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 SEPTEMBER 30, 1997
Commission file number 0-6510
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 96733-6687
(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 November 3, 1997
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 - September 30, 1997 (Unaudited)
& December 31, 1996 3
Condensed Statements of Operations and Retained Earnings,
Three Months Ended September 30, 1997 & 1996 (Unaudited) 4
Condensed Statements of Operations and Retained Earnings,
Nine Months Ended September 30, 1997 & 1996 (Unaudited) 5
Condensed Statements of Cash Flows
Nine Months Ended September 30, 1997 & 1996 (Unaudited) 6
Notes to Condensed Financial Statements (Unaudited) 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 6. Exhibits and Reports on Form 8-K 10
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES
CONDENSED BALANCE SHEETS
Unaudited
9/30/97 12/31/96
(Dollars in Thousands)
ASSETS
Current Assets
Cash $ 970 $ 453
Accounts and notes receivable 17,196 14,343
Inventories 20,953 16,484
Other current assets 4,455 4,028
Total current assets 43,574 35,308
Property 197,792 190,999
Accumulated depreciation (110,132) (104,389)
Property - net 87,660 86,610
Other Assets 10,696 10,933
TOTAL 141,930 132,851
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt and capital lease obligations1,571 1,254
Trade accounts payable 3,375 7,661
Other current liabilities 7,912 6,926
Total current liabilities 12,858 15,841
Long-Term Liabilities
Long-term debt and capital lease obligations 39,056 28,898
Accrued retirement benefits 21,430 21,983
Other long-term liabilities 7,932 8,096
Total long-term liabilities 68,418 58,977
Stockholders' Equity
Common stock, no par value - 1,800,000 shares
authorized, 1,797,125 issued and outstanding 12,318 12,318
Retained earnings 48,336 45,715
Stockholders' Equity 60,654 58,033
TOTAL $141,930 $ 132,851
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
9/30/97 9/30/96
(Dollars in Thousands
Except Share Amounts)
REVENUES
Net sales $29,082 $30,435
Operating income 7,088 6,229
Other income 1,206 340
Total Revenues 37,376 37,004
COSTS AND EXPENSES
Cost of goods sold 20,887 20,977
Operating expenses 6,722 6,258
Shipping and marketing 3,705 4,341
General and administrative 3,541 3,515
Equity in losses of joint ventures 263 88
Interest 799 937
Total Costs and Expenses 35,917 36,116
INCOME BEFORE INCOME TAXES 1,459 888
INCOME TAXES 499 370
NET INCOME 960 518
RETAINED EARNINGS, BEGINNING OF PERIOD 47,376 46,696
RETAINED EARNINGS, END OF PERIOD 48,336 47,214
PER COMMON SHARE
Net Income $ .54 $ .29
See accompanying Notes to Condensed Financial Statements.
MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
Nine Months Ended
9/30/97 9/30/96
(Dollars in Thousands
Except Share Amounts)
REVENUES
Net sales $72,551 $74,750
Operating income 20,937 19,161
Other income 5,886 1,224
Total Revenues 99,374 95,135
COSTS AND EXPENSES
Cost of goods sold 51,300 51,076
Operating expenses 19,452 17,566
Shipping and marketing 10,516 11,155
General and administrative 11,005 10,875
Equity in losses of joint ventures 776 646
Interest 2,230 2,708
Total Costs and Expenses 95,279 94,026
INCOME BEFORE INCOME TAXES 4,095 1,109
INCOME TAXES 1,474 447
NET INCOME 2,621 662
RETAINED EARNINGS, BEGINNING OF PERIOD 45,715 46,552
RETAINED EARNINGS, END OF PERIOD 48,336 47,214
PER COMMON SHARE
Net Income $ 1.46 $ .37
See accompanying Notes to Condensed Financial Statements.
MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
9/30/97 9/30/96
(Dollars in Thousands)
Net Cash Used In Operating Activities $(7,189) $(3,071)
Investing Activities
Purchases of property (6,684) (3,288)
Proceeds from disposal of property 5,339 789
Contributions to joint ventures (1,145) --
Distributions from joint venture 1,950 --
Proceeds from surrender of
insurance policies -- 3,246
Increase in deferred costs and other (1,489) 400
Net Cash Provided By (Used In)
Investing Activities (2,029) 1,147
Financing Activities
Payments of long-term debt and capital
lease obligations (8,470) (10,177)
Proceeds from long-term debt 18,205 12,400
Net Cash Provided By
Financing Activities 9,735 2,223
Net Increase in Cash 517 299
Cash at Beginning of Period 453 166
Cash at End of Period $ 970 $ 465
Supplemental Disclosure and Cash Flow Information - Interest (net
of amounts capitalized) of $2,848,000 and $3,276,000 was paid
during the nine months ended September 30, 1997 and 1996,
respectively. Income taxes of $110,000 and $306,000 were paid
during the nine months ended September 30, 1997 and 1996,
respectively. Capital lease obligations of $740,000 and $848,000
were incurred during the nine months ended September 30, 1997 and
1996, respectively.
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 September 30,
1997 and 1996.
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 1997 and 1996 differs from the
statutory federal rate of 34% primarily because of the state tax
provision and refundable state tax credits.
4. Accounts and notes receivable are reflected net of allowance
for doubtful accounts of $573,000 and $698,000 at September 30,
1997 and December 31, 1996, respectively.
5. Inventories as of September 30, 1997 and December 31, 1996
were as follows (in thousands):
9/30/97 12/31/96
Pineapple products
Finished goods $13,308 $ 7,306
Work in progress 934 1,645
Raw materials 525 789
Real estate held for sale -- 339
Merchandise, materials and supplies 6,186 6,405
Total Inventories $20,953 $16,484
6. Average common shares outstanding for the interim periods
ended September 30, 1997 and 1996 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 third quarter of 1997 was
$960,000 compared to $518,000 for the third quarter of 1996.
Revenues were higher by 1% for the same periods respectively.
Other income for the third quarters of 1997 and 1996 included
revenues from land sales of $1 million and $200,000,
respectively.
For the first nine months of 1997 net income was $2,621,000
compared to $662,000 for the first nine months of 1996. Revenues
of $99 million for the first nine months of 1997 were 4% higher
than the same period in 1996. Other income for the first nine
months of 1997 and 1996 included revenues from land sales of $5.2
million and $700,000, respectively.
The sale of two land parcels in the Company's Commercial &
Property segment contributed approximately $700,000 to the 1997
third quarter net income. The sale of a 50% interest in the 12-
acre parcel adjacent to the Kapalua Bay Hotel in June of 1997
also contributed approximately $2.6 million to net income for the
first nine months of 1997.
Interest expense for the third quarter and first nine months of
1997 were lower by 15% and 18%, respectively, compared to the
same periods in 1996 due principally to lower average borrowings.
Pineapple
Revenue from Pineapple operations was $26.5 million for the third
quarter of 1997 compared to $27.7 million for the third quarter
of 1996. For the first nine months of 1997 revenue was $64.9
million compared to $66.4 million for the same period in 1996.
This segment generated operating profits of $2,210,000 for the
third quarter of 1997 compared to $2,512,000 for the third
quarter of 1996; and $3.2 million for the first nine months of
1997 compared to $4.1 million for the first nine months of 1996.
Higher average prices in 1997 compared to 1996, contributed
approximately $630,000 and $1.4 million to revenue for the third
quarter and first nine months of 1997, respectively. Lower sales
volume of canned pineapple products reduced revenues by $2.3
million and $2.4 million for the third quarter and first nine
months of 1997 respectively. A change in product mix sold
(fruit, juice, concentrate) and a higher average cost per case
sold was also responsible for the lower operating profits in
1997.
Resort
Revenue from the Kapalua Resort was $8.7 million for the third
quarter of 1997 compared to $8 million for the third quarter of
1996. For the first nine months of 1997 revenue from this
segment was $30 million compared to $25 million for the same
period in 1996. Operating profit from the Resort segment was
$173,000 for the third quarter of 1997 compared to $546,000 for
the third quarter of 1996; and $5.6 million for the first nine
months of 1997 compared to $2.7 million for the first nine months
of 1996.
Golf course operations, Villa Rentals and realty operations
contributed to higher revenues in the third quarter and first
nine months of 1997. Revenues and operating profits for first
nine months of 1997 also includes $4.2 million from the sale of a
50% interest in the 12-acre parcel adjacent to the Kapalua Bay
Hotel. These increases were partially offset by planned ground
lease rent concessions allowances which were made to accommodate
the temporary closure of the Kapalua Bay Hotel for major
restoration work from April through mid-August of 1997., and
decreases in other resort revenues related to the Hotel closure.
Higher operating costs and marketing expenses resulted in a
reduction of operating profits from Kapalua's ongoing resort
operations. Other Resort revenues also experienced decreases,
again related to the Hotel closure. These revenue decreases
coupled with higher operating costs, resulted in reduced
operating profits from Kapalua's ongoing operations.
Commercial & Property
Revenue from the Commercial & Property segment was $2.2 million
for the third quarter of 1997 compared to $1.3 million for the
third quarter of 1996. For the first nine months of 1997
revenues were $4.4 million compared to $3.7 million for the first
nine months of 1996. The segment generated an operating profit
of $1.1 million for the third quarter of 1997 compared to an
operating loss of $1,000 for the same period in 1996. For the
first nine months of 1997 these operations produced an operating
profit of $851,000 compared to an operating profit of $88,000 for
the same period a year earlier.
Land sales contributed $1 million to revenues and operating
profits for the third quarter and first nine months of 1997. The
third quarter and first nine months of 1996 includes revenue and
operating profits from land sales of $200,000 and $700,000,
respectively. The Company's Kaahumanu Center operations produced
lower operating losses for the third quarter and first nine
months of 1997. Napili Plaza reported lower operating results of
the third quarter of 1997, but improved results for the first
nine months as compared to the same periods in 1996.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1997 the Company's total debt including capital
leases was $40.6 million, an increase of $10.5 million compared
to December 31, 1996. Cash flows used for operating activities
for the first nine months of 1997 was $7.2 million. The increase
in debt and operating cash flow use largely reflects the peak
pineapple canning months during the summer and a lag in accounts
receivable collections. Positive operating cash flows are
expected during the fourth quarter and the Company's outstanding
debt is expected to be reduced. The Company had approximately
$14 million in unused short- and long-term revolving credit and
equipment financing lines available at September 30,1997.
Consolidated capital expenditures are expected to be
approximately $9.3 million in 1997 of which approximately 50% are
for the replacement of existing equipment. The Company expects
to finance approximately $4.2 million of the 1997 capital
expenditures with capital leases or other equipment financing
arrangements and the remainder will be financed with operating
cash flows and cash from property disposals.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Arosi Litigation
On July 10, 1996, Arosi Hawaii, Inc. ("Arosi") filed a
complaint against Maui Land & Pineapple Company, Inc.
("MLP") and two of its officers, Don Young and Paul J.
Meyer, entitled Arosi Hawaii, Inc. v. Maui Land & Pineapple
Company, Inc., et al., Civil No. 96-0871(1) (Circuit Court
of the Second Circuit, State of Hawaii). The complaint
alleged that MLP's exercise of a contractual first refusal
right tortuously interfered with Arosi's attempt to purchase
the Kapalua Bay Hotel and Villas.
Effective August 22, 1997, the parties executed a
Settlement, Release and Indemnity Agreement, and on October
29, 1997, the case was dismissed with prejudice.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(10) Material Contracts
(A) Partnership Redemption Agreement Among Plantation Club
Associates, Rolfing Partners and Kapalua Land Company, Ltd.*
(27) Financial Data Schedule
As of September 30, 1997 and for the nine months then ended.*
*Filed Herewith
(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.
NOVEMBER 12, 1997 /S/ PAUL J. MEYER
Date Paul J. Meyer
Executive Vice President/Finance
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Maui
Land & Pineapple Company, Inc. Balance Sheet as of September 30, 1997 and
Statement of Operations for the nine months then ended, and is qualified in its
entirety by reference to such financial statements
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 970
<SECURITIES> 0
<RECEIVABLES> 17,769
<ALLOWANCES> 573
<INVENTORY> 20,953
<CURRENT-ASSETS> 43,574
<PP&E> 197,792
<DEPRECIATION> 110,132
<TOTAL-ASSETS> 141,930
<CURRENT-LIABILITIES> 12,858
<BONDS> 39,056
0
0
<COMMON> 12,318
<OTHER-SE> 48,336
<TOTAL-LIABILITY-AND-EQUITY> 141,930
<SALES> 72,551
<TOTAL-REVENUES> 99,374
<CGS> 51,300
<TOTAL-COSTS> 70,752
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,230
<INCOME-PRETAX> 4,095
<INCOME-TAX> 1,474
<INCOME-CONTINUING> 2,621
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,621
<EPS-PRIMARY> 1.46
<EPS-DILUTED> 1.46
</TABLE>
PARTNERSHIP REDEMPTION AGREEMENT
This PARTNERSHIP REDEMPTION AGREEMENT is made
September 30, 1997, among PLANTATION CLUB ASSOCIATES, a Hawaii
general partnership ("PCA" or the "Partnership"), ROLFING
PARTNERS, a Hawaii limited partnership ("Rolfing") and KAPALUA
LAND COMPANY, LTD., a Hawaii corporation ("Kapalua").
R E C I T A L S
A. Rolfing and Kapalua are the sole partners of PCA.
B. Rolfing has notified Kapalua of its desire to
withdraw from PCA.
C. PCA has agreed to redeem Rolfing's partnership
interest in PCA, as set forth herein.
D. Kapalua has agreed to the foregoing withdrawal and
redemption, as set forth herein.
NOW, THEREFORE, in consideration of the mutual
obligations contained in this Agreement, and for other good and
valuable consideration, Kapalua and Rolfing do hereby agree as
follows.
1. Transfer of interest. Effective as of December
31, 1997, Rolfing shall withdraw from PCA and shall transfer to
PCA all of Rolfing's partnership interest in the property and
business of the Partnership.
2. Consideration. In redemption of Rolfing's
interest in PCA, PCA shall pay to Rolfing the sum of Eight
Hundred Twenty-Five Thousand and No/100 Dollars ($825,000.00)
in the following manner: $815,000.00 on or before September
30, 1997 and $10,000.00 on or before December 31, 1997. Except
for the foregoing amounts, Rolfing shall have no further rights
to or interest in the Partnership or it property or the
business of the Partnership. From and after the date of this
Agreement, Rolfing shall have no right to any distributions
from the Partnership except as provided in this paragraph 2,
notwithstanding anything in the Partnership Agreement of PCA
(the "Partnership Agreement") to the contrary.
3. Distribution to Kapalua. Concurrently with the
distribution of $815,000.00 to Rolfing on or before September
30, 1997, PCA shall distribute $1,950,000.00 to Kapalua.
4. Allocation of Profits and Losses.
Notwithstanding anything in the Partnership Agreement to the
contrary, Rolfing shall be allocated income and gain of 15% for
the period January 1, 1997 through September 30, 1997 and 1%
for the period October 1, 1997 through December 31, 1997. The
sum of all income and gain allocated to Rolfing shall not
exceed $825,000.00 for PCA's 1997 fiscal year, as determined by
PCA's tax accountants.
5. Partnership obligations. From and after
September 30, 1997, Rolfing shall have no liability for the
debts and obligations of PCA, and Kapalua and PCA shall
indemnify and hold Rolfing harmless therefrom, including the
costs of defense and attorneys' fees.
6. Kapalua IRS Extension Request. Kapalua shall
prepare a letter to the Internal Revenue Service ("IRS"),
approved by Rolfing, requesting that the IRS grant Kapalua the
extension of the highway expense election, with the stipulation
that Rolfing will not be required to amend their tax returns
for 1990, 1991, and 1992. Kapalua agrees to negotiate with the
IRS to close the open tax years 1990, 1991, and 1992 with
respect to these highway improvements for Rolfing, and will not
put Rolfing in a position where these tax years remain open in
order for Kapalua to obtain their extension approval. Kapalua
will send the extension letter to the IRS by October 7, 1997.
Kapalua agrees to make its best efforts to obtain IRS approval
for the extension by February 28, 1998. If the extension is
not granted by July 15, 1998, PCA will file amended returns for
1990, 1991, and 1992 to close and finalize these tax years for
both Kapalua and Rolfing.
7. Amended tax return. Rolfing acknowledges that
if PCA is unable to obtain an IRS extension with respect to the
payment of future highway costs, PCA will need to file amended
returns showing increased taxable income to Rolfing and
Kapalua. Neither PCA nor Kapalua shall have any liability to
Rolfing with respect to this matter.
8. Further instruments. The parties shall execute
such further instruments as may be necessary to fully carry
this Agreement into effect.
9. No Party deemed drafter. Rolfing and Kapalua are each
relying on their separate advisors and counsel with respect to
the matters herein. This Agreement shall not be construed
against any party as drafter.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed on the day and year first above
written.
KAPALUA LAND COMPANY, LTD., a
Hawaii corporation, in its own capacity and
as general partner of Plantation Club Associates
By /S/ DON YOUNG
Its President
By /S/ ROBERT P. DERKS
Vice President, Operations
"KAPALUA"
ROLFING PARTNERS, a Hawaii limited
partnership, in its own capacity and
as general partner of Plantation Club Associates
By: ROLFING DEVELOPMENT
CORPORATION, a Hawaii Corporation,
Its General Partner
By /S/ MARK ROLFING
Its President
By /S/ DEBI ROLFING
Its Vice President
"ROLFING"
