SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1995 Commission file number 0-4674 MAUI LAND & PINEAPPLE COMPANY, INC. (Exact name of registrant as specified in its charter) HAWAII 99-0107542 (State or other jurisdiction (IRS Employer Identification No.) of incorporation or organization) P.O. Box 187, KAHULUI, MAUI, HAWAII 96732 (Address of principal executive offices) Registrant's telephone number, including area code: (808) 877-3351 NONE Former name, former address and former fiscal year, if changed since last report Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /x/ No / / Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at November 1, 1995 Common Stock, no par value 1,797,125 shares MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES INDEX Page PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Balance Sheets - September 30, 1995 (Unaudited) & December 31, 1994 3 Condensed Statements of Operations and Retained Earnings, Three Months Ended September 30, 1995 & 1994 (Unaudited) 4 Condensed Statements of Operations and Retained Earnings, Nine Months Ended September 30, 1995 & 1994 (Unaudited) 5 Condensed Statements of Cash Flows Nine Months Ended September 30, 1995 & 1994 (Unaudited) 6 Notes to Condensed Financial Statements (Unaudited) 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II. OTHER INFORMATION 11 Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K -2- PART I. - FINANCIAL INFORMATION Item 1. Financial Statements MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES CONDENSED BALANCE SHEETS <TABLE> <CAPTION> Unaudited 09/30/95 12/31/94 (Dollars in Thousands) ASSETS <S> <C> <C> Current Assets Cash $ 1,167 $ 2,269 Accounts and notes receivable 16,925 13,507 Inventories 25,258 20,537 Other current assets 4,034 4,647 -------- -------- Total current assets 47,384 40,960 Property 190,281 274,490 Accumulated depreciation (95,463) (94,296) -------- -------- Property - net 94,818 180,194 Other Assets 12,311 14,257 -------- -------- TOTAL 154,513 235,411 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Notes payable 21,913 27,951 Trade accounts payable 5,776 5,596 Other current liabilities 7,898 8,510 -------- -------- Total current liabilities 35,587 42,057 Long-Term Liabilities Long-term debt and capital lease obligations 26,727 99,180 Accrued retirement benefits 22,466 22,077 Other long-term liabilities 9,050 11,668 -------- -------- Total long-term liabilities 58,243 132,925 Stockholders' Equity Common stock, no par value - 1,800,000 shares authorized, 1,797,125 issued and outstanding 12,318 12,318 Retained earnings 48,365 48,111 -------- -------- Stockholders' Equity 60,683 60,429 -------- -------- $154,513 $235,411 TOTAL ======== ======== </TABLE> See accompanying Notes to Condensed Financial Statements. -3- MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES CONDENSED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (UNAUDITED) <TABLE> <CAPTION> Three Months Ended 9/30/95 9/30/94 (Dollars in Thousands Except Share Amounts) <S> <C> <C> REVENUES Net sales $27,394 $23,686 Operating income 6,031 6,749 Other income 660 2,641 ------- ------- Total Revenues 34,085 33,076 ------- ------- COSTS AND EXPENSES Cost of goods sold 21,736 17,586 Operating expenses 5,392 5,936 Shipping and marketing 3,634 3,810 General and administrative 3,977 4,205 Equity in (earnings) losses of joint ventures (8,576) 3,015 Interest 1,149 1,520 ------- ------- Total Costs and Expenses 27,312 36,072 ------- ------- INCOME (LOSS) BEFORE INCOME TAXES 6,773 (2,996) INCOME TAXES (CREDIT) 2,454 (1,128) ------- ------- NET INCOME (LOSS) 4,319 (1,868) RETAINED EARNINGS, BEGINNING OF PERIOD 44,046 51,471 ------- ------- RETAINED EARNINGS, END OF PERIOD 48,365 49,603 ======= ======= PER COMMON SHARE Net Income (Loss) $ 2.40 $ (1.04) ======= ======= </TABLE> See accompanying Notes to Condensed Financial Statements. -4- MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES CONDENSED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (UNAUDITED) <TABLE> <CAPTION> Nine Months Ended 9/30/95 9/30/94 (Dollars in Thousands Except Share Amounts) <S> <C> <C> REVENUES Net sales $64,797 $64,944 Operating income 21,563 21,350 Other income 3,882 3,704 ------- ------- Total Revenues 90,242 89,998 ------- ------- COSTS AND EXPENSES Cost of goods sold 48,876 46,771 Operating expenses 17,324 17,296 Shipping and marketing 9,609 10,370 General and administrative 12,449 11,650 Equity in (earnings) losses of joint ventures (4,390) 3,480 Interest 5,952 4,298 ------- ------- Total Costs and Expenses 89,820 93,865 ------- ------- INCOME (LOSS) BEFORE INCOME TAXES 422 (3,867) INCOME TAXES (CREDIT) 168 (1,450) ------- ------- NET INCOME (LOSS) 254 (2,417) RETAINED EARNINGS, BEGINNING OF PERIOD 48,111 52,020 ------- ------- RETAINED EARNINGS, END OF PERIOD 48,365 49,603 ======= ======= PER COMMON SHARE Net Income (Loss) $ .14 $ (1.35) ======= ======= </TABLE> See accompanying Notes to Condensed Financial Statements. -5- MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) <TABLE> <CAPTION> Nine Months Ended September 30 1995 1994 (Dollars in Thousands) <S> <C> <C> Net Cash From (Used In) Operating Activities $(4,897) $ 6,578 ------- -------- Investing Activities Purchases of property (4,906) (37,022) Proceeds from disposal of property 3,056 3,013 Reimbursements from Kaahumanu Center Associates 11,224 -- Other (2,682) 1,821 ------- -------- Net Cash From (Used In) Investing Activities 6,692 (32,188) ------- -------- Financing Activities Payments of long-term debt & capital lease obligations (16,298) (23,656) Proceeds from long-term debt 13,288 50,298 Proceeds (payment) of short-term debt 113 50 ------- ------- Net Cash From (Used In) Financing Activities (2,897) 26,692 ------- ------- Net Cash Increase (Decrease) (1,102) 1,082 Cash At Beginning of Period 2,269 1,223 ------- ------- Cash At End of Period $ 1,167 $ 2,305 ======= ======= Supplemental Disclosure of Cash Flow and Non-Cash Information - Interest (net of amounts capitalized) of $6,597,000 and $4,947,000 was paid during the nine months ended September 30, 1995 and 1994, respectively. Income tax refunds (net of payments) of $1,509,000 and $6,347,000 were received during the nine months ended September 30, 1995 and 1994, respectively. See also Notes 4 and 5 to Condensed Financial Statements. </TABLE> See accompanying Notes to Condensed Financial Statements. -6- MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 1. In the opinion of management, the accompanying condensed financial statements contain all normal and recurring adjustments necessary to present a fair statement of financial position and results of operations for the interim periods ended September 30, 1995 and 1994. 2. The Company's reports for interim periods utilize numerous estimates of production, general and administrative expenses, and other costs for the full year. Consequently, amounts in the interim reports are not necessarily indicative of results for the full year. 3. The effective tax rate for 1995 and 1994 differs from the statutory federal rate of 34% primarily because of the state tax provision and refundable state tax credits. 4. On October 31, 1995, the partners of Kaptel Associates, which owns The Ritz-Carlton Kapalua Hotel, concluded an agreement to dissolve the partnership. Effective October 31, 1995, the Company and The Ritz-Carlton Hotel Company transferred their respective 25% interests in the partnership to the remaining partner, NI Hawaii Resorts, Inc. Because of the dissolution agreement, the Company's equity in the losses of Kaptel Associates recorded through June 30, 1995 were reversed in the third quarter of 1995. The reversal of these losses are reflected as decreases in costs and expenses of $8.9 million and $5 million, respectively, for the third quarter and the first nine months of 1995. The Company's balance sheet as of September 30, 1995 reflects the reversal of the $8.9 million accrued losses previously reflected as a noncurrent liability. 5. Effective April 30, 1995, the Employees' Retirement System of the State of Hawaii (ERS) converted its $30.6 million loan to an additional 49% ownership in Kaahumanu Center Associates (KCA). Effective with the conversion of the ERS loan, the Company and the ERS each have a 50% interest in KCA. The Company no longer consolidates KCA and is accounting for its investment in KCA by the equity method. This has resulted in a decrease in the Company's consolidated assets and consolidated debt of approximately $76 million. -7- 6. Inventories as of September 30, 1995 and December 31, 1994 were as follows (in thousands): 09/30/95 12/31/94 Pineapple products $19,417 $15,261 Real estate held for sale 340 336 Merchandise, materials and supplies 5,501 4,940 ------- ------- Total Inventories $25,258 $20,537 ======= ======= 7. Average common shares outstanding for the interim periods ended September 30, 1995 and 1994 were 1,797,125. -8- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS Consolidated Consolidated net income for the third quarter of 1995 was $4.3 million compared to a net loss of $1.9 million for the third quarter of 1994. For the first nine months of 1995, consolidated net income was $254,000 compared to a net loss of $2.4 million for last year's first nine months. Because of the dissolution agreement (see Notes to Condensed Financial Statements), the Company's equity in the losses of Kaptel Associates, recorded through June 30, 1995, were reversed in the third quarter of 1995. The reversal of these losses resulted in increases to net income of $5.7 million and $3.2 million, respectively, for the third quarter and the first nine months of 1995. For the third quarter and first nine months of 1994, the Company's equity in losses of Kaptel Associates increased net losses by $865,000 and $1.7 million, respectively. Pineapple The Company's pineapple operations produced higher revenues for the third quarter of 1995 compared to last year's third quarter as case volume sales and average sales prices improved. Revenues for the first nine months of 1995 were about the same as the first nine months of 1994. Pineapple operations reported increased operating losses for the third quarter and first nine months of 1995 compared to the same periods in 1994 due principally to higher average cost of sales resulting largely from localized drought conditions. Resort Revenues from the Kapalua resort were higher for the third quarter, but lower for the first nine months of 1995 compared to the same periods in 1994. Both the third quarter and the first nine months of 1995 contributed operating profits compared to operating losses last year. Operating profits include the Company's equity in the losses of Kaptel for 1994 and the reversal of losses attributable to this joint venture investment in 1995. Operating profits from the resort's ongoing operations increased in the third quarter of 1995 compared to the third quarter of 1994. For the first nine months of 1995, the operating profits from ongoing operations were lower than the same period in 1994. Resort room occupancies were higher for the third quarter of 1995, but lower for the first nine months compared to the same periods in 1994. -9- Merchandise sales and paid rounds of golf were lower for the 1995 third quarter and first nine months compared to 1994. Higher average golf rates and reductions in expenses partially offset these decreases. Commercial & Property The Commercial & Property segment contributed lower revenues for the third quarter of 1995 due to fewer land sales in 1995 and the exclusion of Kaahumanu Center Associates from the consolidated financial statements as of May 1995 (see Notes to Condensed Financial Statements). For the first nine months of 1995, revenues were higher than the same period in 1994 due to increased lease revenue from Kaahumanu center. Operating profits for the third quarter and the first nine months of 1995 were lower than the same periods in 1994 principally because of higher interest and depreciation expenses related to the redevelopment of Kaahumanu Center. LIQUIDITY AND CAPITAL RESOURCES At September 30, 1995, total debt, including capital leases, was $50 million compared to $128.6 million at December 31, 1994. The decrease was due to the debt related to Kaahumanu Center being reflected in the separate financial statements of Kaahumanu Center Associates (KCA) as of April 30, 1995 (see Notes to Condensed Financial Statements). Also, construction-related reimbursements which the Company received from KCA in May of 1995 were used principally to pay down borrowings. Net cash flow used in operating activities was $4.9 million for the first nine months of 1995. Negative cash flow was due principally to increases in pineapple inventories because of peak canning during the summer and because of increases in accounts receivable as a result of the timing of sales. In October of 1995, the partners of Kaptel Associates, which owns The Ritz-Carlton Kapalua Hotel, concluded an agreement to dissolve the partnership (See Notes to Condensed Financial Statements). The partners also agreed in principle to amend the terms of the Company's ground lease for the hotel property and the related loan. The Company had borrowed $4.8 million from the partnership for construction of certain off-site improvements related to the hotel. Principal and interest are payable solely from rental income receivable by the Company under the hotel ground lease. The modification of these arrangements are contingent on the partnership's ability to modify the terms of its bank financing. -10- PART II OTHER INFORMATION Item 5. Other Information On October 31, 1995, the partners of Kaptel Associates, which owns The Ritz-Carlton Kapalua Hotel, concluded an agreement to dissolve the partnership. Effective October 31, 1995, the Company and The Ritz-Carlton Hotel Company transferred their respective 25% interests in the partnership to the remaining partner, NI Hawaii Resorts, Inc. Because of the dissolution agreement, the Company's equity in the losses of Kaptel Associates recorded through June 30, 1995 were reversed in the third quarter of 1995. The reversal of these losses resulted in increases to net income of $5.7 million ($3.18 per share) and $3.2 million ($1.78 per share), respectively, for the third quarter and the first nine months of 1995. The Company's balance sheet as of September 30, 1995 reflects the reversal of the $8.9 million accrued losses previously reflected as noncurrent liability. The following pro forma statement of operations has been derived from the Company's consolidated statement of operations for the year ended December 31, 1994. The statement reflects the effects of the dissolution agreement on the historical statement of operations as if it had taken place prior to January 1, 1994. It is being presented for informational purposes only and does not purport to be indicative of the operating results of the Company had the dissolution of Kaptel Associates occurred prior to January 1, 1994, nor the results from future operations. -11- PART II, Item 5. (Continued) MAUI LAND & PINEAPPLE COMPANY, INC. PRO FORMA STATEMENT OF OPERATIONS (UNAUDITED) YEAR ENDED DECEMBER 31, 1994 (IN THOUSANDS) <TABLE> <CAPTION> ---------------------------------- Pro Forma Actual Adjustments Pro Forma ------ ----------- --------- <S> <C> <C> <C> Net Sales & Gross Revenue $125,882 -- $125,882 -------- -------- -------- Cost of goods sold 67,623 67,623 Other operating costs and expenses 40,119 40,119 General and administrative 14,352 14,352 Equity in losses of joint ventures 4,844 (4,119)(1) 725 Interest 5,682 5,682 -------- -------- -------- Total Costs and Expenses 132,620 (4,119) 128,501 ======== ======== ======== LOSS BEFORE INCOME TAX (6,738) 4,119 (2,619) INCOME TAX CREDIT (2,829) 1,483 (2) (1,346) -------- -------- -------- NET LOSS (3,909) 2,636 (1,273) ======== ======== ======== Per Common Share: Net Loss $ (2.18) $ (0.71) ======== ======== ======== </TABLE> (1) Represents the Company's equity in the losses of Kaptel Associates for the year ended December 31, 1994. (2) Represents the estimated tax effect of the pro forma adjustment. -12- Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (10) Material Contracts A. Dissolution Agreement, dated October 31, 1995. Attached. (27) Financial Data Schedule As of September 30, 1995 and for the nine months then ended. Attached. (b) Reports on Form 8-K A report on Form 8-K, dated June 29, 1995 and filed on July 3, 1995, included Item 5, Other Information, and no financial statements. -13- SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MAUI LAND & PINEAPPLE COMPANY, INC. November 13, 1995 /s/ PAUL J. MEYER Date Paul J. Meyer Executive Vice President/Finance -14-