Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Re: AMFAC/JMB FINANCE, INC.
Commission File No. 36-3611183
Form 10-Q
Gentlemen:
Enclosed, for the above-mentioned registrant, are eight copies
one of which is manually executed of registrant's current
report on Form 10-Q for the quarter ended September 30, 1995.
Please acknowledge receipt of the Form 10-Q filing, by signing
and
returning the self-addressed stamped postcard.
Thank You.
Very truly yours,
AMFAC/JMB FINANCE, INC.
By: Northbrook Corporation
Parent Company
By: _____________________
Gary Smith
Vice President
and Principal Accounting Officer
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Act of 1934
For the quarter ended September 30, 1995 Commission File
Number 33-24180
AMFAC/JMB HAWAII, INC.
(Exact name of registrant as specified in its charter)
Hawaii 99-0217738
(State of organization) (I.R.S. Employer Identification No.)
AMFAC/JMB FINANCE, INC.
(Exact name of registrant as specified in its charter)
Illinois 36-3611183
(State of organization) (I.R.S. Employer Identification No.)
900 N. Michigan Ave., Chicago, Illinois 60611
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 312-440-4800
See Table of Additional Registrants Below.
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
As of November 10, 1995, each of Amfac/JMB Hawaii, Inc. and
Amfac/JMB Finance, Inc. had 1,000 shares of Common Stock
outstanding. All such Common Stock is owned by its respective
parent and not traded on a public market.
ADDITIONAL REGISTRANTS (1)
Address, including,zip code,
Exact name of State or other IRS and telephone number,
registrant as jurisdiction of Employer including area code of
specified in its incorporation or Identification registrant's principal
Charter organization Number executive offices
Amfac Property Hawaii 99-0150751 900 North Michigan Avenue
Development Corp. Chicago, Illinois 60611
312/440-4800
Amfac Property Hawaii 99-0202331 900 North Michigan Avenue
Investment Chicago, Illinois 60611
Corp. 312/440-4800
Amfac Sugar and Hawaii 99-0185633 900 North Michigan Avenue
Agribusiness, Chicago, Illinois 60611
Inc. 312/440-4800
Kaanapali Water Hawaii 99-0185634 900 North Michigan Avenue
Corporation Chicago, Illinois 60611
312/440-4800
Amfac Agri- Hawaii 99-0176334 900 North Michigan Avenue
business, Inc. Chicago, Illinois 60611
312/440-4800
Kekaha Sugar Hawaii 99-0044650 900 North Michigan Avenue
Company, Chicago, Illinois 60611
Limited 312/440-4800
The Lihue Hawaii 99-0046535 900 North Michigan Avenue
Plantation Chicago, Illinois 60611
Company, 312/440-4800
Limited
Oahu Sugar Hawaii 99-0105277 900 North Michigan Avenue
Company, Chicago, Illinois 60611
Limited 312/440-4800
Pioneer Mill Hawaii 99-0105278 900 North Michigan Avenue
Company, Chicago, Illinois 60611
Limited 312/440-4800
Puna Sugar Hawaii 99-0051215 900 North Michigan Avenue
Company, Chicago, Illinois 60611
Limited 312/440-4800
H. Hackfeld Hawaii 99-0037425 900 North Michigan Avenue
& Co., Ltd. Chicago, Illinois 60611
312/440-4800
Waiahole Hawaii 99-0144307 900 North Michigan Avenue
Irrigation Chicago, Illinois 60611
Company, 312/440-4800
Limited
Waikele Golf Hawaii 99-0304744 900 North Michigan Avenue
Club, Inc. Chicago, Illinois 60611
312/440-4800
1) The Additional Registrants listed are wholly-owned
subsidiaries of the registrant and are guarantors of the
registrant's Certificate of Land Appreciation Notes due
2008.
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 22
PART II OTHER INFORMATION
Item 1. Legal Proceedings 33
Item 6. Exhibits and Reports on Form 8-K 33
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
AMFAC/JMB HAWAII, INC.
Consolidated Balance Sheets
September 30, 1995 and December 31, 1994
(Dollars in Thousands)
(Unaudited)
A S S E T S
<CAPTION>
September 30, December 31,
1995 1994
-------------- -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $5,995 31,702
Short-term investments 150 31,998
Receivables-net 10,567 14,943
Inventories 52,269 52,765
Prepaid expenses 4,796 4,379
-------- --------
Total current assets 73,777 135,787
-------- --------
Investments 45,225 45,046
-------- --------
Property, plant and equipment:
equipment
Land and land improvements 340,739 346,169
Machinery and equipment 56,028 58,339
Construction in progress 1,837 1,060
-------- --------
398,604 405,568
Less accumulated dep.
and amortization 26,076 24,221
-------- --------
372,528 381,347
-------- --------
Deferred expenses 14,540 25,826
Other assets 28,619 26,541
-------- --------
$ 534,689 614,547
========== ==========
L I A B I L I T I E S
Current liabilities:
Current portion of
long-term debt $ 67,730 1,428
Accounts payable 9,672 9,882
Accrued expenses 9,168 15,372
Current portion of
deferred inc. taxes 11,504 4,205
Other amounts due
affiliates 20,498 1,005
----------- ----------- -----------
AMFAC/JMB HAWAII, INC.
Consolidated Balance Sheets - Continued
September 30, 1995 and December 31, 1995
(Dollars in Thousands)
(Unaudited)
Total current liabilities 118,572 31,892
-------- --------
Amounts due to affiliates 75,911 15,097
Acc.postretirement benefit
obligation 68,104 67,378
Long-term debt 27,644 95,556
Other long-term liabilities 40,625 45,077
Deferred income taxes 97,071 98,817
Certificate of Land
Appreciation Notes 220,696 384,737
-------- --------
Commitments and contingencies
(notes 2, 3, 4, 6, 7, 8 and 9)
Total liabilities 648,623 738,554
-------- --------
S T O C K H O L D E R S' E Q U I T Y (D E F I C I T )
Common stock, no par value
Authorized, issued and
outstanding 1,000 shares 1 1
Additional paid-in capital 12,055 14,384
Retained earnings (deficit) (125,990) (138,392)
--------- ---------
Total stockholders' equity
(deficit) (113,934) (124,007)
--------- ---------
$ 534,689 614,547
============ ===========
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<TABLE>
AMFAC/JMB HAWAII, INC.
Consolidated Statements of Operations
Three and Nine Months Ended September 30, 1995 and 1994
(Dollars in Thousands)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
-------------------- --------------------
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenue:
Agriculture 11,255 27,103 30,981 54,277
Property 7,572 5,508 37,029 58,046
------- ------- ------- -------
18,827 32,611 68,010 112,323
------- ------- ------- -------
Cost of sales:
Agriculture 17,418 30,285 37,817 53,051
Property 3,771 2,851 20,536 36,454
------- ------- ------- -------
21,189 33,136 58,353 89,505
Selling, general
and administrative 2,226 3,558 9,410 10,724
Depreciation and
amortization 1,676 1,547 4,996 4,629
------- ------- ------- -------
Total costs and expenses 25,091 38,241 72,759 104,858
Operating income(loss) (6,264) (5,630) (4,749) 7,465
------- ------- ------- -------
Non-operating income
(expenses):
Amortization of
financing costs (316) (468) (1,271) (1,426)
Interest expense (6,813) (6,110) (18,384) (18,607)
Interest income 32 440 1,315 1,087
------- ------- ------- -------
(7,097) (6,138) (18,340) (18,946)
------- ------- ------- -------
Loss before taxes (13,361) (11,768) (23,089) (11,481)
-------- ------- ------- -------
Income tax benefit (2,673) (4,571) (6,289) (4,193)
------- ------- ------- -------
Loss before
extraordinary item (10,688) (7,197) (16,800) (7,288)
AMFAC/JMB HAWAII, INC.
Consolidated Statements of Operations - Continued
Three and Nine Months Ended September 30, 1995 and 1994
(Dollars in Thousands)
Extraordinary gain from
extinguishment of debt
(less applicable income
of $18,670) -- -- 29,202 --
Net income (loss) $(10,688) (7,197) 12,402 (7,288)
======= ====== ======= ========
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<TABLE>
AMFAC/JMB HAWAII, INC.
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1995 and 1994
(Dollars in Thousands)
(Unaudited)
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $12,402 (7,288)
Items not requiring (providing) cash:
Depreciation and amortization 4,996 4,629
Amortization of deferred expenses 1,271 1,426
Equity in earnings of investments 11 48
Income tax expense (benefit) 12,381 (4,193)
Extraordinary gain from
extinguishment of debt (47,872) --
Changes in:
Receivables - net 4,376 (2,471)
Inventories 5,942 34,798
Prepaid expenses (417) 51
Accounts payable (210) (7,055)
Accrued expenses (6,204) (6,908)
Other amounts due affiliates 10,336 532
Other long-term liabilities (94) (2,337)
-------- --------
Net cash (used in) provided by
operating activities (3,082) 11,232
-------- --------
Cash flows from investing activities:
Property additions (3,983) (5,393)
Property disposals and retirements
- net 2,665 --
Investments in joint ventures
and partnerships (190) (147)
Short-term investments 31,848 (23,939)
Other assets (2,078) (1,709)
Other long-term liabilities (3,937) 1,168
-------- --------
Net cash provided by (used in)
investing activities 24,325 (30,020)
-------- --------
AMFAC/JMB HAWAII, INC.
Consolidated Statement of Cash Flows - Continued
Nine Month Ended September 30, 1995 and 1994
(Dollars in Thousands)
(Unaudited)
Cash flows from financing activities:
Deferred expenses -- (311)
Other costs related to extinguishment
of debt (704) --
Net repayments under bank
line-of-credit agreements -- (8,000)
Net repayments of long-term debt (1,610) (1,166)
Payment to redeem and purchase Certificate of Land
Appreciation Notes (COLAS) (105,450) --
Amounts due to affiliates 60,814 --
--------- --------
Net cash used in financing activities (46,950) (9,477)
--------- --------
Net decrease in cash and cash
equivalents (25,707) (28,265)
Cash and cash equivalents,
beginning of year 31,702 51,880
--------- --------
Cash and cash equivalents,
end of period $ 5,995 23,615
========= ========
Supplemental disclosure of cash flow
information:
Cash paid for interest
(net of amounts capitalized) $21,266 22,544
========= ========
Schedule of non-cash investing and
financing activities:
Transfer of property actively held
for sale to real estate inventories
and accrued costs relating to real
estate sales $ 5,446 5,280
========= ========
AMFAC/JMB HAWAII, INC.
Consolidated Statement of Cash Flows - Continued
Nine Month Ended September 30, 1995 and 1994
(Dollars in Thousands)
(Unaudited)
Disposition of debt:
Gain on extinguishment of debt $47,872 --
Face value of debt extinguished (164,041) --
Other costs related to debt
extinguishment 704 --
Write-off of deferred COLA costs 10,015 --
--------- --------
Cash paid to redeem and purchase COLAS $(105,450) --
========= ========
<FN>
Accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements
September 30, 1995 and 1994
(Dollars in Thousands)
Readers of this quarterly report should refer to the Company's
audited financial statements for the fiscal year ended
December 31, 1994, which are included in the Company's 1994
Annual Report, as certain footnote disclosures which would
substantially duplicate those contained in such audited
financial statements have been omitted from this report.
(1) BASIS OF ACCOUNTING
On November 17, 1988, the stockholders of Amfac, Inc.
("Amfac") agreed to the merger ("Merger") of Amfac with an
affiliate of JMB Realty Corporation ("JMB"). The Merger was
consummated on November 18, 1988 and, in connection therewith,
an affiliate of JMB owned approximately 95.17% of the common
stock of Amfac and an affiliate of Merrill Lynch, Pierce,
Fenner & Smith, Incorporated owned approximately 4.83%.
Amfac/JMB Hawaii (the "Company") was a wholly-owned subsidiary
of Amfac. On May 1, 1995, as part of an internal
reorganization, Amfac was merged into its ultimate parent
corporation, Northbrook Corporation ("Northbrook"). The
Company is now a wholly-owned, direct subsidiary of
Northbrook.
The Company has two primary business segments. The
agriculture segment ("Agriculture") is responsible for the
Company's activities related to the cultivation and processing
of sugar cane and other agricultural products. The real
estate segment ("Property") is responsible for land
development activities related to the Company's owned land in
the State of Hawaii, and the management and operation of the
Company's golf course facilities.
The consolidated financial statements as of December 31,
1994 and for the nine months ended September 30, 1995, include
the accounts of the Company and its wholly-owned subsidiaries.
All significant intercompany balances and transactions have
been eliminated in consolidation.
The Company's policy is to consider all amounts held with
original maturities of three months or less in U.S. Government
obligations, certificates of deposit and money market funds
(approximately $2,367 and $25,427 at September 30, 1995 and
December 31, 1994, respectively) as cash equivalents, which
approximates market. These amounts include $1,948 and $2,139
at September 30, 1995 and December 31, 1994, respectively,
which were restricted primarily to fund debt service on
certain long-term debt (see note 4).
The Company has adopted Statement of Financial Accounting
Standards ("SFAS") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities", which requires
that certain debt and equity securities that are bought and
held principally for the purpose of selling in the near term
as well as debt securities that are not held with the positive
intent and ability to hold to maturity to be reported at fair
value. The Company holds approximately $0 and $9,818 in
corporate debt securities and approximately $150 and $22,180
in U.S. Government Agency obligations as of September 30, 1995
and December 31, 1994, respectively. Due to the relative
short-term nature of the Company's investments and its policy
of generally holding such securities to maturity, the Company
considers its investments in such securities, which are
recorded at cost, to approximate fair value. Such investments
have been classified as short-term investments.
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
As part of the Company's agriculture operations, the
Company enters into commodities futures contracts and options
in sugar as deemed appropriate to reduce the risk of future
price fluctuations in sugar. These futures contracts and
options are accounted for as hedges and, accordingly, gains
and losses are deferred and recognized in cost of sales as
part of the production cost.
Investments in certain partnerships and joint ventures,
if any, over which the Company exercises significant influence
are accounted for by the equity method. Revenues include the
Company's equity in net income or loss from such investments.
To the extent the Company engages in such activities as a
general partner, the Company is contingently liable for the
obligations of its partnership and joint venture investments.
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
net realizable value.
Land 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 market.
For financial reporting purposes, the Company uses the
effective interest rate method and accrues interest on the
Certificate of Land Appreciation Notes due 2008 ("COLAS") at
4% per annum, which is the "Mandatory Base Interest" (see note
3).
Interest is capitalized to qualifying assets (principally
real estate under development) during the period that such
assets are undergoing activities necessary to prepare them for
their intended uses. Such capitalized interest is charged to
cost of sales as revenue from the real estate development is
recognized. No material amounts have been capitalized for the
nine months ended September 30, 1995 and 1994.
The Company and its subsidiaries report its taxes as part
of the consolidated tax return of the Company's parent,
Northbrook. The Company and its subsidiaries entered into a
tax indemnification agreement in 1989 with Amfac which
indemnifies the Company and its subsidiaries for
responsibility for all past, present and future federal and
state income tax liabilities (other than income taxes which
are directly attributable to cancellation of indebtedness
income caused by the repurchase or redemption of securities as
provided for in or contemplated by the Repurchase Agreement)
(see note 3).
Effective January 1, 1993, the Company adopted SFAS No.
109 - Accounting for Income Taxes. This statement establishes
financial accounting and reporting standards for the effects
of income taxes that result from an enterprise's activities
during the current and preceding years. SFAS No. 109 changed
the Company's previous practice in that it requires the
accrual of deferred taxes and the recording of a provision for
taxes in the separate financial statements of the members of a
consolidated tax group. In addition, SFAS No. 109 requires
the recognition of deferred tax assets and liabilities for the
tax effects of differences between assigned values and tax
bases of assets acquired and liabilities assumed in a purchase
business combination. Accordingly, current and deferred taxes
have been allocated to the Company as if the Company were a
separate taxpayer. However, in general, the tax
indemnification agreement does not
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
require the Company to actually pay income taxes; current
taxes payable or receivable (excluding income taxes which are
directly attributable to cancellation of indebtedness income
caused by the repurchase or redemption of securities as
provided for in or contemplated by the Repurchase Agreement)
have been reflected as deemed contributions and distributions,
respectively, to additional paid in capital in the
accompanying consolidated financial statements.
(2) AMOUNTS DUE TO AFFILIATES - FINANCING
The maturity date of the approximately $15,097 of
remaining acquisition-related financing owed to affiliates is
December 31, 1996. Affiliates also provided financing of
approximately $7,700 during March 1995 with a maturity date of
December 31, 1996; such borrowing was repaid in May 1995. The
amounts due to affiliates on December 31, 1996 bear interest
at a rate per annum equal to the prime interest rate (8.75% at
September 30, 1995) plus one percent.
On June 1, 1995, the Company borrowed $52,000 from
Northbrook to redeem Class A COLAS pursuant to the Redemption
Offer (see note 3). The Company has also borrowed
approximately $8,814 as of September 30, 1995, consisting of
approximately $4,400 for the August 1995 COLA Base Interest
payment and approximately $4,414 for working capital needs.
The loans from Northbrook are payable interest only, mature on
June 1, 1997 and carry an interest rate per annum equal to the
prime interest rate plus two percent. Pursuant to the
Indenture relating to the COLAS, the amounts borrowed from
Northbrook are considered "Senior Indebtedness" to the COLAS.
(3) CERTIFICATE OF LAND APPRECIATION NOTES
The COLAS are unsecured debt obligations of the Company.
Interest on the COLAS is payable semi-annually on February 28
and August 31 of each year. The COLAS mature on December 31,
2008, and bear interest after the Final Issuance Date (August
31, 1989) at a rate of 10% per annum ("Base Interest") of the
outstanding principal balance of the COLAS on a cumulative,
non-compounded basis, of which 6% per annum is contingent
("Contingent Base Interest") and payable only to the extent of
Net Cash Flow (Net Cash Flow for any period is generally an
amount equal to 90% of the Company's net cash revenues and
receipts after payment of cash expenditures, including the
Qualified Allowance (as defined) other than federal and state
income taxes and after the establishment by the Company of
reserves).
In each calendar year from 1989 through 1995, the
outstanding principal balance of the COLAS can be reduced by a
maximum of 5% per annum of the original principal balance, on
a cumulative basis, to the extent of Net Cash Flow in any year
in excess of all current and unpaid deferred Contingent Base
Interest and, after such date, principal reductions from
remaining Net Cash Flow in excess of all current and unpaid
deferred Contingent Base Interest will be made at the election
of the Company (subject to certain restrictions). The COLAS
bear additional contingent interest in any year, after any
principal reduction, equal to 55% of remaining Net Cash Flow.
Upon maturity, holders of COLAS will be entitled to receive
the remaining outstanding principal balance of the COLAS plus
unpaid mandatory Base Interest plus additional interest equal
to the unpaid Contingent Base Interest, to the extent of the
Maturity Market Value (Maturity Market Value generally means
90% of the excess of the Fair Market Value (as defined) of the
Company's assets at Maturity over its
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
liabilities incurred in connection with its operations), plus
55% of the remaining Maturity Market Value.
On March 14, 1989, Amfac/JMB Finance ("Finance"), a
wholly-owned subsidiary of Northbrook and the Company entered
into an agreement (the "Repurchase Agreement") concerning
Finance's obligations to repurchase, on June 1, 1995 and 1999,
the COLAS upon request of the holders thereof. The COLAS were
issued in two units consisting of one Class A and one Class B
COLA. As specified in the Repurchase Agreement, the
repurchase of the Class A COLAS may have been requested by the
holders of such COLAS on June 1, 1995 at a price equal to the
original principal amount of such COLAS ($.5) minus all
payments of principal and interest allocated to such COLAS.
The cumulative interest paid per Class A COLA through June 1,
1995 was $.135. The repurchase of the Class B COLAS may be
requested of Finance by the holders of such COLAS on June 1,
1999 at a price equal to 125% of the original principal amount
of such COLAS ($.5) minus all payments of principal and
interest allocated to such COLAS. Through the date of this
report, the cumulative interest paid per Class B COLA is
approximately $.145.
On March 14, 1989, Northbrook entered into a keep-well
agreement with Finance, whereby it agreed to contribute
sufficient capital or make loans to Finance to enable Finance
to meet its COLA repurchase obligations described above.
Notwithstanding Finance's repurchase obligations, the Company
may elect to redeem any COLAS requested to be repurchased at
the specified price.
On March 15, 1995, pursuant to the indenture that governs
the terms of the COLAS (the "Indenture"), the Company elected
to offer to redeem (the "Redemption Offer") all Class A COLAS
from the registered holders, thereby eliminating Finance's
obligation to satisfy the Class A COLA repurchase options
requested by such holders as of June 1, 1995. Pursuant to the
Redemption Offer, and in accordance with the terms of the
Indenture, the Company was therefore obligated to purchase any
and all Class A COLAS submitted pursuant to the Redemption
Offer at a price of $.365 per Class A COLA. In conjunction
with the Company's Redemption Offer, the Company made a tender
offer (the "Tender Offer") to purchase up to approximately
$68,000 principal value of the Class B COLAS at a price of
$.220 per Class B COLA from COLA holders electing to have
their Class A COLAS repurchased.
The two offers to repurchase the COLAS terminated on
April 17, 1995 in accordance with their terms and with the
Indenture. Approximately 229,000 Class A COLAS were submitted
for repurchase pursuant to the Redemption Offer and
approximately 99,000 Class B COLAS were submitted for
repurchase pursuant to the Tender Offer, requiring an
aggregate payment by the Company of approximately $105,450 on
June 1, 1995. The Company used its available cash to purchase
Class B COLAS pursuant to the Tender Offer and borrowed
$52,000 from Northbrook to purchase Class A COLAS pursuant to
the Redemption Offer.
As a result of the repurchases, the Company retired
approximately $164,041 in face value of COLA debt and
recognized a financial statement gain of approximately $29,202
(net of income taxes of $18,670, the write-off of deferred
financing costs of $10,015 and expenses of $704). Such gain
is treated as cancellation of indebtedness income for tax
purposes and, accordingly, the income taxes related to the
Class A Redemption Offer (approximately $9,157) will not be
indemnified by the tax agreement with Amfac (see note 1).
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
The terms of the Indenture relating to the COLAS place
certain restrictions on the Company's declaration and payment
of dividends. Such restrictions generally relate to the
source, timing and amounts 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"). An initial funding of $60,000 was received in
June 1991. The remaining balance of $6,000 was added to the
principal balance on July 1, 1992 in payment of the first year
of accrued interest on the loan. The non-recourse loan is
secured by a first mortgage on the Kaanapali Golf Courses, and
is considered "Senior Indebtedness" (as defined in the
Indenture relating to the COLAS). The loan bears 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 subsequent year (9% at July 1, 1995) plus one percent or
(ii) ten percent per annum through June 30, 1993 and nine
percent per annum thereafter. The loan is payable interest
only on a quarterly basis. The annual interest payments are
in excess of the cash flow generated by the Kaanapali Golf
Courses and the Company ceased making required debt service
payments in April 1995. The Company has been working with the
ERS to renegotiate the terms of the loan including a possible
extension of the June 1996 maturity date. The principal
balance has been included in the current portion of long-term
debt as of September 30, 1995 in the accompanying consolidated
financial statements. In conjunction with the Company's
renegotiations, the Company made an interest payment of $1,650
in August 1995. Under the current loan terms, unpaid interest
for the nine months ended September 30, 1995 was $2,970.
Although the Company expects to successfully conclude the
renegotiation, there can be no assurance that new terms will
be consummated, or consummated on terms favorable to the
Company.
In January 1993, The Lihue Plantation Company, Limited
("Lihue") obtained a ten-year $13,250 loan used to fund the
acquisition of Lihue's power generation equipment. The
$13,250 loan, constituting "Senior Indebtedness" under the
COLAS' Indenture, consists of two ten-year amortizing term
loans of $10,000 and $3,250, respectively, payable in
quarterly installments commencing July 1, 1993 in the
principal amount of $250, and $81 (plus interest),
respectively. The $10,000 and $3,250 loans have outstanding
balances of $7,750 and $1,624, respectively, as of September
30, 1995 and bear interest at a rate equal to the prime rate
(8.75% at September 30, 1995) plus three and one half percent
and the prime rate plus four and one-half percent,
respectively. Lihue has purchased an interest rate agreement
which effectively caps the prime rate for the first five years
of the loan agreement at eight percent. The loan is secured
by the Lihue power generation equipment, sugar inventories and
receivables, certain other assets and real property of the
Company and has limited recourse to the Company and certain
other subsidiaries.
In October 1993, Waikele Golf Club, Inc. ("WGCI"), a
wholly-owned subsidiary of the Company that owns and operates
the Waikele Golf Course, obtained a five-year $20,000 loan
facility from two lenders. The loan consists of two $10,000
amortizing loans. Each loan bears interest only for the first
two years and interest and principal payments based upon
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
an assumed 20-year amortization period for the remaining three
years. The loans bear interest at prime plus 1/2% and LIBOR
(5.875% at September 30, 1995) plus 3%, respectively. WGCI
received an initial funding of $14,000, of which $600 was held
back by the lenders to pay interest. In October 1994, in
accordance with the loan agreement, the Company received an
additional funding of $6,000 and a release of the $600
interest holdback, both of which were contingent upon
achieving a certain level of Net Operating Income (as defined)
by the golf course during the first six months of 1994. The
loan is secured by WGCI's assets (the golf course and related
improvements and equipment), is guaranteed by the Company, and
is considered "Senior Indebtedness" (as defined in the
Indenture relating to the COLAS). As of September 30, 1995,
scheduled annual principal maturities are $101 in 1995, $405
in 1996 and 1997, and the balance of $19,089 in 1998.
(5) SEGMENT INFORMATION
Agriculture and Property comprise separate industry
segments of the Company. Operating Income - Other consists
primarily of unallocated overhead expenses and Total Assets -
Other consists primarily of cash and deferred expenses. Total
assets at the balance sheet dates, capital expenditures,
operating income (loss) and depreciation and amortization
during the nine months ended September 30, 1995 and 1994 are
set forth below by each industry segment:
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
--------- ---------
<S> <C> <C>
Total Assets:
Agriculture $316,344 321,906
Property 199,534 207,980
Other 18,811 84,661
--------- ---------
$534,689 614,547
========= =========
Capital Expenditures:
Agriculture $2,283 2,658
Property 1,700 2,735
Other -- --
--------- ---------
$3,983 5,393
========= =========
Operating income (loss):
Agriculture (11,837) (3,991)
Property 8,258 14,506
Other (1,170) (3,050)
--------- ---------
$(4,749) 7,465
========== =========
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
Nine Months Nine Months
Ended Ended
September 30, September 30, 1995 1994
--------- ---------
Depreciation and amortization:
Agriculture $3,426 3,642
Property 1,425 838
Other 145 149
--------- ---------
$4,996 4,629
========= =========
</TABLE>
(6) TRANSACTIONS WITH AFFILIATES
The Company incurred interest expense of approximately
$894 for the nine months ended September 30, 1994 and
approximately $3,304 for the nine months ended September 30,
1995 in connection with the acquisition and additional
financing, obtained from an affiliate, of which $2,810 was
unpaid as of September 30, 1995.
With respect to any calendar year, JMB or its affiliates
are entitled to a Qualified Allowance in an amount equal to:
(i) approximately $6,200 during each of the calendar years
1989 through 1993, and (ii) thereafter, 1-1/2% per annum of
the Fair Market Value (as defined) of the gross assets of the
Company and its subsidiaries (other than cash and cash
equivalents and Excluded Assets (as defined)). However, such
amount shall be paid for each year only following the payment
of a specified level of Base Interest to the holders of the
COLAS. Any portion of the Qualified Allowance not paid for
any year shall accumulate without interest. Any Qualified
Allowance subsequent to 1989 has been deferred and is payable
only to the extent future Net Cash Flows are sufficient to pay
the holders of the COLAS a specified level of return and,
accordingly, no such amounts have been reflected in the
accompanying consolidated financial statements.
The Company, its subsidiaries, and their joint ventures
reimburse Northbrook, JMB and their affiliates for direct
expenses incurred on their behalves, including salaries and
salary-related expenses incurred in connection with the
management of the Company's (or subsidiaries' or joint
ventures') operations. The total of such costs was
approximately $375 the nine months ended September 30, 1994
and approximately $452 for the nine months ended September 30,
1995, $452 of which was unpaid as of September 30, 1995. In
addition, as of September 30, 1995, the other amounts due to
affiliates includes $9,157 of income taxes payable related to
the Class A COLA Redemption Offer (see note 3). Also, the
Company pays a non-accountable reimbursement of approximately
$30 per month to JMB and its affiliates for general overhead
expenses, all of which was paid as of September 30, 1995.
JMB Insurance Agency, Inc. earns insurance brokerage
commissions in connection with providing the placement of
insurance coverage for certain of the properties and
operations of the Company. Such commissions are comparable to
those available to the Company in similar dealings with
unaffiliated third parties. The total of such commissions for
the nine months ended September 30, 1994 was approximately
$967 and approximately $1,697 for the nine months ended
September 30, 1995, all of which was paid as of September 30,
1995.
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
Northbrook and its affiliates allocate certain charges
for services to the Company based upon the estimated level of
services, of which $8,079 was unpaid as of September 30, 1995.
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.
(7) EMPLOYEE BENEFIT PLANS
The Company participates in benefit plans covering
substantially all 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.
One of the Company's defined benefit plans, the
Retirement Plan for the Employees of Amfac, Inc. (the "Plan"),
terminated effective December 31, 1994. The settlement of the
Plan occurred on May 11, 1995. The Company intends to
introduce a new plan for the beneficiaries of the plan, which
will be effective upon the termination of the current Plan.
The new plan's cost to the Company and the benefits provided
to the participants are expected to be comparable to the
current Plan.
(8) COMMITMENTS AND CONTINGENCIES
The Company is involved in various matters of litigation
and other claims. Management, with knowledge of facts and
after consultation with legal counsel, is of the opinion that
the Company's liability (if any), when ultimately determined,
will not have a material adverse effect on the Company's
financial position.
The Company's Property segment has contractual
commitments (related to project costs) of approximately $2,800
as of September 30, 1995. 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, 1995, certain portions of the
Company's land not currently under development or used in
sugar operations are mortgaged as security for approximately
$2,882 of performance bonds related to property development.
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Concluded
(Dollars in Thousands)
(9) INCOME TAXES
Deferred income taxes reflect the net tax effects of
temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used
for income tax purposes. Significant components of the Company's
deferred tax liabilities and assets
as of December 31, 1994 are as follows:
Deferred tax (assets):
Post retirement benefits $(28,461)
Interest accruals (5,345)
Other accruals (4,513)
Total gross deferred tax (assets) (38,319)
---------
Deferred tax liabilities:
Plant and equipment, principally due to differences
in depreciation and purchase accounting adjustments 6,146
Accounts receivable, related to profit on sales of sugar 2,255
Inventories, principally due to sugar production
costs, capitalized interest and purchase 1,962
accounting adjustments
Land and land improvements, principally due
to purchase accounting adjustments 105,926
Deferred gains, due to installment gains for income 10,079
tax purposes
Investments in unconsolidated entities, principally
due to purchase accounting adjustments 14,973
--------
Total deferred tax liabilities 141,341
--------
Net deferred tax liability $103,022
=========
(10) ADJUSTMENTS
In the opinion of the Company, all adjustments (consisting
solely of normal recurring adjustments) necessary for a fair
presentation have been made to the accompanying figures as of
September 30, 1995, and for the three and nine months ended
September 30, 1995 and 1994.
<TABLE>
AMFAC/JMB FINANCE, INC.
Balance Sheets
September 30, 1995 and December 31, 1994
(Dollars in thousands)
(Unaudited)
<CAPTION>
A s s e t s
September 30, December 31,
1995 1994
----------- -----------
<S> <C> <C>
Current assets:
Cash $ 1 1
Receivable from an affiliate -- 140,425
---------- ---------
$ 1 140,426
========= ==========
L i a b i l i t y a n d S t o c k h o l d e r ` s E q u i t y
Current liabilities:
Repurchase obligation (note 2) $ -- 140,425
--------- -----------
Common stock, $1 par value; authorized, issued
and outstanding - 1,000 shares 1 1
--------- -----------
$ 1 140,426
========== ==========
<FN>
The accompanying notes are an integral part of these balance sheets.
</TABLE>
AMFAC/JMB FINANCE, INC.
Notes to the Balance Sheets
(Unaudited)
(1) ORGANIZATION AND ACCOUNTING POLICY
Amfac/JMB Finance, Inc. ("Finance") was incorporated
November 7, 1988 in the State of Illinois. Finance has had no
financial operations. All of the outstanding shares of
Finance are owned by Northbrook Corporation ("Northbrook"),
which is majority-owned by 900 Partners' Investments.
(2) RECEIVABLE FROM AN AFFILIATE
On March 14, 1989, Northbrook entered into a keep-well
agreement with Finance, whereby it agreed to contribute
sufficient capital to Finance to enable Finance to meet the
COLA repurchase obligations described below in note 3.
Pursuant to Northbrook's obligation to Finance under the keep-
well agreement, Finance had recorded a receivable as of
December 31, 1994, equal to the maximum amount of its
liability from the COLA repurchase obligations of
approximately $140,425,000, and accordingly, had classified
such amount as a current asset on its financial statements.
On March 15, 1995, pursuant to the indenture that governs
the terms of the COLAS (the "Indenture"), Amfac/JMB Hawaii,
Inc. elected to exercise its right to redeem, and therefore
was obligated to purchase, any and all Class A COLAS submitted
pursuant to the Redemption Offer at a price of $365 per Class
A COLA. Pursuant to Amfac/JMB Hawaii, Inc.'s election to
redeem the Class A COLAS for repurchase, Amfac/JMB Hawaii,
Inc. assumed Finance's maximum amount of its liability from
the COLA repurchase obligations of $140,425,000, and
accordingly, Finance removed the receivable and liability from
its financial statements.
(3) REPURCHASE OBLIGATIONS
On March 14, 1989, Finance and a subsidiary of Northbrook
(Amfac/JMB Hawaii, Inc.) entered into an agreement (the
"Repurchase Agreement") concerning Finance's obligation (on
June 1, 1995 and 1999) to repurchase, upon request of the
holders thereof, the Certificate of Land Appreciation Notes
due 2008 ("COLAS"), to be issued by Amfac/JMB Hawaii, Inc. in
conjunction with the acquisition of Amfac/JMB Hawaii, Inc.. A
total aggregate principal amount of $384,737,000 of COLAS were
issued during the offering, which terminated on August 31,
1989. The COLAS were issued in two units consisting of one
Class A and one Class B COLA. As specified in the Repurchase
Agreement, the repurchase of the Class A COLAS may have been
requested of Finance by the holders of such COLAS on June 1,
1995 at a price equal to the original principal amount of such
COLAS ($500) minus all payments of principal and interest
allocated to such COLAS. The cumulative interest paid per
Class A COLA through June 1, 1995 was $135. The repurchase of
the Class B COLAS may be requested of Finance by the holders
of such COLAS on June 1, 1999 at a price equal to 125% of the
original principal amount of such COLAS ($500) minus all
payments of principal and interest allocated to such COLAS.
To date, the cumulative interest paid per Class B COLA is
approximately $145.
On March 14, 1989, Northbrook entered into a keep-well
agreement with Finance, whereby it agreed to contribute
sufficient capital or make loans to Finance to enable Finance
to meet its COLA repurchase obligations described above.
As discussed in note 2, Amfac/JMB Hawaii, Inc. elected to
redeem the Class A COLAS for repurchase, thereby assuming
Finance's repurchase liability for June 1, 1995.
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
All references to "Notes" herein are to Notes to
Consolidated Financial Statements contained in this report.
On December 5, 1988, the Company commenced an offering to
the public of COLAS pursuant to a Registration Statement on
Form S-1 under the Securities Act of 1933. A total of 384,737
COLAS were issued prior to the termination of the offering on
August 31, 1989. The net proceeds received from the sale of
the COLAS totaled approximately $352 million (after deduction
of organization and offering expenses of approximately $33
million). Such net proceeds have been used to repay a portion
of the acquisition-related financing, which was incurred to
pay certain costs associated with the Merger including a
portion of the Merger consideration paid to shareholders of
Amfac.
On March 14, 1989, Amfac/JMB Finance ("Finance"), a
wholly-owned subsidiary of Northbrook Corporation
("Northbrook"), which is majority-owned by 900 Partners'
Investments, and the Company entered into an agreement (the
"Repurchase Agreement") concerning Finance's obligations (on
June 1, 1995 and 1999) to repurchase the COLAS upon request of
the holders thereof. The COLAS were issued in two units
consisting of one Class A and one Class B COLA. As specified
in the Repurchase Agreement, the repurchase of the Class A
COLAS may have been requested by the holders of such COLAS on
June 1, 1995 at a price equal to the original principal amount
of such COLAS ($500) minus all payments of principal and
interest allocated to such COLAS. The cumulative interest
paid per Class A COLA through June 1, 1995 was $135. The
repurchase of the Class B COLAS may be requested of Finance by
the holders of such COLAS on June 1, 1999 at a price equal to
125% of the original principal amount of such COLAS ($500)
minus all payments of principal and interest allocated to such
COLAS. Through the date of this report, the cumulative
interest paid per Class B COLA is approximately $145.
On March 14, 1989, Northbrook entered into a keep-well
agreement with Finance, whereby it agreed to contribute
sufficient capital or make loans to Finance to enable Finance
to meet its COLA repurchase obligations described above.
Notwithstanding Finance's repurchase obligations, the Company
may elect to redeem any COLAS requested to be repurchased at
the specified price.
On March 15, 1995, pursuant to the indenture that governs
the terms of the COLAS (the "Indenture"), the Company elected
to offer to redeem (the "Redemption Offer") all Class A COLAS
from its registered holders. Pursuant to the Redemption
Offer, and in accordance with the terms of the Indenture, the
Company was therefore obligated to purchase any and all Class
A COLAS submitted pursuant to the Redemption Offer at a price
of $365 per Class A COLA. In conjunction with the Company's
Redemption Offer, the Company made a tender offer (the "Tender
Offer") to purchase up to approximately $68 million principal
value of the Class B COLAS at a price of $220 per Class B COLA
from COLA holders electing to have their Class A COLAS
repurchased.
The two offers to repurchase the COLAS terminated on
April 17, 1995 in accordance with their terms and with the
Indenture. Approximately 229,000 Class A COLAS were submitted
for repurchase pursuant to the Redemption Offer and
approximately 99,000 Class B COLAS were submitted for
repurchase pursuant to the Tender Offer, requiring an
aggregate payment of the Company of approximately $105 million
on June 1, 1995. The Company used its available cash to
purchase Class B COLAS pursuant to the Tender Offer and
borrowed $52 million from Northbrook to purchase Class A
COLAS pursuant to the Redemption Offer. Accordingly, the
Company has classified $52 million of the approximately $105
million paid on June 1, 1995 as a long-term liability on its
consolidated balance sheets.
The $52 million loan from Northbrook matures on June 1,
1997, is payable interest only and carries an interest rate
per annum equal to the prime rate (8.75% at September 30,
1995) plus 2%. The Company has also borrowed approximately
$8.8 million as of September 30, 1995 consisting of
approximately $4.4 million for the August 1995 COLA Base
Interest payment and approximately $4.4 million for working
capital needs. Pursuant to the Indenture relating to the
COLAS, these amounts borrowed from Northbrook are considered
"Senior Indebtedness" to the COLAS.
As a result of the repurchases, the Company retired
approximately $164 million face value of COLA debt and
recognized a financial statement gain of approximately $29.2
million (net of income taxes of $18.7 million, the write-off
of deferred financing costs of $10.0 million and expenses of
$.7 million). Such gain is treated as cancellation of
indebtedness income for tax purposes and, accordingly, the
income taxes related to the Class A Redemption Offer
(approximately $9.2 million) will not be indemnified by the
tax agreement with Amfac (see note 1).
Pursuant to the terms of the Indenture relating to the
COLAS, the Company is required to maintain a Value Maintenance
Ratio of 1.05 to 1.00. Such ratio is equal to the relationship
of the Company's Net Asset Value (defined as the excess of (i)
Fair Market Value of the gross assets of the Company over (ii)
the amount of the liabilities (excluding liabilities resulting
from generally accepted accounting principles enacted
subsequent to the date of the Indenture) of the Company other
than the outstanding principal balance of the COLAS, any
unpaid Mandatory and Contingent Base Interest, and certain
other liabilities, which were not outstanding as of December
31, 1994) to the sum of (x) the outstanding principal amount
of the COLAS, plus (y) any unpaid Base Interest, plus (z) the
outstanding principal balance of any Indebtedness incurred to
redeem COLAS. The COLA Indenture requires the Company to
obtain independent appraisals of the fair market value of the
gross assets used to calculate the Value Maintenance Ratio as
of December 31 in each even-numbered calendar year.
Accordingly, the Company obtained independent appraisals of
substantially all of its gross real estate assets as of
December 31, 1994; the appraised values of such assets ranged
in total from approximately $600-$650 million. Based on such
values, and after consideration of the other components of the
computation, the Company was in compliance with the Value
Maintenance Ratio as of December 31, 1994. It should be noted
that the concept of Fair Market Value is intended to represent
the value that an independent arm's-length purchaser, seeking
to utilize such asset for its highest and best use would pay,
taking into consideration the risks and benefits associated
with such use or development, current restrictions on
development (including zoning limitations, permitted
densities, environmental restrictions, restrictive covenants,
etc.) and the likelihood of changes to such restrictions;
provided, however, that with respect to any Fair Market Value
determination of all of the assets of the Company, such assets
shall not be valued as if sold in bulk to a single purchaser.
There can be no assurance that the Company's properties can be
ultimately sold at prices equivalent to their appraised
values.
In June 1991, the Company obtained a five-year $66
million loan from the Employees' Retirement System of the
State of Hawaii ("ERS"). An initial funding of $60 million
was received in June 1991. The remaining balance of $6
million was added to the principal balance on July 1, 1992 in
payment of the first year of accrued interest on the loan.
The non-recourse loan is secured by a first mortgage on the
Kaanapali Golf Courses, and is considered "Senior
Indebtedness" (as defined in the Indenture relating to the COLAS).
The loan bears 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 subsequent year (9% at July 1, 1995)
plus one percent or (ii) ten percent per annum through June 30,
1994 and nine percent per annum thereafter. The loan is payable
interest only on a quarterly basis. The annual interest payments
are in excess of the cash flow generated by the Kaanapali Golf
Courses and the Company ceased making required debt service payments
in April 1995. The Company is working with the ERS to
renegotiate the terms of the loan including a possible
extension of the June 1996 maturity date. The principal
balance is included in the current portion of long-term debt
as of September 30, 1995 in the accompanying consolidated
financial statements. In conjunction with the Company's
negotiations, the Company made an interest payment of
approximately $1.7 million in August 1995. Under the current
loan terms, unpaid interest for the nine months ended
September 30, 1995 was approximately $3.0 million. Although
the Company expects to successfully conclude the loan
renegotiation, there can be no assurance that the
renegotiation will be consummated, or consummated on terms
favorable to the Company.
In October 1993, Waikele Golf Club, Inc. ("WGCI"), a
wholly-owned subsidiary of the Company that owns and operates
the Waikele Golf Course, obtained a five-year $20 million loan
facility from two lenders. The loan consists of two $10
million amortizing loans. Each loan bears interest only for
the first two years and interest and principal payments based
upon an assumed 20-year amortization period for the remaining
three years. The loans bear interest at prime plus 1/2% and
LIBOR (5.875% at September 30, 1995) plus 3%, respectively.
WGCI received an initial funding of $14 million, of which $.6
million was held back by the lenders to pay interest. In
October 1994, in accordance with the loan agreement, the
Company received an additional funding of $6 million and a
release of the $.6 million interest holdback, both of which
were contingent upon achieving a certain level of Net
Operating Income (as defined) by the golf course during the
first six months of 1994. The loan is secured by WGCI's
assets (the golf course and related improvements and
equipment), is guaranteed by the Company, and is considered
"Senior Indebtedness" (as defined in the Indenture relating to
the COLAS).
Pursuant to an agreement entered into with the City of
Honolulu in 1991 relating to the development of the Company's
Waikele project, if the Company sells the Waikele golf course,
depending on the price and other circumstances, a payment of
up to $15 million might be given to the City to be used to
assist in the City's affordable housing developments.
A significant portion of the Company's cash needs result
from the nature of the real estate development business, which
requires significant investment in preparing development
plans, seeking land urbanization and other governmental
approvals, and completing infrastructure improvements prior to
the realization of sales proceeds. The Company has funded its
cash requirements to date primarily through the use of short-
term bank borrowings, long-term financing secured by its golf
courses on Maui and Oahu, borrowings from affiliates and
revenues generated from the development and sale of its
properties and investments. Funding of the Company's future
cash requirements is dependent upon obtaining appropriate
financing and revenues generated from the development and sale
of its properties. Although under current market conditions
development financing is difficult to obtain, the Company is
not currently seeking this type of financing based upon the
stage of development of its various land holdings in Hawaii.
In order to generate additional cash flows for the
Company, management has identified certain land parcels that
are not included in the Company's long-term development plans.
The Company continues to pursue an aggressive land sales
program for these non-strategic assets. During 1995, the
Company has generated approximately $21.1 million in land
sales, most of which related to non-strategic parcels.
During 1994, the Company generated approximately $44.3
million in property sales (primarily from the sale of the last
two remaining residential parcels at the Waikele project on
Oahu ("Waikele") for approximately $37 million). The
remaining $7.3 million of property sales in 1994 related to
land sales on the islands of Maui, Kauai and Hawaii.
Additionally, the Company received an approximate $4.2 million
deposit, which represents the purchase price for 452 acres on
Maui.
At September 30, 1995, the Company had cash and cash
equivalents of approximately $6.1 million, which is a decrease
from the amounts held at December 31, 1994 primarily due to
the repurchase of the COLAS as described above.
The Company intends to use its cash reserves, sales
proceeds and financing or joint venture arrangements to meet
its short-term and long-term liquidity requirements, which
include funding the development costs remaining at Waikele,
West Maui, and Kauai, agricultural deficits, payment of
interest expense, and the repayment of principal on debt
obligations, as necessary. The Company's long-term liquidity
is dependent upon its ability to obtain additional financing
and the consummation of certain property sales. There can be
no assurance that additional long-term financing can be
obtained or property sales consummated. The Company's land
holdings on Maui and Kauai are its primary source of future
land sale revenues. However, due to current market
conditions, the difficulty in obtaining land use approvals and
the high development costs of required infrastructure, the
planned development of these land holdings and the ability to
generate cash flow from them are longer term in nature than
Waikele. Accordingly, if no such financing can be obtained or
additional property sales consummated, the Company will defer
(to the extent possible) development costs and capital
expenditures to meet liquidity requirements. Additionally,
the Company's plans for property sales may also be adversely
impacted by the inability of potential buyers to obtain
financing.
The Company does not expect to generate a sufficient
level of Net Cash Flow to pay Base Interest in excess of four
percent for 1995. The COLA Base Interest payment of
approximately $4.4 million due August 31, 1995 was borrowed
from Northbrook. The loan is due June 1, 1997, accrues
interest at the prime rate plus two percent and is considered
"Senior Indebtedness".
During 1995 and 1994, the Company implemented certain
cost savings measures, which deferred development project
costs and capital expenditures for longer-term projects. The
Company's Property segment is anticipated to expend an
additional approximately $6.0 million in project costs during
the remainder of 1995.
The Company has recently implemented a plan to
restructure its sugar operations, including consolidation of
the operations at its two Kauai plantations and changing to a
seasonal mode of operations at each of its plantations
(consistent with other global sugar operations). The Company
anticipates that significant cost savings related to the sugar
operations will be associated with these changes.
The price of raw sugar that the Company receives is based
upon the price of domestic sugar (less delivery and
administrative costs) as currently controlled by U.S.
Government price support legislation (which is currently
scheduled to expire in 1995). Based upon information
available as of the date of this report, the Company is
hopeful that new legislation will continue to include support
for the domestic sugar industry on a basis comparable with the
current program. However, at this stage, there can be no
certainty whether government price supports will or will not
be continued, reduced or eliminated entirely. In fact, the
current United States Department of Agriculture chairman is
proposing a $15 billion reduction in the various agricultural
programs over a five year period. Such a reduction or an
elimination of price supports could have a material adverse affect
on the Company's agriculture operations. The Company is currently
evaluating its alternatives in the event price supports are reduced or
eliminated, including the possible cessation of its remaining
sugar cane operations.
In August 1993, the Company announced its plans to phase
out the sugar operations at its Oahu Sugar Company by mid-
1995, such phase out coinciding with the expiration of its
major land lease on Oahu. Oahu Sugar, which operated almost
entirely on leased land, had incurred losses in its sugar
operations in prior years and expected those losses to
continue in the future. For several months, Oahu Sugar had
negotiated with the plantation's major lessor to reach an
agreement on concessions in rent and other lease terms
required by Oahu Sugar to continue its agricultural
operations. To grant such concessions, the lessor required a
long-term commitment from the plantation that it would
continue its sugar operations. Because of the plantation's
losses, along with the future uncertainties posed by the
domestic agriculture price support legislation and
international trade policy, Oahu Sugar could not agree to such
a long-term commitment to stay in operation. Oahu Sugar
completed the final harvest of its crop in April 1995. The
Company has shut down Oahu Sugar and any estimated future
costs related to the shut down are not expected to have a
material adverse effect on the financial condition of the
Company. The Company is currently examining options for
developing the fee simple land it owns adjacent to the Oahu
Sugar mill site, including seeking the necessary government
approvals for a light industrial subdivision for a portion of
the property, as discussed below.
During the fourth quarter of 1993, the Company
substantially completed an earlier downsizing and
restructuring of its operations. The changes involved (among
other things) a reduction in management personnel and the
creation of separate operating divisions for real estate and
agriculture. As part of the restructuring, Roderick T.
Wilson, President, CEO and Director, and Donald S. DeCastro,
Executive Vice President and COO, resigned their positions
effective December 31, 1993 and assisted with transition
matters pursuant to consulting arrangements which expire in
1995 and 1994, respectively. The two new operating divisions
now report directly to senior management located in Chicago.
In addition, in recognition of the slower pace of development
activity and the need to conserve cash resources, the Company
in 1994 completed a reorganization of its operations.
Pursuant to this restructuring, there has been an approxi
mately 10% reduction in employees. The Company also revised
its management compensation and incentive programs.
Compensation for the entire management group is closely linked
with achievement of the financial goals of the Company.
Management will continue to closely monitor and manage the
level of expenditures. The restructuring is expected to
reduce the Company's operating costs and improve its overall
efficiency.
RESULTS OF OPERATIONS
GENERAL:
The Company and its subsidiaries report their taxes as a
part of the consolidated tax return of the Company's parent,
Northbrook. The Company and its subsidiaries entered into a
tax indemnification agreement with Amfac (now merged into
Northbrook), which indemnifies them for responsibility for all
past, present and future federal and state income tax
liabilities (other than income taxes which are directly
attributable to cancellation of indebtedness income caused by
the repurchase or redemption of securities as provided for in
or contemplated by the Repurchase Agreement). Accordingly,
prior to January 1, 1993 the Company had not recorded any
income tax expense or liability.
Effective January 1, 1993, the Company adopted SFAS No. 109
- - Accounting for Income Taxes ("SFAS No. 109"). This
statement establishes financial accounting and reporting
standards for the effects of income taxes that result from an
enterprise's activities during the current and preceding
years. SFAS No. 109 changed the Company's previous practice
in that it requires the accrual of deferred taxes and the
recording of a provision for taxes in the separate financial
statements of members of a consolidated tax group, including
the recognition of deferred tax assets and liabilities for the
tax effects of differences between assigned values and tax
bases of assets acquired and liabilities assumed in the Merger
(see Note 1). Accordingly, current and deferred taxes have
been allocated to the Company as if the Company were a
separate taxpayer. However, in general, the tax
indemnification agreement does not require the Company to
actually pay income taxes; current taxes payable or receivable
(excluding income taxes which are directly attributable to
cancellation of indebtedness income caused by the repurchase
or redemption of securities as provided for in or contemplated
by the Repurchase Agreement) have been reflected as deemed
contributions and distributions, respectively, to additional
paid in capital in the accompanying consolidated financial
statements.
Cash and cash equivalents, short-term investments,
Certificate of Land Appreciation Notes and deferred expenses
decreased and the long-term portion of amounts due affiliates
increased as of September 30, 1995 as compared to December 31,
1994 primarily due to the COLA repurchases as discussed above
(see Note 3).
Accrued expenses decreased as of September 30, 1995 as
compared to December 31, 1994, primarily due to payments of
certain costs accrued in conjunction with the sale of the
Company's interest in C&H in 1993 and the timing of interest
payments on the COLAS.
Current portion of long-term debt increased and long-term
debt decreased as of September 30, 1995 as compared to
December 31, 1994, due primarily to the reclassification of
the ERS loan from long-term to current (see Note 4).
Current portion of deferred income taxes increased as of
September 30, 1995 as compared to December 31, 1994 primarily
due to the increase in preproductive agriculture costs which
are expensed as incurred for tax purposes.
The current portion of amounts due affiliates increased as
of September 30, 1995 as compared to December 31, 1994
primarily due to income taxes related to the Class A COLA
Redemption Offer and the payment of severance and termination
benefits and pension charges by Northbrook on behalf of the
Company.
AGRICULTURE:
The Company's Agriculture segment is responsible for
activities related to the cultivation, processing and sale of
sugar cane and other agricultural products. Agriculture's
revenues are primarily derived from the Company's sale of its
raw sugar.
The Company's sugar plantation subsidiaries sell their raw
sugar production to the Hawaiian Sugar and Transportation
Company ("HSTC"), which is an agricultural cooperative owned
by the major Hawaii producers of raw sugar (including the
Company), under a new marketing agreement. HSTC sells the raw
sugar production to the California and Hawaii Sugar Company
("C&H") pursuant to a new long-term supply contract. The
terms of the supply contract do not require a specified level
of production by the Hawaii producers; however, HSTC is
obligated to sell and C&H is obligated to purchase any raw
sugar produced. HSTC returns to its raw sugar suppliers
proceeds based upon the domestic sugar price less delivery and
administrative charges. The Company recognizes revenues and
related cost of sales upon delivery of its raw sugar to C&H.
Currently, the price the Company receives for its raw sugar
is based upon the domestic price of sugar, which is impacted
by U.S. government price support legislation (currently is
scheduled to expire in 1995). Based upon information
available as of the date of this report, the Company is
hopeful that new legislation will continue to include support
for the domestic sugar industry on a basis comparable with the
current program. However, at this stage, there can be no
certainty whether government price supports will or will not
be continued or be eliminated entirely. In fact, the current
United States Department of Agriculture chairman is proposing
a $15 billion reduction in the various agricultural programs
over a five year period. Such a reduction or an elimination
of price supports could have a material adverse affect on the
Company's agriculture operations. The Company is currently
evaluating its alternatives in the event price supports are
reduced or eliminated, including the possible cessation of its
remaining sugar cane operations.
As part of the Company's agriculture operations, the
Company enters into commodities futures contracts and options
in sugar as deemed appropriate to reduce the risk of future
price fluctuations in sugar. These futures contracts and
options are accounted for as hedges and, accordingly, gains
and losses are deferred and recognized in cost of sales as
part of the production cost.
In September 1992, Hurricane Iniki struck the Island of
Kauai causing considerable damage and loss to the people and
businesses on Kauai. The Company has two sugar plantations on
Kauai, both of which sustained considerable damage. The
Company's real estate assets on Kauai suffered little damage,
since most of the Company's development expenditures up to
that time had been focused on the islands of Oahu and Maui.
The Company settled its insurance claims in 1995 for the
damage suffered and collected approximately $30 million in
proceeds over the approximately three year period.
Accounts receivable decreased as of September 30, 1995 as
compared to December 31, 1994 due primarily to the receipt of
the aforementioned insurance proceeds related to the final
settlement of the Iniki claims.
Other long-term liabilities decreased as of September 30,
1995 as compared to December 31, 1994 primarily due to the
recognition of a previously deferred gain related to the
Company's accumulated postretirement benefit obligation as a
result of the shutdown of operations at Oahu Sugar Company.
Inventories increased as of September 30, 1995 as compared
to December 31, 1994 primarily due to the capitalization of
planting and other costs. This was offset in part by the sale
of land parcels held in inventory.
Machinery and equipment decreased as of September 30, 1995
as compared to December 31, 1994 primarily due to the sale of
substantially all of the machinery and equipment of Oahu Sugar
Company, which ceased operations in April 1995. Oahu Sugar
received net proceeds of approximately $3.0 million after
accrued expenses, which approximates the carrying value of the
equipment at the date of sale.
Agricultural revenues and cost of sales decreased for the
three and nine months ended September 30, 1995 as compared to
the three and nine months ended September 30, 1994 due
primarily to lower production, in part attributed to the
closure of Oahu Sugar in April 1995. In addition, during the
first three months of 1995, no shipments were made to C&H due
to the timing of harvesting sugar. The decrease in cost of
sales was offset in part by higher costs associated with the
final phase of the operations of Oahu Sugar relative to the
tons produced.
Agricultural operating loss increased for the nine months
ended September 30, 1995 as compared to the nine months ended
September 30, 1994 due primarily to the higher costs at Oahu
Sugar discussed above and lower non-sugar revenues.
Agricultural operating loss increased for the three months
ended September 30, 1995 as compared to the three months ended
September 30, 1994 due primarily to lower non-sugar revenues.
PROPERTY:
The Company's Property segment is responsible for the
following: land planning and development activities;
obtaining land use, zoning and other governmental approvals;
selling or financing developed and undeveloped land parcels;
and the management and operation of the Company's golf course
facilities.
As discussed below, the Company owns a 50% interest in
approximately 96 acres of beachfront property on Maui ("North
Beach") that currently have certain regulatory approvals for
hotel development. In accordance with the provisions of the
COLA Indenture, appraisals were performed for certain
properties in 1994, which reflected a decline in value of the
North Beach property. Accordingly, the Company recorded, as a
matter of prudent accounting practice, a reduction to the
carrying value of its investment in the North Beach property
in the fourth quarter of 1994 in the amount of approximately
$3.5 million to properly reflect the estimated market value of
the property in its then current state of development. These
reductions were attributed to the current softness in the
market for the development and sale of resort-oriented real
estate.
Land and land improvements decreased as of September 30,
1995 as compared to December 31, 1994 primarily due to land
parcel sales in 1995.
The Company expended approximately $.4 and $2.4 million for
the nine months ended September 30, 1995 and 1994,
respectively, for planned project costs at Waikele. Such
costs include construction of roadways, utilities and related
infrastructure improvements and the golf course and clubhouse,
all of which are substantially complete. On a cumulative
project-to-date basis, the Company has generated revenues at
Waikele totaling approximately $230 million. Such sales have
included commercial property and parcel sales to home
builders.
For the three and nine months ended September 30, 1995, the
Company generated approximately $2.1 and $21.1 million of land
sales.
Property sales and cost of sales decreased for the nine
months ended September 30, 1995 as compared to the nine months
ended September 30, 1994 primarily due to the sale of the
remaining two residential parcels at the Waikele project on
Oahu during the first quarter of 1994.
The Company is currently examining options for developing the
approximately 60 acres of fee simple land it owns at the mill
site of Oahu Sugar Company, and has begun the process of
seeking community input and the necessary government approvals
for a light industrial subdivision on an approximately 31-acre
portion of the property, which excludes property containing
the sugar mill and adjacent buildings. In connection with the
development of this property, the Company has received state
land use urbanization for the entire 60-acre site. In
addition, the Company has received an "industrial" city
development plan designation for 25.5 acres of the proposed 31-
acre light industrial subdivision, and is currently seeking
such "industrial" designation for the remaining 5.5 acres.
In March 1991, the Company received final land use approval
from the State for development of approximately 240
residential lots on approximately 125 acres of land known as
"South Beach Mauka" and located adjacent to the existing
Kaanapali Beach Resort. In connection with this land use
approval, the Company is committed to providing additional
housing on Maui in the affordable price range, and to
participating in the funding of the design and construction of
the planned bypass highway extending from Lahaina to
Kaanapali. The Company has entered into a development
agreement with the State Department of Transportation covering
the Company's participation in the design and construction of
the bypass highway development. It is anticipated that, upon
the receipt of government approvals, the Company will expend
up to $3.5 million (in the aggregate) in the design of the
bypass highway and/or the widening of the existing highway.
Financial participation by the Company of up to $6.7 million
for the construction of the bypass highway is subject to
certain conditions related to certain future land use
designations and zoning of Company lands. The development and
construction of the bypass highway is expected to be a long-
term project.
During 1993, the Company obtained final land use approval
from the State, and certification through the State's Housing
Finance Development Corporation ("HFDC"), for the development
of a project on approximately 300 acres of Company land known
as "Puukolii Village", which is also located near Kaanapali
Beach Resort. In connection with this land use approval, the
Company is committed to providing additional housing on Maui
in the affordable price range. The final land use approval
and the HFDC development agreement contain certain conditions
which must be satisfied in order for the Company to develop
Puukolii Village, including realigning the access road (which
will benefit uses for adjacent Company lands in future
periods). Moreover, development of certain portions of
Puukolii Village cannot commence until after completion of the
state-planned Lahaina bypass highway (mentioned above). The
proposed development of Puukolii Village is anticipated to
satisfy the Company's affordable housing requirements in
connection with the South Beach Mauka land use approval as
well as the North Beach property. (described above).
The planned development of the Company's land on Maui is
longer term in nature than Waikele. As Maui is less populated
than Oahu and more dependent on the resort/tourism industry,
much of the Company's land is intended for resort and resort-
related uses. Due to overall economic conditions and trends
in tourism, recent demand for these land uses has been
relatively weak. The Company's currently available homesite
product on Maui, which is targeted to the second home buyer,
has experienced very slow sales activity to date. The
Company's competitors on Maui have also experienced slow sales
activity in the second home market. The Company is continuing
to evaluate its planned products and the timing of development
of its land holdings in light of the current weak market
demand and the capital resources needed for future
development.
The Company is marketing Kaanapali Golf Estates, a new
residential community, which is part of South Beach Mauka
adjacent to the Kaanapali Beach Resort in West Maui. The
Company currently has approximately 21 homesites on the
market, which are priced from approximately $250,000 to in
excess of $1 million. The absorption period for this type of
product is difficult to forecast under the current economic
conditions and trends in tourism.
In addition, the Company is in the process of subdividing an
ocean front parcel in Kaanapali into six single family
homesites of approximately one acre each. The individual lot
prices range from $1.9 million to $2.4 million. Currently,
two of the lots in the project are in escrow, with closings
anticipated in late 1995.
In early 1986, the Company entered into a joint venture
agreement with Tobishima Pacific Inc., a wholly- owned
subsidiary of a Japanese company, the purpose of which is to
plan, manage and develop approximately 96 acres of beachfront
property at Kaanapali (known as "North Beach"). The joint
venture (in which the Company has a 50% interest) has State
land use and County zoning approvals for the subdivision and
development of the infrastructure improvements necessary to
accommodate up to 3,200 hotel and/or condominium units on this
site. These development plans may be affected by the current
review of state land designations (discussed below). This
North Beach property constitutes nearly all of the remaining
developable beachfront acreage at Kaanapali. In October 1992,
the Company completed construction of a 3-acre park on the
North Beach site, which is part of the master plan for this
property and was a requirement imposed by the County in
obtaining certain permits. The development of North Beach
continues to be tied to the completion of the aforementioned
Lahaina bypass highway or other traffic mitigation measures
satisfactory to the Maui County Planning Commission. The
Company is currently reviewing alternatives in providing other
traffic mitigation measures.
The Office of State Planning ("OSP") for the State of Hawaii
is currently implementing changes to the State designations
for land use throughout the State of Hawaii, a process that is
performed every five years. The Company is not aware of any
changes being made by the OSP that will materially affect the
current state land use designations on Company lands.
In addition, citizen advisory committees ("CAC") reviewed
Maui County's Community Plans to determine whether changes
should be recommended, a process that is done every ten years.
As previously reported, one of the citizen advisory committees
involved in this review process recommended several changes to
the Lahaina Community Plan that could have an adverse impact
on Company lands, including one recommendation (among others)
to downzone to park designation roughly two-thirds of the
Company's North Beach property in Kaanapali. If the CAC
recommendations are ultimately followed, they could have a
material adverse effect on the value of the North Beach
property or on other Company lands.
The Company continues to vigorously oppose the
aforementioned CAC recommendations. The Company strongly
believes that such recommendations regarding Company lands are
wholly inappropriate and that the Company's arguments to
retain the current zoning and other entitlements are
meritorious. After the CAC made its recommendations, the Maui
County Planning Commission held public hearings and then
published its own recommendations as part of the Community
Plan review process. The Commission disagreed with most of
the CAC's recommendations and has recommended that there be no
substantial change in the land use designation for the
Company's lands, including North Beach. However, the Mayor of
Maui County has expressed concern to the planning commission
over further development at North Beach, and urged broad
review of the Lahaina Community Plan issues. A committee of
the Maui County Council has conducted public hearings on the
Community Plan and has concurred with the Planning Commission
recommendation on North Beach. The Maui County Council will
conduct final public hearings and has scheduled public readings
on the Community Plan amendments in December 1995. The Maui
County Council will adopt by ordinance any amendments it desires
to make to the Community Plans. It is anticipated any ordinances
adopted by the Maui County Council will occur by late 1995 or
early 1996. While the Company is hopeful that its arguments
will be heeded, there can be no assurance that the current
zoning (and other land use designations and entitlements) for
the North Beach property and other Company lands will be
retained, or that efforts to recover just compensation for any
loss of current entitlements would be successful. Management
continues to evaluate and consider all alternatives in seeking
favorable resolutions to these entitlements and zoning issues.
Appropriate state land use designations and conformity with
county community plans are essential elements to the land
development process. It is impossible to predict the outcome
of these reviews at this time and, accordingly, the Company
cannot determine what impact (if any) these reviews will
ultimately have on the Company's lands.
Further, the Department of the Army has determined that
there are two wetlands sites on the North Beach property,
totaling approximately 21,800 square feet. The Company has
retained experts to evaluate these sites and to insure
compliance with all laws. While there can be no assurance as
to the ultimate determinations with respect to the wetlands
issue, the Company does not anticipate that these sites will
materially adversely affect the development plans for North
Beach.
In June 1994, the Company submitted a Land Use Boundary
Amendment Petition with the State of Hawaii Land Use
Commission and a General Plan Amendment Application with the
County of Kauai for the urbanization of approximately 552
acres of land on Kauai currently in sugar cane cultivation.
The proposed project is planned to be a mixed use master
planned community which will include a variety of both
affordable and market rate residential units, commercial and
industrial projects and a number of community and public based
facilities. The filing of these land use applications is the
first step required in converting agriculture zoned land into
urban zoned land. There are a number of additional reports,
studies, applications and permits that will be required before
final land use approvals are obtained. In May 1995, the
County of Kauai approved the Company's General Plan Amendment
Application, subject to a number of conditions (to be
addressed during the subsequent zoning amendment process).
Final action on the Company's Land Use Boundary Amendment
petition is anticipated in late 1995. While the Company is
optimistic that the proposed project will receive favorable
support, it is anticipated that the approval process will
require at least 3 - 5 years. The entitlement process in
Hawaii has historically been a very difficult and arduous
process and there is no guarantee that all approvals will be
obtained. Once construction commences, subject to market
conditions, the project is expected to span over 20 years.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company and/or certain of its affiliates have been
named as defendants in several pending lawsuits, most of which
constitute routine litigation arising from the ordinary course
of business. While it is impossible to predict the outcome of
the litigation that is now pending (or threatened) and for
which the potential liability is not covered by insurance, the
Company is of the opinion that the ultimate liability from any
of the litigation will not materially adversely affect the
Company's financial condition.
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<S>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a)The following documents are included as an
exhibits to this report.
<C> <C>
4.1** Indenture, including
the form of COLAS, among Amfac/JMB
Hawaii, Inc., its subsidiaries as
Guarantors and Continental Bank National
Association, as Trustee (dated as of
March 14, 1989).
4.2*** Revolving Credit
Agreement dated February 15, 1989 and
the First and Second Amendments to the
Revolving Credit Agreement dated
February 15, 1990 and February 15, 1990
between Amfac/JMB Hawaii, Inc. and
Continental Bank N.A.
4.3**** The $175,000,000
Revolving Line of Credit and Letter of
Credit Facility from Continental Bank
N.A. to Amfac/JMB Hawaii, Inc. as of
August 15, 1990.
4.4***** Amendment dated as
of January 17, 1990 to the Indenture
relating to the COLAS.
4.5***** $28,097,832
Promissory Note from Amfac, Inc. to
Amfac/JMB Hawaii, Inc. Extended and
Reissued Effective December 31, 1990,
December 31, 1991, December 31, 1994.
4.6****** 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.
4.7****** The $75,000,000
Amended and Restated Credit Agreement
dated September 10, 1991, among
Amfac/JMB Hawaii, Inc. and Continental
Bank N.A.
4.8****** $28,097,832
Promissory Note from Amfac, Inc. to
Amfac/JMB Hawaii, Inc. extended and
reissued effective December 31, 1991
4.9****** $28,800,000 Amended
and Restated Credit Agreement dated
August 1, 1992 among Amfac/JMB Hawaii,
Inc. and Continental Bank N.A.
4.10*****13,250,000 Loan
Agreement among Heller Financial, Inc.,
as Lender, The Lihue Plantation Company
Limited, Limited, as Borrower, and
Amfac/JMB Hawaii, Inc., Kekaha Sugar
Company, Limited, Oahu Sugar Company
Limited and Pioneer Mill Company,
Limited, as Guarantors December 30,
1992.
4.11***** $15,000,000 Credit
Agreement dated March 31, 1993 among
AMFAC/JMB Hawaii, Inc. and Continental
Bank N.A.
4.12***** $10,000,000 loan
agreement between Waikele Golf Club,
Inc. and ORIX USA Corporation.
$10,000,000 loan
agreement between Waikele Golf Club,
Inc. and Bank of Hawaii.
4.13***** $28,097,832
Promissory Note from Amfac, Inc. to
Amfac/JMB Hawaii, Inc. extended and
reissued effective December 31, 1994.
4.14 $52,000,000 Promissory
Note to Northbrook Corporation from
Amfac/JMB Hawaii, Inc. effective May 31,
1995 is filed herewith.
10.1* Escrow Deposit
Agreement.
10.2* General Lease S-
4222, dated January 1, 1969, by and
between the State of Hawaii and Kekaha
Sugar Company, Limited.
10.3* Grove Farm Haiku
Lease, dated January 25, 1974 by and
between Grove Farm Company, Incorporated
and The Lihue Plantation Company,
Limited.
10.4* General Lease S-
4412, dated October 31, 1974, by and
between the State of Hawaii and the
Lihue Plantation Company, Limited.
10.5* General Lease S-
4576, dated March 15, 1978, by and
between the State of Hawaii and The
Lihue Plantation Company, Limited.
10.6* General Lease S-
3827, dated July 8, 1964, by and between
the State of Hawaii and East Kauai Water
Company, Ltd.
10.7* Kauai Lagoon Resort
Hotel Lease, dated March 25, 1987, by
and between The Lihue Plantation
Company, Limited and Hemmeter-VMS Kauai
Company I.
10.8* Kauai Lagoons Resort
Golf Course Lease, dated March 25, 1987,
by and between The Lihue Plantation
Company, Limited and Hemmeter-VMS Kauai
Company I.
10.9* Construction and
Operation Agreement, dated June 23,
1978, between The Lihue Plantation
Company, Limited and Foster Wheeler
Kauai, Inc.
10.10* Power Purchase
Agreement, dated as of July 14, 1978, by
and between The Lihue Plantation
Company, Limited and Citizens Utilities
Company.
10.11* 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.
10.12* 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.
10.13* Amendment to the
Campbell Estate Lease, dated April 16,
1970, between Trustees under the Will
and of the Estate of James Campbell,
Deceased, and Oahu Sugar Company,
Limited amending and restating the
previous lease.
10.14* Bishop Estate Lease
No. 24,878, dated June 17, 1977, by and
between the Trustees of the Estate of
Bernice Pauahi Bishop and Pioneer Mill
Company, Limited.
10.15* General Lease S-
4229, dated February 25, 1969, by and
between the State of Hawaii, by its
Board of Land and Natural Resources and
Pioneer Mill Company, Limited.
10.16* Honokohau Water
License, dated December 22, 1980,
between Maui Pineapple Company Ltd. and
Pioneer Mill Company, Limited.
10.17* Water Licensing
Agreement, dated September 22, 1980, by
and between Maui Land & Pineapple
Company, Inc. and Amfac, Inc.
10.18* Joint Venture
Agreement, dated as of March 19, 1986,
by and between Amfac Property
Development Corp. and Tobishima
Properties of Hawaii, Inc.
10.19* Development
Agreement, dated March 19, 1986, by and
between Kaanapali North Beach Joint
Venture and Amfac Property Investment
Corp. and Tobishima Pacific, Inc.
10.20* California and
Hawaiian Sugar Company ("C & H")
Standard Sugar Marketing Contract, dated
as of January 1, 1972.
Note: The exhibit copy
is unsigned, however, the contract (as
amended) is effective between C & H and
each of the following companies:
Kekaha Sugar
Company, Limited
The Lihue Plantation Company, Limited
Oahu Sugar Company, Limited
Pioneer Mill Company, Limited.
10.21* California and
Hawaiian Sugar Company Standard Molasses
Marketing Contract, dated as of January
1, 1972.
Note: The exhibit copy
is unsigned, however, the contract (as
amended) is effective between C & H and
each of the following companies:
Kekaha Sugar Company, Limited
The Lihue Plantation Company, Limited
Oahu Sugar Company, Limited
Pioneer Mill Company, Limited
10.22* Indenture of Lease,
dated May 5, 1987, between The Lihue
Plantation Company, Limited and Hemmeter-
-VMS Kauai Company I.
10.23* Keep-Well Agreement
between Northbrook Corporation and
Amfac/JMB Finance, Inc.
10.24* Repurchase
Agreement, dated March 14, 1989, by and
between Amfac/JMB Hawaii, Inc. and
Amfac/JMB Finance, Inc.
10.25* Amfac Hawaii Tax
Agreement, dated November 21, 1988
between Amfac/JMB Hawaii, Inc., and
Amfac Property Development Corp.; Amfac
Property Investment Corp.; Amfac Sugar
and Agribusiness, Inc.; Kaanapali Water
Corporation; Amfac Agribusiness, Inc.;
Kekaha Sugar Company, Limited; The Lihue
Plantation Company, Limited; Oahu Sugar
Company, Limited; Pioneer Mill Company,
Limited; Puna Sugar Company, Limited; H.
Hackfeld & Co., Ltd.; and Waiahole
Irrigation Company, Limited.
10.26* Amfac-Amfac Hawaii
Tax Agreement, dated February 27, 1989
between Amfac, Inc. and Amfac/JMB
Hawaii, Inc.
10.27* Services Agreement,
dated November 18, 1988, between
Amfac/JMB Hawaii, Inc., and Amfac
Property Development Corp.; Amfac
Property Investment Corp.; Amfac Sugar
and Agribusiness, Inc.; Kaanapali Water
Corporation; Amfac Agribusiness, Inc.;
Kekaha Sugar Company, Limited; The Lihue
Plantation Company, Limited; Oahu Sugar
Company, Limited; Pioneer Mill Company,
Limited; Puna Sugar Company, Limited; H.
Hackfeld & Co., Ltd.; and Waiahole
Irrigation Company, Limited and JMB
Realty Corporation.
19.0* $35,700,000 agreement
for sale of C&H and certain other C&H
assets, to A&B Hawaii, Inc. in June of
1993.
Pursuant to item 6.01
(b)(4) of Regulation SK, the registrant
hereby undertakes to provide the
commission upon its request a copy of
any agreement with respect to long-term
indebtedness of the registrant and its
consolidated subsidiaries that does not
exceed 10 percent of the total assets
of the registrant and its subsidiaries
on a consolidated basis.
</TABLE>
* Previously filed as exhibits to the Company's
Registration Statement of Form S-1 (as amended) under the
Securities Act of 1933 (File No. 33-24180) and hereby
incorporated by reference.
** Previously filed as exhibits to the Company's Form
10-K report under the Securities Act of 1934 (File No. 33-
24180) filed on March 27, 1989 and hereby incorporated by
reference.
*** Previously filed as exhibits to the Company's Form
10-K report under the Securities Act of 1934 (File No. 33-
24180) filed on March 28, 1990 and hereby incorporated by
reference.
**** Previously filed as exhibit to the Company's Form 10-
Q report under the Securities Act of 1934 (File No. 33-24180)
filed on November 13, 1990 and hereby incorporated by
reference.
***** Previously filed as exhibits to the Company's
Form 10-K report under the Securities Act of 1934 (File No. 33-
24180) filed on March 27, 1991 and hereby incorporated by
reference.
****** Previously filed as exhibits to the Company's
Form 10-Q report under the Securities Act of 1934 (File No. 33-
24180) filed on August 13, 1991 and hereby incorporated by
reference.
******* Previously filed as exhibits to the Company's Form
10-Q report under the Securities Act of 1934 (File No. 33-
24180) filed on November 8, 1991 and hereby incorporated by
reference.
******** Previously filed as exhibits to the Company's Form
10-K report under the Securities Act of 1934 (File No. 33-
24180) filed on March 27, 1992 and hereby incorporated by
reference.
********* Previously filed as exhibit to the Company's
Form 10-Q report under the Securities Act of 1934 (File No. 33-
24180) filed on November 11, 1992 and hereby incorporated by
reference.
********** Previously filed as exhibit to the Company's
Form 10-K report under the Securities Act of 1934 (File No. 33-
24180) filed on March 29, 1993 and hereby incorporated by
reference.
*********** Previously filed as exhibit to the Company's
Form 10-Q report under the Securities Act of 1934 (File No. 33-
24180) filed on May 14, 1993 and hereby incorporated by
reference.
************Previously filed as exhibit to the Company's Form
10-Q report under the Securities Act of 1934 (File No. 33-
24180) filed November 11, 1993 and hereby incorporated by
reference.
*************Previously filed as exhibit to the Company's
Form 10-K report under the Securities Act of 1934 (File No. 33-
24180) filed March 27, 1994 and hereby incorporated by
reference.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMFAC/JMB HAWAII, INC.
By: Gary Smith
Vice President
Date: November 10, 1995
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.
Gary Smith
Principal Accounting Officer
Date: November 10, 1995
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMFAC/JMB FINANCE, INC.
By: Gary Smith
Vice President
Date: November 10, 1995
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.
Gary Smith
Principal Accounting Officer
Date: November 10, 1995
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMFAC PROPERTY DEVELOPMENT CORP.
By: Gary Smith
Vice President
Date: November 10, 1995
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.
Gary Smith
Principal Accounting Officer
Date: November 10, 1995
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMFAC PROPERTY INVESTMENT CORP.
By: Gary Smith
Vice President
Date: November 10, 1995
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.
Gary Smith
Principal Accounting Officer
Date: November 10, 1995
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 SUGAR AND AGRIBUSINESS, INC.
By: Gary Smith
Vice President
Date: November 10, 1995
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.
Gary Smith
Principal Accounting Officer
Date: November 10, 1995
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
KAANAPALI WATER CORPORATION
By: Gary Smith
Vice President
Date: November 10, 1995
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.
Gary Smith
Principal Accounting Officer
Date: November 10, 1995
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 AGRIBUSINESS, INC.
By: Gary Smith
Vice President
Date: November 10, 1995
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.
Gary Smith
Principal Accounting Officer
Date: November 10, 1995
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
KEKAHA SUGAR COMPANY, LIMITED
By: Gary Smith
Vice President
Date: November 10, 1995
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.
Gary Smith
Principal Accounting Officer
Date: November 10, 1995
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE LIHUE PLANTATION COMPANY, LIMITED
By: Gary Smith
Vice President
Date: November 10, 1995
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.
Gary Smith
Principal Accounting Officer
Date: November 10, 1995
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
OAHU SUGAR COMPANY, LIMITED
By: Gary Smith
Vice President
Date: November 10, 1995
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.
Gary Smith
Principal Accounting Officer
Date: November 10, 1995
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PIONEER MILL COMPANY, LIMITED
By: Gary Smith
Vice President
Date: November 10, 1995
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.
Gary Smith
Principal Accounting Officer
Date: November 10, 1995
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PUNA SUGAR COMPANY, LIMITED
By: Gary Smith
Vice President
Date: November 10, 1995
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.
Gary Smith
Principal Accounting Officer
Date: November 10, 1995
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
H. HACKFELD & CO., LTD.
By: Gary Smith
Vice President
Date: November 10, 1995
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.
Gary Smith
Principal Accounting Officer
Date: November 10, 1995
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WAIAHOLE IRRIGATION COMPANY, LIMITED
By: Gary Smith
Vice President
Date: November 10, 1995
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.
Gary Smith
Principal Accounting Officer
Date: November 10, 1995
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WAIKELE GOLF CLUB, INC.
By: Gary Smith
Vice President
Date: November 10, 1995
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.
Gary Smith
Principal Accounting Officer
Date: November 10, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE REGISTRANT'S FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER
30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS INCLUDED IN SUCH REPORT.
</LEGEND>
<CIK> 0000842701
<NAME> AMFAC/JMB FINANCE, INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> $ 1
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
EFFECTIVE JUNE 1, 1995
FLOATING RATE PROMISSORY NOTE
US$52,000,000.00
Chicago, Illinois
May 31, 1995
AMFAC/JMB HAWAII, INC., a Hawaii corporation (the
"Borrower"), HEREBY PROMISES TO PAY to the order of Northbrook
Corporation (the "Holder"), on or before June 1, 1997 (the
"maturity date"), the principal sum of FIFTY-TWO MILLION
United States dollars (US$52,000,000.00) or, if less, the
aggregate unpaid principal amount as shown either on the
schedule attached hereto (and any continuation thereof) or in
the records of the Holder, with interest on the unpaid balance
of such principal amount at a rate per annum equal to the
Reference Rate (as defined below) plus 2% per annum, which
interest shall be payable in arrears on September 30, 1995, on
the last day of every third month thereafter prior to the
maturity date and on the maturity date or, if the Borrower
shall fail to pay the unpaid balance of such principal amount
on the maturity date, on the day on which the unpaid balance
of such principal amount is paid in full; provided, however,
that whenever any payment to be made hereunder shall be stated
to be due on a day other than a day when commercial banks are
open for normal business in Chicago, Illinois, such payment
shall be made on the next succeeding day when such banks shall
be so open (and such extension of time shall be included in
the computation of interest due on such day). All computation
of interest hereunder shall be made on the basis of a year of
360 days for the actual number of days elapsed.
The Referenced Rate shall mean, at any time, the rate of
interest then most recently announced by Bank of America N.A.
at Chicago, Illinois as its "reference" rate, or its
equivalent rate at such time.
Borrower represents and warrants that indebtedness
represented by this Promissory Note is for business purposes
within the meaning of Section 6404 of Chapter 17 of the
Illinois Revised Statutes and that such indebtedness
constitutes a business loan within the meaning of such Section
and is not usurious.
Both principal and interest are payable in United States
dollars to the order of the Holder in same-day funds on the
day when due.
The unpaid principal amount of this Promissory Note may
be prepaid in whole or in part at any time by the Borrower
without premium, penalty or costs whatsoever, provided that
all accrued and unpaid interest on the principal amount so
prepaid is paid at such time.
Borrower hereby waives presentment for payment, demand,
protest and notice of dishonor and hereby assents to any
extension of the time of payment, forbearance or other
indulgence that may be granted by the Holder, without notice.
The terms of this Promissory Note may not be modified or
terminated orally, but only by an agreement in writing signed
by the party to be charged.
The principal sum under this Promissory Note is
considered to be Senior Indebtedness to the COLAS pursuant to
the Indenture.
This Promissory Note shall be governed by and construed
in accordance with the internal laws of the State of Illinois.
Amfac/JMB Hawaii, Inc.
By:____________________
Chester A. Richardson
Senior Vice President
Schedule Attached to Floating Rate Promissory Note dated May
31, 1995, of Amfac/JMB Hawaii, Inc. payable to the order of
Northbrook Corporation.
PRINCIPAL PAYMENTS
DATE AMOUNT OF PRINCIPAL UNPAID PRINCIPAL BALANCE NOTATION MADE BY
5/31/95 $52,000,000.00
