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Maui Land and Pineapple Company Inc Reports Operating Results (10-Q)

August 04, 2010 | About:
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10qk

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Maui Land and Pineapple Company Inc (MLP) filed Quarterly Report for the period ended 2010-06-30.

Maui Land And Pineapple Company Inc has a market cap of $33.3 million; its shares were traded at around $3.9489 with and P/S ratio of 0.7.

Highlight of Business Operations:

For the second quarter of 2010, we reported a net loss of $4.6 million and for the first six months of 2010, we reported a net loss of $7.3 million. Cash used in operating activities for the first six months of 2010 was $2.1 million and includes the receipt of $5.5 million in tax refunds. These results reflect improved operating performance and overhead cost reductions, and $3.4 million of gains due to the termination of certain post-retirement benefits. In December 2009, we ceased our pineapple operations, as well as our Kapalua Villas, Kapalua Adventures, security and shuttle operations.

· On June 30, 2010, we filed with the Securities and Exchange Commission a final prospectus for the distribution to our shareholders of subscription rights to purchase up to 10,389,610 shares of our common stock at $3.85 per share. The rights offering expired on July 29, 2010 and resulted in gross proceeds of $40 million, of which $35.2 million was used to repay $40 million of senior secured convertible notes.

We reported a net loss of $4.6 million ($0.57 per share) for the second quarter of 2010 compared to a net loss of $54.2 million ($6.75 per share) for the second quarter of 2009. The loss for the second quarter of 2009 included a charge of $21.3 million for the decrease in value of our investment in Bay Holdings; charges of $14.2 million for the write off of development plans that are no longer considered feasible due to changes in market conditions; and a charge of $1.9 million representing an adjustment to estimated fair value less cost to sell of certain real estate that we have classified as held for sale (included in loss from discontinued operations).

Interest expense was $2.5 million for the second quarter of 2010 compared to $3.1 million for the second quarter of 2009. Included in interest expense for the second quarter of 2010 and 2009 are net charges of $206,000 and $736,000, respectively, representing the change in the estimated fair value of the derivative liability that was bifurcated from the $40 million convertible notes, plus accretion on the carrying value of the notes. Also included in interest expense is a credit of $258,000 for the second quarter of 2009, representing the change in fair value of certain interest rate swap agreements. These swap agreements expired in January 2010. In the second quarter of 2010 our average borrowings were approximately $900,000 lower than the second quarter of 2009. Our effective interest rate on borrowings was 5.7% in the second quarter of 2010 compared to 6.5% in the second quarter of 2009.

Resort segment revenues decreased from $6.7 million in the second quarter of 2009 to $5.4 million for the second quarter of 2010, or 19%, primarily reflecting the absence of revenues from The Kapalua Villas and Kapalua Adventures in 2010 as these operations were leased to third parties to operate in December 2009. We are now receiving lease and license income related to these operations that is reflected in the Community Development segment results. Partially offsetting the decrease in Resort operations revenues from The Kapalua Villas and Kapalua Adventures was an increase in revenues from our golf operations and from the Kapalua Spa. The Kapalua Spa began operating in July 2009. The Resort segment reported an operating loss of $2.7 million for the second quarter of 2010, compared to an operating loss of $4.6 million for the second quarter of 2009. The improved results reflect better results from our golf and spa operations and general cost reductions throughout the Resort segment operations. The results reported by the Companys operating segments include allocations of corporate and administrative overhead charges. Visitor counts to Maui for the second quarter of 2010 increased over the same period a year ago, which also contributed to the improved results.

The Community Development segment reported an operating loss of $70,000 for the second quarter of 2010 compared to an operating loss of $41.0 million for the second quarter of 2009. Revenues from this operating segment were $2.8 million for the second quarter of 2010 compared to $1.8 million for the second quarter of 2009. Increased revenues reflect lease and license agreements that were put in place in December 2009 and increased commission income from the sale of real estate. The operating loss for the second quarter of 2009 included a charge of $21.3 million representing impairment of our investment in Bay Holdings and a charge of $14.2 million for the write off of project development plans that were no longer feasible as designed due to changing market conditions. In 2010, we did not recognize any additional losses from this investment as the carrying value of our investment and our loan to Bay Holdings have been written down to zero and we have no further obligation to fund losses (Note 11 to condensed consolidated financial statements).

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