SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C.  20549

                                FORM 10Q/A


                              AMENDMENT NO. 1


             Filed pursuant to Section 12, 13, or 15(d) of the
                      Securities Exchange Act of 1934



                         AMFAC/JMB HAWAII, L.L.C.
           ----------------------------------------------------
          (Exact name of registrant as specified in its charter)


      Commission File No.                             36-3109397
          33-24180                        (IRS Employer Identification No.)




                          AMFAC/JMB FINANCE, INC.
          ------------------------------------------------------
          (Exact name of registrant as specified in its charter)


      Commission File No.                             36-6311183
          33-24180-01                     (IRS Employer Identification No.)


  900 N. Michigan Ave., Chicago, IL                              60611     
(Address of principal executive office)                        (Zip Code)  



     The undersigned registrant hereby amends the following section of its
Report for the quarter ended June 30, 1998 on Form 10-Q as set forth in the
pages attached hereto:

   PART I.  FINANCIAL INFORMATION

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

                            Pages 24 through 36


     Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.


                             AMFAC/JMB HAWAII, L.L.C.


                             /s/ EDWARD J. KROLL
                             ---------------------
                             By:   Edward J. Kroll
                                   Vice President




Dated:  October 14, 1998





<PAGE>


PART I.  FINANCIAL INFORMATION

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

General

     A significant portion of the Company's cash needs result from the
nature of the real estate development business, which requires a
substantial investment in preparing development plans, seeking land
urbanization and other governmental approvals and completing infrastructure
improvements prior to sale. Additionally, the Company's sugar operations
incur a large cash deficit during the first half of the year ranging from
$10 to $20 million.  This seasonal cash need is due to the sugar
plantation's operating costs being incurred fairly ratably during the year,
while most of the revenues are received between May and December concurrent
with raw sugar deliveries to C&H.  In addition to seasonal cash needs, in
many years cash flow from sugar operations has been negative requiring a
net cash investment to fund the operating deficits and any capital costs.
Other significant cash needs include overhead expenses, debt service and
the obligation to repurchase Class B COLAs on June 1, 1999.

     The Company believes that additional borrowings from Northbrook
Corporation ("Northbrook") will be necessary to meet its short-term and
long-term liquidity needs. Northbrook has made such borrowings available to
the Company in the past and intends to make such borrowings available, at
least in the short-term. However, there is no assurance that Northbrook
will have sufficient funds, or that Northbrook will continue to make such
funds available to the Company.

     In recent years, the Company has funded its cash requirements
primarily through the use of long-term financings, borrowings from
Northbrook and revenues generated from the development and sale of its
properties. Significant short-term cash requirements relate to the funding
of agricultural deficits, interest expenses, costs to process the SMA
permit for North Beach, development costs on Oahu and Maui and overhead
expenses. At June 30, 1998, the Company had cash and cash equivalents of
approximately $13.4 million. The Company intends to use its cash reserves,
land sales proceeds and proceeds from new financings or joint venture
arrangements to meet its short-term liquidity requirements. However, there
can be no assurance that new financings can be obtained or property sales
consummated.  The Company's land holdings on Maui and Kauai are its primary
sources of future land sale revenues.  However, due to current market
conditions, the difficulty in obtaining land use approvals and the high
development costs of required infrastructure, the Company does not believe
that it will be able to generate significant amounts of cash in the short-
term from the development of these lands. As a result, the Company is
marketing for sale certain unentitled agricultural and conservation
parcels.

     The Company has placed a relatively large portion of its land holdings
on the market to generate cash to finance the Company's operations, to meet
debt service requirements and to raise cash should the holders exercise
their right to sell back to the Company their Class B COLAs on June 1,
1999.  The Company has approximately 740 acres of land listed for sale on
Maui, approximately 2,000 acres on Kauai and 700 acres on the Big Island of
Hawaii. These lands consist primarily of unentitled, agricultural and
conservation parcels.  Significant interest has been expressed in many of
these parcels and some are under contract for sale for aggregate sales
prices exceeding $19 million. However, these contracts often have due
diligence investigation periods which allow the purchasers to terminate the
agreements.  It is difficult to predict how successful the Company will be
in selling these lands at acceptable prices. Although the lands currently
for sale represent a large portion of the Company's overall land portfolio,
these properties were not planned for development during the next 15 to 20
years. Therefore, their possible sale is not expected to result in a
material impact on the Company's real estate development operations for at
least the next ten years.



<PAGE>


     During the first six months of 1998, the Company generated
approximately $21 million of land sales of which $16 million came from the
sale of the 6,700 acre Kealia parcel.  The Company has received $5.5
million in cash at closing from the sale of the Kealia parcel;  the
remaining $10.5 million is payable (pursuant to the terms of a first
mortgage note) in three equal installments due in late 1998 and early 1999.

During all of 1997, the Company generated approximately $21.2 million of
land sales, of which $4.8 million came from land related to Kaanapali Golf
Estates on Maui, $5.2 million from the four remaining oceanfront
residential lots at Kai Ala Place on Maui and $7.4 million was from the
sale of unentitled, agricultural and conservation land parcels on Kauai and
the Big Island of Hawaii. 

     The Company continues to implement certain cost savings measures and
to defer certain development costs and capital expenditures for longer-term
projects.  The Company's Property  segment expended approximately $10.1
million in project costs during 1997 and anticipates expending
approximately $11.1 million in project costs during 1998.  As of June 30,
1998, contractual commitments related to project costs totaled
approximately $3.3 million.

     In early March 1997, the Company restructured its operations into the
following six separate operating divisions:  Sugar, Golf, Coffee, Water,
Land Management and Real Estate Development. The Company also formed a
corporate services division to provide accounting, MIS, human resources,
tax and other administrative services for the six operating groups. The
Company believes it will operate more effectively as several smaller
entrepreneurial-minded divisions. Approximately four percent(4%) of the
Company's total employees were released as part of the restructuring, which
has resulted in annual payroll savings of approximately $1.1 million. The
Company incurred termination costs of approximately $0.6 million related to
the restructuring during the first quarter of 1997. At December 31, 1997,
the Company and its subsidiaries employed 845 persons.

     In February 1998, the Company announced the relocation of the
headquarters for its real estate development division from Honolulu to
Kaanapali, Maui. Due to poor market conditions on Kauai and a shortage of
land inventory on Oahu, the focus of the Company's land development
operations is expected to be on Maui.  In connection with the office re-
location, four executives and one administrative person resigned their
positions with the Company.  The Company is currently organizing a
management team for the Maui development office, which will be smaller in
number than the staff was on Oahu.  At the request of the Company, two of
the resigning executives have agreed to assist with the move and transition
of the headquarters to Maui.  These changes are expected to result in one-
time termination and relocation costs of $.5 million during 1998.  Annual
recurring cost savings are expected to be approximately $.7 million from
lower compensation, rent and other employee-related costs. 

     The sugar industry in Hawaii has experienced significant difficulties
for a number of years. Growers in Hawaii have long struggled with high
costs of production, which have led to the closure of many plantations,
including Oahu Sugar Company. Transportation costs of raw sugar to the C&H
refinery are also significant.  During 1996 and 1997, the Company conducted
a series of meetings and discussions aimed at developing a plan to return
its sugar operations on Kauai to profitability.  Participants in this
process included rank-and-file workers, supervisors, union officials and
Company management.  The plan developed by this group was named "Imua,"
which is the Hawaiian word meaning "to move forward." Imua included
significant changes in how the Company's plantations would be operated and
how employees would be compensated. Imua was the subject of formal
negotiations with the union in late 1997 and early 1998. These negotiations
were recently completed and the union leadership supported the Imua plan.
However, in February 1998, Imua failed by a large margin in a ratification
vote by the union membership at the Kauai plantations. 


<PAGE>


     The contract covering employees at the Kauai and Maui plantations
expired on January 31, 1998 and was extended on a day-to-day basis.  The
extension agreements which covered 88% of the Kauai plantation workers and
70% of the Maui plantation employees, had a provision which allowed either
party to cancel the extension upon three days' notice. 

     In early April 1998, the Company sent the union a new proposal, which
was different from Imua but still contained substantial wage and other
concessions which were critical to the survival of the Company's sugar
plantations. After lengthy negotiations with the union, the union
membership at the Kauai plantation ratified a two year contract which
included a 10% reduction in wages for one year as well as other
concessions.  The union membership at Pioneer Mill ratified a three year
contract which included a 9% reduction in wages for one year as well as
other concessions.  Although the concessions will have a meaningful,
positive impact on current operations, they do not provide the type of
structural changes necessary to provide for long-term profitability and a
secure future for the Company's sugar operations.  Currently, the Company
is proceeding with the 1998 harvest campaign.  Decisions regarding the
future of sugar will be made on a year-to-year basis in light of operating
results and forecasts for the upcoming year.

     Changes in the price of raw sugar impact the level of agricultural
deficits, and as a result the annual cash needs of the Company.  Although
government legislation is currently in place (through 2002) that sets a
target price range for raw sugar, it is possible that such legislation
could be amended or repealed resulting in a reduction in the price of raw
sugar.  Such a reduction could cause the Company to evaluate the shutdown
of its sugar plantations.

     Company management cannot accurately predict the actual cost of a
potential shutdown as there are a significant number of factors that would
impact the actual cost including the exact timing of the shutdown,
potential environmental issues, the market and pricing for the sale of the
plantation's field and mill equipment and employee termination costs which
are subject to negotiation with the union. Other significant unknowns
relate to the costs associated with terminating the power sale agreements
with the local utility companies.

     If the Company's sugar production decreases, the Company's water needs
will also decrease.  Subject to significant regulatory restrictions, excess
water may be used for other purposes and the Company is exploring
alternative uses for such water.  Waiahole Irrigation Company, Limited
("WIC") is a wholly-owned subsidiary of the Company and owns and operates a
water collection and transmission system commonly referred to as the
"Waiahole Ditch" (a series of tunnels and ditches constructed in the early
1900's).  The Waiahole Ditch has the capacity to transport approximately 27
million gallons of water per day from the windward part of Oahu to the
central Oahu plain leeward of the Ko'olau mountain range.  This water was
used by the Company's Oahu Sugar operations from the early 1900s until
1995, when the plantation was closed. 

     After the closure of Oahu Sugar, WIC negotiated a collective agreement
with several farms and golf courses (the "Users") to deliver irrigation
water to them for a fee. However, to consummate these agreements, water
permits (the "Water Permits") were applied for from the State of Hawaii
Water Commission (the "Water Commission").  The Water Commission issued a
final decision in December 1997 relating to the Water Permits which allowed
only about one-half of the capacity of the Waiahole Ditch to be transported
through the system.  The continued operation of the Waiahole Ditch and
receipt of the delivery fees (from the agreement with the Users) were
predicated upon an allocation (from the Water Commission) at or near the
capacity of the Waiahole Ditch.  When the lower allocation was received,
WIC terminated the agreement with the Users.  Currently, water is delivered
to the Users on a month-to-month basis at the fees originally included in
the agreement.


<PAGE>


     After several months of discussions with prospective purchasers, the
Company reached an agreement with the State of Hawaii pursuant to which the
State will purchase the stock or substantially all of the assets of WIC for
$8.5 million (which includes 450 acres of conservation land). The purchase
was subject to state legislative approval which was obtained in May 1998. 
Closing remains conditional upon other factors.  If the sale is not
consummated, WIC will then decide whether to re-negotiate the fee for
delivery of water through the system.  Finally, if improvements cannot be
made in either the pricing or volume of Waiahole Ditch water, WIC will
consider reducing or terminating the operations of the Waiahole Ditch. 
Such a closure or limitation of the Waiahole Ditch would not have a
material adverse effect on the Company's financial condition or on its
results of operations.

     The Company has received a commitment of $1.5 million in federal
funding under the Rural Economic Transition Assistance - Hawaii program. 
The Company has identified various new agricultural crops in which these
"matching funds" are to be used by the Company.

     During the first six months of 1998, cash increased by $4.3 million
from December 31, 1997.  Net cash used in operating activities of $14.0
million and in investing activities of $1.3 million was primarily provided
by $20.4 million of long-term financing proceeds from Northbrook partially
offset by principal loan repayments on long-term debt of approximately $.8
million.

     During the first six months of 1998, net cash flow used in operating
activities was $14.0 million, as compared to net cash used in operating
activities of $10.1 during the first six months of 1997. The $3.9 million
increase in cash flow used in operating activities during the first six
months of 1998 as compared to the first six months of 1997 was due
primarily to a $5.2 million increase in receivables related to (i) the sale
of land parcels of Kealia of approximately $10.5 million and (ii) the
reclassification of $1.7 million outstanding on a note receivable from a
prior year land sale from noncurrent to current (discussed below), (iii)
offset in part by a $6.6 million decrease in receivables from HS&TC due in
part to a later start in the harvest season as compared to the prior year.

     During the first six months of 1998, net cash flow used in investing
activities was $1.3 million as compared to $6.2 million during the first
six months of 1997. The $4.9 million decrease in net cash used in investing
activities was principally due to a decrease of $2.2 million in other
assets during the first six months of 1998 primarily due to the
reclassification of a note receivable recorded in connection with a prior
year land sale from noncurrent to current.  The note which is due in 1999,
has an outstanding balance of approximately $1.7 million and is classified
in current receivables at June 30, 1998.  Additionally, during the first
six months of 1998 property additions were $1.3 million as compared to $2.4
million during the first six months of 1997.

     During the first six months of 1998, net cash flow provided by
financing activities increased to $19.6 million from $16.7 million during
the first six months of 1997.  The $2.9 million increase is due primarily
to (i) an increase in net advances by affiliates totaling $20.4 million
during the first six months of 1998 as compared to $12.2 million during the
first six months of 1997 (see Note 4) offset in part by (ii) $5.0 million
of additional long-term financing primarily related to the loan secured by
the golf course owned by WGCI in the first six months of 1997. These
amounts were also partially offset by $.8 million and $.9 million of
principal loan repayment on long-term debt in the first six months of 1998
and 1997, respectively.



<PAGE>


     COLA RELATED OBLIGATIONS.  AJF and the Company are parties to the
Repurchase Agreement pursuant to which AJF is obligated to repurchase the
Class B COLAs tendered by the holders thereof on June 1, 1999.  Northbrook
agreed pursuant to the Keep-Well Agreement  to contribute sufficient
capital or make loans to AJF to enable AJF to meet the COLA repurchase
obligations, if any, described above.  Notwithstanding AJF's repurchase
obligations, the Company may elect to redeem any COLAs requested to be
repurchased at the specified price.

     The Company and its parent, Northbrook, are currently working to
generate sufficient funds to meet the maximum potential repurchase
obligation.  Although there can be no assurances that any or all of these
efforts will be successful, the Company is optimistic that the funds
necessary to meet the repurchase obligations will be raised if these
efforts are successful.  Failure to meet the repurchase obligations could
lead to a claim against AJF and, in turn, Northbrook.

     The COLAs were issued in units consisting of one Class A COLA and one
Class B COLA.  The repurchase of the Class B COLAs on June 1, 1999 may be
required of AJF by the holders of such COLAs at a price equal to 125% of
the original principal amount of such COLAs ($500) minus all payments of
principal and interest allocated to such COLAs.  As of December 31, 1997,
the Company had approximately 156,000 Class A COLAs units and approximately
286,000 Class B COLAs units outstanding, with a principal balance of
approximately $78 million and $143 million, respectively.  The Company
estimates that assuming only 4% per annum interest payments ("Mandatory
Base Interest") is paid that the redemption price for the Class B COLAs at
June 1, 1999 would be approximately $410 per unit.  Therefore, the maximum
potential repurchase obligation would be $117.3 million.  At March 31,
1998, the cumulative interest paid per Class A COLA unit and Class B COLA
unit was approximately $195 and $195, respectively.

     On January 30, 1998, Amfac Finance Limited Partnership ("Amfac
Finance"), an Illinois limited partnership and an affiliate of the Company
extended a tender offer to purchase (the "Tender Offer") up to $65.4
million principal amount of separately Certificated Class B COLAs
("Separate Class B COLAs") for cash at a unit price of $375 to be paid by
Amfac Finance on each Separate Class B COLA on or about March 24, 1998. 
The maximum cash to be paid under the Tender Offer is $49.0 million
(130,842 Separate Class B COLAs at a unit price of $375 each).
Approximately 62,857 Separate Class B COLAs were submitted to Amfac Finance
for repurchase pursuant to the Tender Offer requiring an aggregate payment
by Amfac Finance of approximately $23.6 million on March 31, 1998. The
Tender Offer will not reduce the outstanding indebtedness of the Company. 
The Separate Class B COLAs to be purchased by Amfac Finance pursuant to the
Tender Offer will remain outstanding pursuant to the terms of the
Indenture.  Except as provided in the last sentence of this paragraph,
Amfac Finance will be entitled to the same rights and benefits of any other
holder of Class B COLAs, including having the right to have AJF repurchase
on June 1, 1999, the separate Class B COLAs that it owns.  Amfac Finance
has not yet determined whether it will require AJF to repurchase its
separate Class B COLAs.  Because Amfac Finance is an affiliate of the
Company, Amfac Finance will not be able to participate in determining
whether the holders of the required principal amount of debt under the
Indenture have concurred in any direction, waiver or consent under the
terms of the Indenture.

     As a result of the Tender Offer, the Company recognized $7.9 million
of taxable gain in accordance with income tax regulations for certain
transactions with affiliates.  Such gain is treated as cancellation of
indebtedness income for income tax purposes only, and accordingly, the
income taxes related to the Tender Offer (approximately $3.1 million) will
be indemnified by Northbrook through the tax agreement (note 1).



<PAGE>


     Pursuant to the terms of the Indenture relating to the COLAs, the
Company is required to maintain a Value Maintenance Ratio (defined in the
Indenture) of 1.05 to 1.00. Such ratio is equal to the relationship of the
Company's Net Asset Value to the sum of: (i) the outstanding principal
amount of the COLAs, (ii) any unpaid Base Interest, and (iii) the
outstanding principal balance of any Indebtedness incurred to redeem COLAs
(the "COLA Obligation"). Net Asset value represents the excess of the Fair
Market Value (as defined in the Indenture) of the gross assets of the
Company over the liabilities of the Company other than the COLA obligations
and certain other liabilities. The COLA Indenture requires the Company to
obtain independent appraisals of the fair market value of the gross assets
used to calculate the Value Maintenance Ratio as of December 31 in each
even-numbered calendar year.

     The Company has received independent appraisals indicating that the
appraised value of substantially all of its gross assets as of December 31,
1996, was approximately $653 million.  Based upon the appraisals, the
Company was able to meet the Value Maintenance Ratio  as of December 31,
1996.  As of December 31, 1997, the Fair Market Value of the gross assets
of the Company is determined by Company management.  To the extent that
management believes that the aggregate Fair Market Value of the Company's
assets exceeds by more than 5% the Fair Market Value of such assets
included in the most recent appraisal, the Company must obtain an updated
appraisal supporting such increase. It should be noted that pursuant to the
Indenture the concept of Fair Market Value is intended to represent the
value that an independent arm's-length purchaser, seeking to utilize such
asset for its highest and best use would pay, taking into consideration the
risks and benefits associated with such use or development, current
restrictions on development (including zoning limitations, permitted
densities, environmental restrictions, restrictive covenants, etc.) and the
likelihood of changes to such restrictions; provided, however, that with
respect to any Fair Market Value determination of all of the assets of the
Company, such assets shall not be valued as if sold in bulk to a single
purchaser. Although the Company believes the value of certain of its assets
as of December 31, 1997, may be lower than their value one year earlier,
the Company believes that the values were  sufficient to be in compliance
with the Value Maintenance Ratio.  There can be no assurance that the
Company will be able to sell its real estate assets for their aggregate
appraised value. Because of the size and diversity of the real estate
holdings of the Company and the uncertainty of the Hawaii real estate
market, it is likely that it would take a considerable period of time for
the Company to sell its assets.  In recent years, the Company has sold some
of its real estate for less than their appraised value to meet cash needs.
In addition, the aggregate value of the Company's assets could be
negatively affected by the recent financial difficulties in Southeast Asia
and Japan.

     The Company uses the effective interest method and as such interest on
the COLAs is accrued at the Mandatory Base Interest rate (4% per annum).
The Company has not generated a sufficient level of Net Cash Flow to pay
Contingent Base Interest (interest in excess of 4%) on the COLAs (see
Note 3) from 1990 through 1997.  Contingent Base Interest through 2008 is
payable only to the extent of Net Cash Flow. Net Cash Flow for any period
is generally an amount equal to 90% of the Company's net cash revenues,
proceeds and receipts after payment of cash expenditures, excluding federal
and state income taxes and after the establishment by the Company of
reserves. At December 31, 2008, Contingent Base Interest may also be
payable to the extent of Maturity Market Value. Maturity Market Value
generally means 90% of the excess of the Fair Market Value of the Company's
assets at maturity over its liabilities (including Qualified Allowance
(described in the next paragraph), but only to the extent earned and
payable from Net Cash Flow generated through maturity) at maturity.
Approximately $106.4 million of the $114.0 million cumulative deficiency of
Contingent Base Interest related to the period from August 31, 1989 (Final
Issuance Date) through June 30, 1998 has not been accrued in the
accompanying consolidated financial statements as  the Company believes
that it is not probable at this time that a sufficient level of Net Cash


<PAGE>


Flow will be generated in the future or that there will be sufficient
Maturity Market Value as of December 31, 2008 (the COLA maturity date) to
pay any such unaccrued Contingent Base Interest.  The following table is a
summary of Mandatory Base Interest and Contingent Base Interest for the six
months ended and the year ended December 31, 1997 (dollars are in
millions):

                                                    1998      1997  
                                                  --------  --------

Mandatory Base Interest paid . . . . . . . . .    $    4.4       8.8
Contingent Base Interest paid. . . . . . . . .       --        --   
Cumulative deficiency of Contingent 
  Base Interest at end of year . . . . . . . .    $  114.0     107.4

     Net Cash Flow was $0 for 1997 is expected to be $0 for 1998.

     With respect to any calendar year, JMB or its affiliates may receive a
Qualified Allowance in an amount equal to 1.5% per annum of the Fair Market
Value of the gross assets of the Company (other than cash and cash
equivalents and certain other types of assets as provided for in the
Indenture) for providing certain advisory services to the Company. The
aforementioned advisory services, which are provided pursuant to a 30-year
Services Agreement entered into between the Company and JMB Realty
Corporation ("JMB"), an affiliate of the Company, in November 1988, include
making recommendations in the following areas: (i) the construction and
development of real property; (ii) land use and zoning changes; (iii) the
timing and pricing of properties to be sold; (iv) the timing, type and
amount of financing to be incurred; (v) the agricultural business; and (vi)
the uses (agricultural, residential, recreational or commercial) for the
land. However, the Qualified Allowance shall be earned and paid for each
year prior to maturity of the COLAs only if the Company generates
sufficient Net Cash Flow to pay Mandatory and Contingent Base Interest for
such year in an amount equal to 8% . Any portion of the Qualified Allowance
not paid for any year shall cumulate without interest and JMB or its
affiliates shall be paid such deferred amount in succeeding years, only
after the payment of all Contingent Base Interest for such succeeding year
and then, only to the extent that Net Cash Flow exceeds levels specified in
the Indenture. 

     A Qualified Allowance for 1989 of approximately $6.2 million was paid
on February 28, 1990.  Approximately $64.5 million of Qualified Allowance
related to the period from January 1, 1990 through December 31, 1997 has
not been earned and paid, and is payable only to the extent that future Net
Cash Flow is sufficient. Accordingly, because the Company does not believe
it is probable at this time that a sufficient level of Net Cash Flow will
be generated in the future to pay the Qualified Allowance, the Company has
not accrued for any Qualified Allowance payments in the accompanying
consolidated financial statements. JMB has informed the Company that no
incremental costs or expenses have been incurred relating to the provision
of these advisory services.  The Company believes that using an incremental
cost methodology is reasonable.  The following table is a summary of the
Qualified Allowance for the year ended December 31, 1997 (dollars are in
millions):

                                                           1997  
                                                         --------

      Qualified Allowance calculated . . . . . . . . .   $   10.1
      Qualified Allowance paid . . . . . . . . . . . .      --   
      Cumulative deficiency of Qualified 
        Allowance at end of year . . . . . . . . . . .   $   64.5



<PAGE>


     After the maturity date of the COLAs, JMB will continue to provide
advisory services pursuant to the Services Agreement, the Qualified
Allowance for such years will continue to be 1.5% per annum of the Fair
Market Value of the gross assets of the Company and its subsidiaries and
the Qualified Allowance will continue to be payable from the Company's Net
Cash Flow.  Upon the termination of the Services Agreement, if there has
not been sufficient Net Cash Flow to pay the cumulative deficiency in the
Qualified Allowance, if any, such amount would not be due or payable to
JMB.

     Upon maturity, holders of COLAs will be entitled to receive the
remaining outstanding principal balance of the COLAs plus unpaid Mandatory
Base Interest plus additional interest equal to the unpaid Contingent Base
Interest, to the extent of the Maturity Market Value (Maturity Market Value
generally means 90% of the excess of the Fair Market Value (as defined) of
the Company's assets at maturity over its liabilities (including Qualified
Allowance, but only to the extent earned and payable from Net Cash Flow
generated through maturity) at maturity, which liabilities have been
incurred in connection with its operations), plus 55% of the remaining
Maturity Market Value.

RESULTS OF OPERATIONS

     GENERAL:

     The Company and its subsidiaries report its taxes as a part of the
consolidated tax return for Northbrook.  The Company and its subsidiaries
have entered into a tax indemnification agreement with Northbrook, which
indemnifies the Company and its subsidiaries for responsibility for all
past, present and future federal and state income tax liabilities (other
than income taxes which are directly attributable to cancellation of
indebtedness income caused by the repurchase or redemption of securities as
provided for in or contemplated by the Repurchase Agreement). 

     Current and deferred taxes have been allocated to the Company as if
the Company were a separate taxpayer in accordance with the provisions of
SFAS No. 109 - Accounting for Income Taxes.  However, to the extent the tax
indemnification agreement does not require the Company to actually pay
income taxes, current taxes payable or receivable (excluding income taxes
which are directly attributable to cancellation of indebtedness income
caused by the repurchase or redemption of securities as provided for in or
contemplated by the Repurchase Agreement) have been reflected as deemed
contributions to additional paid-in capital or distributions from retained
earnings (deficit) in the accompanying consolidated financial statements.
As such, the deferred income tax liabilities reflected on the Company's
consolidated balance sheet are not expected to result in cash payments by
the Company.

     The Company is assessing the modifications or replacement of its
software that may be necessary for its computer systems to function
properly with respect to dates in the year 2000 and thereafter.  The
Company does not believe that the cost of either modifying existing
software or converting to new software will have a material adverse impact
on the financial condition of the Company and the Company's management is
taking action to ensure that the year 2000 issue will not pose significant
operational problems for its computer systems. The Company is initiating
discussions with parties with whom it does business to ensure that those
parties have appropriate plans to remediate year 2000 issues where their
systems impact the Company's operations.  There is no assurance that the
systems of those parties will function properly and would not have an
adverse effect on the Company's operations.

     Selling, general and administrative costs deceased for the three and
six months ended June 30, 1998 as compared to the three and six months
ended June 30, 1997 due primarily to payroll savings associated with the
Company's restructuring in early 1997.



<PAGE>


     Interest expense increased for the three and six months ended June 30,
1998 as compared to the three and six months ended June 30, 1997 due to
additional affiliated financing.

     AGRICULTURE SEGMENT:

     The Company's Agriculture segment is responsible for activities
related to the cultivation, processing and sale of sugar cane and coffee. 
Agriculture's revenues are primarily derived from the Company's sale of its
raw sugar.  Reference is made to the "Liquidity and Capital Resources"
section of "Management's Discussion and Analysis  of Financial Condition
and Results of Operations" for a discussion of potential uncertainties
regarding the price of raw sugar and the continuation of the Company's
sugar cane operations.

     The Company's sugar plantations sell all their raw sugar production to
the Hawaiian Sugar and Transportation Company ("HSTC"), which is an
agricultural cooperative owned by the major Hawaii producers of raw sugar
(including the Company).  Pursuant to a long term supply contract, HSTC is
required to sell, and the California and Hawaiian Sugar Company ("C&H") is
required to purchase, all raw sugar produced by the HSTC's cooperative
members.  HSTC remits to its cooperative members the remaining proceeds
from its sugar sales after storage, delivery and administrative costs.  The
Company recognizes revenues and related cost of sales upon delivery of its
raw sugar by HSTC to C&H.

     As part of the Company's agriculture operations, the Company enters
into commodities futures contracts and options in raw sugar as deemed
appropriate to reduce the risk of future price fluctuations.  These futures
contracts and options are accounted for as hedges and, accordingly, gains
and losses are deferred and recognized in cost of sales as part of the
production cost.

     During the first six months of 1998, agriculture revenues were $3.4
million as compared to $8.3 million in the first six months of 1997.

     Agricultural revenues and cost of sales decreased for the three and
six months ended June 30, 1998 as compared to the three and six months
June 30, 1997 due to the decrease in tons produced and to the timing of
sugar production and related sales as a result of the delay of the sugar
harvest season attributable to the timing of the sugar union negotiations
and contract ratification.  For the three and six months ended June 30,
1998, the Company sold approximately 7,853 tons of sugar, a 155% decrease
over the same period in 1997.  The average price of sugar sold for the six
months ended June 30, 1998 of approximately $353 represents a 1% decrease
over the average price for the six months ended June 30, 1997.  The Company
harvested approximately 1,664 and 3,777 acres for the six months ended
June 30, 1998 and 1997, respectively.

     The operating loss of $2.4 million in the first six months of 1998 as
compared to the $1.4 million in the first six months of 1997 was due
primarily to higher cost of sales related to coffee operations and the
lower return per ton on sugar sold as discussed above.

     PROPERTY SEGMENT:

     The Company's Property segment is responsible for land planning and
development activities; obtaining land use, zoning and other governmental
approvals; selling or financing developed and undeveloped land parcels; and
the management and operation of the Company's golf course facilities.



<PAGE>


     Revenues increased to $32.9 million during the first six months of
1998 from $19.6 million during the first six months of 1997. Property
revenues include revenues from land sales of approximately $21 million and
$9.4 million for the first six months of 1998 and 1997, respectively, and
revenues from the operations of the three golf courses owned by the Company
of approximately $7.9 million and $8.1 million for the first six months of
1998 and 1997. Land sales included revenues for the six months ended
June 30, 1998 of approximately $16 million from the sale of the 6,700 area
Kealia parcel on Kauai, $3.6 million of land sales related to Kaanapali
Golf Estates and $1.4 million primarily from the sale of unentitled
agricultural and conservation land parcels on Kauai and Hawaii.  The
Company has received $5.5 million of the $16 million Kealia parcel sales
proceeds and the remaining $10.5 million is payable (pursuant to the terms
of a first mortgage note) in three equal installments due in late 1998 and
early 1999.

     During the first six months of 1998, property cost of sales were $29.9
million as compared to $16.2 million in the first six months of 1997. The
$13.7 million increase in costs was due primarily to an increase in sales
volume associated with land parcels sold (as discussed above).

     Property sales and cost of sales increased for the three and six
months ended June 30, 1998 as compared to the three and six months ended
June 30, 1997 due to higher sales volume.  Operating income improved
primarily due to slightly improved margins realized on property sold during
1998 and lower general and administrative expenses.

     (a)  Maui

     In general, the development of the Company's land on Maui is expected
to be long-term in nature.  As Maui is less populated than Oahu and more
dependent on the resort/tourism industry, much of the Company's land is
intended for resort and resort-related uses.  Due to overall economic
conditions and trends in tourism, demand for these land uses has been weak.
The Company's homesite inventory on Maui, which is targeted to the second
home buyer, has experienced slower sales activity over the past five years
than originally expected.  The Company's competitors on Maui have also
experienced slow sales activity.  The Company is continuing to evaluate its
plans and the timing of development of its land holdings in light of the
current weak market demand and the capital resources needed for future
development.

     The Company has determined that the focus of its development efforts
should be on its Kaanapali/Honokowai land holdings (approximately 3,200
acres) on Maui.  Although additional governmental approvals are required
for most of these lands, approximately 900 acres of the Company's
Kaanapali/Honokowai land holdings already have some form of entitlements. 
Due to the strong market appeal of the Kaanapali Beach Resort, the Company
believes its development efforts are best concentrated in this area where
it has certain development approvals already secured.

     The Company's Kahoma, Launiupoko and Olowalu properties (in total
approximately 9,000 acres) are considered to be better suited in the near
term for agricultural uses and possibly for lower density, more rural
developments.  To generate cash, the Company has decided to sell certain
portions of these land holdings as unentitled parcels, and may consider
selling additional portions of these lands based upon market conditions and
the cash needs of the Company.

     KAANAPALI GOLF ESTATES.  The Company is marketing Kaanapali Golf
Estates ("KGE"), a residential community that is part of the Kaanapali
Beach Resort on West Maui.  KGE is divided into several parcels and is
approved for 340 homesites of which the Company through individual and bulk
sales has sold approximately 90 homesites.  In May 1997, the Company
obtained final subdivision approval for a 32-lot subdivision of one such
parcel, referred to as "Parcel 17B".  The Company commenced on-site
construction of the subdivision improvements for Parcel 17B in August 1997


<PAGE>


and completed these improvements in March 1998 at a cost of approximately
$1.7 million.  During 1997, the Company generated approximately $2.8
million from the sale of 18 lots at Parcel 17B and approximately $2.0
million from the sale of the remaining 6 lots in a nearby parcel referred
to as Parcel 14.  For the six months ended June 30, 1998, the Company
generated $1.8 from the sale of eleven lots at Parcel 17B.  One additional
lot was sold in July 1998 and there are currently two lots available at an
average price of approximately $170,000.  In May 1998, the Company sold
Parcel 18, an 18-lot subdivision in KGE, in bulk for $1.8 million.

     KAI ALA PLACE. In 1995, the Company subdivided an oceanfront parcel
commonly known as Kai Ala Place into six single family homesites of
approximately one acre each. Two of the lots were sold in 1995 generating
sales proceeds of approximately $4.1 million. The remaining four lots were
sold in 1997 as a package to a local developer for a "package" price of
$5.2 million.

     NORTH BEACH. The Company is currently part of a joint venture with
Tobishima Pacific Inc. ("Tobishima"), a wholly-owned subsidiary of a
Japanese company, the purpose of which is to plan, manage and develop
approximately 96 acres of beachfront property at Kaanapali known as "North
Beach".  The joint venture, in which the Company has a 50% interest, has
governmental approvals, subject to receiving a Project SMA permit, for the
development of up to 3,200 hotel or condominium units on four separate
sites.  The North Beach property constitutes nearly all of the remaining
developable beachfront acreage at Kaanapali. The development of North Beach
continues to be tied to the completion of the Lahaina bypass highway or
other traffic mitigation measures satisfactory to the Maui County Planning
Commission ("MPC"). Although the joint venture has state urbanization,
county zoning and a Master SMA permit, a Project SMA permit is required for
each of the four sites as development plans are completed.

     The Company filed for a Project SMA in March 1997 to develop a time-
share resort on 14 acres of the North Beach property (the "Site").  A
public hearing was held on the Project SMA permit on July 10, 1997.
Although there was a significant amount of testimony both for and against
the project, the MPC did not make a final decision at the public hearing. 
Instead, "intervention status" was granted to several parties who presented
their specific objections to the SMA permit in a quasi-judicial process
(known as a "contested case" hearing). The hearing officer for the
contested case issued his proposed Decision and Order (the "D&O") in
December 1997.  Although the proposed D&O recommended granting the Project
SMA permit, there were a significant number of new conditions with respect
to the development.  The Company plans to object to many of these
conditions and to request that the MPC modify or delete these conditions. 
Final MPC action on the Company's Project SMA permit application is not
anticipated until later in 1998.  Although there can be no assurance that
the Project SMA permit will be received (and that if such permit is
approved, that its terms and conditions will be acceptable to the Company),
Company management is hopeful that the Company will receive the necessary
approvals to proceed with the development of the Site. 

     The Company believes that the potential for a successful time-share
development at North Beach will be greatly enhanced by the involvement of a
company with past experience in time-share development, and in the
marketing and sale of time-share intervals (one week ownership rights).  In
February 1997, the Company formed a limited partnership with an affiliate
of an experienced time-share development and management company. Kaanapali
Ownership Resorts L.P., the new limited partnership, is owned 85% by
affiliates of the Company and 15% by Kaanapali Partners Limited
Partnership, an affiliate of the owners of The Ridge Tahoe resort in
Nevada. The partnership is in the process of arranging project financing
for the development of the time-share resort. 



<PAGE>


     In September 1997, the Company and Tobishima entered into an agreement
with Maui County providing the County with the option to purchase 33 acres
at North Beach (separate from the Site) for $15 million.  Maui County
cannot exercise its option to purchase unless and until the Company
receives the Project SMA permit in a form acceptable to the Company for
development of the Site.  The acquisition of the 33 acres by Maui County
would reduce the overall density of the North Beach development by
approximately one-third.  The Mayor of Maui County and the County
administration have agreed that, assuming the reduction in density were to
be effected, the infrastructure upgrades proposed by the Company for the
time-share resort would be sufficient for the development of the Site. 

     Due to significant differences between the Company and Tobishima, the
Company has taken actions to effectively restructure or terminate the joint
venture relationship.  Such actions will ultimately affect the ownership
structure of the North Beach parcel.  Until the structure at North Beach is
resolved, the Company has delayed its planning and entitlement efforts for
its Hawaii time-share project, the Kaanapali Ocean Resort, which is planned
for 14-acres at North Beach.

     NORTH BEACH MAUKA.  The Company has plans for an additional 18-hole
golf course, condominiums, commercial/retail and residential uses.  The
Company also plans to evaluate adding a significant time-share component to
the development plans for this 318-acre parcel.  Currently, the Company has
Community Plan approvals and R-3 zoning (residential, minimum 10,000 square
foot lots) for North Beach Mauka.  State urbanization is required, along
with final zoning and subdivision.

     PUUKOLII VILLAGE.  The Company has regulatory approval to develop a
project known as "Puukolii Village", on approximately 249 acres which is
also located near Kaanapali Beach Resort. A significant portion of this
project will be affordable housing. Development of most of Puukolii Village
cannot commence until after completion of the planned Lahaina/Kaanapali
bypass highway.  The proposed  development of Puukolii Village is
anticipated to satisfy the Company's affordable housing requirements in
connection with its Kaanapali/Honokowai land use entitlements.  For the
portion of Puukolii Village that is not dependent upon completion of the
Lahaina/Kaanapali bypass highway, the Company has unsuccessfully attempted
to sell several residential parcels to home builders and multi-family
residential developers.  Until such time that an acceptable agreement can
be reached with a housing developer,  limited funds will be expended on
infrastructure (including an access road) for Puukolii Village. 

     In connection with certain of the Company's land use approvals on
Maui, the Company has agreed to provide employee and affordable housing and
to participate in the funding of the design and construction of the planned
Lahaina/Kaanapali bypass highway. The Company has entered into an agreement
with the State of Hawaii Department of Transportation covering the
Company's participation in the design and construction of the bypass
highway.  In conjunction with state urbanization of the Company's Kaanapali
Golf Estates project, the Company committed to spend up to $3.5 million,
(of which approximately $.8 million has been spent as of June 30, 1998)
toward the design of the highway. Due to lengthy delays by the State in the
planned start date for the bypass highway, the Company recently funded
approximately $.9 million for the engineering and design of the widening
(from 2 to 4 lanes) of the existing highway through the Kaanapali Beach
Resort.  The Company believes this $.9 million can be credited against the
$3.5 million commitment discussed above. The Company's remaining commitment
of another $6.7 million for the construction of the bypass highway is
subject to the Company obtaining future entitlements on Maui and the actual
construction of the bypass highway.  The development and construction of
the bypass highway is expected to be a long-term project that will not be
completed until the year 2004 or later.



<PAGE>


     (b)  Oahu

     In 1997, the Company began developing the 64 acres of fee simple land
it owns at the Oahu Sugar mill-site. The Company has received county zoning
for a light industrial subdivision on a 37-acre portion of the property,
which excludes property containing the actual sugar mill and adjacent
buildings. In connection with the development of this property, the Company
has received state land use urbanization for the entire 64-acre site.

     The Company is currently negotiating several contracts for bulk land
sales for this development as the Company had received no acceptable offers
on the twenty-three lots within the light industrial subdivision.  The
infrastructure  for these first twenty-three lots was expected to cost
approximately $5.9 million, of which $4.0 million has been spent through
June 30, 1998. The Company does not anticipate completing additional
infrastructure.

     (c)  Kauai

     The Company owns approximately 21,200 acres of land on the island of
Kauai, the vast majority of which is classified and zoned by the State of
Hawaii and the County of Kauai, respectively, as agricultural and
conservation lands.  There are two large contiguous parcels which comprise
the bulk of these Kauai land holdings: Kapaa and Lihue/Hanamaulu.  Each of
the parcels is located along the eastern shore of Kauai.  Large portions of
the agricultural lands are currently used for sugar cane cultivation, and
portions of the conservation lands are utilized by the Company's sugar
plantations to collect, store and transmit irrigation water from
mountainous areas to the sugar cane fields. 

     The Company has state urbanization and county zoning for a 552 acre
master-planned community known as the Lihue/Hanamaulu Town Expansion, which
includes approximately 1,800 affordable and market rate residential units,
commercial and industrial facilities and a number of community and other
public uses. The Company does not plan to pursue subdivision and building
permits for this project until the real estate market on Kauai improves. 
Once construction commences the project is expected to span 20 years. 

     The Company has decided to sell large portions of its Kauai land
holdings which includes primarily 2,000 acres in Kapaa.  The Company has
certain additional lands also listed for sale; however, many of these are
smaller remnant parcels.  The Company may consider selling additional
portions of these lands based upon market conditions and the cash needs of
the Company.

     (d)  Hawaii

     The Company owns approximately 700 acres of land on the island of
Hawaii of which almost all are  classified by the State of Hawaii and zoned
by the County of Hawaii as agricultural lands.  These lands are located on
the eastern (windward) side of the island, primarily in the Keaau and Pahoa
districts, south of the town of Hilo.