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, 1998 Commission file number 0-6510 MAUI LAND & PINEAPPLE COMPANY, INC. (Exact name of registrant as specified in its charter) HAWAII 99-0107542 (State or other jurisdiction (IRS Employer Identification No.) of incorporation or organization) P. O. BOX 187, KAHULUI, MAUI, HAWAII 96733-6687 (Address of principal executive offices) Registrant's telephone number, including area code: (808) 877- 3351 NONE Former name, former address and former fiscal year, if changed since last report Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [x]No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at May 4, 1998 Common Stock, no par value 7,188,500 shares MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES INDEX Page PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Balance Sheets, March 31, 1998 (Unaudited) and December 31, 1997 3 Condensed Statements of Operations and Retained Earnings, Three Months Ended March 31, 1998 and 1997 (Unaudited) 4 Condensed Statements of Cash Flows, Three Months Ended March 31, 1998 and 1997 (Unaudited) 5 Notes to Condensed Financial Statements (Unaudited) 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II. OTHER INFORMATION Item 1. Legal Proceedings 10 Item 6. Exhibits and Reports on Form 8-K 10 PART I FINANCIAL INFORMATION Item 1. Financial Statements MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES CONDENSED BALANCE SHEETS Unaudited 3/31/98 12/31/97 (Dollars in Thousands) ASSETS Current Assets Cash $ 957 $ 1,611 Accounts and notes receivable 9,597 12,748 Inventories 19,888 18,713 Other current assets 3,462 4,076 Total current assets 33,904 37,148 Property 202,008 200,504 Accumulated depreciation (114,552) (112,457) Property - net 87,456 88,047 Other Assets 9,712 9,519 Total 131,072 134,714 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Current portion of long-term debt and capital lease obligations 2,813 3,052 Trade accounts payable 3,968 6,166 Other current liabilities 5,874 7,647 Total current liabilities 12,655 16,865 Long-Term Liabilities Long-term debt and capital lease obligations 29,885 29,435 Accrued retirement benefits 21,697 21,571 Equity in losses of joint venture 7,004 6,655 Other long-term liabilities 1,241 1,292 Total long-term liabilities 59,827 58,953 Stockholders' Equity Common stock, no par value - 1,800,000 shares authorized, 1,797,125 issued and outstanding 12,318 12,318 Retained earnings 46,272 46,578 Stockholders' equity 58,590 58,896 Total $131,072 $ 134,714 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 3/31/98 3/31/97 (Dollars in Thousands Except Share Amounts) Revenues Net sales $20,158 $21,052 Operating income 8,187 7,453 Other income 124 383 Total Revenues 28,469 28,888 Costs and Expenses Cost of goods sold 14,280 14,531 Operating expenses 6,502 6,026 Shipping and marketing 3,479 3,375 General and administrative 3,605 3,877 Equity in losses of joint ventures 322 243 Interest 760 671 Total Costs and Expenses 28,948 28,723 Income (Loss) Before Income Taxes (479) 165 Income Taxes (Credits) (173) 61 Net Income (Loss) (306) 104 Retained Earnings, Beginning of Period 46,578 45,715 Retained Earnings, End of Period 46,272 45,819 Per Common Share Net income (loss) $ (.04) $ .01 See accompanying Notes to Condensed Financial Statements. MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended 3/31/98 3/31/97 (Dollars in Thousands) Net Cash Provided by Operating Activities $ 1,109 $ 1,510 Investing Activities Purchases of property (1,546) (2,205) Contributions to joint ventures (100) (830) Other (328) (255) Net Cash Used in Investing Activities (1,974) (3,290) Financing Activities Payments of long-term debt and capital lease obligations (2,089) (1,215) Proceeds from long-term debt 2,300 2,900 Net Cash Provided by Financing Activities 211 1,685 Net Decrease in Cash (654) (95) Cash at Beginning of Period 1,611 453 Cash at End of Period $ 957 $ 358 Supplemental Disclosure and Cash Flow Information - Interest (net of amounts capitalized) of $1,319,000 and $1,424,000 was paid during the three months ended March 31, 1998 and 1997, respectively. Income taxes of $250,000 were paid during the three months ended March 31, 1998. 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, 1998 and 1997. 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 1998 and 1997 differs from the statutory federal rate of 34% primarily because of the state tax provision and refundable state tax credits. 4. Accounts and notes receivable are reflected net of allowance for doubtful accounts of $578,000 and $567,000 at March 31, 1998 and December 31, 1997, respectively. 5. Inventories as of March 31, 1998 and December 31, 1997 were as follows (in thousands): 3/31/98 12/31/97 Pineapple products Finished goods $ 8,801 $ 8,977 Work in progress 1,530 823 Raw materials 1,447 1,325 Real estate held for sale 1,411 1,349 Merchandise, materials and supplies 6,699 6,239 Total Inventories $19,888 $18,713 6. Business Segment Information (in thousands): Three Months Ended March 31 1998 1997 Revenues Pineapple $ 17,316 $ 18,416 Resort 10,107 9,389 Commercial & Property 995 1,078 Corporate 51 5 Total revenues 28,469 28,888 Operating profit (loss) Pineapple (327) 340 Resort 1,726 1,703 Commercial & Property (92) (90) Total operating profit 1,307 1,953 Corporate expenses - net (1,026) (1,117) Interest expense (760) (671) Income (taxes) credits 173 (61) Net income (loss) $ (306) $ 104 7. Average common shares outstanding for the interim periods ended March 31, 1998 and 1997 were 1,797,125. On April 30, 1998, the Company effected a four-for-one split of its common stock. Income (loss) per common share for the current and prior period has been restated to reflect the 7,188,500 shares outstanding after the split. 8. Certain prior period amounts have been restated to conform to the current presentation. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS Consolidated For the first quarter of 1998, the Company reported a consolidated net loss of $306,000, compared to consolidated net income of $104,000 for the first quarter of 1997. Revenues for the same period declined by about 1% from a year earlier. Interest expense for the first quarter of 1998 was higher by approximately 13%, principally because of higher average borrowings. General and administrative expenses were lower by 7%, principally due to lower insurance and other costs in the land management area and staffing changes made by the Pineapple division. Pineapple Revenue from Pineapple operations was lower by 6% in the first quarter of 1998 compared to the first quarter of 1997. Lower case sales volume reduced pineapple revenues by approximately $1.9 million. Higher average sales prices, increased fresh fruit sales and a change in product mix sold (fruit, juice, concentrate) offset part of the revenue reduction caused by lower sales volume of canned product. Pineapple operations generated an operating loss of $327,000 for the first quarter of 1998 compared to an operating profit of $340,000 for the first quarter of 1997. The operating loss for 1998 was a result of lower sales volume coupled with a higher average cost of sales per case due to increased production costs. Resort Revenue from the Kapalua Resort operations increased by 8% and operating profits increased by approximately 1% for the first quarter of 1998 compared to the first quarter of 1997. Most of the revenue increase was attributable to increased golf play and higher green and cart fees, and increased real estate sales commissions from resale activity. Lease revenue, in particular from the Kapalua Bay Hotel, also increased in 1998, primarily because of planned ground lease reductions in 1997 to accommodate the closure of the hotel for restoration work. These revenue increases were partially offset by lower merchandise sales, higher operating costs and increased marketing expenses. Commercial & Property Revenue from Commercial & Property operations decreased by 8% and operating losses increased by approximately 2% for the first quarter of 1998 compared to the first quarter of 1997. Insurance and other costs in the land management area decreased in 1998, but these declines were offset by lower results from Kaahumanu Center, in particular because of higher bad debt expense. LIQUIDITY, CAPITAL RESOURCES AND OTHER At March 31, 1998, total debt including capital leases was $32.7 million, approximately $200,000 higher than December 31, 1997. Increased debt and positive cash flows from operating activities were used to finance capital expenditures. Unused short- and long-term lines of credit available to the Company at the end of the first quarter of 1998 totaled $21.3 million. Expenditures for fixed assets, investments and Resort deferred development costs are estimated to be approximately $11.7 million in 1998. Included in this amount is approximately $5.3 million for replacement of existing equipment for Pineapple and Resort operations. The Company expects to finance most of these expenditures with cash flows from operations. On April 30, 1998, the Company effected a four-for-one split of its common stock thereby increasing the common shares outstanding to 7,188,500. On May 1, 1998 the Company's common stock began trading on the American Stock Exchange under the stock symbol "MLP." PART II OTHER INFORMATION Item 1. Legal Proceedings Antidumping Petition On April 7, 1998, the United States Court of Appeals for the Federal Circuit heard the appeals of Maui Pineapple Company, Ltd. and the Department of Commerce regarding the antidumping petition and calculation of duties on imports of canned pineapple fruit from Thailand. A final decision may take up to six months. On April 19, 1998, the Department of Commerce announced the preliminary results of the second administrative review covering the period from July 1996 to June 1997. As a result of these reviews, the overall duties that are expected to be in effect in mid-July will be significantly lower. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (3)(i)Articles of Incorporation (Amended as of April 2,1998).* (27) Financial Data Schedule As of March 31, 1998 and for the three months then ended.* *Filed Herewith (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 11, 1998 /S/ PAUL J. MEYER Date Paul J. Meyer Executive Vice President/Finance (Principal Financial Officer)