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, 2000
[ ] 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 1, 2000
Common Stock, no par value 7,195,800 shares
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MAUI LAND & PINEAPPLE COMPANY, INC.
AND SUBSIDIARIES
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets,
June 30, 2000 (Unaudited) and December 31, 1999 3
Condensed Statements of Operations and Retained Earnings,
Three Months Ended June 30, 2000 and 1999 (Unaudited) 4
Condensed Statements of Operations and Retained Earnings,
Six Months Ended June 30, 2000 and 1999 (Unaudited) 5
Condensed Statements of Cash Flows,
Six Months Ended June 30, 2000 and 1999 (Unaudited) 6
Notes to Condensed Financial Statements (Unaudited) 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures About Market
Risk 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 4. Submission of Matters to a Vote of Security-Holders 13
Item 6. Exhibits and Reports on Form 8-K 13
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements
MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES
CONDENSED BALANCE SHEETS
Unaudited
6/30/00 12/31/99
(Dollars in Thousands)
ASSETS
Current Assets
Cash and cash equivalents $ 674 $ 2,657
Accounts and notes receivable 11,061 15,098
Inventories 27,032 16,925
Other current assets 4,372 4,779
Total current assets 43,139 39,459
Property 232,804 224,958
Accumulated depreciation (128,878) (123,982)
Property - net 103,926 100,976
Other Assets 13,752 12,952
Total 160,817 153,387
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt
and capital lease obligations 2,435 3,056
Trade accounts payable 5,626 12,492
Other current liabilities 7,615 10,987
Total current liabilities 15,676 26,535
Long-Term Liabilities
Long-term debt and capital lease obligations 41,542 25,497
Accrued retirement benefits 23,298 23,204
Equity in losses of joint venture 9,434 8,944
Other long-term liabilities 2,669 2,361
Total long-term liabilities 76,943 60,006
Minority Interest in Subsidiary 452 446
Stockholders' Equity
Common stock, no par value - 7,200,000 shares
authorized, 7,195,800 issued and outstanding 12,455 12,455
Retained earnings 55,291 53,945
Stockholders' equity 67,746 66,400
Total $160,817 $ 153,387
See accompanying Notes to Condensed Financial Statements.
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MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
Three Months Ended
6/30/00 6/30/99
(Dollars in Thousands
Except Share Amounts)
Revenues
Net sales $21,135 $22,013
Operating income 9,405 8,032
Other income 381 326
Total Revenues 30,921 30,371
Costs and Expenses
Cost of goods sold 14,341 13,776
Operating expenses 7,551 6,946
Shipping and marketing 3,845 3,603
General and administrative 3,858 4,773
Interest 738 401
Equity in losses of joint ventures 226 268
Total Costs and Expenses 30,559 29,767
Income Before Income Taxes 362 604
Income Tax Expense 62 223
Net Income 300 381
Retained Earnings, Beginning of Period 54,991 50,899
Retained Earnings, End of Period 55,291 51,280
Per Common Share
Net income $ .04 $ .05
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
6/30/00 6/30/99
(Dollars in Thousands
Except Share Amounts)
Revenues
Net sales $45,273 $45,297
Operating income 19,796 18,196
Other income 627 525
Total Revenues 65,696 64,018
Costs and Expenses
Cost of goods sold 30,060 28,518
Operating expenses 15,053 13,422
Shipping and marketing 8,062 9,367
General and administrative 7,470 8,220
Interest 1,206 892
Equity in losses of joint ventures 444 417
Total Costs and Expenses 62,295 60,836
Income Before Income Taxes 3,401 3,182
Income Tax Expense 1,156 1,177
Net Income 2,245 2,005
Retained Earnings, Beginning of Period 53,945 50,174
Cash Dividends (899) (899)
Retained Earnings, End of Period 55,291 51,280
Per Common Share
Net income .31 .28
Dividends $ .125 $ .125
See accompanying Notes to Condensed Financial Statements.
<PAGE>
MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
6/30/00 6/30/99
(Dollars in Thousands)
Net Cash Provided by (Used in)
Operating Activities $(6,230) $ 7,852
Investing Activities
Purchases of property (9,988) (7,027)
Proceeds from disposal of property 112 122
Contributions to joint ventures -- (300)
Increases in deferred costs and other (279) (1,462)
Net Cash Used in Investing Activities (10,155) (8,667)
Financing Activities
Payments of long-term debt and capital
lease obligations (4,080) (954)
Proceeds from long-term debt 19,300 932
Proceeds from short-term debt 75 273
Dividend paid (899) (899)
Other 6 270
Net Cash Provided by (Used in)
Financing Activities 14,402 (378)
Net Decrease in Cash (1,983) (1,193)
Cash and Cash Equivalents
at Beginning of Period 2,657 3,447
Cash and Cash Equivalents
at End of Period $ 674 $ 2,254
Supplemental Disclosure and Cash Flow Information - Interest (net
of amounts capitalized) of $1,054,000 and $844,000 was paid
during the six months ended June 30, 2000 and 1999, respectively.
Income taxes of $1,622,000 and $1,036,000 were paid during the six
months ended June 30, 2000 and 1999, respectively.
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,
results of operations and cash flows for the interim periods
ended June 30, 2000 and 1999.
2. The Company's reports for interim periods utilize numerous
estimates of production cost, 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 2000 and 1999 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 $748,000 and $783,000 at June 30, 2000
and December 31, 1999, respectively.
5. Inventories as of June 30, 2000 and December 31, 1999 were
as follows
(in thousands):
6/30/00 12/31/99
Pineapple products
Finished goods $14,516 $ 7,399
Work in progress 1,092 839
Raw materials 3,385 1,476
Real estate held for sale 804 577
Merchandise, materials and supplies 7,235 6,634
Total Inventories $27,032 $16,925
<PAGE>
6. Business Segment Information (in thousands):
Three Months Ended Six Months Ended
June 30 June 30
2000 1999 2000 1999
Revenues
Pineapple $ 17,692 $ 19,249 $ 34,463 $ 39,168
Resort 11,762 10,057 28,580 22,801
Commercial
& Property 1,222 1,031 2,397 1,954
Other 245 34 256 95
Total Revenues 30,921 30,371 65,696 64,018
Operating Profit (Loss)
Pineapple (784) 1,399 (1,050) 3,242
Resort 1,983 1,101 6,076 2,759
Commercial
& Property (84) (166) (122) (381)
Other (15) (1,329) (297) (1,546)
Total Operating Profit1,100 1,005 4,607 4,074
Interest Expense (738) (401) (1,206) (892)
Income Tax Expense (62) (223) (1,156) (1,177)
Net Income $ 300 $ 381 $ 2,245 $ 2,005
7. Average common shares outstanding for the interim periods
ended June 30, 2000 and 1999 were 7,195,800 and 7,188,500,
respectively.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS
Consolidated
The Company reported consolidated net income of $300,000 for the
second quarter of 2000 compared to $381,000 for the second
quarter of 1999. For the first half of 2000 the Company's net
income was $2,245,000 compared to $2,005,000 for the first half
of 1999. Consolidated revenues were $30.9 million and $65.7 for
the second quarter and first half of 2000, respectively, compared
to $30.4 million and $64 million for the second quarter and first
half of 1999, respectively.
General and administrative expenses were lower in the second
quarter and first half of 2000 by $915,000 and $750,000,
respectively, compared to the same periods in 1999. These
expenses were lower in 2000 primarily because in 1999 the Company
wrote off $1.1 million of deferred costs for consultants who were
engaged to analyze and develop strategic plans for the Company.
Pension and post retirement expenses also decreased in 2000
primarily because of an increase in the discount rate and
favorable investment returns on the pension plan assets.
Partially offsetting these cost reductions were increased
employment related expenses.
Interest expense increased by 84% and 35%, respectively, in the
second quarter and first half of 2000 compared to the same
periods in 1999. The increases were primarily due to higher
average borrowings and higher interest rates in 2000. Part of
the expense increase was offset by interest capitalized in 2000
on major construction projects, in particular the Kapalua Village
Course Clubhouse and Plantation Estates Phase II subdivision.
Pineapple
The Pineapple segment incurred operating losses of $784,000 and
$1,050,000 in the second quarter and first half of 2000,
respectively, compared to operating profits of $1,399,000 and
$3,242,000 in the comparable periods of 1999. Revenues of $17.7
million and $34.5 million for the second quarter and first half
of 2000, respectively, were 8% and 12% lower than the same
periods last year. The overall case volume of imports of canned
pineapple products into the U.S. was lower in the first five
months of 2000 compared to the same period in 1999. However, an
increase in imports by the Company's principal U. S. competitors,
combined with aggressive pricing and promotional activity has
resulted in the Company's Pineapple segment realizing lower case
sales volume and lower average prices for canned pineapple
products.
Preliminary results of the fourth annual administrative review of
duties on pineapple imports from Thailand covering the period
from July 1, 1998 to June 30, 1999, were released by the
Department of Commerce on August 1, 2000. The nine Thai
pineapple companies reviewed were found to have lower dumping
margins than those currently being assessed.
The Department of Commerce recently initiated the proceedings for
the "sunset review" of antidumping duties on imports of canned
pineapple products from Thailand. This review is expected to
take approximately one year. If a ruling is made to keep the
antidumping duties in place, they will be renewed for an
additional five years.
In June 2000, the Department of Commerce issued a final
determination concluding that tin mill products from Japan are
being, or are likely to be, sold in the U.S. at less than fair
value. The final determination specifically excludes from duties
tin-coated steel with the specifications used by the Company to
make cans. The exclusion was made as a result of requests by the
Company and by other interested parties.
Resort
Kapalua Resort produced an operating profit of $1,983,000 in the
second quarter of 2000 compared to $1,101,000 in the second
quarter of 1999. For the first half of 2000 Kapalua had an
operating profit of $6,076,000 compared to $2,759,000 for the
same period a year ago. Revenues for the second quarter and
first half of 2000 increased by 17% and 25%, respectively,
compared to the same periods in 1999.
Real estate sales accounted for approximately 20% and 30% of
Resort operating profit for the second quarter and first half of
2000, respectively. There was no profit from real estate sales
for the comparable periods in 1999.
Higher occupancies at the hotels and villas in the Kapalua Resort
and higher average green fees also contributed to the improved
Resort operating results for the second quarter and first half of
2000.
On a consolidated basis, lower shipping and marketing expense for
the first half of 2000 was largely the result of the Company
absorbing a reduced amount of expense for the 2000 Mercedes
Championships. Such reduction was offset by a similar decrease
in the tournament operations fee that is reflected in
consolidated operating revenue for the same period.
All 36 luxury beachfront condominiums under construction by the
Company's joint venture with Lend Lease Real Estate Investment
Inc., called The Coconut Grove on Kapalua Bay are now under
binding sales contracts. Sales are anticipated to close
beginning in the first quarter of 2001 as construction of the
buildings is completed and title is delivered to the buyers. The
Company has obtained the necessary zoning and entitlements for
construction of the 31 half-acre residential lot subdivision on
Site 19, and is presently awaiting final subdivision approval
from the County of Maui. Sales are expected to begin in October
2000 after State and Federal registrations are completed. The
Company does not expect to record profits from this project until
2001.
Commercial & Property
The Commercial & Property segment produced operating losses of
$84,000 and $122,000 for the second quarter and first half of
2000, respectively, compared to $166,000 and $381,000 for the
same periods in 1999. Revenues increased by $191,000 and
$443,000 for the second quarter and the first half of 2000,
respectively, compared to the same periods in 1999. Increased
revenues and lower operating losses were due to improved
operating results and increased electricity revenues from
Kaahumanu Center.
LIQUIDITY, CAPITAL RESOURCES AND OTHER
At June 30, 2000, total debt including capital leases was $44
million, an increase of $15.4 million from year-end 1999. The
increase in debt was primarily due to negative cash flows from
operating activities and to capital expenditures. Increased
pineapple inventories reflecting the seasonal pineapple canning
activity coupled with lower sales volume, and expenditures for
construction of Plantation Estates Phase II were largely
responsible for the negative operating cash flows. Cash flow
from operating activities is expected to improve after the
pineapple canning season peaks in the third quarter. At the end
of the second quarter of 2000, the Company had $15 million in
unused short- and long-term credit facilities available. These
credit facilities and operating cash flows are expected to be
sufficient to finance the Company's remaining cash requirements
in 2000.
Consolidated expenditures in 2000 for fixed assets and deferred
development costs are expected to approximate $21.9 million of
which $8 million is for replacement of equipment and facilities
for Pineapple and Resort operations. Capital expenditures for
2000 includes $7.3 million for construction of the Village Course
Clubhouse, which is expected to be completed by the end of August
2000 and the Kapalua Golf Academy that opened in January 2000.
In July 2000, the Company's Board of Directors approved $3.1
million for an integrated accounting and information technology
system. Installation and implementation of the system will begin
in August 2000 and is expected to take approximately one year.
Capital expenditures for 2000 include $1.5 million of the cost
for this project.
The Company's information and non-information technology systems
encountered no significant date-related problems since the year
2000 began. The Company anticipates that its Information
Services personnel will spend approximately 5% of their time in
2000 to monitor business critical systems for any date-related
problems that may occur during the year and through year-end
2000. No material future expenditures for date-related problems
have been identified.
This report contains forward-looking statements, within the
meaning of Private Securities Litigation Reform Act of 1995, as
to the Company's expectations regarding the adequacy of credit
facilities, the closing of lot sales at The Coconut Grove on
Kapalua Bay and sale of lots at Site 19. Forward-looking
statements contained in this report or otherwise made by the
Company are subject to certain risks and uncertainties that could
cause actual results to differ materially from those in the
forward-looking statements. Potential risks and uncertainties
include, but are not limited to, those risks and uncertainties as
disclosed in the Company's Annual Report to Shareholders and Form
10-K filing with the Securities and Exchange Commission.
Item 3. Quantitative and Qualitative Disclosures about Market
Risk
The Company's primary market risk exposure with regard to
financial instruments is to changes in interest rates. The
Company manages this risk by monitoring interest rates and future
cash requirements, and evaluating opportunities to refinance
borrowings at various maturities and interest rates. There were
no material changes to the Company's market risk exposure during
the first six months of 2000.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Chemical Litigation - On July 10, 2000, Maui Land & Pineapple
Company, Inc. v. Occidental Chemical Corporation, civil No. 97-
0867 (Second Circuit Court, State of Hawaii) was dismissed
without prejudice.
Item 4. Submission of Matters to a Vote of Security-Holders
On April 26, 2000, 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 1, 2000, the
record date of the annual meeting, was 7,195,800.
The results of the voting were as follows:
Election of Class One Directors for a three-year term:
Shares Voted For Shares Withheld
Randolph G. Moore 6,417,785 18,735
Fred E. Trotter, III 6,410,480 26,040
Election of the firm Deloitte & Touche LLP as auditor of the
Company for the fiscal year 2000:
Shares voted for: 6,425,388
Shares voted against: 1,503
Shares abstained: 9,629
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(4) Instruments Defining the Rights of Security Holders
*A. 2000 Loan Modification Agreement effective as of
June 30, 2000.
(27) Financial Data Schedule
*As of June 30, 2000 and for the six months then ended.
*Filed Herewith
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K for the period
covered by this report.
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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 7, 2000 /S/ PAUL J. MEYER
Date Paul J. Meyer
Executive Vice President/Finance
(Principal Financial Officer)
