AMFAC JMB HAWAII INC, 10-Q, 1999-05-17

AMFAC JMB HAWAII INC
10-Q, 1999-05-17
REAL ESTATE OPERATORS (NO DEVELOPERS) & LESSORS

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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, 1999 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) (IRS Employer Identification No.)

For the quarter ended March 31, 1999 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) (IRS Employer Identification No.)

900 N. Michigan Ave., Chicago, IL 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 14, 1999, 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 14, 1999, 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.

<PAGE>

ADDITIONAL REGISTRANTS (1)

Address, including,
zip code, and
Exact name of State or other telephone number,
registrant as jurisdiction of IRS Employer including area code of
specified in incorporation Identificationregistrant's principal
its Charter or organization Number executive offices
- ------------- --------------- ----------------------------------------

Amfac Land Hawaii 99-0185633 900 North Michigan Avenue
Company, Chicago, Illinois 60611
Limited. 312/440-4800

Amfac Property Hawaii 99-0150751 900 North Michigan Avenue
Development Chicago, Illinois 60611
Corp. 312/440-4800

Amfac Hawaii 99-0202331 900 North Michigan Avenue
Property Chicago, Illinois 60611
Investment 312/440-4800
Corp.

H. Hackfeld Hawaii 99-0037425 900 North Michigan Avenue
& Co., Ltd. Chicago, Illinois 60611
312/440-4800

Kaanapali Hawaii 99-0176334 900 North Michigan Avenue
Estate Chicago, Illinois 60611
Coffee, Inc. 312/440-4800

Kaanapali Hawaii 99-0185634 900 North Michigan Avenue
Water Chicago, Illinois 60611
Corporation 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.

<PAGE>

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. . . 26

PART II. OTHER INFORMATION

Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . 42

Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . 42

<PAGE>

<TABLE>
PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

AMFAC/JMB HAWAII, L.L.C.

Consolidated Balance Sheets

March 31, 1999 and December 31, 1998
(Dollars in Thousands)
(Unaudited)

<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
------------- -----------
<S> <C> <C>
A S S E T S
- -----------

Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . $ 20,581 26,526
Receivables-net . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,504 13,248
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,529 29,770
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 2,002 2,048
-------- --------
Total current assets. . . . . . . . . . . . . . . . . . . . . . 63,616 71,592
-------- --------

Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 40
-------- --------
Property, plant and equipment:
Land and land improvements. . . . . . . . . . . . . . . . . . . . . . 291,542 291,617
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . 66,462 65,641
Construction in progress. . . . . . . . . . . . . . . . . . . . . . . 569 737
-------- --------
358,573 357,995
Less accumulated depreciation and amortization. . . . . . . . . . . . 46,442 44,865
-------- --------
312,131 313,130
-------- --------
Deferred expenses, net. . . . . . . . . . . . . . . . . . . . . . . . . 10,558 10,862
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,215 35,456
-------- --------
$422,560 431,080
======== ========

<PAGE>

AMFAC/JMB HAWAII, L.L.C.

Consolidated Balance Sheets - Continued

March 31, 1999 and December 31, 1998
(Dollars in Thousands)
(Unaudited)
MARCH 31, DECEMBER 31,
1999 1998
------------ -----------
L I A B I L I T I E S
- ---------------------
Current liabilities:
Current portion of long-term debt:
Requiring payment (note 3). . . . . . . . . . . . . . . . . . . . . $ 66,534 --
Deferred gain (note 3). . . . . . . . . . . . . . . . . . . . . . . 14,605 --
Debt in default (note 4). . . . . . . . . . . . . . . . . . . . . . 66,000 --
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,182 7,166
-------- --------
154,321 7,166

Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . 5,884 6,773
Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 8,883 8,111
Current portion of deferred income taxes. . . . . . . . . . . . . . . 2,786 81
Amounts due to affiliates . . . . . . . . . . . . . . . . . . . . . . 12,598 12,310
-------- --------
Total current liabilities . . . . . . . . . . . . . . . . . . . 184,472 34,441
-------- --------
Amounts due to affiliates - senior debt financing . . . . . . . . . . . 112,977 110,325
Accumulated postretirement benefit obligation . . . . . . . . . . . . . 50,362 51,314
Long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,180 100,240
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . 30,282 30,908
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . 60,849 60,971
Certificate of Land Appreciation Notes. . . . . . . . . . . . . . . . . 139,553 220,692
-------- --------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . 609,675 608,891
-------- --------
Commitments and contingencies (notes 2, 3, 4, 6, 7 and 8)

M E M B E R ' S E Q U I T Y (D E F I C I T )
- ------------------------------------------------
Member's equity (deficit) . . . . . . . . . . . . . . . . . . . . . . . (187,115) (177,811)
-------- --------
Total Member's equity (deficit) . . . . . . . . . . . . . . . . (187,115) (177,811)
-------- --------
$422,560 431,080
======== ========

<FN>
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>

<PAGE>

<TABLE>
AMFAC/JMB HAWAII, L.L.C.

Consolidated Statements of Operations

Three Months Ended March 31, 1999 and 1998
(Dollars in Thousands)
(Unaudited)
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Revenue:
Agriculture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 907 917
Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,739 3,875
Golf. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,437 4,434
-------- --------
8,083 9,226
-------- --------
Cost of sales:
Agriculture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 890 1,559
Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 733 2,129
Golf. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,979 2,223
-------- --------
3,602 5,911
Operating expenses:
Selling, general and administrative . . . . . . . . . . . . . . . . . 2,426 2,264
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . 1,577 1,659
-------- --------
Total costs and expenses. . . . . . . . . . . . . . . . . . . . . . . . 7,605 9,834

Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . 478 (608)
-------- --------
Non-operating income (expenses):
Amortization of deferred costs. . . . . . . . . . . . . . . . . . . . (310) (308)
Interest expense. . . . . . . . . . . . . . . . . . . . . . . . . . . (7,116) (7,882)
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . 463 91
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (236) --
-------- --------
(7,199) (8,099)
-------- --------
Loss before taxes . . . . . . . . . . . . . . . . . . . . . . . . . (6,721) (8,707)
-------- --------
Income tax benefit. . . . . . . . . . . . . . . . . . . . . . . . . . 2,596 (3,343)
-------- --------
Net loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (4,125) (5,364)
======== ========

<FN>
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>

<PAGE>

<TABLE>
AMFAC/JMB HAWAII, L.L.C.

Consolidated Statements of Cash Flows

Three Months Ended March 31, 1999 and 1998
(Dollars in Thousands)
(Unaudited)

<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (4,125) (5,364)
Items not requiring (providing) cash:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . 1,577 1,659
Amortization of deferred costs. . . . . . . . . . . . . . . . . . . . . 310 308
Equity in earnings of investments . . . . . . . . . . . . . . . . . . . -- 14
Income tax benefit. . . . . . . . . . . . . . . . . . . . . . . . . . . (2,596) (3,343)
Deferred interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 145 250
Interest on advances from affiliates. . . . . . . . . . . . . . . . . . 2,652 3,362

Changes in:
Receivables - net . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,744 1,410
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,633) (7,409)
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 (88)
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (889) 278
Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 772 (1,818)
Amounts due to affiliates . . . . . . . . . . . . . . . . . . . . . . . . 288 300
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . (1,339) (880)
-------- --------
Net cash used in operating activities . . . . . . . . . . . . . . . (1,048) (11,321)
-------- --------
Cash flows from investing activities:
Property additions. . . . . . . . . . . . . . . . . . . . . . . . . . . . (704) (759)
Property sales, disposals and retirements - net . . . . . . . . . . . . . -- 9
Investments in joint ventures and partnerships. . . . . . . . . . . . . . -- (239)
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (759) (3)
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . (384) 88
-------- --------
Net cash used in investing activities . . . . . . . . . . . . . . . (1,847) (904)
-------- --------

<PAGE>

AMFAC/JMB HAWAII, L.L.C.

Consolidated Statements of Cash Flows - Continued

Three Months Ended March 31, 1999 and 1998
(Dollars in Thousands)
(Unaudited)

1999 1998
--------- ---------
Cash flows from financing activities:
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6) --
Net (repayments) proceeds of long-term debt . . . . . . . . . . . . . . . (3,044) (463)
Net amounts due to affiliates . . . . . . . . . . . . . . . . . . . . . . -- 14,914
-------- --------
Net cash provided by (used in) financing activities . . . . . . . . (3,050) 14,451
-------- --------
Net increase in cash and cash equivalents . . . . . . . . . . . . . (5,945) 2,226
Cash and cash equivalents, beginning of year. . . . . . . . . . . . 26,526 9,115
-------- --------
Cash and cash equivalents, end of period. . . . . . . . . . . . . . $ 20,581 11,341
======== ========

Supplemental disclosure of cash flow information:
Cash paid for interest (net of amount capitalized). . . . . . . . . . . . $ 5,252 7,773
======== ========
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 . . . . . $ 126 328
======== ========

<FN>
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>

<PAGE>

AMFAC/JMB HAWAII, L.L.C.

Notes to Consolidated Financial Statements

March 31, 1999 and 1998

(Dollars in Thousands)

Readers of this quarterly report should refer to the Company's audited
financial statements for the fiscal year ended December 31, 1998, which are
included in the Company's 1998 Annual Report, as certain footnote
disclosures which would substantially duplicate those contained in such
audited financial statements have been omitted from this report.

All reference to "Notes" are to Notes to the Consolidated Financial
Statements contained in 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
("Northbrook"). The primary business activities of the Company are land
development and sales, golf course management and agriculture. The Company
owns approximately 34,000 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 49,000 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
by and between A/J Hawaii and the Company (which was then named Amfac/JMB
Mergerco, L.L.C. (the "Merger Agreement")). 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 holders of Certificate
of Land Appreciation Notes due 2008 Class A (the "Class A COLAs") and the
Certificate 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 will continue until at least December 31, 2027, unless
earlier dissolved. Except as noted in Notes 2 and 3 to Notes to the
Balance Sheets of Amfac/JMB Finance, Inc.("AJF"), the Company's sole member
(Northbrook) is not obligated for any debt, obligation or liability of the
Company.

The Company has three 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

<PAGE>

AMFAC/JMB HAWAII, L.L.C.

Notes to Consolidated Financial Statements - Continued

(Dollars in Thousands)

of which is in the State of Hawaii. The golf segment ("Golf") is
responsible for the management and operation of the Company's golf course
facilities.

The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.

The Company's policy is to consider all amounts held with original
maturities of three months or less in U.S. Government obligations,
certificates of deposit and money market funds (approximately $ 18,694 and
$24,188 at March 31, 1999 and December 31, 1998, respectively) as cash
equivalents, which approximates market. These amounts include $ 1,957 and
$1,923 at March 31, 1999 and December 31, 1998, 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.

These contracts are marked to market with unrealized gains and losses
deferred and recognized in earnings when realized as an adjustment to cost
of sales as part of the production cost (the deferral accounting method).
The related amounts due to or from the exchange are included in inventory.
Unrealized changes in fair value of contracts no longer effective as hedges
are recognized in income from the date the contracts become ineffective
until their expiration.

In June 1998, the FASB issued Statement No. 133, Accounting for
Derivative Instruments and Hedging Activities. The Company expects to
adopt this Statement effective January 1, 2000. The Statement will require
the Company to recognize all derivatives on the balance sheet at fair
value. The Company does not anticipate that the adoption of this Statement
will have a significant effect on results of operations or financial
position.

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.

<PAGE>

AMFAC/JMB HAWAII, L.L.C.

Notes to Consolidated Financial Statements - Continued

(Dollars in Thousands)

For financial reporting purposes, the Company uses the effective
interest rate method and accrued interest on the COLAs at 4% per annum,
which is the "Mandatory Base Interest" (see Note 3).

Interest is capitalized to qualifying assets (principally real estate
under development) during the period that such assets are undergoing
activities necessary to prepare them for their intended use. Such
capitalized interest is charged to cost of sales as revenue from the real
estate development is recognized. Interest costs of $225 and $152 have
been capitalized for the three months ended March 31, 1999 and 1998,
respectively.

Net interest received (paid) on contracts that qualify as hedges is
recognized over the life of the contract as an adjustment to interest
income (expense) of the hedged financial instrument.

The Company and its subsidiaries report their taxes as part of the
consolidated tax return of the Company's parent, Northbrook. The Company
and its subsidiaries have entered into a tax indemnification agreement with
Northbrook in which Northbrook 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).

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 1998 financial statements have been
reclassified to conform to the 1999 presentation.

(2) AMOUNTS DUE TO AFFILIATES - SENIOR DEBT 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 (7.75% at March 31,
1999), plus one percent. In addition to the $52,000 borrowed from
Northbrook in 1995 to redeem Class A COLAs pursuant to the Class A
Redemption Offer (see Note 3), the Company had also borrowed approximately
$18,746 and $9,814 during 1996 and 1995, respectively, to fund COLA
Mandatory Base Interest payments, Royal Kaanapali Golf Course debt interest
payments and other operational needs. These loans from Northbrook were
payable interest only, had a maturity date of June 1, 1998 and carried an
interest rate per annum equal to the prime interest rate plus two percent.
Pursuant to the Indenture relating to the COLAs, the amounts borrowed from
Northbrook are "Senior Indebtedness" to the COLAs.

<PAGE>

AMFAC/JMB HAWAII, L.L.C.

Notes to Consolidated Financial Statements - Continued

(Dollars in Thousands)

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. In 1998, the $104,759 note was cancelled pursuant to a split
Note Agreement and bifurcated into two nine-year notes: (i) a $99,595 note
payable to an affiliate of Northbrook and (ii) a $15,000 note payable (with
an initial balance of $7,920) to Northbrook. The bifurcated notes are
payable interest only and accrue interest at the prime rate plus 2%. The
Company borrowed an additional $16,628 during 1997 and $24,828 during 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%.

As of December 31, 1998, the Company agreed to exercise its option to
redeem Class B COLAs that are "put" to AJF for repurchase in partial
consideration for (a) the agreement by the Company's affiliate, Fred Harvey
Transportation Company ("Fred Harvey"), to defer until December 31, 2001
all interest accruing from January 1, 1998 through December 31, 2001 and
relating to the approximately $100,000 of Senior Indebtedness of the
Company currently owing to Fred Harvey; and (b) Northbrook agreeing to
cause approximately $55,100 of the Company's indebtedness that was senior
to the COLAs to be contributed to the capital of the Company. In
connection with the foregoing deferral of interest and contribution of
capital, the Company agreed to allow the senior debt held by Northbrook and
its affiliates to be secured by assets of the Company. As a result of the
contribution, in the Company's December 31, 1998 balance sheet, the
"Amounts due to affiliates - senior debt financing" were decreased, and the
Company's "Member's equity (deficit)" was increased, by approximately
$55,100. The deferral of interest, together with this contribution to
capital, were made as part of the Company's effort to alleviate significant
liquidity constraints and continue to meet the Value Maintenance Ratio
requirement under the Indenture. At current interest rates, and assuming
no further advances of Senior Indebtedness, approximately $45,000 of such
deferred interest relating to currently existing Senior Indebtedness will
become due and payable on December 31, 2001. At such time, there can be no
assurance that the Company will either (i) have unrestricted cash available
for meeting such obligation or (ii) have the ability to refinance such
$45,000 obligation. Failure to meet such obligation, if called, would
cause all Senior Indebtedness owing to Fred Harvey or its affiliates to be
immediately due and payable. A default on Senior Indebtedness of such
magnitude could constitute an event of default under the Indenture. To the
extent that Northbrook or any of its affiliates make additional advances of
Senior Indebtedness to the Company during 1999, Northbrook or its
affiliates intend to defer any interest accruing on such additional
indebtedness until December 31, 2001. Therefore, interest in excess of
$45,000 may be due and payable on December 31, 2001 and any such excess may
be substantial.

The total amount due Northbrook and its subsidiaries as of March 31,
1999 was $112,977, which includes deferred interest to affiliates on senior
debt of approximately $13,383, all of which has been deferred until
December 31, 2001, as described above). Pursuant to the Indenture, the
amounts borrowed from Northbrook or its affiliates are "Senior
Indebtedness" to the COLAs.

<PAGE>

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 due 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 in Note 6)
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 incur or
pay Contingent Base Interest on the COLAs from 1990 through 1998.
Approximately $116,337 of the $123,962 cumulative deferred Contingent Base
Interest (i.e. not due and payable in the absence of events which have not
occurred) related to the period from August 31, 1989 (Final Issuance Date)
through March 31, 1999 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 such
unaccrued and deferred Contingent Base Interest. The following table is a
summary of Mandatory Base Interest and Contingent Base Interest for the
three months ended March 31, 1999 and the year ended December 31, 1998:

Three Months The Year
Ended Ended
March 31, December 31,
1999 1998
----------- ------------

Mandatory Base Interest paid. . . . . . . $ 4,414 8,828
Contingent Base Interest due and paid . . -- --
Cumulative deferred Contingent Base
Interest. . . . . . . . . . . . . . . . $123,962 120,652

Net Cash Flow was $0 for 1998 and is expected to be $0 for 1999.

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 plus additional interest equal to

certain levels of 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 in the Indenture) of the
Company's assets at maturity over its liabilities (including Qualified
Allowance, but only to the extent earned and payable from Net Cash Flow
generated through maturity) at maturity, which liabilities have been
incurred in connection with its operations), plus 55% of the remaining
Maturity Market Value.

On March 14, 1989, 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

<PAGE>

AMFAC/JMB HAWAII, L.L.C.

Notes to Consolidated Financial Statements - Continued

(Dollars in Thousands)

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 holders of Class A COLAs were entitled to request
AJF to repurchase their Class A 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 $.135. Also pursuant to the
Repurchase Agreement, the holders of Class B COLAs are entitled to request
AJF to repurchase their Class B COLAs on June 1, 1999 at a price equal to
125% of the original principal amount of such COLAs ($.5) minus all
payments of principal and interest allocated to such Class B COLAs. As of
March 31, 1999, the cumulative interest paid per Class A and Class B COLA
was approximately $.215 and $.215, 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, and
has, in fact, elected to redeem any COLAs requested to be repurchased at
the specified price.

As of December 31, 1998, pursuant to the Indenture, the Company
elected to exercise its right to redeem (the "Class B Redemption Offer")
all Class B COLAs tendered by the registered holders pursuant to the
Repurchase Agreement, thereby eliminating AJF's Class B COLA repurchase
obligations with respect to such holders as of June 1, 1999. Pursuant to
the Class B Redemption Offer mailed on March 15, 1999 to COLA holders, and
in accordance with the terms of the Indenture, the Company is therefore
obligated to purchase any and all Class B COLAs submitted pursuant to the
Class B Redemption Offer at a price of $.410 per Class B COLA.

The Class B Redemption Offer terminated on April 15, 1999 in
accordance with its terms and with the Indenture. Approximately 162,277
Class B COLAs have been submitted for repurchase pursuant to the Class B
Redemption Offer. Approximately 97,947 Class B COLAs have been submitted
for repurchase by persons unaffiliated with the Company and which require
an aggregate cash payment by the Company of approximately $40,158 on
June 1, 1999. AF Investors, L.L.C. ("AF Investors"), an affiliate of the
Company, submitted approximately 64,330 of its 89,325 Class B COLAs for
repurchase pursuant to the Class B Redemption Offer and AF Investors has
agreed to take back senior debt of the Company in lieu of cash. Such
senior debt is expected to mature on December 31, 2008 and bear interest at
a rate per annum equal to the prime rate (at the time of such loan (7.75%
at March 31, 1999)) plus 2%. Additional interest may be payable on such
senior debt upon its maturity based upon the fair market value, if any, of
the Company's equity at that time. AF Investors' Class B COLAs were
contributed by Amfac Finance Limited Partnership ("Amfac Finance"), an
Illinois Limited partnership and an affiliate of the Company, to AF
Investors in December 1998. As of the date of this report, there are
sufficient funds available to the Company to satisfy the actual cash
repurchase obligations pursuant to the Class B Redemption Offer. Based
upon the Company's cash and liquid investments as of March 31, 1999, it
expects to borrow approximately $30,000 (such amount is subject to change
based on cash flows generated by

<PAGE>

AMFAC/JMB HAWAII, L.L.C.

Notes to Consolidated Financial Statements - Continued

(Dollars in Thousands)

the Company through June 1, 1999) from Northbrook or its affiliates to
purchase Class B COLAs pursuant to the Class B Redemption Offer. The term
of such loan from Northbrook, or its affiliates, is expected to mature on
December 31, 2008 and bear interest at a rate per annum equal to the prime
rate (at the time of such loan (7.75% at March 31, 1999)) plus 2%.
Additional interest may be payable on such senior debt upon its maturity
based upon the fair market value, if any, of the Company's equity at that
time. Pursuant to the Indenture, any cash amounts borrowed for the Class B
Redemption Offer together with any promissory note issued to AF Investors
in consideration for the repurchase of its Class B COLAs will be "Senior
Indebtedness" to the COLAs.

As a result of the Class B COLA repurchases on June 1, 1999, the
Company will retire approximately $81,139 face value of Class B COLA debt
and correspondingly will recognize a financial statement gain of
approximately $14,605 of which $8,815 is attributable to the retirement of
COLA debt held by persons unaffiliated with the Company. Such gain will be
adjusted by the write-off of an applicable portion of deferred financing
costs of approximately $3,535 and the write off of the accrued deferred
contingent base interest of approximately $7,600. The tax payable on the
gain (approximately $2,059) related to the Class B Class B Redemption Offer
will not be indemnified pursuant to the tax agreement with Northbrook (see
Note 1).

On March 15, 1995, pursuant to the Indenture, the Company elected to
offer to redeem (the "Class A COLA Redemption Offer") all Class A COLAs
from the registered Class A COLA holders, thereby eliminating AJF's
obligation to satisfy the Class A COLA repurchase options requested by such
holders as of June 1, 1995. Pursuant to the Class A COLA 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 Class A COLA Redemption Offer at a price of $.365 per Class
A COLA. In conjunction with the Company's Class A COLA 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 Class A COLA 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, 1999, 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.

As a result of the Class A COLA repurchases on June 1, 1995, the
Company retired approximately $164,045 in face value of COLA debt and
recognized a financial statement extraordinary gain 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 extended a Tender Offer to Purchase
(the "Class B 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

<PAGE>

AMFAC/JMB HAWAII, L.L.C.

Notes to Consolidated Financial Statements - Continued

(Dollars in Thousands)

the Class B 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 62,857 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 $23,571 on March 31, 1998. In addition,
on October 23, 1998, Amfac Finance extended a Tender Offer to purchase (the
"Class A/B Tender Offer") up to approximately $22,500 principal amount of
jointly certificated Class A and B COLAs (together "COLA Units") for cash
at a unit price of $.460 to be paid by Amfac Finance on each COLA Unit on
or about December 23, 1998. The maximum cash to be paid under the Tender
Offer was approximately $12,236 (26,600 COLA Units at a unit price of $.460
for each COLA Unit). Approximately 26,473 COLA Units were submitted to
Amfac Finance for repurchase pursuant to the Tender Offer requiring an
aggregate payment by Amfac Finance of approximately $12,178 on December 23,
1998. Neither the Class B nor the Class A/B Tender Offer reduced the
outstanding indebtedness of the Company. In December 1998, Amfac Finance
contributed its Class A and Class B COLAs to AF Investors. The COLAs held
by AF Investors remain outstanding pursuant to the terms of the Indenture.
Except as provided in the last sentence of this paragraph, AF Investors is
entitled to the same rights and benefits of any other holder of COLAs,
including having the right to have AJF repurchase on June 1, 1999, the
separate Class B COLAs that it owns. As discussed above, AF Investors
submitted approximately 64,330 of its 89,325 Class B COLAs for repurchase
pursuant to the Class B Redemption offer. AF Investors has agreed to take
back senior debt of the Company for the portion so put in lieu of cash.
Because AF Investors is an affiliate of the Company, AF Investors 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 Class B and Class A/B Tender Offers, the Company
recognized approximately $7,857 and $14,295, respectively, 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 Class B Tender Offer (approximately $3,064) and Class A/B Tender Offer
(approximately $5,575) were, or will be, indemnified by Northbrook through
the tax agreement between Northbrook and the Company (See Note 1).

The terms of the Indenture place certain restrictions on the Company's
declaration and payment of dividends. Such restrictions generally relate to
the source, timing and amounts which may be declared and/or paid. The COLAs
also impose certain restrictions on, among other things, the creation of
additional indebtedness for certain purposes, the Company's ability to
consolidate or merge with or into other entities, and the Company's
transactions with affiliates.

(4) LONG-TERM DEBT

In June 1991, the Company obtained a five-year $66,000 loan from the
Employees' Retirement System of the State of Hawaii ("ERS"). The
nonrecourse loan is secured by a first mortgage on the Kaanapali Golf
Courses, and is "Senior Indebtedness" (as defined in the Indenture). 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.

<PAGE>

AMFAC/JMB HAWAII, L.L.C.

Notes to Consolidated Financial Statements - Continued

(Dollars in Thousands)

In April 1996, the Company reached an agreement to amend the loan with
the ERS, extending the maturity date for five years. In exchange for the
loan extension, the ERS received the right to participate in the "Net
Disposition Proceeds" (as defined) related to the sale or the refinancing
of the golf courses or at the maturity of the loan. The ERS share of the
Net Disposition Proceeds increases from 30% 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 Minimum Interest for the three months ended March 31, 1999
and 1998 was $1,414 and $1,261, respectively. The accrued Minimum Interest
was $2,828 and $1,261 as of March 31, 1999 and 1998, respectively. The
Company has not paid the Minimum Interest to the ERS for the payments due
on January 1, 1999 and April 1, 1999 as discussed below. On April 1, 1998,
the Company paid $1,399 which represents the minimum Interest due through
March 31, 1998. The scheduled minimum 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 due accrues interest and
is payable on an annual basis from excess cash flow, if any, generated from
the Kaanapali Golf Courses. The annual interest payments in 1998 were in
excess of the cash flow generated by the Kaanapali Golf Courses. The total
accrued interest payable from excess cash flow was approximately $5,128 as
of March 31, 1999. 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. Due to depressed golf
course revenues, the Company did not pay to the ERS the Minimum Interest
payment due on January 1, 1999 and April 1, 1999 totaling $2,828. As
expected, the Company received a default notice from the ERS and is
currently pursuing renegotiation of the loan terms.

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 $2,501 as of March 31, 1999 and bears interest at a
rate equal to prime rate (7.75% at March 31, 1999) 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, has
limited recourse to the Company and certain other subsidiaries and is
"Senior Indebtedness" as defined in the Indenture relating to the COLAs.

<PAGE>

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 (5.0% at March 31, 1999)
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 has been increased to $25,000, the maturity
date has been extended to February 2007, the interest rate has been changed
to LIBOR plus 2% until the fifth anniversary and LIBOR plus 2.25%
thereafter and principal is to be repaid based on a 30-year amortization
schedule. The loan is secured by WGCI's assets (the golf course and related
improvements and equipment), is guaranteed by the Company, and is "Senior
Indebtedness" (as defined in the Indenture). As of March 31, 1999, the
outstanding balance was $24,481, with scheduled annual principal maturities
of $262 in 1999 through 2006 and the balance of $22,470 in 2007.

In December 1996, Amfac Property Development Corp. ("APDC"), a wholly-
owned subsidiary of the Company, obtained a $10,000 loan facility from City
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 "Senior Indebtedness" (as defined in the Indenture). The loan bears
interest at the bank's base rate (7.75% at March 31, 1999) plus .5% and
originally was scheduled to mature on December 1, 1998. In November 1998,
APDC sold certain mill-site property which served as collateral for the
$10,000 City Bank loan for an approximate sales price of $7,690 in cash
plus 2% of the gross sales price of subsequent parcel sales of all or any
portion of the property by the purchaser. The bank required $6,000 of the
sales proceeds as a principal reduction on the loan in order to release the
collateral. APDC received a one-year extension on the $4,000 remaining
balance of the loan which is secured by another parcel at the mill-site.
The extended loan bears interest at the bank's base rate plus 1.25% and
matures on December 1, 1999.

In September 1998, Amfac Property Investment Corporation ("APIC"), a
wholly-owned subsidiary of the Company, purchased Tobishima Pacific, Inc.'s
("TPI") 50% ownership interest in the 96-acre beachfront parcel (commonly
referred to as Kaanapali North Beach) for $12,000. APIC paid $2,400 in
cash and signed a note for $9,600. The note is secured by a mortgage on
the property in favor of TPI and is "Senior Indebtedness" (as defined in
the Indenture). The note is payable in five annual installments in the
principal amount of $1,920 beginning in September 1999. The note bears
interest of 8.5% and is payable quarterly. In January 1999, the Company
paid TPI approximately $2,200 on its note to release Lot #1 for the
Kaanapali Ocean Resort and the new 10-acre public recreation area at North
Beach.

(5) SEGMENT INFORMATION

Agriculture, Property and Golf comprise separate industry segments of
the Company. Operating Income (Loss)-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, 1999 and December 31,
1998 are set forth below by each industry segment:

<PAGE>

AMFAC/JMB HAWAII, L.L.C.

Notes to Consolidated Financial Statements - Continued

(Dollars in Thousands)

March 31, December 31,
1999 1998
------------ ------------
Total Assets:
Agriculture . . . . . . . . . . . . . . $198,922 197,288
Property. . . . . . . . . . . . . . . . 117,431 121,957
Golf. . . . . . . . . . . . . . . . . . 77,294 77,644
Other . . . . . . . . . . . . . . . . . 28,913 34,191
-------- --------

$422,560 431,080
======== ========

Three Months Ended
March 31,
------------------------
1999 1998
-------- --------
Capital Expenditures:
Agriculture . . . . . . . . . . . . . . $ 538 417
Property. . . . . . . . . . . . . . . . 51 325
Golf. . . . . . . . . . . . . . . . . . 115 17
-------- --------
$ 704 759
======== ========

Operating income (loss):
Agriculture . . . . . . . . . . . . . . $ (1,080) (1,924)
Property. . . . . . . . . . . . . . . . 140 (6)
Golf. . . . . . . . . . . . . . . . . . 1,939 1,745
Other . . . . . . . . . . . . . . . . . (521) (423)
-------- --------
$ 478 (608)
======== ========

Depreciation and amortization:
Agriculture . . . . . . . . . . . . . . $ 946 1,131
Property. . . . . . . . . . . . . . . . 226 218
Golf. . . . . . . . . . . . . . . . . . 359 306
Other . . . . . . . . . . . . . . . . . 46 4
-------- --------
$ 1,577 1,659
======== ========

(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 in the Indenture) of the gross assets
of the Company and its subsidiaries (other than cash and cash equivalents
and Excluded Assets (as defined in the Indenture)) 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

<PAGE>

AMFAC/JMB HAWAII, L.L.C.

Notes to Consolidated Financial Statements - Continued

(Dollars in Thousands)

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 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 $74,102
of Qualified Allowance related to the period from January 1, 1990 through
December 31, 1998 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 the 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, 1998:

1998
-------
Qualified Allowance calculated. . . . . . . . . . . . . $ 9,776
Qualified Allowance paid. . . . . . . . . . . . . . . . $ --
Cumulative deficiency of Qualified Allowance at
end of year . . . . . . . . . . . . . . . . . . . . . $74,102

Net Cash Flow was $0 for 1998 is expected to be $0 for 1999.

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 for the three
months ended March 31, 1999 and 1998 was approximately $167 and $165,
respectively, of which $1,442 was unpaid as of March 31, 1999. In addition,

<PAGE>

AMFAC/JMB HAWAII, L.L.C.

Notes to Consolidated Financial Statements - Continued

(Dollars in Thousands)

as of March 31, 1999, 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,
1999.

JMB Insurance Agency, Inc., an affiliate of JMB, 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, 1999 and 1998 was
approximately $248 and $255, respectively, all of which was paid as of
March 31, 1999.

Northbrook and its affiliates allocated certain charges for services
to the Company based upon the estimated level of services for the three
months ended March 31, 1999 and 1998 of approximately $184 and $140,
respectively, of which $2,048 was unpaid as of March 31, 1999. 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.

In 1998, the $104,759 affiliate note (see Note 4) was cancelled
pursuant to a Split Note Agreement and bifurcated into two nine-year notes
(i) a $99,595 note payable to an affiliate of Northbrook and (ii) a $15,000
note payable (with an initial balance of $7,920) to Northbrook. The
bifurcated notes were payable interest only and accrue interest at the
prime rate plus 2%. Pursuant to the Indenture, the amounts borrowed from
Northbrook and its affiliates are "Senior Indebtedness" to the COLAs. The
Company borrowed an additional $24,828 during 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 $2,652 and $3,362 for
the three months ended March 31, 1999 and 1998, respectively.

As of December 31, 1998, the Company agreed to exercise its option to
redeem Class B COLAs that are "put" to AJF for repurchase (as described in
Note 3 above), in partial consideration for (a) Fred Harvey's agreement to
defer until December 31, 2001 all interest accruing from January 1, 1998
through December 31, 2001 and relating to the approximately $100,000 of
Senior Indebtedness of the Company currently owing to Fred Harvey (as
described in Note 4 above); and (b) Northbrook agreeing to cause
approximately $55,100 of the Company's indebtedness that was senior to the
COLAs to be contributed to the capital of the Company. As a result of the
contribution, in the Company's December 31, 1998 balance sheet, the
"Amounts due to affiliates - senior debt financing" were decreased, and the
Company's "Member's equity (deficit)" was increased, by approximately
$55,100. The deferral of interest, together with this contribution to
capital, were made as part of the Company's effort to alleviate significant

<PAGE>

AMFAC/JMB HAWAII, L.L.C.

Notes to Consolidated Financial Statements - Continued

(Dollars in Thousands)

liquidity constraints and continue to meet the Value Maintenance Ratio
requirement under the Indenture. At current interest rates, and assuming
no further advances of Senior Indebtedness, approximately $45,000 of such
deferred interest relating to currently existing Senior Indebtedness will
become due and payable on December 31, 2001. At such time, there can be no
assurance that the Company will either (i) have unrestricted cash available
for meeting such obligation or (ii) have the ability to refinance such
$45,000 obligation. Failure to meet such obligation, if called, would
cause all Senior Indebtedness owing to Fred Harvey or its affiliates to be
immediately due and payable. A default on Senior Indebtedness of such
magnitude could constitute an event of default under the Indenture. To the
extent that Northbrook or any of its affiliates make additional advances of
Senior Indebtedness to the Company during 1999, Northbrook or its
affiliates intend to defer any interest accruing on such additional
indebtedness until December 31, 2001. Therefore, interest in excess of
$45,000 may be due and payable on December 31, 2001 and any such excess may
be substantial.

The total amount due Northbrook and its subsidiary as of March 31,
1999 was $112,977, which includes deferred interest to affiliates on the
senior debt of approximately $13,383, all of which has been deferred until
December 31, 2001, as described above. Pursuant to the Indenture, the
amounts borrowed from Northbrook and its affiliates are "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 $4,305 as of March 31, 1999. 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, 1999, certain portions of the Company's land not
currently under development are mortgaged as security for approximately
$1,525 of performance bonds related to property development.

<PAGE>

AMFAC/JMB HAWAII, L.L.C.

Notes to Consolidated Financial Statements - Continued

(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, 1998 are as follows:

Deferred tax (assets):
Postretirement benefits . . . . . . . . . . . . . $ (20,012)
Interest accruals . . . . . . . . . . . . . . . . (3,047)
Cancellation of Debt Income on
COLA tenders. . . . . . . . . . . . . . . . . . (8,639)
Other accruals. . . . . . . . . . . . . . . . . . (2,039)
---------

Total gross deferred tax assets . . . . (33,737)
---------

Deferred tax liabilities:
Accounts receivable, related to profit on
sales of sugar. . . . . . . . . . . . . . . . . 3,216
Inventories, principally due to sugar production
costs, capitalized costs, capitalized interest
and purchase accounting adjustments. . . . . . (870)
Plant and equipment, principally due to
depreciation and purchase accounting
adjustments . . . . . . . . . . . . . . . . . . 9,920
Land and land improvements, principally
due to purchase accounting adjustments. . . . . 75,163
Deferred gains, due to installment sales
for income tax purposes . . . . . . . . . . . . 7,676
Investments in unconsolidated entities,
principally due to purchase accounting
adjustments . . . . . . . . . . . . . . . . . . (316)
---------
Total deferred tax liabilities. . . . . 94,789
---------

Net deferred tax liability. . . . . . . $ 61,052
=========

(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, 1999 and for the three
months ended March 31, 1999 and 1998.

<PAGE>

AMFAC/JMB FINANCE, INC.

Balance Sheets

March 31, 1999 and December 31, 1998

(Dollars in thousands, except per share information)

(Unaudited)

A s s e t s
-----------

March 31, December 31,
1999 1998
------------- ------------

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 3)

Common stock, $1 par value;
authorized, issued and
outstanding - 1,000 shares. . . . $ 1 1
========= ========

The accompanying notes are an integral part of these balance sheets.

<PAGE>

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. (the "Company")
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 the
Company's election to redeem the Class A COLAs submitted for repurchase,
the Company assumed AJF's maximum amount of its liability from the June 1,
1995 COLA repurchase obligation of $140,425.

On March 15, 1999, pursuant to the Indenture, the Company elected to
exercise its right to redeem, and therefore is obligated to purchase, any
and all Class B COLAs submitted pursuant to the June 1, 1999 Redemption
Offer at a price of $.410 per Class B COLA. Pursuant to the Company's
election to redeem the Class B COLAs submitted for repurchase, the Company
assumed AJF's liability from the June 1, 1999 Class B COLA repurchase
obligation (a maximum of $117,306).

(3) REPURCHASE OBLIGATION

On March 14, 1989, AJF and the Company 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") issued by the Company. A
total aggregate principal amount of $384,737 of COLAs were issued during
the offering, which terminated on August 31, 1989. The COLAs were issued in
two units consisting of one Class A and one Class B COLA. As specified in
the Repurchase Agreement, the holders of Class A COLAs were entitled to
request AJF to repurchase their Class A COLAs June 1, 1995 at a price equal
to the original principal amount of such COLAs ($.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 $.135. Also pursuant to the
Repurchase Agreement the holders of the Class B COLAs are entitled to
request AJF to repurchase their Class B COLAs on June 1, 1999 at a price
equal to 125% of the original principal amount of such Class B COLAs
($.500) minus all payments of principal and interest allocated to such
COLAs. To date, the cumulative interest paid per Class A and Class B COLA
is approximately $.215 and $.215, respectively.

As discussed in Note 2 of Notes to the Balance Sheets, above, the
Company has elected to redeem the Class B COLAs submitted for repurchase,
thereby assuming AJF's repurchase obligation on June 1, 1999.

<PAGE>

PART I. FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES

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 cash deficit during the first half of the year of $10 to $15
million. This seasonal cash deficit is due to the sugar plantation's
operating costs being incurred fairly ratably during the year, while
revenues are received between May and December, concurrent with raw sugar
deliveries to the California and Hawaiian Sugar Company ("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 also
include overhead expenses, debt service and the Company's obligation to
redeem on June 1, 1999 Class B COLAs that have been "put" by the COLA
holders for repurchase.

The Company believes that additional borrowings from Northbrook or its
affiliates will be necessary to meet its short-term and long-term liquidity
needs. Northbrook and its affiliates have made such borrowings available to
the Company in the past and, through the end of 1999, intend to continue
making such borrowings available, to the extent of available liquidity.
However, there is no assurance that Northbrook or its affiliates will have
sufficient funds either through the end of 1999 or in the long-term, or
that Northbrook or its affiliates will make such funds available to the
Company, to meet the Company's short-term or long-term liquidity needs. To
the extent that Northbrook or its affiliates make such borrowings available
to the Company during 1999, Northbrook and its affiliates intend to defer
until December 31, 2001 any interest accruing on such borrowings.

As of December 31, 1998, pursuant to the indenture that governs the
terms of the COLAs (the "Indenture"), the Company elected to offer to
redeem (the "Class B Redemption Offer") all Class B COLAs from the
registered holders, thereby eliminating AJF's Class B COLA repurchase
obligations with respect to such holders as of June 1, 1999. Pursuant to
the Class B Redemption Offer mailed on March 15, 1999 to the Class B COLA
holders, and in accordance with the terms of the Indenture, the Company is
therefore obligated to purchase any and all Class B COLAs submitted
pursuant to the Class B Redemption Offer at a price of $410 per Class A
COLA.

<PAGE>

Illinois Limited partnership and an affiliate of the Company, to AF
Investors in December 1998. As of the date of this report, there are
sufficient funds available to the Company to satisfy the actual cash
repurchase obligations. Based upon the Company's cash and liquid
investments as of March 31, 1999, it expects to borrow approximately $30
million (such amount is subject to change based on cash flows generated by
the Company through June 1, 1999) from its parent, Northbrook or an
affiliate of Northbrook, to purchase Class B COLAs pursuant to the Class B
Redemption Offer. The term of such loan from Northbrook, or its
affiliates, is expected to mature on December 31, 2008 and bear interest at
a rate per annum equal to the prime rate (at the time of such loan (7.75%
at March 31, 1999)) plus 2%. Additional interest may be payable on such
senior debt upon its maturity based upon the fair market value, if any, of
the Company's equity at that time. Pursuant to the Indenture, any cash
amounts borrowed by the Company for the Class B Redemption Offer together
with any promissory note issued to AF Investors in consideration for the
repurchase of its Class B COLAs will be "Senior Indebtedness" to the COLAs.

As a result of the Class B COLA repurchases, the Company will retire
approximately $81.1 million face value of COLA debt and correspondingly
will recognize a financial statement gain of approximately $14.6 million of
which approximately $8.8 million is attributable to the retirement of COLA
debt held by persons unaffiliated with the Company. Such gain will be
adjusted by the write-off of an applicable portion of deferred financing
costs of approximately $3.5 million million and the write off of the
accrued deferred contingent based interest of approximately $7.6 million.
The tax payable on the gain (approximately $2.1 million) related to the
Class B Redemption Offer will not be indemnified by the tax agreement with
Northbrook (see Note 1).

As of December 31, 1998, the Company agreed to exercise its option to
redeem Class B COLAs that are "put" to AJF for repurchase, in partial
consideration for (a) the agreement by the Company's affiliate, Fred Harvey
Transportation Company ("Fred Harvey"), to defer until December 31, 2001
all interest accruing from January 1, 1998 through December 31, 2001 and
relating to the approximately $100 million of Senior Indebtedness of the
Company currently owing to Fred Harvey (as described in Note 4); and (b)
Northbrook agreeing to cause approximately $55.1 million of the Company's
indebtedness that was senior to the COLAs to be contributed to the capital
of the Company. In connection with the foregoing deferral of interest and
contribution of capital, the Company agreed to allow the senior debt held
by Northbrook and its affiliates to be secured by assets of the Company.
As a result of the contribution, in the Company's December 31, 1998 balance
sheet, the "Amounts due to affiliates - senior debt financing" were
decreased, and the Company's "Member's equity (deficit)" was increased, by
approximately $55.1 million. The deferral of interest, together with this
contribution to capital, were made as part of the Company's effort to
alleviate significant liquidity constraints and continue to meet the Value
Maintenance Ratio requirement under the Indenture. At current interest
rates, and assuming no further advances of Senior Indebtedness,
approximately $45 million of such deferred interest relating to currently
existing Senior Indebtedness will become due and payable on December 31,
2001. There can be no assurance that, at such time, the Company will
either (i) have unrestricted cash available for meeting such obligation or
(ii) have the ability to refinance such $45 million obligation. Failure to
meet such obligation, if called, would cause all Senior Indebtedness owing
to Fred Harvey or its affiliates to be immediately due and payable. A
default on Senior Indebtedness of such magnitude could constitute an event
of default under the Indenture. To the extent that Northbrook or any of
its affiliates make additional advances of Senior Indebtedness to the
Company during 1999 (as described above), interest in excess of $45 million
will be due and payable on December 31, 2001 and such excess could be
substantial.

<PAGE>

In recent years, the Company has funded its significant cash
requirements primarily through senior debt borrowings from Northbrook and a
subsidiary and to a lesser extent from revenues generated by 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, 1999, the
Company had unrestricted cash and cash equivalents of approximately $18,624
million, subject to its Class B COLA redemption election and obligation
discussed above. 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 completed.
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 for sale a relatively large portion of its land
holdings on the market to generate cash to finance the Company's
operations, to meet debt service requirements and to meet obligations in
connection with the Company's Class B Redemption Offer discussed above.
The Company has approximately 2,300 acres of land on the Kauai and 270
acres on Maui currently listed for sale. These lands consist primarily of
unentitled agricultural and conservation parcels. Approximately 650 acres
are currently under contract for sale with sales prices approximating $9
million in the aggregate. However, these contracts have due diligence
investigation periods which allow the prospective purchasers to terminate
the agreements. There can be no assurance that the signed contracts for
sale will in fact close under their current terms or any other terms or
that the Company will be successful in selling these lands at acceptable
prices.

During the first three months of 1999, the Company generated
approximately $.7 million of land sales. During all of 1998, the Company
generated approximately $41.3 million of land sales, of which approximately
$16 million came from the sale of the 6,700 acre Kealia parcel in June
1998. The Company has received $11.2 million in cash from the sale of the
Kealia parcel ($5.6 million at closing and $5.6 million from subsequent
installment payments); the remaining $4.8 million was received (pursuant to
the terms of a first mortgage note and amendment) in March 1999. The sale
of the 740-acre Olowalu parcel on Maui closed in September 1998 for a sales
price of $9.6 million, paid in full at closing. The Company was able to
lease back approximately 395 acres of the mauka ("towards the mountains")
portion of Olowalu for its agricultural operations. While the Company is
pursuing other bulk parcel sales, there can be no assurance that any such
sales will be consummated. In November 1998, the Company received
approximately $7.7 million in cash from the sale of certain mill-site
property at Oahu Sugar. The Company used a portion of the proceeds to pay
down $6 million on the Company's $10 million City Bank loan and received a
one-year extension on the repayment of the $4 million remaining balance.
Additionally, the Company generated approximately $4.1 million of lot sales
related to Kaanapali Golf Estates and approximately $3.0 million primarily
from the sale of unentitled agricultural and conservation land parcels on
Kauai and 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 $7.0
million in project costs during 1998, and anticipates expending
approximately $8.0 million in project costs during 1999. As of March 31,
1999, contractual commitments related to project costs totaled
approximately $4.3 million.

<PAGE>

The Company has completed the purchase of its former joint venture
partner's 50% interest in the 96 acre beachfront parcel commonly referred
to as Kaanapali North Beach. The Company and Tobishima Pacific, Inc.
("TPI") were unable to agree on key operating decisions related to the
development of the Kamapali Ocean Resort ("KOR") and the future development
plan for the entire North Beach property. To break the deadlock on these
issues, the Company exercised a buy/sell option using a $12 million stated
purchase price, and TPI elected to sell its interest. The Company financed
80% of the purchase price for TPI's interest in North Beach and signed a
note and first mortgage in favor of TPI for $9.6 million. The note is
payable in five equal, annual principal installments beginning in September
1999 and with interest at 8.5% per annum payable quarterly beginning in
December 1998. In January 1999, the Company paid TPI $2.2 million on its
note to release Lot #1 for KOR and the new 10-acre public recreation area
at North Beach.

The Company has made significant changes in the operations of its
sugar plantations in an effort to reduce operating costs and increase
productivity. 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 the Oahu Sugar Company. Transportation costs of raw
sugar to the C&H refinery are also significant. Over the years, the
Company has implemented numerous cost reduction and consolidation plans.

After lengthy negotiations with the union, in 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 June
1998, the union membership at Pioneer Mill ratified a three-year contract
which included a 9% reduction in wages for one year as well as other
concessions. Although the concessions will have a meaningful, positive
impact on current operations, they do not provide the type of structural
changes that the Company was seeking to provide for long-term profitability
and a secure future for the Company's sugar operations.

Decisions regarding the future of the Company's sugar operation will
be made on a year-to-year basis taking into account the current year's
operating results and forecasts for the upcoming year. There can be no
assurance that the Company will continue with sugar production in the
future.

In March 1999, the Company announced its plans to shut down its sugar
operations at Pioneer Mill on Maui at the end of the 1999 harvest season
(September 1999). Pioneer Mill has consistently incurred losses in prior
years and it was expected that those losses would continue in the future.
The Company expects to use portions of the land at Pioneer Mill for
alternative crops. The Company's estimated future costs to shut down sugar
operations at Pioneer Mill are not expected to have a material adverse
effect on the financial condition of the Company.

Company management cannot predict precisely the actual cost of a
plantation shutdown until a shut down plan is developed. There are a
significant number of factors that impact the actual cost including: the
exact timing of the shutdown, potential environmental issues (currently
unknown), the market and pricing for the possible sale or lease of the
plantation's field and mill equipment, and employee termination costs
(which are subject to union negotiation). Other significant unknowns (in
the case of Kauai) relate to the costs associated with terminating the
power sale agreements with the local utility company.

Changes in the price of raw sugar could also impact the level of
agricultural deficits, and as a result the annual cash needs of the
Company. Although government legislation, which is in place through 2002,
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
consider the shutdown of its remaining sugar plantations.

<PAGE>

During the first three months of 1999, cash decreased by $5.9 million
from December 31, 1998. Net cash was used in operating activities of $1.0
million, investing activities of $1.8 and financing activities of $3.0
million.

During the first three months of 1999, net cash flow used in operating
activities was $1.0 million, as compared to net cash used in operating
activities of $11.3 million during the first three months of 1998. The
$12.3 million increase in cash flow used in operating activities was due
primarily to (i) a $6.7 million decrease in receivables related to the
collection of $7.6 million in receivables related to prior year land sales
partially offset by a $.8 million increase in receivables related to sugar
operations compared to the $1.4 million decrease in receivables in 1998,
(ii) a $4.6 million increase in inventory primarily related to a $5.3
million increase in sugar growing crop inventory compared to a $7.4 million
increase in 1998 primarily attributable to a $8.0 million increase in sugar
growing crop inventory and (iii) a $1.0 million operating income compared
to a $.6 million operating loss in 1998.

During the first three months of 1999, net cash flow used in investing
activities was $1.8 million as compared to $.9 million during the first
three months of 1998. The $.9 million decrease in net cash used in
investing activities was principally due to an increase of $.8 million in
other assets during the first three months of 1999.

During the first three months of 1999, net cash flow used in financing
activities was $3.0 million compared to $14.5 million provided in the first
three months of 1998. The $17.5 million decrease in cash provided from
financing activities is due primarily to (i) net advances by affiliates
totaling $14.9 million during the first three months of 1998 and (ii) a
$2.6 million increase in principal loan repayment on long-term debt
primarily related to the $2.2 million paid to TPI in 1999 discussed above.

As the Company's sugar production decreases, the Company's water needs
will also decrease. Subject to significant state 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 on the island of Oahu 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 in 1995, 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 agreements with the Users. Currently, water is
delivered to the Users on a month-to-month basis at the originally agreed-
upon fees.

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
was subject to state legislative approval which was obtained in May 1998.
Closing remains conditional upon other factors, including resolution of
certain third party claims to portions of the Waiahole Ditch water. The
purchase agreement has been further extended after an initial expiration on

<PAGE>

October 3, 1998. If the sale is not completed, 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. 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.

The Company has signed a stock purchase agreement for the sale of
Kaanapali Water Corporation, the Company's water utility business on West
Maui, which serves the Kaanapali Beach Resorts for a price of approximately
$5.5 million. The sale is contingent upon State of Hawaii Public Utilities
Commission approval.

COLA RELATED OBLIGATIONS. AJF and the Company are parties to the
Repurchase Agreement pursuant to which AJF is obligated to repurchase on
June 1, 1999 the Class B COLAs tendered by the holders thereof. 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. In addition, the Company is obligated
to cause AJF to comply with AJF's repurchase obligation. AJF currently
does not have significant assets, and the Company is uncertain of the
extent to which AJF would be able to perform its repurchase obligation.
Notwithstanding AJF's repurchase obligations, the Company has the option
to, and has, in fact, elected to, redeem the Class B COLAs that are "put"
to AJF for repurchase.

The COLAs were issued in units consisting of one Class A COLA and one
Class B COLA. As of March 31, 1999, the Company had approximately 156,000
Class A COLAs and approximately 286,000 Class B COLAs outstanding, with a
principal balance of approximately $78 million and $143 million,
respectively. At March 31, 1999, the cumulative interest paid per Class A
COLA and Class B COLA was approximately $215 and $215, respectively.

As of December 31, 1998, pursuant to the Indenture, the Company
elected to offer to redeem (the "Class B Redemption Offer") all Class B
COLAs from the registered holders, thereby eliminating AJF's Class B COLA
repurchase obligation with respect to such holders as of June 1, 1999.
Pursuant to the Class B Redemption Offer mailed on March 15, 1999 to the
COLA holders, and in accordance with the terms of the Indenture, the
Company is therefore obligated to purchase any and all Class B COLAs
submitted pursuant to the Class B Redemption Offer at a price of $410 per
Class B COLA.

The Class B Redemption Offer terminated on April 15, 1999 in
accordance with its terms and with the Indenture. Approximately 162,277
Class B COLAs have been submitted for repurchase pursuant to the Class B
Redemption Offer of which approximately 97,947 Class B COLAs have been
submitted for repurchase by persons unaffiliated with the Company and which
require an aggregate cash payment by the Company of approximately $40.2
million on June 1, 1999. AF Investors, L.L.C. ("AF Investors"), an
affiliate of the Company, submitted approximately 64,330 of its 89,325
Class B COLAs for repurchase pursuant to the Class B Redemption Offer and
AF Investors has agreed to take back senior debt of the Company in lieu of
cash. Such senior debt is expected to mature on December 31, 2008 and bear
interest at a rate per annum equal to the prime rate (at the time of such
loan (7.75% at March 31, 1999)) plus 2%. Additional interest may be
payable on such senior debt upon its maturity based upon the fair market
value, if any, of the Company's equity at that time. AF Investors' Class B
COLAs were contributed by Amfac Finance Limited Partnership ("Amfac
Finance"), an Illinois Limited partnership and an affiliate of the Company,
to AF Investors in December 1998. As of the date of this report, there are
sufficient funds available to the Company to satisfy the actual cash
repurchase obligations. Based upon the Company's cash and liquid
investments as of March 31, 1999, it expects to borrow approximately $30
million (such amount is subject to change based on cash flows generated by
the Company through June 1, 1999) from its parent, Northbrook or an
affiliate of Northbrook, to purchase Class B COLAs pursuant to the Class B

<PAGE>

Redemption Offer. The term of such loan from Northbrook, or its
affiliates, is expected to mature on December 31, 2008 and bear interest at
a rate per annum equal to the prime rate (at the time of such loan (7.75% %
at March 31, 1999)) plus 2%. Additional interest may be payable on such
senior debt upon its maturity based upon the fair market value, if any, of
the Company's equity at that time. Pursuant to the Indenture, any cash
amounts borrowed for the Class B Redemption Offer together with any
promissory note issued to AF Investors in consideration for the repurchase
of its Class B COLAs will be "Senior Indebtedness" to the COLAs.

As a result of the Class B COLA repurchases, the Company will retire
approximately $81.1 million face value of COLA debt and correspondingly
will recognize a financial statement gain of approximately $14.6 million of
which $8.8 million is attributable to the retirement of COLA debt held by
persons unaffiliated with the Company. Such gain will be adjusted by the
write-off of an applicable portion of deferred financing costs of
approximately $3.5 million and the write off of the accrued deferred
contingent base interest of approximately $7.6 million. The tax payable on
the gain (approximately $2.1 million) related to the Class B Redemption
Offer will not be indemnified under the tax agreement with Northbrook (see
Note 1).

On January 30, 1998, Amfac Finance extended a tender offer to purchase
(the "Class B 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 tendered on or about March 24, 1998. The maximum cash to be paid
under the Class B Tender Offer was approximately $49.0 million (130,842
Separate Class B COLAs at a unit price of $375 each). Approximately 62,857
Separate Class B COLAs were submitted to Amfac Finance for repurchase
pursuant to the Class B Tender Offer, requiring an aggregate payment by
Amfac Finance of approximately $23.6 million on March 31, 1998. In
addition, on October 23, 1998, Amfac Finance extended a Tender Offer to
purchase (the "Class A/B Tender Offer") up to approximately $22.5 million
principal amount of jointly certificated Class A and B COLAs (together
"COLA Units") for cash at a unit price of $460 to be paid by Amfac Finance
on each COLA Unit on or about December 23, 1998. The maximum cash to be
paid under the Class A/B Tender Offer was approximately $12.2 million
(26,600 COLA Units at a unit price of $460 for each COLA Unit).
Approximately 26,473 COLA Units were submitted to Amfac Finance for
repurchase pursuant to the Class A/B Tender Offer, requiring an aggregate
payment by Amfac Finance of approximately $12.2 million on December 23,
1998. Neither the Class B nor the Class A/B Tender Offer reduced the
outstanding indebtedness of the Company. In December 1998, Amfac Finance
contributed its COLAs to AF Investors. The COLAs held by AF Investors
remain outstanding pursuant to the terms of the Indenture. Except as
provided in the last sentence of this paragraph, AF Investors is entitled
to the same rights and benefits of any other holder of COLAs, including
having the right to have AJF repurchase on June 1, 1999, the separate Class
B COLAs that it owns. As discussed above, AF Investors submitted
approximately 64,330 of its 89,325 Class B COLAs for repurchase pursuant to
the Class B Redemption Offer. AF Investors has agreed to take back senior
debt of the Company in lieu of cash. Because AF Investors is an affiliate
of the Company, AF Investors 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 Class B and Class A/B Tender Offers, the Company
recognized approximately $7.9 million and $14.3 million, respectively, 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 Class B Tender Offer (approximately $3.1
million) and Class A/B Tender Offer (approximately $5.7 million) were, or
will be, indemnified by Northbrook through the tax agreement between
Northbrook and the Company (See Note 1).

<PAGE>

Pursuant to the terms of the Indenture, 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 that is required to be paid, 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,
1998, was at least approximately $453 million. Based upon the appraisals
and, where a lower value was indicated, a contract to sell, the Company was
able to meet the Value Maintenance Ratio as of December 31, 1998. It should
be noted that, under the Indenture, the concept of Fair Market Value
generally is defined as 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, and
restrictive covenants) and the likelihood of changes to such restrictions;
provided, however, that with respect to any Fair Market Value determination
of all of the assets of the Company, such assets shall not be valued as if
sold in bulk to a single purchaser. There can be no assurance that the
Company 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.

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 incur
or pay Contingent Base Interest (interest in excess of 4%) on the COLAs
(see Note 3) from 1990 through 1998. Contingent Base Interest through 2008
is due 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,
excluding federal and state income taxes and after the establishment by the
Company of reserves. At December 31, 2008, certain levels of Contingent
Base Interest may also be due and 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 $116.3 million of the $124.0 million
cumulative deficiency of deferred Contingent Base Interest related to the
period from August 31, 1989 (Final Issuance Date) through March 31, 1999
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 deferred Contingent Base
Interest. The following table is a summary of Mandatory Base Interest and
deferred Contingent Base Interest (i.e. not currently due and payable) for
the three months ended March 31, 1999 and the year ended December 31, 1998
(dollars are in millions):

<PAGE>

Three Months The Year
Ended Ended
March 31, December 31,
1999 1998
----------- ------------

Mandatory Base Interest paid. . . . . . . . $ 4.9 8.8
Contingent Base Interest due and paid . . . -- --
Cumulative deferred Contingent Base
Interest. . . . . . . . . . . . . . . . . $ 124.0 120.7

Net Cash Flow was $0 for 1998 and is expected to be $0 for 1999.

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 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 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 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 $74.1 million of Qualified Allowance
related to the period from January 1, 1990 through December 31, 1998 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, 1998 (dollars are in
millions):

1998
------

Qualified Allowance calculated. . . . . . . . . . . . . . . $ 9.8
Qualified Allowance paid. . . . . . . . . . . . . . . . . . --
Cumulative deficiency of Qualified Allowance at end of year $ 74.1

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.

<PAGE>

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 certain levels of unpaid
Contingent Base Interest, to the extent of the Maturity Market Value 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 their 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 related
earnings (deficit)/member's equity (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.

YEAR 2000

The year 2000 issue is the result of computer programs being written
using two digits rather than four to define a year. Consequently, any
computer programs that have time-sensitive software may recognize a date
using "00" as the year 1900 rather than the year 2000. This could result
in a system failure or miscalculations causing disruptions of operations
including, among other things, a temporary inability to process
transactions or engage in other normal business activities.

The Company is reviewing its computer systems for year 2000
compliancy. The Company has completed an internal assessment of its
information system technology and currently does not anticipate any
hardware upgrade; however, it had determined a need to upgrade portions of
the Company's software so that its computer systems would function properly
with respect to dates in the year 2000 and thereafter.

The Company has completed an internal review of its accounting, human
resources and payroll applications which are supported by approximately six
different major software vendors. Except for the golf course and water
company division, the Company has received software upgrades for the
financial applications and has completed testing and implementation of the
new software upgrades. The Company has installed the software upgrade for
the payroll application, which is expected to be year 2000 compliant.
However, the Company uses a third party service bureau to process its
payroll and it is not currently possible to conduct testing to verify that
the software provided will be year 2000 compliant. The Company has not
incurred and does not expect to incur any costs with respect to the testing
and implementation of the software upgrades. The accounting systems at the

<PAGE>

golf courses and the water company are not yet year 2000 compliant. The
Company currently expects new accounting system software to be tested and
implemented by the end of September 1999 at a cost of approximately $60,000
to $80,000. However, in the event the Company's system reveals that,
contrary to software vendors' claims, the system upgrades or new software
are not year 2000 compliant, the Company believes it has the ability to
make the necessary changes through the use of third party consultants as
well as the utilization of internal resources. The Company does not have
an estimate of the length of time which could potentially be required to
make these changes, nor an estimate of the costs involved to make such
changes.

The Company's agriculture operations are testing and reviewing their
operational systems at certain of their plantations. At those locations
where a review has not been completed, reviews are expected to be completed
by the end of the first quarter of 1999. The agriculture operations have
also begun identifying and contacting key third party vendors with whom
these operations have a material relationship to determine their year 2000
readiness and expect to have completed contacting its key vendors by the
end of June 1999. If these vendors are not year 2000 compliant or are
unsuccessful in their efforts to become year 2000 compliant, a disruption
in service and supplies may result in the inability of the Company to
process and deliver its agricultural products to market. The subsequent
loss in revenues may have a material adverse effect on the financial
position of the Company.

The Company's Property operations (which include the development and
sales activities of the Company's land operations as well as the Company's
water operations) and the Company's Golf operations have reviewed their
operational systems in the fourth quarter of 1998. Key third party vendors
with whom these operations have a material relationship were contacted to
determine their year 2000 readiness. While these vendors have indicated
that they are or expect to be year 2000 compliant by the end of 1999, there
can be no assurance that they will be successful in their efforts to become
year 2000 compliant. A disruption in service and/or supplies may disrupt
the Company's conduct of its real estate activities, its water deliveries
and/or its golf operations. A resulting loss in revenues might have a
material adverse effect on the financial position of the Company.

The Company's transfer agent has been upgrading its computer systems
so that its computer systems will function properly with respect to dates
in the years 2000 and thereafter. The Company's transfer agent has begun
testing its computer systems and will continue to test throughout 1999.
The Company has no contingency plans in place in the event that the
Company's transfer agent systems upgrades are not year 2000 compliant.

The Company has reviewed its non-information technology systems (such
as its telephone, utilities, sprinkler and alarm systems) and has contacted
the appropriate third party vendors to determine their year 2000
compliancy. The Company does not have an estimate of the cost, if any,
that may be required to make its non-information systems year 2000
compliant. In addition, the Company has begun contacting the various
banks, insurance companies and state regulatory agencies with whom the
Company has material relationships to determine their year 2000 readiness.
The entities contacted have indicated that they are currently implementing
and/or are testing the required changes to be year 2000 compliant.

If the steps taken by the Company and its vendors to be year 2000
compliant are not successful, the Company could experience various
operational difficulties. These could include, among other things, an
inability to process transactions to the correct accounting period,
difficulties in posting general ledger interfaces, an inability to process
computer-generated checks, bank transactions posted to the wrong periods,
and the failure of scheduling applications which are date sensitive.

<PAGE>

The Company currently has no contingency plans in place in the event
it does not complete all phases of the year 2000 compliance program. The
Company plans to continue to monitor the on-going results of the review and
testing phases as well as the status of completion to determine whether
such a plan is necessary.

The foregoing discussion of year 2000 issues and the Company's
responses thereto is based upon information presently known and certain
assumptions and estimates (including those relating to costs and timing of
remediation) currently made by the Company, as well as statements and
representations made to the Company by its third party vendors. There are
various risks that assumptions and estimates made by the Company will not
prove to be correct, that delays in testing or remediation may occur and/or
that significant additional remediation efforts may be required. In
addition, the Company is also relying on the efforts and statements and
representations of third parties, in particular its third party software
vendors. Accordingly, the information concerning the year 2000 issues and
the Company's responses thereto, including the nature, extent, timing and
cost of the Company's remediation efforts, are subject to change and such
changes could be material. In addition, there is no assurance that the
software applications and packages currently believed to be year 2000
compliant will prove to be so after testing.

SENIOR DEBT. Interest expense decreased for the three months ended
March 31, 1999 as compared to the three months ended March 31, 1998 due to
a lower senior debt financing from affiliates balance attributable to
Northbrook's contribution of senior debt to capital discussed above.

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 1999 and 1998, agriculture revenues
were $.9 million.

During the first three months of 1999 and 1998, the Company did not
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 1999, cost of sales were $.9 million
as compared to $1.6 million in the first three months of 1998. The $.7
million decrease was due primarily to an increase in cost of sales
primarily from the timing of certain costs attributable to the Company's
coffee operations in 1998.

<PAGE>

The operating loss of $1.1 million in the first three months of 1999
as compared to $1.9 million in the first three months of 1998 was due
primarily to the increase in cost of sales related to coffee operations
during the first three months of 1998 (as discussed above).

The Company harvested approximately 1,175 and 0 acres for the three
months ended March 31, 1999 and 1998, respectively.

GOLF SEGMENT:

The Company's golf segment is responsible for the management and
operation of the two golf courses at Kaanapali Golf Courses in Kaanapali,
Maui and the Waikele Golf Club on Oahu.

Golf revenues were $4.4 million during the first three months of 1999
and 1998. During the first three months of 1999, approximately 53,000
rounds of golf were played as compared to 52,600 during the first three
months of 1998.

Golf cost of sales were $2.0 million and $2.2 million during the first
three months of 1999 and 1998, respectively. Golf operating expenses of
$.5 million during the first three months of 1999 and 1998, consisted
primarily of depreciation expense.

The increase in the operating income of $1.9 million during the first
three months of 1999 as compared to $1.7 million during the first three
months of 1998 was due primarily to the decrease in cost of sales (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.

Revenues decreased to $2.7 million during the first three months of
1999 from $3.9 million during the first three months of 1998. Property
revenues include revenues from land sales of approximately $3.9 million and
$2.7 million for the first three months of 1999 and 1998.

During the first three months of 1998, property cost of sales were
$.7 million as compared to $2.1 million in the first three months of 1998.
The $1.4 million decrease in costs was due primarily to an decrease in
sales volume associated with land parcels sold (as discussed above).

Property sales and cost of sales decreased for the three months ended
March 31, 1999 as compared to the three months ended March 31, 1998 due to
lower land sales volume. Operating income improved slightly primarily due
to slightly higher margins realized on property sold during 1999 offset in
part by higher general and administrative expenses.

(a) OAHU.

On the island of Oahu, the Company owns approximately 620 acres of
land of which approximately 150 acres is classified as urban and
approximately 470 acres is classified as conservation open land. After the
closure of the Oahu Sugar plantation in 1995, the Company began developing
the 64-acre mill site located in Waipahu, which is approximately 10 miles
west of downtown Honolulu near Pearl Harbor. The Company received county
zoning approval for a light industrial subdivision on the property.

In November 1998, the Company sold a portion of this mill site
property, which served as collateral for a $10 million loan from City Bank
for an approximate sales price of $7.7 million in cash (plus 2% of the
gross sales price of subsequent parcel sales of all or any portion of the
property by the purchaser) and paid $6 million of the sales proceeds as a
principal reduction on the loan. The purchaser assumed responsibility for

<PAGE>

completion of the infrastructure requirements for this portion of the mill-
site development project. The Company received a one-year extension on
repayment of the $4 million remaining balance of the loan which is secured
by another parcel at the mill-site. The extended loan bears interest at
the bank's base rate (7.75% at March 31, 1999) plus 1.25% and matures on
December 1, 1999.

The Company is marketing the remaining land in bulk at the mill-site
development. The Company does not anticipate expending funds for
infrastructure at this development.

The Company also owns the Waikele Golf Course located at the Company's
completed Waikele project. Waikele is located directly north of the Oahu
Sugar mill site development in Central Oahu. The Waikele Golf Course has
experienced a significant drop in play from eastbound (primarily Japanese)
tour groups which has depressed rounds played, average rate and, as a
result, net operating income. The Company has developed and implemented a
marketing plan to return the golf course to its previous levels of
profitability. It is difficult, however, to predict how effective these
efforts will be. The Waikele Golf Course generated approximately $1.3
million and $1.4 million, respectively, in revenues during the first three
months of 1999 and 1998, respectively.

The Company's approximately 470 acres of conservation lands on Oahu,
primarily watershed lands located on the northeastern side of the Ko'olau
mountains, relate to the Waiahole Ditch. These lands will be sold as part
of the Waiahole Ditch sale agreement with the State of Hawaii (assuming
such transaction is ultimately completed).

(b) MAUI.

In general, the development of the Company's land on Maui is expected
to be long-term in nature. Maui is less populated than Oahu and more
dependent on the resort/tourism industry, so 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.
The Company believes its development efforts are best concentrated in this
area where it has certain development approvals already secured.

The Company's Kahoma and Launiupoko properties (in total,
approximately 7,000 acres) are considered to be better suited in the near
term for agricultural uses and possibly for lower density, more rural
developments. 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. The Company had 230 acres of land on Maui listed for sale as
of March 31, 1999. These lands are currently under contract for sale. (See
also discussion of land sales in "Management Discussion and Analysis of
Financial Condition and Results of Operations - General".)

<PAGE>

The Company owns and operates the Royal Kaanapali Golf Courses
("RKGC"), which are two 18-hole golf courses located at the Kaanapali Beach
Resort on West Maui. The courses occupy approximately 320 acres of land.
The two Kaanapali golf courses generated approximately $3.1 million and
$3.0 million, respectively, in revenues during the first three months of
1999 and 1998, respectively. (Reference is made to Note 4 concerning the
default notice issued as of January 1, 1999 by the lender concerning the
indebtedness secured by the golf courses.)

KAANAPALI GOLF ESTATES. The Company is marketing Kaanapali Golf
Estates ("KGE"), a residential community that is part of the Kaanapali
Beach Resort in West Maui. KGE is divided into several parcels and is
approved for 340 homesites of which the Company has sold approximately 90
homesites through individual lot and bulk parcel sales.

In May 1997, the Company obtained final subdivision approval for a 32-
lot subdivision of one such parcel, referred to as "Parcel 17B". The
Company commenced on-site construction of the subdivision improvements for
Parcel 17B in August 1997 and completed these improvements in March 1998 at
a cost of approximately $1.7 million. During 1997, the Company generated
revenues of approximately $2.8 million from the sale of 18 lots at Parcel
17B. During 1998, the Company generated revenue of approximately $2.3
million from the sale of the remaining 14 lots at Parcel 17B.

In May 1998, the Company sold Parcel 18, an 18-lot subdivision in KGE,
in bulk for $1.8 million.

Parcels 16 and 21 totalling 34 acres were listed for sale as of
March 31, 1999. Currently under contract for sale in bulk is 17 acre
Parcel 21.

NORTH BEACH. In October 1998, the Company received the final county
approval needed to develop the Kaanapali Ocean Resort ("KOR"), a 280 unit
time share project on the 14 acre Lot 1 ("KOR Site") of Kaanapali North
Beach. In connection with the special management area use permit with the
County of Maui ("SMA Permit") for KOR, the Company signed a settlement
agreement with certain Maui citizens who were opposing the project in
"contested case hearings". Additionally, several opposing citizens who did
not enter into the settlement agreement signed letters agreeing to withdraw
from the contested case hearings. The Company submitted the (ultimately
approved) settlement agreement to the Maui Planning Commission in October
1998. Key provisions of the settlement agreement include the Company's
obligation to provide a new 10-acre public recreation area on North Beach,
a maximum limit of 1,950 units density on North Beach (versus the existing
3,200 units) and a requirement to implement certain drainage improvements
associated with the development of the Company's remaining Kaanapali lands.

Concurrent with construction of KOR, the Company plans to begin
construction of improvements for a 13-acre public park at Wainee, Maui.
The park land and improvements will be donated by the Company to the County
of Maui. The Company has completed the purchase of Tobishima Pacific,
Inc.'s ("TPI") 50% ownership interest in North Beach. The Company and TPI
were unable to agree on key operating decisions related to the development
of KOR and the future development plan for the entire North Beach property.

To break the deadlock on these issues, the Company exercised a buy/sell
option using a $12 million stated purchase price, and TPI elected to sell
its interest. The Company financed with TPI 80% of the purchase price for
TPI's interest in North Beach and signed a note and first mortgage in favor
of TPI for $9.6 million for the balance. The note is payable in five
equal, annual principal installments beginning in September 1999, with
interest of 8.5% payable quarterly. In January 1999, the Company paid TPI
$2.2 million on its note to release Lot #1 for KOR and the new 10-acre
public recreation area at North Beach.

In February 1997, the Company formed a limited partnership with an
affiliate of a time share company. The new limited partnership KOR, is
owned 85% by subsidiaries of the Company and 15% by Kaanapali Partners
Limited Partnership, an affiliate of the owners of The Ridge Tahoe resort

<PAGE>

in Nevada. Construction plans for KOR are expected to be finalized and
construction begun by summer 1999. The Company is working with various
lenders to obtain construction and other financing for KOR. Assuming
development proceeds, sales of time share intervals are scheduled to begin
during the early part of the year 2000.

In September 1997, the Company and TPI entered into an agreement with
Maui County providing the County with the option to purchase up to 33 acres
at North Beach (separate from the KOR Site) for $15 million. In connection
with receiving the SMA permit for KOR, the Company agreed to extend the
County's option for a period of six to twelve months (depending on the
election described below) in 1999 and to provide alternate park sites for
the County's consideration. Specifically, the County could decide to
purchase a smaller portion of the original 33 acre site for the original
per acre purchase price. Alternatively, the County could decide to
purchase 17 acres located directly to the south of the original option site
again for the original per acre purchase price. Based on the County's
actions, the option will expire June 30, 1999. The Company will work
directly with the new County administration and Council on this option.

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 located
"Mauka" ("towards the mountains") of 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 expected 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 the
Company reaches an acceptable agreement with a housing developer, limited
funds will be expended on infrastructure for Puukolii Village.

MAUI INFRASTRUCTURE COSTS. 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, 1999) 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 $1.0 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 $1.0
million will 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.

<PAGE>

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.

The Company had approximately 2,300 acres of land on Kauai listed for
sale as of March 31, 1999. Approximately 400 acres are currently under
contract for sale. The Company may consider selling additional portions of
these lands based upon market conditions and the cash needs of the Company.

(See also discussion of land sales in the "Liquidity and Capital Resources"
section above.)

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. (7)

<PAGE>

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)

4.19 Note Split Agreement between Northbrook Corporation and
Amfac/JMB Hawaii, Inc., effective January 1, 1998. (15)

4.20 $99,594,751.09 Promissory Note between Northbrook Corporation
and Amfac/JMB Hawaii, Inc., dated January 1, 1998. (15)

4.21 $15,000,000.00 Promissory Note between Northbrook Corporation
and Amfac/JMB Hawaii, Inc., dated January 1, 1998. (15)

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)

<PAGE>

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)

<PAGE>

10.24 Amended buy-sell notice dated August 27, 1998 from APIC. (14)

10.25 Assignment and assumption agreement dated September 30, 1998,
executed by TPI and APIC. (14)

10.26 Purchase money promissory note secured by mortgage dated
September 30, 1998, executed by APIC. (14)

10.27 Assignment and Contribution Agreement effective December 31,
1998 between Northbrook Corporation and Amfac/JMB Hawaii, L.L.C. (15)

10.28 Note Modification Agreement dated December 31, 1998 between
Amfac/JMB Hawaii, L.L.C. and Fred Harvey Transportation Company. (15)

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.

<PAGE>

(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.

(14) Previously filed as exhibit to the Company's Form 10-Q report
under the Securities Act of 1934 (File No. 33-24180) filed November 12,
1998 and hereby incorporated by reference.

(15) Previously filed as exhibit to the Company's Form 10-K report
under the Securities Act of 1934 (File No. 33-24180) filed March 8, 1999
and hereby incorporated by reference.

<PAGE>

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, L.L.C.

/s/ EDWARD J. KROLL
-------------------
By: Edward J. Kroll
Vice President
Date: May 14, 1999

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.