Wednesday, August 6, 2003

Pineapple costs
Maui Land

Management changes and layoffs
related to the firm's restructuring
contribute to a $4 million loss

Maui Land & Pineapple Co., which is in the midst of a restructuring, said yesterday its second-quarter loss widened to $4 million as pineapple operations worsened and administration expenses increased due to management changes and employee layoffs.

Maui Land & Pineapple The company, which lost $2.1 million in the second quarter a year ago, has undergone managerial and operational changes this year following a disastrous 2002. It lost $5.7 million last year, its worst showing since 1993. MLP already has lost $4.7 million in the first half of 2003.

A search committee is still looking for a replacement for Gary Gifford, who retired as president and chief executive officer at the May shareholders meeting. He was replaced on an interim basis by MLP executive Donald Young.

Also, about 10 employees were laid off from the pineapple division in the first half of this year as part of the company's plan for that unit to place more emphasis on fresh pineapple than canned pineapple. Additional layoffs will occur in the second half of this year, Young said, but he said the company hopes to minimize the impact through attrition and job relocation. MLP had 1,870 employees companywide at the end of 2002.

Art "Our primary focus continues to be on the pineapple operation," Young said. "It's an ongoing process that's going to take a number of years to change the business."

MLP also has been shedding the bulk of its commercial property division. Last week, the company announced it had sold Napili Plaza, a 45,200-square-foot neighborhood retail center in West Maui, to A&B Properties Inc., a subsidiary of Alexander & Baldwin Inc., for $7.1 million. MLP said yesterday it will realize a gain of approximately $2 million from that sale, which will be included in its third-quarter results. MLP also is in the process of selling the considerably larger Queen Kaahumanu Center, which MLP co-owns with the state Employees' Retirement System.

"We will continue to have commercial property as part of the resort operations at Kapalua and as part of our development plans," Young said. "There may be some future commercial property (MLP will pursue), but in terms of the business segment, our two main properties were Napili and Queen Kaahumanu."

Young said MLP is in the planning and entitlement stage for a shopping center in the Pukalani area in central Maui. Completion of that project, though, likely is several years away, he said.

Meanwhile, MLP's second-quarter revenues rose 8.6 percent to $36.5 million from $33.6 million a year ago.

Earnings per share widened to a loss of 56 cents from a loss of 29 cents a year ago. In addition to the management changes and employee layoffs, MLP cited legal fees, consultant costs, depreciation expenses and pension expense as reasons for the loss from operations.

Pineapple operations, which in recent years has been a drag on the company, lost $2.9 million compared with a loss of $1.3 million a year ago. Pineapple revenues, though, rose 7.7 percent to $23.9 million from $22.1 million. The company attributed the gain to higher volume and prices of pineapple sales from Costa Rica by MLP subsidiary Royal Coast Tropical Fruit Co. Inc., as well as increased sales volume of Hawaiian Gold, fresh whole pineapple grown on Maui. MLP said sales volume of its canned pineapple products in the quarter was lower due to increased general and administrative costs, which included layoffs in the division.

Kapalua Resort's operating loss widened to $1 million from a loss of $400,000 a year ago as a shrinking inventory of available products resulted in fewer sales. Resort revenues rose 2.1 percent to $10.5 million from $10.3 million because of increased hotel and villa room occupancies at Kapalua, an increased number of paid rounds of golf, higher green fees and improved merchandise sales.

The commercial and property division's operating loss narrowed to $139,000 from a loss of $458,000 while revenues nearly doubled to $2.1 million from $1.1 million. The higher revenues and improved operating results were due to lot sales at the Kapua Village employee subdivision.


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