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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-K

|ý | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

For the Fiscal Year Ended December 31, 2001

OR

|o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

Commission File Number 1-9145

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ML MACADAMIA ORCHARDS, L.P.(Exact Name of registrant as specified in its charter)

DELAWARE(State or other jurisdiction of incorporation or organization)

99-0248088(I.R.S. Employer Identification No.)26-238 Hawaii Belt Drive
HILO, HAWAII(Address of principal executive offices)

96720(Zip Code)


Registrant's telephone number, including area code:(808) 969-8057

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of Each Class

Name of Each Exchange on Which RegisteredDepositary Units Representing Class A Limited Partners' Interests

New York Stock Exchange


SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

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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 twelve 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 ý    No o

Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this 10-K or any amendment to this
10-K. o

As
of March 15, 2002, 7,500,000 shares of the registrant's Class A Units were outstanding, and the aggregate market value of such Units held by non-affiliates
was $28,050,000 (based on the closing price on that date of $3.74 per Unit).

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PART I

ITEM 1. BUSINESS OF THE PARTNERSHIP

(a) General Description of the Business

ML Macadamia Orchards, L.P. (the "Partnership") is a publicly traded partnership, organized under the laws of the State of Delaware, and engaged in the business
of growing and farming macadamia nuts in Hawaii. It believes that it is one of the world's largest growers of macadamia nuts. The Partnership owns or leases approximately 4,169 tree acres of macadamia
nut orchards in three locations within a 50-mile radius on the island of Hawaii. ("Tree acres" are acres of the Partnership's owned or leased lands utilized for macadamia nut orchards.
"Gross acres" includes areas not utilized for orchards.) The Partnership sells all of its macadamia nut production to Mauna Loa Macadamia Nut Corporation ("Mauna Loa") under long-term nut
purchases contracts. The Partnership farms its own orchards and approximately 2,800 additional acres of macadamia orchards for other orchard owners. The Partnership is managed by its general partner,
ML Resources, Inc. ("MLR" or the "Managing Partner"). Until July 31, 2001, the Managing Partner was a wholly owned subsidiary of C. Brewer and Company, Limited ("CBCL"),
which in turn is wholly owned by Buyco, Inc. ("Buyco"). On August 1, 2001, all of the stock of the Managing Partner was purchased by D. Buyers Enterprises, LLC ("DBE"). J.W.A. Buyers is
the sole owner and Member of DBE and the Chairman of the Board of C. Brewer and Buyco.

Ownership
of Class A Units confers no direct or indirect interest in Buyco, CBCL, DBE or any of their affiliated entities, or in Mauna Loa.

The
Partnership commenced operations in June 1986, following its acquisition of interests in approximately 2,423 tree acres of macadamia nut orchards from subsidiaries of CBCL. In
December 1986 and October 1989, respectively, the Partnership acquired from subsidiaries of CBCL
interests in approximately 266 and 1,260 additional tree acres of macadamia orchards. In September 1991 the Partnership acquired approximately 78 tree acres of producing macadamia orchards.

On
May 1, 2000, the Partnership purchased 142 acres of macadamia orchards and the macadamia farming operations from subsidiaries of CBCL. The farming operations consist of farming
contracts, farming equipment, vehicles, a husking plant, irrigation well, office buildings, garages and warehouses, office furniture and equipment and material inventories related to macadamia
farming. All the assets and operations are located on the island of Hawaii.

(b) Financial Information about Industry Segments

The response to this section of Item 1 is incorporated by reference to Note 4 of the Notes to the Consolidated Financial Statements.

(c) Narrative Description of the Business

Owned-orchard Segment

The Partnership currently sells all of the macadamia nuts from its orchards to Mauna Loa under long-term nut purchase contracts. Mauna Loa processes
and markets the nuts under theMauna Loa® brand name and is believed to be the largest processor and marketer of macadamia nuts in the
world. The Partnership is Mauna Loa's largest single supplier of macadamia nuts. Mauna Loa was a subsidiary of CBCL until its sale in September 2000 to The Shansby Group. On May 1, 2000,
the Partnership began farming its own macadamia orchards. Prior to that date, subsidiaries of CBCL performed the farming activities for the Partnership under long-term farming contracts.

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Nut Purchase Contracts.The Partnership is a party to five nut purchase contracts with Mauna Loa.
They cover all nuts produced by the orchards acquired in June 1986, December 1986, October 1989, September 1991 and May 2000, respectively. The 1986 contracts expire
in 2006, while the 1989 contract expires in 2019 and also provides for the exclusion of unusable nuts from those purchased by Mauna Loa. The first three contracts are identical in all other material
respects. The fourth contract was acquired by assignment with the orchard purchase in September 1991 and expires in 2003. The fourth contract is similar to the 1986 contracts, but the nut price
is calculated on a crop year (July 1 through
June 30) rather than a calendar year basis, which results in a slightly different nut price. All four contracts use a pricing formula based 50% on a two-year trailing average of the
macadamia nut price published annually by the United States Department of Agriculture and 50% on Mauna Loa's "netback component." The netback component is calculated by subtracting Mauna Loa's
processing and marketing costs per pound and a "capital charge" of 20% from its nut revenues per pound. The fifth contract expires in 2006. Its pricing formula is based 100% on the
two-year trailing average of USDA reported prices. The first three nut purchase contracts may be terminated by Mauna Loa upon thirty days' notice if the Managing Partner is involuntarily
removed as the managing general partner and replaced by a person or entity not affiliated with Mauna Loa. The fourth nut purchase contract may be terminated at any time by mutual agreement in writing,
or it may be terminated by the Partnership as of the end of any calendar year by giving Mauna Loa at least twelve months advance notice of its intention to terminate. The fifth contract may be
terminated at any time by mutual agreement in writing.

Competition.Because the Partnership's revenues from nut sales are tied to a formula dependent in
large part upon Mauna Loa's market performance, the Partnership bears certain risks associated with Mauna Loa's marketing of the nuts, including the likelihood of increased future competition.
Subsequent to the sale of Mauna Loa to the Shansby Group in September 2000, the Partnership no longer has access to the operational and marketing strategies and financial results of Mauna Loa,
as it is no longer a related entity.

Mauna
Loa considers its primary competition to be other premium nut products, except in Hawaii where its products compete with those of other macadamia nut producers and other food and
non-food tourist items. As a premium nut, macadamia nuts compete with cashews, almonds and pistachios.

Mauna
Loa sells macadamia nuts as "retail" nuts and "commercial" nuts and produces and sells various macadamia nut products. These include pristine salted and unsalted roasted macadamia
nuts, packages of diced macadamia nuts and macadamia oil (for cooking and baking), value-added products such as candy-glazed macadamia nuts, chocolate-covered macadamia nuts, chocolate macadamia nut
candy bars, honey-roasted macadamia nuts and macadamia nut brittle.

Macadamia
nuts comprised less than 5% of the sales of branded premium nuts sold through mass merchandisers, drug and grocery stores on the U.S. mainland. Cashews and mixed nuts represent
the bulk of the dollar sales in this segment, followed by pistachios. Macadamia nuts are the highest priced of all premium nuts, and, therefore, they may be sensitive to price competition from other
nuts.

The
primary market for theMauna Loa® brand is the U.S. mainland, where Mauna Loa sells its products through brokers to food
stores, club stores, drug store chains, mass merchandisers and commercial customers.

A
strong secondary market for theMauna Loa® brand is the state of Hawaii, where Mauna Loa sells through its own direct sales
force primarily to retailers. Substantial portions of the macadamia nut
products sold are purchased by visitors for gifts and souvenirs. Mauna Loa believes that it is the largest seller of macadamia products in the State of Hawaii.

Outside
the United States, Mauna Loa's other major market for branded products is Japan and the Far East with some limited distribution in other regions.

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The
remaining sales are comprised of ingredient nuts, visitor center sales, and mail order sales.

In
addition to the State of Hawaii, mature macadamia nut orchards are located in Australia, Africa, and Central America. For the 2002 crop, Hawaii was expected to supply 27% of the world
crop, and Australia, the world's largest producer, was expected to supply 39%.

A
general decline in nut prices would adversely affect the prices which Mauna Loa could charge for its macadamia nut products and could have a negative effect on its profitability. Since
the purchase price for the Partnership's nuts under all of its nut purchase contracts is based in part on nut prices reported by the industry and in part on the marketing success of Mauna Loa, a
general decline in macadamia nut prices could also adversely affect the Partnership's revenues.

Macadamia Farming Segment

Since the May 2000 purchase of the macadamia farming operations, the Partnership farms its own 4,169 acres of macadamia orchards and approximately 2,800
additional acres of macadamia orchards owned by other growers. Prior to May 2000, the Partnership's orchards were farmed by two subsidiaries of CBCL under four long-term farming
contracts.

All
the orchards are located in three separate regions on the island of Hawaii ("Keaau", "Ka'u" and "Mauna Kea"). Because each region has different terrain and weather conditions,
farming methods vary somewhat among the three locations.

Farming Contracts.The Partnership was a party to four farming contracts with two affiliates of CBCL,
Ka'u Agribusiness Company, Inc. ("KACI") and Mauna Kea Agribusiness Company, Inc. ("MKACI"). Services under these contracts included cultivation, weed and pest control, fertilization,
pruning and hedging, replanting, harvesting, husking and related services for the Partnership's orchards. In return, the Partnership reimbursed KACI and MKACI for direct and indirect costs incurred in
providing such
services, including an equipment utilization charge and an annual farming fee. The contracts were terminated May 1, 2000 when the Partnership acquired all the farming assets from KACI and
MKACI.

KACI
and MKACI were also a party to approximately twenty additional farming contracts, which have been assigned to the Partnership with the May 2000 acquisition. Services provided
and reimbursements for costs under these contracts are identical to those listed above. These contracts also provide a management fee to the Partnership, which is based as either a fixed fee per acre
farmed, or as a percent of reimbursed costs, ranging from 5% to 20%.

Orchard Maintenance.Maintenance of an orchard is essential to macadamia nut farming. Pruning and
hedging of trees is necessary to allow space for mechanical harvesting and cultivating equipment to operate safely and efficiently and to remove dead branches. Where mechanical equipment is used, the
orchard floor must be maintained in a condition that will permit its operation. Soil and gravel are used to repair mud holes and other surface irregularities caused by soil erosion from heavy rain and
by farming equipment. Pruning and surface maintenance are usually performed after the harvest season.

Orchard
management also requires the proper selection and application of fertilizers, pesticides (to control rodents, insects and fungi) and herbicides (to control weeds). Insects,
rodents and fungi, as well as wild pigs, if not controlled, can cause losses to nut production.

Harvesting.The harvest period begins in the late summer and runs through the following spring.
Mature nuts fall from the trees and are harvested using mechanized harvest equipment when the orchard floor is level enough to permit its use. Nuts are harvested by hand when the orchard floor is too
uneven to permit mechanical harvesting, when the nut drop is very light and when nuts remain after harvesting. At Keaau, Ka'u and Mauna Kea, seasonal labor for hand harvesting and other operations is
generally available from nearby Hilo and adjacent communities.

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Mechanical
harvesting is less costly than hand harvesting, but mechanical harvesting is possible only where the orchard floor is relatively flat. Approximately 70% of the orchards in
Ka'u, 59% in Keaau and 94% in Mauna Kea are currently mechanically harvested. The remaining acres are too uneven for mechanical harvesting and must be harvested by hand.

During
the harvest season, the nuts are collected every six to ten weeks. Nuts suffer loss in quality if they remain on the ground too long. The harvested nuts are then transported to
the husking facilities, which are located in Ka'u and Keaau. The Keaau husking facility is owned by Mauna Loa, and the Ka'u husking facility is owned by the Partnership. Nuts harvested in the Mauna
Kea region are transported to the husking facility in Keaau. At the husking facility, the outer husk is removed and the nuts, still in their shell, are weighed and sampled to determine moisture
content and kernel quality.
Title to the nuts husked in Keaau passes to Mauna Loa after weighing. Title to the nuts husked at Ka'u pass to Mauna Loa after delivery to the Mauna Loa processing plant in Keaau. The nuts are then
moved to a drying facility.

Processing.The nuts purchased by Mauna Loa from the Partnership and from the other orchards farmed
by the Partnership are primarily processed at Mauna Loa's processing plant located adjacent to the orchards located in the Keaau area. The plant was built in 1966 and is presently capable of handling
approximately 210,000 pounds of dry-in-shell (commonly abbreviated "DIS") nuts per day. Processing at the plant includes drying, cracking, roasting, inspecting and limited
packaging. The plant also includes separate warehouses, a machine shop, storage facilities, husking facilities, nut drying facilities, a generator and a 10,000 square foot chocolate processing plant.
None of these processing facilities are owned by the Partnership.

At
Mauna Loa's plant in Keaau, the harvested nuts pass by conveyors over metal screens, blowers and rock separators that remove extraneous material from the in-husk nuts. The
husks are then split and removed by pressing the nuts between steel roller bars and a rubber pad. At this stage, the nut kernels are still encased in their hard round shells and roughly 20% of their
weight is attributable to moisture content. At this point, the nuts are referred to as wet-in-shell (commonly abbreviated "WIS"). The WIS weight of the nuts is used to
determine payments to be made by Mauna Loa under the Nut Purchase Contracts. Approximately 20% of the WIS weight of the nuts will become dry salable kernels when all further processing is completed.

After
the nuts are weighed, the moisture content of the nuts is reduced by blowing warm air over them, which produces DIS nuts. Metal rollers are used to crack the nuts and remove most
of the shell. Mechanical and optical equipment, as well as hand sorting, are used to separate the salable kernels from unusable nuts and pieces of broken shell.

The
dry nut kernels are roasted and then sorted into retail and commercial grades. At this stage, some of the nuts are bulk-packed and sent to various co-packers
on the U.S. mainland for packaging. At Mauna Loa's plant in Keaau the nuts may be salted, or covered with chocolate or one of several coatings, and finally packaged, labeled and readied for shipment.

Stabilization Payments

In December 1986, the Partnership acquired a 266-acre orchard that was several years younger than other orchards of the Partnership. Because of
the relative immaturity of the newer orchard, its productivity (and therefore its cash flow) was expected to be correspondingly lower for the first several years than for the other older orchards.

Accordingly,
the seller of this orchard (KACI) agreed to make cash stabilization payments to the Partnership for each year through 1993 in which the cash flow (as defined) from this
orchard fell short of the target cash flow level, which equaled $507,000. Stabilization payments for any given year were limited to the lesser of the amount of the shortfall or a maximum payment
amount. For the years from

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1987 through 1993, inclusive, the Partnership received a total of $1,628,000 (including a 4% Hawaii general excise tax) in stabilization payments under this agreement.

The
Partnership accounted for stabilization payments (net of the 4% Hawaii general excise tax) as a reduction in the cost basis of the orchard. As such, these payments are being
reflected in the Partnership's net income ratably through 2019 as a reduction to the depreciation expense reported for this orchard.

In
return, the Partnership is obligated to pay the seller 100% of any year's cash flow from this orchard in excess of the target cash flow as additional percentage rent until the
aggregate amount of the additional percentage rent paid equals 150% of the total amount of stabilization payments previously received. Thereafter, the Partnership is obligated to pay the seller 50% of
this orchard's cash flow in excess of the target cash flow as additional incentive rent. No additional rent was due in 1999, 2000, or 2001.

Risks Involved in Operating Macadamia Orchards

Macadamia nut trees are subject to damage or destruction from diseases, pests, floods, droughts, windstorms, hurricanes, volcanic activity and other natural
causes. Partnership tree replacements for all orchards from all causes were 0.7% in 1999, 0.9% in 2000, and 0.8% in 2001. Both crop and tree insurance are in place to protect the Partnership against
material losses.

Diseases and Pests.The Partnership's Keaau orchards have experienced tree replacements of 1.5% in
1999, 2.0% in 2000, and 2.0% in 2001. Other macadamia growers in the vicinity have also experienced higher than normal tree losses due to a problem known as "Macadamia Quick Decline" ("MQD"). Based
upon research by the University of Hawaii and other experts, it is believed that the situation is due to fungi associated with high moisture conditions. It is also believed that a particular variety
of macadamia nut tree (variety 333) is most susceptible to MQD. Another tree variety (variety 344) has also been identified as being more susceptible to MQD than other varieties. Approximately 9% of
the Partnership's orchards are variety 333 and 45% are variety 344. Both the Keaau and Mauna Kea orchards are areas with high moisture conditions, and may be more susceptible to the MQD problem. MQD
is present in the Ka'u orchards, but tree losses to date have been less than 1% in the Ka'u area.

There
are also two types of fungal diseases, which can affect nut production but are not fatal to the trees themselves. One of these is Phytophthora, which affects the macadamia flowers
and nutlets, and the other is Botrytis cinerea. These types of fungal disease were generally controllable with fungicides, but many of these fungicides are no longer available. Historically, these
fungi have attacked the orchards located in Keaau every three to four years. There was a Phytophthora occurrence in the Keaau and Mauna Kea orchards from February to mid-March in 1999,
which slightly affected the 1999-2000 crop year production for these orchards. A moderate infestation of Phytophthora occurred in January 2000, and a light infestation has occurred
in late January-early February 2001.

Rainstorms and Floods.The Partnership's orchards are located in areas on the island of Hawaii that
are susceptible to heavy rainstorms. On November 2, 2000, over 30 inches of rain fell in twenty-four hours in East Hawaii. The orchards in the Ka'u region were in the middle of
fall/winter harvesting and an estimated 2.5 million pounds of nuts were washed away. Orchard roads, bridges, and irrigation systems were damaged throughout the area, as well as the state
highway. The Partnership sustained damage to approximately 81 acres of orchards. Cleanup and irrigation repair cost was approximately $200,000. Fortunately, only six macadamia trees were washed away.
Some of the orchards owned by others and farmed by the Partnership were more heavily damaged. Approximately 300 acres of other owners' orchards were affected by rocks, debris and washouts, including
3,500 trees that were washed away.

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Windstorms.The Partnership's orchards are located in areas on the island of Hawaii that are
susceptible to windstorms. Twenty-four major windstorms have occurred on the island of Hawaii since 1961, and four of those caused material losses to Partnership orchards. Several of the
Partnership's orchards are surrounded by windbreak trees, which provide limited protection. Younger trees that have not developed extensive root systems are particularly vulnerable to windstorms.

Insurance.The Partnership secures tree insurance each year under a federally subsidized program. The
tree insurance for 2001 provides coverage up to a maximum of approximately $22 million against loss of trees due to wind, fire or volcanic activity. Crop insurance was purchased for the
2001-2002 crop year and provides coverage up to a maximum of approximately $9.1 million against loss of nuts due to wind, fire, volcanic activity, earthquake, adverse weather,
wildlife damage and failure of irrigation water supplies.

Volcanoes.The orchards are located on the island of Hawaii, where there are two active volcanoes. To
date, no lava flows from either volcano have affected or threatened the orchards.

Rainfall.The productivity of orchards depends in large part on moisture conditions. Inadequate
rainfall can reduce nut yields significantly, while excessive rain without adequate drainage can foster disease and hamper harvesting operations. While rainfall at the orchards located in the Keaau
and Mauna Kea areas has generally been adequate, the orchards located in the Ka'u area generally receive less rainfall and, as a result, a portion of the Ka'u orchards is presently irrigated.
Irrigation can mitigate the effects
of a drought, but it cannot completely protect a macadamia nut crop from the effect of a drought. Recorded rainfall at each of the three locations of the Partnership's orchards for the past five years
is shown below:

Year

Ka'u

Keaau

Mauna Kea1997

54.9
"
142.3
"
157.5
"1998

8.8
"
115.5
"
153.7
"1999

30.5
"
132.3
"
130.0
"2000

47.1
"
147.9
"
158.0
"2001

46.0
"
124.0
"
133.4
"


In,
1998, an El Nino related drought affected all of Hawaii for the first three months and continued to affect Ka'u for the full year. The Ka'u region recorded the lowest rainfall in the
Partnership's history, with less than nine inches of rain. The 1998-99 Ka'u crop year was reduced by over 30% due to the lack of rainfall. The Keaau and Mauna Kea regions, which normally
receive substantial rainfall, benefited from the lack of rainfall during the first three months of the year. During this period, flowering and pollination were highly successful in these orchards,
resulting in the largest macadamia crops ever produced in these two regions.

The
drought continued in Ka'u until the fall of 1999. However, twelve inches of rain fell in the beginning of 1999, which allowed the Ka'u orchards to flower and produce a crop that was
just less than normal.

Drought
continued for the third year in Ka'u in 2000, with only 10 inches of rain falling from January to July. After the November rainstorm, when the Ka'u region received over 30 inches
of rainfall in twenty-four hours, essentially no rain was received again until February 2001, when 13 inches was recorded.

Water Supply for Irrigation

With the May 2000 acquisition, the Partnership acquired an irrigation well (the "Sisal Well"), which supplies water to the Partnership's orchards in Ka'u
which were purchased in June 1986 and 1989. The Sisal Well is situated on land owned by MKACI. On May 1, 2000 the Partnership entered

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into a license agreement with MKACI, which allows the Partnership necessary access to maintain and operate the Sisal Well, as well as the use of roads to access, maintain and operate the
Partnership's macadamia orchards. Annual rent for the license agreement is one dollar. The license agreement terminates on the earlier of June 30, 2045, or at the termination of the
May 1, 2000 lease between Partnership and KACI.

Prior
to the May 2000 acquisition, the Partnership and KACI were parties to a water agreement to which KACI agreed to supply water to those portions of the June 1986
Orchards and October 1986 Orchards located at Ka'u and which had been irrigated historically.

If
the amount of water provided by the Sisal Well becomes insufficient to irrigate the above named orchards, the Partnership may consider increasing the capacity of the Sisal Well,
drilling an alternative well into the historical source which provides water to the Sisal Well or obtaining water from other sources.

On
a historical basis, the quantity of water available from the Sisal Well has been generally sufficient to irrigate these orchards in accordance with prudent farming practices. The
irrigated portion of the Ka'u II Orchards is expected to need greater quantities of water as the orchards mature. The Managing Partner anticipates that the amount of water available from the Sisal
well will be generally sufficient, assuming average levels of rainfall, to irrigate the Irrigated Orchards in accordance with prudent farming practices for the next several years. If no irrigation
water is available to the Irrigated Orchards, then, based on historical average rainfall levels, diminished yields of macadamia nut production can be expected.

Employees

As of December 31, 2001, the Partnership employed 331 people, of which 33 were seasonal employees. Of the total, 22 are in farming supervision and
management, 261 in production, maintenance and agricultural operations, and 15 in accounting and administration.

With
the May 2000 acquisition, the Partnership agreed to the assumption of three bargaining agreements with the ILWU Local 142. These agreements cover all production, maintenance
and agricultural employees of the Ka'u Orchard Division, of the Keaau Orchard Division and of the Mauna Kea Orchard Division. These labor contracts became effective May 1, 1997 and are due to
expire on April 30, 2002. The parties have recently agreed to a new three-year contract, which will expire on April 30, 2005. The Partnership believes that relations with its
employees are very good.

ITEM 2. PROPERTIES

Location.The Partnership owns or leases approximately 4,169 tree acres of macadamia orchards on the
island of Hawaii. The orchards are located in three areas: Ka'u, Keaau and Mauna Kea. The Ka'u area is located in the south part of the island about fifty miles from Hilo. The Keaau area is located
six miles south of Hilo on the east side of the island, and the Mauna Kea area is located three miles north of Hilo on the east side of the island.

The
majority of macadamia nut trees grown in the State of Hawaii are grown on the island of Hawaii in volcanic soil that permits drainage during heavy rainfall. While the orchards are
located approximately within a 50-mile radius, the climate and other conditions that affect the growing of macadamia nuts are different. These differences are the result of prevailing wind
patterns and island topography, which produce a variety of microclimates throughout the island.

Age and Density.The productivity of macadamia nut orchards depends on several factors including,
among others, the age of the trees, the number of trees planted per acre, soil condition, climate, rainfall and/or irrigation. The most significant characteristic affecting yields is maturity. The
trees in a macadamia nut orchard generally begin to produce nuts at a commercially acceptable level at

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around nine years of age. Thereafter, nut yields increase gradually until the trees reach maturity, after which the nut yield remains relatively constant except for variances produced by rainfall,
cultivation practices, pest infestation and disease.

Macadamia
orchards normally reach peak production after fifteen to eighteen years of age. Of the 4,169 tree acres of macadamia orchards owned or leased by the Partnership, 3,270 tree
acres are over eighteen years of age and roughly 899 tree acres are under eighteen years of age. Around 2% of trees are lost to various causes each year and are replaced.

[MAP]

Rainfall.Macadamia trees grow best in climates with substantial and evenly distributed rainfall (or
equivalent irrigation) and in soil that provides good drainage. Inadequate rainfall can significantly reduce nut yields, while excessive rain without adequate drainage can impede healthy tree growth,
promote the growth of harmful fungal diseases and produce mud holes that require repair of the orchard floor.

At
Keaau, normal rainfall is adequate without irrigation, and the volcanic soil provides good drainage. However, short droughts and occasional flooding have occurred. At Mauna Kea,
normal rainfall is adequate without irrigation and the volcanic soil provides adequate drainage. In the event of a very long drought, production at Keaau and Mauna Kea might be affected. At Ka'u,
located on the drier side of the island, the rainfall averages are substantially less than at Keaau, particularly at the lower elevations. Approximately 652 acres at the lower elevations of Ka'u are
irrigated to provide for additional water when required. Under extremely dry conditions at Ka'u, such as a prolonged drought, irrigation is not sufficient, and production will be adversely affected.

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Orchards.The following table lists each of the orchards, the year acquired, tree acres, tenure, and
lease rents:

|Orchard           |             | Acquired   |  | Tree
Acres |      | Tenure        |  | Lease
Expiration |  | Min. Rent
per Annum
|----------------- | ----------- | ---------- |  | ---------- | ---- | ------------- |  | ---------------- |  | -------------------
|Keaau I           |             | June 1986  |  | 1467       |      | Fee simple    |  |                  |  |                    
|Ka'u I            |             | June 1986  |  | 456        |      | Fee simple    |  |                  |  |                    
|"                 |             | June 1986  |  | 500        |      | Leasehold (1) |  | 2019             |  | $                  
|Ka'u Green Shoe I |             | Dec. 1986  |  | 266        |      | Leasehold (1) |  | 2019             |  | $                  
|Keaau II          |             | Oct. 1989  |  | 220        |      | Fee simple    |  |                  |  |                    
|Ka'u II           |             | Oct. 1989  |  | 327        |      | Leasehold (2) |  | 2034             |  | $                  
|"                 |             | Oct. 1989  |  | 175        |      | Leasehold (1) |  | 2028             |  | $                  
|"                 |             | Oct. 1989  |  | 26         |      | Leasehold (3) |  | 2029             |  | $                  
|"                 |             | Oct. 1989  |  | 186        |      | Leasehold (1) |  | 2031             |  | $                  
|Mauna Kea         |             | Oct. 1989  |  | 326        |      | Leasehold (2) |  | 2034             |  | $                  
|Keaau Lot 10      |             | Sept. 1991 |  | 78         |      | Fee simple    |  |                  |  |                    
|Ka'u O            |             | May 2000   |  | 142        |      | Leasehold (1) |  | 2045             |  | $                  
|                  |             |            |  |            |      |               |  |                  |  |                    
|                  | Total acres |            |  |            | 4169 |               |  |                  |  |                    

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For
certain additional information concerning farming leases, see Item 13, page 43.

In
addition to the minimum annual lease payment amount, all the leases require the Partnership to pay various expenses with respect to the leased premises as well as an additional rental
payment based on the market price per pound of macadamia nuts sold in Hawaii.

With
respect to the Ka'u Green Shoe I Orchard, the lease requires the Partnership to pay KACI, the seller and lessor, additional rent equal to 100% of any year's cash flow generated by
such orchard in excess of a target level of $507,000 until the aggregate amount paid equals 150% of the aggregate amount of the stabilization payments previously received by the Partnership.
Thereafter, the Partnership is required, with respect to any year prior to the expiration of the lease, to pay as additional rent, 50%
of the cash flow generated by such orchard for such year in excess of a target level of $507,000 of cash flow. For additional information, see "Stabilization Payments" on page 5.

ITEM 3. LEGAL PROCEEDINGS AND SETTLEMENT

Mauna Loa.The Partnership is a party to five macadamia nut purchase contracts with Mauna Loa. Three
of these contracts, one written in 1983 and two in 1986, require Mauna Loa to pay for all nuts delivered. Since the inception of these three contracts, Mauna Loa has always paid for all nuts
delivered. The other two nut purchase contracts were written in 1989 and 1999 and allow for the deduction of unusable nuts in calculating payment due.

On
October 31, 2000, a dispute arose with Mauna Loa regarding the payment for nuts delivered by the Partnership during the year. In violation of the nut purchase contracts and
past practice, Mauna Loa deducted $908,000 for certain substandard nuts related to the 1983 and 1986 contracts. A demand letter was sent, litigation ensued and a motion for summary judgment was
entered on June 4, 2001 against Mauna Loa awarding principal, interest and attorneys fees to the Partnership.

10

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Settlement
discussions followed the judgment in order to avoid an appeal and further litigation. The Partnership agreed to accept principal, interest and portion of its legal fees along
with a complete release by both parties.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted during the fourth quarter of the fiscal year covered by this report to a vote of security holders.

11

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PART II

ITEM 5. MARKET FOR REGISTRANT'S CLASS A UNITS AND RELATED UNITHOLDER MATTERS

The Partnership's Class A Depositary Units are listed for trading on the New York Stock Exchange (symbol = NUT). There were 1,437 registered holders
of Class A Depositary Units on December 31, 2001.

Distributions
declared and high and low sales prices of the Class A Depositary Units, based on New York Stock Exchange daily composite transactions, are shown in the table below:

|      |  |             |  | Distribution |       | High |       | Low
|----- |  | ----------- |  | ------------ | ----- | ---- | ----- | ---
|2001: |  | 4th Quarter |  | $            | 0.050 |      | 3.29  |    
|      |  | 3rd Quarter |  |              | 0.050 |      | 3.40  |    
|      |  | 2nd Quarter |  |              | 0.050 |      | 4.00  |    
|      |  | 1st Quarter |  |              | 0.050 |      | 4.80  |    
|2000: |  | 4th Quarter |  | $            | 0.090 |      | 5     |    
|      |  | 3rd Quarter |  |              | 0.125 |      | 5     |    
|      |  | 2nd Quarter |  |              | 0.125 |      | 53/16 |    
|      |  | 1st Quarter |  |              | 0.125 |      | 51/4  |    

Restrictions on Cash Distributions

On May 2, 2000, the Partnership entered into a new Credit Agreement with Pacific Coast Farm Credit Services, ACA, under which it borrowed $4 million
on a ten-year promissory note and will have available a $5 million revolving line of credit facility through May 1, 2004.

In
connection with the Credit Agreement certain restrictions are placed on the Partnership in regard to indebtedness, sales of assets and maintenance of certain financial minimums. The
Partnership's cash distributions will be restricted unless all requirements of these covenants are met and the effects of any cash distributions do not breach any of the financial covenants. The
restrictive covenants consist of the following:



On
December 31, 2001 the Partnership's working capital was $3.2 million and its current ratio was 1.82 to 1. The Partnership is in compliance with all covenants of the
Credit Agreement at December 31, 2001.

12

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ITEM 6. SELECTED FINANCIAL DATA

(In thousands, except per pound and per unit data)

|                     |                                              | 2001 |   | 2000   |  | 1999 |        | 1998 |   | 1997  
|-------------------- | -------------------------------------------- | ---- | - | ------ |  | ---- | ------ | ---- | - | ------
|Financial:           |                                              |      |   |        |  |      |        |      |   |       
|                     | Total revenue                                |      | $ | 16,893 |  | $    | 13,758 |      | $ | 15,950
|                     | Net cash provided by operating activities(1) |      |   | 2,237  |  |      | 2,507  |      |   | 3,849 
|                     | Income (loss) before taxes                   |      |   | 1,112  |  |      | (360   | )    |   | 4,847 
|                     | Net income (loss)                            |      |   | 1,010  |  |      | (398   | )    |   | 4,645 
|                     | Distributions declared                       |      |   | 1,515  |  |      | 3,523  |      |   | 3,030 
|                     | Total working capital                        |      |   | 3,183  |  |      | 1,599  |      |   | 9,031 
|                     | Total assets                                 |      |   | 65,329 |  |      | 65,625 |      |   | 66,503
|                     | Long-term debt                               |      |   | 3,402  |  |      | 3,716  |      |   |      
|                     | Total partners' capital                      |      |   | 56,844 |  |      | 57,349 |      |   | 61,270
|                     | Class A limited partners' capital            |      |   | 56,275 |  |      | 56,775 |      |   | 60,657
|                     | Net cash flow(2)                             |      |   | 3,093  |  |      | 1,824  |      |   | 6,247 
|Operations:          |                                              |      |   |        |  |      |        |      |   |       
|                     | Acres harvested                              |      |   | 4,169  |  |      | 4,169  |      |   | 4,027 
|                     | Macadamia nuts harvested (lbs.)(3)           |      |   | 23,013 |  |      | 19,255 |      |   | 25,569
|                     | Net price $/lb.(3)(4)                        |      | $ | 0.4830 |  | $    | 0.5125 |      | $ | 0.6238
|Per Class A Unit(5): |                                              |      |   |        |  |      |        |      |   |       
|                     | Income (loss) before taxes                   |      | $ | 0.15   |  | $    | (0.05  | )    | $ | 0.64  
|                     | Net income (loss)                            |      |   | 0.13   |  |      | (0.05  | )    |   | 0.61  
|                     | Net cash flow(2)                             |      |   | 0.41   |  |      | 0.24   |      |   | 0.82  
|                     | Distributions                                |      |   | 0.20   |  |      | 0.465  |      |   | 0.40  
|                     | Partners' capital                            |      |   | 7.50   |  |      | 7.57   |      |   | 8.09  

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion should be read in conjunction with the financial statements and the related notes included elsewhere in this report.

On
May 1, 2000, the Partnership completed the purchase of the macadamia farming operations from four subsidiaries of C. Brewer and Company, Ltd. The acquired assets
consisted of 142 acres of macadamia orchards, farming contracts, farming equipment, vehicles, a husking plant, irrigation well, office buildings, garages and warehouses, office furniture and equipment
and material inventories related to macadamia farming. All the assets and operations are located on the island of Hawaii. Effective with the acquisition, the Partnership began performing all the
farming operations for its own 4,169 acres and for approximately 3,000 additional acres owned by other growers.

13

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Results of operations2001, 2000, 1999

Owned-Orchard SegmentProduction and Yields

Production and yield data for the eight orchards are summarized below (expressed in wet-in-shell pounds at 25% moisture):

|                  |                                           |            |  |       |       |           |            | Average Yield per Acre
|----------------- | ----------------------------------------- | ---------- |  | ----- | ----- | --------- | ---------- | ----------------------
|
|
|Keaau I           |                                           | June 1986  |  | 1,467 |       | 7,608,097 |            | 5,186                 
|Keaau II          |                                           | Oct. 1989  |  | 220   |       | 698,947   |            | 3,177                 
|Keaau Lot 10      |                                           | Sept. 1991 |  | 78    |       | 249,426   |            | 3,198                 
|Ka'u I            |                                           | June 1986  |  | 956   |       | 6,689,285 |            | 6,997                 
|Ka'u Green Shoe I |                                           | Dec. 1986  |  | 266   |       | 1,690,253 |            | 6,354                 
|Ka'u II           |                                           | Oct. 1989  |  | 714   |       | 3,822,942 |            | 5,354                 
|Ka'u O            |                                           | May 2000   |  | 142   |       | 700,611   |            | 4,934                 
|Mauna Kea         |                                           | Oct. 1989  |  | 326   |       | 1,553,489 |            | 4,765                 
|                  |                                           |            |  |       |       |           |            |                       
|                  | Totals (except yields which are averages) |            |  |       | 4,169 |           | 23,013,050 |                       
|                  |                                           |            |  |       |       |           |            |                       

Production
for the orchards purchased in 1989 and 2000 is net of unusable nuts, as stated in their respective nut purchase agreements. Production for the orchards purchased in 1986 and
1991 includes all nuts delivered. The nut purchase contracts for the 1986 and 1991 orchards require the purchaser, Mauna Loa Macadamia Nut Corporation ("Mauna Loa"), to purchase all of the nuts
delivered from these orchards. The Partnership reports on a calendar year basis, though the natural crop year generally begins in August and runs through April.

Production
in 2001 was 9.4% higher than 2000, but 10% lower than the record harvest in 1999. Significant factors affecting the crop were as follows:

The
Ka'u Green Shoe I orchard and the Mauna Kea orchard are not yet fully mature. As a result, the yields from these orchards are expected to be lower on average over the next few years
than for the Partnership's mature orchards. At full maturity under favorable growing conditions, a macadamia orchard can produce between 5,500 and 7,500 WIS pounds of macadamia nuts per acre each year
at Ka'u and between 4,000 and 6,000 WIS pounds of macadamia nuts per acre each year at Keaau. No trees have reached full maturity in the Mauna Kea area, but it is expected that production at maturity
at the Mauna Kea orchard will approximate Keaau levels.

14

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Owned-Orchard SegmentNut Revenue

Macadamia nut revenues depend on the number of producing acres, yields per acre and the nut purchase price. The impact of these factors is summarized in the
following table:

|                                |  | 2001   |  | 2000   |   | 1999   |  | 2001 Over 2000 |   | 2000 Over 1999 |  
|------------------------------- |  | ------ |  | ------ | - | ------ |  | -------------- | - | -------------- | -
|Trees acres harvested           |  | 4,169  |  | 4,169  |   | 4,027  |  |               |   | + 4            | %
|Average yield (WIS lbs./acre)   |  | 5,520  |  | 5,045  |   | 6,349  |  | + 9            | % | - 21           | %
|                                |  |        |  |        |   |        |  |                |   |                |  
|Nuts harvested (000's WIS lbs.) |  | 23,013 |  | 21,034 |   | 25,569 |  | + 9            | % | - 18           | %
|Nut price ($/WIS lbs. @ 25%)    |  | 0.4830 |  | 0.5126 |   | 0.6238 |  | - 6            | % | - 18           | %
|                                |  |        |  |        |   |        |  |                |   |                |  
|Gross nut sales ($000s)         |  | 11,115 |  | 10,762 |   | 15,950 |  | + 3            | % | - 33           | %
|Litigation Adjustment           |  | 908    |  | (908   | ) |       |  |                |   |                |  
|                                |  |        |  |        |   |        |  |                |   |                |  
|Recorded nut sales ($000s)      |  | 12,023 |  | 9,854  |   | 15,950 |  |                |   |                |  
|                                |  |        |  |        |   |        |  |                |   |                |  

Under
the nut purchase contracts with Mauna Loa, the price for nuts delivered is based 50% on the two-year trailing average of USDA published macadamia nut prices and 50% on
a "netback component". The netback component is determined by subtracting from Mauna Loa's gross revenues from the sale of macadamia products (i) allocable processing, packaging, marketing,
selling and advertising costs and (ii) a 20% capital charge on the difference between those aggregate gross revenues and aggregate allocable costs.

15

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The following table sets forth the manner in which the nut purchase price per pound was determined for 2001, 2000 and 1999 ($/lb.):

2001

2000

1999USDA pricetwo years prior (a)

0.6155

0.6996

0.7125USDA priceone year prior (a)

0.6227

0.6155

0.6996USDA pricetwo year trailing average

0.6191

0.6576

0.7061Gross revenues

1.5024

2.1065

2.1695Less allocable processing, packaging, marketing, sales and advertising costs

1.0834

1.5732

1.5023Less 20% capital charge

0.0838

0.0887

0.1334Net-back component

0.3352

0.3546

0.5338USDA pricetwo year trailing average

0.6191

0.6576

0.7061Net-back component

0.3352

0.3456

0.5338Average of USDA two year trailing average price and net-back component

0.4771

0.5061

0.6199Plus Hawaii general excise tax (0.5%)

0.0024

0.0025

0.0031Net purchase price (b) (c) (d)

0.4795

0.5086

0.6230


---

The
2001 average nut price from all orchards declined 6% from 2000. The 2000 average nut price from all orchards declined 18% from 1999. The USDA portion fell 6% in 2001 and 7% in 2000,
representing a general decline in worldwide macadamia prices caused by increased production, primarily in
Australia. The netback component fell 5% in 2001 compared to 2000 and 34% in 2000 compared to 1999. Mauna Loa sold an unusually large amount of its nuts as lower valued ingredient nuts in 2000, which
reduced their average revenue per pound in 2000.

The
USDA published price for the 2000-01 crop year was $0.5601 per pound (WIS at 25% moisture), which is 10% lower than the 1999-2000 price of $0.6227 and 9%
lower than the 1998-99 price of $0.6155. The USDA two-year trailing average, which affects the Partnership's 2001 nut price, will be $0.5914, a 4% decrease over the 2000
two-year average.

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Owned-Orchard SegmentCost of Goods Sold

Agricultural unit costs depend on the operating expenses required to maintain the orchards and to harvest the crop as well as on the quantity of nuts actually
harvested.

The
Partnership's unit costs (expressed in dollars per wet-in-shell pound at 25% moisture) are calculated by dividing all agricultural costs for each orchard
(including lease rent, property tax, tree insurance and depreciation) by the number of pounds of macadamia nuts produced by that orchard and are summarized below ($/lb.):

|                  |  |            |  | Cost per pound
|----------------- |  | ---------- |  | --------------
|
|
|Keaau I           |  | June 1986  |  | .4442         
|Keaau II          |  | Oct. 1989  |  | .4380         
|Keaau Lot 10      |  | Sept. 1991 |  | .3132         
|Ka'u I            |  | June 1986  |  | .4466         
|Ka'u Green Shoe I |  | Dec. 1986  |  | .2582         
|Ka'u II           |  | Oct. 1989  |  | .2683         
|Ka'u O            |  | May 2000   |  | .3077         
|Mauna Kea         |  | Oct. 1989  |  | .6050         
|All Orchards      |  |            |  | .4071         

As
a result of the farming operations acquisition, the Partnership now farms its own orchards, and some costs previously charged as farming expenses by KACI and MKACI were eliminated.
These are the Hawaii general excise tax, capital recovery costs and the farming fee. The Partnership saved approximately $118,000 in Hawaii general excise taxes for 2001 and $113,000 for the last
eight months of 2000. Hawaii general excise taxes were $128,000 in 1999. The capital recovery savings in 2001 were $24,000 and in 2000 were $18,000. Capital recovery costs were $61,000 in 1999. The
elimination of the farming fee in 2000 saved the Partnership $128,000 in 2001 and $69,000 in 2000. The farming fee was $195,000 in 1999. The general and administrative expense in 2001 was $408,000. In
addition, the general and administrative expenses incurred in the farming operation, which were previously billed and expensed as farming costs, have been classified for the May to
December 2000 period as general and administration expenses. This amounted to $335,000 in 2000.

Cost
of goods sold was $404,000 higher in 2001 than in 2000 and $1.2 million less in 2000 than in 1999, but the cost per pound was 4.6% less in 2001 than 2000 and 6.4% higher in
2000 than 1999. The higher
production costs in 2001 were the result of a larger harvest. Lower production costs in 2000 were due to the savings mentioned above and to a much smaller harvest in 2000.

Farming SegmentFarming Service Revenue

In connection with the acquisition, the Partnership acquired approximately 20 farming contracts to farm macadamia orchards owned by other growers. These contracts
cover macadamia orchards in the same three locations on the island of Hawaii where the Partnership owns orchards. The farming contracts provide the Partnership to be reimbursed for all direct farming
costs (cultivation, irrigation and harvesting), collect a pro-rata share of indirect costs and overheads, and charge a management fee. The management fee is based on the number of acres
farmed or on a percentage of total costs billed. Revenues from farming services were $4.9 million for 2001 and for May to December 2000 were $3.7 million. The 2001 farming
services revenue was less than anticipated due to the abandonment of 200 acres by one of the growers and less repairs required. The total in 2000 was less than expected by the Partnership due to the
November rainstorm and flood, which prohibited harvesting in some of the orchards under contract in the Ka'u region due to damage and debris in the orchards.

17

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Farming SegmentCost of Services Sold

The cost of services sold relating to the farming contracts was $4.4 million for 2001 and $3.5 million for the May to December period of 2000. These
costs were all reimbursed to the Partnership.

General and Administrative Costs

General and administrative expenses are comprised of accounting and reporting costs, reimbursements to the Managing Partner for directors' fees, office expenses
and liability insurance, and the management fee. In addition, general and administrative costs are also incurred in connection with the farming operations. Previous to the May 2000 acquisition,
general and administration costs relating to the Partnership's orchards were included in the Partnership's farming expenses.

Total
general and administrative costs for 2001 were $174,000 higher than in 2000. All of this increase was due to $408,000 in legal costs associated with the dispute related to the nut
purchase contract with Mauna Loa.

In
2000, general and administrative costs were $305,000 higher than in 1999. All of this increase was due to costs that were previously charged as farming expenses. With the acquisition,
the Partnership also assumed providing certain accounting services to subsidiaries of CBCL. These services generated income of $130,000 in 2000. The Partnership does not expect to provide any
accounting services after 2000.

A
management fee based on Partnership cash flow is payable annually to the Managing Partner. The amount paid was $65,000 for 2001, $32,000 for 2000, and $137,000 for 1999.

Interest Income and Expense

The Partnership recorded interest expense of $433,000 in 2001 and $325,000 in 2000. This was due to (1) the long-term loan used to acquire the
farming operations, (2) the assumption of several capitalized equipment leases, and (3) interest expense on a new revolving line of credit. There was no interest expense in 1999 or 1998.

The
Partnership funds its working capital needs through funds on hand and, when needed, from short-term borrowings, generating interest expense in the process. Net interest
income or expense, therefore, is partly a function of any balance carried over from the prior year, the amount and timing of cash generated and distributions paid to investors in the current year, as
well as the current level of interest rates. Interest was earned in the amount of $80,000 in 2001, primarily from the settlement with Mauna Loa. During 2000 interest income was earned in the amount of
$244,000. Throughout 1999 the Partnership had cash on hand, earned $266,000 in interest income (net of line of credit fees), and incurred no interest expense.

Other
income of $207,000 was recorded in 2001 due mainly to the settlement agreement with Mauna Loa. $104,000 was recorded in 2000 due to a claim received on a crop insurance policy for
the 1999-2000 crop. Production in some fields in the Ka'u region were lower than their ten-year average by more than a 25% deductible in 2000 due to the drought in that region.

Inflation and Taxes

In general, prices paid to macadamia nut farmers fluctuate independently of inflation. Macadamia nut prices are influenced strongly by prices for finished
macadamia products, which depend on competition and consumer acceptance. Farming costs, particularly labor and materials, and general and administrative costs do generally reflect inflationary trends.

18

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The
Partnership is subject to a gross income tax as a result of its election to continue to be taxed as a partnership rather than to be taxed as a corporation, as allowed by the Taxpayer
Relief Act of 1997. This tax is calculated at 3.5% on partnership gross income (net revenues less cost of goods sold) beginning in 1998. The gross income tax was $102,000 in 2001, $38,000 in 2000, and
$202,000 in 1999.

Liquidity and Capital Resources

Net cash provided by operations was $2.2 million in 2001 compared with $2.5 million in 2000 and $3.8 million in 1999.

On
December 31, 2001 the Partnership's working capital was $3.2 million and its current ratio was 1.82 to 1, up from $1.6 million and 1.48 to 1 in 2000. The higher
working capital for 2001 is due to the settlement with Mauna Loa and cost controls. The Partnership is in compliance with the Credit Agreement covenants.

Capital
expenditures in 2001 were $75,000. In 2000 capital expenditure were $8.9 million, all due to the orchards and farming operations acquisition. There were no capital
expenditures in 1999 or 1998. Capital expenditures planned for 2002 are less than $500,000 and are expected to be financed by way of new equipment leases.

Macadamia
nut farming is seasonal, with production peaking late in the fall. However, farming operations continue year round. As a result, additional working capital is required for much
of the year. The Partnership meets its working capital needs with cash on hand, and when necessary, through short-term borrowings under a $5.0 million revolving line of credit. The
line of credit was obtained on May 2, 2000 and expires May 1, 2004. At December 31, 2001 the Partnership had a cash balance of $357,000 and line of credit drawings outstanding of
$1,200,000. The cash balance was $174,000 at the end of 2000, and the line of credit drawings were $900,000 at December 31, 2000.

It
is the opinion of management that the Partnership has adequate cash on hand and borrowing capacity available to meet anticipated working capital needs for operations as presently
conducted. However, with the September 2000 sale of Mauna Loa, the managing partner no longer has control over the timing of nut payments to the Partnership. The nut purchase contracts require
Mauna Loa to make nut payments 30 days after the end of each quarter. During certain parts of the year, if payments are not received, as the contracts require, available cash resources could be
depleted.

In
January 2002, Mauna Loa notified the Partnership that it would not be able to pay the Partnership in full on the due date for fourth quarter deliveries. On January 30,
2002, the Partnership received a payment of $2.4 million on a total receivable of $5.3 million and issued a notice of nonperformance to
Mauna Loa, providing 30 days to remedy the nonperformance. In February and March, additional payments were received totaling $986,000, leaving an unpaid past due balance of approximately
$2 million. On March 11, Mauna Loa was provided with a Notice of Default. Additionally, nuts deliveries have continued in the first quarter of 2002 amounting to $1.5 million,
which will be due on April 30, 2002.

Mauna
Loa has represented to Partnership management that it is willing and able to pay the past due balance plus contractual interest over the next 60 days. As such, management
believes that the receivable is collectible and has not established an allowance for this account. The Partnership is assessing various alternatives on the defaulted contracts.

Legal Proceedings

Mauna Loa.The Partnership is a party to five macadamia nut purchase contracts with Mauna Loa. Three
of these contracts, one written in 1983 and two in 1986, require Mauna Loa to pay for all nuts delivered. Since the inception of these three contracts, Mauna Loa has always paid for all nuts

19

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delivered. The other two nut purchase contracts were written in 1989 and 1999 and allow for the deduction of unusable nuts in calculating payment due.

On
October 31, 2000, a dispute arose with Mauna Loa regarding the payment for nuts delivered by the Partnership during the year. In violation of the nut purchase contracts and
past practice, Mauna Loa deducted $908,000 for certain substandard nuts related to the 1983 and 1986 contracts. A demand letter was sent, litigation ensued and a motion for summary judgment was
entered in May 2001 against Mauna Loa, awarding principal, and interest and attorneys fees to the Partnership.

Settlement
discussions followed the judgment in order to avoid an appeal and further litigation. The Partnership agreed to accept principal, interest and portion of its legal fees along
with a complete release by both parties.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Partnership is exposed to market risks resulting from changes in interest rates. The Partnership has market risk exposure on its Credit Agreement due to its
variable rate pricing that is based on rates based on LIBOR, the Farm Credit Discount Note Rate and the Farm Credit Medium Term Note Rate.
As of December 31, 2001, a one percent increase or decrease in the applicable rate under the Credit agreement will result in an interest expense fluctuation of approximately $36,000.

20

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ITEM 8. FINANCIAL STATEMENTS, SUPPLEMENTARY DATA AND SCHEDULES

Index to Financial Statements

|                                                                                      |  | Page Number
|------------------------------------------------------------------------------------- |  | -----------
|Report of Independent Accountants                                                     |  | 22         
|Balance Sheets, December 31, 2001 and 2000                                            |  | 23         
|Income Statements, for the Years Ended December 31, 2001, 2000, and 1999              |  | 24         
|Statements of Partners' Capital, for the Years Ended December 31, 2001, 2000 and 1999 |  | 25         
|Statements of Cash Flows for the Years Ended December 31, 2001, 2000 and 1999         |  | 26         
|Notes to Financial Statements, Including Supplementary Data                           |  | 27         

21

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REPORT OF INDEPENDENT ACCOUNTANTS

Limited Partners
ML Macadamia Orchards, L.P.

In
our opinion, the accompanying balance sheets and the related income statements, statements of partners' capital and statements of cash flows present fairly, in all material respects,
the financial position of ML Macadamia Orchards, L.P. at December 31, 2001 and 2000, and the results of its operations and its cash flows for each of the three years in the period ended
December 31, 2001, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Partnership's
management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the
United States of America which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

Honolulu, Hawaii
March 12, 2002

22

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ML Macadamia Orchards, L.P.  Balance Sheets(in thousands)

|                                  |                                                                                        | December 31,                           
|--------------------------------- | -------------------------------------------------------------------------------------- | ---------------------------------------
|
|Assets                            |                                                                                        |                                        
|Current assets                    |                                                                                        |                                        
|                                  | Cash and cash equivalents                                                              |                                        
|                                  | Accounts receivable                                                                    |                                        
|                                  | Inventory of farming supplies                                                          |                                        
|                                  | Other current assets                                                                   |                                        
|                                  |                                                                                        |                                        
|                                  |                                                                                        | Total current assets                   
|Land, orchards and equipment, net |                                                                                        |                                        
|Intangible assets, net            |                                                                                        |                                        
|                                  |                                                                                        |                                        
|                                  |                                                                                        | Total assets                           
|                                  |                                                                                        |                                        
|Liabilities and partners' capital |                                                                                        |                                        
|Current liabilities               |                                                                                        |                                        
|                                  | Current portion of long-term debt                                                      |                                        
|                                  | Short-term borrowings                                                                  |                                        
|                                  | Accounts payable                                                                       |                                        
|                                  | Cash distributions payable                                                             |                                        
|                                  | Accrued payroll and benefits                                                           |                                        
|                                  | Other current liabilities                                                              |                                        
|                                  |                                                                                        |                                        
|                                  |                                                                                        | Total current liabilities              
|Long-term debt                    |                                                                                        |                                        
|Deferred income tax liability     |                                                                                        |                                        
|                                  |                                                                                        |                                        
|                                  |                                                                                        | Total liabilities                      
|                                  |                                                                                        |                                        
|Commitments and contingencies     |                                                                                        |                                        
|Partners' capital                 |                                                                                        |                                        
|                                  | General partner                                                                        |                                        
|                                  | Class A limited partners, no par or assigned value, 7,500 units issued and outstanding |                                        
|                                  |                                                                                        |                                        
|                                  |                                                                                        | Total partners' capital                
|                                  |                                                                                        |                                        
|                                  |                                                                                        | Total liabilities and partners' capital
|                                  |                                                                                        |                                        

See
accompanying notes to financial statements.

23

---

ML Macadamia Orchards, L.P.  Income Statements(in thousands, except per unit data)

|                                                        |                                                             | 2001                                      |                          | 2000   |        | 1999  |       
|------------------------------------------------------- | ----------------------------------------------------------- | ----------------------------------------- | ------------------------ | ------ | ------ | ----- | ------
|Macadamia nut sales                                     |                                                             | $                                         | 12,023                   |        | $      | 9,854 |       
|Contract farming revenue                                |                                                             |                                           | 4,870                    |        |        | 3,774 |       
|Administrative services revenue                         |                                                             |                                           |                         |        |        | 130   |       
|                                                        |                                                             |                                           |                          |        |        |       |       
|                                                        | Total revenues                                              |                                           |                          | 16,893 |        |       | 13,758
|                                                        |                                                             |                                           |                          |        |        |       |       
|Cost of goods and services sold                         |                                                             |                                           |                          |        |        |       |       
|                                                        | Costs expensed for farming and services                     |                                           |                          | 11,427 |        |       | 10,229
|                                                        | Depreciation and amortization                               |                                           |                          | 2,547  |        |       | 2,250 
|                                                        | Other                                                       |                                           |                          | 5      |        |       | 180   
|                                                        |                                                             |                                           |                          |        |        |       |       
|                                                        |                                                             | Total cost of goods sold                  |                          |        | 13,979 |       |       
|                                                        |                                                             |                                           |                          |        |        |       |       
|                                                        |                                                             | Gross income                              |                          |        | 2,914  |       |       
|General and administrative expenses                     |                                                             |                                           |                          |        |        |       |       
|                                                        | Costs expensed under management contract with related party |                                           |                          | 308    |        |       | 352   
|                                                        | Other                                                       |                                           |                          | 1,348  |        |       | 1,130 
|                                                        |                                                             |                                           |                          |        |        |       |       
|                                                        |                                                             | Total general and administrative expenses |                          |        | 1,656  |       |       
|                                                        |                                                             |                                           |                          |        |        |       |       
|                                                        |                                                             |                                           | Operating income (loss)  |        |        | 1,258 |       
|Interest expense                                        |                                                             |                                           | (433                     | )      |        | (325  | )     
|Interest income                                         |                                                             |                                           | 80                       |        |        | 244   |       
|Other income                                            |                                                             |                                           | 207                      |        |        | 104   |       
|                                                        |                                                             |                                           |                          |        |        |       |       
|                                                        |                                                             |                                           | Income (loss) before tax |        |        | 1,112 |       
|Income tax expense                                      |                                                             |                                           | (102                     | )      |        | (38   | )     
|                                                        |                                                             |                                           |                          |        |        |       |       
|                                                        |                                                             |                                           | Net income (loss)        |        | $      | 1,010 |       
|                                                        |                                                             |                                           |                          |        |        |       |       
|Net cash flow (as defined in the Partnership Agreement) |                                                             | $                                         | 3,093                    |        | $      | 1,824 |       
|                                                        |                                                             |                                           |                          |        |        |       |       
|Net income (loss) per Class A Unit                      |                                                             | $                                         | 0.13                     |        | $      | (0.05 | )     
|                                                        |                                                             |                                           |                          |        |        |       |       
|Net cash flow per Class A Unit                          |                                                             | $                                         | 0.41                     |        | $      | 0.24  |       
|                                                        |                                                             |                                           |                          |        |        |       |       
|Cash distributions per Class A Unit                     |                                                             | $                                         | 0.20                     |        | $      | 0.465 |       
|                                                        |                                                             |                                           |                          |        |        |       |       
|Class A Units outstanding                               |                                                             |                                           | 7,500                    |        |        | 7,500 |       
|                                                        |                                                             |                                           |                          |        |        |       |       

See
accompanying notes to financial statements.

24

---



ML Macadamia Orchards, L.P.  Statements of Partners' Capital(in thousands)

|                                          |                          | 2001 |        | 2000   |   | 1999  
|----------------------------------------- | ------------------------ | ---- | ------ | ------ | - | ------
|Partners' capital at beginning of period: |                          |      |        |        |   |       
|                                          | General partners         |      | $      | 574    |   | $     
|                                          | Class A limited partners |      |        | 56,775 |   |       
|                                          |                          |      |        |        |   |       
|                                          |                          |      | 57,349 |        |   | 61,270
|                                          |                          |      |        |        |   |       
|Allocation of net income (loss):          |                          |      |        |        |   |       
|                                          | General partners         |      |        | 10     |   |       
|                                          | Class A limited partners |      |        | 1,000  |   |       
|                                          |                          |      |        |        |   |       
|                                          |                          |      | 1,010  |        |   | (398  
|                                          |                          |      |        |        |   |       
|Cash distributions:                       |                          |      |        |        |   |       
|                                          | General partners         |      |        | 15     |   |       
|                                          | Class A limited partners |      |        | 1,500  |   |       
|                                          |                          |      |        |        |   |       
|                                          |                          |      | 1,515  |        |   | 3,523 
|                                          |                          |      |        |        |   |       
|Partners' capital at end of period:       |                          |      |        |        |   |       
|                                          | General partners         |      |        | 569    |   |       
|                                          | Class A limited partners |      |        | 56,275 |   |       
|                                          |                          |      |        |        |   |       
|                                          |                          | $    | 56,844 |        | $ | 57,349
|                                          |                          |      |        |        |   |       

See
accompanying notes to financial statements.

25

---

ML Macadamia Orchards, L.P.  Statement of Cash Flows(in thousands)

|                                                                                  |                                                                                      | 2001                                       |        | 2000    |        | 1999   |        
|--------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------ | ------------------------------------------ | ------ | ------- | ------ | ------ | -------
|Cash flows from operating activities:                                             |                                                                                      |                                            |        |         |        |        |        
|                                                                                  | Cash received from goods and services                                                |                                            | $      | 15,535  |        | $      | 16,813 
|                                                                                  | Cash paid to suppliers and employees                                                 |                                            |        | (12,945 | )      |        | (14,214
|                                                                                  | Interest received                                                                    |                                            |        | 80      |        |        | 233    
|                                                                                  | Interest paid                                                                        |                                            |        | (433    | )      |        | (325   
|                                                                                  |                                                                                      |                                            |        |         |        |        |        
|Net cash provided by operating activities                                         |                                                                                      |                                            | 2,237  |         |        | 2,507  |        
|                                                                                  |                                                                                      |                                            |        |         |        |        |        
|Cash flows from investing activities:                                             |                                                                                      |                                            |        |         |        |        |        
|                                                                                  | Acquisition of orchards and farming business                                         |                                            |        | (75     | )      |        | (8,928 
|                                                                                  |                                                                                      |                                            |        |         |        |        |        
|Net cash used in investing activities                                             |                                                                                      |                                            | (75    | )       |        | (8,928 | )      
|                                                                                  |                                                                                      |                                            |        |         |        |        |        
|Cash flows from financing activities:                                             |                                                                                      |                                            |        |         |        |        |        
|                                                                                  | Proceeds from drawings on line of credit                                             |                                            |        | 6,700   |        |        | 3,700  
|                                                                                  | Proceeds from long term debt                                                         |                                            |        |        |        |        | 4,000  
|                                                                                  | Repayment of long term debt                                                          |                                            |        | (400    | )      |        |       
|                                                                                  | Repayment of line of credit                                                          |                                            |        | (6,400  | )      |        | (2,800 
|                                                                                  | Capital lease payments                                                               |                                            |        | (61     | )      |        | (31    
|                                                                                  | Cash distributions paid                                                              |                                            |        | (1,818  | )      |        | (3,599 
|                                                                                  |                                                                                      |                                            |        |         |        |        |        
|Net cash provided by (used in) financing activities                               |                                                                                      |                                            | (1,979 | )       |        | 1,270  |        
|                                                                                  |                                                                                      |                                            |        |         |        |        |        
|Net increase (decrease) in cash                                                   |                                                                                      |                                            | 183    |         |        | (5,151 | )      
|Cash at beginning of period                                                       |                                                                                      |                                            | 174    |         |        | 5,325  |        
|                                                                                  |                                                                                      |                                            |        |         |        |        |        
|Cash at end of period                                                             |                                                                                      | $                                          | 357    |         | $      | 174    |        
|                                                                                  |                                                                                      |                                            |        |         |        |        |        
|Reconciliation of net income (loss) to net cash provided by operating activities: |                                                                                      |                                            |        |         |        |        |        
|                                                                                  | Net income (loss)                                                                    |                                            | $      | 1,010   |        | $      | (398   
|                                                                                  | Adjustments to reconcile net income (loss) to cash provided by operating activities: |                                            |        |         |        |        |        
|                                                                                  |                                                                                      | Depreciation and amortization              |        |         | 2,547  |        |        
|                                                                                  |                                                                                      | (Increase) decrease in accounts receivable |        |         | (1,892 | )      |        
|                                                                                  |                                                                                      | Decrease in inventories                    |        |         | 11     |        |        
|                                                                                  |                                                                                      | Increase in other current assets           |        |         | (21    | )      |        
|                                                                                  |                                                                                      | (Increase) decrease in other assets        |        |         | 70     |        |        
|                                                                                  |                                                                                      | Increase (decrease) in accounts payable    |        |         | 235    |        |        
|                                                                                  |                                                                                      | Increase in current liabilities            |        |         | 257    |        |        
|                                                                                  |                                                                                      | Deferred income tax expense (credit)       |        |         | 20     |        |        
|                                                                                  |                                                                                      |                                            |        |         |        |        |        
|                                                                                  | Total adjustments                                                                    |                                            |        | 1,227   |        |        | 2,905  
|                                                                                  |                                                                                      |                                            |        |         |        |        |        
|Net cash provided by operating activities                                         |                                                                                      | $                                          | 2,237  |         | $      | 2,507  |        
|                                                                                  |                                                                                      |                                            |        |         |        |        |        

See
accompanying notes to financial statements.

26

---



ML Macadamia Orchards, L.P.        Notes to Financial Statements

(1) OPERATIONS AND OWNERSHIP

ML Macadamia Orchards, L.P. (the "Partnership") owns and farms 4,169 tree acres of macadamia orchards on the island of Hawaii. Once the nuts are harvested, the
Partnership sells them to another entity, which processes and markets the finished products. The Partnership farms approximately 2,800 additional acres of macadamia orchards on Hawaii for other
orchard owners.

The
Partnership is owned 99% by limited partners and 1% by the managing general partner, ML Resources, Inc. ("MLR"). Until July 31, 2001, MLR was a wholly-owned subsidiary
of C. Brewer and Company, Limited ("CBCL"), whose parent company is Buyco, Inc. ("Buyco"). On August 1, 2001, all of the stock of MLR was sold to D. Buyers Enterprises,
LLC ("DBE"), an entity solely owned by J.W.A. Buyers, who also serves as the chairman of the board of CBCL and Buyco.

Limited
partner interests are represented by Class A Units, which are evidenced by depositary receipts that trade publicly and are listed on the New York Stock Exchange. Mauna Loa
Orchards, L.P., an affiliate of the general partner, held 30,000 Class A Units at December 31, 2001 and 2000.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



27

---





(3) ACQUISITION

On May 1, 2000, the Partnership purchased 142 acres of mature macadamia trees and substantially all of the assets used in the macadamia farming business
from Ka'u Agribusiness Company, Inc., Ka'u Sugar, Inc., Mauna Kea Macadamia Orchards, Inc., and Mauna Kea Agribusiness Company, Inc., all related entities. The farming
assets consist of the farming equipment, vehicles, a husking plant, irrigation well, leasehold improvements, office furniture and equipment and inventories related to macadamia farming. The purchase
price was $8.9 million dollars and was paid using $4.9 million in cash and a loan from Pacific Coast Farm Credit of $4 million.

The
initial purchase price has been allocated to assets acquired based on estimated fair value. The allocated fair value of assets acquired is summarized as follows (000's):

Inventory

$
127Nursery


52Property, plant and equipment


9,176Current liabilities


(427
)Total

$
8,928


28

---

(4) SEGMENT INFORMATION

The Partnership has two reportable segments, the owned-orchard segment and the farming segment, which are organized on the basis of revenues and assets. The
owned-orchard segment derives its revenues from the sale of macadamia nuts grown in orchards owned or leased by the Partnership. The farming segment derives its revenues from the farming of macadamia
orchards owned by other growers. It also farms those orchards owned by the Partnership.

Management
evaluates the performance of each segment on the basis of operating income. The Partnership accounts for intersegment sales and transfers at cost. Such intersegment sales and
transfers are eliminated in consolidation.

The
Partnership's reportable segments are distinct business enterprises that offer different products or services. Revenues from the owned-orchard segment are subject to
long-term nut purchase contracts and tend to vary from year to year due to changes in the calculated nut price per pound and pounds produced. The farming segment's revenues are based on
long-term farming contracts which generate a farming profit based on a percentage of farming cost or based on a fixed fee per acre and tend to be less variable than revenues from the
owned-orchard segment.

The
following is a summary of each reportable segment's operating income and the segment's assets as of and for the period ended December 31, 2001 and for the period May 1,
2000 (date of acquisiton) through December 31, 2000.

Segment Reporting for the Twelve Months ended December 31, 2001  (in thousands)

Owned Orchards

Contract Farming

Intersegment Elimination

TotalRevenues

$
12,023

$
11,744

$
(6,874
)
$
16,893Composition of Inter-segment revenues





6,874





6,874Operating income (loss)


1,064


194





1,258Depreciation expense


1,644


903





2,547Segment assets


58,040


7,289





65,329Expenditures for property and equipment


75








75


Segment Reporting for the Twelve Months ended December 31, 2000  (in thousands)

Owned Orchards

Contract Farming

Intersegment Elimination

TotalRevenues

$
9,854

$
8,722

$
(4,818
)
$
13,758Composition of intersegment revenues





4,818





4,818Operating income (loss)


(609
)

226





(383
)Depreciation expense


1,644


605





2,249Segment assets


58,419


7,206





65,625Expenditures for property and equipment


2,533


6,865





9,398


29

---

(5) RELATED PARTY TRANSACTIONS



30

---









31

---



(6) CASH FLOW PERFORMANCE

Cash flow performance (based on definitions used in the Partnership Agreement) for the past three years is shown below (000's):

2001

2000

1999Gross revenues

$
17,180

$
14,106

$
16,217Less:Farming costs


11,435


10,409


8,396Administrative costs


1,656


1,485


1,242Payments of principal and interest


894


356


Other


36





Operating cash flow


3,159


1,856


6,579Less:Farming fee








195Management fee


66


32


137Net cash flow

$
3,093

$
1,824

$
6,247


32

---

(7) LAND, ORCHARDS AND EQUIPMENT

Land, orchards and equipment, stated at cost, consisted of the following at December 31, 2001 and 2000 (000's):

2001

2000Land

$
8,168

$
8,168Improvements


1,074


1,074Machinery and equipment


4,736


4,741Irrigation well and equipment


1,155


1,156Producing orchards


67,267


67,267Capital leases


367


207Land, orchards and equipment (gross)


82,767


82,613Less accumulated depreciation and amortization


24,508


21,975Land, orchards and equipment (net)

$
58,259

$
60,638


(8) SHORT-TERM AND LONG-TERM CREDIT

At December 31, 2001 and 2000, the Partnership's long-term debt comprises (000's):

2001

2000Term debt

$
3,600

$
4,000Other


277


1753,877


4,175Current portion


475


459$
3,402

$
3,716


Revolving Credit Loan.On May 2, 2000 the Partnership entered into a new credit agreement with Pacific Coast Farm
Credit Services under which it has available a $5 million revolving credit facility through May 1, 2004. Borrowings under this credit facility were $1,200,000 as of December 31,
2001 at an interest rate of 5.0% and $900,000 as of December 31, 2000 at an interest rate of 9.5%

Borrowings
under this agreement bear interest at the prime lending rate. From and after the first anniversary date, the Partnership is required to pay a facility fee of 0.175% to 0.25%
per annum, depending on certain financial ratios, on the daily unused portion of the credit. The Partnership, at its option, may make prepayments without penalty.

Term Debt.As of December 31, 2001, the Partnership had a $4 million promissory note outstanding, which was
issued on May 2, 2000. The note is scheduled to mature in 2010 and bears interest at rates from 6.45 percent to 9.16 percent. Principal payments are due annually on May 2
in the amount of $400,000.

Both
the revolving credit loan and the term debt are collateralized by all personal property assets of the Partnership. The agreement also provides for the maintenance of certain
financial indexes including a minimum current ratio and net worth.

33

---

Maturities
of long-term debt are as follows (000's):

Year ending December 31,2002

$
4822003


4732004


4522005


435Thereafter


2,035$
3,877


(9) INCOME TAXES

The components of income tax expense for the years ended December 31, 2001, 2000 and 1999 were as follows (000's):

2001

2000

1999Currently payable

$
82

$
88

$
172Deferred


20


(50
)

30$
102

$
38

$
202


The
provision for income taxes equates to the 3.5% federal tax rate applied to gross income for the years ended December 31, 2001, 2000 and 1999:

The
components of the net deferred tax liability reported on the balance sheet as of December 31, 2001 and 2000 are as follows (000's):

2001

2000Deferred tax liabilities:Financial statement bases of land, orchards, inventory and equipment is greater than tax bases

$
673

$
679Financial statement bases of capitalized leases, long- term debt on capitalized leases and interest expense on capitalized leases is greater than tax bases


7


3Financial statement bases of receivable is less than tax bases





(33
)Excess of tax depreciation over financial statement depreciation


540


550$
1,220

$
1,199


34

---

(10) LEASES

The Partnership leases the land underlying 1,948 acres of its orchards under long-term operating leases. Future minimum lease payments under
non-cancelable leases (exclusive of renewal options) as of December 31, 2001 were as follows (000's):

2002

$
1602003


1492004


1282005


1262006


124Later Years


2,902$
3,589


Each
of the above leases (other than equipment leases) also provides for additional lease payments based on USDA-reported macadamia nut price levels. Those contingent lease
payments totaled $39,000 in 1999, $17,000 in 2000, and $11,000 in 2001. Total lease rent for all operating leases was $152,000 in 1999, $146,000 in 2000, and $143,000 in 2001.

(11) PENSION PLAN

The Company established a pension plan in conjunction with the acquisition of farming operations on May 1, 2000. The plan covers employees that are members
of a union bargaining unit and the projected benefit obligation was assumed from the previous employer.

The
Company's funding policy is to contribute an amount to the plan sufficient to meet the minimum funding requirements set forth in the Employee Retirement Income Security Act of 1974.

The
components of net pension cost for the years ended December 31, 2001 and 2000 were as follows (000's):

2001

2000Service cost

$
50

$
23Interest cost


11


5Expected return on assets


(3
)

Recognition of net loss or (gain) from earlier periods


1


Amortization of unrecognized prior service cost


7


4$
66

$
32


35

---

The
reconciliation of the beginning and ending balances of the benefit obligation and fair value of plan assets and the funding status of the plan is as follows as of and for the year
ended December 31, 2001 and 2000 (000's):

2001

2000Change in benefit obligation:Projected benefit obligation at beginning of year

$
153

$
99Service cost


50


23Interest cost


11


5Actuarial loss


(20
)

25Benefits paid


(3
)

Projected benefit obligation at end of year


191


152Change in plan assets:Fair value of plan assets at beginning of year


30


Actual return on plan assets


1


Employer contribution


3


30Benefits paid


(3
)

Fair value of plan assets at end of year


31


30Funded status


(160
)

(122
)Unrecognized prior service cost


89


95Unrecognized net loss


5


25Net amount recognized

$
(66
)
$
(2
)


Amounts
recognized in the balance sheet at December 31, 2001 and 2000 are as follows (000's):

2001

2000Accrued pension liability

$
(66
)
$
(7
)Intangible asset





5$
(66
)
$
(2
)


Actuarial
assumptions used to determine costs and benefit obligations for the pension plan at December 31, 2001 and 2000 are as follows:

2001

2000Discount rate

7.25
%
7.25
%Compensation increases

2.00
%
2.00
%Return on assets for the year

9.00
%
8.00
%


Experience
gains and losses are amortized over the average future service period of employees.

36

---

(12) QUARTERLY OPERATING RESULTS (Unaudited)

The following chart summarizes unaudited quarterly operating results for the years ended December 31, 2001 and 2000 (000's, except per unit data):

Net Sales

Gross Income (Loss)

Net Income (Loss)

Net Income (Loss) per Class A Unit20011st Quarter

$
3,017

$
252

$
(416
)
$
(0.05
)2nd Quarter


2,162


1,233


702


0.093rd Quarter


4,767


504


485


0.064th Quarter


6,947


924


239


0.0320001st Quarter

$
1,492

$
264

$
65

$
0.012nd Quarter


1,234


199


62


0.013rd Quarter


5,961


1,456


929


0.124th Quarter


5,071


(820
)

(1,454
)

(0.19
)


37

---



PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

The Partnership presently has no officers or directors. Instead, the officers and directors of the Managing Partner perform all management functions for the
Partnership. Each director of the Managing Partner is elected for a term of one year and until his successor is duly elected and qualified. Each officer of the Managing Partner is elected by the Board
of Directors of the Managing Partner and is subject to removal by that board at any time.

A. Identification of Directors

James S. Andrasick.58 years old; director of Managing Partner since 1986 and member of the Audit and Conflicts
Committee since 2000; senior vice president and chief financial officer and treasurer of Alexander and Baldwin, Inc. since June 2000; president of CBCL from September 1992 to
March 2000.

John W. A. Buyers.73 years old; owner of Managing Partner since August 2001, chairman since 1989 and director
of Managing Partner since 1986; chairman of C. Brewer and Company, Limited; chairman of Buyco and owner of D. Buyers Enterprises, LLC ("DBE").

James H. Case.81 years old; director and member of Audit and Conflicts Committee of Managing Partner since 1986;
senior partner of the law firm of Carlsmith Ball; not an employee, officer, or director of any CBCL or DBE affiliate other than the Managing Partner.

Ralph C. Hook, Jr.78 years old; director and member of Audit and Conflicts Committee of Managing Partner since 1986;
not an employee, officer, or director of any CBCL or DBE affiliate other than the Managing Partner.

J. Alan Kugle.63 years old; director since September 2000 and from 1986 to 1995; Chief Executive
Officer-Real Estate, general counsel and secretary of CBCL; president of Managing Partner from 1987 to 1990; not an employee, officer, or director of any DBE affiliate other than the
Managing Partner.

Kent T. Lucien.48 years old; President and director of Managing Partner from September 1995 to
August 2001; Chief Executive Officer-Operations and chief financial officer of CBCL; not an employee, officer, or director of any DBE affiliate other than the Managing Partner.

David McClain.55 years old; director and member of the Audit and Conflicts Committee of Managing Partner since
September 2000; not an employee, officer, or director of any CBCL or DBE affiliate other than the Managing Partner.

B. Identification of Executive Officers of the Managing Partner

John W. A. Buyers.73 years old; chairman and chief executive officer of Managing Partner since 1989.

Dennis J. Simonis.45 years old; president of Managing Partner since August 2001; chief financial officer of D.
Buyers Enterprises, LLC; not otherwise an employee, officer, or director of any CBCL affiliate. Formerly executive vice president and chief operating officer of Mauna Loa.

Randolph H. Cabral.49 years old; senior vice president and orchard manager of Managing Partner since May 2000;
not otherwise an employee, officer, or director of any CBCL affiliate. Formerly senior vice president and orchard manager of KACI.

38

---

Wayne W. Roumagoux.55 years old; senior financial officer of Managing Partner since August 2001; controller of
DBE; not otherwise an employee, officer, or director of any CBCL affiliate.

C. Identification of Certain Significant Employees

Not applicable

D. Family Relationships

Not applicable

E. Business Experience of Current Directors and Executive Officers

Current Directors of the Managing Partner.

James S. Andrasick.Mr. Andrasick has been senior vice president, chief financial officer and treasurer of Alexander
and Baldwin, Inc. (ALEX), a publicly-traded diversified ocean transportation, real estate and agribusiness company, since June 2000. He previously served as president and chief operating
officer of CBCL from September 1992 to March 2000, and was one of its directors during that period. From 1989 until September 1992, he was executive vice president in charge of
the sugar, distribution and Central America operations. From 1983 to 1988 he served as executive vice president, finance and administration and chief financial officer with responsibilities for
finance and administration as well as spice and guava operations. He joined CBCL in 1978 as vice president of planning and controller after serving three years on the IU International Corporation
corporate development staff. Mr. Andrasick received his bachelor's degree with honors from the U.S. Coast Guard Academy and his master's degree from the Massachusetts Institute of Technology.
Mr. Andrasick is a trustee of the U.S. Coast Guard Foundation, a director and former chairman of the American Red Cross, Hawaii State Chapter, a director of the Hawaii Opera Theater, and past
chairman of the board of governors of the University of Hawaii Foundation and the Hawaii Employers Council. He resides in Honolulu, Hawaii.

John W. A. Buyers.Mr. Buyers was elected chairman of Managing Partner in 1988 and has been Chairman of ML Resources
since July 1992. He has been chairman of the board, president and chief executive officer of CBCL since 1982. After service in the U.S. Marine Corps, Mr. Buyers attended Princeton
University where he graduatedcum laudein 1952. He latter received an M.A. in Industrial Management from the Massachusetts Institute of Technology as a
Sloan Fellow. He is a director of
First Hawaiian Bank, BancWest, Inc., and Outrigger Enterprises, Inc. He is also a director of John B. Sanfilippo & Sons, Inc., a nut and marketing company located in Elk
Grove Village, Illinois and the Hawaii Island Economic Development Board. He is a member of the U.S. Chamber of Commerce Committee on Food and Agriculture in Washington, D.C. He resides in Hakalau,
Hawaii.

James H. Case.Mr. Case is senior partner in the Hawaii law firm of Carlsmith Ball. Mr. Case graduated with an
A.B. from Williams College and received a J.D. from Harvard Law School. He became associated with the Carlsmith law firm in 1951 and became a partner in 1959. He has served on the boards of directors
of Hamakua Sugar Company, Inc., Paauilo, Hawaii, InterIsland Resorts, Ltd., Honolulu, Hawaii, Pacific Club, Honolulu, Hawaii, Central Union Church, Honolulu, Hawaii, Hanahauoli School,
Honolulu, Hawaii, and Arcadia Retirement Residence, Honolulu, Hawaii. He resides in Honolulu, Hawaii.

Ralph C. Hook, Jr.Dr. Hook is co-director of the Family Business Center of Hawaii, which is part of the
College of Business Administration at the University of Hawaii. He joined the faculty of the University of Hawaii in 1968 as Dean of the College of Business Administration. In 1974, he returned to
teaching as Professor of Marketing in the College of Business Administration. He became a Professor Emeritus of Marketing in June 1995. Dr. Hook received a bachelor's and master's
degrees

39

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from the University of Missouri at Columbia and a Ph.D. in Marketing from the University of Texas at Austin. He has been a member of the board of Hook Brothers Corporation since 1983, and a director
of Market City, Ltd. since December 2000. He resides in Honolulu, Hawaii.

J. Alan Kugle.Mr. Kugle is the executive vice president, secretary and general counsel for CBCL since 1980. He was
chairman of Mauna Loa from 1983 to 1992. He began his CBCL career in 1976 as vice president and general counsel and became senior vice president and general counsel in 1978. Mr. Kugle graduated
with an A.B. Degree from Franklin and Marshall College and a J.D. Degree from the New York University School of Law. Mr. Kugle is also a director of Olokele Sugar Company, Ltd. (a CBCL
subsidiary), Honolulu, Hawaii, Maui Tropical Plantations (an investee of CBCL), Wailuku, Hawaii, Wailuku Agribusiness Company, Inc., (a CBCL subsidiary), Wailuku, Hawaii and other CBCL
subsidiaries. He resides in Honolulu, Hawaii.

Kent T. Lucien.Mr. Lucien currently serves as CEOOperations of CBCL. He has also served as executive
vice president and the chief financial officer of CBCL since 1991. He joined CBCL as a senior analyst in 1980. Until August of 2001, he served as president of the Managing Partner and has served as
executive vice president. Mr. Lucien is an honors graduate of Occidental College and received an M.B.A. from Stanford University. He resides in Honolulu, Hawaii.

David McClain.Dr. McClain is the Dean of the College of Business Administration at the University of Hawaii at Manoa
since 2000. He is the First Hawaiian Bank Distinguished Professor of Leadership and Management since 2000. Dr. McClain joined the University of Hawaii at Manoa in 1991 as the Henry A. Walker,
Jr. Distinguished Professor of Business Enterprise and Professor of Financial Economics
and Institutions. Dr. McClain serves on the Board of Directors of Babson-United, Watertown, MA (since 1997) (privately held); Chair, Family Literacy Fund, Hawaii Community Foundation; Chair,
Hawaii Council on Economic Education; Co-Chair, University Connections Advisory Board; and serves as a member of a number of nonprofit boards in Hawaii. Dr. McClain earned a Ph.D.
in Economics from the Massachusetts Institute of Technology in 1974 and a BA in Economics and Mathematics from the University of Kansas in 1968. He has taught at Massachusetts Institute of
Technology's Sloan School of Management and at Boston University, where he chaired the Department of Finance and Economics. He also served as Senior Staff Economist, Council of Economic Advisors to
President Jimmy Carter. He resides in Honolulu, Hawaii.

Executive Officers Who Do Not Serve as Directors.

Randolph H. Cabral.Mr. Cabral has served as senior vice president and orchard manager of the Managing Partner since
May 2000. Mr. Cabral was previously employed at Ka'u Agribusiness Company, Inc., from 1989 until the Partnership's acquisition of Ka'u Agribusiness' macadamia business in 2000. He
served as senior vice president from 1998 to 2000, as vice president from 1996 to 1998, and as orchard manager from 1989. From 1983 to 1989, Mr. Cabral served as orchard manager with Mauna Loa
Macadamia Nut Corporation. Mr. Cabral has an AS in General Agriculture from the University of Hawaii. He resides in Hilo, Hawaii.

Dennis J. Simonis.Mr. Simonis has served as president of the Managing Partner since August 2001 and was
formerly the executive vice president and chief financial officer. From 1993 to 2001, Mr. Simonis served in various capacities at Mauna Loa, including executive vice president and chief
operating officer. He served from 1985-1993 as a vice president of Theo H. Davies and worked as a senior auditor for Price Waterhouse between 1979 and 1985. Mr. Simonis graduated
magna cum laude with a B.S. in Accounting from Carroll College in Waukesha, Wisconsin and earned his C.P.A. certificate in 1983. He resides in Hilo, Hawaii.

40

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F. Section 16 Disclosure

Under Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), each director and certain officers of ML Resources, Inc.,
the managing general partner of Registrant (a "Reporting Person"), are required to report their ownership and changes in ownership of Class A Depositary Units to the Securities and Exchange
commission, the New York Stock Exchange and Registrant. Based on reporting forms submitted to Registrant, no Reporting Person has failed to file on a timely basis reports required by
Section 16(a) of the Exchange Act during 2000, except that Randolph Cabral, who became senior vice president on May 1, 2000, and who owns 100 Class A Units, did not
file a Form 3 until October 4, 2000; and Wayne Roumagoux, who became principal accounting officer on August 1, 2001, and owns no shares, did not file a Form 3
until February 4, 2002.

ITEM 11. EXECUTIVE COMPENSATION

A. Summary Compensation Table

The Partnership is managed by the Managing Partner. Compensation paid by the Managing Partner to its chief executive officer and other executive officers is
reimbursed by the Partnership, as provided in Section 4.5 of the Partnership Agreement. The following table reflects the aggregate compensation for services in all capacities paid by the
Managing Partner to its executive officers for the years ended December 31, 2001, 2000 and, 1999. There were no long-term compensation awards or payouts during those years.

Annual CompensationName and Principal PositionYear

Salary

Bonus

OtherJohn W. A. Buyers,
Chief executive officer

2001
2000
1999

$




$




$
15,750
15,000
15,000Dennis J. Simonis
President and chief operating officer

2001


92,700


34,500


Randolph H. Cabral
Senior vice president

2001
2000


97,000
46,000


30,100





B. No Option, SAR, Long-term Incentive or Pension Plans

Neither the Managing Partner nor the Partnership presently has option plans, SAR plans, or long-term incentive plans. All salaried employees
participate in defined contribution plan and other benefit plans, which were administered by CBCL for part of the year and are now administered directly by the Partnership. The officers of the
Managing Partner are employees of the Partnership, which does not have a defined benefit plan for non-bargaining employees. As such, neither the Managing Partner nor the Partnership are
responsible for making any payments on the retirement of any of its present executive officers.

C. No Employment Contracts or Termination Agreements

The Managing Partner does not have any employment or severance agreements with any of its present executive officers. The president of the Partnership has an
agreement, which provides for twelve months of severance pay in the event of termination without just cause.

41

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D. Compensation of Executive Officers

The Managing Partner does not have a compensation committee since the chief executive officer of the Managing Partner is not compensated for serving in that
position. The only executive officers of the Managing Partner (employed by the Partnership) are Mr. Simonis, who has served as its president since August 2001 and chief financial officer
since May 2001, and Mr. Cabral, who has served as senior vice president and orchard manager since May 2000. These officers' salary and guideline bonus percentage are administered
under the salary policies of DBE. Any bonus payments are approved by the Managing Partner's Board of Directors annually, based on the overall performance of the Partnership as evidenced by its net
income and cash flow for the year. Performance in both categories is measured relative to the original Partnership operating budget approved by the Managing Partner's Board of Directors at the
beginning of each year.

E. Director Compensation

Directors of the Managing Partner presently receive a quarterly retainer of $3,000 and a meeting fee of $750 per meeting. Members of the Managing Partner's audit
and conflicts committee receive a meeting fee of $750 per meeting. There are no other agreements or arrangements between the Managing Partner and its directors.

F. Stock Performance Chart

The following chart compares the Partnership's total return to (i) the Russell 2001 (a small business index) and (ii) a peer group index composed of
publicly traded limited partnerships with either similar capitalization or in commodity based markets (other than gas and oil) or both.

LOGO

|                                  |  | Dec-96 |     | Dec-97 |   | Dec-98 |  | Dec-99 |     | Dec-00 |   | Dec-01
|--------------------------------- |  | ------ | --- | ------ | - | ------ |  | ------ | --- | ------ | - | ------
|ML Macadamia Orchards LP          |  | $      | 100 |        | $ | 116    |  | $      | 111 |        | $ | 145   
|Russell 2000 Index                |  | $      | 100 |        | $ | 122    |  | $      | 119 |        | $ | 145   
|Custom Composite Index (7 Stocks) |  | $      | 100 |        | $ | 124    |  | $      | 111 |        | $ | 94    

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

As of December 31, 2001, and subsequent to that date to the date of this report, (i) no person (including any "group" as that term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934) is known by the Partnership or the Managing Partner to be the beneficial owner of more than 5% of the Class A Units;
(ii) the Managing Partner did not own any Class A Units; and (iii) no director or executive officer of the Managing Partner owned more than 1% of the Class A Units.

The
table below sets forth certain information as to the Class A Units beneficially owned by the directors of the Managing Partner, and all directors and executive officers of the
Managing Partner as a group, as of December 31, 2001.

Name of Beneficial Owner

Class A Units Owned

Percent of Class A UnitsJames S. Andrasick



*John W. A. Buyers

4,176

*Randolph H. Cabral

100

*James H. Case (1)

8,000

*Ralph C. Hook (2)

4,000

*J. Alan Kugle

1,200

*Kent T. Lucien

7,500

*David McClain



*Dennis J. Simonis



*All directors and executive officers as a group (9 persons)

29,976

0.4
%


---

In
addition, Mauna Loa Orchards L.P. ("MLO"), a limited partnership whose partners are CBCL and certain direct or indirect wholly-owned subsidiaries of CBCL, owns 30,000 Class A
Units.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

1.General

The Managing Partner makes all decisions relating to the management of the Partnership. The Managing Partner, as such, has the duty to act in good faith and to
manage the Partnership in a manner that is fair and reasonable to all unitholders. CBCL owned all of the capital stock of the Managing Partner until August 1, 2001, at which point the stock was
sold to J.W.A. Buyers through D. Buyers Enterprises, LLC. Certain officers and directors of both CBCL and DBE and/or their affiliates also act as officers and directors of the Managing Partner and
certain directors of the Managing Partner are substantial shareholders of Buyco, Inc., the parent company of CBCL. Disputes that might otherwise develop between the Managing Partner and CBCL or
its affiliates may not develop because the parties representing the entities are identical. As a result of these relationships, certain conflicts of interest could arise with respect to the
administration of and allocation of costs under the Partnership Agreement and in situations described below, among others.

43

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A
committee of the Managing Partner's Board of Directors composed of four persons who are independent of CBCL, DBE and their affiliates (the "Audit and Conflicts Committee") reviews, on
an annual basis, or more frequently as such committee may deem appropriate, the Managing Partner's management of the Partnership and any conflicts of interest that may have arisen or may arise as a
result of the relationships among CBCL or DBE and their affiliates, the Managing Partner and the Partnership. The Partnership Agreement states that, except for one initial member of the Conflicts
Committee, no member of the Conflicts Committee may be an officer, director, employee or shareholder of the Managing Partner or any of their affiliates. The Audit and Conflicts Committee presently
consists of three individuals who are not affiliated with DBE or CBCL, and one director who is no longer an officer of CBCL, but is not considered independent pursuant to a three-year
restriction period and remains a shareholder of CBCL. However, under exceptional and limited circumstances, the company's board of directors determined in its business judgment that membership on the
committee by the individual is required by the best interests of the Partnership and it shareholders.

2.Farming Leases

At the time of the Partnership's acquisition of the interests in the October 1989 Orchards, MLO assigned to the Partnership all of MLO's rights and
obligations under three 45-year farming leases relating to 327 tree acres of the Ka'u II Orchards and all of the Mauna Kea Orchards. The farming
leases permit the Partnership to conduct macadamia nut farming operations on such macadamia orchard properties. The farming leases provide for fixed minimum annual lease payments to be paid to either
KACI or MKACI (collectively, the "Agribusiness Companies"), as the case may be. Such annual rental payments are subject to increase after ten years, twenty years and thirty years based on then current
fair market lease rates. The then current fair market lease rate will be determined by mutual agreement between the Partnership, on the one hand, and either KACI or MKACI, as the case may be, on the
other hand. If mutual agreement cannot be reached, the then current fair market lease rate will be determined by appraisal. Whether determined by mutual agreement or by appraisal, the then current
fair market lease rate will be determined as a fair market lease rate for use of such premises as macadamia orchards.

The
Partnership acquired its interests in the trees situated on such leased macadamia orchard properties subject to repurchase options retained by the Agribusiness Companies. The
repurchase options grant the Agribusiness Companies the continuing right to repurchase all or any portion of such trees after June 30, 2019 at a price equal to the then current fair market
value of the trees, according to their value as producing macadamia nut trees, as determined by mutual agreement between the Partnership, on the one hand, and either KACI or MKACI, as the case may be,
on the other hand. If mutual agreement cannot be reached, the then current fair market value will be determined by appraisal. Whether determined by mutual agreement or by appraisal, the fair market
value of such trees will be determined according to their value as producing macadamia nut trees, assuming that the owner thereof has rights to farm and harvest such trees and has ongoing arrangements
with respect to land leases, farming and nut purchases of the same type as the Partnership has immediately prior to such time.

At
the end of the 45-year lease terms of such leases, the Agribusiness Companies will be required to repurchase such trees at their then current fair market value as orchards
if such entities do not offer to extend such farming leases at the then current fair market lease rates. The then current fair market lease rate and the then current market value of the trees for such
purposes will be determined through mutual agreement between the Partnership, on the one hand, and either KACI or MKACI, as the case may be, on the other hand or, if mutual agreement cannot be
obtained, by appraisal, in each case in the manner described above. Such repurchase obligations will apply with respect to the expiration of each extension of the lease terms of such leases until such
leases have been in effect for a total of

44

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99 years, at which time the leases will expire and the ownership interests in such trees will revert back to the Agribusiness Companies.

In
the event that the Partnership decides not to accept an offer to extend the leases at the then current fair lease rates upon the expiration of the leases or any extension thereof (or
does not assign the leases to a third party who elects to accept such offer), the leases will expire, the Agribusiness Companies will not be required to repurchase the trees covered thereby and
ownership of such trees will revert back to the Agribusiness Companies (and in any event ownership of such trees will revert back to the Agribusiness Companies after 99 years).

As
described above, the farming leases provide for determinations of the fair market lease rate to be paid by the Partnership under the farming leases and the fair market value of the
Partnership's trees situated on property covered by such leases by mutual agreement between the Partnership, on the one hand, and with KACI or MKACI, as the case may be, on the other hand, or, if
mutual agreement cannot be reached, by appraisal.

3.Nut Purchase Contracts

The Partnership is a party to five nut purchase contracts with Mauna Loa Macadamia Nut Corporation ("Mauna Loa"). Mauna Loa was a wholly-owned subsidiary of CBCL
until its sale on September 29, 2000 to an unrelated party. CBCL was also the sole owner of ML Resources, Inc, the Partnership's general partner until August 1, 2001, at which point it
was sold to DBE. The five nut purchase contracts cover all nuts produced by the orchards acquired in June 1986, December 1986, October 1989, September 1991, and
May 2000 respectively. The first two contracts run for 20 years, while the third contract runs for 30 years and also provides for the exclusion of unusable nuts from those
purchased by Mauna Loa. The first three contracts are identical in all other material respects. The fourth contract was acquired by assignment with the purchase of the September 1991 orchard
and expires in 2003. The fourth contract is similar to the first three contracts, but the nut price is calculated on a crop year (July 1 through June 30) rather than calendar year basis,
which results in a slightly different nut price. The fifth contract was acquired by assignment with the purchase of the May 2000 orchards and expires in 2006. The fifth contract is similar to
the first three contracts and also provides for the exclusion of unusable nuts. The first four contracts use a pricing formula based 50% on a two-year trailing average of the macadamia nut
price published annually by the U.S. Department of Agriculture ("USDA") and 50% on Mauna Loa's "netback component". The netback component is calculated by subtracting Mauna Loa's processing and
marketing costs per pound and a "capital charge" of 20% from its nut revenues per pound. The fifth contract uses only the USDA two-year trailing average to determine its nut price. The nut
price paid to the Partnership under the first two contracts was $0.6230 for 1999, $0.5086 for 2000, and $0.4795 for 2001. The average nut price paid to the Partnership under the third contract was
$0.6230 for 1999, $0.5078 for 2000, and $0.4750 for 2001. The average nut price paid to the Partnership under the fourth nut price contract was $0.6682 for 1999, $0.5339 for 2000, and $0.5119 for
2001. The nut price paid to the Partnership under the fifth contract was $0.6609 for 2000, and $0.6222 for 2001.

4.Farming Contracts

Prior to the Partnership's acquisition of the macadamia farming operations on May 1, 2000, the Partnership was a party to four farming contracts with the
Agribusiness Companies, that together covered all farming, harvesting and husking activities for the orchards acquired in June 1986, December 1986, October 1989 and
September 1991, respectively. On May 1, 2000, the Partnership acquired the macadamia farming operations from the Agribusiness Companies.

The
contracts provided the Agribusiness Companies with reimbursement of their direct and indirect costs incurred under these contracts. The reimbursements paid to the two farm managers
were

45

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$7.4 million for 1999 and $2.1 million for the first four months of 2000. Husking activities for the Keaau and Mauna Kea orchards are performed at Mauna Loa's Keaau facility.
Reimbursements made to Mauna Loa were $595,000 in 1999, $453,000 in 2000, and $443,000 in 2001. .

Each
of the farming contracts provided a farming fee equal to two and one-half percent of the Partnership's gross profits from farming operations. The Partnership paid the
Agribusiness Companies total farming fees of $195,000 in 1999. Due to the acquisition, no farming fee was paid for 2000 and 2001.

5.Management Fee

Under the terms of the Partnership Agreement, the Partnership reimburses the Managing Partner for all expenses incurred by it in the conduct of Partnership
business, including any expenses reasonably allocated to the Managing Partner or to the Partnership as well as a management fee equal to 2% of the Partnership's operating cash flow (as defined in the
Partnership Agreement). Certain conflicts may arise in connection with the allocation of such expenses among the Managing Partner, the Partnership, DBE and its affiliates. Management cost
reimbursements under the Partnership Agreement were $525,000 in 1999 and $320,000 in 2000, and $247,000 in 2001. The management fee was $137,000 in 1999, $32,000 in 2000, and $65,000 in 2001.

6.Relationships with CBCL and DBE

Since the Partnership began operations in June 1986, the Partnership has purchased substantially all of its fertilizer and certain transportation services
from subsidiaries of CBCL. Transportation services purchased consist of transportation of raw nuts from the orchards in the Mauna Kea and Ka'u areas to the processing plant. For 2001, 2000, and 1999,
fertilizer, herbicide, pesticide and transportation services purchased by the Partnership from CBCL subsidiaries totaled $0.9 million, $0.9 million, and $0.4 million,
respectively. The Partnership will continue to purchase transportation needs from CBCL subsidiaries as long as, and to the extent that, such purchases can be made on a basis at least as favorable as
that available from third parties. CBCL has sold its fertilizer business to and unrelated third party effective January 1, 2002. Since September 2001, the Partnership has leased
approximately 4,000 s.f. of office space in Hilo for it's accounting staff through the General Partner, which is owned by DBE. The Partnership Agreement requires that the price and terms of any such
transactions be no less favorable than those available in comparable transactions between unrelated parties.

7.Acquisition of Ka'u Orchards and Macadamia Farming Business

On May 1, 2000, the Partnership purchased 142 acres of mature macadamia trees and substantially all of the assets used in the macadamia farming business
from KACI, MKACI, Mauna Kea Macadamia Orchards, Inc. and Ka'u Sugar, Inc., all affiliates of CBCL. The farming assets consist of the farming equipment, vehicles, a husking plant,
irrigation well, leasehold improvements, office furniture and equipment and inventories related to macadamia farming. The purchase price was $8.9 million. As the sellers and the general partner
of the Partnership were each a direct wholly-owned subsidiary of CBCL, this acquisition involved the general partner in a conflict of interest. The Conflicts Committee negotiated the proposed terms of
this acquisition, reached the conclusion that this acquisition would be in the best interest of the Partnership and the holders of the Class A Units, approved this acquisition and reported to
the Board of the Directors of the general partner its recommendation that this acquisition should be approved by that Board. The Board of Directors of the general partner unanimously approved such
acquisition.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

A. List of Documents Filed as a Part of this Report

46

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B. Reports on Form 8-K

On October 20, 2000, the Partnership filed a report on Form 8-K announcing that on September 29, 2000, CBCL had sold all its
stock in Mauna Loa Macadamia Nut Corporation to The Shansby Group, a San Francisco based equity partnership.

47

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

|                      |  | ML MACADAMIA ORCHARDS, L.P.(Registrant)
|--------------------- |  | ---------------------------------------
|                      |  | By:                                    
|                      |  | By:                                    
|Dated: March 28, 2002 |  |                                        

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities
indicated and on the date set forth above.

ML RESOURCES, INC.

|Signature                                       |  | Title                                                         
|----------------------------------------------- |  | --------------------------------------------------------------
|                                                |  |                                                               
|/s/J. W. A. BUYERSJ. W. A. Buyers               |  | Chairman of the Board and Principal Executive Officer
Director
|/s/DENNIS J. SIMONISDennis J. Simonis           |  | President and Chief Financial Officer                         
|/s/WAYNE W. ROUMAGOUXWayne W. Roumagoux         |  | Senior Financial Officer (Principal Accounting Officer)       
|/s/JAMES S. ANDRASICKJames S. Andrasick         |  | Director                                                      
|/s/JAMES H. CASEJames H. Case                   |  | Director                                                      
|/s/DR. RALPH C. HOOK, JR.Dr. Ralph C. Hook, Jr. |  | Director                                                      
|/s/J. ALAN KUGLEJ. Alan Kugle                   |  | Director                                                      
|/s/DR. DAVID MCCLAINDr. David McClain           |  | Director                                                      
|/s/KENT T. LUCIENKent T. Lucien                 |  | Director                                                      

48

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EXHIBIT INDEX

|Exhibit Number |  | Description                                                                                                                                                                                                                              
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1            |  | Amended and Restated Agreement and Plan of Merger, effective as of December 18, 1997, between Registrant and C. Brewer Homes, Inc. (a)                                                                                                   
|2.2            |  | Asset Purchase Agreement including Exhibits dated March 14, 2000 (g)                                                                                                                                                                     
|3.2            |  | Form of Class A Certificate of Limited Partnership as filed with the Secretary of State of Delaware. (c)                                                                                                                                 
|3.3            |  | Certificate of Limited Partnership of Registrant as filed with the Secretary of State of Delaware. (c)                                                                                                                                   
|4.1            |  | Depositary Agreement between Registrant, Manufacturers Hanover Trust Company as Depositary and Mauna Loa Resources Inc. as attorney-in-fact of the limited partners of Registrant. (c)                                                   
|4.2            |  | Form of Depositary Receipt. (c)                                                                                                                                                                                                          
|5.1            |  | Legal Opinion of Counsel dated May 1, 2000 (g)                                                                                                                                                                                           
|10.2           |  | Macadamia Nut Purchase Contract between Mauna Loa and Registrant dated December 22, 1986. (b)                                                                                                                                            
|10.3           |  | Macadamia Nut Purchase Contract between Mauna Loa and Registrant dated as of October 1, 1989. (b)                                                                                                                                        
|10.4           |  | Contribution Agreement among Mauna Loa Orchards, L.P. ("MLO"), Ka'u Agribusiness Co., Inc. ("KACI"), Mauna Kea Agribusiness Co., Inc. ("MKACI"), Mauna Kea Macadamia Orchards, Inc. ("MKMO") and Mauna Loa dated as of July 1,
 1989. (b)
|10.5           |  | Lease between the Trustees of the Estate of Bernice Pauahi Bishop ("Trustees of the Bishop Estate") and Mauna Loa. (c)                                                                                                                   
|10.6           |  | Lease between KACI and Registrant. (d)                                                                                                                                                                                                   
|10.7           |  | MLO/MLMO Conveyance Agreement between MLO and Registrant dated as of October 1, 1989. (b)                                                                                                                                                
|10.8           |  | Butcher/MLMO Contribution Agreement between Howard Butcher III ("Butcher") and Registrant dated as of October 1, 1989. (b)                                                                                                               
|10.9           |  | Farming Lease between KACI and MLO dated as of July 1, 1989. (b)                                                                                                                                                                         
|10.10          |  | Farming Lease between MKACI and MKMO dated as of July 1, 1989. (b)                                                                                                                                                                       
|10.11          |  | Farming Lease between MKACI and MLO dated as of July 1, 1989. (b)                                                                                                                                                                        
|10.12          |  | Water Agreement, as amended, between KACI and Registrant dated as of October 1, 1989. (b)                                                                                                                                                
|10.13          |  | Cash Flow Warranty Agreement among KACI, MKACI and Registrant dated as of July 1, 1989. (b)                                                                                                                                              
|10.14          |  | Guarantee Agreement between Mauna Loa and Registrant dated as of October 1, 1989. (b)                                                                                                                                                    
|10.15          |  | Agreement of Indemnification between CBCL and each director of the Managing Partner. (b)                                                                                                                                                 
|10.16          |  | Indemnification Agreement (Title) among Mauna Loa, KACI and MKACI in favor of Registrant. (b)                                                                                                                                            
|10.17          |  | Indemnification Agreement (Subdivision) among Mauna Loa, KACI and MKACI in favor of Registrant. (b)                                                                                                                                      

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|10.18 |  | Deed between MLO and Registrant relating to 14% undivided interest in 220 tree acres of macadamia orchard properties located in the Keaau area of the island of Hawaii ("Keaau II Orchards"). (b)
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.19 |  | Bill of Sale between MLO and Registrant relating to 14% undivided interest in Keaau II Orchards. (b)                                                                                             
|10.20 |  | Deed between Butcher and Registrant relating to 86% undivided interest in Keaau II Orchards. (b)                                                                                                 
|10.21 |  | Bill of Sale between Butcher and Registrant relating to 86% undivided interest in Keaau II Orchards. (b)                                                                                         
|10.22 |  | Assignment of Partial Interest in Lease No. 15,020 and consent from MLO to Registrant. (b)                                                                                                       
|10.23 |  | Assignment of Partial Interest in Lease No. 16,859 and consent from MLO to Registrant. (b)                                                                                                       
|10.24 |  | Assignment of Partial Interest in Lease No. 20,397 and consent from MLO to Registrant. (b)                                                                                                       
|10.25 |  | Assignment of Lease from MLO to Registrant relating to Lease from the Trustees of the Bishop Estate. (b)                                                                                         
|10.26 |  | Assignment from MLO to Registrant relating to certain orchards. (b)                                                                                                                              
|10.27 |  | Lease from the Trustees of the Bishop Estate to MLO. (b)                                                                                                                                         
|10.28 |  | Lease No. 15,020 from the Trustees of the Bishop Estate to MLO. (b)                                                                                                                              
|10.29 |  | Form of Amendments to Lease No. 15,020 from the Trustees of the Bishop Estate. (b)                                                                                                               
|10.30 |  | Lease No. 16,859 from the Trustees of the Bishop Estate to the Hawaiian Agricultural Company (a predecessor of KACI). (b)                                                                        
|10.31 |  | Form of Amendments to Lease No. 16,859 from the Trustees of the Bishop Estate. (b)                                                                                                               
|10.32 |  | Lease No. 20,397 from the Trustees of the Bishop Estate to CBCL. (b)                                                                                                                             
|10.33 |  | Form of Amendments to Lease No. 20,397 from the Trustees of the Bishop Estate to CBCL. (b)                                                                                                       
|10.34 |  | Lease from Richard L. Hughes to Mauna Loa. (b)                                                                                                                                                   
|10.35 |  | Lease from the Trustees of the Bishop Estate to Mauna Loa. (b)                                                                                                                                   
|10.36 |  | Co-ownership and Partition Agreement between KACI and MLO. (b)                                                                                                                                   
|10.37 |  | Co-ownership and Partition Agreement among Mauna Loa, KACI and MLO.(b)                                                                                                                           
|10.38 |  | Co-ownership and Partition Agreement between KACI and MLO relating to Lease Nos. 15,020 and 16,859. (b)                                                                                          
|10.39 |  | Co-ownership and Partition Agreement between MKACI and MLO. (b)                                                                                                                                  
|10.40 |  | Macadamia Nut Purchase Contract between Mauna Loa and Keaau Macadamia X Corporation ("Keaau Lot 10") dated September 15, 1983. (e)                                                               
|10.41 |  | Assignment of Owner's Interest in Macadamia Nut Purchase Contract and Farming Contract between Keaau Lot 10 and Registrant. (e)                                                                  
|10.42 |  | Warranty Deed between Keaau Lot 10 and Registrant. (e)                                                                                                                                           
|10.43 |  | Amended and Restated June 1986 Farming Contract, effective January 1, 1998, between Registrant and KACI. (f)                                                                                     
|10.44 |  | Amended and Restated December 1986 Farming Contract, effective January 1, 1998, between Registrant and KACI. (f)                                                                                 

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|10.45 |  | Amended and Restated 1989 Farming Contract, effective January 1, 1998, among Registrant, KACI and MKACI. (f)                   
|----- |  | -------------------------------------------------------------------------------------------------------------------------------
|10.46 |  | Amended and Restated Farming Contract for the Keaau Lot 10 Orchard, effective January 1, 1998, between Registrant and KACI. (f)
|10.47 |  | Restated Kaiwiki Orchards Farming lease between Registrant and MKACI dated February 26, 1997. (f)                              
|10.48 |  | Credit Agreement between Registrant and Pacific Coast Farm Credit Services, PCA dated May 1, 2000 (g)                          
|10.49 |  | Security Agreement between Registrant and Pacific Coast Farm Credit Services, PCA dated May 1, 2000 (g)                        
|10.50 |  | Orchards Farming Lease between Registrant and Ka'u Agribusiness Co., Inc. (g)                                                  
|11.1  |  | Statement re: Computation of Net Income per Class A Unit.                                                                      

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