SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
Commission file number 0-4674
MAUI LAND & PINEAPPLE COMPANY, INC.
(Exact name of registrant as specified in its charter)
HAWAII 99-0107542
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
P.O. Box 187, KAHULUI, MAUI, HAWAII 96732
(Address of principal executive offices)
Registrant's telephone number, including area code:
(808) 877-3351
NONE
Former name, former address and former fiscal year,
if changed since last report
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 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 the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at May 1, 1996
Common Stock, no par value 1,797,125 shares
MAUI LAND & PINEAPPLE COMPANY, INC.
AND SUBSIDIARIES
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets - March 31, 1996 (Unaudited)
& December 31, 1995 3
Condensed Statements of Operations and Retained Earnings,
Three Months Ended March 31, 1996 & 1995 (Unaudited) 4
Condensed Statements of Cash Flows
Three Months Ended March 31, 1996 & 1995 (Unaudited) 5
Notes to Condensed Financial Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION 9
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES
CONDENSED BALANCE SHEETS
Unaudited
03/31/96 12/31/95
(Dollars in Thousands)
ASSETS
Current Assets
Cash $ 237 $ 166
Accounts and notes receivable 12,095 13,142
Inventories 19,713 19,675
Other current assets 3,666 3,571
-------- --------
Total current assets 35,711 36,554
Property 187,361 185,175
Accumulated depreciation (98,735) (96,618)
-------- --------
Property - net 88,626 88,557
Other Assets 12,006 11,974
-------- --------
TOTAL 136,343 137,085
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Trade accounts payable 5,187 5,761
Other current liabilities 6,514 7,365
-------- --------
Total current liabilities 11,701 13,126
Long-Term Liabilities
Long-term debt and capital lease obligations 35,916 36,227
Accrued retirement benefits 22,718 22,594
Other long-term liabilities 6,518 6,268
-------- --------
Total long-term liabilities 65,152 65,089
Stockholders' Equity
Common stock, no par value - 1,800,000
shares authorized, 1,797,125 issued and
outstanding 12,318 12,318
Retained earnings 47,172 46,552
-------- --------
Stockholders' Equity 59,490 58,870
-------- --------
$136,343 $137,085
TOTAL ======== ========
See accompanying Notes to Condensed Financial Statements.
MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
Three Months Ended
3/31/96 3/31/95
(Dollars in Thousands
Except Share Amounts)
REVENUES
Net sales $22,014 $19,893
Operating income 7,023 8,933
Other income 1,262 1,131
------- -------
Total Revenues 30,299 29,957
------- -------
COSTS AND EXPENSES
Cost of goods sold 15,597 14,648
Operating expenses 5,540 6,327
Shipping and marketing 3,194 2,803
General and administrative 3,761 4,361
Equity in losses of
joint ventures 293 1,746
Interest 930 3,035
------- -------
Total Costs and Expenses 29,315 32,920
------- -------
INCOME (LOSS) BEFORE INCOME TAXES 984 (2,963)
INCOME TAXES (CREDIT) 364 (1,096)
------- -------
NET INCOME (LOSS) 620 (1,867)
RETAINED EARNINGS, BEGINNING OF PERIOD 46,552 48,111
------- -------
RETAINED EARNINGS, END OF PERIOD 47,172 46,244
======= =======
PER COMMON SHARE
Net Income (Loss) $ .34 $ (1.04)
======= =======
See accompanying Notes to Condensed Financial Statements.
MAUI LAND & PINEAPPLE COMPANY, INC.
AND SUBSIDIARIES
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended
3/31/96 3/31/95
(Dollars in Thousands
Except Share Amounts)
Net Cash Provided By
Operating Activities $ 1,412 $ 702
------- -------
Investing Activities
Purchases of property (1,592) (3,197)
Proceeds from disposal of property 504 715
Other 165 (1,753)
------- -------
Net Cash Used In Investing Activities (923) (4,235)
------- -------
Financing Activities
Payments of long-term debt and capital
lease obligations (2,168) (571)
Proceeds from long-term debt 1,750 3,311
Proceeds from short-term debt -- 944
------- -------
Net Cash Provided By (Used In)
Financing Activities (418) 3,684
------- -------
Net Increase in Cash 71 151
Cash At Beginning of Period 166 2,269
------- -------
Cash At End of Period $ 237 $ 2,420
======= =======
Supplemental Disclosure and Cash Flow Information - Interest (net
of amounts capitalized) of $1,536,000 and $3,709,000 was paid
during the three months ended March 31, 1996 and 1995,
respectively. Income tax refunds (net of payments) of $33,000
were received during the three months ended March 31, 1995.
See accompanying Notes to Condensed Financial Statements.
MAUI LAND & PINEAPPLE COMPANY, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
1. In the opinion of management, the accompanying condensed
financial statements contain all normal and recurring
adjustments necessary to present a fair statement of
financial position and results of operations for the interim
periods ended March 31, 1996 and 1995.
2. The Company's reports for interim periods utilize numerous
estimates of production, general and administrative
expenses, and other costs for the full year. Consequently,
amounts in the interim reports are not necessarily
indicative of results for the full year.
3. The effective tax rate for 1996 and 1995 differs from the
statutory federal rate of 34% primarily because of the state
tax provision and refundable state tax credits.
4. Inventories as of March 31, 1996 and December 31, 1995 were
as follows (in thousands):
03/31/96 12/31/95
Pineapple products $13,170 $13,920
Real estate held for sale 393 340
Merchandise, materials and supplies 6,150 5,415
------- -------
Total Inventories $19,713 $19,675
======= =======
5. Average common shares outstanding for the interim periods
ended March 31, 1996 and 1995 were 1,797,125.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS
Consolidated
Consolidated net income for the first quarter of 1996 was
$620,000. For the first quarter of 1995, the Company incurred a
net loss of $1.9 million.
Operating profits from the Company's Pineapple and Resort
operations and lower interest expense resulting from a reduced
debt level contributed to improved results in 1996.
Additionally, the Company's equity in the losses of Kaptel
Associates increased the net loss for the first quarter of 1995
by $1.1 million. Kaptel Associates joint venture was dissolved
in October 1995.
Pineapple
The Company's Pineapple operations generated higher revenues in
1996 on similar case sales volume as the first quarter of 1995,
due to improved prices. Higher prices were largely the result of
the favorable ruling in 1995 on the anti-dumping case against the
Thai pineapple producers and weather-related production problems
experienced by foreign producers in 1995. Increased revenues
resulted in an operating profit for the Company's Pineapple
operations for the first quarter of 1996 compared to an operating
loss for the same period a year earlier.
Resort
Kapalua Resort produced an operating profit in the first quarter
of 1996 compared to an operating loss for the first quarter of
1995. The improved operating performance results from ongoing
resort operations and reduced equity in losses from joint venture
investments.
Kapalua Resort's ongoing operations generated higher revenues and
operating profits for the first quarter of 1996 compared to the
first quarter of 1995 as merchandise sales, paid rounds of golf
and resort occupancies increased. These results largely reflect
higher visitor counts on the Island of Maui.
Commercial & Property
Revenue and operating profits from the Commercial & Property
segment decreased in the first quarter of 1996 compared to the
first quarter of 1995. These decreases are primarily attributed
to the exclusion of Kaahumanu Center Associates (KCA) from the
Company's consolidated financial statements as of April 30, 1995.
Since May of 1995 the Company's interest in KCA was reduced from
99% to 50% and the Company began accounting for its investment by
the equity method.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1996, the Company's total debt including capital
leases was $37.1 million, the Company's lowest debt level in over
five years. The higher level of debt in prior years resulted
largely from capital expenditures related to the expansion and
renovation of Kaahumanu Center and other investment activities
and, to a lesser extent, negative cash flows from operating
activities.
The Company's cash requirements normally increase during the
months of May through August each year because that is the peak
pineapple canning period. In 1996 these peak cash flow needs
will be funded with short-term borrowings under lines of credit.
As of March 31, 1996, the Company had $9.1 million of unused
short- and long-term lines of credit available. Aside from
seasonal increases in borrowing, the Company believes that total
debt will be further reduced by year-end 1996 as a result of
positive cash flows from operations.
Capital expenditures in 1996 are expected to be approximately
$6.6 million for new equipment and for replacement of existing
equipment. These expenditures include $2 million to replace the
processing water disposal system presently used by the Company's
pineapple cannery. In addition to these capital expenditures the
Company expects to contribute approximately $1.2 million to the
County of Maui for its share of increased capacity in the West
Maui sewer system. The Company expects to fund these
expenditures with cash flows from operations and with capital
leases.
PART II OTHER INFORMATION
Item 5. Other Information
In an April 29, 1996 letter to the Harry Weinberg
Family Foundation, Inc., Mary Cameron Sanford, who
chairs the Company's Board of Directors and whose
family owns about 40% of the Company's stock, stated
she would recommend that the Company's Board of
Directors appoint a Foundation representative as a
director at the August 2, 1996 Board meeting based on
certain understandings, including agreements that while
the representative serves, for approximately two years
the Foundation will not acquire additional stock of the
Company or seek additional board representation,
subject to various conditions and exceptions. The
Foundation confirmed those understandings in a letter
dated April 30, 1996. Ms. Sanford's letter was
unanimously approved by Company's Board at its May 3,
1996 meeting. The Foundation is a public charitable
foundation that owns 37.1% of the Company's stock.
Ms. Sanford's April 29, 1996 letter, and the
Foundation's April 30, 1996 letter, are filed herewith
as exhibits and are incorporated herein by reference.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(10) Material Contrasts
A. Letter to Mr. Darrell D. Friedman from Mary
Cameron Sanford dated April 29, 1996.
Attached.
B. Letter to Mary Cameron Sanford from Darrell
D. Friedman dated April 30, 1996. Attached.
(27) Financial Data Schedule
A. As of March 31, 1996 and for the three months
then ended. Attached.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the
period covered by this report.
SIGNATURE
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.
MAUI LAND & PINEAPPLE COMPANY, INC.
May 14, 1996 /S/ PAUL J. MEYER
Date Paul J. Meyer
Executive Vice President/Finance
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Maui
Land & Pineapple Company, Inc. Balance Sheet as of March 31, 1996 and the
Statement of Operations for the three months then ended, and is qualified in its
entirely by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 237
<SECURITIES> 0
<RECEIVABLES> 12,095
<ALLOWANCES> 0
<INVENTORY> 19,713
<CURRENT-ASSETS> 35,711
<PP&E> 187,361
<DEPRECIATION> 98,735
<TOTAL-ASSETS> 136,343
<CURRENT-LIABILITIES> 11,701
<BONDS> 35,916
0
0
<COMMON> 12,318
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 136,343
<SALES> 22,014
<TOTAL-REVENUES> 30,299
<CGS> 15,597
<TOTAL-COSTS> 21,137
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 930
<INCOME-PRETAX> 984
<INCOME-TAX> 364
<INCOME-CONTINUING> 620
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 620
<EPS-PRIMARY> .34
<EPS-DILUTED> .34
</TABLE>
April 29, 1996
VIA FAX
Mr. Darrell D. Friedman
President
The Harry Weinberg Family Foundation, Inc.
c/o The Associated Jewish Community Federation of Baltimore
Associated Krieger Building
101 West Mount Royal Avenue
Baltimore, Maryland 21201-5781
Dear Mr. Friedman:
Thank you very much for traveling to Honolulu with Mr. Scriggins
to meet with myself and Richard Cameron. As shareholders and as
directors of Maui Land & Pineapple Company, Inc., Richard and I
believe that it is the best interests of Maui Land & Pineapple
Company, the Harry Weinberg Family Foundation, Inc., the Cameron
family and all other shareholders to include an appropriate
representative of the Harry Weinberg Family Foundation, Inc. on
the Maui Land & Pineapple Company board.
Richard and I will recommend to the Company's board of directors
that this be accomplished at its August 2 meeting. Mr. Joe
Hartley, whom you met with on several occasions during his tenure
as the Company's Chief Executive Officer, has offered to resign
from the board in order to make a seat available for the
Foundation. We will recommend to the board that at its August
meeting it accept Mr. Hartley's resignation and fill the
resulting vacancy with a designee of the Foundation satisfactory
to the board.
Mr. Himmelrich appears to be an excellent choice for that seat,
both because of his business experience and because of the talent
you described for working with others on a cooperative and
constructive basis. Of course, we would like the Company's board
members to meet with Mr. Himmelrich before they act on his
appointment. For that reason, and to help Mr. Himmelrich prepare
himself to assume a board seat, we hope Mr. Himmelrich can visit
with us either this week or at some other time prior to August.
This will provide an opportunity to meet the Company's directors,
to discuss its affairs with key management personnel, and to tour
the subsidiaries' facilities.
We hope Mr. Himmelrich and yourself can attend the annual meeting
on May 3. If that trip is possible, Mr. Himmelrich will be
welcome as an observer at the May 3 board meeting. In any event,
between then and the August meeting, the Company would provide
Mr. Himmelrich with materials distributed to board members.
Our willingness to make the foregoing recommendations (which we
believe will be fully acceptable to the board) are premised on
the Foundation's confirmation of agreements on two topics.
First, prior to April 1, 1998, in the absence of approval from a
majority of the board other than the Foundation's designee, the
Foundation will not acquire direct or indirect voting or
investment power over any additional securities of the Company
(except as a result of stock dividends or other distributions
made on a prorata basis by the Company), solicit proxies with
respect to the Company's stock, enter into any agreements with
respect to the voting of the Company's stock, or in any way
participate in a group for the purpose of acquiring, holding, or
disposing of the Company's stock. (Of course, the latter point
would not in any way affect the right of the Foundation, acting
independently, to dispose of the shares.) Second, until mailing
of the Company's proxy statements for its 1998 annual meeting, in
the absence of such approval, the Foundation will not seek any
additional board seats (except in connection with any increase in
board size) or assist any other party in any effort to affect the
size or membership of the Company's board. Please confirm that
these points (subject to the following paragraph) are acceptable
to the Foundation.
The foregoing agreements would not apply if there were, without
the approval of the Foundation's designee, either a change in
capitalization of the Company that reduces the percentage of the
Company's voting securities held by the Foundation, or a change
in the Company's articles, bylaws or state law that materially
and adversely affects the voting rights of shares owned by the
Foundation. And, of course, the foregoing agreements would not
apply if Mr. Himmelrich (or another representative of the
Foundation reasonably acceptable to the Company's board) is not
seated as indicated at the August meeting, or if Mr. Himmelrich
subsequently leaves the board and another representative of the
Foundation reasonably acceptable to the board is not elected by
it to fill that vacancy.
As indicated above, I fully expect the board to concur with our
recommendations as to the foregoing matters. However, if the
board does not concur in those recommendations, Richard and I
will use our best efforts as shareholders to accomplish the
election to the board of Mr. Himmelrich, or another designee of
the Foundation reasonably satisfactory to us, on the foregoing
basis.
Darrell, I was delighted to make your acquaintance, and feel we
can work together for the benefit of the Company. I also believe
Friday's meetings and the steps outlined above are extremely
positive developments. The Company's management shares that
view. If there is anything I or the Company can do to assist Mr.
Himmelrich in familiarizing himself with the Company's operations
and personnel, please let Gary Gifford or myself know.
Very truly yours,
/S/ MARY CAMERON SANFORD
Mary Cameron Sanford
HARRY WEINBERG FAMILY FOUNDATION, INC.
Associated Krieger Building
101 West Mount Royal Avenue
Baltimore, Maryland 21201
301-727-4828
April 30, 1996
Mary Cameron Sanford
Chairman of the Board
Maui Land & Pineapple Company, Inc.
120 Kane Street, PO Box 187
Kahului, Maui, Hawaii 96732-0187
Dear Mrs. Sanford:
We write to confirm our mutual agreements set forth in your
letter of April 29, 1996.
Let me say that we, too, enjoyed the opportunity to meet with you
and Richard, as well as Gary Gifford and Paul Meyer, last Friday
in Honolulu. We appreciated very much your hospitality and
believe the meetings were constructive, and establish a framework
for a beneficial dialogue and relationship with respect to the
affairs of Maui Land & Pineapple Company, Inc.
Unfortunately, Mr. Himmelrich and I do not believe we will be
able to manage to attend the annual meeting on May 3. However,
we would both like to visit soon thereafter and we would suggest
July 9-12 as possible dates for your consideration. I will call
you to confirm.
As we now will be unable to attend the May 3 annual meeting in
person, we are pleased to enclose our proxy for voting at the
meeting.
Again, many thanks for your hospitality last Friday, and we look
forward to working together.
Sincerely yours,
/S/ DARRELL D. FRIEDMAN
Darrell D. Friedman
President
DDF:mvk
