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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

Annual Report Pursuant to Section 13 or 15(d)
of the Securities Act of 1934

For the fiscal year
ended December 31, 2004 Commission File Number #0-50273


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


Delaware 01-0731997
(State of organization) (I.R.S. Employer Identification No.)

900 N. Michigan Ave., Chicago, Illinois 60611
(Address of principal executive office) (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
------------------- ---------------------

N/A N/A

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

Limited Liability Company Interests (Class A Shares)
----------------------------------------------------
(Title of Class)

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 "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 if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K [ X ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [ ] No [ X ]

State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the
common equity was last sold, or the average bid and asked price of such
common equity, as of the last business day of the registrant's most
recently completed second fiscal quarter. Not applicable.

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 March 15, 2005, the registrant had 1,792,613 shares of common stock
outstanding.

Documents incorporated by reference: None





TABLE OF CONTENTS



Page
----
PART I

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

Item 2. Properties. . . . . . . . . . . . . . . . . . . 10

Item 3. Legal Proceedings . . . . . . . . . . . . . . . 10

Item 4. Submission of Matters to a Vote of
Security Holders. . . . . . . . . . . . . . . . 12


PART II

Item 5. Market Price of and Dividends on the
Registrant's Common Equity and
Related Stockholder Matters . . . . . . . . . . 13

Item 6. Financial Information . . . . . . . . . . . . . 14

Item 7. Management's Discussion and
Analysis of Financial Condition and
Results of Operations . . . . . . . . . . . . . 15

Item 7A. Quantitative and Qualitative Disclosures
about Market Risk . . . . . . . . . . . . . . . 20

Item 8. Financial Statements and
Supplementary Data. . . . . . . . . . . . . . . 21

Item 9. Changes in and Disagreements
with Accountants on Accounting
and Financial Disclosure. . . . . . . . . . . . 45

Item 9A. Controls and Procedures . . . . . . . . . . . . 45


PART III

ITEM 10. Managers and Executive Officers
of the Registrant . . . . . . . . . . . . . . . 46

Item 11. Executive Compensation. . . . . . . . . . . . . 48

Item 12. Security Ownership of Certain
Beneficial Owners and Management. . . . . . . . 49

Item 13. Certain Relationships and
Related Transactions. . . . . . . . . . . . . . 50

Item 14. Principal Accountant Fees and Services. . . . . 50


PART IV

Item 15. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K . . . . . . . . . . . . 51


SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . 53




i





PART I

ITEM 1. BUSINESS

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"). As indicated in the Plan, Kaanapali
Land has elected to be taxable as a corporation. The Debtors had filed
their petitions 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 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 Northbrook Corporation
("Northbrook") into FHTC and the subsequent merger of FHTC into Kaanapali
Land, which made the assets and liquidity of Northbrook available to the
Debtors to help fund their land development business.

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. All material requirements and transactions that
the Company must implement under the Plan are described herein. References
in this Form 10-K 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.

KLC Land (formerly known as Amfac Hawaii, LLC and, previously,
Amfac/JMB Hawaii, LLC) is a Hawaii limited liability company that is a
wholly-owned subsidiary of Kaanapali Land. KLC Land and Kaanapali Land have
continued the businesses formerly conducted by KLC Land and Northbrook and
their subsidiaries prior to the bankruptcy, although some of such
businesses have been discontinued or reduced in scope as described herein.

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 (later merged into Northbrook) purchased
the stock of Amfac, Inc. ("Amfac"), in 1988, pursuant to a public tender
offer, and thus Amfac became an indirect subsidiary of Northbrook at such
time. As a consequence of the merger of Amfac into Northbrook in 1995, KLC
Land, 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") in 2000. Pursuant
to the Plan, Northbrook was merged into FHTC and FHTC was thereafter merged
into Kaanapali Land in November 2002.





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

The Company operates in three primary business segments: (i)
Property, (ii) Agriculture and (iii) Golf. The Company operates through a
number of subsidiaries, each of which is 100% owned directly or indirectly
by Kaanapali Land, LLC.

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 Form 10 filed on May 1, 2003 and
incorporated herein by reference.

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 are known. However, any claims of the Internal
Revenue Service ("IRS") relative to pre-petition transactions were left
unimpaired by the Plan, as described below.

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 a more detailed
discussion of these 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 December 31, 2004, Kaanapali Land has distributed in the
aggregate, approximately $1,813,000 in cash and approximately 161,100
Class A Shares on account of the claims that have been made and does not
anticipate making any further distributions under the Plan.






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.

The IRS filed a claim in the bankruptcy proceedings in the aggregate
amount of approximately $20.6 million for taxes, interest and penalties
related to the years 1998-2000. The Company entered into a stipulation
with the IRS whereby the IRS withdrew its claim due to the fact that the
Plan left the IRS unimpaired relative to any taxes that may be due. As a
result of the examination relative to 2000, the IRS has asserted a
deficiency in taxes, which the Company is contesting. Federal tax return
examinations have been completed for years through 1999 and all required
payments for taxes due and interest have been made. The statutes of
limitations with respect to the Company's tax returns for 2001 and
subsequent years remain open. The Company believes adequate provisions for
income tax have been recorded for all years. However, there can be no
assurance that the Company will be successful in such contest 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, the amount for which the Company could be liable
could be material.

KLC Land 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. KLC Land conducts all of its business
through various subsidiaries. Those with remaining assets of significant
net value include KLC Holdings, LLC ("KLC") and Kaanapali Development Corp.
("KDC") and certain limited liability companies owned 50% each by KLC and
KDC.

The Company has completed certain restructuring transactions and may
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
unneeded 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.






PROPERTY

KAANAPALI 2020 PLANS. "Kaanapali 2020", the comprehensive plan for
approximately 4,000 acres of land in the Kaanapali/Honokawai area on the
west side of Maui, Hawaii is one of Kaanapali Land's principal entitlement
focuses. The entitlement work is being done by KDC, which owns
substantially all of the land within the Kaanapali 2020 boundaries.
Currently, Kaanapali Land is preparing applications for the necessary
entitlements to carry out the Kaanapali 2020 plan. While some of these
lands have some form of entitlements, it is anticipated that at least a
substantial portion of the land 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 other use. 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 KDC 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. KDC will need to apply for subdivision of the land in
order to develop 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 as well as certain
extractions.

For the last few years, KDC has been working with the West Maui
community to involve the community in plans for the use of the Kaanapali
2020 lands. Committees, comprised of private sector individuals from the
community as well as public employee participants, have been working with
KDC to create a vision for the future of the Kaanapali lands. Variations
of this strategy have 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 plan can be implemented with the support of the community
that meets Kaanapali Land's long-term financial objectives.

The Kaanapali 2020 plan is currently at a predevelopment stage. The
plan is now in the process of being finalized to the extent necessary to
commence the entitlement process. Approximately 990 acres of land have
been identified to contain approximately 2,800 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 that it holds for development rather than
investment, is designed to enhance the value of its properties in phases.
In most instances, the process begins with the preparation of market and
feasibility studies that consider potential uses for the property, as well
as costs associated with those uses. The studies consider factors such as
location, physical characteristics, demographic patterns, anticipated
absorption rates, transportation, 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 use 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 projects. Applications for entitlements include
applications for state land use reclassification, county community plan
amendments and changes in zoning.

The Company is working to market an approximate 270-acre parcel in the
region to the east of the main Kaanapali-2020 area. The parcel is still in
the planning stages but is expected to be comprised of 59 agricultural lots
that will be offered to individual buyers. Although it is hoped that the
marketing of lots will commence in the second half of 2005, various
contingencies including, but not limited to, governmental and market
factors may impact the viability or timing of the project. Therefore,
there can be no assurance that the Company will be able to meet such
timetable, that the subdivision will ultimately be approved or that the
lots will sell for prices deemed advantageous by the Company.

The entitlement process involves substantial amounts of time and
expense. The applications generally require the submission of
comprehensive plans that involve the use of consultants and other
professionals. Parties affected can challenge the applications at the time
of submission, 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, 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. The Company may also be subject to conditions that the
entitlement will be revoked if 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 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 as originally planned, the Company may be required to revise
its land plan. In that case, the revised plans may not be as economically
viable as the original 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.






OTHER PROPERTY. Apart from the golf course (discussed below) and the
Kaanapali 2020 lands, the Company owns approximately 390 acres of remaining
land. The site of the Pioneer Mill 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. The Company believes that certain portions of the Wainee
Lands might be available for a number of uses compatible with the close
proximity of the Wainee Lands to the Lahaina Town-center, including both
affordable and market housing and certain recreational and service uses,
once the property is reclassified and rezoned. The Company is conducting
various meetings with the West Maui community, public officials and
consultants to determine a plan for a portion of their lands. A
determination on the viability to proceed in the entitlement process will
be made during 2005. However, the Company is currently considering several
options for the Wainee Lands. During January 2005, the Company sold its
mill sites and associated lands located on the Island of Kauai for
approximately $1.3 million. 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 land associated with now-
closed sugar growing and processing operations, remnant parcels abutting
infrastructure improvements from previously sold lands, such as strips
along roadways, 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 formerly 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 liquidated its remaining inventory of coffee beans and mill
equipment. The Company leased to a third party portions of the Kaanapali
2020 land on which the coffee trees are located for the purpose of
continuing agricultural coffee operations on such land. The lessee
purchased the Company's coffee mill equipment during the first quarter of
2004.

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 $1.2 million of annual revenue, to
grow seed corn according to Monsanto's specifications. In addition to
generating such revenue, this operation is otherwise 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 Monsanto have recently renewed these seed corn contracts on
terms that are similar to the previous agreement.

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 Course on Oahu. The assets and operations of the
Waikele Golf Course represent all of the golf segment for purposes of
business segment information. The Waikele Golf Course operates at a modest
level of profit.

For a description of financial information by segment, please read
Note 9 to the attached consolidated financial statements, which information
is incorporated herein by reference.





SIGNIFICANT ASSET SALES

There are strategic land sales that the Company has consummated or
that may occur based on options held by third parties. These transactions
were generally pursued in order to raise additional cash that would enhance
the Company's ability to fund the Kaanapali 2020 development. No further
significant bulk land sales are currently contemplated by the Company.

NORTH BEACH. Prior to the sale of Lots 2 and 4 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, at which time a non-refundable payment was made
for $2 million (before closing costs and prorations). The remainder of the
purchase price was reflected by a note secured by a mortgage due and paid
in March 2004 for approximately $14.4 million. A minor portion of the
proceeds of the note is subject to possible adjustment based on the number
of units ultimately approved for construction on the site. On August 5,
2003, the Company closed the sale of Lot 4 (an approximately 40 acre site)
for a purchase price of $33 million; of which $16 million was paid in cash
(before closing costs and prorations) at closing and the balance was
delivered in the form of a promissory note in the original principal amount
of $17 million. The note was fully collected by the Company during
December 2004. At closing, the Company also granted to the purchaser an
option to purchase Lot 3, which expires in August 2005. The option price
consists of a base price of $22.5 million, which is subject to potential
adjustment upward depending on the number of units permitted to be
developed on Lot 3 and Lot 4, and also an adjustment for inflation if the
option is exercised after January 1, 2005. There can be no assurance that
such option will be exercised or the timing thereof.

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 was one remaining parcel available for sale in the
residential community called "Parcel 22/23". Parcel 22/23 includes
approximately 110 acres. In December 2003, the Company closed on its sale
of Parcel 22/23 to a third party for a purchase price of $12.5 million.
Approximately $11.5 million was received in cash at closing and the Company
deposited approximately $1 million into an escrow account. In conjunction
with the sale, the Company has agreed to pay a portion of the cost of
certain roadway improvements and pay the costs of the design and
construction of an underground sewer line and drainage construction as well
as the cost of certain other improvements. Such escrowed funds will fund
the Company's portion of the costs associated with the road improvements
and the sewer and drainage costs. The Company is responsible for certain
costs in excess of the escrowed funds associated with the road improvements
and sewer and drainage costs and has accrued approximately $1 million in
excess of the amount escrowed as an estimate of such costs. These
improvement projects are proceeding and are expected to be completed during
2005.

OTHER MAUI PROPERTY ASSETS

The company has certain other property assets on Maui that are not
considered part of Kaanapali 2020. The most significant of such assets is
the Pioneer Mill Site.






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, but has in the interim entered into a contract for
the demolition of the improvements on the Pioneer Mill Site. It is
anticipated that such demolition will cost approximately $2.5 million and
that the work will be completed during the second half of 2005. Pioneer
Mill was 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 Hawaii Department of Health
("HDOH") and the HDOH has shown an interest in the environmental conditions
relating to or arising out of the former operations of Pioneer Mill. The
United States Environmental Protection Agency, Region IX (hereinafter
"EPA") has designated HDOH as the oversight agency for Pioneer Mill.
Pioneer Mill has received a report on the results of environmental testing
conducted on the site by the United States Environmental Protection Agency
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. It is possible that further clean up operations may
become necessary in connection with the planned demolition of the former
sugar mill buildings on the site.

EMPLOYEES.

At March 1, 2005, Kaanapali Land and its subsidiaries employed
approximately 88 persons, more than half of whom are employed at the
Waikele Golf Course. Certain corporate services are provided by Pacific
Trail and its affiliates. Kaanapali Land reimburses for these services and
related 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 factors that historically have negatively
impacted Kaanapali Land's property activities, including market conditions,
the difficulty in obtaining regulatory approvals, the high cost of required
infrastructure and the Company's operating deficits in its other business
segments. As a result, the planned use 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.






Maui's real estate market has experienced improvement during 2004 and
the areas of primary and secondary residential homes, condominiums and time
share units have been relatively strong. There can be no assurance that
the recent recovery of Maui'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 property
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.

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 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 from numerous groups - including native Hawaiians,
environmental organizations, various community and civic groups,
condominium associations and politicians advocating no-growth policies,
among others.

Currently, Kaanapali Land is preparing applications for the necessary
entitlements to carry out the Kaanapali 2020 plan, including a 59 lot
agricultural subdivision. While some of these lands have some form of
entitlements, it is anticipated that at least a substantial portion of the
land 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 other use. 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.

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 3. Legal Proceedings for a
description of certain legal proceedings related to environmental
conditions.







ITEM 2. PROPERTIES

LAND HOLDINGS.

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


ITEM 3. 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
was a defendant, such proceedings were stayed as against such Debtor by the
filing of the Reorganization Case. However, all such proceedings have been
resolved pursuant to the Plan. Any claims that were not filed on a timely
basis under the Plan have been discharged by the Bankruptcy Court and thus
any future legal proceedings relative to claims that predate the
consummation of the Plan 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.

On or about February 23, 2001 Kekaha Sugar Co., Ltd., a subsidiary of
Kaanapali Land, received a letter from the 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. HDOH has performed some testing at the site and results are
pending. Kekaha Sugar Co., Ltd. is substantially without assets and
further pursuit of this matter by HDOH could have a material 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 concern 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. In that regard, HDOH visited the site for the purpose of
taking additional soil samples in September 2004. As noted above, the high
priority assignment could result in a high degree of oversight by the HDOH
as the issues raised are studied and addressed. Lihue Plantation 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 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 was 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 has 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
United States Environmental Protection Agency 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. It
is possible that further cleanup operations may become necessary in
connection with the planned demolition of the former sugar mill buildings
on the site.

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 is currently
engaged in environmental site assessment of lands it leased from the U.S.
Navy and located on the Waipio Peninsula. Oahu Sugar has submitted a
Remedial Investigation Report to the HDOH. The HDOH has provided comments
which indicate additional testing may be required. Oahu Sugar has
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 seeks, 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 has responded to the information requests. Oahu Sugar received an
order from EPA that would purport to require certain testing and
remediation of the site. Oahu Sugar is in the process of evaluating the
order. The cost of compliance can not be estimated at this time. However,
Oahu Sugar is substantially without assets and the pursuit of any action,
informational, enforcement, or otherwise by HDOH or EPA could have a
material adverse effect on the financial condition of Oahu Sugar.

The IRS filed a claim in the bankruptcy proceedings in the aggregate
amount of approximately $20.6 million for taxes, interest and penalties
related to the years 1998-2000. The Company entered into a stipulation
with the IRS whereby the IRS withdrew its claim due to the fact that the
Plan left the IRS unimpaired relative to any taxes that may be due. As a
result of the examination relative to 2000, the IRS has asserted a
deficiency in taxes, which the Company is contesting. Federal tax return
examinations have been completed for years through 1999 and all required
payments for taxes due and interest have been made. The statutes of
limitations with respect to the Company's tax returns for 2001 and
subsequent years remain open. The Company believes adequate provisions for
income tax have been recorded for all years. However, there can be no
assurance that the Company will be successful in such contest 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, the amount for which the Company could be liable
could be material.

On February 15, 2005, D/C Distribution 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. 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 alleges that it is an insurance company to whom D/C has
tendered for defense and indemnity various personal injury lawsuits
allegedly based on exposure to asbestos containing products. Plaintiff
alleges 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
seeks, 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 have been exhausted; that plaintiff is not obligated to





reimburse D/C for its attorneys' fees in that the amounts of attorneys'
fees incurred by D/C have been incurred, unreasonably; that plaintiff is
entitled to recoupment and reimbursement of some or all of the amounts it
has paid for defense and/or indemnity; and that D/C has breached its
obligation of cooperation with plaintiff. The litigation is in its early
stages and D/C believes that it has meritorious defenses and positions, and
intends to vigorously defend.

Kaanapali Land, as successor by merger to other entities, and D/C
Distribution Corporation ("D/C"), a subsidiary of Kaanapali Land, have been
named as defendants in personal injury actions allegedly based on exposure
to asbestos. There are approximately 60 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. D/C is without sufficient assets to
satisfy all of its liabilities for these cases, and therefore, any material
existing or future judgments against D/C in these cases will have a
material adverse effect on D/C's financial condition. Kaanapali Land does
not believe that it has liability, directly or indirectly, for such
subsidiary's obligations.

Northbrook Corporation ("Northbrook"), a predecessor by merger to
Kaanapali Land was named in a lawsuit filed in August 2003 in the Circuit
Court of Cook County, Chicago, Illinois, styled Silverado Golf & Country
Club, Inc. v. JMB Realty Corporation and Northbrook Corporation. The
lawsuit sought unspecified damages and alleged that the defendants engaged
in fraudulent conduct in connection with the administration and termination
of a defined benefit pension plan that had been sponsored by Northbrook
Corporation and certain affiliates and predecessors. In the eight count
amended complaint, the plaintiff sought unspecified general damages, the
imposition of a constructive trust, an accounting, attorneys' fees and
costs, interest, punitive damages and such other further relief as deemed
appropriate by the court under the circumstances. The amended complaint
was dismissed with prejudice on March 4, 2005, pursuant to a settlement and
without any payment of money by defendants.

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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.







PART II

ITEM 5. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

As of December 31, 2004 there were approximately 415 holders of record
of the Company's 161,100 outstanding Class A Shares and approximately 16
holders of record of the Company's 1,631,513 outstanding Class B Shares.
The Company has no outstanding options, warrants to purchase or securities
convertible into, common equity of the Company. There is no established
public trading 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, no dividends have been paid by the Company in 2004 or 2003 and the
Company does not anticipate making any distributions for the foreseeable
future.







ITEM 6. SELECTED FINANCIAL DATA

KAANAPALI LAND, LLC (a)
For the years ended December 31, 2004, 2003, 2002, 2001 and 2000
(Dollars in Thousands Except Per Share Amounts)

2004 2003 2002 2001 2000
-------- -------- -------- -------- --------
Total revenues
(c) . . . . . . $ 14,557 66,640 11,112 81,894 79,247
======== ======== ======== ======== ========
Net income
(loss) (d). . . $ 4,887 70,636 140,784 (17,082) (45,707)
======== ======== ======== ======== ========

Income (loss)
from continuing
operations per
share, basic
and diluted . . $ 2.73 5.86 (b) (6,794) (13,206)
======== ======== ======== ======== ========

Net income
(loss) per
share, basic
and diluted . . $ 2.73 39.44 (b) (4,270) (11,427)
======== ======== ======== ======== ========

Total assets . . $179,401 189,473 189,626 223,628 311,705
======== ======== ======== ======== ========

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

(a) The above selected financial data should be read in conjunc-
tion with the financial statements and the related notes appearing
elsewhere in this report. 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, the Company recognized as revenue a gain from the
extinguishment of debt of $10,653.

(d) In 2002, the Company recognized an extraordinary gain on
reorganization of $136,618. In 2003, the Company recognized a gain on
disposition of unconsolidated investment of $60,134.








ITEM 7. 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 in 2002 after
the mergers of Northbrook into FHTC and FHTC into Kaanapali Land in
November 2002.

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.


LIQUIDITY AND CAPITAL RESOURCES

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.

Unless wound up by the Company, 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 KLC 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 remaining
real property owned by the KLC Debtors, 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 Non-Debtor KLC
Subsidiaries 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 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 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. 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.

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, represent approximately 9.0% of the ownership of
the Company.

At December 31, 2004, the Company had cash and cash equivalents of
approximately $45.7 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, 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 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. Reference is made to
Item 1 - Business, Item 3 - 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 mortgage note payable as of December 31, 2004 was a
loan secured by the Waikele Golf Course. The owner of the golf course
repaid the mortgage in full on March 1, 2005, with proceeds obtained
through a new mortgage loan granted by a subsidiary of Kaanapali Land in
the original principal amount of approximately $7.2 million.

The Company's continuing operations have in recent periods been
primarily reliant upon the net proceeds of sales of developed and
undeveloped land parcels. A purchase money note receivable related to
Lot 2 in the amount of approximately $14.4 million was paid in March 2004.
A minor portion of the proceeds of the note is subject to possible
adjustment based on the number of units ultimately approved for
construction on the site. A purchase money note related to Lot 4 in the
amount of approximately $17 million, which was due no later than August
2006, was paid in December 2004. The Company expects that it will have
adequate liquidity for the foreseeable future.






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 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.

2004 COMPARED TO 2003

Cash and cash equivalents increased and notes receivable, net
decreased in the accompanying balance sheets due to the collection of the
notes receivable during 2004 which were received in the sales of Lots 2 and
4 during 2003.

The accumulated post-retirement benefit obligation decreased due in
part to benefits paid but primarily due to the effect of the termination of
most of the post-retirement obligations. Such reductions have been
reflected as reduction of post-retirement benefit obligation in the
Consolidated Statement of Operations.

Other liabilities decreased primarily due to the Company's payment to
the U.S. Treasury as a result of the IRS' examination and resulting tax
adjustments related to the Company's Federal tax returns for 1998 and 1999.

The decrease is also a result of the settlement of certain personal injury
actions and the reduction of certain reserves related to obligations
resulting from the sales of properties in prior years which have been
completed.

Mortgage payable decreased in the accompanying balance sheets due to
the debt modification agreement reached with the lender of the Waikele Golf
Course. In conjunction with the loan modification, a principal payment of
$1 million was made to the lender to decrease the outstanding principal
balance of the note.

The decrease in sales and cost of sales is primarily due to the sale
of Lot 2, the sale of Lot 4, and the sale of Parcel 22/23 during 2003.

Selling, general and administrative expense decreased primarily as a
result of the recovery from an insurance company of amounts previously
expensed by D/C relating to the defense of certain liability claims, a
decrease in legal fees incurred during 2004 as a result of the settlement
of various litigation matters during 2003 and a reduction in payroll
related costs as a result of the reduction in personnel in 2004.

Interest decreased due to the settlement with a lender which resulted
in the Company being released from its obligations under a mortgage
indebtedness in December 2003. The decrease is also due to a lower
interest rate on the mortgage payable secured by the Waikele Golf Course
during the second half of 2004 as a result of the loan modification with
the lender effective June 1, 2004, offset by interest paid for federal
income taxes.

The reduction to carrying value of investments for the year ended
December 31, 2004 represents impairment losses recognized to reduce the
carrying value of certain land parcels and leasehold improvements which are
not considered to be part of the Company's Kaanapali 2020 development plan.

The decrease in income tax expense is a result of the decrease in the
Company's income from continuing operations as well as an increase in the
deferred tax asset valuation allowance.





2003 COMPARED TO 2002

The decrease in receivables, net is primarily due to the collection of
a receivable during 2003 relating to the participation in the sales price
of various lots sold during 2002 by third parties in accordance with a
sales contract on land sold in previous years by the Company and the
collection of escrowed funds relating to a parcel sold in 2000 by the
Company.

Property, net decreased and note receivable, net increased due to the
sales of Lot 2 and Lot 4, the sale of Parcel 22/23 as well as the
conveyance of the Oahu MS mill site property to its lender.

Accounts payable and accrued expenses decreased due to the settlement
of litigation which resulted in the reversal of a litigation reserve which
was recorded in a previous year. The decrease was also due to the reversal
of accruals relating to the Oahu MS Mill site foreclosure as well as the
reversal of accruals relating to various other litigation matters.

The accumulated post-retirement benefit obligation decreased due in
part to benefits paid but primarily due to the effect of the expected
termination of the post-retirement life insurance benefits at the end of
2003 and a significant portion of the health care obligations at the end of
2004. Such reductions have been reflected as reduction of post-retirement
benefit obligation in the Consolidated Statement of Operations.

The decrease in Mortgage and other notes payable is due to the
settlement in December 2003 with a lender which resulted in Oahu MS no
longer being obligated under the loan encumbering the Oahu MS mill site
property in exchange for Oahu MS conveying the property.

The investment in unconsolidated entities, at equity decrease and the
gain on disposition of unconsolidated investment increase is due to the
consummation of the settlement agreement with a lender, which resulted in
the Company no longer having any ownership interests in or obligations
related to the Royal Kaanapali Golf Courses.

The increase in sales and cost of sales is primarily due to the sale
of Lot 2, the sale of Lot 4, and the sale of Parcel 22/23 during 2003.

Selling, general and administrative decreased primarily due to the
reversal of certain accruals related to the settlement of litigation offset
by an increase in the allowance for receivables relating to the loans made
by Kaanapali Land. Because there can be no assurance that the obligor will
have funds sufficient to satisfy the loans from Kaanapali Land, the total
amount of the loans has been reserved.

Interest decreased principally due to the discharge of the COLA's and
the Senior Indebtedness pursuant to the emergence of the Debtors from
bankruptcy in 2002 and the restructuring transactions contemplated by the
Plan.

Depreciation decreased principally due to the cessation of the Lihue
Power Plant operations during the first quarter of 2003.

The change in equity in income (loss) from unconsolidated investments
is primarily due to the Company's share of loss in 2003 from its investment
in the owner of the Royal Kaanapali Golf Courses.

The increase in income tax expense is a result of the increase in the
Company's income from continuing operations.







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.

At December 31, 2004, the Company's only known material contractual
obligation was the mortgage loan of approximately $7.2 million which was
paid off in March 2005.


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 7A. 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 arrangement at December 31, 2004 was at a variable
rate. Based upon the Company's indebtedness and interest rates at
December 31, 2004, a 1% increase in market rates or a 1% decrease in market
rates would have no significant effect on future earnings and cash flows.








ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


KAANAPALI LAND, LLC

INDEX


Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets, December 31, 2004 and 2003

Consolidated Statements of Operations for the years ended
December 31, 2004, 2003 and 2002

Consolidated Statements of Stockholders' Equity (Deficit) for
the years ended December 31, 2004, 2003 and 2002

Consolidated Statements of Cash Flows for the years ended
December 31, 2004, 2003 and 2002

Notes to Consolidated Financial Statements



Schedules not filed:

All schedules have been omitted as the required information is
inapplicable or the information is presented in the financial statements or
related notes.











REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



The Managing Member and 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, 2004 and 2003, 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, 2004. 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 the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. Our audit included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control over financial reporting. Accordingly, we
express no such opinion. Our audit also included examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and 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, 2004 and 2003, and the consolidated results of its operations
and its cash flows for each of the three years in the period ended
December 31, 2004, in conformity with accounting principles generally
accepted in the United States.






/s/ Ernst & Young LLP




Chicago, Illinois
March 23, 2005









KAANAPALI LAND, LLC

Consolidated Balance Sheets

December 31, 2004 and 2003
(Dollars in Thousands, except share data)


A S S E T S
-----------
2004 2003
-------- --------

Cash and cash equivalents. . . . . . . . . . . . . $ 45,744 28,995
Receivables, net . . . . . . . . . . . . . . . . . 445 777
Property, net. . . . . . . . . . . . . . . . . . . 104,036 104,926
Notes receivable, net of deferred gain
of $5,308 in 2003. . . . . . . . . . . . . . . . -- 26,058
Prepaid pension costs. . . . . . . . . . . . . . . 26,630 25,989
Other assets . . . . . . . . . . . . . . . . . . . 2,546 2,728
-------- --------
$179,401 189,473
======== ========


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

Accounts payable and accrued expenses. . . . . . . $ 1,647 2,444
Deferred income taxes. . . . . . . . . . . . . . . 25,120 19,369
Accumulated postretirement benefit obligation. . . 3,267 13,743
Other liabilities. . . . . . . . . . . . . . . . . 44,171 52,498
Mortgage note payable. . . . . . . . . . . . . . . 7,178 8,288
-------- --------
Total liabilities. . . . . . . . . . . . . 81,383 96,342

Commitments and contingencies


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

Common stock, at 12/31/04 and 12/31/03 non par
value (shares authorized - 4,500,000; shares
issued 1,792,613 and 1,791,274,
respectively . . . . . . . . . . . . . . . . . . -- --
Additional paid-in capital . . . . . . . . . . . . 5,357 5,357
Accumulated earnings . . . . . . . . . . . . . . . 92,661 87,774
-------- --------

Total stockholders' equity . . . . . . . . 98,018 93,131
-------- --------

$179,401 189,473
======== ========












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





KAANAPALI LAND, LLC

Consolidated Statements of Operations

Years ended December 31, 2004, 2003 and 2002
(Dollars in Thousands Except Per Share Amounts)

2004 2003 2002
-------- -------- --------
Revenues:
Sales. . . . . . . . . . . . . . . . . $ 10,793 59,178 11,085
Interest and other income. . . . . . . 3,764 7,462 27
-------- -------- --------
14,557 66,640 11,112
-------- -------- --------
Cost and expenses:
Cost of sales. . . . . . . . . . . . . 2,693 39,564 5,176
Reduction of post-retirement
benefit obligation . . . . . . . . . (8,860) (7,679) (9,520)
Selling, general and administrative. . 6,897 11,332 12,505
Interest . . . . . . . . . . . . . . . 743 1,129 2,395
Depreciation and amortization. . . . . 1,136 1,164 2,994
Reduction to carrying value of
investments. . . . . . . . . . . . . 1,310 -- 13,717
-------- -------- --------
3,919 45,510 27,267
-------- -------- --------
Operating income (loss). . . . . . . . . 10,638 21,130 (16,155)

Equity in income (loss) from
unconsolidated investments . . . . . -- (402) 5,180
-------- -------- --------
Income (loss) from continuing
operations before income taxes,
gain on disposition of uncon-
solidated investment and
extraordinary gain on
reorganization . . . . . . . . . . . 10,638 20,728 (10,975)
Income tax (expense) benefit . . . . . (5,751) (10,226) 15,141
-------- -------- --------
Income (loss) from continuing
operations . . . . . . . . . . . . . 4,887 10,502 4,166
Gain on disposition of
unconsolidated investment. . . . . . -- 60,134 --
Extraordinary gain on
reorganization, net. . . . . . . . . -- -- 136,618
-------- -------- --------
Net income (loss). . . . . . . . $ 4,887 70,636 140,784
======== ======== ========
Earnings per share:
Income (loss) from continuing
operations, basic and diluted. . . . $ 2.73 5.86 (a)
======== ======== ========
Net income (loss), basic and
diluted. . . . . . . . . . . . . . . $ 2.73 39.44 (a)
======== ======== ========

(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.






KAANAPALI LAND, LLC

Consolidated Statements of Stockholders' Equity (Deficit)

Years ended December 31, 2004, 2003 and 2002

(Dollars in Thousands)

Total
Accumu- Stock-
Additional lated holders'
Common Paid-In (Deficit) Treasury Equity
Stock Capital Earnings Stock (Deficit)
-------- --------- -------- -------- --------

Balance at
January 1, 2002. . . . . . . $ 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

Net income . . . . . . . . . . -- -- 70,636 -- 70,636
-------- -------- -------- -------- --------
Balance at
December 31, 2003. . . . . . -- 5,357 87,774 -- 93,131

Net income . . . . . . . . . . -- -- 4,887 -- 4,887
-------- -------- -------- -------- --------
Balance at
December 31, 2004. . . . . . $ -- 5,357 92,661 -- 98,018
======== ======== ======== ======== ========











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






KAANAPALI LAND, LLC

Consolidated Statements of Cash Flows

Years ended December 31, 2004, 2003 and 2002
(Dollars in Thousands)


2004 2003 2002
-------- -------- --------
Cash flows from operating activities:
Net income (loss). . . . . . . . . . . $ 4,887 70,636 140,784
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) continuing operations:
Extraordinary gain on reorganiza-
tion, net. . . . . . . . . . . . . -- -- (136,618)
Gains on sale of property. . . . . . (5,723) (18,657) --
Gain on disposition of uncon-
solidated investment . . . . . . . -- (60,134) --
Restructuring costs. . . . . . . . . -- -- (3,042)
Depreciation and amortization. . . . 1,136 1,164 2,994
Equity in loss (income) from
unconsolidated investments . . . . -- 402 (5,180)
Reduction to carrying value of
investments. . . . . . . . . . . . 695 -- 13,717
Changes in operating assets and
liabilities:
Receivables, net . . . . . . . . . . 332 1,118 207
Prepaid pension costs. . . . . . . . (549) (1,216) (3,465)
Accumulated post-retirement
benefit obligation . . . . . . . . (10,476) (9,817) (8,315)
Accounts payable, accrued expenses
and other. . . . . . . . . . . . . (9,117) (6,015) 2,118
Deferred income taxes. . . . . . . . 5,751 10,226 (15,141)
-------- -------- --------

Net cash provided by (used in)
operating activities . . . . . . . . . (13,064) (12,293) (11,941)
-------- -------- --------

Cash flows from investing activities:
Property additions . . . . . . . . . . (2,053) (1,190) (178)
Property sales, disposals and
retirements, net . . . . . . . . . . 1,610 26,994 457
Distributions from (contributions to)
investments in unconsolidated
entities, at equity, net . . . . . . -- (254) 10,475
Proceeds from notes receivable . . . . 31,366 -- --
-------- -------- --------
Net cash provided by
investing activities . . . . . . . . . 30,923 25,550 10,754
-------- -------- --------






KAANAPALI LAND, LLC

Consolidated Statements of Cash Flows - Continued

Years ended December 31, 2004, 2003 and 2002
(Dollars in Thousands)


2004 2003 2002
-------- -------- --------
Cash flows from financing activities:
Net repayments of debt . . . . . . . . (1,110) (110) (103)
Settlement payments pursuant to
the Plan . . . . . . . . . . . . . . -- -- (2,850)
-------- -------- --------
Net cash used in
financing activities . . . . . (1,110) (110) (2,953)
-------- -------- --------
Net increase (decrease) in
cash and cash equivalents. . . 16,749 13,147 (4,140)

Cash and cash equivalents
at beginning of year . . . . . 28,995 15,848 19,988
-------- -------- --------
Cash and cash equivalents
at end of year . . . . . . . . $ 45,744 28,995 15,848
======== ======== ========

Supplemental disclosure of cash flow
information:
Cash paid for interest from
continuing operations. . . . . . . . $ 743 643 916
======== ======== ========

Cash received (paid) for
income taxes . . . . . . . . . . . . $ (4,100) -- 8
======== ======== ========

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
======== ======== ========

Non-cash investing and financing
activities:
Note receivable received in sale
of Lot 2 . . . . . . . . . . . . . . $ -- 14,366 --
Deferred gain. . . . . . . . . . . . . -- (5,308) --
-------- -------- --------
-- 9,058 --
Note receivable received in sale
of Lot 4 . . . . . . . . . . . . . . -- 17,000 --
-------- -------- --------
Note receivable, net . . . . . . . . . $ -- 26,058 --
======== ======== ========




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





KAANAPALI LAND, LLC

Notes to Consolidated Financial Statements

(Dollars in Thousands)


(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND BASIS OF ACCOUNTING

Kaanapali Land, LLC ("Kaanapali Land"), a Delaware limited liability
company is the reorganized entity resulting from the Joint Plan of
Reorganization of Amfac Hawaii, LLC (now known as KLC Land Company, LLC
("KLC Land")), certain of its subsidiaries (together with KLC Land, the
"KLC Debtors") and FHT Corporation ("FHTC" and, together with the KLC
Debtors, the "Debtors") under Chapter 11 of the Bankruptcy Code, dated
June 11, 2002 (as amended, the "Plan"). The Plan was filed jointly by all
Debtors to consolidate each case for joint administration in the Bankruptcy
Court in order to (a) permit the petitioners to present a joint
reorganization plan that recognized, among other things, the common
indebtedness of the debtors (i.e. the Certificate of Land Appreciation
Notes ("COLAs") and Senior Indebtedness) and (b) facilitate the overall
administration of the bankruptcy proceedings. As indicated in the Plan,
Kaanapali Land has elected to be taxable as a corporation. The 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 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 Northbrook Corporation
("Northbrook") into FHTC and the subsequent merger of FHTC into Kaanapali
Land, which made the assets and liquidity of Northbrook available to the
Debtors to help fund their land development business.

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.

In accordance with the Plan, a maximum of 1,863,000 shares of
Kaanapali Land were issuable. At December 31, 2004, approximately
1,793,000 shares were issued and outstanding and Kaanapali Land believes
that no further shares will be issued under the Plan.






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 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 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 merged into Kaanapali Land were recorded at their
historical cost. The Company did not adopt fresh-start reporting due to
the fact that holders of existing shares of Northbrook immediately before
the confirmation received greater than 50% of the successor entity under
the Plan. Subject to the foregoing, the occurrence of the Plan Effective
Date did not result in a change in the Company's basis of accounting. The
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.

Absent any change in the Company's basis of accounting, the
presentation of predecessor financial statements has not been considered
material to a fair presentation or meaningful to an understanding of the
financial condition and results of operations of the Company. Fresh-start
accounting was not adopted as the successor entity (Kaanapali Land LLC) had
no previous operations and is a successor by merger to the predecessor
entity (Northbrook Corporation) that had, on a consolidated basis, the same
operations as the successor upon emergence from bankruptcy. Further, the
financial statements are comparable between periods as the remaining assets
and liabilities are carried at the same basis. The successor is not a new
entity and, as part of the Plan, there were no divestitures of segments,
disposal of assets, or other changes in the basic operations of the
Company.

The accompanying consolidated financial statements include the
accounts of Kaanapali Land and all of its subsidiaries and its predecessor
(collectively, the "Company"), which include KLC Land and its wholly-owned
subsidiaries. The liabilities compromised by the Plan have been presented
at the present value of amounts expected to be paid as of the Plan
Effective Date, which has been estimated to approximate the historical
carrying values of such liabilities. Accordingly, the carrying value of
all remaining liabilities at the Plan Effective Date reflected the present
value of the amounts expected to be paid. All significant intercompany
transactions and balances have been eliminated in consolidation.

The Company's continuing operations are in three business segments -
agriculture, property and golf. The Agriculture segment processed and
marketed coffee (prior to the shutdown of operations in September 2001) and
continues to grow seed corn under contract and lease land currently
cultivated in coffee to a third party, 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 Property, Agriculture and Golf segments operate exclusively in
the State of Hawaii. For further information on the Company's business
segments see Note 9.

STATEMENT OF CASH FLOWS

The Company considers as cash equivalents all investments with
maturities of three months or less when purchased.






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. 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. The
Company believes the carrying value of its debt (see Note 3) approximates
fair value.

RECEIVABLES

The allowance for doubtful receivables was $1,476 and $2,115 at
December 31, 2004 and 2003, respectively.

LAND DEVELOPMENT

Project costs associated with the 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 15-40 years for the
Company's depreciable land improvements, 3-18 years for machinery and
equipment, or the lease term if less. At December 31, 2004, the Company
held approximately $1,900 of non-depreciable land improvements and
approximately $3,300 of depreciable land improvements, relating principally
to the Waikele Golf Course, which are being depreciated over their
estimated 15-year useful life. Maintenance and repairs are charged to
operations as incurred. Significant betterments and improvements are
capitalized and depreciated over their estimated useful lives.

In 2004 and 2002, the Company recognized impairment losses of $1,310
and $13,717, respectively. The 2004 impairment loss was primarily to
reduce the carrying value of certain land parcels and leasehold
improvements. The 2002 impairment loss consisted of the reduction of the
carrying value of certain land parcels. The land parcels were not
considered to be part of future development plans as such land parcels are
not part of the Company's Kaanapali 2020 development plan.

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. Assets held for sale are
recorded at the lower of the carrying value of the asset or fair value less
costs to sell.





2004 2003
-------- --------

Property, net:
Land . . . . . . . . . . . . . . . . . . $ 89,833 90,528
Land improvements. . . . . . . . . . . . 4,658 3,344
Buildings. . . . . . . . . . . . . . . . 19,766 19,766
Machinery and equipment. . . . . . . . . 12,947 19,217
-------- --------
127,204 132,855
Accumulated depreciation . . . . . . . . (23,168) (27,929)
-------- --------
Property, net. . . . . . . . . . . . . . $104,036 104,926
======== ========

Land held for sale of approximately $14,000, none of which has any
current operations, is included in Property in the consolidated balance
sheets at December 31, 2004 and 2003 and is carried at the lower of cost or
fair value less cost to sell. No land is currently in use except for the
land associated with the Waikele Golf Course (carrying value of
approximately $8 million at December 31, 2004), an approximate 800 acres of
Kaanapali 2020 land that has been set aside for the Company's seed corn
operations and an approximate 120 acres of coffee trees that have been
leased to a third party.

The Company's principal property holdings are on the island of Maui
(including approximately 4,000 acres known as Kaanapali 2020, of which
approximately 1,500 acres is classified as conservation land which
precludes development) and have a carrying value of approximately $77
million. In addition, the Company's property holdings on the island of
Oahu have a carrying value of approximately $27 million. 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.

LAND SALES AND MORTGAGES RECEIVABLE

On January 31, 2003, an option to purchase Lot 2 (an approximate 11.5
acre site in the North Beach area of Kaanapali) was exercised. A non-
refundable payment was made for $2,000 (before closing costs and
prorations). The remainder of the purchase price was reflected by a note
secured by a mortgage due and paid in March 2004 for approximately $14,000.

A minor portion of the proceeds of the note is subject to possible later
adjustment based on the number of units ultimately approved for
construction on the site.

The Company recorded the sale under the cost recovery method of
accounting. The full note was recorded, offset by the entire deferred gain
of approximately $5,308 at December 31, 2003. The deferred gain was
recognized during 2004 based upon the anticipated number of units approved
for construction on the site.

On August 5, 2003, the Company closed the sale of Lot 4 (an
approximate 40 acre site in the North Beach area of Kaanapali) for a
purchase price of $33,000. The cash portion of the purchase price (before
closing costs and prorations) of $16,000 was paid at closing and the
balance was delivered in the form of a promissory note in the original
principal amount of $17,000. The promissory note was paid in December
2004. The promissory note was secured by a first mortgage encumbering
Lot 4, and bore interest at the rate of 8% per annum. Interest payments
were paid monthly. The Company recognized approximately $13,000 of gain
related to this transaction for financial reporting purposes during the
third quarter of 2003.






At closing, the Company also granted to the purchaser an option to
purchase Lot 3, which expires in August 2005. The option price consists of
a base price of $22,500, which is subject to potential adjustment upward
depending on the number of units permitted to be developed on Lots 3 and 4,
and also an adjustment for inflation if the option is exercised after
January 1, 2005. There can be no assurance that such option will be
exercised or the timing thereof.

In December 2003, the Company closed on its sale of Parcel 22/23 to a
third party for a purchase price of $12,500. Approximately $11,500 was
received in cash at closing and the Company deposited approximately $1,000
into an escrow account. The Company recognized a gain of approximately
$4,000 related to the transaction for financial reporting purposes in 2003.

In conjunction with the sale, the Company has agreed to pay a portion of
the cost of certain roadway improvements and pay the costs of the design
and construction of an underground sewer line and drainage construction as
well as the cost of certain other improvements. Such escrowed funds will
fund the Company's portion of the costs associated with the road
improvements and the sewer and drainage construction costs. The Company is
responsible for certain costs in excess of the escrowed funds associated
with the road improvements and sewer and drainage construction costs and
has accrued approximately $1,000 in excess of the amount escrowed as an
estimate of such costs. These improvement projects are proceeding and are
expected to be completed during 2005.

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.

RECLASSIFICATIONS

Certain amounts in the 2003 and 2002 consolidated financial statements
have been reclassified to conform to the 2004 presentation.


(2) INVESTMENTS

The Company owns approximately 16.67% of Amfac Property Investment
Corp. ("APIC"), which owned and operated the Royal Kaanapali Golf Courses
("RKGC") prior to the consummation of the settlement agreement with its
lender. The remaining approximately 83.33% of the shares of APIC are owned
by AF Investors, LLC ("AF Investors") which is a subsidiary of Amfac
Finance Limited Partnership ("AFLP").






In December 2002, AFLP redeemed the interest held by Kaanapali Land
(as successor to Northbrook) for approximately $60. Kaanapali Land
remained obligated under certain circumstances to fund costs related to,
among other things, golf course improvements required under the settlement
agreement with the lender. A portion of these funding obligations was
anticipated to be reimbursed by AFLP under the Funding Agreement entered
into by Kaanapali Land, AFLP and certain other affiliated entities in
October 2002. Subsequently, due to adverse developments in certain
litigation, the expected source of funds to AFLP to make such repayments
became impaired and it now appears doubtful that the Company will receive
any meaningful portion of the amounts that were previously expected to be
reimbursed under the Funding Agreement. The Company continued to record
its investment in unconsolidated entities due to its funding obligations
and because the Company was awaiting final consummation of the settlement
agreement with the lender. The agreement was consummated on September 9,
2003, and as a consequence, the Company recorded a gain on disposition of
its investment of approximately $60,134 for financial reporting purposes
which represented the extent of the amount recorded as investment in
unconsolidated entities.

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 NOTE PAYABLE

The Waikele Golf Course mortgage note payable, secured by the Waikele
Golf Course, had an outstanding principal balance of $7,178 and $8,288 at
December 31, 2004 and 2003, respectively. The loan had certain cash flow
and other financial covenants.

Effective June 1, 2004, the debt was modified pursuant to a loan
modification agreement with the lender. In accordance with the agreement,
a $1,000 principal payment was made to the lender to reduce the outstanding
principal balance of the note, the interest rate was modified to LIBOR plus
4.25% with no LIBOR floor (6.43% at December 31, 2004), and the debt was
extended to mature on December 1, 2011. The loan continued to have certain
cash flow and other financial covenants. Waikele Golf Course, LLC repaid
the mortgage in full on March 1, 2005, with proceeds obtained through a new
mortgage loan granted by a subsidiary of Kaanapali Land in the original
principal amount of approximately $7,200.


(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. The Company has formerly been involved in various sandwich leases
for land.

The Company leases various office spaces with average annual rental of
approximately $250 per year. Leases expire at various times through
December 2005. Although the Company is a party to certain other leasing
arrangements, none of them are material.

Certain leases where Debtors were the lessee were rejected pursuant to
the Plan, which reduced any pre-Petition debt and prospective liability of
the Company for those leases into claims that were allowed under the Plan,
and have been satisfied or discharged.







(5) EMPLOYEE BENEFIT PLANS

(a) PENSION PLANS

As of December 31, 2004, 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, 2004 and 2003,
the net pension credit for 2004, 2003 and 2002, and major assumptions used
to determine these amounts.

2004 2003
------- -------

Benefit obligation at beginning of year. . . . . . $44,922 42,731
Service cost . . . . . . . . . . . . . . . . . . . 62 65
Interest cost. . . . . . . . . . . . . . . . . . . 2,695 2,939
Actuarial loss . . . . . . . . . . . . . . . . . . 1,928 4,720
Special termination benefit. . . . . . . . . . . . -- 1,404
Benefits paid. . . . . . . . . . . . . . . . . . . (4,615) (6,937)
------- -------
Benefit obligation at end of year. . . . . . . . . 44,992 44,922
------- -------

Fair value of plan assets at beginning of year . . 67,870 60,515
Actual return on plan assets . . . . . . . . . . . 8,701 14,292
Benefits paid. . . . . . . . . . . . . . . . . . . (4,615) (6,937)
------- -------
Fair value of plan assets at end of year . . . . . 71,956 67,870
------- -------

Funded status. . . . . . . . . . . . . . . . . . . 26,964 22,948
Unrecognized net actuarial (gain) loss . . . . . . (344) 3,029
Unrecognized prior service cost. . . . . . . . . . 10 12
------- -------
Prepaid pension cost . . . . . . . . . . . . . . . $26,630 25,989
======= =======

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

At December 31, 2004, approximately 53% of the plan's assets are invested
in equity securities, 17% in fixed income funds and 30% in alternative
strategies.






The components of the net periodic pension benefit (credit) for the
years ended December 31, 2004, 2003 and 2002 (which are reflected as other
income in the consolidated statements of operations) are as follows:

2004 2003 2002
------- ------- -------

Service cost . . . . . . . . . . . . . . $ 62 65 49
Interest cost. . . . . . . . . . . . . . 2,695 2,939 3,041
Expected return on plan assets . . . . . (4,266) (4,647) (5,462)
Recognized net actuarial (gain)
loss . . . . . . . . . . . . . . . . . 867 154 (865)
Amortization of prior service cost . . . 1 1 (11)
Special termination benefit. . . . . . . -- 1,404 953
------- ------- -------

Net periodic pension credit. . . . . . . $ (641) (84) (2,295)
======= ======= =======

The principal assumptions used to determine the net periodic pension
benefit (credit) and the actuarial value of the accumulated benefit
obligation were as follows:

As of January 1, 2004 2003 2002
---------------- ------- ------- -------

Discount rate. . . . . . . . . . . . . . 6.25% 7.0% 7.5%
======= ======= =======

Rates of compensation increase . . . . . 3% 3% 3%

Expected long-term rate of return
on assets. . . . . . . . . . . . . . . 7.0% 7.0% 7.5%
======= ======= =======

As of December 31, 2004 2003 2002
------------------ ------- ------- -------

Discount rate. . . . . . . . . . . . . . 5.9% 6.25% 7.0%
======= ======= =======

Rates of compensation increase . . . . . 3% 3% 3%
======= ======= =======

Expected long-term rate of return
on assets. . . . . . . . . . . . . . . 7.0% 7.0% 7.0%
======= ======= =======

The above long-term rates of return were selected based on historical
asset returns and expectations of future returns.

The measurement date is December 31, the last day of the corporate
fiscal year. The accumulated benefit obligation at December 31, 2004 and
2003 equals approximately $45,000 and $44,900, respectively.

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.

There is no required contribution payable in 2004 to the pension plan.

Furthermore, due to ERISA full funding limits, no contribution, whether
required or discretionary, could be made and deducted on the corporation's
tax return for the current fiscal year.





The Company's target asset allocations reflect the Company's
investment strategy of maximizing the rate of return on plan assets and the
resulting funded status, within an appropriate level of risk. Plan assets
are reviewed and, if necessary, rebalanced in accordance with target
allocation levels once every three months.

(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. Where such benefits are offered,
substantially all employees may become eligible for such benefits if they
reach a specified retirement age while employed by KLC Land (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.

Other entities continued to fund benefit costs for both plans on a
pay-as-you-go basis, and each entity continued funding its post-retirement
health care obligations until the end of 2004, which was a date on or after
the date when its required cost maintenance period as defined under
Internal Revenue Code Section 420 expired. Retiree medical benefits for
these entities terminated at the end of 2004. Most post-retirement life
insurance benefits were terminated 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
(decrease) in the assumed healthcare trend rate by 1% in 2004 would
increase (decrease) the medical plans' accumulated postretirement benefit
obligation as of December 31, 2004 by $26 and $(24), respectively, and the
aggregate of the service and interest cost components of net periodic
postretirement benefit cost for the year then ended by $7 and $(6),
respectively.

Net periodic postretirement benefit credit for 2004, 2003 and 2002
includes the following components:

2004 2003 2002
Total Total Total
------- ------- -------

Service cost . . . . . . . . . . . . $ 12 1 1
Interest cost. . . . . . . . . . . . 284 550 622
Amortization of net gain . . . . . . (8,208) (7,777) (7,879)
Recognized settlement gain . . . . . (948) (499) (233)
------- ------- -------
Net periodic postretirement
benefit credit . . . . . . . . . . $(8,860) (7,725) (7,489)
======= ======= =======







The following table sets forth the plans' change in benefit obligation
and benefit cost as of December 31, 2004 and 2003 as follows:

December 31, December 31,
2004 2003
------------ ------------

Benefit obligation at beginning of year. $ 5,343 8,906
Service cost . . . . . . . . . . . . . . 12 1
Interest cost. . . . . . . . . . . . . . 284 550
Actuarial losses (gain). . . . . . . . . (72) 396
Employer contribution. . . . . . . . . . (1,616) (2,091)
Plan change. . . . . . . . . . . . . . . -- (2,419)
Settlement . . . . . . . . . . . . . . . (948) --
------- -------
Benefit obligation at end of year. . . . 3,003 5,343
Unrecognized net actuarial gain. . . . . 264 8,400
------- -------
Accumulated postretirement benefit cost. $ 3,267 13,743
======= =======

The subsidiary's expected contributions for 2005 are approximately
$345.

The subsidiary continuing to provide benefits currently amortizes
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
was being amortized over four years, commencing in 2001.

The weighted-average discount rate used in determining the
accumulated postretirement benefit obligation was 5.90% as of December 31,
2004 and 6.25% as of December 31, 2003.

At the time the Company performed its calculations related to the
Medicare Prescription Drug Improvement and Modernization Act of 2003 (the
"Act") final rules were not yet released. The Company has not yet
determined if its plan is Actuarially Equivalent (as defined in the Act)
and thus, no adjustment has yet been recorded in the consolidated financial
statements.


(6) INCOME TAXES

Income tax expense (benefit) attributable to income from continuing
operations for the years ended December 31, 2004, 2003 and 2002 consists
of:

Current Deferred Total
-------- -------- --------
Year ended December 31, 2004:
U.S. federal. . . . . . . . . $ -- 5,161 5,161
State . . . . . . . . . . . . -- 590 590
-------- -------- --------
$ -- 5,751 5,751
======== ======== ========
Year ended December 31, 2003:
U.S. federal. . . . . . . . . $ -- 9,177 9,177
State . . . . . . . . . . . . -- 1,049 1,049
-------- -------- --------
$ -- 10,226 10,226
======== ======== ========
Year ended December 31, 2002:
U.S. federal. . . . . . . . . $ -- (13,588) (13,588)
State . . . . . . . . . . . . -- (1,553) (1,553)
-------- -------- --------
$ -- (15,141) (15,141)
======== ======== ========





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:
2004 2003 2002
-------- -------- --------
Computed "expected" tax provision
(benefit) . . . . . . . . . . . . . $ 3,723 7,255 (3,842)
Increase (reduction) in income
taxes resulting from:
Increase (reduction) in
valuation allowance. . . . . . . 2,365 3,756 (12,766)
Other, net . . . . . . . . . . . . (337) (785) 1,467
-------- -------- --------
Total. . . . . . . . . . . . . $ 5,751 10,226 (15,141)
======== ======== ========

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, 2004 and
2003 are as follows:
2004 2003
-------- --------
Deferred tax assets:
Post retirement benefits . . . . . . . . . $ (1,274) (5,360)
Reserves related primarily to losses
on divestitures. . . . . . . . . . . . . (8,491) (9,583)
Loss carryforwards . . . . . . . . . . . . (6,216) (4,776)
Tax credit carryforwards . . . . . . . . . (4,081) (4,144)
Other, net . . . . . . . . . . . . . . . . (1,772) (3,301)
-------- --------
Total deferred tax assets. . . . . . . . (21,834) (27,164)
Less - valuation allowance . . . . . . . 10,297 7,932
-------- --------
Net deferred tax assets. . . . . . . . . (11,537) (19,232)
-------- --------
Deferred tax liabilities:
Property, plant and equipment,
principally due to purchase
accounting adjustments,
net of impairment charges. . . . . . . . 25,667 28,465
Prepaid pension and core retirement
award costs. . . . . . . . . . . . . . . 10,990 10,136
-------- --------
Total deferred tax liabilities . . . . 36,657 38,601
-------- --------
Net deferred tax liability . . . . . . $ 25,120 19,369
======== ========

Subject to the results of the contest with respect to the Company's
2000 U.S. Federal income tax return described below, the Company at
December 31, 2004 has net operating loss carryforwards ("NOLs") for Federal
income tax purposes of approximately $9,000 and approximately $65,000 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 2020 and the
state NOLs begin to expire in 2005.

As a result of the examination relative to 2000, the IRS has asserted
a deficiency in taxes, which the Company is contesting. Federal tax return
examinations have been completed for years through 1999. All required
payments for taxes due and interest, including approximately $4,000 in 2004
for 1998 and 1999, have been made. The statutes of limitations with
respect to the Company's tax returns for 2001 and subsequent years remain
open. The Company believes adequate provisions for income tax have been
recorded for all years.





(7) TRANSACTIONS WITH AFFILIATES

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 believed by management to be comparable to
those that would be paid to such affiliate insurance agency in similar
dealings with unaffiliated third parties. The total of such commissions
for the years ended December 31, 2004, 2003 and 2002 was approximately $8,
$102 and $75, respectively, all of which was paid as of December 31, 2004.

The Company pays a non-accountable reimbursement of $30 per month to
JMB Realty Corporation in respect of general overhead expense, all of which
was paid as of December 31, 2004.

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 2004. The total costs for the years ended 2004, 2003 and 2002
were approximately $1,800, $1,800 and $2,000, respectively, of which
approximately $378 was unpaid as of December 31, 2004.

The Company had other amounts due from affiliates of approximately
$300 at December 31, 2003. The amounts were paid during 2004.


(8) COMMITMENTS AND CONTINGENCIES

Material legal proceedings of the Company are described below. Unless
otherwise noted, the parties adverse to the Company in the legal
proceedings described below have not made a claim for damages in a
liquidated amount and/or the Company believes that it would be speculative
to attempt to determine the Company's exposure relative thereto, and as a
consequence believes that an estimate of the range of potential loss cannot
be made. 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.

On June 3, 2003, Trustees filed a Complaint against Oahu MS and City
Bank in Trustees Under the Will and the Estate of Bernice Paugahi Bishop,
deceased, also known as Kamehameha Schools v. Amfac Property Development
Corp., et al, in the Circuit Court of the First Circuit, State of Hawaii,
Civil No. 03-1-1154-05, seeking, among other things, cancellation of
certain leases with APDC, collection of unpaid net rents on the leases, and
appointment of a receiver to collect future subrents under the subleases.
Concurrent therewith, Trustees filed a motion for appointment of receiver.
Oahu MS filed its answer on June 24, 2003.






On October 22, 2004, the parties entered into a settlement agreement
to resolve the case and related issues. Under the terms of the settlement,
and in consideration of among other things APDC's payment of $400 to Bishop
Estate, the parties have entered into mutual releases of pending claims
arising out of or in connection with the pending lawsuit, the leased
properties, and the receivership. Pursuant to the terms of the settlement,
the above-mentioned sum was paid and the leases were cancelled effective
December 29, 2004. The stipulation to dismiss the suit is expected to be
filed shortly.

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. HDOH has
performed some testing at the site and results are pending. Kekaha Sugar
Co., Ltd. is substantially without assets and further pursuit of this
matter by HDOH could have a material 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 concern 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. Lihue Plantation is
substantially without assets and further pursuit of this matter by HDOH
could have a material adverse effect on the financial condition of LPCo.

Pioneer Mill was 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 has 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
United States Environmental Protection Agency 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. It
is possible that further cleanup operations may become necessary in
connection with the planned demolition of the former sugar mill buildings
on the site.






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 is currently
engaged in environmental site assessment of lands it leased from the U.S.
Navy and located on the Waipio Peninsula. Oahu Sugar has submitted a
Remedial Investigation Report to the HDOH. The HDOH has provided comments
which indicate additional testing may be required. Oahu Sugar has
responded to these comments with additional information. Oahu Sugar is
substantially without assets and further pursuit of this matter by HDOH
could have a material adverse effect on the financial condition of Oahu
Sugar. 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 seeks, 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 is in the process of responding to the
information requests. Oahu Sugar received an order from EPA that would
purport to require certain testing and remediation of the site. Oahu Sugar
is in the process of evaluating the order. The cost of compliance can not
be estimated at this time. However, Oahu Sugar is substantially without
assets and the pursuit of any action, informational, enforcement, or
otherwise, could have a material adverse effect on the financial condition
of Oahu Sugar.

The IRS filed a claim in the bankruptcy proceedings in the aggregate
amount of approximately $20,600 for taxes, interest and penalties related
to the years 1998-2000. The Company entered into a stipulation with the
IRS whereby the IRS withdrew its claim due to the fact that the Plan left
the IRS unimpaired relative to any taxes that may be due. As a result of
the examination relative to 2000, the IRS has asserted a deficiency in
taxes, which the Company is contesting. Federal tax return examinations
have been completed for years through 1999 and all required payments for
taxes due and interest have been made. The statutes of limitations with
respect to the Company's tax returns for 2001 and subsequent years remain
open. The Company believes adequate provisions for income tax have been
recorded for all years. However, there can be no assurance that the
Company will be successful in such contest 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, the amount for which the Company could be liable could be material.

On February 15, 2005, D/C Distribution 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. 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 alleges that it is an insurance company to whom D/C has
tendered for defense and indemnity various personal injury lawsuits
allegedly based on exposure to asbestos containing products. Plaintiff
alleges 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
seeks, 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 have been exhausted; that plaintiff is not obligated to
reimburse D/C for its attorneys' fees in that the amounts of attorneys'
fees incurred by D/C have been incurred, unreasonably; that plaintiff is
entitled to recoupment and reimbursement of some or all of the amounts it
has paid for defense and/or indemnity; and that D/C has breached its
obligation of cooperation with plaintiff. The litigation is in its early
stages and D/C believes that it has meritorious defenses and positions, and
intends to vigorously defend.






Kaanapali Land, as successor by merger to other entities, and D/C
Distribution Corporation ("D/C"), a subsidiary of Kaanapali Land, have been
named as defendants in personal injury actions allegedly based on exposure
to asbestos. There are approximately 60 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 D/C, there can be no
certainty that it will be able to satisfy all of its liabilities for these
cases, as it 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.

Northbrook Corporation ("Northbrook"), a predecessor by merger to
Kaanapali Land was named in a lawsuit filed in August 2003 in the Circuit
Court of Cook County, Chicago, Illinois, styled Silverado Golf & Country
Club, Inc. v. JMB Realty Corporation and Northbrook Corporation. The
lawsuit sought unspecified damages and alleged that the defendants engaged
in fraudulent conduct in connection with the administration and termination
of a defined benefit pension plan that had been sponsored by Northbrook
Corporation and certain affiliates and predecessors. In the eight count
amended complaint, plaintiff sought unspecified general damages, the
imposition of a constructive trust, an accounting, attorneys' fees and
costs, interest, punitive damages and such other further relief as deemed
appropriate by the court under the circumstances. The amended complaint
was dismissed with prejudice on March 4, 2005, pursuant to a settlement and
without any payment of money by defendants.

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.


(9) 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, and equity in income (loss) from unconsolidated
investments.






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.

2004 2003 2002
-------- -------- --------
Revenues:
Property . . . . . . . . . . . . . $ 8,139 61,492 4,753
Agriculture . . . . . . . . . . . 1,354 1,241 1,972
Golf . . . . . . . . . . . . . . . 3,843 4,141 4,360
Corporate. . . . . . . . . . . . . 1,221 5,074 27
-------- -------- --------
$ 14,557 71,948 11,112
======== ======== ========

Operating income (loss):
Property . . . . . . . . . . . . . $ 4,981 21,234 1,323
Agriculture . . . . . . . . . . . 973 (912) (8,028)
Golf . . . . . . . . . . . . . . . 381 580 764
-------- -------- --------

Operating income (loss). . . . . . . 6,335 20,902 (5,941)

Corporate. . . . . . . . . . . . . . 5,046 1,357 (7,819)
Interest expense . . . . . . . . . . (743) (1,129) (2,395)
Equity in income (loss) from
unconsolidated investments . . . . -- (402) 5,180
-------- -------- --------
Income (loss) from continuing
operations before income taxes,
gain on disposition of uncon-
solidated investment and
extraordinary gain on re-
organization . . . . . . . . . . . $ 10,638 20,728 (10,975)
======== ======== ========

Identifiable Assets:
Property . . . . . . . . . . . . . $ 62,009 65,919 55,970
Agriculture. . . . . . . . . . . . 51,137 48,091 51,419
Golf . . . . . . . . . . . . . . . 27,362 29,084 29,076
-------- -------- --------

140,508 143,094 136,465

Corporate. . . . . . . . . . . . . . 38,893 46,379 53,161
-------- -------- --------
$179,401 189,473 189,626
======== ======== ========

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

2004 2003 2002
-------- -------- --------
Capital Expenditures:
Property . . . . . . . . . . . . . $ 1,737 861 --
Agriculture. . . . . . . . . . . . 2 197 --
Golf . . . . . . . . . . . . . . . 314 132 163
Corporate. . . . . . . . . . . . . -- -- 15
-------- -------- --------
$ 2,053 1,190 178
======== ======== ========






2004 2003 2002
-------- -------- --------
Depreciation and Amortization:
Property . . . . . . . . . . . . . $ 92 87 90
Agriculture. . . . . . . . . . . . 91 60 1,417
Golf . . . . . . . . . . . . . . . 535 609 552
Corporate. . . . . . . . . . . . . 418 408 935
-------- -------- --------
Total. . . . . . . . . . . . . . . . $ 1,136 1,164 2,994
======== ======== ========

(10) CALCULATION OF NET INCOME PER SHARE

The following tables set forth the computation of net income (loss)
per share - basic and diluted:
For the For the
Period Period
January 1, November 14,
Year Ended Year Ended 2002 through 2002 through
December 31, December 31, November 13, December 31,
2004 2003 2002 2002
------------ ------------ ------------ ------------
(Amounts in thousands except per share amounts)
NUMERATOR:
Operating income
(loss) . . . . . . . $ 10,638 21,130 (2,117) (14,038)
========== ========== ========== ==========
Equity in income
(loss) from
unconsolidated
investments. . . . . -- (402) 5,525 (345)
========== ========== ========== ==========
Income (loss) from
continuing
operations . . . . . 4,887 10,502 12,939 (8,773)

Gain on disposition
of unconsolidated
investment . . . . . -- 60,134 -- --

Extraordinary gain . . -- -- 136,618 --
---------- ---------- ---------- ----------
Net income (loss). . . $ 4,887 70,636 149,557 (8,773)
========== ========== ========== ==========
DENOMINATOR:
Denominator for
net income (loss)
per share -
basic and diluted. . 1,793 1,791 4 1,863
========== ========== ========== ==========
Net income (loss)
per share -
basic and diluted. . $ 2.73 39.44 37,389.34 (4.71)
========== ========== ========== ==========
Net income per
share - basic and
diluted:
Income (loss)
from continuing
operations . . . . . $ 2.73 5.86 3,234.84 (4.71)
Gain on disposition
of unconsolidated
investment . . . . . -- 33.58 -- --
Extraordinary gain . . -- -- 34,154.50 --
---------- ---------- ---------- ----------
Net income per
share basic and
diluted. . . . . . . $ 2.73 39.44 37,389.34 (4.71)
========== ========== ========== ==========





Pursuant to the Plan, a maximum of 1,863,000 shares of the Company
were issuable. As of December 31, 2004, the Company had issued and
outstanding 1,631,513 Class B shares, non par value, and approximately
161,100 Class A shares, non par value stock. The Company does not expect
to issue any additional shares under the Plan. 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.



ITEM 9. 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 2004, 2003 and 2002.



ITEM 9A. 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.





PART III


ITEM 10. 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 11 below. As of
March 15, 2004, 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
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. Reference is also made to Item 11 for more
information.

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 following table sets forth certain business experience during the
past five years of such officers of the Company.

Gary Nickele (age 52) has been Manager of KLC Land since August, 2000
and President of KLC Land 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.

Stephen Lovelette (age 48) has been an Executive Vice President of KLC
Land 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. Mr. Lovelette holds a bachelor's degree from
The College of the Holy 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 55) 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).

In light of the fact that the Company's shares are not publicly
traded, the Company is a limited liability company and the rights of
members are governed by the limited liability company agreement, the
Company has determined that it is not necessary to have either an audit
committee financial expert or a code of ethics as those terms are defined
in the rules and regulations of the SEC.







ITEM 11. 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 2004 180,000 100,000 N/A
and Chief 2003 180,000 100,000 N/A
Executive 2002 180,000 100,000 N/A
Officer

Stephen A.
Lovelette Executive 2004 195,000 100,000 N/A
Vice President 2003 175,000 50,000 N/A
2002 175,000 50,000 N/A

Gailen J. Hull Senior Vice 2004 175,000 50,000 N/A
President and 2003 175,000 50,000 N/A
Chief Financial 2002 175,000 N/A N/A
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 all other executive officers.

(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 KLC Land.






ITEM 12. 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
Chicago, Illinois 60611 (89.9% of the
Class B Shares)
(1) (2)

(1) The sole managing member of Pacific Trail, Pacific Trail Holdings,
Inc. ("PTHI"), may be deemed to beneficially own the Class B Shares
owned by Pacific Trail. PTHI disclaims beneficial ownership with
respect to any of the shares owned by Pacific Trail. Each of the
shareholders of PTHI may be deemed to own the Class B Shares owned by
Pacific Trail. Each of such shareholders, being Gary Nickele, Gailen
Hull and Andrew N. Todd, disclaims beneficial ownership with respect
to any of the shares owned by Pacific Trail. The addresses of PTHI
and Messrs. Nickele, Hull and Todd are the same as for Pacific Trail.

(2) As of March 15, 2005, there were 1,631,513 Class B Shares issued
and outstanding.

No other person including any officer of the Company is known by the
Company to beneficially own in excess of 5% of the Class A or Class B
shares issued, outstanding and distributed. No officers of the Company own
any Class A Shares.







ITEM 13. 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, 2004, 2003 and
2002 (including amounts related to discontinued operations in 2001) was
approximately $8 thousand, $102 thousand and $75 thousand, respectively,
all of which was paid as of December 31, 2004.

The Company pays a non-accountable reimbursement of approximately $30
thousand per month to JMB Realty Corporation in respect of general overhead
expense, all of which was paid as of December 31, 2004.

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 2004. The total costs for the years ended December 31, 2004,
2003 and 2002 was approximately $1.8 million, $1.8 million and $2.0
million, respectively, of which approximately $378 thousand was unpaid as
of December 31, 2004.

The Company had other amounts due from affiliates of approximately
$300 thousand at December 31, 2003. The amounts were paid during 2004.


ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The aggregate audit fees incurred for professional services by Ernst
and Young LLP ("E&Y") in 2004 and 2003 were $157,000 and $154,300,
respectively. In accordance with the SEC's definitions and rules, "audit
fees" are fees the Company paid E&Y for professional services for the audit
of the Company's consolidated financial statements included in Form 10-K
and review of financial statements included in Form 10-Qs, and for services
that are normally provided by the accountant in connection with statutory
and regulatory filings or engagements. There were no non-audit related,
tax or other services provided by E&Y.

The Company has not adopted any pre-approval policies and procedures.
All audit and permitted non-audit services are approved by the managing
member of the Company before the service is undertaken.






PART IV

ITEM 15. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits.

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 filed as an exhibit
to the Company's Form 10 filed May 1, 2003 and hereby
incorporated by reference.

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 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)

10.4 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)

10.5 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)

10.6 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)

10.7 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)

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






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

10.10 Funding Agreement dated October 29, 2002 between
Kaanapali Land and certain affiliates filed as an exhibit to
the Company's Form 10 filed May 1, 2003 and hereby incorporated
by reference.

10.11 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.

10.12 Property Purchase and Option Agreement by and between NB
Lot 4, LLC, Maui Beach Resort Limited Partnership, and NB
Lot 3, LLC dated August 4, 2003 filed as an exhibit to the
Company's report on Form 8-K (File No. 0-50273) filed on
August 22, 2003 is hereby incorporated by reference.

21. List of Subsidiaries

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.

99.1 Settlement Agreement dated March 14, 2003 between Amfac
Property Investment Corp., Amfac Hawaii, LLC, Pioneer
Mill Company, Limited, and Employees' Retirement System
of the State of Hawaii filed as an exhibit to the Company's
report on Form 8-K (File No. 0-50273) filed on September 26,
2003 is hereby incorporated by reference.

(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.

(b) No reports on Form 8-K were filed since the beginning of the
last quarter of the period covered by the report.







SIGNATURES


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: Pacific Trail Holdings, LLC
(Sole Member)


/s/ Gailen J. Hull
---------------------
By: Gailen J. Hull
Senior Vice President
Date: March 25, 2004



Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.



/s/ Gailen J. Hull
---------------------
By: Gailen J. Hull,
Senior Vice President
Chief Accounting Officer
and Chief Financial Officer
Date: March 25, 2004



/s/ Gary Nickele
---------------------
By: Gary Nickele,
President and
Chief Executive Officer
Date: March 25, 2004