Maui Land and Pineapple Company Inc Reports Operating Results (10-Q)
Maui Land And Pineapple Company Inc has a market cap of $45 million; its shares were traded at around $5.28 with and P/S ratio of 0.9.
Highlight of Business Operations: For the first quarter of 2010, we reported a net loss of $2.7 million and we had cash provided by operations of $3.3 million. Better operating performance and overhead cost reductions, and $3.4 million of gains due to the termination of our post-retirement life insurance plan and the elimination of medical benefits for non-bargaining retirees resulted in improved financial performance in the first quarter of 2010. Included in the improved operating cash flows was the receipt of $5.5 million in tax refunds. In December 2009, we ceased our pineapple operations, as well as our Kapalua Villas, Kapalua Adventures, security and shuttle operations.
We reported a net loss of $2.7 million ($0.33 per share) for the first quarter of 2010 compared to a net loss of $13.2 million ($1.65 per share) for the first quarter of 2009. Net income for the first quarter of 2010 includes a credit of $3.4 million representing the gain recognized from the curtailment of our postretirement medical plan and settlement of our postretirement life insurance plan (Note 12 to condensed consolidated financial statements). In addition, although revenues were approximately the same in the first quarter of 2010 and 2009, excluding the credit mentioned above, cost reduction efforts resulted in significantly lower costs and expense in the first quarter of 2010 compared to the first quarter of 2009.
Interest expense was $3.3 million for the first quarter of 2010 compared to $1.5 million for the first quarter of 2009. Included in interest expense for the first quarter of 2010 and 2009 is a net charge (credit) of $1,017,000 and $(586,000), 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 are credits of $63,000 and $230,000 for the first quarters of 2010 and 2009, respectively, representing the change in fair value of certain interest rate swap agreements. These swap agreements expired in January 2010. In the first quarter of 2010 our average borrowings were approximately $10.7 million lower than the first quarter of 2009. Our effective interest rate on borrowings was 5.9% in the first quarter of 2010 compared to 4.9% in the first quarter of 2009.
The Community Development segment reported an operating profit of $800,000 for the first quarter of 2010 compared to an operating loss of $3.2 million for the first quarter of 2009. Revenues from this operating segment were $3.9 million for the first quarter of 2010 compared to $2.0 million for the first quarter of 2009. Increased revenues reflect the land sale in the first quarter of 2010 and higher revenues from lease and license agreements that were put in place in December 2009. Included in the operating loss for the first quarter of 2009 is $1.1 million representing our equity in the losses of Bay Holdings. 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 10 to condensed consolidated financial statements).
At March 31, 2010, our total debt, including capital leases, was $94.1 million, compared to $96.6 million at December 31, 2009. The decrease in outstanding debt in the first quarter of 2010 was primarily due to payments made as we received approximately $5.5 million in tax refunds and net cash proceeds of approximately $1.5 million from the sale of real estate. At March 31, 2010, we had approximately $16.1 million available under existing lines of credit and $795,000 in cash and cash equivalents; an excess of current liabilities over current assets of $63.8 million, and a deficiency in stockholders equity (total liabilities exceeded total assets) of $78.0 million.
Included in current liabilities are $57.8 million of borrowings outstanding under agreements that are scheduled to mature in March 2011, with financial covenants requiring among other things, a minimum of $8 million in liquidity and a limitation on new indebtedness. In addition, we have $40 million of outstanding convertible notes that may be redeemed by holders as early as July 2011. Failure to satisfy the minimum liquidity covenants or to otherwise default under one credit agreement could result in a default under both credit agreements as well as a default under the $40 million senior secured convertible notes. Defaults under the credit agreements could result in all outstanding borrowings becoming immediately due and payable. If we default under the senior secured convertible notes, the holders of such notes may require us to redeem the notes, in which case we would also be required to pay a redemption premium equal to 115% multiplied by (i) the principal and accrued and unpaid interest under each note, or (ii) the highest closing sale price of our common stock during the period between the event of default and delivery of redemption notice multiplied by the number of shares of our common stock into which a note is then convertible.
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