<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
COMMISSION FILE NUMBER 0-22948
C. BREWER HOMES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 99-0145055
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
90 WAIKO ROAD
WAILUKU, HAWAII 96793
(Address of principal executive offices) (Zip Code)
(808) 242-6833
(Registrant's telephone number, including area code)
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
----- -----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Outstanding at
February 9, 1997
----------------
CLASS A COMMON STOCK (PAR VALUE $.01 PER SHARE ) 3,100,257 shares
CLASS B COMMON STOCK (PAR VALUE $.01 PER SHARE) 5,235,743 shares
<PAGE>
C. BREWER HOMES, INC.
INDEX
PAGE
NUMBER
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Statements of Income (Loss) - Quarters and Three
Ended December 31, 1996 and December 31, 1995. . . . 3
Balance Sheets - December 31, 1996 and
March 31, 1996 . . . . . . . . . . . . . . . . . . . 4
Statements of Cash Flows - Three Quarters
Ended December 31, 1996 and December 31, 1995. . . . 5
Notes to Financial Statements. . . . . . . . . . . . 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . . 8-16
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . 17-21
Signature. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
<PAGE>
C. BREWER HOMES, INC.
STATEMENTS OF INCOME (LOSS)
(IN THOUSANDS, EXCEPT EARNINGS (LOSS) PER COMMON SHARE)
(UNAUDITED)
<TABLE>
<CAPTION>
Quarters Ended Three Quarters Ended
--------------------------- ---------------------------
December 31, December 31, December 31, December 31,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Property sales . . . . . . . . . . . . . . . . . . . . . . . . . $5,321 $ 823 $13,065 $5,150
Cost of property sales . . . . . . . . . . . . . . . . . . . . . 4,643 625 11,496 3,594
------ ------ ------- ------
Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . 678 198 1,569 1,556
General and administrative expenses. . . . . . . . . . . . . . . 536 556 1,880 2,513
------ ------ ------- ------
Operating income (loss). . . . . . . . . . . . . . . . . . . . 142 (358) (311) (957)
Equity in earnings of Iao Partners . . . . . . . . . . . . . . . 48 101 114 631
Interest income (expense) - net. . . . . . . . . . . . . . . . . 2 2 (19) 126
Other expense - net. . . . . . . . . . . . . . . . . . . . . . . (63) (168) (198) (539)
------ ------ ------- ------
Income (loss) before income taxes (benefit). . . . . . . . . . . 129 (423) (414) (739)
Income taxes (benefit) . . . . . . . . . . . . . . . . . . . . . 47 (158) (149) (281)
------ ------ ------- ------
Net income (loss). . . . . . . . . . . . . . . . . . . . . . . . $ 82 $ (265) $ (265) $ (458)
------ ------ ------- ------
------ ------ ------- ------
Earnings (loss) per common share . . . . . . . . . . . . . . . . $ 0.01 $(0.03) $ (0.03) $(0.05)
------ ------ ------- ------
------ ------ ------- ------
Weighted average number of common shares outstanding . . . . . . 8,332 8,332 8,332 8,333
------ ------ ------- ------
------ ------ ------- ------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 3
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C. BREWER HOMES, INC.
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE INFORMATION)
<TABLE>
<CAPTION>
December 31, March 31,
1996 1996
------------ ---------
(unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 101 $ 3,080
Mortgage notes receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 852 2,636
Real estate developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,399 36,606
Investment in Iao Partners, net of deferred land gain. . . . . . . . . . . . . . . . 3,302 2,936
Property and equipment - net . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175 162
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 482 505
-------- --------
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 42,311 $ 45,925
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable to banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 23,289 $ 27,395
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,213 702
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,799 3,777
Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,427 2,181
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161 183
-------- --------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,889 34,238
-------- --------
Commitments and contingencies
Stockholders' equity
Class A Common Stock, $.01 par value, one vote per share,
3,086,200 shares issued and outstanding at December 31, 1996 and
2,700,173 shares issued and outstanding at March 31, 1996 . . . . . . . . . . . 31 27
Class B Common Stock, $.01 par value, three votes per share,
5,249,800 shares issued and outstanding at December 31, 1996 and
5,635,827 shares issued and outstanding at March 31, 1996 . . . . . . . . . . . 53 57
Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . . . . . . . 27,370 27,370
Retained deficit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (16,008) (15,743)
Treasury stock, at cost, 4,335 shares . . . . . . . . . . . . . . . . . . . . . (24) (24)
-------- --------
Total stockholders' equity. . . . . . . . . . . . . . . . . . . . . . . . . . . 11,422 11,687
-------- --------
Total liabilities and stockholders' equity. . . . . . . . . . . . . . . . . . . $ 42,311 $ 45,925
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 4
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C. BREWER HOMES, INC.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Three Quarters Ended
--------------------------
December 31, December 31,
1996 1995
------------ ------------
Operating activities
Net loss . . . . . . . . . . . . . . . . . . . . . . $ (265) $ (458)
Adjustments to net loss
Depreciation. . . . . . . . . . . . . . . . . . . 47 37
Deferred income taxes . . . . . . . . . . . . . . 246 105
Equity in earnings of Iao Partners. . . . . . . . (114) (631)
Amortization of deferred land gain. . . . . . . . (252) (388)
Changes in operating assets and liabilities
Mortgage notes receivable . . . . . . . . . . . . 1,784 275
Real estate developments. . . . . . . . . . . . . (793) (9,140)
Other assets. . . . . . . . . . . . . . . . . . . 23 180
Accounts payable. . . . . . . . . . . . . . . . . 511 (5,791)
Accrued expenses. . . . . . . . . . . . . . . . . 22 (714)
Other liabilities . . . . . . . . . . . . . . . . (22) (1,058)
------- --------
Cash flow from (used in) operating . . . . . . 1,187 (17,583)
------- --------
Investing activities
Capital expenditures. . . . . . . . . . . . . . . (60) (31)
Other . . . . . . . . . . . . . . . . . . . . . . - 11
------- --------
Cash flow used in investing activities . . . . (60) (20)
------- --------
Financing activities
Loan proceeds . . . . . . . . . . . . . . . . . . 8,238 30,358
Loan payments . . . . . . . . . . . . . . . . . . (12,344) (25,940)
Purchase of treasury stock. . . . . . . . . . . . - (24)
------- --------
Cash flow from (used in) financing . . . . . . (4,106) 4,394
------- --------
Decrease in cash and cash equivalents. . . . . . . . . (2,979) (13,209)
Cash and cash equivalents at beginning of period . . . 3,080 16,179
------- --------
Cash and cash equivalents at end of period . . . . . . $ 101 $ 2,970
------- --------
------- --------
The accompanying notes are an integral part of the financial statements.
Page 5
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C. BREWER HOMES, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited financial
statements of C. Brewer Homes, Inc. (the "Company") include all adjustments
(consisting only of normal recurring adjustments) considered necessary to
present fairly its financial position as of December 31, 1996 and its results of
operations and cash flows for the periods ended December 31, 1996 and December
31, 1995. The results of operations for the quarter and three quarters ended
December 31, 1996 are not necessarily indicative of the results to be expected
for the full year or for any future period.
2. EARNINGS (LOSS) PER COMMON SHARE
Earnings (loss) per common share is computed using the weighted average
number of common shares outstanding during the period.
3. CASH DIVIDENDS
The Company did not pay cash dividends on its common stock during the
quarters or three quarters ended December 31, 1996 and December 31, 1995.
4. MORTGAGE NOTES RECEIVABLE
During the third quarter of fiscal year 1997, pursuant to a decree of
foreclosure, the Company reacquired certain property it had sold in December
1992 which was subject to a mortgage note receivable. As a result, the Company
has reclassified approximately $1.4 million from Mortgage Notes Receivable to
Real Estate Developments as of December 31, 1996.
5. INVESTMENT IN IAO PARTNERS
The following condensed income statement information represents 100% of the
results of Iao Partners for the periods presented. In addition, such results
exclude the amortization of the deferred gain relating to the land sold to the
Company's 50% joint venture partner Schuler Homes, Inc. (in thousands):
<TABLE>
<CAPTION>
Quarters Ended Three Quarters Ended
--------------------------- ---------------------------
December 31, December 31, December 31, December 31,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Statements of Income
Sales of residential real estate. . . . . . . . . . . . . . . $1,539 $1,112 $4,185 $6,187
Cost of residential real estate sold. . . . . . . . . . . . . 1,479 940 4,024 5,042
------ ------ ------ ------
Gross profit . . . . . . . . . . . . . . . . . . . . . . . 60 172 161 1,145
Interest income . . . . . . . . . . . . . . . . . . . . . . . 38 32 75 121
General and administrative expenses . . . . . . . . . . . . . (2) (2) (7) (4)
------ ------ ------ ------
Income before income taxes . . . . . . . . . . . . . . . . $ 96 $ 202 $ 229 $1,262
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
Page 6
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6. NOTES PAYABLE
On August 31, 1995, the Company entered into two secured revolving loan
agreements (an infrastructure loan agreement and a building loan agreement) with
the Bank of Hawaii and City Bank ("Lenders") that provide for a maximum
outstanding balance of $35 million and which expire in September 1998. On
September 5, 1996, the Company entered into two modification agreements with the
Lenders which amended the terms and conditions of the existing revolving loan
facilities to allow advances not to exceed an aggregate of $4 million for
working capital purposes. Under the infrastructure loan modification agreement,
the working capital advance shall not exceed $1.5 million with interest accruing
at the Bank of Hawaii's base rate plus one-half (0.5) percentage point with
infrastructure loan advances accruing interest at the base rate plus one (1.0)
percentage point. Under the building loan modification agreement, the working
capital advance shall not exceed $2.5 million with interest accruing on both the
working capital and the construction advances at the Bank of Hawaii's base rate
plus one-half (0.5) percentage point. All advances made under both modification
agreements for working capital purposes together with all accrued and unpaid
interest shall be due and payable in full on April 30, 1997. The infrastructure
loan and building loan agreements were also amended to require the Company to
remit to the Lenders 100% of the net proceeds from the sale of each home sold at
the Company's Kehalani project. In addition to the collateral already held by
the Lenders, C. Brewer and Company, Limited ("CBCL") delivered a guaranty of
payment for the Company's indebtedness related to the working capital advances.
Such guaranty by CBCL is secured by a first mortgage lien on the Company's
Kalihiwai Ridge III property located on the island of Kauai.
The Company is currently negotiating with its Lenders to extend its
existing $4 million working capital facility beyond April 30, 1997. The Company
is also seeking to generate additional funds through sales of certain land
parcels. Moreover, the Company anticipates that it will require additional
long-term financing to further develop its projects. The Company is currently
continuing its ongoing efforts to obtain such long-term financing. No assurance
can be given that such financing will be obtained or that any available
financing will be on acceptable terms. Failure to obtain such financing would
have a material adverse effect on the Company's business.
7. STOCK-BASED COMPENSATION
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation". The standard encourages a fair
value based method of accounting for employee stock options or similar equity
instruments, but allows continued use of the intrinsic value based method of
accounting prescribed by Accounting Principles Board (APB) Opinion No. 25,
"Accounting for Stock Issued to Employees." The Company will continue to follow
the provisions set forth in APB No. 25 and will therefore make the pro forma
disclosures that will be required by SFAS No. 123 in its financial statements
for the year ended March 31, 1997.
8. RECLASSIFICATION
Certain prior period amounts have been reclassified to conform to the
December 31, 1996 presentation.
Page 7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Except for the historical financial information contained herein, the
following discussion and analysis may contain "forward-looking" statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Such statements
include declarations regarding the intent, belief or current expectations of the
Company and its management. Prospective investors are cautioned that any such
forward-looking statements are not guarantees of future performance and involve
a number of risks and uncertainties; actual results could differ materially
from those indicated by such forward-looking statements. Among the important
factors that could cause actual results to differ materially from those
indicated by such forward-looking statements are: (i) variability in quarterly
operating results, (ii) risks associated with the concentration of the
Company's business in Hawaii, (iii) risks associated with the lack of adequate
public infrastructure in Hawaii, (iv) risks associated with the long-term
nature of planned residential projects, high capital investment and carrying
costs, (v) risks associated with the entitlement process for development of
property in Hawaii, (vi) risk of natural disasters, (vii) risks associated
with the recent commencement of homebuilding activities, (viii) risks
associated with the homebuilding industry, (ix) the rate of new home sales, (x)
effects of interest rate increases and the availability of mortgage financing,
(xi) risks associated with environmental and conservation matters, (xii)
increased land acquisition costs, (xiii) restrictions on land use and
development, (xiv) reduced availability of homeowners' insurance in Hawaii,
(xv) risks associated with the inability to obtain policies of insurance
assuring the Company of good and marketable title to certain parcels of land,
(xvi) risks associated with obtaining performance, maintenance and other bonds,
(xvii) effects of increases in unemployment in Hawaii, and (xviii) other risks
identified from time to time in the Company's reports and registration
statements filed with the Securities and Exchange Commission.
OVERVIEW
The Company, which was a subsidiary of C. Brewer and Company, Limited
("CBCL") before December 1993, had historically performed the land entitlement,
development and marketing functions for CBCL. Prior to the quarter ended
December 31, 1993, the Company's revenue was derived from the sale of developed
land, including sales of large parcels and individual lots. In late 1993, the
Company shifted its strategy away from land sales to the construction and sale
of homes to maximize the value inherent in its landholdings.
While the Company's present business strategy does not emphasize land
sales, one of its current projects, Kalihiwai Ridge II on the island of Kauai,
includes the improvement and sale of large parcels suitable for homesites.
Although the Company's current strategy focuses on the construction and
sale of homes, the Company has deferred 50% of the revenue and costs relating to
the land it sold to its joint venture partner at the Iao Parkside project on the
island of Maui. The Company sold this land to Schuler Homes, Inc. ("SHI") in
fiscal 1993, and it was subsequently contributed to a joint venture in which the
Company is a 50% partner. To date, the Company has recognized approximately
$6.6 million of the income from this sale through the quarter ended December 31,
1996. At December 31, 1996 the Company had deferred income of approximately
$1.0 million related to this sale that will be recognized as home sales at the
Iao Parkside project are closed. In addition, during the quarter ended
September 30, 1996, the Company and SHI mutually determined not to jointly
develop the Kula Lei project through Iao Partners as previously contemplated.
Except as indicated above, the Company generally records a sale and
recognizes income when a closing occurs and title passes to the purchaser. To
the extent that the Company provides mortgage financing to a purchaser, minimum
down payment and continuing investment criteria required by generally accepted
accounting principles must be met before income is recognized. The Company
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currently offers mortgage financing to purchasers of lots at its Kalihiwai Ridge
II project and, on a limited basis, a second mortgage of up to 20% of the
selling price for certain homes at its Kehalani project.
FACTORS THAT MAY AFFECT OPERATING RESULTS
The Company has experienced, and expects to continue to experience,
variability in revenue and net income on a quarterly basis. Many factors
contribute to this variability including: (i) the timing of home closings and
land sales; (ii) the condition of the real estate markets and the economy in
general in Hawaii; (iii) the cyclical nature of the homebuilding industry and
changes in prevailing interest rates; (iv) costs of materials and labor; (v) the
availability and cost of capital; and (vi) delays in construction schedules
caused by the timing of inspections and approvals by regulatory agencies
including zoning approvals and receipt of entitlements; the completion of
necessary public infrastructure, the timing of utility hookups, and adverse
weather. Any increases in home mortgage interest and local unemployment rates
may also adversely affect future demand for the Company's homes. This
variability may cause the Company's overall results of operations to fluctuate
significantly on a quarter-to-quarter basis and revenues anticipated to occur in
a fiscal quarter may not be earned until subsequent fiscal quarters. For
example, due to a general slowdown in the Hawaii economy, the Company
anticipates that home sale closings in the fourth quarter of fiscal year 1997
will be less than home sale closings in the third quarter of fiscal year 1997
and fourth quarter of fiscal year 1996.
The Company presently conducts all of its business in the State of Hawaii,
primarily on the island of Maui but also on the islands of Kauai and Hawaii. In
addition, a majority of the Company's Maui operations are concentrated in
central Maui. Although Hawaii was one of the country's fastest growing
economies in the late 1980s, the Company believes that the recessions in the
United States and Japan and, to a lesser extent, the effects of Hurricane Iniki
in September 1992, have contributed to a slowdown in Hawaii's economy during the
1990s. Hawaii's gross state product grew by 0.6% (after adjusting for
inflation) during the four year period between 1990 and 1994, after having grown
by 18.9% between 1986 and 1990. The Company has recently observed a reduction
in the rate of new home sales, which the Company believes to be the result of
recent increases in Hawaii unemployment rates and the general lack of confidence
of prospective home buyers in the Hawaii economy. Any prolonged economic
stagnation or downturn in Hawaii could have a material adverse effect on the
Company's business.
In addition, much of the land in the State of Hawaii, particularly on the
islands of Maui, Kauai and Hawaii, has historically not been supported by
adequate public infrastructure (e.g., roads, water utilities, sewage and
drainage facilities) necessary for residential development. As a result of the
high cost of providing infrastructure, developers face significant difficulty in
profitably pricing their homes. Infrastructure constraints also limit the speed
at which new housing can be constructed even if environmental and other land use
considerations can be resolved more quickly. For example, the availability and
cost of domestic water connection may pose a major limitation for developers in
certain areas of central Maui. Infrastructure construction is further
complicated by the terrain and climate of Hawaii, which may necessitate
extensive grading and constructing retaining walls and drainage systems to
control erosion. The total investment in infrastructure for a large residential
community in Hawaii can be substantial.
The Company's planned residential projects are long-term in duration. In
Hawaii it can take in excess of ten years from the decision to develop
unentitled land until the first home or homesite is sold, depending on the
nature of the governmental approval process, the project's size, the state of
the economy and the physical characteristics of the site. In addition, before
planned residential projects can generate any revenue, significant capital
expenditures and carrying costs are required for, among other things, compliance
with governmental land use and environmental requirements, land development and
installation of infrastructure.
Page 9
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The entitlement process for development of property in Hawaii is lengthy,
complex and costly, involving numerous state and county discretionary regulatory
approvals. Conversion of an unentitled parcel of land to residential zoning
usually requires the following approvals: adoption of or amendment to the
County Community Plan to reflect the desired general land use; approval by the
State Land Use Commission to reclassify the parcel to an urban designation;
County Council approval to rezone the property to the specific use desired; and,
if the parcel is located in the Coastal Zone Management area, the granting of a
Special Management Area Permit by the County Planning Commission. In obtaining
the necessary land entitlements at the state and county levels, the Company
obtains approvals from these authorities for related matters, including density,
provisions for affordable housing, roads, utilities and the dedication of
acreage for schools, parks and other purposes. County approval is typically
obtained after state approval. Subsequent to county approval of entitlements,
subdivision approvals and building permits must be obtained. The entitlement
process is complicated by the conditions, restrictions and exactions that are
placed on these approvals, such as requirements for construction of
infrastructure improvements, payment of impact fees, restrictions on the
permitted uses of the land and provisions of affordable housing.
The climates and geology of Hawaii present certain risks of natural
disasters. In September 1992, Hurricane Iniki caused a delay in the
construction of roads and utilities at the Company's Kalihiwai Ridge project on
the island of Kauai as construction resources were directed to civil recovery
projects for the community. In addition, certain of the Company's projects are
located on the island of Hawaii, where the Kilauea volcano is currently active.
To the extent that hurricanes, severe storms, volcanoes or other natural
disasters occur, the Company's business may be adversely affected.
Although the Company has been holding, entitling, developing, marketing and
selling land for over 20 years, it has only been building homes since late 1993
and, to date, has closed a total of 549 home sales. As a result, the Company is
subject to the risks inherent in establishing a new line of business. Because
the Company has only recently commenced homebuilding operations, the Company's
historical financial performance is not necessarily a meaningful indicator of
future results. For example, the Company's cost of property sales as a
percentage of property sales has increased substantially, and therefore its
gross margin has declined as compared to periods prior to the commencement of
homebuilding activities.
Historically, most sectors of the homebuilding industry have been cyclical
and have been significantly affected by changes in general economic conditions,
levels of consumer confidence and income, housing demand, interest rates and the
availability of financing. In addition, homebuilders such as the Company are
subject to various risks including competitive overbuilding, environmental
risks, cost overruns, lack of public infrastructure, changes in government
regulation, availability and cost of capital, and increases in real estate taxes
and other local government fees.
The Company is also subject to certain risks associated with the
availability and cost of materials and labor, delays in construction schedules
and cost overruns. For example, homebuilders nationwide have experienced
significant volatility in the cost of lumber, with lumber prices varying by as
much as 50% over a several month period. The Company's developments are also
susceptible to delays caused by strikes or other events involving construction
trade unions. Environmental regulations can also have an adverse impact on the
availability and price of certain raw materials such as lumber. In addition,
the Company's operations are susceptible to delays caused by weather
disturbances, international events affecting the shipping industry and the
transportation of building materials necessary for the Company's business, and
other factors not within a developer's control.
In the past, the Company has experienced delays in obtaining the necessary
material and labor to install steel framing systems at its Waiolani I project.
The Hawaii residential construction industry has experienced serious labor and
material shortages, including lumber, insulation, drywall, cement and
carpenters. Delays in construction of homes due to these shortages or to
inclement weather conditions
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could have an adverse effect upon the Company's homebuilding operations. In
addition, the Company's operations are susceptible to delays caused by strikes,
weather disturbances and international events affecting the shipping industry
and the transportation of building materials to Hawaii.
The rate of new home sales in fiscal year 1996 was lower than the rate of
new home sales experienced in fiscal year 1995, which the Company believes to be
the result of the lack of confidence of prospective home buyers in Hawaii's
economy. If new home sales rates continue at their current levels or decline
further, the Company's financial results will be adversely affected. In
response to current market conditions, the Company has provided, and may provide
in the future, certain sales incentives to encourage buyer interest. As a
result, the Company's gross margin as a percentage of sales on residential homes
has declined, and may decline in the future.
Substantially all home buyers utilize long-term mortgage financing to
purchase their homes and lenders generally make loans only to borrowers who
satisfy the lenders' income and other requirements. Although mortgage financing
for qualified home buyers is currently available, there can be no assurance that
mortgage financing will remain readily available to the Company's customers due
to general economic conditions, the restricted ability of banks and savings and
loan institutions to finance the purchase of homes by home buyers and other
factors. In particular, during periods of high interest rates, it is generally
more difficult for people to qualify for mortgage loans due to the higher
payments associated with higher interest rates. Moreover, restrictions on the
deductibility of mortgage interest for federal income tax purposes could
adversely affect the Company's operations.
The Company is subject to local, state and federal statutes, ordinances,
rules and regulations protecting health and safety, archeological preservation
laws and environmental laws, including laws protecting endangered species. The
particular laws which apply to any given project vary greatly according to the
site, the site's environmental condition and the present and former uses of the
site. Environmental laws (i) may cause the Company to incur substantial
compliance, mitigation and other costs, (ii) may prohibit or severely restrict
development in certain environmentally sensitive areas, and (iii) may delay
completion of the Company's projects. Some of the properties held for
development by the Company were formerly sites of large agricultural operations,
which involved the use of pesticides and other agricultural chemicals. No
assurance can be given that such laws will not have a material adverse effect on
the Company's operations in the future.
Although the Company believes that its existing landholdings will provide
sufficient inventory to enable the Company to develop homesites and build and
sell new homes for more than ten years, the Company intends, on a selective
basis, to acquire additional land for residential development. Such additional
land, including land subject to the option granted to it by CBCL and acquired at
fair market value, will not have the same low cost as the Company's owned
property. Therefore, the Company's costs for new projects will be significantly
higher than for projects on currently owned land.
In addition, the Company is subject to local, state and federal statutes,
ordinances, rules and regulations affecting land use and building design.
Approximately 627 acres of the Company's existing supply of land and
approximately 1,964 acres currently subject to the option granted to the Company
by CBCL are not fully entitled. Before developing any of its unentitled land,
the Company will be required to obtain a variety of regulatory approvals from
state and local governmental authorities relating to such matters as permitted
land uses and levels of density, the installation of utilities, and the
dedication of acreage for open space, parks, schools and other community
purposes. After these entitlements are granted, subdivision approvals and
building permits must be obtained. Changes in circumstances or in applicable
law may require amended or additional approvals. Based on the Company's
experience, it may take over ten years from the decision to develop unentitled
land until the delivery of a first home. The Company may incur substantial
costs in connection with the land use approval process. In addition to costs
and fees required in connection with various applications, counties may assess
"impact fees" based on governmental assessment of the effects of the Company's
projects on existing communities, including such things as infrastructure,
transportation, waste disposal, education and air quality. The
Page 11
<PAGE>
Company is subject to risks associated with changes in governmental regulations
and increases in property taxes and other governmental fees.
In addition, subsequent to Hurricane Iniki, many of the insurance companies
doing business in Hawaii have restricted, curtailed or suspended the issuance of
homeowners' insurance policies on single-family and multi-family homes. This
has had the effect of both reducing the availability of hurricane insurance and,
in general, increasing the cost of such insurance. Mortgage financing for a new
home is conditioned on, among other things, the availability of adequate
homeowners' insurance. There can be no assurance that homeowners' insurance
will be available or affordable to prospective purchasers of the Company's
homes. Long-term restrictions on or unavailability of homeowners' insurance
could have a material adverse effect on the Company's business.
The Company is currently unable to obtain policies of insurance assuring it
of good and marketable title to certain parcels of land. The Company believes
that the defects in title arise from a variety of causes, including, but not
limited to, defects in documenting transfers of the property, lack of paper
title, lack of conveyance by co-owners and missing probate records, most of
which defects occurred in the late 1800s and early 1900s. The Company believes
that this condition exists with respect to approximately one acre of its 79
acres of land at its Piihana project. Title to a 50% undivided interest in
approximately one acre out of its 28 acres at its Iao II project is vested in
another party, and the Company is in the process of attempting to acquire that
50% undivided interest. As a result of title uncertainties, the Company is
sometimes unable to obtain insurance policies, delivery of which is typically a
condition to obtaining financing for a project. In order to cure title defects
and obtain appropriate title insurance, the Company has initiated, or intends to
initiate, legal actions to "quiet title" such parcels in its name. The process
of prosecuting actions to quiet title is sometimes lengthy and could have the
effect of delaying the Company's planned development of particular projects. No
assurance can be given that the Company will prevail in its current or intended
title actions or will otherwise be able to obtain insurable title to such
properties.
The Company is frequently required, in connection with the development of
its projects, to obtain performance, maintenance and other bonds. The amount of
these bonds outstanding at any time varies in accordance with the Company's
pending development activities. In the event any such obligations are drawn
upon because of the Company's failure to build required infrastructure, the
Company would be obligated to reimburse the issuing surety company or bank,
which could have a material adverse effect on the Company's financial
statements.
RESULTS OF OPERATIONS
The following discussion of results of operations and financial condition
should be read in conjunction with the Financial Statements and Notes thereto.
PROPERTY SALES. The Company's revenue from property sales for the quarter
ended December 31, 1996 was $5.3 million compared to $823,000 for the quarter
ended December 31, 1995. At Kehalani, the Company closed 23 single-family home
sales at an average price of $226,000 during the third quarter of fiscal 1997
compared to three single-family home sales closed at an average price of
$251,000 during the prior year's third quarter.
Property sales for the three quarters ended December 31, 1996 increased to
$13.1 million from $5.2 million for the three quarters ended December 31, 1995.
During the first three quarters of fiscal 1997, the Company closed 57
single-family home sales at Kehalani at an average price of $224,000 compared to
16 home sales closings at an average price of $263,000 in the first three
quarters of fiscal 1996. In the first three quarters of fiscal 1997, the
Company recognized $300,000 of revenue related to the deferred gain on the Iao
land sale to SHI compared to $400,000 recognized in the first three quarters
Page 12
<PAGE>
of fiscal 1996. The Company also sold no land parcels on the island of Hawaii
during the first three quarters of fiscal 1997 compared to two land parcel sales
in the first three quarters of fiscal 1996.
COST OF PROPERTY SALES. Cost of property sales for the third quarter of
fiscal 1997 was $4.6 million compared to $625,000 for the third quarter of
fiscal 1996. The increase in cost of property sales in the third quarter of
fiscal 1997 compared to the third quarter of fiscal 1996 was primarily
attributable to increased single-family home sale closings at Kehalani and the
related construction costs incurred. Cost of property sales as a percentage of
property sales in the third quarter of fiscal 1997 was 87% compared to 76% for
the third quarter of the fiscal 1996. The increase in cost of property sales as
a percentage of property sales was primarily the result of a decrease in the
average sales price per home reflecting the sales incentive and discount program
implemented by the Company during fiscal 1997. The Company anticipates that
cost of property sales as a percentage of property sales will continue to be
negatively impacted at least through the remainder of fiscal 1997 as a result of
the continuation of the sales incentive and discount program.
Cost of property sales for the three quarters ended December 31, 1996 was
$11.5 million compared to $3.6 million for the three quarters ended December 31,
1995. This increase was primarily the result of expanded property sales in the
first three quarters of fiscal 1997 compared to the same period of last fiscal
year. In addition, cost of property sales as a percentage of property sales was
88% for the first three quarters of fiscal 1997 compared to 70% for the first
three quarters of fiscal 1996. This increase was principally due to the
decrease in the average sales price of homes closed in fiscal 1997 compared to
fiscal 1996.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
include charges from CBCL for risk management, employee benefits, human
resources, and other services provided to the Company, offset by the Company's
charges to CBCL for certain land entitlement, development (including planning
and engineering) and management services. General and administrative expenses
for the third quarter of fiscal 1997 were $536,000, a 4% decrease from the
$556,000 incurred in the third quarter of fiscal 1996. This decrease was
primarily due to the Company's workforce reduction program which resulted in a
decline in salary and related costs in the third quarter of fiscal 1997 compared
to the prior year's third quarter.
General and administrative expenses for the first three quarters of
fiscal 1997 were $1.9 million compared to $2.5 million incurred in the
similar period of fiscal 1996. This decrease was primarily the result of
lower salary and related costs in the first three quarters of fiscal 1997 as
compared to the prior year's first three quarters due to the impact of the
Company's workforce reduction program. In addition, the prior year's first
three quarters included costs incurred in connection with seeking additional
debt financing.
EQUITY IN EARNINGS OF IAO PARTNERS. The Company and SHI entered into a
joint venture partnership agreement in October 1992 (which was subsequently
amended in October 1993), in connection with the acquisition by SHI of the Iao
Parkside property from the Company. SHI contributed the Iao Parkside property
and $25,000 to the joint venture partnership and the Company contributed
$25,000. Each partner has a 50% interest in the joint venture which is engaged
in the development and sale of 480 multi-family condominium homes on
approximately 28 acres. The equity in earnings recognized for this joint
venture was $48,000 in the third quarter of fiscal 1997 compared to $101,000 in
the third quarter of fiscal 1996. This represents the Company's share of income
from the closing of 13 multi-family home sales at the Iao Parkside project
compared to eight multi-family homes closed in the third quarter of fiscal 1996.
During the third quarter of fiscal 1997, Iao Partners sold five homes under a
zero-down program under which the partnership issued a 20% second mortgage.
Such home sales were accounted for under the cost recovery method and,
therefore, an insignificant profit on these sales was recognized.
Page 13
<PAGE>
Equity in earnings of Iao Partners for the three quarters ended December
31, 1996 was $114,000 compared to $631,000 recorded in the same period of the
prior year. The decrease in equity in earnings was primarily attributable to
fewer home sale closings in the first three quarters of fiscal 1997 compared to
the first three quarters of fiscal 1996. In addition, earnings for the first
three quarters of fiscal 1997 were impacted by the cost recovery accounting
treatment for certain home sales closed during the first three quarters of
fiscal 1997.
INTEREST INCOME (EXPENSE) - NET. Interest income (expense) - net consists
of interest earned from the temporary investment of cash balances in
investment-grade, short-term, interest-bearing securities, and interest revenue
associated with purchase money mortgage notes owned by the Company, offset by
interest expense incurred which is not capitalized. Interest income - net was
$2,000 in both the third quarter of fiscal 1997 and 1996.
Interest expense - net for the first three quarters of fiscal 1997 was
$19,000 compared to interest income-net of $126,000 for the first three quarters
of fiscal 1996. Interest expense-net was higher for the first three quarters of
fiscal 1997 compared to the first three quarters of fiscal 1996 principally
because of lower cash balances in the current year's first three quarters
compared to the prior year's first three quarters resulting in lower interest
income.
OTHER EXPENSE - NET. Other expense - net consists of miscellaneous income
and expense items including certain marketing and advertising expenses. The
decrease of $105,000 in other expense in the third quarter of fiscal 1997 as
compared to the third quarter of fiscal 1996 was primarily the result of
decreased costs associated with certain marketing and advertising expenses
incurred in the third quarter of fiscal 1996.
Other expense - net for the first three quarters of fiscal 1997 was
$198,000 compared to $539,000 for the first three quarters of fiscal 1996. This
decrease was primarily attributable to the reduction of certain marketing and
advertising expenses incurred at the Company's Kehalani project during the first
three quarters of fiscal 1997 compared to the first three quarters of fiscal
1996 and to costs associated with the resolution of certain property easement
issues in the first three quarters of fiscal 1996.
DEFERRED REVENUE AND BACKLOG
The Company deferred 50% of the revenue from the land sold to SHI for its
Iao Parkside joint venture project. As of December 31, 1996, the Company had a
total of $1.2 million in deferred revenue that will be recognized as the homes
in this project are sold.
At December 31, 1996, the Company's backlog consisted of 11 homes and three
land parcels with an aggregate sales value of $2.8 million. At Kehalani, eight
homes were in backlog with a total sales value of $1.8 million. At Iao Parkside
three homes with an aggregate sales value of $456,000 were in backlog. The
backlog at Iao Parkside represents 100% of the joint venture's sales contracts.
The financial results of this joint venture are not consolidated into the
Company's results, but rather are accounted for by the equity method.
Accordingly, the Company will not recognize 100% of the revenue from such
contracts, but will recognize its share of the financial results of this joint
venture partnership. Also, three land parcels at Kalihiwai Ridge II with a
sales value of $555,000 were in backlog. Sales contracts included in backlog
are typically subject to cancellation by the purchaser under specified
circumstances such as failure to obtain financing. As a result, no assurances
can be given that the homes which presently comprise backlog will result in
actual closings nor can assurance be given as to when such closings may occur.
In addition, the Company believes that home sale rates on the island of Maui
continue to be adversely affected by various factors, including uncertainty of
prospective home buyers resulting from a weakness in the Hawaiian economy.
Page 14
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company requires capital to plan projects, obtain entitlements, acquire
and develop land, and construct homes. Prior to the Company's restructuring and
initial public offering in December 1993, the Company used internally generated
funds and funds from CBCL for development purposes, including planning,
entitling, engineering, site preparation, construction of roads, water and
sewer lines, as well as the construction and marketing of its lots and parcels
of land. In December 1993, the Company consummated its initial public offering
of Class A Common Stock, which resulted in net proceeds to the Company of $27.4
million.
The Company has both short-term and long-term capital requirements,
including those relating to its Kehalani project. The Company intends to fund
its capital requirements through a combination of internally generated funds,
bank and other financing. The Company further intends to primarily rely on bank
financing for its home construction requirements. As a result, the Company's
business and earnings are substantially dependent on its ability to obtain bank
and other financing on acceptable terms. The Company also plans to seek
additional financing, a portion of the proceeds from which will be used to fund
necessary development work at its Kehalani master-planned community. No
assurance can be given that the Company will be able to obtain such financing or
that any available financing will be on terms acceptable to the Company.
Failure to obtain such financing would have a material adverse effect on the
Company's business.
On August 31, 1995, the Company entered into two secured revolving loan
agreements with the Bank of Hawaii and City Bank ("Lenders") that provide for a
maximum outstanding balance of $35 million and which expire in September 1998.
On September 5, 1996, the Company entered into two modification agreements with
the Lenders which amended the terms and conditions of the existing revolving
loan facilities to allow advances not to exceed an aggregate of $4 million for
working capital purposes. The revolving loan facility consists of two
components. Under the infrastructure loan modification agreement, the working
capital advance shall not exceed $1.5 million with interest accruing at the Bank
of Hawaii's base rate plus one-half (0.5) percentage point with construction
advances accruing interest at the base rate plus one (1.0) percentage point.
Under the building loan modification agreement, the working capital advance
shall not exceed $2.5 million with interest accruing on both the working capital
and the construction advances at the Bank of Hawaii's base rate plus one-half
(0.5) percentage point. All advances made under both modification agreements
for working capital purposes together with all accrued and unpaid interest shall
be due and payable in full on April 30, 1997. The infrastructure loan and
building loan agreements were also amended to require the Company to remit to
the Lenders 100% of the net proceeds from the sale of each home sold at the
Company's Kehalani project. In addition to the collateral already held by the
Lenders, C. Brewer and Company, Limited ("CBCL") delivered a guaranty of payment
for the Company's indebtedness related to the working capital advances. Such
guaranty by CBCL is secured by a first mortgage lien on the Company's Kalihiwai
Ridge III property located on the island of Kauai. The Company is currently
negotiating with its Lenders to extend its existing $4 million working capital
facility beyond April 1997. No assurance can be given that such negotiations
will be successful. Failure to obtain such financing would have a material
adverse effect on the Company's business.
Page 15
<PAGE>
The Company is also seeking to generate additional funds through sales of
certain land parcels. Moreover, the Company anticipates that it will require
additional long-term financing to further develop its projects. The Company is
currently continuing its ongoing efforts to obtain such long-term financing.
Failure to obtain such long-term financing would have a material adverse effect
on the Company's business.
Page 16
<PAGE>
C. BREWER HOMES, INC.
PART II. OTHER INFORMATION
ITEMS 1. THROUGH 5. Not Applicable
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibit No. Description
----------- -----------
2.1 Agreement and Plan of Merger, dated October 21, 1994,
between C. Brewer Homes, Inc., a Hawaii corporation, and C.
Brewer Homes, Inc., a Delaware corporation. (Incorporated
by reference to Exhibit 2.1 of the Registrant's Current
Report on Form 8-K dated October 21, 1994.)
3.1 Restated Certificate of Incorporation of the Registrant.
(Incorporated by reference to Exhibit 3.1 of the
Registrant's Current Report on Form 8-K dated October 21,
1994.)
3.2 Bylaws of the Registrant. (Incorporated by reference to
Exhibit 3.2 of the Registrant's Current Report on Form 8-K
dated October 21, 1994.)
4.1 Specimen of Class A Common Stock Certificate.
(Incorporated by reference to Exhibit 4.1 of the
Registrant's registration statement under the Securities Act
on Form S-1, Registration Statement No. 33-68924.)
4.2 Restated Certificate of Incorporation of the Registrant.
(Incorporated by reference to Exhibit 3.1 of the
Registrant's Current Report on Form 8-K dated October 21,
1994.)
4.3 Section 1 of Bylaws of Registrant. (Incorporated by
reference to Exhibit 3.2 of the Registrant's Current Report
on Form 8-K dated October 21, 1994.)
4.4 Amended and Restated Declaration of Registration Rights.
(Incorporated by reference to Exhibit 4.1 of the
Registrant's registration statement under the Securities Act
on Form S-3, Registration Statement No. 33-75230.)
10.1 Form of Indemnification Agreement. (Incorporated by
reference to Exhibit 10.1 of the Registrant's Quarterly
Report on Form 10-Q dated November 14, 1994.)
Page 17
<PAGE>
+10.2 1993 Stock Option/Stock Issuance Plan. (Incorporated by
reference to Exhibit 99.1 of the Registrant's registration
statement under the Securities Act on Form S-8, Registration
Statement No. 33-75230.)
+10.3 Form of Automatic Option Grant Agreement. (Incorporated by
reference to Exhibit 10.3 of the Registrant's registration
statement under the Securities Act on Form S-1, Registration
Statement No. 33-68924.)
+10.4 Form of Employee Benefits Allocation Agreement.
(Incorporated by reference to Exhibit 10.4 of the
Registrant's registration statement under the Securities Act
on Form S-1, Registration Statement No. 33-68924.)
+10.5 C. Brewer and Company, Limited Pension Plan for Salaried,
Non-Bargaining Unit Employees and Hilo Coast Processing
Company Pension Plan for Salaried, Non-Bargaining Unit
Employees (Defined Benefit Plan). (Incorporated by
reference to Exhibit 10.5 of the Registrant's registration
statement under the Securities Act on Form S-1, Registration
Statement No. 33-68924.)
+10.6 C. Brewer Homes, Inc. Performance Incentive Plan.
(Incorporated by reference to Exhibit 10.6 of the
Registrant's registration statement under the Securities Act
on Form S-1, Registration Statement No. 33-68924.)
10.7 Form of Intercompany Agreement. (Incorporated by reference
to Exhibit 10.7 of the Registrant's registration statement
under the Securities Act on Form S-1, Registration Statement
No. 33-68924.)
10.8 Form of Asset Exchange Agreement. (Incorporated by
reference to Exhibit 10.8 of the Registrant's registration
statement under the Securities Act on Form S-1, Registration
Statement No. 33-68924.)
10.9 Form of Option/Right of First Refusal Agreement.
(Incorporated by reference to Exhibit 10.9 of the
Registrant's registration statement under the Securities Act
on Form S-1, Registration Statement No. 33-68924.)
10.10 Form of Development and Management Services Agreement.
(Incorporated by reference to Exhibit 10.10 of the
Registrant's registration statement under the Securities Act
on Form S-1, Registration Statement No. 33-68924.)
10.12 Manager's Revocable License (Lease) of premises located at
90 Waiko Road, Maui, Hawaii dated February 8, 1993.
(Incorporated by reference to Exhibit 10.12 of the
Registrant's registration statement under the Securities Act
on Form S-1, Registration Statement No. 33-68924.)
Page 18
<PAGE>
10.13 Central Maui Source Development Agreement dated July 28,
1975. (Incorporated by reference to Exhibit 10.13 of the
Registrant's registration statement under the Securities Act
on Form S-1, Registration Statement No. 33-68924.)
10.14 Partnership Agreement between the Registrant and Schuler
Homes, Inc. dated October 15, 1992. (Incorporated by
reference to Exhibit 10.14 of the Registrant's registration
statement under the Securities Act on Form S-1, Registration
Statement No. 33-68924.)
10.17 Memorandum of Agreement among the Registrant, Schuler Homes,
Inc. and Maui County dated June 11, 1992. (Incorporated by
reference to Exhibit 10.17 of the Registrant's registration
statement under the Securities Act on Form S-1, Registration
Statement No. 33-68924.)
10.23 Sublease of premises located at 888 Kalanianaole Avenue,
Hilo, Hawaii, dated as of October 1, 1993. (Incorporated
by reference to Exhibit 10.23 of the Registrant's
registration statement under the Securities Act on Form S-1,
Registration Statement No. 33-68924.)
+10.32 Form of Notice of Grant to be generally used in connection
with the 1993 Stock Option/Stock Issuance Plan.
(Incorporated by reference to Exhibit 99.2 of the
Registrant's registration statement under the Securities Act
on Form S-8, Registration Statement No. 33-75230.)
+10.33 Form of Stock Option Agreement to be generally used in
connection with the 1993 Stock Option/Stock Issuance Plan.
(Incorporated by reference to Exhibit 99.2 of the
Registrant's registration statement under the Securities Act
on Form S-8, Registration Statement No. 33-75230.)
+10.34 Addendum to Stock Option Agreement (Financial Assistance).
(Incorporated by reference to Exhibit 99.2 of the
Registrant's registration statement under the Securities Act
on Form S-8, Registration Statement No. 33-75230.)
+10.35 Addendum to Stock Option Agreement (Limited Stock
Appreciation Right). (Incorporated by reference to Exhibit
99.2 of the Registrant's registration statement under the
Securities Act on Form S-8, Registration Statement No.
33-75230.)
+10.36 Addendum to Stock Option Agreement (Special Tax Elections).
(Incorporated by reference to Exhibit 99.2 of the
Registrant's registration statement under the Securities Act
on Form S-8, Registration Statement No. 33-75230.)
Page 19
<PAGE>
+10.37 Form of Stock Issuance Agreement to be generally used in
connection with the 1993 Stock Option/Stock Issuance Plan.
(Incorporated by reference to Exhibit 99.2 of the
Registrant's registration statement under the Securities Act
on Form S-8, Registration Statement No. 33-75230.)
10.39 Commercial Lease and Deposit Receipt dated as of January 18,
1995 between George Hotniansky, et al. and the Registrant.
(Incorporated by reference to Exhibit 10.39 of the
Registrant's registration statement on Form 10-K dated
June 28, 1995.)
10.40 Revolving Loan Agreement (Infrastructure) between the
Registrant and Bank of Hawaii dated as of August 31, 1995.
(Incorporated by reference to Exhibit 10.1 of the
Registrant's Quarterly Report on Form 10-Q dated November
14, 1995.)
10.41 Revolving Loan Agreement (Building) between the Registrant
and Bank of Hawaii dated as of August 31, 1995.
(Incorporated by reference to Exhibit 10.2 of the
Registrant's Quarterly Report on Form 10-Q dated November
14, 1995.)
10.42 Form of Revolving Note (Infrastructure) between the
Registrant and Bank of Hawaii dated as of August 31, 1995.
(Incorporated by reference to Exhibit 10.3 of the
Registrant's Quarterly Report on Form 10-Q dated November
14, 1995.)
10.43 Form of Revolving Note (Building) between the Registrant and
Bank of Hawaii dated as of August 31, 1995. (Incorporated
by reference to Exhibit 10.3 of the Registrant's Quarterly
Report on Form 10-Q dated November 14, 1995.)
10.44 First Mortgage, Security Agreement and Financing Statement
between the Registrant and Bank of Hawaii dated as of August
31, 1995. (Incorporated by reference to Exhibit 10.4 of
the Registrant's Quarterly Report on Form 10-Q dated
November 14, 1995.)
10.45 UCC-1 Financing Statement between the Registrant and Bank of
Hawaii dated as of August 31, 1995. (Incorporated by
reference to Exhibit 10.5 of the Registrant's Quarterly
Report on Form 10-Q dated November 14, 1995.)
10.46 Hazardous Materials Indemnity Agreement between the
Registrant and Bank of Hawaii dated as of August 31, 1995.
(Incorporated by reference to Exhibit 10.6 of the
Registrant's Quarterly Report on Form 10-Q dated November
14, 1995.)
Page 20
<PAGE>
10.47 Form of Agreement between Registrant and Fletcher Pacific
Construction Co., Ltd. dated as of May 30, 1995.
(Incorporated by reference to Exhibit 10.6 of the
Registrant's Quarterly Report on Form 10-Q dated November
14, 1995.)
10.48 First Loan Modification Agreement (Infrastructure Facility)
between the Registrant and Bank of Hawaii dated as of
September 5, 1996. (Incorporated by reference to Exhibit
10.48 of the Registrant's Quarterly Report on Form 10-Q
dated November 14, 1996.)
10.49 First Loan Modification Agreement (Building Facility)
between the Registrant and Bank of Hawaii dated as of
September 5, 1996. (Incorporated by reference to Exhibit
10.49 of the Registrant's Quarterly Report on Form 10-Q
dated November 14, 1996.)
10.50 Amendment to First Mortgage, Security Agreement and
Financing Statement between the Registrant and Bank of
Hawaii dated as of September 5, 1996. (Incorporated by
reference to Exhibit 10.50 of the Registrant's Quarterly
Report on Form 10-Q dated November 14, 1996.)
10.51 Guaranty between C. Brewer and Company, Limited and Bank of
Hawaii dated as of September 5, 1996. (Incorporated by
reference to Exhibit 10.51 of the Registrant's Quarterly
Report on Form 10-Q dated November 14, 1996.)
10.52 Corporate Resolution Re: Guaranty to Bank of Hawaii from
Board of Directors of C. Brewer and Company, Limited dated
as of September 5, 1996. (Incorporated by reference to
Exhibit 10.52 of the Registrant's Quarterly Report on Form
10-Q dated November 14, 1996.)
10.53 Agreement to Guaranty between the Registrant and C. Brewer
and Company, Limited dated as of September 4, 1996.
(Incorporated by reference to Exhibit 10.53 of the
Registrant's Quarterly Report on Form 10-Q dated November
14, 1996.)
*11.1 Statement regarding computation of earnings (loss) per
common share.
*27.1 Financial Data Schedule.
* Filed herewith
+ Management contract or compensatory plan or arrangement.
(b) No reports on Form 8-K were filed for the quarter ended December 31, 1996.
Page 21
<PAGE>
C. BREWER HOMES, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
C. BREWER HOMES, INC.
(Registrant)
Date: February 14, 1997 By /s/ Edward T. Foley
----------------------------------------------
EDWARD T. FOLEY
Executive Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer
and Duly Authorized Officer)
Page 22
<PAGE>
C. BREWER HOMES, INC.
EXHIBIT INDEX
Sequentially
Numbered
Exhibit No. Description Page Number
- ----------- -----------
11.1 Statement regarding computation of earnings (loss)
per common share. 24
27.1 Financial Data Schedule.
Page 23
<PAGE>
Exhibit 11.1
C. BREWER HOMES, INC.
COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE
(IN THOUSANDS, EXCEPT FOR EARNINGS (LOSS) PER COMMON SHARE)
<TABLE>
<CAPTION>
Quarters Ended Three Quarters Ended
--------------------------- ---------------------------
December 31, December 31, December 31, December 31,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Class A Common Stock
Shares issued and outstanding . . . . . . . . . . . . . . . . 3,082 2,685 3,082 2,685
Class B Common Stock
Shares issued and outstanding . . . . . . . . . . . . . . . . 5,254 5,651 5,254 5,651
Treasury stock purchased in July 1995 . . . . . . . . . . . . (4) (4) (4) (3)
------ ------ ------ ------
Weighted average number of common shares outstanding . . . . . . 8,332 8,332 8,332 8,333
------ ------ ------ ------
------ ------ ------ ------
Net income (loss). . . . . . . . . . . . . . . . . . . . . . . . $ 82 $ (265) $ (265) $ (458)
------ ------ ------ ------
------ ------ ------ ------
Earnings (loss) per common share . . . . . . . . . . . . . . . . $ 0.01 $(0.03) $(0.03) $(0.05)
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
Page 24
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 101
<SECURITIES> 0
<RECEIVABLES> 852
<ALLOWANCES> 0
<INVENTORY> 37,399
<CURRENT-ASSETS> 101
<PP&E> 327
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0
0
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</TABLE>
