<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
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/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
For the transition period from to
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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)
255-A EAST 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
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding at
November 10, 1997
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Class A Common Stock (par value $.01 per share) 3,492,847 shares
Class B Common Stock (par value $.01 per share) 4,843,153 shares
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C. BREWER HOMES, INC.
INDEX
PAGE
NUMBER
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Statements of Income (Loss) - Quarters and Half Years
Ended September 30, 1997 and September 30, 1996......................3
Balance Sheets - September 30, 1997 and March 31, 1997...............4
Statements of Cash Flow - Half Years
Ended September 30, 1997 and September 30, 1996......................5
Notes to Financial Statements........................................6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.................8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.............................18
Signature...........................................................21
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C. BREWER HOMES, INC.
STATEMENTS OF INCOME (LOSS)
(IN THOUSANDS, EXCEPT LOSS PER COMMON SHARE)
(UNAUDITED)
<TABLE>
<CAPTION>
Quarters Ended Half Years Ended
---------------------------- ----------------------------
September 30, September 30, September 30, September 30,
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Property sales.................... $ 6,111 $ 5,321 $ 6,735 $ 7,744
Cost of property sales............ 5,652 4,787 6,265 6,853
------------- ------------- ------------- -------------
Gross margin................... 459 534 470 891
General and administrative
expenses.......................... 531 636 1,004 1,380
------------- ------------- ------------- -------------
Operating loss................. (72) (102) (534) (489)
Equity in earnings of Iao
Partners.......................... 26 36 47 66
Interest expense - net............ (74) (6) (134) (21)
Other income (expense) - net...... (34) (57) 74 (99)
------------- ------------- ------------- -------------
Loss before income tax benefit. (154) (129) (547) (543)
Income tax benefit................ (60) (47) (213) (196)
------------- ------------- ------------- -------------
Net loss....................... $ (94) $ (82) $ (334) $ (347)
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------------- ------------- ------------- -------------
Loss per common share............. $(0.01) $(0.01) $(0.04) $(0.04)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Weighted average number of common
shares outstanding................ 8,332 8,332 8,332 8,332
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</TABLE>
The accompanying notes are an integral part of the financial statements.
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C. BREWER HOMES, INC.
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE INFORMATION)
<TABLE>
<CAPTION>
September 30, March 31,
1997 1997
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(unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents............................... $ 184 $ 147
Mortgage notes receivable............................... 672 794
Real estate developments................................ 35,227 34,230
Investment in Iao Partners, net of deferred land gain... 3,531 3,347
Property and equipment - net............................ 138 172
Income taxes receivable................................. 1,070 856
Other assets............................................ 554 379
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Total assets........................................ $ 41,376 $ 39,925
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LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable to banks.................................. $ 26,010 $ 24,939
Accounts payable........................................ 1,218 469
Accrued expenses........................................ 3,790 3,821
Deferred income taxes................................... 1,761 1,761
Other liabilities....................................... 215 219
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Total liabilities................................... 32,994 31,209
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Commitments and contingencies
Stockholders' equity
Class A Common Stock, $.01 par value, one vote per
share, 3,403,928 shares issued and outstanding at
September 30, 1997 and 3,087,200 shares issued and
outstanding at March 31, 1997........................ 34 31
Class B Common Stock, $.01 par value, three votes
per share, 4,932,072 shares issued and outstanding
at September 30, 1997 and 5,248,800 shares issued
and outstanding at March 31, 1997.................... 50 53
Additional paid-in capital........................... 27,370 27,370
Retained deficit..................................... (19,048 ) (18,714)
Treasury stock, at cost, 4,335 shares................ (24) (24)
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Total stockholders' equity............................... 8,382 8,716
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Total liabilities and stockholders' equity............... $ 41,376 $ 39,925
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</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 FLOW
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Half Years Ended
---------------------------
September 30, September 30,
1997 1996
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<S> <C> <C>
Operating activities
Net loss.............................................................. $ (334) $ (347)
Adjustments to net loss
Depreciation...................................................... 38 32
Deferred income taxes............................................. -- 196
Equity in earnings of Iao Partners................................ (47) (66)
Amortization of deferred land gain................................ (137) (152)
Changes in operating assets and liabilities
Mortgage notes receivable......................................... 122 318
Real estate developments.......................................... (997) (217)
Income taxes receivable........................................... (214) (394)
Other assets...................................................... (175) (75)
Accounts payable.................................................. 749 392
Accrued expenses.................................................. (31) 184
Other liabilities................................................. (4) (65)
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Cash flow used in operating activities........................ (1,030) (194)
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Investing activities
Capital expenditures.............................................. (4) (34)
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Cash flow used in investing activities........................ (4) (34)
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Financing activities
Loan proceeds..................................................... 7,312 4,565
Loan payments..................................................... (6,241) (7,296)
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Cash flow provided by (used in) financing activities.......... 1,071 (2,731)
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Increase (decrease) in cash and cash equivalents.......................... 37 (2,959)
Cash and cash equivalents at beginning of period.......................... 147 3,080
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Cash and cash equivalents at end of period................................ $ 184 $ 121
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</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 5
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C. BREWER HOMES, INC.
NOTES OF 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 September 30, 1997, and its
results of operations and cash flows for the periods ended September 30, 1997
and September 30, 1996. The results of operations for the quarter and half
year ended September 30, 1997 are not necessarily indicative of the results
to be expected for the full year or for any future period.
2. LOSS PER COMMON SHARE
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 ended September 30, 1997 and September 30, 1996.
4. INVESTMENT IN IAO PARTNERS
Condensed financial information relating to the Company's investment in Iao
Partners is as follows (in thousands):
<TABLE>
<CAPTION>
Quarters Ended Half Years Ended
--------------------------- ---------------------------
September 30, September 30, September 30, September 30,
1997 1996 1997 1996
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Sales of residential real estate............... $ 1,697 $ 1,293 $ 2,300 $ 2,646
Cost of residential real estate sold........... 1,661 1,241 2,259 2,545
------------- ------------- ------------- ------------
Gross profit................................. 36 52 41 101
Interest income................................ 54 24 108 37
General and administrative expenses............ (4) (3) (8) (5)
------------- ------------- ------------- ------------
Income before taxes.......................... $ 86 $ 73 $ 141 $ 133
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</TABLE>
5. NOTES PAYABLE
On August 31, 1995, the Company entered into two secured revolving loan
agreements (an infrastructure loan agreement and a building loan agreement,
collectively referred to as the "Revolving Loan Agreements") with the Bank of
Hawaii and City Bank (the "Lenders") which provided for a maximum outstanding
balance of $35 million and which were scheduled to expire in September 1998.
On September 5, 1996, the Company entered into two modification agreements
(the "First Loan Modification Agreements") with the Lenders which amended the
terms and conditions of the Revolving Loan Agreements to allow advances not
to exceed an aggregate of $4 million for working capital purposes. All
advances made under the First Loan Modification Agreements for working
capital purposes together with all accrued and unpaid interest were due and
payable in full on April 30, 1997. The
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First Loan Modification Agreements also required the Company to remit to the
Lenders 100% of the net proceeds from the sale of each home at the Company's
Kehalani project. Pursuant to the First Loan Modification 0Agreements, and
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. The Company's
obligation to repay any amounts paid by CBCL under such guaranty was secured
by a first mortgage lien in favor of CBCL on the Company's Kalihiwai Ridge
III property located on the island of Kauai.
On July 25, 1997, the Company and the Lenders entered into an agreement
to consolidate and restructure the Revolving Loan Agreements, as modified by
the First Loan Modification Agreements (the "Master Facility Agreement").
The Master Facility Agreement provides for a maximum outstanding principal
balance of approximately $31.4 million and includes: (i) four individual
commercial mortgage loans in the aggregate amount of approximately $21.4
million with per annum interest rates ranging from the Bank of Hawaii's base
rate (the "Base Rate") plus 1% to the Base Rate plus 2%, (ii) a revolving
line of credit for borrowing up to $6 million for working capital purposes
with a per annum interest rate at the Base Rate plus .5% (the "Working
Capital Line of Credit"), and (iii) a revolving line of credit for borrowing
of up to $4 million for home construction at the Company's Kaimana and
Halemalu projects with a per annum interest rate at the Base Rate plus 1%.
The outstanding principal balance under the Master Facility Agreement
together with all accrued and unpaid interest shall be due and payable in
full on May 31, 1998.
Pursuant to the terms of the Master Facility Agreement, and in addition
to a first mortgage lien already held by the Lenders on the Company's
Kehalani property on the island of Maui, the Company executed in favor of the
Lenders a first mortgage on its Puueo I and Puueo II properties on the island
of Hawaii. In addition, CBCL delivered a guaranty for payment of the Working
Capital Line of Credit. The Company's obligations to repay any amounts paid
by CBCL under such guaranty is secured by a first mortgage lien on the
Company's Kalihiwai Ridge III property.
The Company believes that entering into the Master Facility Agreement and
amending the terms and conditions of its existing revolving loan facilities
was necessary to enable the Company to meet its working capital requirements
through the end of fiscal year 1998. The Company is also seeking to generate
additional funds through sales of certain of its land parcels. Moreover, the
Company anticipates that it will require additional long-term financing to
further develop its projects. The Company is continuing its ongoing efforts
to obtain such long-term financing. 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 long-term
financing would have a material adverse effect on the Company's business.
6. RECLASSIFICATION
Certain prior year's amounts have been reclassified to conform to the
September 30, 1997 presentation.
7. OTHER EVENTS
On November 6, 1997, C. Brewer Homes, Inc. entered into an agreement in
principle for a business combination between it and Mauna Loa Macadamia
Partners, L.P. ("Mauna Loa"), subject to execution of a final merger
agreement, approval of the transaction by the Company's shareholders and the
limited partners of Mauna Loa, and other normal closing conditions.
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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. The
Company's 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) risks associated with the Company's
proposed business combination with Mauna Loa (ii) variability in quarterly
operating results, (iii) risks associated with the concentration of the
Company's business in Hawaii, (iv) risks associated with the lack of adequate
public infrastructure in Hawaii, (v) risks associated with the long-term
nature of planned residential projects, high capital investment and carrying
costs, (vi) risks associated with the entitlement process for development of
property in Hawaii, (vii) risk of natural disasters, (viii) risks associated
with the recent commencement of homebuilding activities, (ix) risks
associated with the homebuilding industry, (x) the rate of new home sales,
(xi) effects of interest rate increases and the availability of mortgage
financing, (xii) risks associated with environmental and conservation
matters, (xiii) increased land acquisition costs, (xiv) risks associated with
competition, (xv) restrictions on land use and development, (xvi) reduced
availability of homeowners' insurance in Hawaii, (xvii) risks associated with
the inability to obtain policies of insurance assuring the Company of good
and marketable title to certain parcels of land, (xviii) risks associated
with obtaining performance, maintenance and other bonds, (xix) effects of
increases in unemployment in Hawaii (xx) risks associated with operating as a
general contractor, and (xxi) other risks identified from time to time in the
Company's reports and registration statements filed with the Securities and
Exchange Commission.
The following discussion of results of operations and financial condition
should be read in conjunction with the Financial Statements and Notes thereto.
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. As such, before
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. From late 1993 through early 1997, the Company's business strategy was
focused primarily on the construction and sale of homes, except for its
Kalihiwai Ridge II project on the island of Kauai which included the
improvement and sale of large parcels suitable for homesites. In early 1997,
the Company expanded its business strategy to include the development and
sale of lots and parcels of land.
In fiscal year 1993, the Company sold approximately 28 acres of land to
its 50% joint venture partner, Schuler Homes, Inc. ("SHI"), who subsequently
contributed this land to the partnership. As a result, the Company deferred
50% of the revenue and costs relating to the sale. Through September 30,
1997, the Company has recognized approximately $6.7 million of the deferred
income from this sale. At September 30, 1997, the Company had deferred income
of approximately $.9 million related to this sale that will be recognized as
home sales at the Iao Parkside project are closed.
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 sales are recorded and
income is recognized. The Company currently offers mortgage financing only 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. The Company may continue to provide customer mortgage
financing for future land and home sales.
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RESULTS OF OPERATIONS
PROPERTY SALES. The Company's revenue from property sales for the quarter
ended September 30, 1997 was $6.1 million compared to $5.3 million for the
quarter ended September 30, 1996. At Kehalani, the Company closed 27 home
sales at an average price of $208,000 during the second quarter of fiscal
year 1998, compared to 24 home sales closed at an average price of $219,000
during the second quarter of fiscal year 1997. In addition, the Company
sold two lots in the second quarter of fiscal year 1998 at its Kalihiwai
Ridge II Project on the island of Kauai compared to no such sales in the
second quarter of fiscal year 1997.
Property sales for the half year ended September 30, 1997 decreased to $6.7
million from $7.7 million for the half year ended September 30, 1996. During
the first half of fiscal year 1998, the Company closed 30 single-family home
sales at Kehalani at an average price of $208,000 compared to 34 home sales
closings at an average price of $223,000 in the first half of fiscal 1997.
In the first half of both fiscal years 1998 and 1997, the Company recognized
$200,000 in revenue related to the deferred gain on the Iao land sale to SHI.
COST OF PROPERTY SALES. Cost of property sales for the second quarter of
fiscal year 1998 was $5.7 million compared to $4.8 million in the second
quarter of fiscal year 1997. The increase in cost of property sales in the
second quarter of fiscal year 1998 compared to the second quarter of fiscal
year 1997 was attributable to increased home sales closings.
Cost of property sales for the half year ended September 30, 1997 was $6.3
million compared to $6.9 million for the half year ended September 30, 1996.
This increase was primarily the result of reduced property sales in the first
half of fiscal year 1998 compared to the same period of last fiscal year. In
addition, cost of property sales as a percentage of property sales was 93%
for the first half of fiscal year 1998 compared to 89% for the first half of
fiscal year 1997. This increase was principally due to the decrease in the
average sales price of homes closed in the first half of fiscal year 1998
compared to the first half of fiscal year 1997.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
include charges from CBCL for risk management, employee benefits, human
resources, office maintenance 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 second quarter of fiscal year
1998 were $531,000 compared to $636,000 in the second quarter of fiscal year
1997. This decrease was primarily the result of reduced payroll and office
rent expenses.
General and administrative expenses for the first half of fiscal year 1998
were $1.0 million, as compared to $1.4 million incurred in the similar period
of fiscal year 1997. This decrease was primarily the result of lower salary
and related costs in the first half of fiscal year 1998 as compared to the
prior year's first half due to the continuing impact of the Company's
workforce reduction program.
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 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 partnership which is
engaged in the development and sale of 480 "affordable" multi-family
condominium homes on approximately 28 acres. The equity in earnings
recognized for this joint venture was $26,000 in the second quarter of fiscal
year 1998 as compared to $36,000 in the second quarter of fiscal year 1997.
This represents the Company's share of income from the closing of 13 unit
sales at the Iao Parkside project in the second quarter of fiscal year 1998
compared to ten unit sales closed in the second quarter of fiscal year 1997.
Equity in earnings of Iao Partners for the six months ended September 30,
1997 was $47,000 compared to $66,000 recorded in the same period of the prior
year. The decrease in equity in earnings was primarily attributable to the
decrease in the average sales price of homes closed in the first half of
fiscal year 1998 compared to the first half of fiscal year 1997.
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INTEREST EXPENSE - NET. Interest expense - net consists of interest earned
from 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 expense - net in the second
quarter of fiscal year 1998 was $74,000 compared to $6,000 in the previous
fiscal year's second quarter. Interest expense - net was higher in the second
quarter of fiscal year 1998 as compared to the second quarter of fiscal year
1997 primarily due to less interest being capitalized to real estate
developments.
Interest expense - net for the first half of fiscal year 1998 was $134,000
compared to $21,000 for the first half of fiscal year 1997. Interest
expense-net was higher for the first half of fiscal year 1998 compared to the
first half of fiscal year 1997 principally because of a lower percentage of
interest incurred being capitalized to active real estate projects.
OTHER INCOME (EXPENSE) - NET. Other income (expense) - net consists of
miscellaneous income and expense items including certain marketing and
advertising expenses. Other expense - net in the second quarter of fiscal
year 1998 was $34,000 compared to other expense - net of $57,000 in the
second quarter of fiscal year 1997. The decrease in other expense - net in
the second quarter of fiscal year 1998 compared to the first quarter of
fiscal year 1997 was primarily the result of reduced sales and marketing
costs and lower miscellaneous project expenses.
Other income - net for the first half of fiscal year 1998 was $74,000
compared to other expense - net of $99,000 for the first half of fiscal year
1997. This increase was primarily attributable to the sales commission
earned from a certain land sale made by a CBCL subsidiary.
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 September 30, 1997, the Company
had a total of $1.1 million in deferred revenue that will be recognized as
the homes in this project are sold.
At September 30, 1997 the Company's backlog consisted of 47 homes with an
aggregate sales value of $9.5 million. At Kehalani, 44 homes were in backlog
with a total sales value of $9.1 million. At Iao Parkside, three homes with
an aggregate sales value of $400,000 were in backlog. The backlog at Iao
Parkside represents 100% of the joint venture's sales contracts. The
financial results of this joint venture partnership 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 50% of the financial results of this joint
venture partnership. 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 assurance 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 sales rates at its Kehalani project on the island
of Maui continue to be adversely affected by various factors, including
uncertainty of prospective home buyers resulting from a continuing weakness
in the Hawaiian economy.
LIQUIDITY AND FINANCIAL CONDITION
The Company requires capital to plan projects, obtain entitlements,
acquire and develop land, construct homes, and for working capital. Prior to
the Company's restructuring and initial public offering, the Company used
internally generated funds and funds from CBCL for working capital and
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 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, and
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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 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 such financing will be on terms acceptable to the Company.
On August 31, 1995, the Company entered into two secured revolving loan
agreements (an infrastructure loan agreement and a building loan agreement,
collectively referred to as the "Revolving Loan Agreements") with the Bank of
Hawaii and City Bank (the "Lenders") which provided for a maximum outstanding
balance of $35 million and which were scheduled to expire in September 1998.
On September 5, 1996, the Company entered into two modification agreements
(the "First Loan Modification Agreements") with the Lenders which amended the
terms and conditions of the Revolving Loan Agreements to allow advances not
to exceed an aggregate of $4 million for working capital purposes. All
advances made under the First Loan Modification Agreements for working
capital purposes together with all accrued and unpaid interest were due and
payable in full on April 30, 1997. The First Loan Modification Agreements
also required the Company to remit to the Lenders 100% of the net proceeds
from the sale of each home at the Company's Kehalani project. Pursuant to
the First Loan Modification Agreements, and 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. The Company's obligation to repay any amounts paid
by CBCL under such guaranty was secured by a first mortgage lien in favor of
CBCL on the Company's Kalihiwai Ridge III property located on the island of
Kauai.
On July 25, 1997, the Company and the Lenders entered into an agreement
to consolidate and restructure the Revolving Loan Agreements, as modified by
the First Loan Modification Agreements (the "Master Facility Agreement").
The Master Facility Agreement provides for a maximum outstanding principal
balance of approximately $31.4 million and includes: (i) four individual
commercial mortgage loans in the aggregate amount of approximately $21.4
million with per annum interest rates ranging from the Bank of Hawaii's base
rate (the "Base Rate") plus 1% to the Base Rate plus 2%, (ii) a revolving
line of credit for borrowing up to $6 million for working capital purposes
with a per annum interest rate at the Base Rate plus .5% (the "Working
Capital Line of Credit"), and (iii) a revolving line of credit for borrowing
of up to $4 million for home construction at the Company's Kaimana and
Halemalu projects with a per annum interest rate at the Base Rate plus 1%.
The outstanding principal balance under the Master Facility Agreement
together with all accrued and unpaid interest shall be due and payable in
full on May 31, 1998.
Pursuant to the terms of the Master Facility Agreement, and in addition
to a first mortgage lien already held by the Lenders on the Company's
Kehalani property on the island of Maui, the Company executed in favor of the
Lenders a first mortgage on its Puueo I and Puueo II properties on the island
of Hawaii. In addition, CBCL delivered a guaranty for payment of the Working
Capital Line of Credit. The Company's obligations to repay any amounts paid
by CBCL under such guaranty is secured by a first mortgage lien on the
Company's Kalihiwai Ridge III property.
The Company believes that entering into the Master Facility Agreement and
amending the terms and conditions of its existing revolving loan facilities
was necessary to enable the Company to meet its working capital requirements
through the end of fiscal year 1998. The Company is also seeking to generate
additional funds through sales of certain of its land parcels. Moreover, the
Company anticipates that it will require additional long-term financing to
further develop its projects. The Company is continuing its ongoing efforts
to obtain such long-term financing. 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 long-term
financing would have a material adverse effect on the Company's business.
NEW ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial
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Accounting Standards (SFAS) No. 128, EARNINGS PER SHARE, which is required to
be implemented for financial statements for periods after December 15, 1997,
including interim periods; earlier application is not permitted. The Company
does not anticipate that the adoption of SFAS No. 128 will have a material
effect on its earnings (loss) per common share.
In June 1997, the FASB issued SFAS No. 130, REPORTING COMPREHENSIVE
INCOME, the provisions of which are effective for fiscal years beginning
after December 15, 1997. This Statement requires that all items that are
required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed
with the same prominence as other financial statements. The future adoption
of this pronouncement is not expected to have a material effect on the
Company's presentation of its results of operation.
In June 1997, the FASB issued SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF
AN ENTERPRISE AND RELATED INFORMATION, the provisions of which are effective
for fiscal years beginning after December 15, 1997. This Statement
establishes standards for reporting information about operating segments in
annual financial statements and requires selected information about operating
segments in interim financial reports issued to shareholders. It also
establishes standards for related disclosures about products and services,
geographic areas and major customers. The Company has not determined the
impact that the adoption of this new accounting standard will have on its
financial statement disclosures.
CERTAIN FACTORS THAT MIGHT AFFECT FUTURE OPERATING RESULTS
In addition to other information in this Quarterly Report on Form 10-Q,
the following are important factors that should be considered in evaluating
the Company and its business.
On November 6, 1997, C. Brewer Homes, Inc. entered into an agreement in
principle for a business combination between it and Mauna Loa Macadamia
Partners, L.P. ("Mauna Loa"), subject to execution of a final merger
agreement, approval of the transaction by the Company's shareholders and the
limited partners of Mauna Loa, and other normal closing conditions.
Negotiating the terms of the proposed business combination may result in
significant diversion of time by the Company's management from other matters.
In addition, there can be no assurance that the business combination will be
consummated on a timely basis, or at all. The failure to consummate the
business combination could have a material adverse effect on the Company's
business, financial condition and results of operations. Furthermore, the
consummation of the business combination may result in the loss of key
employees of the Company. In the event the business combination is
consummated, the failure to successfully integrate the businesses,
operations, and personnel of the Company and Mauna Loa could have a material
adverse effect on the Company's business, financial condition and results of
operations.
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, all 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, particularly in California, and Japan have contributed to a
slowdown in Hawaii's economy during the 1990s. After adjusting for inflation,
Hawaii's gross state product grew 0.2% in each year from 1992 to 1994, and
0.5% in 1995, after having grown by a total of 18.9% between 1986 and 1990.
Estimated growth in gross state product in 1996 has been reported at
approximately 1.0%. The Company has observed a reduction in the rate of new
home sales since late 1993, which the Company believes to be the result of
increases in Hawaii unemployment rates and the general lack of confidence in
the Hawaii economy by prospective home buyers. Any prolonged economic
stagnation or downturn in Hawaii could have a material adverse effect on the
Company's business.
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;
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(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; (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.
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.
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 606 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.
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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 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 1997 was higher than the rate
of new home sales experienced in fiscal year 1996, which the Company believes
to be the result of substantially reduced home sales prices. If new home
sales rates continue at their current levels or decline, 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 and sell land, 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
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owned property. Therefore, the Company's costs for new projects will be
significantly higher than for projects on currently owned land.
The land development and homebuilding industries are highly competitive.
The Company competes for desirable properties, financing, raw materials and
skilled labor. Moreover, the Company competes for land and residential sales
with numerous large and small developers, including some developers with
greater financial and other resources than the Company, government built or
subsidized housing units, individual resales of existing homes and
condominiums, and available rental housing. Competition for the acquisition
of raw land is particularly intense in Hawaii, largely due to the
concentration of land ownership and the limited supply of land available for
development.
The real estate industry is cyclical and affected by consumer confidence
levels, prevailing economic conditions generally and by interest rate and
unemployment levels in particular. The Company believes that the general
slowdown in Hawaii's economy, including a recent increase in the unemployment
rate, has caused a decline in Hawaii's home sales rates, which has increased
the competition for home buyers among Hawaii's homebuilders. Various other
factors affect the housing industry and demand for new homes, including the
availability of labor and materials and increases in the costs thereof,
changes in costs associated with home ownership such as increases in property
taxes and energy costs, changes in consumer preferences, demographic trends
and the availability of and changes in mortgage financing programs.
The Company is subject to local, state and federal statutes, ordinances,
rules and regulations affecting land use and building design. Approximately
515 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 Company is
subject to risks associated with changes in governmental regulations and
increases in property taxes and other governmental fees.
Subsequent to Hurricane Iniki in September 1992, 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
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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.
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C. BREWER HOMES, INC.
PART II. OTHER INFORMATION
ITEMS 1, 2, AND 3. Not Applicable
ITEM 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Stockholders on August 29, 1997 at
which the Company's stockholders voted: 1) to elect the following six
directors: John W.A. Buyers, Seth A. Bakes, Clinton R. Churchill, David A.
Heenan, Paul C.T. Loo and Kent T. Lucien; and 2) to ratify the selection of
Coopers & Lybrand L.L.P. as independent public accountants for the Company
for the fiscal year ending March 31, 1998.
Holders of record of the Company's Class A Common Stock and Class B
Common Stock as of the close of business on June 30, 1997 were entitled to
vote at the Annual Meeting. As of that date, there were 3,392,089 shares of
Class A Common Stock, one vote per share, and 4,943,911 shares of Class B
Common Stock, three votes per share, (collectively, "Voting Stock")
outstanding and entitled to vote at the meeting. There were present at the
Annual Meeting, either in person or by proxy, holders of an aggregate of
6,116,682 shares of Voting Stock of the Company entitled to vote at the
meeting, which constituted a quorum.
Each nominated director was elected for a term of one year by over 64% of
the Voting Stock. The following number of votes were cast for each nominee
for director (there were no abstentions or broker non-votes):
For Against Withheld
------------------------------------------------
1. John W.A. Buyers 11,724,944 0 0
2. Seth A. Bakes 11,724,944 0 0
3. Clinton R. Churchill 11,724,944 0 0
4. David A. Heenan 11,724,944 0 0
5. Paul C.T. Loo 11,724,944 0 0
6. Kent T. Lucien 11,724,544 0 0
In addition, over 64% of the Voting Stock elected to ratify the selection
of Coopers & Lybrand L.L.P. as independent public accountants for the Company
for the fiscal year ending March 31, 1998, with the number of votes cast as
follows (there were 7,200 abstentions and no broker non-votes):
For Against Withheld
------------------------------------------------
11,726,364 3,700 0
ITEM 5. OTHER EVENTS
On November 6, 1997, C. Brewer Homes, Inc. entered into an agreement in
principle for a business combination between it and Mauna Loa Macadamia
Partners, L.P. ("Mauna Loa"), subject to execution of a final merger
agreement, approval of the transaction by the Company's shareholders and the
limited partners of Mauna Loa, and other normal closing conditions.
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ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
EXHIBIT
NUMBER DOCUMENT DESCRIPTION
- ------- ---------------------
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 10-K dated June 30, 1997.)
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. See Exhibit 3.2
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.
33-88310.)
10.1 Form of Indemnification Agreement. (Incorporated by reference to
Exhibit 10.1 of the Registrant's Quarterly Report on Form 10-Q dated
September 30, 1994.)
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
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statement under the Securities Act on Form S-1, Registration
Statement No. 33-68924.)
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 as of 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 of 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.)
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.
3-75230.)
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 September 30, 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
September 30, 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 September 30, 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
September 30, 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 September 30, 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 September
30, 1995.)
10.46 Hazardous Materials Indemnity Agreement between the Registrant and
Bank of Hawaii dated as
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<PAGE>
of August 31, 1995. (Incorporated by reference to Exhibit 10.6 of the
Registrant's Quarterly Report on Form 10-Q dated September 30, 1995.)
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
September 30, 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 4, 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 5, 1996. (Incorporated by
reference to Exhibit 10.53 of the Registrant's Quarterly Report on
Form 10-Q dated November 14, 1996.)
10.54 Release and Separation Agreement, dated January 15, 1997, between the
Company and B.G. Moynahan. (Incorporated by reference to Exhibit 10.54
of the Registrant's Current Report on Form 8-K dated January 31,
1997.)
10.55 Consultant Agreement, dated January 16, 1997, between the Company and
B.G. Moynahan. (Incorporated by reference to Exhibit 10.55 of the
Registrant's Current Report on Form 8-K dated January 31, 1997.)
10.56 Letter dated January 7, 1997 from the Company to Seth A. Bakes
regarding terms of employment. (Incorporated by reference to Exhibit
10.56 of the Registrant's Annual Report on Form 10-K/A dated June 30,
1997.)
10.57 Letter dated January 16, 1997 from Seth A. Bakes to the Company
regarding terms of employment. (Incorporated by reference to Exhibit
10.57 of the Registrant's Annual Report on Form 10-K/A dated June 30,
1997.)
10.58 Master Facility Agreement (Consolidated and Restructured) between the
Registrant and Bank of Hawaii dated as of July 25, 1997.(Incorporated
by reference to Exhibit 10.58 of the Registrant's Quarterly Report on
Form 10-Q dated August 14, 1997)
10.59 Second Amendment to First Mortgage, Security Agreement and Financing
Statement between the Registrant and Bank of Hawaii dated as of July
25, 1997. (Incorporated by reference to Exhibit 10.59 of the
Registrant's Quarterly Report on Form 10-Q dated August 14, 1997)
10.60 Hazardous Materials Indemnity Agreement and Amendment between the
Registrant and Bank of Hawaii dated as of July 25, 1997. (Incorporated
by reference to Exhibit 10.60 of the Registrant's Quarterly Report on
Form 10-Q dated August 14, 1997)
10.61 Guaranty between C. Brewer and Company, Limited and Bank of Hawaii
dated as of July 25, 1997. (Incorporated by reference to Exhibit 10.61
of the Registrant's Quarterly Report on Form 10-Q dated August 14,
1997)
*11.1 Statement Regarding Computation of Earnings (Loss) Per Common Share.
*27.1 Financial Data Schedule
* Filed herewith
(b) Reports on Form 8-K
On November 12, 1997 the Company filed a report on Form 8-K announcing a
proposed business combination with Mauna Loa, and attaching a related
letter, term sheet and press release as exhibits thereto.
Page 20
<PAGE>
C. BREWER HOMES, INC.
SIGNATURE
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: November 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 21
<PAGE>
C. BREWER HOMES, INC.
EXHIBIT INDEX
Exhibit No. Description
- -------------------------------------------------------------------------------
11.1 Statement Regarding Computation of Earnings (Loss) Per Common
Share.
27.1 Financial Data Schedule
Page 22
<PAGE>
Exhibit 11.1
C. BREWER HOMES, INC.
Computation of Earnings (Loss) Per Common Share
(in thousands, except for loss per common share)
<TABLE>
<CAPTION>
Quarters Ended Half Years Ended
------------------------------- --------------------------------
September 30, September 30, September 30, September 30,
1997 1996 1997 1996
---------------- ------------- ---------------- --------------
<S> <C> <C> <C> <C>
Class A Common Stock
Shares issued and outstanding . . . . . . . . . . . . 3,404 2,885 3,404 2,658
Class B Common Stock
Shares issued and outstanding . . . . . . . . . . . . 4,932 5,451 4,932 5,678
Treasury stock purchased in July 1995 . . . . . . . . (4) (4) (4) (2)
---------------- ------------- ---------------- --------------
Weighted average number of common shares outstanding . . . 8,332 8,332 8,332 8,334
---------------- ------------- ---------------- --------------
---------------- ------------- ---------------- --------------
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . $ (94) $ (82) $ (334) $ (347)
---------------- ------------- ---------------- --------------
---------------- ------------- ---------------- --------------
Loss per common share. . . . . . . . . . . . . . . . . . . $ (0.01) $ (0.01) $ (0.04) $ (0.04)
---------------- ------------- ---------------- --------------
---------------- ------------- ---------------- --------------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> SEP-30-1997
<CASH> 184
<SECURITIES> 0
<RECEIVABLES> 672
<ALLOWANCES> 0
<INVENTORY> 35,227
<CURRENT-ASSETS> 184
<PP&E> 340
<DEPRECIATION> 202
<TOTAL-ASSETS> 41,376
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 84
<OTHER-SE> 8,298
<TOTAL-LIABILITY-AND-EQUITY> 41,376
<SALES> 6,111
<TOTAL-REVENUES> 6,111
<CGS> 5,652
<TOTAL-COSTS> 5,652
<OTHER-EXPENSES> 590
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 97
<INCOME-PRETAX> (155)
<INCOME-TAX> (60)
<INCOME-CONTINUING> (94)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (94)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
