Item
8. Financial Statements and Supplementary Data
Kaanapali
Land, LLC
Index
Report
of Independent Registered Public Accounting Firm, Grant Thornton LLP
Report
of Independent Registered Public Accounting Firm, Ernst & Young LLP
Consolidated
Balance Sheets, December 31, 2014 and 2013
Consolidated
Statements of Operations for the years ended December 31, 2014, 2013 and 2012
Consolidated
Statements of Comprehensive Income (Loss) for the years ended December 31, 2014,
2013
and 2012
Consolidated
Statements of Equity for the years ended December 31, 2014, 2013 and 2012
Consolidated
Statements of Cash Flows for the years ended December 31, 2014, 2013 and 2012
Notes
to Consolidated Financial Statements
Schedules
not filed:
All
schedules have been omitted as the required information is inapplicable or the information is presented in the financial statements
or related notes.
Report
of Independent Registered Public Accounting Firm
The
Managing Member and Stockholders
Kaanapali
Land, LLC
We
have audited the accompanying consolidated balance sheets of Kaanapali Land, LLC (the "Company") as of December
31, 2014 and 2013, and the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows
for the years then ended. These consolidated financial statements are the responsibility of the Company’s management.
Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform these audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. We were not engaged to perform an audit of the
Company’s internal control over financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts
and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
consolidated financial position of Kaanapali Land, LLC as of December 31, 2014 and 2013, and the consolidated results of
their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted
in the United States of America.
/s/
Grant Thornton LLP
Chicago,
Illinois
May
18, 2016
Report
of Independent Registered Public Accounting Firm
The
Managing Member and Stockholders
Kaanapali
Land, LLC
We
have audited the accompanying consolidated statements of operations, comprehensive income (loss), stockholders’ equity,
and cash flows of Kaanapali Land, LLC (the “Company”) for the year ended December 31, 2012. These consolidated
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audit.
We
conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated
results of operations, stockholders’ equity and cash flows of Kaanapali Land, LLC for the year ended December 31, 2012,
in conformity with U.S. generally accepted accounting principles.
/s/
Ernst & Young LLP
Chicago,
Illinois
March
27, 2013
Kaanapali
Land, LLC
Consolidated
Balance Sheets
December
31, 2014 and 2013
(Dollars
in Thousands, except share data)
|
2014
|
|
2013
|
Assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
23,608
|
|
|
13,140
|
Restricted cash
|
|
692
|
|
|
872
|
Property, net
|
|
77,977
|
|
|
90,792
|
Pension plan assets
|
|
21,043
|
|
|
24,891
|
Other assets
|
|
2,803
|
|
|
1,924
|
|
$
|
126,123
|
|
|
131,619
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
Accounts payable
and accrued expenses
|
$
|
382
|
|
|
399
|
Deposits and deferred
gains
|
|
2,394
|
|
|
1,205
|
Deferred income
taxes
|
|
19,643
|
|
|
21,612
|
Other liabilities
|
|
14,895
|
|
|
15,463
|
|
|
|
|
|
|
Total
liabilities
|
|
37,314
|
|
|
38,679
|
|
|
|
|
|
|
Commitments and
contingencies (Note 7)
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
Common
stock, at 12/31/14 and 12/31/13
Shares
authorized – unlimited, Class C shares
52,000;
shares issued and outstanding 1,792,613
in
2014 and 2013, Class C shares issued and
outstanding
52,000 in 2014 and 2013
|
|
--
|
|
|
--
|
Additional paid-in
capital
|
|
5,471
|
|
|
5,471
|
Accumulated
other comprehensive income (loss),
net
of tax
|
|
(8,850)
|
|
|
(6,069)
|
Accumulated earnings
|
|
91,430
|
|
|
93,191
|
|
|
|
|
|
|
Stockholders’
equity
|
|
88,051
|
|
|
92,593
|
|
|
|
|
|
|
Non controlling
interests
|
|
758
|
|
|
347
|
|
|
|
|
|
|
Total
equity
|
|
88,809
|
|
|
92,940
|
|
|
|
|
|
|
|
$
|
126,123
|
|
|
131,619
|
The
accompanying notes are an integral part of the consolidated financial statements.
Kaanapali
Land, LLC
Consolidated
Statements of Operations
Years
ended December 31, 2014, 2013 and 2012
(Dollars
in Thousands Except Per Share Amounts)
|
2014
|
|
2013
|
|
2012
|
Revenues:
|
|
|
|
|
|
|
|
|
Sales
|
$
|
18,879
|
|
|
8,209
|
|
|
4,761
|
Interest
and other income
|
|
209
|
|
|
622
|
|
|
379
|
|
|
19,088
|
|
|
8,831
|
|
|
5,140
|
|
|
|
|
|
|
|
|
|
Cost and expenses:
|
|
|
|
|
|
|
|
|
Cost
of sales
|
|
17,826
|
|
|
7,653
|
|
|
4,252
|
Selling,
general and administrative
|
|
2,635
|
|
|
4,347
|
|
|
382
|
Depreciation
and amortization
|
|
195
|
|
|
232
|
|
|
286
|
|
|
20,656
|
|
|
12,232
|
|
|
4,920
|
|
|
|
|
|
|
|
|
|
Operating income
(loss) before income taxes
|
|
(1,568)
|
|
|
(3,401)
|
|
|
220
|
Income
tax benefit (expense)
|
|
182
|
|
|
586
|
|
|
(638)
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
(1,386)
|
|
|
(2,815)
|
|
|
(418)
|
|
|
|
|
|
|
|
|
|
Less: Net
income attributable to
non
controlling interests
|
|
131
|
|
|
149
|
|
|
--
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to stockholders
|
$
|
(1,517)
|
|
|
(2,964)
|
|
|
(418)
|
|
|
|
|
|
|
|
|
|
Net
income (loss) per share – basic and diluted
|
$
|
(0.82)
|
|
|
(1.61)
|
|
|
(0.23)
|
The
accompanying notes are an integral part of the consolidated financial statements.
Kaanapali
Land, LLC
Consolidated
Statements of Comprehensive Income (Loss)
Years
ended December 31, 2014, 2013 and 2012
(Dollars
in Thousands Except Per Share Amounts)
|
2014
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
$
|
(1,386)
|
|
|
(2,815)
|
|
|
(418)
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income (loss):
|
|
|
|
|
|
|
|
|
Net
unrealized gains (losses) on pension plan assets
|
|
(4,559)
|
|
|
8,230
|
|
|
96
|
Other comprehensive
income (loss), before tax
|
|
(4,559)
|
|
|
8,230
|
|
|
96
|
|
|
|
|
|
|
|
|
|
Income
tax expense related to items of other
comprehensive
income (loss)
|
|
1,778
|
|
|
(3,210)
|
|
|
(38)
|
Other comprehensive
income (loss), net of tax
|
|
(2,781)
|
|
|
5,020
|
|
|
58
|
|
|
|
|
|
|
|
|
|
Comprehensive income
(loss)
|
|
(4,167)
|
|
|
2,205
|
|
|
(360)
|
|
|
|
|
|
|
|
|
|
Comprehensive
income (loss) attributable to
non
controlling interests
|
|
131
|
|
|
149
|
|
|
--
|
|
|
|
|
|
|
|
|
|
Comprehensive
income (loss) attributable to
stockholders
|
$
|
(4,298)
|
|
|
2,056
|
|
|
(360)
|
The
accompanying notes are an integral part of the consolidated financial statements.
Kaanapali
Land, LLC
Consolidated
Statements of Equity
Years
ended December 31, 2014, 2013 and 2012
(Dollars
in Thousands)
|
|
Common
Stock
|
|
Additional
Paid-In
Capital
|
|
Accumu-
lated
(Deficit)
Earnings
|
|
Accumu-
lated
Other
Compre-
hensive
Income/
(Loss)
|
|
Total
Stock-
holders’
Equity
|
|
Non
Controlling
Interests
|
|
Total
Equity
|
Balance at
December
31,
2011
|
|
$
|
--
|
|
5,471
|
|
96,213
|
|
(11,147)
|
|
90,537
|
|
--
|
|
90,537
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other compre-
hensive
income,
net
of tax
|
|
|
--
|
|
--
|
|
--
|
|
58
|
|
58
|
|
--
|
|
58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
--
|
|
--
|
|
(418)
|
|
--
|
|
(418)
|
|
--
|
|
(418)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
December
31,
2012
|
|
|
--
|
|
5,471
|
|
95,795
|
|
(11,089)
|
|
90,177
|
|
--
|
|
90,177
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of consolidat-
ing
Kaanapali
Coffee
Farms
Lot
Owners’
Association
|
|
|
--
|
|
--
|
|
360
|
|
--
|
|
360
|
|
198
|
|
558
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other compre-
hensive
income,
net
of tax
|
|
|
--
|
|
--
|
|
--
|
|
5,020
|
|
5,020
|
|
--
|
|
5,020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
--
|
|
--
|
|
(2,964)
|
|
--
|
|
(2,964)
|
|
149
|
|
(2,815)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
December
31,
2013
|
|
|
--
|
|
5,471
|
|
93,191
|
|
(6,069)
|
|
92,593
|
|
347
|
|
92,940
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of consolidat-
ing
Kaanapali
Coffee
Farms
Lot
Owners’
Association
|
|
|
--
|
|
--
|
|
(244)
|
|
--
|
|
(244)
|
|
280
|
|
36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other compre-
hensive
income,
net
of tax
|
|
|
--
|
|
--
|
|
--
|
|
(2,781)
|
|
(2,781)
|
|
--
|
|
(2,781)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
--
|
|
--
|
|
(1,517)
|
|
--
|
|
(1,517)
|
|
131
|
|
(1,386)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
December
31,
2014
|
|
$
|
--
|
|
5,471
|
|
91,430
|
|
(8,850)
|
|
88,051
|
|
758
|
|
88,809
|
The
accompanying notes are an integral part of the consolidated financial statements.
Kaanapali
Land, LLC
Consolidated
Statements of Cash Flows
Years
ended December 31, 2014, 2013 and 2012
(Dollars
in Thousands)
|
2014
|
|
2013
|
|
2012
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
|
Net
loss
|
$
|
(1,386)
|
|
|
(2,815)
|
|
|
(418)
|
Adjustments
to reconcile net loss to net cash
provided
by (used in) operating activities:
|
|
|
|
|
|
|
|
|
Proceeds
from property sales
|
|
14,570
|
|
|
5,127
|
|
|
936
|
Gain/loss
on property sales
|
|
(1,609)
|
|
|
(655)
|
|
|
109
|
Impairment
loss
|
|
670
|
|
|
856
|
|
|
--
|
Pension
plan assets
|
|
(710)
|
|
|
(507)
|
|
|
(573)
|
Depreciation
and amortization
|
|
195
|
|
|
232
|
|
|
286
|
Deferred
income taxes
|
|
(192)
|
|
|
(531)
|
|
|
620
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Restricted
cash
|
|
180
|
|
|
(468)
|
|
|
--
|
Other
assets
|
|
(879)
|
|
|
(981)
|
|
|
506
|
Accounts
payable, accrued expenses, deposits,
deferred
gains and other
|
|
604
|
|
|
(690)
|
|
|
(6,191)
|
Net cash provided
by (used in) operating activities
|
|
11,443
|
|
|
(432)
|
|
|
(4,725)
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
Property
additions
|
|
(1,011)
|
|
|
(817)
|
|
|
(424)
|
Effect
of consolidating Kaanapali Coffee Farms
Lot
Owners’ Association
|
|
--
|
|
|
119
|
|
|
--
|
Proceeds
from short-term investments
|
|
--
|
|
|
--
|
|
|
5,000
|
Net cash provided
by (used in) investing activities
|
|
(1,011)
|
|
|
(698)
|
|
|
4,576
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
Contributions
|
|
202
|
|
|
--
|
|
|
--
|
Distributions
|
|
(166)
|
|
|
--
|
|
|
--
|
Net cash provided
by financing activities
|
|
36
|
|
|
--
|
|
|
--
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents
|
|
10,468
|
|
|
(1,130)
|
|
|
(149)
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at beginning of year
|
|
13,140
|
|
|
14,270
|
|
|
14,419
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at end of year
|
$
|
23,608
|
|
|
13,140
|
|
|
14,270
|
|
|
|
|
|
|
|
|
|
Cash received (paid)
for income taxes
|
$
|
--
|
|
|
--
|
|
|
--
|
Supplemental
Non-Cash Investing Activities
:
Amounts
included in Proceeds from property sales include promissory notes of $1,582 and $1,208 at December 31, 2014 and 2013, respectively.
The
accompanying notes are an integral part of the consolidated financial statements.
Kaanapali
Land, LLC
Notes
to Consolidated Financial Statements
(Dollars
in Thousands)
(1)
Summary of Significant Accounting Policies
Organization
and Basis of Accounting
Kaanapali
Land, LLC ("Kaanapali Land"), a Delaware limited liability company is the reorganized entity resulting from the Joint
Plan of Reorganization of Amfac Hawaii, LLC (now known as KLC Land Company, LLC ("KLC Land")), certain of its subsidiaries
(together with KLC Land, the "KLC Debtors") and FHT Corporation ("FHTC" and, together with the KLC Debtors,
the "Debtors") under Chapter 11 of the Bankruptcy Code, dated June 11, 2002 (as amended, the "Plan").
The Plan was filed jointly by all Debtors to consolidate each case for joint administration in the Bankruptcy Court in order to
(a) permit the petitioners to present a joint reorganization plan that recognized, among other things, the common indebtedness
of the debtors (i.e. the Certificate of Land Appreciation Notes ("COLAs") and Senior Indebtedness) and (b) facilitate
the overall administration of the bankruptcy proceedings. As indicated in the Plan, Kaanapali Land has elected to be taxable as
a corporation.
The
Plan was confirmed by the Bankruptcy Court by orders dated July 29, 2002 and October 30, 2002 (collectively, the "Order")
and became effective November 13, 2002 (the "Plan Effective Date"). During August 2005, pursuant to a motion for entry
of final decree, the bankruptcy cases were closed.
In
accordance with the Plan, approximately 1,793,000 Common Shares were issued all of which remained outstanding at December 31,
2014.
Kaanapali
Land's membership interests are denominated as non par value "Shares" and were originally divided into two classes:
the Class A Shares, which were widely held primarily by non-affiliated persons who had previously held Company indebtedness prior
to the Plan Effective Date and "Class B Shares" which were generally held by affiliates of Kaanapali Land. Pursuant
to the LLC Agreement, the Class A Shares and Class B Shares were automatically redesignated Company Common Shares on November
15, 2007. Accordingly, the Company's Class A Shares and Class B Shares ceased to exist separately on November 15, 2007.
The
accompanying consolidated financial statements include the accounts of Kaanapali Land and all of its subsidiaries and its predecessor
(collectively, the "Company"), which include KLC Land and its wholly-owned subsidiaries. In 2013, the Kaanapali Coffee
Farms Lot Owners’ Association was consolidated into the accompanying consolidated financial statements. The interests of
third party owners are reflected as non controlling interests. All significant intercompany transactions and balances have been
eliminated in consolidation. All references to acres/acreage are unaudited.
The
Company's continuing operations are in two business segments - Agriculture and Property. The Agriculture segment formerly grew
seed corn and soybeans under contract and remains engaged in farming, harvesting and milling operations relating to coffee orchards
on behalf of the applicable land owners. The corn and soybean contract expired June 30, 2012. The Property segment primarily
develops land for sale and negotiates bulk sales of undeveloped land. The Property and Agriculture segments operate exclusively
in the State of Hawaii. For further information on the Company's business segments see Note 8.
Cash
and Cash Equivalents
The
Company considers as cash equivalents all investments with maturities of three months or less when purchased. The Company’s
cash balances are maintained primarily in two financial institutions. Restricted cash represents cash held by the Kaanapali Coffee
Farms Lot Owners’ Association. At times, such balances may exceed the Federal Deposit Insurance Corporation insurance limits.
Management does not believe the Company is exposed to significant risk of loss on cash and cash equivalents.
Subsequent
Events
The
Company has performed an evaluation of subsequent events from the date of the financial statements included in this annual report
through the date of its filing with the SEC.
Reclassification
of Prior Year Presentation
Certain
prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no
effect on the reported consolidated financial statements.
Recently
Issued Accounting Pronouncements
In
April 2014, the FASB issued Accounting Standards Update (ASU) 2014-08, Presentation of Financial Statements (Topic 205) and Property,
Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (ASU
2014-08). This update changes the requirements for reporting discontinued operations under Subtopic 205-20. A disposal of a component
of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents
a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when either (i)
the component of an entity or group of components of an entity meets the criteria to be classified as held for sale, (ii) the
component of an entity or group of components of an entity is disposed of by sale, or (iii) the component of an entity or group
of components of an entity is disposed of other than by sale. The amendments in ASU 2014-08 improve the definition of discontinued
operations by limiting discontinued operations reporting to disposals of components of an entity that represent strategic shifts
that have (or will have) a major effect on an entity’s operations and financial results. The amendments in the update require
additional disclosures about discontinued operations and disclosures related to the disposal of an individually significant component
of an entity that does not qualify for discontinued operations presentation. The amendments in ASU 2014-08 are to be applied to
all disposals (or classifications as held for sale) of components of an entity that occur within annual periods beginning on or
after December 15, 2014, and interim periods within those years. Early adoption is permitted, but only for disposals (or classifications
as held for sale) that have not been reported in financial statements previously issued or available for issuance. The Company
has chosen not to early adopt the provisions under ASU 2014-08 and is currently evaluating the impact of adopting this new accounting
standard.
In
May 2014, the Financial Accounting Standards Board (“FASB”) issued guidance under the Accounting Standards Codification
(“ASC”) 606, Revenue from Contract with Customers, which establishes a single comprehensive revenue recognition model
for all contracts with customers and will supersede most existing revenue guidance. This guidance requires entities to recognize
revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which
the entity expects to be entitled to receive in exchange. Transition options include either a full or modified retrospective approach
and early adoption is permitted. The implementation date for this guidance was recently deferred and will now be effective at
the beginning of our first quarter of fiscal year 2019. We are currently evaluating the impact of the adoption of this requirement
on our Consolidated Financial Statements.
In
May 2015, the FASB issued Accounting Standards Update (ASU) 2015-07, Fair Value Measurement Disclosures for Investments in Certain
Entities That Calculate Net Asset Value per Share (or its Equivalent), as a new Topic, Accounting Standards Codification (ASC)
Topic 820. Under this new guidance, investments measured at net asset value (“NAV”), as a practical expedient for
fair value, are excluded from the fair value hierarchy. Removing investments measured using the practical expedient from the fair
value hierarchy is intended to eliminate the diversity in practice that currently exists with respect to the categorization of
these investments. The only criterion for categorizing investments in the fair value hierarchy will be the observability of the
inputs. This ASU is effective for annual periods beginning after December 15, 2015 and shall be applied retrospectively to all
periods presented. The Company is currently evaluating the potential impact of adopting this new accounting standard.
In
February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations
by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements.
For public business entities, the standard is effective for fiscal years beginning after December 15, 2018, including interim
periods within those fiscal years. For all other entities, the standard is effective for fiscal years beginning after December 15,
2019, and interim periods within fiscal years beginning after December 15, 2020. Early application of the amendments in this
update is permitted for all entities. The Company is currently evaluating the effect that implementation of this update will have
on its consolidated financial position and results of operations upon adoption.
Land
Development
During
the first quarter of 2006, the Company received final subdivision approval on an approximate 336 acre parcel in the
region "mauka" (toward the mountains) from the main highway serving the area. This project, called Kaanapali Coffee
Farms, consists of 51 agricultural lots, which are currently being offered to individual buyers. The land improvements
were completed during 2008. As of December 31, 2014, the Company sold thirty-one lots at Kaanapali Coffee Farms
including three during the fourth quarter 2014, seven during the second quarter 2014, three during the first quarter 2014 and
nine in 2013. In 2015, two lots were sold in the first quarter, one was sold in the second quarter and one in the third
quarter. In 2016, three lots were sold in the first quarter and one in the second quarter. In conjunction with the sale of four of
the lots sold in 2014, in addition to cash proceeds, the Company received promissory notes. As of December 31, 2014,
$2,199 remains outstanding.
Project
costs associated with the development and construction of real estate projects are capitalized and classified as Property, net.
Such capitalized costs are not in excess of the projects' estimated fair value as reviewed periodically or as considered necessary.
In addition, interest, insurance and property tax are capitalized to qualifying assets during the period that such assets are
undergoing activities necessary to prepare them for their intended use.
For
development projects, capitalized costs are allocated using the direct method for expenditures that are specifically associated
with the lot being sold and the relative-sales-value method for expenditures that benefit the entire project.
Recognition
of Profit From Real Property Sales
For
real property sales, profit is recognized in full when the collectability of the sales price is reasonably assured and the earnings
process is virtually complete. When the sale does not meet the requirements for full profit recognition, all or a portion of the
profit is deferred until such requirements are met.
Other
revenues are recognized when delivery has occurred or services have been rendered, the sales price is fixed or determinable, and
collectability is reasonably assured.
Property
Property
is stated at cost. Depreciation is based on the straight-line method over the estimated economic lives of 15-40 years for the
Company's depreciable land improvements, 3-18 years for machinery and equipment. Maintenance and repairs are charged to operations
as incurred. Significant betterments and improvements are capitalized and depreciated over their estimated useful lives.
Provisions
for impairment losses related to long-lived assets, if any, are recognized when expected future cash flows are less than the carrying
values of the assets. If indicators of impairment are present, the Company evaluates the carrying value of the related long-lived
assets in relationship to the future undiscounted cash flows of the underlying operations or anticipated sales proceeds. The Company
adjusts the net book value of property to fair value if the sum of the expected undiscounted future cash flow or sales proceeds
is less than book value. Assets held for sale are recorded at the lower of the carrying value of the asset or fair value less
costs to sell.
|
2014
|
|
2013
|
Property,
net:
|
|
|
|
|
|
Land
|
$
|
77,089
|
|
|
88,133
|
Buildings
|
|
1,530
|
|
|
2,977
|
Machinery
and equipment
|
|
3,816
|
|
|
3,960
|
|
|
82,435
|
|
|
95,070
|
Accumulated
depreciation
|
|
(4,458)
|
|
|
(4,278)
|
|
|
|
|
|
|
Property,
net
|
$
|
77,977
|
|
|
90,792
|
Inventory
of land held for sale of approximately $14,120 and $21,300, representing primarily Kaanapali Coffee Farms, was included in Property,
net in the consolidated balance sheets at December 31, 2014 and 2013, respectively, and is carried at the lower of cost or
net realizable value. Based on current and foreseeable market conditions, discussions with real estate brokers and review of historical
land sale activity (level 2 and 3), the value of the inventory of property was reduced by $670 during 2014 and $856 during 2013
to reflect the property at the lower of carrying value or fair value less costs to sell. The value adjustment is reflected in
cost of sales in the consolidated statements of operations at December 31, 2014 and 2013, respectively. The impairment and
land held for sale is recognized in the Property segment as disclosed in footnote 8 Business Segment Information. Generally, no
land is currently in use except for certain acreage of coffee trees which are being maintained to support the Company's land development
program and miscellaneous parcels of land that have been leased or licensed to third parties on a short term basis.
The
Company's significant property holdings are on the island of Maui consisting of approximately 4,000 acres, of which approximately
1,500 acres is classified as conservation land which precludes development. The Company has determined, based on its current projections
for the development and/or disposition of its property holdings, that the property holdings are not currently recorded in an amount
in excess of proceeds that the Company expects that it will ultimately obtain from the operation and disposition thereof.
In
September 2014, Kaanapali Land Management Corp. (“KLMC”), pursuant to a property and option purchase agreement with
an unrelated third party, closed on the sale of an approximate 14.9 acre parcel in West Maui. The purchase price was $3,300, paid
in cash at closing. The agreement commits KLMC to fund up to between $803 and $1,008, depending on various factors, for off-site
roadway, water, sewer and electrical improvements that will also provide service to other KLMC properties. The purchaser was also
granted an option for the purchase of an adjacent site of approximately 18.5 acres for $4,078, of which $525 was paid in cash
upon the closing of the 14.9 acre site. The nonrefundable $525 option payment can be applied to the purchase of the 18.5 acre
site. The option expires in September 2017. The 14.9 acre site is intended to be used for a hospital, skilled nursing facility,
assisted living facility, and medical offices, and the option site is intended to be used for other medical and health related
facilities.
In
October 2014, through a limited liability company of which KLMC was the manager, a sale was made to an unrelated third party of
an approximate 7.65 acre parcel in West Maui commonly referred to as Lot 10-H. KLMC received proceeds from the sale of approximately
$1,300.
Other
Liabilities
Other
liabilities are comprised of estimated liabilities for losses, commitments and contingencies related to various divested assets
or operations. These estimated liabilities include the estimated effects of certain asbestos related claims, certain lease and
other real estate related guarantees and obligations, obligations related to former officers and employees such as pension, post-retirement
benefits and workmen's compensation, investigation and potential remedial efforts in connection with environmental matters in
the state of Hawaii. In late 2012, the Company made a final cash payment in settlement of a future real estate related obligation.
As a result, a settlement gain of approximately $3,000 is recognized in selling, general and administrative in 2012. Management's
estimates are based, as applicable, on taking into consideration claim amounts filed by third parties, life expectancy of beneficiaries,
advice of consultants, negotiations with claimants, historical settlement experience, the number of new cases expected to be filed
and the likelihood of liability in specific situations. Management periodically reviews the adequacy of each of its reserve amounts
and adjusts such as it determines appropriate to reflect current information. Reference is made to Note 7, Commitments and
Contingencies.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Short-Term
Investments
It
is the Company's policy to classify all of its investments in U.S. Government obligations with original maturities greater than
three months as held-to maturity, as the Company has the ability and intent to hold these investments until their maturity, and
are recorded at amortized cost, which approximates fair value. Prior to maturity in May 2012, the Company held short term investments
consisting of $5,000 of such securities purchased in June 2011. The Company held no short-term investments as of December 31,
2014 or 2013.
Income
Taxes
Income
taxes are accounted for under the asset and liability approach which requires recognition of deferred tax assets and liabilities
for the differences between the financial reporting and tax basis of assets and liabilities. A valuation allowance reduces deferred
tax assets when it is more likely than not some portion or all of the deferred tax assets will not be realized. As of December
31, 2014 and 2013, there were no uncertain tax positions that had a material impact on the Company's consolidated financial statements.
(2)
Mortgage Note Payable
Certain
subsidiaries of Kaanapali Land are jointly indebted to Kaanapali Land pursuant to a certain Secured Promissory Note in the principal
amount of $70,000 dated November 14, 2002, and due September 30, 2020, as extended. Such note had an outstanding balance
of principal and accrued interest as of December 31, 2014 and 2013 of approximately $86,700 and $87,300, respectively. The interest
rate currently is 1.19% per annum and compounds semi-annually. The note, which is prepayable, is secured by substantially all
of the remaining real property owned by such subsidiaries, pursuant to a certain Mortgage, Security Agreement and Financing Statement,
dated as of November 14, 2002 and placed on record in December 2002. The note has been eliminated in the consolidated financial
statements because the obligors are consolidated subsidiaries of Kaanapali Land.
(3)
Rental Arrangements
During
2014 and 2013, the Company leased various office spaces with average annual rental of approximately $27 and $26 per year, respectively.
Although the Company was a party to certain other leasing arrangements, none of them were material.
(4)
Employee Benefit Plans
As
of December 31, 2014, the Company participates in a defined benefit pension plan that covers substantially all its eligible employees.
The Pension Plan is sponsored and maintained by Kaanapali Land in conjunction with other plans providing benefits to employees
of Kaanapali Land and its affiliates. The Pension Plan for Bargaining Unit Employees of Amfac Plantations (the "Pension Plan")
provides benefits based primarily on length of service and career-average compensation levels. Kaanapali Land's policy is to fund
pension costs in accordance with the minimum funding requirements under provisions of the Employee Retirement Income Security
Act ("ERISA"). Under such guidelines, amounts funded may be more or less than the pension expense or credit recognized
for financial reporting purposes.
The
Company does not consider the excess assets of the Pension Plan to be a source of liquidity. While under certain circumstances
the Company could seek to use the excess assets to provide such funds, there are substantial costs, including Federal income tax
consequences, in doing so.
FASB
ASC Topic 820, Fair Value Measurements and Disclosures
, establishes a framework for measuring fair value. That framework provides
a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the
highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and
the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are described
as follows:
Level 1
-
|
|
Inputs to the valuation
methodology are unadjusted quoted prices for identical assets or liabilities in active markets.
|
|
|
|
Level 2
-
|
|
Inputs to the valuation methodology
include: quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar instruments
in inactive markets; or other inputs that are observable for the asset or liability.
|
|
|
|
Level 3
-
|
|
Inputs to the valuation methodology
are unobservable and significant to the fair value measurement.
|
The
asset or liability's fair value measurement level within the fair value hierarchy is based on the lowest level of any input that
is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize
unobservable inputs.
Following
is a description of the valuation methodologies used for Pension Plan assets measured at fair value.
--
|
|
Common and Preferred
Stock
: Valued at the closing price reported in the active market in which the individual security is traded.
|
|
|
|
--
|
|
Mutual Funds Holding Corporate Notes,
Bonds and Debentures
: Valued at the closing price reported in the active market in which the mutual fund is
traded.
|
|
|
|
--
|
|
Private Equity Investments and Investment
in Partnerships
: Valued at net asset value ("NAV") of shares/ownership units held by the Pension
Plan at year-end. NAV represents the Pension Plan's interests in the net assets of these investments which consisted primarily
of equity and debt securities, some of which are exchange-traded or valued using independent pricing feeds (i.e. Bloomberg
or Reuters) or independent broker quotes.
|
|
|
|
--
|
|
Investment Contract with Insurance
Company
: Valued at fair value by recording a Market Value Adjustment to estimate the current market value of fixed
income securities held by the insurance company.
|
The
following table sets forth by level, within the fair value hierarchy, the Pension Plan's assets at fair value as of December 31,
2014:
|
|
Level
1
|
|
Level
2
|
|
Level
3
|
|
Total
|
Common and preferred
stocks
|
|
$
|
22,300
|
|
--
|
|
--
|
|
22,300
|
Corporate notes,
bonds and debentures
|
|
|
1,400
|
|
--
|
|
--
|
|
1,400
|
Investment in partnerships
|
|
|
--
|
|
18,600
|
|
4,900
|
|
23,500
|
Investments in
insurance companies
|
|
|
--
|
|
--
|
|
1,200
|
|
1,200
|
Investments in
private equity funds
|
|
|
--
|
|
6,500
|
|
10,300
|
|
16,800
|
Cash and cash equivalents
|
|
|
100
|
|
--
|
|
--
|
|
100
|
Total
Pension Plan assets
at
fair value
|
|
$
|
23,800
|
|
25,100
|
|
16,400
|
|
65,300
|
The
following table sets forth by level, within the fair value hierarchy, the Pension Plan's assets at fair value as of December 31,
2013:
|
|
Level
1
|
|
Level
2
|
|
Level
3
|
|
Total
|
Common and preferred
stocks
|
|
$
|
20,500
|
|
--
|
|
--
|
|
20,500
|
Corporate notes,
bonds and debentures
|
|
|
1,400
|
|
--
|
|
--
|
|
1,400
|
Investment in partnerships
|
|
|
--
|
|
19,500
|
|
6,700
|
|
26,200
|
Investments in
insurance companies
|
|
|
--
|
|
--
|
|
1,600
|
|
1,600
|
Investments in
private equity funds
|
|
|
--
|
|
6,500
|
|
9,600
|
|
16,100
|
Cash and cash equivalents
|
|
|
200
|
|
--
|
|
--
|
|
200
|
Total
Pension Plan assets
at
fair value
|
|
$
|
22,100
|
|
26,000
|
|
17,900
|
|
66,000
|
Changes
in Level 3 Investments
The
following table sets forth a summary of changes in fair value of the plan's level 3 assets for the year ended December 31, 2014:
|
|
Investment
in
Insurance
Companies
|
|
Investment
in
Partnerships
|
|
Investment
in
Private
Equity
Funds
|
|
Total
|
Balance, beginning
of year
|
|
$
|
1,600
|
|
6,700
|
|
9,600
|
|
17,900
|
Net
earned interest and
realized/unrealized
gains
(losses)
|
|
|
100
|
|
600
|
|
700
|
|
1,400
|
Transfers in to
Level 3
|
|
|
600
|
|
--
|
|
--
|
|
600
|
Transfers from
Level 3
|
|
|
--
|
|
--
|
|
--
|
|
--
|
Purchases,
sales, issuances and
settlements
(net)
|
|
|
(1,100)
|
|
(2,400)
|
|
--
|
|
(3,500)
|
|
|
|
|
|
|
|
|
|
|
Balance, end of
year
|
|
$
|
1,200
|
|
4,900
|
|
10,300
|
|
16,400
|
The
following table sets forth a summary of changes in fair value of the plan's level 3 assets for the year ended December 31, 2013:
|
|
Investment
in
Insurance
Companies
|
|
Investment
in
Partnerships
|
|
Investment
in
Private
Equity
Funds
|
|
Total
|
Balance, beginning
of year
|
|
$
|
1,800
|
|
1,100
|
|
7,800
|
|
10,700
|
Net
earned interest and
realized/unrealized
gains
(losses)
|
|
|
100
|
|
1,400
|
|
700
|
|
2,200
|
Transfers in to
Level 3
|
|
|
--
|
|
1,800
|
|
--
|
|
1,800
|
Transfers from
Level 3
|
|
|
(1,100)
|
|
--
|
|
--
|
|
(1,100)
|
Purchases,
sales, issuances and
settlements
(net)
|
|
|
800
|
|
2,400
|
|
1,100
|
|
4,300
|
|
|
|
|
|
|
|
|
|
|
Balance, end of
year
|
|
$
|
1,600
|
|
6,700
|
|
9,600
|
|
17,900
|
The
following tables summarize the components of the change in pension benefit obligations, plan assets and funded status of the Company's
defined benefit pension plan at December 31, 2014, 2013 and 2012.
|
|
2014
|
|
2013
|
|
2012
|
Benefit obligation
at beginning of year
|
|
$
|
41,113
|
|
45,814
|
|
45,605
|
Service cost
|
|
|
580
|
|
636
|
|
627
|
Interest cost
|
|
|
1,734
|
|
1,653
|
|
1,881
|
Actuarial (gain)
loss
|
|
|
4,366
|
|
(3,311)
|
|
1,660
|
Benefits paid
|
|
|
(3,570)
|
|
(3,679)
|
|
(3,959)
|
|
|
|
|
|
|
|
|
Accumulated
and projected benefit obligation
at
end of year
|
|
|
44,223
|
|
41,113
|
|
45,814
|
|
|
|
|
|
|
|
|
Fair value of plan
assets at beginning of year
|
|
|
66,004
|
|
61,968
|
|
61,090
|
Actual return on
plan assets
|
|
|
2,832
|
|
7,715
|
|
4,837
|
Benefits paid
|
|
|
(3,570)
|
|
(3,679)
|
|
(3,959)
|
|
|
|
|
|
|
|
|
Fair value of plan
assets at end of year
|
|
|
65,266
|
|
66,004
|
|
61,968
|
|
|
|
|
|
|
|
|
Funded status
|
|
|
21,043
|
|
24,891
|
|
16,154
|
|
|
|
|
|
|
|
|
Unrecognized net
actuarial (gain) loss
|
|
|
14,484
|
|
9,920
|
|
18,146
|
Unrecognized prior
service cost
|
|
|
22
|
|
27
|
|
31
|
|
|
|
|
|
|
|
|
Prepaid pension
cost
|
|
$
|
35,549
|
|
34,838
|
|
34,331
|
At
December 31, 2014, approximately 36% of the plan's assets are invested in equity composite, 11% in debt composite, 47% in multi-strategy
composite and 6% in real assets composite. The allocations are within Company's target allocations in association with the Company's
investment strategy.
The
components of the net periodic pension credit for the years ended December 31, 2014, 2013 and 2012 (which are reflected as selling,
general and administrative in the consolidated statements of operations) are as follows:
|
|
2014
|
|
2013
|
|
2012
|
Service costs
|
|
$
|
580
|
|
636
|
|
627
|
Interest cost
|
|
|
1,734
|
|
1,653
|
|
1,881
|
Expected return
on plan assets
|
|
|
(4,003)
|
|
(4,025)
|
|
(4,101)
|
Recognized net
actuarial loss
|
|
|
974
|
|
1,225
|
|
1,016
|
Amortization of
prior service cost
|
|
|
4
|
|
4
|
|
4
|
|
|
|
|
|
|
|
|
Net periodic pension
credit
|
|
$
|
(711)
|
|
(507)
|
|
(573)
|
The
principal weighted average assumptions used to determine the net periodic pension benefit (credit) and the actuarial value of
the accumulated benefit obligation were as follows:
|
|
2014
|
|
2013
|
|
2012
|
As
of January 1
,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
|
4.47%
|
|
3.75%
|
|
4.37%
|
|
|
|
|
|
|
|
|
Rates of compensation
increase
|
|
|
3%
|
|
3%
|
|
3%
|
|
|
|
|
|
|
|
|
Expected long-term
rate of return on assets
|
|
|
7.0%
|
|
7.0%
|
|
7.0%
|
|
|
|
|
|
|
|
|
As
of December 31
,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate –
net periodic pension credit
|
|
|
4.47%
|
|
3.75%
|
|
4.37%
|
|
|
|
|
|
|
|
|
Discount rate –
accumulated benefit obligation
|
|
|
3.71%
|
|
4.47%
|
|
3.75%
|
|
|
|
|
|
|
|
|
Rates of compensation
increase
|
|
|
3%
|
|
3%
|
|
3%
|
|
|
|
|
|
|
|
|
Expected long-term
rate of return on assets
|
|
|
7.0%
|
|
7.0%
|
|
7.0%
|
The
above long-term rates of return were selected based on historical asset returns and expectations of future returns.
The
Company amortizes experience gains and losses as well as effects of changes in actuarial assumptions and plan provisions over
a period no longer than the average expected mortality of participants in the pension plan.
The
measurement date is December 31, the last day of the corporate fiscal year.
A
comparison of the market value of the Pension Plan's net assets with the present value of the benefit obligations indicates the
Company's ability at a point in time to pay future benefits. The fair value of the Pension Plan's assets available for benefits
will fluctuate.
There
was no contribution required in 2014 to the pension plan. Furthermore, due to ERISA full funding limits, no contribution, whether
required or discretionary, could be made and deducted on the corporation's tax return for the current fiscal year.
The
Company's target asset allocations reflect the Company's investment strategy of maximizing the rate of return on plan assets and
the resulting funded status, within an appropriate level of risk. Plan assets are reviewed and, if necessary, rebalanced in accordance
with target allocation levels once every three months.
The
estimated future benefit payments under the Company's pension plan are as follows (in thousands):
|
|
Amounts
|
2015
|
|
$
|
3,877
|
2016
|
|
|
3,507
|
2017
|
|
|
3,370
|
2018
|
|
|
3,222
|
2019
|
|
|
3,126
|
2020-2024
|
|
|
13,869
|
Effect
of a 1% change in the discount rate and salary increase rate for the fiscal years ended December 31, 2014 and 2013:
|
|
2014
Discount
Rate
|
|
2014
Salary
Increase
|
|
2013
Discount
Rate
|
|
2013
Salary
Increase
|
Effect
of a 1% increase on:
|
|
|
|
|
|
|
|
|
|
Net
periodic pension cost
|
|
$
|
(16)
|
|
--
|
|
(20)
|
|
1
|
Pension
benefit obligation
at
year end
|
|
$
|
(4,135)
|
|
5
|
|
(3,509)
|
|
6
|
|
|
|
|
|
|
|
|
|
|
Effect of a 1%
decrease on:
|
|
|
|
|
|
|
|
|
|
Net
periodic pension cost
|
|
$
|
8
|
|
1
|
|
14
|
|
--
|
Pension
benefit obligation
at
year end
|
|
$
|
5,007
|
|
(2)
|
|
4,177
|
|
(3)
|
Effect
of a 1% change in the rate of return on assets for the fiscal year ended December 31, 2014:
|
|
1%
Increase
|
|
1%
Decrease
|
Net periodic pension
cost
|
|
$
|
(572)
|
|
572
|
The
Company recognizes the over funded or under funded status of its employee benefit plans as an asset or liability in its consolidated
statements of financial position and recognizes changes in its funded status in the year in which the changes occur through comprehensive
income. Included in accumulated other comprehensive income at December 31, 2014 and 2013 are the following amounts that have not
yet been recognized in net periodic pension cost: unrecognized prior service costs of $22 ($13, of tax) and $27 ($16, net of tax),
respectively, and unrecognized actuarial loss of $14,506 ($8,849, net of tax) and $9,947 ($6,068, net of tax, respectively.
The
Company maintains a nonqualified deferred compensation arrangement (the "Rabbi Trust") which provides certain former
directors of Amfac and their spouses with pension benefits. The Rabbi Trust invests in marketable securities and cash equivalents
(Level 1). The deferred compensation liability of approximately $947 represented in the Rabbi Trust and assets funding such deferred
compensation liability of approximately $23 are consolidated in the Company's consolidated balance sheet.
(5) Income
Taxes
Income
tax expense/(benefit) attributable to income from continuing operations for the years ended December 31, 2014, 2013 and 2012 consists
of:
|
|
Current
|
|
Deferred
|
|
Total
|
Year
ended December 31, 2014:
|
|
|
|
|
|
|
|
U.S.
federal
|
|
$
|
--
|
|
(164)
|
|
(164)
|
State
|
|
|
--
|
|
(18)
|
|
(18)
|
|
|
$
|
--
|
|
(182)
|
|
(182)
|
|
|
|
|
|
|
|
|
Year ended December
31, 2013:
|
|
|
|
|
|
|
|
U.S.
federal
|
|
$
|
--
|
|
(527)
|
|
(527)
|
State
|
|
|
--
|
|
(59)
|
|
(59)
|
|
|
$
|
--
|
|
(586)
|
|
(586)
|
|
|
|
|
|
|
|
|
Year ended December
31, 2012:
|
|
|
|
|
|
|
|
U.S.
federal
|
|
$
|
--
|
|
574
|
|
574
|
State
|
|
|
--
|
|
64
|
|
64
|
|
|
$
|
--
|
|
638
|
|
638
|
Income
tax expense/(benefit) attributable to income from continuing operations differs from the amounts computed by applying the U.S.
federal income tax rate of 35 percent to pretax income from operations as a result of the following:
|
|
2014
|
|
2013
|
|
2012
|
Provision
at statutory rate
|
|
$
|
(598)
|
|
(1,171)
|
|
71
|
Increase
(reduction) in income taxes
resulting
from:
|
|
|
|
|
|
|
|
Increase
(reduction) in valuation allowance
|
|
|
396
|
|
1,077
|
|
241
|
Other,
net
|
|
|
20
|
|
(492)
|
|
326
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
(182)
|
|
(586)
|
|
638
|
During
the year ended December 31, 2014, the Company increased its valuation allowance by $396 due to the uncertainty regarding future
valuation.
Deferred
income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. The deferred tax effects of temporary differences at December 31,
2014, 2013 and 2012 are as follows:
|
|
December
31,
|
|
|
2014
|
|
2013
|
|
2012
|
Deferred
tax assets:
|
|
|
|
|
|
|
|
Reserves
related primarily to losses
on
divestitures
|
|
$
|
(5,793)
|
|
(5,871)
|
|
(5,810)
|
Loss
carryforwards
|
|
|
(11,861)
|
|
(11,466)
|
|
(10,030)
|
Tax
credit carryforwards
|
|
|
(2,777)
|
|
(2,777)
|
|
(2,777)
|
Other,
net
|
|
|
(722)
|
|
(892)
|
|
(892)
|
Total
deferred tax assets
|
|
|
(21,153)
|
|
(21,006)
|
|
(19,509)
|
Less
– valuation allowance
|
|
|
14,638
|
|
14,242
|
|
13,165
|
Total
deferred tax assets
|
|
|
(6,515)
|
|
(6,764)
|
|
(6,344)
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
Property,
plant and equipment, principally
due
to purchase accounting adjustments,
net
of impairment charges
|
|
|
17,157
|
|
17,874
|
|
18,183
|
Prepaid
pension costs
|
|
|
9,001
|
|
10,502
|
|
7,094
|
Total
deferred tax liabilities
|
|
|
26,158
|
|
28,376
|
|
25,277
|
Net
deferred tax liability
|
|
$
|
19,643
|
|
21,612
|
|
18,933
|
The
Company at December 31, 2014 has net operating loss carryforwards ("NOLs") of approximately $48,500 for state income
tax purposes which can be used to offset taxable income, if any, in future years. Federal NOLs of approximately $28,300 originated
in 2006 and later years and expire over twenty years. State NOLs began to expire in 2010.
Federal
tax return examinations have been completed for all years through 2005. The statutes of limitations with respect to the Company's
taxes for 2010 and subsequent years remain open, subject to possible utilization of loss carryforwards from earlier years. The
Company believes adequate provisions for income tax have been recorded for all years, although there can be no assurance that
such provisions will be adequate. To the extent that there is a shortfall, any such shortfall for which the Company may be liable
could be material.
In
August 2015, the Company received a notice that its 2013 federal income tax return had been selected for examination. The examination
was concluded in December 2015 with no changes to reported tax.
(6) Transactions
with Affiliates
An
affiliated insurance agency, JMB Insurance Agency, Inc., which has some degree of common ownership with the Company, earns insurance
brokerage commissions in connection with providing the placement of insurance coverage for certain of the properties and operations
of the Company. Such commissions are believed by management to be comparable to those that would be paid to such affiliate insurance
agency in similar dealings with unaffiliated third parties. The total of such commissions for the years ended December 31, 2014,
2013 and 2012 was approximately $20, $16 and $20, respectively.
The
Company reimburses their affiliates for general overhead expense and for direct expenses incurred on its behalf, including salaries
and salary-related expenses incurred in connection with the management of the Company's operations. Generally, the entity that
employs the person providing the services receives the reimbursement. Substantially all of such reimbursable amounts were incurred
by JMB Realty Corporation or its affiliates, 900 Financial Management Services, LLC, and JMB Financial Advisors, LLC, all of which
have some degree of common ownership with the Company. The total costs recorded in cost of sales and selling, general and administrative
expenses in the consolidated statement of operations for the years ended 2014, 2013 and 2012 were approximately $1,109, $1,148
and $1,517, respectively, of which approximately $100 was unpaid as of December 31, 2014.
The
Company derives revenue from farming and common area maintenance services and for providing non-potable water to the Kaanapali
Coffee Farms Lot Owners Association (“LOA”). The LOA is the association of the owners of the Kaanapali Coffee Farms.
The revenues were $1,154, $1,004 and $1,065 for the years ended December 31, 2014, 2013 and 2012, respectively. Such revenue is
recognized in the Agriculture Segment as disclosed in footnote 8 Business Segment Information. The revenue amounts have been eliminated
in consolidated financial statements.
(7) Commitments
and Contingencies
At
December 31, 2014, the Company has no principal contractual obligations related to the land improvements in conjunction with Phase
I of the Kaanapali Coffee Farms project.
On
November 23, 2015, the SEC contacted Kaanapali Land regarding the Company’s compliance with the reporting requirements under
Section 13(a) of the Securities Exchange Act of 1934, as the Company is delinquent on its annual and interim SEC filings.
In light of this letter, Kaanapali Land is unable to determine whether the SEC might pursue some future action related to this
matter.
Material
legal proceedings of the Company are described below. Unless otherwise noted, the parties adverse to the Company in the legal
proceedings described below have not made a claim for damages in a liquidated amount and/or the Company believes that it would
be speculative to attempt to determine the Company's exposure relative thereto, and as a consequence believes that an estimate
of the range of potential loss cannot be made. Any claims that were not filed on a timely basis under the Plan have been discharged
by the Bankruptcy Court and thus the underlying legal proceedings should not result in any liability to the Debtors. All other
claims have been satisfied. Proceedings against subsidiaries or affiliates of Kaanapali Land that are not Debtors were not stayed
by the Plan and were permitted to proceed. However, two such subsidiaries, Oahu Sugar Company, LLC (“Oahu Sugar”)
and D/C Distribution Corporation (“D/C”), filed subsequent petitions for liquidation under Chapter 7 of the Bankruptcy
Code in April 2005 and July 2007, respectively, as described below. As a consequence of the Chapter 7 filings, both subsidiaries
are not under control of the Company.
As
a result of an administrative order issued to Oahu Sugar by the Hawaii Department of Health (“HDOH”), Order No. CH
98-001, dated January 27, 1998, Oahu Sugar was engaged in environmental site assessment of lands it leased from the U.S. Navy
and located on the Waipio Peninsula. Oahu Sugar submitted a Remedial Investigation Report to the HDOH. The HDOH provided comments
that indicated that additional testing may be required. Oahu Sugar responded to these comments with additional information. On
January 9, 2004, the Environmental Protection Agency (“EPA”) issued a request to Oahu Sugar seeking information related
to the actual or threatened release of hazardous substances, pollutants and contaminants at the Waipio Peninsula portion of the
Pearl Harbor Naval Complex National Priorities List Superfund Site. The request sought, among other things, information relating
to the ability of Oahu Sugar to pay for or perform a clean up of the land formerly occupied by Oahu Sugar. Oahu Sugar responded
to the information requests and had notified both the Navy and the EPA that while it had some modest remaining cash that it could
contribute to further investigation and remediation efforts in connection with an overall settlement of the outstanding claims,
Oahu Sugar was substantially without assets and would be unable to make a significant contribution to such an effort. Attempts
at negotiating such a settlement were fruitless and Oahu Sugar received an order from EPA in March 2005 that would purport to
require certain testing and remediation of the site. As Oahu Sugar was substantially without assets, the pursuit of any action,
informational, enforcement, or otherwise, would have had a material adverse effect on the financial condition of Oahu Sugar. Counsel
for the trustee, EPA, the Navy, and for Fireman’s Fund, one of Kaanapali Land’s insurers, are exploring ways in which
to conclude the Oahu Sugar bankruptcy. There are no assurances that such an agreement can be reached.
Therefore,
as a result of the pursuit of further action by the HDOH and EPA as described above and the immediate material adverse effect
that the actions had on the financial condition of Oahu Sugar, Oahu Sugar filed with the United States Bankruptcy Court, Northern
District of Illinois, Eastern Division its voluntary petition for liquidation under Chapter 7 of Title 11, United States
Bankruptcy Code. Such filing is not expected to have a material adverse effect on the Company as Oahu Sugar was substantially
without assets at the time of the filing. While it is not believed that any other affiliates have any responsibility for the debts
of Oahu Sugar, the EPA has indicated that it intends to make a claim against Kaanapali Land as further described below, and therefore,
there can be no assurance that the Company will not incur significant costs in conjunction with such claim.
The
deadline for filing proofs of claim with the bankruptcy court passed in April 2006. Prior to the deadline, Kaanapali Land, on
behalf of itself and certain subsidiaries, filed claims that aggregated approximately $224,000, primarily relating to unpaid guarantee
obligations made by Oahu Sugar that were assigned to Kaanapali Land pursuant to the Plan on the Plan Effective Date. In addition,
the EPA and the U.S. Navy filed a joint proof of claim that seeks to recover certain environmental response costs relative to
the Waipio Peninsula site discussed above. The proof of claim contained a demand for previously spent costs in the amount of approximately
$260, and additional anticipated response costs of between approximately $2,760 and $11,450. No specific justification of these
costs, or what they are purported to represent, was included in the EPA/Navy proof of claim. Due to the insignificant amount of
assets remaining in the debtor's estate, it is unclear whether the United States Trustee who has taken control of Oahu Sugar will
take any action to contest the EPA/Navy claim, or how it will reconcile such claim for the purpose of distributing any remaining
assets of Oahu Sugar.
EPA
has sent three requests for information to Kaanapali Land regarding, among other things, Kaanapali Land's organization and relationship,
if any, to entities that may have, historically, operated on the site and with respect to operations conducted on the site. Kaanapali
Land responded to these requests for information. By letter dated February 7, 2007, pursuant to an allegation that Kaanapali
Land is a successor to Oahu Sugar Company, Limited, a company that operated at the site prior to 1961 ("Old Oahu"),
EPA advised Kaanapali that it believes it is authorized by the Comprehensive Environmental Response Compensation and Liability
Act (“CERCLA”) to amend the existing Unilateral Administrative Order against Oahu Sugar Company, LLC, for the clean
up of the site to include Kaanapali Land as an additional respondent. The purported basis for the EPA's position is that Kaanapali
Land, by virtue of certain corporate actions, is jointly and severally responsible for the performance of the response actions,
including, without limitation, clean-up at the site. No such amendment has taken place as of the date hereof. Instead, after a
series of discussions between Kaanapali and the EPA, on or about September 30, 2009, the EPA issued a Unilateral Administrative
Order to Kaanapali Land for the performance of work in support of a removal action at the former Oahu Sugar pesticide mixing site
located on Waipio peninsula. The work consists of the performance of soil and groundwater sampling and analysis, a topographic
survey, and the preparation of an engineering evaluation and cost analysis of potential removal actions to abate an alleged "imminent
and substantial endangerment" to public health, welfare or the environment. The order appears to be further predicated primarily
on the alleged connection of Kaanapali Land to Old Oahu and its activities on the site. Kaanapali Land is currently performing
work, including the conduct of sampling at the site, required by the order while reserving its rights to contest liability regarding
the site. With regard to liability for the site, Kaanapali Land believes that its liability, if any, should relate solely to a
portion of the period of operation of Old Oahu at the site, although in some circumstances CERCLA apparently permits imposition
of joint and several liability, which can exceed a responsible party's equitable share. Kaanapali Land believes that the U.S.
Navy bears substantial liability for the site by virtue of its ownership of the site throughout the entire relevant period, both
as landlord under its various leases with Oahu Sugar and Old Oahu and by operating and intensively utilizing the site directly
during a period when no lease was in force. The Company believes that the cost of the work as set forth in the current order will
not be material to the Company as a whole; however, in the event that the EPA were to issue an order requiring remediation of
the site, there can be no assurances that the cost of said remediation would not ultimately have a material adverse effect on
the Company. In addition, if there is litigation regarding the site, there can be no assurance that the cost of such litigation
will not be material or that such litigation will result in a judgment in favor of the Company. Currently, Kaanapali and the EPA
are exchanging comments relative to further studies to be performed at the site, including a possible ecological risk assessment.
Kaanapali expects that after a further review, the next phase is likely a consideration of the remedial alternatives for the Site.
On
February 11, 2015, the Company filed a complaint for declaratory judgment, bad faith and damages against Fireman’s
Fund Insurance Company (“Fireman’s Fund”) in the Circuit Court of the First Circuit, State of Hawaii, Civil
No. 15-1-0239-02, in connection with costs and expenses it has incurred or may incur in connection with the Waipio site. In the
five-count complaint, the Company seeks, among other things, a declaratory judgment of its rights under various Fireman’s
Fund policies and an order that Fireman’s Fund defend and indemnify Kaanapali Land from all past, present and future costs
and expenses in connection with the site, including costs of investigation and defense incurred by Kaanapali and the professionals
it has engaged. In addition, Kaanapali seeks general, special, and punitive damages, prejudgment and post judgment interest, and
such other legal or equitable relief as the court deems just and proper. Fireman’s Fund has not yet filed a responsive pleading.
There are no assurances of the amounts of insurance proceeds that may or may not be ultimately recovered.
Kaanapali
Land, as successor by merger to other entities, and D/C have been named as defendants in personal injury actions allegedly based
on exposure to asbestos. While there are relatively few cases that name Kaanapali Land, there were a substantial number of cases
that were pending against D/C on the U.S. mainland (primarily in California). Cases against Kaanapali Land (hereafter, “Kaanapali
Land asbestos cases”) are allegedly based on its prior business operations in Hawaii and cases against D/C are allegedly
based on sale of asbestos-containing products by D/C's prior distribution business operations primarily in California. Each entity
defending these cases believes that it has meritorious defenses against these actions, but can give no assurances as to the ultimate
outcome of these cases. The defense of these cases has had a material adverse effect on the financial condition of D/C as it has
been forced to file a voluntary petition for liquidation as discussed below. Kaanapali Land does not believe that it has liability,
directly or indirectly, for D/C's obligations in those cases. Kaanapali Land does not presently believe that the cases in which
it is named will result in any material liability to Kaanapali Land; however, there can be no assurance in that regard.
On
February 12, 2014, counsel for Fireman’s Fund, the carrier that has been paying defense costs and settlements for the
Kaanapali Land asbestos cases, stated that it would no longer advance fund settlements or judgments in the Kaanapali Land asbestos
cases due to the pendency of the D/C and Oahu Sugar bankruptcies. In its communications with Kaanapali Land, Fireman’s fund
expressed its view that the automatic stay in effect in the D/C bankruptcy case bars Fireman’s Fund from making any payments
to resolve the Kaanapali Land asbestos claims because D/C Distribution is also alleging a right to coverage under those policies
for asbestos claims against it. However, in the interim, Fireman’s Fund advised that it presently intends to continue to
pay defense costs for those cases, subject to whatever reservations of rights may be in effect and subject further to the policy
terms. Fireman’s Fund has also indicated that to the extent that Kaanapali Land cooperates with Fireman’s Fund in
addressing settlement of the Kaanapali Land asbestos cases through coordination with its adjusters, it is Fireman’s Fund’s
present intention to reimburse any such payments by Kaanapali Land, subject, among other things, to the terms of any lift-stay
order, the limits and other terms and conditions of the policies, and prior approval of the settlements. Kaanapali Land continues
to pursue discussions with Fireman’s Fund in an attempt to resolve the issues, however, Kaanapali Land is unable to determine
what portion, if any, of settlements or judgments in the Kaanapali Land asbestos cases will be covered by insurance.
On
February 15, 2005, D/C was served with a lawsuit entitled American & Foreign Insurance Company v. D/C Distribution and Amfac
Corporation, Case No. 04433669 filed in the Superior Court of the State of California for the County of San Francisco, Central
Justice Center. No other purported party was served. In the eight-count complaint for declaratory relief, reimbursement and recoupment
of unspecified amounts, costs and for such other relief as the court might grant, plaintiff alleged that it is an insurance company
to whom D/C tendered for defense and indemnity various personal injury lawsuits allegedly based on exposure to asbestos containing
products. Plaintiff alleged that because none of the parties have been able to produce a copy of the policy or policies in question,
a judicial determination of the material terms of the missing policy or policies is needed. Plaintiff sought, among other things,
a declaration: of the material terms, rights, and obligations of the parties under the terms of the policy or policies; that the
policies were exhausted; that plaintiff is not obligated to reimburse D/C for its attorneys' fees in that the amounts of attorneys'
fees incurred by D/C have been incurred unreasonably; that plaintiff was entitled to recoupment and reimbursement of some or all
of the amounts it has paid for defense and/or indemnity; and that D/C breached its obligation of cooperation with plaintiff. D/C
filed an answer and an amended cross-claim. D/C believed that it had meritorious defenses and positions, and intended to vigorously
defend. In addition, D/C believed that it was entitled to amounts from plaintiffs for reimbursement and recoupment of amounts
expended by D/C on the lawsuits previously tendered. In order to fund such action and its other ongoing obligations while such
lawsuit continued, D/C entered into a Loan Agreement and Security Agreement with Kaanapali Land, in August 2006, whereby Kaanapali
Land provided certain advances against a promissory note delivered by D/C in return for a security interest in any D/C insurance
policy at issue in this lawsuit. In June 2007, the parties settled this lawsuit with payment by plaintiffs in the amount of $1,618.
Such settlement amount was paid to Kaanapali Land in partial satisfaction of the secured indebtedness noted above.
Because
D/C was substantially without assets and was unable to obtain additional sources of capital to satisfy its liabilities, D/C filed
with the United States Bankruptcy Court, Northern District of Illinois, its voluntary petition for liquidation under Chapter 7
of Title 11, United States Bankruptcy Code during July 2007, Case No. 07-12776. Such filing is not expected to have a material
adverse effect on the Company as D/C was substantially without assets at the time of the filing. Kaanapali Land filed claims in
the D/C bankruptcy that aggregated approximately $26,800, relating to both secured and unsecured intercompany debts owed by D/C
to Kaanapali Land. In addition, a personal injury law firm based in San Francisco that represents clients with asbestos-related
claims, filed proofs of claim on behalf of approximately two thousand claimants. While it is not likely that a significant number
of these claimants have a claim against D/C that could withstand a vigorous defense, it is unknown how the trustee will deal with
these claims. It is not expected, however, that the Company will receive any material additional amounts in the liquidation of
D/C.
On
or about April 28, 2015, eight litigants who filed asbestos claims in California state court (hereinafter, “Petitioners”)
filed a motion for relief from the automatic stay in the D/C bankruptcy (hereinafter “life stay motion”). Under relevant
provisions of the bankruptcy rules and on the filing of the D/C bankruptcy action, all pending litigation claims against D/C were
stayed pending resolution of the bankruptcy action. In their motion, Petitioners asked the bankruptcy court to lift the stay in
the bankruptcy court to name D/C and/or its alternate entities as defendants in their respective California state court asbestos
actions and to satisfy their claims against insurance policies that defend and indemnify D/C and/or their alternate entities.
The Petitioner’s motion to lift stay thus in part has as an objective ultimate recovery, if any, from, among other things,
insurance policy proceeds that were allegedly assets of both the D/C and Oahu Sugar bankruptcy estates. As noted above, Kaanapali,
the EPA, and the Navy are claimants in the Oahu Sugar bankruptcy and the Fireman’s Fund policies are allegedly among the
assets of the Oahu Sugar bankruptcy estate as well. For this and other reasons, Kaanapali, the EPA and the Navy opposed the motion
to lift stay. After briefing and argument, on May 14, 2015, the United States Bankruptcy Court, for the Northern District
of Illinois, Eastern Division, in In Re D/C Distribution, LLC, Bankruptcy Case No. 07-12776, issued an order lifting the stay.
In the order, the court permitted the Petitioners to “proceed in the applicable nonbankruptcy forum to final judgment (including
any appeals) in accordance with applicable nonbankruptcy law. Claimants are entitled to settle or enforce their claims only by
collecting upon any available insurance Debtor’s liability to them in accordance with applicable nonbankruptcy law. No recovery
may be made directly against the property of Debtor, or property of the bankruptcy estate.” Kaanapali, Firemen’s Fund
and the United States appealed the bankruptcy court order lifting the stay. In March 2016, the district court reversed the bankruptcy
court order finding that the bankruptcy court did not apply relevant law to the facts in the case to arrive at a reasoned decision.
On appeal the district court noted that the law requires consideration of a number of factors when lifting a stay to permit certain
claims to proceed, including consideration of the adequacy of remaining insurance to meet claims still subject to the stay. Among
other things, the court noted that the bankruptcy court failed to explain why it was appropriate for the petitioners to liquidate
their claims before the other claimants whose claims remained subject to the stay. The district court remanded the case for further
proceedings. It is uncertain whether such further proceedings on the lift stay will take place.
The
parties in the D/C and Oahu Sugar bankruptcies have reached out to each other to determine if there is any interest in pursuing
a global settlement of the claims in the Oahu Sugar and D/C bankruptcies insofar as the Fireman’s Fund insurance policies
are concerned. If such discussions take place, they may take the form of a mediation or other format and involve some form of
resolution of Kaanapali’s interest in various of the Fireman’s Fund insurance policies for Kaanapali’s various
and future insurance claims. Kaanapali may consider entering into such discussions, but there is no assurance that such discussions
will take place or prove successful in resolving any of the claims in whole or in part.
On
or about February 13, 2013, PM Land Company received demand to mediate a dispute arising in connection with the contract for sale
of a lot in the Kaanapali Coffee Farms subdivision. PM Land held the sum of $450,000 as a result of the sale to the claimants
that did not proceed to closing. Claimants sought, among other things, cancellation of the contract, the return of the amounts
of money still on deposit, treble damages, attorneys’ fees and costs. PM Land Company mediated, settled this matter and
retained $150,000 of the deposit.
The
Company has received notice from Hawaii’s Department of Land and Natural Resources (“DNLR”) that DNLR on a periodic
basis would inspect all significant dams and reservoirs in Hawaii, including those maintained by the Company on Maui in connection
with its agricultural operations. A series of such inspections have taken place over the period from 2006 through the most recent
inspections that occurred in January 2013. To date, the DLNR has cited certain deficiencies concerning two of the Company’s
reservoirs relating to dam and reservoir safety standards established by the State of Hawaii. These deficiencies include, among
other things, vegetative overgrowth, erosion of slopes, uncertainty of inflow control, spillway capacity, and freeboard. The Company
has taken certain corrective actions as well as updating important plans to address emergency events and basic operations and
maintenance. In 2012, the State of Hawaii issued new Hawaii Administrative Rules for Dams and Reservoirs which require dam owners
to obtain from DLNR Certificates of Impoundment (“permits”) to operate and maintain dams or reservoirs. Obtaining
such permits requires owners to completely resolve all cited deficiencies. Therefore, the process may involve further analysis
of dam and reservoir safety requirements, which would likely involve hiring specialized engineering consultants, and ultimately
could result in significant and costly improvements which may be material to the Company.
The
DLNR categorizes the reservoirs as "high hazard" under State of Hawaii Administrative Rules and State Statutes concerning
dam and reservoir safety. This classification, which bears upon government oversight and reporting requirements, may increase
the cost of managing and maintaining these reservoirs in a material manner. The Company does not believe that this classification
is warranted for either of these reservoirs and has initiated a dialogue with DLNR in that regard. In April 2008, the Company
received further correspondence from DLNR that included the assessment by their consultants of the potential losses that result
from the failure of these reservoirs. In April 2009, the Company filed a written response to DLNR to correct certain factual errors
in its report and to request further analysis on whether such "high hazard" classifications are warranted. It is unlikely
that the “high hazard” designation will be changed.
Other
than as described above, the Company is not involved in any material pending legal proceedings, other than ordinary routine litigation
incidental to its business. The Company and/or certain of its affiliates have been named as defendants in several pending lawsuits.
While it is impossible to predict the outcome of such routine litigation that is now pending (or threatened) and for which the
potential liability is not covered by insurance, the Company is of the opinion that the ultimate liability from any of this litigation
will not materially adversely affect the Company's consolidated results of operations or its financial condition.
The
Company often seeks insurance recoveries under its policies for costs incurred or expected to be incurred for losses or claims
under which the policies might apply. While payouts from various coverages are being sought and may be recovered in the future,
no anticipatory amounts have been reflected in the Company’s consolidated financial statements.
Kaanapali
Land Management Corp. (KLMC) is a party to an agreement with the State of Hawaii for the development of the Lahaina Bypass Highway.
An approximate 2.4 mile portion of this two lane state highway has been completed. The more significant portion remains uncompleted.
Under certain circumstances, which have not yet occurred, KLMC remains committed for approximately $1,100 of various future costs
relating to the planning and design of the uncompleted portion of the Bypass Highway. Under certain conditions, which have not
yet been met, KLMC has agreed to contribute an amount not exceeding $6,700 toward construction costs. Any such amount contributed
would be reduced by the value of KLMC’s land actually contributed to the State for the Bypass Highway.
These
potential commitments have not been reflected in the accompanying consolidated financial statements. While the completion of the
Bypass Highway would add value to KLMC’s lands north of the town of Lahaina, there can be no assurance that it will be completed
or when any future phases will be undertaken.
(8) Business
Segment Information
As
described in Note 1, the Company operates in two business segments. Total revenues, operating profit, identifiable assets, capital
expenditures, and depreciation and amortization by business segment are presented in the tables below.
Total
revenues by business segment include primarily (i) sales, all of which are to unaffiliated customers and (ii) interest income
that is earned from outside sources on assets which are included in the individual industry segment's identifiable assets.
Operating
income (loss) is comprised of total revenue less cost of sales and operating expenses. In computing operating income (loss), none
of the following items have been added or deducted: general corporate revenues and expenses, interest expense and income taxes.
Identifiable
assets by business segment are those assets that are used in the Company's operations in each industry. Corporate assets consist
principally of cash and cash equivalents, prepaid pension costs and receivables related to previously divested businesses.
|
|
2014
|
|
2013
|
|
2012
|
Revenues:
|
|
|
|
|
|
|
|
Property
|
|
$
|
16,050
|
|
5,838
|
|
2,047
|
Agriculture
|
|
|
3,037
|
|
2,979
|
|
3,070
|
Corporate
|
|
|
1
|
|
14
|
|
23
|
|
|
$
|
19,088
|
|
8,831
|
|
5,140
|
|
|
|
|
|
|
|
|
Operating income
(loss):
|
|
|
|
|
|
|
|
Property
|
|
$
|
(737)
|
|
(2,038)
|
|
(1,149)
|
Agriculture
|
|
|
175
|
|
611
|
|
320
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
|
(562)
|
|
(1,427)
|
|
(829)
|
|
|
|
|
|
|
|
|
Corporate
|
|
|
(1,006)
|
|
(1,974)
|
|
1,049
|
|
|
|
|
|
|
|
|
Operating
income (loss) from continuing
operations
before income taxes
|
|
$
|
(1,568)
|
|
(3,401)
|
|
220
|
|
|
|
|
|
|
|
|
Identifiable Assets:
|
|
|
|
|
|
|
|
Property
|
|
$
|
39,254
|
|
39,357
|
|
41,483
|
Agriculture
|
|
|
58,243
|
|
58,125
|
|
57,026
|
|
|
|
|
|
|
|
|
|
|
|
97,497
|
|
97,482
|
|
98,509
|
|
|
|
|
|
|
|
|
Corporate
|
|
|
28,626
|
|
34,137
|
|
28,380
|
|
|
|
|
|
|
|
|
|
|
$
|
126,123
|
|
131,619
|
|
126,889
|
The
Company’s property segment consists primarily of revenue received from land sales and lease and licensing agreements.
The
Company’s agricultural segment currently consists of coffee operations. Seed corn operations formerly were under a contract
with Monsanto Seed Company which expired June 30, 2012.
The
Company is exploring alternative agricultural operations, but there can be no assurance that replacement operations at any level
will result.
The
Company reclassified revenues and operating income (loss) from coffee operations reported in the property segment in 2012 to the
agriculture segment of $977.
Agricultural
identified assets include land classified as agricultural or conservation for State and County purposes.
|
|
2014
|
|
2013
|
|
2012
|
Capital
Expenditures:
|
|
|
|
|
|
|
|
Property
|
|
$
|
480
|
|
748
|
|
251
|
Agriculture
|
|
|
529
|
|
69
|
|
173
|
Corporate
|
|
|
2
|
|
--
|
|
--
|
|
|
$
|
1,011
|
|
817
|
|
424
|
|
|
|
|
|
|
|
|
Depreciation and
Amortization:
|
|
|
|
|
|
|
|
Property
|
|
$
|
60
|
|
59
|
|
61
|
Agriculture
|
|
|
135
|
|
173
|
|
225
|
Total
|
|
$
|
195
|
|
232
|
|
286
|
(9) Calculation
of Net Income Per Share
The
following tables set forth the computation of net income (loss) per share - basic and diluted:
|
|
Year
Ended
December
31,
2014
|
|
Year
Ended
December
31,
2013
|
|
Year
Ended
December
31,
2012
|
|
|
(Amounts
in thousands except per share amounts)
|
Numerator:
|
|
|
|
|
|
|
|
Net income (loss)
attributable to stockholders
|
|
$
|
(1,517)
|
|
(2,964)
|
|
(418)
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
Number of weighted
average shares outstanding
|
|
|
1,845
|
|
1,845
|
|
1,845
|
|
|
|
|
|
|
|
|
Net income (loss)
per share – basic and diluted
|
|
$
|
(0.82)
|
|
(1.61)
|
|
(0.23)
|
As
of December 31, 2014, the Company had issued and outstanding 1,792,613 Shares and 52,000 Class C Shares. The LLC Agreement initially
provided for two classes of membership interests, Class A Shares and Class B Shares, which had substantially identical rights
and economic value under the LLC Agreement; except that holders of Class A Shares were represented by a "Class A Representative"
who was required to approve certain transactions proposed by Kaanapali Land before they could be undertaken. Class B Shares were
held by Pacific Trail and various entities and individuals that are affiliated with Pacific Trail. Class A Shares were issued
under the Plan to claimants who had no such affiliation. Pursuant to the LLC Agreement, the Class A Shares and Class B Shares
were automatically redesignated as Common Shares on November 15, 2007. Accordingly, the Company's Class A Shares and Class
B Shares ceased to exist separately on November 15, 2007. The Class C Shares have the same rights as the Shares except that
the Class C Shares will not participate in any distributions until the holders of the Shares have received aggregate distributions
equal to $19 per share, subject to customary antidilution adjustments. Net income per share data are based on the aggregate 1,844,613
outstanding shares.
(10) Subsequent
Events
As
of December 31, 2014, the Company sold 31 of the 51 lots at Kaanapali Coffee Farms. In 2015, two lots were sold in the first
quarter, one was sold in the second quarter and one in the third quarter. In 2016, three lots were sold in the first quarter
and one in the second quarter. In conjunction with the sale of four of the lots sold in 2014, in addition to cash proceeds, the
Company received promissory notes. As of April 1, 2016, $1,509 remains outstanding.
The
Pension Plan determines its accumulated and projected benefit obligation in part based on mortality tables. If the mortality table
issued in November 2015 had been used to determine the benefit obligation as of December 31, 2014, such obligation would be greater,
and the prepaid pension cost would be less than reflected in the accompanying consolidated financial statements. Any such difference
would not have an effect on the Company’s operations or liquidity.
On
January 7, 2016 KLC Holding Corp. (“KLC”) and various of its subsidiaries (“KLC Subsidiaries”) entered
into a sales agreement (“KLC Sales Agreement”) with an unrelated third party for the sale of substantially all of
the remaining real property and related assets of the Registrant on the island of Maui, along with the stock and membership interests
of certain KLC Subsidiaries (the “KLC Sales Property”). The KLC Sales Agreement calls for a scheduled sales price
for the KLC Sales Property of approximately $95 million, before costs of sale, a portion of which may be paid by note under certain
circumstances. Under the KLC Sales Agreement, the price is subject to adjustment for certain revenues and expenditures of the
KLC Subsidiaries prior to closing. Finally, the KLC Sales Agreement has a provision for a $5 million hold back of proceeds at
closing for up to 24 months to secure certain seller objections and indemnifications.
The
KLC Sales Agreement has a scheduled closing date of July 5, 2016, as twice extended and subject to further extension under
certain conditions. Under the KLC Sales Agreement, the buyer has certain rescission and termination rights. In addition there
are significant conditions to closing, including investigation and evaluation by the buyer during the due diligence period. Accordingly,
there can be no assurance that the sale of the KLC Sales Property will be completed under the existing or any other terms.
On
December 23, 2015 Pioneer Mill Company, LLC entered into a property sales agreement with an unrelated third party for the sale
of the Pioneer Mill Site (“Mill Site Sales Agreement”) which called for a sales price of $20.5 million (before costs
of sale, including commissions) and had a scheduled closing date of May 31, 2016, as extended. On April 19, 2016, the
buyer gave notice they would not be proceeding with the purchase and thereby terminated the Mill Site Sales Agreement.
If
closing of the KLC Sales Agreement were to occur, the Registrant will incur significant liabilities for federal and state income
taxes. Potentially all the remaining proceeds are expected to be retained by the Registrant for future working capital and other
needs. As noted above, there are no assurances that the sale will close on the terms and/or timing set forth in the agreement
or otherwise.
(11) Supplementary
Quarterly Data (Unaudited)
|
|
2014
|
|
|
Quarter
ended
3/31
|
|
Quarter
ended
6/30
|
|
Quarter
ended
9/30
|
|
Quarter
ended
12/31
|
Total
revenues
|
|
$
|
2,522
|
|
7,528
|
|
4,187
|
|
4,851
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) attributable to
stockholders
|
|
$
|
(291)
|
|
(220)
|
|
(487)
|
|
(519)
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) per Share –
basic
and diluted
|
|
$
|
(0.16)
|
|
(0.12)
|
|
(0.26)
|
|
(0.28)
|
|
|
2013
|
|
|
Quarter
ended
3/31
|
|
Quarter
ended
6/30
|
|
Quarter
ended
9/30
|
|
Quarter
ended
12/31
|
Total
revenues
|
|
$
|
2,676
|
|
1,386
|
|
508
|
|
4,261
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) attributable to
stockholders
|
|
$
|
81
|
|
154
|
|
(733)
|
|
(2,466)
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) per Share –
basic
and diluted
|
|
$
|
0.04
|
|
0.08
|
|
(0.40)
|
|
(1.33)
|
|
|
2012
|
|
|
Quarter
ended
3/31
|
|
Quarter
ended
6/30
|
|
Quarter
ended
9/30
|
|
Quarter
ended
12/31
|
Total
revenues
|
|
$
|
1,121
|
|
1,282
|
|
1,276
|
|
1,461
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(835)
|
|
(409)
|
|
(635)
|
|
1,461
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) per Share –
basic
and diluted
|
|
$
|
(0.45)
|
|
(0.22)
|
|
(0.35)
|
|
0.79
|