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 March 31, 1996 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 May 1, 1996 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 - March 31, 1996 (Unaudited) & December 31, 1995 3 Condensed Statements of Operations and Retained Earnings, Three Months Ended March 31, 1996 & 1995 (Unaudited) 4 Condensed Statements of Cash Flows Three Months Ended March 31, 1996 & 1995 (Unaudited) 5 Notes to Condensed Financial Statements (Unaudited) 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II. OTHER INFORMATION 9 PART I. - FINANCIAL INFORMATION Item 1. Financial Statements MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES CONDENSED BALANCE SHEETS Unaudited 03/31/96 12/31/95 (Dollars in Thousands) ASSETS Current Assets Cash $ 237 $ 166 Accounts and notes receivable 12,095 13,142 Inventories 19,713 19,675 Other current assets 3,666 3,571 -------- -------- Total current assets 35,711 36,554 Property 187,361 185,175 Accumulated depreciation (98,735) (96,618) -------- -------- Property - net 88,626 88,557 Other Assets 12,006 11,974 -------- -------- TOTAL 136,343 137,085 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Trade accounts payable 5,187 5,761 Other current liabilities 6,514 7,365 -------- -------- Total current liabilities 11,701 13,126 Long-Term Liabilities Long-term debt and capital lease obligations 35,916 36,227 Accrued retirement benefits 22,718 22,594 Other long-term liabilities 6,518 6,268 -------- -------- Total long-term liabilities 65,152 65,089 Stockholders' Equity Common stock, no par value - 1,800,000 shares authorized, 1,797,125 issued and outstanding 12,318 12,318 Retained earnings 47,172 46,552 -------- -------- Stockholders' Equity 59,490 58,870 -------- -------- $136,343 $137,085 TOTAL ======== ======== See accompanying Notes to Condensed Financial Statements. MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES CONDENSED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (UNAUDITED) Three Months Ended 3/31/96 3/31/95 (Dollars in Thousands Except Share Amounts) REVENUES Net sales $22,014 $19,893 Operating income 7,023 8,933 Other income 1,262 1,131 ------- ------- Total Revenues 30,299 29,957 ------- ------- COSTS AND EXPENSES Cost of goods sold 15,597 14,648 Operating expenses 5,540 6,327 Shipping and marketing 3,194 2,803 General and administrative 3,761 4,361 Equity in losses of joint ventures 293 1,746 Interest 930 3,035 ------- ------- Total Costs and Expenses 29,315 32,920 ------- ------- INCOME (LOSS) BEFORE INCOME TAXES 984 (2,963) INCOME TAXES (CREDIT) 364 (1,096) ------- ------- NET INCOME (LOSS) 620 (1,867) RETAINED EARNINGS, BEGINNING OF PERIOD 46,552 48,111 ------- ------- RETAINED EARNINGS, END OF PERIOD 47,172 46,244 ======= ======= PER COMMON SHARE Net Income (Loss) $ .34 $ (1.04) ======= ======= See accompanying Notes to Condensed Financial Statements. MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended 3/31/96 3/31/95 (Dollars in Thousands Except Share Amounts) Net Cash Provided By Operating Activities $ 1,412 $ 702 ------- ------- Investing Activities Purchases of property (1,592) (3,197) Proceeds from disposal of property 504 715 Other 165 (1,753) ------- ------- Net Cash Used In Investing Activities (923) (4,235) ------- ------- Financing Activities Payments of long-term debt and capital lease obligations (2,168) (571) Proceeds from long-term debt 1,750 3,311 Proceeds from short-term debt -- 944 ------- ------- Net Cash Provided By (Used In) Financing Activities (418) 3,684 ------- ------- Net Increase in Cash 71 151 Cash At Beginning of Period 166 2,269 ------- ------- Cash At End of Period $ 237 $ 2,420 ======= ======= Supplemental Disclosure and Cash Flow Information - Interest (net of amounts capitalized) of $1,536,000 and $3,709,000 was paid during the three months ended March 31, 1996 and 1995, respectively. Income tax refunds (net of payments) of $33,000 were received during the three months ended March 31, 1995. See accompanying Notes to Condensed Financial Statements. MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 1. In the opinion of management, the accompanying condensed financial statements contain all normal and recurring adjustments necessary to present a fair statement of financial position and results of operations for the interim periods ended March 31, 1996 and 1995. 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 1996 and 1995 differs from the statutory federal rate of 34% primarily because of the state tax provision and refundable state tax credits. 4. Inventories as of March 31, 1996 and December 31, 1995 were as follows (in thousands): 03/31/96 12/31/95 Pineapple products $13,170 $13,920 Real estate held for sale 393 340 Merchandise, materials and supplies 6,150 5,415 ------- ------- Total Inventories $19,713 $19,675 ======= ======= 5. Average common shares outstanding for the interim periods ended March 31, 1996 and 1995 were 1,797,125. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS Consolidated Consolidated net income for the first quarter of 1996 was $620,000. For the first quarter of 1995, the Company incurred a net loss of $1.9 million. Operating profits from the Company's Pineapple and Resort operations and lower interest expense resulting from a reduced debt level contributed to improved results in 1996. Additionally, the Company's equity in the losses of Kaptel Associates increased the net loss for the first quarter of 1995 by $1.1 million. Kaptel Associates joint venture was dissolved in October 1995. Pineapple The Company's Pineapple operations generated higher revenues in 1996 on similar case sales volume as the first quarter of 1995, due to improved prices. Higher prices were largely the result of the favorable ruling in 1995 on the anti-dumping case against the Thai pineapple producers and weather-related production problems experienced by foreign producers in 1995. Increased revenues resulted in an operating profit for the Company's Pineapple operations for the first quarter of 1996 compared to an operating loss for the same period a year earlier. Resort Kapalua Resort produced an operating profit in the first quarter of 1996 compared to an operating loss for the first quarter of 1995. The improved operating performance results from ongoing resort operations and reduced equity in losses from joint venture investments. Kapalua Resort's ongoing operations generated higher revenues and operating profits for the first quarter of 1996 compared to the first quarter of 1995 as merchandise sales, paid rounds of golf and resort occupancies increased. These results largely reflect higher visitor counts on the Island of Maui. Commercial & Property Revenue and operating profits from the Commercial & Property segment decreased in the first quarter of 1996 compared to the first quarter of 1995. These decreases are primarily attributed to the exclusion of Kaahumanu Center Associates (KCA) from the Company's consolidated financial statements as of April 30, 1995. Since May of 1995 the Company's interest in KCA was reduced from 99% to 50% and the Company began accounting for its investment by the equity method. LIQUIDITY AND CAPITAL RESOURCES At March 31, 1996, the Company's total debt including capital leases was $37.1 million, the Company's lowest debt level in over five years. The higher level of debt in prior years resulted largely from capital expenditures related to the expansion and renovation of Kaahumanu Center and other investment activities and, to a lesser extent, negative cash flows from operating activities. The Company's cash requirements normally increase during the months of May through August each year because that is the peak pineapple canning period. In 1996 these peak cash flow needs will be funded with short-term borrowings under lines of credit. As of March 31, 1996, the Company had $9.1 million of unused short- and long-term lines of credit available. Aside from seasonal increases in borrowing, the Company believes that total debt will be further reduced by year-end 1996 as a result of positive cash flows from operations. Capital expenditures in 1996 are expected to be approximately $6.6 million for new equipment and for replacement of existing equipment. These expenditures include $2 million to replace the processing water disposal system presently used by the Company's pineapple cannery. In addition to these capital expenditures the Company expects to contribute approximately $1.2 million to the County of Maui for its share of increased capacity in the West Maui sewer system. The Company expects to fund these expenditures with cash flows from operations and with capital leases. PART II OTHER INFORMATION Item 5. Other Information In an April 29, 1996 letter to the Harry Weinberg Family Foundation, Inc., Mary Cameron Sanford, who chairs the Company's Board of Directors and whose family owns about 40% of the Company's stock, stated she would recommend that the Company's Board of Directors appoint a Foundation representative as a director at the August 2, 1996 Board meeting based on certain understandings, including agreements that while the representative serves, for approximately two years the Foundation will not acquire additional stock of the Company or seek additional board representation, subject to various conditions and exceptions. The Foundation confirmed those understandings in a letter dated April 30, 1996. Ms. Sanford's letter was unanimously approved by Company's Board at its May 3, 1996 meeting. The Foundation is a public charitable foundation that owns 37.1% of the Company's stock. Ms. Sanford's April 29, 1996 letter, and the Foundation's April 30, 1996 letter, are filed herewith as exhibits and are incorporated herein by reference. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (10) Material Contrasts A. Letter to Mr. Darrell D. Friedman from Mary Cameron Sanford dated April 29, 1996. Attached. B. Letter to Mary Cameron Sanford from Darrell D. Friedman dated April 30, 1996. Attached. (27) Financial Data Schedule A. As of March 31, 1996 and for the three months then ended. Attached. (b) Reports on Form 8-K There were no reports on Form 8-K filed for the period covered by this report. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MAUI LAND & PINEAPPLE COMPANY, INC. May 14, 1996 /S/ PAUL J. MEYER Date Paul J. Meyer Executive Vice President/Finance