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 SEPTEMBER 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 November 1, 2000
Common Stock, no par value 7,195,800 shares
MAUI LAND & PINEAPPLE COMPANY, INC.
AND SUBSIDIARIES
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets,
September 30, 2000 (Unaudited) and December 31, 1999 3
Condensed Statements of Operations and Retained Earnings,
Three Months Ended September 30, 2000 and 1999 (Unaudited) 4
Condensed Statements of Operations and Retained Earnings,
Nine Months Ended September 30, 2000 and 1999 (Unaudited) 5
Condensed Statements of Cash Flows,
Nine Months Ended September 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 6. Exhibits and Reports on Form 8-K 13
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES
CONDENSED BALANCE SHEETS
Unaudited
9/30/00 12/31/99
(Dollars in Thousands)
ASSETS
Current Assets
Cash and cash equivalents $ 1,079 $ 2,657
Accounts and notes receivable 19,541 15,098
Inventories 27,957 16,925
Other current assets 4,315 4,779
Total current assets 52,892 39,459
Property 237,898 224,958
Accumulated depreciation (130,880) (123,982)
Property - net 107,018 100,976
Other Assets 14,378 12,952
Total 174,288 153,387
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt
and capital lease obligations 9,146 3,056
Trade accounts payable 8,868 12,492
Other current liabilities 8,892 10,987
Total current liabilities 26,906 26,535
Long-Term Liabilities
Long-term debt and capital lease obligations 42,990 25,497
Accrued retirement benefits 23,246 23,204
Equity in losses of joint venture 9,784 8,944
Other long-term liabilities 2,635 2,361
Total long-term liabilities 78,655 60,006
Minority Interest in Subsidiary 425 446
Stockholders' Equity
Common stock, no par value - 7,200,000 shares
authorized, 7,195,800 issued and outstanding 12,455 12,455
Retained earnings 55,847 53,945
Stockholders' equity 68,302 66,400
Total $174,288 $ 153,387
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
9/30/00 9/30/99
(Dollars in Thousands
Except Share Amounts)
Revenues
Net sales $28,279 $31,277
Operating income 8,595 8,077
Other income 321 305
Total Revenues 37,195 39,659
Costs and Expenses
Cost of goods sold 19,675 21,592
Operating expenses 7,167 6,769
Shipping and marketing 4,511 4,484
General and administrative 3,855 4,089
Interest 808 457
Equity in losses of joint ventures 327 237
Total Costs and Expenses 36,343 37,628
Income Before Income Taxes 852 2,031
Income Tax Expense 296 761
Net Income 556 1,270
Retained Earnings, Beginning of Period 55,291 51,280
Retained Earnings, End of Period 55,847 52,550
Per Common Share
Net income $ .08 $ .18
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
9/30/00 9/30/99
(Dollars in Thousands
Except Share Amounts)
Revenues
Net sales $73,552 $76,574
Operating income 28,391 26,273
Other income 948 830
Total Revenues 102,891 103,677
Costs and Expenses
Cost of goods sold 49,735 50,110
Operating expenses 22,220 20,191
Shipping and marketing 12,573 13,851
General and administrative 11,325 12,309
Interest 2,014 1,349
Equity in losses of joint ventures 771 654
Total Costs and Expenses 98,638 98,464
Income Before Income Taxes 4,253 5,213
Income Tax Expense 1,452 1,938
Net Income 2,801 3,275
Retained Earnings, Beginning of Period 53,945 50,174
Cash Dividends (899) (899)
Retained Earnings, End of Period 55,847 52,550
Per Common Share
Net income .39 .46
Dividends $ .125 $ .125
See accompanying Notes to Condensed Financial Statements.
MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
9/30/00 9/30/99
(Dollars in Thousands)
Net Cash Provided by (Used in)
Operating Activities $(9,214) $ 1,331
Investing Activities
Purchases of property (14,813) (10,713)
Proceeds from disposal of property 199 418
Distributions from (Contributions to)
joint ventures 46 (575)
Increases in deferred costs and other (326) (1,979)
Net Cash Used in Investing Activities (14,894) (12,849)
Financing Activities
Payments of long-term debt and capital
lease obligations (4,745) (1,726)
Proceeds from long-term debt 28,100 11,131
Proceeds from short-term debt 95 498
Dividend paid (899) (899)
Other (21) 339
Net Cash Provided by Financing Activities 22,530 9,343
Net Decrease in Cash (1,578) (2,175)
Cash and Cash Equivalents
at Beginning of Period 2,657 3,447
Cash and Cash Equivalents
at End of Period $ 1,079 $ 1,272
Supplemental Disclosure and Cash Flow Information - Interest (net
of amounts capitalized) of $1,747,000 and $1,235,000 was paid
during the nine months ended September 30, 2000 and 1999, respectively.
Income taxes of $1,622,000 and $1,493,000 were paid during the nine
months ended September 30, 2000 and 1999, 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,
results of operations and cash flows for the interim periods
ended September 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 $685,000 and $783,000 at September 30,
2000 and December 31, 1999, respectively.
5. Inventories as of September 30, 2000 and December 31, 1999
were as follows
(in thousands):
9/30/00 12/31/99
Pineapple products
Finished goods $16,037 $ 7,399
Work in progress 1,043 839
Raw materials 2,564 1,476
Real estate held for sale 774 577
Merchandise, materials and supplies 7,539 6,634
Total Inventories $27,957 $16,925
6. Business Segment Information (in thousands):
Three Months Ended Nine Months Ended
September 30 September 30
2000 1999 2000 1999
Revenues
Pineapple $ 24,810 $ 28,337 $ 59,273 $ 67,505
Resort 11,061 10,118 39,641 32,919
Commercial
& Property 1,302 1,201 3,699 3,155
Other 22 3 278 98
Total Revenues 37,195 39,659 102,891 103,677
Operating Profit (Loss)
Pineapple 822 2,034 (228) 5,276
Resort 1,317 799 7,393 3,558
Commercial
& Property (171) (76) (293) (457)
Other (308) (269) (605) (1,815)
Total Operating
Profit 1,660 2,488 6,267 6,562
Interest Expense (808) (457) (2,014) (1,349)
Income Tax Expense (296) (761) (1,452) (1,938)
Net Income $ 556 $ 1,270 $ 2,801 $ 3,275
7. Average common shares outstanding for the interim periods
ended September 30, 2000 and 1999 were 7,195,800 and 7,188,500,
respectively.
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 2000 was
$556,000 as compared to $1,270,000 for the third quarter of 1999.
Revenues of $37 million for the third quarter of 2000 were 6%
lower than the third quarter of 1999.
For the first nine months of 2000 the Company produced
consolidated net income of $2,801,000 compared to $3,275,000 for
the first nine months of 1999. Revenues of $103 million for the
first nine months of 2000 were lower by 1% than the same period
in 1999.
General and administrative expenses were lower in the third
quarter and first nine months of 2000 by $234,000 and $984,000,
respectively, compared to the same periods in 1999. In 2000, the
Company's pension and post retirement expenses decreased
primarily because of an increase in the discount rate and
favorable investment returns on the pension plan assets. These
cost reductions were partially offset by increased employment-
related expenses and expenses for the analysis and selection of
an integrated accounting and information technology system which
the Company will be implementing. 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.
Interest expense was higher by 77% and 49%, respectively, in the
third quarter and first nine months of 2000 compared to the same
periods in 1999 due to higher average borrowings and higher
interest rates in 2000. The higher interest expense was
partially offset by interest capitalized in 2000 on major
construction projects at the Company's Kapalua Resort.
Pineapple
Revenues from Pineapple operations were lower by 12% for the
third quarter of 2000 and for the first nine months of 2000
compared to the same period in 1999. Pineapple operations
produced an operating profit of $822,000 for the third quarter of
2000 as compared to $2,034,000 for the third quarter of 1999.
For the first nine months of 2000, the pineapple operations
incurred an operating loss of $228,000 compared to an operating
profit of $5,276,000 for the first nine months of 1999.
Lower operating profits are primarily the result of lower average
prices and case sales volume. This is in part attributed to an
increase in imports by the Company's principal U. S. competitors,
combined with aggressive pricing and promotional activity.
Promotional activity by the Company is anticipated to improve
case sales volume in the last quarter of 2000, but results for
2000 are expected to continue to lag 1999.
The Department of Commerce released preliminary results of the
fourth annual administrative review of antidumping duties on
pineapple imports from Thailand covering the period from July 1,
1998 to June 30, 1999. The preliminary results found the nine
Thai pineapple companies reviewed to have lower dumping margins
than those reflected in the antidumping duties currently being
assessed. A final determination is expected to be released by
November 30, 2000.
Preliminary results of the "sunset review" released by the
Department of Commerce indicate that the revocation of the
antidumping duty on canned pineapple from Thailand would likely
result in continued dumping by these companies. For a
continuation of existing duties, the Company must convince the
U.S. International Trade Commission that elimination of the
duties will potentially cause injury to the domestic industry.
The International Trade Commission is expected to meet in the
first half of 2001 to determine whether or not the antidumping
duties should be extended for another five years.
Resort
Revenues from the Company's Kapalua Resort operations were $11.1
million for the third quarter of 2000 compared to $10.1 million
for the third quarter of 1999. For the first nine months of
2000, Resort revenues were $39.6 million compared to $32.9
million for the first nine months of 1999. The resort's
operating profit was $1.3 million for the third quarter compared
to $799,000 for the third quarter of 1999. For the first nine
months of 2000, the resort's operating profit was $7.4 million
compared to $3.6 million for the first nine months of 1999. Real
estate sales accounted for 27% of Resort operating profit for the
first nine months of 2000. There was no profit from real estate
sales for the comparable period in 1999.
Kapalua's operating results overall benefited from increased room
occupancies at the hotels and villas. Hotel ground lease rents
also increased because of higher average room rates and rent
percentage. Improved Kapalua Villa results were partially due to
general excise tax refunds related to prior years. The opening
of the Golf Academy earlier in the year and the Village Clubhouse
in the third quarter also contributed to improved Resort
revenues. Lower consolidated shipping and marketing expenses
were largely the result of the Company absorbing a reduced amount
of expenses relating to the Mercedes Championships for the first
nine months of 2000. This reduction was offset by a similar
decrease for the same period in the tournament operations fee
that is recorded in Resort revenue.
The Company's joint venture with Lend Lease Real Estate
Investment Inc., called The Coconut Grove on Kapalua Bay was
formed to develop and sell 36 luxury beachfront condominiums.
The condominium units are scheduled for completion in April 2001.
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 received final County of Maui approval for the
construction of the 31 half-acre residential lot subdivision
called Pineapple Hills Estates (previously called Site 19).
State and Federal registrations have also been completed and the
Company began sales of the project in November 2000. The Company
expects to report profits from lot sales in 2001 with profits
being accounted for using the percentage of completion method.
Commercial & Property
Revenue from the Commercial & Property segment was $1.3 million
for the third quarter of 2000 compared to $1.2 million for the
third quarter of 1999. For the first nine months of 2000, the
segment reported revenues of $3.7 million compared to $3.2
million for the same period in 1999. The segment produced
operating losses of $171,000 for the third quarter of 2000
compared to $76,000 for the third quarter of 1999. For the first
nine months of 2000 the segment reported operating losses of
$293,000 compared to $457,000 for the same period in 1999.
Increased revenues were primarily due to improved tenant sales
and improved operating results at Kaahumanu Center.
LIQUIDITY, CAPITAL RESOURCES AND OTHER
Total debt including capital leases was $52.1 million at
September 30, 2000, compared to $28.6 million at December 31,
1999. The increase in outstanding debt was primarily due to
negative cash flows from operating activities and capital
expenditures. The seasonal increase in pineapple inventories
because of pineapple canning activity during the summer, combined
with lower pineapple sales volume, and expenditures for
construction of Plantation Estates Phase II were largely
responsible for the negative operating cash flows. Outstanding
debt is expected to decrease in the last quarter of 2000 as
pineapple inventory levels are reduced, accounts receivable are
collected and sales of lots in the Pineapple Hill Estates
subdivision are closed. Unused short and long-term lines of
credit of $5.7 million were available to the Company at September
30, 2000. These credit facilities and fourth quarter operating
cash flows are expected to be sufficient to finance the Company's
remaining cash requirements in 2000.
Expenditures for fixed assets, real estate planning and other pre-
development costs are expected to approximate $21.6 million in
2000. This amount includes $7.4 million for the construction and
completion of the Village Course Clubhouse and Kapalua Golf
Academy and $7.7 million for replacement of equipment and
facilities for Pineapple and Resort operations. Capital
expenditures in 2000 also include $1.5 million for the
implementation and installation of an integrated accounting and
information technology system.
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 and operating cash flows, pineapple promotional
activities, the closing of condominium sales at The Coconut Grove
on Kapalua Bay and the closing of lot sales at Pineapple Hill
Estates. 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 nine months of 2000.
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(27) Financial Data Schedule
*As of September 30, 2000 and for the nine 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.
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 10, 2000 /S/ PAUL J. MEYER
Date Paul J. Meyer
Executive Vice President/Finance
(Principal Financial Officer)
