ML MACADAMIA ORCHARDS L P, 10-K405, 2000-03-07

ML MACADAMIA ORCHARDS L P
10-K405, 2000-03-07
AGRICULTURAL PRODUCTION-CROPS

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<PAGE>

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K

(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended DECEMBER 31, 1999
-----------------
OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-9145
------

ML MACADAMIA ORCHARDS, L.P.
---------------------------
(Exact Name of registrant as specified in its charter)

DELAWARE 99-0248088
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

828 FORT STREET, HONOLULU, HAWAII 96813
(Address ofprincipal executive offices) (Zip Code)

Registrant's telephone number, including area code: (808) 532-4130
--------------

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Name of Each Exchange
Title of Each Class on Which Registered
----------------------------------- -----------------------
Depositary Units Representing
Class A Limited Partners' Interests New York Stock Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

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
--- ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this 10-K or any amendment to this
10-K. [X]

As of March 1, 2000, 7,500,000 shares of the registrant's Class A Units were
outstanding, and the aggregate market value of such Units held by non-affiliates
was $31,875,000 (based on the closing price on that date of $4.25 per Unit).

<PAGE>

PART I

ITEM 1. BUSINESS OF THE PARTNERSHIP

GENERAL DESCRIPTION OF THE BUSINESS

ML Macadamia Orchards, L.P. (the "Partnership") is a publicly-traded
partnership, organized under the laws of the State of Delaware, and engaged in
the business of growing macadamia nuts in Hawaii. It is one of the world's
largest growers of macadamia nuts. The Partnership owns or leases approximately
4,027 tree acres of macadamia nut orchards in three locations within a 50-mile
radius on the island of Hawaii, where macadamia nut yields are among the world's
highest. ("Tree acres" are acres of the Partnership's owned or leased lands
utilized for macadamia nut orchards. "Gross acres" includes areas not utilized
for orchards.) The Partnership is managed by its sole general partner, ML
Resources, Inc. ("MLR" or the "Managing Partner"). The Managing Partner is a
wholly owned subsidiary of C. Brewer and Company, Limited ("CBCL"), which in
turn is wholly owned by Buyco, Inc. ("Buyco"). Prior to September 8, 1999, ML
Resources, Inc. was a wholly owned subsidiary of Mauna Loa Macadamia Nut
Corporation ("Mauna Loa"), which was a wholly owned subsidiary of CBCL.

Ownership of Class A Units confers no direct or indirect interest in Buyco,
CBCL, Mauna Loa or any of their affiliated corporations.

The Partnership commenced operations in June 1986, following its acquisition of
interests in approximately 2,423 tree acres of macadamia nut orchards from Mauna
Loa and one of Mauna Loa's affiliates. In December 1986 and October 1989,
respectively, the Partnership acquired from affiliates of Mauna Loa interests in
approximately 266 and 1,260 additional tree acres of macadamia orchards. In
September 1991 the Partnership acquired approximately 78 tree acres of producing
macadamia orchards.

NARRATIVE DESCRIPTION OF THE BUSINESS

The Partnership sells all of its macadamia nuts to Mauna Loa, under four
long-term nut purchase contracts. Mauna Loa processes and markets the nuts under
the MAUNA LOA-Registered Trademark- brand name and is the largest processor and
marketer of macadamia nuts in the world. The Partnership is Mauna Loa's largest
single supplier of macadamia nuts. All farming activities are performed for the
Partnership by CBCL subsidiaries under long-term farming contracts.

NUT PURCHASE CONTRACTS.

The Partnership is a party to four nut purchase contracts with Mauna Loa. They
cover all nuts produced by the orchards acquired in June 1986, December 1986,
October 1989, and September 1991, respectively. The first two contracts expire
in 2006, while the third contract expires in 2019 and also provides for the
exclusion of unusable nuts from those purchased by Mauna Loa. The first three
contracts are identical in all other material respects. The fourth contract was
acquired by assignment with the purchase in September 1991 of the Lot 10 orchard
and expires in 2003. The fourth contract is similar to the first three
contracts, but the nut price is calculated on a crop year (July 1 through June
30) rather than a calendar year basis, which results in a slightly different nut
price. All four contracts use a pricing formula based 50% on a two-year trailing
average of the macadamia nut price published annually by the United States
Department

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of Agriculture and 50% on Mauna Loa's "netback component." The netback component
is calculated by subtracting Mauna Loa's processing and marketing costs per
pound and a "capital charge" of 20% from its nut revenues per pound. The first
three nut purchase contracts may be terminated by Mauna Loa upon thirty days'
notice if the Managing Partner is involuntarily removed as the managing general
partner and replaced by a person or entity not affiliated with Mauna Loa. The
fourth nut purchase contract may be terminated at any time by mutual agreement
in writing, or it may be terminated by the Partnership as of the end of any
calendar year by giving Mauna Loa at least twelve months advance notice of its
intention to terminate.

COMPETITION

Because the Partnership's revenues from nut sales (and therefore its overall
financial results) are tied to a formula dependent in large part upon Mauna
Loa's market performance, the Partnership bears certain risks associated with
Mauna Loa's marketing of the nuts, including the likelihood of increased future
competition.

Mauna Loa considers its primary competition to be other premium nut products,
except in Hawaii where its products compete with those of other macadamia nut
producers and other food and non-food tourist items. As a premium nut, macadamia
nuts compete with cashews, almonds and pistachios.

Mauna Loa sells macadamia nuts as "retail" nuts and "commercial" nuts and
produces and sells various macadamia nut products. These include pristine salted
and unsalted roasted macadamia nuts, packages of diced macadamia nuts and
macadamia oil (for cooking and baking), value-added products such as
candy-glazed macadamia nuts, chocolate-covered macadamia nuts, chocolate
macadamia nut candy bars, honey-roasted macadamia nuts and macadamia nut
brittle.

Macadamia nuts comprised less than 5% of the sales of branded premium nuts sold
through mass merchandisers, drug and grocery stores on the U.S. mainland.
Cashews and mixed nuts represent the bulk of the dollar sales in this segment,
followed by pistachios. Macadamia nuts are the highest priced of all premium
nuts, and, therefore, they may be sensitive to price competition from other
nuts.

Approximately fifty percent of sales of the MAUNA LOA-Registered Trademark-
brand are made in the U.S. mainland, where Mauna Loa sells its products through
brokers to food stores, club stores, drug store chains, mass merchandisers and
commercial customers.

Approximately thirty percent of sales of the MAUNA LOA-Registered Trademark-
brand are made in Hawaii where Mauna Loa sells through its own direct sales
force primarily to retailers. Substantial portions of the macadamia nut products
sold are purchased by visitors for gifts and souvenirs. Mauna Loa believes that
it is the largest seller of macadamia products in the State of Hawaii.

Outside the United States, Mauna Loa's other major market is Japan and the Far
East. Approximately fifteen percent of sales of the MAUNA LOA-Registered
Trademark- brand are made in Japan and the Far East.

The remaining sales are comprised of ingredient nuts, visitor center sales, and
mail order sales.

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In addition to the State of Hawaii, mature macadamia nut orchards are located in
Australia, Africa, and Central America. For the 1999 crop, Hawaii was expected
to supply 31% of the world crop, and Australia, the world's largest producer,
was expected to supply 45%.

A general decline in nut prices would adversely affect the prices which Mauna
Loa could charge for its macadamia nut products and could have a negative effect
on its profitability. Since the purchase price for the Partnership's nuts under
all of its nut purchase contracts is based in part on nut prices reported by the
industry and in part on the marketing success of Mauna Loa, a general decline in
macadamia nut prices could also adversely affect the Partnership's revenues.

FARMING CONTRACTS

All of the Partnership's orchards are farmed by two subsidiaries of CBCL under
four long-term farming contracts. The orchards are located at three separate
locations on the island of Hawaii ("Keaau", "Ka'u" and "Mauna Kea"). Because
each area has different terrain and weather conditions, farming methods vary
somewhat among the three locations.

FARMING CONTRACTS. The Partnership is a party to four farming contracts with two
affiliates of CBCL, Ka'u Agribusiness Company, Inc. ("KACI") and Mauna Kea
Agribusiness Company, Inc. ("MKACI"). Services under these contracts include
cultivation, weed and pest control, fertilization, pruning and hedging,
replanting, harvesting, husking and related services for the Partnership's
orchards. In return, the Partnership reimburses KACI and MKACI for their direct
and indirect costs incurred in providing such services, including an equipment
utilization charge and an annual farming fee. The first two contracts (the "1986
contracts") expire in 2006, while the third contract (the "1989 contract")
expires in 2019. The fourth contract (the "Lot 10 contract") was acquired with
the purchase of the Lot 10 orchard in 1991 and expires in 2006. The four
contracts are identical in all other material respects. The contracts are
terminable if the Managing Partner is involuntarily removed and replaced by a
person or entity not affiliated with Mauna Loa.

Each of the farming contracts was amended effective January 1, 1998 to provide
that farming fees would equal 2 1/2% of the Partnership's gross profits from
farming operations, rather than 3% of the Partnership's operating cash flow,
attributable to the relevant orchard.

ORCHARD MAINTENANCE. Maintenance of an orchard is essential to macadamia nut
farming. Pruning and hedging of trees is necessary to allow space for mechanical
harvesting and cultivating equipment to operate safely and efficiently and to
remove dead branches. Where mechanical equipment is used, the orchard floor must
be maintained in a condition that will permit its operation. Soil and gravel are
used to repair mud holes and other surface irregularities caused by soil erosion
from heavy rain and by farming equipment, though this operation is not performed
as frequently due to current cost controls. Pruning and surface maintenance are
usually performed after the harvest season.

Orchard management also requires the proper selection and application of
fertilizers, pesticides (to control rodents, insects and fungi) and herbicides
(to control weeds). Insects, rodents and fungi, as well as wild pigs, if not
controlled, can cause losses to nut production.

HARVESTING. The harvest period begins in the late summer and runs through the
following spring. Mature nuts fall from the trees and are harvested using
mechanized harvest equipment when the

5
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orchard floor is level enough to permit its use. Nuts are harvested by hand when
the orchard floor is too uneven to permit mechanical harvesting, when the nut
drop is very light and when nuts remain after harvesting. At Keaau, Ka'u and
Mauna Kea, seasonal labor for hand harvesting and other operations is generally
available from nearby Hilo and adjacent communities.

Mechanical harvesting is less costly than hand harvesting, but mechanical
harvesting is possible only where the orchard floor is relatively flat.
Approximately 56% of the orchards acquired in 1986, 81% of the orchards acquired
in 1989 and 100% of the orchard acquired in 1991 are currently mechanically
harvested. The remaining acres of the 1986 and 1989 orchards are too uneven for
mechanical harvesting and must be harvested by hand.

During the harvest season, the nuts are collected every six to ten weeks. Nuts
suffer loss in quality if they remain on the ground too long. The harvested nuts
are then transported to the husking facility. The Keaau and Ka'u areas have
husking facilities, which are not owned by the Partnership. Nuts harvested in
the Mauna Kea area are transported to the husking facility in the Keaau area. At
the husking facility, the outer husk is removed and the nuts, still in their
shell, are weighed and sampled to determine moisture content and kernel quality.
Title to the nuts passes to Mauna Loa after weighing, and the nuts are then
moved to a drying facility.

PROCESSING. The nuts purchased from the Partnership by Mauna Loa are primarily
processed at Mauna Loa's processing plant located adjacent to the orchards
located in the Keaau area. The plant was built in 1966 and is presently capable
of handling approximately 210,000 pounds of dry-in-shell (commonly abbreviated
"DIS") nuts per day. Processing at the plant includes drying, cracking,
roasting, inspecting and packaging. The plant also includes separate warehouses,
a machine shop, storage facilities, husking facilities, nut drying facilities, a
generator and a 10,000 square foot chocolate processing plant. None of these
processing facilities are owned by the Partnership.

At Mauna Loa's plant in Keaau, the harvested nuts pass by conveyors over metal
screens, blowers and rock separators that remove everything but the in-husk
nuts. The husks are then split and removed by pressing the nuts between steel
roller bars and a rubber pad. At this stage, the nut kernels are still encased
in their hard round shells and roughly 20% of their weight is attributable to
moisture content. At this point, the nuts are referred to as wet-in-shell
(commonly abbreviated "WIS"). The WIS weight of the nuts is used to determine
payments to be made by Mauna Loa under the Nut Purchase Contracts. Approximately
20% of the WIS weight of the nuts will become dry salable kernels when all
further processing is completed.

After the nuts are weighed, the moisture content of the nuts is reduced by
blowing warm air over them, producing DIS nuts. The nuts are then cracked by
metal rollers to remove the shell. Mechanical and optical equipment, as well as
hand sorting, are used to separate the nut kernels from pieces of broken shell.

The dry nut kernels are roasted and then sorted into retail and commercial
grades. At this stage, less than half of the nuts are bulk-packed and sent to
four co-packers on the U.S. mainland for packaging. At Mauna Loa's plant in
Keaau the nuts may be salted, or covered with chocolate or one of several candy
glazes, and finally packaged, labeled and readied for shipment.

6
<PAGE>

STABILIZATION PAYMENTS

In December 1986, the Partnership acquired a 266-acre orchard that was several
years younger than other orchards of the Partnership. Because of the relative
immaturity of the newer orchard, its productivity (and therefore its cash flow)
was expected to be correspondingly lower for the first several years than for
the other older orchards.

Accordingly, the seller of this orchard (KACI) agreed to make cash stabilization
payments to the Partnership for each year through 1993 in which the cash flow
(as defined) from this orchard fell short of the target cash flow level, which
equaled $507,000. Stabilization payments for any given year were limited to the
lesser of the amount of the shortfall or a maximum payment amount. For the years
from 1987 through 1993, inclusive, the Partnership received a total of
$1,628,000 (including a 4% Hawaii general excise tax) in stabilization payments
under this agreement.

The Partnership accounted for stabilization payments (net of the 4% Hawaii
general excise tax) as a reduction in the cost basis of the orchard. As such,
these payments are being reflected in the Partnership's net income ratably
through 2019 as a reduction to the depreciation expense reported for this
orchard.

In return, the Partnership is obligated to pay the seller 100% of any year's
cash flow from this orchard in excess of the target cash flow as additional
percentage rent until the aggregate amount of the additional percentage rent
paid equals 150% of the total amount of stabilization payments previously
received. Thereafter, the Partnership is obligated to pay the seller 50% of this
orchard's cash flow in excess of the target cash flow as additional incentive
rent. The Partnership paid KACI $297,000 under these provisions for 1997. No
additional rent was due in 1998 or 1999.

RISKS INVOLVED IN OPERATING MACADAMIA ORCHARDS

Macadamia nut trees are subject to damage or destruction from diseases, pests,
floods, droughts, windstorms, hurricanes, volcanic activity and other natural
causes. Partnership tree replacements for all orchards from all causes were 1.6%
in 1997, 0.9% in 1998 and 0.7% in 1999.

DISEASES AND PESTS. The Partnership's Keaau orchards have experienced tree
replacements of 3.6% in 1997, 1.9% in 1998 and 1.5% in 1999. Other macadamia
growers in the vicinity have also experienced higher than normal tree losses due
to a problem known as "Macadamia Quick Decline" ("MQD"). Based upon research by
the University of Hawaii and other experts, it is believed that the situation is
due to fungi associated with high moisture conditions. It is also believed that
a particular variety of macadamia nut tree (variety 333) is most susceptible to
MQD. Another tree variety (variety 344) has also been identified as being more
susceptible to MQD than other varieties. Based on the latest research, Mauna Loa
and the University of Hawaii are working to identify the specific causes of the
problem and potentially to develop feasible control measures. There is no
assurance, however, that a feasible control measure can be developed.
Approximately 9% of the Partnership's orchards are variety 333 and 45% are
variety 344. Both the Keaau and Mauna Kea orchards are areas with high moisture
conditions, and may be more susceptible to the MQD problem. MQD is present in
the Ka'u orchards, but tree losses to date have been less than 1% in the Ka'u
area.

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There are also two types of fungal diseases, which can affect nut production
but are not fatal to the trees themselves. One of these is Phytophthora,
which affects the macadamia flowers and nutlets, and the other is Botrytis
cinerea. These types of fungal disease were generally controllable with
fungicides, but many of these fungicides are no longer available.
Historically, these fungi have attacked the orchards located in Keaau every
three or four years. There was a Phytophthora occurrence in the Keaau and
Mauna Kea orchards from February to mid-March in 1999, which slightly
affected the 1999-2000 crop year production for these orchards. A moderate
infestation of Phytophthora also occured in January 2000, and the data as of
February 2000 indicates that the nutset may be less than normal.

WINDSTORMS AND INSURANCE. The Partnership's orchards are located in areas on the
island of Hawaii that are susceptible to windstorms. Twenty-four major
windstorms have occurred on the island of Hawaii since 1961, and four of those
caused material losses to Partnership orchards. Several of the Partnership's
orchards are surrounded by windbreak trees, which provide limited protection.
Younger trees that have not developed extensive root systems are particularly
vulnerable to windstorms.

On February 24, 1997, high winds hit the Hilo side of the island of Hawaii,
resulting in the loss of 5,381 trees (about 1.5% of all of the Partnership's
trees) in the Mauna Kea and Keaau orchards. Clean-up and replanting costs were
approximately $275,000. There was no insurance recovery because losses were
below the deductible amount.

The Partnership secures tree insurance each year under a federally subsidized
program. The tree insurance for 2000 provides coverage up to a maximum of
approximately $34 million against loss of trees due to wind, fire or volcanic
activity. Crop insurance was purchased for the 1999-2000 crop year and provides
coverage up to a maximum of approximately $7.5 million against loss of nuts due
to wind, fire, volcanic activity, earthquake, adverse weather, wildlife damage
and failure of irrigation water supplies.

VOLCANOES. The orchards are located on the island of Hawaii, where there are two
active volcanoes. To date, no lava flows from either volcano have affected or
threatened the orchards.

RAINFALL. The productivity of orchards depends in large part on moisture
conditions. Inadequate rainfall can reduce nut yields significantly, while
excessive rain without adequate drainage can foster disease and hamper
harvesting operations. While rainfall at the orchards located in the Keaau and
Mauna Kea areas has generally been adequate, the orchards located in the Ka'u
area generally receive less rainfall and, as a result, a portion of the Ka'u
orchards is presently irrigated. Irrigation can mitigate the effects of a
drought, but it cannot completely protect a macadamia nut crop from the effect
of a drought. Recorded rainfall at each of the three locations of the
Partnership's orchards for the past five years is shown below:

<TABLE>
<CAPTION>
YEAR KA'U KEAAU MAUNA KEA
---- ------ ------- ---------
<S> <C> <C> <C>
1995 27.0" 88.6" 123.1"
1996 69.3" 125.2" 146.6"
1997 54.9" 142.3" 157.5"
1998 8.8" 115.5" 153.7"
1999 30.5" 132.3" 130.0"
</TABLE>

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In, 1998, the El Nino related drought affected all of Hawaii for the first three
months and continued to affect Ka'u for the full year. The Ka'u region recorded
the lowest rainfall in the Partnership's history, with less than nine inches of
rain. The 1998-99 Ka'u crop year was reduced by over 30% due to the lack of
rainfall. The Keaau and Mauna Kea regions, which normally receive substantial
rainfall, benefitted from the lack of rainfall during the first three months of
the year. During this period, flowering and pollination were highly successful
in these orchards, resulting in the largest macadamia crops ever produced in
these two regions.

The drought continued in Ka'u until the fall of 1999. However, twelve inches
of rain fell in the beginning of 1999, which allowed the Ka'u orchards to
flower and produce a less than normal crop.

WATER SUPPLY FOR IRRIGATION

In June 1986, the Partnership and KACI entered into an agreement (the "Water
Agreement") pursuant to which KACI agreed to supply water to that portion of the
June 1986 Orchards located at Ka'u ("Ka'u I") which had been irrigated
historically. In 1989, the Water Agreement was amended to supply water to that
portion of the October 1989 Orchards at Ka'u ("Ka'u II") which had also been
irrigated historically. The Water Agreement, as amended, provides that KACI will
supply water to such portion of the Ka'u I Orchards and the Ka'u II Orchards
(the "Irrigated Orchards") from a well (the "Sisal Well") located on property
owned by KACI as requested by the Partnership from time to time in an amount
equal to, at the time of request, the lesser of (i) the amount necessary to
irrigate the Irrigated Orchards in accordance with prudent farming practices or
(ii) 95% of the Sisal Well's present operating capacity of 1,700 gallons per
minute, provided that the amount of water required to be provided under clause
(ii) will not exceed approximately 643 million gallons of water per year. The
cost to the Partnership for receiving such water is a pro rata share of the cost
incurred by KACI in providing such water.

If the amount of water provided to the Irrigated Orchards by the Sisal Well
becomes insufficient to irrigate the Irrigated Orchards in accordance with
prudent farming practices as determined by the Partnership in good faith, KACI
will be obligated, at the request of the Partnership, to use reasonable efforts
to increase the capacity of the Sisal Well, to drill an alternative well into
the historical source which provides water to the Sisal Well or to obtain water
from other sources in order to provide such amount of water. If KACI incurs
capital costs in connection with any such actions, the Partnership will be
required to pay its pro rata shares of such costs. If water is not supplied to
the Partnership as required under the Water Agreement, the Partnership will be
entitled to drill for water on the portion of the Ka'u I Orchards which is held
in fee by the Partnership. The Water Agreement also provides that, if KACI sells
or otherwise transfers all or any portion of the retained water rights beneath
the Irrigated Orchards or the property containing the Sisal Well, the right of
the Partnership to receive water under the Water Agreement will be reasonably
provided for.

On a historical basis, the quantity of water available under the Water Agreement
to the irrigated portion of the Ka'u I Orchards has been generally sufficient to
irrigate these orchards in accordance with prudent farming practices. The
irrigated portion of the Ka'u II Orchards is expected to need greater quantities
of water as the orchards mature. The Managing Partner anticipates that the
amount of water available under the Water Agreement, as amended, will be
generally sufficient, assuming average levels of rainfall, to irrigate the
Irrigated Orchards in

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accordance with prudent farming practices for the next several years. If no
irrigation water is available to the Irrigated Orchards, then, based on
historical average rainfall levels, diminished yields of macadamia nut
production can be expected.

EMPLOYEES

The Partnership presently has no employees. Instead, the employees, officers and
directors of the Managing Partner perform all management functions for the
Partnership. As of December 31, 1999, the Managing Partner employed three
people.

ITEM 2. PROPERTIES.

LOCATION. The Partnership owns or leases approximately 4,027 tree acres of
macadamia orchards on the island of Hawaii. The orchards are located in three
areas: Ka'u, Keaau and Mauna Kea. The Ka'u area is located in the south part of
the island about fifty miles from Hilo. The Keaau area is located six miles
south of Hilo on the east side of the island, and the Mauna Kea area is located
three miles north of Hilo on the east side of the island.

[MAP OF HAWAII]

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The majority of macadamia nut trees grown in the State of Hawaii are grown on
the island of Hawaii in volcanic soil that permits drainage during heavy
rainfall. While the orchards are located approximately within a 50-mile radius,
the climate and other conditions which affect the growing of macadamia nuts are
different. These differences are the result of prevailing wind patterns and
island topography which produce a variety of microclimates throughout the
island.

AGE AND DENSITY. The productivity of macadamia nut orchards depends on several
factors including, among others, the age of the trees, the number of trees
planted per acre, soil condition, climate, rainfall and/or irrigation. The most
significant characteristic affecting yields is maturity. The trees in a
macadamia nut orchard generally begin to produce nuts at a commercially
acceptable level at around nine years of age. Thereafter, nut yields increase
gradually until the trees reach maturity, after which the nut yield remains
relatively constant except for variances produced by rainfall, cultivation
practices, pest infestation and disease.

Macadamia orchards normally reach peak production after fifteen to eighteen
years of age. Of the 4,027 tree acres of macadamia orchards owned or leased by
the Partnership, 2,721 tree acres are over eighteen years of age and roughly
1,306 tree acres are under eighteen years of age. Around 2% of trees are lost to
various causes each year and are replaced.

RAINFALL. Macadamia trees grow best in climates with substantial and evenly
distributed rainfall (or equivalent irrigation) and in soil that provides good
drainage. Inadequate rainfall can significantly reduce nut yields, while
excessive rain without adequate drainage can impede healthy tree growth, promote
the growth of harmful fungal diseases and produce mud holes that require repair
of the orchard floor.

At Keaau, normal rainfall is adequate without irrigation, and the volcanic soil
provides good drainage. However, short droughts and occasional flooding have
occurred. At Mauna Kea, normal rainfall is adequate without irrigation and the
volcanic soil provides adequate drainage. In the event of a very long drought,
production at Keaau and Mauna Kea might be affected. At Ka'u, located on the
drier side of the island, the rainfall averages substantially less than at
Keaau, particularly at the lower elevations. Approximately 652 acres at the
lower elevations of Ka'u are irrigated to provide for additional water when
required. Under extremely dry conditions at Ka'u, such as a prolonged drought,
irrigation is not sufficient, and production will be adversely affected.

At the time of the conveyance of these orchards to the Partnership, Mauna Loa
and KACI reserved the water rights to the land underlying the orchards. To
supply water to that portion of the orchards located at Ka'u which had been
irrigated historically, KACI and the Partnership entered into a water agreement
whereby KACI agreed to supply water to the Partnership from a well which is on
property retained by KACI to irrigate this property. The water agreement has
been amended to provide for water to be supplied for irrigation purposes to the
portion of the October 1989 Ka'u Orchards which have historically been
irrigated.

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<PAGE>

ORCHARDS. The following table lists each of the orchards, the year acquired,
gross and tree acres, tenure, and lease rents:

<TABLE>
<CAPTION>
TREE LEASE MIN. RENT
ORCHARD ACQUIRED ACRES TENURE EXPIRATION PER ANNUM
- ------------------------ -------------- ------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C>
Keaau I June 1986 1467 Fee simple
Ka'u I June 1986 456 Fee simple
" June 1986 500 Leasehold (1) 2019 $ 25,000
Ka'u Green Shoe I Dec. 1986 266 Leasehold (1) 2019 $ 5,586
Keaau II Oct. 1989 220 Fee simple
Ka'u II Oct. 1989 327 Leasehold (2) 2034 $ 23,544
" Oct. 1989 175 Leasehold (1) 2028 $ 17,314
" Oct. 1989 26 Leasehold (3) 2029 $ 2,041
" Oct. 1989 186 Leasehold (1) 2031 $ 18,585
Mauna Kea Oct. 1989 326 Leasehold (2) 2034 $ 23,508
Keaau Lot 10 Sept. 1991 78 Fee simple
-------------
Total acres 4027

</TABLE>
- --------------------------------------------------------------------------------
(1) Lease of land only; trees may be removed at termination of lease.
(2) Lease of land only; lessor may purchase trees from lessee at any time after
June 30, 2019.
(3) Lease of land; trees revert to lessor upon termination of lease.

For certain additional information concerning farming leases, see Item 13, page
38.

In addition to the minimum annual lease payment amount, all the leases require
the Partnership to pay various expenses with respect to the leased premises as
well as an additional rental payment based on the market price per pound of
macadamia nuts sold in Hawaii.

With respect to the Ka'u Green Shoe I Orchard, the lease requires the
Partnership to pay KACI, the seller and lessor, additional rent equal to 100% of
any year's cash flow generated by such orchard in excess of a target level of
$507,000 until the aggregate amount paid equals 150% of the aggregate amount of
the stabilization payments previously received by the Partnership. Thereafter,
the Partnership is required, with respect to any year prior to the expiration of
the lease, to pay as additional rent, 50% of the cash flow generated by such
orchard for such year in excess of a target level of $507,000 of cash flow. For
additional information, see "Stabilization Payments" on page 7.

CERTAIN INFORMATION REGARDING LEASES. The 715 tree acres comprising the Ka'u II
Orchards were situated on approximately 1,424 actual acres of land. Such 1,424
acres of land were located on larger tracts of land, which covered an aggregate
of approximately 10,358 acres. The Partnership initially acquired (i) a lease of
an undivided interest in the larger tracts of land within which the property
relating to the Ka'u II Orchards were located, (ii) an undivided interest in the
entire leasehold estate relating to the larger tracts of land within which a
portion of the property relating to the Ka'u II Orchards were located and (iii)
the entire leasehold estate of the remaining portion of the property relating to
the Ka'u II Orchards Leasehold Interest. The larger tracts have been
partitioned, and the Partnership has revested in Mauna Loa and KACI the
Partnership's undivided leasehold interest in the 8,934 additional acres not
related to the land upon which the Ka'u II Orchards are located. The
Partnership's

12
<PAGE>

undivided leasehold interest in the remaining portions of such larger tracts has
been converted to a leasehold interest of the entirety of such remaining
portions.

ITEM 3. LEGAL PROCEEDINGS.

On July 13, 1998, Waterside Partners, a limited partner, filed a suit asking
that it be awarded its costs and expenses for prosecution of a lawsuit and a
proxy contest related to a proposed merger involving the Partnership. A hearing
was held on the Motion for attorney's fees and expenses on January 29, 1999, and
the court ruled that the Plaintiff was not entitled to any attorney fees or
expenses. The Plaintiff appealed to the Supreme Court of Delaware, which decided
on November 1, 1999 to uphold the lower court ruling.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

No matters were submitted during the fourth quarter of the fiscal year covered
by this report to a vote of security holders.

PART II

ITEM 5. MARKET FOR REGISTRANT'S CLASS A UNITS AND RELATED
UNITHOLDER MATTERS.

The Partnership's Class A Depositary Units are listed for trading on the New
York Stock Exchange (symbol = NUT). There were 1,622 registered holders of
Class A Depositary Units on December 31, 1999.

Distributions declared and high and low sales prices of the Class A Depositary
Units, based on New York Stock Exchange daily composite transactions, are shown
in the table below:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
DISTRIBUTION HIGH LOW
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1999: 4th Quarter $0.10 3 15/16 3 1/2
3rd Quarter 0.10 3 7/8 3 5/8
2nd Quarter 0.10 3 15/16 3 5/16
1st Quarter 0.10 3 15/16 3

1998: 4th Quarter $0.075 3 11/16 3 1/4
3rd Quarter 0.075 4 3 1/2
2nd Quarter 0.075 4 3/16 3 1/8
1st Quarter 0.075 4 3
</TABLE>

13
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA.
(In thousands, except per pound and per unit data)

<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Financial:
Total revenue $ 15,950 $ 12,408 $ 12,128 $ 13,216 $ 10,590
Net cash provided by
operating activities (1) 3,849 3,675 4,613 2,062 3,370
Income before taxes 4,847 1,039 1,831 3,033 1,192
Net income 4,645 963 15,581 3,033 1,192
Distributions declared 3,030 2,273 2,273 1,515 1,515
Total working capital 9,031 5,785 5,213 4,342 1,235
Total assets 66,503 64,842 66,727 65,953 64,455
Long-term debt - - - - -
Total partners' capital 61,270 59,655 60,965 47,656 46,138
Class A limited partners' capital 60,657 59,058 60,355 47,179 45,676
Net cash flow (2) 6,247 2,566 3,435 4,635 2,793

Operations (3):
Macadamia nuts harvested (lbs.) (4) 25,569 19,463 20,315 22,110 18,820
Net price $/lb. (4)(5) $ 0.6238 $ 0.6375 $ 0.5970 $ 0.5977 $ 0.5627

Per Class A Unit (6):
Income before taxes $ 0.64 $ 0.14 $ 0.24 $ 0.40 $ 0.16
Net income 0.61 0.13 2.06 0.40 0.16
Net cash flow (2) 0.82 0.34 0.45 0.61 0.37
Distributions 0.40 0.30 0.30 0.20 0.20
Partners' capital 8.09 7.87 8.05 6.29 6.09
</TABLE>

(1) See "Statement of Cash Flows" in the financial statements for method of
calculation.
(2) See Footnote 4 in the notes to financial statements for method of
calculation.
(3) During all periods presented there were 4,027 acres of trees harvested.
(4) Wet-in-shell at 25% moisture.
(5) Weighted average for all orchards.
(6) 7,500,000 Class A Units were issued and outstanding for all periods
presented.

14
<PAGE>

ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

This discussion should be read in conjunction with the financial statements and
the related notes included elsewhere in this report.

RESULTS OF OPERATIONS - 1999, 1998 AND 1997

PRODUCTION AND YIELDS

Production and yield data for the seven orchards are summarized below (expressed
in wet-in-shell pounds at 25% moisture):

<TABLE>
<CAPTION>
Average Yield per Acre
1999 -----------------------------------
Orchard Acquired Acreage Production 1999 1998 1997
- ------------------------- ------------- ----------- --------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Keaau I June 1986 1,467 10,550,840 7,192 4,855 4,212
Keaau II Oct. 1989 220 1,135,026 5,159 3,336 2,686
Keaau Lot 10 Sept. 1991 78 463,569 5,943 3,661 3,551
Ka'u I June 1986 956 6,971,923 7,293 7,189 6,168
Ka'u Green Shoe I Dec. 1986 266 1,262,117 4,745 3,249 8,617
Ka'u II Oct. 1989 714 3,239,592 4,537 3,811 5,746
Mauna Kea Oct. 1989 326 1,945,647 5,968 2,645 2,994
----------- ---------------
Totals (except yields
which are averages) 4,027 25,568,714 6,349 4,833 5,045
=========== ===============
</TABLE>

For 1999, overall nut production increased by 31%. The combined Keaau orchards
increased 49% over 1998, and the Mauna Kea orchards were up 126%. Both regions
began 1999 with substantial nut production from the 1998-99 crop year, and then
realized heavy and early nut production from the 1999-2000 crop year. The Ka'u
region showed signs of a rebound after two years of drought, with an increase in
production of 10% over 1998.

For 1998, overall nut production declined 4% from the prior year. The Keaau
orchards, affected by drought only through March 1998, increased production by
16% compared to 1997. The combined Ka'u orchards, where the El Nino related
drought had the most effect, were down 15%. The Ka'u Green Shoe I orchard is
without irrigation and suffered the most, down 62%.

The Ka'u Green Shoe I orchard and the Mauna Kea orchard are not yet fully
mature. As a result, the yields from these orchards are expected to be lower on
average over the next few years than for the Partnership's mature orchards. At
full maturity under favorable growing conditions, a macadamia orchard can
produce between 5,500 and 7,500 WIS pounds of macadamia nuts per acre each year
at Ka'u and between 4,000 and 6,000 WIS pounds of macadamia nuts per acre each
year at Keaau. No trees have reached full maturity in the Mauna Kea area, but it
is expected that production at maturity at the Mauna Kea orchard will
approximate Keaau levels.

15
<PAGE>

REVENUE

Macadamia nut revenues depend on the number of producing acres, yields per acre
and the nut purchase price. The impact of these factors is summarized in the
following table:

<TABLE>
<CAPTION>
1999 1998
over over
1999 1998 1997 1998 1997
------------- ------------ ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Trees acres harvested 4,027 4,027 4,027 - -
Average yield (WIS lbs./acre) 6,349 4,833 5,045 + 31% - 4%
------------- ------------ ------------
Nuts harvested (000's WIS lbs.) 25,569 19,463 20,315 + 31% - 4%
Nut price ($/WIS lbs. @ 25%) 0.6238 0.6375 0.5970 - 2% + 7%
------------- ------------ ------------
Gross nut sales ($000's) 15,950 12,408 12,128 + 29% + 2%
============= ============ ============
</TABLE>

All of the Partnership nut production is sold under long-term contracts to Mauna
Loa Macadamia Nut Corporation ("Mauna Loa"). The price for these nuts is based
50% on the two-year trailing average of USDA published macadamia nut prices and
50% on a "netback component". The netback component is determined by subtracting
from Mauna Loa's gross revenues from the sale of macadamia products (i)
allocable processing, packaging, marketing, selling and advertising costs and
(ii) a 20% capital charge on the difference between those aggregate gross
revenues and aggregate allocable costs.

The following table sets forth the manner in which the nut purchase price per
pound was determined for 1999, 1998 and 1997 ($/lb.):

<TABLE>
<CAPTION>
1999 1998 1997
------------- -------------- --------------
<S> <C> <C> <C>
USDA price - two years prior (a) 0.7125 0.6886 0.6413
USDA price - one year prior (a) 0.6996 0.7125 0.6886
------------- -------------- --------------
USDA price - two year trailing average 0.7061 0.7006 0.6650
============= ============== ==============

Gross revenues 2.1695 2.2741 2.1673
Less allocable processing, packaging,
marketing, sales and advertising costs 1.5023 1.5654 1.5150
Less 20% capital charge 0.1334 0.1417 0.1305
------------- -------------- --------------
Net-back component 0.5338 0.5670 0.5218
============= ============== ==============

USDA price - two year trailing average 0.7061 0.7006 0.6650
Net-back component 0.5338 0.5670 0.5218
------------- -------------- --------------
Average of USDA two year trailing
average price and net-back component 0.6199 0.6338 0.5934
Plus Hawaii general excise tax (0.5%) 0.0031 0.0032 0.0030
------------- -------------- --------------
Net purchase price (b) 0.6230 0.6369 0.5964
============= ============== ==============
</TABLE>

(a) Mauna Loa's own purchases comprise a substantial portion of nut purchases
reported to the USDA. Therefore, the USDA price component of the purchase
price is, to a substantial

16
<PAGE>

degree, the average price that Mauna Loa has paid to purchase macadamia
nuts from the Partnership and from third parties during the previous two
years.

(b) The nut purchase contract covering nut production from the 78 acre Keaau
Lot 10 orchard acquired in September 1991 defines the "two-year trailing
average" provision slightly differently from the other nut purchase
contracts, and thus, results in a slightly different nut price. This
orchard accounts for less than 2% of the Partnership's macadamia nut
production.

The 1999 average nut price declined 2.1% from the average price in 1998.
Worldwide macadamia prices have been falling due to increased production,
primarily in Australia. The netback component of the 1999 nut price declined due
to decreased nut revenues per pound at Mauna Loa, but this was partially offset
by a reduction of Mauna Loa's processing and marketing costs.

The 1998 average nut price of $0.6375 per pound was 6.8% higher than 1997. The
USDA trailing average component increased by $0.0357, and the netback component
increased by $0.0451. The netback increase is attributable mostly to a 5%
increase in Mauna Loa's revenues per pound.

The USDA published price for the 1998-99 crop year was $0.6155 per pound (WIS at
25% moisture), which is 12% lower than the 1997-98 price of $0.6996 and 14%
lower than the 1996-97 price of $0.7125. The USDA two-year trailing average
which affects the Partnership's 2000 nut price will be $0.6576, a 7% decrease
over the 1999 two-year average.

COST OF GOODS SOLD

Agricultural unit costs depend on the operating expenses required to maintain
the orchards and to harvest the crop as well as on the quantity of nuts actually
harvested.

The Partnership's unit costs (expressed in dollars per wet-in-shell pound at 25%
moisture), which are calculated by dividing all agricultural costs for each
orchard (including lease rent, property tax and tree insurance) by the number of
pounds of macadamia nuts produced by that orchard, are summarized below ($/lb.):

<TABLE>
<CAPTION>
Cost per pound
-------------------------------------------
Orchard Acquired 1999 1998 1997
- ------------------------- ----------------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Keaau I June 1986 0.3504 0.4557 0.4972
Keaau II Oct. 1989 0.4039 0.5640 0.6385
Keaau Lot 10 Sept. 1991 0.1938 0.3297 0.3145
Ka'u I June 1986 0.4211 0.4270 0.4429
Ka'u Green Shoe I Dec. 1986 0.3955 0.4669 0.3881
Ka'u II Oct. 1989 0.4618 0.5387 0.3819
Mauna Kea Oct. 1989 0.4221 0.8802 0.8059

All Orchards 0.3910 0.4787 0.4623
</TABLE>

Cost of goods sold was $754,000 higher in 1999, but declined 18% from the
previous year on a per pound basis. This is the lowest annual cost-per-pound
ever achieved by the Partnership and

17
<PAGE>

is the result of the large nut production, which spread the indirect and
overhead farming costs over more pounds.

Total production costs charged to the income statement in 1998 were lower than
1997 by $69,000, but 3.5% higher on a cost-per-pound basis. Production costs
were generally down due to the overall lower production, but irrigation costs
were higher by $300,000 in 1998 due to a drought in the Ka'u region.

GENERAL AND ADMINISTRATIVE COSTS

General and administrative expenses are comprised of accounting and reporting
costs, reimbursements to the Managing Partner for compensation, directors' fees,
office expenses and liability insurance, and the management fee. These costs
were $121,000 higher in 1999 than in 1998. Of this amount, $80,000 was due to
the higher management fee earned by the general partner, which is based on
Partnership cash flow. The balance of this increase was due to legal costs
incurred in litigation concerning a proxy contest in the 1998 merger attempt.
(See "Legal Proceedings" on page 19.)

Total general and administrative costs in 1998 were $95,000 higher than in 1997.
Until 1998, the general partner and Partnership offices were located in the
corporate offices of C. Brewer and Company, Limited ("CBCL"), and office costs,
such as office rent, telephone and postage, were absorbed by CBCL. CBCL moved
their headquarters to Hilo, Hawaii, in early 1998, and these occupancy costs
were incurred for the first time by the Partnership.

A management fee based on Partnership cash flow is payable annually to the
Managing Partner. The amount paid was $137,000 for 1999, $57,000 for 1998 and
$75,000 for 1997.

INTEREST INCOME AND EXPENSE

The Partnership funds its working capital needs through funds on hand and, when
needed, from short-term borrowings, generating interest expense in the process.
Net interest income or expense, therefore, is partly a function of any balance
carried over from the prior year, the amount and timing of cash generated and
distributions paid to investors in the current year, as well as the current
level of interest rates. Throughout 1999 the Partnership had cash on hand,
earned $266,000 in interest income (net of line of credit fees), and incurred no
interest expense. Interest income was $244,000 in 1998 and $171,000 in 1997.

MERGER TRANSACTION COSTS

The Partnership incurred special charges of $1.1 million in the second quarter
of 1998 resulting from the write off of costs related to the cancelled merger of
the Partnership with Hawaii Land and Farming (formerly C. Brewer Homes, Inc.).

INFLATION AND TAXES

In general, prices paid to macadamia nut farmers fluctuate independently of
inflation. Macadamia nut prices are influenced strongly by prices for finished
macadamia products, which depend on competition and consumer acceptance. Farming
costs, particularly labor and materials, and general and administrative costs do
generally reflect inflationary trends.

18
<PAGE>

The Partnership is subject to a gross income tax as a result of its election to
continue to be taxed as a partnership rather than to be taxed as a corporation,
as allowed by the Taxpayer Relief Act of 1997. This tax is calculated at 3.5% on
partnership gross income (net revenues less cost of goods sold) beginning in
1998. The gross income tax was $202,000 in 1999 and $76,000 in 1998. In 1997,
the year of this election, the deferred tax liability was reduced from
$14,982,000 to $1,232,000, creating a deferred tax credit of $13,750,000.

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 meets its working
capital needs with cash on hand, and when necessary, through short-term
borrowings under a $4.0 million revolving line of credit. The line was extended
for one year on June 1, 1998, again on June 1, 1999, and may be extended for
additional one-year intervals upon the payment of extension fees.

The Partnership had a cash balance of $5.3 million at year-end 1999, and there
were no line of credit drawings during 1999, 1998 or 1997. It is the opinion of
management that the Partnership has adequate cash on hand and borrowing capacity
available to meet anticipated working capital needs for operations as presently
conducted.

LEGAL PROCEEDINGS

19
<PAGE>

ITEM 8. FINANCIAL STATEMENTS, SUPPLEMENTARY DATA AND SCHEDULES.

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
Report of Independent Accountants 21

Balance Sheets, December 31, 1999 and 1998 22

Income Statements, for the Years Ended December 31, 1999, 1998 and 1997 23

Statements of Partners' Capital, for the Years Ended December 31, 1999,
1998 and 1997 24

Statements of Cash Flows for the Years Ended December 31, 1999,
1998 and 1997 25

Notes to Financial Statements, Including Supplementary Data 26
</TABLE>

20
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

Limited Partners
ML Macadamia Orchards, L.P.

In our opinion, the accompanying balance sheets and the related income
statements, statements of partners' capital and statements of cash flows present
fairly, in all material respects, the financial position of ML Macadamia
Orchards, L.P. at December 31, 1999 and 1998, and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
1999, in conformity with generally accepted accounting principles in the United
States. These financial statements are the responsibility of the Partnership's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits in accordance with
generally accepted auditing standards in the United States which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.

PRICEWATERHOUSECOOPERS LLP

Honolulu, Hawaii
February 4, 2000

21
<PAGE>

ML MACADAMIA ORCHARDS, L.P.
BALANCE SHEETS
(in thousands)

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------
1999 1998
--------------- -----------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 5,325 $ 4,317
Accounts receivable, primarily from related parties 7,687 5,435
Other current assets 3 -
--------------- -----------------
Total current assets 13,015 9,752
Land, orchards and equipment, net 53,488 55,090
--------------- -----------------
Total assets $ 66,503 $ 64,842
=============== =================

LIABILITIES AND PARTNERS' CAPITAL
Current liabilities
Accounts payable to related parties $ 2,819 $ 3,021
Cash distributions payable 758 568
Other current liabilities 407 378
--------------- -----------------
Total current liabilities 3,984 3,967
Deferred income tax liability 1,249 1,220
--------------- -----------------
Total liabilities 5,233 5,187
--------------- -----------------
Commitments and contingencies
Partners' capital
General partner 613 597
Class A limited partners, no par or assigned value,
7,500 units issued and outstanding 60,657 59,058
--------------- -----------------
Total partners' capital 61,270 59,655
--------------- -----------------
Total liabilities and partners' capital $ 66,503 $ 64,842
=============== =================

- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

22
<PAGE>

ML MACADAMIA ORCHARDS, L.P.
INCOME STATEMENTS
(in thousands, except per unit data)

<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ -------------
<S> <C> <C> <C>
Macadamia nut sales to related party $ 15,950 $ 12,408 $ 12,128
Cost of goods sold
Costs expensed under farming contracts
with related parties 8,217 7,466 7,301
Depreciation and amortization 1,602 1,603 1,604
Other 373 369 602
------------- ------------ -------------
Total cost of goods sold 10,192 9,438 9,507
------------- ------------ -------------
Gross income 5,758 2,970 2,621
General and administrative expenses
Costs expensed under management
contract with related party 662 584 503
Other 515 472 458
------------- ------------ -------------
Operating income 4,581 1,914 1,660
Merger transaction costs - (1,119) -
Interest income 266 244 171
------------- ------------ -------------
Income before tax 4,847 1,039 1,831
Income tax benefit (expense) (202) (76) 13,750
------------- ------------ -------------
Net income $ 4,645 963 15,581
============= ============ =============

- --------------------------------------------------------------------------------------------------------------------------

Net cash flow (as defined in the Partnership Agreement) $ 6,247 $ 2,566 $ 3,435
============= ============ =============
- --------------------------------------------------------------------------------------------------------------------------

Net income per Class A Unit $ 0.61 $ 0.13 $ 2.06
============= ============ =============

Net cash flow per Class A Unit $ 0.82 $ 0.34 $ 0.45
============= ============ =============

Cash distributions per Class A Unit $ 0.40 $ 0.30 $ 0.30
============= ============ =============

Class A Units outstanding 7,500 7,500 7,500
============= ============ =============

- --------------------------------------------------------------------------------------------------------------------------
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

23
<PAGE>

ML MACADAMIA ORCHARDS, L.P.
STATEMENTS OF PARTNERS' CAPITAL
(in thousands)

<TABLE>
<CAPTION>
1999 1998 1997
------------- -------------- -------------
<S> <C> <C> <C>
Partners' capital at beginning of period:
General partners $ 597 $ 610 $ 477
Class A limited partners 59,058 60,355 47,179
------------- -------------- -------------
59,655 60,965 47,656
------------- -------------- -------------

Allocation of net income:
General partners 46 10 156
Class A limited partners 4,599 953 15,426
------------- -------------- -------------
4,645 963 15,582
------------- -------------- -------------

Cash distributions:
General partners 30 23 23
Class A limited partners 3,000 2,250 2,250
------------- -------------- -------------
3,030 2,273 2,273
------------- -------------- -------------

Partners' capital at end of period:
General partners 613 597 610
Class A limited partners 60,657 59,058 60,355
------------- -------------- -------------
$ 61,270 $ 59,655 $ 60,965
============= ============== =============

- -----------------------------------------------------------------------------------------------------------------------
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

24
<PAGE>

ML MACADAMIA ORCHARDS, L.P.
STATEMENT OF CASH FLOWS
(in thousands)

<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Cash received from macadamia nut sales $ 13,698 $ 13,837 $ 12,218
Cash paid under farming and management contracts (9,085) (8,404) (6,746)
Cash paid to other suppliers (1,045) (2,002) (1,030)
Interest received (paid), net 281 244 171
-------- -------- --------
Net cash provided by operating activities 3,849 3,675 4,613
-------- -------- --------

Cash flows from investing activities:
Capital acquisition costs expenditures -- -- (292)
-------- -------- --------
Net cash used in investing activities -- -- (292)
-------- -------- --------

Cash flows from financing activities:
Distributions paid (2,841) (2,272) (2,083)
-------- -------- --------
Net cash used in financing activities (2,841) (2,272) (2,083)
-------- -------- --------

Net increase in cash 1,008 1,403 2,238
Cash at beginning of period 4,317 2,914 676
-------- -------- --------
Cash at end of period $ 5,325 $ 4,317 $ 2,914
======== ======== ========

Reconciliation of net income to net cash
provided by operating activities:
Net income $ 4,645 $ 963 $ 15,581
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization 1,602 1,602 1,604
Deferred income tax expense (credit) 30 (12) (13,750)
(Increase) decrease in accounts receivable (2,252) 1,374 90
Increase in other current assets (3) -- --
Increase (decrease) in accounts payable (202) (660) 1,058
Increase in other liabilities 29 408 30
-------- -------- --------
Total adjustments (796) 2,712 (10,968)
-------- -------- --------
Net cash provided by operating activities $ 3,849 $ 3,675 $ 4,613
======== ======== ========

- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

25
<PAGE>

ML MACADAMIA ORCHARDS, L.P.
NOTES TO FINANCIAL STATEMENTS

(1) OPERATIONS AND OWNERSHIP

ML Macadamia Orchards, L.P. (the "Partnership") owns or leases 4,027 tree acres
of macadamia orchards on the island of Hawaii. Once the nuts are harvested, the
Partnership sells them to another entity, which processes and markets the
finished products.

The Partnership is owned 99% by limited partners and 1% by the managing general
partner, ML Resources, Inc. ("MLR"). MLR is a subsidiary of C. Brewer and
Company, Limited ("CBCL"), whose parent company is Buyco, Inc. ("Buyco"). Prior
to September 8, 1999, ML Resources, Inc. was a subsidiary of Mauna Loa Macadamia
Nut Corporation ("Mauna Loa"), which is a subsidiary of CBCL.

Limited partner interests are represented by Class A Units, which are evidenced
by depositary receipts that trade publicly and are listed on the New York Stock
Exchange. Mauna Loa Orchards, L.P., an affiliate of the general partner, held
30,000 Class A Units at December 31, 1999 and 1998.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) CASH AND CASH EQUIVALENTS. Cash and cash equivalents include unrestricted
demand deposits with banks and all highly liquid deposits with an original
maturity of less than three months. The cash equivalents are not protected by
federal deposit insurance.

(b) FINANCIAL INSTRUMENTS. The fair value of all financial instruments
approximates the carrying value, as the majority of the financial instruments
have fairly short durations until maturity, or the market and risk factors
associated with the instruments have not changed.

(c) FARMING COSTS. In accordance with industry practice in Hawaii, orchard
maintenance and harvesting costs for commercially producing macadamia orchards
are charged against earnings in the year that the costs are incurred.

(d) LAND, ORCHARDS AND EQUIPMENT. Land, orchards and equipment are reported at
cost, net of accumulated depreciation and amortization. Net farming costs for
any "developing" orchards are capitalized on the balance sheet until revenues
from that orchard exceed expenses for that orchard (or nine years after
planting, if earlier).

Depreciation of orchards and other equipment is reported on a straight-line
basis over the estimated useful lives of the assets (40 years for orchards and
between 5 and 12 years for other equipment). A 5% residual value is assumed for
orchards. The macadamia orchards acquired in 1986 situated on leased land are
being amortized on a straight-line basis over the terms of the leases
(approximately 33 years from the inception of the Partnership) with no residual
value assumed. The macadamia orchards acquired in 1989 situated on leased land
are being amortized on a straight-line basis over a 40 year period (the terms of
these leases exceed 40 years) with no residual value assumed. For income tax
reporting, depreciation is calculated under accelerated methods.

26
<PAGE>

(e) INCOME TAXES. The accompanying statements of operations do not include a
provision for corporate income taxes, as the income of the Partnership is not
taxed directly; rather, the Partnership's tax attributes are included in the
individual tax returns of its partners. Neither the Partnership's financial
reporting income nor the cash distributions to unitholders can be used as a
substitute for the detailed tax calculations which the Partnership must
perform annually for its partners.

The Partnership is subject to a gross income tax as a result of its election
to continue to be taxed as a partnership rather than to be taxed as a
corporation, as allowed by the Taxpayer Relief Act of 1997. This tax is
calculated at 3.5% on partnership gross income (net revenues less cost of
goods sold) beginning in 1998. With this election, the deferred tax liability
was reduced in 1997 from $14,982,000 to $1,232,000, creating a deferred tax
credit of $13,750,000.

Deferred tax liabilities are recognized for the future tax consequences
attributable to differences between the projected financial reporting and tax
reporting basis of assets and liabilities.

(f) ESTIMATES. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

(g) NET INCOME PER CLASS A UNIT. Net income per Class A Unit is calculated by
dividing 99% of Partnership net income by the average number of Class A Units
outstanding for the period.

(3) RELATED PARTY TRANSACTIONS

(a) NUT PURCHASE CONTRACTS. The Partnership is a party to four nut purchase
contracts with Mauna Loa. They cover all nuts produced by the orchards
acquired in June 1986, December 1986, October 1989 and September 1991,
respectively. The first two contracts run for 20 years, while the third
contract runs for 30 years and also provides for the exclusion of unusable
nuts from those purchased by Mauna Loa. The first three contracts are
identical in all other material respects. The fourth contract was acquired by
assignment with the purchase of the September 1991 orchard and expires in
2003. The fourth contract is similar to the first three contracts, but the
nut price is calculated on a crop year (July 1 through June 30) rather than
calendar year basis, which results in a slightly different nut price. All
four contracts use a pricing formula based 50% on a two-year trailing average
of the macadamia nut price published annually by the U.S. Department of
Agriculture and 50% on Mauna Loa's "netback component". The netback component
is calculated by subtracting Mauna Loa's processing and marketing costs per
pound and a "capital charge" of 20% from its nut revenues per pound. The nut
price paid to the Partnership under the first three nut purchase contracts
was $0.5964 for 1997, $0.6369 for 1998 and $0.6230 for 1999. The average nut
price paid to the Partnership under the fourth nut price contract was $0.6422
for 1997, $0.6796 for 1998 and $0.6682 for 1999.

(b) FARMING CONTRACTS. The Partnership is a party to four farming contracts
with two subsidiaries of CBCL, Ka'u Agribusiness Company, Inc. ("KACI") and
Mauna Kea Agribusiness Company, Inc. ("MKACI"), that together cover all
farming, harvesting and husking activities for the orchards acquired in June
1986, December 1986, October 1989 and September 1991, respectively. The first
two contracts run for 20 years, the third contract runs for 30 years

27
<PAGE>

and the fourth contract, acquired with the purchase of the September 1991
orchard, expires in 2006.

The contracts provide KACI and MKACI with reimbursement of their direct and
indirect costs incurred under these contracts. The reimbursements paid to the
two farm managers were $6.8 million for 1997, $6.9 million for 1998, and $7.4
million for 1999. Husking activities for the Keaau and Mauna Kea orchards are
performed at Mauna Loa's Keaau facility. Reimbursements made to Mauna Loa
were $361,000 in 1997 and $489,000 in 1998. In 1999, KACI contracted to
operate this facility, and reimbursement to KACI in 1999 was $595,000.

Each of the farming contracts was amended effective January 1, 1998 to
provide farming fees equal to two and one-half percent of the Partnership's
gross profits from farming operations (previously three percent for the first
three farming contracts and none for the fourth contract). The two farm
managers earned farming fees of $113,000 in 1997, $121,000 in 1998 and
$195,000 in 1999.

(c) MANAGEMENT COSTS AND FEE. The Partnership Agreement provides the
managing general partner reimbursement of administrative costs (which consist
primarily of compensation costs, board of directors fees, insurance costs and
office expenses) incurred under the agreement as well as a management fee
equal to two percent of the Partnership's operating cash flow (as defined).
Those reimbursable costs totaled $428,000 in 1997, $528,000 in 1998 and
$525,000 in 1999. The managing general partner earned a management fee of
$75,000 in 1997, $57,000 in 1998 and $137,000 in 1999.

In addition to a management fee, the managing general partner is entitled,
under the existing Partnership Agreement, to receive an annual incentive fee
equal to 0.5% of the aggregate fair market value (as defined) of the Class A
Units for the preceding calendar year provided that net cash flow (as
defined) for the preceding calendar year exceeds specified levels. No
incentive fee was earned in 1997, 1998 or 1999.

(d) STABILIZATION PAYMENTS. In December 1986, the Partnership acquired a 266
acre orchard that was several years younger than its other orchards. Because
of the relative immaturity of the newer orchard, its productivity (and
therefore its cash flow) was expected to be correspondingly lower for the
first several years than for the other older orchards.

The Partnership accounted for stabilization payments (net of general excise
tax) as a reduction in the cost basis of this orchard. As a result, the
payments will be reflected in the Partnership's net income ratably through
2019 as a reduction to amortization for this orchard.

In return, the Partnership is obligated to pay KACI 100% of any year's cash
flow from this orchard in excess of the target cash flow as additional
percentage rent until the aggregate amount of additional percentage rent
equals 150% of the total amount of stabilization payments previously
received. Thereafter, the Partnership is obligated to pay KACI 50% of this
orchard's cash flow in excess of the target cash flow as additional incentive
rent. Such additional percentage rent totaled $297,000 in 1997. No additional
rent was due in 1998 or 1999.

<PAGE>

(e) CASH FLOW WARRANTY PAYMENTS. In October 1989, the Partnership acquired 1,040
acres of orchards that were several years younger on average than the
Partnership's other orchards. Their productivity (and therefore their cash flow)
was expected to be lower for the first several years than for the Partnership's
older orchards.

Accordingly, the sellers of these orchards (affiliates of Mauna Loa) agreed to
make cash flow warranty payments to the Partnership for each year through 1994
in which the cash flow (as defined) from these orchards fell short of a cash
flow target level. Warranty payments for any year were limited to the lesser of
the amount of the shortfall or a maximum payment amount.

The Partnership accounted for cash flow warranty payments as reductions in
the cost basis of the orchards. As a result, these payments will be reflected
in the Partnership's net income ratably through 2030 as reductions to
depreciation for these orchards.

(4) CASH FLOW PERFORMANCE

Cash flow performance (based on definitions used in the Partnership
Agreement) for the past three years is shown below (000's):

<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Gross revenues $ 16,217 $ 12,652 $ 12,300
Less:
Farming costs 8,396 7,714 7,790
Administrative costs 1,242 2,194 886
------------ ------------ ------------
Operating cash flow 6,579 2,744 3,624
Less:
Farming fee 195 121 113
Management fee 137 57 76
------------ ------------ ------------
Net cash flow $ 6,247 $ 2,566 $ 3,435
============ ============ ============
</TABLE>

(5) LAND, ORCHARDS AND EQUIPMENT

Land, orchards and equipment, stated at cost, consisted of the following at
December 31, 1999 and 1998 (000's):

<TABLE>
<CAPTION>
1999 1998
-------- ---------
<S> <C> <C>
Land $ 8,168 $ 8,168
Producing orchards 64,711 64,711
Other 335 335
--------- ---------
Land, orchards and equipment (gross) 73,214 73,214
Less accumulated depreciation
and amortization 19,726 18,124
-------- ---------
Land, orchards and equipment (net) $ 53,488 $ 55,090
======== =========
</TABLE>

29
<PAGE>

(6) SHORT-TERM AND LONG-TERM CREDIT
The Partnership had a $4.0 million revolving line of credit at December 31, 1997
for working capital purposes. The line was extended for one year on June 1,
1998, again on June 1, 1999 and may be extended for additional one-year
intervals upon the payment of extension fees. Annual extension fees paid were
$8,000 in June 1997, $5,000 in June 1998 and $5,000 in June 1999. A commitment
fee of 3/8 of one percent of the unused portion is required and borrowings are
charged interest at either the bank's "base rate" or at the one, two or three
month "LIBOR" rate (plus 175 to 200 basis points) at the Partnership's option.
The line of credit currently requires minimum net cash flow (as defined in the
Partnership Agreement) of $1.6 million per year and minimum net worth levels
(before non-cash adjustments due to implementation of FAS No. 109) of $40
million. In addition, the line of credit requires a "clean-up" period of at
least thirty consecutive days during each year.

There were no drawings outstanding at December 31, 1999. No amounts were
borrowed during 1997, 1998 or 1999.

(7) INCOME TAXES

The components of income tax expense for the years ended December 31, 1999
and 1998 were as follows (000's):

<TABLE>
<CAPTION>
1999 1998
--------- ----------
<S> <C> <C>
Currently payable $ 172 $ 88
Deferred 30 (12)
--------- ----------
$ 202 $ 76
========= ==========
</TABLE>

The reconciliation of the total provision for income taxes by applying the 3.5%
federal tax rate to gross income for the years ended December 31, 1999 and 1998
is as follows (000's):

<TABLE>
<CAPTION>
1999 1998
--------- ----------
<S> <C> <C>
Income tax provision at statutory rate $ 202 $ 104
Other - (28)
--------- -----------
$ 202 $ 76
========= ===========
</TABLE>

The components of the net deferred tax liability reported on the
balance sheet as of December 31, 1999 and 1998 are as follows (000's):

<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Deferred tax liabilities:
Financial statement bases of land, orchards,
inventory and equipment is greater than tax bases $ 686 $ 670
Excess of tax depreciation over
Financial statement depreciation 563 550
---------- ----------
$ 1,249 $ 1,220
========== ==========
</TABLE>

<PAGE>

(8) LEASES

The Partnership leases the land underlying 1,806 acres of its orchards under
long-term operating leases. Future minimum lease payments under non-cancelable
leases (exclusive of renewal options) as of December 31, 1999 were as follows
(000's):

<TABLE>
<S> <C>
2000 $ 116
2001 116
2002 116
2003 116
2004 116
Later Years 2,834
------------
$ 3,414
============
</TABLE>

Each of the above leases also provides for additional lease payments based on
USDA-reported macadamia nut price levels. Those contingent lease payments
totaled $62,000 in 1997, $55,000 in 1998 and $39,000 in 1999. Total lease
rent for all operating leases was $487,000 in 1997, $171,000 in 1998 and
$152,000 in 1999.

(9) MERGER PROPOSAL

In December 1997, the Partnership entered into a merger agreement with C.
Brewer Homes, Inc. ("Homes"). The Partnership filed with the Securities and
Exchange Commission on February 13, 1998, a registration statement in
connection with this merger. On June 26, 1998, a special meeting of the
Partnership's unitholders was held for the purpose of voting on the Merger
Proposal. The Merger Proposal was not approved, and all costs related to the
merger were expensed in the quarter ending June 30, 1998.

(10) QUARTERLY OPERATING RESULTS (UNAUDITED)

The following chart summarizes unaudited quarterly operating results for
the years ended December 31, 1999 and 1998 (000's, except per unit data):

<TABLE>
<CAPTION>
Net Gross Income Net Income Net Income (Loss)
Sales (Loss) (Loss) per Class A Unit
------------- ---------------- ------------ -----------------
<S> <C> <C> <C> <C>
1999
1st Quarter $ 3,447 $ 868 $ 541 $ 0.07
2nd Quarter 614 140 16 -
3rd Quarter 4,253 634 467 0.06
4th Quarter 7,637 4,116 3,621 0.48

1998
1st Quarter $ 3,455 $ 958 $ 669 $ 0.09
2nd Quarter 93 (32) (1,227) (0.16)
3rd Quarter 3,480 545 329 0.04
4th Quarter 5,379 1,498 1,192 0.16
</TABLE>

<PAGE>

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

The Partnership presently has no officers or directors. Instead, the officers
and directors of the Managing Partner perform all management functions for the
Partnership. Each director of the Managing Partner is elected for a term of one
year and until his successor is duly elected and qualified. Each officer of the
Managing Partner is elected by the Board of Directors of the Managing Partner
and is subject to removal by that board at any time.

A. IDENTIFICATION OF DIRECTORS

JAMES S. ANDRASICK. 55 years old; director of Managing Partner since
1986; chairman and chief executive officer of Mauna Loa; president of
CBCL since September 1992.

JOHN W. A. BUYERS. 71 years old; chairman since 1989 and director of
Managing Partner since 1986; director of Mauna Loa since August 1992;
chairman and chief executive officer of CBCL; chairman and president of Buyco.

JAMES H. CASE. 79 years old; director and member of Conflicts Committee of
Managing Partner since 1986; senior partner of the law firm of Carlsmith
Ball; not an employee, officer, or director of any CBCL affiliate other than
the Managing Partner.

RALPH C. HOOK, JR. 76 years old; director and member of Conflicts
Committee of Managing Partner since 1986; not an employee, officer, or
director of any CBCL affiliate other than the Managing Partner.

KENT T. LUCIEN. 46 years old; president and director of Managing
Partner since September 1995; vice president of Mauna Loa; executive
vice president and chief financial officer of CBCL.

B. IDENTIFICATION OF EXECUTIVE OFFICERS OF THE MANAGING PARTNER

JOHN W. A. BUYERS. 71 years old; chairman and chief executive officer of
Managing Partner since 1989.

KENT T. LUCIEN. 46 years old; president of Managing Partner since September
1995.

GREGORY A. SPRECHER. 52 years old; senior vice president and chief
financial officer of Managing Partner since June 1997; not otherwise an
employee, officer, or director of any CBCL affiliate.

C. IDENTIFICATION OF CERTAIN SIGNIFICANT EMPLOYEES

Not applicable

D. FAMILY RELATIONSHIPS

Not applicable

<PAGE>

E. BUSINESS EXPERIENCE OF CURRENT DIRECTORS AND EXECUTIVE OFFICERS

CURRENT DIRECTORS OF THE MANAGING PARTNER.

JAMES S. ANDRASICK. Mr. Andrasick was promoted to president and chief
operating officer of CBCL in September 1992, and is one of its directors.
From 1989 until September 1992, he was executive vice president in charge of
the sugar, distribution and Central America operations. From 1983 to 1988 he
served as executive vice president, finance and administration and chief
financial officer with responsibilities for finance and administration as
well as spice and guava operations. He joined CBCL in 1978 as vice president
of planning and controller after serving three years on the IU International
Corporation corporate development staff. In 1980 he became senior vice
president and chief financial officer of CBCL. Previously, he had been
employed by the Ford Motor Company at its world headquarters and product
development groups in various supervisory positions in finance. Mr. Andrasick
received his bachelor's degree with honors from the U.S. Coast Guard Academy
and his master's degree from the Massachusetts Institute of Technology. Mr.
Andrasick is a trustee of the U.S. Coast Guard Foundation, a director and
former chairman of the American Red Cross, Hawaii State Chapter, and past
chairman of the board of governors of the University of Hawaii Foundation and
the Hawaii Employers Council. He resides in Honolulu, Hawaii.

JOHN W. A. BUYERS. Mr. Buyers was elected chairman of the Managing Partner in
1988 and has been chairman of ML Resources since July 1992. He has been
chairman of the board and chief executive officer of CBCL since 1992. From
1982 to 1992, he was chairman and president of CBCL and chairman and
president of Buyco since 1986. From 1975 to 1982, he was president and chief
executive officer of CBCL. From 1971 to 1975, Mr. Buyers was president and
chief executive officer of General Waterworks Company in Philadelphia,
Pennsylvania. After service in the U.S. Marine Corps, Mr. Buyers graduated
CUM LAUDE from Princeton University in 1952 and later received an M.A. in
Industrial Management from the Massachusetts Institute of Technology as a
Sloan Fellow. He is also a director of First Hawaiian Bank and BancWest,
Inc., and John B. Sanfilippo & Sons, Inc., Elk Grove Village, Illinois. He is
a member of the U.S. Chamber of Commerce Committee on Food and Agriculture in
Washington, D.C., and was vice chair of the Hawaii Island Economic
Development Board this past year. He resides in Hakalau, Hawaii.

JAMES H. CASE. Mr. Case is senior partner in the Hawaii law firm of Carlsmith
Ball. Mr. Case graduated with an A.B. from Williams College and received a
J.D. from Harvard Law School. He became associated with the Carlsmith law
firm in 1951 and became a partner in 1959. He has served on the boards of
directors of Hamakua Sugar Company, Inc., Paauilo, Hawaii, InterIsland
Resorts, Ltd., Honolulu, Hawaii, Pacific Club, Honolulu, Hawaii, Central
Union Church, Honolulu, Hawaii, Hanahauoli School, Honolulu, Hawaii, and
Arcadia Retirement Residence, Honolulu, Hawaii. He resides in Honolulu,
Hawaii.

RALPH C. HOOK, JR. Dr. Hook is co-director of the Family Business Center of
Hawaii, which is part of the College of Business Administration at the
University of Hawaii. He joined the faculty of the University of Hawaii in
1968 as Dean of the College of Business Administration. In 1974, he returned
to teaching as Professor of Marketing in the College of Business
Administration. He became a Professor Emeritus of Marketing in June 1995. Dr.
Hook received a bachelor's and master's degrees from the University of
Missouri at Columbia and a Ph.D. in Marketing from the

<PAGE>

University of Texas at Austin. He has been a member of the board of Hook
Brothers Corporation since 1983. He resides in Honolulu, Hawaii.

KENT T. LUCIEN. Mr. Lucien currently serves as president of the Managing
Partner and has been executive vice president and the chief financial officer
of CBCL since 1991. Previously he served as a vice president and as an
executive vice president of the Managing Partner. He joined CBCL as a senior
analyst in 1980. Mr. Lucien is an honors graduate of Occidental College and
received an M.B.A. from Stanford University. He resides in Honolulu, Hawaii.

EXECUTIVE OFFICERS WHO DO NOT SERVE AS DIRECTORS.

GREGORY A. SPRECHER. Mr. Sprecher has served as senior vice president and
chief financial officer of the Managing Partner since June 1997. From 1974 to
1990 Mr. Sprecher served as treasurer and controller for Young Laundry & Dry
Cleaning, in Honolulu. He served as Young's chief financial officer and
treasurer from 1990 to 1994. In 1994, the company was sold to American Linen,
and Mr. Sprecher served there as project manager until 1995. Mr. Sprecher has
a B.S. in Finance from California State College at Long Beach. He resides in
Honolulu, Hawaii.

F. SECTION 16 DISCLOSURE

Under Section 16 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), each director and certain officers of ML Resources, Inc.,
the managing general partner of Registrant (a "Reporting Person"), are
required to report their ownership and changes in ownership of Class A
Depositary Units to the Securities and Exchange commission, the New York
Stock Exchange and Registrant. Based on reporting forms submitted to
Registrant, no Reporting Person has failed to file on a timely basis reports
required by Section 16(a) of the Exchange Act during 1999.

<PAGE>

ITEM 11. EXECUTIVE COMPENSATION

A. SUMMARY COMPENSATION TABLE

The Partnership is managed by the Managing Partner. Compensation paid by the
Managing Partner to its chief executive officer and other executive officers
is reimbursed by the Partnership, as provided in Section 4.5 of the
Partnership Agreement. The following table reflects the aggregate
compensation for services in all capacities paid by the Managing Partner to
its executive officers for the years ended December 31, 1999, 1998 and 1997.
There were no long- term compensation awards or payouts during those years.

NAME AND PRINCIPAL POSITION ANNUAL COMPENSATION
--------------------------- -------------------
YEAR SALARY BONUS OTHER
---- ------ ----- -----
<S> <C> <C> <C> <C>
John W. A. Buyers, 1999 $ - $ - $15,000
chief executive officer 1998 - - 11,700
1997 - - 9,600

Gregory A. Sprecher 1999 100,000 15,000 -
chief financial officer 1998 100,000 16,500 -
1997 58,333 - -
</TABLE>

B. NO OPTION, SAR, LONG-TERM INCENTIVE OR PENSION PLANS.

The Managing Partner does not presently have an option plan, SAR plan, or
long-term incentive plan. The present executive officers of the Managing
Partner are included in the pension plan and other benefits plans of its
parent company, CBCL. As such, the Managing Partner is not responsible for
making any payments on the retirement of any of its present executive
officers.

C. NO EMPLOYMENT CONTRACTS OR TERMINATION AGREEMENTS

The Managing Partner does not have any employment or severance agreements
with any of its present executive officers.

D. COMPENSATION OF EXECUTIVE OFFICERS

The Managing Partner does not have a compensation committee since the chief
executive officer of the Managing Partner is not compensated for serving in
that position. The only executive officer of the Managing Partner employed by
it is Mr. Sprecher, who has served as its chief financial officer since June
1997. Mr. Sprecher's salary and guideline bonus percentage are administered
under the salary policies of CBCL. Any bonus payments are approved by the
Managing Partner's Board of Directors annually, based on the overall
performance of the Partnership (as evidenced by its net income for the year)
and on general and administrative cost control performance. Performance in
both categories is measured relative to the original Partnership operating
budget approved by the Managing Partner's Board of Directors at the beginning
of each year.

<PAGE>

E. DIRECTOR COMPENSATION

Directors of the Managing Partner presently receive a quarterly retainer of
$3,000 and a meeting fee of $750 per meeting. Members of the Managing
Partner's conflicts committee receive a meeting fee of $750 per meeting.
There are no other agreements or arrangements between the Managing Partner
and its directors.

F. STOCK PERFORMANCE CHART

The following chart compares the Partnership's total return to (i) the
Russell 2000 (a small business index) and (ii) a peer group index composed of
publicly traded limited partnerships with either similar capitalization or in
commodity based markets (other than gas and oil) or both.

[GRAPH]

CUMULATIVE TOTAL RETURN
BASED UPON AN INITIAL INVESTMENT OF $100 ON DECEMBER 31, 1994
WITH DIVIDENDS REINVESTED

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
DEC-94 DEC-95 DEC-96 DEC-97 DEC-98 DEC-99
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ML MACADAMIA ORCHARDS-LP $100 $108 $157 $181 $173 $227
RUSSELL 2000 $100 $128 $150 $183 $178 $216
CUSTOM COMPOSITE INDEX
(7 STOCKS) $100 $114 $121 $150 $134 $114
- -------------------------------------------------------------------------------------
</TABLE>

<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

As of December 31, 1999, and subsequent to that date to the date of this
report, (i) no person (including any "group" as that term is used in Section
13(d)(3) of the Securities Exchange Act of 1934) is known by the Partnership
or the Managing Partner to be the beneficial owner of more than 5% of the
Class A Units; (ii) the Managing Partner did not own any Class A Units; and
(iii) no director or executive officer of the Managing Partner owned more
than 1% of the Class A Units.

The table below sets forth certain information as to the Class A Units
beneficially owned by the directors of the Managing Partner, and all
directors and executive officers of the Managing Partner as a group, as of
December 31, 1998.

<TABLE>
<CAPTION>
PERCENT
CLASS A OF
NAME OF UNITS CLASS A
BENEFICIAL OWNER OWNED UNITS
---------------- ----- -----
<S> <C> <C>
James S. Andrasick - *
John W.A. Buyers 4,176 *
James H. Case (1) 8,000 *
Ralph C. Hook (2) 4,000 *
Kent T. Lucien 7,500 *
Gregory A. Sprecher 5,000 *
All directors and executive officers 28,676 0.4%
as a group (6 persons)
</TABLE>
- ------------------
* Less than 1%

(1) Beneficially owned by James H. Case pursuant to a self-directed
retirement plan sponsored by Carlsmith Ball, a law firm in which Mr. Case
is a partner, and administered by Pacific Century Trust.
(2) Beneficially owned by Ralph C. Hook pursuant to the Ralph C. Hook
Revocable Living Trust dated March 1, 1993.

In addition, Mauna Loa Orchards L.P. ("MLO"), a limited partnership whose
partners are CBCL and certain direct or indirect wholly-owned subsidiaries of
CBCL, owns 30,000 Class A Units.

<PAGE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

1. GENERAL

The Managing Partner makes all decisions relating to the management of the
Partnership. The Managing Partner, as such, has the duty to act in good faith
and to manage the Partnership in a manner that is fair and reasonable to all
unitholders. CBCL owns all of the capital stock of the Managing Partner.
Certain officers and directors of CBCL and/or its affiliates also act as
officers and directors of the Managing Partner and certain directors of the
Managing Partner are substantial shareholders of Buyco, Inc., the parent
company of CBCL. Disputes that might otherwise develop between the Managing
Partner and CBCL or its affiliates may not develop because the parties
representing the entities are identical. As a result of these relationships,
certain conflicts of interest could arise with respect the administration of
and allocation of costs under the Partnership Agreement and in situations
described below, among others.

A committee of the Managing Partner's Board of Directors composed of two
persons who are independent of CBCL and its affiliates (the "Conflicts
Committee") reviews, on an annual basis, or more frequently as such committee
may deem appropriate, the Managing Partner's management of the Partnership
and any conflicts of interest that may have arisen or may arise as a result
of the relationships among CBCL and its affiliates, the Managing Partner and
the Partnership. The Partnership Agreement states that, except for one
initial member of the Conflicts Committee, no member of the Conflicts
Committee may be an officer, director, employee or shareholder of the
Managing Partner, Mauna Loa or any of their affiliates. The Conflicts
Committee presently consists of two individuals who are not affiliated with
CBCL.

2. FARMING LEASES.

At the time of the Partnership's acquisition of the interests in the October
1989 Orchards, MLO assigned to the Partnership all of MLO's rights and
obligations under three 45-year farming leases relating to 327 tree acres of
the Ka'u II Orchards and all of the Mauna Kea Orchards. The farming leases
permit the Partnership to conduct macadamia nut farming operations on such
macadamia orchard properties. The farming leases provide for fixed minimum
annual lease payments to be paid to either KACI or MKACI (collectively, the
"Agribusiness Companies"), as the case may be. Such annual rental payments
are subject to increase after ten years, twenty years and thirty years based
on then current fair market lease rates. The then current fair market lease
rate will be determined by mutual agreement between the Partnership, on the
one hand, and either KACI or MKACI, as the case may be, on the other hand. If
mutual agreement cannot be reached, the then current fair market lease rate
will be determined by appraisal. Whether determined by mutual agreement or by
appraisal, the then current fair market lease rate will be determined as a
fair market lease rate for use of such premises as macadamia orchards.

The Partnership acquired its interests in the trees situated on such leased
macadamia orchard properties subject to repurchase options retained by the
Agribusiness Companies. The repurchase options grant the Agribusiness
Companies the continuing right to repurchase all or any portion of such trees
after June 30, 2019 at a price equal to the then current fair market value of
the trees, according to their value as producing macadamia nut trees, as
determined by mutual agreement between the Partnership, on the one hand, and
either KACI or MKACI, as the case

<PAGE>

may be, on the other hand. If mutual agreement cannot be reached, the then
current fair market value will be determined by appraisal. Whether determined
by mutual agreement or by appraisal, the fair market value of such trees will
be determined according to their value as producing macadamia nut trees,
assuming that the owner thereof has rights to farm and harvest such trees and
has ongoing arrangements with respect to land leases, farming and nut
purchases of the same type as the Partnership has immediately prior to such
time.

At the end of the 45-year lease terms of such leases, the Agribusiness
Companies will be required to repurchase such trees at their then current
fair market value as orchards if such entities do not offer to extend such
farming leases at the then current fair market lease rates. The then current
fair market lease rate and the then current market value of the trees for
such purposes will be determined through mutual agreement between the
Partnership, on the one hand, and either KACI or MKACI, as the case may be,
on the other hand or, if mutual agreement cannot be obtained, by appraisal,
in each case in the manner described above. Such repurchase obligations will
apply with respect to the expiration of each extension of the lease terms of
such leases until such leases have been in effect for a total of 99 years, at
which time the leases will expire and the ownership interests in such trees
will revert back to the Agribusiness Companies.

In the event that the Partnership decides not to accept an offer to extend
the leases at the then current fair lease rates upon the expiration of the
leases or any extension thereof (or does not assign the leases to a third
party who elects to accept such offer), the leases will expire, the
Agribusiness Companies will not be required to repurchase the trees covered
thereby and ownership of such trees will revert back to the Agribusiness
Companies (and in any event ownership of such trees will revert back to the
Agribusiness Companies after 99 years). As the Managing Partner and the
Agribusiness Companies are each direct wholly owned subsidiaries of CBCL, a
decision to renew the farming leases will involve the Managing Partner in a
conflict of interest.

As described above, the farming leases provide for determinations of the fair
market lease rate to be paid by the Partnership under the farming leases and
the fair market value of the Partnership's trees situated on property covered
by such leases by mutual agreement between the Partnership, on the one hand,
and with KACI or MKACI, as the case may be, on the other hand, or, if mutual
agreement cannot be reached, by appraisal. As any determination by the
Partnership with respect to any such mutual agreement will be made by the
Managing Partner and as the Managing Partner and the Agribusiness Companies
are each direct wholly owned subsidiaries of CBCL, such determination on
behalf of the Partnership will involve the Managing Partner in a conflict of
interest. Accordingly, the Conflicts Committee of the Board of Directors of
the Managing Partner will review any such determinations made by mutual
agreement.

3. NUT PURCHASE CONTRACTS AND FARMING CONTRACTS.

Mauna Loa purchases from the Partnership all of the macadamia nut production
from the orchards acquired in 1986 pursuant to the 1986 nut purchase
contracts, all of the macadamia nut production from the orchards acquired in
1989 (excluding "unusable nuts") under the 1989 nut purchase contract and all
of the macadamia nut production from the Lot 10 orchard under the Lot 10 nut
purchase contract. In addition, KACI farms the orchards acquired in 1986 for
the Partnership pursuant to the 1986 orchards farming contracts and, along
with MKACI, farms the

<PAGE>

orchards acquired in 1989 for the Partnership pursuant to the 1989 farming
contract. KACI also farms the Lot 10 Orchard for the Partnership pursuant to
the Lot 10 farming contract. Various conflicts of interest exist or may arise
with respect to the Partnership's sale and Mauna Loa's purchase of nuts under
the nut purchase contracts, the allocation of costs reimbursed by the
Partnership under the farming contracts for purposes of determining the
netback component of the purchase price for nuts under the nut purchase
contracts and the allocation of personnel and resources with respect to
services provided by KACI and MKACI under the farming contracts. For example,
the purchase price under the nut purchase contracts will depend on Mauna
Loa's processing, packaging, marketing, sales and advertising expenses and
nonagricultural overhead costs, all of which are controlled and allocated by
Mauna Loa. Mauna Loa also has complete control over the identification and
weighing of nuts at its processing plants.

Under the terms of the farming contracts, KACI and MKACI are required to
provide certain reports to the Partnership, including an annual report
describing in reasonable detail the conduct of farming and harvesting
operations at the orchards, and they also are required to provide a
statement, certified by its independent accountants, which reflects its
allocation of direct costs and overhead for the relevant year. The reports
submitted to the Managing Partner are reviewed by the Conflicts Committee.
The Managing Partner has the right to object to the information set forth in
such annual reports relating to the calculation of the nut purchase price
and/or farming costs and to engage a certified public accounting firm of its
own selection to verify and confirm such information. The Managing Partner on
behalf of the Partnership has the right to assert claims against Mauna Loa
based on such independent review, and, if any such review and assertion
results in an adjustment favorable to the Partnership in the nut purchase
price or farming cost figures by an amount in excess of 5% of the amount
initially calculated by Mauna Loa, Mauna Loa will be required to reimburse
the Partnership for the expenses incurred in engaging the accounting firm and
asserting such claims. Cost reimbursements under the farming contracts
totaled $6.8 million in 1997, $6.9 million in 1998 and $7.4 million for 1999.
Farming fees totaled $113,000 in 1997, $121,000 in 1998 and $195,000 in 1999.

4. MANAGEMENT FEE.

Under the terms of the Partnership Agreement, the Partnership reimburses the
Managing Partner for all expenses incurred by it in the conduct of
Partnership business, including any expenses reasonably allocated to the
Managing Partner or to the Partnership as well as a management fee equal to
2% of the Partnership's operating cash flow (as defined in the Partnership
Agreement). Certain conflicts may arise in connection with the allocation of
such expenses among the Managing Partner, the Partnership, CBCL and its
affiliates. Management cost reimbursements under the Partnership Agreement
were $428,000 in 1997, $528,000 in 1998 and $525,000 in 1999. The management
fee was $75,000 in 1997, $57,000 in 1998 and $137,000 in 1999.

5. RELATIONSHIPS WITH CBCL.

Since the Partnership began operations in June 1986, the Partnership has
purchased substantially all of its fertilizer and certain transportation
services from subsidiaries of CBCL. Transportation services purchased consist
of transportation of raw nuts from the orchards in the Mauna Kea and Ka'u
areas to the processing plant. For 1999, 1998 and 1997, fertilizer,
herbicide, pesticide and transportation services purchased by the Partnership
from CBCL subsidiaries totaled $0.4

<PAGE>

million, $0.6 million and $0.8 million, respectively. It is expected that the
Partnership will continue to purchase its fertilizer and transportation needs
from CBCL subsidiaries as long as, and to the extent that, such purchases can
be made on a basis at least as favorable as that available from third
parties. The Partnership Agreement requires that the price and terms of any
such transactions be no less favorable than those available in comparable
transactions between unrelated parties.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

A. LIST OF DOCUMENTS FILED AS A PART OF THIS REPORT.

1. FINANCIAL STATEMENTS. See Index to Financial Statements at page 20
of this Form 10-K.

2. FINANCIAL STATEMENT SCHEDULES. None required.

3. EXHIBITS. See Exhibit Index at page 43 of this Form 10-K.

B. REPORTS ON FORM 8-K.

No reports on Form 8-K were filed during the last quarter of 1999.

<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

ML MACADAMIA ORCHARDS, L.P.
(Registrant)

By: ML RESOURCES, INC.
(Managing General Partner)

DATED: MARCH 3, 2000 By: /s/ J. W. A. BUYERS
------------------------ --------------------------
J. W. A. Buyers
Chairman of the Board and
Principal Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been executed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

ML RESOURCES, INC.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ J. W. A. BUYERS Chairman of the Board MARCH 3, 2000
------------------------------------- (Principal Executive Officer), -------------
J. W. A. Buyers Director

/s/ KENT T. LUCIEN President, Director MARCH 3, 2000
------------------------------------- -------------
Kent T. Lucien

/s/ GREGORY A. SPRECHER Senior Vice President MARCH 3, 2000
------------------------------------- (Principal Financial Officer -------------
Gregory A. Sprecher and Principal Accounting Officer)

/s/ JAMES S. ANDRASICK Director MARCH 3, 2000
------------------------------------- -------------
James S. Andrasick

/s/ JAMES H. CASE Director MARCH 3, 2000
------------------------------------- -------------
James H. Case

/s/ DR. RALPH C. HOOK, JR. Director MARCH 3, 2000
------------------------------------- -------------
Dr. Ralph C. Hook, Jr.
</TABLE>

42
<PAGE>

EXHIBIT INDEX
<TABLE>
<CAPTION>

EXHIBIT
NUMBER DESCRIPTION
- ----------- -----------
<S> <C>
2.1 Amended and Restated Agreement and Plan of Merger, effective as of
December 18, 1997, between Registrant and C. Brewer Homes, Inc. (a)

3.1 Agreement of Limited Partnership of Registrant. (b)

3.2 Form of Class A Certificate of Limited Partnership as filed with
the Secretary of State of Delaware. (c)

3.3 Certificate of Limited Partnership of Registrant as filed with the
Secretary of State of Delaware. (c)

4.1 Depositary Agreement between Registrant, Manufacturers Hanover Trust
Company as Depositary and Mauna Loa Resources Inc. as
attorney-in-fact of the limited partners of Registrant. (c)

4.2 Form of Depositary Receipt. (c)

10.1 Macadamia Nut Purchase Contract between Mauna Loa Macadamia Nut
Corporation ("Mauna Loa") and Registrant dated June 12, 1986. (b)

10.2 Macadamia Nut Purchase Contract between Mauna Loa and Registrant
dated December 22, 1986. (b)

10.3 Macadamia Nut Purchase Contract between Mauna Loa and Registrant
dated as of October 1, 1989. (b)

10.4 Contribution Agreement among Mauna Loa Orchards, L.P. ("MLO"), Ka'u
Agribusiness Co., Inc. ("KACI"), Mauna Kea Agribusiness Co., Inc.
("MKACI"), Mauna Kea Macadamia Orchards, Inc. ("MKMO") and Mauna
Loa dated as of July 1, 1989. (b)

10.5 Lease between the Trustees of the Estate of Bernice Pauahi Bishop
("Trustees of the Bishop Estate") and Mauna Loa. (c)

10.6 Lease between KACI and Registrant. (d)

10.7 MLO/MLMO Conveyance Agreement between MLO and Registrant dated as
of October 1, 1989. (b)

10.8 Butcher/MLMO Contribution Agreement between Howard Butcher III
("Butcher") and Registrant dated as of October 1, 1989. (b)

10.9 Farming Lease between KACI and MLO dated as of July 1, 1989. (b)

10.10 Farming Lease between MKACI and MKMO dated as of July 1, 1989. (b)
</TABLE>

<PAGE>

EXHIBIT
NUMBER DESCRIPTION
- ----------- -----------
<S> <C>

10.11 Farming Lease between MKACI and MLO dated as of July 1, 1989. (b)

10.12 Water Agreement, as amended, between KACI and Registrant dated as
of October 1, 1989. (b)

10.13 Cash Flow Warranty Agreement among KACI, MKACI and Registrant dated
as of July 1, 1989. (b)

10.14 Guarantee Agreement between Mauna Loa and Registrant dated as of
October 1, 1989. (b)

10.15 Agreement of Indemnification between CBCL and each director of the
Managing Partner. (b)

10.16 Indemnification Agreement (Title) among Mauna Loa, KACI and MKACI
in favor of Registrant. (b)

10.17 Indemnification Agreement (Subdivision) among Mauna Loa, KACI and
MKACI in favor of Registrant. (b)

10.18 Deed between MLO and Registrant relating to 14% undivided interest
in 220 tree acres of macadamia orchard properties located in the
Keaau area of the island of Hawaii ("Keaau II Orchards"). (b)

10.19 Bill of Sale between MLO and Registrant relating to 14% undivided
interest in Keaau II Orchards. (b)

10.20 Deed between Butcher and Registrant relating to 86% undivided
interest in Keaau II Orchards. (b)

10.21 Bill of Sale between Butcher and Registrant relating to 86%
undivided interest in Keaau II Orchards. (b)

10.22 Assignment of Partial Interest in Lease No. 15,020 and consent
from MLO to Registrant. (b)

10.23 Assignment of Partial Interest in Lease No. 16,859 and consent
from MLO to Registrant. (b)

10.24 Assignment of Partial Interest in Lease No. 20,397 and consent
from MLO to Registrant. (b)

10.25 Assignment of Lease from MLO to Registrant relating to Lease from
the Trustees of the Bishop Estate. (b)

10.26 Assignment from MLO to Registrant relating to certain orchards. (b)

</TABLE>

<PAGE>

EXHIBIT
NUMBER DESCRIPTION
- ----------- -----------
<S> <C>
10.27 Lease from the Trustees of the Bishop Estate to MLO. (b)

10.28 Lease No. 15,020 from the Trustees of the Bishop Estate to MLO. (b)

10.29 Form of Amendments to Lease No. 15,020 from the Trustees of the
Bishop Estate. (b)

10.30 Lease No. 16,859 from the Trustees of the Bishop Estate to the
Hawaiian Agricultural Company (a predecessor of KACI). (b)

10.31 Form of Amendments to Lease No. 16,859 from the Trustees of the
Bishop Estate. (b)

10.32 Lease No. 20,397 from the Trustees of the Bishop Estate to CBCL. (b)

10.33 Form of Amendments to Lease No. 20,397 from the Trustees of the
Bishop Estate to CBCL. (b)

10.34 Lease from Richard L. Hughes to Mauna Loa. (b)

10.35 Lease from the Trustees of the Bishop Estate to Mauna Loa. (b)

10.36 Co-ownership and Partition Agreement between KACI and MLO. (b)

10.37 Co-ownership and Partition Agreement among Mauna Loa, KACI and MLO.(b)

10.38 Co-ownership and Partition Agreement between KACI and MLO relating
to Lease Nos. 15,020 and 16,859. (b)

10.39 Co-ownership and Partition Agreement between MKACI and MLO. (b)

10.40 Macadamia Nut Purchase Contract between Mauna Loa and Keaau Macadamia
X Corporation ("Keaau Lot 10") dated September 15, 1983. (e)

10.41 Assignment of Owner's Interest in Macadamia Nut Purchase Contract
and Farming Contract between Keaau Lot 10 and Registrant. (e)

10.42 Warranty Deed between Keaau Lot 10 and Registrant. (e)

10.43 Amended and Restated June 1986 Farming Contract, effective January 1,
1998, between Registrant and KACI. (f)

10.44 Amended and Restated December 1986 Farming Contract, effective
January 1, 1998, between Registrant and KACI. (f)

10.45 Amended and Restated 1989 Farming Contract, effective January 1,
1998, among Registrant, KACI and MKACI. (f)
</TABLE>

<PAGE>

EXHIBIT
NUMBER DESCRIPTION
- ----------- -----------
<S> <C>

10.46 Amended and Restated Farming Contract for the Keaau Lot 10 Orchard,
effective January 1, 1998, between Registrant and KACI. (f)

10.47 Restated Kaiwiki Orchards Farming lease between Registrant and MKACI
dated February 26, 1997. (f)

11.1 Statement re: Computation of Net Income per Class A Unit.

27 Financial Data Schedule.
</TABLE>

- ------------------
(a) Incorporated by reference to Appendix A of Registrant's Registration
Statement under the Securities Act on Form S-4, Registration Statement No.
333-46271, filed February 13, 1998.

(b) Incorporated by reference to the corresponding Exhibit previously filed as
an Exhibit to Registrant's Registration Statement under the Securities Act
on Form S-1, Registration Statement No. 33-30659, filed October 20, 1989.

(c) Incorporated by reference to the corresponding Exhibit previously filed as
an Exhibit to Registrant's Registration Statement under the Securities Act
on Form S-1, Registration Statement No. 33-4903, filed June 5, 1986.

(d) Incorporated by reference to the corresponding Exhibit previously filed as
an Exhibit to Registrant's Annual Report on Form 10-K, Commission filed No.
1-9145, for the year ended December 31, 1986, filed March 27, 1987.

(e) Incorporated by reference to the corresponding Exhibit previously filed as
an Exhibit to Registrant's Annual Report on Form 10-K, Commission filed No.
1-9145, for the year ended December 31, 1991, filed March 27, 1992.

(f) Incorporated by reference to the corresponding Exhibit previously filed as
an Exhibit to Registrant's Registration Statement under the Securities Act
on Form S-4, Registration Statement No. 333-46271, filed February 13, 1998.

<PAGE>
EXHIBIT 11.1

ML MACADAMIA ORCHARDS, L.P.
COMPUTATION OF NET INCOME PER CLASS A UNIT
(in thousands, except per unit data)
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Net income $ 4,645 $ 963 $ 15,581

Class A Unitholders
(ownership percentage) x 99% x 99% x 99%
--------- --------- ---------

Net income allocable
to Class A Unitholders $ 4,599 $ 953 $ 15,425
========= ========= =========

Class A Units outstanding 7,500 7,500 7,500
========= ========= =========

Net income per Class A Unit $ 0.61 $ 0.13 $ 2.06
========= ========= =========
</TABLE>

<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 5,325
<SECURITIES> 0
<RECEIVABLES> 7,687
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 13,015
<PP&E> 73,214
<DEPRECIATION> 19,726
<TOTAL-ASSETS> 66,503
<CURRENT-LIABILITIES> 3,984
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 61,270
<TOTAL-LIABILITY-AND-EQUITY> 66,503
<SALES> 15,950
<TOTAL-REVENUES> 15,950
<CGS> 10,192
<TOTAL-COSTS> 10,192
<OTHER-EXPENSES> 1,177
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,847
<INCOME-TAX> 202
<INCOME-CONTINUING> 4,645
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,645
<EPS-BASIC> 0.61
<EPS-DILUTED> 0.61

</TABLE>