UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10/A

GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of The Securities Exchange Act of 1934

KAANAPALI LAND, LLC
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(Exact name of registrant as specified in its charter)

Delaware 01-0731997
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(State or other jurisdic- (I.R.S. Employer
tion of incorporation or Identification No.)
organization)

900 North Michigan Avenue
Chicago, Illinois 60611
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(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (312) 915-1987

Securities to be registered pursuant to Section 12(b) of the Act:

Name of each exchange
Title of each class on which each class
to be so registered is to be registered
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N/A N/A
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Securities to be registered pursuant to Section 12(g) of the Act:

Class A Shares
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(Title of class)

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(Title of class)

TABLE OF CONTENTS

Page
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Item 1. Business . . . . . . . . . . . . . . . . . . 1

Item 2. Financial Information. . . . . . . . . . . . 11

Item 2A. Management's Discussion and
Analysis of Financial Condition and
Results of Operations. . . . . . . . . . . . 12

Item 2B. Quantitative and Qualitative Disclosures
About Market Risk. . . . . . . . . . . . . . 16

Item 3. Properties . . . . . . . . . . . . . . . . . 16

Item 4. Security Ownership of Certain
Beneficial Owners and Management . . . . . . 16

Item 5. Managers and Executive Officers of the
Registrant . . . . . . . . . . . . . . . . . 17

Item 6. Executive Compensation . . . . . . . . . . . 19

Item 7. Certain Relationships and
Related Transactions . . . . . . . . . . . . 20

Item 8. Legal Proceedings. . . . . . . . . . . . . . 20

Item 9. Market Price of and Dividends on the
Registrant's Common Equity and Related
Stockholder Matters. . . . . . . . . . . . . 27

Item 10. Recent Sales of Unregistered Securities. . . 27

Item 11. Description of Registrant's Securities
to be Registered . . . . . . . . . . . . . . 28

Item 12. Indemnification of Directors and Officer . . 30

Item 13. Financial Statements and Supplementary Data. 31

Item 14. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure . . . . . . . . . . . . 61

Item 15. Financial Statement and Exhibits . . . . . . 61

ITEM 1. BUSINESS

The principal goal of the Plan was to address the Debtors' debt
burdens so that the Debtors could emerge from Chapter 11 with a viable
capital structure and with the resources necessary to operate their land
development business. The Plan achieved this goal by converting certain
indebtedness and other liabilities of the Debtors into new equity of
Kaanapali Land (to the extent such creditors did not elect an available
cash distribution option). Another goal of the Plan was to secure
additional liquidity for the Debtors to help fund future operations. The
Plan achieved this goal through the Merger of FHTC with Northbrook
Corporation ("Northbrook"), which made the assets and liquidity of
Northbrook available to the Debtors to help fund their land development
business. FHTC was the surviving entity in such merger, and shortly
thereafter was in turn merged into Kaanapali Land pursuant to the Plan.

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"). Kaanapali Land
continues to work toward completion of the various requirements of the Plan
and to implement the restructuring transactions that are contemplated to be
effected under the Plan, including, among other things, the resolution of
all outstanding claims and distributions on all claims that are allowed
under the Plan. All material requirements and transactions that the
Company must implement under the Plan are described herein. References
in this Form 10 to Kaanapali Land or the Company for dates on or after the
Plan Effective Date are to the entity surviving the Reorganization Case and
for dates before the Plan Effective Date are to predecessor entities,
unless otherwise specified.

AHI (formerly known as Amfac/JMB Hawaii, LLC), is a Hawaii limited
liability company that is a wholly-owned subsidiary of Kaanapali Land. AHI
and Kaanapali Land have continued the businesses formerly conducted by AHI
and its subsidiaries prior to the bankruptcy, although some of such
businesses have been discontinued or reduced in scope as described herein.
As such, AHI and its subsidiaries operated the same three business segments
as described below.

FHTC was incorporated on December 9, 1963 in the state of Arizona.
FHTC was purchased by a former affiliate of AHI in 1968. FHTC conducted a
transportation and tourism business through the mid-1990s, consisting
primarily of owning (or leasing) buses and related assets and offering bus
tours for visitors to tourist destinations in the Western United States. In
1997, FHTC became a direct subsidiary of Northbrook. However, as of the
date of the bankruptcy filing it no longer had any physical assets, but
continued to have financial assets and liabilities, primarily with related
entities. FHTC's most significant asset at the time of the bankruptcy
filing was its senior secured loan to AHI.

Northbrook was formed in 1978 as a holding company to facilitate the
purchase of a number of businesses, generally relating to short line
railroads, rail car leasing and light manufacturing. Over 90% of the stock
of Northbrook was purchased by persons and entities affiliated with JMB
Realty Corporation, through a series of stock purchases in 1987 and 1988.
One of Northbrook's subsidiaries (since merged into Northbrook) purchased
the stock of Amfac, Inc., in 1988, pursuant to a public tender offer, and
thus became an indirect subsidiary of Northbrook at such time. As a
consequence of the merger of Amfac, Inc. ("Amfac") into Northbrook in 1995,
AHI, FHTC and Amfac's other direct subsidiaries became direct subsidiaries
of Northbrook. All existing shareholders of Northbrook contributed their
shares to Pacific Trail Holdings, LLC ("Pacific Trail"), which was formerly
called Amfac Holdco, LLC, in 2000. Pursuant to the Plan, Northbrook was
merged into FHTC and FHTC was thereafter merged into Kaanapali Land in
November 2002. At December 31, 2002, none of the former Northbrook
subsidiaries had any significant ongoing business operations except for
those described below.

Kaanapali Land's subsidiaries include the Debtors as reorganized under
the Plan, certain subsidiaries of AHI that were not debtors (the "Non-
Debtor AHI Subsidiaries") and other former subsidiaries of Northbrook
(collectively with Kaanapali Land, all the Reorganized Debtors, the Non-
Debtor AHI Subsidiaries and such other subsidiaries are referred to herein
as the "Company"). Kaanapali Land will pursue its businesses utilizing the
assets of the AHI Debtors and the Non-Debtor AHI Subsidiaries and the
assets formerly owned by Northbrook and its other subsidiaries.

The Company operates three primary business segments: (i) Land
Development, Management and Sales, (ii) Agriculture and (iii) Golf. As
discussed below, of the foregoing, the Company's primary business is Land
Development, Management and Sales.

SUMMARY OF PLAN

Material aspects of the history and business of the Company, the Plan,
the procedures for consummating the Plan and the risks attendant thereto
were set forth in a Second Amended Disclosure Statement With Respect to
Joint Plan of Reorganization of Amfac Hawaii, LLC, Certain of Its
Subsidiaries and FHT Corporation Under Chapter 11 of the Bankruptcy Code,
dated June 11, 2002 (the "Disclosure Statement"). The Disclosure Statement
and the Plan are each filed as Exhibits to this Form 10.

All claims against the Debtors were deemed discharged as of the Plan
Effective Date, provided that creditors with allowed claims became entitled
to receive distributions under the Plan as of that date and provided that
the Plan does not impair any claims of taxing authorities. The time for
filing proofs of claim relating to all classes of claims has expired,
including the period for those whose executory contracts were rejected by
the Debtors. Therefore, all claims that may be asserted by the creditors
against the Debtors relative to amounts due on pre-petition obligations as
of the Plan Effective Date, with the exception of a potential claim that
may be filed by the Employees' Retirement System of the State of Hawaii
("ERS") and a potential claim of the Internal Revenue Service ("IRS")
described below, are known.

Under the distribution provisions of the Plan, consummation of the
Plan entitled creditors with allowed claims in the impaired classes to
receive, as of the Plan Effective Date, distributions from Kaanapali Land.

Under the Plan, all claimants that were entitled to receive shares
were entitled to receive shares of Kaanapali Land following the Plan
Effective Date. The Limited Liability Company Agreement of Kaanapali Land
(the "LLC Agreement") provides for two classes of membership interests,
"Class A Shares" and "Class B Shares", which have substantially identical
rights and economic value under the LLC Agreement; except that holders of
Class A Shares are represented by a "Class A Representative" who must
approve certain transactions proposed by Kaanapali Land before they can be
undertaken. The Class A Representative is further entitled to receive
certain reports from the Company and meet with Company officials on a
periodic basis. Reference is made to the LLC Agreement for such
provisions. Class B Shares are held by Pacific Trail Holdings, LLC
("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. Reference is made to Item 11 below for a
further explanation of the LLC Agreement and the rights and duties of the
Class A Representative.

As of July 16, <STRIKEOUT>April 23,</STRIKEOUT> 2003, Kaanapali
Land has distributed or has authorized its distribution agent to
distribute, in the aggregate, approximately $1,777,000
<STRIKEOUT>$2,477,000</STRIKEOUT> in cash and approximately 159,756
<STRIKEOUT>139,776</STRIKEOUT> Class A Shares on account of the claims that
have been made, and expects that ultimately an additional approximately
$84,000 in cash and 18,892 Class A Shares will be distributed on account of
such remaining claims, assuming that all holders of such claims comply with
the requirements for distribution.

Kaanapali Land has issued all Class B Shares required to be issued
under the Plan to Pacific Trail and those entities and individuals who are
affiliated with Pacific Trail that are entitled to Class B Shares. As a
consequence, Kaanapali Land has approximately 1,631,513 Class B Shares
outstanding.

A number of claims, primarily relating to matters that were in
litigation on the Petition Date, or personal injury or employee matters
where litigation was threatened, have not been resolved and are likely to
be disputed by the Company if they cannot be resolved in the near future.
The Company would likely in those cases petition the Bankruptcy Court to
dismiss such claims. Even if the Bankruptcy Court ruled that all such
claims were allowed claims entitled to distribution, which the Company
believes is highly unlikely, the maximum cash exposure to the Company
thereon is not material to the Company and the maximum exposure for the
issuance of additional Class A Shares is approximately 1,281 shares.
However, this does not take into account a potential claim by ERS that
could be asserted against the Debtors as described in more detail in Item 8
below. The dispute with the ERS is subject to a settlement agreement with
the Company and certain affiliates that has been approved by the Bankruptcy
Court in April 2003 and was <STRIKEOUT>is expected to be
</STRIKEOUT> approved by the Circuit Court of Hawaii in May 2003. Such
settlement is expected to close in the third quarter of 2003, whereupon any
further potential claim against the Debtors by ERS would be extinguished.
However, there can be no assurance that the state court will approve the
settlement or that closing of the transactions thereunder will occur. As a
result of such settlement, it is not expected that any claim will be filed
by ERS, although there can at this time be no assurance that one will not
be so filed, as the parties have agreed to an extension of the time
required for ERS to file such a claim until 5 business days after notice by
the Debtors. The Debtors do not intend to issue such a notice so long as
the settlement appears likely to close. However, in the event that such a
claim is ultimately filed, the Company intends to vigorously defend against
it and reassert counterclaims that it raised in the underlying litigation.

In addition, the IRS filed a claim in the bankruptcy proceedings in
the aggregate amount of approximately $20,600,000 for taxes, interest and
penalties related to the years 1998-2000. The Company has contacted the
IRS to request that it withdraw its claim due to the fact that the Plan
leaves the IRS unimpaired relative to any taxes that may be due. Although
the Company is optimistic that the IRS will withdraw such claim, it has not
yet done so and there can be no assurance that it will. In any event, the
IRS audit of the period covered by the claim is in its preliminary stages,
and no deficiencies in taxes have been proposed by the auditors. The
Company intends to dispute vigorously any IRS claim for additional taxes,
whether asserted by means of the claim filed in the bankruptcy proceeding,
arising in the pending audit, or in future audits. However, there can be
no assurance that the Company will be successful in such defense and,
although the Company has reserved for potential tax liabilities on its
financial statements, to the extent that the Company is unsuccessful in
defending against any such claims, either in the bankruptcy court or in
connection with the IRS audits, the amount for which the Company could be
liable could have a material adverse effect on the Company, given its
relatively modest cash position.

AHI is the direct subsidiary of Kaanapali Land through which the
Company conducts substantially all of its operations, except those relating
to the Waikele Golf Course whose operations are conducted by another direct
subsidiary of Kaanapali Land. AHI conducts all of its business through
various subsidiaries. Those with remaining assets of significant net value
include KLC Holdings, LLC ("KLC"), Kaanapali Development Corp. ("KDC") and
Pioneer Mill Company, Limited ("PMCo") and certain limited liability
companies owned 50% each by KLC and KDC.

The Company has completed certain restructuring transactions and
intends to complete others, as permitted by the Plan, for the purpose of
simplifying the corporate structure and administrative organization of the
Company. The general impact of such transactions will be to reduce the
number of subsidiaries of Kaanapali Land and to move assets into those
entities that make the most sense for administrative reasons or to
facilitate future transactions with third parties. Other than the
dissolution of inactive subsidiaries, the Company has (i) contributed its
remaining North Beach lots on Maui to newly formed limited liability
companies, 50% owned each by KLC and KDC, (2) obtained modest cash proceeds
for the redemption of its indirect interest in the majority owner of APIC,
and (3) merged Oahu Sugar Company, Limited into a newly-formed limited
liability company. Soon after the consummation of the ERS settlement,
currently projected to occur during the third quarter of 2003, the Company
intends to merge PMCo into a newly formed limited liability company and
transfer PMCo's remaining Kaanapali lands to KDC in order that all lands
relating to the Kaanapali 2020 development (or adjacent thereto) are held
for development or sale by KDC. It is expected that further
restructuring transactions will be undertaken over time as entities wind up
their affairs or are otherwise no longer necessary to the ongoing business
of the Company. These transactions will likely be in the form of
dissolutions or mergers.

LAND DEVELOPMENT, MANAGEMENT AND SALES

KAANAPALI 2020 DEVELOPMENT PLANS. "Kaanapali 2020", Kaanapali Land's
comprehensive plan for approximately 4,000 acres of land in the
Kaanapali/Honokawai area on the west side of Maui, Hawaii is its principal
entitlement focus. Currently, Kaanapali Land is preparing market and
feasibility studies in anticipation of applying for the necessary
entitlements to carry out the Kaanapali 2020 development plan. While some
of these lands have some form of entitlements, it is anticipated that all
of the land to be developed will require state district boundary amendments
and county general plan amendments, as well as rezoning approvals.
Approximately 1,500 acres of this land is located toward the top of
mountain ridges and in gulches and is classified as conservation land,
which precludes development. However, this land, and other land that will
be designated as open space, is an important component of the overall
project and is part of obtaining the entitlements for the land as a whole.

The process of determining market and project feasibility will be
ongoing with pursuit of entitlements. If Kaanapali Land obtains the
necessary entitlements, it intends, if market and project feasibility
studies justify it, to develop some or all of the project (either alone or
through one or more joint ventures with strategic partners) and/or sell
some or all of the entitled parcels. Kaanapali Land will need to apply for
subdivision of the land in order to develop or sell the parcels. As a
condition to subdivision of the land, the county will generally require the
completion or bonding of certain infrastructure, including roads, water and
sewer facilities, each of which will require their own building and grading
permits.

For the last few years, Kaanapali Land has been working with the West
Maui community to involve the community in plans for the use and
development of the Kaanapali 2020 lands. Committees, comprised of private
sector individuals from the community as well as public employee
participants, have been working with Kaanapali Land to create a vision for
the future of the Kaanapali lands. This development strategy has been used
in several communities, including the successful Weston, Florida planned
community that has recently been substantially completed by an affiliate of
Kaanapali Land. Management is optimistic that a development plan can be
implemented with the support of the community that meets Kaanapali Land's
long-term financial objectives.

The Kaanapali 2020 development plan is currently at a predevelopment
stage. Once the initial market and financial feasibility studies are
completed, if they justify moving forward, the development plan will be
finalized and the entitlement process will commence. Approximately 990
acres of land have been identified for development with up to approximately
3,000 residential units along with commercial, retail and recreational
assets. The balance of the land is expected to remain open space or
agricultural. Over the next few years, the Company expects to seek the
necessary approvals to pursue its business strategy.

PROJECT PLANNING AND DEVELOPMENT. The Company's real estate
development approach, for land which it holds for development rather than
investment, is designed to enhance the value of its properties in phases.
In most instances, the development process begins with the preparation of
market and feasibility studies that consider potential uses for the
property, as well as costs associated with the development of those uses.
The studies consider factors such as location, physical characteristics,
demographic patterns, anticipated absorption rates, transportation,
development costs and regulatory and environmental requirements.

The Company expects to prepare a land plan that is consistent with the
findings of the studies and then to commence the process of applying for
the entitlements necessary to permit the development of the property in
accordance with the land plan. The length and difficulty of obtaining the
requisite entitlements, as well as the cost of complying with any
conditions attached to the entitlements, are significant factors in
determining the viability of the Company's development projects.
Applications for entitlements include applications for state land use
reclassification, county community plan amendments and changes in zoning.

The entitlement process can involve substantial amounts of time and
expense. The applications generally require the submittal of comprehensive
plans that involve the use of consultants and other professionals. Parties
affected by the development can challenge the applications at the time of
submittal, which may substantially delay the process. Generally, once the
applications are deemed acceptable, the various governing agencies involved
in the entitlement process commence consideration of the requested
entitlements. The applicable agencies often impose conditions, which may
be costly to the developer, on any approvals of the entitlements. These
conditions may include the requirement that the Company dedicate land for
public use, fund infrastructure improvements, pay impact fees and provide
affordable housing in the area of the development. The Company may also be

subject to conditions that the entitlement will be revoked if the
development of the project does not take place within a particular time
period. If there is a significant change in the land plans, if the
governmental requirements change, or if market feasibility conditions
change subsequent to obtaining the county approvals, the Company may be
required to apply for amendments to the existing entitlement. The
amendment process can also be lengthy and costly, and it may result in
additional conditions attaching to any approvals.

If the Company is not successful in obtaining the necessary
entitlements to develop the property as originally planned, the Company may
be required to revise its land plan. In that case, development of the land
in accordance with revised plans may not be as economically viable as the
original land plan. There can be no assurance that all necessary approvals
will be obtained, that modifications to those plans will not require
additional approvals, or that such additional approvals will be obtained,
nor can there be any assurance as to the timing of such events.

OAHU SUGAR MILL SITE DEVELOPMENT. In 1995, the Company closed the
Oahu Sugar Company plantation. The former sugar mill site, now owned by a
subsidiary of Kaanapali Land, comprises approximately 15 acres and is
located in Waipahu, approximately 10 miles west of downtown Honolulu, near
Pearl Harbor. The subsidiary has received county zoning approval for a
light industrial subdivision on the property. The Company had expected to
market this property in bulk after addressing certain identified
environmental issues. However, sale of the property is not expected to
yield significant net cash proceeds to Company because the property
was <STRIKEOUT>is</STRIKEOUT> encumbered by liens totalling
approximately $2.9 million, including accrued interest, as of December 31,
2002 pursuant to bank mortgage financing in an amount which
approximates the anticipated value of the property. The lender has filed a
complaint for foreclosure of the property after prolonged negotiations for
extension of the financing. Therefore, there can be no assurance that the
Company will be able to sell the property, particularly given the disputes
that have arisen between the Company and the lender.

LAND MANAGEMENT AND SALES. Apart from the golf course properties
(discussed below), the Kaanapali 2020 lands and the Oahu Sugar mill site,
the Company owns approximately 500 acres of remaining land. Parcel 22/23
(defined in and more fully discussed in Section III.C.) is the only
remaining fully entitled parcel in the Kaanapali Golf Estates development
and consists of approximately 110 acres zoned for residential development.
Parcel 22/23 is currently undeveloped. The site of the Pioneer Mill
Company sugar mill that was closed in 1997 ("Pioneer Mill Site") located in
Lahaina and owned by a subsidiary of the Company, is approximately 19.5
acres and is zoned for industrial use. Pioneer Mill also owns several
parcels, known collectively as the "Wainee Lands", which are located in
Lahaina south of the mill site. The Wainee Lands include approximately 235
acres and are classified and zoned for agricultural use. However, the
Company believes that certain portions of the Wainee Lands might be
developed as an affordable housing community once the property is
reclassified and rezoned. However, the Company is currently considering
several options for the Wainee Lands. The Company also owns less than
100 acres of miscellaneous land parcels located on the Islands of Kauai,
Maui and Oahu. These miscellaneous parcels primarily include mill sites,
other land associated with now-closed sugar growing and processing
operations and water-related assets. It is not expected that upon sale
these miscellaneous parcels will yield any significant cash proceeds to the
Company.

AGRICULTURE

HISTORIC OPERATIONS. A significant portion of the Company's revenues
were formally derived from agricultural operations primarily consisting of
the cultivation, milling and sale of raw sugar. The last remaining sugar
plantation of the Company, owned by a subsidiary of Kaanapali Land was shut
down at the end of 2000. In September 2001, the Company also ceased its
coffee operations, which were owned by a subsidiary of Kaanapali Land. The
Company is in the process of liquidating its remaining inventory of coffee
beans and its mill equipment. However, the Company is in negotiations with
a third party concerning the leasing of portions of the Kaanapali 2020 land
on which the coffee trees are located for the purpose of continuing
agricultural coffee operations on such land. If such negotiations result
in a binding lease agreement, the lessee may also purchase the Company's
coffee mill equipment. Most sugar mill equipment with significant value
has already been sold.

SEED CORN OPERATIONS. The Company's seed corn operations are located
on former Maui sugar lands that are now part of the Kaanapali 2020 area.
The Company earns modest income under a contract with Monsanto Seed Company
that generates approximately $1.1 million of annual revenue , to grow
seed corn according to Monsanto's specifications. In addition to
generating such income, this operation is politically advantageous, because
the cultivated land helps control dust and soil erosion and keeps the
fields green, to the benefit of the local community. The Company may seek
to expand this operation if it can find ready markets for their products
and it is profitable to do so. There can be no assurance that any
expansion will occur or that current operations will remain profitable.
The Company and <STRIKEOUT>is currently negotiating with
</STRIKEOUT> Monsanto have recently renewed these <STRIKEOUT>on the
renewal of their</STRIKEOUT> seed corn contracts on terms that are
similar to the previous agreement . <STRIKEOUT>There can be no
assurance that such renewal will be consummated.</STRIKEOUT>

GOLF

The Company owns the golf course land and improvements and is
responsible for the management and operation of an 18-hole golf course
known as the Waikele Golf Club on Oahu. In 2002, the <STRIKEOUT>The
</STRIKEOUT> Waikele Golf Course operated at a modest level of profit
after debt service. <STRIKEOUT>is modestly profitable at current levels
of debt</STRIKEOUT>. Substantial improvements in local economic conditions
and the Hawaiian tourism industry would be necessary for the Company to
realize significant net cash proceeds (after debt service) from this
business segment. There can be no assurance that such improvements will
occur in the near term.

Other golf courses, known as the Royal Kaanapali Golf Courses
("RKGC"), are on Maui. The RKGC are owned by Amfac Property Investment
Corp. ("APIC"), a corporation that is approximately 16.7% owned by two
subsidiaries of Kaanapali Land and 83.3% owned by AF Investors, LLC
("AFI"), an affiliate of Kaanapali Land in which Kaanapali Land has no
direct or indirect interest as of December 31, 2002. APIC, and with
respect to certain specified limited amounts, two other subsidiaries of the
Company are borrowers under a $66 million loan made by the Employees'
Retirement System of the State of Hawaii ("ERS") in 1991. The loan, which
as of December 31, 2002 had a balance of approximately $81 million, is
secured by the RKGC (and certain adjacent lands owned by APIC). All of
APIC's assets are subject to the loan. The loan matured in June 2001 and
has not been extended, despite efforts of the borrowers to obtain such an
extension as described below.

The borrowers have been engaged in settlement negotiations with ERS
since 2000, which negotiations have resulted in the execution of a
definitive settlement agreement (the "ERS Settlement Agreement") in March
2003. Although the borrowers believe that the transactions contemplated by
the ERS Settlement Agreement will be consummated during the third quarter
of 2003, the ERS Settlement Agreement is subject to contingencies including
approval by the state court which has authority over the underlying
litigation. Such approval is anticipated in the second quarter of 2003.
As a consequence of such contingencies, there can be no assurance as to the
consummation of such settlement agreement. Consummation of the ERS
Settlement Agreement and the transactions contemplated therein would
provide the Company with easements and other rights that it considers
adequate for the development or sale of Parcel 22/23 as described below,
but would also result in the Company having no further interest in the
RKGC.

For a description of financial information by segment, please read
note 10 to the attached consolidated financial statements, which
information is incorporated herein by reference.

PROJECTED ASSET SALES

There are strategic land sales that the Company is currently pursuing
or considering in order to raise additional cash that would enhance the
Company's the ability to fund the Kaanapali 2020 development.

PARCEL 22/23. Kaanapali Golf Estates ("KGE") is a residential
community that is part of the Kaanapali Beach Resort in West Maui. KGE has
been subdivided into several parcels that have been sold to residential
developers. There is one remaining parcel available for sale in the
residential community called "Parcel 22/23". Parcel 22/23 includes
approximately 110 acres. Parcel 22/23 is currently subject to a property
purchase agreement for sale to a third party that is expected to close
during the second half of 2003 assuming that the ERS Settlement Agreement
is consummated and certain other contingencies in the property purchase
agreement are satisfied. However, the litigation with the ERS described
below (in the event that the ERS Settlement Agreement is not consummated)
may adversely impact the Company's ability to consummate the sale. The
amount of net sales proceeds are also subject to completion by the Company
of site improvements required by the buyer. Therefore, there can be no
assurance that such sale will be consummated or the amount of proceeds
will be as projected .

NORTH BEACH. Prior to the sale of Lot 2 in 2003, the Company owned
three beachfront lots that total approximately 62 developable acres,
commonly known as Lots 2, 3 and 4. All three lots are zoned for hotel
development. In December 2000, the Company sold a fourth parcel, the 14-
acre Kaanapali Ocean Resort ("KOR") site known as Lot 1, to SVO Pacific,
Inc. ("SVO"), an affiliate of Starwood Hotels and Resorts, which is in the
process of developing time-share units on the property. In addition, SVO
received an option to purchase Lot 2, which contains approximately 11.5
acres. In January 2003, the option for Lot 2 was exercised and the sale
closed on January 31, 2003. A non-refundable payment was made for $2
million (before closing costs and prorations). The remainder of the
purchase price is secured by a note due March 31, 2004 for approximately
$14.4 million, a portion of which is subject to refund based on the number
of units approved for development on the sale pursuant to the Special
Management Area permit that SVO is seeking for the parcel. Lot 4 contains
approximately 40 acres but, due to requirements arising from an earlier
entitlement proceeding, five acres are subject to a requirement that the
land be used as a community park. Lot 4 has previously been offered
for sale but <STRIKEOUT>and</STRIKEOUT> is currently not
under contract . Although the Company continues to discuss a potential
transaction with a third party, in the event that no contract is entered
into with such party, the Company's current intention is to retain Lot 3
and Lot 4 <STRIKEOUT>with a scheduled closing in the third quarter of

2003. There are certain contingencies to the contract and there is no
assurance that the transaction will be consummated under its existing or
any other terms. Lot 3 is intended to be retained</STRIKEOUT> for the
foreseeable future.

PIONEER MILL SITE. The Company owns approximately 19 acres in
Lahaina, known as the Pioneer Mill Site, which is zoned for industrial
development. This was the former site of Pioneer Mill's sugar and coffee
mills on Maui. Pioneer Mill is currently evaluating strategic options
relating to this site. Pioneer Mill has discovered petroleum contamination
at the site and has been in the process of remediating the contamination.
The United States Environmental Protection Agency has conducted some
environmental testing at the site and Pioneer Mill is awaiting a report on
the results of that investigation. Due to the current environmental issues
at the site, is not likely that any sale or development will take place in
the near term. Although Pioneer Mill does not currently believe that it
has significant additional environmental exposure on this site, any sale of
the property may, among other things, either require Pioneer Mill to
demolish most of the current site improvements or adjust the price so that
a buyer would undertake such demolition.

EMPLOYEES.

At April 1, 2003, Kaanapali Land and its subsidiaries employed
approximately 100 persons. Certain corporate services are provided by
Pacific Trail and its affiliates. Kaanapali Land reimburses for these
services including overhead at cost.

TRADEMARKS AND SERVICE MARKS.

The Company maintains a variety of trademarks and service marks that
support each of its business segments. These marks are filed in various
jurisdictions, including the United States Patent and Trademark Office, the
State of Hawaii Department of Commerce and Consumer Affairs and foreign
trademark offices. The trademarks and service marks protect, among other
things, the use of the term "Kaanapali" and related names in connection
with the developments in the vicinity of the Kaanapali Resort area on Maui,
the various trade names and service marks obtained in connection with the
Company's coffee operations and the use of the term "Waikele" in connection
with the Waikele golf course and related developments. Also protected are
certain designs and logos associated with the names protected. Certain
marks owned by the Company have been licensed to third parties, however,
the income therefrom is not material to the Company's financial results.
To the extent deemed advantageous in connection with the Company's ongoing
businesses, to satisfy contractual commitments with respect to certain
marks or where the Company believes that there are future licensing
opportunities with respect to specific marks, the Company intends to
maintain such marks to the extent necessary to protect their use relative
thereto. The Company also intends to develop and protect appropriate marks
in connection with its future land development activities.

MARKET CONDITIONS AND COMPETITION.

There are a number of current factors that have negatively impacted
Kaanapali Land's development and land sale activities, including market
conditions, the difficulty in obtaining regulatory approvals, the high
development cost of required infrastructure and the Company's operating
deficits in its other business segments. As a result, the planned
development of many of the Company's land holdings and the ability to
generate cash flow from these land holdings have become long-term in
nature, and the Company has found it necessary to sell certain parcels in
order to raise cash rather than realize their full economic potential
through the entitlement process.

The Hawaii economy experienced a downturn beginning in late 1990 after
the initial Persian Gulf War, a recession in Japan and a slowdown in
California's economy. The real estate market in Hawaii was negatively
impacted by these events and its recovery was slow and incomplete. The
severe negative impact of the September 11, 2001 terrorist attacks on
tourism and investment further exacerbated the problems. The Company
believes that improvements in tourism arrivals and the length of stay (in
Hawaii) are also important to improving Hawaii's economy and its real
estate market.

Although there can be no assurance that Hawaii's real estate market
will improve in the near term, there have been recent improvements. The
areas of primary and secondary residential homes, condominiums and time
share units have been relatively strong compared to other parts of the
economy and sales prices during the past couple years have approximated
those experienced in the early and mid-1990's, but prices are still at
levels below the late 1980's and below replacement cost of many of the
properties. Despite these improvements, the real estate market, and
especially the market for unimproved land, has not achieved the levels
experienced during the late 1980's. Additionally, there can be no
assurance that any possible recovery of Hawaii's real estate market can be
sustained.

There are several developers, operators, real estate companies and
other owners of real estate that compete with the Company in its land
development business on Maui, many of which have greater resources. The
number of competitive properties in a particular market could have a
material adverse effect on the Company's success in its development
operations.

The golf course operated by the Company competes with several other
golf courses located in its proximity and with other entertainment and
tourist activities. Competition in the agriculture business segment
affects the prices the Company may obtain for the land and other assets it
leases to third parties for the production of agricultural products.

GOVERNMENT REGULATIONS AND APPROVALS

The current regulatory approval process for a development project can
take three to five years or more and involves substantial expense. There
is no assurance that all necessary approvals and permits will be obtained
with respect to the Company's current and future projects. Generally,
entitlements are extremely difficult to obtain in Hawaii. There is often
significant opposition to proposed developments from numerous groups -
including native Hawaiians, environmental organizations, various community
and civic groups, condominium associations and politicians advocating no-
growth policies, among others.

Currently, the Company is preparing market and feasibility studies in
anticipation of applying for the necessary entitlements to carry out the
Kaanapali 2020 development plan. While some of these lands have some form
of entitlements, it is anticipated that all of the land to be developed
will require state district boundary amendments and county general plan
amendments, as well as rezoning approvals. Approximately 1,500 acres of
this land that is located toward the top of mountain ridges and in gulches
is classified as conservation, which precludes development. This
conservation land, and other land that will be designated as open space, is
an important component of the overall project and is expected to be part of
obtaining the entitlements for the remaining land. The Kaanapali 2020
development plan is currently at a predevelopment stage. First, market and
feasibility studies must be completed. If they indicate that there is
appropriate market demand and economic feasibility, the plan will be
finalized and the entitlement process will commence. For the last few
years, the Company has been working with the West Maui community to plan
possible or potential use and development of the Kaanapali 2020 lands.
Committees, comprised of private sector individuals from the community as
well as public employee participants, have been working the company to
create a vision for the future of the Kaanapali lands.

ENVIRONMENTAL MATTERS.

The Company is subject to environmental and health safety laws and
regulations related to the ownership, operation, development and
acquisition of real estate. Under those laws and regulations, the Company
may be liable for, among other things, the costs of removal or remediation
of certain hazardous substances, including asbestos-related liability.
Those laws and regulations often impose liability without regard to fault.
The Company is not aware of any environmental condition on any of its
properties which is likely to have a material adverse effect on its
consolidated financial position or results of operations; however, no
assurance can be given that any such condition does not exist or may not
arise in the future. Reference is made to Item 8. Legal Proceedings for a
description of certain legal proceedings related to the environmental
conditions at the Pioneer Mill and Oahu Sugar sites.

ITEM 2. FINANCIAL INFORMATION

KAANAPALI LAND, LLC (a)
For the years ended December 31, 2002, 2001, 2000, 1999 and 1998
(Dollars in Thousands Except Per Share Amounts)

2002 2001 2000 1999 1998
-------- -------- -------- -------- --------
Total revenues
(c). . . . . . $ 11,112 81,894 79,247 106,254 110,084
======== ======== ======== ======== ========
Net income
(loss) (d) . . $140,784 (17,082) (45,707) (34,245) (60,582)
======== ======== ======== ======== ========

Income (loss)
from continuing
operations per
Share. . . . . (b) (6,794) (13,206) (8,561) (15,145)
======== ======== ======== ======== ========

Net income
(loss) per
share. . . . . (b) (4,270) (11,427) (8,561) (15,145)
======== ======== ======== ======== ========

Total assets. . $189,626 223,628 311,705 391,118 486,614
======== ======== ======== ======== ========

Certificate of
Land Apprecia-
tion Notes . . $ -- 139,413 139,413 139,413 220,692
======== ======== ======== ======== ========

(a) The above selected financial data should be read in conjunc-
tion with the financial statements and the related notes appearing
elsewhere in this registration statement. The amounts reflected are those
business segments of the Company's predecessor that are continuing in
nature.

(b) The income per share from continuing operations for the period
prior to the Plan Effective Date is $3,235 and the loss per share from
continuing operations for the period after the Plan Effective Date is $5.
The net income per share for the period prior to the Plan Effective Date is
$37,389 and the net loss per share for the period after the Plan Effective
Date is approximately $5.

(c) In 2001 and 1999, the Company recognized as revenue a gain from
the extinguishment of debt of $10,653 and $12,678, respectively.

(d) In 2002, the Company recognized an extraordinary gain on
reorganization of $136,618.

ITEM 2A. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

All references to "Notes" herein are to Notes to Consolidated
Financial Statements contained in this report. Information is not
presented on a reportable segment basis in this section because in the
Company's judgment such discussion is not material to an understanding of
the Company's business. Due to the fact the Company emerged from
bankruptcy in November 2002, substantially all of the 2002 and earlier
operations relate to the operations of the predecessor, Northbrook. No
material transactions (other than the issuance and distribution of the
shares on or in connection with the Plan Effective Date, the effects of the
restructuring and the related extraordinary gain) occurred after the
mergers of Northbrook into FHTC and FHTC into Kaanapali Land in November
2002.

LIQUIDITY AND CAPITAL RESOURCES

General

In addition to historical information, this Report contains forward-
looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements are based on management's current
expectations about its businesses and the markets in which the Company
operates. Such forward-looking statements are not guarantees of future
performance and involve known and unknown risks, uncertainties or other
factors which may cause actual results, performance or achievements of the
Company to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements.
Actual operating results may be affected by various factors including,
without limitation, changes in national and Hawaiian economic conditions,
competitive market conditions, uncertainties and costs related to, the
imposition of conditions on receipt of governmental approvals and costs of
material and labor, and actual versus projected timing of events all of
which may cause such actual results to differ materially from what is
expressed or forecast in this report.

A description of the reorganization of Kaanapali Land and its
subsidiaries pursuant to the Plan and a description of certain elements of
the Plan are set forth in Item 1 above.

Pursuant to the terms and conditions of the Plan and except as
otherwise determined in compliance with the Plan or the Order, the Debtors
shall continue to exist after the Plan Effective Date as separate legal
entities. Except as otherwise provided in the Order or the Plan, the
Debtors have been discharged from all claims and liabilities existing
through the Plan Effective Date. As such, all persons and entities who had
receivables, claims or contracts with the Debtors that first arose prior to
the Petition Date and have not previously filed timely claims under the
Plan or have not previously reserved their right to do so in the
Reorganization Case are precluded from asserting any claims against the
Debtors or their assets for any acts, omissions, liabilities, transactions
or activities that occurred before the Plan Effective Date.

On November 14, 2002, pursuant to the Plan, all of the AHI Debtors
executed and delivered to Kaanapali Land a certain Secured Promissory Note
in the principal amount of $70 million. Such note matures on October 31,
2011 and carries an interest rate of 3.04% compounded semi-annually. The
note, which is prepayable, is secured by substantially all of the real
property owned by the AHI Debtors, pursuant to a certain Mortgage, Security
Agreement and Financing Statement, dated as of November 14, 2002 and placed
of record in December 2002. The note has been eliminated in the
consolidated financial statements because the obligors are consolidated
subsidiaries of Kaanapali Land .

In addition to such Secured Promissory Note, certain Non-Debtor AHI
Subsidiaries continue to be liable to Kaanapali Land under the portion of
the Senior Indebtedness (as defined in the Plan) not discharged under the
Plan, which Senior Indebtedness is secured against certain of the real
property assets that such Non-Debtor AHI Subsidiaries continue to own by
mortgages that were placed of record at various times prior to the petition
date. Such remaining Senior Indebtedness was deemed assigned to Kaanapali
Land on the Plan Effective Date. In addition, on the Plan Effective Date,
Kaanapali Land was deemed to have succeeded to the interest of the COLA
Holders with respect to all indebtedness under the Certificate of Land
Appreciation Notes(" COLA Notes ") formerly issued by Amfac/JMB
Hawaii, Inc. (as predecessor to AHI) that was not satisfied under the
Plan, which indebtedness was deemed under the Plan to continue to be
enforceable against the Non-Debtor AHI Subsidiaries that were guarantors of
the COLA Notes under the COLA Indenture. Kaanapali Land has notified each
of the Non-Debtor AHI Subsidiaries that are liable on such indebtedness
that such indebtedness is due and owing and that Kaanapali Land reserves
all of its rights and remedies in such regard. Given the financial
condition of such Non-Debtor AHI Subsidiaries, however, it is unlikely that
Kaanapali Land will realize payments on such indebtedness that are more
than a small percentage of the total amounts outstanding thereunder. The
Senior Indebtedness and the remaining COLA indebtedness have
<STRIKEOUT>has</STRIKEOUT> been eliminated in the consolidated financial
statements because the obligors are consolidated subsidiaries of
Kaanapali Land, which is now the sole obligee thereunder .

Those persons and entities that were not affiliated with Northbrook
and were holders of COLAs (Certificate of Land Appreciation Notes) on the
date that the Plan was confirmed by the Bankruptcy Court, and their
successors in interest, are expected to represent approximately 9.5% of the
ownership of the Company when all distributions under the Plan are
completed. The COLAs were originally issued in 1988 for approximately $385
million. The net proceeds from the COLAs were applied toward the purchase
of the net assets of Amfac Hawaii. As of the time of the bankruptcy filing,
the COLAs were reduced to approximately $142 million including accrued
interest (including those held by Northbrook and its affiliates).
Approximately $112 million of such amount represented COLAs held by non-
affiliates that were entitled to cash or Class A Shares of the Company.

The primary business of Kaanapali Land is the land development of the
Company's assets on the Island of Maui. The Kaanapali 2020 development
plan will take many years at significant expense to fully implement,
although the material portion of such anticipated expenses are not
currently subject to any contractual commitments.

At December 31, 2002, the Company had cash of approximately $15.8
million which is available for working capital requirements, including
future operating expenses, and the Company's obligations for Kaanapali 2020
development costs, environmental remediation costs, including those on
former mill-sites, other potential environmental costs, costs pursuant to
the ERS settlement agreement, retiree medical insurance benefits (which are
generally expected to be paid through the end of 2004), and existing and
possible future litigation. Reference is made to Item 1 - Business, Item 8
- - Legal Proceedings and the footnotes to the financial statements.
Proceeds from land sales are the Company's only source of significant cash
proceeds and the Company's ability to meet its liquidity needs is dependent
on the timing and amount of such proceeds.

The Company's current indebtedness includes an $8.4 million mortgage
loan secured by the Waikele Golf Course which has a maturity date of
December 1, 2006 , with an interest rate of 6.75% per annum at
December 31, 2002 . The Company currently expects to service and
ultimately refinance such loan in the ordinary course of business. Oahu MS,
a subsidiary of Kaanapali Land, is also the borrower under a $2.8 million
mortgage loan which has been due and payable since December 1, 2002. At
its maturity, this loan carried an interest rate of 6.29% per annum;
however, as described in Item 8 below, the lender asserts that interest
continues to accrue at the default rate of 18% per annum from and after
such maturity date. The Company and the lender have engaged in
negotiations regarding a possible further extension of the loan. Oahu MS
does not have the funds necessary to pay the remaining balance of the loan.

If such loan cannot be further extended it would likely result in Oahu MS
no longer having an ownership interest in the property. The lender has
commenced foreclosure proceedings that would lead to such result if the
foreclosure <STRIKEOUT>they</STRIKEOUT> were consummated.

The Company's continuing operations are primarily reliant upon the net
proceeds of sales of developed and undeveloped land parcels. As described
above, a purchase money note receivable related to Lot 2 is due in March
2004. Additionally, Parcel<STRIKEOUT>s</STRIKEOUT> 22/23 is
<STRIKEOUT>and Lot 4 are</STRIKEOUT> under contract for sale. If such note
is paid upon maturity and such sale is <STRIKEOUT>s are </STRIKEOUT>
consummated, the Company expects that it will have adequate liquidity for
the foreseeable future. However, there can be no assurance that any of
such cash proceeds will be realized.

Should the Company be unable to satisfy its liquidity requirements
from proceeds of land sales it will likely pursue alternate financing
arrangements. However it cannot be determined at this time what, if any,
financing alternatives may be available and at what cost; and therefore
there can be no assurance that there will be any available financing and a
lack of such financing would have a material adverse effect on the
operations of the Company.

RESULTS OF OPERATIONS

Reference is made to the footnotes to the financial statements for
additional discussion of items addressing comparability between years.

2002 COMPARED TO 2001

The restructuring in 2002 resulted in significant changes to the
balance sheet, particularly causing (i) decreases in mortgage and other
notes payable, deferred income taxes, deferred costs and other assets and
(ii) changes in the equity of the Company principally due to the gain on
reorganization. The restructuring also resulted in the decrease in
interest expense and the increase in restructuring costs.

Sales and cost of sales declined principally due to the decline in
land sales. The amount reflected as a negative cost of sales in 2002 is
primarily related to the decrease in the accumulated post retirement
benefit obligation for retired agricultural workers. The decrease in other
liabilities is primarily the result of a settlement of future obligations
relating to a land sale in a prior year for an amount less than was
recorded at the time of sale.

The reduction to carrying value of investments was the primary cause
for the decrease in property. The decrease in accumulated post retirement
benefit obligation is primarily due to the decrease in the unrecognized net
actuarial gain. The change in equity in income (loss) from unconsolidated
investments is primarily due to the Company's share of the loss in 2001 for
value impairment at the Royal Kaanapali Golf Courses versus the gain in
2002 from the sale of the Company's interest in a hotel.

2001 COMPARED TO 2000

Sales and cost of sales decreased in the aggregate due to significant
decreases in agricultural operations (primarily as a result of the shutdown
of the sugar operations on Kauai in 2000) and in Golf Course operations
(primarily as a result of the Royal Kaanapali Golf Courses being accounted
for on the equity method in 2001). Sales and cost of sales increased in
2001 due to significant land sales on Kauai and Maui.

The extinguishment of debt in 2001 is the result of the retirement of
debt securing the Waikele Golf Course for an amount less than its carrying
amount. Interest and other income in 2001 included the effects of the net
periodic pension credit and the reimbursement to the Company of certain
administrative and other charges.

The operations of the Royal Kaanapali Golf Courses on the equity
method of accounting are reflected as equity in income (loss) from
unconsolidated investments in 2001. The application of the equity method
was the primary cause of the decrease in interest expense and the loss from
unconsolidated investments.

The reduction to carrying value of investments includes approximately
$13.7 million and $15.9 million for land in 2001 and 2000, respectively,
and approximately $4.4 million and $22.0 million for assets used in
agricultural operations in 2001 and 2000, respectively.

INFLATION

Due to the lack of significant fluctuations in the level of inflation
in recent years, inflation generally has not had a material effect on real
estate development.

In the future, high rates of inflation may adversely affect real
estate development generally because of their impact on interest rates.
High interest rates not only increase the cost of borrowed funds to the
Company, but can also have a significant effect on the affordability of
permanent mortgage financing to prospective purchasers. However, high rates
of inflation may permit the Company to increase the prices that it charges
in connection with real property sales, subject to general economic
conditions affecting the real estate industry and local market factors, and
therefore may be advantageous where property investments are not highly
leveraged with debt or where the cost of such debt has been previously
fixed.

CRITICAL ACCOUNTING POLICIES

The discussion and analysis of the Company's financial condition and
results of operations are based upon the Company's consolidated financial
statements, which have been prepared in accordance with accounting
principles generally accepted in the United States. The preparation of
these financial statements requires management to make estimates and
judgements that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosures of contingent assets and
liabilities. These estimates are based on historical experience and on
various other assumptions that management believes are reasonable under the
circumstances; additionally management evaluates these results on an on-
going basis. Management's estimates form the basis for making judgements
about the carrying values of assets and liabilities that are not readily
apparent from other sources. Different estimates could be made under
different assumptions or conditions, and in any event, actual results may
differ from the estimates.

The Company reviews its property for impairment of value. This
includes considering certain indications of impairment such as significant
changes in asset usage, significant deterioration in the surrounding
economy or environmental problems. If such indications are present and the
undiscounted cash flows estimated to be generated by those assets are less
than the assets' carrying value, the Company will adjust the carrying value
down to its estimated fair value. Fair value is based on management's
estimate of the property's fair value based on discounted projected cash
flows.

There are various judgments and uncertainties affecting the
application of these and other accounting policies, including the
liabilities related to asserted and unasserted claims and the utilization
of net operating losses. Materially different amounts may be reported
under different circumstances or if different assumptions were used.

ITEM 2B. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's future earnings, cash flows and fair values relevant to
financial instruments are dependent upon prevalent market rates. Market
risk is the risk of loss from adverse changes in market prices and interest
rates. The Company manages its market risk by matching projected cash
inflows from operating properties, financing activities, and investing
activities with projected cash outflows to fund debt payments, capital
expenditures and other cash requirements. Prior to the filing of the
Reorganization Case, the Company's primary risk exposure had been to
interest rate risk. The Company does not enter into financial instruments
for trading purposes.

The Company's debt arrangements are at variable rates. Based upon the
Company's indebtedness and interest rates at December 31, 2002, a 1%
increase in market rates or a 1% decrease in market rates would have no
significant affect on future earnings and cash flows.

ITEM 3. PROPERTIES

LAND HOLDINGS.

The major real properties owned by the Company are described under
Item 1. Business.

MAUI.

As of December 31, 2002, the Company owned approximately 4,900 acres
of land on the island of Maui, most of which was classified as agricultural
land or conservation land for State and County purposes. All of the
Company's Maui land holdings are located in West Maui near the Lahaina and
the Kaanapali Beach Resort areas. Included in this acreage is
approximately 19.7 acres of land at Lahaina that contain the former Pioneer
Mill sugar mill, closed in 1999, which also housed the coffee mill
operations of Kaanapali Estate Coffee, Inc., which is winding up its
affairs.

OTHER PROPERTY.

In addition to the real property discussed above, the Company also
owns two sugar mills on Kauai, each with its own power plant. The mills and
power plants are located in Kekaha and Lihue, Kauai. Each of these
facilities was involved in the production of raw sugar from sugar cane and
the production of electrical and steam power until their closings in late
2000. The Lihue power plant continued to operate pursuant to a modified
agreement with the local electric utility, through the end of 2002.

ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Security ownership of certain beneficial owners.

NAME AND ADDRESS AMOUNT AND NATURE
OF BENEFICIAL OF BENEFICIAL
TITLE OF CLASS OWNER OWNERSHIP
- -------------- --------------------------- --------------------

Class B Shares Pacific Trail Holdings, LLC 1,466,573 Shares
900 North Michigan Avenue owned directly (1)
Chicago, Illinois 60010

(1) As the sole managing member of Pacific Trail, Pacific Trail
Holdings, Inc. may be deemed to beneficially own the Class B Shares
owned by Pacific Trail. Pacific Trail Holdings, Inc. disclaims
beneficial ownership with respect to any of the shares owned by
Pacific Trail.

No Class A or Class B shares of the Company are owned by any of its
executive officers.

(2) As of April 23, 2003, there were 1,631,513 Class B Shares issued and
outstanding, all of which were held by Pacific Trail and individuals
and entities that are affiliated with it. Pacific Trail is owned in
excess of 95%, directly or indirectly, by JMB Realty Corporation,
certain of its current and former shareholders, officers and
directors and their families.

(3) No other person is known by the Company to beneficially own in excess
of 5% of the Class A or Class B shares issued, outstanding and
distributed.

<STRIKEOUT>
As of April 23, 2003, there were approximately 139,776 Class A Shares
issued, outstanding and distributed, and the Company is not aware of any
person that is the beneficial owner of more than 5% of the Class A Shares.

As of April 23, 2003, there were 1,631,513 Class B Shares issued and
outstanding, all of which were held by Pacific Trail and individuals and
entities that are affiliate with it. Pacific Trail is owned in excess of
95%, directly or indirectly, by JMB Realty Corporation, certain of its
current and former shareholders, officers and directors and their families.

No shares of the Company are owned by any executive officer.
</STRIKEOUT>

ITEM 5. MANAGERS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The sole manager of Kaanapali Land, LLC is Pacific Trail, which is also
Kaanapali Land's largest shareholder. Pacific Trail manages the
business of Kaanapali Land pursuant to the terms of the LLC Agreement.
Although the executive officers of Kaanapali Land are empowered to manage
its day-to-day business affairs, under the LLC Agreement, most significant
actions of Kaanapali Land outside the ordinary course of business must
first be authorized by Pacific Trail , which is responsible and has full
power and authority to do all things deemed necessary and desirable by it
to conduct the business of Kaanapali Land. Pacific Trail may not be
removed as manager except in those circumstances described in Item 10
below. <STRIKEOUT>under certain narrow circumstances that are not
expected to occur.</STRIKEOUT> As of April 15, 2003, the executive
officers and certain other officers of the Company were as follows:

Position
Held with
Name the Company
---------- ------------

Gary Nickele President and
Chief Executive Officer
Peggy H. Sugimoto Senior Vice President
Tamara G. Edwards Senior Vice President
Stephen A. Lovelette Executive Vice President
Gailen J. Hull Senior Vice President and
Chief Financial Officer

Certain of these officers are also officers and/or directors of JMB
Realty Corporation ("JMB") and numerous affiliated companies of JMB
(hereinafter collectively referred to as "JMB affiliates"). JMB affiliates
outside of the Company have not materially engaged in the agriculture
business and have primarily purchased, or made mortgage loans securing,
existing commercial, retail, office, industrial and multi-family
residential rental buildings or have owned or operated hotels on various
other hospitality businesses. However, certain partnerships sponsored by
JMB and other affiliates of JMB are engaged in land development activities
including planned communities, none of which are in Hawaii.

There is no family relationship among any of the foregoing officers.

The LLC Agreement also provides for the appointment of a "Class A
Representative" to monitor the activities of Kaanapali Land on behalf of
its Class A Shareholders. The Class A Representative who must be
independent is entitled to receive certain information from Kaanapali Land
and must approve certain actions that Kaanapali Land may take outside the
course of business primarily related to debt that might be obtained from
affiliated parties. The current Class A Representative is American Express
Tax and Business Services, Inc.

There are no arrangements or understandings between or among any of
said officers and any other person pursuant to which any officer was
selected as such.

The business experience during the past five years of such officers of
the Company includes the following:

Gary Nickele (age 50) has been Manager of AHI since August, 2000 and
President of AHI and certain of its subsidiaries since February 2001. He
has been the President of Kaanapali Land since May 2002. Mr. Nickele is
also the President and Director of Arvida/JMB Managers, Inc., the sole
general partner of Arvida/JMB Partners, L.P. ("Arvida Partners"). Arvida
Partners conducts land development activities primarily in Florida. Mr.
Nickele has been associated with JMB and Arvida Partners since February,
1984 and September, 1987, respectively. He holds a J.D. degree from the
University of Michigan Law School and is a member of the Bar of the State
of Illinois. Mr. Nickele's experience relative to JMB, the Company and
Arvida Partners during the past five years has included overall
responsibility for all legal matters, oversight of the relationship of
Arvida Partners and its affiliates, including matters relating to property
development and sales and general personnel and administrative functions.
During the past five years, Mr. Nickele has also been an Executive Vice
President of JMB.

Peggy H. Sugimoto (age 52) has been Senior Vice President and Chief
Financial Officer of AHI since 1994 and had been Manager from August 1996
to February 1999. Ms. Sugimoto has been a Senior Vice President of
Kaanapali Land since May, 2002. Ms. Sugimoto has been associated with the
Company since 1976. She is a Certified Public Accountant. During the
past five years, Ms. Sugimoto has been responsible for the accounting and
treasury functions of AHI and its subsidiaries in Hawaii.

Tamara G. Edwards (age 48) has been Senior Vice President of AHI since
August 1996. Ms. Edwards has been President of several of the subsidiaries
since March 1997. Ms. Edwards served as Senior Counsel for the Company from
1995 through 1997. She was also formerly a Manager of AHI and Director of
certain of its subsidiaries. She is a member of the Bar of California,
Florida and Hawaii. During the past five years, Ms. Edwards has been
responsible for the land sale activities of AHI and its subsidiaries and
the management of non-agricultural and non-development activities
concerning the Company's land assets.

Stephen Lovelette (age 47) has been an Executive Vice President of AHI
since 2000 and Kaanapali Land since May 2002. Mr. Lovelette is in charge
of implementing the Kaanapali 2020 development plan. Mr. Lovelette has
been associated with JMB and its affiliates for over 15 years. Prior to
joining an affiliate of JMB, Mr. Lovelette worked for Arvida Company under
its previous ownership and continues to oversee its development efforts.
Mr. Lovelette holds a bachelor's degree from The College of the Holly Cross
and an MBA from Seton Hall University. In addition, Mr. Lovelette has
extensive experience in corporate finance and has been responsible for
obtaining substantial financial commitments from institutional lenders
relating to the assets of JMB and Arvida Partners. During the past five
years, Mr. Lovelette has also been a Managing Director of JMB.

Gailen J. Hull (age 54) is Senior Vice President and, since August
2002, Chief Financial Officer of Kaanapali Land. Mr. Hull has been
associated with JMB since March, 1982. He holds a Masters degree in
Business Administration from Northern Illinois University and is a
Certified Public Accountant. Mr. Hull has substantial experience in the
management of the accounting and financial reporting functions of both
public and private entities, primarily including those of JMB, Arvida
Partners, the Company and their respective affiliates. During the past five
years, Mr. Hull has also been a Senior Vice President of JMB.

It is currently anticipated that Gary Nickele will devote 25 to 50
percent of his time to the operations of the Company. The percentage is
largely dependant upon potential land sale transactions, the entitlement
processes relating to various land parcels and other matters (including
attention devoted to litigation, overhead, staffing and operations).

ITEM 6. EXECUTIVE COMPENSATION

Certain of the officers of the Company listed in Item 5 above are
officers of JMB and are compensated by JMB or an affiliate thereof (other
than the Company and its subsidiaries). The Company will reimburse JMB,
Pacific Trail and their affiliates for any expenses incurred while
providing services to the Company.

SUMMARY COMPENSATION TABLE

Annual Compensation (1)(3)
---------------------------
Other
Annual
Compensa-
Principal Salary Bonus tion
Name (2) Position (4) Year ($) ($) ($)
- --------------- ------------ ----- ------- ------ ---------

Gary Nickele President 2002 180,000 100,000 N/A
and Chief 2001 172,300 N/A N/A
Executive
Officer

Peggy Sugimoto Senior Vice 2002 165,000 55,000 N/A
President 2001 160,000 50,000 N/A
2000 155,000 50,000 N/A

Tamara G. Edwards Senior Vice 2002 250,000 100,000 N/A
President 2001 250,000 41,500 N/A
2000 250,000 115,000 N/A

Stephen A.
Lovelette Executive
Vice President 2002 175,000 50,000 N/A

Gailen J. Hull Senior Vice 2002 175,000 N/A N/A
President and
Chief Financial
Officer
- ----------

(1) The Company does not have a compensation committee. Executive
officer compensation was determined through deliberations with Pacific
Trail representatives.

(2) Includes CEO and 4 most highly compensated executives whose
salary and bonus exceed $100,000.

(3) Salary and bonus amounts for Messrs. Nickele, Lovelette and
Hull represent the portion of total compensation allocated and charged to
the Company.

(4) Positions listed are those for Kaanapali Land, and prior to its
formation, with AHI.

ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

An affiliated insurance agency , JMB Insurance Agency, Inc.,
earns insurance brokerage commissions in connection with providing the
placement of insurance coverage for certain of the properties and
operations of the Company. Such commissions are comparable to those that
would be paid to such affiliate insurance agency in similar dealings with
unaffiliated third parties, and are generally paid by the insurance
carriers that the agency represents out of the premiums paid by the Company
for such coverage. The total of such commissions for the years ended
December 31, 2002, 2001 and 2000 (including amounts related to discontinued
operations in 2001 and 2000) was approximately $75 thousand, $1.1 million
and $1.3 million, respectively, not all of which was paid as of
December 31, 2002.

The Company pays a non-accountable reimbursement of approximately $30
thousand per month to JMB Realty Corporation <STRIKEOUT>an affiliate
</STRIKEOUT> in respect of general overhead expense, all of which was paid
as of December 31, 2002.

The Company reimburses their affiliates 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 affiliate, Management Services,
LLC, during 2002. The total costs for the years ended 2002, 2001 and
2000 was approximately $2.0 million, $1.1 million and $2.8 million,
respectively, of which approximately $.5 million was unpaid as of
December 31, 2002.

Employees of certain of the Company's unconsolidated affiliates are
entitled to participate in the Company's defined contribution pension plan.

Pursuant to an agreement through December 31, 2001 Northbrook was entitled
to receive a reimbursement from such affiliates in an amount equal to the
service cost related to these employees. The amount of the reimbursement
for 2002, 2001 and 2000 was $0, $1.2 million and $1.5 million,
respectively, all of which was paid as of December 31, 2002.

The Company had other amounts due from affiliates of $19 thousand and
$.3 million at December 31, 2002 and 2001, respectively. Such amounts
relate primarily to amounts due from former affiliates and do not relate to
ongoing transactions.

ITEM 8. LEGAL PROCEEDINGS

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. In proceedings filed prior to the Petition Date where a
Debtor is a defendant, such proceedings were stayed as against such Debtor
by the filing of the Reorganization Case. Those proceedings may now
continue since the Plan Effective Date has occurred so long as the
plaintiffs therein filed timely claims under the Plan. However, any
judgments rendered therein would be subject to the distribution provisions
of the Plan, which would in most cases result in the entitlement of such
claims to proceeds that are substantially less than the face amount of such
judgments. 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. Proceedings
against subsidiaries or affiliates of Kaanapali Land that are not Debtors
were not stayed by the Plan and may proceed.

APIC, which is not a Debtor and is owned approximately 16.7% by the
Company, is the primary borrower under a $66 million loan made by the ERS
in 1991. The loan, which has a balance as of December 31, 2002 of
approximately $81 million, is secured by the RKGC (and certain adjacent
lands). All of APIC's assets are subject to the loan. The loan matured in
June 2001 and has not been extended, despite efforts of the borrowers to
obtain such an extension as described below.

Due to insufficient cash flow generated by the RKGC and because of
disagreements with the lender over, among other things, lender's failure
(i) to consent to a grant of required easements in order for the Company to
develop and market its adjoining properties and (ii) to release adjacent
lands that are not related to the golf course operations from the mortgage,
as required under the loan documents, APIC and the other borrowers under
the loan did not pay the required interest payments due in 2000 on the loan
secured by these golf courses. ERS then issued a default notice and
instituted a foreclosure action in August 2000 (Employees' Retirement
System of the State of Hawaii v. Amfac/JMB Hawaii, L.L.C., et. al., Civil
No. 00-1-2597-08, First Circuit Court, State of Hawaii). Pursuant to an
agreement between the lender and the borrowers, the borrowers paid
approximately $3.8 million in September 2000 to the ERS for a portion of
the past due interest amounts and the ERS agreed to temporarily suspend its
action to realize upon its security while the parties attempted to
negotiate a definitive agreement to extend the loan beyond its June 30,
2001 maturity date. Efforts of the borrowers to negotiate such an
agreement broke down in December 2001, only after Northbrook (an affiliate
of APIC that had no obligations under the loan) had funded certain minimum
interest payments (together with the ERS' legal fees and other related
costs). In January 2002, ERS recommenced its foreclosure action, which the
borrowers are contesting. The borrowers have also brought counterclaims
against ERS relative to the lender's defaults described above, which
defaults have caused APIC and the Company substantial damages relating to
its efforts to sell either the unrelated parcels that the ERS refused to
release from the mortgage or other land parcels that required easements and
other rights to which the ERS was required to consent.

The borrowers' counterclaims against the ERS in such litigation
assert, among other things, that because of the refusal of the ERS to
perform in accordance with the loan documents and grant the required
consents and releases, dating back to the inception of the loan, the
Company suffered damages over time relating to various development projects
and sale transactions that APIC and/or the Company consummated or attempted
to consummate since 1991. Also alleged is that these refusals and the
interference of the ERS with APIC's and the Company's legitimate
development efforts was intended by ERS to give the ERS leverage over APIC
and the Company's development and land sale activities to the benefit of
ERS, not to protect the ERS' bargained for security for its loan on the
RKGC. Some projects allegedly were substantially delayed by the ERS'
defaults and significant land sales were allegedly either substantially
delayed or failed altogether. Income from sales allegedly was also
adversely affected in addition to the expenses of development caused by the
ERS' delays and refusals. In addition, APIC and the Company allegedly
suffered significant damages relative to the costs of attorneys and other
professionals that the Company was forced to pay (including those of ERS'
attorneys and professionals) in its failed attempt to obtain the consents
and releases. Failure to obtain the necessary easements promised by ERS
allegedly could allegedly subject APIC and/or the Company to damages claims
from landowners on parcels previously sold by the Company and, particu-
larly, could allegedly significantly negatively impact the value and
marketability of its remaining land parcels in Kaanapali Golf Estates,
which requires such easements for access and to ensure that the parcel
enjoys necessary water and drainage rights. As a consequence of the ERS'
alleged actions, the borrowers' counterclaims allege, among other things,
that the ERS breached its duties under the contract, breached the ERS'
implied covenant of good faith and fair dealing, fraudulently induced the

borrowers to enter into the loan, acted in a fraudulent manner respecting
its fiduciary relationship with the borrowers and/or acted in bad faith.
The counterclaim seeks, among other things, damages, attorneys' fees and
costs, and an order directing the ERS to provide the releases and consents
required by the loan documents. There can be no assurance that defendants
will prevail in the counterclaim or in the defense of ERS's attempt to
realize on its security. On March 19, 2002, the court entered an order
appointing a receiver for the property that is security for the loan, as
well as for the golf course operations related thereto. The receiver has
taken over the golf course operations from APIC and hired most of APIC's
former employees. APIC's former employees are seeking from APIC payment of
severance and certain benefits, among other things.

The borrowers have been engaged in settlement negotiations with ERS
since 2000, which negotiations have resulted in the execution of the ERS
Settlement Agreement in March 2003. Although the borrowers believe that
the transactions contemplated by the ERS Settlement Agreement will be
consummated during the third quarter of 2003, the ERS Settlement Agreement
is subject to contingencies <STRIKEOUT>including approval by the state
court which has authority over the underlying litigation. Such approval is
anticipated in the second quarter of 2003</STRIKEOUT>. As a consequence of
such contingencies, there can be no assurance as to the consummation of
such settlement agreement. Consummation of the ERS Settlement Agreement
and the transactions contemplated therein would provide the Company with
easements and other rights that it considers adequate for the development
or sale of Parcel 22/23, but would also result in the Company having no
further interest in the RKGC.

In October 2002, in anticipation of the finalization of the ERS
Settlement Agreement, Kaanapali Land, AHI and certain related entities
entered into a Funding Agreement (the "Funding Agreement") with APIC, AFI
and AFI's parent, Amfac Finance Limited Partnership ("AFLP") that specifies
how amounts paid by Kaanapali Land as "Funding Entity" under such
settlement agreement will be treated. Kaanapali Land was willing to enter
into the Funding Agreement because, among other things, the ERS had
threatened to file a significant claim (in an amount that has not been
specified by ERS) in the Reorganization Case against the borrowers who
are Debtors, which claim, if allowed in whole or significant part would
likely cause a material adverse impact on the Company and its prospects for
successfully implementing the Plan. Although the Debtors believe that any
such claim would be without merit, either in whole or substantial part
there could be no assurance that it would not ultimately be allowed in a
significant amount. The existence of the Funding Agreement made it
possible to enter into the ERS Settlement Agreement, which in turn has
significantly reduced, if not eliminated, the risk that any such claim will
be filed by ERS under the Plan. Generally, 1/6 of the funded amounts shall
be treated as capital contributions to AHI and Pioneer Mill and then to
APIC, on account of AHI's stock ownership in APIC. The remaining 5/6 of
such amounts shall be treated as a loan by Kaanapali Land to AFLP, which
will then be treated as having been contributed by AFLP, through AFI, to
APIC on account of AFI's stock ownership in APIC. The ability of AFLP to
reimburse Kaanapali Land for such loan amounts depends on the recovery by
AFLP of a judgment it has obtained in certain litigation that is unrelated
to the Company. There can be no assurance that AFLP will ultimately
realize on such judgment or that it will obtain proceeds relative thereto
or otherwise in an amount sufficient to satisfy the loan from Kaanapali
Land.

Concurrently with the execution of the ERS Settlement Agreement, APIC
entered into a settlement agreement with the union representing the
bargaining unit employees employed by APIC at the time the receivership
commenced. Such settlement shall, upon consummation of the ERS Settlement
Agreement, result in certain amounts being paid or distributed to such
employees in return for releases by each of them and the union in favor of
APIC and the Company. APIC intends to handle its former non-bargaining
unit employees employed at the RKGC at such time in substantially the same
manner. However, there can be no assurance that such settlement will be
consummated, nor that all eligible former employees will take advantage of
it. The total amount estimated to be paid to APIC's former employees as
a consequence of such settlement is approximately $1.24 million.

In connection with the Reorganization Case, the ERS, the Debtors and
APIC, during the third quarter of 2002, entered into a Stipulation approved
by the Bankruptcy Court, which as amended from time to time and approved by
the Bankruptcy Court since originally entered, among other things,
currently (i) provides for an extension of the bar date by which the ERS
must file any claims it may have against any of the Debtors until five (5)
business days after written notice from the Debtors and (ii) reserves the
rights of the ERS and the Debtors with respect to objections that the ERS
may have to the treatment of its claims under the Plan and further provides
that such objections, if asserted, will be resolved by the Bankruptcy Court
following confirmation of the Plan in the manner as set forth in the
Stipulation. The consummation of the ERS Settlement Agreement would result
in the release and waiver of any claims that the ERS might have against the
Debtors in the Reorganization Case.

On September 20, 1996, Oahu Sugar Company, LLC, successor by merger to
Oahu Sugar Company, Limited ("Oahu Sugar") and a subsidiary of Kaanapali
Land, filed a lawsuit, Oahu Sugar v. Walter Arakaki and Steve Swift, Case
No. 96-3880-09, in the Circuit Court of the First Circuit, State of Hawaii.

In the lawsuit, Oahu Sugar, which is a Non-Debtor AHI Subsidiary, alleged
that it entered into an agreement to sell to defendants certain sugar cane
processing equipment at Oahu Sugar's sugar cane mill in Waipahu. Oahu
Sugar alleged that defendants failed to timely dismantle and remove the
equipment, as required by the agreement, and that defendants were obligated
to pay Oahu Sugar rent for the area occupied by the equipment beyond the
time provided for by the parties. Oahu Sugar further alleged that it
provided notice to defendants that Oahu Sugar was entitled to treat the
equipment as abandoned property and to sell the equipment, because the
equipment had not been removed from the property in a timely fashion, as
required by the parties' agreement. In its complaint, Oahu Sugar sought,
among other things, declaratory relief that it was entitled to treat the
equipment as abandoned, damages for breach of contract, and rent under an
unjust enrichment theory.

Defendants filed an answer, as amended, denying the substantive
allegations of Oahu Sugar's complaint and asserting various affirmative
defenses. In addition, the defendants filed a seven-count counterclaim
against Oahu Sugar. In the counterclaim, defendants alleged, among other
things, that Oahu Sugar failed to make the equipment available for removal
on a timely basis, and that Oahu Sugar otherwise improperly interfered with
defendants' plans for the removal and subsequent sale of the equipment. In
the counterclaim, defendants sought, among other things, general, special
and punitive damages, attorneys' fees, costs, and such other relief as the
Court may have deemed appropriate.

Oahu Sugar's declaratory relief claim was settled in advance of trial.

Oahu Sugar obtained dismissals and directed verdicts on six of defendants'
claims. The remaining portions of the complaint and counterclaim proceeded
to a jury trial and verdict. On December 2, 1999, the jury denied Oahu
Sugar relief on its remaining claims and awarded the defendants
approximately $2.6 million in damages on their counterclaim. On March 2,
2000, the trial court entered a judgment against Oahu Sugar for the $2.6
million in damages awarded by the jury. In addition, the trial court
awarded counterclaimants $751 thousand in attorneys' fees, $28 thousand in
costs and $866 thousand in prejudgment interest. Oahu Sugar's post trial
motions for judgment as a matter of law and for a new trial were denied.
Oahu Sugar filed a notice of appeal. The defendants began efforts to
collect the amounts awarded to them. Defendants caused garnishee summons
to be issued to various affiliated and unaffiliated entities. The
defendants scheduled a debtor's examination for August 23, 2000 which was
not concluded. The Hawaii Supreme Court scheduled the case for an
appellate conference and mediation that was unsuccessful. Then, on
January 3, 2001, the Hawaii Supreme Court entered an order dismissing the
appeal. The Supreme Court held that it lacked jurisdiction over the appeal
because the judgment entered on March 2, 2000 was legally defective in that
it did not identify the claim for which judgment was entered or dismiss all
of the other claims and counterclaims of the parties. In light of the
order of the Hawaii Supreme Court, the parties filed legal briefs before
the trial court to have the court determine, among other things, whether a
corrected judgment consistent with the jury verdict may be entered as of
March 2, 2000 or a new judgment order is required. After hearing the
arguments of the parties, on March 19, 2001, the trial court ruled that it
would not enter a corrected judgment as of March 2, 2000 and that a new
judgment order will be required. On April 12, 2001, the court entered the
new judgment order on the counterclaims providing for the payment of
approximately $2.6 million in damages, $730 thousand in attorneys' fees,
$28 thousand in costs, $867 thousand in prejudgment interest, and
additional prejudgment interest from January 20, 2000 through April 12,
2001. From and after entry of the order, post-judgment interest will
accrue on the unpaid balance at the statutory rate of ten percent per annum
until paid in full. Oahu Sugar is pursuing an appeal and the opposing side
has filed a cross appeal seeking further relief on any potential retrial of
the matter. The case is fully briefed and awaits a decision by the Hawaii
Supreme Court. Oahu Sugar continues to believe that it is entitled to
affirmative relief on its complaint and that it has meritorious defenses to
the counterclaim that it has pursued on appeal. The Company, however, can
provide no assurances that it will be successful in obtaining affirmative
relief or overturning the verdict against Oahu Sugar. This verdict, if
upheld, could have a material adverse effect on the Oahu Sugar's financial
condition.

against Oahu Sugar and Oahu MS for alleged breach of warranty of title,
indemnity and contribution in connection with their respective
transactions, and seeking, among other things, damages, attorneys' fees,
costs, and prejudgment interest. Oahu Sugar and Oahu MS have filed answers
to the complaint, as amended, and the cross-claims. On May 3, 2001,
plaintiffs filed an amended complaint dropping the remedy of foreclosure in
connection with certain property transferred to the YMCA and adding various
allegations including, without limitation, allegations regarding the final
judgment entered in the underlying matter. The case is proceeding and is
set for mediation in July 2003 and for trial in April 2004. Oahu Sugar and
Oahu MS believe they have meritorious defenses and intend to pursue their
defenses vigorously. However, there can be no assurances that this case,
when once adjudicated, will not have a material adverse effect on the
financial condition of Oahu Sugar or Oahu MS.

The Company believes that Oahu Sugar has meritorious defenses to the
above referenced pending lawsuits that continue to be pending and Oahu
Sugar will defend itself vigorously. However, as Oahu Sugar is
substantially without assets to satisfy any material existing or future
judgment, there can be no assurances that these cases (or any of them), if
adjudicated in a manner adverse to Oahu Sugar, will not have a material
adverse effect on the financial condition of Oahu Sugar.

On October 23, 2002, Oahu MS was named in a civil action entitled City
Bank v. Amfac Property Development Corp., et. al. pending in the Circuit
Court of the First Circuit, State of Hawaii, Civil No. 02-2494-10. In this
case, plaintiff seeks injunctive relief and declaratory relief to cease
actions preventing City Bank and its consultants from gaining access to the
mortgaged property for environmental testing. In addition, the
complaint seeks unspecified damages as may be shown at trial, costs,
interest and reasonable attorneys' fees, and such other further relief as
the Court award. Although plaintiff filed a Motion for Preliminary
Injunction, no hearing has been set on the motion.

On January 2, 2003, Oahu MS was named in a civil action entitled City
Bank v. Amfac Property Development Corp., et. al. pending in the Circuit
Court of the First Circuit, State of Hawaii, Civil No. 03-1-0005-01. In
this case, plaintiff seeks foreclosure of property owned by Oahu and
encumbered by a mortgage in favor of Plaintiff. City Bank made a $10.0
million loan to APDC under a loan agreement dated December 18, 1996. City
Bank claims that as a result of alleged defaults, the entire amount of the
presently unpaid obligations under the loan documents is due and remains
due and payable. It alleges that the amount due as of December 2, 2002 is
$2,872,862.66 plus a per diem charge of $1,405.47 accruing on the unpaid
principal, until payment is made and/or interest changes, plus advances and
expenses incurred in connection with the action. In its complaint, City
Bank seeks all amounts allegedly due and owing to City Bank, together with
legal interest thereafter to accrue thereon and all advances, costs and
attorneys' fees; a foreclosure decree and sale; the appointment of a
receiver to conduct an environmental audit on a specified portion of the
secured property and to collect rents being paid on a portion of the
mortgaged properties; the entry of an order of deficiency against APDC to
the extent such exists after sale with execution to follow thereon; and
such other relief as the court may deem proper. Together with the
Complaint, City Bank filed a Motion for Appointment of Receiver alleging
that it is entitled to have a receiver appointed for an environmental audit
on the mortgaged property and collection of all net rental income assigned
to City Bank. This motion was granted.

On or about February 23, 2001 Kekaha Sugar Co., Ltd., a subsidiary of
Kaanapali Land, received a letter from the Hawaii Department of Health
("HDOH") assigning the Kekaha Sugar Co., Ltd. site a high priority status
based on HDOH's review of available environmental data. In the letter,
HDOH identified five major areas of potential environmental concern
including the former wood treatment plant, the herbicide mixing plant, the
seed dipping plant, the settling pond, and the Kekaha Sugar Mill. While
setting forth specific concerns, the HDOH reserved the right to designate
still further areas of potential concern which might require further
investigation and possible remediation. HDOH further reserved the right to
modify its prioritization of the site should conditions warrant. The
assignment of the high priority status will likely result in a high degree
of oversight by the HDOH as the issues raised are studied and addressed.
Kekaha Sugar Co., Ltd. has responded to the letter. The United States
Environmental Protection Agency has performed a visual inspection of the
property and indicated there will be some testing performed. Kekaha Sugar
Co., Ltd. is substantially without assets and further pursuit of this
matter by HDOH could have a materially adverse effect on the financial
condition of Kekaha Sugar Co., Ltd.

On or about February 23, 2001, Lihue Plantation received a similar
letter from the HDOH assigning the LPCo site a high priority status based
on HDOH's review of available environmental data. In the letter, HDOH
identified four major areas of potential environmental concerning including
the Lihue Plantation herbicide mixing plant, the seed dipping plant, the
settling pond and the Lihue Sugar Mill. While setting forth specific
concerns, the HDOH reserved the right to designate still further areas of
potential concern which might require further investigation and possible
remediation. HDOH further reserved the right to modify its prioritization
of the site should conditions warrant. As noted above, the high priority
assignment will likely result in a high degree of oversight by the HDOH as
the issues raised are studied and addressed.

Oahu MS has discovered chlorinated solvents in the groundwater at the
former Oahu Sugar Waipahu Sugar Mill site. The contamination does not
appear in high concentrations. Oahu MS' recommendation for remediation
using hydrogen-releasing compounds has been rejected by the HDOH. Oahu MS
may have to do further work at the site. At this point, Oahu MS is unable
to identify with certainty the treatment options, if any, that the HDOH may
require or approve for the site, or the costs of same.

Pioneer Mill is engaged in an ongoing cleanup arising out of the
discovery of petroleum contamination found at the Pioneer Mill site. The
Pioneer Mill site has been assigned a high priority and the HDOH has shown
an interest in the environmental conditions relating to or arising out of
the former operations of Pioneer Mill. These issues will have to be
addressed as they are raised. Currently, Pioneer Mill is awaiting a report
on the results of environmental testing conducted on the site by the United
States Environmental Protection Agency.

As a result of an administrative order issued to Oahu Sugar by the
Hawaii Department of Health, Order No. CH 98-001, dated January 27, 1998,
Oahu Sugar is currently engaged in environmental site assessment of lands
it leased from the U.S. Navy and located on the Waipio Peninsula. Sampling
is underway and the investigation is otherwise still in its preliminary
stages. Oahu Sugar has submitted a Remedial Investigation Report to the
HDOH. The HDOH has provided comments which indicate additional testing may
be required.

In addition, the IRS filed a claim in the bankruptcy proceedings in
the aggregate amount of approximately $20,600,000 for taxes, interest and
penalties related to the years 1998-2000. The Company has contacted the
IRS to request that it withdraw its claim due to the fact that the Plan
leaves the IRS unimpaired relative to any taxes that may be due. Although
the Company is optimistic that the IRS will withdraw such claim, it has not
yet done so and there can be no assurance that it will. In any event, the
IRS audit of the period covered by the claim is in its preliminary stages
and no deficiencies in taxes have been proposed by the auditors. The
Company intends to dispute vigorously any IRS claim for additional taxes,
whether asserted by means of the claim filed in the bankruptcy proceeding,
arising in the pending audit, or in future audits. However, there can be
no assurance that the Company will be successful in such defense and,
although the Company has reserved for potential tax liabilities on its
financial statement,s to the extent that the Company is unsuccessful in
defending against any such claims, either in the bankruptcy court or in
connection with the IRS audits, the amount for which the Company could be
liable could have a material adverse effect on the Company, given its
relatively modest cash position.

EC Managers, Inc., a subsidiary of Kaanapali Land, and general partner
of EC Partners, L.P., formerly known as Arvida/JMB Partners, L.P.-II (the
"Partnership"), has been named a defendant in a lawsuit filed on January
11, 1996 in the Circuit Court in and for the Eighteenth Judicial Circuit,
Seminole County, Florida entitled Land Investment I, Ltd., Heathrow Land &
Development Corporation, Heathrow Shopping Center Associates and Paulucci
Investments v. Arvida/JMB Managers-II, Inc., Arvida/JMB Partners, L.P.-II,
Arvida Company and JMB Realty Corporation, Case No. 96-62-CA-15E. The
complaint, as amended, includes counts for breach of the management
agreement, fraud in the inducement and conspiracy to commit fraud in the
inducement, breach of the Heathrow partnership agreement and constructive
trust in connection with the purchase and management of the Heathrow
development. Plaintiffs seek, among other things, unspecified compensatory
damages, punitive damages, prejudgment interest, attorneys' fees, costs,
and such other relief as the Court deems appropriate. Substantial fact
discovery has been conducted to date and the defendants expect further
substantial discovery, both of fact and expert witnesses, to take place.

On June 24, 1999, the Court granted partial summary judgment in favor
of the plaintiffs against Arvida Company, finding that Arvida Company owed
plaintiffs a fiduciary duty as a broker and advisor under the management
agreement. The ruling did not reach the issue of the statute of
limitations defense nor whether any such duties were owed in connection
with the Partnership's acquisition of an interest in the Heathrow
development through the Heathrow partnership.

No discovery cut-off date or trial date has been set, although the
court has indicated a desire to try this case in November, 2003.

Kaanapali Land, as successor by merger, and D/C Distribution, a
subsidiary of Kaanapali Land, have been named as defendants in personal
injury actions allegedly based on exposure to asbestos. There are
approximately 110 cases against such subsidiary that are pending on the
mainland and are alleged based on such subsidiary's prior business
operations. Each company believes that it has meritorious defenses against
these actions, but can give no assurances as to the ultimate outcome of
these cases. In the case of the subsidiary, there can be no certainty that
such subsidiary will be able to satisfy all of its liabilities for these
cases. As the subsidiary is without assets to satisfy any material
existing or future judgments, there can be no assurances that these cases
(or any of them), if adjudicated in a manner adverse to the subsidiary,
will not have a material adverse effect on the financial condition of such
subsidiary. Kaanapali Land does not believe that it has liability,
directly or indirectly, for such subsidiary's obligations.

Other than as described above and the Reorganization Case 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.

ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

As of June 30, 2003 there were approximately 360 holders of record
of the Company's Class A Shares and approximately 16 holders of record of
the Company's Class B Shares. The Company has no outstanding options,
warrants to purchase or securities convertible into, common equity of the
Company, has no Class A Shares that can be sold pursuant to Rule 144, and,
although all 1,613,513 outstanding Class B Shares held by Pacific Trail and
related parties are saleable in accordance with the provisions of Rule 144,
the Company has no securities that are being publicly offered or that it is
proposing to publicly offer. There is no public market for the
Company's membership interests. The Company has elected to be treated as a
corporation for federal and state income tax purposes. As a consequence,
under current law, holders of membership interests in the Company will not
receive annual K-1 reports or direct allocations of profits or losses
relating to the financial results of the Company as they would for the
typical limited liability company that elects to be treated as a
partnership for tax purposes. In addition, any distributions that may be
made by the Company will be treated as dividends. However, the Company
does not anticipate making any distributions for the foreseeable future.

ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES

As of December 31, 2002, a total of 122,005 Class A Shares and
1,613,513 Class B Shares had been issued and distributed pursuant to the
Plan in reliance on the exemption set forth in Section 1145 of the U.S.
Bankruptcy Code.

ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED

GENERAL. The LLC Agreement provides for the issuance of an unlimited
number of membership interests in Kaanapali Land which may be denominated
as shares. Kaanapali Land has currently denominated two classes of common
equity membership interests, Class A Shares and Class B Shares. As of
July 16, <STRIKEOUT>April 23,</STRIKEOUT> 2003, there were in the
aggregate approximately 159,756 <STRIKEOUT>139,776</STRIKEOUT>
Class A Shares either outstanding or which the Company's
distribution agent has been authorized to distribute, , all of which
were for distribution <STRIKEOUT>issued</STRIKEOUT> to various
creditors of the Debtors under the Plan <STRIKEOUT>, (it is expected that
approximately 19,000 additional Class A Shares of those that remain
reserved for issuance under the Plan will be distributed)</STRIKEOUT> and
there were 1,631,513 Class B Shares outstanding. It is expected that
approximately 19,000 additional Class A Shares of those that remain
reserved for issuance under the Plan will be distributed. So long as
there is a Class A Representative (as described below), any common shares
issued to or acquired by Pacific Trail or its affiliates are issued as
Class B Shares. Kaanapali Land may issue additional membership interests
in one or more classes, or one or more series of any such class, with such
designations, preferences and relative, participating, optional or other
special rights, powers and duties, including rights, powers and duties
which may be senior to the Class A Shares and Class B Shares, all as shall
be determined by Pacific Trail, including without limitation, with respect
to (i) the rights of each class or series of shares to participate in
distributions and (ii) the rights of each class or series of shares upon
dissolution and liquidation of Kaanapali Land. All Class A Shares and
Class B Shares are fully paid and nonassessable.

Class A Shares and Class B Shares are identical in all respects
(including with respect to voting and such distributions, if any, as may be
declared by Pacific Trail as the manager, including liquidating
distributions) except for certain entity governance provisions in the
Kaanapali Land Company Agreement for the benefit of the Class A Shares, as
described below. After the termination of the position of the Class A
Representative, Class A Shares and Class B Shares shall become one class.

No shareholder is entitled to any preemptive, preferential or other
similar right with respect to additional capital contributions or loans to
Kaanapali Land or issuance of any membership interests in Kaanapali Land,
except as otherwise specified in the Kaanapali Land Company Agreement. No
shareholder is entitled to resign as a member or withdraw its capital from
Kaanapali Land. Each Class A Share is entitled to one vote on all matters
on which holders of membership interests are entitled to vote generally.
To the extent any consent, decision, approval or other right is vested
solely in holders of Class A Shares, such consent, decision, approval or
other right will be decided upon by holders of a majority of the Class A
Shares issued and outstanding.

MANAGEMENT OF KAANAPALI LAND. Pacific Trail is the manager of
Kaanapali Land and has the exclusive power and authority under the
Kaanapali Land Company Agreement to manage and conduct the business of
Kaanapali Land, subject to those rights and covenants relating to the
Class A Representative described below. Pacific Trail is not entitled to
receive any compensation for serving as manager of Kaanapali Land, but
Kaanapali Land bears all of its operating and administrative expenses,
including reimbursements to the manager for such expenses incurred by the
manager and its affiliates in performing its services (including a share of
salary and employment related expenses of the individuals providing these
services).

CLASS A REPRESENTATIVE. Under the terms of the Kaanapali Land Company
Agreement, an institution will be appointed as the Class A Representative.
The initial Class A Representative is American Express Tax and Business
Services, Inc. Kaanapali Land is required to deliver to the Class A
Representative copies of all reports filed by Kaanapali Land with the
Securities and Exchange Commission (including, without limitation, its
annual and quarterly financial reports). The Class A Representative is
entitled to reasonable access to the books and records of Kaanapali Land
and to an annual meeting with manager of Kaanapali Land and its executive
team to review the operations of Kaanapali Land. The position of the
Class A Representative will terminate on the earlier of the fifth
anniversary of the effective date of the Plan (November 13, 2007) or at
such time as the number of outstanding Class A Shares represents less than
5% of the total number of shares of Kaanapali Land outstanding as of the
effective date of the Plan. All reasonable fees and expenses of the Class
A Representative will be paid by Kaanapali Land.

In the event of the resignation of the Class A Representative, Pacific
Trail is required to appoint a new Class A Representative which must be
reasonably acceptable to the resigning Class A Representative. In the
event of the removal of the Class A Representative, which may occur if the
Class A Representative has dissolved or is adjudged bankrupt or insolvent,
a receiver takes charge of the Class A Representative, or the Class A
Representative willfully refuses to act in such capacity, PTH is required
to promptly appoint a new Class A Representative, which appointment shall
be effective subject to the reasonable objection of a majority of the
Class A shareholders within 10 business days of notice of such appointment.

COVENANTS RELATING TO CLASS A REPRESENTATIVE. Without the consent of
the Class A Representative, Kaanapali Land may not incur any indebtedness
owing to the Class B shareholders or their affiliates if, immediately after
giving effect to the incurrence of such indebtedness and the application of
the proceeds thereof, there would be in excess of $25 million in aggregate
principal indebtedness from the Class B shareholders or their affiliates,
if and so long as there is a Class A Representative. Any such indebtedness
will bear interest at the "prime rate" as announced from time to time by
Bank One N.A. and may be secured by property of Kaanapali Land and its
subsidiaries. Kaanapali Land is required to deliver a certificate to the
Class A Representative, in connection with the delivery of the annual
report, to the effect that all transactions entered into between Kaanapali
Land and any of the Class B shareholders or their affiliates during that
fiscal year are described in the annual report in all material respects
and, except as otherwise provided in the Kaanapali Land Company Agreement
or as provided in any contract or agreement existing prior to the date of
the Kaanapali Land Company Agreement which has been assumed by Kaanapali
Land pursuant to the Plan, are on terms no less favorable, at the time of
entering into the transaction, than those which are available from
unaffiliated third parties for similar transactions in the same
geographical area.

TRANSFERABILITY OF SHARES OF KAANAPALI LAND. Class A Shares are
freely transferable. Ownership of Class A Shares is reflected on the
shareholder register of Kaanapali Land as maintained by its registered
transfer agent, Wells Fargo Bank Minnesota, N.A., Corporate Trust Services,
Sixth and Marquette; N9303-120, Minneapolis, Minnesota 55479. Kaanapali
Land is under no obligation to cause the Class A Shares to be listed for
trading on any securities exchange or quoted on any automated quotation
system.

Under the terms of the Kaanapali Land Company Agreement, the Class B
shareholders may not sell or transfer any of their shares in Kaanapali
Land, other than to their affiliates, unless such transaction provides for
all holders of Class A Shares to have the right to sell or transfer of all
of their Class A Shares on the same terms and conditions. In the event of
any sale of the Class B Shares, the Class A shareholders will be required,
without any further vote or consent, to sell their Class A Shares in such
transaction.

LIMITED LIABILITY OF KAANAPALI LAND SHAREHOLDERS. Under Delaware law
and the Kaanapali Land Company Agreement, no shareholder of Kaanapali Land
will be obligated personally for any debt, obligation or liability of
Kaanapali Land solely by reason of being a member of Kaanapali Land.

AMENDMENTS. The Kaanapali Land Company Agreement may be amended only
upon the approval of members holding a majority of the total of the Class A
Shares and Class B Shares.

ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICER

Section 10.3 of the LLC Agreement provides as follows with respect to
the indemnification of PTH, as the manager, any member of Kaanapali Land or
the Class A Representative, and any affiliated person of any of the
manager, any member or the Class A Representative (collectively, the
"Covered Persons" and individually a "Covered Person"):

(a) The Company shall indemnify, to the fullest extent permitted by
applicable law, each Covered Person and each Covered Person's
Affiliates, directors, trustees, members, managers,
shareholders, officers, partners, controlling persons,
employees and agents (including any individual who serves at
their request as director, officer, partner, trustee or the
like of another corporation, including the Company) and/or the
legal representatives and controlling persons of any of them
(each of the foregoing being an "Indemnitee") against any
liabilities and expenses, including amounts paid in
satisfaction of judgments, in compromise or as fines and
penalties, and counsel fees and expenses reasonably incurred by
such Indemnitee in connection with the defense or disposition
of any action, suit or other proceeding, whether civil or
criminal, before any court or administrative or investigative
body, in which such Indemnitee may be or may have been
threatened, while acting for, or on behalf of the Company or in
furtherance of the Company's business except to the extent (and
only to the extent) it is established (i) by final judgment
adverse to such Indemnitee that the actions (or failure to act)
were (was) material to the matter giving rise to the proceeding
and were (was) the result of active and deliberate dishonesty;
(ii) the Indemnitee actually received an improper personal
benefit in money, property or services; or (iii) in the case of
a criminal proceeding, that such Indemnitee had reasonable
cause to believe that the act or omission was unlawful. Any
indemnification made pursuant to this Section 10.3 shall be
made only out of assets of the Company, including errors' and
omissions' insurance for such purpose.

The following sections of the LLC Agreement provide as follows with
respect to the limitation of liability of the Covered Persons:

SECTION 10.1 LIABILITY. Except as otherwise provided by the
Act, the debts, obligations and liabilities of the Company, whether
arising in contract, tort or otherwise, shall be solely the debts,
obligations and liabilities of the Company, and no Covered Person
shall be obligated personally for any such debt, obligation or
liability of the Company or any other Covered Person solely by reason
of being a Covered Person.

SECTION 10.2 DUTIES OF COVERED PERSONS; EXCULPATION. To the
extent that, at law or in equity, a Covered Person has duties
(including fiduciary duties) under applicable law and liabilities
relating thereto to the Company or to any other Covered Person, a
Covered Person acting under this Agreement shall not be liable to the
Company or to any other Covered Person for its good faith reliance on
the provisions of this Agreement, and in no event shall any Covered
Person be liable to the Company or to any other Covered Person for
any act or omission if such Covered Person acted in good faith and in
a manner reasonably believed to be in the best interests of the
Company or, if the Class A Representative is the Covered Person, in a
manner reasonably believed to be in the best interests of the Class A
Members. The provisions of this Agreement, to the extent that they
limit the duties and liabilities of a Covered Person otherwise
existing at law or in equity, are agreed by the parties hereto to
replace such other duties and liabilities of such Covered Person.

ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

KAANAPALI LAND, LLC

INDEX

Report of Independent Auditors

Consolidated Balance Sheets, December 31, 2002 and 2001

Consolidated Statements of Operations for the years ended
December 31, 2002, 2001 and 2000

Consolidated Statements of Stockholder's Equity (Deficit) for
the years ended December 31, 2002, 2001 and 2000

Consolidated Statements of Cash Flows for the years ended
December 31, 2002, 2001 and 2000

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 AUDITORS

The Board of Directors and Shareholders
Kaanapali Land, LLC

We have audited the accompanying consolidated balance sheets of Kaanapali
Land, LLC (and the predecessors thereof as defined in Note 1) as of
December 31, 2002 and 2001, and the related consolidated statements of
operations, stockholders' equity (deficit), and cash flows for each of the
three years in the period ended December 31, 2002. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the 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, 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 financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Kaanapali
Land, LLC (and the predecessors thereof as defined in Note 1) at December
31, 2002 and 2001, and the consolidated results of its operations and its
cash flows for each of the three years in the period ended December 31,
2002, in conformity with accounting principles generally accepted in the
United States.

/s/ Ernst & Young LLP

Chicago, Illinois
April 25, 2003

KAANAPALI LAND, LLC

Consolidated Balance Sheets

December 31, 2002 and 2001
(Dollars in Thousands, except share data)

A S S E T S
-----------
2002 2001
-------- --------
Cash and cash equivalents . . . . . . . $ 15,848 19,988
Receivables, net. . . . . . . . . . . . 1,959 2,166
Inventories . . . . . . . . . . . . . . 159 444
Property, net . . . . . . . . . . . . . 142,832 158,099
Amounts due from affiliates, net. . . . 19 1,523
Deferred costs and expenses, net. . . . 213 4,621
Prepaid pension costs . . . . . . . . . 25,905 23,610
Other assets. . . . . . . . . . . . . . 2,691 13,177
-------- --------
$189,626 223,628
======== ========

L I A B I L I T I E S
---------------------

Accounts payable and accrued expenses . $ 10,202 16,206
Deferred income taxes . . . . . . . . . 9,143 53,971
Accumulated postretirement benefit
obligation. . . . . . . . . . . . . . 23,560 33,118
Other liabilities . . . . . . . . . . . 51,705 57,941
Mortgage and other notes payable. . . . 11,248 125,032
-------- --------
Total liabilities . . . . . . . 105,858 286,268

Commitments and contingencies

Investment in unconsolidated entities,
at equity . . . . . . . . . . . . . . 61,273 61,006

S T O C K H O L D E R S' E Q U I T Y (D E F I C I T )
------------------------------------------------------

Common stock, at 12/31/02 non par value
(shares authorized - 4,500,000;
shares issued 1,863,213.49 and at
12/31/01 $20.00 par value (shares
authorized - 5,000; shares issued -
3,990.9483) . . . . . . . . . . . . . -- 81
Additional paid-in capital. . . . . . . 5,357 91,845
Accumulated earnings (deficit). . . . . 17,138 (211,791)
-------- --------
22,495 (119,865)
Less: Treasury stock (72.9459 shares
at 12/31/01). . . . . . . . . . . . . -- (3,781)
-------- --------
Total stockholders' equity
(deficit) . . . . . . . . . . 22,495 (123,646)
-------- --------
$189,626 223,628
======== ========

The accompanying notes are an integral part
of the consolidated financial statements.

KAANAPALI LAND, LLC

Consolidated Statements of Operations

Years ended December 31, 2002, 2001 and 2000
(Dollars in Thousands Except Per Share Amounts)

2002 2001 2000
-------- -------- --------
Revenues:
Sales . . . . . . . . . . . . . $ 11,085 59,079 75,123
Interest and other income . . . 27 12,162 4,124
Extinguishment of debt. . . . . -- 10,653 --
-------- -------- --------
11,112 81,894 79,247
-------- -------- --------
Cost and expenses:
Cost of sales . . . . . . . . . (4,344) 50,796 83,593
Selling, general and
administrative. . . . . . . . 12,505 15,652 18,265
Interest. . . . . . . . . . . . 2,395 11,387 18,227
Depreciation and amortization . 2,994 3,621 5,865
Reduction to carrying value
of investments. . . . . . . . 13,717 18,109 37,853
-------- -------- --------
27,267 99,565 163,803
-------- -------- --------

Operating loss. . . . . . . . . . (16,155) (17,671) (84,556)

Equity in income (loss) from
unconsolidated investments. . 5,180 (12,967) 2,162
-------- -------- --------
Loss from continuing operations
before income taxes, discon-
tinued operations and extra-
ordinary gain on reorganiza-
tion. . . . . . . . . . . . . (10,975) (30,638) (82,394)

Income tax benefit. . . . . . . 15,141 3,462 29,570
-------- -------- --------

Income (loss) from continuing
operations. . . . . . . . . . 4,166 (27,176) (52,824)
Income (loss) from discontinued
operations, net of applicable
income taxes. . . . . . . . . -- 10,094 7,117
Extraordinary gain on
reorganization, net . . . . . 136,618 -- --
-------- -------- --------
Net income (loss) . . . . $140,784 (17,082) (45,707)
======== ======== ========

Earnings per share:
Income (loss) from continuing
operations. . . . . . . . . . (a) (6,794) (13,206)
======== ======== ========
Net income (loss) . . . . . . . (a) (4,270) (11,427)
======== ======== ========

(a) The income from continuing operations per share and the net income
per share for the period prior to the Plan Effective Date is $3,235 and
$37,389, respectively. The loss from continuing operations per share and
the net loss per share for the period after the Plan Effective Date is $5
and $5, respectively.

The accompanying notes are an integral part
of the consolidated financial statements.

<table>
KAANAPALI LAND, LLC

Consolidated Statements of Stockholders' Equity (Deficit)

Years ended December 31, 2002, 2001 and 2000
(Dollars in Thousands)

<caption>
Total
Stock-
Additional Accumu- holders'
Common Paid-In lated Treasury Equity
Stock Capital Deficit Stock (Deficit)
-------- --------- -------- -------- --------
<s> <c> <c> <c> <c> <c>

Balance at January 1, 2000. $ 81 91,845 (118,722) (3,781) (30,577)

Net loss. . . . . . . . . . -- -- (45,707) -- (45,707)

Spinoff of subsidiary . . . -- -- 4,350 -- 4,350
-------- -------- -------- -------- --------

Balance at December 31, 2000 81 91,845 (160,079) (3,781) (71,934)

Net loss. . . . . . . . . . -- -- (17,082) -- (17,082)

Distribution of uncon-
solidated investment. . . -- -- (312) -- (312)

Spinoff of subsidiary . . . -- -- (34,318) -- (34,318)
-------- -------- -------- -------- --------
Balance at December 31, 2001 81 91,845 (211,791) (3,781) (123,646)

Net income. . . . . . . . . -- -- 140,784 -- 140,784

Effect of reorganization. . (81) (86,488) 88,145 3,781 5,357
-------- -------- -------- -------- --------

Balance at December 31, 2002 $ -- 5,357 17,138 -- 22,495
======== ======== ======== ======== ========

<fn>
The accompanying notes are an integral part
of the consolidated financial statements.
</table>

KAANAPALI LAND, LLC

Consolidated Statements of Cash Flows

Years ended December 31, 2002, 2001 and 2000
(Dollars in Thousands)

2002 2001 2000
-------- -------- --------
Cash flows from operating
activities:
Net income (loss) . . . . . . . $140,784 (17,082) (45,707)
Adjustments to reconcile net
income (loss) to net cash
provided by (used in) continuing
operations:
Income from discontinued
operations, net . . . . . . -- (10,094) (7,117)
Extraordinary gain on
reorganization, net . . . . (136,618) -- --
Restructuring costs . . . . . (3,042) -- --
Depreciation and amortization 2,994 3,621 5,865
Equity in loss (income) from
unconsolidated investments. (5,180) 12,967 (2,162)
Reduction to carrying value
of investments. . . . . . . 13,717 18,109 37,853
Interest deferred on long-term
debt. . . . . . . . . . . . -- (167) 165
Extinguishment of debt. . . . -- (10,717) --
Changes in operating assets and
liabilities:
Receivables, net. . . . . . . 207 568 2,232
Inventories . . . . . . . . . 285 (1,249) 13,743
Accounts payable, accrued
expenses and other. . . . . (9,947) 18,719 17,039
Deferred income taxes . . . . (15,141) (3,462) (26,299)
-------- -------- --------

Net cash provided by (used in)
continuing operating activities (11,941) 11,213 (4,388)
Net cash provided by discon-
tinued operating activities . . -- -- 27,538
-------- -------- --------
Net cash provided by (used in)
operating activities. . . . . . (11,941) 11,213 23,150

Cash flows from investing activities:
Property additions. . . . . . . (178) (532) (3,023)
Property additions, discontinued
operations. . . . . . . . . . -- -- (5,629)
Property sales, disposals and
retirements, net. . . . . . . 457 3,191 1,061
Property sales, disposals, net,
discontinued operations . . . -- -- 188
Deferred contract cost additions,
discontinued operations . . . -- -- (4,817)
Distributions from investments
in unconsolidated entities,
at equity . . . . . . . . . . 10,475 381 215
-------- -------- --------
Net cash provided by (used in)
investing activities. . . . . . 10,754 3,040 (12,005)

KAANAPALI LAND, LLC

Consolidated Statements of Cash Flows - Continued

2002 2001 2000
-------- -------- --------

Cash flows from financing activities:
Loan proceeds . . . . . . . . . -- 8,500 --
Net repayments of debt. . . . . (103) (19,027) (261)
Net repayments of debt,
discontinued operations . . . -- -- (11,800)
Amounts due to affiliates . . . -- --
Loan acquisition costs. . . . . -- (23) (35)
Settlement payments pursuant
to the Plan . . . . . . . . . (2,850) -- --
-------- -------- --------
Net cash provided by
(used in) financing
activities. . . . . . . (2,953) (10,550) (12,096)
-------- -------- --------
Net increase (decrease) in
cash and cash equivalents (4,140) 3,703 (951)
Cash and cash equivalents
at beginning of year. . 19,988 16,285 17,236
-------- -------- --------
Cash and cash equivalents
at end of year. . . . . $ 15,848 19,988 16,285
======== ======== ========

Supplemental disclosure of
cash flow information:
Cash paid for interest from
continuing operations . . . . $ 916 7,083 12,826
Cash paid for interest from
discontinued operations . . . -- -- 11,222
-------- -------- --------
$ 916 7,083 24,048
======== ======== ========

Cash received (paid)
for income taxes. . . . . . . $ 8 -- 144
======== ======== ========

KAANAPALI LAND, LLC

Consolidated Statements of Cash Flows - Continued

2002 2001 2000
-------- -------- --------

Activity due to spinoff of
subsidiary:
Reduction in current assets . . $ -- -- (728)
Reduction in property, plant
and equipment . . . . . . . . -- -- (45,557)
Reduction in current liabilities -- -- 1,952
Reduction in debt in default. . -- -- 75,322
Reduction in deferred tax
liability . . . . . . . . . . -- -- 14,876
Reduction in other assets/
liabilities . . . . . . . . . -- -- 421
Establishment of investment in
unconsolidated entity,
at equity . . . . . . . . . . -- -- (41,936)
-------- -------- --------

Net contribution due to spinoff . $ -- -- 4,350
======== ======== ========

Extraordinary gain on reorganization:
Reduction in other notes
payable - COLAs . . . . . . . $111,195 -- --
Reduction in deferred taxes . . 29,688 -- --
Reduction in accrued expenses . 3,059 -- --
Reduction in other assets/
liabilities . . . . . . . . . 1,075 -- --
Payments of restructuring costs (3,042) -- --
Additional paid in capital -
stock issuance. . . . . . . . (5,357) -- --
-------- -------- --------
Extraordinary gain on
reorganization. . . . . . . . $136,618 -- --
======== ======== ========

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 ("AHI"), Certain of Its Subsidiaries
(together with AHI, the "AHI Debtors") and FHT Corporation ( " FHTC
" and, together with the AHI 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 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 Debtors had filed their
petition for reorganization under Chapter 11 on February 27, 2002 (the
"Petition Date") in the United States Bankruptcy Court for the Northern
District of Illinois, Eastern Division (the "Bankruptcy Court") which
petitions were consolidated into a single joint proceeding by the
Bankruptcy Court (the "Reorganization Case").

The principal goal of the Plan was to address the Debtors' debt
burdens so that the Debtors could emerge from Chapter 11 with a viable
capital structure and with the resources necessary to operate their
businesses and improve the value of their land holdings. The Plan achieved
this goal by converting certain indebtedness and other liabilities of the
Debtors into new equity of Kaanapali Land (to the extent such creditors did
not elect an available cash distribution option). Another goal of the Plan
was to secure additional liquidity for the Debtors to help fund future
operations. The Plan achieved this goal through the Merger of FHTC with
Northbrook Corporation ("Northbrook"), which made the assets and liquidity
of Northbrook available to the Debtors to help fund their land development
business. FHTC was the surviving entity in such merger, and shortly
thereafter was in turn merged into Kaanapali Land pursuant to the Plan.

In accordance with the Plan, approximately 1,863,000 shares of
Kaanapali Land were issued during 2002. As a consequence of the merger
of Northbrook into FHTC on November 8, 2002, and the subsequent merger of
FHTC into Kaanapali Land on November 14, 2002, each pursuant to the Plan,
the <STRIKEOUT>The</STRIKEOUT> assets and liabilities of Kaanapali Land
are essentially the same as those of Northbrook and its subsidiaries and,
thus, Northbrook is considered to be the predecessor entity of Kaanapali
Land for 2000, 2001, and the portion of 2002 prior to the Plan Effective
Date was used and accordingly there was no effect on the consolidated
financial statements of the Company as a result of these mergers . As
greater than 85% of the shareholders in Kaanapali Land were shareholders or
affiliates of shareholders in Northbrook, the assets and liabilities of
Northbrook and FHTC <STRIKEOUT>Kaanapali Land</STRIKEOUT> were
merged into Kaanapali Land recorded at their <STRIKEOUT>the
</STRIKEOUT> historical cost. Subject to the foregoing, the occurrence
of the Plan Effective Date did not result in a change in the Company's
basis of accounting. Instead, its principal effect on the Company's 2002
financial statements was to (i) cease recording interest expense on the
COLAs subsequent to the Petition Date and (ii) recognize an extraordinary
gain on reorganization upon the confirmation of the Plan, net of
restructuring costs. <STRIKEOUT>carry-over basis of
Northbrook.</STRIKEOUT>

The accompanying consolidated financial statements include the
accounts of Kaanapali Land and all of its subsidiaries and its predecessor
(collectively, the "Company"), which include AHI and its wholly-owned
subsidiaries. All significant intercompany transactions and balances have
been eliminated in consolidation. Discontinued operations represent the
resorts business (collectively "Resorts") and include Xanterra Parks &
Resorts, L.L.C. and its wholly-owned subsidiaries, Xanterra, Inc. and its
wholly-owned subsidiary Xanterra Parks & Resorts, Inc. (See Note 9). The
Resorts entities were spun-off by Northbrook to its sole shareholder on
December 31, 2001.

The Company's continuing operations are in three business segments
agriculture, property and golf. The Golf segment includes that of Amfac
Property Investment Corp. ("APIC"), an equity investee. Though APIC
continues to own the Royal Kaanapali Golf Courses, a receiver was appointed
to operate them on March 19, 2002 and it is anticipated that APIC will no
longer have title to such golf courses after consummation of the settlement
with the Employees' Retirement System of the State of Hawaii ("ERS"), as
described in Note 3. The Agriculture segment grew and processed sugar cane
(prior to the shutdown of its remaining sugar operations in November, 2000)
and grew, processed and marketed coffee (prior to the shutdown of
operations in September 2001) and continues to grow seed corn under
contract. The Property segment primarily develops land for sale and
negotiates bulk sales of undeveloped land. The Golf segment is responsible
for the management and operation of the Waikele Golf Course. The Property,
Agriculture and Golf segments operate exclusively in the State of Hawaii.
For further information on the Company's business segments see Note 10.

STATEMENT OF CASH FLOWS

The Company considers as cash equivalents all amounts of U.S.
government obligations and certificates of deposit held with maturities of
three months or less when purchased and all money market funds.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Statement of Financial Accounting Standards No. 107 ("SFAS No. 107"),
"Disclosures about Fair Value of Financial Instruments", requires entities
to disclose the SFAS No. 107 value of certain on and off balance sheet
financial instruments for which it is practicable to estimate. Value is
defined in SFAS No. 107 as the amount at which the instrument could be
exchanged in a current transaction between willing parties, other than in a
forced or liquidation sale. Except as noted below, the Company believes the
carrying amounts of its financial instruments on its balance sheet
approximate SFAS No. 107 value due to the relatively short maturity of
these instruments. Except for the Certificates of Land Appreciation Notes
("COLAs") (which were discharged by the Bankruptcy Court on the Effective
Date), the Company believes the carrying value of its debt (see Note 3)
approximates fair value.

INVENTORY CAPITALIZATION

The Company capitalizes all of the expenditures incurred in bringing
crops to their existing condition and location. Inventory reflected in the
accompanying consolidated balance sheets at December 31, 2002 and 2001 is
not in excess of its estimated net realizable value.

RECEIVABLES

The allowance for doubtful receivables was $452 and $454 at
December 31, 2002 and 2001, respectively.

INVESTMENTS

Investments in certain partnerships and related entities over which
the Company exercises significant influence are accounted for by the equity
method. To the extent any subsidiary of Kaanapali Land engages in such
activities as general partner, such subsidiary may be contingently liable
for the obligations of its partnership and joint venture investments.

LAND DEVELOPMENT

Project costs associated with the acquisition, development and
construction of real estate projects are capitalized and classified as
Property. Such capitalized costs are not in excess of the projects'
estimated fair value as reviewed periodically or as considered necessary.
In addition, interest is capitalized to qualifying assets during the period
that such assets are undergoing activities necessary to prepare them for
their intended use. No interest has been capitalized for the periods
presented.

RECOGNITION OF PROFIT FROM REAL PROPERTY SALES

For real property sales, profit is recognized in full when the
collectibility 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, a portion of the profit is
deferred until such requirements are met.

PROPERTY

Property is stated at cost. Depreciation is based on the straight-
line method over the estimated economic lives of 15 <STRIKEOUT>20
</STRIKEOUT>-40 years for the Company's depreciable land
improvements, 3-18 years for machinery and equipment, or the lease term if
less. At December 31, 2002, the Company held approximately $1.9 million
of non-depreciable land improvements and approximately $3.3 million of
depreciable land improvements, relating principally to the Waikele Golf
Course, which are being depreciated over their estimated 15-year useful
life. The Company's land improvements relating to its former sugar
operations that have been shut down were previously depreciated over longer
periods. Maintenance and repairs are charged to operations as
incurred. Significant betterments and improvements are capitalized and
depreciated over their estimated useful lives.

In 2002, 2001 and 2000, the Company recognized impairment losses of
$13,717, $18,109 and $37,853. The 2002 impairment loss was primarily to
reduce the carrying value of certain land parcels that are not considered
to be part of future development plans. Such land parcels are not part
of the Company's Kaanapali 2020 development plan and are currently neither
in use nor being marketed for sale. The 2001 impairment loss
represented $13,725 to reduce the carrying value of certain land parcels
and $4,384 related to assets used in the agricultural operations. The 2000
impairment loss represented $15,853 to reduce the carrying value of certain
land parcels and $22,000 related to assets used in the agricultural
operations.

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 future cash flow
or sales proceeds is less than book value.

2002 2001
-------- --------

Property, net:
<STRIKEOUT>
Land and land improvements. . . . . . $130,479 138,410
</STRIKEOUT>

Land. . . . . . . . . . . . . . . . . $127,135 135,114
Land improvements . . . . . . . . . . 3,344 3,296

Buildings . . . . . . . . . . . . . . 21,586 26,703
Machinery and equipment . . . . . . . 25,929 26,717
-------- --------
177,994 191,830
Accumulated depreciation. . . . . . . (35,162) (33,731)
-------- --------
Property, net . . . . . . . . . . . . $142,832 158,099
======== ========

Land held for sale of approximately $11,000 and $4,900 , none of
which has any current operations, is included in Property in the
consolidated balance sheets at December 31, 2002 and 2001 and is carried at
the lower of cost or fair value less cost to sell. Further, a portion of
the land held for sale, the Oahu Sugar Mill Site (carrying value of
approximately $2.6 million at December 31, 2002) is subject to a
foreclosure proceeding that may result in disposition other than by sale.
No land is currently in use except for the land associated with the Waikele
Golf Course (carrying value of approximately $26 million at December 31,
2002) and an approximate 800 acres of Kaanapali 2020 land that has been set
aside for the Company's seed corn operations.

The Company's principal land holdings are on the island of Maui and
have a carrying value of approximately $110 million. In addition, the
Company's material land holdings on the island of Oahu have a carrying
value of approximately $29 million. The Company has determined, based on
its current projections for the development and/or disposition of its land
holdings, that the land holdings are not currently recorded in an amount in
excess of proceeds that the Company expects that it will ultimately obtain
from the disposition thereof.

DEFERRED COSTS AND EXPENSES

Deferred costs and expenses consist primarily of financing costs
related to various debt instruments. Such costs are being amortized on an
effective interest or a straight-line basis over the terms of the related
debt and the contracts.

Accumulated amortization was $27 and $836 at December 31, 2002 and
2001, respectively.

OTHER LIABILITIES

Other liabilities includes project completion costs on land sold in
prior years, reserves for losses on divested segments, reserves for
workmen's compensation and general liability claims, and reserves for
commitments and contingencies as discussed in Note 8, including potential
tax liabilities.

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.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In October 2001, the Financial Accounting Standards Board (FASB)
issued Statement No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets (FASB Statement No. 144) which supersedes FASB Statement
No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed Of. FASB Statement No. 144 provides more
guidance on estimating cash flows when performing a recoverability test,
requires that a long-lived asset to be disposed of other than by sale (e.g.
abandoned) be classified as "held and used" until it is disposed of, and
establishes more restrictive criteria to classify an asset as "held for
sale". The Company has presented separately as discontinued operations in
all periods the results of operations for all assets disposed of on or
after January 1, 2002 (the date of adoption of SFAS No. 144) and for all
assets classified as real estate held for disposition as of December 31,
2002. In addition, discontinued operations in accordance with APB 30 for
2001 and 2000 have been classified as discontinued operations in the
accompanying consolidated statements of operations.

In April 2002, the FASB issued Statement No. 145 which, among other
things, rescinds the requirement that gains and losses on extinguishments
of debt be classified as extraordinary items. The Company adopted
Statement No. 145 effective January 1, 2002, which requires
reclassifications of prior extraordinary gains on extinguishment of debt.

RECLASSIFICATIONS

Certain amounts in the 2001 and 2000 consolidated financial statements
have been reclassified to conform to the 2002 presentation.

(2) INVESTMENTS

The Company's investments in unconsolidated entities at December 31,
2002 and 2001 consist of the following:

Ownership Percentage Carrying Value
-------------------- --------------------
Description 2002 2001 2002 2001
- ----------- -------- -------- -------- --------
Amfac Finance Limited
Partnership (including
its 83.33% investment
in APIC) . . . . . . 0% 85.38% $(49,521) (49,837)
Amfac Property Invest-
ment Corp. . . . . . 16.67% 16.67% (11,752) (11,168)
Real estate partner-
ships. . . . . . . . Various -- (1)
-------- --------
$(61,273) (61,006)
======== ========

The Company does not control Amfac Finance Limited Partnership
("AFLP") and, accordingly, AFLP is accounted for on the equity method. All
intercompany amounts have been eliminated in the accompanying consolidated
financial statements.

Effective December 28, 2000, AF Investors, LLC ("AF Investors"), a
subsidiary of AFLP, made a capital contribution to APIC in return for
83.33% of the shares of APIC. Immediately prior to AF Investors' capital
contribution, APIC was a wholly-owned subsidiary of AHI. The $4,350
increase in consolidated stockholders' equity as of December 31, 2000,
represents the net deficit of APIC that has been allocated to that portion
of APIC no longer attributable to the Company's ownership interests. APIC
owns and operates the Royal Kaanapali Golf Courses ("RKGC"). The net
losses related to the golf course operations (including related interest
charges) of $2,332 for the year ended December 31, 2000 is included in the
net loss in the consolidated statements of operations. In 2001, AFLP
redeemed an approximately 4% limited partnership interest held by the
Company in exchange for distribution of a portion of debt from a
consolidated subsidiary of the Company.

In 2002 and 2001, the ownership interest in APIC's operations is
reflected on the equity method of accounting. The accompanying 2002 and
2001 consolidated statement of operations reflects a net after-tax loss of
$3,068 and $18,582, respectively, representing the Company's share of the
net losses related to the golf course operations (including related
interest charges) and the impairment loss recorded by APIC in 2001 to
adjust the carrying value of the golf courses to their estimated market
value. As of December 31, 2001, AF Investors was a 99.52% owned subsidiary
of Amfac Finance and Amfac Finance was 85.38% owned by Northbrook which
held a limited partnership interest therein.

In December 2002, AFLP redeemed the interest held by Kaanapali Land
(as successor to Northbrook) for approximately $60. Kaanapali Land however
remains obligated under certain circumstances to fund costs related to,
among other things, golf course improvements required under the settlement
agreement with the ERS described below. These funding obligations are
currently estimated to be approximately $1,300, of which a portion is
anticipated to be reimbursed by AFLP under the Funding Agreement entered
into by Kaanapali Land, AFLP and certain other affiliated entities in
October 2002. An additional approximate $1,200 is expected to be paid
or distributed to former bargaining unit and non-bargaining unit employees
should the foreclosure be consummated. The Company continues to record
its investment in unconsolidated entities due to its potential funding
obligations and because the Company is awaiting final consumption of the
ERS settlement agreement, which is subject to court approval. Upon
resolution of these matters, the Company expects to record a gain on
disposition of its investment for financial reporting purposes to the
extent of its investment in unconsolidated entities.

See Footnote 8 for additional discussion.

In addition, equity in income (loss) from unconsolidated investments
includes the gain from the 2002 sale of an interest in a hotel and the
Company's share of the results of operations of the hotel prior to the sale
of the Company's interest.

(3) MORTGAGE AND OTHER NOTES PAYABLE

Each component of the Company's mortgage and other notes payable was
entered into by the separate operating subsidiaries of the Company and
generally places certain specified restrictions on the transfer of an
individual subsidiary's assets, as well as on the use of proceeds generated
from operations and the sales of such assets.

A summary and description of the Company's mortgage and other notes
payable as of December 31, 2002 and 2001 is as follows:

2002 2001
-------- --------
COLAs (A) . . . . . . . . . . . . $ -- 113,682
Waikele Golf Course (B) . . . . . 8,398 8,500
Oahu Sugar mill site (C). . . . . 2,850 2,850
-------- --------
$ 11,248 125,032
======== ========

(A) The COLA's and the Senior Indebtedness referred to below were
discharged as to the Debtors and restructured effective on the Plan
Effective Date pursuant to the emergence of the Debtors from bankruptcy in
2002 and the restructuring transactions contemplated by the Plan. Such
restructuring caused the remaining unsatisfied COLA indebtedness to be
assigned to Kaanapali Land and entitled the previous holders thereof as of
the distribution record date under the Plan who made timely cash elections
under the Plan to receive cash in the amount of $35 per $500 principal
amount of COLAs. All other holders of COLAs as of the distribution record
date under the Plan are entitled to receive 1 Class A Share of Kaanapali
Land per $500 principal amount of COLAs in conversion of their COLAs. It
is expected that the restructuring of the COLAs under the Plan will
ultimately result in distributions of cash respecting approximately 25.5%
of the COLAs, anticipated to total approximately $2.49 million with the
remainder converted into Class A Shares of Kaanapali Land (or Class B
Shares of Kaanapali Land as described below). Although a significant
portion of such distributions were made in 2002, they are not anticipated
to be substantially completed until the fourth quarter of 2004 and the
Company accrued approximately $700 related to such amounts as of December
31, 2002. All of the Senior Indebtedness, COLA note claims and claims held
by entities and individuals affiliated with the Company against the Debtors
were converted into Class B shares of Kaanapali Land.

The COLAs were unsecured debt obligations of AHI, and were
subordinated in priority to all "Senior Indebtedness" (as defined in the
Indenture governing the COLAs). Senior Debt payable to Northbrook and its
affiliates (including deferred interest) totaled approximately $188,000 and
$186,108 at the Petition Date and December 31, 2001, respectively, and has
been eliminated in the accompanying consolidated financial statements. The
COLAs were issued in 1989, were scheduled to mature on December 31, 2008,
and bore interest payable semiannually at 10% per annum ("Base Interest")
of the outstanding principal balance on a cumulative, non-compounded basis,
of which 6% per annum is contingent ("Contingent Base Interest") and
payable, only to the extent of Net Cash Flow or Maturity Market Value (as
defined in the Indenture). AHI did not generate a sufficient level of Net
Cash Flow to pay Contingent Base Interest on the COLAs from 1990 through
the Petition Date, and any remaining obligation to do so was discharged on
the Plan Effective Date. Therefore, no cumulative deferred Contingent Base
Interest related to the period from August 31, 1989 (Final Issuance Date)
through the Petition Date has been paid or accrued in the accompanying
consolidated financial statements.

For financial reporting purposes, interest had been accrued on the
COLAs using the effective interest method. Accordingly, the consolidated
financial statements include Base Interest at 4% per annum ("Mandatory Base
Interest") for the period January 1, 2002 to the Petition Date and the year
ended December 31, 2001. No interest was accrued after the Petition Date
in accordance with the Plan. Pursuant to the Plan, the COLAs were
discharged as to the Debtors and restructured effective as of the Plan
Effective Date in return for the distributions mentioned in item (A) above.

Extraordinary gain on reorganization, net is primarily represented
by conversion or retirement by cash payment of the COLAs. The estimated
value of settlement of claims by the COLA holders under the Plan as
confirmed by the Bankruptcy Court was 7% of the outstanding principal
balance on such COLAs. In addition, general unsecured creditors with
allowed claims that elected (or were deemed to have elected) to receive
shares were entitled to shares having an estimated value of approximately
7% of the allowed claim amount. Accordingly, 7% of the allowed claims
(including the COLAs) converting to shares was considered a capital
contribution and 93% of all allowed claims (including the COLAs) was
considered extraordinary gain on reorganization, net. Creditors, including
COLA Holders, electing cash receive payment on their claims funded through
the $2.85 million reflected as "Settlement payments pursuant to the Plan"
in the Consolidated Statements of Cash Flows. Such settlement payments
represent approximately 7% of the outstanding principal amount of the
allowed claims for those COLA holders receiving cash, and 15% of the
allowed claims of general unsecured creditors receiving cash.

The non-affiliated COLAs Holders and general unsecured creditors are
to receive Class A shares. Claims of affiliated creditors (including
general unsecured claims, COLA claims and claims on the Senior Indebtedness
of such affiliates) are to receive Class B shares. As both classes of
shares represent membership interests that have no par value, common shares
in the Consolidated Balance Sheets and the Consolidated Statements of
Stockholders' Equity (Deficit) at December 31, 2002 is reflected at zero.

The Consolidated Statement of Stockholders' Equity for 2002 reflects
the above as Effect of Reorganization with the Consolidated Balance Sheet
at December 31, 2002 reflecting the fair market value of the settlement as
additional paid-in capital.

As disclosed in the consolidated statements of cash flows,
approximately $111 million of extraordinary gain on restructuring was
recognized due to reduction in the carrying amounts of COLAs in accordance
with paragraph 15 of SFAS 15. The disclosure has been revised to reflect
this fact in the footnotes, and that the gain represents the excess of the
settlement value in reorganization over the carrying amount of the COLAs.

No gain was recognized for financial reporting purposes on the
discharge of Senior Indebtedness. The Senior Indebtedness was between
entities consolidated and eliminated in the predecessor financial
statements.

(B) The Waikele Golf Course debt, secured by the Waikele Golf
Course, had an original principal balance of $8,500, an interest rate of
LIBOR plus 3.75%, principal amortization based on a 25-year amortization
schedule and a maturity date of December 1, 2006. The loan has certain
cash flow and other financial covenants.

(C) In December 1996, Oahu MS, a wholly-owned subsidiary of
Kaanapali Land, obtained a $10,000 loan facility from City Bank. The loan,
which had been extended through December 1, 2000 with certain
modifications, is secured by a mortgage on certain property at the Oahu
Sugar mill-site (the sugar plantation was closed in 1995). Such extended
loan bore interest at the bank's base rate plus 1.25%. In January 2001,
Oahu MS reached an agreement with the Bank for an extension until
December 1, 2001 with a principal payment of $150 upon execution of the
agreement leaving a remaining outstanding principal balance of $2,850. On
December 1, 2001, Oahu MS reached an agreement with the bank for an
additional extension until March 1, 2002. On June 28, 2002, City Bank and
Oahu MS entered into an agreement extending the loan for an additional nine
months to December 1, 2002 at City Bank's base rate plus 2%. On the
maturity date, Oahu MS did not pay the balance due. On January 2, 2003,
City Bank filed a complaint for foreclosure. In January 2003, Oahu MS and
City Bank commenced settlement discussions and the parties subsequently
reached a tentative agreement involving extension of the maturity date of
the loan. City Bank terminated negotiations regarding the form of the Loan

Modification and Extension Agreement on March 10, 2003. Oahu MS does not
have the funds necessary to pay the remaining balance of the loan without
sale of the remaining mill site land. If such loan cannot be further
extended, it would likely result in Oahu MS no longer having an ownership
interest in the property. Without regard to any offsetting claims
asserted by Oahu MS as described above, as this mortgage loan is a recourse
obligation of Oahu MS, any deficiency remaining on such loan upon
consummation of a foreclosure would continue to be a liability of Oahu
MS. The outstanding balance has been reflected as maturing in 2003 in
the schedule of annual principal payments. The net book value of the mill
site land securing the loan is less than the outstanding balance of the
indebtedness.

Scheduled annual principal maturities on the Company's mortgage and
other notes payable are as follows:

2003 . . . . . . $ 2,959
2004 . . . . . . 119
2005 . . . . . . 129
2006 . . . . . . 8,041
2007 . . . . . . --
Thereafter . . . --
-------
Total. . . . . . $11,248
=======

(4) RENTAL ARRANGEMENTS

The Company has rented, as lessee, various land, facilities and
equipment under operating leases. Most land leases provided for renewal
options and minimum rentals plus contingent payments based on revenues or
profits. Included as rent expense in selling, general and administrative
expense are minimum rentals and contingent payments for operating leases in
the following amounts:

2002 2001 2000
------- ------- -------

Minimum and fixed rents . . . . . . $ 1,381 1,475 1,723
Contingent payments . . . . . . . . 124 559 1,163
Property taxes, insurance
and other charges . . . . . . . . 655 669 1,182
------- ------- -------
$ 2,160 2,703 4,068
======= ======= =======

Future minimum lease payments under noncancelable operating leases
aggregate approximately $351 and are due as follows: $196, $139 and $16 for
2003, 2004 and 2005, respectively. Certain leases where Debtors were the
lessee were rejected pursuant to the Plan, which reduced any pre-Petition
Date and prospective liability of the Company for them to claims that were
allowed under the Plan, if entitled to distributions of cash or Class A
Shares of Kaanapali Land as provided in the Plan.

(5) EMPLOYEE BENEFIT PLANS

(a) PENSION PLANS

As of December 31, 2002, the Company participates in a defined benefit
pension plan that covers substantially all its eligible employees. The
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. Accordingly,
there is no difference between the accumulated benefit obligation and the
projected benefit obligation. 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 following tables summarize the components of the funded status of
the Company's defined benefit pension plan at December 31, 2002 and 2001,
the net pension credit for 2002, 2001 and 2000, and major assumptions used
to determine these amounts.

2002 2001
------- -------

Benefit obligation at beginning of year . . . . $37,762 40,182
Service cost. . . . . . . . . . . . . . . . . . 49 128
Interest cost . . . . . . . . . . . . . . . . . 3,041 2,897
Actuarial loss. . . . . . . . . . . . . . . . . 6,112 2,328
Benefits paid . . . . . . . . . . . . . . . . . (4,233) (7,773)
------- -------

Benefit obligation at end of year . . . . . . . 42,731 37,762
------- -------

Fair value of plan assets at beginning of year. 74,687 83,107
Actual return on plan assets. . . . . . . . . . (8,986) 455
Benefits paid . . . . . . . . . . . . . . . . . (5,186) (8,875)
------- -------
Fair value of plan assets at end of year. . . . 60,515 74,687
------- -------

Funded status . . . . . . . . . . . . . . . . . 17,784 36,925
Unrecognized net actuarial (gain) loss. . . . . 8,121 (13,304)
Unrecognized prior service cost . . . . . . . . -- (11)
------- -------

Prepaid pension cost. . . . . . . . . . . . . . $25,905 23,610
======= =======

Unrecognized net gains or losses are amortized over a ten year period.

At December 31, 2002, approximately 73% of the plan's assets are invested
in equity securities, 10% in an annuity contract, and 17% in fixed income
funds.

The components of the net periodic pension benefit (credit) for the
years ended December 31, 2002, 2001 and 2000 (which are reflected as other
income in the consolidated statements of operations) are as follows:

2002 2001 2000
------- ------- -------

Service cost. . . . . . . . . . . . . $ 49 128 367
Interest cost . . . . . . . . . . . . 3,041 2,897 2,864
Expected return on plan assets. . . . (5,462) (5,753) (5,855)
Recognized net actuarial gain . . . . (865) (1,787) (1,513)
Amortization of prior service cost. . (11) (52) (52)
Special termination benefit . . . . . 953 1,102 7,227
------- ------- -------

Net periodic pension benefit (credit) $(2,295) (3,465) 3,038
======= ======= =======

Benefit plan assumptions:
Discount rate . . . . . . . . . . . . 7.0% 7.5% 7.5%
======= ======= =======
Expected long-term rate of return
on assets . . . . . . . . . . . . . 7.5% 7.5% 7.5%
======= ======= =======

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 and certain
future obligations of the Pension Plan may be subject to bargaining unit
agreements.

(b) RETIREE HEALTH AND LIFE INSURANCE BENEFITS

In addition to providing pension benefits, AHI and certain of its
affiliates currently provide certain healthcare and life insurance benefits
to certain eligible retired employees. Where such benefits are offered,
substantially all employees may become eligible for such benefits if they
reach a specified retirement age while employed by AHI (or the applicable
affiliate) and if they meet a certain length of service criteria. The
postretirement healthcare plan is contributory and contains cost-sharing
features such as deductibles and copayments. However, these features, as
they apply to bargaining unit retirees, are subject to collective
bargaining provisions of a labor contract between each such entity and the
International Longshoremen's & Warehousemen's Union as they may have been
amended or settled through agreements or memoranda executed with the union
at about the time each operating facility was closed. The postretirement
life insurance plan is non-contributory.

Each relevant entity continues to fund benefit costs for both plans on
a pay-as-you-go basis, and each entity expects to continue funding its
post-retirement health care obligations until the end of 2004, which is a
date on or after the date when its legal "Maintenance of Effort" obligation
relative to the health care portion expires. These entities believe that
they generally have no obligation to continue the post-retirement life
insurance benefits, and most intend to terminate such benefits effective at
the end of 2003. Kaanapali Land has not assumed any obligation to fund
the cost of these benefits on behalf of any of its affiliates.

For measuring the expected postretirement benefit obligation, an 11%
annual rate of increase in the per capita claims cost was assumed through
2004. The healthcare cost trend rate assumption has a significant effect on
the amount of the obligation and periodic cost reported. An increase and
(decrease) in the assumed healthcare trend rate by 1% in 2002 would
increase and (decrease) the medical plans' accumulated postretirement
benefit obligation as of December 31, 2002 by $299 and $(255),
respectively, and the aggregate of the service and interest cost components
of net periodic postretirement benefit cost for the year then ended by $16
and $(14), respectively.

Net periodic postretirement benefit cost (credit) for 2002, 2001 and
2000 (which is primarily reflected in agricultural cost of sales on the
consolidated statements of operations) includes the following components:

2002 2001 2000
Total Total Total
------- ------- -------

Service cost. . . . . . . . . . . . $ 1 34 277
Interest cost . . . . . . . . . . . 622 887 1,698
Amortization of net (gain) loss . . (7,879) (6,327) (2,421)
Recognized curtailment (gain) loss. (233) (859) (3,965)
------- ------- -------
Net periodic postretirement
benefit cost (credit) . . . . . . $(7,489) (6,265) (4,411)
======= ======= =======

The following table sets forth the plans' change in benefit obligation
and benefit cost as of December 31, 2002 and 2001 as follows:

December 31, December 31,
2002 2001
------------ ------------

Benefit obligation at beginning of year $ 9,615 13,006
Service cost. . . . . . . . . . . . . 1 34
Interest cost . . . . . . . . . . . . 622 887
Actuarial losses. . . . . . . . . . . 746 304
Employer contribution . . . . . . . . (2,075) (2,191)
Curtailment . . . . . . . . . . . . . (9) (2,381)
Maintenance of Effort obligation. . . -- (184)
Special termination benefit . . . . . 6 140
------- -------

Benefit obligation at end of year . . 8,906 9,615
Unrecognized net actuarial gain . . . 14,654 23,503
------- -------

Accumulated postretirement benefit cost $23,560 33,118
======= =======

Decreases in the Maintenance of Effort obligation recognize that the
requirement to maintain an average level of certain retiree health care
benefits expires in 2004. Such obligations are principally related to
collectively bargained contractual obligations of Lihue Plantation, Pioneer
Mill and Oahu Sugar.

These entities currently amortize unrecognized gains over the shorter
of ten years or the average life expectancy of the inactive participants
since almost all of the Plans' participants are inactive. The portion of
the unrecognized net actuarial gain represented by the decrease in the
Maintenance of Effort obligation is being amortized over four years,
commencing in 2001. In addition, due to the significant total amount of
unrecognized gain at December 31, 2002 and 2001, which is included in the
financial statements as a liability, and the disproportionate relationship
between the unrecognized gain and accumulated postretirement benefit
obligation at December 31, 2002, these entities may, in the future, change
their amortization policy to accelerate the recognition of the unrecognized
gain. In considering such change, they would need to determine whether
significant changes in the accumulated postretirement benefit obligation
and unrecognized gain may occur in the future as a result of changes in
actuarial assumptions, experience and other factors. Any future change to
accelerate the amortization of the unrecognized gain would have no effect
on cash flows, but could have a significant effect on an entity's statement
of operations.

The weighted-average discount rate used in determining the
accumulated postretirement benefit obligation was 7% as of December 31,
2002 and 7.25% as of December 31, 2001.

(6) INCOME TAXES

Income tax expense (benefit) attributable to income from continuing
operations for the years ended December 31, 2002, 2001 and 2000 consists
of:
Current Deferred Total
-------- -------- --------
Year ended December 31, 2002:
U.S. federal . . . . . . . $ -- (13,588) (13,588)
State. . . . . . . . . . . -- (1,553) (1,553)
-------- -------- --------
$ -- (15,141) (15,141)
======== ======== ========
Year ended December 31, 2001:
U.S. federal . . . . . . . $ -- (3,107) (3,107)
State. . . . . . . . . . . -- (355) (355)
-------- -------- --------
$ -- (3,462) (3,462)
======== ======== ========
Year ended December 31, 2000:
U.S. federal . . . . . . . $ -- (26,537) (26,537)
State. . . . . . . . . . . -- (3,033) (3,033)
-------- -------- --------
$ -- (29,570) (29,570)
======== ======== ========

Income tax 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 loss from operations as a result of the
following:
2002 2001 2000
-------- -------- --------
Computed "expected" tax provision
(benefit). . . . . . . . . . . . $ (3,842) (10,723) (28,838)
Reduction in income taxes resulting
from:
Net loss from unconsolidated
investment. . . . . . . . . . 1,197 7,247 --
Reduction in valuation allowance (12,766) -- --
Other, net. . . . . . . . . . . 270 14 (732)
-------- -------- --------
Total . . . . . . . . . . . $(15,141) (3,462) (29,570)
======== ======== ========

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, 2002 and
2001 are as follows:
2002 2001
-------- --------
Deferred tax assets:
Post retirement benefits. . . . . . . . $ (9,188) (12,916)
Reserves related primarily to losses
on divestitures . . . . . . . . . . . (12,880) (11,775)
Loss carryforwards. . . . . . . . . . . (3,870) (15,294)
Tax credit carryforwards. . . . . . . . (4,258) (6,114)
Other, net. . . . . . . . . . . . . . . (753) (5,447)
-------- --------
Total deferred tax assets . . . . . . (30,949) (51,546)
Less - valuation allowance. . . . . . 4,175 16,941
-------- --------
Net deferred tax assets . . . . . . . (26,774) (34,605)
-------- --------

2002 2001
-------- --------
Deferred tax liabilities:
Property, plant and equipment,
principally due to depreciation,
net of impairment charges and
purchase accounting adjustments . . . 25,814 41,790
Prepaid pension and core retirement
award costs . . . . . . . . . . . . . 10,103 9,188
Basis difference in partnership
interests . . . . . . . . . . . . . . -- 37,598
-------- --------
Total deferred tax liabilities. . . 35,917 88,576
-------- --------
Net deferred tax liability. . . . . $ 9,143 53,971
======== ========

The net deferred tax liability was reduced by approximately $30,000
due to the restructuring and has been reflected as a component of the
Extraordinary gain on reorganization in 2002.

At December 31, 2002, the Company has net operating loss carryforwards
("NOLs") for federal income tax purposes of approximately $4 million and
approximately $56 million for state income tax purposes which can be used
to offset taxable income, if any, in future years. The federal NOLs begin
to expire in 2016. The reduction in the valuation allowance is primarily
due to the expected utilization of NOLs in 2002 that had been previously
reserved for financial reporting purposes. The state NOLs, primarily in
the state of Hawaii, have significant expiration dates commencing in 2005.
NOLs have generally been reserved because utilization is dependent on
future events that cannot be reasonably predicted. The Company also has
available alternative minimum tax credits which can be used to offset
future federal income taxes, if any. The alternative minimum tax credits
aggregated approximately $4 million as of December 31, 2002 and can be
utilized over an indefinite period. U.S. Federal tax return examinations
have been completed for years through 1997. The Company believes adequate
provisions for income tax have been recorded for all years. The Company's
Federal tax returns for the periods 1998-2000 are currently being examined.

The statutes of limitations with respect to the Company's tax returns for
1998 through 2002 remain open.

(7) TRANSACTIONS WITH AFFILIATES

Employees of certain of the Company's unconsolidated affiliates are
entitled to participate in the Company's defined contribution pension plan.

(8) COMMITMENTS AND CONTINGENCIES

secured by these golf courses. ERS then issued a default notice and
instituted a foreclosure action in August 2000 (Employees' Retirement
System of the State of Hawaii v. Amfac/JMB Hawaii, L.L.C., et. al., Civil
No. 00-1-2597-08, First Circuit Court, State of Hawaii). Pursuant to an
agreement between the lender and the borrowers, the borrowers paid
approximately $3.8 million in September 2000 to the ERS for a portion of
the past due interest amounts and the ERS agreed to temporarily suspend its
action to realize upon its security while the parties attempted to
negotiate a definitive agreement to extend the loan beyond its June 30,
2001 maturity date. Efforts of the borrowers to negotiate such an
agreement broke down in December 2001, only after Northbrook (an affiliate
of APIC that had no obligations under the loan) had funded certain minimum
interest payments (together with the ERS' legal fees and other related
costs). In January 2002, ERS recommenced its foreclosure action, which the
borrowers are contesting. The borrowers have also brought counterclaims
against ERS relative to the lender's defaults described above, which
defaults have caused APIC and the Company substantial damages relating to
its efforts to sell either the unrelated parcels that the ERS refused to
release from the mortgage or other land parcels that required easements and
other rights to which the ERS was required to consent.

Oahu Sugar's declaratory relief claim was settled in advance of trial.

because the judgment entered on March 2, 2000 was legally defective in that
it did not identify the claim for which judgment was entered or dismiss all
of the other claims and counterclaims of the parties. In light of the
order of the Hawaii Supreme Court, the parties filed legal briefs before
the trial court to have the court determine, among other things, whether a
corrected judgment consistent with the jury verdict may be entered as of
March 2, 2000 or a new judgment order is required. After hearing the
arguments of the parties, on March 19, 2001, the trial court ruled that it
would not enter a corrected judgment as of March 2, 2000 and that a new
judgment order will be required. On April 12, 2001, the court entered the
new judgment order on the counterclaims providing for the payment of
approximately $2.6 million in damages, $730 thousand in attorneys' fees,
$28 thousand in costs, $867 thousand in prejudgment interest, and
additional prejudgment interest from January 20, 2000 through April 12,
2001. From and after entry of the order, post-judgment interest will
accrue on the unpaid balance at the statutory rate of ten percent per annum
until paid in full. Oahu Sugar is pursuing an appeal and the opposing side
has filed a cross appeal seeking further relief on any potential retrial of
the matter. The case is fully briefed and awaits a decision by the Hawaii
Supreme Court. Oahu Sugar continues to believe that it is entitled to
affirmative relief on its complaint and that it has meritorious defenses to
the counterclaim that it has pursued on appeal. The Company, however, can
provide no assurances that it will be successful in obtaining affirmative
relief or overturning the verdict against Oahu Sugar. This verdict, if
upheld, could have a material adverse effect on the Oahu Sugar's financial
condition.

On or about December 15, 2000, Oahu Sugar and Oahu MS Development
Corp. ("Oahu MS", f/k/a Amfac Property Development Corp.), subsidiaries of
Kaanapali Land, among others, were named in a lawsuit entitled Walter
Arakaki and Steve Swift v. Oahu Sugar Company, Limited et al., Civil No.
00-1-3817-12, and filed in the Circuit Court of the First Circuit of
Hawaii. In the complaint, as amended, plaintiffs seek a declaration that
certain conveyances of real estate made by Oahu Sugar or Oahu MS, since
December 1996, were allegedly fraudulent transfers made in violation of the
common law, the Hawaii fraudulent transfer act, and rights which they claim
arose in connection with the claims they filed in Oahu Sugar v. Walter
Arakaki and Steve Swift, Case No. 96-3880-09, discussed above (hereinafter,
"underlying matter"). Plaintiffs seek, among other things, injunctive and
declaratory relief, compensatory damages, punitive damages, orders of
attachment against sales proceeds, voidance of certain transfers,
foreclosure and other remedies in connection with various transfers of real
estate made by Oahu Sugar to Oahu MS the Young Men's Christian Association
of Honolulu ("YMCA"), and the Filipino Community Center, Inc. ("FCC"),
among others, all over the years 1996-2000. Although the amount of
damages sought in this case are unspecified, the case arises in connection
with the plaintiffs' efforts to realize on their judgment in the earlier
action against Oahu Sugar described above. The YMCA and FCC have also
been named defendants in this action and have filed cross-claims for relief
against Oahu Sugar and Oahu MS for alleged breach of warranty of title,
indemnity and contribution in connection with their respective
transactions, and seeking, among other things, damages, attorneys' fees,
costs, and prejudgment interest. Oahu Sugar and Oahu MS have filed answers
to the complaint, as amended, and the cross-claims. On May 3, 2001,
plaintiffs filed an amended complaint dropping the remedy of foreclosure in
connection with certain property transferred to the YMCA and adding various
allegations including, without limitation, allegations regarding the final
judgment entered in the underlying matter. The case is proceeding and is
set for mediation in July 2003 and for trial in April 2004. Oahu Sugar and
Oahu MS believe they have meritorious defenses and intend to pursue their
defenses vigorously. However, there can be no assurances that this case,
when once adjudicated, will not have a material adverse effect on the
financial condition of Oahu Sugar or Oahu MS.

In addition, the IRS filed a claim in the bankruptcy proceedings in
the aggregate amount of approximately $20,600,000 for taxes, interest and
penalties related to the years 1998-2000. The Company has contacted the
IRS to request that it withdraw its claim due to the fact that the Plan
leaves the IRS unimpaired relative to any taxes that may be due. Although
the Company is optimistic that the IRS will withdraw such claim, it has not
yet done so and there can be no assurance that it will. In any event, the
IRS audit of the period covered by the claim is in its preliminary stages
and no deficiencies in taxes have been proposed by the auditors. The
Company intends to dispute vigorously any IRS claim for additional taxes,
whether asserted by means of the claim filed in the bankruptcy proceeding,
arising in the pending audit, or in future audits. However, there can be
no assurance that the Company will be successful in such defense and,
although the Company has reserved for potential tax liabilities on its
financial statement,s to the extent that the Company is unsuccessful in
defending against any such claims, either in the bankruptcy court or in
connection with the IRS audits, the amount for which the Company could be
liable could have a material adverse effect on the Company, given its
relatively modest cash position.

No discovery cut-off date or trial date has been set, although the
court has indicated a desire to try this case in November, 2003.

(9) DISCONTINUED OPERATIONS

In December 2001, the Company consummated a non-taxable spin-off of
Resorts to its shareholders. Accordingly, Resorts is no longer a
subsidiary of Kaanapali Land and is classified as a discontinued operation.

Resorts' income statement information for 2001 and 2000 was as
follows:
2001 2000
-------- --------
Revenues:
Sales . . . . . . . . . . . . . . . . . . . $229,524 242,692
Other income. . . . . . . . . . . . . . . . 4,082 5,477
-------- --------
233,606 248,169
-------- --------
Costs and expenses:
Cost of sales . . . . . . . . . . . . . . . 150,123 158,421
Selling, general and administrative . . . . 51,083 47,877
Interest. . . . . . . . . . . . . . . . . . 8,133 10,976
Depreciation and amortization . . . . . . . 18,710 18,608
-------- --------
228,049 235,882
Income from discontinued operations
before income taxes . . . . . . . . . . . . 5,557 12,287

Income tax benefit (provision). . . . . . . . 4,537 (5,170)
-------- --------

Income from discontinued operations . . . . . $ 10,094 7,117
======== ========

(10) BUSINESS SEGMENT INFORMATION

As described in Note 1, the Company operates in three 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 includes primarily (i) sales, all
of which are from 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 profit is comprised of total revenue less operating
expenses. In computing operating profit, none of the following items have
been added or deducted: general corporate revenues and expenses, interest
expense, income taxes, equity in income (loss) from unconsolidated
investments and gain from the extinguishment of debt.

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. Investments in net
assets of unconsolidated investments are related to ownership interests
held by the Company primarily in various real estate related entities.

2002 2001 2000
-------- -------- --------
Revenues:
Property. . . . . . . . . . . . $ 4,753 50,636 37,850
Agriculture . . . . . . . . . . 1,972 4,252 22,283
Golf. . . . . . . . . . . . . . 4,360 4,175 14,990
Corporate . . . . . . . . . . . 27 22,831 4,124
-------- -------- --------
$ 11,112 81,894 79,247
======== ======== ========

Operating Profit (loss):
Property. . . . . . . . . . . . $ 1,323 (17,806) (18,845)
Agriculture . . . . . . . . . . (8,028) (3,742) (44,425)
Golf. . . . . . . . . . . . . . 764 120 3,884
-------- -------- --------

Operating loss. . . . . . . . . . (5,941) (21,428) (59,386)

Corporate . . . . . . . . . . . . (7,819) 15,144 (6,943)
Interest expense. . . . . . . . . (2,395) (11,387) (18,227)
Equity in income (loss) from
unconsolidated investments. . . 5,180 (12,967) 2,162
-------- -------- --------
Loss from continuing operations
before income taxes . . . . . . $(10,975) (30,638) (82,394)
======== ======== ========

Identifiable Assets:
Property. . . . . . . . . . . . $ 55,970 67,410
Agriculture . . . . . . . . . . 51,419 64,760
Golf. . . . . . . . . . . . . . 29,076 29,441
-------- --------
136,465 161,611

Corporate . . . . . . . . . . . . 53,161 62,017
-------- --------
$189,626 223,628
======== ========

Agricultural identified assets include land classified as agricultural
or conservation for State and County purposes.

2002 2001 2000
-------- -------- --------
Capital Expenditures:
Property. . . . . . . . . . . . $ -- 13 129
Agriculture . . . . . . . . . . -- 20 2,642
Golf. . . . . . . . . . . . . . 163 499 239
Corporate . . . . . . . . . . . 15 -- 13
-------- -------- --------
$ 178 532 3,023
======== ======== ========
Depreciation and Amortization:
Property. . . . . . . . . . . . $ 90 86 339
Agriculture . . . . . . . . . . 1,417 1,924 2,931
Golf. . . . . . . . . . . . . . 552 839 1,318
Corporate . . . . . . . . . . . 935 772 1,277
-------- -------- --------
Total . . . . . . . . . . . . . . $ 2,994 3,621 5,865
======== ======== ========

(11) CALCULATION OF NET INCOME PER SHARE

The following tables set forth the computation of net income (loss)
per share - basis and diluted:

For the For the
Period Period
January 1, November 14, Years Ended
2002 through 2002 through December 31,
November 13, December 31,----------------------
2002 2002 2001 2000
------------ ------------ --------- ----------
(Amounts in thousands except per share amounts)
NUMERATOR:
Operating loss. . . . $ (2,117) (14,038) (17,671) (84,556)
========== ======== ========= ==========
Equity in income (loss)
from unconsolidated
investments . . . . 5,525 (345) (12,967) 2,162
========== ======== ========= ==========
Income from continuing
operations. . . . . 12,939 (8,773) (27,176) (52,824)

Income from discon-
tinued operations . -- -- 10,094 7,117

Extraordinary gain. . 136,618 -- -- --
---------- -------- --------- ----------
Net income (loss) . . $ 149,557 (8,773) (17,082) (45,707)
========== ======== ========= ==========

DENOMINATOR:
Denominator for net
income (loss) per
share - basic and
diluted. . . . . . . $ 4 1,863 4 4
========== ======== ========= ==========
Net income (loss)
per share - basic
and diluted. . . . . 37,389.34 (4.71) (4,270.50) (11,426.75)
========== ======== ========= ==========

Net income per share -
basic:
Income (loss) from
continuing opera-
tions . . . . . . . $ 3,234.84 (4.71) (6,794.00) (13,206.00)
Income from discon-
tinued operations . -- -- 2,523.50 1,779.25
Extraordinary gain. . 34,154.50 -- -- --
---------- -------- --------- ----------
Net income per share
basic and diluted. . $37,389.34 (4.71) (4,270.50) (11,426.75)
========== ======== ========= ==========

As of December 31, 2002, the Company had issued approximately
1,863,000 shares of Class B, non par value stock and approximately 231,700
of Class A, non par value stock. The LLC Agreement provides for two
classes of membership interests, Class A Shares and Class B Shares, which
have substantially identical rights and economic value under the LLC
Agreement; except that holders of Class A Shares are represented by a
"Class A Representative" who must approve certain transactions proposed by
Kaanapali Land before they can be undertaken. Class B Shares are 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.

(12) SUBSEQUENT EVENTS

On January 31, 2003, an option to purchase an approximate 11.5 acre
site was exercised. A non-refundable payment was made for $2 million
(before closing costs and prorations). The remainder of the purchase price
is secured by a note due March 31, 2004 for approximately $14.4 million, a
portion of which is subject to refund based on the number of hotel room
units approved for construction on the site.

An approximate 40 acre site has been offered for sale and is currently
under contract. There are certain contingencies to the contract and there
is no assurance that the transaction will be consummated under its existing
or any other terms.

ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE

There were no changes in or disagreements with the accountants during
the fiscal years 2002 and 2001.

ITEM 15. FINANCIAL STATEMENT AND EXHIBITS

(a) The following documents are filed as part of this report:

(1) Financial Statements

See Index to Financial Statements and Supplementary Data
filed with this report.

(2) Exhibits

See Index to Exhibits, which is incorporated herein by
reference.

(b) Exhibits:

The Exhibits required by Item 601 of Regulation S-K are
listed in the Index to Exhibits, which is incorporated herein
by reference.

All other schedules have been omitted since the required information
is presented in the financial statements and the related notes or is not
applicable.

SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

KAANAPALI LAND, LLC

By: Gailen J. Hull
Senior Vice President
Date: April 30, 2003

EXHIBIT INDEX

Exhibit No. Exhibit
- ----------- -------

2.1 Order Confirming Second Amendment Joint Plan of
Reorganization Dated June 11, 2002, including as an
exhibit thereto, the Second Amended Joint Plan of
Reorganization of Amfac Hawaii, LLC, Certain of its
Subsidiaries and FHT Corporation Under Chapter 11 of the
Bankruptcy Code incorporated herein by reference the
Amfac Hawaii, LLC Current Report on Form 8-K for
July 29, 2002 dated August 13, 2002 (File No. 33-24180).

2.2 Second Amended Disclosure Statement with Respect to
Joint Plan of Reorganization of Amfac Hawaii, LLC,
Certain of its Subsidiaries and FHT Corporation Under
Chapter 11 of the Bankruptcy Code, incorporated herein
by reference from the Amfac Hawaii, LLC Current Report
on Form 8-K for July 29, 2002 dated August 13, 2002
(File No. 33-24180).

3.1 Amended and Restated Limited Liability Company Agreement
of Kaanapali Land, LLC dated November 14, 2002 is filed
herewith.

10.1 $10,000,000 loan agreement between Amfac Property
Development Corp. and City Bank at December 18, 1996
filed as an exhibit to Amfac Hawaii, LLC's Form 10-K
report for December 31, 1996 under the Securities Act
of 1934 (File No. 33-24180) filed March 21, 1997 and
hereby incorporated by reference.

10.2 General Lease S-3821, dated July 8, 1964, by and between
the State of Hawaii and East Kauai Water Company, Ltd.
(1)

10.3 Amended and Restated Power Purchase Agreement, dated as
of June 15, 1992, by and between The Lihue Plantation
Company, Limited and Citizens Utilities Company. (1)

10.4 U.S. Navy Waipio Peninsula Agricultural Lease, dated
May 26, 1964, between The United States of America (as
represented by the U.S. Navy) and Oahu Sugar Company,
Ltd. (1)

10.5 Amendment to the Robinson Estate Hoaeae Lease, dated
May 15, 1967, by and between various Robinsons, heirs of
Robinsons, Trustees and Executors, etc. and Oahu Sugar
Company, Limited amending and restating the previous
lease. (1)

10.6 Amendment to the Campbell Estate Lease, dated April 16,
1970, between Trustees under the Will and of the Estate
of James Campbell, Deceased, and Oahu Sugar Company,
Limited amending and restating the previous lease. (1)

10.7 Bishop Estate Lease No. 24,878, dated June 17, 1977, by
and between the Trustees of the Estate of Bernice Pauahi
Bishop and Pioneer Mill Company, Limited. (1)

10.8 General Lease S-4229, dated February 25, 1969, by and
between the State of Hawaii, by its Board of Land and
Natural Resources and Pioneer Mill Company, Limited. (1)

10.9 Honokohau Water License, dated December 22, 1980,
between Maui Pineapple Company Ltd. and Pioneer Mill
Company, Limited. (1)

10.10 Water Licensing Agreement, dated September 22, 1980, by
and between Maui Land & Pineapple Company, Inc. and
Amfac, Inc. (1)

10.11 Funding Agreement dated October 29, 2002 between
Kaanapali Land and certain affiliates is filed herewith.

10.12 Service Agreement, dated November 18, 1988, between
Amfac/JMB Hawaii, Inc., and Amfac Property Development
Corp.; Amfac Property Investment Corp.; Amfac Sugar and
Agribusiness, Inc.; Kaanapali Water Corporation; Amfac
Agribusiness, Inc.; Kekaha Sugar Company, Limited; The
Lihue Plantation Company; Oahu Sugar Company, Limited;
Pioneer Mill Company, Limited; Puna Sugar Company,
Limited; H. Hackfeld & Co., Ltd.; and Waiahole
Irrigation Company, Limited and JMB Realty Corporation,
incorporated herein by reference to the Amfac Hawaii,
LLC Annual Report on Form 10-K filed on March 22, 1989
(File No. 33-24180) for the year ended December 31,
1988.

(1) Previously filed as exhibits to Amfac Hawaii, LLC's Registration
Statement on Form S-1 (as amended) under the Securities Act of 1933 (File
No. 33-24180) and hereby incorporated by reference.