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

November 02, 2010 | About:

10qk

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Maui Land and Pineapple Company Inc (MLP) filed Quarterly Report for the period ended 2010-09-30.

Maui Land And Pineapple Company Inc has a market cap of $84 million; its shares were traded at around $4.46 with and P/S ratio of 1.7.

Highlight of Business Operations:

In the third quarter of 2010, our debt was reduced by $60 million as we accomplished the key initiatives that are further described below. For the third quarter of 2010, we reported net income of $20.0 million and for the first nine months of 2010, we reported net income of $12.7 million; compared to net losses of $25.5 million and $92.9 million, for the same periods in 2009. Cash used in operating activities for the first nine months of 2010 was $5.8 million. In addition, these results reflect improved operating performance and overhead cost reductions, and $3.3 million of gains due to the termination of certain post-retirement benefits.

We reported net income of $20.0 million ($1.35 per share) for the third quarter of 2010 compared to a net loss of $25.5 million ($3.17 per share) for the third quarter of 2009. Net income for the third quarter of 2010 was primarily due to recognition of $25.7 million of the deferred gain from the March 2009 sale of the Plantation Golf Course (Note 10 to condensed consolidated financial statements). The net loss for the third quarter of 2009 included $22.8 million equity in losses from our investment in Bay Holdings. We ceased recording further losses from this investment in September 2009 after the carrying value of our investment including our $3.6 million unsecured loan was reduced to zero and our estimated liability under the completion and recourse guarantees were recorded.

For the first nine months of 2010, we reported net income of $12.7 million ($1.23 per share) compared to a net loss of $92.9 million ($11.57 per share) for the first nine months of 2009. In addition to the gain from the PGC sale mentioned above, net income for the first nine months of 2010 includes a credit of $3.3 million representing the gain recognized from the curtailment of our postretirement medical plan and settlement of our postretirement life insurance plan (Note 13 to condensed consolidated financial statements) and pre-tax profits of $2.5 million from the sale of real estate inventory and our former administrative offices in Kahului. The first nine months of 2009 includes charges totaling $47.2 million related to our investment in Bay Holdings. Our losses for the first nine months of 2009 also includes charges of $14.2 million for the write off of development plans that were 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 $2.4 million for the third quarter of 2010 compared to $2.7 million for the third quarter of 2009. Included in interest expense for the third quarter of 2010 are charges of $280,000 representing accretion of the carrying value of $40 million of convertible notes. Included in interest expense for the third quarter of 2009 are net credits of $63,000 representing the change in the estimated fair value of the derivative liability that was bifurcated from the $40 million of convertible notes, plus the change in fair value of certain interest swap agreements, and accretion on the carrying value of the convertible notes. The swap agreements expired in January 2010 and the convertible notes were repaid in August 2010. In the third quarter of 2010 our average borrowings were approximately $5.4 million lower than the third quarter of 2009. Our effective interest rate on borrowings was 5.6% in the third quarter of 2010 compared to 6.4% in the third quarter of 2009.

Interest expense was $8.3 million for the first nine months of 2010 compared to $7.3 million for the first nine months of 2009. Included in interest expense for the first nine months of 2010 and 2009 are net charges (credits) of $1,439,000 and $(431,000), respectively, representing the accretion of and change in the estimated fair value of the derivative liability and swap agreements described above. In the first nine months of 2010 our average borrowings were approximately $15.2 million lower than the first nine months of 2009. Our effective interest rate on borrowings was 5.7% in the first nine months of 2010 compared to 5.8% in the first nine months of 2009.

The Resort segment reported an operating profit of $23.5 million for the third quarter of 2010, compared to an operating loss of $3.4 million for the third quarter of 2009. For the first nine months of 2010, the Resort segment operating profit was $18.3 million compared to an operating loss of $12.2 million for the first nine months of 2009. Operating profit for the third quarter and first nine months of 2010 includes a $25.7 million gain from the March 2009 sale of the Plantation Golf Course (Note 10 to condensed consolidated financial statements). The improved results in 2010 also 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 in 2010 increased over 2009, which also contributed to the improved results.

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