SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended September 30, 2007
or
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from _____ to _____
Commission file #0-50273
KAANAPALI LAND, LLC
(Exact name of registrant as specified in its charter)
Delaware 01-0731997
(State of organization) (IRS Employer Identification No.)
900 N. Michigan Ave., Chicago, IL 60611
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 312/915-1987
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 (the "Exchange Act") during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes [ X ] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ]
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of
accredited filer and large accelerated filer in Rule 12b-2 of the Exchange
Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ X ]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ]
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court. Yes [ X ] No [ ]
As of October 31, 2007, the registrant had 1,792,613 shares of common stock
outstanding.
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements. . . . 3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . . 16
Item 4. Controls and Procedures. . . . . . . . . . . . . . 19
PART II OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . 20
Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . 20
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . 20
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . 21
PART I FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
KAANAPALI LAND, LLC
Condensed Consolidated Balance Sheets
September 30, 2007 and December 31, 2006
(Dollars in Thousands, except share data)
(Unaudited)
A S S E T S
-----------
September 30, December 31,
2007 2006
------------- -----------
Cash and cash equivalents . . . . . . . $ 28,625 39,624
Receivables, net. . . . . . . . . . . . 535 148
Property, net . . . . . . . . . . . . . 117,468 105,189
Prepaid pension costs . . . . . . . . . 31,365 29,150
Other assets. . . . . . . . . . . . . . 9,410 11,233
-------- --------
$187,403 185,344
======== ========
L I A B I L I T I E S
---------------------
Accounts payable and accrued
expenses. . . . . . . . . . . . . . . $ 6,395 4,488
Deferred income taxes . . . . . . . . . 28,070 28,647
Accumulated postretirement benefit
obligation. . . . . . . . . . . . . . 2,539 2,452
Other liabilities . . . . . . . . . . . 30,256 29,085
-------- --------
Total liabilities . . . . . . . 67,260 64,672
Commitments and contingencies
S T O C K H O L D E R S' E Q U I T Y
-------------------------------------
Common stock, at 9/30/07 and
12/31/06 non par value
(shares authorized - 4,500,000;
shares issued 1,792,613). . . . . . . -- --
Additional paid-in capital. . . . . . . 5,357 5,357
Accumulated other comprehensive
income. . . . . . . . . . . . . . . . 1,087 --
Accumulated earnings. . . . . . . . . . 113,699 115,315
-------- --------
Total stockholders' equity. . 120,143 120,672
-------- --------
$187,403 185,344
======== ========
The accompanying notes are an integral part
of the condensed consolidated financial statements.
KAANAPALI LAND, LLC
Condensed Consolidated Statements of Operations
Three and Nine Months Ended September 30, 2007 and 2006
(Unaudited)
(Dollars in Thousands, except per share data)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -------------------
2007 2006 2007 2006
-------- -------- -------- --------
Revenues:
Sales . . . . . . . . . . $ 3,458 5,170 7,982 6,945
Interest and
other income. . . . . . 412 832 1,564 2,311
-------- -------- -------- --------
3,870 6,002 9,546 9,256
-------- -------- -------- --------
Cost and expenses:
Cost of sales . . . . . . 2,284 3,500 5,486 5,774
Selling, general and
administrative. . . . . 1,172 2,445 4,294 6,806
Depreciation and
amortization. . . . . . 322 267 961 788
-------- -------- -------- --------
3,778 6,212 10,741 13,368
-------- -------- -------- --------
Operating income (loss)
from continuing
operations before
income taxes. . . . . . 92 (210) (1,195) (4,112)
Income tax benefit
(expense) . . . . . . . (29) (2,752) 284 (3,530)
-------- -------- -------- --------
Net income (loss) . . $ 63 (2,962) (911) (7,642)
======== ======== ======== ========
Earnings per share:
Net income (loss) . . . . $ .03 (1.65) (.51) (4.26)
======== ======== ======== ========
The accompanying notes are an integral part
of the condensed consolidated financial statements.
KAANAPALI LAND, LLC
Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30, 2007 and 2006
(Unaudited)
(Dollars in Thousands)
2007 2006
-------- --------
Net cash provided by (used in)
operating activities. . . . . . . . . $ 4,041 (202)
Cash flows from investing activities:
Property additions. . . . . . . . . . (15,040) (8,563)
-------- --------
Net cash provided by (used in)
investing activities. . . . . . . . . (15,040) (8,563)
-------- --------
Net increase (decrease) in
cash and cash equivalents . . (10,999) (8,765)
Cash and cash equivalents
at beginning of period. . . . 39,624 51,677
-------- --------
Cash and cash equivalents
at end of period . . . . . . $ 28,625 42,912
======== ========
The accompanying notes are an integral part
of the condensed consolidated financial statements.
KAANAPALI LAND, LLC
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollars in Thousands)
The accompanying unaudited condensed consolidated financial
statements are prepared in accordance with accounting principles generally
accepted in the United States for interim financial information and with
the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by accounting principles generally accepted in the United States
for complete financial statements, and therefore, should be read in
conjunction with the Company's Annual Report on Form 10-K (File No. 0-
50273) for the year ended December 31, 2006. Capitalized terms used but
not defined in this quarterly report have the same meanings as the
Company's 2006 Annual Report on Form 10-K.
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND BASIS OF ACCOUNTING
Kaanapali Land, LLC ("Kaanapali Land"), a Delaware limited liability
company, is the reorganized entity resulting from the Joint Plan of
Reorganization of Amfac Hawaii, LLC (now known as KLC Land Company, LLC
("KLC Land")), certain of its subsidiaries (together with KLC Land, the
"KLC Debtors") and FHT Corporation ("FHTC" and, together with the KLC
Debtors, the "Debtors") under Chapter 11 of the Bankruptcy Code, dated
June 11, 2002 (as amended, the "Plan").
The Company's continuing operations are in three business segments -
Agriculture, Property and Golf. The Agriculture segment grows seed corn
and soybeans under contract and leases or provides harvesting rights to a
third party on certain lands currently cultivated in or used for the
processing of coffee, while maintaining additional coffee acreage for
possible future use. 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 assets and operations of the golf course represent all of the golf
segment for purposes of business segment information. The Property,
Agriculture and Golf segments operate exclusively in the State of Hawaii.
PROPERTY
The Company's principal property holdings are on the island of Maui.
The Company has determined, based on its current projections for the
development and/or disposition of its property holdings, that the property
holdings are not currently recorded in an amount in excess of proceeds that
the Company expects that it will ultimately obtain from the disposition
thereof.
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.
In the opinion of management, all adjustments necessary for a fair
presentation of the statement of financial position and results of
operations for the interim periods presented have been included in these
financial statements and are of a normal and recurring nature.
Operating results for the nine months ended September 30, 2007 are
not necessarily indicative of the results that may be achieved in future
periods.
RECLASSIFICATIONS
Certain amounts in the 2006 consolidated financial statements have
been reclassified to conform to the 2007 presentation.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 2006, the FASB issued Interpretation No. 48, Accounting for
Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109
("FIN 48"), to create a single model to address accounting for uncertainty
in tax positions. FIN 48 prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. This Interpretation
also provides guidance on derecognition, classification, interest and
penalties, accounting in interim periods, disclosure and transition. The
Company adopted FIN 48 effective January 1, 2007, as required. As a result
of the adoption, the Company recorded a cumulative effect adjustment of
approximately $700 through a reduction in January 1, 2007 accumulated
earnings.
As of the date of adoption and after recognizing the impact of
FIN 48, the Company's gross unrecognized tax benefits totaled approximately
$10,500, with up to approximately $8,500 expected to reverse within three
months of September 30, 2007, which would impact the effective tax rate.
The Company is no longer subject to U.S. federal, state and local income
tax examinations by tax authorities for years before 2004. The Company's
continuing practice is to recognize interest and penalties related to
income tax matters in income tax expense. The Company had approximately
$1,000 accrued for interest and no accrual for penalties at September 30,
2007.
In September 2006, the FASB issued SFAS No. 158, Employers'
Accounting for Defined Benefit Pension and Other Postretirement Plans -- an
amendment of FASB Statements No. 87, 88, 106, and 132(R). This statement
requires an employer to recognize the over funded or under funded status of
a defined benefit postretirement plan as an asset or liability in its
statement of financial position and to recognize changes in that funded
status in the year in which the changes occur through comprehensive
income. The Company adopted SFAS No. 158 effective January 1, 2007, as
required. As a result of the adoption, the Company recorded accumulated
other comprehensive income of approximately $1,100 and increased prepaid
pension cost to the funded status of the Plan.
On September 15, 2006, the FASB issued SFAS No. 157 ("SFAS No. 157"),
"Fair Value Measurements," which defines fair value, establishes guidelines
for measuring fair value, and expands disclosures regarding fair value
measurements. SFAS No. 157 does not require any new fair value
measurements but rather eliminates inconsistencies in guidance found in
various prior accounting pronouncements. SFAS No. 157 is effective for
fiscal years beginning after November 15, 2007. The Company is currently
evaluating the impact of this standard on results of operations and
financial position.
(2) LAND DEVELOPMENT
During the first quarter of 2006, the Company received final
subdivision approval on an approximate 336 acre parcel in the region
"mauka" (toward the mountains) from the main Kaanapali 2020 area. This
project, called Kaanapali Coffee Farms, consists of 58 agricultural lots,
50 of which are currently being offered to individual buyers. It is
anticipated that the land improvements will be completed in 2007. In
conjunction with the final approval, the Company was required to obtain two
subdivision bonds in the amounts of approximately $18,600 and $4,700 and
was required to secure those bonds with a cash deposit of $8,300 into an
interest bearing collateral account. During the first quarter 2007, one of
the bonds was reduced from $18,600 to $11,300 and the collateral was
reduced to $5,900, which is reported in Other Assets in the consolidated
balance sheet. The funds will be withdrawn from the collateral account by
the Company upon stage of completion of the subdivision improvements and
release of the bonds. During July and early August 2006 the Company closed
on the sale of three lots at Kaanapali Coffee Farms. The Company has
closed on the sale of three additional lots in 2007, one each in January,
August and October. In conjunction with the sales of the lots that closed
in August and October 2007, in addition to cash proceeds, the Company
received non-interest-bearing promissory notes for $737 and $692,
respectively. The promissory notes are due July 2009 and October 31, 2009.
The note received in August 2007 was discounted based on an imputed
interest rate of 6% and the discount will be amortized over the term of the
note.
(3) MORTGAGE AND OTHER NOTES PAYABLE
A subsidiary of Kaanapali Land ("Holder") holds a mortgage note
secured by Waikele Golf Course. The mortgage loan was amended March 31,
2006 upon which the accrued interest was added to principal and the Holder
agreed to make future advances under the note in an amount not to exceed
$3,000 for purposes of funding the golf course improvements. Interest on
the principal balance accrues at an adjustable rate of prime plus 1%. The
principal and accrued interest, which are prepayable, are due March 1,
2015. As of September 30, 2007, the note had an outstanding principal and
accrued interest balance of $9,902. The note has been eliminated in the
consolidated financial statements because the obligor and maker are
consolidated subsidiaries of Kaanapali Land.
(4) EMPLOYEE BENEFIT PLANS
(a) PENSION PLANS
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 components of the net periodic pension benefit (credit), included
in selling, general and administrative in the consolidated statements of
operations for the three and nine months ended September 30, 2007 and 2006
are as follows:
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -------------------
2007 2006 2007 2006
-------- -------- -------- --------
Service cost. . . . . . . $ 5 7 15 21
Interest cost . . . . . . 650 622 1,950 1,866
Expected return on
plan assets . . . . . . (1,215) (1,175) (3,645) (3,525)
Recognized net
actuarial (gain) loss . 160 130 480 390
-------- -------- -------- --------
Net periodic pension
credit. . . . . . . . . $ (400) (416) (1,200) (1,248)
======== ======== ======== ========
(b) RETIREE HEALTH AND LIFE INSURANCE BENEFITS
In addition to providing pension benefits, a subsidiary of KLC Land
currently provides certain healthcare and life insurance benefits to
certain eligible retired employees. The postretirement healthcare plan is
contributory and contains cost-sharing features such as deductibles and
copayments. The postretirement life insurance plan is non-contributory.
Net periodic postretirement benefit cost for the three and nine
months ended September 30, 2007 and 2006 includes the following components:
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -------------------
2007 2006 2007 2006
-------- -------- -------- --------
Interest cost . . . . . . $ 31 33 93 99
Amortization of
net gain. . . . . . . . (2) (15) (6) (45)
-------- -------- -------- --------
Net periodic postretire-
ment benefit cost . . . $ 29 18 87 54
======== ======== ======== ========
The calculation of the accumulated postretirement benefit cost or the
net periodic postretirement benefit cost does not reflect the effects of
the Medicare Prescription Drug Improvement and Modernization Act of 2003
(the "Act").
The Company maintains a nonqualified deferred compensation
arrangement (the "Rabbi Trust") which provides certain former directors of
Amfac and their spouses with pension benefits. The Rabbi Trust invests in
marketable securities and cash equivalents. The deferred compensation
liability represented in the Rabbi Trust and assets funding such deferred
compensation liability are consolidated in the Company's balance sheet.
(5) INCOME TAXES
Federal tax return examinations have been completed for all years
through 2002. Refunds aggregating approximately $4,700 for years through
2000 have been received by Kaanapali Land for previous payments of taxes
and interest. Pursuant to a settlement agreed to with the IRS in 2006, no
liability for Federal taxes was determined for 2001 or 2002; however, in
connection with the settlement of those years, the Company agreed to adjust
certain tax attributes, including the tax basis of assets. The effect in
2006 on the Company's consolidated balance sheet was to increase deferred
tax liabilities by approximately $1,900. Other liabilities were reduced in
the fourth quarter of 2006 due to the completion of Federal tax return
examinations for the years 1998 to 2002 which were settled by the Company
at amounts which reduced significantly the need for reserves for potential
income tax exposure. Income tax expense was also recorded for the year
ended December 31, 2006 due to the finalization of the Company's 2005 tax
return and a payment made in regard to the settlement of a prior year state
tax matter of approximately $300. The statutes of limitations with respect
to the Company's taxes for 2004 and subsequent years remain open. The
Company believes adequate provisions for income tax have been recorded for
all years, although there can be no assurance that such provisions will be
adequate. To the extent that there is a shortfall, any such shortfall for
which the Company could be liable could be material.
(6) COMMITMENTS AND CONTINGENCIES
As security for performance of certain development obligations, the
Company is contingently liable under two subdivision bonds for
approximately $16,000.
At September 30, 2007, the Company's principal contractual
obligations are approximately $9,700 for the completion of land
improvements in conjunction with the Kaanapali Coffee Farms project.
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.
On or about February 23, 2001, KSCo, a company that was, prior to its
dissolution, a subsidiary of Kaanapali Land, received a letter from the
Hawaii Department of Health ("HDOH") assigning the former KSCo 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. KSCo responded to the letter soon after it was received. The
United States Environmental Protection Agency ("EPA") later performed a
visual inspection of the property and indicated there would be some testing
performed. HDOH has performed some testing at the site and it is not known
whether such test results, if any, will require any further response
activities. However, as KSCo was substantially without assets and was
dissolved, the ability of KSCo to perform any requested actions is
doubtful.
On or about February 23, 2001, LPCo 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 concern relative to LPCo's
former operations including the 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. LPCo is
substantially without assets, and further pursuit of this matter by HDOH
could have a material adverse effect on the financial condition of LPCo.
The unaffiliated purchaser of the Kekaha and Lihue Plantation sugar
mills properties in January 2005 assumed any obligations for environmental
matters concerning the property it purchased. However, there can be no
assurance that such purchaser will have sufficient assets to satisfy a
claim should any substantial liabilities result.
Pioneer Mill engaged in a modest cleanup operation arising out of the
discovery of petroleum contamination found at the Pioneer Mill site. The
Pioneer Mill site was assigned a high priority by the HDOH and the HDOH has
shown an interest in the environmental conditions relating to or arising
out of the former operations of Pioneer Mill. EPA designated HDOH as the
oversight agency for Pioneer Mill. Pioneer Mill received a report on the
results of environmental testing conducted on the site by the EPA and HDOH.
However, Pioneer Mill's cleanup efforts to date have satisfied HDOH and
Pioneer Mill received a no further action letter during the fourth quarter
of 2004. Further routine cleanup operations in connection with the
demolition of the former sugar mill buildings on the site were completed
with respect to an underground storage tank discovered on the site.
On or about July 19, 2007, at the request of the Department of Health
and as a result of a report of vandalism and spilled transformer fluid at a
former transformer site, an inspection of various former transformer sites
on Maui was conducted. Preliminarily, the inspection revealed the existence
of transformers at four sites that have the potential for containing
environmental contaminants that must be disposed of in accordance with law.
In addition and in some instances, there appears to be spillage of
transformer fluid that may require remediation. The Company is undertaking
steps to address the situation.
As a result of an administrative order issued to Oahu Sugar by the
HDOH, Order No. CH 98-001, dated January 27, 1998, Oahu Sugar was engaged
in environmental site assessment of lands it leased from the U.S. Navy and
located on the Waipio Peninsula. Oahu Sugar submitted a Remedial
Investigation Report to the HDOH. The HDOH provided comments that
indicated that additional testing may be required. Oahu Sugar responded to
these comments with additional information. On January 9, 2004, EPA issued
a request to Oahu Sugar seeking information related to the actual or
threatened release of hazardous substances, pollutants and contaminants at
the Waipio Peninsula portion of the Pearl Harbor Naval Complex National
Priorities List Superfund Site. The request sought, among other things,
information relating to the ability of Oahu Sugar to pay for or perform a
clean up of the land formerly occupied by Oahu Sugar. Oahu Sugar was in
the process of responding to the information requests and had notified both
the Navy and the EPA that while it had some modest remaining cash that it
could contribute to further investigation and remediation efforts in
connection with an overall settlement of the outstanding claims, Oahu Sugar
was substantially without assets and would be unable to make a significant
contribution to such an effort. Attempts at negotiating such a settlement
were fruitless and Oahu Sugar received an order from EPA in March 2005 that
would purport to require certain testing and remediation of the site. As
Oahu Sugar was substantially without assets, the pursuit of any action,
informational, enforcement, or otherwise, would have had a material adverse
effect on the financial condition of Oahu Sugar.
Therefore, as a result of the pursuit of further action by the HDOH
and EPA as described above and the immediate material adverse effect that
the actions had on the financial condition of Oahu Sugar, Oahu Sugar filed
with the United States Bankruptcy Court, Northern District of Illinois,
Eastern Division its voluntary petition for liquidation under Chapter 7 of
Title 11, United States Bankruptcy Code. Such filing was not expected to
have a material adverse effect on the Company as Oahu Sugar was
substantially without assets at the time of the filing. While it is not
believed that any other affiliates have any responsibility for the debts of
Oahu Sugar, the EPA has indicated that it intends to make a claim against
Kaanapali Land as further described below, and therefore, there can be no
assurance that the Company will not incur significant costs in connection
with such claim.
The deadline for filing proofs of claim against Oahu Sugar with the
bankruptcy court passed in April 2006. Prior to the deadline, Kaanapali
Land, on behalf of itself and certain subsidiaries, filed claims that
aggregated approximately $224,000, primarily relating to unpaid guarantee
obligations made by Oahu Sugar that were assigned to Kaanapali Land
pursuant to the Plan on the Plan Effective Date. In addition, the EPA and
the U.S. Navy filed a joint proof of claim that seeks to recover certain
environmental response costs relative to the Waipio Peninsula site
discussed above. The proof of claim contained a demand for previously
spent costs in the amount of approximately $260, and additional anticipated
response costs of between approximately $2,760 and $11,450. No specific
justification of these costs, or what they are purported to represent, was
included in the EPA/Navy proof of claim. Due to the insignificant amount
of assets remaining in the debtor's estate, it is unclear whether the
United States Trustee who has taken control of Oahu Sugar will take any
action to contest the EPA/Navy claim, or how it will reconcile such claim
for the purpose of distributing any remaining assets of Oahu Sugar.
EPA has sent three requests for information to Kaanapali Land
regarding, among other things, Kaanapali Land's organization and
relationship, if any, to entities that may have, historically, operated on
the site and with respect to operations conducted on the site. Kaanapali
Land responded to these requests for information. By letter dated
February 7, 2007, pursuant to an allegation that Kaanapali Land is a
successor to Oahu Sugar Company, Limited, a company that operated at the
site prior to 1961 ("Old Oahu"), EPA advised Kaanapali that it believes it
is authorized by CERCLA to amend the existing Unilateral Administrative
Order against Oahu Sugar Company, LLC, for the clean up of the site to
include Kaanapali Land as an additional respondent. The purported basis for
the EPA's position is that Kaanapali Land, by virtue of certain corporate
actions, is jointly and severally responsible for the performance of the
response actions, including, without limitation, clean-up at the site. No
such amendment has taken place as of the date hereof. Instead, the EPA's
letter invited Kaanapali Land to engage in settlement discussions with the
EPA to attempt to resolve Kaanapali Land's alleged liability. Kaanapali
Land is in the preliminary stages of evaluating the positions taken by the
EPA. While Kaanapali Land believes that it has defenses to the EPA's
position, Kaanapali Land has nevertheless begun such settlement discussions
with EPA to determine if the matter can be resolved on reasonable terms.
Even if Kaanapali Land were found to be the successor to Old Oahu,
Kaanapali Land believes that its liabilities, if any, should relate solely
to a portion of the period of operation of Old Oahu at the site. Moreover,
Kaanapali Land believes that any settlement should involve substantial
participation of the U.S. Navy, which has owned the site throughout the
entire relevant period, both as landlord under its various leases with Oahu
Sugar and Old Oahu and by operating the site directly during a period when
no lease was in force. Discussions with the Navy have also commenced.
There can be no assurances that the matter can be resolved on terms
acceptable to Kaanapali Land or that this matter will not ultimately have a
material adverse effect on the Company.
Federal tax return examinations have been completed for all years
through 2002. Refunds aggregating approximately $4,700 for years through
2000 have been received by Kaanapali Land for previous payments of taxes
and interest. Pursuant to a settlement agreed to with the IRS in 2006, no
liability for Federal taxes was determined for 2001 or 2002; however, in
connection with the settlement of those years, the Company agreed to adjust
certain tax attributes, including the tax basis of assets. The effect in
2006 on the Company's consolidated balance sheet was to increase deferred
tax liabilities by approximately $1,900. Income tax expense was also
recorded for the year ended December 31, 2006 due to the finalization of
the Company's 2005 tax return and a payment made in regard to the
settlement of a prior year state tax matter of approximately $300. The
statutes of limitations with respect to the Company's tax returns for 2003
and subsequent years remain open. The Company believes adequate provisions
for income taxes have been recorded for all years, although there can be no
assurance that such provisions will be adequate. To the extent that there
is a shortfall, any such shortfall for which the Company could be liable
could be material.
Kaanapali Land, as successor by merger to other entities, and D/C, a
subsidiary of Kaanapali Land, have been named as defendants in personal
injury actions allegedly based on exposure to asbestos. While there are
only a few such cases that name Kaanapali Land, there are in excess of 70
cases against D/C that are pending on the U.S. mainland (primarily in
California). Cases against Kaanapali Land are allegedly based on its prior
business operations in Hawaii and cases against D/C are allegedly based on
D/C's prior distribution business operations primarily in California. Each
entity defending these cases believes that it has meritorious defenses
against these actions, but can give no assurances as to the ultimate
outcome of these cases. There can be no assurances that these cases (or
any of them) if adjudicated in a manner adverse to D/C, will not have a
material adverse effect on the financial condition of D/C. Kaanapali Land
does not believe that it has liability, directly or indirectly, for D/C's
obligations in those cases. Kaanapali Land does not presently believe that
the cases in which it is named will result in any material liability to
Kaanapali Land; however, there can be no assurance in this regard.
On February 15, 2005, D/C was served with a lawsuit entitled American
& Foreign Insurance Company v. D/C Distribution and Amfac Corporation, Case
No. 04433669 filed in the Superior Court of the State of California for the
County of San Francisco, Central Justice Center. No other purported party
was served. In the eight-count complaint for declaratory relief,
reimbursement and recoupment of unspecified amounts, costs and for such
other relief as the court might grant, plaintiff alleged that it is an
insurance company to whom D/C tendered for defense and indemnity various
personal injury lawsuits allegedly based on exposure to asbestos containing
products. Plaintiff alleged that because none of the parties have been
able to produce a copy of the policy or policies in question, a judicial
determination of the material terms of the missing policy or policies is
needed. Plaintiff sought, among other things, a declaration: of the
material terms, rights, and obligations of the parties under the terms of
the policy or policies; that the policies were exhausted; that plaintiff
was not obligated to reimburse D/C for its attorneys' fees in that the
amounts of attorneys' fees incurred by D/C have been incurred unreasonably;
that plaintiff was entitled to recoupment and reimbursement of some or all
of the amounts it has paid for defense and/or indemnity; and that D/C
breached its obligation of cooperation with plaintiff. D/C filed an answer
and an amended cross-claim. D/C believed that it had meritorious defenses
and positions, and intended to vigorously defend. In addition, D/C
believed that it was entitled to amounts from plaintiffs for reimbursement
and recoupment of amounts expended by D/C on the lawsuits previously
tendered. In order to fund such action and its other ongoing obligations
while such lawsuit continued, D/C entered into a Loan Agreement and
Security Agreement with Kaanapali Land, in August 2006, whereby Kaanapali
Land provided certain advances against a promissory note delivered by D/C
in return for a security interest in any D/C insurance policy at issue in
this lawsuit. In June 2007, the parties settled this lawsuit with payment
by plaintiffs in the amount of $1,618. Such settlement amount was paid to
Kaanapali Land in partial satisfaction of the secured indebtedness noted
above.
Because D/C was substantially without assets and was unable to obtain
additional sources of capital to satisfy its liabilities, D/C filed with
the United States Bankruptcy Court, Northern District of Illinois, its
voluntary petition for liquidation under Chapter 7 of Title 11, United
States Bankruptcy Code during July 2007. Such filing is not expected to
have a material adverse effect on the Company as D/C was substantially
without assets at the time of the filing.
The Company has received notice from the Hawaii Department of Land
and Natural Resources ("DLNR") that it would inspect all significant dams
and reservoirs in Hawaii, including those maintained by the Company on Maui
in connection with its agricultural operations. Inspections were performed
in April and October 2006. To date, the DLNR has cited certain maintenance
deficiencies concerning two of the Company's reservoirs, consisting
primarily of overgrowth of vegetation that makes inspection difficult and
could degrade the integrity of reservoir slopes and impact drainage. The
DLNR has required the vegetation clean-up as well as the Company's plan for
future maintenance, inspections and emergency response. Revised versions
of the required plans were submitted to DLNR in December 2006.
On October 15, 2006, a significant earthquake occurred that was felt
in most parts of the state. As a consequence of such earthquake, the DLNR,
in conjunction with the U.S. Army Corps of Engineers, has inspected each
reservoir and identified certain minor damage. In addition, Company
personnel have inspected various portions of its Maui water source and
transmission assets to determine if any other damage of significance has
occurred, but has so far found no material damage. While the damage to the
smaller reservoir cited by the recent DLNR inspection will not require any
immediate action, it is unclear at this time whether the DLNR will require
any work on the larger reservoir even though the damage is located in a
portion of the reservoir that is presently unused. There can be no
assurance that the expense of doing such required work will not be
material.
In September 2007, the Company received further correspondence from
DLNR that it preliminarily intended to categorize each of the reservoirs as
"high hazard" under a new statute recently passed by the State of Hawaii
concerning dam and reservoir safety. This classification, which bears upon
future government oversight and reporting requirements, may increase the
future cost of managing and maintaining these reservoirs in a material
manner. The Company does not believe that this classification is warranted
for either of these reservoirs and has initiated a dialogue with DLNR in
that regard. At this time, it is unknown what the final classification
assigned to these reservoirs will be or to what extent such classification
will impact the future use and maintenance cost of these assets.
During the second quarter of 2007, the Company commenced portions of
the required remedial work on these reservoirs. Some of this work was
commenced in connection with improvements made to one of the reservoirs in
order to construct the new non-potable water system servicing the Kaanapali
Coffee Farms development. Such work has been substantially completed,
however certain portions of the remedial work that are not associated with
such improvements have not been commenced. The Company expects to address
the remaining portions of such work during 2008.
On April 9, 2007, the Company entered into a Plan and Agreement of
Merger to merge KLLLC Mergerco, LLC ("KLLLC") with and into the Company
(the "Merger Agreement"), which provided, subject to the terms and
conditions of the Merger Agreement, that upon the effective time of the
merger, each Class A Share would have been converted into the right to
receive $43.25 in cash per share. Among the conditions to the Merger
Agreement was that there shall be no pending or threatened litigation that
could reasonably be expected (a) to have a material adverse effect on the
business, financial condition or results of operations of the Company or
KLLLC or (b) to increase the costs of the merger in any material respect.
On May 10, 2007, John G. Brant, P.C. Pension Trust and John G. Brant
filed a suit in the Court of Chancery in the State of Delaware against the
Company, Pacific Trail Holdings, LLC, Pacific Trail Holdings, Inc., KLLLC,
and certain officers and directors of the entity defendants. Among other
things, the complaint alleged that the price to be paid for each Class A
Share pursuant to the Merger Agreement was unfair and undervalued the
Company. While neither the Company nor KLLLC believed that the plaintiffs'
claims were meritorious, because the cost of defending and/or settling the
lawsuit could reasonably have been expected to be material, KLLLC
terminated the Merger Agreement pursuant to Article Twelfth of the Merger
Agreement. As a result, the holders of Class A Shares will remain as
shareholders of the Company and the Company will continue to operate under
its current structure. Accordingly, the merger transaction contemplated in
the Company's Schedule 13E-3 previously filed with the Securities and
Exchange Commission on April 9, 2007 was terminated. On or about August 8,
2007, the plaintiff in the Brant litigation filed a petition for attorneys'
fees seeking an award of attorneys' fees in the amount of $1,000 and
reimbursement of costs and expenses in an amount not to exceed $50. The
Company intends to defend itself against the request for fees and costs and
is currently evaluating its options.
Other than as described above, the Company is not involved in any
material pending legal proceedings, other than ordinary routine litigation
incidental to its business. The Company and/or certain of its affiliates
have been named as defendants in several pending lawsuits. While it is
impossible to predict the outcome of such routine litigation that is now
pending (or threatened) and for which the potential liability is not
covered by insurance, the Company is of the opinion that the ultimate
liability from any of this litigation will not materially adversely affect
the Company's consolidated results of operations or its financial
condition.
(7) CALCULATION OF NET INCOME PER SHARE
The following tables set forth the computation of net income (loss)
per share - basic and diluted:
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -------------------
2007 2006 2007 2006
-------- -------- -------- --------
(Amounts in thousands except per share amounts)
NUMERATOR:
Net income (loss) . . . . $ 63 (2,962) (911) (7,642)
======== ======== ======== ========
DENOMINATOR:
Number of shares
outstanding
basic and diluted . . . 1,793 1,793 1,793 1,793
======== ======== ======== ========
Net income (loss)
per share -
basic and diluted . . . $ .03 (1.65) (.51) (4.26)
======== ======== ======== ========
(8) BUSINESS SEGMENT INFORMATION
As described in Note 1, the Company operates in three business
segments. Total revenues and operating profit by business segment are
presented in the tables below.
Total revenues by business segment includes primarily (i) sales, all
of which are 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, as well as corporate assets.
Operating income (loss) is comprised of total revenue less operating
expenses. In computing operating income (loss), none of the following
items have been added or deducted: general corporate revenues and
expenses, interest expense and income taxes.
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -------------------
2007 2006 2007 2006
-------- -------- -------- --------
Revenues:
Property. . . . . . . . $ 2,188 5,136 4,584 6,171
Agriculture . . . . . . 506 363 1,521 1,388
Golf. . . . . . . . . . 1,011 350 2,993 1,054
Corporate . . . . . . . 165 153 448 643
-------- -------- -------- --------
$ 3,870 6,002 9,546 9,256
======== ======== ======== ========
Operating income (loss):
Property. . . . . . . . $ 391 1,879 468 1,598
Agriculture . . . . . . 224 (114) 287 (98)
Golf. . . . . . . . . . 11 (604) 133 (1,442)
-------- -------- -------- --------
Operating income (loss) . 626 1,161 888 58
Corporate . . . . . . . . (534) (1,371) (2,083) (4,170)
-------- -------- -------- --------
Income (loss) from
continuing operations
before income taxes . . $ 92 (210) (1,195) (4,112)
======== ======== ======== ========
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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 international, 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.
On April 9, 2007, the Company entered into a Plan and Agreement of
Merger to merge KLLLC Mergerco, LLC ("KLLLC") with and into the Company
(the "Merger Agreement"), which provided, subject to the terms and
conditions of the Merger Agreement, that upon the effective time of the
merger, each Class A Share would have been converted into the right to
receive $43.25 in cash per share. Among the conditions to the Merger
Agreement was that there shall be no pending or threatened litigation that
could reasonably be expected (a) to have a material adverse effect on the
business, financial condition or results of operations of the Company or
KLLLC or (b) to increase the costs of the merger in any material respect.
On May 10, 2007, John G. Brant, P.C. Pension Trust and John G. Brant
filed a suit in the Court of Chancery in the State of Delaware against the
Company, Pacific Trail Holdings, LLC, Pacific Trail Holdings, Inc., KLLLC,
and certain officers and directors of the entity defendants. Among other
things, the complaint alleged that the price to be paid for each Class A
Share pursuant to the Merger Agreement was unfair and undervalued the
Company. While neither the Company nor KLLLC believed that the plaintiffs'
claims were meritorious, because the cost of defending and/or settling the
lawsuit could reasonably have been expected to be material, KLLLC
terminated the Merger Agreement pursuant to Article Twelfth of the Merger
Agreement. As a result, the holders of Class A Shares will remain as
shareholders of the Company and the Company will continue to operate under
its current structure. Accordingly, the merger transaction contemplated in
the Company's Schedule 13E-3 previously filed with the Securities and
Exchange Commission on April 9, 2007 was terminated. On or about August 8,
2007, the plaintiff in the Brant litigation filed a petition for attorneys'
fees seeking an award of attorneys' fees in the amount of $1.0 million and
reimbursement of costs and expenses in an amount not to exceed $50
thousand. The Company intends to defend itself against the request for
fees and costs.
Certain subsidiaries of Kaanapali Land are jointly indebted to
Kaanapali Land pursuant to a certain Secured Promissory Note in the
principal amount of $70 million, dated November 14, 2002. Such note
matures on October 31, 2011, had an outstanding balance of principal and
accrued interest as of September 30, 2007 of approximately $80 million, and
carries an interest rate of 3.04% compounded semi-annually. The note,
which is prepayable, is secured by substantially all of the remaining real
property owned by such subsidiaries, pursuant to a certain Mortgage,
Security Agreement and Financing Statement, dated as of November 14, 2002
and placed on record in December 2002. The note has been eliminated in the
consolidated financial statements because the obligors are consolidated
subsidiaries of Kaanapali Land.
In addition to such Secured Promissory Note, certain other
subsidiaries of Kaanapali Land continue to be liable to Kaanapali Land
under certain guarantees (the "Guarantees") that they had previously
provided to support certain Senior Indebtedness (as defined in the Plan)
and the Certificate of Land Appreciation Notes ("COLA Notes") formerly
issued by Amfac/JMB Hawaii, Inc. (as predecessor to KLC Land). Although
such Senior Indebtedness and COLA Notes were discharged under the Plan, the
Guarantees of the Non-Debtor KLC Subsidiaries were not. Thus, to the
extent that the holders of the Senior Indebtedness and COLA Notes did not
receive payment on the outstanding balance thereof from distributions made
under the Plan, the remaining amounts due thereunder remain obligations of
the Non-Debtor KLC Subsidiaries under the Guarantees. Under the Plan, the
obligations of the Non-Debtor KLC Subsidiaries under such Guarantees were
assigned by the holders of the Senior Indebtedness and COLA Notes to
Kaanapali Land on the Plan Effective Date. Kaanapali Land has notified
each of the Non-Debtor KLC Subsidiaries that are liable under such
Guarantees that their respective guarantee obligations are 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 KLC Subsidiaries,
however, it is unlikely that Kaanapali Land will realize payments on such
Guarantees that are more than a small percentage of the total amounts
outstanding thereunder or that in the aggregate will generate any material
proceeds to the Company. Nevertheless, Kaanapali Land has submitted a
claim in the Chapter 7 bankruptcy proceeding of Oahu Sugar in order that it
may recover substantially all of the assets remaining in the bankruptcy
estate, if any, that become available for creditors of Oahu Sugar. Any
amounts so received would not be material to the Company. These Guarantee
obligations have been eliminated in the consolidated financial statements
because the obligors are consolidated subsidiaries of Kaanapali Land, which
is now the sole obligee thereunder.
As of September 30, 2007, the Company had cash and cash equivalents
of approximately $29 million, which is available for, among other things,
working capital requirements, including future operating expenses, and the
Company's obligations for engineering, planning, regulatory and development
costs including roadway construction, drainage and utilities, environmental
remediation costs on existing and former properties, potential tax
liabilities resulting from IRS audits, retiree medical insurance benefits
for Pioneer Mill Company, and existing and possible future litigation.
The primary business of Kaanapali Land is the investment in and
development of the Company's assets on the Island of Maui. The various
development plans will take many years at significant expense to fully
implement. A significant portion of such anticipated expenses are
currently subject to contractual commitments, however, significant
additional costs may be incurred. 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.
A subsidiary of Kaanapali Land ("Holder") holds a mortgage loan
secured by Waikele Golf Course. The mortgage loan was amended March 31,
2006 upon which the accrued interest was added to principal and the Holder
agreed to make future advances under the note in an amount not to exceed $3
million for purposes of funding the golf course improvements. Interest on
the principal balance accrues at an adjustable rate of prime plus 1%. The
principal and accrued interest, which are prepayable, are due March 1,
2015. As of September 30, 2007, the note had an outstanding principal and
accrued interest balance of approximately $9.9 million. The note has been
eliminated in the consolidated financial statements because the obligor and
maker are consolidated subsidiaries of Kaanapali Land.
The Company's continuing operations have in recent periods been
primarily reliant upon the net proceeds of sales of developed and
undeveloped land parcels.
During the first quarter of 2006, the Company received final
subdivision approval on an approximate 336 acre parcel in the region
"mauka" (toward the mountains) from the main Kaanapali 2020 area. This
project, called Kaanapali Coffee Farms, consists of 58 agricultural lots,
50 of which are currently being offered to individual buyers. It is
anticipated that the land improvements will be completed in 2007. In
conjunction with the final approval, the Company was required to obtain two
subdivision bonds in the amounts of approximately $18.6 million and $4.7
million and was required to secure the bonds with a cash deposit of $8.3
million into an interest bearing collateral account. During the first
quarter of 2007, one of the bonds was reduced from $18.6 million to $11.3
million and the collateral was reduced to $5.9 million. The funds will be
withdrawn from the collateral account by the Company upon stage of
completion of the subdivision improvements and release of the bonds.
During July and August 2006 the Company closed on the sale of three lots at
Kaanapali Coffee Farms. The Company has closed on the sale of three
additional lots in 2007, one each in January, August and October. In
conjunction with the sales of the lots that closed in August and October,
2007, in addition to cash proceeds the Company received non-interest-
bearing promissory notes for approximately $737 thousand and $692 thousand,
respectively. The promissory notes are due July 2009 and October 2009.
The Company is under contract for the sale of one additional lot that is
scheduled to close no later than April 2009.
Although the Company does not currently believe that it has
significant liquidity problems over the near term, should the Company be
unable to satisfy its liquidity requirements from its existing resources
and future property 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.
RESULTS OF OPERATIONS
Reference is made to the footnotes to the financial statements for
additional discussion of items addressing comparability between years.
Cash and cash equivalents decreased and property, net increased in
the accompanying balance sheets primarily due to the Kaanapali Coffee Farms
development costs incurred partially offset by the sale of two lots and the
release of restricted cash held as collateral for subdivision bonds.
Other assets decreased due to the reduction in the first quarter of
2007 of the collateral for two subdivision bonds obtained in conjunction
with the Kaanapali Coffee Farms project.
Accounts payable and accrued expenses increased due to the accrual of
development costs and retention holdback incurred for the Kaanapali Coffee
Farms project.
Sales and cost of sales decreased for the three months ended
September 30, 2007 due to the sale of three lots during the third quarter
of 2006 compared to the sale of one lot during the same period in 2007.
The decrease in sales was partially offset due to the shut-down of the golf
course from May 1, 2006 through August 31, 2006 for renovations. Sales
increased for the nine months ended September 30, 2007 due to the shut down
of the golf course during 2006 for renovations.
Selling, general and administrative expenses decreased due to the
reduction of certain legal fees incurred in conjunction with asbestos
related claims.
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.
ITEM 4. CONTROLS AND PROCEDURES
The principal executive officer and the principal financial officer
of the Company have evaluated the effectiveness of the Company's disclosure
controls and procedures as defined in Rule 13a-15(e) of the Securities
Exchange Act of 1934, as amended, (the "Exchange Act") as of the end of the
period covered by this report. Based on such evaluation, the principal
executive officer and the principal financial officer have concluded that
the Company's disclosure controls and procedures were effective to ensure
that information required to be disclosed was recorded, processed,
summarized and reported within the time periods specified in the applicable
rules and form of the Securities and Exchange Commission.
There was no change in internal control over financial reporting that
occurred during the period covered by this report that materially affected,
or is reasonably likely to materially affect, our internal control over
financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Note 6 to the Condensed Consolidated Financial Statements
included in Part I of this report.
ITEM 1A. RISK FACTORS
There has been no known material changes from risk factors as
previously disclosed in the Company's Annual Report on Form 10-K for the
year ended December 31, 2006.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
3.1 Amended and Restated Limited Liability Company Agreement
of Kaanapali Land, LLC dated November 14, 2002 filed as
an exhibit to the Company's Form 10 filed May 1, 2003 and
hereby incorporated by reference.
10.1 Plan and Agreement of Merger merging KLLLC Mergerco, LLC
with and into Kaanapali Land, LLC dated April 9, 2007
filed as an exhibit to the Company's Form 8-K filed
April 10, 2007 and hereby incorporated by reference.
31.1. Certification of Chief Executive Officer pursuant to
Rule 13a-14(a) is filed herewith.
31.2. Certification of Chief Financial Officer pursuant to
Rule 13a-14(a) is filed herewith.
32. Certifications pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 are filed herewith.
(b) No reports on Form 8-K were filed since the beginning of the
last quarter of the period covered by the report.
SIGNATURE
Pursuant to the requirements 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: Pacific Trail Holdings, LLC
(sole member)
/s/ Gailen J. Hull
---------------------
By: Gailen J. Hull
Senior Vice President
Date: November 9, 2007