-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DIIdtNyK5E4TAtvD2TBUgksrUUFqIupPSrdAJxt/dLTN0p4Fl39dKWYf8436+ueS WTcReL0nyEpNabnJe2BYDQ== 0000063330-03-000019.txt : 20030814 0000063330-03-000019.hdr.sgml : 20030814 20030813133751 ACCESSION NUMBER: 0000063330-03-000019 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20030630 FILED AS OF DATE: 20030813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MAUI LAND & PINEAPPLE CO INC CENTRAL INDEX KEY: 0000063330 STANDARD INDUSTRIAL CLASSIFICATION: CANNED, FRUITS, VEG & PRESERVES, JAMS & JELLIES [2033] IRS NUMBER: 990107542 STATE OF INCORPORATION: HI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06510 FILM NUMBER: 03840243 BUSINESS ADDRESS: STREET 1: PO BOX 187 STREET 2: 120 KANE ST CITY: KAHULUI MAUI STATE: HI ZIP: 96732 BUSINESS PHONE: 8088773351 MAIL ADDRESS: STREET 1: PO BOX 187 CITY: KAHULUI STATE: HI ZIP: 96733 10-Q 1 sec10q03.txt MAUI LAND & PINEAPPLE COMPANY, INC. 2ND QUARTER 10-Q 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 JUNE 30, 2003 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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [x] 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 August 4, 2003 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, June 30, 2003 (Unaudited) and December 31, 2002 3 Condensed Statements of Operations and Retained Earnings, Three Months Ended June 30, 2003 and 2002 (Unaudited) 4 Condensed Statements of Operations and Retained Earnings, Six Months Ended June 30, 2003 and 2002 (Unaudited) 5 Condensed Statements of Comprehensive Income Three Months Ended June 30, 2003 and 2002 (Unaudited) 6 Condensed Statements of Comprehensive Income Six Months Ended June 30, 2003 and 2002 (Unaudited) 6 Condensed Statements of Cash Flows, Six Months Ended June 30, 2003 and 2002 (Unaudited) 7 Notes to Condensed Financial Statements (Unaudited) 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12 Item 3. Quantitative and Qualitative Disclosures About Market Risk 17 Item 4. Controls and Procedures 17 PART II. OTHER INFORMATION Item 1. Legal Proceedings 18 Item 4. Submission of Matters to a Vote of Security-Holders 18 Item 6. Exhibits and Reports on Form 8-K 19 Signatures 20 PART I FINANCIAL INFORMATION Item 1. Financial Statements MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES CONDENSED BALANCE SHEETS Unaudited 6/30/03 12/31/02 (Dollars in Thousands) ASSETS Current Assets Cash and cash equivalents $ 1,023 $ 658 Accounts and notes receivable 18,836 22,315 Inventories 27,177 23,365 Other current assets 11,065 8,385 Total current assets 58,101 54,723 Property 258,148 264,647 Accumulated depreciation (153,060) (152,449) Property - net 105,088 112,198 Other Assets 16,608 17,274 Total 179,797 184,195 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Current portion of long-term debt and capital lease obligations 6,450 6,846 Trade accounts payable 10,279 13,057 Other current liabilities 9,773 9,318 Total current liabilities 26,502 29,221 Long-Term Liabilities Long-term debt and capital lease obligations 44,054 43,252 Accrued retirement benefits 34,221 33,089 Equity in losses of joint venture 13,564 12,840 Other long-term liabilities 1,451 1,867 Total long-term liabilities 93,290 91,048 Minority Interest in Subsidiary 1,935 1,187 Stockholders' Equity Common stock, no par value - 7,200,000 shares authorized, 7,195,800 issued and outstanding 12,455 12,455 Retained earnings 50,699 55,357 Accumulated other comprehensive loss (5,084) (5,073) Stockholders' equity 58,070 62,739 Total $179,797 $ 184,195 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 6/30/03 6/30/02 (Dollars in Thousands Except Share Amounts) Revenues Net sales $26,591 $25,227 Operating income 8,660 8,092 Other income 1,239 242 Total Revenues 36,490 33,561 Costs and Expenses Cost of goods sold 17,885 16,814 Operating expenses 8,723 8,316 Shipping and marketing 5,038 4,761 General and administrative 8,933 5,767 Interest 655 572 Equity in losses of joint ventures 452 388 Total Costs and Expenses 41,686 36,618 Loss Before Income Taxes and Minority Interest (5,196) (3,057) Income tax benefit 1,432 1,054 Minority interest in income of consolidated subsidiary (268) (63) Net Loss (4,032) (2,066) Retained Earnings, Beginning of Period 54,731 61,842 Retained Earnings, End of Period 50,699 59,776 Per Common Share Net Loss $ (.56) $ (.29) See accompanying Notes to Condensed Financial Statements. MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES CONDENSED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (UNAUDITED) Six Months Ended 6/30/03 6/30/02 (Dollars in Thousands Except Share Amounts) Revenues Net sales $53,746 $50,337 Operating income 18,618 18,451 Other income 1,399 1,058 Total Revenues 73,763 69,846 Costs and Expenses Cost of goods sold 34,747 32,870 Operating expenses 17,094 16,660 Shipping and marketing 10,114 9,509 General and administrative 15,514 10,834 Interest 1,289 1,153 Equity in losses of joint ventures 708 628 Total Costs and Expenses 79,466 71,654 Loss Before Income Taxes and Minority Interest (5,703) (1,808) Income tax benefit 1,741 637 Minority interest in income of consolidated subsidiary (696) (119) Net Loss (4,658) (1,290) Retained Earnings, Beginning of Period 55,357 61,066 Retained Earnings, End of Period 50,699 59,776 Per Common Share Net Loss $ (.65) $ (.18) See accompanying Notes to Condensed Financial Statements. MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) Three Months Ended 6/30/03 6/30/02 (Dollars in Thousands) Net Loss $(4,032) $ (2,066) Other Comprehensive Loss - Foreign Currency Translation Adjustment (13) (8) Comprehensive Loss $(4,045) $ (2,074) Six Months Ended 6/30/03 6/30/02 (Dollars in Thousands) Net Loss $(4,658) $ (1,290) Other Comprehensive Income (Loss) - Foreign Currency Translation Adjustment (11) 16 Comprehensive Loss $(4,669) $ (1,274) See accompanying Notes to Condensed Financial Statements. MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended 6/30/03 6/30/02 (Dollars in Thousands) Net Cash Provided by (Used in) Operating Activities $ 3,742 $ (2,217) Investing Activities Purchases of property (3,959) (5,416) Proceeds from disposal of property 30 630 Increases in other assets (602) (996) Net Cash Used in Investing Activities (4,531) (5,782) Financing Activities Payments of long-term debt and capital lease obligations (11,974) (8,823) Proceeds from long-term debt 12,847 14,389 Proceeds from (payment of) short-term debt (320) 1,000 Other 601 168 Net Cash Provided by Financing Activities 1,154 6,734 Net Increase (Decrease) in Cash 365 (1,265) Cash and Cash Equivalents at Beginning of Period 658 2,173 Cash and Cash Equivalents at End of Period $ 1,023 $ 908 Supplemental Disclosures of Cash Flow Information - Interest (net of amounts capitalized) of $1,321,000 and $1,137,000 was paid during the six months ended June 30, 2003 and 2002, respectively. Income taxes of $(288,000) and $1,483,000 were (received) paid during the six months ended June 30, 2003 and 2002, 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 contain all normal and recurring adjustments necessary to fairly present the statement of financial position, results of operations and cash flows for the interim periods ended June 30, 2003 and 2002. 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 2003 and 2002 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 $1,040,000 and $572,000 at June 30, 2003 and December 31, 2002, respectively. 5. Inventories as of June 30, 2003 and December 31, 2002 were as follows (in thousands): 6/30/03 12/31/02 Pineapple products Finished goods $ 9,384 $11,829 Work in progress 4,214 963 Raw materials 3,234 1,696 Real estate held for sale 4,434 2,134 Merchandise, materials and supplies 5,911 6,743 Total Inventories $27,177 $23,365 6. Business Segment Information (in thousands): Three Months Ended Six Months Ended June 30 June 30 2003 2002 2003 2002 Revenues Pineapple $23,876 $22,163 $44,774 $41,505 Resort 10,529 10,309 23,824 25,529 Commercial & Property 2,105 1,088 5,184 2,811 Other (20) 1 (19) 1 Total Revenues 36,490 33,561 73,763 69,846 Operating Profit (Loss) Pineapple (2,879) (1,322) (4,416) (2,463) Resort (1,028) (400) 266 2,556 Commercial & Property (139) (458) 210 (139) Other (763) (368) (1,170) (728) Total Operating Loss (4,809) (2,548) (5,110) (774) Interest Expense (655) (572) (1,289) (1,153) Income Tax Benefit 1,432 1,054 1,741 637 Net Loss $(4,032) $(2,066) $(4,658) $(1,290) 7. In June 2003, the Company entered into an agreement to sell the Napili Plaza and in July 2003, the Company, as managing member for Kaahumanu Center Associates, signed an agreement to sell Queen Kaahumanu Center. At June 30, 2003, the Napili Plaza property, plant and equipment (net of accumulated depreciation of $4,373,000) has been classified as Real Estate Held for Sale. On August 1, 2003, the sale of Napili Plaza was concluded and the Company's $4.5 million mortgage loan on the on the property was repaid. The Company will report a pretax gain of approximately $2 million in the third quarter of 2003. The sale of Queen Kaahumanu Center is expected to close before the end of third quarter 2003. 8. Average common shares outstanding for the interim periods ended June 30, 2003 and 2002 were 7,195,800. The Company has no securities outstanding that would potentially dilute common shares outstanding. 9. At June 30, 2003 and 2002, the Company did not hold derivative instruments and did not enter into hedging transactions. 10.On January 1, 2003, the Company adopted Statement of Financial Accounting Standard No. 146, Accounting for Costs Associated with Exit or Disposal Activities ("SFAS No. 146"). SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred, and not at the date of an entity's commitment to an exit plan, as was previously required. The adoption of SFAS No. 146 did not have a material effect on the Company's financial statements. On January 1, 2003, the Company adopted Financial Accounting Standards Board Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others ("FIN No. 45"). FIN No. 45 requires an entity to disclose in its financial statement footnotes many of the guarantees or indemnification agreements that it issues. In addition, under certain circumstances, an entity will have to recognize a liability at the time it enters into the guarantee. The adoption of FIN No. 45 did not have a material impact on the Company's financial statements. 11.Certain amounts for the prior year have been reclassified to conform to the current year presentation. 12.Contingencies Pursuant to a 1999 settlement agreement resulting from a lawsuit filed by the County of Maui, the Company and several chemical manufacturers have agreed that until December 1, 2039, they will pay for 90% of the capital cost to install filtration systems in any future water wells if the presence of a nematocide commonly known as DBCP exceeds specified levels, and for the ongoing maintenance and operating cost for filtration systems on existing and future wells. To secure its obligations the Company and the other defendants in the lawsuit 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 June 30, 2003, did not have a material effect on the Company's financial statements. 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. 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. 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. 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. In addition to the matters noted above, there are various other claims and legal actions pending against the Company. In the opinion of management, after consultation with legal counsel, the resolution of these other 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. Both lines expire on August 31, 2003. 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 $57 million mortgage loan of Kaahumanu Center Associates, a limited partnership of which the Company is the general partner. Upon closing of the sale of Queen Kaahumanu Center, the mortgage loan will be repaid and the guarantee will be released (see Note 7 to Condensed Financial Statements). At June 30, 2003, the Company had purchase commitments under signed contacts totaling $6.1 million, which relate primarily to pineapple purchases for its Costa Rican operations and to real estate projects on Maui. 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 $4,032,000 ($.56 per share) for the second quarter of 2003 compared to a net loss of $2,066,000 ($.29 per share) for the second quarter of 2002. Consolidated revenues for the second quarter of 2003 were $36.5 million compared to $33.6 million for the second quarter of 2002. For the first half of 2003, the Company had a net loss of $4,658,000 ($.65 per share) compared to a net loss of $1,290,000 ($.18 per share) for the first half of 2002. Consolidated revenues for the first half of 2003 were $73.8 million compared to $69.8 million for the same period in 2002. Increased losses for the second quarter and first half of 2003 were due to lower net results from the Company's major business segments, Pineapple and Resort, and increased general and administrative expenses. The Commercial & Property segment produced improved results for the second quarter and first half of 2003. Consolidated general and administrative expenses increased by 57% and 45% for the second quarter and first half of 2003, respectively, compared to the same periods in 2002. General and administrative expenses are incurred at the segment level and at the corporate level. Approximately 70% of the general and administrative expenses incurred at the corporate level were allocated to the business segments in 2003 and 2002. Operating profit (loss) reported for the business segment is after allocation of corporate general and administrative expense, but before interest expense and income taxes. Charges related to management changes and employee layoffs in the Pineapple segment accounted for approximately 49% and 33% of the increased consolidated general and administrative expense for the second quarter and first half of 2003, respectively. Litigation costs incurred in the Pineapple segment, other consultant fees, higher depreciation expense and increased pension expense were responsible for approximately 47% and 57% of the increased general and administrative expense for the second quarter and first half of 2003, respectively. Consolidated pension expense for the year 2003 is expected to be $2.7 million, an increase of about 100% over 2002. This increase reflects the decline in pension asset values in 2002 and a decrease in assumed discount rate as of December 31, 2002. While pension asset values have improved in the first six months of 2003, fixed long-term interest rates have continued to decline. At year-end 2003, the Company could be required to recognize an additional minimum liability as prescribed by SFAS No. 87, Employers' Accounting for Pensions. The liability would not affect net income, but would be recorded as a reduction of equity through a non-cash charge to accumulated other comprehensive income. Interest expense was higher in the second quarter and first half of 2003 compared to the same periods in 2002 because of higher average borrowings. Borrowings were higher in 2003 because cash flows from operating activities were insufficient to reduce debt. See Liquidity, Capital Resources and Other for further discussion of cash flows. The Company's average interest rates were lower in the second quarter and first half of 2003 compared to the same periods in 2002. Pineapple Pineapple operations produced an operating loss of $2.9 million for the second quarter of 2003 compared to an operating loss of $1.3 million for the second quarter of 2002. For the first half of 2003 the operating loss from Pineapple was $4.4 million compared to $2.5 million for the first half of 2002. Revenues for the second quarter and first half of 2003 were $23.9 million and $44.8 million, respectively, an increase of approximately 8% for both the quarter and six-month period versus the comparable periods in 2002. Increased revenues for the second quarter and the first six months of 2003 were due primarily to higher volume and prices of pineapple sales from Costa Rica by the Company's 100% owned subsidiary, Royal Coast Tropical Fruit Company, Inc. and increased sales volume of Hawaiian GoldTM, fresh whole pineapple grown on Maui. Increased revenues for the first six months of 2003 also reflected higher average sales prices for the Company's canned pineapple products. Sales volume of the Company's canned pineapple products was lower in the second quarter and first half of 2003 compared to 2002 and currently represents approximately 65% of the Pineapple segment net sales compared to approximately 75% of the segment's net sales a year ago. Revenues for the second quarter of 2003 include $850,000 from a non-recurring cash receipt in April 2003. Cost of sales as a percentage of sales was lower in the second quarter and first half of 2003 compared to 2002 primarily because of the larger proportion of fresh pineapple sales, which generally have a higher profit margin compared to canned sales, and because of lower production cost (primarily at the plantations) in 2003. The increased operating loss for the Pineapple segment for the second quarter and first half of 2003 was primarily due to increased general and administrative expenses as discussed above. General and administrative expense for the Pineapple segment increased by $2.1 million and $3.4 million in the second quarter and first half of 2003, respectively, compared to the same periods in 2002. Significant litigation cost to defend the Company's right to grow certain hybrid pineapple varieties were incurred in the first half of 2003, but the expense is not expected to continue after August 2003. Higher depreciation charged to Pineapple general and administrative expense is attributable to the integrated accounting system that was fully placed in service as of January 2003. This depreciation expense currently is expected to be approximately $1.9 million per year in 2003 through 2006. Production costs are expected to be lower in 2003 because of a reduction in the number of acres that will be planted as compared to 2002. In accordance with Hawaii industry practice, the Company's policy is to charge the costs of growing pineapple to production in the year incurred rather than deferring these costs until the year of harvest. This reduction in acres to be planted in 2003 as compared to 2002 is expected to reduce cost of sales for the year 2003 by approximately $1.0 million. The Company's canned pineapple is sold in competition with product produced in foreign countries; thus, the volume of imports of canned pineapple and the average unit value declared on these imports influences the competitive environment of the market for the Company's products. The effect on the marketplace of a change in the volume or average unit value is not necessarily immediate, and other factors also influence the market, but the import statistics may be indicative of future market condition. For the first five months of 2003, the volume of imports of canned pineapple into the United States increased by 14% and the average unit value increased by 8%. Antidumping duties ranging from less than 1% up to 51% have been in effect on canned pineapple fruit imported from Thailand since mid-1995. At the request of either the Company or a Thai producer, the amount of duties on pineapple imports from Thailand is subject to annual administrative reviews by the U. S. Department of Commerce. Based on the preliminary results of the seventh annual administrative review announced in June 2003, three Thai importers have dumping margins that are considered "de minimis." A determination of a de minimis dumping margin for three consecutive years will result in an importer being exempt from the anti-dumping duty order. In 2001, the Company had appealed a determination that one large Thai producers' dumping margin was de minimis, and in April 2003, the margin was recomputed to an amount in excess of the de minimis threshold. Over the last several years, the Company has been reducing the acreage planted in Champaka pineapple (primarily a canning variety) and increasing the acreage in Hawaiian GoldTM pineapple (primarily sold as fresh whole fruit), resulting in a net reduction in the total planted acreage. This reduction in planted acreage has resulted in a gradual reduction in the need for seasonal labor as well as reductions in the full-time labor force. The first six months of 2003 includes approximately $400,000 of employment severance charges. Acceleration of the reduction in canned pineapple production will result in further decreases to the size of the workforce. The Company's labor force needs are being evaluated and additional charges for severance and termination benefits may be necessary in future periods. The Company is also evaluating the fixed assets used in its Pineapple operations in an effort to determine the most efficient usage of its assets based on an overall reduction in canned pineapple production. This evaluation may result in additional depreciation or impairment charges. Resort Kapalua Resort reported an operating loss for the second quarter of 2003 of $1,028,000 compared to an operating loss of $400,000 for the second quarter of 2002. For the first half of 2003 Kapalua produced an operating profit of $266,000 compared to an operating profit of $2,556,000 for the first half of 2002. Revenues for the second quarter of 2003 were 2% higher than the second quarter of 2002. For the first half of 2003, revenues of $23.8 million were 7% lower than the same period in 2002. Increased revenues for the second quarter of 2003 compared to the second quarter of 2002 were attributable to increased hotel and villa room occupancies at Kapalua, an increased number of paid rounds of golf, higher green fees and to improved merchandise sales. For the first half of 2003, the overall room occupancy at the Resort and paid rounds of golf were lower than the first half of 2002. The increase in merchandise sales in the second quarter and first half of 2003 compared to the same periods in 2002 primarily reflects an increase in Company-operated retail space at Kapalua Resort. The increased operating loss for the second quarter of 2003 and the reduction in operating profit for the first half of 2003 was due to fewer sales of new real estate product in 2003, higher operating costs and higher direct and allocated general and administrative expenses as explained above. Operating cost increases were primarily due to labor related costs. Operating profit attributable to real estate development decreased by $400,000 and $1.5 million in the second quarter of 2003 and first half of 2003, respectively, compared to the same periods in 2002, reflecting lower inventory of new real estate product available for sale. There were no sales of new real estate product in the second quarter of 2003, while the second quarter of 2002 included one Pineapple Hill Estates lot sale. The first half of 2003 included the sale of one lot at Pineapple Hill Estates compared to the first half of 2002, which included the sale of two lots at Pineapple Hill Estates and two lots at Plantation Estates. A house on a lot at Pineapple Hill Estates that the Company constructed through a joint venture was completed in March 2003 and is available for sale. The Company presently has a 6.5-acre oceanfront parcel at Kapalua in escrow. This sale is expected to close after the State Department of Land & Natural Resources approves the buyers' construction plans for a home on this conservation-zoned parcel. The next phase of Plantation Estates at Kapalua may be available for sale before year-end 2003, but revenues from this subdivision would be recognized as subdivision improvements are completed, so revenues probably will not be recognized until 2004. Resort real estate sales are cyclical and depend on a number of factors. Results of real estate sales activity for the second quarter and first half of 2003 are not necessarily indicative of future performance trends for this segment. Hotel and condominium room occupancies for the first six months of 2003 compared to the same period in 2002, increased slightly for the State of Hawaii and for the island of Maui, room occupancies increased by approximately 3%. Room occupancies at the Kapalua Resort decreased by almost 3% for the first six months of 2003 compared to the same period in 2002. Part of the decreased occupancy at Kapalua is due to a greater number of units available in The Kapalua Villas, the Company's short-term condominium rental program. In addition, a portion of the accommodations at the Kapalua Resort is dependent on group business, which was lower in 2003 compared to 2002. Advanced bookings for the second half of 2003 indicate that Kapalua Resort occupancies for the remainder of 2003 and the full year 2003 may exceed 2002. Commercial & Property Commercial & Property operations produced an operating loss of $139,000 for the second quarter of 2003 compared to an operating loss of $458,000 for the second quarter of 2002. For the first half of 2003 the Commercial & Property operating profit was $210,000 compared to an operating loss of $139,000 for the first half of 2002. Revenues from these operations was $2,105,000 for the second quarter of 2003 compared to $1,088,000 for the second quarter of 2002; and $5,184,000 for the first half of 2003 compared to $2,811,000 for the first half of 2002. Higher revenues and improved net operating results for the second quarter and first half of 2003 were primarily due to the closing of lot sales at the Kapua Village employee subdivision. The second quarter and first half of 2003 included ten and 31 lot closings, respectively. The closing of lot sales in this subdivision began in December 2002 and one lot remained in inventory at June 30, 2003. The final lot was sold in July 2003. Revenues and operating profit for the first half of 2002 included a $624,000 gain on the sale of a land parcel. LIQUIDITY, CAPITAL RESOURCES AND OTHER At June 30, 2003, total debt, including capital leases was $50.5 million, an increase of $400,000 from December 31, 2002. Typically, the increase in the Company's debt level from the prior year-end to the end of the second quarter would be significantly greater because cash requirements increase as the seasonal pineapple canning activity begins. However, the Company's debt level at the end of 2002 was relatively high because certain pineapple sales made late in 2002 were not collected before year-end. The debt was reduced to a more normal year-end level when the receivables were collected in early 2003. Cash flows from operating activities was $3.7 million for the first half of 2003 compared to a negative $2.2 million for the same period in 2002. The seasonal pineapple canning activity of the summer months will increase the Company's cash requirements. However, the Company's overall debt level is expected to be lower by the end of the third quarter as compared to June 30, 2003, primarily because the mortgage loan on Napili Plaza was repaid on August 1, 2003 (see Note 7 to Condensed Financial Statements). At June 30, 2003, unused short- and long-term lines of credit totaled $7.1 million. It is anticipated that cash flows from operating activities together with the credit lines currently available to the Company will be sufficient to cover the Company's peak cash requirements in 2003. Should additional credit become necessary the Company would seek additional credit from its lenders. In January 2003, the sales, manufacturing and payroll modules of the integrated accounting system, which the Company began implementing in August 2000, "went live." Through approximately early April 2003, the Pineapple Sales Division experienced significant backlogs in invoicing because of previously unforeseen issues in the new system. At June 30, 2003, the backlog in invoicing was at acceptable levels. The Company's capital expenditures and expenditures for general planning and land entitlements are expected to be approximately $9.3 million in 2003. Approximately $3.4 million is estimated to be for replacement of existing equipment and facilities. Some of these expenditures may be funded with capital leases or new equipment financing loans. In August 2003, the Company expects to receive a non-recurring cash payment of $2 million as a result of resolution of litigation that will be recorded as Other Income in the Pineapple segment. This report contains forward-looking statements, within the meaning of Private Securities Litigation Reform Act of 1995, which are provided in an effort 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 belief regarding the effect of imports on canned pineapple pricing; the Company's expectations as to depreciation expense, pineapple production costs and capital expenditures; the Company's expectations as to the closing of the sale on the 6.5 acre land parcel at Kapalua and the closing of the sale of Queen Kaahumanu Center; the possibility that the next phase of Plantation Estates at Kapalua may be available for sale before year-end 2003; the Company's expectations as to Resort room occupancies; expectations regarding certain non-recurring cash receipts; and the Company's expectations regarding the adequacy of credit facilities and 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 six months of 2003. Item 4. Controls and Procedures (a) Evaluation of disclosure controls and procedures. The Company's principal executive officer and principal financial officer evaluated the effectiveness of the Company's disclosure controls and procedures as of June 30, 2003. 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 were no changes in the Company's internal control over financial reporting that occurred during the Company's last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. PART II OTHER INFORMATION Item 1. Legal Proceedings On August 5, 2003 a settlement agreement was signed, which resolved all claims, counterclaims, and/or contentions on terms satisfactory to all parties, with regard to 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) and 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). Item 4. Submission of Matters to a Vote of Security-Holders On May 27, 2003, the annual meeting of the Company's shareholders was held. Proxies for the meeting were solicited pursuant to Regulation 14A under the Securities Exchange Act of 1934. The number of outstanding shares as of March 20, 2003, the record date of the annual meeting, was 7,195,800. The results of the voting were as follows: Election of Class one Directors for a three-year term: Shares Voted For Shares Withheld Randolph G. Moore 6,563,378 152,799 Fred E. Trotter III 6,543,375 172,802 Election of the firm Deloitte & Touche LLP as auditor of the Company for the fiscal year 2003: Shares voted for: 6,572,776 Shares voted against: 135,273 Shares abstained: 8,128 There were no broker non-votes on any matter voted upon at the meeting. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (4) Instruments Defining the Rights of Security Holders 4.1(x) Third Loan Modification Agreement, dated as of August 11, 2003 (Filed Herewith) 4.2(vii) Sixth Amendment to Term Loan Agreement, entered into on July 30, 2003, and effective as of June 29, 2003 (Filed Herewith) (10) Material Contracts 10.3(x) Employment Separation Agreement (Gary L. Gifford, President/CEO), dated April 15, 2003 (31) Rule 13a - 14(a) Certifications (32) Section 1350 Certifications (b) Reports on Form 8-K (1) A report on Form 8-K dated and filed on May 6, 2003, included Item 7, Financial Statements, Pro Forma Financial Information and Exhibits and Item 9, Regulation FD Disclosure and no financial statements. (2) A report on Form 8-K dated and filed on June 10, 2003, included Item 9, Regulation FD Disclosure and no financial statements. 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. August 13, 2003 /S/ PAUL J MEYER Date Paul J. Meyer Executive Vice President/Finance (Principal Financial Officer) EX-4 3 rtlmodification.txt THIRD LOAN MODIFICATION AGREEMENT DATED AS OF AUGUST 11, 2003 THIRD LOAN MODIFICATION AGREEMENT THIS THIRD LOAN MODIFICATION AGREEMENT ("Agreement") is dated as of August 11, 2003, by and among MAUI LAND & PINEAPPLE COMPANY, INC., a Hawaii corporation, hereinafter called the "Borrower", and BANK OF HAWAII, a Hawaii banking corporation ("BOH"), FIRST HAWAIIAN BANK, a Hawaii banking corporation ("FHB"), CENTRAL PACIFIC BANK, a Hawaii banking corporation ("CPB"), and AMERICAN AGCREDIT, PCA, a corporation or association organized and existing under the laws of the United States of America ("PCA") (BOH, FHB, CPB and PCA are each sometimes called a "Lender" and are collectively called the "Lenders"), and BANK OF HAWAII, as Agent for the Lenders to the extent and in the manner provided in the Loan Documents described below (in such capacity, the "Agent"), and KAPALUA LAND COMPANY, LTD., a Hawaii corporation (the "Accommodation Party"). Recitals: A. The Lenders (i) have made available to the Borrower Revolving Loans in the aggregate principal amount of up to $25,000,000 at any one time outstanding, and (ii) shall make available to the Borrower Term Loans in an amount up to the aggregate principal amount of the Revolving Loans outstanding upon expiration of the Revolving Loan Period, but not to exceed $15,000,000, all as more particularly described in that certain Amended and Third Restated Revolving Credit and Term Loan Agreement dated December 31, 2001, made by and among the Borrower, Lenders and Agent, as amended by a Loan Modification Agreement effective as of December 31, 2002 and a Second Loan Modification Agreement dated as of March 21, 2003 (as amended, the "Loan Agreement"). B. Capitalized terms used, but not defined in this Agreement, shall have the meanings given them in the Loan Agreement. C. The performance of the Borrower under the Loan Documents is secured by the following (as amended and confirmed, collectively, the "Mortgages") made in favor of the Lenders: (1) Mortgage and Security Agreement dated March 1, 1993, made by the Borrower, as Mortgagor, recorded in the Bureau of Conveyances of the State of Hawaii (the "Bureau") as Document No. 93-036896; (2) Mortgage and Security Agreement dated March 1, 1993, made by the Borrower, as Mortgagor, recorded in the Bureau as Document No. 93-036898; and (3) Additional Security Mortgage and Security Agreement dated March 1, 1993, made by the Accommodation Party, recorded in the Bureau as Document No. 93-036900. D. The Borrower has requested certain modifications of the Loan Documents and the Lenders are willing to agree to such modifications under the terms and conditions of this Agreement. Agreements: NOW, THEREFORE, in consideration of the premises, the mutual covenants set forth herein and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties do hereby agree as follows: 1. Amendment to the Loan Agreement: Effective as of June 30, 2003, Section 5.10(c) of the Loan Agreement is amended as follows: (c) A Net Worth of not less than $57,500,000, plus 50% of cumulative Net Profits (but not the net losses) generated after June 30, 2003. 2. Amendment Fee and Costs: In consideration of, and as a condition to, the amendment herein contained, the Borrower shall pay the Agent, on demand, for distribution to the Lenders on a pro rata basis, a $10,000 amendment fee. The Borrower shall also promptly reimburse the Agent for all costs and expenses, including reasonable attorney's fees, incurred by the Agent in connection with this transaction. 3. Modification: This Agreement is a modification only and not a novation. In all other respects, the terms and conditions of the Loan Documents, as hereby modified, are hereby ratified and confirmed and shall remain in full force and effect. 4. Reaffirmation and Enlargement: The Borrower confirms and reaffirms all of its representations, warranties and covenants in the Loan Documents. The execution of this Agreement by the Borrower constitutes the certification of the persons signing this Agreement on behalf of the Borrower that, to the best of their actual knowledge, the representations and warranties made in Article IV of the Loan Agreement are true and correct as of the date of this Agreement. All references in the Loan Documents to the Loan Agreement are hereby enlarged and expanded to mean and include the Loan Agreement as hereby modified. 5. Mortgagors: The Borrower and the Accommodation Party confirm the grant, pledge and mortgage of the properties encumbered by the Mortgages, as and for continuing security for the obligations of the Borrower under the Loan Documents. The Borrower and the Accommodation Party warrant that the properties encumbered by the Mortgages are subject to no liens or encumbrances other than those set forth in the Mortgages. 6. No Offsets: The Borrower and the Accommodation Party each agrees that to its actual knowledge it has no claims, defenses, or offsets against the Lenders or the Agent with respect to the Credit Facility or to the enforcement of the Loan Documents arising prior to the date of this Agreement and that all such claims, defenses and offsets are hereby released. 7. Successors and Assigns: This Agreement is binding upon, and shall inure to the benefit of, the parties hereto and their respective successors and assigns. 8. Counterparts: This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which taken together shall constitute one and the same document, binding all of the parties hereto, notwithstanding all of the parties are not signatory to the original or the same counterparts. Duplicate unexecuted pages of the counterparts may be discarded and the remaining pages assembled as one document. [The following page is the signature page.] To signify their agreement, the parties have executed this Third Loan Modification Agreement as of the date above written. MAUI LAND & PINEAPPLE COMPANY, BANK OF HAWAII, individually INC. and as Agent By /S/ PAUL J. MEYER By /S/JAMES C. POLK Name: Paul J. Meyer Name: James C. Polk Title: EVP/Finance Title: Senior Vice President By /S/Don Young Name: Don Young FIRST HAWAIIAN BANK Title: President Borrower By /S/NEILL CHAR Name: Neill Char Title:Vice President KAPALUA LAND COMPANY, LTD. CENTRAL PACIFIC BANK By /S/ PAUL J. MEYER Name: Paul J. Meyer Title: EVP/Finance By /S/ ROBERT D. MURAKAMI Name: Robert D. Murakami Title:Vice President By /S/ DON YOUNG Name: Don Young Title: President AMERICAN AGCREDIT, PCA Accommodation Party By /S/ GARY VAN SCHUYVER Name: Gary Van Schuyver Title:Vice President Lenders EX-4 4 agcreditamend.txt SIXTH AMENDMENT TO TERM LOAN AGREEMENT EFFECTIVE AS OF JUNE 30, 2003 SIXTH AMENDMENT TO TERM LOAN AGREEMENT This Amendment to Term Loan Agreement ("Amendment") is entered into this 30th day of July, 2003, and is effective as of June 29, 2003, by and between American AgCredit, FLCA successor in interest to Pacific Coast Farm Credit Services, ACA ("Lender") and Maui Land & Pineapple Company, Inc., a Hawaii corporation (the "Borrower"). RECITALS A. Borrower and Lender executed a Term Loan Agreement dated June 1, 1999 ( the "Agreement") which was amended on February 16, 2000, May 16, 2000, March 23, 2001, December 31, 2001 and March 18, 2002. B. Borrower and Lender now wish to amend the Agreement to revise the provisions relating to the Tangible Net Worth. ACCORDINGLY THE PARTIES AGREE AS FOLLOWS: 1. Definitions; References; Interpretation. (a) Unless otherwise specifically defined herein, each term used herein (including the Recitals hereof) which is defined in the Agreement shall have the meaning assigned to such term in the Agreement. (b) Each reference to "this Amendment", "hereof", "hereunder", "herein" and "hereby" and each other similar reference contained in the Agreement and each reference to "the Agreement" or "the Term Loan Agreement" and each other similar reference in the other Loan Documents, shall from and after the date of this Amendment refer to the Agreement as amended hereby. (c) The rules of interpretation set forth in Section 1(b) of the Agreement shall be applicable to this Amendment. 2. Amendment to Term Loan Agreement. Subject to the terms and conditions hereof, Section 12(i)(1) of the Agreement is amended and restated to read as follows: "(1) Minimum Tangible Net Worth. Borrower shall not permit its Consolidated Tangible Net Worth, as of the last day of the Fiscal Quarter ending June 30, 2003 to be less than the sum of Fifty Five Million Eight Hundred Thousand Dollars ($55,800,000.00) and for each Fiscal Quarter thereafter, commencing with the Fiscal Quarter ending September 30, 2003, to be less than the sum of (i) Fifty Six Million Dollars ($56,000,000.00), plus (ii) fifty percent (50%) of the aggregate amount of Borrower's Consolidated Net Income, to the extent positive, for Fiscal Year 2003 and each Fiscal Year thereafter (on a cumulative basis). In the event of the Borrower's sale of its interest in the KCA Partnership, or the KCA Partnership's sale of the Queen Kaahumanu Center, the Borrower's Minimum Tangible Net Worth shall be adjusted upward by the amount of the net after tax gain such that the sale will have no impact on the difference between the then current Consolidated Tangible Net Worth requirement and the increase in actual Consolidated Tangible Net Worth resulting from such sale." 3. Conditions of Effectiveness. The effectiveness of this Amendment shall be subject to the satisfaction of each of the following conditions precedent: (a) Lender shall have received from Borrower a duly executed original of this Amendment. (b) Borrower shall have paid to Lender an amendment fee in the sum of $6,000.00. 4. Borrower's Representations and Warranties. Borrower represents and warrants that as of the date hereof and after giving effect hereto: (a) The execution and delivery of this Amendment by the Borrower is within the corporate powers of the Borrower and does not violate any provisions or terms of any order or any court or governmental agency and will not conflict with or constitute a default under the Borrower's Articles or Bylaws or any agreement or instrument to which the Borrower is a party. (b) The execution and delivery of this Amendment has been duly authorized by proper corporate action on the part of the Borrower and that this Amendment and the Agreement constitute the legal, valid and binding obligations of the Borrower. (c) No default or Event of Default exists under the Agreement. (d) It has disclosed the terms and conditions of this Amendment to its auditors for their use in preparing any quarterly or annual reports on the condition of the Borrower. 5. Continuing Validity. Except as expressly modified or changed by this Amendment, the terms of the original Agreement and all other related loan documents remain unchanged and in full force and effect. Consent by the Lender to the changes described herein does not waive Lender's right to strict performance of the terms and conditions contained in the Agreement as amended. Nothing in this Amendment will constitute a satisfaction of the Indebtedness. It is the Lender's intention to retain as liable parties all makers, guarantors, endorsers of the original Indebtedness, unless such party is expressly released by Lender in writing. 6. Miscellaneous. (a) The Borrower acknowledges and agrees that the execution and delivery by the Lender of this Amendment shall not be deemed to create a course of dealing or an obligation to execute similar amendments or waivers under the same or similar circumstances in the future. (b) This Amendment shall be binding upon and inure to the benefit of the Borrower and the Lender and their respective successors and assigns. (c) This Amendment shall be governed by and construed in accordance with the laws of the State of California, provided that the Lender shall retain all rights arising under federal law. (d) This Amendment may be executed in counterparts, each of which shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. Each of the parties hereto understands and agrees that this document may be delivered by any party thereto either in the form of an executed original or an executed original sent by facsimile transmission to be followed promptly by mailing of a hard copy original, and that receipt by the Lender of a facsimile transmitted document purportedly bearing the signature of the Borrower shall bind the Borrower with the same force and effect as the delivery of a hard copy original. Any failure of the Lender to receive the hard copy executed original of such document shall not diminish the binding effect of receipt of the facsimile transmitted executed original of such document of the party whose hard copy page was not received by the Lender. (e) This Amendment contains the entire agreement of the parties hereto with reference to the matters discussed herein. (f) If any term or provision of this Amendment shall be deemed prohibited or invalid under any applicable law, such provision shall be invalidated without affecting the remaining provisions of this Amendment or the Loan Documents. IN WITNESS WHEREOF the parties have signed this Amendment as of the date first above written. Borrower: MAUI LAND & PINEAPPLE COMPANY, INC., a Hawaii corporation By: /S/ PAUL J. MEYER Title: Executive Vice President/Finance By: /S/ DON YOUNG Title: Acting President Lender: AMERICAN AGCREDIT, FLCA By: /S/ GARY VAN SCHUYVER Title: Vice President EX-10 5 sepagreemt.txt EMPLOYMENT SEPARATION AGREEMENT (Date) Mr. Gary Gifford 3145 Waiea Place Kihei, Maui, HI 96753 Re: Employment Separation Agreement Dear Gary: Thank you for meeting with me to discuss your separation from Maui Land & Pineapple Company, Inc. ("MLP"). Based on our discussion, this letter sets forth the terms and conditions regarding your separation from MLP, which we have agreed to subject to approval by MLP's Board of Directors. Upon review and execution by you and approval by MLP's Board of Directors, this letter will become a legally enforceable agreement between you and MLP on the terms and conditions described below, so please first review it carefully with your attorney. 1. Separation of Employment To be consistent with MLP's payroll periods, your separation from employment with MLP will be effective as of 5:00 p.m., on June 8, 2003 provided that we agree your last day of work at MLP shall be May 27, 2003. You will be paid your regular salary and your unused vested and accumulated vacation pay through June 8, 2003 on or before June 8, 2003. MLP will withhold from your regular salary payments all required payroll and other currently authorized withholdings and deductions and from your vested and accumulated vacation payments only the applicable payroll taxes. After the effective date of your separation MLP understands and agrees that you will not be providing any employment services to MLP and you understand and agree that you will not be provided or eligible for any compensation or employee benefits from MLP except as described in Paragraph 2 below. 2. Separation Benefits. a. Existing Employment Benefits. You will continue to receive all existing employee benefits to which you have vested under MLP's current employee benefit plans and policies, less applicable payroll taxes, in accordance with the terms and conditions of those benefit plans and any applicable Summary Plan Descriptions, which will control in the event of any conflict with this letter, (except for Sub- paragraphs 2.a.(3) and (6)), as follows: (1) Vested and accumulated vacation pay benefit through June 8, 2003 in the amount of $49,038: (2) Employee Stock Ownership Plan Benefit; (3) Terminated Unfunded Executive Deferred Compensation Plan benefit totaling $347,954 payable in equal monthly installments over a maximum of ten years. Payments to commence immediately following your separation from employment in accordance with MLP's normal payroll payment schedule; (4) 2003 Unfunded Incentive Plan Benefit with a pro- rata share of 42% of any award, should a plan be in place and business results trigger payouts. Any award payment would be calculated and paid in accordance with the terms of the Plan documents; (5) Unfunded Long term Incentive Plan awards payable as follows: 2001 Cycle: Pro-rata share of 81% of any award payable in 2004 2002 Cycle: Pro-rata share of 47% of any award payable in 2005 2003 Cycle: Pro-rata share of 14% of any award, should a plan be in place, payable in 2006 Any award under the Plan would be paid following the end of the three year performance cycle in accordance with the terms of the plan documents (6) Unfunded Executive Severance Plan benefit in the amount of $566,667 payable as a lump sum upon separation from employment; (7) Medical Premium payments payable in equal monthly amounts for sixteen (16) months from June 1, 2003 through September 30, 2004 in accordance with the terms and conditions applicable to salaried employees of MLP; (8) Dental Premium payments payable in equal monthly amounts for sixteen (16) months from June 1, 2003 through September 30, 2004 in accordance with the terms and conditions applicable to salaried employees of MLP; (9) Qualified Group Life Insurance Plan with an insurance benefit of $350,000 subject to reduction and payment in accordance with the terms and conditions of the Plan; (10) Other Employees Plans. Any and all other MLP employee benefit plans and policies including but not limited to MLP golf privileges shall apply to you on the same terms and conditions that such plans and privileges are provided to salaried employees generally, as amended from time to time. b. Additional Separation Benefits. In addition to the vested employment benefits described in Paragraph 2.a. above, and in consideration of your release, indemnification and promises described below, MLP will provide the following additional separation benefits: (1) Defined Benefit Plan and SERP Target Benefit Enhancements: MLP will increase the age and or service credit for your Defined Benefit Plan Single Life Annuity and your Unfunded SERP Target Benefit Single Life Annuity so that your combined single life annuity annual benefit under your Defined Benefit Plan Single Life Annuity and your SERP Target Benefit Single Life Annuity is increased to a total amount of $152,094.24. If you select a joint and survivor benefit, the foregoing benefit amount will be adjusted in accordance with the terms of the Plans. The amount of the benefit in excess of the amount paid from the Defined Benefit Plan will be paid from MLP's general assets under the terms of the SERP Plan. (2) Health Care Benefit Enhancements (a) The monthly Medical Premium Payments made by MLP described in Paragraph 2.a.(7) above shall be extended for two (2) months through November 30, 2004 on the same terms and conditions applicable to salaried employees of MLP. (b) The monthly Dental Premium Payments made by MLP described in Paragraph 2 a.(8) above shall be extended by two (2) months through November 30, 2004 on the same terms and conditions applicable to salaried employees of MLP. (c) Retiree Medical Benefits You will be credited with four (4) additional years of service to qualify for retiree medical benefits based on twenty (20) years of service in order to provide you and your spouse with lifetime medical, drug and vision benefits on the following terms and conditions: (i) MLP agrees to provide you and your spouse with pre-Medicare medical, drug and vision plan benefits as available under MLP's medical plans and to pay seventy- five (75%) of the premium cost of MLP's base medical plan provided you timely pay the remaining premium cost of such medical plan coverage as you elect; and, (ii) At such time as you and your spouse each first become eligible for a Medicare Supplement Plan ("MSP"), then the Pre-Medicare plan coverage will cease and instead MLP will pay seventy-five percent (75%) of the premium cost of its base MSP coverage for you and your spouse for the duration of your lifetime provided that you and your spouse cooperate with the application for MSP coverage and timely pay the balance of the premium cost of the MSP coverage you elect. (iii) During any time after your separation from MLP you or your spouse become eligible for comparable medical, drug and vision benefit coverage at no greater cost to you from another employing entity MLP will be relieved from its obligations under this Sub-Paragraph 2.b.(2)(c) during the period that you or your spouse are receiving such benefits coverage from another employing entity. (iv) If after you or your spouse becomes eligible for a MSP, MLP's base MSP no longer exists, MLP agrees to pay seventy-five percent (75%) of the premium cost for a Medicare supplement plan with medical, drug and vision benefits comparable to MLP's base MSP on the same terms as are stated in Subparagraph 2.b.(2)(c)(ii), should you elect such coverage. (3) Unfunded Executive Severance Plan You will also be credited with an additional four (4) months of severance benefits for an additional $141,667 payable in a lump sum at termination. You and MLP agree that MLP's breach of any of MLP's agreements in this Paragraph 2 would be a material breach which will relieve you, but not MLP, of any further obligations under this Agreement and to such remedies as you may be entitled, if any, at law or equity. 3. MLP Property. Any MLP documents, information and property should be returned to MLP on or before June 6, 2003, including and without limitation confidential business or customer reports, maps, files, memoranda, records, phones, software, credit cards, door and automobile and file keys, computers and computer access codes, disks and instruction manuals and vehicles. 4. Confidentiality, Cooperation, and Trade Secrets. In order to assure a cooperative and harmonious separation and recognizing the importance of your and MLP's reputations and business operations, we are further agreeing as follows: a. Neither you nor MLP will make or encourage any disparaging comments about each other or MLP's owners, directors, officers, employees or business operations. You have also agreed to MLP's prior public statement of your separation from MLP. b. You and MLP also agree to keep confidential the terms and amount of this Agreement to the extent not disclosed publicly by MLP either directly or by a filing of such information with a government agency, provided that you may discuss this Agreement with your attorney(s), accountant(s), financial advisor(s) and/or immediate family once they have also agreed to keep the fact and contents of this Agreement confidential and not disclose such information to others. MLP may likewise disclose the terms and amount of this Agreement to (i) its directors, officers, employees, attorneys, auditors and accountants once they have agreed to keep the fact and contents of this Agreement confidential and not to disclose such information to others, and (ii) to government agencies or other private entities as may be required or prudent for its business operations. c. You and MLP agree that you will comply with HRS Chapter 482B and the common law requirements described in Restatement (Second) Of The Law - Agency, Section 396 which will continue in effect after your separation. You and MLP also agree that any and all information obtained by you or disclosed to you during your employment with MLP which is not already known to the general public, including but not limited to MLP's confidential financial and business information, strategic plans, projects, customers, programs, methods of operation, processes, practices, policies and procedures, are strictly confidential and proprietary to trade secrets of MLP and shall not be disclosed or discussed, or revealed by you to any person, entities or organizations at any time unless compelled by law. d. You and MLP also agree that if you are needed to assist MLP to prepare for or to testify on behalf of MLP in any litigation after the effective date of your separation, that you will do so provided that if such preparation or testimony requires you to travel by airplane or requires more than two days of your time at any one time, MLP will reimburse you for any required air travel based on an advanced purchase coach airfare and any hotel accommodations and meals while you are away from home. e. You understand and acknowledge that the provisions in this Paragraph 4 are a material inducement for MLP to enter into this Agreement and to provide the additional separation benefits described in Paragraph 2.b. above. Therefore you and MLP agree that your breach of any of your agreements in this Paragraph 4 would be a material breach which will relieve MLP, but not you, of any further obligations under this Agreement and in addition to any other remedies available to MLP at law or equity shall entitle MLP to recover any of the Additional Separation Benefits (or if not available, the cost to MLP of said benefits) already provided to you. 5. Mutual Release, Indemnification and Promise Not To Sue. a. Release. As a material inducement to you and MLP to enter into this Agreement and to provide you the Additional Separation Benefits describe in Paragraph 2.b. above and to provide MLP with the promises described in Paragraph 4 above, you and MLP hereby irrevocably and unconditionally release, acquit, and forever discharge each other from any and all claims, liabilities, and expenses (including attorneys' fees and costs actually incurred) of any nature whatsoever, statutory or common law, known or unknown, suspected or unsuspected including, but not limited to any constitutional, statutory or common law claims arising out of or under any (i) express or implied contract of employment; (ii) federal, state or common law prohibition of age or other forms of employment discrimination, retaliation, wrongful discharge, or public policy; (iii) your recruitment for, employment with, or separation from employment with MLP and, (iv) any employee benefit plan or law applicable to employee benefit plans against each other based on any act of omission from the beginning of time through the effective date of your separation from employment with MLP (collectively called "Claims"). The foregoing release shall not apply to any claim by you to any vested employee benefit described in Paragraph 2.a. above or any claim by you or MLP to enforce your or MLP's express obligations under this Agreement or for benefits under any federal or Hawaii law that cannot be waived or discharged by agreement. Moreover, except to the extent permitted by law, nothing in this Agreement shall interfere with the enforcement authority of any federal or state agency or your right to cooperate with any investigation by such an agency. You are, however, waiving your right to recover any monetary award based on any such agency action whether or not it is initiated by you. b. Indemnification. As a further material inducement to you and MLP to enter into this Agreement and to pay to you the Additional Separation Benefits described in Paragraph 2.b. above and to provide MLP with the promises described in Paragraph 4 above, you and MLP hereby agree to indemnify and hold each other harmless from and against any and all losses, costs, damages, or expenses, including, without limitation, attorneys' fees incurred by you or MLP arising out of any breach of the agreement by you and MLP not to initiate or file any claim or lawsuit against each other over any Claims released in Paragraph 5.a. above. You and MLP expressly understand and acknowledge that this Agreement may be pleaded as a defense to and may be used as the basis for an attempted injunction against any action, suit, administrative or other proceeding which may be instituted, prosecuted or attempted as a result of an alleged breach of this agreement by you or MLP. c. Promise Not to Sue. You and MLP also agree not to file or initiate any claim or lawsuit against each other with any agency or court based on any Claims covered by the release set forth in Paragraph 5.a. other than to enforce this Agreement or to obtain a benefit that by law cannot be waived. If either you or MLP file any administrative claim or lawsuit(s) against the other based on any Claims waived or released by this Agreement, then in addition to all other remedies provided by law or equity, the filing or initiating party agrees to pay the defending party for all costs, including reasonable attorneys fees, incurred by the party defending against the waived or released Claims. If MLP is the defending party and you ultimately prevail, MLP may credit any amounts paid under this Agreement against any recovery obtained by you. 6. Review and Revocation Rights Because this Agreement includes a waiver and release of your right to file a claim for age discrimination under the Federal Age Discrimination In Employment Act ("ADEA"), you understand and acknowledge that you have up to twenty-one (21) days to decide whether to sign this Agreement and that you should consult with an attorney. In addition, you understand that within seven (7) days after signing this Agreement, you may revoke in writing your waiver and release of any claim under the ADEA, but not any other Claims you have waived or released by either delivering the written notice of revocation to Mr. David Heenan at 900 Fort Street, Suite 1450, Honolulu, Hawaii, 96813, or by mailing the notice to the foregoing address on or before the end of the seven (7) day revocation period provided the mailing is post marked no later than the seventh day of the revocation period and is sent by United States Mail, certified mail, return receipt requested, to Mr. David Heenan at the address shown above. If the seventh day falls on a Saturday, Sunday or holiday, the next regular business day will be considered the seventh day. If you elect in a timely manner to revoke the release of any Federal ADEA claim, the release will still remain in effect for all other Claims but the Additional Separation Benefits described in paragraph 2.b above shall be reduced by twenty-five percent (25%) of their value. You and MLP understand and agree that unless otherwise agreed in another writing by the parties, the terms of this agreement will not be effective until the later of the separation of your employment with MLP or the expiration of the seven (7) day revocation period described above. If you execute and deliver this Agreement but then timely revoke your release of any federal age discrimination claim, this Agreement and release of all other Claims will remain in full force and effect as modified above. 7. Arbitration. Because of the delay, expense and publicity which results from the use of the State and Federal court systems, you and MLP agree to submit to final and binding arbitration any claims and disputes arising out of or related to the interpretation, application and/or enforcement of this Agreement or between you and MLP, including but not limited to any constitutional, statutory, or common law claims rather than to use such court system. In any such arbitration, the then existing American Arbitration Association ("AAA") rules for resolving employment disputes shall govern the arbitration, subject to the Federal Arbitration Act, if applicable, or if not applicable then the Hawaii Uniform Arbitration Act, H.R.S. Chapter 658A then in effect. To the extent such AAA rules include any provisions that would render this agreement to arbitrate unenforceable, they shall be modified to conform to the law or if they cannot be modified they shall be deemed null and void. 8. Voluntary Mutual Agreement You understand your right to discuss and have discussed all aspects of this Agreement with your attorney and represent to MLP that you have carefully read, fully understand all of the provisions of this Agreement and based on the advice of your attorney voluntarily enter into this Agreement. The parties each represent and acknowledge that they are entering into this Agreement to effect an amicable and positive separation of your employment with MLP and not as an admission that either party has violated any law or other legal obligations such as those described in Paragraph 5 above. This Agreement represents an amicable compromise and settlement of all the parties' rights, claims and benefits. 9. Entire Agreement You represent and acknowledge that in executing this Agreement you do not rely, and have not relied, upon any representation or statement by MLP or any representative of MLP not set forth in this Agreement regarding the subjects of this Agreement or your recruitment for, employment with, or separation from employment with MLP. This Agreement sets forth the entire agreement between you and MLP with regard to the conditions of your separation from employment with MLP and supersedes any prior promise or agreement. This Agreement shall be binding upon and inure to the benefit of the parties, their successors and assigns. You agree to keep MLP informed of your address to ensure your receipt of all communications and required government forms, such as W-4s and so forth. PLEASE READ CAREFULLY. THIS EMPLOYMENT SEPARATION AGREEMENT INCLUDES A RELEASE OF ALL CLAIMS. MAUI LAND & PINEAPPLE COMPANY, INC. /S/ GARY L. GIFFORD By: /S/ DAVID HEENAN GARY GIFFORD DAVID HEENAN Its Director Date: 4/15/03 Date: 4/20/03 EX-31 6 cert302.txt RULE 13A - 14(A) CERTIFICATIONS Exhibit 31 CERTIFICATION I, Donald A. Young, certify that: 1. I have reviewed this Form 10-Q of Maui Land & Pineapple Company, Inc.; 2. Based on my knowledge, this 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 report; 3. Based on my knowledge, the financial statements, and other financial information included in this 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 report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared; (b) [This paragraph is intentionally left blank.] (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors: (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 13, 2003 /S/ DON YOUNG Name: Donald A. Young Title: President & Chief Executive Officer CERTIFICATION I, Paul J. Meyer, certify that: 1. I have reviewed this Form 10-Q of Maui Land & Pineapple Company, Inc.; 2. Based on my knowledge, this 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 report; 3. Based on my knowledge, the financial statements, and other financial information included in this 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 report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared; (b) [This paragraph is intentionally left blank.] (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and (5) The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors: (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 13, 2003 /S/ PAUL J. MEYER Name: Paul J. Meyer Title: Executive Vice President/Finance EX-32 7 cert906.txt SECTION 1350 CERTIFICATIONS Exhibit 32 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, In connection with the Quarterly Report of Maui Land & Pineapple Company, Inc. (the "Company") on Form 10-Q for the period ended June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), we, Donald A. Young and Paul J. Meyer, respectively, the President & Chief Executive Officer and Executive vice President/Finance of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /S/ DON YOUNG Donald A. Young President & Chief Executive Officer /S/ PAUL J. MEYER Paul J. Meyer Executive Vice President/Finance (Chief Financial Officer) August 13, 2003 date A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----