into an agreement with
the State of Hawaii Department of Transportation covering the
Company's participation in the design and construction of the
bypass highway. In conjunction with state urbanization of the
Company's Kaanapali Golf Estates project, the Company
committed to spend up to $3.5 million, (of which approximately
$.8 million has been spent as of March 31, 1998) toward the
design of the highway. Due to lengthy delays by the State in
the planned start date for the bypass highway, the Company
recently funded approximately $.9 million for the engineering
and design of the widening (from 2 to 4 lanes) of the existing
highway through the Kaanapali Beach Resort. The Company
believes this $.9 million can be credited against the $3.5
million commitment discussed above. The Company's remaining
commitment of another $6.7 million for the construction of the
bypass highway is subject to the Company obtaining future
entitlements on Maui and the actual construction of the bypass
highway. 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.
(b) Oahu
In 1997, the Company began developing the 64 acres of fee
simple land it owns at the Oahu Sugar mill-site. The Company
has received county zoning for a light industrial subdivision
on a 37-acre portion of the property, which excludes property
containing the actual sugar mill and adjacent buildings. In
connection with the development of this property, the Company
has received state land use urbanization for the entire 64-
acre site.
Marketing of the first twenty-three lots within the light
industrial subdivision commenced in August 1997. Although the
Company received significant interest from potential buyers,
the Company has not received any acceptable firm offers on
these lots. The infrastructure for these first twenty-three
lots is expected to cost approximately $5.9 million, of which
$3.9 million has been spent through March 31, 1998. The
Company does not anticipate completing additional
infrastructure except in connection with a sufficient number
of purchase and sale agreements. If the light industrial lots
cannot be sold individually, the Company will pursue a bulk
land sale for this development. The Company has begun the
process of seeking the necessary government approvals for the
re-development of the remainder of the mill-site parcels,
including planned commercial, public and quasi-public uses.
(c) Kauai
The Company owns approximately 28,000 acres of land on
the island of Kauai, the vast majority of which is classified
and zoned by the State of Hawaii and the County of Kauai,
respectively, as agricultural and conservation lands. There
are three large contiguous parcels which comprise the bulk of
these Kauai land holdings: Kealia, Kapaa and Lihue/Hanamaulu.
Each of the parcels is located along the eastern shore of
Kauai. Large portions of the agricultural lands are currently
used for sugar cane cultivation, and portions of the
conservation lands are utilized by the Company's sugar
plantations to collect, store and transmit irrigation water
from mountainous areas to the sugar cane fields.
The Company has state urbanization and county zoning for
a 552 acre master-planned community known as the
Lihue/Hanamaulu Town Expansion, which includes approximately
1,800 affordable and market rate residential units, commercial
and industrial facilities and a number of community and other
public uses. The Company does not plan to pursue subdivision
and building permits for this project until the real estate
market on Kauai improves. Once construction commences the
project is expected to span 20 years.
The Company has decided to sell large portions of its
Kauai land holdings which includes all of Kealia and Kapaa.
The entire 6,700 Kealia parcel is currently under contract for
sale. The contract includes numerous contingencies and,
therefore, it is difficult to predict whether the buyer will
ultimately close the transaction. Approximately 2,000 acres
in Kapaa are currently listed for sale. The Company has
certain additional lands also listed for sale; however, many
of these are smaller remnant parcels. The Company may
consider selling additional portions of these lands based upon
market conditions and the cash needs of the Company.
(d) Hawaii
The Company owns approximately 1,400 acres of land on the
island of Hawaii of which almost all are classified by the
State of Hawaii and zoned by the County of Hawaii as
agricultural lands. These lands are located on the eastern
(windward) side of the island, primarily in the Keaau and
Pahoa districts, south of the town of Hilo.
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.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a)The following documents are included as an
exhibits to this report.
Exhibit No. Exhibit
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). (2)
4.2 Amendment dated as of January 17, 1990 to the Indenture
relating to the COLAS. (2)
4.3 $28,097,832 Promissory Note from Amfac, Inc. to
Amfac/JMB Hawaii, Inc. Extended and Reissued Effective
December 31, 1993. (3)
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)
4.5 $15,000,000 Credit Agreement dated March 31, 1993 among
AMFAC/JMB Hawaii, Inc. and Continental Bank N.A (5).
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. (6)
4.7 $52,000,000 Promissory Note to Northbrook Corporation
from Amfac/JMB Hawaii, Inc., effective May 31, 1995 is
filed herewith. (7)
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. (8)
4.9 Standard Sugar Marketing Contracts between Hawaiian
Sugar Transportation Company and Hawaii Sugar Growers
dated June 4, 1993. (9)
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. (9)
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. (10)
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. (10)
4.13 $10,000,000 loan agreement between Amfac Property
Development Corp. and City Bank at December 18, 1996.
(11)
4.14 Amended and Restated $25,000,000 loan agreement with
the Bank of Hawaii dated February 4, 1997. (12)
4.15 Limited Partnership Agreement for Kaanapali Ownership
Resorts, L.P. dated February 1, 1997 for development of
time-share resort on Kaanapali. (11)
4.16 Second Supplement to the Indenture dated as of March 1,
1998. (13)
4.17 $104,759,324 promissory Note between Northbrook
Corporation and Amfac Land Company, Ltd. dated January
1, 1998. (13)
4.18 Revolving Credit Note between Fred Harvey
Transportation Company, Inc. and Amfac Land Company,
Ltd., dated January 1, 1998. (13)
10.1 Escrow Deposit Agreement. (1)
10.2 General Lease S-4222, dated January 1, 1969, by and
between the State of Hawaii and Kekaha Sugar Company,
Limited. (1)
10.3 Grove Farm Haiku Lease, dated January 25, 1974 by and
between Grove Farm Company, Incorporated and The Lihue
Plantation Company, Limited. (1)
10.4 General Lease S-4412, dated October 31, 1974, by and
between the State of Hawaii and the Lihue Plantation
Company, Limited. (1)
10.5 General Lease S-4576, dated March 15, 1978, by and
between the State of Hawaii and The Lihue Plantation
Company, Limited. (1)
10.6 General Lease S-3821, dated July 8, 1964, by and
between the State of Hawaii and East Kauai Water
Company, Ltd. (1)
10.7 Amended and Restated Power Purchase Agreement, dated as
of June 15, 1992, by and between The Lihue Plantation
Company, Limited and Citizens Utilities Company. (1)
10.8 U.S. Navy Waipio Peninsula Agricultural Lease, dated
May 26, 1964, between The United States of America (as
represented by the U.S. Navy) and Oahu Sugar Company,
Ltd. (1)
10.9 Amendment to the Robinson Estate Hoaeae Lease, dated
May 15, 1967, by and between various Robinsons, heirs
of Robinsons, Trustees and Executors, etc. and Oahu
Sugar Company, Limited amending and restating the
previous lease. (1)
10.10 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. (1)
10.11 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. (1)
10.12 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.
(1)
10.13 Honokohau Water License, dated December 22, 1980,
between Maui Pineapple Company Ltd. and Pioneer Mill
Company, Limited. (1)
10.14 Water Licensing Agreement, dated September 22, 1980, by
and between Maui Land & Pineapple Company, Inc. and
Amfac, Inc. (1)
10.15 Joint Venture Agreement, dated as of March 19, 1986, by
and between Amfac Property Development Corp. and
Tobishima Properties of Hawaii, Inc. (1)
10.16 Development Agreement, dated March 19, 1986, by and
between Kaanapali North Beach Joint Venture and Amfac
Property Investment Corp. and Tobishima Pacific, Inc.
(1)
10.19 Keep-Well Agreement between Northbrook Corporation and
Amfac/JMB Finance, Inc. (2)
10.20 Repurchase Agreement, dated March 14, 1989, by and
between Amfac/JMB Hawaii, Inc. and Amfac/JMB Finance,
Inc. (2)
10.21 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. (2)
10.22 Amfac-Amfac Hawaii Tax Agreement, dated February 21,
1989 between Amfac, Inc. and Amfac/JMB Hawaii, Inc. (2)
10.23 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.
(2)
19.0 $35,700,000 agreement for sale of C&H and certain other
C&H assets, to A&B Hawaii, Inc. in June 1993. (7)
22.1 Subsidiaries of Amfac/JMB Hawaii, Inc. (1)
99.1 A copy of pages 19, 41-45 and 51 of the Prospectus of
the Company dated December 5, 1988 (relating to SEC
Registration Statement on Form S-1 (as amended) File
No. 33-24180) and hereby incorporated by reference. (2)
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.
(1) 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.
(2) 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.
(3) 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.
(4) 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.
(5) 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.
(6) 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 11, 1993 and hereby incorporated by
reference.
(7) 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, 1994 and hereby incorporated by reference.
(8) 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.
(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.
(10) Previously filed as exhibit to the Company's Form 10-Q
report under the Securities Act of 1934 (File No. 33-24180)
filed on August 13, 1996 and hereby incorporated by reference.
(11) Previously filed as 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.
(12) 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, 1996 and hereby incorporated by reference.
(13) Previously filed as exhibit to the Company's Form 8-K
report under the Securities Act of 1934 (File No. 33-
24180)filed March 3, 1998 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:May 12, 1998
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:May 12, 1998
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:May 12, 1998
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:May 12, 1998
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, LIMITED
By: Edward J. Kroll
Vice President
Date:May 12, 1998
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:May 12, 1998
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:May 12, 1998
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:May 12, 1998
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:May 12, 1998
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:May 12, 1998
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. HACKFIELD $ CO., LTD.
By: Edward J. Kroll
Vice President
Date:May 12, 1998
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:May 12, 1998
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 ESTATES COFFEE, INC.
By: Edward J. Kroll
Vice President
Date:May 12, 1998
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:May 12, 1998
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:May 12, 1998
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:May 12, 1998
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:May 12, 1998
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:May 12, 1998
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:May 12, 1998
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:May 12, 1998
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:May 12, 1998
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:May 12, 1998
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:May 12, 1998
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:May 12, 1998
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:May 12, 1998
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:May 12, 1998
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:May 12, 1998
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:May 12, 1998
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:May 12, 1998
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:May 12, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE QUARTER ENEDED MARCH 31, 1998
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENT INCLUDED IN SUCH REPORT.
</LEGEND>
<CIK> 0000839437
<NAME> AMFAC/JMB HAWAII, LLC
<S> <C>
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<FISCAL-YEAR-END> DEC-31-1998
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