Back to GetFilings.com
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
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 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
of incorporation or organization) number)
120 KANE STREET, P. O. BOX 187, KAHULUI, MAUI, HAWAII 96733-6687
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (808) 877-3351
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
Common Stock, without Par Value American Stock Exchange
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 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 Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value, as of February 3, 2000, of the
voting stock held by nonaffiliates of the registrant:
$116,932,000.
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 February 3, 2000
Common Stock, no par value 7,195,800 shares
Documents incorporated by reference:
Parts I, II and IV -- Portions of the 1999 Annual Report to
Security Holders.
Part III - Portions of Proxy Statement dated March 24, 2000.
Exhibit Index--pages 17 - 20.
PART I
Item 1. Business
(a) General
Maui Land & Pineapple Company, Inc. is a Hawaii corporation,
the successor to a business organized in 1909. The Company
consists of a landholding and operating parent company as well as
its principal wholly owned subsidiaries, Maui Pineapple Company,
Ltd. and Kapalua Land Company, Ltd. The "Company," as used
herein, refers to the parent and all of its subsidiaries.
The Company participates in joint ventures that are
accounted for by the equity method. The most significant of
these ventures is Kaahumanu Center Associates, the owner and
operator of a regional shopping center.
The industry segments of the Company are as follows:
(1) Pineapple - includes growing pineapple,
canning pineapple in tinplated steel containers
fabricated by the Company, production of pineapple
juice and fresh cut pineapple products and
marketing of canned pineapple products and fresh
whole and fresh cut pineapple.
(2) Resort - includes the development and sale of
resort real estate, property management and the
operation of recreational and retail facilities
and utility companies at Kapalua, Maui.
(3) Commercial & Property - includes the
Company's investment in Kaahumanu Center
Associates, the Napili Plaza shopping center, and
non-resort real estate development, rentals and
sales. It includes the Company's land entitlement
and land management activities.
(b) Financial Information About Industry Segments
The information set forth under Note 17 to Consolidated
Financial Statements on page 18 of the Maui Land & Pineapple
Company, Inc. 1999 Annual Report is incorporated herein by
reference.
(c) Narrative Description of Business
(1) Pineapple
Maui Pineapple Company, Ltd. is the operating subsidiary for
the Company's Pineapple segment. It owns and operates fully
integrated facilities for the production of pineapple products.
Pineapple is cultivated on two Company-operated plantations
on Maui that provided approximately 94% of the fruit processed in
1999. The balance of fruit processed was purchased from an
independent Maui grower. Two pineapple crops are normally
harvested from each new planting. The first, or plant crop, is
harvested approximately 18 to 23 months after planting, and the
second, or ratoon crop, is harvested 12 to 14 months later.
Harvested pineapple is processed at the Company's cannery in
Kahului, Maui, where a full line of canned pineapple products is
produced, including solid pineapple in various grades and styles,
juice and juice concentrates. The cannery operates most of the
year; however, over 50% of production volume takes place during
June, July and August. The metal containers used in canning
pineapple are produced in the Company-owned can plant on Maui.
The metal is imported from manufacturers in Japan. A warehouse
is maintained at the cannery site for inventory purposes.
The Company sells canned pineapple products as store-brand
pineapple with 100% HAWAIIAN U.S.A. stamped on the can lid. Its
products are sold principally to large grocery chains, other food
processors, wholesale grocers, and to organizations offering a
complete buyers' brand program to affiliated chains and
wholesalers serving both retail and food service outlets. A
substantial volume of the Company's pineapple products is
marketed through food brokers.
The Company sells fresh whole pineapple to retail and
wholesale grocers in Hawaii and the continental United States.
Since 1996, the Company has been test marketing various fresh cut
pineapple products in Hawaii and on the U.S. West Coast. In
1999, the Company introduced fresh cut pineapple wedges and
chunks in plastic containers to markets in the continental U. S.,
and a fresh pineapple salsa product in plastic containers to the
Hawaii market and to certain stores in California.
In 1999, the Company was granted a U.S. patent on its fresh
cut pineapple technology, which enhances the quality of the
product while extending the shelf life. The extended shelf life
will allow the Company to set up local warehouse programs,
thereby facilitating distribution to retailers.
In 1997, Royal Coast Tropical Fruit Company, Inc. (a wholly
owned subsidiary of Maui Pineapple Company, Ltd.) entered into a
joint venture with an Indonesian pineapple grower and canner.
The joint venture, Premium Tropicals International, LLC, markets
and sells Indonesian canned pineapple in the United States.
Sales through this joint venture began in 1998.
In 1999, Royal Coast Tropical Fruit Company, Inc. formed a
51%-owned pineapple production subsidiary in Central America.
Pineapple cultivated in Central America will be sold principally
as fresh whole fruit to the Company's customers in the United
States and Europe.
In 1999, approximately 20 domestic customers accounted for
about 64% of the Company's pineapple sales. Export sales,
primarily to Japan, Canada and Western Europe, amounted to
approximately 3.4%, 4.6% and 4.1% of total pineapple sales in
1999, 1998 and 1997, respectively. Sales to the U.S. government
amounted to approximately 9.7%, 10.2% and 12.9% of total
pineapple sales in 1999, 1998 and 1997, respectively. The
Company's pineapple sales office is in Concord, California.
As a service to its customers, the Company maintains
inventories of its products in public warehouses in the
continental U.S. The balance of its products is shipped directly
from Hawaii to its customers. The Company's canned pineapple
products are shipped from Hawaii by ocean transportation and are
then taken by truck or rail to customers or to public warehouses.
Fresh whole and fresh cut pineapple is shipped by air or by ocean
transportation.
The Company sells its products in competition with both
foreign and U.S. companies. Its principal competitors are two
U.S. companies, Dole Food Company, Inc. and Del Monte Food Co.,
which produce substantial quantities of pineapple products, a
significant portion of which is produced in Central America and
Southeast Asia. Other producers of pineapple products in
Thailand and Indonesia also are a major source of competition.
Foreign production has the advantage of lower labor costs. The
Company's principal marketing advantages are the high quality of
its fresh and canned pineapple, the relative proximity to the
West Coast United States fresh fruit market and being the only
U.S. canner of pineapple. Other canned fruits and fruit juices
also are a source of competition. Generally, the price of the
Company's products is influenced by supply and demand of
pineapple and other fruits and juices.
The availability of water for irrigation is critical to the
cultivation of pineapple. The East Maui area is commonly
susceptible to drought conditions, which can adversely affect
pineapple operations by resulting in poor yields (tons per acre)
and lower recoveries (the amount of saleable product per ton of
fruit processed). Approximately 78% of the fields in the
Company's East Maui plantation (Haliimaile) are equipped with
drip irrigation systems. Fields that are not drip irrigated are
in areas that typically receive adequate rainfall. During
periods of drought, Company-owned water sources could supply
approximately 65% of the water for the Haliimaile plantation drip
irrigation systems. After completion of a new water well that is
currently being drilled, Company-owned water sources should be
able to supply close to 100% of the water requirement for the
Haliimaile plantation drip irrigation systems.
For information regarding the antidumping petition and
duties currently imposed on imports of canned pineapple fruit
from Thailand, see Part I, Item 3. (A) of this report.
For further information regarding Pineapple operations see
Management's Discussion and Analysis of Financial Condition and
Results of Operations.
(2) Resort
Kapalua Resort is a master-planned golf resort community on
Maui's northwest coast. The property encompasses 1,650 acres
bordering the ocean with three white sand beaches and includes
two hotels, seven residential subdivisions, three championship
golf courses, two ten-court tennis facilities, a 22,000 square
foot shopping center and over ten restaurants. Water and waste
transmission utilities are included in the Resort. Approximately
300 acres are available for further development within the
Kapalua Resort.
Kapalua Land Company, Ltd. is the developing and operating
subsidiary of the Company's Resort segment. The Resort segment
also includes the following wholly owned subsidiaries of the
Company: Kapalua Water Company, Ltd. and Kapalua Waste Treatment
Company, Ltd., public utilities providing water and waste
transmission services for the Kapalua Resort; Kapalua Advertising
Company, Ltd., an in-house advertising agency; Kapalua Investment
Corp., an investment holding company; and Kapalua Realty Company,
Ltd. (wholly owned by Kapalua Land Company, Ltd.), a general
brokerage real estate company located within the Resort.
The Company, through subsidiaries and joint ventures,
developed the Kapalua Resort, which opened in 1975 with The Bay
Course. At Kapalua, the Company owns three golf courses (The
Bay, The Village and The Plantation Courses), one tennis facility
(The Tennis Garden), a shopping center (The Kapalua Shops), the
land under both hotels (The Ritz-Carlton, Kapalua and The Kapalua
Bay Hotel), as well as the acreage available for development and
various on-site administrative and maintenance facilities.
The Company operates the golf and tennis facilities, the
shopping center, ten retail shops, a vacation rental program (The
Kapalua Villas), and certain services to the Resort, including
shuttle, security and maintenance of common areas. The Company
is the ground lessor under long-term leases for both hotels and
also receives rental income from certain other properties. The
Company manages The Kapalua Club, a membership program that
provides certain rights and privileges within the Resort for its
members.
In January 2000, the Kapalua Golf Academy and the Hale Irwin-
designed Village Course practice facility opened. In July of
2000, the Village Course Clubhouse is expected to be completed.
The clubhouse and golf academy development will include an 18-
hole putting course and two commercial retail parcels. This
development provides the foundation for the central resort master
plan including a Town Center, resort spa and residential
development.
In the fourth quarter of 1999, the Company began
construction of 14 single-family lots in the remaining acreage of
Plantation Estates Phase II (see Note 3 to Consolidated Financial
Statements). All of the lots were sold in 1999 and 12 closed
escrow in November and December of 1999. Construction is
expected to be substantially complete in the first quarter of
2000 and revenue on the closed sales is being recognized on the
percentage-of-completion method.
In 1997, the Company and an affiliate of Lend Lease Real
Estate Investment, Inc. (Lend Lease), owner of The Kapalua Bay
Hotel, formed a 50/50 joint venture, Kapalua Coconut Grove LLC,
to develop a 12-acre parcel adjacent to the hotel. Lend Lease
purchased a one-half interest in the land from the Company prior
to formation of the venture. Presales of the 36 luxury
beachfront condominiums, called The Coconut Grove on Kapalua Bay,
began in August of 1999. Mass grading and site work began in the
fourth quarter of 1999.
In December 1999, the Company received a Special Management
Area permit for a proposed 31 half-acre residential custom lot
subdivision on Site 19. Final subdivision approval, a zoning
change and Community Plan amendment for about three acres of the
20-acre site are still needed and are expected in May 2000. Lot
sales are expected to close in the third quarter of 2000 with
profits being recognized using the percentage-of-completion
method.
The Kapalua Resort faces substantial competition from
alternative visitor destinations and resort communities in Hawaii
and throughout the world. Kapalua's marketing strategies target
upscale visitors with an emphasis on golf. In 1999,
approximately 14% of the visitors to Maui were from the Eastbound
market and 86% were from the Westbound market (mostly U.S.
mainland). Kapalua's primary resort competitors on Maui are
Kaanapali, which is approximately five miles from Kapalua, and
Wailea on Maui's south coast. Kapalua's total guestroom
inventory accounts for approximately 10% of the units available
in West Maui and approximately 6% of the total inventory on Maui.
Nationally televised professional golf tournaments have been
a major marketing tool for Kapalua. Since January 1999, Kapalua
has successfully hosted the Mercedes Championships, the season
opening event for the PGA TOUR. The Company has, through the non-
profit organization Kapalua Maui Charities, Inc., agreements with
Mercedes-Benz and the PGA TOUR to host and manage this event at
Kapalua through January 2002. Advertising placements in key
publications are designed to promote Kapalua through the travel
trade, consumer, golf and real estate media.
For further information regarding Resort operations, see
Management's Discussion and Analysis of Financial Condition and
Results of Operations.
(3) Commercial & Property
Kaahumanu Center is the largest retail and entertainment
center on Maui with a gross leasable area (GLA) of approximately
573,000 square feet. Kaahumanu Center is owned by Kaahumanu
Center Associates (KCA), a 50/50 partnership between the Company,
as general partner, and the Employees' Retirement System of the
State of Hawaii, as a limited partner. On December 31, 1999, 134
tenants occupied 98% of the available GLA. Kaahumanu Center
faces substantial competition from other retail centers in
Kahului and other areas of Maui. Kahului has approximately nine
major shopping center destinations with a combined GLA of
approximately 1.6 million square feet of retail space. Kaahumanu
Center's primary competitors are the Maui Mall and the Maui
Marketplace, both located within three miles of Kaahumanu Center.
Napili Plaza is a 44,000 square foot retail and commercial
office center located in West Maui. As of December 31, 1999, 18
tenants occupied 78% of the GLA. Napili Plaza faces competition
from several retail locations in the Napili area, which have
approximately 195,000 square feet of retail space.
The Company's land entitlement and management activities are
included in the Commercial & Property segment. Land entitlement
is the process of obtaining the required county, state and
federal approvals to proceed with a planned development and use
of a parcel of land, and satisfying all conditions and
restrictions imposed in connection with such governmental
approvals. The Company actively works with regulatory agencies
and legislative bodies at all levels of government to obtain
necessary entitlements.
For further information regarding Commercial & Property
operations, see Management's Discussion and Analysis of Financial
Condition and Results of Operations.
(4) Employees
In 1999, the Company employed approximately 2,040 employees.
Pineapple operations employed approximately 520 full-time and 960
seasonal or intermittent employees. Approximately 48% of the
Pineapple operations employees were covered by collective
bargaining agreements. Resort operations employed approximately
450 employees, of which approximately 14% were part-time
employees and approximately 30% were covered by collective
bargaining agreements. The Company's Commercial & Property
operations employed approximately 80 employees and approximately
30 employees were engaged in administrative activities.
(5) Other Information
The Company's Pineapple segment engages in continuous
research to develop techniques to reduce costs through crop
production and processing innovations and to develop and perfect
new products. Improved production systems have resulted in
increased productivity by the labor force. Research and
development expenses approximated $839,000 in 1999, $815,000 in
1998 and $601,000 in 1997.
The Company has reviewed its compliance with federal, state
and local provisions that regulate the discharge of materials
into the environment or otherwise relate to the protection of the
environment. The Company does not expect any material future
financial impact as a result of compliance with these laws.
The Company has a commitment relating to the filtration of
water wells, as described in Part I, Item 3(B) of this report.
The Company's share of the cost to maintain and operate the
filtration systems for the existing wells and its share of the
cost of the letter of credit has been estimated, and a reserve
for this liability was recorded in 1999. Such amount did not
have a material effect on the Company's financial statements for
the year ended December 31, 1999. The Company is unable to
estimate the range of potential financial impact for the possible
filtration cost for any future wells acquired or drilled by the
County of Maui and, therefore has not made a provision in its
financial statements for such costs.
(d) Financial Information About Foreign and Domestic Operations
and Export Sales
Export sales only arise in the Company's Pineapple segment.
Export sales of pineapple products are primarily to Japan,
Western Europe and Canada. For the last three years, these sales
did not exceed 10% of total consolidated revenues.
Executive Officers of Registrant
Below is a list of the names and ages of the Company's
executive officers, indicating their position with the Company
and their principal occupation during the last five years. The
current terms of the executive officers expire in May of 2000 or
at such time as their successors are elected.
Gary L. Gifford (52) President and Chief Executive Officer
since 1995; Executive Vice
President/Resort 1987 to 1995.
Paul J. Meyer (52) Executive Vice President/Finance since
1984.
Douglas R. Schenk (47) Executive Vice President/Pineapple since
1995; Vice President/Pineapple 1993 to
1995.
Donald A. Young (52) Executive Vice President/Resort since
1995; Executive Vice
President/Operations of Kapalua Land
Company, Ltd. 1992 to 1995.
Scott A. Crockford (44) Vice President/Retail Property since
1995; General Manager of Kaahumanu
Center 1989 to 1995.
Warren A. Suzuki (47) Vice President/Land Management &
Development since October 1995; Vice
President/Construction & Planning of
Kapalua Land Company, Ltd. from May 1995
to October 1995; Director of Project
Coordination of Kapalua Land Company,
Ltd. 1988 to May 1995.
Item 2. PROPERTIES
The Company owns approximately 28,600 acres of land on Maui.
Approximately 30% of the acreage is used directly or indirectly
in the Company's operations and the remaining land is primarily
in pasture or forest reserve. This land, most of which was
acquired from 1911 to 1932, is carried on the Company's balance
sheet at cost. The Company believes it has clear and
unencumbered marketable title to all such property, except for
the following:
(1) a mortgage on the fee and leasehold interest in the 36-acre
Ritz-Carlton Kapalua Hotel site, which secures a loan to the
ground lessee for up to $65 million;
(2) a perpetual conservation easement granted to the State of
Hawaii on a 13-acre parcel at Kapalua;
(3) certain easements and rights-of-way that do not materially
affect the Company's use of its property;
(4) a mortgage on approximately 4,400 acres used in pineapple
operations, which secures the Company's $15 million term loan
agreement;
(5) a mortgage on the three golf courses at Kapalua, which
secures the Company's $15 million revolving credit and $15
million development line arrangement;
(6) a permanent conservation easement granted to The Nature
Conservancy of Hawaii, a non-profit corporation, covering
approximately 8,600 acres of forest reserve land;
(7) a $4,807,000 mortgage on the fee interest in Napili Plaza
shopping center; and
(8) a small percentage of the Company's land in various
locations on which multiple claims exist, some of which the
Company has initiated quiet title actions.
Approximately 22,800 acres of the Company's land are located
in West Maui, approximately 5,700 acres are located in East Maui
and approximately 28 acres are located in Kahului, Maui.
The 22,800 acres in West Maui comprise a largely contiguous
parcel that extends from the sea to an elevation of approximately
5,700 feet and includes nine miles of ocean frontage with
approximately 3,300 lineal feet along sandy beaches, as well as
agricultural and grazing lands, gulches and heavily forested
areas. The West Maui acreage includes the Company's Honolua
pineapple plantation, which uses approximately 3,600 acres in its
operations and approximately 1,650 acres designated for the
Kapalua Resort.
The East Maui property is situated at elevations between
1,000 and 3,000 feet above sea level on the slopes of Haleakala
and approximately 3,140 acres are in pineapple operations as the
Company's Haliimaile plantation.
The Kahului acreage includes offices, a can manufacturing
plant and a pineapple-processing cannery with interconnected
warehouses at the cannery site where finished product is stored.
Approximately 3,500 acres of leased land are used in the
Company's pineapple operations. A major operating lease covering
approximately 1,500 acres of land expired on December 31, 1999.
The lease currently is being renegotiated for a minimum term of
ten years. Fourteen leases expiring at various dates through
2018 cover the balance of the leased property. The aggregate
land rental for all leased land was $589,000 in 1999.
Item 3. LEGAL PROCEEDINGS
A. Antidumping Petition
In June 1994, Maui Pineapple Company, Ltd. and the
International Longshore and Warehouse Union filed an antidumping
petition with the U.S. International Trade Commission (ITC) and
the U.S. Department of Commerce (DOC). The petition alleged that
producers of canned pineapple in Thailand were violating U.S. and
international trade laws by selling their products in the U.S. at
less than fair value, and that such sales were causing injury to
the U.S. industry producing canned pineapple.
In the second quarter of 1995, the DOC and the ITC completed
their investigations concluding that unfair imports of canned
pineapple from Thailand were causing material injury to the
domestic industry. As a result of the affirmative findings of
both the DOC and the ITC, antidumping duties were imposed on all
imports of canned pineapple fruit from Thailand into the United
States with cash duty deposits ranging up to 51%.
The Thai respondents appealed the dumping calculations of
DOC to the United States Court of International Trade (USCIT).
In November 1996, the USCIT remanded certain issues back to the
DOC for recalculation. The Company strongly disagreed with the
USCIT decision on one of the issues, which would substantially
reduce the duties being imposed, and the Company and the DOC
appealed the decision by the USCIT to the United States Court of
Appeals for the Federal Circuit.
In July 1999, the Court of Appeals reversed the decision of
the USCIT, in effect affirming the existing duties on imports
established by the DOC.
B. Chemical Litigation
In Board of Water Supply of the County of Maui v. Shell Oil
Company, et al., Civil No. 96-0370 (Second Circuit Court, State
of Hawaii), (the "DBCP Litigation") the County of Maui (the
"County") sued several chemical manufacturers claiming that they
were responsible for the presence of a nematocide commonly known
as "DBCP" in certain water wells that the County maintains. One
of those chemical manufacturers, Occidental Chemical Corporation
(OCC), claimed that Maui Land & Pineapple Company, Inc. and Maui
Pineapple Company, Ltd. (the "Company") were required to
indemnify OCC against the County's claims under the terms of a
March 14, 1978 Agreement for Sale of DBCP between the Company and
OCC. The Company rejected the OCC tender and the indemnification
and, on November 13, 1997, filed a lawsuit against OCC, Maui Land
& Pineapple Company, Inc. v. Occidental Chemical Corporation,
Civil No. 97-0867 (Second Circuit Court, State of Hawaii),
seeking judgment declaring that the Company has no obligation to
indemnify OCC against the County's claims.
The Company tendered the defense and indemnification of
OCC's claims to its insurers, including Hawaiian Insurance &
Guaranty Company, which has been liquidated by the State of
Hawaii and is now known as HUI/Unico in Liquidation, Inc.
("HUI/Unico"). HUI/Unico agreed to defend the Company against
OCC's claims under a reservation of the right to contest its
obligation to do so. On September 2, 1997, HUI/Unico filed a
lawsuit against the Company, Reynaldo D. Graulty, Insurance
Commissioner of the State of Hawaii, in his capacity as
Liquidator of HUI/Unico in Liquidation, Inc. v. Maui Land &
Pineapple Company, Inc., Civil No. 97-3571-09 (First Circuit
Court, State of Hawaii), seeking judgment declaring that
HUI/Unico had no obligation to defend and indemnify the Company
against OCC's claims.
On August 31, 1999, a Settlement Agreement and Release of
All Claims (the "Settlement Agreement") was executed among the
Defendants in the DBCP Litigation and the County. The Defendants
include OCC, Dow Chemical Company (DOW), Shell Oil Company, AMVAC
Chemical Corporation, American Vanguard Corporation, Brewer
Environmental Industries, LLC, and as Third Party Defendants, the
Company. Under the Settlement Agreement, the Defendants as a
group agreed to pay $3,000,000 in cash for the installation of a
charcoal filter system for one water well, the temporary
installation of a charcoal filter system for two water wells, and
other related costs. The Company's portion of this cash payment,
as detailed in the following paragraph, is $450,000. The
Defendants also agreed to pay 100% of the capital costs to
install charcoal filter systems and to pay ongoing operational
and maintenance costs on four other water wells specified in the
Settlement Agreement in the event that water from these wells
consistently contains levels of DBCP exceeding certain specified
levels and the water from the wells is needed by the County. In
addition, the Defendants have agreed to pay 90% of the capital
costs to install charcoal filter systems and to pay ongoing
operation and maintenance costs for wells that may be acquired by
or that may be drilled by the County if water from these wells
consistently contain levels of DBCP exceeding specified levels
and the water from these wells is needed for use by the County.
There are procedures in the Settlement Agreement under which the
Defendants can attempt to minimize the DBCP impact on future
wells by relocating the wells to areas unaffected by DBCP or by
using less costly methods to remove DBCP from the water.
Defendants are obligated to pay for these capital costs and
operation and maintenance costs through December 1, 2039, and the
obligation is limited to a maximum of 50 wells. The liability of
the Defendants under the Settlement Agreement is joint and
several.
The Settlement Agreement requires the Defendants to post as
security for their obligations a letter of credit in the amount
of $20,000,000, and to maintain the letter of credit, subject to
possible reductions in amount by virtue of payments, for the 40-
year term of the Settlement Agreement. In the event that a claim
for payment by the County is not paid on a timely basis or in the
event that the letter of credit is not renewed by the Defendants
on a timely basis, the County may draw against the then current
letter of credit. The letter of credit is issued on behalf of
Dow in accordance with the terms of a Contribution Agreement,
referenced below. The County has released Defendants from all
liability to the County for DBCP affecting County water wells on
the island of Maui. In addition, the Company has released
potential claims against the County for past transfers of land to
the County for well sites and for potential rental claims for
property upon which wells are situated. Board of Water Supply of
the County of Maui v. Shell Oil Company, et al., Civil No. 96-
0370 was dismissed on September 28, 1999.
Also on August 31, 1999, a Compromise and Settlement
Agreement (the "Contribution Agreement") was executed among the
Defendants in the DBCP Litigation. The Defendants agreed in the
Contribution Agreement to share in various proportions the
liability for the settlement of the DBCP Litigation referenced
above. The Company and OCC agreed to pay in cash a total of
$600,000 of the $3,000,000 cash payment and to each bear 11.25%
of all future costs under the Settlement Agreement. By virtue of
the Occidental Agreement (described below), the Company paid 75%
of this cash cost or $450,000 of the $600,000. With respect to
future costs, under the Occidental Agreement, the Company will be
required to pay a total of 16.875% of the future costs under the
Settlement Agreement. Under the Contribution Agreement, each of
the Defendants agreed to fund its respective proportion of the
obligations under the Settlement Agreement. In the event any of
the Defendants fails to do so, the remaining Defendants must fund
the defaulting defendant's deficiency in order to avoid a
potential default under the Settlement Agreement. Also under the
Contribution Agreement, Dow has agreed to obtain the $20,000,000
letter of credit required by the Settlement Agreement on behalf
of all the Defendants. Each will share in its respective
proportion of the cost of the letter of credit. In addition, in
the event that the letter of credit is drawn upon, either in
whole or in part, each Defendant is required to pay to Dow its
proportionate share of the drawing. The Contribution Agreement
releases all claims of the Defendants against each other for
contribution with respect to claims raised in the DBCP
Litigation.
On August 5, 1999, the Company entered into a settlement
agreement with OCC (the "Occidental Agreement") in which the
Company agreed to pay to OCC $100,000 for a release of liability
for past, present and future attorneys' fees and costs in the
DBCP Litigation and (i) 50% of OCC's share (up to a maximum of
$300,000, subject to potential increase) of the negotiated cost
of remediation of one existing well and the temporary drought
treatment of two wells that are the subject of the DBCP
Litigation and (ii) 50% of OCC's share of future capital,
operation and maintenance costs associated with the remediation
of future DBCP affected wells on Maui as such costs may become
due and payable to the Board of Water Supply. In addition, the
Company agreed to pay 50% of OCC's share of any liability in any
future action brought against it by the County or any other
person alleging property damage allegedly based on contamination
of one or more water wells on Maui by DBCP, whether such
liability is determined by settlement or by verdict, and pay 50%
of OCC's attorneys' fees and costs and expenses incurred in the
defense of such action.
On December 22, 1999, the Company and HUI/Unico entered into
a Release and Settlement Agreement under which the Company
received $600,000 from HUI/Unico in December 1999, the Company
released any right that it had to make any existing or future
claims against HUI/Unico's insurance policies, and HUI/Unico's
declaratory judgement action against the Company was dismissed on
December 29, 1999.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The information set forth under the caption "Common Stock"
on page 19 of the Maui Land & Pineapple Company, Inc. 1999 Annual
Report is incorporated herein by reference.
Item 6. SELECTED FINANCIAL DATA
The information set forth under the caption "Selected
Financial Data" on page 20 of the Maui Land & Pineapple Company,
Inc. 1999 Annual Report is incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
"Management's Discussion and Analysis of Financial Condition
and Results of Operations" on pages 21 through 24 of the Maui
Land & Pineapple Company, Inc. 1999 Annual Report is incorporated
herein by reference.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
"Market Risk" on page 24 of the Maui Land & Pineapple
Company, Inc. 1999 Annual Report is incorporated herein by
reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The "Independent Auditors' Report," "Consolidated Financial
Statements" and "Notes to Consolidated Financial Statements" on
pages 7 through 18 of the Maui Land & Pineapple Company, Inc.
1999 Annual Report are incorporated herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information set forth under the captions "Section 16(a)
Beneficial Ownership Reporting Compliance" and "Election of
Directors" on pages 6 through 8 of the Maui Land & Pineapple
Company, Inc. Proxy Statement, dated March 24, 2000, is
incorporated herein by reference.
Information regarding the registrant's executive officers is
included in
Part I, Item 1. Business.
Item 11. EXECUTIVE COMPENSATION
The information set forth under the caption "Executive
Compensation" on pages 9 through 13 and under the subcaption
"Directors' Meetings and Committees" on page 8 of the Maui Land &
Pineapple Company, Inc. Proxy Statement, dated March 24, 2000, is
incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information set forth under the caption "Security
Ownership of Certain Beneficial Owners and Management" on pages 4
through 6 of the Maui Land & Pineapple Company, Inc. Proxy
Statement, dated March 24, 2000, is incorporated herein by
reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth under the caption "Compensation
Committee Interlocks and Insider Participation" on page 13 of the
Maui Land & Pineapple Company, Inc. Proxy Statement, dated March
24, 2000, is incorporated herein by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) 1. Financial Statements
The following Financial Statements and Supplementary Data of
Maui Land & Pineapple Company, Inc. and subsidiaries and the
Independent Auditors' Report are included in Item 8 of this
report:
Consolidated Balance Sheets, December 31, 1999 and 1998
Consolidated Statements of Operations and Retained Earnings
for the Years
Ended December 31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1999, 1998 and 1997
Notes to Consolidated Financial Statements
(a) 2. Financial Statement Schedules
The following Financial Statement Schedule of Maui Land &
Pineapple Company, Inc. and subsidiaries and the Independent
Auditors' Report is filed herewith:
II. Valuation and Qualifying Accounts for the Years Ended
December 31, 1999, 1998 and 1997.
(a) 3. Exhibits
Exhibits are listed in the "Index to Exhibits" found on
pages 17 to 20 of this Form 10-K.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the last
quarter of the period covered by this report.
(d) The Financial Statements of Kaahumanu Center Associates
for the Years Ended December 31, 1999, 1998 and 1997 are filed as
exhibits.
INDEPENDENT AUDITOR'S REPORT
To the Stockholders and Directors of
Maui Land & Pineapple Company, Inc.:
We have audited the consolidated financial statements of Maui
Land & Pineapple Company, Inc. and its subsidiaries as of
December 31, 1999 and 1998 and for each of the three years in the
period ended December 31, 1999, and have issued our report
thereon, dated February 9, 2000 (February 24, 2000 as to Note
13). Such consolidated financial statements and report are
included in your 1999 Annual Report and are incorporated herein
by reference. Our audits also included the financial statement
schedule of Maui Land & Pineapple Company, Inc. listed in Item
14(a)2. This financial statement schedule is the responsibility
of the Company's management. Our responsibility is to express an
opinion based on our audits. In our opinion, the financial
statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
/S/ DELOITTE & TOUCHE LLP
Honolulu, Hawaii
February 9, 2000
SCHEDULE II
MAUI LAND & PINEAPPLE COMPANY, INC.
AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
ADDITIONS
ADDITIONS CHARGED
BALANCE AT CHARGED TO TO OTHER BALANCE
BEGINNING COSTS AND ACCOUNTS DEDUCTIONS AT END
DESCRIPTION OF PERIOD EXPENSES (describe)(a) (describe)(b) OF PERIOD
(Dollars in Thousands)
Allowance for
Doubtful Accounts
1999 $ 493 $ 292 $ 161 $(163) $ 783
1998 567 191 9 (274) 493
1997 698 47 13 (191) 567
(a) Recoveries.
(b) Write off of uncollectible accounts.
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.
MAUI LAND & PINEAPPLE COMPANY, INC.
March 24, 2000 By /S/ GARY L. GIFFORD
Gary L. Gifford
President & Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the
dates indicated.
By /S/ RICHARD H. CAMERON Date March 24, 2000
Richard H. Cameron
Chairman of the Board
By /S/ PAUL J. MEYER Date March 24, 2000
Paul J. Meyer
Executive Vice President/Finance
(Principal Financial Officer)
By /S/ TED PROCTOR Date March 24, 2000
Ted Proctor
Controller & Assistant Treasurer
(Principal Accounting Officer)
By /S/ DANIEL H. CASE Date March 24, 2000
Daniel H. Case
Director
By /S/ DAVID A. HEENAN Date March 24, 2000
David A. Heenan
Director
By /S/ RANDOLPH G. MOORE Date March 24, 2000
Randolph G. Moore
Director
By /S/ CLAIRE C. SANFORD Date March 24, 2000
Claire C. Sanford
Director
By /S/ FRED E. TROTTER III Date March 24, 2000
Fred E. Trotter III
Director
INDEX TO EXHIBITS
The exhibits designated by an asterisk (*) are filed herewith.
The exhibits not so designated are incorporated by reference to
the indicated filing. All previous exhibits were filed with the
Securities and Exchange Commission in Washington D. C. under file
number 0-6510.
3. Articles of Incorporation and By-laws
3(i)* Restated Articles of Association, as of February 24, 2000.
3(ii) Bylaws (Amended as of March 29, 1999). Exhibit (3ii) to
Form 10-Q for the quarter ended March 31, 1999.
4. Instruments Defining the Rights of Security Holders.
Instruments defining the rights of holders of long-term debt have
not been filed as exhibits where the amount of debt authorized
thereunder does not exceed ten percent of the total assets of the
Company and its subsidiaries on a consolidated basis. The
Company hereby undertakes to furnish a copy of any such
instrument to the Commission upon request.
4.1(i) Amended and Second Restated Revolving Credit and
Term Loan Agreement, dated as of December 4, 1998.
Exhibit 4.1(i) to Form 10-K for the year ended December 31, 1998.
(ii)* 1999 Loan Modification Agreement, dated as of December 30, 1999.
4.2(i) Bridge Loan Agreement between Pacific Coast Farm
Credit Services, ACA and Maui Land & Pineapple Company,
Inc., dated December 30, 1998. Exhibit 4.2(i) to Form
10-K for the year ended December 31, 1998.
(ii) Term Loan Agreement between Pacific Coast Farm Credit
Services and Maui Land & Pineapple Company, Inc., entered into as
of June 1, 1999. Exhibit 4(A) to Form 10-Q for the quarter ended
June 30, 1999.
(iii)* Modifications to Term Loan Agreement, dated February 16, 2000.
10. Material Contracts
10.1(i) Limited Partnership Agreement of Kaahumanu Center
Associates, dated June 23, 1993. Exhibit (10)A to Form
10-Q for the quarter ended June 30, 1993.
(ii) Cost Overrun Guaranty Agreement, dated June 28, 1993.
Exhibit (10)B of Form 10-Q for the quarter ended
June 30, 1993.
(iii) Environmental Indemnity Agreement, dated June 28, 1993.
Exhibit (10)C to Form 10-Q for the quarter ended June 30, 1993.
(iv) Indemnity Agreement, dated June 28, 1993. Exhibit (10)D to
Form 10-Q for the quarter ended June 30, 1993.
(v) Direct Liability Agreement, dated June 28, 1993.
Exhibit (10)E to Form 10-Q for the quarter ended June 30, 1993.
(vi) Amendment No. 1 to Limited Partnership Agreement
of Kaahumanu Center Associates. Exhibit (10)B to Form 8-K,
dated as of April 30, 1995.
vii) Conversion Agreement, dated April 27, 1995. Exhibit (10)C to
Form 8-K, dated as of April 30, 1995.
(viii) Indemnity Agreement, dated April 27, 1995.
Exhibit (10)D to Form 8-K, dated as of April 30, 1995.
10.2 Exhibits 10.2(i) to 10.2(xiv) relate to The Ritz-
Carlton, Kapalua Hotel
(i) Partnership Agreement; Development Agreement;
Operating Agreement; Hotel Ground Lease; Supplemental
Agreement; Construction Loan Agreement; Promissory
Note; Real Property Mortgage; Leasehold Mortgage.
Exhibit (10)A-I to Form 10-Q for the quarter ended
September 30, 1990.
(ii) Dissolution Agreement, dated October 31, 1995.
Exhibit (10)A to Form 10-Q for the quarter ended
September 30, 1995.
(iii) First Mortgage, Security Agreement, Financing
Statement and Assignment of Rentals covering the fee
simple interest and the leasehold interest, securing a
loan of $65,000,000, dated February 24, 1996. Exhibit
10.4(iii) to Form 10-K for the year ended December 31, 1995.
(iv) Subordination, Nondisturbance and Attornment
Agreement (Ground Lessor), dated February 24, 1996.
Exhibit 10.4(iv) to Form 10-K for the year ended
December 31, 1995.
(v) Hotel Ground Lease by and between Maui Land &
Pineapple Company, Inc. (Lessor) and NI Hawaii Resort,
Inc. (Lessee), effective January 1, 1996. Exhibit 10.4(v) to
Form 10-K for the year ended December 31, 1995.
(vi) Amendment Relating to Off-Site Loan, dated January 9, 1996
and effective January 1, 1995. Exhibit 10.4(vi) to
Form 10-K for the year ended December 31, 1995.
(vii) Letter Agreement, dated January 1, 1996, Re:
Nonrecourse Open Account For Off-Site Improvements.
Exhibit 10.4(vii) to Form 10-K for the year ended
December 31, 1995.
(viii) Agreement with NI Hawaii Resort, Inc. (Ground
Lease), dated January 9, 1996. Exhibit 10.4(viii) to
Form 10-K for the year ended December 31, 1995.
(ix) Amendment and Restatement of Tennis Operating
Agreement by and between Kapalua Land Company, Ltd.
(Operator) and NI Hawaii Resort, Inc. (Owner), dated
January 9, 1996. Exhibit 10.4(ix) to Form 10-K for the
year ended December 31, 1995.
(x) Assignment Agreement (Assignment of Amended and
Restated Tennis Operating Agreement), dated January 9, 1996.
Exhibit 10.4(x) to Form 10-K for the year ended December 31, 1995.
(xi) Golf Course Use Agreement by and between Maui Land
& Pineapple Company, Inc. and NI Hawaii Resort, Inc.,
dated January 9, 1996. Exhibit 10.4(xi) to Form 10-K
for the year ended December 31, 1995.
(xii) Memorandum of Understanding between Maui
Hotels, Kapalua Investment Corp. and NI Hawaii Resort, Inc.,
effective October 31, 1995. Exhibit 10.4(xii) to Form 10-K for
the year ended December 31, 1995.
(xiii) Supplemental Agreement, entered into among
Maui Hotels, Kapalua Investment Corp. and NI Hawaii
Resort, Inc. as of February 15, 1996. Exhibit 10.4(xiii) to
Form 10-K for the year ended December 31, 1995.
(xiv) Release of Real Property Mortgage, Security
Agreement and Financing Statement, dated March 12, 1996.
Exhibit 10.4(xiv) to Form 10-K for the year ended December 31, 1995.
10.3 Compensatory plans or arrangements
(i) Executive Deferred Compensation Plan (revised as
of 8/16/91). Exhibit (10)A to Form 10-Q for the
quarter ended September 30, 1994.
(ii) Executive Insurance Plan (Amended). Exhibit (10)A
to Form 10-K for the year ended December 31, 1980.
(iii) Supplemental Executive Retirement Plan (effective as of
January 1, 1988). Exhibit (10)B to Form 10-K for the year ended
December 31, 1988.
(iv) Restated and Amended Executive Change-In-Control
Severance Agreement (Gary L. Gifford, President/CEO),
dated as of March 16, 1999. Exhibit 10.3 (iv) to Form
10-K for the year ended December 31, 1998.
(v) Restated and Amended Executive Change-In-Control
Severance Agreement (Paul J. Meyer, Executive Vice
President/Finance), dated as of March 17, 1999.
Exhibit 10.3 (v) to Form 10-K for the year ended
December 31, 1998.
(vi) Restated and Amended Executive Change-In-Control
Severance Agreement (Donald A. Young, Executive Vice
President/Resort), dated as of March 16, 1999. Exhibit 10.3 (vi)
to Form 10-K for the year ended December 31, 1998.
(vii) Restated and Amended Executive Change-In-
Control Severance Agreement (Douglas R. Schenk,
Executive Vice President/Pineapple), dated as of March 23, 1999.
Exhibit 10.3 (vii) to Form 10-K for the year ended December 31, 1998.
(viii) Restated and Amended Change-In-Control Severance Agreement
(Warren A. Suzuki, Vice President/Land Management),
dated as of March 16, 1999. Exhibit 10.3 (viii) to Form 10-K
for the year ended December 31, 1998.
(ix) Restated and Amended Change-In-Control Severance
Agreement (Scott A. Crockford, Vice President/Retail
Property), dated as of March 16, 1999. Exhibit 10.3 (ix) to
Form 10-K for the year ended December 31, 1998.
(x) Executive Severance Plan, as amended through
November 6, 1998. Exhibit 10.3 (x) to Form 10-K for the
year ended December 31, 1998.
10.4(i) Hotel Ground Lease between Maui Land & Pineapple
Company, Inc. and The KBH Company. Exhibit (10)B to
Form 10-Q for the quarter ended September 30, 1985.
(ii) Third Amendment of Hotel Ground Lease, dated and effective
as of September 5, 1996. Exhibit (10)A to Form 10-Q for the
quarter ended September 30, 1996.
10.5(i)*Settlement Agreement and Release of All Claims
(Board of Water Supply of the County of Maui vs. Shell
Oil Company, et al.)
11. Statement re computation of per share earnings:
Net Income (Loss) divided by weighted Average Common
Shares Outstanding equals Net Income (Loss) Per Common
Share.
13.* Annual Report to Security Holders: Maui Land &
Pineapple Company, Inc. 1999 Annual Report.
21. Subsidiaries of registrant:
All of the following were incorporated in the State of Hawaii:
Maui Pineapple Company, Ltd.
Kapalua Land Company, Ltd.
Kapalua Investment Corp.
Kapalua Water Company, Ltd.
Kapalua Waste Treatment Company, Ltd.
Honolua Plantation Land Company, Inc.
27.* Financial Data Schedule. As of December 31, 1999
and for the year then ended.
99. Additional Exhibits.
99.1* Financial Statements of Kaahumanu Center Associates
for the years ended December 31, 1999, 1998 and 1997.