Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2023 | May 15, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2023 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2023 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 0-50273 | |
Entity Registrant Name | KAANAPALI LAND, LLC | |
Entity Central Index Key | 0001230058 | |
Entity Tax Identification Number | 01-0731997 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 900 N. Michigan Ave. | |
Entity Address, City or Town | Chicago | |
Entity Address, State or Province | IL | |
Entity Address, Postal Zip Code | 60611 | |
City Area Code | 312 | |
Local Phone Number | 915-1987 | |
Title of 12(b) Security | N/A | |
Trading Symbol | N/A | |
Security Exchange Name | NONE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 1,792,613 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Assets | ||
Cash and cash equivalents | $ 19,071 | $ 19,815 |
Property, net | 58,959 | 58,988 |
Investments | 19,389 | 19,115 |
Other assets | 418 | 596 |
Total assets | 97,837 | 98,514 |
Liabilities | ||
Accounts payable and accrued expenses | 470 | 643 |
Deposits and deferred gains | 1,356 | 1,371 |
Deferred income taxes | 9,205 | 9,322 |
Other liabilities | 7,138 | 7,174 |
Total liabilities | 18,169 | 18,510 |
Equity | ||
Common equity, at 3/31/23 and 12/31/22 (Shares authorized – unlimited; shares issued and outstanding – 1,792,613 common shares and 52,000 Class C shares) | ||
Additional paid-in capital | 5,471 | 5,471 |
Accumulated earnings | 74,197 | 74,533 |
Total shareholders’ equity | 79,668 | 80,004 |
Total liabilities and shareholders’ equity | $ 97,837 | $ 98,514 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - shares | Mar. 31, 2023 | Dec. 31, 2022 |
Common stock, shares issued | 1,792,613 | 1,792,613 |
Common stock, shares outstanding | 1,792,613 | 1,792,613 |
Common Class C [Member] | ||
Common stock, shares issued | 52,000 | 52,000 |
Common stock, shares outstanding | 52,000 | 52,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Revenues: | ||
Sales | $ 1,153 | $ 6,008 |
Interest and other income | 342 | 15 |
Total revenues | 1,495 | 6,023 |
Cost and expenses: | ||
Cost of sales | 702 | 4,200 |
Selling, general and administrative | 1,195 | (1,406) |
Depreciation and amortization | 52 | 65 |
Total cost and expenses | 1,949 | 2,859 |
Operating income (loss) before income taxes | (454) | 3,164 |
Income tax benefit (expense) | 118 | (846) |
Net income (loss) | (336) | 2,318 |
Less: Net loss attributable to non-controlling interests | (89) | |
Net income (loss) attributable to shareholders | $ (336) | $ 2,407 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Operations (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Statement [Abstract] | ||
Net income (loss) per share - basic | $ (0.18) | $ 1.30 |
Net income (loss) per share - diluted | $ (0.18) | $ 1.30 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Statement [Abstract] | ||
Net income (loss) | $ (336) | $ 2,318 |
Other comprehensive income: | ||
Net unrealized (gains) losses on pension plan assets | (17) | |
Other comprehensive income, before tax | (17) | |
Income tax benefit (expense) related to items of other comprehensive income | 4 | |
Other comprehensive income, net of tax | (13) | |
Comprehensive income (loss) | (336) | 2,305 |
Comprehensive loss attributable to non-controlling interests | (89) | |
Comprehensive income (loss) attributable to shareholders | $ (336) | $ 2,394 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Parent [Member] | AOCI Attributable to Parent [Member] | Noncontrolling Interest [Member] | Total |
Beginning balance, value at Dec. 31, 2021 | $ 5,471 | $ 71,698 | $ 79,467 | $ 2,298 | $ 742 | $ 80,209 | |
Net income (loss) | 2,407 | 2,407 | (89) | 2,318 | |||
Effect of consolidat- ing Kaanapali Coffee Farms Lot Owners’ Association | (15) | (15) | 207 | 192 | |||
Other comprehensive income, net of tax | (13) | (13) | (13) | ||||
Ending balance, value at Mar. 31, 2022 | 5,471 | 74,090 | 81,846 | $ 2,285 | $ 860 | 82,706 | |
Beginning balance, value at Dec. 31, 2022 | 5,471 | 74,533 | 80,004 | ||||
Net income (loss) | (336) | (336) | (336) | ||||
Other comprehensive income, net of tax | |||||||
Ending balance, value at Mar. 31, 2023 | $ 5,471 | $ 74,197 | $ 79,668 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Statement of Cash Flows [Abstract] | ||
Net cash provided by (used in) operating activities | $ (721) | $ 3,366 |
Net cash used in investing activities: | ||
Property additions | (23) | (128) |
(23) | (128) | |
Net cash provided by financing activities: | ||
Contributions | 192 | |
192 | ||
Net increase (decrease) in cash, cash equivalents and restricted cash | (744) | 3,430 |
Cash, cash equivalents and restricted cash at beginning of period | 19,815 | 17,837 |
Cash, cash equivalents and restricted cash at end of period | $ 19,071 | $ 21,267 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Significant Accounting Policies | (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 accompanying condensed consolidated financial statements include the accounts of Kaanapali Land and all of its subsidiaries and its predecessors (collectively, the “Company”), which include KLC Land and its wholly-owned subsidiaries. Prior to July 1, 2022, the Kaanapali Coffee Farms Lot Owners’ Association (“LOA”) was consolidated into the Company’s consolidated financial statements and the interests of third-party owners of the lots in the Kaanapali Coffee Farms subdivision were reflected as equity including non controlling interests. The Company sold its last owned lot in the Kaanapali Coffee Farms subdivision in early 2022 and as a consequence, the Company elected to turn over control of the LOA board of directors to the third-party owners of the lots in the subdivision. An election for a new board of directors, comprised entirely of third-party lot owners, was held during June 2022 and the results of the election were announced July 1, 2022. Therefore, effective July 1, 2022, the Company deconsolidated the LOA due to the loss of control over the LOA and derecognized the assets, liabilities, equity (including the non controlling interests) and results of operations in its financial statements. The Company does not have any direct or indirect retained interest in the LOA. The Company currently has agreements with the LOA to farm coffee, perform common area maintenance services and provide delivery of non-potable water. The Company's continuing operations are in two business segments - Agriculture and Property. The Agriculture segment primarily engages in farming, harvesting and milling operations relating to coffee orchards on behalf of the applicable land owners. The Company also cultivates, harvests and sells bananas and citrus fruits, and engages in certain ranching operations. 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. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements, and therefore, should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2022 (“2022 Form 10-K”). These unaudited condensed consolidated financial statements include all normal and recurring adjustments considered necessary for a fair presentation of the financial position and results of operations and cash flows for interim periods in accordance with U.S. GAAP. A description of the Company’s significant accounting policies is included in Note 1 to the Notes to the Condensed Consolidated Financial Statements included in its 2022 Form 10-K. Except as noted below, there were no material changes in the Company’s significant accounting policies during the three months ended March 31, 2023. Property The Company's significant property holdings are on the island of Maui and consist of approximately 3,900 1,500 Inventory of land held for sale is carried at the lower of cost or fair market value, less costs to sell, which is based on current and foreseeable market conditions, discussions with real estate brokers and review of historical land sale activity (Levels 2 and 3). Land is currently utilized for commercial specialty coffee farming operations which also support the Company's land development program, as well as farming bananas, citrus and other farm products and ranching operations. Additionally, miscellaneous parcels of land have been leased or licensed to third parties on a short term basis. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP 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. Operating results for the three months ended March 31, 2023 are not necessarily indicative of the results that may be achieved for the full year ending December 31, 2023 or in any other future periods. Cash and Cash Equivalents The Company considers as cash equivalents all investments with maturities of three months or less when purchased. Included in this balance as of March 31, 2023 is a money market fund for $16,300 Subsequent Events The Company has performed an evaluation of subsequent events from the date of the financial statements included in this quarterly report through the date of its filing with the Securities and Exchange Commission. Revenue Recognition Revenue from real property sales is recognized at the time of closing when control of the property transfers to the customer. After closing of the sale transaction, the Company has no remaining performance obligation. Other revenues are recognized when control of goods or services transfers to the customers, in the amount that the Company expects to receive for the transfer of goods or provision of services. Revenue recognition standards require 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. The revenue recognition standards have implications for all revenues, excluding those that are under the specific scope of other accounting standards. The Company’s revenues that were subject to revenue recognition standards were as follows (in thousands): Three Months Ended March 31, 2023 2022 Sales of real estate $ -- $ 4,750 Coffee and other sales 855 971 Total $ 855 $ 5,721 The revenue recognition standards require the use of a five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. Lease Accounting The Company’s lease arrangements, both as lessor and as lessee, are short-term leases. The Company leases land to tenants under operating leases, and the Company leases property, primarily office and storage space, from lessors under operating leases. During the three months ended March 31, 2023 and 2022, the Company recognized $298 $262 $22 $19 Recently Issued Accounting Pronouncements In December 2022, the FASB issued ASU No. 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848”. The amendments in this Update defer the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. The amendments in this Update are effective for all entities upon issuance of this Update. While the Company is currently evaluating the effect that implementation of this update will have on its consolidated financial statements, no significant impact is anticipated. |
Land Development
Land Development | 3 Months Ended |
Mar. 31, 2023 | |
Real Estate [Abstract] | |
Land Development | (2) Land Development During the first quarter of 2006, the Company received final subdivision approval on an approximately 336 acre parcel in the region "mauka" (toward the mountains) from the main highway serving the area. This project, called Kaanapali Coffee Farms, originally consisted of 51 5,000 all 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 approximately 14.9 $3,300 $583 |
Mortgage Note Payable
Mortgage Note Payable | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Mortgage Note Payable | (3) 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 November 14, 2002 September 30, 2029 $90,290 $90,203 0.39% |
Employee Benefit Plans and Inve
Employee Benefit Plans and Investments | 3 Months Ended |
Mar. 31, 2023 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plans and Investments | (4) Employee Benefit Plans and Investments Prior to June 1, 2022, the Company participated in a defined benefit pension plan (the “Pension Plan”) that covers substantially all its eligible employees. The Pension Plan was sponsored and maintained by Kaanapali Land in conjunction with other plans providing benefits to employees of Kaanapali Land and its affiliates. Pacific Trail Holdings LLC, the manager of the Company, adopted a plan to freeze the benefit accruals under and close participation in the Pension Plan and terminate the Pension Plan on June 1, 2022. Effective February 7, 2022, the Level 1 and Level 2 plan asset investments were reallocated to a money market fund. Benefit accruals were frozen on March 31, 2022. The Company paid lump sum benefits totaling approximately $420 $19 The Company currently expects to transfer during 2023 at least 25% of the remaining Pension Plan assets to a qualified replacement plan (“QRP”) in which 100% of the participants in the terminated Pension Plan remaining employed by the Company would become active participants in the QRP. The QRP is also expected to include the employees of certain affiliates of the Company. Thereafter, remaining assets of the terminated Pension Plan will revert to the Company. Under such circumstances, the Company will be subject to a 20% excise tax. There can be no assurances that the Company will be successful in executing such plan or that the Company will not be subject to additional taxes. The components of the net periodic pension benefit (credit) included in selling, general and administrative in the Company’s condensed consolidated statements of operations are as follows (in thousands): Three Months Ended March 31, 2023 2022 Service cost $ -- $ 110 Interest cost -- 1 Expected return on plan assets -- (61) Recognized net actuarial (gain) loss -- (5) Curtailment (gain) loss -- (12) Net periodic pension cost (credit) $ -- $ 33 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 deferred compensation liability of $329 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | (5) Income Taxes The statutes of limitations with respect to the Company's taxes for 2019 and more recent years remain open to examinations by tax authorities, subject to possible utilization of loss carryforwards from earlier years. Notwithstanding the foregoing, all net operating losses (“NOL”) generated and not yet utilized are subject to adjustment by the Internal Revenue Service (“IRS”). 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 could be liable could be material. The Tax Cuts and Jobs Act (the “Act”) is a comprehensive tax reform bill containing a number of other provisions that either currently or in the future could impact the Company, particularly the effect of certain limitations effective for the tax year 2018 and forward (prior losses remain subject to the prior 20 year carryover period) on the use of federal NOL carryforwards, which will generally be limited to being used to offset 80% of future annual taxable income. |
Transactions with Affiliates
Transactions with Affiliates | 3 Months Ended |
Mar. 31, 2023 | |
Related Party Transactions [Abstract] | |
Transactions with Affiliates | (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. No such commissions were paid for the three months ended March 31, 2023 and 2022. The Company reimburses its 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, 900FMS, LLC, 900Work, 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 three months ended March 31, 2023 and 2022 were $263 $370 $111 The Company had derived revenue from farming and common area maintenance services and for providing non-potable water to the LOA. The LOA is the association of the lot owners of the Kaanapali Coffee Farms. Effective July 1, 2022, the LOA is no longer an affiliate of the Company due to the loss of control over the LOA. The revenue for the three months ended March 31, 2022 was $313 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | (7) Commitments and Contingencies 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. Under an insurance settlement the Company reached with Fireman’s Fund as a result of a complaint the Company filed against Fireman’s Fund in 2015, Fireman’s Fund paid $6,800 On April 16, 2021, the U.S. Department of Justice and the U.S. Environmental Protection Agency, on behalf of various federal agencies of the United States of America, executed a Consent Decree with Kaanapali Land, LLC, a Delaware limited liability company (the “Company”) that, if entered by the U.S. District Court sitting in the District of Hawaii, United States of America v. Kaanapali Land, and Oahu Sugar Company, LLC Case No. 1:21-CV-00190, resolved the U.S. federal government’s current environmental claims against the Company with respect to contamination at the former mixing site on Waipio Peninsula on Oahu in Hawaii that had been leased by Oahu Sugar Company LLC, a former subsidiary of the Company. In return for payments by the Company totaling $7,500 A former subsidiary, D/C Distribution Corporation (“D/C”), filed a petition for liquidation under Chapter 7 of the Bankruptcy Code in July 2007, as described below. As a consequence of the Chapter 7 filing, D/C is not under control of the Company. 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 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 had been paying defense costs and settlements for the Kaanapali Land asbestos cases, stated that it would no longer pay settlements or judgments in the Kaanapali Land asbestos cases due to then pending 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 barred Fireman’s Fund from making any payments to resolve the Kaanapali Land asbestos claims because D/C Distribution was also alleging a right to coverage under those policies for asbestos claims against it. However, in the interim, Fireman’s Fund advised that it intended to continue to pay defense costs for those cases, subject to whatever reservations of rights that might be in effect and subject further to the policy terms. Fireman’s Fund also indicated that, to the extent that Kaanapali Land cooperated with Fireman’s Fund in addressing settlement of the Kaanapali Land asbestos cases through coordination with its adjusters, it was Fireman’s Fund’s 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 and Fireman’s Fund entered into a settlement agreement on or about November 24, 2021 whereby Fireman’s Fund paid $2,441 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 On January 21, 2020, certain asbestos claimants filed a Stay Relief Motion in the Bankruptcy Court for the Northern District of Illinois, Eastern Division, Case No. 07-12776 (“motion to lift stay”) in connection with the D/C proceeding. The motion sought the entry of an order, among other things, modifying the automatic stay in the D/C bankruptcy to permit those claimants to prosecute various lawsuits in state courts against D/C Distribution, LLC, and to recover on any judgment or settlement solely from any available insurance coverage. Various oppositions to the motion to lift stay were filed, and the matter was heard and taken under advisement in April 2020. On July 21, 2020, the bankruptcy court issued an order granting the motion to lift stay to permit the movants to pursue their claims and to recover any judgment or settlement from and to the extent of any available insurance coverage of D/C Distribution, LLC, only. The bankruptcy trustee for D/C is now in the process of closing the bankruptcy case. Certain asbestos-related proofs claims in the bankruptcy case have been withdrawn in connection with closing. A court hearing was held on March 29, 2023 in which the court awarded the trustee’s compensation and expenses and therefore D/C no longer has any assets. The closing of the D/C bankruptcy case is pending. Upon the closing of the case, the Company expects to reverse a related contingent liability. After the closing of the case, there is no guarantee that personal injury claimants will not assert asbestos-related claims against D/C in the future. 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 April 2022. 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, and uncertainty of structural stability under certain loading and seismic conditions. The Company has taken certain corrective actions, including lowering the reservoir operating level, as well as updating important plans to address emergency events and basic operations and maintenance. In 2018, the Company contracted with an engineering firm to develop plans to address certain DLNR cited deficiencies on one of the Company’s reservoirs. Remediation plans for addressing all deficiencies have been submitted to DLNR. 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 will involve continuing engagement with 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. 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 approximately 2.4 mile portion of this two lane state highway has been completed. Construction to extend the southern terminus was completed mid-2018. The northern portion of the Bypass Highway, which extends to KLMC’s lands, is in the early stage of planning. Under certain circumstances, which have not yet occurred, KLMC remains committed for approximately $1,100 These potential commitments have not been reflected in the accompanying condensed 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. |
Calculation of Net Income (Loss
Calculation of Net Income (Loss) Per Share | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Calculation of Net Income (Loss) Per Share | (8) Calculation of Net Income (Loss) Per Share The following tables set forth the computation of net loss per share - basic and diluted: Three Months Ended March 31, (Amounts in thousands, Except per share amounts) 2023 2022 Numerator: Net income (loss) $ (336) $ 2,318 Less: Net loss attributable to non-controlling interests -- (89) Net income (loss) attributable to shareholders $ (336) $ 2,407 Denominator: Number of weighted average share outstanding - basic and diluted 1,845 1,845 Net income (loss) per share, attributable to Kaanapali Land - basic and diluted $ (0.18 $ 1.30 |
Business Segment Information
Business Segment Information | 3 Months Ended |
Mar. 31, 2023 | |
Segment Reporting [Abstract] | |
Business Segment Information | (9) Business Segment Information As described in Note 1, the Company operates in two business segments. Total revenues and operating profit by business segment are presented in the tables below. Total revenues by business segment includes 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. Three Months Ended March 31, 2023 2022 Revenues: Property $ 192 $ 4,806 Agriculture 1,014 1,217 Corporate 289 -- $ 1,495 $ 6,023 Operating income (loss): Property $ (380 $ 1,172 Agriculture 148 250 Operating income (loss) (232) 1,422 Corporate (222 1,742 Operating income (loss) before income taxes $ (454 $ 3,164 The Company’s Property segment consists primarily of revenue received from land sales and lease and licensing agreements. The Company’s Agriculture segment consists primarily of coffee operations and licensing agreements. The Company’s Corporate segment consists primarily of interest earned on investments. The Company is exploring alternative agricultural operations, but there can be no assurance that replacement operations at any level will result. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Accounting | 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 accompanying condensed consolidated financial statements include the accounts of Kaanapali Land and all of its subsidiaries and its predecessors (collectively, the “Company”), which include KLC Land and its wholly-owned subsidiaries. Prior to July 1, 2022, the Kaanapali Coffee Farms Lot Owners’ Association (“LOA”) was consolidated into the Company’s consolidated financial statements and the interests of third-party owners of the lots in the Kaanapali Coffee Farms subdivision were reflected as equity including non controlling interests. The Company sold its last owned lot in the Kaanapali Coffee Farms subdivision in early 2022 and as a consequence, the Company elected to turn over control of the LOA board of directors to the third-party owners of the lots in the subdivision. An election for a new board of directors, comprised entirely of third-party lot owners, was held during June 2022 and the results of the election were announced July 1, 2022. Therefore, effective July 1, 2022, the Company deconsolidated the LOA due to the loss of control over the LOA and derecognized the assets, liabilities, equity (including the non controlling interests) and results of operations in its financial statements. The Company does not have any direct or indirect retained interest in the LOA. The Company currently has agreements with the LOA to farm coffee, perform common area maintenance services and provide delivery of non-potable water. The Company's continuing operations are in two business segments - Agriculture and Property. The Agriculture segment primarily engages in farming, harvesting and milling operations relating to coffee orchards on behalf of the applicable land owners. The Company also cultivates, harvests and sells bananas and citrus fruits, and engages in certain ranching operations. 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. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements, and therefore, should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2022 (“2022 Form 10-K”). These unaudited condensed consolidated financial statements include all normal and recurring adjustments considered necessary for a fair presentation of the financial position and results of operations and cash flows for interim periods in accordance with U.S. GAAP. A description of the Company’s significant accounting policies is included in Note 1 to the Notes to the Condensed Consolidated Financial Statements included in its 2022 Form 10-K. Except as noted below, there were no material changes in the Company’s significant accounting policies during the three months ended March 31, 2023. |
Property | Property The Company's significant property holdings are on the island of Maui and consist of approximately 3,900 1,500 Inventory of land held for sale is carried at the lower of cost or fair market value, less costs to sell, which is based on current and foreseeable market conditions, discussions with real estate brokers and review of historical land sale activity (Levels 2 and 3). Land is currently utilized for commercial specialty coffee farming operations which also support the Company's land development program, as well as farming bananas, citrus and other farm products and ranching operations. Additionally, miscellaneous parcels of land have been leased or licensed to third parties on a short term basis. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP 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. Operating results for the three months ended March 31, 2023 are not necessarily indicative of the results that may be achieved for the full year ending December 31, 2023 or in any other future periods. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers as cash equivalents all investments with maturities of three months or less when purchased. Included in this balance as of March 31, 2023 is a money market fund for $16,300 |
Subsequent Events | Subsequent Events The Company has performed an evaluation of subsequent events from the date of the financial statements included in this quarterly report through the date of its filing with the Securities and Exchange Commission. |
Revenue Recognition | Revenue Recognition Revenue from real property sales is recognized at the time of closing when control of the property transfers to the customer. After closing of the sale transaction, the Company has no remaining performance obligation. Other revenues are recognized when control of goods or services transfers to the customers, in the amount that the Company expects to receive for the transfer of goods or provision of services. Revenue recognition standards require 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. The revenue recognition standards have implications for all revenues, excluding those that are under the specific scope of other accounting standards. The Company’s revenues that were subject to revenue recognition standards were as follows (in thousands): Three Months Ended March 31, 2023 2022 Sales of real estate $ -- $ 4,750 Coffee and other sales 855 971 Total $ 855 $ 5,721 The revenue recognition standards require the use of a five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. |
Lease Accounting | Lease Accounting The Company’s lease arrangements, both as lessor and as lessee, are short-term leases. The Company leases land to tenants under operating leases, and the Company leases property, primarily office and storage space, from lessors under operating leases. During the three months ended March 31, 2023 and 2022, the Company recognized $298 $262 $22 $19 |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In December 2022, the FASB issued ASU No. 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848”. The amendments in this Update defer the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. The amendments in this Update are effective for all entities upon issuance of this Update. While the Company is currently evaluating the effect that implementation of this update will have on its consolidated financial statements, no significant impact is anticipated. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Revenues Subject to Revenue Recognition Standards | Three Months Ended March 31, 2023 2022 Sales of real estate $ -- $ 4,750 Coffee and other sales 855 971 Total $ 855 $ 5,721 |
Employee Benefit Plans and In_2
Employee Benefit Plans and Investments (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Retirement Benefits [Abstract] | |
Schedule of Components of Net Periodic Pension Benefit (Credit) | Three Months Ended March 31, 2023 2022 Service cost $ -- $ 110 Interest cost -- 1 Expected return on plan assets -- (61) Recognized net actuarial (gain) loss -- (5) Curtailment (gain) loss -- (12) Net periodic pension cost (credit) $ -- $ 33 |
Calculation of Net Income (Lo_2
Calculation of Net Income (Loss) Per Share (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Computation of Net Loss Per Share - Basic and Diluted | Three Months Ended March 31, (Amounts in thousands, Except per share amounts) 2023 2022 Numerator: Net income (loss) $ (336) $ 2,318 Less: Net loss attributable to non-controlling interests -- (89) Net income (loss) attributable to shareholders $ (336) $ 2,407 Denominator: Number of weighted average share outstanding - basic and diluted 1,845 1,845 Net income (loss) per share, attributable to Kaanapali Land - basic and diluted $ (0.18 $ 1.30 |
Business Segment Information (T
Business Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Operating Income (Loss) by Segments | Three Months Ended March 31, 2023 2022 Revenues: Property $ 192 $ 4,806 Agriculture 1,014 1,217 Corporate 289 -- $ 1,495 $ 6,023 Operating income (loss): Property $ (380 $ 1,172 Agriculture 148 250 Operating income (loss) (232) 1,422 Corporate (222 1,742 Operating income (loss) before income taxes $ (454 $ 3,164 |
Schedule of Revenues Subject to
Schedule of Revenues Subject to Revenue Recognition Standards (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Sales of real estate | $ 4,750 | |
Coffee and other sales | 855 | 971 |
Total | $ 855 | $ 5,721 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 USD ($) a | Mar. 31, 2022 USD ($) | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Area of significant property holdings on island of Maui | a | 3,900 | |
Area of property holdings in Maui classified as conservation land which precludes development | a | 1,500 | |
Money market fund | $ 16,300 | |
Operating lease income | 298 | $ 262 |
Operating lease expense | $ 22 | $ 19 |
Land Development (Details Narra
Land Development (Details Narrative) $ in Thousands | 1 Months Ended | 3 Months Ended | |
Mar. 31, 2022 USD ($) | Sep. 30, 2014 USD ($) a | Mar. 31, 2006 Lot | |
Real Estate [Line Items] | |||
[custom:NumberOfAgriculturalLotsHeldForSale] | Lot | 51 | ||
[custom:CashProceedsFromSaleOfLot] | $ 5,000 | ||
Acres of land sold | a | 14.9 | ||
Proceeds from sale of agricultural lot | $ 3,300 | ||
Maximum [Member] | |||
Real Estate [Line Items] | |||
Future funds committed by KLMC to improve parcel of land sold | $ 583 |
Mortgage Note Payable (Details
Mortgage Note Payable (Details Narrative) - Secured Debt [Member] - Affiliated Entity [Member] - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | ||
Debt instrument, face amount | $ 70,000 | |
Debt instrument, issuance date | Nov. 14, 2002 | |
Debt instrument, maturity date | Sep. 30, 2029 | |
Outstanding balance of principal and accrued interest | $ 90,290 | $ 90,203 |
Debt instrument, interest rate | 0.39% |
Schedule of Components of Net P
Schedule of Components of Net Periodic Pension Benefit (Credit) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Retirement Benefits [Abstract] | ||
Service cost | $ 110 | |
Interest cost | 1 | |
Expected return on plan assets | (61) | |
Recognized net actuarial (gain) loss | (5) | |
Curtailment (gain) loss | (12) | |
Net periodic pension cost (credit) | $ 33 |
Employee Benefit Plans and In_3
Employee Benefit Plans and Investments (Details Narrative) $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Retirement Benefits [Abstract] | |
Lump sum benefits paid to pension plan participants for settlement of all benefit Pension Plan liabilities | $ 420 |
Excess assets of pension plan | 19,000 |
Deferred liability for nonqualified deferred compensation arrangement ("Rabbi Trust") | $ 329 |
Transactions with Affiliates (D
Transactions with Affiliates (Details Narrative) - Affiliated Entity [Member] - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Related Party Transaction [Line Items] | ||
Selling, general and administrative expenses incurred during the period with related parties | $ 263 | $ 370 |
Amounts due to affiliates not yet paid | $ 111 | |
Revenue from farming and common area maintenance services and for providing non-potable water to the Kaanapali Coffee Farms Lot Owners Association ('LOA') | $ 313 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | |||
Jul. 31, 2021 | Mar. 31, 2023 | Sep. 30, 2014 | Dec. 31, 2013 | |
Gain Contingencies [Line Items] | ||||
Insurance Settlement Agreement, proposed escrow funding | $ 6,800 | |||
Litigation settlement from Conset Decree | $ 7,500 | |||
Proposed settlement to be paid by Fireman's Fund | $ 2,441 | |||
Approximate future costs and expenditures KLMC remains committed for on uncompleted portion of Bypass Highway | $ 1,100 | |||
Dc Distributions Bankruptcy [Member] | ||||
Gain Contingencies [Line Items] | ||||
Amount of claims filed | $ 26,800 |
Schedule of Computation of Net
Schedule of Computation of Net Loss Per Share - Basic and Diluted (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Numerator: | ||
Net income (loss) | $ (336) | $ 2,318 |
Less: Net loss attributable to non-controlling interests | (89) | |
Net income (loss) attributable to shareholders | $ (336) | $ 2,407 |
Denominator: | ||
Number of weighted average share outstanding - basic | 1,845 | 1,845 |
Number of weighted average share outstanding - diluted | 1,845 | 1,845 |
Net income (loss) per share - basic | $ (0.18) | $ 1.30 |
Net income (loss) per share - diluted | $ (0.18) | $ 1.30 |
Schedule of Operating Income (L
Schedule of Operating Income (Loss) by Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Segment Reporting Information [Line Items] | ||
Revenues | $ 1,495 | $ 6,023 |
Operating loss before income taxes | (454) | 3,164 |
Property [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | 192 | 4,806 |
Operating loss | (380) | 1,172 |
Agriculture [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | 1,014 | 1,217 |
Operating loss | 148 | 250 |
Corporate Segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | 289 | |
Operating loss | (222) | 1,742 |
Property And Agriculture [Member] | ||
Segment Reporting Information [Line Items] | ||
Operating loss | $ (232) | $ 1,422 |