MAUI LAND & PINEAPPLE COMPANY, INC.
ANNUAL REPORT
1995
CONTENTS
Letter to Shareholders 2
Pineapple 4
Resort 5
Commercial & Property 6
Independent Auditors' Report 7
Consolidated Balance Sheets 8
Consolidated Statements of Operations and Retained Earnings 10
Consolidated Statements of Cash Flows 11
Notes to Consolidated Financial Statements 12
Common Stock 19
Selected Financial Data 20
Management's Discussion and Analysis of
Results of Operations and Financial Condition 21
Officers and Directors 24
THE COMPANY
Maui Land & Pineapple Company, Inc., a Hawaii corporation organized in
1909, is a land-holding and operating company with several wholly-owned
subsidiaries, including two major operating companies, Maui Pineapple Company,
Ltd. and Kapalua Land Company, Ltd. The Company, as used herein, refers to
the parent and its wholly-owned subsidiaries. The Company's principal
business activities are Pineapple, Resort and Commercial & Property.
The Company owns approximately 28,600 acres on the island of Maui, of
which about 7,900 acres are used directly or indirectly in the Company's
operations. Approximately 1,940 people were employed by the Company in 1995
on a year-round or seasonal basis.
Maui Pineapple Company, Ltd. is the operating subsidiary for Pineapple.
It is the sole supplier of private label, 100% Hawaiian canned pineapple
products to United States supermarkets. It also sells its products to food
service suppliers and food processors.
Kapalua Land Company, Ltd. is the development and operating subsidiary
for a destination resort community in West Maui. The Kapalua Resort is
located on approximately 1,500 acres bordering the ocean, including three
beaches.
Commercial & Property includes Kaahumanu Center, Napili Plaza and other
non-resort property rentals and sales.
10-K REPORT
Shareholders who wish to receive, free of charge, a copy of the Company's 10-K
Report to the U.S. Securities and Exchange Commission may write to:
Corporate Secretary
Maui Land & Pineapple Company, Inc.
P. O. Box 187
Kahului, Hawaii 96732-0187
ANNUAL MEETING
The Annual Meeting of Shareholders of the Company will be held at 9:00 a.m. on
Friday, May 3, 1996, in the Corporate Office courtyard of Maui Land &
Pineapple Company, Inc., 120 Kane Street, Kahului, Hawaii.
OFFICES
Corporate Offices Pineapple Marketing Office
Maui Land & Pineapple Company, Inc. Maui Pineapple Company, Ltd.
P. O. Box 187 P. O. Box 4003
Kahului, Hawaii 96732-0187 Concord, California 94524-4003
Telephone: 808-877-3351 Telephone: 510-798-0240
Fax: 808-871-0953 Fax: 510-798-0252
Maui Pineapple Company, Ltd.
P. O. Box 187
Kahului, Hawaii 96732-0187
Telephone: 808-877-3351
Fax: 808-871-0953
Kapalua Land Company, Ltd.
1000 Kapalua Drive
Kapalua, Hawaii 96761-9028
Telephone: 808-669-5622
Fax: 808-669-5454
Transfer Agent & Registrar
Chemical Mellon Shareholder Services
Shareholder Relations
P. O. Box 469
Washington Bridge Station
New York, New York 10033
Telephone: 800-356-2017
Independent Auditors
Deloitte & Touche LLP
1132 Bishop Street, Suite 1200
Honolulu, Hawaii 96813-2870
Telephone: 808-543-0700
<TABLE>
MAUI LAND & PINEAPPLE COMPANY, INC. & SUBSIDIARIES
FINANCIAL HIGHLIGHTS
<CAPTION>
1995 1994 1993
(Dollars in Thousands
Except Per Share Amounts)
<S> <C> <C> <C>
REVENUES
Pineapple $ 81,052 $ 81,044 $ 86,033
Resort 34,330 34,109 31,455
Commercial & Property 10,123 10,617 13,635
Corporate 72 112 49
-------- -------- --------
Total 125,577 125,882 131,172
======== ======== ========
NET LOSS (1,559) (3,909) (11,059)
======== ======== ========
NET LOSS PER COMMON SHARE $ (.87) $ (2.18) $ (6.15)
======== ======== ========
AVERAGE COMMON SHARES OUTSTANDING 1,797,125 1,797,125 1,797,125
TOTAL ASSETS $137,085 $235,411 $211,588
CURRENT RATIO 2.78 .97 2.47
LONG-TERM DEBT and CAPITAL LEASES $ 36,227 $ 99,180 $ 96,108
STOCKHOLDERS' EQUITY 58,870 60,429 64,321
STOCKHOLDERS' EQUITY PER COMMON SHARE $ 32.76 $ 33.63 $ 35.79
EMPLOYEES 1,940 2,020 2,280
</TABLE>
TO OUR SHAREHOLDERS AND EMPLOYEES
Nineteen ninety-five developed into a more difficult year for the
Company than we anticipated because of the continued highly competitive market
conditions for pineapple products and the relatively low level of pineapple
prices which prevailed for the first ten months of the year. Also, while we
experienced a modest increase in overall visitor occupancy on Maui, the
uncertainty surrounding the financial condition of the two hotels at Kapalua
and the continued competitive conditions in the luxury hotel room market
segment combined to restrain operating results at Kapalua. Lastly, 1995 was a
very difficult year for retailers throughout the U.S. and Maui was no
exception.
The Company's net loss of $1.6 million for the full year, however, is an
improvement from the losses suffered in 1994 of $3.9 million and in 1993 of
$11 million. We are convinced the fundamental improvements in operating
efficiency achieved over the last two years and improved business conditions
will lead to improved results in 1996.
In 1995, on revenues of $126 million, the Company incurred a pre-tax
loss of $3 million compared to a pre-tax loss of $6.7 million in 1994. After
an income tax credit of $1.4 million, the Company's net loss was $1.6 million
or $.87 per share. The operating results in 1995 from our major business
segments, Pineapple, Resort and Commercial & Property, were a $3.6 million
loss, a $7.3 million profit and a $3.6 million profit, respectively.
This compares to operating results of a $900,000 loss, a $2.2 million
loss and a $5.3 million profit, respectively, for Pineapple, Resort and
Commercial & Property in 1994. It should be noted that 1995 results for the
Resort division and for the Company overall include a $5 million reversal of
our share of non-cash, pre-tax losses from the partnership which owned The
Ritz-Carlton Kapalua Hotel attributable to prior years. Excluding the effects
of accounting for this entity, Resort's operating results were a $2.3 million
operating profit in 1995 compared to a $1.9 million operating profit in 1994.
Progress was made in 1995 in returning our pineapple business to
profitability. While we continued to experience very low price levels for our
products during most of the year, effects of the antidumping verdict against
Thai producers of pineapple products began to take effect late in the year.
More specifically, U.S. grocery prices for pineapple in the last four weeks of
the year were up approximately 11 percent for premium branded and private
label products and approximately 24 percent for other imported products
compared to the same period in 1994. Imports of foreign canned pineapple for
the full year of 1995 showed a 15 percent reduction in volume and a 5 percent
increase in average unit value compared to 1994. Imports in the month of
December of 1995 showed an increase of 31 percent in average unit value over
December of 1994. These volume and price developments experienced late in the
year are especially encouraging.
We are also encouraged by the results of our research on fresh chilled
pineapple products and our marketing efforts to promote consumer awareness of
our position as the only producer of a full line of 100% Hawaiian pineapple
products.
Unfortunately, a drought experienced on Maui for most of 1995 had a
significant negative effect on production, resulting in both higher costs and
lower production volume than in 1994. These extraordinarily dry conditions
tend not to occur for extended periods of time. Improved growing conditions
in 1996 should result in improved production volume and lower unit costs.
Perhaps more importantly, the Company should benefit from higher prices for
pineapple products.
Improving economic conditions in the U.S. and Japan have resulted in a
modest improvement for Hawaii's visitor industry. Maui destination resorts
also experienced a modest increase in occupancy for the year. Visitor
occupancy at Kapalua was at about the same level as 1994. This reflected,
among other things, competitive factors and the uncertainty surrounding the
financial conditions at The Ritz-Carlton Kapalua Hotel, which defaulted on the
terms of its mortgage loan early in the year, and at the Kapalua Bay Hotel,
which filed for Chapter 11 bankruptcy in December of 1995.
We are pleased to report that in March of 1996, NI Hawaii Resorts, Inc.,
our former partner, effectively repaid the existing bank mortgage on The Ritz-
Carlton Kapalua and provided it with alternative financing from related
companies. The bankrupt owner of the Kapalua Bay Hotel is continuing its
effort to sell that hotel. We are hopeful these efforts will result in an
acquisition of the hotel by a financially strong owner which will provide new
hotel management by a high quality operator.
Based on the first two and a half months of 1996 and the level of
advance reservations at Kapalua, we expect Maui's visitor industry and Kapalua
to show improved performance and financial results in 1996.
Resort development activity in 1995 continued to be depressed and
activity was modest at best in the resort second home market. We anticipate a
higher level of interest and activity in resort real estate over the next few
years and are planning accordingly.
Operating profit from the Company's Commercial & Property segment
declined from $5.3 million in 1994 to $3.6 million in 1995 due primarily to
losses incurred by Kaahumanu Center Associates because of increased interest
and depreciation expenses. Refinancing of Kaahumanu Center was concluded in
May. As a result, the Employees' Retirement System of the State of Hawaii
converted its construction loan into a 50
percent ownership position in Kaahumanu Center and a new $65 million mortgage
loan from a consortium of banks was funded. Nineteen ninety-five was the
first full year of operation for the redeveloped Center. With a gross
leasable area of 572,000 square feet, Kaahumanu Center is Maui's only regional
mall and is the largest center on the island. As of year-end, the mall shops,
not including Sears, Liberty House, J.C. Penney and Foodland, were 91 percent
leased and other new tenants have agreed to lease an additional 4 percent of
the mall space. Napili Plaza continued to show improvement in 1995 by
expanding its occupancy to 80 percent of available space, thus improving its
operating profit contribution from 1994.
A number of new tenants have expressed interest in or are negotiating
with us for space in Kaahumanu Center and Napili Plaza. We expect an
improving retail environment will result in improved occupancy and operating
results in 1996 for both properties, but the planned expansion of other retail
facilities on Maui will keep retail business conditions competitive.
At year-end 1995, the Company's consolidated debt, including capital
leases, stood at $37.5 million, a $91 million reduction from year-end 1994.
Of this reduction, $71.6 million is a result of the refinancing of the Center
and Kaahumanu Center Associates being accounted for by the equity method and
its debt no longer being reflected in the consolidated statements. While the
reduction in the debt level was dramatic and was one of our primary objectives
in 1995, we must accomplish further reductions before the Company reaches its
targeted level of financial leverage. Resumption of dividends, a key goal for
us, continues to depend on improved operating cash flow and debt coverage.
Overall we are pleased with the substantial and fundamental progress
made in our businesses in 1995. While it is disappointing that a number of
factors combined to produce a loss for the year, we are hopeful that with
improved economic conditions and our greater operating efficiency, the Company
will produce improved results over the next few years.
Thank you for your continued support.
/S/ MARY C. SANFORD /S/ GARY L. GIFFORD
MARY C. SANFORD GARY L. GIFFORD
Chairman President & CEO
February 2, 1996
PINEAPPLE
In 1995 Maui Pineapple Company, Ltd. recorded a $3.5 million operating
loss. After allocations for interest and corporate expenses, the loss totaled
$6.9 million. These results are worse than our prior year results and are
particularly disappointing because we anticipated improved financial
performance. During the year we focused on meeting case sales volume, pricing
objectives, recovery goals and on lowering the unit cost per case. We did
achieve higher pricing levels than in 1994, but we were unable to meet our
objectives in the other key measures of performance.
The major factors affecting our profits in 1995 were the continuing
competitive marketplace and the weather. The marketplace affected case sales
volume and the weather affected unit costs and pack.
In 1995 the Island of Maui experienced a severe drought with especially
dry conditions on the Haliimaile plantation. Dry weather reduced fruit size
and caused sunburned, porous fruit. This in turn lowered recovery in canned
pineapple and juice products. The lower recovery resulted in fewer cases
packed than originally planned, which raised per case production costs. We
reduced some effects of the drought by using drip irrigation systems; however,
there was not enough water to adequately irrigate the Haliimaile plantation.
Assuming we have normal rainfall this year, we do not expect effects of the
drought to negatively affect the 1996 crop.
The Company's overall case volume of sales declined by 5% compared to
1994. In total, canned fruit sales volume was unchanged compared with 1994.
The grocery and government segments showed modest gains. Institutional sales
moved down sharply due to several customers who purchased large inventories of
canned pineapple at the end of 1994.
Total juice sales volume declined by 11%. The grocery, government and
institutional juice segments declined 5%, 82% and 4% respectively. We
experienced the largest decline in the government segment due to the loss of
the U.S. Department of Agriculture and Department of Defense bids; they were
awarded to smaller regional juice packers. Concentrate sales were down 26%, a
planned volume reduction.
Although sales were down slightly for the year, we did retain our
customer base and were able to acquire a number of new customers late in the
year. Mainland Jet Fresh and local fresh fruit sales declined in 1995.
On May 30, 1995, the U.S. Department of Commerce announced results of
the antidumping investigation and imposed duties of between 2% and 51% on
imports by Thailand pineapple companies. These duties were much higher than
those announced in the January 1995 preliminary determination. This decision
affirmed our claims that Thai companies were selling canned pineapple below
their cost of production.
On June 30, 1995, the International Trade Commission ruled 6-0 in the
Company's favor on final injury determination. All four Thai respondents have
filed an appeal with the U.S. Trade Court in New York. They are challenging
the Department of Commerce's methodology in calculating the duty. They make
no challenge to the final determination on injury to the domestic industry.
The Company also has filed an appeal with the same court which allows us to
introduce new evidence to help the Department of Commerce defend its decision.
We do not expect a decision on the appeal before December 1996. We believe
the appeal by the Thai respondents adds a degree of uncertainty to the
marketplace, which will dampen price increases until the matter is resolved.
Many Thai producers shipped additional inventory into the U.S. before
the final antidumping determination. This oversupply of canned pineapple
continued to exert downward pressure on prices and volume during the first
half of the year. By year-end the situation had improved dramatically.
Drought-related crop conditions in the Far East and the favorable antidumping
decision reduced U.S. imports. As a result, most pineapple producers
announced moderate fruit price increases beginning in the third quarter.
These increases ranged from 8.5% for nationally branded products to 20% for
regionally distributed imports. These conditions allowed Maui Pineapple
Company to make its first significant price increase in four years. The
increase began to impact revenues in the fourth quarter. The full benefit
will be felt in 1996.
In 1994 we commenced a modest consumer-focused marketing effort to
promote awareness of Hawaiian pineapple. During 1995 we expanded on this
effort in selected geographical areas of the U.S., positioning our product as
the only 100% Hawaiian U.S.A. canned pineapple.
We are moving toward our diversification objectives. Soon we will begin
selling Costa Rican fresh pineapple to U.S. east coast customers under the
label of Royal Coast. This addition of fresh pineapple allows us to provide
a line extension to our existing east coast customer base. We are continuing
research and development on fresh chilled pineapple and intend to enter this
rapidly expanding market in 1996.
The outlook for 1996 continues to improve. We believe the effects of
the antidumping decision have only begun to be felt. We hope this decision
will establish a price level from which we can improve financially in 1996 and
beyond. We therefore are looking forward to a year of growth and improved
financial performance.
RESORT
Kapalua Land Company, Ltd. had a profit of $7.3 million in 1995 compared
with a loss of $2.2 million in 1994 before allocated interest and corporate
expenses. Most of this improvement was due to the reversal of previously
allocated losses from Kaptel Associates, The Ritz-Carlton Kapalua Hotel joint
venture. Development activities other than the Kaptel joint venture improved
by $900,000 over the previous year while profits from ongoing Resort
operations declined by $500,000.
Although The Ritz-Carlton Kapalua Hotel has consistently generated a
positive cash flow from operations, beginning in February 1995 Kaptel was only
able to make partial payment on its debt service and defaulted on its loan.
NI Hawaii Resorts, Inc. (NI), the major general partner, commenced
negotiations with the lenders to acquire the loan and on October 31, 1995 the
partners concluded an agreement to dissolve the partnership. As a result, we
transferred our 25% ownership interest in the partnership to NI and reversed
all of the previously allocated losses. This represents an increase in
earnings of $5.0 million for 1995 compared to an allocated loss of $4.1
million in 1994.
An amended management agreement was also negotiated with The Ritz-
Carlton Hotel Company as the hotel operator and a revised ground lease was
negotiated with us. We retain ownership of the land (subordinate to a $65
million first mortgage) with a reduced rent, but with important controls
related to the use of this property. Additionally, $4.75 million of off-site
construction loan debt is to be repaid solely from ground rent and any balance
remaining on the loan at January 1, 1999 will be canceled. We will not
recognize any ground rent income until 1999.
We believe this restructuring and commitment from NI gives The Ritz-
Carlton Kapalua Hotel the necessary financial foundation and quality
management to show continued long-term improvement.
The owners of the Kapalua Bay Hotel actively tried to sell the hotel
since April of last year, but have been unsuccessful in their efforts. In
December 1995, the owners filed bankruptcy under Chapter 11 and are presently
still trying to conclude a sale. Under terms of our ground lease, we have a
right of first refusal regarding any potential sale. Our primary interest is
to make sure the hotel is properly positioned with strong financial ownership
and experienced quality management.
Other development activities at the Resort included the sale of one of
the remaining five lots in Plantation Estates Phase I. As a result,
Plantation Club Associates contributed $152,000 to operating profits. In 1994
the Resort's share of the loss from this joint venture was $766,000. Real
estate activity within the Resort slowed during 1995, but prices remained
stable.
Capital expenditures for the Resort water system and sewer capacity
decreased from $3.4 million in 1994 to $800,000 in 1995. Last year we
completed payment on water system improvements needed to comply with the
Environmental Protection Agency Safe Drinking Water Act. On December 12,
1995, the Public Utility Commission ruled favorably on our application for a
rate increase for our water and waste treatment companies. This increase
provides a fair return on our investment in water system infrastructure and
will have a positive impact on our operating results going forward. We also
continued our funding of the expansion of the Lahaina Sewage Treatment Plant
and expect to make our final payment in 1996. This investment provides us
with the required sewage capacity for future development.
Resort on-going operations posted a profit of $2.3 million in 1995
compared with a profit of $2.8 million in 1994. Resort revenues were $34.3
million in 1995 compared to $34.1 million in 1994. Cash flow from Resort
operations increased to $5.0 million from $4.4 million in 1994.
Our financial performance was not helped by market conditions in the
visitor industry. Preliminary figures indicate that while the total number of
visitors to Hawaii increased 3% during 1995, Maui had fewer visitors. Resort
occupancy at Kapalua remained the same at 56%. This was again well below the
average occupancy for Maui as competition in the over-built luxury hotel
market remains intense.
While none of our operations exhibited strong growth during 1995, the
decline in profitability was largely due to non-recurring accounting
adjustments and administrative expenses coupled with a predicted decline in
initiation revenues from The Kapalua Club, our Resort membership program.
This program continued to make a significant financial contribution to overall
profitability during its second year of operation. More importantly, with
additional members and increased participation, The Kapalua Club is performing
its role as a catalyst for developing a feeling of community within the
Resort.
In our recreation departments, the number of paid golf rounds declined
by 2% from 1994 levels, but total golf and merchandise revenues were up
slightly. Tennis play was comparable with prior year levels and profitability
improved.
Our Kapalua villa program continues to grow with a 7% increase in the
number of units in the program, a 10% increase in the number of occupied rooms
and a 7% improvement in profitability. The addition of a sales representative
in February resulted in a noticeable impact on bookings late in the year.
The 1995 edition of the Lincoln-Mercury Kapalua International Golf
Tournament was the most successful ever and remains the cornerstone of our
marketing efforts.
While our financial progress exhibited over the previous three years
stalled in 1995, the company was making major strides in non-financial areas.
During the year, all company employees attended CARE training, a comprehensive
guest service and company standards training program. This program reinforces
our commitment to excellence, not only in our physical plant, but in the total
guest experience.
Last year we also established the Kapalua Nature Society, an
organization that will manage our environment-related Resort programs and
create an awareness of the environment, culture and history of the Kapalua
area.
For 1996, we expect moderate growth in the Hawaii visitor industry and
the Resort real estate market. We, therefore, look for modest improvement in
our financial performance and believe Kapalua remains well positioned to show
stronger long-term returns.
COMMERCIAL & PROPERTY
The Company's Commercial & Property business segment produced a
substantially lower operating profit in 1995 on about the same level of
revenues as compared to 1994. Revenues were $10.1 million compared to $10.6
million in 1994. Operating profit was $3.6 million compared to $5.4 million
in 1994. Land sales arising from four transactions contributed a total of
$3.4 million profit and cash flow in 1995. The largest of these, the final
payment from the State of Hawaii for the 50-acre parcel taken under
condemnation for the King Kekaulike High School, was received in June and
amounted to $1.8 million. Three other transactions involved the sale of homes
on Baldwin Avenue in Makawao which generated $1.6 million in operating profit
and cash flow.
Kaahumanu Center's results were lower than expected due to the depressed
level of retail sales on Maui caused by the relatively weak local economy.
Job layoffs in the sugar industry, a low level of construction activity and
continued weakness in the visitor industry all combined in 1995 to result in a
poor business environment for retailers on the island. Kaahumanu Center,
while it has achieved a dominant position as the largest retail center, was
negatively affected throughout the year by the weak economy. While Kaahumanu
Center's main market has been and will continue to be island residents, the
Center has improved its attractions for Maui's visitors.
JTB, Japan's largest tour company, has signed a lease and started
construction of its "Oli Oli Station," a briefing and processing facility for
JTB's group tour business.
Approximately 50,000 visitors are expected to use this facility in its first
year of operation. Kaahumanu Center is also the terminus for the West Maui,
South Maui and Airporter bus systems, effectively Maui's only mass
transportation system.
With an improving visitor market and an improving local economy,
Kaahumanu Center is in a position to show improved results in 1996. Napili
Plaza, the Company's 44,000 square foot neighborhood shopping center located
in west Maui, should benefit even more directly from improving resort
occupancy and visitor traffic due to its location.
Nineteen ninety-six will likely not produce the same levels of profits
and cash flow from land sales. However, the Company's commercial properties
should, for the reasons mentioned, show better financial results.
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Directors of Maui Land & Pineapple Company, Inc.:
We have audited the accompanying consolidated balance sheets of Maui
Land & Pineapple Company, Inc. and its subsidiaries as of December 31, 1995
and 1994, and the related consolidated statements of operations and retained
earnings and of cash flows for each of the three years in the period ended
December 31, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We did not audit the financial statements of Kaptel Associates, the
Company's investment in which was previously accounted for by the equity
method. The Company's share of losses in excess of its investment in Kaptel
Associates of $4,990,000 as of December 31, 1994, and its share of losses from
Kaptel Associates of $4,119,000 and $871,000 for the years ended December 31,
1994 and 1993, respectively, are included in the accompanying financial
statements. The financial statements of Kaptel Associates were audited by
other auditors whose report has been furnished to us, and our opinion, insofar
as it relates to the amounts included for Kaptel Associates, is based solely
on the report of such other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, based on our audits and the report of the other auditors
for 1994 and 1993, such consolidated financial statements present fairly, in
all material respects, the financial position of the Companies as of December
31, 1995 and 1994, and the results of their operations and their cash flows
for each of the three years in the period ended December 31, 1995 in
conformity with generally accepted accounting principles.
/S/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Honolulu, Hawaii
February 2, 1996
<TABLE>
MAUI LAND & PINEAPPLE COMPANY, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1995 and 1994
<CAPTION>
1995 1994
(Dollars in Thousands)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 166 $ 2,269
Accounts and notes receivable 13,142 13,507
Refundable income taxes 518 1,910
Inventories
Pineapple products 13,920 15,261
Real estate held for sale 340 336
Merchandise, materials and supplies 5,415 4,940
Prepaid expenses and other assets 3,053 2,737
-------- --------
Total Current Assets 36,554 40,960
-------- --------
NOTES RECEIVABLE--REAL ESTATE SALES 541 541
-------- --------
INVESTMENTS AND OTHER ASSETS 11,433 13,716
-------- --------
PROPERTY
Land 4,469 6,936
Land improvements 41,671 50,386
Buildings 47,625 124,046
Machinery and equipment 90,240 92,442
Construction in progress 1,170 680
-------- --------
Total property 185,175 274,490
Less accumulated depreciation 96,618 94,296
-------- --------
Net Property 88,557 180,194
-------- --------
TOTAL $137,085 $235,411
======== ========<PAGE>
<CAPTION>
1995 1994
(Dollars in Thousands)
<S> <C> <C>
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ -- $ 27,951
Capital lease obligations 1,263 1,439
Trade accounts payable 5,761 5,596
Payroll and employee benefits 3,658 3,178
Accrued interest 1,030 2,379
Other accrued liabilities 1,414 1,514
-------- --------
Total Current Liabilities 13,126 42,057
-------- --------
LONG-TERM LIABILITIES
Long-term debt 34,500 96,138
Capital lease obligations 1,727 3,042
Deferred income taxes 504 1,847
Accrued retirement benefits 22,594 22,077
Other noncurrent liabilities 5,764 9,821
-------- --------
Total Long-Term Liabilities 65,089 132,925
-------- --------
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS' EQUITY
Common stock--no par value, 1,800,000 shares
authorized, 1,797,125 shares issued
and outstanding 12,318 12,318
Retained earnings 46,552 48,111
-------- --------
Stockholders' Equity 58,870 60,429
-------- --------
TOTAL $137,085 $235,411
======== ========
See Notes to Consolidated Financial Statements
</TABLE>
<TABLE>
MAUI LAND & PINEAPPLE COMPANY, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
Years Ended December 31, 1995, 1994 and 1993
<CAPTION>
1995 1994 1993
(Dollars in Thousands Except Per Share Amounts)
<S> <C> <C> <C>
REVENUES
Net sales $ 92,758 $ 91,158 $ 96,208
Operating revenue 28,573 30,760 27,330
Other income 4,246 3,964 7,634
-------- -------- --------
Total Revenues 125,577 125,882 131,172
-------- -------- --------
COST AND EXPENSES
Cost of goods sold 70,935 67,623 84,932
Operating expenses 22,694 23,551 22,577
Shipping and marketing 16,793 16,568 17,673
General and administrative 15,160 14,352 18,657
Equity in (earnings) losses
of joint ventures (4,001) 4,844 1,018
Interest 7,021 5,682 4,797
-------- -------- --------
Total Costs and Expenses 128,602 132,620 149,654
-------- -------- --------
LOSS BEFORE INCOME TAX CREDIT (3,025) (6,738) (18,482)
INCOME TAX CREDIT (1,466) (2,829) (7,423)
-------- -------- --------
NET LOSS (1,559) (3,909) (11,059)
-------- -------- --------
RETAINED EARNINGS, BEGINNING OF YEAR 48,111 52,020 64,427
CASH DIVIDENDS DECLARED -- -- 1,348
-------- -------- --------
RETAINED EARNINGS, END OF YEAR 46,552 48,111 52,020
======== ======== ========
PER COMMON SHARE
Net Loss (.87) (2.18) (6.15)
======== ======== ========
Cash Dividends $ -- $ -- $ .75
======== ======== ========
See Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
MAUI LAND & PINEAPPLE COMPANY, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 1995, 1994 and 1993
<CAPTION>
1995 1994 1993
(Dollars in Thousands)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net Loss $ (1,559) $ (3,909) $(11,059)
Adjustments to reconcile net loss to cash
provided by operating activities
Depreciation 10,202 10,851 10,315
Deferred income taxes (1,471) (851) 1,066
Gain on property disposals (3,408) (2,966) (6,517)
Equity in (earnings) losses
of joint ventures (3,850) 4,844 1,018
Increase in accounts
and notes receivable (723) (469) (2,179)
Decrease (increase) in refundable
income taxes 1,392 6,054 (7,064)
Decrease in inventories 862 575 5,113
Increase (decrease) in
trade payables 573 (4,207) 2,821
Net change in other operating assets
and liabilities 124 1,614 4,126
-------- -------- --------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 2,142 11,536 (2,360)
-------- -------- --------
INVESTING ACTIVITIES
Purchases of property (5,679) (43,488) (30,211)
Proceeds from sale of property 3,469 3,062 6,866
Reimbursement from Kaahumanu
Center Associates 11,843 -- --
Payments for other investments (3,260) (137) (1,288)
-------- -------- --------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 6,373 (40,563) (24,633)
-------- -------- --------
FINANCING ACTIVITIES
Payments of long-term debt (25,515) (24,632) (16,490)
Proceeds from long-term borrowings 16,388 56,558 50,474
Payments of short-term borrowings -- -- (3,750)
Dividends paid -- -- (1,797)
Payments on capital lease obligations (1,491) (1,853) (1,526)
Contribution by joint venture partner -- -- 312
-------- -------- --------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES (10,618) 30,073 27,223
-------- -------- --------
NET INCREASE (DECREASE) IN CASH (2,103) 1,046 230
CASH AT BEGINNING OF YEAR 2,269 1,223 993
-------- -------- --------
CASH AT END OF YEAR $ 166 $ 2,269 $ 1,223
======== ======== ========
Supplemental Disclosures of Cash Flow Information and Non-Cash Investing and Financing
Activities:
1. Cash paid (received) during the year (in thousands):
Interest (net of
amount capitalized) $ 7,339 $ 5,753 $ 3,265
Income tax refunds $(1,205) $ (7,967) $ (851)
2. The $4.7 million loan from Kaptel Associates to the Company has been offset against
the cost of the related off-site improvements (see Note 3 to Consolidated Financial
Statements).
3. Effective April 30, 1995, the Employees' Retirement System of the State of Hawaii
converted its $30.6 million loan to an additional 49% ownership in Kaahumanu Center
Associates (see Note 3 to Consolidated Financial Statements).
4. Capital lease obligations of $1,343,000 in 1994 and $3,533,000 in 1993 were
incurred for new equipment.
See Notes to Consolidated Financial Statements.
</TABLE>
MAUI LAND & PINEAPPLE COMPANY, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION
The consolidated financial statements include the accounts of Maui Land
& Pineapple Company, Inc. and its wholly-owned subsidiaries, primarily Maui
Pineapple Company, Ltd. and Kapalua Land Company, Ltd. Significant
intercompany balances and transactions have been eliminated.
INVENTORIES
Inventories of tinplate, cans, ends and canned pineapple products are
stated at cost, not in excess of market value, using the dollar value last-in,
first-out (LIFO) method.
The costs of growing pineapple are charged to production in the year
incurred rather than deferred until the year of harvest. For financial
reporting purposes, each year's total cost of growing and harvesting pineapple
is allocated to products on the basis of their respective market values; for
income tax purposes, the allocation is based upon the weight of fruit included
in each product.
Real estate held for sale is stated at the lower of cost or fair value
less cost to sell.
Merchandise, materials and supplies are stated at cost, not in excess of
market value, using retail and average cost methods.
INVESTMENTS AND OTHER ASSETS
Cash surrender value of life insurance policies are reflected net of
loans against these policies.
Investments in joint ventures are accounted for using the equity method.
PROPERTY AND DEPRECIATION
Property is stated at cost. Major replacements, renewals and
betterments are capitalized while maintenance and repairs that do not improve
or extend the life of an asset are charged to expense as incurred. When
property is retired or otherwise disposed of, the cost of the property and the
related accumulated depreciation are written off and the resulting gains or
losses are included in income. Depreciation is provided over estimated useful
lives of the respective assets using the straight-line method.
POSTRETIREMENT BENEFITS
The Company's policy is to fund pension cost at a level at least equal
to the minimum amount required under federal law, but not more than the
maximum amount deductible for federal income tax purposes.
Deferred compensation plans for certain management employees provide for
specified payments after retirement. The present value of estimated payments
to be made are accrued over the period of active employment.
The estimated cost of providing postretirement health care and life
insurance benefits is accrued over the period employees render the necessary
services.
REVENUE RECOGNITION
Sales of real estate are recognized as revenues in the period in which
sufficient cash has been received, collection of the balance is reasonably
assured and risks of ownership have passed to the buyer.
INTEREST CAPITALIZATION
Interest costs are capitalized during the construction period of major
capital projects.
LEASES
Leases that transfer substantially all of the benefits and risks of the
ownership of the property are accounted for as capital leases. Amortization
of capital leases is included in depreciation expense. Other leases are
accounted for as operating leases.
INCOME TAXES
The Company's provision for income taxes is calculated using the
liability method. Deferred income taxes are provided for all temporary
differences between the financial statement and tax bases of assets and
liabilities using enacted tax rates.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Future actual amounts could differ from those estimates.
NET LOSS PER COMMON SHARE
Net loss per common share is computed using weighted average number of
shares outstanding during the period.
2. INVENTORIES
The replacement cost of pineapple product inventories at year-end
approximated $26 million in 1995 and 1994. In 1995 and 1993 there were
partial liquidations of LIFO inventories; thus, cost of sales included prior
years' inventory costs which were lower than current costs. Had current costs
been charged to cost of sales, the net loss for 1995 and 1993 would have
increased by $54,000 or $.03 per share and $515,000 or $.29 per share,
respectively.
3. INVESTMENTS AND OTHER ASSETS
Investments and Other Assets at December 31, 1995 and 1994 consisted of
the following:
1995 1994
(Dollars in Thousands)
Plantation Club Associates $ 3,683 $ 3,996
Cash Surrender Value of Life
Insurance Policies
(net of loans totalling $3,088,000) 1,172 761
Deferred Costs 4,617 7,344
Other 1,961 1,615
------- -------
Total $11,433 $13,716
======= =======
Deferred costs are primarily off-site construction costs incurred for
the Kapalua Resort, which will be allocated to future development projects.
At December 31, 1994, deferred costs also included tenant improvement
allowances for the Kaahumanu Center, which were being amortized over the life
of the related leases.
PLANTATION CLUB ASSOCIATES
Plantation Club Associates (PCA) is an unincorporated joint venture
between Kapalua Land Company, Ltd. (Kapalua) and Rolfing Partners (Rolfing).
It was formed in 1988 to finance and develop a third 18-hole golf course and
two residential development projects at the Kapalua Resort. Kapalua and
Rolfing each contributed $9.3 million in cash to the joint venture. Kapalua
also contributed the fee interest in approximately 230 acres of land to be
used for the residential projects. Kapalua's basis in the land was nominal
and PCA did not assign any cost to the land contributed. Profits and losses
of the joint venture are allocated based on the estimated distributions to the
partners, which are 85% to Kapalua and 15% to Rolfing. The partnership
agreement requires that all major decisions receive unanimous approval of the
partners.
Summarized balance sheet information for PCA as of December 31, 1995 and
1994 and operating information for the three years ended December 31, 1995
follows:
1995 1994
(Dollars in Thousands)
Real estate inventories $2,874 $3,207
Other assets 1,925 2,185
------ ------
Total Assets 4,799 5,392
Less: Total Liabilities 551 519
------ ------
Partners' Capital $4,248 $4,873
====== ======
1995 1994 1993
Revenues $ 672 $5,155 $ 1
Costs and expenses 481 5,965 174
------ ------ -----
Net Income (Loss) $ 191 $ (810) $(173)
====== ====== =====
PCA's real estate inventories as of December 31, 1995 consist of four
residential lots in Plantation Estates Phase I and allocated planning and off-
site costs related to Plantation Estates Phase II.
Kapalua's pre-tax share of the joint venture's net income (loss) was
$152,000, $(766,000) and $(147,000) for 1995, 1994 and 1993, respectively.
These amounts include expenses incurred by the Company related to the
investment (primarily amortization of capitalized interest cost).
KAPTEL ASSOCIATES
Kapalua Investment Corp. (KIC), a wholly-owned subsidiary of Maui Land &
Pineapple Company, Inc. was a 25% general partner in Kaptel Associates, the
partnership that owned The Ritz-Carlton Kapalua Hotel. In February of 1995,
Kaptel defaulted on its $186 million non-recourse financing arrangement. NI
Hawaii Resorts, Inc. (NI), the major general partner, commenced negotiations
with the lenders to acquire the indebtedness and on October 31, 1995, the
partners of Kaptel concluded an agreement to dissolve the partnership. KIC
transferred its interest in the partnership to NI.
Because of the dissolution agreement, the Company's equity in the losses
of Kaptel Associates recorded through June 30, 1995 were reversed in the third
quarter of 1995. The net reversal of these losses in 1995 of $4,990,000 was
recorded as a credit to equity in (earnings) losses of joint ventures. The
Company's share of the partnership's losses for 1994 and 1993 was $4,119,000
and $871,000, respectively.
Summarized balance sheet information for Kaptel Associates as of
December 31, 1994 and operating information for the years ended December 31,
1994 and 1993 follows:
1994
(Dollars in Thousands)
Current assets $ 3,507
Property and equipment, net 155,985
Other assets, net 14,681
--------
Total Assets 174,173
========
Current liabilities 8,355
Financing 185,786
--------
Total Liabilities 194,141
========
Partners' Deficit $(19,968)
========
1994 1993
Revenues $ 39,750 $ 33,434
Costs and expenses 56,226 51,435
-------- --------
Net Loss $ 16,476 $ 18,001
======== ========
The Company was leasing the 36-acre hotel site to Kaptel under a long-
term lease. In 1990, the Company borrowed $4,750,000 from Kaptel for
construction of certain off-site improvements related to the hotel property.
Principal and interest payments on the loan were payable solely from rental
income receivable by the Company under the hotel ground lease. The lease has
been renegotiated with the hotel owner, effective January 1, 1996. The
Company's fee interest is subordinate to a $65 million first mortgage. Ground
rents will be applied against the off-site loan and any balance remaining on
the loan at January 1, 1999 will be canceled. For accounting purposes,
modification of the lease arrangement has resulted in the off-site loan being
offset against the cost of the off-site improvements.
KAAHUMANU CENTER ASSOCIATES
In June 1993 Kaahumanu Center Associates (KCA) was formed to finance the
expansion and renovation of and to own and operate Kaahumanu Center. KCA is a
partnership between the Company, as general partner, and the Employees'
Retirement System of the State of Hawaii (ERS), as a limited partner. The
Company contributed the existing shopping center, subject to the existing
first mortgage, and approximately nine acres of adjacent land. ERS
contributed $312,000 and made a $30.6 million loan to the partnership. The
remainder of the construction cost was funded principally by bank loans.
The expansion and renovation was substantially complete by the end of
November of 1994. Effective April 30, 1995, the ERS converted its $30.6
million loan to an additional 49% ownership in KCA. Effective with the
conversion of the ERS loan, the Company and ERS each have a 50% interest in
KCA.
The Company no longer consolidates KCA and is accounting for its
investment in KCA by the equity method. The Company has a long-term agreement
with KCA to manage the Kaahumanu Center. The Company generates the
electricity which is used by the Kaahumanu Center. For the eight months ended
December 31, 1995, the Company charged KCA $1,695,000 for management fees and
electricity. At December 31, 1995, $843,000 was due to the Company from KCA
for management fees, electricity and reimbursable costs.
Summarized balance sheet information for KCA as of December 31, 1995 and
operating information for the eight months ended December 31, 1995 follows:
Dollars in
Thousands
----------
Current assets $ 2,658
Property and equipment, net 77,793
Other assets, net 4,472
--------
Total Assets 84,923
========
Current liabilities 1,576
Noncurrent liabilities 64,019
--------
Total Liabilities 65,595
========
Partners' Capital 19,328
========
Revenues 8,991
Costs and expenses 11,272
--------
Net Loss $ 2,281
========
The Company's share of the losses from KCA for the eight months ended
December 31, 1995 was $1,141,000. ERS and the Company each have a 9%
cumulative, non-compounded priority right to cash distributions based on their
contributions to the partnership (preferred return). For the purpose of
calculating the preferred returns, each partner's capital contribution had an
agreed upon value of $30.9 million on May 1, 1995. The Company's preferred
return is subordinate to the ERS preferred return. As of December 31, 1995,
the accumulated unpaid preferred returns were $1.6 million each for ERS and
the Company.
The Company's investment in KCA is a negative $4.6 million and is
included in other noncurrent liabilities. The negative balance is a result of
recording the Company's initial contribution at net book value of the assets
contributed, reduced by the related debt.
4. BORROWING ARRANGEMENTS
Short-term bank lines of credit available to the Company at December 31,
1995 were $1.7 million. These lines provide for interest at the prime rate
(8.5% at December 31, 1995) plus 3/4% to 1%. There were no borrowings under
these lines at December 31, 1995.
During 1995, 1994 and 1993, the Company had average borrowings
outstanding of $67.6 million, $114.2 million and $80 million, respectively, at
average interest rates of 9.7%, 8.5% and 7.1%, respectively.
Long-term debt at December 31, 1995 and 1994 consisted of the following
(interest rates represent the rates at December 31):
1995 1994
(Dollars in Thousands)
Revolving credit agreement, 8.75% and 9% $14,500 $27,750
Mortgage loan, 10% (see below) -- 13,890
Kaptel Associates, 7.7% (see Note 3) -- 4,750
Employees' Retirement System of the
State of Hawaii, 9% (see below) -- 30,588
Senior unsecured notes, 8.86% 20,000 20,000
Construction Loan, 8.75% (see below) -- 27,111
------- -------
Total 34,500 124,089
Less portion classified as current -- 27,951
------- -------
Long-term debt $34,500 $96,138
======== =======
The Company has a revolving credit agreement with participating banks
under which it may borrow up to $22 million in revolving loans through
December 31, 1996. The commitment reduces to $19 million as of December 31,
1996 and terminates on June 30, 1997. In addition, the available commitment
is also reduced by 75% of the after-tax net proceeds from the sale of real
estate and by the addition of any permanent mortgage financing proceeds.
Commitment fees of 1/2% are payable on the unused portions of this credit
line. At December 31, 1995, the interest rate on this loan was prime plus
1/4%. The agreement provides for an interest rate reduction to the prime rate
if the available commitment is reduced to $15 million. The agreement contains
certain financial covenants, including the maintenance of consolidated net
worth and working capital at certain levels and limits on the incurrence of
other indebtedness and capital expenditures. The loan is collateralized by
the Company's three golf courses at the Kapalua Resort. The agreement
currently prohibits the Company from declaring any dividends.
The loan from Kaptel Associates was for the construction of certain off-
site improvements related to The Ritz-Carlton Kapalua Hotel (see Note 3).
The loan from the Employees' Retirement System of the State of Hawaii
(ERS) and the construction loan relate to the expansion and renovation of
Kaahumanu Center (see Note 3). After conversion of the ERS loan to equity in
KCA, the 10% mortgage loan and 8.75% construction loan were reflected on KCA's
separate financial statements.
In September 1993 the Company concluded a private placement of $20
million in ten-year, 8.86% senior unsecured notes. Mandatory annual principal
payments of 20% of the original principal amount will begin in 1999. The
agreement includes certain financial covenants which are similar to the
Company's revolving credit agreement.
Maturities of long-term debt during the next five years, from 1996
through 2000, are as follows: $14,500,000 in 1997, $4,000,000 in 1999 and
$4,000,000 in 2000.
5. POSTRETIREMENT BENEFITS
In 1979 the Company sold 205,533 shares of common stock to the Employee
Stock Ownership Trust (ESOT) for clerical personnel and regular non-bargaining
unit employees. Contributions to the ESOT were charged to expense as the
unallocated shares held by the ESOT were allocated to the participants'
accounts. As of December 31, 1993, there were no unallocated shares.
Contributions to the ESOT were based on the debt service requirements of the
ESOT acquisition loan. Contributions paid in 1994 and 1993 were $574,000 and
$571,000, respectively. The final employee benefit expense of $520,000 was
recorded in 1993.
The Company has defined benefit pension plans covering substantially all
regular employees. Pension benefits are based primarily on years of service
and compensation levels.
The projected benefit obligations were determined using discount rates
of 7% and 8% as of December 31, 1995 and 1994, respectively, and compensation
increases ranging up to 4.5%. The expected long-term rate of return on assets
was 8% for 1995 and 1994. The assets of the plans consist primarily of
stocks, bonds, real estate and short-term investments.
Net pension cost for 1995, 1994 and 1993 included the following
components:
1995 1994 1993
(Dollars in Thousands)
Service cost--benefits earned during
the year $ 882 $1,078 $ 972
Interest cost on projected benefit obligation 2,076 1,963 1,955
Actual return on plan assets (5,294) 490 (2,403)
Net amortization and deferral 2,863 (3,070) (140)
------ ------ -------
Net pension expense $ 527 $ 461 $ 384
====== ====== =======
<TABLE>
The following table sets forth the funded status of the pension plans and the
amounts recognized in the balance sheets at December 31:
<CAPTION>
1995 1994
Assets Accumulated Assets Accumulated
Exceed Benefits Exceed Benefits
Accumulated Exceed Accumulated Exceed
Benefits Assets Benefits Assets
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligations
Vested benefits $26,543 $ 1,215 $22,882 $ 1,038
Nonvested benefits 302 90 298 60
------- ------- ------- -------
Accumulated benefit
obligation 26,845 1,305 23,180 1,098
Effect of assumed increase in
compensation levels 3,825 284 2,577 255
------- ------- ------- -------
Projected benefit obligation for
services rendered to date 30,670 1,589 25,757 1,353
Assets of plans at fair value 29,996 663 26,374 533
------- ------- ------- -------
Assets over (under) projected
benefit obligation (674) (926) 617 (820)
Unrecognized net loss 4,290 176 3,836 20
Unrecognized net transition
(asset) obligation (3,350) 448 (3,913) 451
Unrecognized prior service cost 351 75 404 83
Adjustment required to
recognize minimum liability -- (415) -- (299)
------- ------- ------- -------
Pension asset (liability)
recognized in
balance sheets $ 617 $ (642) $ 944 $ (565)
======= ======= ======= =======
</TABLE>
In addition to providing pension benefits, the Company provides certain
health care and life insurance benefits to substantially all retirees. The
net periodic cost of these benefits for 1995, 1994 and 1993 consists of the
following components:
<TABLE>
<CAPTION>
1995 1994 1993
(Dollars in Thousands)
<S> <C> <C> <C>
Service cost $ 337 $ 433 $ 694
Interest cost 985 1,056 1,318
Actual return on plan assets -- 59 (36)
Net amortization and deferral (374) (219) 19
------ ------ ------
Net expense $ 948 $1,329 $1,995
====== ====== ======
<CAPTION>
The funded status of these plans as of December 31, 1995 and 1994 was as follows:
1995 1994
(Dollars in Thousands)
<S> <C> <C>
Accumulated postretirement
benefit obligation:
Retirees $ 6,970 $ 6,940
Fully eligible active
plan participants 3,159 3,027
Other active plan participants 4,897 4,335
------- -------
Total 15,026 14,302
Plan assets at fair value -- 63
------- -------
Accumulated postretirement benefit obligation
in excess of plan assets 15,026 14,239
Unrecognized prior service cost 1,766 1,913
Unrecognized net gain 2,272 2,559
------- -------
Accrued postretirement benefit obligation
recognized in balance sheets $19,064 $18,711
======= =======
</TABLE>
Plan assets at December 31, 1994 were related to life insurance plans
for retirees. The assumed rate of return on the plan assets was 8%.
Measurements of the accumulated postretirement benefit obligation as of
December 31, 1995 and 1994 were determined using discount rates of 7% and 8%,
respectively, and compensation increases ranging up to 4.5%.
The accumulated postretirement benefit obligation as of December 31,
1995 was determined using a health care cost trend rate of 10% in 1995,
decreasing by .5% each year from 1995 through 2004 and 5% thereafter. The
accumulated postretirement benefit obligation as of December 31, 1994 was
determined using a health care cost trend rate of 10% from 1994 through 2003
and 5% thereafter. The effect of a 1% annual increase in these assumed cost
trend rates would increase the accumulated postretirement benefit obligation
by approximately $2,571,000 as of December 31, 1995 and the aggregate of the
service and interest cost for 1995 by approximately $259,000.
As of December 1, 1994, certain reductions to the postretirement health
care benefit for the Company's prospective pineapple bargaining unit retirees
became effective. These benefit reductions resulted in a $1 million reduction
of the accumulated benefit obligation, which is being amortized over 14 years
beginning in 1994.
6. REAL ESTATE SALES
Other income for 1995, 1994 and 1993 includes $3.4 million, $3 million
and $6.8 million, respectively, attributable to real estate sales.
7. LEASES
LESSEE
Property at December 31, 1995 and 1994 includes capital leases of
$10,452,000 and $14,452,000, respectively (accumulated depreciation of
$5,840,000 and $6,886,000, respectively).
Total rental expense under operating leases was $818,000 in 1995,
$837,000 in 1994 and $1,109,000 in 1993. A major operating lease covers
approximately 1,500 acres used primarily for Pineapple operations.
Future minimum rental payments under operating leases aggregate
$2,636,000 and are payable during the next five years (1996 to 2000) as
follows: $625,000, $586,000, $482,000, $376,000, $57,000, respectively, and
$510,000 thereafter.
Future minimum rental payments under capital leases aggregate $3,301,000
(includes $311,000 representing interest) and are payable from 1996 to 1999 as
follows: $1,452,000, $1,102,000, $653,000 and $94,000, respectively.
LESSOR
The Company leases land, buildings and land improvements. Total rental
income under these operating leases were as follows:
1995 1994 1993
(Dollars in Thousands)
Minimum rentals $4,569 $5,323 $5,004
Contingent rentals
(based on sales volume) 1,235 2,048 1,590
------ ------ ------
Total $5,804 $7,371 $6,594
====== ====== ======
Property at December 31, 1995 and 1994 includes leased property of
$18,617,000 and $95,295,000, respectively (accumulated depreciation of
$7,402,000 and $12,193,000, respectively).
Future minimum rental income aggregates $61,672,000 and is receivable
during the next five years (1996 to 2000) as follows: $2,620,000, $2,524,000,
$2,296,000, $1,872,000, $1,504,000, respectively, and $50,856,000 thereafter.
8. INCOME TAXES
The components of the income tax provision (credit) were as follows:
1995 1994 1993
(Dollars in Thousands)
Current $ 5 $(1,978) $(8,489)
Deferred (1,471) (851) 1,066
------- ------- -------
Total $(1,466) $(2,829) $(7,423)
======= ======= =======
A reconciliation between the total provision (credit) and the amount
computed using the statutory federal rate of 34% follows:
1995 1994 1993
(Dollars in Thousands)
Federal provision (credit) at
statutory rate $(1,028) $(2,291) $(6,284)
Adjusted for
State income taxes (credits)--
net of effect on
federal income taxes (192) (350) (980)
Appreciated property donation (228) -- --
Other (18) (188) (159)
------- ------- -------
Total provision (credit) for
income taxes $(1,466) $(2,829) $(7,423)
======= ======= =======
Deferred tax assets and liabilities were comprised of the following
types of temporary differences as of December 31, 1995 and 1994:
1995 1994
(Dollars in Thousands)
Accrued retirement benefits $ 7,671 $ 7,967
Net operating loss carryforward 4,237 6,691
Minimum tax credit carryforward 2,552 2,515
Accrued liabilities 1,232 958
Allowance for bad debts 219 152
------- -------
Total deferred tax assets 15,911 18,283
------- -------
Inventory (461) (1,016)
Charitable contributions (1,311) (1,174)
Income from partnerships (2,095) (5,869)
Pineapple marketing costs (815) (755)
Deferred condemnation proceeds (6,580) (5,990)
Property net book value (4,983) (5,288)
Other (42) (38)
------- -------
Total deferred tax liabilities (16,287) (20,130)
------- -------
Net deferred tax liabilities $ (376) $(1,847)
======= =======
At December 31, 1995 the Company had federal income tax net operating
loss carryforwards of approximately $10 million, which expire in 2009. The
Company also had federal minimum tax credit carryforwards of $2.6 million.
The Company's federal income tax returns for 1989 through 1994 are under
examination by the Internal Revenue Service. The revenue agent's report on
these years has not yet been issued and the Company cannot predict the outcome
of these examinations.
9. RESEARCH AND DEVELOPMENT
Research and development expenses totaled $410,000 in 1995, $375,000 in
1994 and $416,000 in 1993.
10. CONTINGENCIES & COMMITMENTS
There are various claims and legal actions pending against the Company.
In the opinion of management, after consultation with legal counsel, the
resolution of these matters will not have a material adverse effect on the
Company's financial position or results of operations. The Company has
guaranteed the payment of up to $10 million of debt service for Kaahumanu
Center Associates. The guaranty will be released by the lender when Kaahumanu
Center attains a defined level of net operating income. At December 31, 1995,
the Company had commitments under signed contracts of $3.2 million.
11. CONCENTRATIONS OF CREDIT RISK
A substantial portion of the Company's trade receivables results from
sales of pineapple products, primarily to food distribution customers in the
United States. Credit is extended after evaluating creditworthiness and no
collateral is generally required from customers. Notes receivable result
principally from sales of real estate in Hawaii and are collateralized by the
property sold.
12. DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair
value of each class of financial instruments:
Notes and Interest Receivable:
The fair value of these assets was estimated based on rates currently
available for similar types of transactions.
Notes Payable, Long-Term Debt and Accrued Interest:
The fair value of these liabilities was estimated based on rates
currently available to the Company for debt with similar terms and remaining
maturities.
The estimated fair values of the Company's financial instruments at
December 31, 1995 and 1994 were as follows:
1995 1994
(Dollars in Thousands)
Carrying Fair Carrying Fair
Amount Value Amount Value
Notes and Interest Receivable $ 891 $ 830 $ 731 $ 606
Notes Payable, Long-Term Debt
and Accrued Interest $38,618 $36,935 $129,909 $122,918
13. BUSINESS SEGMENTS
The Company's principal activities are Pineapple, Resort and Commercial
& Property. Inter-segment sales were insignificant.
Pineapple includes growing pineapple, canning pineapple in tin-plated
steel containers fabricated by the Company, and marketing canned pineapple
products and fresh pineapple.
Resort includes the development and sale of real estate, property
management and the operation of recreational and retail facilities and utility
companies at Kapalua on the Island of Maui. It also includes the Company's
investments in Plantation Club Associates and Kaptel Associates.
Commercial & Property includes Kaahumanu Center (investment in Kaahumanu
Center Associates, effective May 1, 1995), Napili Plaza shopping center and
other land development, property rentals and sales.
"Operating Profit (Loss)" is total revenues less all expenses except
corporate expenses, interest expense and income taxes. Assets identifiable by
activity are those assets that are used in the operations of each activity.
Neither total export sales nor sales to any single customer exceeded 10%
of consolidated revenues.
NOTES TO FINANCIAL STATEMENTS
1995 1994 1993
(Dollars in Thousands)
Revenues
Pineapple $ 81,052 $ 81,044 $ 86,033
Resort 34,330 34,109 31,455
Commercial & Property 10,123 10,617 13,635
Corporate 72 112 49
-------- -------- --------
Total Revenues 125,577 125,882 131,172
======== ======== ========
Operating Profit (Loss)
Pineapple (3,548) (867) (16,223)
Resort (1) 7,338 (2,203) (1,614)
Commercial & Property (2) 3,603 5,357 9,085
-------- -------- --------
Total Operating Profit (Loss) 7,393 2,287 (8,752)
-------- -------- --------
Corporate Expenses--Net (3,397) (3,343) (4,933)
Interest Expense (7,021) (5,682) (4,797)
-------- -------- --------
Loss Before Income Tax Credit (3,025) (6,738) (18,482)
======== ======== ========
Depreciation
Pineapple 5,112 5,561 4,957
Resort 3,492 3,689 3,839
Commercial & Property 1,355 1,309 1,111
Corporate 243 292 408
-------- -------- --------
Total Depreciation 10,202 10,851 10,315
======== ======== ========
Capital Expenditures
Pineapple 1,442 1,148 8,173
Resort 975 1,851 2,091
Commercial & Property 634 40,427 28,057
Corporate 243 75 507
-------- -------- --------
Total Capital Expenditures 3,294 43,501 38,828
======== ======== ========
Identifiable Assets
Pineapple 66,877 71,343 78,634
Resort 57,462 64,415 66,829
Commercial & Property 8,405 94,475 54,638
Corporate 4,341 5,178 11,487
-------- -------- --------
Total Assets $137,085 $235,411 $211,588
======== ======== ========
(1) Resort operating profit (loss) includes the Company's equity in the
earnings (loss) of Plantation Club Associates of $152,000 for 1995,
$(766,000) for 1994 and $(147,000) for 1993. Resort operating profit
(loss) also includes the Company's equity in the loss of Kaptel
Associates of $4,119,000 for 1994 and $871,000 for 1993 and the reversal
of previous equity in losses of $4,990,000 in 1995.
(2) Commercial & Property includes the Company's equity in the loss of
Kaahumanu Center Associates of $1,141,000 for the eight months ended
December 31, 1995.
COMMON STOCK
In compliance with the terms of a loan agreement the Company may not
declare any dividends in 1996.
At February 1, 1996, there were 411 shareholders of record.
Stock is traded over the counter nationally. The range of common stock
bid prices which follow were supplied by the National Quotation Bureau
Incorporated and do not include retail markup, markdown or commission:
First Second Third Fourth
Quarter Quarter Quarter Quarter
1995 High 52 52 51 52
Low 40 38 39 30
1994 High 105 90 71 70
Low 90 65 63 40
<TABLE>
SELECTED FINANCIAL DATA
<CAPTION>
1995 1994 1993 1992 1991
(Dollars in Thousands Except Per Share Amounts)
<S> <C> <C> <C> <C> <C>
FOR THE YEAR
Summary of Operations
Revenues $125,577 $125,882 $131,172 $147,049 $132,560
Cost of goods sold 70,935 67,623 84,932 81,147 82,001
Operating expenses 22,694 23,551 22,577 20,762 19,149
Shipping and marketing 16,793 16,568 17,673 15,917 14,907
General and
administrative 15,160 14,352 18,657 16,578 14,314
Equity in (earnings) losses
of joint ventures (4,001) 4,844 1,018 11 (7,805)
Interest expense 7,021 5,682 4,797 4,031 4,253
Income Taxes (Credit) (1,466) (2,829) (7,423) 2,183 1,922
Income (loss) before cumulative effect of
accounting changes (1,559) (3,909) (11,059) 6,420 3,819
Cumulative effect of
accounting changes -- -- -- (7,673) --
Net Income (Loss) (1,559) (3,909) (11,059) (1,253) 3,819
Per Common Share
Income (loss) before cumulative effect of
accounting changes (.87) (2.18) (6.15) 3.57 2.13
Cumulative effect of
accounting changes -- -- -- (4.27) --
Net Income (Loss) (.87) (2.18) (6.15) (.70) 2.13
Pro Forma Amounts Assuming
Inventory Accounting Principle
was Applied Retroactively
Net Income (Loss) -- -- -- (2,138) 4,088
Net Income (Loss) Per
Common Share -- -- -- (1.19) 2.28
Other Data
Cash dividends
Amount -- -- 1,348 1,797 1,797
Per common share -- -- .75 1.00 1.00
Depreciation $ 10,202 $ 10,851 $ 10,315 $ 9,774 $ 9,215
Return on beginning
stockholders' equity (2.6%) (6.1%) (14.5%) (1.6%) 5.0%
Percent of net income (loss)
to revenues (1.2%) (3.1%) (8.4%) (0.9%) 2.9%
AT YEAR END
Current assets less
current liabilities (1) $ 23,428 $ (1,097) $ 29,398 $ 26,233 $ 20,158
Ratio of current assets
to current liabilities (1) 2.78 .97 2.47 2.33 2.28
Property, net of
depreciation (2) $ 88,557 $180,194 $148,774 $121,045 $117,077
Total assets (2) 137,085 235,411 211,588 177,544 162,434
Long-term debt and
capital leases (3) 36,227 99,180 96,108 60,569 57,971
Stockholders' equity
Amount 58,870 60,429 64,321 76,187 78,729
Per common share $ 32.76 $ 33.63 $ 35.79 $ 42.40 $ 43.81
Common shares outstanding 1,797,125 1,797,125 1,797,125 1,797,125 1,797,125
</TABLE>
(1) At December 31, 1994, current liabilities exceeded current assets
because borrowings totaling $27.8 million on a revolving credit
commitment were classified as current. The commitment has since been
amended and borrowings under this line were classified as noncurrent at
December 31, 1995 (see Note 4)
(2) Property, net of depreciation, and Total assets decreased in 1995
primarily because, as of April 30, 1995, the Company no longer
consolidates Kaahumanu Center Associates (see Note 3).
(3) Long-term debt decreased in 1995 primarily because the debt related to
the renovation and expansion of Kaahumanu Center is reflected on the
separate financial statements of Kaahumanu Center Associates as of April
30, 1995 (see Note 3).
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
1995 vs. 1994
CONSOLIDATED
The Company reported a consolidated net loss of $1.6 million for 1995.
For 1994 the Company incurred a consolidated net loss of $3.9 million. The
primary reason for the reduced loss in 1995 was the reversal of the Company's
previous equity in losses of Kaptel Associates. In October 1995, the Company
transferred its interest in Kaptel to the major general partner and reversed
losses recorded through June 30, 1995 into income in the third quarter of 1995
(see Note 3 to Consolidated Financial Statements). Income from the reversal
of these losses was partially offset by higher operating losses from the
Company's Pineapple operations and lower operating profits from ongoing Resort
operations and the Commercial & Property segment.
General and administrative expenses increased by approximately 5.6%,
largely due to higher bad debt and workers compensation expenses. These
increases were partially offset by lower expenses for postretirement medical
costs, primarily as a result of changes in medical inflation assumptions.
Interest expense increased by 24% in 1995 compared to 1994. The
increase was primarily the result of a high debt level for the first four
months of 1995 arising from the Kaahumanu Center expansion project (see Note 3
to Consolidated Financial Statements) and higher average interest rates.
PINEAPPLE
Revenues from Pineapple operations were about the same in 1995 as in
1994. Higher average prices in 1995 were partially offset by lower case
volume of sales.
The operating loss from Pineapple operations increased from $867,000 to
$3.5 million. The higher operating loss in 1995 resulted from higher
production costs which increased cost of sales and from increased general and
administrative costs.
Shipping and selling expense for 1995 was about the same as in 1994 as
lower sales volume was offset by an increase in ocean freight rates.
Higher production costs in 1995 were largely due to hot, dry weather
conditions which resulted in smaller than normal, porous fruit. This lower
quality fruit reduced pineapple yields and recoveries, which in turn increased
per unit production costs. In 1995, there was a partial liquidation of LIFO
inventories, which resulted in lower costs from prior years being included in
cost of sales. Cost of sales for 1995 would have been higher by $104,000
based on current production costs.
RESORT
Revenues from the Kapalua Resort were $34.3 million in 1995 compared to
$34.1 million in 1994. The segment contributed an operating profit of $7.3
million in 1995 compared to an operating loss of $2.2 million in 1994.
Operating profit for 1995 includes $5 million representing the reversal of the
Company's equity in prior year losses of Kaptel Associates. The operating
loss for 1994 included $4.1 million of losses from Kaptel Associates.
Plantation Club Associates contributed $152,000 to operating profits for 1995
while for 1994 the Resort's share of the loss was $766,000.
Resort occupancies were about the same in 1995 compared to 1994.
Merchandise sales were lower by 2%. Revenues from the Resort membership
program decreased by 34% and real estate sales commissions declined by 45%.
These declines were offset by increased revenues from golf operations and The
Kapalua Villas. Paid rounds of golf decreased by 2%, but overall revenues
from golf operations increased because of higher average rates. The number of
occupied rooms at The Kapalua Villas increased by 10% and revenues increased
by 12%.
In total, Resort recreation and retail operations contributed lower
operating profits in 1995. Higher expenses related to commercial leases and
increased general and administrative expenses further reduced 1995 operating
profits.
COMMERCIAL & PROPERTY
Revenues of $10.1 million in 1995 from Commercial & Property was lower
by $.5 million compared to 1994. Operating profits for 1995 decreased by $1.8
million, from $5.4 million in 1994 to $3.6 million for 1995. Lower revenues
in 1995 were primarily the result of exclusion of Kaahumanu Center Associates
(KCA) from the Company's consolidated financial statements since May 1995.
Increased revenues from land sales in 1995 partially offset the decrease
attributable to KCA.
As of April 30, 1995, the Employees Retirement System of the State of
Hawaii converted its $30.6 million loan to KCA to an additional 49% equity
interest in the partnership. Accordingly, as of April 30, 1995, the Company
no longer consolidated KCA and, instead, accounted for the investment by the
equity method.
Lower operating profits in 1995 resulted from the Company's equity in
the losses of KCA for the last eight months of 1995. These losses are largely
attributable to higher interest and depreciation expenses related to the
expansion and renovation of Kaahumanu Center.
1994 vs. 1993
CONSOLIDATED
The Company reported a consolidated net loss for the year 1994 of $3.9
million. This compares to a consolidated net loss of $11 million for 1993.
The principal reason for the improved results was a decrease in the loss from
the Pineapple operations. These improved results more than offset increased
losses from joint venture investments at the Kapalua Resort and a lower amount
of income from land sales. Other income for 1994 includes $3 million from the
sale of land; other income for 1993 included $6.8 million attributable to land
sales.
General and administrative expenses decreased in 1994 by 23% as compared
to the year 1993. Company-wide cost reduction efforts were principally
responsible for this improvement. A large part of the decrease was
attributable to lower personnel costs, including a decrease in postretirement
medical benefits, a restructuring of the medical plans for current employees
and a decrease in the number of personnel through early retirements and job
consolidations. Also, there was no employee benefit expense associated with
the Company's ESOP in 1994 because all stock had been allocated to
participants' accounts as of December 31, 1993.
Interest expense increased in 1994 by 18% because of higher average
rates and higher borrowings. Borrowings and the amount of interest
capitalized increased in 1994 because of the expansion and renovation of
Kaahumanu Center. Construction at the Center was substantially completed by
the end of November 1994.
PINEAPPLE
Revenue from Pineapple operations decreased by 6% in 1994 and the
operating loss from Pineapple operations decreased from $16.2 million in 1993
to $867,000 in 1994. The improved results were principally due to cost
reductions.
Revenues decreased due to lower case volume of sales and to slightly
lower sales prices. Revenues from the fresh fruit operations increased in
1994 compared to 1993 due to higher sales volumes.
The number of cases packed in 1994 increased by approximately 2%, but
the per unit production cost decreased substantially. The cost reduction was
accomplished by job consolidations, reduced overtime, layoffs and other
measures to cut costs and to increase efficiency. In 1993 there was a partial
liquidation of LIFO inventories which resulted in lower costs from prior years
being included in cost of sales. Cost of sales for 1993 would have been
higher by $858,000 based on 1993 production costs.
Shipping and selling costs, which includes freight, brokerage and
warehousing costs, decreased by 17% due largely to lower case volume of sales.
Also, inventory levels at the end of 1992 were higher than normal which
resulted in higher warehousing and other holding costs in 1993.
RESORT
Revenues from the Kapalua Resort increased by 8%, from $31.5 million in
1993 to $34.1 million in 1994. The operating loss attributable to the Resort
increased from $1.6 million in 1993 to $2.2 million in 1994. The increased
loss was largely due to the Company's share of losses from joint ventures
which are accounted for on the equity method (see Note 3 to Consolidated
Financial Statements). Excluding these losses, Resort operations produced
operating profits in 1994 compared to operating losses for 1993.
Resort occupancies increased in 1994 as compared to 1993. The Kapalua
Villas contributed a 17% increase in revenues. Paid rounds of golf decreased
by approximately 3%, but revenues from the golf operations increased by 2% due
to higher average rates. Revenues attributable to merchandise sales increased
by 2%. In 1994 a new Resort membership program was initiated which also
contributed to the increase in revenues.
The improved results for the Resort's on-going operations were also
attributable to reductions in operating costs and improved retail margins.
COMMERCIAL & PROPERTY
Revenues from Commercial & Property decreased from $13.6 million in 1993
to $10.6 million for 1994 and operating profits decreased by $3.7 million from
$9.1 million to $5.4 million. The decreases were largely due to lower
revenues from land sales and condemnation proceeds which were included in
1993.
Decreased revenues from land sales and condemnations were partially
offset by higher revenues from Kaahumanu Center and Napili Plaza. Increased
revenues from Kaahumanu Center had a more pronounced effect in the third and
fourth quarters of 1994 compared to 1993 as the renovation work neared
completion and the space occupied by tenants increased. Revenues from Napili
Plaza also increased due to higher occupancies of leasable area.
LIQUIDITY, CAPITAL RESOURCES AND OTHER
At December 31, 1995, the Company's total debt, including capital
leases, was $37.5 million compared to $128.6 million at the end of 1994. The
decrease was primarily the result of Kaahumanu Center Associates (KCA) being
accounted for by the equity method and not being included in the Company's
consolidated financial statements at December 31, 1995 and the receipt of
reimbursements from KCA for construction costs. The removal of the Kaptel
Associates loan from the Company's balance sheet and positive cash flows from
operating activities also contributed to reducing the Company's debt.
In March 1996 the Company's $22 million revolving credit agreement was
extended to June 30, 1997. The commitment reduces to $19 million on December
31, 1996. In addition, the available commitment is also reduced by 75% of the
after-tax net proceeds from the sale of real estate and by the addition of any
permanent mortgage financing proceeds.
In 1996 capital expenditures are expected to be approximately $7
million. These expenditures are for new equipment and replacements considered
essential to the Company's current operations.
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. This expenditure represents
the balance of the $4.3 million total contribution to this project.
In June 1995 a final ruling by the International Trade Commission (ITC)
allowed import duties averaging 24.6% to be imposed on Thai pineapple
producers. The ruling was the result of an anti-dumping petition filed by
Maui Pineapple Company, Ltd. and the International Longshoremen's and
Warehousemen's Union in 1994 which alleged that Thailand's canned pineapple
producers were breaking United States and international trade laws by selling
in the U.S. below their production costs. Moderate price increases have
occurred in the marketplace since the ITC decision was announced. In
September 1995 Thai pineapple producers filed appeals with the U.S. Court of
International Trade. The Company does not expect any ruling on the appeal
until December 1996.
The Company as a partner in various partnerships may, under certain
circumstances, be called upon to make additional capital contributions (see
Note 3 to Consolidated Financial Statements).
IMPACT OF INFLATION AND CHANGING PRICES
The Company uses the LIFO method of accounting for its pineapple
inventories. Under this method the cost of products sold approximates current
cost and during periods of rising prices the ending inventory balance is below
current cost. The replacement cost of pineapple inventory was $26 million at
December 31, 1995.
Most of the land owned by the Company was acquired from 1911 to 1932 and
is carried at cost. A small portion of "Real Estate Held for Sale" represents
land cost. Replacements and additions to the Pineapple operations occur every
year and some of the assets presently in use were placed in service in 1934.
At Kapalua some of the fixed assets were constructed and placed in service in
the mid-to-late 1970s. Depreciation expense would be considerably higher if
fixed assets were stated at current cost.
MAUI LAND & PINEAPPLE COMPANY, INC.
Officers
President & Chief Executive Officer
Gary L. Gifford
Executive Vice President/Finance & Treasurer
Paul J. Meyer
Executive Vice President/Pineapple
Douglas R. Schenk
Executive Vice President/Resort
Donald A. Young
Vice President/Retail Property
Scott A. Crockford
Vice President/Human Resources
Julie L. Salady
Vice President/Land Management
Warren A. Suzuki
Secretary
Adele H. Sumida
Controller & Assistant Treasurer
Ted L. Proctor
<PAGE>
Directors
Mary C. Sanford--Chairman
Chairman of the Board
Maui Publishing Company, Ltd.
Richard H. Cameron--Vice Chairman
Publisher
Maui Publishing Company, Ltd.
Peter D. Baldwin
President
Baldwin Pacific Corporation
Joseph W. Hartley, Jr.
Retired President & CEO
Maui Land & Pineapple Company, Inc.
Randolph G. Moore
Chief Executive Officer
Kaneohe Ranch
Fred E. Trotter III
President
F. E. Trotter, Inc.
Mrs. J. Walter Cameron--Director Emeritus
Director
Maui Publishing Company, Ltd.
Andrew T. F. Ing--Director Emeritus
Chairman of the Board
Denis Wong and Associates
Audit and Compensation Committees
Peter D. Baldwin
Richard H. Cameron
Joseph W. Hartley, Jr.
Andrew T. F. Ing
Randolph G. Moore--Chairman, Audit
Mary C. Sanford
Fred E. Trotter III--Chairman, Compensation
PRINCIPAL SUBSIDIARIES
MAUI PINEAPPLE COMPANY, LTD.
Officers
President & Chief Executive Officer
Douglas R. Schenk
Executive Vice President/Sales & Marketing
James B. McCann
Executive Vice President/Finance & Treasurer
Paul J. Meyer
Vice President/Cannery
Eduardo E. Chenchin
Vice President/Plantations
L. Douglas MacCluer
Secretary
Adele H. Sumida
Controller
Stacey M. Jio
Assistant Treasurer
Ted L. Proctor
<PAGE>
Directors
Mary C. Sanford--Chairman
Richard H. Cameron--Vice Chairman
Peter D. Baldwin
Douglas B. Cameron
Gary L. Gifford
Joseph W. Hartley, Jr.
Andrew T. F. Ing
Paul J. Meyer
Randolph G. Moore
Claire C. Sanford
Douglas R. Schenk
Douglas R. Sodetani
Fred E. Trotter III
Mrs. J. Walter Cameron--Director Emeritus
KAPALUA LAND COMPANY, LTD.
Officers
President & Chief Executive Officer
Donald A. Young
Executive Vice President/Finance & Treasurer
Paul J. Meyer
Vice President/Administration & Support Operations
Robert P. Derks
Vice President/Development
Robert M. McNatt
Vice President/Resort Operations
Gary M. Planos
Vice President/Marketing & Real Estate
Margaret A. Santos
Secretary
Adele H. Sumida
Controller
Russell E. Johnson
Assistant Treasurer
Ted L. Proctor
Directors
Mary C. Sanford--Chairman
Richard H. Cameron--Vice Chairman
Peter D. Baldwin
Gary L. Gifford
Joseph W. Hartley, Jr.
Andrew T. F. Ing
Paul J. Meyer
Randolph G. Moore
Jared B. H. Sanford
Douglas R. Sodetani
Fred E. Trotter III
Donald A. Young
Mrs. J. Walter Cameron--Director Emeritus
