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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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 November 7, 2002
Common Stock, no par value 7,195,800 shares
MAUI LAND & PINEAPPLE COMPANY, INC.
AND SUBSIDIARIES
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets,
September 30, 2002 (Unaudited) and December 31, 2001 3
Condensed Statements of Operations and Retained Earnings,
Three Months Ended September 30, 2002 and 2001 (Unaudited) 4
Condensed Statements of Operations and Retained Earnings,
Nine Months Ended September 30, 2002 and 2001 (Unaudited) 5
Condensed Statements of Comprehensive Income (Loss),
Three Months Ended September 30, 2002 and 2001 (Unaudited) 6
Condensed Statements of Comprehensive Income (Loss),
Nine Months Ended September 30, 2002 and 2001 (Unaudited) 6
Condensed Statements of Cash Flows,
Nine Months Ended September 30, 2002 and 2001 (Unaudited) 7
Notes to Condensed Financial Statements (Unaudited) 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Item 3. Quantitative and Qualitative Disclosures About Market
Risk 16
Item 4. Controls and Procedures 16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 6. Exhibits and Reports on Form 8-K 17
Signatures 18
Certifications Pursuant to Section 302 of The
Sarbanes-Oxley Act of 2002 19
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES
CONDENSED BALANCE SHEETS
Unaudited
9/30/02 12/31/01
(Dollars in Thousands)
ASSETS
Current Assets
Cash and cash equivalents $ 895 $ 2,173
Accounts and notes receivable 18,181 15,992
Inventories 33,612 26,425
Other current assets 8,599 4,510
Total current assets 61,287 49,100
Investment and other assets 13,955 14,287
Property 262,427 255,306
Accumulated depreciation (150,563) (142,260)
Property - net 111,864 113,046
Total 187,106 176,433
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt and
capital lease obligations 5,618 3,759
Trade accounts payable 9,792 10,534
Other current liabilities 9,545 9,344
Total current liabilities 24,955 23,637
Long-Term Liabilities
Long-term debt and capital lease obligations 50,124 39,581
Accrued retirement benefits 24,504 24,072
Equity in losses of joint venture 12,633 11,518
Other long-term liabilities 3,906 3,636
Total long-term liabilities 91,167 78,807
Minority Interest in Subsidiary 1,033 570
Stockholders' Equity
Common stock, no par value - 7,200,000 shares
authorized, 7,195,800 issued and outstanding 12,455 12,455
Retained earnings 57,577 61,066
Accumulated other comprehensive loss (81) (102)
Stockholders' equity 69,951 73,419
Total $187,106 $ 176,433
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
9/30/02 9/30/01
(Dollars in Thousands
Except Share Amounts)
Revenues
Net sales $29,622 $31,959
Operating income 8,539 8,898
Equity in earnings of joint ventures -- 2,201
Other income 320 2,885
Total Revenues 38,481 45,943
Costs and Expenses
Cost of goods sold 21,489 23,456
Operating expenses 8,299 8,670
Shipping and marketing 5,192 4,787
General and administrative 6,299 4,674
Interest 709 680
Equity in losses of joint ventures 382 577
Total Costs and Expenses 42,370 42,844
Income (Loss) Before Income Taxes (3,889) 3,099
Income Tax Expense (Credit) (1,690) 1,125
Net Income (Loss) (2,199) 1,974
Retained Earnings, Beginning of Period 59,776 54,542
Retained Earnings, End of Period 57,577 56,516
Per Common Share
Net Income (Loss) $(0.31) $ .27
See accompanying Notes to Condensed Financial Statements.
MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
Nine Months Ended
9/30/02 9/30/01
(Dollars in Thousands
Except Share Amounts)
Revenues
Net sales $79,959 $88,743
Operating income 26,990 29,220
Equity in earnings of joint ventures -- 2,440
Other income 1,378 3,732
Total Revenues 108,327 124,135
Costs and Expenses
Cost of goods sold 54,359 62,078
Operating expenses 24,959 26,179
Shipping and marketing 14,701 13,880
General and administrative 17,252 14,042
Interest 1,862 2,230
Equity in losses of joint ventures 1,010 957
Total Costs and Expenses 114,143 119,366
Income (Loss) Before Income Taxes (5,816) 4,769
Income Tax Expense (Credit) (2,327) 1,751
Net Income (Loss) (3,489) 3,018
Retained Earnings, Beginning of Period 61,066 53,498
Retained Earnings, End of Period 57,577 56,516
Per Common Share
Net Income (Loss) $ (.48) $ .42
See accompanying Notes to Condensed Financial Statements.
MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
Three Months Ended
9/30/02 9/30/01
(Dollars in Thousands)
Net Income (Loss) $(2,199) $ 1,974
Other Comprehensive Income (Loss) -
Foreign Currency Translation Adjustment 5 (23)
Comprehensive Income (Loss) $(2,194) $ 1,951
Nine Months Ended
9/30/02 9/30/01
(Dollars in Thousands)
Net Income (Loss) $(3,489) $ 3,018
Other Comprehensive Income (Loss) -
Foreign Currency Translation Adjustment 21 (39)
Comprehensive Income (Loss) $(3,468) $ 2,979
See accompanying Notes to Condensed Financial Statements.
MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
9/30/02 9/30/01
(Dollars in Thousands)
Net Cash Provided by (Used in)
Operating Activities $(5,988) $ 3,101
Investing Activities
Purchases of property (7,711) (10,729)
Proceeds from disposal of property 668 1,011
Increases in other assets (1,112) (982)
Net Cash Used in Investing Activities (8,155) (10,700)
Financing Activities
Payments of long-term debt and capital
lease obligations (11,695) (25,015)
Proceeds from long-term debt 23,462 31,654
Proceeds from short-term debt 1,050 713
Other 48 155
Net Cash Provided by Financing Activities 12,865 7,507
Net Decrease in Cash (1,278) (92)
Cash and Cash Equivalents
at Beginning of Period 2,173 351
Cash and Cash Equivalents
at End of Period $ 895 $ 259
Supplemental Disclosure of Cash Flow Information - Interest (net
of amounts capitalized) of $1,824,000 and $2,332,000 was paid
during the nine months ended September 30, 2002 and 2001,
respectively. Income taxes of $1,483,000 and $599,000 were paid
during the nine months ended September 30, 2002 and 2001,
respectively.
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 include all normal and recurring adjustments
necessary to fairly present the financial position, results of
operations and cash flows of the Company for the interim periods
ended September 30, 2002 and 2001. Significant accounting
policies used in the interim periods are consistent with the
policies as of December 31, 2001.
2. The Company's reports for interim periods utilize numerous
estimates of production cost, general and administrative
expenses, and other costs for the full year. Future actual
amounts may differ from the estimates. Amounts in the interim
reports are not necessarily indicative of results for the full
year.
3. The effective tax rate for 2002 and 2001 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 $754,000 and $689,000 at September 30,
2002 and December 31, 2001, respectively.
5. Inventories as of September 30, 2002 and December 31, 2001
were as follows (in thousands):
9/30/02 12/31/01
Pineapple products
Finished goods $17,106 $13,968
Work in progress 3,716 663
Raw materials 1,808 1,191
Real estate held for sale 3,885 3,709
Merchandise, materials and supplies 7,097 6,894
Total Inventories $33,612 $26,425
6. Average common shares outstanding for the interim periods
ended September 30, 2002 and 2001 were 7,195,800. The Company
has no securities outstanding that would potentially dilute
common shares outstanding.
7. At September 30, 2002 and 2001, the Company did not hold
derivative instruments and did not enter into hedging
transactions.
8. Business Segment Information (in thousands):
Three Months Ended Nine Months Ended
September 30 September 30
2002 2001 2002 2001
Revenues
Pineapple $ 25,599 $ 25,456 $ 67,104 $ 68,622
Resort 11,595 19,051 37,124 51,622
Commercial & Property 1,286 1,398 4,097 3,846
Other 1 38 2 45
Total Revenues 38,481 45,943 108,327 124,135
Operating Profit (Loss)
Pineapple (2,183) (2,001) (4,646) (3,957)
Resort (207) 6,503 2,349 12,679
Commercial & Property (340) (432) (479) (810)
Other (450) (291) (1,178) (913)
Total Operating Profit
(Loss) (3,180) 3,779 (3,954) 6,999
Interest Expense (709) (680) (1,862) (2,230)
Income Tax (Expense)
Credit 1,690 (1,125) 2,327 (1,751)
Net Income (Loss) $(2,199) $ 1,974 $(3,489) $ 3,018
9. The Company adopted FASB Statement No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets," effective
January 1, 2002. Such adoption did not have a material
impact on the financial position, results of operations and
cash flows of the Company for the interim period ended
September 30, 2002.
10. Contingencies
In 1996, the County of Maui sued several chemical
manufacturers claiming that they were responsible for the
presence of a nematocide commonly known as DBCP in certain
water wells on Maui. The Company was a Third Party
Defendant in the suit as a result of a 1978 agreement for
the sale of DBCP to the Company from one of the DBCP
manufacturers. In August 1999, settlement of the case was
reached. The Company's portion of the cash payment in 1999
to install filtration systems in existing contaminated wells
was substantially covered by proceeds of a settlement
concluded on this issue with its insurance carrier. The
Company and the other defendants as a group have agreed that
until December 1, 2039, they will pay for 90% of the capital
cost to install filtration systems in any future wells if
DBCP contamination exceeds specified levels and for the
ongoing maintenance and operating cost for filtration
systems on existing and future wells. The level of DBCP in
the existing wells should decline over time as the wells are
pumped, which may end the requirement for filtration before
2039. To secure the obligations of the defendants under the
settlement agreement, the defendants are required to furnish
to the County of Maui an irrevocable standby letter of
credit throughout the entire term of the agreement. The
Company had estimated a range of its share of the cost to
operate and maintain the filtration systems for the existing
wells and its share of the cost of the letter of credit, and
recorded a reserve for this liability in 1999. The reserve
recorded in 1999 and adjustments thereto through September
30, 2002 did not have a material effect on the Company's
financial statements. There are procedures in the
settlement agreement 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.
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.
In connection with pre-development planning for a land
parcel in Upcountry Maui, pesticide residues in the parcel's
soil were discovered in levels that are in excess of Federal
and Hawaii State limits. Studies by environmental
consultants, in consultation with the State Department of
Health, indicate that remediation probably will be
necessary. The cost of remediation will depend on the
various alternatives as to the use of the property and the
method of remediation. Until the Company makes further
progress on obtaining proper entitlements for the parcel,
the ultimate use of the property remains uncertain and,
therefore, an estimate of the remediation cost cannot be
made.
There are various claims and legal actions pending against
the Company. In the opinion of management, after
consultation with legal counsel, the resolution of these
matters will not have a material adverse effect on the
Company's financial position or results of operations.
Premium Tropicals International, LLC (PTI) is a joint
venture between Royal Coast Tropical Fruit Company, Inc. (a
wholly owned subsidiary of Maui Pineapple Company, Ltd.) and
an Indonesian pineapple grower and canner. The joint
venture markets and sells Indonesian canned pineapple in the
United States. The Company is a guarantor of a $3 million
line of credit, which supports letters of credit to be
issued on behalf of PTI for import trading purposes and a $1
million line of credit used for working capital purposes.
The Company, as a partner in various partnerships, may under
particular circumstances be called upon to make additional
capital contributions.
The Company has guaranteed the payment of up to $10 million
of the $60 million mortgage loan of Kaahumanu Center
Associates.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS
Consolidated
The Company reported a net loss of $2.2 million for the third
quarter of 2002 compared to net income of $2.0 million for the
third quarter of 2001. For the nine months ended September 30,
2002, the Company's net loss was $3.5 million compared to net
income of $3.0 million for the comparable period in 2001.
Consolidated revenues for the third quarter and first nine months
of 2002 were lower by 16% and 13%, respectively, compared to the
same periods in 2001.
General and administrative expenses (including amounts allocated
to the business segments) were higher by 35% and 23%,
respectively, for the third quarter and first nine months of 2002
as compared to the same periods in 2001. Increased legal fees
related to lawsuits in the Pineapple segment, higher pension
costs largely due to lower pension asset investment results in
2001, and increases in general insurance costs, in part due to
the impact of the events of September 11, 2001 on the insurance
industry, were the primary reasons for higher general and
administrative costs in the third quarter and first nine months
of 2002. In addition, increased payroll expense primarily
reflecting wage adjustments, and higher depreciation expense
principally related to the implementation of a portion of a new
accounting and information system, were also responsible for
higher general and administrative costs in 2002.
Interest expense was higher by 4% for the third quarter of 2002,
as compared to the third quarter of 2001 primarily because of a
higher amount of interest capitalized in 2001. In 2001, the
Company capitalized interest on its investment in Kapalua Coconut
Grove LLC and on the construction of the Pineapple Hill Estates
subdivision improvements. There were no comparable projects in
2002. Interest expense was lower by 17% for the first nine
months of 2002 compared to the first nine months of 2001
reflecting lower average borrowings and lower average interest
rates. Average borrowings were lower in 2002 compared to 2001,
because cash flows from operating activities in the fourth
quarter of 2001 were used to reduce borrowings.
Pineapple
The Pineapple segment reported an operating loss of $2.2 million
for the third quarter of 2002 compared to an operating loss of
$2.0 million for the third quarter of 2001. For the first nine
months of 2002, the Pineapple segment produced an operating loss
of $4.6 million compared to an operating loss of $4.0 million for
the first nine months of 2001. Revenues of $25.6 million for the
third quarter of 2002 were 1% higher than the third quarter of
2001. For the first nine months of 2002, revenues of $67.1
million were 2% lower than the same period a year earlier. The
increased loss from the Pineapple segment for the third quarter
and first nine months of 2002 is principally attributable to
higher general and administrative expenses as discussed above.
Case sales volume of canned pineapple was lower in the third
quarter and first nine months of 2002 compared to the same
periods in 2001 reflecting the continued competitive conditions
of the canned pineapple market. The average sales price for the
Company's canned pineapple products for the third quarter of 2002
was the same as the average sales price for the third quarter of
2001, primarily due to firming of prices for some canned
pineapple products. For the first nine months of 2002, the
average sales price for canned pineapple products was lower than
the same period in 2001. Increased revenues from fresh pineapple
sales in the third quarter and first nine months of 2002
partially offset lower revenues from canned sales.
The Company's average cost per case of canned pineapple sold was
slightly lower in the third quarter and first nine months of 2002
as compared to the same periods in 2001. Average shipping and
selling costs per case sold were higher in the third quarter and
first nine months of 2002 compared to the same periods in 2001
primarily reflecting airfreight surcharges that went into effect
in December 2001.
At the request of the International Longshore and Warehouse
Union, the expiration of the collective bargaining contract
covering approximately 1,000 employees in the Company's Pineapple
segment has been extended from November 30, 2002 to January 31,
2003.
For the first seven months of 2002, the volume of imports of
canned pineapple into the United States increased and the average
unit value of these imports also increased as compared to the
same period in 2001. While the increase in average unit value is
consistent with the Company's understanding that the availability
of canned pineapple from certain foreign countries may be
tightening, the increase in volume continues to negatively affect
the market for the Company's products.
The labor dispute between the West Coast longshoremen and
shipping companies resulted in a ten-day shutdown of 29 West
Coast shipping ports. On October 9, 2002, President George W.
Bush invoked the 1947 Taft-Hartley Act to start an 80-day
"cooling-off period" ending the shutdown of the ports. Although
the West Coast ports are currently in operation, shipments
arriving at the ports are taking several days longer to be
unloaded on the West Coast. Uncertainty remains as to further
disruption of shipping service at the conclusion of the 80-day
"cooling-off" period. Approximately 400,000 cases of the
Company's canned and fresh pineapple products were enroute from
Kahului to the West Coast when the work stoppage began on
September 29, 2002. The effect on the Company of the labor
dispute has been a delay of deliveries and invoicing, as well as
some loss of product. The Company is currently incurring
additional airfreight costs and inter-modal rerouting costs to
make timely deliveries to its customers and additional
warehousing, labeling and casing costs to meet estimated orders
for the remainder of 2002 and the first quarter of 2003. The
Company has not estimated the fourth quarter 2002 effect or the
potential effect of the labor dispute on its financial
statements.
In August 2002, the Company filed with the U.S. Customs Service a
certification for claim of distribution under the Continued
Dumping and Subsidy Offset Act of 2000. This Act provides for
disbursement to the injured U.S. companies of antidumping duties
collected by Customs. The Company anticipates that it will
receive a distribution in December 2002, although the amount is
not known. In December 2001, the Company received a $1.8 million
cash distribution from the U. S. Customs Service pursuant to this
Act.
In August 2002, the Department of Commerce was to have released
final antidumping duties pursuant to the sixth annual
administrative review of antidumping duties on pineapple imports
from Thailand. The Company's appeal of the results of the fifth
annual administrative review continues and it is estimated that
the court will render a decision sometime in mid-2003.
Resort
Kapalua Resort reported an operating loss of $207,000 for the
third quarter of 2002 compared an operating profit of $6.5
million for the third quarter of 2001. For the first nine months
of 2002, the Resort segment produced an operating profit of $2.3
million as compared to an operating profit of $12.7 million for
the first nine months of 2001. Revenues for the third quarter
and first nine months of 2002 were lower by 39% and 28%,
respectively, as compared to the same periods in 2001. The
reduction in revenues and operating profit from the Resort
segment was primarily due to lower contributions from real estate
sales reflecting the timing of bringing new real estate product
to market.
Resort operating profit from the sale of real estate development
projects for the third quarter and first nine months of 2002 was
lower by $7.1 million and $9.2 million, respectively, as compared
to the same periods in 2001. Real estate sales for the first
nine months of 2002 includes the sale of four lots at Pineapple
Hill Estates and two lots at Plantation Estates. Two of the
Pineapple Hill Estates lot sales took place in the third quarter.
The aggregate sales price for all six lots was $4 million
generating operating profits of $1.3 million.
The first nine months of 2001 included the recognition of profit
of $5.0 million from the sale of 19 lots at Pineapple Hill
Estates, on the percentage-of-completion method and operating
profit of $1 million from the sale of a remnant land parcel
within the Kapalua Resort. In addition, during the first nine
months of 2001, 18 of the 36 units in The Coconut Grove luxury
condominium project closed escrow resulting in approximately $3.9
million and $4.6 million of operating profit recognized by the
Resort for the third quarter and first nine months of 2001,
respectively. The sales of all units in this condominium project
were completed by year-end 2001. The Kapalua Coconut Grove LLC
was a joint venture in which the Company had a 50% interest.
The Pineapple Hill Estates subdivision is a 31-lot subdivision
that began construction in March of 2001 and was completed in
November 2001. Twenty lots were sold in 2001. In October 2002,
four Pineapple Hill Estates sales contracts with aggregate sales
price of $2.5 million closed escrow. Of the three remaining lots
in Pineapple Hill Estates one has been contributed to a joint
venture for construction of a home and should be available for
sale in January 2003.
Resort real estate sales are cyclical and depend on a number of
factors. Results of real estate sales activity for the first
nine months of 2002 are not necessarily indicative of future
performance trends for this segment.
Excluding real estate sales, operating profit from Kapalua Resort
for the third quarter of 2002 improved by $390,000 as compared to
the third quarter of 2001 primarily due to increased real estate
commissions on property resales. For the first nine months of
2002, reduced golf play, lower merchandise sales and reductions
in contributions from other Resort operations more than offset
increased profits from real estate commissions.
Hotel room occupancies for the State of Hawaii, as well as for
the island of Maui and the Kapalua Resort were higher in
September 2002 as compared to September 2001. However, for the
first nine months of 2002, occupancies continued to be lower than
the same period in 2001.
Commercial & Property
The Commercial & Property segment reported an operating loss of
$340,000 for the third quarter of 2002 compared to an operating
loss of $432,000 for the third quarter of 2001. For the first
nine months of 2002, the segment produced an operating loss of
$479,000 compared to an operating loss of $810,000 for the same
period a year earlier. Results for the first nine months of 2002
included a non-recurring $622,000 gain on the first quarter sale
of a real estate parcel. Revenues of $1.3 million for the third
quarter of 2002 were 8% lower than the third quarter of 2001.
For the first nine months of 2002, revenues of $4.1 million were
7% higher than the comparable period in 2001.
The reduction in operating loss for the third quarter of 2002 was
due to better results from Queen Kaahumanu Center, reflecting
lower expense for uncollectible accounts in 2002 and write off of
tenant improvements included in the third quarter of 2001.
Excluding the aforementioned land sale, lower results for the
first nine months of 2002 were attributable to increased losses
from Queen Kaahumanu Center primarily because of lower tenant
sales.
In the May of 2002, the Company began construction of a 45-lot
employee housing subdivision in West Maui with a total sales
price of approximately $4.2 million. The Company has binding
contracts of sale on all 45 lots and expects that the
improvements will be completed and the sales will be closed
before year-end.
LIQUIDITY, CAPITAL RESOURCES AND OTHER
At September 30, 2002, total debt including capital leases was
$55.7 million, an increase of $12.4 million from year-end 2001.
The increased debt level primarily reflects the seasonal
pineapple canning activity of the summer months. The Company's
debt level is expected to decrease in the fourth quarter, which
is when canned pineapple sales are historically highest. Unused
long- and short-term credit lines totaled $4.0 million at
September 30, 2002. These credit facilities and cash flows from
operating activities are estimated to be sufficient to cover the
Company's cash requirements through 2002. However, should
additional funds become necessary, the Company anticipates that
it would seek additional financing.
The West Coast labor dispute may cause some of the Company's
Pineapple revenues and cash flows that were expected in the
fourth quarter of 2002 to be realized in 2003. The Company does
not have an estimate of the effect of the dispute to date on its
financial statements or the potential effect of a continuation of
the labor dispute.
For the nine months ended September 30, 2002, net cash used by
operating activities was $6.0 million compared to net cash of
$3.1 million provided by operating activities for the same period
in 2001. Aside from the net loss of $3.5 million for the first
nine months of 2002 and the net income of $3.0 million for the
first nine months of 2001, the decreased cash flows for 2002 are
primarily due to normal variations in the timing of cash receipts
and disbursements.
The Company's capital expenditures and expenditures for land use
planning are expected to be approximately $10.9 million in 2002.
Approximately $3.2 million is estimated to be for replacement of
existing equipment and facilities. Some of these expenditures
may be funded with capital leases or equipment financing. In the
third quarter of 2002, the Company closed $1.4 million in
equipment financing.
In 2002, the Company expects to make cash advances of
approximately $1.3 million to Kaahumanu Center Associates to
cover cash deficits from operations and capital expenditures.
Advances through the first nine months of 2002 totaled $400,000.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements, within the
meaning of Private Securities Litigation Reform Act of 1995,
which are provided to assist in the understanding of certain
aspects of the Company's anticipated future financial
performance. The words "estimate," "project," "intend,"
"expect," "believe" and similar expressions are intended to
identify forward-looking statements. Among other things, the
forward-looking statements in this report address the Company's
expectations regarding the volume of imports of canned pineapple,
labor relations in Hawaii and the West Coast, distributions under
the Continued Dumping and Subsidy Offset Act of 2000, timing of
Resort real estate sales, the closing of lot sales at an employee
housing subdivision, level of capital expenditures, cash advances
to Kaahumanu Center Associates, and the adequacy of credit
facilities and the timing and adequacy of operating cash flows.
Forward-looking statements contained in this report or otherwise
made by the Company are subject to significant risks and
uncertainties, many of which are outside of the Company's
control. Although the Company believes that the assumptions
underlying its forward-looking statements are reasonable, any
assumption could prove to be inaccurate and that could cause
actual results to differ materially from those in the forward-
looking statements. Potential risks and uncertainties include,
but are not limited to, those risks and uncertainties as
disclosed in the Company's Annual Report to Shareholders and Form
10-K filing with the Securities and Exchange Commission. Unless
expressly stated, the Company does not undertake and specifically
disclaims any obligation to update any forward-looking statements
to reflect events or circumstances after the date of such
statements.
Item 3. Quantitative and Qualitative Disclosures about Market
Risk
The Company's primary market risk exposure with regard to
financial instruments is to changes in interest rates. The
Company attempts to manage this risk by monitoring interest rates
and future cash requirements, and evaluating opportunities to
refinance borrowings at various maturities and interest rates.
There were no material changes to the Company's market risk
exposure during the first nine months of 2002.
Item 4. Controls and Procedures
(a) Evaluation of disclosure controls and procedures. Within
the 90-day period prior to the date of this report, the
Company's principal executive officer and principal
financial officer evaluated the effectiveness of the
Company's disclosure controls and procedures. Based on this
evaluation, it was concluded that the Company's disclosure
controls and procedures are effective in timely identifying
material information that should be disclosed in this
report.
(b) Changes in internal controls. There have been no changes in
the Company's internal controls or other factors that could
significantly affect the Company's disclosure controls and
procedures subsequent to the date the evaluation was
undertaken.
Part II OTHER INFORMATION
Item 1. Legal Proceedings
See Part I, Item 3. of Form 10-K for the year ended December 31,
2001 for background information on the following legal
proceedings.
Del Monte Fresh Produce (Hawaii) Inc. v. Maui Pineapple Company,
Ltd., Civil No. 01-1-2671-09, First Circuit Court of the State of
Hawaii. On August 29, 2002, a motion was granted declaring that
the plaintiff has the right to use the Ginaca machines, which are
the subject of this action, in a mainland fresh fruit operation.
Maui Pineapple Company, Ltd., et al. v. Del Monte Fresh Produce
(Hawaii), Inc., et al. Civil No. 01-1-0173(1), (Circuit Court of
the Second Circuit, State of Hawaii). Trial date has been set
for June of 2003.
Maui Pineapple Company, Ltd., et al. v. Del Monte Corporation, et
al., Case No: C 01-01449 CRB, in the United States District Court
For the Northern District of California (San Francisco Division).
Trial date has been set for November 25, 2002.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 99.1 - Certification Pursuant To 18 U.S.C.
Section 1350, As Adopted Pursuant To Section 906
Of The Sarbanes-Oxley Act Of 2002
Exhibit 99.2 - Certification Pursuant To 18 U.S.C.
Section 1350, As Adopted Pursuant To Section 906
Of The Sarbanes-Oxley Act Of 2002
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K 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.
November 8, 2002 /S/ PAUL J. MEYER
Date Paul J. Meyer
Executive Vice President/Finance
(Principal Financial Officer)
CERTIFICATIONS PURSUANT TO
SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION
I, Paul J. Meyer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Maui Land &
Pineapple Company, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14 ) for the registrant and we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b. evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing the
equivalent function):
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Date: November 8, 2002
/S/ PAUL J. MEYER
Name: Paul J. Meyer
Title: Executive Vice
President/Finance
CERTIFICATION
I, Gary L. Gifford, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Maui Land &
Pineapple Company, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14 ) for the registrant and we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b. evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing the
equivalent function):
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Date: November 8, 2002
/S/ GARY L. GIFFORD
Name: Gary L. Gifford
Title: President & Chief
Executive Officer