Guarantor and Non-Guarantor Financial Statements

12 Months Ended

Dec. 31, 2011

GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS [Abstract]

Guarantor and Nonguarantor Financial Information Disclosure [Text Block]

GUARANTOR AND NON-GUARANTOR FINANCIAL STATEMENTS

The following consolidating financial information and condensed consolidating financial information includes:

(1) Condensed consolidating balance sheets as of December 31, 2011 and 2010, respectively; consolidating statements of operations and comprehensive (loss) income for the years ended December 31, 2011, 2010 and 2009, respectively; and condensed consolidating statements of cash flows for the years ended December 31, 2011, 2010 and 2009, respectively, of (a) Kennedy-Wilson Holdings, Inc., as the parent, (b) Kennedy-Wilson, Inc., as the subsidiary issuer, (c) the guarantor subsidiaries, (d) the non-guarantor subsidiaries and (e) Kennedy-Wilson Holdings, Inc. on a consolidated basis; and

(2) Elimination entries necessary to consolidate Kennedy-Wilson Holdings, Inc., as the parent, with Kennedy-Wilson, Inc. and its guarantor and non-guarantor subsidiaries

Included in the guarantor subsidiaries column below are data for certain guarantor subsidiaries that were less than 100% owned by Kennedy-Wilson as of December 31, 2010. Such guarantor subsidiaries were restructured prior to the exchange offer such that Kennedy-Wilson now owns 100% of all of the guarantor subsidiaries as of December 31, 2011. As a result, in accordance with Rule 3-10(d) of Regulation S-X promulgated by the SEC, no separate financial statements are required for these subsidiaries as of December 31, 2011.

CONDENSED CONSOLIDATING BALANCE SHEET AS OF DECEMBER 31, 2010
	Parent		Kennedy-Wilson, Inc.		Guarantor Subsidiaries (1)		Non-guarantor Subsidiaries		Elimination			Consolidated Total
Assets
Cash and cash equivalents	$	—	$	42,793,000	$	3,350,000	$	825,000	$	—		$	46,968,000
Accounts receivable	—		348,000		1,551,000		198,000		—			2,097,000
Accounts receivable — related parties	—		1,652,000		5,268,000		142,000		—			7,062,000
Notes receivable	—		862,000		18,402,000		1,000,000		—			20,264,000
Notes receivable — related parties	—		3,837,000		—		—		—			3,837,000
Real estate, net of accumulated depreciation	—		—		56,207,000		26,494,000		—			82,701,000
Investments in joint ventures	—		2,501,000		257,521,000		6,864,000		—			266,886,000
Investments in and advances to consolidated subsidiaries	300,244,000		368,820,000		20,251,000		—		(689,315,000		)	—
Investment in loan pool participations	—		—		25,218,000		—		—			25,218,000
Other assets	—		4,945,000		3,417,000		488,000		—			8,850,000
Goodwill	—		—		17,216,000		6,749,000		—			23,965,000
Total Assets	$	300,244,000	$	425,758,000	$	408,401,000	$	42,760,000	$	(689,315,000	)	$	487,848,000
Liabilities and equity
Liabilities
Accounts payable	$	52,000	$	673,000	$	725,000	$	54,000	$	—		$	1,504,000
Accrued expenses and other liabilities	—		1,830,000		6,914,000		320,000		—			9,064,000
Accrued salaries and benefits	—		8,857,000		1,553,000		311,000		—			10,721,000
Deferred tax liability	—		25,871,000		—		—		—			25,871,000
Notes payable	—		20,533,000		—		4,250,000		—			24,783,000
Borrowings under line of credit	—		27,750,000		—		—		—			27,750,000
Mortgage loans payable	—		—		17,752,000		17,497,000		—			35,249,000
Junior subordinated debentures	—		40,000,000		—		—		—			40,000,000
Total liabilities	52,000		125,514,000		26,944,000		22,432,000		—			174,942,000
Equity
Kennedy-Wilson Holdings, Inc. shareholders' equity	300,192,000		300,244,000		368,820,000		20,251,000		(689,315,000		)	300,192,000
Noncontrolling interests	—		—		12,637,000		77,000		—			12,714,000
Total equity	300,192,000		300,244,000		381,457,000		20,328,000		(689,315,000		)	312,906,000
Total liabilities and equity	$	300,244,000	$	425,758,000	$	408,401,000	$	42,760,000	$	(689,315,000	)	$	487,848,000

—————

⁽¹⁾ Included in the guarantor subsidiaries column above are data for certain subsidiaries that were less than 100% owned as of December 31, 2010 by Kennedy-Wilson at the time the notes were originally issued. Such guarantor subsidiaries were restructured prior to registering the notes such that Kennedy-Wilson now owns 100% of all the guarantor subsidiaries as of December 31, 2011. As a result, in accordance with Rule 3-10(d) of Regulation S-X promulgated by the SEC, no separate financial statements are required for these subsidiaries.

CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, 2010
	Parent			Kennedy-Wilson, Inc.			Guarantor Subsidiaries (1)			Non-guarantor Subsidiaries			Elimination			Consolidated Total
Revenue
Management and leasing fees	$	—		$	183,000		$	5,873,000		$	2,857,000		$	—		$	8,913,000
Management and leasing fees — related party	—			—			11,258,000			1,159,000			—			12,417,000
Commissions	—			684,000			5,338,000			337,000			—			6,359,000
Commissions — related party	—			—			5,355,000			20,000			—			5,375,000
Sale of real estate	—			—			3,937,000			—			—			3,937,000
Sale of real estate - related party	—			—			9,535,000			—			—			9,535,000
Rental and other income	—			—			1,903,000			2,097,000			—			4,000,000
Total revenue	—			867,000			43,199,000			6,470,000			—			50,536,000
Operating expenses
Commission and marketing expenses	—			—			2,841,000			345,000			—			3,186,000
Compensation and related expenses	8,094,000			14,063,000			13,121,000			2,877,000			—			38,155,000
Merger-related compensation and related expenses	2,225,000			—			—			—			—			2,225,000
Cost of real estate sold	—			—			2,714,000			—			—			2,714,000
Cost of real estate sold - related party	—			—			8,812,000			—						8,812,000
General and administrative	227,000			6,753,000			3,453,000			881,000			—			11,314,000
Rental operating expenses	—			—			1,234,000			679,000			—			1,913,000
Depreciation and amortization	—			159,000			764,000			695,000			—			1,618,000
Total operating expenses	10,546,000			20,975,000			32,939,000			5,477,000			—			69,937,000
Equity in joint venture income (loss)	—			—			10,629,000			(81,000		)	—			10,548,000
Interest income from loan pool participations and notes receivable	—			46,000			11,760,000			49,000			—			11,855,000
Income from consolidated subsidiaries	17,031,000			50,902,000			426,000			—			(68,359,000		)	—
Operating income	6,485,000			30,840,000			33,075,000			961,000			(68,359,000		)	3,002,000
Non-operating income (expense)
Interest income	—			153,000			39,000			—			—			192,000
Interest income — related party	—			662,000			—			—			—			662,000
Remeasurement gain	—			—			2,108,000			—			—			2,108,000
Gain on early extinguishment of mortgage debt	—			—			16,670,000			—			—			16,670,000
Loss on extinguishment of debt	—			(4,788,000		)	—			—			—			(4,788,000		)
Interest expense	—			(6,109,000		)	(990,000		)	(535,000		)	—			(7,634,000		)
Income before provision for income taxes	6,485,000			20,758,000			50,902,000			426,000			(68,359,000		)	10,212,000
Provision for income taxes	—			(3,727,000		)	—			—			—			(3,727,000		)
Net income	6,485,000			17,031,000			50,902,000			426,000			(68,359,000		)	6,485,000
Net income attributable to the noncontrolling interests	—			—			(2,963,000		)	(16,000		)	—			(2,979,000		)
Net income attributable to Kennedy-Wilson Holdings, Inc.	6,485,000			17,031,000			47,939,000			410,000			(68,359,000		)	3,506,000
Preferred dividends and accretion of preferred stock issuance costs	(4,558,000		)	—			—			—			—			(4,558,000		)
Net (loss) income attributable to Kennedy-Wilson Holdings, Inc. common shareholders	1,927,000			17,031,000			47,939,000			410,000			(68,359,000		)	(1,052,000		)
Other comprehensive income, net of tax	6,440,000			6,440,000			6,440,000			—			(12,880,000		)	6,440,000
Total comprehensive income	$	8,367,000		$	23,471,000		$	54,379,000		$	410,000		$	(81,239,000	)	$	5,388,000

—————

⁽¹⁾    Included in the guarantor subsidiaries column above are data for certain subsidiaries that were less than 100% owned for the year ended December 31, 2010 by Kennedy-Wilson at the time the notes were originally issued. Such guarantor subsidiaries were restructured prior to registering the notes such that Kennedy-Wilson now owns 100% of all the guarantor subsidiaries. As a result, in accordance with Rule 3-10(d) of Regulation S-X promulgated by the SEC, no separate financial statements are required for such guarantor subsidiaries.

CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, 2009
	Parent			Kennedy-Wilson, Inc.			Guarantor Subsidiaries (1)			Non-guarantor Subsidiaries			Elimination			Consolidated Total
Revenue
Management and leasing fees	$	—		$	49,000		$	5,724,000		$	3,253,000		$	—		$	9,026,000
Management and leasing fees — related party	—			—			8,775,000			1,363,000			—			10,138,000
Commissions	—			708,000			3,360,000			136,000			—			4,204,000
Commissions — related party	—			—			727,000			—			—			727,000
Sale of real estate	—			—			52,699,000			—			—			52,699,000
Sale of real estate — related party	—			—			6,698,000			—			—			6,698,000
Rental and other income	—			26,000			575,000			2,142,000			—			2,743,000
Total revenue	—			783,000			78,558,000			6,894,000			—			86,235,000
Operating expenses
Commission and marketing expenses	—			—			2,891,000			520,000			—			3,411,000
Compensation and related expenses	3,857,000			6,199,000			11,744,000			2,989,000			—			24,789,000
Merger-related compensation and related expenses	12,468,000			—			—			—			—			12,468,000
Cost of real estate sold	—			—			36,179,000			—			—			36,179,000
Cost of real estate sold — related party	—			—			5,752,000			—			—			5,752,000
General and administrative	3,000			1,466,000			3,960,000			922,000			—			6,351,000
Merger-related general and administrative	3,652,000			—			—			—			—			3,652,000
Rental operating expenses	—			—			302,000			846,000			—			1,148,000
Depreciation and amortization	—			133,000			309,000			680,000			—			1,122,000
Total operating expenses	19,980,000			7,798,000			61,137,000			5,957,000			—			94,872,000
Equity in joint venture income (loss)	—			—			8,137,000			(118,000		)	—			8,019,000
Income from consolidated subsidiaries	10,323,000			21,091,000			(579,000		)	—			(30,835,000		)	—
Operating (loss) income	(9,657,000		)	14,076,000			24,979,000			819,000			(30,835,000		)	(618,000		)
Non-operating income (expense)
Interest income	—			102,000			—			—			—			102,000
Interest income — related party	—			400,000			—			—			—			400,000
Interest expense	—			(7,894,000		)	(3,882,000		)	(1,398,000		)	—			(13,174,000		)
Other than temporary impairment	—			(322,000		)	(6,000		)	—			—			(328,000		)
Income before provision for income taxes	(9,657,000		)	6,362,000			21,091,000			(579,000		)	(30,835,000		)	(13,618,000		)
Benefit from income taxes	—			3,961,000			—			—			—			3,961,000
Net (loss) income	(9,657,000		)	10,323,000			21,091,000			(579,000		)	(30,835,000		)	(9,657,000		)
Net income (loss) attributable to the noncontrolling interests	—			—			(5,704,000		)	25,000			—			(5,679,000		)
Net (loss) income attributable to Kennedy-Wilson Holdings, Inc.	(9,657,000		)	10,323,000			15,387,000			(554,000		)	(30,835,000		)	(15,336,000		)
Other comprehensive income, net of tax	2,601,000			2,601,000			2,601,000			—			(5,202,000		)	2,601,000
Total comprehensive income	$	(7,056,000	)	$	12,924,000		$	17,988,000		$	(554,000	)	$	(36,037,000	)	$	(12,735,000	)

—————

⁽¹⁾    Included in the guarantor subsidiaries column above are data for certain subsidiaries that were less than 100% owned for the year ended December 31, 2009 by Kennedy-Wilson at the time the notes were originally issued. Such guarantor subsidiaries were restructured prior to registering the notes such that Kennedy-Wilson now owns 100% of all the guarantor subsidiaries. As a result, in accordance with Rule 3-10(d) of Regulation S-X promulgated by the SEC, no separate financial statements are required for such guarantor subsidiaries.

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2010
	Parent			Kennedy-Wilson, Inc.			Guarantor Subsidiaries (1)			Non-guarantor Subsidiaries			Consolidated Total
Cash flows (used in) provided by operating activities:	$	(2,670,000	)	$	(9,635,000	)	$	13,074,000		$	1,388,000		$	2,157,000
Cash flows from investing activities:
Additions to notes receivable	—			(377,000		)	(24,259,000		)	(1,000,000		)	(25,636,000		)
Settlements of notes receivable	—			15,000			8,423,000			—			8,438,000
Additions to notes receivable - related party	—			(5,914,000		)	—			—			(5,914,000		)
Settlements of notes receivable - related party	—			8,721,000			—			—			8,721,000
Net proceeds from sale of real estate	—			—			3,639,000			—			3,639,000
Net proceeds from sale of real estate - related party	—			—			9,548,000			—			9,548,000
Purchases of and additions to real estate	—			—			(19,590,000		)	(4,174,000		)	(23,764,000		)
Distributions from joint ventures	—			—			9,790,000			387,000			10,177,000
Contributions to joint ventures	—			(1,220,000		)	(77,203,000		)	(5,468,000		)	(83,891,000		)
Contributions to loan pool participations	—			—			(16,154,000		)	—			(16,154,000		)
(Investments in) distributions from consolidated subsidiaries, net	(108,730,000		)	13,161,000			87,197,000			8,372,000			—
Net cash (used in) provided by investing activities	(108,730,000		)	14,386,000			(18,609,000		)	(1,883,000		)	(114,836,000		)
Cash flow from financing activities:
Borrowings under notes payable	—			—			—			4,250,000			4,250,000
Repayment of notes payable	—			(5,600,000		)	—			—			(5,600,000		)
Borrowings under lines of credit	—			48,250,000			—			—			48,250,000
Repayment of lines of credit	—			(30,500,000		)	—			—			(30,500,000		)
Borrowings under mortgage loans payable	—			—			20,016,000			—			20,016,000
Repayment of mortgage loans payable	—			—			(21,492,000		)	(3,243,000		)	(24,735,000		)
Repayment of convertible subordinated debt	—			(32,550,000		)	—			—			(32,550,000		)
Debt issue costs	—			(598,000		)	—			(46,000		)	(644,000		)
Issuance of preferred stock	132,294,000			—			—			—			132,294,000
Repurchase of common stock	(11,301,000		)	—			—			—			(11,301,000		)
Repurchase of warrants	(11,500,000		)	—			—			—			(11,500,000		)
Dividends paid	(4,533,000		)	—			—			—			(4,533,000		)
Contributions from noncontrolling interests	—			—			10,955,000			—			10,955,000
Distributions from noncontrolling interests	—			—			(3,242,000		)	—			(3,242,000		)
Net cash provided by (used in) financing activities	104,960,000			(20,998,000		)	6,237,000			961,000			91,160,000
Effect of currency exchange rate changes on cash and cash equivalents	6,440,000			4,263,000			—			—			10,703,000
Net change in cash and cash equivalents	—			(11,984,000		)	702,000			466,000			(10,816,000		)
Cash and cash equivalents, beginning of year	—			54,777,000			2,648,000			359,000			57,784,000
Cash and cash equivalents, end of year	$	—		$	42,793,000		$	3,350,000		$	825,000		$	46,968,000

—————

⁽¹⁾    Included in the guarantor subsidiaries column above are data for certain subsidiaries that were less than 100% owned for the year ended December 31, 2010 by Kennedy-Wilson at the time the notes were originally issued. Such guarantor subsidiaries were restructured prior to registering the notes such that Kennedy-Wilson now owns 100% of all the guarantor subsidiaries. As a result, in accordance with Rule 3-10(d) of Regulation S-X promulgated by the SEC, no separate financial statements are required for such guarantor subsidiaries.

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2009
	Parent			Kennedy-Wilson, Inc.			Guarantor Subsidiaries (1)			Non-guarantor Subsidiaries			Consolidated Total
Cash flows (used in) provided by operating activities:	$	(17,648,000	)	$	(6,449,000	)	$	(1,497,000	)	$	368,000		$	(25,226,000	)
Cash flows from investing activities:
Additions to notes receivable	—			(500,000		)	—			—			(500,000		)
Settlements of notes receivable	—			300,000			2,000			—			302,000
Additions to notes receivable - related party	—			(8,774,000		)	—			—			(8,774,000		)
Settlements of notes receivable - related party	—			2,935,000			—			—			2,935,000
Additions to notes receivable from sale of real estate	—			(2,663,000		)	—			—			(2,663,000		)
Settlements of notes receivable from sale of real estate	—			1,858,000			—			—			1,858,000
Net proceeds from sale of real estate held for sale	—			—			58,027,000			—			58,027,000
Purchases of and additions to real estate	—			—			(35,730,000		)	(70,000		)	(35,800,000		)
Assets acquired in merger	89,181,000			—			—			—			89,181,000
Distributions from joint ventures	—			—			2,283,000			91,000			2,374,000
Contributions to joint ventures	—			(1,000,000		)	(36,933,000		)	—			(37,933,000		)
(Investments in) distributions from consolidated subsidiaries, net	(67,267,000		)	43,705,000			24,422,000			(860,000		)	—
Net cash provided by (used in) investing activities	21,914,000			35,861,000			12,071,000			(839,000		)	69,007,000
Cash flow from financing activities:
Borrowings under notes payable	—			37,059,000			—			—			37,059,000
Repayment of notes payable	—			(32,114,000		)	—			—			(32,114,000		)
Borrowings under lines of credit	—			20,500,000			—			—			20,500,000
Repayment of lines of credit	—			(24,000,000		)	—			—			(24,000,000		)
Borrowings under mortgage loans payable	—			—			30,286,000			—			30,286,000
Repayment of mortgage loans payable	—			—			(35,866,000		)	—			(35,866,000		)
Debt issue costs	—			(160,000		)	(638,000		)	—			(798,000		)
Issuance of common stock	59,000			—			—			—			59,000
Repurchase of common stock	(3,690,000		)	—			—			—			(3,690,000		)
Dividends paid	(3,235,000		)	—			—			—			(3,235,000		)
Contributions from noncontrolling interests	—			—			6,804,000			—			6,804,000
Distributions from noncontrolling interests	—			—			(10,712,000		)	—			(10,712,000		)
Net cash (used in) provided by financing activities	(6,866,000		)	1,285,000			(10,126,000		)	—			(15,707,000		)
Effect of currency exchange rate changes on cash and cash equivalents	2,600,000			1,279,000			—			—			3,879,000
Net change in cash and cash equivalents	—			31,976,000			448,000			(471,000		)	31,953,000
Cash and cash equivalents, beginning of year	—			22,801,000			2,200,000			830,000			25,831,000
Cash and cash equivalents, end of year	$	—		$	54,777,000		$	2,648,000		$	359,000		$	57,784,000

—————

⁽¹⁾    Included in the guarantor subsidiaries column above are data for certain subsidiaries that were less than 100% owned for the year ended December 31, 2009 by Kennedy-Wilson at the time the notes were originally issued. Such guarantor subsidiaries were restructured prior to registering the notes such that Kennedy-Wilson now owns 100% of all the guarantor subsidiaries. As a result, in accordance with Rule 3-10(d) of Regulation S-X promulgated by the SEC, no separate financial statements are required for such guarantor subsidiaries.