SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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 August 3, 1998
Common Stock, no par value 7,188,500 shares
<PAGE>
MAUI LAND & PINEAPPLE COMPANY, INC.
AND SUBSIDIARIES
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets,
June 30, 1998 (Unaudited) and December 31, 1997 3
Condensed Statements of Operations and Retained Earnings,
Three Months Ended June 30, 1998 and 1997 (Unaudited) 4
Condensed Statements of Operations and Retained Earnings,
Six Months Ended June 30, 1998 and 1997 (Unaudited) 5
Condensed Statements of Cash Flows,
Six Months Ended June 30, 1998 and 1997 (Unaudited) 6
Notes to Condensed Financial Statements (Unaudited) 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 4. Submission of Matters to a Vote of Security-Holders 12
Item 6. Exhibits and Reports on Form 8-K 12
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES
CONDENSED BALANCE SHEETS
Unaudited
6/30/98 12/31/97
(Dollars in Thousands)
ASSETS
Current Assets
Cash $ 753 $ 1,611
Accounts and notes receivable 10,997 12,748
Inventories 23,965 18,713
Other current assets 3,554 4,076
Total current assets 39,269 37,148
Property 203,613 200,504
Accumulated depreciation (116,658) (112,457)
Property - net 86,955 88,047
Other Assets 9,482 9,519
Total 135,706 134,714
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt
and capital lease obligations 2,612 3,052
Trade accounts payable 4,228 6,166
Other current liabilities 7,361 7,647
Total current liabilities 14,201 16,865
Long-Term Liabilities
Long-term debt and capital lease obligations 32,836 29,435
Accrued retirement benefits 21,699 21,571
Equity in losses of joint venture 7,344 6,655
Other long-term liabilities 913 1,292
Total long-term liabilities 62,792 58,953
Stockholders' Equity
Common stock, no par value - 7,200,000 shares
authorized, 7,188,500 issued and outstanding 12,318 12,318
Retained earnings 46,395 46,578
Stockholders' equity 58,713 58,896
Total $135,706 $ 134,714
See accompanying Notes to Condensed Financial Statements.
<PAGE>
MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
Three Months Ended
6/30/98 6/30/97
(Dollars in Thousands
Except Share Amounts)
Revenues
Net sales $22,263 $22,417
Operating income 7,221 6,396
Other income 652 4,297
Total Revenues 30,136 33,110
Costs and Expenses
Cost of goods sold 15,122 15,882
Operating expenses 6,500 6,704
Shipping and marketing 3,689 3,436
General and administrative 3,563 3,587
Equity in losses of joint ventures 325 270
Interest 748 760
Total Costs and Expenses 29,947 30,639
Income Before Income Taxes 189 2,471
Income Tax Expense 66 914
Net Income 123 1,557
Retained Earnings, Beginning of Period 46,272 45,819
Retained Earnings, End of Period 46,395 47,376
Per Common Share
Net income $ .02 $ .22
See accompanying Notes to Condensed Financial Statements.
<PAGE>
MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
Six Months Ended
6/30/98 6/30/97
(Dollars in Thousands
Except Share Amounts)
Revenues
Net sales $42,421 $43,469
Operating income 15,408 13,849
Other income 776 4,680
Total Revenues 58,605 61,998
Costs and Expenses
Cost of goods sold 29,402 30,413
Operating expenses 13,002 12,730
Shipping and marketing 7,168 6,811
General and administrative 7,168 7,464
Equity in losses of joint ventures 647 513
Interest 1,508 1,431
Total Costs and Expenses 58,895 59,362
Income (Loss) Before Income Taxes (290) 2,636
Income Tax Expense (Credit) (107) 975
Net Income (Loss) (183) 1,661
Retained Earnings, Beginning of Period 46,578 45,715
Retained Earnings, End of Period 46,395 47,376
Per Common Share
Net income (loss) $ (.03) $ .23
See accompanying Notes to Condensed Financial Statements.
<PAGE>
MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
6/30/98 6/30/97
(Dollars in Thousands)
Net Cash Used in Operating Activities $ (806) $ (202)
Investing Activities
Purchases of property (3,060) (5,760)
Proceeds from disposal of property 601 3,380
Contributions to joint ventures (100) (830)
Other (454) (441)
Net Cash Used in Investing Activities (3,013) (3,651)
Financing Activities
Payments of long-term debt and capital
lease obligations (4,839) (5,032)
Proceeds from long-term debt 7,800 10,355
Net Cash Provided by Financing Activities 2,961 5,323
Net Increase (Decrease) in Cash (858) 1,470
Cash at Beginning of Period 1,611 453
Cash at End of Period $ 753 $ 1,923
Supplemental Disclosure and Cash Flow Information - Interest (net
of amounts capitalized) of $1,581,000 and $1,669,000 was paid
during the six months ended June 30, 1998 and 1997, respectively.
Income taxes of $519,000 were paid during the six months ended
June 30, 1998.
See accompanying Notes to Condensed Financial Statements.
<PAGE>
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 June 30, 1998
and 1997.
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 1998 and 1997 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 $447,000 and $567,000 at June 30, 1998
and December 31, 1997, respectively.
5. Inventories as of June 30, 1998 and December 31, 1997 were
as follows (in thousands):
6/30/98 12/31/97
Pineapple products
Finished goods $10,992 $ 8,977
Work in progress 2,419 823
Raw materials 2,561 1,325
Real estate held for sale 1,439 1,349
Merchandise, materials and supplies 6,554 6,239
Total Inventories $23,965 $18,713
6. Business Segment Information (in thousands):
Three Months Ended June 30 Six Months Ended June 30
1998 1997 1998 1997
Revenues
Pineapple $ 19,710 $ 20,003 $ 37,026 $ 38,419
Resort 9,329 12,001 19,436 21,390
Commercial
& Property 1,132 1,100 2,127 2,178
Corporate (35) 6 16 11
Total revenues 30,136 33,110 58,605 61,998
Operating profit (loss)
Pineapple 920 667 593 1,007
Resort 1,068 3,691 2,794 5,394
Commercial
& Property (20) (119) (112) (209)
Total operating
profit 1,968 4,239 3,275 6,192
Corporate
expenses - net (1,031) (1,008) (2,057) (2,125)
Interest expense (748) (760) (1,508) (1,431)
Income tax
(expense) credit (66) (914) 107 (975)
Net income (loss) $ 123 $ 1,557 $ (183) $ 1,661
7. Average common shares outstanding for the interim periods
ended June 30, 1998 and 1997 were 7,188,500.
On May 1, 1998, the Company effected a four-for-one split of
its common stock. All references to the number of shares of
common stock and per share amounts have been restated to
reflect the split.
8. Certain prior period amounts have been restated to conform
to the current presentation.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS
Consolidated
Consolidated net income for the second quarter of 1998 was
$123,000 compared to $1.6 million for the second quarter of 1997.
Revenues for the second quarter of 1998 were 9% lower than the
second quarter of 1997.
For the first six months of 1998 the Company had a net loss of
$183,000 compared to net income of $1.7 million for the first
half of 1997. Revenues for the same period declined by 5%.
Lower results for the second quarter and first half of 1998
primarily reflect the sale, in the second quarter of 1997, of a
50 percent interest in the 12-acre parcel adjacent to the Kapalua
Bay Hotel. This transaction added $4.2 million to revenues and
$2.6 million to net income in 1997.
Interest expense was 2% lower for the second quarter and 5%
higher for the first six months of 1998 compared to the same
periods in 1997 primarily as a result of differences in the
average borrowing levels. Average interest rates were
approximately the same in 1998 and 1997.
General and administrative expenses were lower by 1% for the
second quarter and 4% for the first half of 1998 compared to the
same periods in 1997, principally due to lower costs in the land
management area and staffing changes made by the Pineapple
division.
Pineapple
Revenues from Pineapple operations were lower by 1% and 4%,
respectively, for the second quarter and first half of 1998,
respectively, as compared to the same periods in 1997 largely due
to lower canned pineapple case sales volume. Revenues were
reduced by $600,000 and $2.5 million, respectively, for the
second quarter and first six months of 1998 compared to 1997, as
a result of lower sales volume. The decline in revenues due to
lower case sales volume was partially offset by higher prices and
an increase in fresh fruit sales.
Pineapple operations produced an operating profit of $920,000 for
the second quarter of 1998 compared to $667,000 for the second
quarter of 1997. For the first six months of 1998 Pineapple
operations had an operating profit of $593,000 compared to $1
million for the same period in 1997. Increased operating profit
for the second quarter of 1998 reflects lower per unit cost of
sales due to a change in the mix of products sold (fruit, juice,
concentrate) and improved recoveries (cases per ton), which more
than offset lower sales volume and higher shipping and selling
costs.
Resort
Revenues from the Company's Kapalua Resort segment were $9.3
million and $12 million for the second quarter of 1998 and 1997,
respectively. For the first six months of 1998 and 1997,
revenues were $19.4 million and $21.4 million, respectively.
Operating profits from the Resort were $1.1 million and $3.7
million for the second quarter of 1998 and 1997, respectively.
For the first half of 1998 and 1997 operating profits were $2.8
million and $5.4 million, respectively.
Resort revenues and operating profit for the second quarter and
first six months of 1997 includes $4.2 million from the sale of
the parcel next to the Kapalua Bay Hotel. Excluding this
transaction, revenues and operating profits from the Resort
improved substantially in the second quarter and first half of
1998 as compared to the same periods in 1997.
Revenues from golf operations increased in 1998 due to more
rounds played and higher average green fees. Lease revenues, in
particular from the Kapalua Bay Hotel, increased in 1998,
primarily due to planned ground lease reductions in 1997 to
accommodate the closure of the hotel for restoration work.
Income from real estate commissions increased in 1998 as a result
of resale activity. The Kapalua Villas contributed to the
improved results with increased occupancies and room rates.
Merchandise sales were marginally better in the first half of
1998 compared to the first half of 1997 and increased by
approximately 8% for the second quarter of 1998 as compared to
the second quarter of 1997.
Commercial & Property
Revenues from the Commercial & Property segment increased by 3%
for the second quarter of 1998 and operating losses decreased by
approximately $100,000 as compared to the second quarter of 1997.
For the first six months of 1998, revenues declined by 2% and the
operating loss was $112,000 compared to $209,000 for the first
half of 1997. The improved results were primarily due to the
sale of two land parcels in the second quarter of 1998 that
resulted in operating profit contributions of approximately
$200,000. The Company's equity in the losses of Kaahumanu Center
Associates increased in the second quarter and first half of 1998
largely because of higher bad debt expense.
LIQUIDITY, CAPITAL RESOURCES AND OTHER
At June 30, 1998, total debt including capital leases was $35.4
million, approximately $3 million higher than December 31, 1997.
Borrowings are expected to continue to increase through September
corresponding to the Company's peak pineapple canning months.
Unused short- and long-term lines of credit available to the
Company at the end of the second quarter of 1998 totaled $17.6
million.
Expenditures for fixed assets, investments and Resort deferred
development costs are estimated to be approximately $11.7 million
in 1998. Included in this amount is approximately $5.3 million
for replacement of existing equipment for Pineapple and Resort
operations. The Company expects to finance most of these
expenditures with cash flows from operations.
The Company's target for installing and testing Year 2000
upgrades for its core data processing applications is year-end
1998. Presently, it appears that the receipt from vendors and
installation of two software upgrade packages may be delayed to
the first quarter 1999. The Company has completed a checklist of
its non-information technology systems and has identified the
systems that may require upgrades in order to be Year 2000
compliant. In the second quarter of 1998 the Company initiated
letters to major vendors, suppliers and trading partners to
assess the risk of interruption of the Company's businesses by
outsiders. Currently, no material expenditures for Year 2000
compliance have been identified. For background information see
Liquidity, Capital Resources and Other under Management's
Discussion and Analysis of Financial Condition and Results of
Operations in the Maui Land & Pineapple Company, Inc. 1997 Annual
Report.
The Company is in the process of implementing a plan to reduce
over five years the production of canned pineapple by as much as
13%. Approximately 1,400 acres of land, most of which is
currently leased from third parties, will as a result be removed
from pineapple cultivation over the next five years. Staff size
will also be reduced by job consolidations and an early
retirement incentive package.
On May 1, 1998, the Company's common stock began trading on the
American Stock Exchange under the ticker symbol "MLP."
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Cannery Waste Water Citations
The Department of Health of the State of Hawaii ("DOH") had cited
the Company for violation of permits that regulate the disposal
of processing wastewater and cooling water used by the Kahului
cannery. In June of 1997, at a total cost of $3.2 million the
Company completed a system for disposing of the processing water
by transmission to sugar cane fields for irrigation.
In June of 1998 the Company and the DOH entered into a Consent
Order whereby the Company agreed to pay a cash penalty of $40,000
and to perform Supplemental Environmental Projects ("SEPS")
totaling $346,400. The SEPS which the Company and the DOH have
agreed to are designed to protect the environment.
Item 4. Submission of Matters to a Vote of Security-Holders
On May 1, 1998, the annual meeting of the Company's shareholders
was held. Proxies for the meeting were solicited pursuant to
Regulation 14A under the Securities Exchange Act of 1934. The
number of outstanding shares as of March 6, 1998, the record date
for the annual meeting, was 1,797,125. The results of the
matters voted upon were as follows:
Election of Class Two directors for a three-year term:
Shares Voted For Shares Withheld
Peter D. Baldwin 1,519,855 12,615
Samuel K. Himmelrich Sr. 1,517,832 14,638
Election of the firm Deloitte & Touche LLP as auditor of the
Company for fiscal year 1998:
Shares voted for: 1,530,872
Shares voted against: 588
Shares abstained: 1,010
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(27) Financial Data Schedule
As of June 30, 1998 and for the six months then ended.*
*Filed Herewith
(b) Reports on Form 8-K
A report of Form 8-K, dated April 2, 1998 and filed on April
3, 1998, included Item 5, Other Information and no financial
statements.
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.
August 4, 1998 /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 June 30, 1998 and the
Statement of Operations for the six months then ended, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
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<PERIOD-END> JUN-30-1998
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<PP&E> 203,613
<DEPRECIATION> 116,658
<TOTAL-ASSETS> 135,706
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<BONDS> 32,836
0
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<COMMON> 12,318
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<SALES> 42,421
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</TABLE>
