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, 2000 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.)
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 12, 2000, 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.
<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 Identification registrant'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
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 . . . . 17
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . 25
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . 27
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMFAC/JMB HAWAII, L.L.C.
Consolidated Balance Sheets
March 31, 2000 and December 31, 1999
(Dollars in Thousands)
MARCH 31, DECEMBER 31,
2000 1999
(Unaudited) (Note 1)
----------- -----------
A S S E T S
- -----------
Current assets:
Cash and cash equivalents. . . . . . $ 6,999 10,931
Receivables-net. . . . . . . . . . . 3,118 2,905
Inventories. . . . . . . . . . . . . 36,386 31,741
Prepaid expenses . . . . . . . . . . 1,862 1,623
-------- --------
Total current assets . . . . . 48,365 47,200
-------- --------
Investments. . . . . . . . . . . . . . 40 40
-------- --------
Property, plant and equipment:
Land and land improvements . . . . . 252,516 253,352
Machinery and equipment. . . . . . . 62,390 62,210
Construction in progress . . . . . . 507 488
-------- --------
315,413 316,050
Less accumulated depreciation
and amortization . . . . . . . . . 46,234 44,896
-------- --------
269,179 271,154
-------- --------
Deferred expenses, net . . . . . . . . 6,178 6,384
Other assets . . . . . . . . . . . . . 34,300 34,916
-------- --------
$358,062 359,694
======== ========
<PAGE>
AMFAC/JMB HAWAII, L.L.C.
Consolidated Balance Sheets - Continued
MARCH 31, DECEMBER 31,
2000 1999
(Unaudited) (Note 1)
----------- -----------
L I A B I L I T I E S
- ---------------------
Current liabilities:
Accounts payable . . . . . . . . . . $ 6,296 6,955
Accrued expenses . . . . . . . . . . 8,675 9,400
Current portion of long-term
debt . . . . . . . . . . . . . . . 5,206 5,184
Current portion of deferred
income taxes . . . . . . . . . . . 3,415 1,481
Debt in default. . . . . . . . . . . 74,588 73,004
Amounts due to affiliates. . . . . . 12,303 12,076
Amounts due to affiliates -
Senior Debt financing. . . . . . . 3,395 832
-------- --------
Total current liabilities. . . 113,878 108,932
-------- --------
Amounts due to affiliates -
Senior Debt financing. . . . . . . . 176,593 172,133
Accumulated postretirement
benefit obligation . . . . . . . . . 46,710 47,775
Long-term debt . . . . . . . . . . . . 27,466 27,557
Other long-term liabilities. . . . . . 17,353 16,851
Deferred income taxes. . . . . . . . . 52,310 52,550
Certificate of Land Appreciation
Notes. . . . . . . . . . . . . . . . 139,413 139,413
-------- --------
Total liabilities. . . . . . . 573,723 565,211
-------- --------
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). . . . . . . (215,661) (205,517)
-------- --------
Total Member's equity
(deficit). . . . . . . . . . (215,661) (205,517)
-------- --------
$358,062 359,694
======== ========
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE>
AMFAC/JMB HAWAII, L.L.C.
Consolidated Statements of Operations
Three Months Ended March 31, 2000 and 1999
(Dollars in Thousands)
(Unaudited)
2000 1999
-------- --------
Revenue:
Agriculture. . . . . . . . . . . . . $ 6,215 907
Property . . . . . . . . . . . . . . 5,059 2,739
Golf . . . . . . . . . . . . . . . . 4,660 4,437
-------- --------
15,934 8,083
-------- --------
Cost of sales:
Agriculture. . . . . . . . . . . . . 6,241 890
Property . . . . . . . . . . . . . . 3,975 969
Golf . . . . . . . . . . . . . . . . 2,417 1,979
-------- --------
12,633 3,838
Operating expenses:
Selling, general and administrative. 2,296 2,426
Depreciation and amortization. . . . 1,338 1,577
-------- --------
Total costs and expenses . . . . . . . 16,267 7,841
Operating income (loss) . . . . . . . (333) 242
-------- --------
Non-operating income (expenses):
Amortization of deferred costs . . . (211) (310)
Interest expense . . . . . . . . . . (8,006) (7,116)
Interest income. . . . . . . . . . . 100 463
-------- --------
(8,117) (6,963)
-------- --------
Loss before taxes. . . . . . . . . (8,450) (6,721)
-------- --------
Income tax benefit . . . . . . . . . 3,250 2,596
-------- --------
Net loss . . . . . . . . . . . . . $ (5,200) (4,125)
======== ========
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE>
AMFAC/JMB HAWAII, L.L.C.
Consolidated Statements of Cash Flows
Three Months Ended March 31, 2000 and 1999
(Dollars in Thousands)
(Unaudited)
2000 1999
-------- --------
Cash flows from operating activities:
Net loss . . . . . . . . . . . . . . . . $ (5,200) (4,125)
Items not requiring (providing) cash:
Depreciation and amortization. . . . . 1,338 1,577
Amortization of deferred costs . . . . 211 310
Income tax benefit . . . . . . . . . . (3,250) (2,596)
Interest on debt in default. . . . . . 1,584 1,559
Interest on advances from
affiliates . . . . . . . . . . . . . 4,487 2,652
Changes in:
Receivables - net. . . . . . . . . . . . (213) 6,744
Inventories. . . . . . . . . . . . . . . (2,467) (4,633)
Prepaid expenses . . . . . . . . . . . . (239) 46
Accounts payable . . . . . . . . . . . . (659) (889)
Accrued expenses . . . . . . . . . . . . (725) (642)
Amounts due to affiliates. . . . . . . . 227 288
Other long-term liabilities. . . . . . . (1,124) (1,339)
-------- --------
Net cash provided by (used in)
operating activities . . . . . . (6,030) (1,048)
-------- --------
Cash flows from investing activities:
Property additions . . . . . . . . . . . (203) (704)
Other assets . . . . . . . . . . . . . . (722) (759)
Other long-term liabilities. . . . . . . 561 (384)
-------- --------
Net cash provided by (used in)
investing activities . . . . . . (364) (1,847)
-------- --------
Cash flows from financing activities:
Deferred expenses. . . . . . . . . . . . (5) (6)
Net (repayments) proceeds of
long-term debt . . . . . . . . . . . . (69) (3,044)
Net amounts due to affiliates. . . . . . 2,536 --
-------- --------
Net cash provided by (used in)
financing activities . . . . . . 2,462 (3,050)
-------- --------
Net increase (decrease) in
cash and cash equivalents. . . . (3,932) (5,945)
Cash and cash equivalents,
beginning of year. . . . . . . . 10,931 26,526
-------- --------
Cash and cash equivalents,
end of period. . . . . . . . . . $ 6,999 20,581
======== ========
Supplemental disclosure of cash flow
information:
Cash paid for interest (net of
amount capitalized). . . . . . . . . . $ 3,341 5,252
======== ========
Schedule of non-cash investing and
financing activities:
Transfer of property actively held
for sale to real estate inventories. $ 2,178 126
======== ========
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE>
AMFAC/JMB HAWAII, L.L.C.
Notes to Consolidated Financial Statements
March 31, 2000 and 1999
(unaudited)
(Dollars in Thousands)
Readers of this quarterly report should refer to the Company's audited
financial statements for the fiscal year ended December 31, 1999, which are
included in the Company's 1999 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 31,000 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 45,000 acres of land used primarily in
conjunction with its agricultural operations. The Company's operations are
subject to significant government regulation.
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
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.
Due to the unpredictable nature of the timing and amount of land sales
and the seasonal nature of the agricultural operations, the Company has
experienced, and expects to continue to experience, significant variability
in quarterly revenues and costs of sales. The results of any interim
period are not necessarily indicative of the results that can be expected
for the entire year.
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.
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.
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 $5,100 and
$9,000 at March 31, 2000 and December 31, 1999, respectively) as cash
equivalents, which approximates market. These amounts include $605 and
$954 at March 31, 2000 and December 31, 1999, respectively, which were
restricted.
<PAGE>
AMFAC/JMB HAWAII, L.L.C.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
Project costs associated with the acquisition, development and
construction of real estate projects are capitalized and classified as
construction in progress. Such capitalized costs are not in excess of the
project's estimated fair value, as reviewed periodically or as considered
necessary. In addition, 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
$273 and $225 have been capitalized for the three months ended March 31,
2000 and 1999, respectively.
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.
Impairment losses are to be recorded on long-lived assets used in
operation when indicators of impairment are present and the undiscounted
cash flows estimated to be generated by those assets are less than the
assets' carrying amount. Land held for sale of approximately $25,022 is
included in inventory in the accompanying consolidated balance sheets at
March 31, 2000 and December 31, 1999 and is carried at the lower of cost or
fair value less cost to sell.
During the fourth quarter of 1999, the Company reduced the carrying
value of five land parcels which it expects to dispose of within 2000 and
recorded an $11,360 loss to reflect the estimated market value of those
parcels.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three month period ended March 31, 2000 are not necessarily
indicative of the results that may be expected for the year ended
December 31, 2000.
Certain amounts in the 1999 financial statements have been
reclassified to conform to the 2000 presentation.
<PAGE>
AMFAC/JMB HAWAII, L.L.C.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
(2) AMOUNTS DUE TO AFFILIATES - SENIOR DEBT FINANCING
In February 1997, the 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 replaced by two nine-year notes:
(i) a $99,595 note payable to Fred Harvey Transportation Company, an
affiliate of Northbrook, and (ii) a $15,000 note (with an initial balance
of $7,920) payable to Northbrook. These notes are payable interest only
until maturity, have a maturity date of February 17, 2007 and accrue
interest 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 agreements by the Company's affiliates, Fred
Harvey Transportation Company ("Fred Harvey") and AF Investors LLC ("AF
Investors"), to defer until December 31, 2001 all interest accruing from
January 1, 1998 through December 31, 2001 and relating to the approximately
$99,595 of Senior Indebtedness of the Company currently owing to Fred
Harvey and the approximately $47,693 of Senior Indebtedness of the Company
currently owing to AF Investors (see below); and (b) Northbrook agreeing to
cause approximately $55,148 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. 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, assuming no further advances of
Senior Indebtedness and excluding additional short-term amounts borrowed in
February 2000, approximately $65,202 of such deferred interest relating to
all Senior Indebtedness existing at March 31, 2000 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 $65,202
obligation. Failure to meet such obligation, if called, would cause all
Senior Indebtedness owing to Fred Harvey or other Northbrook affiliates to
be immediately due and payable. A default on Senior Indebtedness of such
magnitude could constitute an event of default under the Indenture.
On June 1, 1999, the Company borrowed approximately $21,318 from AF
Investors, to redeem a portion of the Class B COLAs pursuant to the Class B
COLA Redemption Offer (see Note 3). Additionally, AF Investors submitted
Class B COLAs pursuant to the Class B Redemption Offer and agreed to take
back senior debt in the amount of $26,375 from the Company in lieu of cash.
Pursuant to the terms of the Indenture, such amounts borrowed from AF
Investors constitute Senior Indebtedness that matures on December 31, 2008
and bears interest at a rate per annum of prime (9.00% at March 31, 2000)
plus 1% (note deferral of interest discussions above). Additional interest
may be payable on such Senior Indebtedness upon its maturity based upon
fair market value, if any, of the Company's equity at that time.
In October of 1999, AF Investors paid approximately $808 to assume the
lender's position in the loan to the Lihue Plantation Company, Limited
("Lihue") which was originally used to fund the acquisition of the Lihue's
power generation equipment (see note 4). The loan had an outstanding
balance of $808 on the date of the loan transfer and bears interest at the
rate equal to prime (9.00% at March 31, 2000) plus three and one half
percent. The loan is secured by the Lihue power generation equipment,
sugar inventories and receivables, certain other assets and real property
<PAGE>
AMFAC/JMB HAWAII, L.L.C.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
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. The outstanding balance as of March 31, 2000 of
$558 and related accrued interest of $22 is included in current
liabilities.
In February 2000, the Company borrowed approximately $2,788 from
Northbrook for purposes of satisfying the Mandatory Base Interest payment
related to the COLAs due February 28, 2000. Such Senior Indebtedness
matures on December 31, 2000 and bears interest at a rate per annum equal
to prime (9.00% at March 31, 2000) plus 1%.
The total amount due Northbrook and its subsidiaries for Senior Debt
financing as of March 31, 2000 was $179,988, which includes accrued and
deferred interest to affiliates on Senior Debt of approximately $29,353 (of
which $29,304 has been deferred until December 31, 2001, as described
above). Under the terms of the Indenture, the amounts borrowed from
Northbrook or its affiliates are "Senior Indebtedness" to the COLAs.
(3) CERTIFICATE OF LAND APPRECIATION NOTES
The COLAs are unsecured debt obligations of the Company. Interest on
the COLAs is payable semi-annually on February 28 and August 31 of each
year. The COLAs mature on December 31, 2008. Reference is made to the
Company's Annual Report on Form 10-K for discussion of the issuance and
redemption history of the COLAs. Though the Company continues to be
current with respect to its obligation to pay Mandatory Base Interest on
the COLAS, the Company has not generated a sufficient level of Net Cash
Flow to incur or pay Contingent Base Interest on the COLAs commencing in
1990. Approximately $85,584 of 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, 2000 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 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, 2000 and the year ended December 31, 1999:
Three Months The Year
Ended Ended
March 31, December 31,
2000 1999
------------- ------------
Mandatory Base Interest paid . . . . . . . $ 2,788 7,202
Contingent Base Interest due and paid. . . -- --
Cumulative deferred Contingent Base
Interest . . . . . . . . . . . . . . . . $85,584 83,493
Net Cash Flow was $0 for 1999 and is expected to be $0 for 2000.
As a result of the Class B COLA repurchases on June 1, 1999, the
Company retired approximately $81,279 face value of Class B COLA debt and
correspondingly recognized a financial statement gain of approximately
$14,630 of which $8,841 is attributable to the retirement of COLA debt held
by persons unaffiliated with the Company. Such financial statement gain
was reduced by applicable income taxes of approximately $7,203, the write-
off of an applicable portion of deferred financing costs and other expenses
<PAGE>
AMFAC/JMB HAWAII, L.L.C.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
of approximately $3,786 and increased by the reversal of the previously
accrued deferred Contingent Base Interest of approximately $7,624 resulting
in a financial statement extraordinary gain of approximately $11,265. The
tax payable on the gain (approximately $2,009) related to the Class B COLAs
which were submitted for repurchase by persons unaffiliated with the
Company pursuant to the Class B COLA Redemption Offer is not indemnified
pursuant to the tax agreement with Northbrook.
As of March 31, 2000, the Company had approximately 155,271 Class A
COLAs and approximately 123,554 Class B COLAs outstanding, with a principal
balance of approximately $77,635 and $61,778, respectively.
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 September 30, 1993 and nine
percent per annum thereafter.
In April 1996, the Company reached an agreement with the ERS to amend
the loan, extending the maturity date for five years. In exchange for the
loan extension, the ERS received the right to participate in the "Net
Disposition Proceeds" (as defined) related to the sale or 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 years ended December 31, 1999 and
1998 was $5,610 and $5,365, respectively. The accrued Minimum Interest was
$1,414 as of December 31, 1999 and 1998. The scheduled minimum payments
are normally paid quarterly on the principal balance of the $66,000 loan.
The Company paid the Minimum Interest to the ERS on October 29, 1999 for
the payments due on January 1, April 1, July 1 and October 1, 1999, as
discussed below. 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 minimum interest payments have been in excess of
the cash flow generated by the Kaanapali Golf Courses. The total accrued
interest payable from excess cash flow was approximately $5,590 as of
December 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
<PAGE>
AMFAC/JMB HAWAII, L.L.C.
Notes to Consolidated Financial Statements - Continued
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 loan amendment. Due to
insufficient cash flow generated by the golf courses and intransigence by
the ERS related to certain easements needed by the Company's development
operations, the Company chose not to pay to the ERS the quarterly Minimum
Interest payments beginning January 1, 1999, through October 29, 1999. As
expected, the Company received a default notice from the ERS. On October
29, 1999, after receipt of consent to certain easements, the Company paid
the ERS the minimum interest payments due beginning with the January 1,
1999 through October 1, 1999 payments aggregating approximately $5,743
(including other miscellaneous costs). The Company has not paid the ERS
the minimum interest payments due on January 1 and April 1, 2000. As
expected, the Company received a default notice from the ERS and is
currently pursuing renegotiation of the loan terms as well as attempting to
obtain the other easements which the Company believes the ERS is obligated
to provide.
(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, 2000 and March 31,
1999 are set forth below by each industry segment:
March 31, December 31,
2000 1999
---------- ------------
Total Assets:
Agriculture. . . . . . . . . . . . . . . $174,578 169,433
Property . . . . . . . . . . . . . . . . 93,596 96,937
Golf . . . . . . . . . . . . . . . . . . 76,839 76,893
Other. . . . . . . . . . . . . . . . . . 13,049 16,431
-------- --------
$358,062 359,694
======== ========
Three Months Ended
March 31,
------------------------
2000 1999
-------- --------
Capital Expenditures:
Agriculture. . . . . . . . . . . . . . . $ 167 538
Property . . . . . . . . . . . . . . . . 4 51
Golf . . . . . . . . . . . . . . . . . . 32 115
-------- --------
$ 203 704
======== ========
Operating income (loss):
Agriculture. . . . . . . . . . . . . . . $ (1,071) (1,080)
Property . . . . . . . . . . . . . . . . (595) (96)
Golf . . . . . . . . . . . . . . . . . . 1,743 1,939
Other. . . . . . . . . . . . . . . . . . (410) (521)
-------- --------
$ (333) 242
======== ========
<PAGE>
AMFAC/JMB HAWAII, L.L.C.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
Three Months Ended
March 31,
------------------------
2000 1999
-------- --------
Depreciation and amortization:
Agriculture. . . . . . . . . . . . . . . $ 894 946
Property . . . . . . . . . . . . . . . . 102 226
Golf . . . . . . . . . . . . . . . . . . 340 359
Other. . . . . . . . . . . . . . . . . . 2 46
-------- --------
$ 1,338 1,577
======== ========
(6) TRANSACTIONS WITH AFFILIATES
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. Accordingly, the Company has not accrued for any
Qualified Allowance in the accompanying consolidated financial statements.
For the years 1999, 2000 and 2001, JMB has agreed that the Qualified
Allowance shall in no event exceed $5,000. The cumulative deficiency of
Qualified Allowance is $79,102 as of December 31, 1999. Net Cash Flow was
$0 for 1999 and is expected to be $0 for 2000.
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, 2000 and 1999 was approximately $132 and $167,
respectively, of which $431 was unpaid as of March 31, 2000. In addition,
as of March 31, 2000, the current portion of amounts due to affiliates
includes $9,106 and $2,009 of income tax payable related to the Class A
COLA Redemption Offer and Class B COLA Redemption Offer, respectively (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, 2000.
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, 2000 and 1999 was
approximately $250 and $248, respectively, all of which was paid as of
March 31, 2000.
<PAGE>
AMFAC/JMB HAWAII, L.L.C.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
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, 2000 and 1999 of approximately $174 and $184,
respectively, of which $756 was unpaid as of March 31, 2000. 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.
Reference is made to Note 2 - Amounts Due to Affiliates - Senior Debt
Financing.
(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 continues to face a severe liquidity shortage. The
Company has made expense cuts and deferrals where possible. Additionally,
the Company has not paid the quarterly interest payments (due in January
and April, 2000) to the State of Hawaii Employee Retirement System related
to their $66 million loan secured by the Royal Kaanapali Golf Courses.
These measures, along with the closing of the sale of a land parcel in
Kaanapali Golf Estates in January 2000, have kept the Company operating
through the date of this report. However, management does not expect any
relief from the extremely tight cash situation, at least until a new
investor is admitted to the Kaanapali Ocean Resort ("KOR") limited
partnership.
Unfortunately, there are several large, contingent cash expenditures
that may make any relief temporary. These include:
(1) the ultimate outcome of the litigation and environmental
matters described in Part II. "Legal Proceedings";
(2) a loss of sugar revenues resulting from an anticipated sugar
price that is 15% lower than the average price received in 1999;
(3) the uninsured portion of the costs associated with the
breakdown in February 2000 of the primary power generation equipment at the
Lihue Plantation Company power plant; and
(4) the possibility that Kauai Electric Company, if it is unable to
obtain certain land use permits, could attempt to exercise its option to
rescind its purchase of a parcel of land from the Lihue Plantation Company
(a subsidiary of the Company) and require the return of the approximately
$5 million purchase price paid to Lihue Plantation in 1992.
<PAGE>
AMFAC/JMB HAWAII, L.L.C.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
It is difficult to predict the ultimate outcome of these various
contingencies, any of which could have a material adverse effect on the
financial condition of the Company.
In the absence of additional land and business sales (none of which
are currently expected to close until late in the second quarter of 2000)
or financing from third parties (which has generally not been obtainable),
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. However, there is no assurance that Northbrook or
its affiliates will have sufficient funds through the end of 2000, 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 2000, any such borrowings would
be required (i) to be Senior Indebtedness, (ii) to accrue interest at the
rate of prime plus 1%, and (iii) to have principal and interest fully
repayable prior to the end of year 2000. The Company has implemented other
alternatives to address the projected cash deficits for 2000. These
alternatives include expense cuts and deferrals at several of the Company's
businesses. Although these expense cuts and deferrals have improved the
Company's short-term cash situation, the Company must either complete
additional land or business sales, or receive new loans from Northbrook or
its affiliates, to provide sufficient cash to operate through the end of
2000.
The Company's Property segment had contractual commitments (related to
project costs) of approximately $531 as of March 31, 2000. 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, 2000, certain portions of the Company's land not
currently under development are mortgaged as security for approximately
$1,414 of performance bonds related to property development.
(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.
Northbrook's tax returns have been examined by the Internal Revenue
Service (the "IRS") for the period 1992-1994, and deficiencies were
proposed by the IRS. In April 2000, Northbrook and the IRS reached an
agreement related to the period 1992 through 1994, the result of which
requires no expenditures by the Company. The statutes of limitations with
respect to Northbrook's tax returns for the years 1995 through 1998 remain
open. The Company is a subsidiary of Northbrook and accordingly is subject
to tax liability exposure due to the severally liable nature of
responsibility for the payment of taxes for consolidated tax returns.
<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 realizing a cash return on the investment.
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 plantations' 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 and debt service.
As previously reported, the Company continues to face a severe
liquidity shortage. The Company has made expense cuts and deferrals where
possible. Additionally, the Company has not paid the quarterly interest
payments (due in January and April 2000) to the State of Hawaii Employee
Retirement System related to their $66 million loan secured by the Royal
Kaanapali Golf Courses. These measures, along with the closing of the sale
of a land parcel in Kaanapali Golf Estates in January 2000, have kept the
Company operating through the date of this report. However, management
does not expect any relief from the extremely tight cash situation, at
least until a new investor is admitted to the KOR limited partnership (as
described below).
Unfortunately, there are several large, contingent cash expenditures
that may make any relief temporary. These include:
(1) the ultimate outcome of the litigation and environmental
matters described in Part II. "Legal Proceedings";
(2) a loss of sugar revenues resulting from an anticipated sugar
price that is 15% lower than the average price received in 1999;
(3) the uninsured portion of the costs associated with the
breakdown in February 2000 of the primary power generation equipment at the
Lihue Plantation Company power plant; and
(4) the possibility that Kauai Electric Company, if it is unable to
obtain certain land use permits, could attempt to exercise its option to
rescind its purchase of a parcel of land from the Lihue Plantation Company
(a subsidiary of the Company) and require the return of the approximately
$5 million purchase price paid to Lihue Plantation in 1992.
It is difficult to predict the ultimate outcome of these various
contingencies, any of which could have a material adverse effect on the
financial condition of the Company.
In the absence of additional land and business sales (none of which
are currently expected to close until late in the second quarter of 2000)
or financing from third parties (which has generally not been obtainable),
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
<PAGE>
the Company in the past. In February 2000, the Company borrowed
approximately $2.8 million from Northbrook for the Mandatory Base Interest
payment related to the COLAs due February 28, 2000. The borrowings have
met the requirements discussed below. However, there is no assurance that
Northbrook or its affiliates will have sufficient funds through the end of
2000, 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 2000, any such
borrowings would be required (i) to be Senior Indebtedness, (ii) to accrue
interest at the rate of prime plus 1%, and (iii) to have principal and
interest fully repayable prior to the end of year 2000. The Company has
implemented other alternatives to address the projected cash deficits for
2000. These alternatives include expense cuts and deferrals at several of
the Company's businesses. Although these expense cuts and deferrals have
improved the Company's short-term cash situation, the Company must either
complete additional land or business sales, or receive new loans from
Northbrook or its affiliates, to provide sufficient cash to operate through
the end of 2000.
In recent years, the Company has funded its significant cash
requirements primarily through senior debt borrowings from Northbrook and
one of its subsidiaries and 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 and overhead
expenses. At March 31, 2000, the Company had unrestricted cash and cash
equivalents of approximately $6.4 million. The Company intends to use its
cash reserves, land sales proceeds and proceeds from new financings or
joint venture arrangements to meet its short-term liquidity requirements.
However, there can be no assurance that new financings can be obtained or
property sales 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 also marketing
certain unentitled agricultural and conservation parcels to generate cash.
Although only small portions of the Company's lands are formally
listed for sale, management is exploring the possible sale of other parcels
with prospects that the Company has identified through its own extensive
network of contacts in the real estate business. Additionally, it is well
known throughout the real estate industry in Hawaii that the Company has
been aggressively marketing and selling land and, thus, management receives
a significant number of direct inquiries from brokers and prospective
purchasers.
Approximately 14 acres of land on Kauai and 1,600 acres on Maui are
currently under contract for sale. However, the 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 and
conditions or any other terms or that the Company will be successful in
selling this land or other land at an acceptable price.
During the first three months of 2000, the Company generated
approximately $3.5 million in land sales from the sale of Parcel 16 at the
Kaanapali Golf Estates on Maui.
During 1999, the Company generated approximately $14.9 million from
the sale of approximately 2,200 acres on Maui and Kauai, including the sale
of Kapaa 1400 on Kauai for $4.4 million (November 1999) and the sale of a
17 acre parcel in Kaanapali Golf Estates on Maui for $4.5 million (October
1999).
<PAGE>
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 $3.7
million in project costs during 1999 and anticipates expending (subject to
cash availability) approximately $8.7 million in project costs during 2000.
As of March 31, 2000, contractual commitments related to project costs
totaled approximately $.5 million.
In 1998, the Company 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 Kaanapali 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. In addition to the scheduled principal and interest payments,
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 and more recently Pioneer
Mill 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. The two-
year contract, which covers approximately 89% of the Kauai plantation
workforce, expired on January 31, 2000 and has been extended on a day-to-
day basis. The extension agreement allows either party to cancel upon
three days notice. Renewal of the contract is currently being negotiated;
however, there can be no assurance that the prior concessions and any
additional changes that may be necessary will be obtained. The absence of
these concessions and/or changes would cause the Company to consider the
possible shutdown of its sugar operations on Kauai. Although the prior
concessions provided a meaningful, positive impact on operations, they did
not provide the type of structural changes necessary to provide for long-
term profitability and a secure future for the Company's sugar operations.
The Lihue Plantation Company ("Lihue Plantation") on Kauai recently
suffered a breakdown of its power-generating turbine. The Company believes
that the turbine repair costs and lost profits are covered by insurance
(although there can be no assurance that all of the repair costs and lost
profits will be so covered). In addition, Kauai Electric has indicated its
intention to suspend power capacity payments to Lihue Plantation until the
turbine repairs are completed and the power plant is again generating
power. It is too uncertain at this time to predict whether the ultimate
outcome of such matters will have a material adverse effect on the Company.
The Company completed its final harvest of sugar cane at Pioneer Mill
on Maui in September 1999 in conjunction with its shut down. Pioneer Mill
had consistently incurred losses in prior years and it was expected that
those losses would continue in the future. The Company intends 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.
<PAGE>
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.
The price of raw sugar has fallen from approximately 22 cents/lb. to
18 cents/lb. for current deliveries. Futures prices for 2000 range from 18
cents/lb. to 19 cents/lb. While the Company had hedged (effectively pre-
sold) a portion of the 1999 deliveries and did not experience any material
impact in 1999 resulting from the 1999 raw sugar price reduction, the
Company anticipates receiving (at the current price levels) approximately
$3.9 million less in net sugar proceeds from its 2000 harvest than
originally forecasted. As the futures prices for 2000 have generally not
exceeded the Company's break-even price, the Company is only 5% hedged for
year 2000 deliveries. If the USDA continues to manage the sugar program at
the current price levels, losses will be approximately $4 million greater
than projected and it is doubtful that the Company will be able to sustain
its sugar business on Kauai for more than another year or two. As
described, 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 (currently approximately 21.5 cents to 23 center
per pound) for raw sugar, it is possible that such legislation could be
amended or repealed resulting in a reduction in the price of raw sugar to
world levels (currently approximately 5 cents to 6 cents/lb). Such a
reduction could also cause the Company to consider the shutdown of its
remaining sugar plantations on Kauai.
Decisions regarding the future of the Company's sugar operations 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.
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 previously owned
and operated 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). After the closure of Oahu Sugar
in 1995, the Company negotiated an agreement in June 1998 with the State of
Hawaii pursuant to which the State purchased the Waiahole Ditch from WIC
for $8.5 million (which includes 450 acres of conservation land). The sale
was consummated in July 1999 (with a payment by WIC of approximately $2.5
million to a third party to resolve its water claim related to the Waiahole
Ditch).
In February 1999, the Company signed a stock purchase agreement for
the sale of Kaanapali Water Corporation, the Company's water utility
business on West Maui for $5.5 million. This water utility serves the
Kaanapali Beach Resorts. The sale received the approval of the State of
Hawaii Public Utilities Commission and successfully closed on May 25, 1999.
<PAGE>
During the first three months of 2000, cash decreased by $3.9 million
from December 31, 1999. Net cash was used in operating activities of $6.0
million, investing activities of $.4 million and provided by financing
activities of $2.5 million.
During the first three months of 2000, net cash flow used in operating
activities was $6.0 million, as compared to net cash used in operating
activities of $1.0 million during the first three months of 1999. The $5.0
million increase in cash flow used in operating activities was due
primarily to (i) a $.2 million increase in receivables during the first
three months of 2000 compared to a $6.7 million decease in receivables in
1999 related to the collection of $7.6 million in receivables related to
prior year land sales and (ii) a $2.5 million increase in inventories in
2000 compared to $4.6 million in 1999 as a result of increases in
agricultural inventories of $4.6 million and $5.3 million for the three
months ended March 31, 2000 and 1999, respectively, offset in part by
decreases in real estate related inventories of $2.2 million and $.7
million for the three months ended March 31, 2000 and 1999, respectively,
through land sales.
During the first three months of 2000, net cash flow used in investing
activities was $.4 million as compared to $1.8 million used during the
first three months of 1999. The $1.4 million increase in net cash used in
investing activities was principally due to a decrease in net property
additions of $.5 million and an increase in other liabilities of $.9
million.
During the first three months of 2000, net cash flow provided by
financing activities was $2.5 million compared to $3.1 million used in the
first three months of 1999. The $5.6 million increase in cash provided
from financing activities is due primarily to $2.5 million in net cash
advances from affiliates in 2000 and a decrease in net long-term debt
payments of $.1 million in 2000 compared to $3.1 million in 1999 primarily
for the $2.2 million principal payment to TPI discussed above.
Reference is made to Note 2 - Amounts Due to Affiliates - Senior Debt
Financing. The total amount due Northbrook and its subsidiaries for Senior
Debt financing as of March 31, 2000 was $179,988, which includes accrued
and deferred interest to affiliates on senior debt of approximately $29,353
(of which $29,304 has been deferred until December 31, 2001, as described
above). Under the terms of the Indenture, the amounts borrowed from
Northbrook or its affiliates are "Senior Indebtedness" to the COLAs.
RESULTS OF OPERATIONS
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.
<PAGE>
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 2000 and 1999, agriculture revenues
were $6.2 and $.9 million, respectively.
Agricultural revenues and cost of sales increased for the three months
ended March 31, 2000 as compared to the three months ended March 31, 1999
due to the timing of sugar production deliveries. For the three months
ended March 31, 2000, the Company sold approximately 14,300 tons of sugar
at an average price of approximately $346 per ton. The Company harvested
approximately 1,100 acres for the three months ended March 31, 2000 and
1999. Agricultural revenues for the three months ended March 31, 1999 are
primarily from diversified agriculture and miscellaneous other income.
There was no revenue recognized from the sale of sugar for the three months
ended March 31, 1999.
The operating loss for the three months ended March 31, 2000 and
March 31, 1999 was approximately $1.1 million.
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 $4.7 million, during the first three months of 2000
as compared to $4.4 million for the three months ended March 31, 1999.
During the first three months of 2000, approximately 54,000 rounds of golf
were played as compared to 52,000 during the first three months of 1999.
Golf cost of sales were $2.4 million during the first three months of
2000 as compared to $2.0 million for the first three months of 1999. Golf
operating expenses of $.5 million during the first three months of 2000 and
1999, consisted primarily of depreciation expense.
Operating income of $1.7 million decreased slightly during the first
three months of 2000 as compared to $1.9 million during the first three
months of 1999.
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 increased to $5.1 million during the first three months of
2000 from $2.7 million during the first three months of 1999. Land sales
included revenues for the three months ended March 31, 2000 of
approximately $3.5 million from the sale of approximately 17 acres on Maui.
Revenues for the three months ended March 31, 1999 included approximately
$.7 million from the sale of 10 acres on Kauai.
During the first three months of 2000, property cost of sales were
$4.0 million as compared to $1.0 million in the first three months of 1999.
The $3.0 million increase in costs was due primarily to an increase in land
sales (as discussed above).
Property sales and cost of sales increased for the three months ended
March 31, 2000 as compared to the three months ended March 31, 1999 due to
land sales. Operating loss increased to $.6 million during the three
months ended March 31, 2000 compared to $.1 million for the three months
ended March 31, 1999.
<PAGE>
(a) OAHU.
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. The remaining land is currently under contract for sale.
There can be no assurance that a sale will be consummated. 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
marketing plans to return the golf course to its previous levels of
profitability. However, these programs have had limited success to date
due to additional competition from new and existing golf courses and
continued softness in the Japanese tour group market. At this point, it is
difficult to predict if and when previous levels of sales and profitability
can be achieved again.
(b) MAUI.
The Company has determined that the focus of its future 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 and where
successful resort development has occurred during the past thirty years.
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.
(Reference is made to Note 4 concerning the default notice issued 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 the
Company has sold approximately 210 homesites (through individual lot and
bulk parcel sales) as of March 31, 2000.
In October 1999, the Company sold in bulk the 17-acre Parcel 21 for
$4.5 million. In January 2000, the Company sold the 17-acre Parcel 16 for
$3.5 million. The 19-acre Parcel is currently under contract for sale.
There can be no assurance that a sale will be consummated.
NORTH BEACH. In October 1998, the Company received the final Maui
County approval (an SMA permit) 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 February 1997, the Company formed a limited partnership with an
experienced time share management team to proceed with the planning and
development of KOR. The limited partnership was unable to obtain financing
for KOR on a basis acceptable to the Company. As a result, in February
2000, a subsidiary of the Company purchased all of the interests of the
limited partnership and entered into negotiations with several larger
timeshare companies. In May 2000, an investment agreement was signed to
admit one of the timeshare companies to the limited partnership subject to
certain requirements. If such agreement is consummated, it would result in
a cash infusion to the Company. However, the potential investor can
terminate such agreement at their discretion. There can be no assurance
that such transaction will be consummated on any terms.
<PAGE>
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. As such, development of this parcel is
expected to be long term.
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, 2000) 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 $1.1 million for the
engineering and design of the widening of the existing highway through the
Kaanapali Beach Resort. The Company believes this $1.1 million will be
credited against the $3.5 million commitment discussed above. The Company
has also committed another $6.7 million for the construction of the bypass
highway, 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 2007 or later.
The Company has reached an agreement with Maui County pursuant to
which the Company has agreed to exchange the Pioneer Mill office building
and five acres of agricultural land for affordable, employee housing
credits. The Company has received sufficient credits for its planned KOR
development and the development of single family homes on parcels in the
Kaanapali Golf Estates.
(c) KAUAI.
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 has 478 acres of land currently listed for sale on Kauai.
The Company may consider selling additional portions of these lands based
upon market conditions and the cash needs of the Company.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On September 20, 1996, Oahu Sugar Company, Limited ("Oahu Sugar")
filed a lawsuit, Oahu Sugar v. Walter Arakaki and Steve Swift, Case No. 96-
3880-09, in the Circuit Court of the First Circuit, State of Hawaii. In
the lawsuit, Oahu Sugar alleged that it entered into an agreement to sell
to defendants certain sugar cane processing equipment at Oahu Sugar's sugar
cane mill in Waipahu. Oahu Sugar alleged that defendants failed to timely
dismantle and remove the equipment, as required by the agreement, and that
defendants were obligated to pay Oahu Sugar rent for the area occupied by
the equipment beyond the time provided for by the parties. Oahu Sugar
further alleged that it provided notice to defendants that Oahu Sugar was
entitled to treat the equipment as abandoned property and to sell the
equipment, because the equipment had not been removed from the property in
a timely fashion, as required by the parties' agreement. In its complaint,
Oahu Sugar sought, among other things, declaratory relief that it was
entitled to treat the equipment as abandoned, damages for breach of
contract, and rent under an unjust enrichment theory.
Defendants filed an answer, as amended, denying the substantive
allegations of Oahu Sugar's complaint and asserting various affirmative
defenses. In addition, the defendants filed a seven-count counterclaim
against Oahu Sugar. In the counterclaim, defendants alleged, among other
things, that Oahu Sugar failed to make the equipment available for removal
on a timely basis, and that Oahu Sugar otherwise improperly interfered with
defendants' plans for the removal and subsequent sale of the equipment. In
the counterclaim, defendants sought, among other things, general, special
and punitive damages, attorneys' fees, costs, and such other relief as the
Court may have deemed appropriate.
Oahu Sugar's declaratory relief claim was settled in advance of trial.
Oahu Sugar obtained dismissals and directed verdicts on six of defendants'
claims. The remaining portions of the complaint and counterclaim proceeded
to a jury trial and verdict. On December 2, 1999, the jury denied Oahu
Sugar relief on its remaining claims and awarded the defendants
approximately $2.6 million in damages on their counterclaim. On March 22,
2000, the trial court entered judgment against Oahu Sugar for the $2.6
million in damages awarded by the jury. In addition, the trial court
awarded counterclaimants $751,000 in attorneys' fees, $28,000 in costs and
$866,000 in prejudgment interest. Oahu Sugar's post trial motions for
judgment as a matter of law and for a new trial have been denied. Oahu
Sugar has filed a notice of appeal and intends to pursue the appeal
(subject to satisfying lending requirements). Oahu Sugar continues to
believe that it is entitled to affirmative relief on its complaint and that
it has meritorious defenses to the counterclaim that it intends to appeal.
The Company, however, can provide no assurances that it will be successful
in obtaining affirmative relief or overturning the verdict against Oahu
Sugar. This verdict, if upheld, could have a material adverse effect on
the Oahu Sugar's financial condition.
On October 7, 1999, Oahu Sugar Company was named in a lawsuit
entitled, Akee, et al. v. Dow Chemical Company, et al., Civil No. 99-3757-
10, and filed in Hawaii State Court (Circuit Court of the First Circuit of
Hawaii). This multiple plaintiff toxic tort case named Oahu Sugar and a
number of additional defendants including several large chemical, petroleum
and agricultural companies. In March 2000, Oahu Sugar Company was
dismissed without prejudice.
<PAGE>
On September 30, 1999, Oahu Sugar was one of several defendants named
in a lawsuit entitled, City and County of Honolulu v. Leppert, et al.
Civil No. CV 99 00670 ACK-FIY, and filed in the federal court, District of
Hawaii. Plaintiff filed this environmental action in an attempt to assert
several causes of action including (1) clean-up and other response costs
under the Comprehensive Environmental Response, Compensation, and Liability
Act ("CERCLA"); (2) owner/operator liability, contribution and indemnity
under Hawaii statutory law; (3) strict liability for ultrahazardous
activity; and (4) negligence. Plaintiff alleges that defendant Oahu Sugar
previously operated a sugar mill on property currently owned by plaintiff,
and used pesticides, herbicides, fumigants, petroleum products and by-
products and other hazardous chemicals which were allegedly released into
the soil and/or groundwater at the subject property. Plaintiff seeks
recovery of response costs it has incurred and to be incurred, a
declaration of the rights and liabilities for past and any future claims,
damages for lost property value, technical consulting and legal costs in
investigating the property, increased construction costs, and attorneys'
fees and costs. Oahu Sugar intends to defend itself vigorously.
On September 30, 1999, Oahu Sugar was named in a related lawsuit
entitled, City and County of Honolulu v. Leppert, et al., Civil No. 99-
3678-09, and filed in Hawaii State Court, Circuit Court for the First
Circuit of Hawaii. Oahu Sugar has been served in this matter. This case is
the same case as the CERCLA action above, except that it asserts causes of
action under the Hawaii Environmental Response Law, the state law
equivalent of CERCLA. The alleged specific causes of action include (1)
owner/operator liability, contribution and indemnity under Hawaii Revised
Statue Section 128D-18; (2) strict liability; (3) negligence, and, (4)
declaratory relief on state claims. Oahu Sugar has filed a motion to stay
this proceeding pending the outcome of the federal litigation. In any
event, Oahu Sugar intends to vigorously defend itself.
One of Oahu Sugar's insurance carriers is partially funding the
defense of these environmental-related cases, subject to a reservation of
rights. Oahu Sugar can give no assurances as to the portion of defense
costs and indemnity costs, if any, that will ultimately be borne by the
insurance carrier.
These environmental-related lawsuits are in the beginning stages of
litigation. The Company believes that Oahu Sugar has meritorious defenses
to these lawsuits and Oahu Sugar will defend itself vigorously. However,
there can be no assurances that these cases (or any of them), when once
adjudicated, will not have a material adverse effect on the financial
condition of Oahu Sugar.
The Hawaii Department of Health ("Health Department") has conducted
inspections of the plantation properties of Kekaha Sugar Co., Ltd., Lihue
Plantation Co., Ltd., and Pioneer Mill Co. As a result of the inspections,
the Health Department has noted various areas of alleged non-compliance
with environmental law. In the case of Kekaha Sugar Co., Ltd., the Health
Department is preparing to bring a civil action against Kekaha to ensure
compliance with laws and to assess penalties, but the Health Department has
not indicated the amount of penalties it will seek. As a result of the
inspection of its properties, Lihue Plantation Co., Ltd. has received a
letter requiring certain corrective actions, but the Department of Health
has reserved the right to take further enforcement action. Pioneer Mill
Co. has not received the inspection report of the Hawaii Department of
Health and is therefore unable to determine what actions or penalties the
Hawaii Department of Health may impose.
While there can be no assurance that the above matters will be
concluded without a material adverse effect on the financial condition of
the Company, the Company believes that it has made adequate provision in
the accompanying financial statements for its reasonably estimated loss
contingencies.
<PAGE>
Other than as described above, 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 such routine 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 this 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)
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)
<PAGE>
Exhibit
No. Exhibit
- ------- --------
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)
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)
<PAGE>
Exhibit
No. Exhibit
- ------- --------
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)
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)
<PAGE>
Exhibit
No. Exhibit
- ------- --------
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.
(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.
<PAGE>
(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/ GAILEN J. HULL
-------------------
By: Gailen J. Hull
Vice President
Date: May 12, 2000
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.
/s/ GAILEN J. HULL
-------------------
Gailen J. Hull
Principal Accounting Officer
Date: May 12, 2000
<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 LAND COMPANY, LIMITED
/s/ GAILEN J. HULL
-------------------
By: Gailen J. Hull
Vice President
Date: May 12, 2000
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.
/s/ GAILEN J. HULL
-------------------
Gailen J. Hull
Principal Accounting Officer
Date: May 12, 2000
<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 PROPERTY DEVELOPMENT CORP.
/s/ GAILEN J. HULL
-------------------
By: Gailen J. Hull
Vice President
Date: May 12, 2000
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.
/s/ GAILEN J. HULL
-------------------
Gailen J. Hull
Principal Accounting Officer
Date: May 12, 2000
<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 PROPERTY INVESTMENT CORP.
/s/ GAILEN J. HULL
-------------------
By: Gailen J. Hull
Vice President
Date: May 12, 2000
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.
/s/ GAILEN J. HULL
-------------------
Gailen J. Hull
Principal Accounting Officer
Date: May 12, 2000
<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.
H. HACKFIELD & CO., LTD.
/s/ GAILEN J. HULL
-------------------
By: Gailen J. Hull
Vice President
Date: May 12, 2000
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.
/s/ GAILEN J. HULL
-------------------
Gailen J. Hull
Principal Accounting Officer
Date: May 12, 2000
<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.
KAANAPALI ESTATES COFFEE, INC.
/s/ GAILEN J. HULL
-------------------
By: Gailen J. Hull
Vice President
Date: May 12, 2000
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.
/s/ GAILEN J. HULL
-------------------
Gailen J. Hull
Principal Accounting Officer
Date: May 12, 2000
<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.
KAANAPALI WATER CORPORATION
/s/ GAILEN J. HULL
-------------------
By: Gailen J. Hull
Vice President
Date: May 12, 2000
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.
/s/ GAILEN J. HULL
-------------------
Gailen J. Hull
Principal Accounting Officer
Date: May 12, 2000
<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.
KEKAHA SUGAR COMPANY, LIMITED
/s/ GAILEN J. HULL
-------------------
By: Gailen J. Hull
Vice President
Date: May 12, 2000
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.
/s/ GAILEN J. HULL
-------------------
Gailen J. Hull
Principal Accounting Officer
Date: May 12, 2000
<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.
THE LIHUE PLANTATION COMPANY, LIMITED
/s/ GAILEN J. HULL
-------------------
By: Gailen J. Hull
Vice President
Date: May 12, 2000
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.
/s/ GAILEN J. HULL
-------------------
Gailen J. Hull
Principal Accounting Officer
Date: May 12, 2000
<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.
OAHU SUGAR COMPANY, LIMITED
/s/ GAILEN J. HULL
-------------------
By: Gailen J. Hull
Vice President
Date: May 12, 2000
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.
/s/ GAILEN J. HULL
-------------------
Gailen J. Hull
Principal Accounting Officer
Date: May 12, 2000
<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.
PIONEER MILL COMPANY, LIMITED
/s/ GAILEN J. HULL
-------------------
By: Gailen J. Hull
Vice President
Date: May 12, 2000
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.
/s/ GAILEN J. HULL
-------------------
Gailen J. Hull
Principal Accounting Officer
Date: May 12, 2000
<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.
PUNA SUGAR COMPANY, LIMITED
/s/ GAILEN J. HULL
-------------------
By: Gailen J. Hull
Vice President
Date: May 12, 2000
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.
/s/ GAILEN J. HULL
-------------------
Gailen J. Hull
Principal Accounting Officer
Date: May 12, 2000
<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.
WAIAHOLE IRRIGATION COMPANY, LIMITED
/s/ GAILEN J. HULL
-------------------
By: Gailen J. Hull
Vice President
Date: May 12, 2000
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.
/s/ GAILEN J. HULL
-------------------
Gailen J. Hull
Principal Accounting Officer
Date: May 12, 2000
<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.
WAIKELE GOLF CLUB, INC.
/s/ GAILEN J. HULL
-------------------
By: Gailen J. Hull
Vice President
Date: May 12, 2000
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.
/s/ GAILEN J. HULL
-------------------
Gailen J. Hull
Principal Accounting Officer
Date: May 12, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2000 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 6,999
<SECURITIES> 0
<RECEIVABLES> 4,980
<ALLOWANCES> 0
<INVENTORY> 36,386
<CURRENT-ASSETS> 48,365
<PP&E> 315,413
<DEPRECIATION> 46,234
<TOTAL-ASSETS> 358,062
<CURRENT-LIABILITIES> 113,878
<BONDS> 343,472
<COMMON> 0
0
0
<OTHER-SE> (215,661)
<TOTAL-LIABILITY-AND-EQUITY> 358,062
<SALES> 15,934
<TOTAL-REVENUES> 16,034
<CGS> 12,633
<TOTAL-COSTS> 1,549
<OTHER-EXPENSES> 2,296
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,006
<INCOME-PRETAX> (8,450)
<INCOME-TAX> 3,250
<INCOME-CONTINUING> (5,200)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,200)
<EPS-BASIC> (5.2)
<EPS-DILUTED> (5.2)
</TABLE>
