AMFAC JMB HAWAII INC, 10-Q, 2000-11-14

AMFAC JMB HAWAII INC
10-Q, 2000-11-14
REAL ESTATE OPERATORS (NO DEVELOPERS) & LESSORS

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

For the quarter ended
September 30, 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 November 10, 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 (the "COLAs").

<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 . . . . 21

PART II. OTHER INFORMATION

Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . 31

Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . 35

PART III. DEFAULTS UPON SENIOR SECURITIES . . . . . . . . . . . 39

<PAGE>

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

AMFAC/JMB HAWAII, L.L.C.

Consolidated Balance Sheets

September 30, 2000 and December 31, 1999
(Dollars in Thousands)

SEPTEMBER 30, DECEMBER 31,
2000 1999
(Unaudited) (Note 1)
------------- -----------
A S S E T S
-----------

Current assets:
Cash and cash equivalents. . . . . . $ 4,658 10,931
Receivables-net. . . . . . . . . . . 3,852 2,905
Inventories. . . . . . . . . . . . . 22,966 31,741
Prepaid expenses . . . . . . . . . . 859 1,623
-------- --------
Total current assets . . . . . 32,335 47,200
-------- --------

Investments. . . . . . . . . . . . . . 40 40
-------- --------
Property, plant and equipment:
Land and land improvements . . . . . 250,847 253,352
Machinery and equipment. . . . . . . 45,476 62,210
Construction in progress . . . . . . 197 488
-------- --------
296,520 316,050
Less accumulated depreciation
and amortization . . . . . . . . . 48,758 44,896
-------- --------
247,762 271,154
-------- --------
Deferred expenses, net . . . . . . . . 5,452 6,384
Other assets . . . . . . . . . . . . . 34,744 34,916
-------- --------
$320,333 359,694
======== ========

<PAGE>

AMFAC/JMB HAWAII, L.L.C.

Consolidated Balance Sheets - Continued

SEPTEMBER 30, DECEMBER 31,
2000 1999
(Unaudited) (Note 1)
------------- -----------
L I A B I L I T I E S
---------------------
Current liabilities:
Accounts payable . . . . . . . . . . $ 7,009 6,955
Accrued expenses . . . . . . . . . . 8,630 9,400
Current portion of long-term
debt . . . . . . . . . . . . . . . 5,206 5,184
Current portion of deferred
income taxes . . . . . . . . . . . 2,435 1,481
ERS debt in default. . . . . . . . . 73,963 73,004
Amounts due to affiliates. . . . . . 12,779 12,076
Amounts due to affiliates -
Senior Debt financing in default . 8,039 832
-------- --------
Total current liabilities. . . 118,061 108,932
-------- --------
Amounts due to affiliates -
Senior Debt financing in default . . 186,503 172,133
Accumulated postretirement
benefit obligation . . . . . . . . . 44,580 47,775
Long-term debt . . . . . . . . . . . . 27,323 27,557
Other long-term liabilities. . . . . . 17,477 16,851
Deferred income taxes. . . . . . . . . 26,485 52,550
Certificate of Land Appreciation
Notes. . . . . . . . . . . . . . . . 139,413 139,413
-------- --------
Total liabilities. . . . . . . 559,842 565,211
-------- --------
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). . . . . . . (239,509) (205,517)
-------- --------
Total Member's equity
(deficit). . . . . . . . . . (239,509) (205,517)
-------- --------
$320,333 359,694
======== ========

The accompanying notes are an integral part
of the consolidated financial statements.

<PAGE>

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

Consolidated Statements of Operations

Three and Nine Months Ended September 30, 2000 and 1999
(Dollars in Thousands)
(Unaudited)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
-------------------------- --------------------------
2000 1999 2000 1999
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Revenue:
Agriculture. . . . . . . . . . . . . . . . . . . $ 3,947 9,520 16,749 29,243
Property . . . . . . . . . . . . . . . . . . . . 10,075 4,823 15,845 11,685
Golf . . . . . . . . . . . . . . . . . . . . . . 3,119 3,643 11,522 11,438
-------- -------- -------- --------
17,141 17,986 44,116 52,366
-------- -------- -------- --------
Cost of sales:
Agriculture. . . . . . . . . . . . . . . . . . . 12,198 14,490 27,670 31,766
Property . . . . . . . . . . . . . . . . . . . . 5,728 990 9,887 8,103
Golf . . . . . . . . . . . . . . . . . . . . . . 2,288 2,233 6,889 6,537
-------- -------- -------- --------
20,214 17,713 44,446 46,406
Operating expenses:
Selling, general and administrative. . . . . . . 1,998 1,845 6,334 5,738
Depreciation and amortization. . . . . . . . . . 1,293 1,399 3,944 4,498
Reduction in carrying value of assets
in sugar operations. . . . . . . . . . . . . . 22,000 -- 22,000 --
-------- -------- -------- --------

Total costs and expenses . . . . . . . . . . . . . 45,505 20,957 76,724 56,642

Operating income (loss) . . . . . . . . . . . . . (28,364) (2,971) (32,608) (4,276)
-------- -------- -------- --------

Non-operating income (expenses):
Amortization of deferred costs . . . . . . . . . (518) (217) (941) (812)
Interest expense . . . . . . . . . . . . . . . . (9,030) (7,773) (25,758) (21,322)
Interest income. . . . . . . . . . . . . . . . . 46 160 204 767
-------- -------- -------- --------
(9,502) (7,830) (26,495) (21,367)
-------- -------- -------- --------

<PAGE>

AMFAC/JMB HAWAII, L.L.C.

Consolidated Statements of Operations - Continued

THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
-------------------------- --------------------------
2000 1999 2000 1999
----------- ---------- ----------- ----------

Loss before taxes and extraordinary item . . . (37,866) (10,801) (59,103) (25,643)
-------- -------- -------- --------

Income tax benefit . . . . . . . . . . . . . . . 24,736 4,110 33,281 10,053
-------- -------- -------- --------

Loss before extraordinary item . . . . . . . . (13,130) (6,691) (25,822) (15,590)
-------- -------- -------- --------

Extraordinary gain form extinguishment of debt
(less applicable income taxes of $7,256) . . . . -- 28 -- 11,271
-------- -------- -------- --------

Net income (loss). . . . . . . . . . . . . . . $(13,130) (6,663) (25,822) (4,319)
======== ======== ======== ========

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

<PAGE>

AMFAC/JMB HAWAII, L.L.C.

Consolidated Statements of Cash Flows

Nine Months Ended September 30, 2000 and 1999
(Dollars in Thousands)
(Unaudited)

2000 1999
-------- --------
Cash flows from operating activities:
Net income (loss). . . . . . . . . . . . . . $(25,822) (4,319)
Items not requiring (providing) cash:
Depreciation and amortization. . . . . . . 3,944 4,498
Amortization of deferred costs . . . . . . 941 812
Income tax benefit . . . . . . . . . . . . (33,281) (4,859)
Extraordinary gain from extinguishment
of debt. . . . . . . . . . . . . . . . . -- (18,478)
Reduction in carrying value of assets
in sugar operations. . . . . . . . . . . 22,000 --
Interest on ERS debt in default. . . . . . 959 4,831
Interest on advances from affiliates . . . 14,374 11,849
Changes in:
Receivables - net. . . . . . . . . . . . . . (947) 7,061
Inventories. . . . . . . . . . . . . . . . . 10,741 12,634
Prepaid expenses . . . . . . . . . . . . . . (566) 222
Accounts payable . . . . . . . . . . . . . . 54 (169)
Accrued expenses . . . . . . . . . . . . . . (770) (100)
Amounts due to affiliates. . . . . . . . . . 703 (2,575)
Other long-term liabilities. . . . . . . . . (3,279) (3,282)
-------- --------
Net cash provided by (used in)
operating activities . . . . . . . . (10,949) 8,125
-------- --------
Cash flows from investing activities:
Property additions . . . . . . . . . . . . . (2,582) (1,889)
Property sales, disposals and
retirements - net. . . . . . . . . . . . . 45 10,517
Other assets . . . . . . . . . . . . . . . . (479) (226)
Other long-term liabilities. . . . . . . . . 710 (4,043)
-------- --------
Net cash provided by (used in)
investing activities . . . . . . . . (2,306) 4,359
-------- --------
Cash flows from financing activities:
Payment to redeem and purchase
Certificate of Land Appreciation
Notes (COLAs). . . . . . . . . . . . . . . -- (40,286)
Deferred expenses. . . . . . . . . . . . . . (9) (54)
Net (repayments) proceeds of
long-term debt . . . . . . . . . . . . . . (212) (6,119)
Net amounts due to affiliates. . . . . . . . 7,203 21,318
Other costs related to extinguishment
of debt. . . . . . . . . . . . . . . . . . -- (239)
-------- --------
Net cash provided by (used in)
financing activities . . . . . . . . 6,982 (25,380)
-------- --------
Net increase (decrease) in
cash and cash equivalents. . . . . . (6,273) (12,896)
Cash and cash equivalents,
beginning of year. . . . . . . . . . 10,931 26,526
-------- --------
Cash and cash equivalents,
end of period. . . . . . . . . . . . $ 4,658 13,630
======== ========

<PAGE>

AMFAC/JMB HAWAII, L.L.C.

Consolidated Statements of Cash Flows - Continued

2000 1999
-------- --------

Supplemental disclosure of cash flow
information:
Cash paid for interest (net of
amount capitalized). . . . . . . . . . . . $ 11,422 9,005
======== ========

Schedule of non-cash investing and
financing activities:
Transfer of property actively held
for sale to real estate inventories. . . $ 1,966 272
======== ========

Disposition of debt:
Gain on extinguishment of debt . . . . . . . $ -- 18,478
Face value of debt extinguished. . . . . . . -- (81,294)
Other costs related to extinguish-
ment of debt . . . . . . . . . . . . . . . -- 239
Issuance of Senior Debt to
affiliates . . . . . . . . . . . . . . . . -- 26,375
Write-off of Contingent Base Interest. . . . -- (7,624)
Write-off of deferred COLA costs . . . . . . -- 3,540
-------- --------
Cash paid to redeem and
purchase COLAs . . . . . . . . . . . $ -- (40,286)
======== ========

The accompanying notes are an integral part
of the consolidated financial statements.

<PAGE>

AMFAC/JMB HAWAII, L.L.C.

Notes to Consolidated Financial Statements

September 30, 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. ("AHI", and collectively with the Additional
Registrants, as their respective interests may appear, the "Company") is a
Hawaii limited liability company. AHI is wholly-owned by Northbrook
Corporation ("Northbrook"). The primary business activities of the
Company, are land development and sales and golf course management and
agriculture. In September 2000, the Company announced its plan to shutdown
the remaining sugar operations which represented a substantial portion of
its agriculture segment. The Company owns approximately 31,000 acres of
land located on the islands of Oahu, Maui, Kauai and Hawaii in the State of
Hawaii. 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.

AHI's sole member (Northbrook) is not obligated for any debt,
obligation or liability of the Company. However, AHI and certain of the
Additional Registrants are obligated to Northbrook and its affiliates for
the repayment of substantial loans and advances made to them, as described
below.

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 AHI 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.

<PAGE>

AMFAC/JMB HAWAII, L.L.C.

Notes to Consolidated Financial Statements - Continued

(Dollars in Thousands)

The Company's policy is to consider all amounts held with original
maturities of three months or less in U.S. Government obligations,
certificates of deposit and money market funds (approximately $2,800 and
$9,000 at September 30, 2000 and December 31, 1999, respectively) as cash
equivalents that are reflected at cost, which approximates market. These
amounts include $779 and $954 at September 30, 2000 and December 31, 1999,
respectively, which were restricted.

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 $732 have been capitalized for the nine months ended September 30,
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 $20,572 and
$25,022 is included in inventory in the accompanying consolidated balance
sheets at September 30, 2000 and December 31, 1999, respectively, and is
carried at the lower of cost or fair value less cost to sell.

During the third quarter of 2000, the Company recognized impairment
losses of $22,000 primarily on property, plant and equipment formerly used
in its sugar operation. Such losses have been reflected in as reduction in
carrying value of assets in sugar operations as of September 30, 2000.

During the fourth quarter of 1999, the Company reduced the carrying
value of five land parcels which it had expected to dispose of during 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 (which assume that the Company will continue
as a going concern) 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 and nine month period ended September 30, 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

AHI has issued certain Certificates of Land Appreciation Notes due
2008 Class A (the "Class A COLAs") and Certificates of Land Appreciation
Notes Class B (the "Class B COLAs", and, collectively with the Class A
COLAs, the "COLAs") pursuant to an Indenture dated March 14, 1989 (the
"Indenture") (see note 3). Under the Indenture, the Company is entitled to
borrow certain amounts from affiliates and third parties that qualify as
"Senior Indebtedness" under the Indenture and are senior in priority to the
repayment of the COLAs. Such "Senior Indebtedness" that is due and owing
to Northbrook and its affiliates from time to time is referred to in these
notes as the "Senior Debt". Commencing in August 1989 and from time to
time thereafter, Northbrook (or its predecessor in interest, Amfac, Inc.),
and certain of its affiliates, have made Senior Debt advances to the
Company.

In February 1997, the outstanding balance of the Senior Debt, was
consolidated under a single $104,759 ten year promissory note, payable to
Northbrook. In addition, in February 1997, the Company borrowed additional
amounts from Northbrook's affiliate Fred Harvey Transportation Company
("Fred Harvey") under a $30,000 revolving credit note. In 1998, the
$104,759 note was replaced by two nine-year notes: (i) a $99,595 note, and
(ii) a $15,000 note (with an initial balance of $7,920). The $99,595 note
was transferred by Northbrook to Fred Harvey in 1998, and later in 1998,
Fred Harvey sold the $30,000 note 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, AHI agreed to exercise its option to redeem
Class B COLAs that would be "put" to AMFAC/JMB Finance, Inc. ("AJF") for
repurchase in partial consideration for (a) the agreement by Fred Harvey to
defer until December 31, 2001 all interest accruing from January 1, 1998
through December 31, 2001 relating to the $99,595 note discussed above;
(b) the agreement of AF Investors, LLC ("AF Investors"), another affiliate
of Northbrook, to accept Senior Debt in lieu of cash for those COLAs it
held that it intended to put and to defer interest accruing on such Senior
Debt and any other Senior Debt it may thereafter hold relative to the put
of the COLAs in the same manner as the Fred Harvey Senior Debt (see below);
and (c) Northbrook agreeing to cause approximately $55,148 of the Senior
Debt that it held to be contributed to the capital of the Company
(including the $15,000 note and $30,000 note, identified above, together
with accrued interest thereon). In connection with the foregoing deferral
of interest and contribution of capital, the Company agreed to provide
Northbrook and its affiliates with security for the Senior Debt held by
them. Such security consists of mortgages on certain real property owned
by the Company, pledges of stock of AHI's direct and indirect subsidiaries,
and such other unencumbered assets of the Company and its subsidiaries as
Northbrook and its affiliates holding such Senior Debt may request. 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.

In connection with the "put" discussed above, on May 25, 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, as of May 31, 1999, 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 Debt that matures on December 31, 2008 and
bears interest at a rate per annum of prime (9.50% at September 30, 2000)

<PAGE>

AMFAC/JMB HAWAII, L.L.C.

Notes to Consolidated Financial Statements - Continued

(Dollars in Thousands)

plus 1%. Interest on such senior Debt is deferred through December 31,
2001, as discussed above. Additional interest may be payable on such
Senior Debt upon its maturity based upon fair market value, if any, of the
Company's equity at that time.

At current interest rates, approximately $66,892 of such deferred
interest relating to all Senior Debt existing at December 31, 1999 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
$66,892 obligation. Failure to meet such obligation, if called, would
cause all Senior Debt owing to Northbrook, Fred Harvey, AF Investors or
other Northbrook affiliates to be immediately due and payable. A default
on Senior Debt of such magnitude would constitute an event of default under
the Indenture.

In October 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. The loan had an outstanding balance of $808 on
the date of the loan transfer and bears interest at the rate equal to prime
(9.50% at September 30, 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 of the Company, has
limited recourse to the Company and is Senior Debt. The outstanding
balance as of September 30, 2000 of $57 and related accrued interest of $2
is included in current liabilities. This loan was satisfied in full in
October 2000.

In the nine months ended September 30, 2000, the Company borrowed
approximately $5,576 from Northbrook for purposes of satisfying the
Mandatory Base Interest payment related to the COLAs due in 2000. During
the nine months ended September 30, 2000, the Company borrowed an
additional $2,400 to fund certain capitalizable property development and
agriculture disbursements. Such Senior Debt was originally scheduled to
mature on December 31, 2000, but its maturity date was extended (in
September 2000) to February 28, 2001. It bears interest at a rate per
annum equal to prime (9.50% at September 30, 2000) plus 1%, is guaranteed
by the Company and is also to be secured by assets of the Company.

The total amount due Northbrook and its subsidiaries for Senior Debt
financing as of September 30, 2000 was $194,542 which includes accrued and
deferred interest to affiliates on Senior Debt of approximately $39,219 (of
which $39,215 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.

<PAGE>

AMFAC/JMB HAWAII, L.L.C.

Notes to Consolidated Financial Statements - Continued

(Dollars in Thousands)

Company in Oahu Sugar Company, Limited v. Walter Arakaki and Steve Swift
(see Part II, Item 1, Legal Proceedings, below). Such holders have
notified the Company that they have reserved all rights and are assessing
their options respecting the Senior Debt. There can be no assurance that
such holders will not accelerate the Senior Debt and exercise their
remedies against the Company with respect thereto. An acceleration of the
Senior Debt would constitute an event of default under the Indenture.

(3) CERTIFICATE OF LAND APPRECIATION NOTES

The COLAs are unsecured debt obligations of the Company, and are
subordinated in priority to all "Senior Indebtedness" (as defined in the
Indenture) including, but not limited to, the Senior Debt. 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 (as defined in the
Indenture) on the COLAS, the Company has not generated a sufficient level
of Net Cash Flow to incur or pay Contingent Base Interest (as defined in
the Indenture) on the COLAs commencing in 1990. Approximately $89,766 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 September 30, 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 (as defined in the Indenture) will be generated in
the future or that there will be sufficient Maturity Market Value (as
defined in the Indenture) 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 nine months ended September 30, 2000 and the year ended
December 31, 1999:
Nine Months The Year
Ended Ended
September 30, December 31,
2000 1999
------------ ------------
Mandatory Base Interest paid . . . . . . . $ 5,576 7,202
Contingent Base Interest due and paid. . . -- --
Cumulative deferred Contingent Base
Interest . . . . . . . . . . . . . . . . $89,766 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
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.

<PAGE>

AMFAC/JMB HAWAII, L.L.C.

Notes to Consolidated Financial Statements - Continued

(Dollars in Thousands)

As of September 30, 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. 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 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 principal balance remains nonrecourse,
certain payments and obligations, such as the Minimum Interest payments and
the ERS's share of appreciation, if any, are recourse to the Company.
However, the Company's obligations to make future Minimum Interest payments
and to pay the ERS a share of appreciation would be terminated if the
Company tendered an executed deed to the golf course property to the ERS in
accordance with the terms of the loan amendment. Due to insufficient cash
flow generated by the golf courses and intransigence by the ERS with
respect to its obligation 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

<PAGE>

AMFAC/JMB HAWAII, L.L.C.

Notes to Consolidated Financial Statements - Continued

(Dollars in Thousands)

beginning with the January 1, 1999 through October 1, 1999 payments
aggregating approximately $5,743 (including other miscellaneous costs). For
the same reasons, the Company had not paid the ERS the Minimum Interest
payments due on January 1, April 1, July 1, and October 1, 2000. As
expected, the Company received a further default notice from the ERS which
notice included an acceleration of all amounts due under the loan and the
ERS filed to realize upon their security. Pursuant to an agreement between
the ERS and the Company, the Company paid approximately $3,800 in September
2000, to the ERS for a portion of the past due interest amounts and the ERS
has agreed to temporarily suspend its action to realize upon its security.
The Company 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. There can be no assurance that such
negotiations will result in a definitive agreement to settle the disputes
between the Company and the ERS concerning this loan.

In December 1996, Amfac Property Development Corp. ("APDC"), a wholly-
owned subsidiary of the Company, obtained a $10,000 loan facility from City
Bank. The loan is secured by a mortgage on property under development at
the mill-site of Oahu Sugar (the sugar plantation was closed in 1995), and
is "Senior Indebtedness" (as defined in the Indenture). The loan bears
interest at the bank's base rate (9.5% at September 30, 2000) plus .5% and
originally was scheduled to mature on December 1, 1998. In November 1998,
APDC sold certain mill-site property which served as collateral for the
$10,000 City Bank loan for an approximate sales price of $7,690 in cash
plus 2% of the gross sales price of subsequent parcel sales of all or any
portion of the property by the purchaser. The bank required $6,000 of the
sales proceeds as a principal reduction on the loan in order to release the
collateral. APDC received a one-year extension on the $4,000 remaining
balance of the loan which is secured by another parcel at the mill-site.
The extended loan bears interest at the bank's base rate plus 1.25% and was
scheduled to mature on December 1, 1999. APDC reached an agreement with
the bank for an additional one year extension on $3 million of the $4
million loan. APDC made a $1 million loan payment on December 2, 1999.
The new extended loan bears interest at the bank's base rate plus 1.25% and
matures on December 1, 2000. The Company is currently pursuing a
renegotiation of the loan terms including an extension of the maturity
beyond December 1, 2000. There can be no assurance that any such
renegotiation attempt will be successful. Upon maturity of the loan, it is
not expected that APDC will have the funds necessary to pay the remaining
balance of the loan. If such loan cannot be further extended, it would
likely result in APDC no longer having an ownership interest in the
property.

The note bears interest of 8.5% and is payable quarterly. In January 1999,
the Company paid TPI approximately $2,220 on its note to release Lot #1 for
the Kaanapali Ocean Resort and the new 10-acre public recreation area at
North Beach and an additional $1,920 in September 1999 as required under
the terms of the note. In October 2000, an affiliate of Northbrook
purchased the note for the outstanding principal and accrued interest
aggregating approximately $5,585. The Company is pursuing negotiations to
restructure the debt and the affiliate has agreed to defer the amounts
currently due under the note until November 30, 2000.

<PAGE>

AMFAC/JMB HAWAII, L.L.C.

Notes to Consolidated Financial Statements - Continued

(Dollars in Thousands)

(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 nine months ended September 30, 2000 and
September 30, 1999 are set forth below by each industry segment:

September 30, December 31,
2000 1999
------------- ------------
Total Assets:
Agriculture. . . . . . . . . . . . . . . $141,535 169,433
Property . . . . . . . . . . . . . . . . 92,766 96,937
Golf . . . . . . . . . . . . . . . . . . 76,412 76,893
Other. . . . . . . . . . . . . . . . . . 9,620 16,431
-------- --------
$320,333 359,694
======== ========

Nine Months Ended
September 30,
------------------------
2000 1999
-------- --------
Capital Expenditures:
Agriculture. . . . . . . . . . . . . . . $ 1,739 1,320
Property . . . . . . . . . . . . . . . . 670 374
Golf . . . . . . . . . . . . . . . . . . 173 195
-------- --------
$ 2,582 1,889
======== ========
Operating income (loss):
Agriculture. . . . . . . . . . . . . . . $(36,006) (5,723)
Property . . . . . . . . . . . . . . . . 897 (531)
Golf . . . . . . . . . . . . . . . . . . 3,179 3,351
Other. . . . . . . . . . . . . . . . . . (678) (1,373)
-------- --------
$(32,608) (4,276)
======== ========
Depreciation and amortization:
Agriculture. . . . . . . . . . . . . . . $ 2,650 2,765
Property . . . . . . . . . . . . . . . . 301 510
Golf . . . . . . . . . . . . . . . . . . 988 1,084
Other. . . . . . . . . . . . . . . . . . 5 139
-------- --------
$ 3,944 4,498
======== ========

<PAGE>

AMFAC/JMB HAWAII, L.L.C.

Notes to Consolidated Financial Statements - Continued

(Dollars in Thousands)

(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 (as defined in the Indenture) that could, under
certain circumstances, become payable to JMB Realty Corporation ("JMB"), an
affiliate of the Company, under the Indenture. 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 in
any year. 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 and its 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 the joint ventures' operations. The total of such costs
for the nine months ended September 30, 2000 and 1999 was approximately
$537 and $587 respectively, of which $695 was unpaid as of September 30,
2000. In addition, as of September 30, 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
September 30, 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 nine months ended September 30, 2000 and 1999 was
approximately $482 and $558, respectively, some of which has not been paid
as of September 30, 2000.

Northbrook and its affiliates allocated certain charges for services
to the Company based upon the estimated level of services for the nine
months ended September 30, 2000 and 1999 of approximately $386 and $450,
respectively, of which $967 was unpaid as of September 30, 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.

<PAGE>

AMFAC/JMB HAWAII, L.L.C.

Notes to Consolidated Financial Statements - Continued

(Dollars in Thousands)

As a consequence of the Company's decision to shut down its remaining
sugar operations, a reduction in recorded obligations for future benefits
is expected. Such reduction will be reflected in the consolidated
financial statements when it is determined.

(8) COMMITMENTS AND CONTINGENCIES

The Company continues to face a severe liquidity shortage. The
Company has made expense cuts and deferrals where possible and in September
2000, announced its plans to shut down sugar operations on Kauai due to
continued losses of these operations occasioned by low sugar prices and
harvest yield and high operating costs. Additionally, the Company has not
paid all of the quarterly interest payments (due in January, April, July
and October, 2000) to the State of Hawaii Employee Retirement System
related to their $66 million loan secured by the Royal Kaanapali Golf
Course. The Company has also been allowed to defer payment of amounts
related to the loan secured by Kaanapali North Beach until November 30,
2000. These measures, along with the closing of the sale of land parcels
in 2000 and the additional Senior Debt borrowings from Northbrook made
during 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 the Company sells a portion of its
North Beach property on Maui (now scheduled for the fourth quarter of 2000)
and another parcel on Maui near Lahaina (tentatively scheduled for the
first quarter of 2001). However, there can be no assurance that either of
these land sales will ultimately be consummated.

Due to the Company's plan to shutdown sugar operations on Kauai, there
are expected to be significant employee and other closing costs. The costs
are not reflected in the accompanying consolidated financial statements as
such amounts and source of payments are in the process of being finalized.

In addition, there are several large, contingent cash expenditures
that may affect the Company's future operations. These include:

(1) the ultimate outcome of the litigation and environmental
matters described in Part II. "Legal Proceedings";

(2) the cost of energy production at the Lihue power plant. After
the cessation of sugar cane processing, the by-product burned to fuel the
plant will no longer be available and alternative fuels may have to be
used. The current power contract obligation with the local utility may
require energy production for up to three years. These costs could be
significant but are presently not determinable;

(3) the cost of environmental clean up of the Lihue plantation and
its buildings which could be significant but are presently not
determinable; 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
$4 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.

<PAGE>

AMFAC/JMB HAWAII, L.L.C.

Notes to Consolidated Financial Statements - Continued

(Dollars in Thousands)

In the absence of additional land and business sales (none of which
are currently expected to close until late in the fourth quarter of 2000 or
the first quarter of 2001) or financing from third parties (which has
generally not been obtainable), the Company believes that additional Senior
Debt 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 the
financial capability or willingness to 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" (as defined in the Indenture), (ii) to accrue
interest at the rate of prime plus 1%, and (iii) to have principal and
interest fully repayable by February 28, 2001. Moreover, as a condition to
the additional Senior Debt loans made by Northbrook and its affiliates
commencing in 1999, the Company agreed to make substantial portions of the
remaining unencumbered real and personal property assets of the Company
security for all of the Senior Debt held by Northbrook and its affiliates.
Although 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 the event
such cash is not forthcoming, it is likely that the Company will be unable
to make its Mandatory Base Interest payment to the holders of COLAs in
February 2001, which would at that time trigger a default under the
Indenture.

The Company's Property segment had contractual commitments (related to
project costs) of approximately $1,033 as of September 30, 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 September 30, 2000, certain portions of the Company's land not
currently under development are mortgaged as security for approximately
$1,417 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. Northbrook and the IRS have settled all open tax
issues related to the period 1992 through 1994, the result of which
requires no expenditures by the Company. The Company's income tax benefit
for the three and nine months ended September 30, 2000 includes the effects
of such settlement on its liability for deferred income taxes.
Northbrook's tax returns for the periods 1995-1997 are currently being
examined. The statutes of limitations with respect to Northbrook's tax
returns for the years 1995 through 1999 remain open. The Company is a
subsidiary of Northbrook and accordingly is subject to tax liability
exposure due to the several nature of the liability for the payment of
taxes for entities filing 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

In addition to historical information, this Quarterly Report contains
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act 1995. These statements are based on management's
current expectations about its businesses and the markets in which the
Company operates. Such forward-looking statements are not guarantees of
future performance and involve known and unknown risks, uncertainties or
other factors which may cause actual results, performance or achievements
of the Company to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. Actual operating results may be affected by various factors
including, without limitation, changes in national and Hawaiian economic
conditions, competitive market conditions, uncertainties and costs related
to and the imposition of conditions on receipt of governmental approvals
and costs of material and labor, all of which may cause such actual results
to differ materially from what is expressed or forecast in this report.

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.
Management at the Company's sugar plantation on Kauai has been unable to
develop an acceptable plan to address the negative cash flow. As a result,
the Company plans to close this operation on Kauai. 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 and plans to shutdown sugar operations on Kauai due to continued
losses of these operations occasioned by low sugar prices and harvest yield
and high operating costs. Additionally, the Company has not paid all of
the quarterly interest payments (due in January, April, July and October
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 land parcels and the
additional Senior Debt borrowings from Northbrook made during 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 the Company sells a portion of its North Beach
property on Maui (now scheduled for the fourth quarter of 2000) and another
parcel on Maui near Lahaina (tentatively scheduled for the first quarter of
2001). However, there can be no assurance that either of these land sales
will ultimately be consummated.

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";

<PAGE>

(3) the cost of environmental clean up of the Lihue plantation and
its buildings which could be significant but are presently not
determinable; 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 fourth quarter of 2000 or
the first quarter of 2001) or financing from third parties (which has
generally not been obtainable), the Company believes that additional
Senior Debt 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.
During the nine months ended September 30, 2000, the Company borrowed
approximately $5.6 million from Northbrook for the Mandatory Base Interest
payments related to the COLAs due in 2000. During the nine months ended
September 30, 2000, the Company borrowed an additional $2.4 million to fund
capitalizable property and agriculture disbursements. The borrowings have
met the requirements discussed below. However, there is no assurance that
Northbrook or its affiliates will have the financial capability or
willingness to 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" (as defined in the Indenture), (ii) to accrue interest at the
rate of prime plus 1%, and (iii) to have principal and interest fully
repayable by February 28, 2001. Moreover, as a condition to the additional
Senior Debt loans made by Northbrook and its affiliates commencing in 1999,
the Company has agreed to make substantial portions of the remaining
unencumbered real and personal property assets of the Company security for
all of the Senior Debt held by Northbrook and its affiliates. Although
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 the event such cash
is not forthcoming, it is likely that the Company will be unable to make
its Mandatory Base Interest payment to the holders of COLAs in February
2001, which would at that time trigger a default under the Indenture.

In recent years, the Company has funded its significant cash
requirements primarily through Senior Debt borrowings from Northbrook and
its affiliates 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 September 30, 2000, the Company had unrestricted cash and cash
equivalents of approximately $3.9 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.

<PAGE>

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.

The Company has listed for sale the bulk of its remaining land
holdings on Kauai, which aggregate approximately 17,000 acres. Management
is exploring the possible sale of other parcels on Maui and Oahu 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. From time to time certain of the Company's lands are under
contract for sale. However, the contracts typically have due diligence
investigation periods which allow the prospective purchasers to terminate
the agreements. There can be no assurance that any signed contracts for
sale will in fact close under the original terms and conditions or any
other terms or that the Company will be successful in selling the land at
an acceptable price.

During the first nine months of 2000, the Company generated
approximately $11.9 million in land sales primarily from the sale of
Parcels 16 and 19/20 at the Kaanapali Golf Estates on Maui for an aggregate
of $7.0 million and $3.5 million for approximately 1,600 acres of
agriculture and conservation zoned land at Kahoma on Maui. An additional
$1.4 million in revenue was generated from the sale of approximately 32
acres on Maui and Kauai.

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).

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 $3.7 million in project costs during 2000.

As of September 30, 2000, contractual commitments related to project costs
totaled approximately $1.0 million. However, the Company also has made a
number of commitments to fund certain infrastructure costs relating to the
future construction of a new Lahaina/Kaanapali bypass highway on Maui, that
could require additional significant expenditures in the longer term should
such highway be built (see discussion of Maui Infrastructure Costs below).

<PAGE>

scheduled to mature on December 1, 1999. APDC has reached an agreement
with the bank for an additional one year extension on $3 million of the $4
million loan. APDC made a $1 million loan payment on December 2, 1999.
The new extended loan bears interest at the bank's base rate plus 1.25% and
matures on December 1, 2000. The Company is currently pursuing a
renegotiation of the loan terms including an extension of the maturity
beyond December 1, 2000. There can be no assurance that any such
renegotiation attempt will be successful. Upon maturity of the loan, it is
not expected that APDC will have the funds necessary to pay the remaining
balance of the loan. If such loan cannot be further extended, it would
likely result in APDC no longer having an ownership interest in the
property.

In September 1998, the Company purchased Tobishima Pacific, Inc.'s
("TPI") 50% ownership interest in the 96-acre beachfront parcel (commonly
referred to as Kaanapali North Beach) for $12.0 million. The Company paid
$2.4 million in cash and signed a note for $9.6 million. The note is
secured by a mortgage on the property and was in favor of TPI and is
"Senior Indebtedness" (as defined in the Indenture). The note was payable
in five annual installments in the principal amount of $1.9 million
beginning in September 1999. The note bears interest of 8.5% and is
payable quarterly. In January 1999, the Company paid TPI approximately
$2.2 million on its note to release Lot #1 for the Kaanapali Ocean Resort
and the new 10-acre public recreation area at North Beach and an additional
$1.9 million in September 1999 as required under the terms of the note. In
October 2000, an affiliate of Northbrook purchased the note for the
outstanding principal and accrued interest aggregating approximately $5.6
million. The Company is pursuing negotiations to restructure the debt and
the affiliate has agreed to defer the amounts currently due under the note
until November 30, 2000.

During the third quarter, management announced the shut down of its
remaining sugar plantations on Kauai. The decision was made as a result of
significant losses incurred during 2000, and the expectation that such
losses would continue for the foreseeable future. The losses resulted from
a significant drop in the domestic price of raw sugar and lower sugar
yields. The Company expects to complete its final harvest of sugar cane
sometime during the next several months. The exact date for the final
harvest will depend upon the outcome of negotiations with the plantations
various land lessors.

Company management cannot predict precisely the actual cost of a
plantation shutdown until a shutdown 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 a
range of 18 cents/lb. to 16 cents/lb. for deliveries during 2000. 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 to $5 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 was only 5% hedged for year 2000 deliveries. The Company has since
closed all of its futures and options contracts.

<PAGE>

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 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.
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. As a consequence of management's decision to
shut down the Kauai sugar operations, the Company negotiated with the union
concerning the employee-related costs of such shutdown. The agreement was
ratified by the union employees in November 2000.

The Lihue Plantation Company ("Lihue Plantation") on Kauai suffered a
breakdown of its power-generating turbine in February 2000. The Company
believes that the turbine repair costs and lost profits (net of a $0.5
million policy deductible) are covered by insurance (although there can be
no assurance that all of the lost profits will be so covered). Lihue
Plantation has completed the repair of the turbine and has incurred
expenditures of approximately $2.1 million in connection with the turbine
repair and certain other related expenditures. As of September 30, 2000,
Lihue Plantation has received $1.4 million in advances against the claim
from the insurance carriers.

The Company completed its final harvest of sugar cane at Pioneer Mill
on Maui in September 1999 in conjunction with its shutdown. 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.

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.

During the first nine months of 2000, cash decreased by $6.3 million
from December 31, 1999. Net cash was used in operating activities of $10.9
million, investing activities of $2.3 million and provided by financing
activities of $6.9 million.

During the first nine months of 2000, net cash flow used in operating
activities was $10.9 million, as compared to net cash provided by operating
activities of $8.1 million during the first nine months of 1999. The $19.0
million increase in cash flow used in operating activities was due
primarily to (i) a $16.9 million operating loss after adjustment for non-
cash items for the nine months ended September 30, 2000 compared to a $5.6
million operating loss for the nine months ended 1999 primarily due to the

<PAGE>

increase of $8.3 million in the operating loss from agricultural operations
and a $3.8 million payment for interest on the ERS debt in default in
September 2000, (ii) a $1 million increase in receivables during the first
nine months of 2000 compared to a $7.1 million decrease in receivables for
the first nine months of 1999 related to the collection of $7.5 million in
receivables related to prior year land sales, and (iii) a $10.7 million
decrease in inventories for the nine months ended September 30, 2000
compared to a $12.6 million decrease in 1999. The $2.9 million variance in
the decrease in inventories is primarily due to the final sugar harvest at
Pioneer Mill on Maui in 1999.

During the first nine months of 2000, net cash flow used in investing
activities was $2.3 million as compared to $4.4 million provided during the
first nine months of 1999. The $6.7 million increase in net cash used in
investing activities was principally due to a decrease in net property
sales, disposals and retirements and a decrease in other liabilities for
the nine months ended September 30, 1999 primarily due to the stock sale of
Kaanapali Water Corporation (discussed above).

During the first nine months of 2000, net cash flow provided by
financing activities was $6.9 million compared to $25.4 million used in the
first nine months of 1999. The $32.3 million increase in cash provided
from financing activities is due primarily to (i) the $40.3 million of cash
used to redeem the Class B COLAS in June 1999 offset in part by $21.3
million in advances from affiliates compared to $7.2 million in advances
from affiliates for the first nine months of 2000 and (ii) to a decrease in
net long-term debt payments of $.2 million for the nine months ended
September 30, 2000 compared to $6.1 million for the nine months ended
September 30, 1999 primarily for the $4.1 million in principal payments to
TPI and $1.8 million in principal payments related to the loan used to fund
the acquisition of Lihue's power generation equipment.

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 September 30, 2000 was $194,542, which includes
accrued and deferred interest to affiliates on senior debt of approximately
$39,219 (of which $39,215 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.

The Company has received a notice from each of the holders of the
Senior Debt notifying the Company that all Senior Debt is currently in
default due to the existence of other defaults or circumstances that
constitute events of default under the Senior Debt, including, without
limitation (i) the failure of the Company to make quarterly interest
payments on the loan from the ERS related to their $66 million loan secured
by the Royal Kaanapali Golf Courses; and (ii) the entry of, and failure of
the Company to satisfy or otherwise stay, the judgment rendered against the
Company in Oahu Sugar Company, Limited v. Walter Arakaki and Steve Swift
(see Part II, Item 1, Legal Proceedings, below). Such holders have
notified the Company that they have reserved all rights and are assessing
their options respecting the Senior Debt. There can be no assurance that
such holders will not accelerate the Senior Debt and exercise their
remedies against the Company with respect thereto.

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 have been 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 shutdown of the
Company's sugar cane operations.

<PAGE>

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.

During the first nine months of 2000 and 1999, agriculture revenues
were $16.7 and $29.2 million, respectively.

Agriculture revenues and cost of sales decreased for the nine months
ended September 30, 2000 as compared to the nine months ended September 30,
1999 due to the shutdown of sugar operations at Pioneer Mill which
completed its final harvest in September 1999, the decrease in tons
produced and the timing of sugar production deliveries. For the nine
months ended September 30, 2000 the Company sold approximately 38,254 tons
of sugar, a 50% decrease over the same period in 1999. The average price
of sugar sold for the nine months ended September 30, 2000 of approximately
$331 per ton represents a 4% decrease over the same average price for the
nine months ended September 30, 1999. The Company harvested 7,449 and
13,288 acres for the nine months ended September 30, 2000 and 1999,
respectively.

Agriculture revenues and cost of sales decreased for the three months
ended September 30, 2000 as compared to the three months ended
September 30, 1999 due to the decrease in tons produced and the shutdown of
sugar operations at Pioneer Mill in 1999. For the three months ended
September 30, 2000 the Company sold approximately 8,908 tons of sugar, a
70% decrease over the same period in 1999. Approximately 53% of the
decrease in the tons of sugar sold is attributable to the 1999 shutdown of
sugar operations at Pioneer Mill; the remaining approximately 47% decrease
in tons sold is attributed to an approximately 42% decrease in sugar
production at the Kauai plantations due to a 29% decline in yield per acre
of sugarcane harvested. The average price of sugar sold for the three
months ended September 30, 2000 of approximately $322 per ton represents a
7.6% decrease over the same average price for the three months ended
September 30, 1999 before adjustments related to sales for the six months
ended June 30, 1999. The Company harvested 3,662 and 6,157 acres for the
three months ended September 30, 2000 and 1999, respectively.

The operating loss of $9.2 million and $14.0 million for the three and
nine months ended September 30, 2000 as compared to the $6.0 million and
$5.7 million operating loss for the three and nine months ended
September 30, 1999, reflects the decrease in the average price of sugar
sold and the decrease in tons of sugar sold and produced without a
commensurate decrease in expenses.

GOLF SEGMENT:

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

Golf revenues were $3.1 and $11.5 million, during the three and nine
months ended September 30, 2000 as compared to $3.6 and $11.4 million for
the three and nine months ended September 30, 1999. During the three and
nine months ended September 30, 2000, approximately 41,000 and 142,000
rounds of golf were played as compared to 47,000 and 144,000 during the
first three and nine months of 1999.

<PAGE>

Golf cost of sales were $2.3 and $6.9 million during the three and
nine months ended September 30, 2000 as compared to $2.2 and $6.5 million
for the three and nine months ended September 30, 1999. Golf operating
expenses of $.5 and $1.5 million during the first three and nine months of
2000 and 1999, consisted primarily of depreciation expense.

Operating income of $.4 and $3.2 million decreased during the three
and nine months ended September 30, 2000 as compared to $.9 and $3.4
million during the three and nine months ended September 30, 1999 primarily
due to the decrease in revenue as a result of the decrease in rounds of
golf played.

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 $10.1 and $15.8 million during the three and
nine months ended September 30, 2000 from $4.8 and $11.9 million during the
three and nine months ended September 30, 1999. Land sales included
revenues for the nine months ended September 30, 2000 of approximately
$11.9 million primarily from the sale of approximately 1,600 acres on Maui.

Revenues for the nine months ended September 30, 1999 included
approximately $5.7 million from the sale of 800 acres of primarily
agricultural lands on Kauai and Maui.

During the three and nine months ended September 30 2000, property
cost of sales were $5.7 and $9.9 million as compared to $1 and $8.1 million
for the three and nine months ended September 30, 1999. The 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 and nine
months ended September 30, 2000 as compared to the three and nine months
ended September 30, 1999 due to a increase in land sales. Operating income
increased to $2.9 and $1 million during the three and nine months ended
September 30, 2000 compared to $2.5 operating income and $0.5 million
operating loss for the three and nine months ended September 30, 1999.

(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 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.

<PAGE>

(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.

In the fourth quarter of 2000, the company signed an agreement to sell
a parcel on Maui near Lahaina with a tentative closing date of early 2001.
If such agreement was consummated, it would result in a cash infusion to
the Company. The buyer has the usual due diligence period which would
allow the termination of such agreement. There can be no assurance that
such transaction will be consummated on any terms.

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 sells the parcels through bulk parcel sales.

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. In July 2000, the Company sold the 19-acre Parcel 19/20 for
$3.5 million.

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
due diligence and certain pre-closing requirements. In an effort to
resolve certain outstanding issues with the timeshare company, the Company
negotiated an amendment of the agreement, that, among other things,
provided that the parcel would be sold outright to the timeshare company
and extended the closing date until the fourth quarter of 2000 and
converted the investment agreement to a purchase and sale contract for the
KOR site. In addition, the time-share company will receive a five-year
option to purchase Lot 2 at Kaanapali North Beach. If such agreement is
consummated, it would result in a cash infusion to the Company. However,
there can be no assurance that such transaction will be consummated on any
terms.

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.

<PAGE>

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
not assured and is expected to be long term in any event.

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 $0.8 million
has been spent as of September 30, 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 $1.2 million for the
engineering and design of the widening of the existing highway through the
Kaanapali Beach Resort. The Company believes this $1.2 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, if ever.

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 the planned
development of Lot 1 at Kaanapali North Beach and the development of single
family homes on parcels in the Kaanapali Golf Estates.

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.

In September 2000, the Company sold a 14-acre parcel at Hanamaulu on
Kauai for $.6 million.

<PAGE>

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company had not paid the ERS the minimum interest payments due on
January 1, April 1, and July 1, 2000. The Company received a default
notice from the ERS which notice included an acceleration of all amounts
due under the loan and the ERS filed to realize upon their security.
Pursuant to an agreement between the ERS and the Company, the Company paid
approximately $3,800 in September 2000, to the ERS for a portion of the
past due interest amounts and the ERS has agreed to temporarily suspend its
action to realize upon its security. The Company 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.
There can be no assurance that such negotiations will result in a
definitive agreement to settle the disputes between the Company and the ERS
concerning this loan. Reference is made to Note 4 of Notes to the
Consolidated Financial Statements.

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.
Interest on the $4.22 million award continues to accrue at a rate of 10%
per annum. The defendants have begun efforts to collect the amounts
awarded to them. Defendants have caused garnishee summons to be issued to
various affiliated and unaffiliated entities. The defendants scheduled a
debtor's examination for August 23, 2000. The examination has not been
concluded. The Hawaii Supreme Court scheduled the case for an appellate
conference and mediation on August 31, 2000. The mediation was
unsuccessful and the matter continues on appeal. Oahu Sugar continues to
believe that it is entitled to affirmative relief on its complaint and that

<PAGE>

it has meritorious defenses to the counterclaim that it intends to pursue
on 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.

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. In the complaint, as amended, plaintiff files this environmental
action in an attempt to assert several causes of action including actions
for (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. Two of the
other defendants, Clinton Churchill and David Heenan, as trustees under the
will and estate of James Campbell ("Campbell Estate"), have filed a third
party complaint, as amended, seeking indemnity and contribution from Oahu
Sugar arising from, among other things, a lease between Oahu Sugar and
Campbell Estate concerning the land which is allegedly contaminated. The
Campbell Estate has also filed a third party compliant, as amended, against
Northbrook Corporation ("Northbrook") seeking a defense and indemnity.
Campbell Estate, Oahu Sugar, and Northbrook filed cross motions for summary
judgment on the third party complaints. On October 27, 2000, the court
ruled that Oahu Sugar, under its 1970 amendment of lease with Campbell
Estate, and Northbrook, under its guaranty of the lease, have an obligation
to defend and indemnify the Campbell Estate for any environmental liability
under specified federal and state environmental law, negligence and strict
liability for ultrahazardous activity, assessed against Campbell Estate as
owner of the subject property due to actions taken by Oahu Sugar on the
property from 1970 forward, only, and not for activities occurring before
1970. The court also ruled that Campbell Estate is entitled to recover its
attorneys' fees, costs, and expenses incurred in establishing its right to
indemnity. Oahu Sugar intends to defend itself vigorously. On November 6,
2000, Campbell Estate filed a motion for reconsideration to have the trial
court reconsider that portion of its ruling that relieves Oahu Sugar and
Northbrook of the obligation to indemnify Campbell Estate for the failure
to eliminate and cleanup the alleged contamination to the extent that it
occurred prior to 1970. Oahu Sugar intends to oppose the motion for
reconsideration.

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 actions

<PAGE>

for (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. On July 3, 2000, the Hawaii state
court issued a stay of this action, pending the outcome of the federal
litigation and subject to various other stated conditions. In any event,
Oahu Sugar intends to vigorously defend itself.

An insurance carrier for Oahu Sugar 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.

On May 10, 2000, Oahu Sugar was named in a civil action entitled,
Albert and Marciana Kalaikai v. Oahu Sugar, et. al., pending in the Circuit
Court of the First Circuit, State of Hawaii, Civil No. 00-1-1497-05. In
this case, plaintiffs seek damages for alleged asbestos related injuries
sustained, among other things, from exposure to asbestos-containing
products over the course of in excess of forty years and at numerous
locations including the Oahu Sugar mill site over the period of 1950-1960.
The case is in the beginning stages of litigation and Oahu Sugar intends to
defend itself vigorously.

Oahu Sugar is also a defendant in another alleged asbestos related
personal injury action entitled, Anthony Fiori and Stella Fiori v.
Raybestos-Manhattan, filed in the San Francisco County Superior Court, Case
No. 304868, filed on or about July 13, 1999. In the complaint, plaintiffs
seek $3.0 million in economic and non-economic damages, as well as $1.0
million in punitive damages, for injuries alleged sustained.

An insurance carrier for Oahu Sugar has agreed to defend Oahu Sugar in
the Kalaikai and Fiori cases, subject to a reservation of rights. Oahu
Sugar can give no assurances as to the portion of the defense costs and
indemnity costs, if any, that will be ultimately borne by the insurance
carrier.

Oahu Sugar is substantially without assets to satisfy any judgments in
these actions. However, the liability, if any, of Oahu Sugar in these
matters should not extend to other subsidiaries.

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 issued a complaint, order and notice of hearing. The complaint
alleged, among other things, storage of hazardous waste without a permit
and failure to make a hazardous waste determination, and assessed a penalty
of $67,848. The order required Kekaha Sugar Co. to take corrective action.
At this time Kekaha Sugar Co. does not anticipate further enforcement
actions in connection with the issues identified by the Health Department.
As a result of the inspections of its properties, Lihue Planation Co., Ltd.
was advised of various areas of non-compliance with rules regarding the
labeling and storage of oil and hazardous waste materials. On February 25,
2000, the Health Department issued a warning letter requiring Lihue
Plantation Co., Ltd. to take certain corrective action. Lihue Plantation
Co., Ltd. has submitted and implemented its corrective actions plans, and
has notified the Health Department of the same. While the Health
Department has reserved the right to take further enforcement action, Lihue

<PAGE>

Plantation Co., does not anticipate any further assessment of penalties in
connection with the February 25, 2000 letter; however, Lihue Plantation
Co., Ltd. can give no assurances that further penalties may not be assessed
in connection with inspections conducted by the Health Department. In
connection with the inspection of Pioneer Mill Co., the Health Department
noted various areas of non-compliance in a May 12, 2000 warning letter
issued to Pioneer Mill Co. Pioneer Mill Co. has corrected, or is in the
process of correcting, the identified areas of non-compliance and has
submitted documentation of same to the Health Department. Pioneer Mill Co.
does not anticipate that any further penalties will be issued in connection
with the inspections; however, Pioneer Mill Co. can give no assurances that
further penalties may not be assessed in connection with the inspections
conducted by the Health Department.

As a result of an administrative order issued it Oahu Sugar Company by
the Hawaii Department of Health, Order No. CH 98-0012, dated January 27,
1998, Oahu Sugar is currently engaged in environmental site assessment of
lands it leased from the U.S. Navy and located on the Waipio Peninsula.
Sampling is underway and the investigation is otherwise still in its
preliminary stages.

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.

<PAGE>

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)

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)

<PAGE>

Exhibit
No. Exhibit
------- --------

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)

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)

<PAGE>

Exhibit
No. Exhibit
------- --------

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)

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)

<PAGE>

Exhibit
No. Exhibit
------- --------

22.1 Subsidiaries of Amfac/JMB Hawaii, Inc. (1)

99.1 A copy of pages 19, 41-45 and 51 of the Prospectus of the
Company dated December 5, 1988 (relating to SEC Registration Statement on
Form S-1 (as amended) File No. 33-24180) and hereby incorporated by
reference. (2)

Pursuant to Item 6.01 (b)(4) of Regulation SK, the registrant
hereby undertakes to provide the Commission upon its request a copy of any
agreement with respect to long-term indebtedness of the registrant and its
consolidated subsidiaries that does not exceed 10 percent of the total
assets of the registrant and its subsidiaries on a consolidated basis.

(1) Previously filed as exhibits to the Company's Registration
Statement of Form S-1 (as amended) under the Securities Act of 1933 (File
No. 33-24180) and hereby incorporated by reference.

(2) Previously filed as exhibits to the Company's Form 10-K report
under the Securities Act of 1934 (File No. 33-24180) filed on March 27,
1989 and hereby incorporated by reference.

(3) Previously filed as exhibits to the Company's Form 10-K report
under the Securities Act of 1934 (File No. 33-24180) filed on March 27,
1991 and hereby incorporated by reference.

(4) Previously filed as exhibits to the Company's Form 10-Q report
under the Securities Act of 1934 (File No. 33-24180) filed on August 13,
1991 and hereby incorporated by reference.

(5) Previously filed as exhibit to the Company's Form 10-Q report
under the Securities Act of 1934 (File No. 33-24180) filed on May 14, 1993
and hereby incorporated by reference.

(6) Previously filed as exhibit to the Company's Form 10-Q report
under the Securities Act of 1934 (File No. 33-24180) filed on November 11,
1993 and hereby incorporated by reference.

(7) Previously filed as exhibits to the Company's Form 10-K report
under the Securities Act of 1934 (File No. 33-24180) filed on March 27,
1994 and hereby incorporated by reference.

(8) Previously filed as an exhibit to the Company's Form 10-Q
report under the Securities Act of 1934 (File No. 33-24180) filed May 12,
1995 and hereby incorporated by reference.

(9) Previously filed as an exhibit to the Company's Form 10-Q
report under the Securities Act of 1934 (File No. 33-24180) filed May 13,
1996 and hereby incorporated by reference.

(10) Previously filed as exhibit to the Company's Form 10-Q report
under the Securities Act of 1934 (File No. 33-24180) filed on August 13,
1996 and hereby incorporated by reference.

(11) Previously filed as exhibit to the Company's Form 10-K report
under the Securities Act of 1934 (File No. 33-24180) filed March 21, 1997
and hereby incorporated by reference.

(12) Previously filed as exhibit to the Company's Form 10-Q report
under the Securities Act of 1934 (File No. 33-24180) filed May 15, 1996 and
hereby incorporated by reference.

<PAGE>

(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.

PART III DEFAULTS UPON SENIOR SECURITIES

The Company had not paid the ERS the minimum interest payments due on
January 1, April 1, July 1, and October 1, 2000. Amounts due on such
indebtedness aggregated $73,963 as of September 30, 2000 and are included
in "ERS debt in default" in the accompanying Consolidated Balance Sheets.
Reference is made to Note 4 of the Notes to Consolidated Financial
Statements.

The Company has received a notice from each of the holders of the
Senior Debt notifying the Company that all Senior Debt is currently in
default due to the existence of other defaults or circumstances that
constitute events of default under the Senior Debt. Amounts due on such
indebtedness aggregated $194,542 as of September 30, 2000 and are included
in "Amounts due to affiliates - Senior Debt Financing" in the accompanying
Consolidated Balance Sheets. Reference is made to Note 2 of Notes to
Consolidated Financial Statements.

<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: November 10, 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.