<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File Number 1-9145
MAUNA LOA MACADAMIA PARTNERS, L.P.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 99-0248088
-------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employee
incorporation or organization) Identification No.)
827 FORT STREET, HONOLULU, HAWAII 96813
----------------------------------- ----------
(Address Of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: 808-544-6112
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 twelve 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
------ ------
As of April 30, 1996, Registrant had 7,500,000 Class A Units issued and
outstanding.
1
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MAUNA LOA MACADAMIA PARTNERS, L.P.
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I - Financial Information
Item 1. Financial Statements 3-7
Item 2. Management's Discussion and Analysis of Financial
Financial Condition and Results of Operations 8-9
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K 9
Signatures 10
</TABLE>
2
<PAGE> 3
MAUNA LOA MACADAMIA PARTNERS, L.P.
Balance Sheets (Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
March 31
----------------------- December 31,
1996 1995 1995
------- ------ ------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,035 209 421
Accounts receivable from related parties 1,542 3,128 4,095
Annualized cost adjustment 507 22 -
Prepaid expenses and other current assets 55 50 54
------- ------ ------
Total current assets 3,139 3,409 4,570
------- ------ ------
Land, orchards and equipment 73,191 73,191 73,191
Less accumulated depreciation 13,716 12,116 13,316
------- ------ ------
Land, orchards and equipment (net) 59,475 61,075 59,875
------- ------ ------
Deferred charges (net) 1 9 10
------- ------ ------
Total assets $62,615 64,493 64,455
------- ------ ------
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Line of credit payable $ - - -
Mortgage note payable (current portion) - 60 265
Accounts payable to related parties 1,362 2,295 2,455
Distributions payable 379 379 383
Other current and accrued liabilities 251 180 232
------- ------ ------
Total current liabilities 1,992 2,914 3,335
------- ------ ------
Mortgage note payable (noncurrent portion) - 249 -
Deferred income tax expense 14,982 14,982 14,982
Commitments
Partners' capital:
General partners 457 464 462
Class A limited partners 45,184 45,884 45,676
------ ------ ------
Total partners' capital 45,641 46,348 46,138
------- ------ ------
Total liabilities and partners' capital $62,615 64,493 64,455
======= ====== ======
=============================================================================================
</TABLE>
See notes to financial statements.
3
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MAUNA LOA MACADAMIA PARTNERS, L.P.
Income Statements (Unaudited)
(In Thousands, Except Per Unit Data)
<TABLE>
<CAPTION>
For the Quarter Ended
March 31,
----------------------
1996 1995
------ ------
<S> <C> <C>
Macadamia nut sales to related party $1,542 2,574
Cost of goods sold:
Costs expensed under farming
contracts with related parties 1,078 1,624
Depreciation and amortization 227 279
Other expenses 48 47
------ -----
Total cost of goods sold 1,353 1,950
------ -----
Gross profit 189 624
General and administrative expenses:
Costs expensed under management
contract with related party 114 136
Other expenses 192 209
------ -----
Total general and administrative expenses 306 345
------ -----
Operating income (loss) (117) 279
Interest expense (net) 1 13
------ -----
Income (loss) before income taxes (118) 266
Deferred income tax expense - -
------ -----
Net income (loss) $ (118) 266
====== =====
- -----------------------------------------------------------------------------------------
Net cash flow (as defined in the Partnership Agreement) $ 118 533
====== =====
Net income (loss) per Class A Unit $(0.02) 0.04
====== =====
Net cash flow per Class A Unit $ 0.02 0.07
====== =====
Cash distributions per Class A Unit $ 0.05 0.05
====== =====
Class A Units outstanding (average) 7,500 7,500
====== =====
- -----------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
4
<PAGE> 5
MAUNA LOA MACADAMIA PARTNERS, L.P.
Statements of Partners' Capital (Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
For the Quarter Ended
March 31,
----------------------
1996 1995
----- ------
<S> <C> <C>
Partners' capital at beginning of period:
General partners $ 462 465
Class A limited partners 45,676 45,996
------ ------
46,138 46,461
------ ------
Allocation of net income (loss):
General partners (1) 3
Class A limited partners (117) 263
------ ------
(118) 266
------ ------
Cash distributions:
General partners 4 4
Class A limited partners 375 375
------ ------
379 379
------ ------
Partners' capital at end of period:
General partners 457 464
Class A limited partners 45,184 45,884
------ ------
45,641 46,348
====== ======
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
5
<PAGE> 6
MAUNA LOA MACADAMIA PARTNERS, L.P.
Statements of Cash Flows (Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
For the Quarter Ended
March 31,
----------------------
1996 1995
------ ------
<S> <C> <C>
Cash flows from operating activities:
Cash received from macadamia nut sales $ 4,095 5,441
Cash paid under farming and management contracts (2,586) (3,139)
Cash paid to other suppliers (248) (316)
Net interest received (paid) 1 (13)
----- -----
Net cash provided by operating activities 1,262 1,973
----- -----
Cash flows from financing activities:
Line of credit repayments - (1,407)
Principal payments of mortgage note payable (265) (15)
Distributions paid (383) (379)
----- -----
Net cash used in financing activities (648) (1,801)
----- -----
Net increase in cash and cash equivalents 614 172
Cash and cash equivalents at beginning of period 421 37
----- -----
Cash and cash equivalents at end of period $ 1,035 209
===== =====
==================================================================================================
Reconciliation of net income (loss) to net
cash provided by operating activities:
Net income (loss) $ (118) 266
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 236 282
Decrease in accounts receivable from related party 2,553 2,867
Increase in prepaid expenses and other assets (1) (26)
Decrease in accounts payable to related parties (1,093) (1,489)
Increase (decrease) in other current and accrued liabilities 19 (27)
Increase (decrease) in annualized cost adjustment
(other than from depreciation) (334) 100
----- -----
Total adjustments 1,380 1,707
----- -----
Net cash provided by operating activities $ 1,262 1,973
===== =====
- --------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
6
<PAGE> 7
MAUNA LOA MACADAMIA PARTNERS, L.P.
Notes to Financial Statements
(1) In the opinion of management, the accompanying unaudited Balance Sheets as
of March 31, 1996, March 31, 1995 and December 31, 1995 and the related
unaudited Statements of Income, Partners' Capital and Cash Flows for the
quarters ended March 31, 1996 and 1995 contain all adjustments, consisting
only of normally recurring accruals, necessary to pre-sent fairly the
financial position as of March 31, 1996, March 31, 1995 and December 31,
1995 and the results of operations, changes in partners' capital and cash
flows for the quarters ended March 31, 1996 and 1995.
(2) These interim financial statements should be read in conjunction with the
Financial Statements and the Notes to Financial Statements filed with the
Commission in the Partnership's 1995 Annual Report on Form 10-K.
(3) All production costs are annualized for interim reporting purposes, with
the difference between costs incurred to date and costs expensed to date
being reported on the balance sheet as an annualized cost adjustment.
(4) All capital allocations reflect the general partners' 1% equity interest
and the limited partners' 99% percent equity interest.
(5) Because the Partnership is not presently a taxable entity, no current
income taxes have been accrued. The Omnibus Budget Reconciliation Act of
1987 includes a provision that some publicly traded limited partnerships,
including the Partnership, are to be taxed as corporations beginning in
1998.
(6) On March 8, 1996, the first quarter cash distribution was declared in the
amount of five cents (5c.) per Class A Unit, payable on May 15, 1996 to
unitholders of record as of March 31, 1996.
(7) On March 31, 1996, there were 7,500,000 Class A Units issued and
outstanding and 1,500,000 Class B Units issued and outstanding. No value
has been assigned to the Class B Units.
7
<PAGE> 8
MAUNA LOA MACADAMIA PARTNERS, L.P.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
OPERATING RESULTS -- FOR THE QUARTERS ENDED MARCH 31, 1996 AND 1995
First quarter 1996 nut sales revenues decreased by 40% versus the same quarter
in 1995 as a result both of lower production and a lower nut price estimate:
<TABLE>
<CAPTION>
For the Quarter
Ended March 31,
------------------
1996 1995 Change
------ ------ ------
<S> <C> <C> <C>
Nuts Harvested (000's Lbs. WIS) 2,773 4,020 - 31%
Nut Price ($/Lb) .5559 .6403 - 13%
----- -----
Net Nut Sales ($000's) 1,542 2,574 - 40%
===== =====
</TABLE>
The decrease in first quarter 1996 nut production reflects harvest timing
differences primarily due to the late nut drop for the 1994-95 crop year, which
resulted in unusually high first quarter production in 1995. For the past five
years, first quarter nut production has averaged 2,896,000 WIS pounds (with
median first quarter production of 2,773,000 WIS pounds during that same five
year period).
Weather at the Partnership's orchards in the first quarter of 1996 has been
good. As a result, we expect good production for the 1996-97 crop year if
weather and other conditions continue to be favorable.
The nut price for the first quarter of 1996 was 13% lower than for the first
quarter of 1995 but was only about 1% lower than the final 1995 nut price. Nut
prices used for interim reporting reflect the estimated full year processing
and marketing performance of Mauna Loa Macadamia Nut Corporation ("Mauna Loa"),
which purchases all of the Partnership's nut production. Since most nut
purchases and nut sales occurs in the second half of the year, nut prices are
subject to subsequent adjustment based on Mauna Loa's actual full year
performance.
Production expenses were 31% lower in the first quarter of 1996 than for the
same quarter in 1995 primarily as a result of the 31% decrease in number of
pounds harvested during the quarter. Unit costs per pound were roughly the
same in the two quarters.
General and administrative expenses were 11% lower in the first quarter of 1996
than for the same quarter of 1995 as a result of savings in several cost areas.
These included reduced director fees resulting from a reduction in the number
of directors from seven to five, reduced compensation costs resulting from a
staffing realignment and lower excise taxes resulting from lower nut
production.
Net interest expense for the first quarter of 1996 was significantly lower than
in the first quarter of 1995 as a result of improved cash balances in the
current year.
8
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SEASONALITY, CAPITAL RESOURCES AND LIQUIDITY
Macadamia nut farming is seasonal, with production peaking late in the fall.
However, farming operations continue year round. As a result, additional
working capital is required for much of the year.
The Partnership has a $4.0 million revolving line of credit in place to fund
working capital needs. Line of credit drawings were zero at March 31, 1996 and
at March 31, 1995. The line of credit is renewable annually on June 1st and it
is the Partnership's intention to renew this line next month.
It is the opinion of management that the Partnership has adequate borrowing
capacity available to meet anticipated working capital needs. Except for
opportunistic orchard acquisitions, the Partnership has made no capital
expenditures to date. The Partnership is currently undertaking a capital
project to convert 102 acres of its younger Ka'u orchards from hand harvesting
to mechanical harvesting during the second quarter of 1996. This project is
expected to cost approximately $61,000 and will be funded out of current cash
flow. No other capital expenditure is currently planned.
INFLATION AND TAXES
In general, prices paid to macadamia nut farmers fluctuate independently of
inflation. Those prices are influenced strongly by prices for finished
macadamia products which, in turn, depend on competition and consumer
acceptance. Farming costs, particularly materials and labor, do generally
reflect inflationary trends as do general and administrative costs.
The Omnibus Budget Reconciliation Act of 1987 ("OBRA") provides that some
publicly traded limited partnerships, including the Partnership, are to be
taxed as corporations beginning in 1998. If this provision is not modified and
if the Partnership does not modify its operating structure prior to 1998, the
amount of cash available for distribution could be reduced materially.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The following documents are filed as part of this report:
<TABLE>
<CAPTION>
Exhibit Page
Number Description Number
------- ----------- ------
<S> <C> <C>
(11.1) Statement re Computation of Net Income 11
per Class A Unit
</TABLE>
(b) Reports on Form 8-K:
None.
9
<PAGE> 10
MAUNA LOA MACADAMIA PARTNERS, L.P.
SIGNATURES
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.
MAUNA LOA MACADAMIA PARTNERS, L.P.
(Registrant)
By MAUNA LOA RESOURCES INC.
Managing General Partner
By /s/ D. S. DYMOND
---------------------------------
D. S. Dymond
Senior Vice President and
Principal Financial Officer
Date: May 14, 1996
10
<PAGE> 1
Exhibit 11.1
MAUNA LOA MACADAMIA PARTNERS, L.P.
Computation of Net Income per Class A Unit
(Unaudited)
(In Thousands, Except Per Unit Data)
<TABLE>
<CAPTION>
For the quarter
ended March 31,
-----------------------
1996 1995
------- -------
<S> <C> <C>
Net income (loss) $ (118) $ 266
Class A Unitholders
(ownership percentage) x 99% x 99%
------ ------
Net income (loss) allocable to Class A Unitholders $ (117) $ 263
===== =====
Class A Units outstanding 7,500 7,500
===== =====
Net income (loss) per Class A Unit $(0.02) 0.04
====== =====
</TABLE>
11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,035
<SECURITIES> 0
<RECEIVABLES> 1,542
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,139
<PP&E> 73,191
<DEPRECIATION> 13,716
<TOTAL-ASSETS> 62,615
<CURRENT-LIABILITIES> 1,992
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 45,641
<TOTAL-LIABILITY-AND-EQUITY> 62,615
<SALES> 1,542
<TOTAL-REVENUES> 1,542
<CGS> 1,353
<TOTAL-COSTS> 1,353
<OTHER-EXPENSES> 306
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1
<INCOME-PRETAX> (118)
<INCOME-TAX> 0
<INCOME-CONTINUING> (118)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (118)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
