**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C.  20549**

**FORM 10-Q**

**(Mark One)**

**x**                              QUARTERLYREPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACTOF 1934

**Forthe quarterly period ended JUNE 30, 2006**

**OR**

**o**                                 TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

**Commissionfile number  1-6510**

**MAUI LAND & PINEAPPLE COMPANY, INC.**

(Exact name of registrant as specified in its charter)

| **HAWAII**                                                                        | ** ** | **99-0107542**                     |
|-----------------------------------------------------------------------------------|------------|------------------------------------|
| (State or other  jurisdiction of  incorporation or organization)                  |       | (IRS Employer  Identification No.) |
| **P. O. BOX 187, KAHULUI, MAUI, HAWAII  96733-6687**                    |
| (Address of  principal executive offices)                                         |
| Registrant’s  telephone number, including area code: **(808) 877-3351**      |
| **NONE**                                                                          |
| Former name,  former address and former fiscal year, if changed since last report |

 

Indicateby check mark whether the registrant (1) has filed all reports required tobe filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject tosuch filing requirements for the past 90 days.

| Yes   x | No   o |
|-------------------|------------------|

 

Indicate by check mark whether the registrant is a largeaccelerated filer, an accelerated filer, or a non-accelerated filer. Seedefinition of “accelerated filer and larger accelerated filer” in Rule 12b-2of the Exchange Act.

| Large accelerated filer  o | Accelerated  filer  x | Non-accelerated  filer  o |
|--------------------------------------|---------------------------------|-------------------------------------|

 

Indicateby check mark whether the registrant is a shell company (as defined in Rule 12b-2of the Exchange Act).

| Yes   o | No   x |
|-------------------|------------------|

 

Indicatethe number of shares outstanding of each of the issuer’s classes of commonstock, as of the latest practicable date.

| Class                       | ** ** | **Outstanding at August 4, 2006** |
|-----------------------------|------------|----------------------------------------|
| Common Stock, no  par value |       | 7,522,050 shares                       |

 

 

----

**MAUILAND & PINEAPPLE COMPANY, INC.AND SUBSIDIARIES**

**TABLEOF CONTENTS**

|                                                                                                                                     | ** ** | Page   |
|-------------------------------------------------------------------------------------------------------------------------------------|------------|--------|
| PART I. FINANCIAL INFORMATION                                                                                                  |       |   |   |   |
| Item 1. Financial Statements                                                                                                        |       |   |   |   |
| Condensed Consolidated  Balance Sheets,  June 30, 2006 and December 31, 2005 (Unaudited)                                  |       |   | 3 |   |
| Condensed Consolidated Statements of Operations  and Retained Earnings,  Three Months Ended June 30, 2006 and 2005 (Unaudited) |       |   | 4 |   |
| Condensed Consolidated Statements of  Operations and Retained Earnings,  Six Months Ended June 30, 2006 and 2005 (Unaudited)   |       |   | 5 |   |
| Condensed Consolidated  Statements of Cash Flows,  Six Months Ended June 30, 2006 and 2005 (Unaudited)                         |       |   | 6 |   |
| Notes to Condensed  Consolidated Financial Statements (Unaudited)                                                                   |       |   | 7 |   |
| Item 2. Management’s  Discussion and Analysis of Financial Condition and Results of Operations                                 |       |   | 15 |   |
| Forward-Looking Statements                                                                                                          |       |   | 27 |   |
| Item 3. Quantitative and  Qualitative Disclosures About Market Risk                                                                 |       |   | 28 |   |
| Item 4. Controls and Procedures                                                                                                     |       |   | 28 |   |
| PART II. OTHER INFORMATION                                                                                                     |       |   |   |   |
| Item 1A. Risk Factors                                                                                                               |       |   | 29 |   |
| Item 4. Submission of  Matters to a Vote of Security Holders                                                                        |       |   | 29 |   |
| Item 5. Other Information                                                                                                           |       |   | 30 |   |
| Item 6. Exhibits                                                                                                                    |       |   | 32 |   |
| Signature                                                                                                                           |       |   | 34 |   |

 

2

----

**PART I   FINANCIALINFORMATION**

**Item 1.**                        FinancialStatements

**MAUI LAND & PINEAPPLE COMPANY, INC. ANDSUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)**

| ** **                                                                                                                 | ** ** | **6/30/06**             | ** ** | **12/31/05** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------|------------|-------------------------|------------|--------------|------------|
| ** **                                                                                                                 | ** ** | **(in thousands)** | ** ** |
| *ASSETS*                                                                                                                   |       |                    |       |         |       |
| Current Assets                                                                                                             |       |                    |       |         |       |
| Cash and cash equivalents                                                                                                  |       | $                       | 3,070      |         | $          | 7,216 |   |
| Accounts and notes receivable                                                                                              |       | 14,592                  |       | 19,605       |       |
| Inventories                                                                                                                |       | 21,320                  |       | 17,305       |       |
| Other current assets                                                                                                       |       | 5,593                   |       | 5,271        |       |
| Total current assets                                                                                                       |       | 44,575                  |       | 49,397       |       |
| Property                                                                                                                   |       | 260,853                 |       | 236,250      |       |
| Accumulated depreciation                                                                                                   |       | (145,772                | )          | (139,315     | )          |
| Property—net                                                                                                          |       | 115,081                 |       | 96,935       |       |
| Other Assets                                                                                                               |       | 50,012                  |       | 39,667       |       |
| Total                                                                                                                      |       | $                       | 209,668    |         | $          | 185,999 |   |
| *LIABILITIES AND STOCKHOLDERS’ EQUITY*                                                                                |       |                    |       |         |       |
| Current Liabilities                                                                                                        |       |                    |       |         |       |
| Current portion of long-term debt and capital lease  obligations                                                           |       | $                       | 423        |         | $          | 837 |   |
| Trade accounts payable                                                                                                     |       | 14,835                  |       | 18,418       |       |
| Deferred revenue                                                                                                           |       | 8,554                   |       | 11,380       |       |
| Other current liabilities                                                                                                  |       | 20,343                  |       | 9,862        |       |
| Total current liabilities                                                                                                  |       | 44,155                  |       | 40,497       |       |
| Long-Term  Liabilities                                                                                                     |       |                    |       |         |       |
| Long-term debt                                                                                                             |       | 18,890                  |       | 10,284       |       |
| Accrued retirement benefits                                                                                                |       | 30,445                  |       | 29,792       |       |
| Other long-term liabilities                                                                                                |       | 12,087                  |       | 13,729       |       |
| Total long-term liabilities                                                                                                |       | 61,422                  |       | 53,805       |       |
| Minority Interest in Subsidiary                                                                                            |       | 526                     |       | 517          |       |
| Commitments and  Contingencies                                                                                             |       |                    |       |         |       |
| Stockholders’  Equity                                                                                                 |       |                    |       |         |       |
| Common stock, no par value—9,000,000 and 8,000,000  shares authorized, 7,258,779 and 7,254,779 issued and outstanding |       | 14,329                  |       | 14,186       |       |
| Additional paid-in-capital                                                                                                 |       | 3,997                   |       | 2,930        |       |
| Retained earnings                                                                                                          |       | 86,715                  |       | 75,540       |       |
| Accumulated other comprehensive loss                                                                                       |       | (1,476                  | )          | (1,476       | )          |
| Stockholders’ Equity                                                                                                  |       | 103,565                 |       | 91,180       |       |
| Total                                                                                                                      |       | $                       | 209,668    |         | $          | 185,999 |   |

 

See accompanying Notes to Condensed Consolidated Financial Statements.

3

----

**MAUILAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES**

**CONDENSED CONSOLIDATEDSTATEMENTS OF OPERATIONSAND RETAINED EARNINGS**

**(UNAUDITED)**

| ** **                             | ** ** | **Three Months Ended**                        | ** ** |
|----------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                             | ** ** | **6/30/06**                                             | ** ** | **6/30/05** | ** ** |
| ** **                             | ** ** | **(in thousands  except share amounts)** | ** ** |
| Operating Revenues                     |       |                                                    |       |   |   |
| Net sales                              |       | $                                                       | 22,861     |   | $ | 43,809 |   |
| Operating income                       |       | 10,632                                                  |       | 7,262 |   |
| Other income                           |       | 88                                                      |       | 99 |   |
| Total Operating  Revenues              |       | 33,581                                                  |       | 51,170 |   |
| Operating Costs  and Expenses          |       |                                                    |       |   |   |
| Cost of sales                          |       | 13,249                                                  |       | 19,755 |   |
| Operating expenses                     |       | 10,935                                                  |       | 8,516 |   |
| Shipping and marketing                 |       | 3,296                                                   |       | 3,171 |   |
| General and administrative             |       | 9,135                                                   |       | 9,207 |   |
| Total Operating  Costs and Expenses    |       | 36,615                                                  |       | 40,649 |   |
| Operating Income                       |       | (3,034                                                  | )          | 10,521 |   |
| Equity in losses of affiliates         |       | (1,540                                                  | )          | (112 | ) |
| Interest expense                       |       | —                                                  |       | (95 | ) |
| Interest income                        |       | 511                                                     |       | 10 |   |
| Income (Loss)  Before Income Taxes     |       | (4,063                                                  | )          | 10,324 |   |
| Income Tax  Expense (Benefit)          |       | (1,463                                                  | )          | 3,840 |   |
| Net Income (Loss)                      |       | (2,600                                                  | )          | 6,484 |   |
| Retained Earnings, Beginning of Period |       | 89,315                                                  |       | 62,226 |   |
| Retained Earnings, End of Period       |       | $                                                       | 86,715     |   | $ | 68,710 |   |
| Earnings Per  Common Share             |       |                                                    |       |   |   |
| Basic                                  |       | $                                                       | (0.36      | ) | $ | 0.90 |   |
| Diluted                                |       | $                                                       | (0.36      | ) | $ | 0.89 |   |

 

See accompanying Notes to Condensed Consolidated Financial Statements.

4

----

**MAUILAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES**

**CONDENSED CONSOLIDATEDSTATEMENTS OF OPERATIONS (Continued)AND RETAINED EARNINGS**

**(UNAUDITED)**

| ** **                             | ** ** | **Six Months Ended**                          | ** ** |
|----------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                             | ** ** | **6/30/06**                                             | ** ** | **6/30/05** | ** ** |
| ** **                             | ** ** | **(in thousands  except share amounts)** | ** ** |
| Operating Revenues                     |       |                                                    |       |   |   |
| Net sales                              |       | $                                                       | 71,822     |   | $ | 71,279 |   |
| Operating income                       |       | 20,516                                                  |       | 17,672 |   |
| Other income                           |       | 195                                                     |       | 380 |   |
| Total Operating  Revenues              |       | 92,533                                                  |       | 89,331 |   |
| Operating Costs  and Expenses          |       |                                                    |       |   |   |
| Cost of sales                          |       | 29,080                                                  |       | 35,398 |   |
| Operating expenses                     |       | 19,773                                                  |       | 17,756 |   |
| Shipping and marketing                 |       | 6,873                                                   |       | 6,967 |   |
| General and administrative             |       | 18,761                                                  |       | 16,502 |   |
| Total Operating  Costs and Expenses    |       | 74,487                                                  |       | 76,623 |   |
| Operating Income                       |       | 18,046                                                  |       | 12,708 |   |
| Equity in losses of affiliates         |       | (1,368                                                  | )          | (216 | ) |
| Interest expense                       |       | (29                                                     | )          | (237 | ) |
| Interest income                        |       | 812                                                     |       | 30 |   |
| Income Before  Income Taxes            |       | 17,461                                                  |       | 12,285 |   |
| Income Tax  Expense                    |       | 6,286                                                   |       | 4,546 |   |
| Net Income                             |       | 11,175                                                  |       | 7,739 |   |
| Retained Earnings, Beginning of Period |       | 75,540                                                  |       | 60,971 |   |
| Retained Earnings, End of Period       |       | $                                                       | 86,715     |   | $ | 68,710 |   |
| Earnings Per  Common Share             |       |                                                    |       |   |   |
| Basic                                  |       | $                                                       | 1.54       |   | $ | 1.07 |   |
| Diluted                                |       | $                                                       | 1.52       |   | $ | 1.06 |   |

 

See accompanying Notes to Condensed Consolidated Financial Statements.

5

----

**MAUI LAND & PINEAPPLE COMPANY, INC. ANDSUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)**

| ** **                                                | ** ** | **Six Months Ended** | ** ** |
|-----------------------------------------------------------|------------|--------------------------------|------------|
| ** **                                                | ** ** | **6/30/06**                    | ** ** | **6/30/05** | ** ** |
| ** **                                                | ** ** | **(in thousands)**        | ** ** |
| Net Cash Provided  by (Used in) Operating Activities      |       | $                              | (2,101     | ) | $ | 516 |   |
| Investing  Activities                                     |       |                           |       |   |   |
| Purchases of property                                     |       | (22,233                        | )          | (6,850 | ) |
| Proceeds from disposal of property                        |       | 16,258                         |       | 2,643 |   |
| Other                                                     |       | (4,182                         | )          | (808 | ) |
| Net Cash Used in  Investing Activities                    |       | (10,157                        | )          | (5,015 | ) |
| Financing  Activities                                     |       |                           |       |   |   |
| Payments of long-term debt and capital lease  obligations |       | (26,288                        | )          | (6,396 | ) |
| Proceeds from long-term debt                              |       | 34,400                         |       | 4,500 |   |
| Net Cash Provided  by (Used in) Financing Activities      |       | 8,112                          |       | (1,896 | ) |
| Net Decrease in Cash and Cash Equivalents                 |       | (4,146                         | )          | (6,395 | ) |
| Cash and Cash Equivalents at Beginning of Period          |       | 7,216                          |       | 11,531 |   |
| Cash and Cash  Equivalents at End of Period               |       | $                              | 3,070      |   | $ | 5,136 |   |

 

Supplemental Disclosures of Cash Flow Information—Interest(net of amounts capitalized) of $29,000 and $257,000 was paid during thesix months ended June 30, 2006 and 2005, respectively. Income taxes of$2,381,000 and $273,000 were paid during the six months ended June 30,2006 and 2005, respectively.

Non-Cash Investing Activities—In 2006, net cash salesproceeds of $21.9 million were deposited with a qualified exchange intermediaryfor re-investment on a tax-deferred basis. Amounts included in accounts payablefor additions to property and other assets totaled $4,383,000 and $2,753,000 atJune 30, 2006 and 2005, respectively.

See accompanying Notes to Condensed Consolidated Financial Statements.

6

----

**MAUI LAND &PINEAPPLE COMPANY, INC. AND SUBSIDIARIES**

**NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS**

**(UNAUDITED)**

**1.**                 Inthe opinion of management, the accompanying condensed consolidated financialstatements contain all normal and recurring adjustments necessary to fairlypresent the financial position, results of operations and cash flows for theinterim periods ended June 30, 2006 and 2005.

**2.**                 TheCompany’s reports for interim periods utilize numerous estimates of productioncost, general and administrative expenses, and other costs for the full year. Futureactual amounts may differ from the estimates. Amounts in the interim reportsare not necessarily indicative of results for the full year.

**3.**                 Netincome was equal to comprehensive income for the interim periods ended June 30,2006 and 2005.

**4.**                 Theeffective tax rate for 2006 and 2005 differs from the statutory federal rateprimarily because of the state tax provision and refundable state tax credits.

**5.**                 Accountsand notes receivable are reflected net of allowance for doubtful accounts of$133,000 and $265,000 at June 30, 2006 and December 31, 2005,respectively.

**6.**                 Inventoriesas of June 30, 2006 and December 31, 2005 were as follows:

| ** **                           | ** ** | **6/30/06**             | ** ** | **12/31/05** | ** ** |
|--------------------------------------|------------|-------------------------|------------|--------------|------------|
| ** **                           | ** ** | **(in thousands)** | ** ** |
| Pineapple products                   |       |                    |       |         |       |
| Finished goods                       |       | $                       | 5,025      |         | $          | 2,425 |   |
| Work in progress                     |       | 232                     |       | 367          |       |
| Raw materials                        |       | 840                     |       | 861          |       |
| Real estate held  for sale           |       | 8,641                   |       | 5,651        |       |
| Merchandise,  materials and supplies |       | 6,582                   |       | 8,001        |       |
| Total Inventories                    |       | $                       | 21,320     |         | $          | 17,305 |   |

 

The Company accounts for the costs of growingpineapple in accordance with the “annual accrual method,” which has been usedby Hawaii’s pineapple and sugarcane growers since the 1950s. Under this method,revenues and costs are determined on the accrual basis, and pineapple productioncosts incurred during a year are charged to the costs of crops harvested duringthat year. These costs include land preparation and planting, cultivation,irrigation, crop development, harvesting and hauling to the cannery. They alsoinclude certain overhead costs that are directly related to the growing ofpineapple. Accordingly, no costs are assigned to the growing (unharvested)crops.  The annual accrual method is themost appropriate method of accounting for the costs of growing pineapplebecause of pineapple’s crop cycle (18 to 48 months) and the uncertainties aboutfruit quality and the number of crops to be harvested from each planting (oneto three crops). AICPA Statement of Position No. 85-3 (SOP), *Accounting by Agricultural Producers and Agricultural Cooperatives*,states that all direct and indirect costs of growing crops should beaccumulated and growing crops should be reported at the lower of cost or market.However, SOP No. 85-3 does not apply to growers of pineapple andsugarcane in tropical regions because tropical agriculture (of which pineappleand sugarcane production in Hawaii are examples) differs greatly fromagriculture in temperate regions of the mainland United States. The Company’sgrowing (unharvested) crops at June 30, 2006 consisted of approximately4,300 acres that are expected to yield approximately 25 tons per acre. At December 31,2005, growing crops consisted of approximately 5,500 acres that are expected toyield 

7

----

approximately 33 tons peracre. The Company’s growing crops are in various stages of development, andwill be harvested principally in the years 2006 through 2008.

TheCompany uses the percentage-of-completion method to recognize revenues andprofits from the sale of residential land parcels where the Company is obligatedto construct improvements (roads, sidewalks, drainage, and utilities) after theclosing of the sale. Under this method, revenues are recognized over theimprovement construction period on the basis of costs incurred as a percentageof total costs to be incurred. The Company recognizes revenues and profitsusing the percentage-of-completion method for the sale of lots that closedescrow in Honolua Ridge Phase I and Phase II residential subdivision at theKapalua Resort. In the first half of 2006, three lots closed escrow in HonoluaRidge Phase II bringing the number sold to ten, with 15 lots remaining to besold. At June 30, 2006, construction of the improvements for Honolua PhaseII was estimated to be approximately 69% complete. Construction of HonoluaRidge Phase I and all of the lot sales were completed by the end of 2005. Costsof sales are allocated to each lot based on relative sales values. Theestimated costs of the projects consist primarily of executed contracts withcontractors. These estimates could be affected by unanticipated construction orland conditions that could result in additional change orders to the existingcontracts or other unforeseen variables that may affect the total cost of theimprovements to be constructed. At June 30, 2006, deferred revenues(current liability) on the Company’s balance sheet related to Honolua RidgePhase II were $7.3 million.

**7.****                 RealEstate Sales**

In March 2006,the Company sold approximately 1,800 acres of Upcountry Maui land for $22.9 million.The Company recognized a gain of $21.5 million and deposited cash proceeds of$21.9 million with a qualified exchange intermediary. As of June 30,2006, these sales proceeds remained on deposit and a portion of such proceedsare expected to be reinvested on a tax deferred basis (Internal Revenue Code Section 1031exchange).

**8.****                 Stock-BasedCompensation**

Effective January 1, 2006, the Company adoptedStatement of Financial Accounting Standards (“SFAS”) No. 123(R), *Share-Based Payment*, using the modifiedprospective application transition method. The Company had previously accountedfor its stock-based compensation arrangements under SFAS No. 123, *Accounting for Stock-Based Compensation.*Becausethe fair value recognition provisions of SFAS No. 123 and SFAS No. 123(R) werematerially consistent under the Company’s equity plans, the adoption of SFAS No. 123(R) didnot have a significant impact on the Company’s financial position or results ofoperations. SFAS No. 123(R) requires all share-based payments,including grants of employee stock options, to be recognized as compensationexpense over the service period (generally the vesting period) in theconsolidated financial statements based on their fair values. Under themodified prospective method, awards that were granted, modified, or settled onor after January 1, 2006 are measured and accounted for in accordance withSFAS No. 123(R). The impact of forfeitures that may occur prior to vestingis also estimated and considered in the amount recognized. In addition, priorto adoption of SFAS No. 123(R), benefits of tax deductions in excess ofrecognized compensation costs were reported as operating cash flows. SFAS No. 123(R) requiresexcess tax benefits be reported as a financing cash inflow rather than as areduction of taxes paid.

The total compensationexpense recognized for stock-based compensation was $1,208,000 and $1,167,000for the six months ended June 30, 2006 and 2005, respectively, and$565,000 and $660,000, for the three months ended June 30, 2006 and 2005,respectively. The total tax benefit related thereto was $435,000 and $420,000,for the six months ended June 30, 2006 and 2005, respectively, and$204,000 and $238,000, for the three months ended June 30, 2006 and 2005,respectively.

8

----

*Stock Options*

In May 2006, the Company’s shareholders approvedthe 2006 Equity and Incentive Award Plan (the “2006 Plan”) and an increase inthe number of shares of common stock authorized under the Articles ofAssociation by 1,000,000 shares, all of which have been reserved for issuanceunder the 2006 Plan. The 2006 Plan provides that the administrator can grantstock options and other equity instruments. The terms of certain grants typesfollow general guidelines, but the term and conditions of each award can varyat the discretion of the administrator. With respect to awards granted tonon-employee directors, the administrator of the 2006 Plan is the Board ofDirectors. The Compensation Committee of the Board is the administrator of the2006 Plan for all other persons, unless the Board assumes authority foradministration. Upon approval of the 2006 Plan, the Company’s Stock andIncentive Compensation Plan of 2003 (the “2003 Plan”) was terminated and nofurther grants will be made under that plan.

The 2003 Plan was approved by the Company’sshareholders on December 11, 2003 and included 500,000 shares of commonstock authorized for issuance. The Company also has stock compensationagreements with its President and Chief Executive Officer under whichnon-qualified stock options (200,000 shares) and restricted stock (100,000shares) were granted in 2003.

Asummary of stock option award activity as of and for the six months ended June 30,2006 is presented below:

| ** **                             | ** ** | **Shares** | ** ** | **Weighted  Average  Exercise  Price ($)** | ** ** | **Weighted  Average  Remaining**

**Contractual  Term (years)** | ** ** | **Aggregate   Intrinsic  Value $(000)** | ** ** |
|----------------------------------------|------------|------------|------------|-------------------------------------------------|------------|----------------------------------------------------------------------|------------|---------------------------------------------------|------------|
| Outstanding at  December 31, 2005 |       | 613,500    |       |                                            | 28.99      |                                                                 |       |                                              |       |   |   |   |   |   |   |
| Granted                                |       | 305,000    |       |                                            | 38.04      |                                                                 |       |                                              |       |   |   |   |   |   |   |
| Exercised                              |       | —     |       |                                            |       |                                                                 |       |                                              |       |   |   |   |   |   |   |
| Forfeited                              |       | (26,500    | )          |                                            | 38.95      |                                                                 |       |                                              |       |   |   |   |   |   |   |
| Outstanding at  June 30, 2006     |       | 892,000    |       |                                            | 31.79      |                                                                 |       |                                              | 8.3        |   |   |   | 5,365 |   |   |
| Exercisable at  June 30, 2006     |       | 279,366    |       |                                            | 25.10      |                                                                 |       |                                              | 6.3        |   |   |   | 3,548 |   |   |

 

The weighted average fair value of options grantedduring the six months ended June 30, 2006 and 2005 was $4,904,000 and$1,691,000, respectively. The total fair value of shares vested during the sixmonths ended June 30, 2006 and 2005 was $802,000 and $565,000,respectively.

For the six months ended June 30, 2006 and 2005,the fair value of the Company’s stock options awarded to employees was estimatedusing a Black-Scholes option pricing model and the following weighted averageassumptions:

| ** **                         | ** ** | **Six Months Ended June 30,**                                | ** ** |
|------------------------------------|------------|----------------------------------------------------------------------------------|------------|
| ** **                         | ** ** | **      2006      ** | ** ** | **      2005      ** | ** ** |
| Expected life of  options in years |       |                                                                             | 6.2        |   |   |   | 5.0 |   |   |
| Expected  volatility               |       |                                                                             | 32.4       | % |   |   | 33.8 | % |   |
| Risk-free  interest rate           |       |                                                                             | 4.9        | % |   |   | 3.8 | % |   |
| Expected dividend yield            |       |                                                                             | —     |   |   |   | — |   |   |

 

SFAS No. 123(R) requires the recognition ofstock-based compensation for the number of awards that are ultimately expectedto vest. As a result, recognized stock compensation was reduced for estimatedforfeitures prior to vesting primarily based on historical annual forfeiturerates of approximately 5.8%. Estimated forfeitures will be reassessed insubsequent periods and may change based on new facts and circumstances.

9

----

As of June 30, 2006,there was $8,619,000 of total unrecognized compensation for awards grantedunder the stock options plans that is expected to be recognized over a weightedaverage period of 2.3 years.

*Restricted Stock*

In 2006, 149,750 shares of restricted stock weregranted pursuant to the 2006 and 2003 Plans, including 100,000 shares to theCompany’s President and Chief Executive Officer, 8,250 shares to new andre-elected directors, and the remainder to certain officers of the Company. Therestricted shares vest as service is provided or vest subject to theachievement of certain performance measures. In the first half of 2006, 4,000shares of restricted stock vested as the directors’ service requirements weremet. The weightedaverage grant-date fair value of restricted stock granted during the six monthsended June 30, 2006 and 2005 was $35.94 and $39.00, per share,respectively.

Asummary of the activity for nonvested restricted stock awards as of and for thequarter ended June 30, 2006 is presented below:

| ** **                                   | ** ** | ** ** | ** ** | **Weighted**        | ** ** |
|----------------------------------------------|------------|------------|------------|---------------------|------------|
| ** **                                   | ** ** | ** ** | ** ** | **Average**         | ** ** |
| ** **                                   | ** ** | ** ** | ** ** | **Grant Date** | ** ** |
| ** **                                   | ** ** | ** ** | ** ** | **Fair**            | ** ** |
| ** **                                   | ** ** | **Shares** | ** ** | **Value ($)**  | ** ** |
| Nonvested balance  at December 31, 2005 |       | 123,771    |       |                | 27.90      |   |   |
| Granted                                      |       | 149,750    |       |                | 35.94      |   |   |
| Forfeited                                    |       | (6,250     | )          |                | 34.62      |   |   |
| Vested                                       |       | (4,000     | )          |                | 35.68      |   |   |
| Nonvested balance at  June 30, 2006     |       | 263,271    |       |                | 32.78      |   |   |

 

**9.****                 OperatingSegment Information:**

| ** **                     | ** ** | **Three Months**       | ** ** | **Six Months**         | ** ** |
|--------------------------------|------------|-----------------------------|------------|-----------------------------|------------|
| ** **                     | ** ** | **Ended June 30** | ** ** | **Ended June 30** | ** ** |
| ** **                     | ** ** | **2006**                    | ** ** | **2005**                    | ** ** | **2006** | ** ** | **2005** | ** ** |
| ** **                     | ** ** | **(in thousands)**     | ** ** |
| Revenues                       |       |                        |       |                        |       |   |   |   |   |
| Agriculture                    |       | $                           | 14,341     |                        | $          | 16,256 |   | $ | 30,264 |   | $ | 32,043 |   |
| Resort                         |       | 11,436                      |       | 8,077                       |       | 24,365 |   | 21,027 |   |
| Community Development          |       | 7,514                       |       | 26,821                      |       | 37,602 |   | 36,227 |   |
| Other                          |       | 290                         |       | 16                          |       | 302 |   | 34 |   |
| Total Operating  Revenues      |       | $                           | 33,581     |                        | $          | 51,170 |   | $ | 92,533 |   | $ | 89,331 |   |
| Operating Profit  (Loss)*      | ** ** | ** **                  | ** ** | ** **                  | ** ** | ** ** | ** ** | ** ** | ** ** |
| Agriculture                    |       | $                           | (3,427     | )                           | $          | (2,603 | ) | $ | (5,725 | ) | $ | (4,691 | ) |
| Resort                         |       | (1,855                      | )          | (2,325                      | )          | (1,425 | ) | (2,028 | ) |
| Community Development          |       | 707                         |       | 15,394                      |       | 24,070 |   | 19,336 |   |
| Other                          |       | 1                           |       | (57                         | )          | (242 | ) | (125 | ) |
| Total Operating  Profit (Loss) |       | (4,574                      | )          | 10,409                      |       | 16,678 |   | 12,492 |   |
| Interest Expense               |       | —                      |       | (95                         | )          | (29 | ) | (237 | ) |
| Interest Income                |       | 511                         |       | 10                          |       | 812 |   | 30 |   |
| Income Tax  (Expense) Benefit  |       | 1,463                       |       | (3,840                      | )          | (6,286 | ) | (4,546 | ) |
| Net Income (Loss)              |       | (2,600                      | )          | 6,484                       |       | 11,175 |   | 7,739 |   |

----

                 * Includes allocated corporate general andadministrative expenses

10

----

In 2006, responsibility for the Company’s PublicUtilities Commissionregulated water and sewage transmission operations that were accountedfor in the Resort segment was transferred to the Community Development segmentand prior year amounts were restated for comparability.

The Community Developmentsegment as reorganized is comprised of all of the Company’s real estateentitlement, development, construction, sales, leasing and conservation activities,and Public UtilitiesCommission regulated water and sewage transmission operations.  The Community Development segment alsoincludes the Company’s 51% equity interest in Kapalua Bay Holdings LLC (Note14). Remaining in the Resort segment are the operations of three championshipgolf courses, a tennis facility, several retail outlets, and a vacation rental program (The KapaluaVillas) at the Kapalua Resort.

**10.**          AverageCommon Shares Outstanding Used to Compute Earnings Per Share

| ** ** | ** ** | **Three Months**       | ** ** | **Six Months**         | ** ** |
|------------|------------|-----------------------------|------------|-----------------------------|------------|
| ** ** | ** ** | **Ended June 30** | ** ** | **Ended June 30** | ** ** |
| ** ** | ** ** | **2006**                    | ** ** | **2005**                    | ** ** | **2006** | ** ** | **2005** | ** ** |
| Basic      |       | 7,256,800                   |       | 7,228,569                   |       | 7,255,806 |   | 7,227,576 |   |
| Diluted    |       | 7,256,800                   |       | 7,321,733                   |       | 7,352,414 |   | 7,322,835 |   |

 

For the three months endedJune 30, 2006, potentially dilutive common shares of 100,525 fromstock-based compensation arrangements are not included in the number of dilutedcommon shares because to do so would have an antidilutive effect on the earningper share amounts (i.e. decrease loss per common share).

**11.**          Componentsof Net Periodic Benefit Cost

| ** **                            | ** ** | **Three Months**        | ** ** | **Six Months**          | ** ** |
|---------------------------------------|------------|------------------------------|------------|------------------------------|------------|
| ** **                            | ** ** | **Ended June 30,** | ** ** | **Ended June 30,** | ** ** |
| ** **                            | ** ** | **2006**                     | ** ** | **2005**                     | ** ** | **2006** | ** ** | **2005** | ** ** |
| ** **                            | ** ** | **(in thousands)**      | ** ** |
| **Pension Benefits**                  | ** ** | ** **                   | ** ** | ** **                   | ** ** | ** ** | ** ** | ** ** | ** ** |
| Service cost                          |       | $                            | 401        |                         | $          | 429 |   | $ | 803 |   | $ | 858 |   |
| Interest cost                         |       | 756                          |       | 781                          |       | 1,512 |   | 1,562 |   |
| Expected return  on plan assets       |       | (808                         | )          | (810                         | )          | (1,616 | ) | (1,620 | ) |
| Amortization of  prior service cost   |       | 6                            |       | 12                           |       | 13 |   | 24 |   |
| Amortization of  transition liability |       | 12                           |       | 6                            |       | 24 |   | 13 |   |
| Recognized  actuarial loss            |       | 97                           |       | 126                          |       | 195 |   | 252 |   |
| Net expense                           |       | $                            | 464        |                         | $          | 544 |   | $ | 931 |   | $ | 1,089 |   |
| **Other  Benefits**                   | ** ** | ** **                   | ** ** | ** **                   | ** ** | ** ** | ** ** | ** ** | ** ** |
| Service cost                          |       | $                            | 97         |                         | $          | 91 |   | $ | 195 |   | $ | 182 |   |
| Interest cost                         |       | 238                          |       | 240                          |       | 475 |   | 480 |   |
| Amortization of  prior service cost   |       | (32                          | )          | (32                          | )          | (64 | ) | (64 | ) |
| Special  termination benefits         |       | —                       |       | —                       |       | — |   | — |   |
| Recognized  actuarial (gain)          |       | (51                          | )          | (68                          | )          | (101 | ) | (136 | ) |
| Net Expense                           |       | $                            | 252        |                         | $          | 231 |   | $ | 505 |   | $ | 462 |   |

 

The Company expects tocontribute $1.9 million to its defined benefit pension plans and expects tocontribute $727,000 to its other post-retirement benefit plans in 2006.

11

----

**12.**          Commitmentsand Contingencies

Pursuant to a 1999 settlement agreement with theCounty of Maui, the Company and several chemical manufacturers have agreed thatuntil December 1, 2039, they will pay for 90% of the capital cost toinstall filtration systems in any future water wells if the presence of anematocide commonly known as DBCP exceeds specified levels, and for the ongoingmaintenance and operating cost for filtration systems on existing and futurewells. The Company estimated its share of the cost to operate and maintain thefiltration systems for the existing wells and its share of the cost of a letterof credit used to secure its obligations, and recorded a liability of $250,000in 1999. The Company recognized an additional liability and expense of $48,000and $167,000 in 2005 and 2004, respectively, and paid $238,000 in 2005 for itsshare of the capital costs to install a filtration system for an existing well.The Company is presently not aware of any plans by the County of Maui toinstall other filtration systems or to drill any water wells in areas affectedby agricultural chemicals. Accordingly, a reserve for costs relating to anyfuture wells has not been recorded because the Company is not able toreasonably estimate the amount of liability (if any).

In addition to the matter noted above, there arevarious other claims and legal actions pending against the Company. In theopinion of management, after consultation with legal counsel, the resolution ofthese other matters is not expected to have a material adverse effect on theCompany’s financial position or results of operations.

The Company, as an investor in various affiliates(partnerships, limited liability companies), may under specific circumstancesbe called upon to make additional capital contributions.

At June 30, 2006, theCompany had commitments under signed contracts totaling $16.0 million, whichprimarily relate to real estate development projects.

**13.**          RelatedParty Transactions

In March 2006, theCompany entered into an agreement to sell 190 acres of Upcountry Maui land andimprovements thereon to David C. Cole, the Company’s Chairman, President andChief Executive Officer, for $4.9 million. As provided for in the purchase andsale agreement, in August 2006, the boundaries of the subject propertywere adjusted to accommodate natural topographic features based on completion ofa survey map; and accordingly, an amendment to the agreement revises the salesprice to $4.1 million for 157 acres. Prior to the closing of the sale, theCompany will lease a 3,500 square foot residence that is located on theproperty to Mr. Cole for $1,500 per month, which amount represents fairmarket value based on an estimate by a third party realtor. In August 2006, theCompany entered into an agreement to sell approximately 89 acres of UpcountryMaui land to Duncan MacNaughton, a member of the Company’s Board of Directors,for $3.6 million. The agreement includes a provision for the Company to leaseback the parcel at a nominal amount until August 30, 2007, should the saleclose prior to that date. In April 2006, the Company entered into anagreement to sell approximately 181 acres of Upcountry Maui land to a VicePresident/Community Development of the Company for $2.8 million. These landsale agreements were structured in compliance with the Company’s policy forrelated party real estate sales. Such policy requires an independent appraisalof the property value, allows for a 3% discount to the sales price in lieu ofbroker’s commissions, and requires review and approval of the sales price bythe Audit Committee of the Board of Directors (the “Committee”). The Committeereviewed the appraisals and the terms of the agreements with the otherindependent Directors, and the sales were approved by all of the independentDirectors. The sales agreements require a deposit of $50,000 upon execution andthe balance of the sales price is payable in cash upon closing of the sale. Subdivisionof the land parcels is a condition precedent to the closing of the sales. TheCompany estimates that the closings will occur in 2007. The subject propertieshad been previously designated for sale in 2004 as part of the real estate thatis considered non-core to the Company’s operations.

12

----

**14.**          KapaluaBay Holdings, LLC

The Company has a 51% ownership interest in KapaluaBay Holdings, LLC, a Delaware limited liability company (“Bay Holdings”), whichis the sole member of Kapalua Bay LLC, a Delaware limited liability company (“KapaluaBay”). Kapalua Bay intends to construct a residential development on land thatit owns at the site of the former Kapalua Bay Hotel, which was closed in April 2006,and a spa on an adjacent parcel of land that is owned by the Company and leasedto Kapalua Bay. Major operating and financial decisions require approval of allthe members in Bay Holdings and, accordingly, the Company’s investment in BayHoldings is being accounted for using the equity method, rather than beingconsolidated with the Company’s financial statements, because the Company doesnot have a controlling interest in Bay Holdings. In July 2006, Kapalua Bayentered into a construction loan agreement for the lesser of $370 million or61.6% of the total projected cost of the project. Upon closing of the loan, thelender disbursed an initial advance of $40.1 million to Kapalua Bay. Thelender is not obligated to make further advances until certain building permitsfor the project have been issued. The Company estimates that such buildingpermits will be issued in the fourth quarter of 2006. After issuance of thebuilding permits, Kapalua Bay may borrow up to an additional $44.9 million, fora total advance of $85 million. Subsequent borrowings by Kapalua Bay arecontingent upon sales of residential units equal to or exceeding $285.0 million.As of July 2006, there has been $166.3 million in sales. The loan iscollateralized by the project assets, including the fee simple interest in theland owned by Kapalua Bay, the adjacent spa parcel owned by the Company, andall of the sales contracts. The Company and the other members of the jointventure have guaranteed to the lender completion of the project and each member’spro rata share of costs and losses incurred by the lender as a result of theoccurrence of specified triggering events. The members’ guarantee to the lenderdoes not include payment in full of the loan. The Company contributed $510,000to the joint venture in June 2006.

Summarizedoperating statement information for Kapalua Bay Holdings, LLC for the threemonths and six months ended June 30, 2006 and 2005 were as follows:

| ** **        | ** ** | **Three Months**        | ** ** | **Six Months**          | ** ** |
|-------------------|------------|------------------------------|------------|------------------------------|------------|
| ** **        | ** ** | **Ended June 30,** | ** ** | **Ended June 30,** | ** ** |
| ** **        | ** ** | **2006**                     | ** ** | **2005**                     | ** ** | **2006** | ** ** | **2005** | ** ** |
| ** **        | ** ** | **(in thousands)**      | ** ** |
| Revenues          |       | $                            | 435        |                         | $          | 6,073 |   | $ | 6,668 |   | $ | 12,038 |   |
| Expenses          |       | 3,449                        |       | 6,130                        |       | 9,351 |   | 12,312 |   |
| Net Profit (Loss) |       | $                            | (3,014     | )                            | $          | (57 | ) | $ | (2,683 | ) | $ | (274 | ) |

 

Note:  Kapalua Bay Hotel was closed for demolitionin April 2006 in connection with the construction of the residentialdevelopment. The Company’s portion of the losses is recorded as “Equity inLosses of Affiliates” in the Condensed Consolidated Statements of Operations.

**15.**          SubsequentEvent

On July 14, 2006 (the “Effective Date”), KapaluaBay entered into a Construction Loan Agreement (the “Loan Agreement”) withLehman Brothers Holdings Inc., a Delaware corporation (“Lehman”), pursuant towhich Lehman agreed to loan to Kapalua Bay the lesser of $370,000,000 and 61.6%of the total projected cost of the project in order to fund various stages ofthe project pursuant to the terms and conditions set forth therein (the “Loan”).Interest accrues on the Loan at a floating rate equal to the one (1) monthLIBOR rate plus two hundred twenty (220) basis points, or 2.2% (the “AdjustedLIBOR Rate”). Subject to certain limitations, during the term of the Loan,Kapalua Bay may elect to have the then-current Adjusted LIBOR Rate apply tosome or all of the outstanding Loan amount. All principal and interest amountsdue under the Loan shall be due and payable in full on August 1, 2009unless Kapalua Bay elects to extend the maturity date for up to two additionalterms of twelve (12) months, which 

13

----

elections are subject tothe satisfaction of certain conditions. Kapalua Bay may not prepay the Loan atany time prior to the second anniversary of the Effective Date, but may prepaythe Loan thereafter, provided that it pays certain costs and fees as set forthin the Loan Agreement. Kapalua Bay paid Lehman a loan fee of $3.7 million outof the proceeds of the initial advance under the Loan Agreement, which paymentrepresents one percent (1.0%) of the maximum Loan amount and is non-refundableregardless of when the Loan is repaid or whether any further advances of theLoan are made. Disbursements under the Loan Agreement are contingent upon,among other things, no event of default or material adverse change occurringwith respect to Kapalua Bay or the project. The Loan is not revolving in natureand amounts repaid may not be subsequently advanced. All Loan proceedsdisbursed by Lehman shall be used only for specified budgeted items for whichsuch proceeds were advanced. See Note 14.

14

----

**Item 2.**                        Management’sDiscussion and Analysis of Financial Condition and Results of Operations

The following discussionand analysis of our financial condition and results of operations should beread in conjunction with our audited consolidated financial statements andrelated notes included in our Annual Report on Form 10-K for theyear ended December 31, 2005 and the unaudited consolidated financialstatements and related notes included in this Quarterly Report on Form 10-Q.Depending upon the context, the terms the “Company”, “we,” “our,” and “us,”refers to either the Company alone, or the Company and its subsidiaries.

***Overview of the Company***

Maui Land &Pineapple Company, Inc. is a Hawaii corporation, the successor to abusiness organized in 1909. Principal subsidiaries include Maui PineappleCompany, Ltd. and Kapalua Land Company, Ltd. Our reportable operating segmentsare Agriculture, Resort and Community Development.

*Agriculture*

The Agriculture segment primarily includes growing,packing, processing, and marketing processed and fresh pineapple. The fruitgrown by us principally consists of three types of pineapple, *Maui Gold*and *Hawaiian Gold*® (usually sold as fresh, whole fruit), Champaka(largely used for canning) and fresh organic pineapple.

Our current strategy is to expand our presence in thefresh pineapple market, while selectively reducing our reliance on theprocessed pineapple market. Therefore, over recent years, we have decreased thetonnage of fruit going to our cannery and commensurately reduced the number ofprocessed pineapple customers that we serve.

Our strategy focuses on marketing only the highestquality of fresh pineapple. We use our processed pineapple operations tocomplement the fresh operations, and direct fruit to either our processed orour fresh packing facility at the time of harvest based on a variety offactors, including market conditions, fruit size and fruit quality. Thetransition of our Agriculture operations continues with an emphasis onautomating many labor-intensive functions and upgrading our workforce throughselective training and performance-based compensation programs.

The fresh fruit market isa year-round business, which requires consistency of supply. Over the past twoyears, we have made significant progress in changing our agronomic practicesand planting schedules to produce a more consistent and predictable supply offruit throughout the year. In addition, we have made significant progress inimplementing improved crop maintenance and agronomic practices that haveimproved our plant yields (tons of fruit per acre) and fruit quality.

*Resort*

The Kapalua Resort is partof approximately 21,800 acres of our land-holdings in West Maui, most of whichremain as open space. Presently, the Kapalua Resort development includesapproximately 2,575 acres bordering the ocean with five white sand beachesand includes The Ritz-Carlton, Kapalua, eight residential subdivisions, threechampionship golf courses (The Bay, The Village and The Plantation), aten-court tennis facility, a shopping center, several restaurants, and over 800single family residential lots, condominiums and homes. We operate KapaluaResort’s three golf courses, the tennis facility, several retail shops, avacation rental program (The Kapalua Villas), and provide certain services tothe Resort. As of June 30, 2006 we had 259 units in the Kapalua Villasvacation rental program.

15

----

*CommunityDevelopment*

The Community Development segment includes our realestate entitlement, development, construction, sales, leasing, and conservationactivities. The focus for this segment is the creation of holistic communities,including a broad range of residential products on Maui. The segment alsoincludes the operations of Kapalua Realty Company, our general brokerage real estatecompany located within the Resort, and our Public Utilities Commissionregulated water and sewage operations that service the Kapalua Resort.

The Community Development segment also includes themanagement of several leases, including the ground lease underlying TheRitz-Carlton, Kapalua, and our 51% equity interest in Kapalua Bay Holdings LLC,the limited liability company that purchased the Kapalua Bay Hotel and theadjacent retail shops. Kapalua Bay Holdings LLC has begun demolition of theKapalua Bay Hotel in order to develop new whole and fractional residentialunits, an ocean-side spa, and a beach club at the Kapalua Bay Hotel’s currentlocation.

We have approximately 1,700 acres of land in Maui thatare at various stages in the land entitlement process. We must obtainappropriate entitlements for land that we intend to develop or use forconstruction. Securing proper land entitlement is a process that requiresobtaining county, state and federal approvals, which can take several years tocomplete and entails a variety of risks.

The CommunityDevelopment segment is working on a number of real estate development andKapalua Resort revitalization projects, some of which are as follows:

·       HonoluaRidge Phase II is a 25-lot subdivision of agricultural zoned land at theKapalua Resort, which is presently under construction and being sold. The lotsrange in size from 4 to 30 acres.

·       KapaluaMauka is a 690-unit residential, golf and commercial project, whichreceived zoning approval in February 2006. The first phase of KapaluaMauka is scheduled to break ground in early 2007 and detailed planning iscurrently underway.

·       HonoluaVillage is 12,000 square feet of commercial space in the central area ofKapalua Resort, which is currently under construction and will house, amongother tenants, Kapalua Realty, Kapalua Logo Store, Sansei Restaurant, La PerleFine Jewelry and the new Kapalua real estate sales and information center.

·       Pulelehuais a proposed “new urbanism” community of approximately 882 units in West Mauithat will include a variety of housing types, mixed commercial and residentialuses, and neighborhood serving commercial uses. Over 50% of the homes andapartments are intended to be affordable for working families as defined by theCounty of Maui. We are presently in the entitlement phase of this project.

·       Hali`imaile Town is aplanned new town in Upcountry Maui that we expect to be a holistic communitywhere sustainable agriculture, education, and green building principles arecore design elements. We are presently in the conceptual design phase of thisproject, with entitlement applications to be submitted in 2007. We areproceeding with the design of a mixed-use residential and commercial area oneleven acres of existing urban-zoned land.

***Current Developments***

In the secondquarter of 2006, some of the Company’s significant transactions, events and keyinitiatives include the following:

·       Inearly April, the Kapalua Bay Hotel held its final guest night and closed itsdoors. In conjunction with our joint venture partners in Kapalua Bay HoldingsLLC, we began the recycling and upcycling 

16

----

of all salvable materialswith the intent of reusing over 90% of the material from the existing hotel. Demolitionof the property commenced in July.

·       InMay, our shareholders re-elected David C. Cole, Walter A. Dods Jr. and Fred E.Trotter III, as Class I Directors.

·       InMay, our shareholders approved a 1,000,000 share increase in authorized sharesto be placed in the newly approved 2006 Equity and Incentive Award Plan.

·       InMay, our Resort and Community Development segments implemented a new accountingsystem.

·       InJune, the Pulelehua project was approved by the State Land Use Commission andthe County Planning Commission recommended approval of the project to the MauiCounty Council. We are currently in the process of securing a date for hearingof the project by the Maui County Council Land Use Committee.

·       InJune, Kapalua Bay LLC began to finalize binding sales contracts for the wholeownership units that will be constructed on the Kapalua Bay Hotel site and inJuly, we began sales of fractional ownership units.

·       In June, our new freshfruit packing line at Kahului commenced operations.

**Critical AccountingPolicies and Estimates**

The preparation ofconsolidated financial statements in conformity with accounting principlesgenerally accepted in the United States of America requires the use ofaccounting estimates. Changes in these estimates and assumptions are consideredreasonably possible and may have a material effect on the consolidatedfinancial statements and thus actual results could differ from the amountsreported and disclosed herein. The Company’s critical accounting policies thatrequire the use of estimates and assumptions were discussed in detail in the mostrecently filed Form 10-K and have not changed materially from thatdiscussion.

**RESULTS OFOPERATIONS**

***Three Months Ended June 30, 2006 compared toThree Months Ended June 30, 2005***

**CONSOLIDATED**

| ** **                         | ** ** | **Three Months Ended June 30,**              | ** ** |
|------------------------------------|------------|------------------------------------------------------------------|------------|
| ** **                         | ** ** | **2006**                                                         | ** ** | **2005** | ** ** | **difference** | ** ** |
| ** **                         | ** ** | **(in millions, except  per share amounts)** | ** ** |
| *Consolidated  Revenues*           |       | $                                                                | 33.6       |   | $ | 51.2 |   |   | $ | (17.6 | ) |   |
| *Net Income (Loss)*                |       | $                                                                | (2.6       | ) | $ | 6.5 |   |   | $ | (9.1 | ) |   |
| *Basic  Earnings Per Common Share* |       | $                                                                | (0.36      | ) | $ | 0.90 |   |   | $ | (1.26 | ) |   |

 

We reported a net loss of$2.6 million ($.36 per share) for the second quarter of 2006 compared to netincome of $6.5 million ($.90 per share) for the second quarter of 2005. Consolidatedrevenues for the second quarter of 2006 were $33.6 million compared to $51.2million for the second quarter of 2005. The reduction in consolidated resultsin the second quarter of 2006 was due to a decrease of $1.9 million in revenuesfrom the Agriculture segment and a decrease of $19.3 million in revenues fromthe Community Development segment, partially offset by an increase of $3.4million in revenues from the Resort segment. The primary difference was adecrease of $14.5 million in revenues and $10.5 million in consolidated pre-taxprofit from land sales that were recorded in the three months ended June 30,2005.

17

----

*General andAdministrative*

Consolidated general and administrative expensesdecreased by 1% to $9.1 million for the second quarter of 2006 from $9.2million for the second quarter of 2005.

Themajor components of the difference in general and administrative expenses wereas follows:

| ** **                                         | ** ** | **Three Months Ended June 30,** | ** ** |
|----------------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                                         | ** ** | ** 2006 **                                | ** ** | ** 2005 ** | ** ** | **difference** | ** ** |
| ** **                                         | ** ** | **(in millions)**                              | ** ** |
| Salaries &  wages                         |       |                                                | $          | 2.8 |   |   |   | $ | 2.3 |   |   |   | $ | 0.5 |   |   |
| Employee  incentives & stock compensation |       |                                                | 0.9        |   |   |   | 1.0 |   |   |   | (0.1 | ) |   |
| Professional  services                             |       |                                                | 1.2        |   |   |   | 1.5 |   |   |   | (0.3 | ) |   |
| Depreciation  expense                              |       |                                                | 1.3        |   |   |   | 1.7 |   |   |   | (0.4 | ) |   |
| Other                                              |       |                                                | 2.9        |   |   |   | 2.7 |   |   |   | 0.2 |   |   |
| Total                                              |       |                                                | $          | 9.1 |   |   |   | $ | 9.2 |   |   |   | $ | (0.1 | ) |   |

 

The increase in salaries and wages in the secondquarter of 2006 compared to the second quarter of 2005 was largely due to personneland wage increases, as well as salaries and wages for our Agriculture segmentpersonnel who were taken out of operations and are being trained for other work.These employees were removed from pineapple operations in connection with thetransition to a less labor-intensive operation that is more focused onfresh fruit.

The decrease in professional services primarilyreflects costs incurred in 2005 to maintain and adjust the accounting systemthat was being used by our Agriculture segment. A decision was made in thefourth quarter of 2005 to replace accounting information technology systems andstandardize our primary accounting systems and processes used by all of ourbusinesses.

The reduction in depreciation expense charged togeneral and administrative expense reflects the change in estimated usefullives for our cannery and can plant assets. In the second quarter of 2005, weestimated that the new cannery and can plant would be in service by the end ofthe second quarter of 2006. In January 2006, our plans were revised tomove forward with the fresh fruit packing facility and to postpone thecompletion of the cannery and can plant renovations to 2007. We prospectivelyrevised the depreciation charges in the fourth quarter of 2005 for this changein estimated useful lives of the cannery and can plant. The reduction indepreciation expense for the cannery and can plant was partially offset by theacceleration of depreciation charges for the agriculture and corporateaccounting systems. These accounting system assets have been fully depreciatedas of June 30, 2006, as the new accounting system was placed in service asof the beginning of the third quarter of 2006.

General and administrativeexpenses are incurred at the corporate level and at the operating segment level.All general and administrative expenses incurred at the corporate level areallocated to the operating segments. Such allocations are consistent with ourmanagement’s evaluation of service provided to the operating segments.

*Interest Expense*

Interest expense was -0-for the second quarter of 2006 compared to $95,000 for the second quarter of2005. Interest incurred in the second quarter of 2006 was $488,000, all ofwhich was capitalized to construction projects. Our major capital projects underconstruction in 2006 include Honolua Ridge Phase II, Honolua Village, the freshprocessing facility and offices, and replacement of our accounting systems. Inthe second quarter of 2005, interest incurred was $293,000 of which $198,000was capitalized. Our effective interest rate on borrowings was 7.4% in thesecond quarter of 2006 compared to 6.2% in the second quarter of 2005.

18

----

**AGRICULTURE**

| ** **                   | ** ** | **Three Months Ended June 30,** | ** ** |
|------------------------------|------------|-----------------------------------------------------|------------|
| ** **                   | ** ** | **2006**                                            | ** ** | **2005** | ** ** | **difference** | ** ** |
| ** **                   | ** ** | **(in millions)**                              | ** ** |
| *Revenues*                   |       | $                                                   | 14.3       |   | $ | 16.3 |   |   | $ | (2.0 | ) |   |
| *% of consolidated revenues* | * *   | *43*                                                | *%*        | *32* | *%* |   |   |   |   |
| *Operating  Loss*            |       | $                                                   | (3.4       | ) | $ | (2.6 | ) |   | $ | (0.8 | ) |   |

 

The Agriculture segment produced an operating loss of$3.4 million for the second quarter of 2006 compared to an operating loss of$2.6 million for the second quarter of 2005. Revenues for the second quarter of2006 were $14.3 million or 12% lower than the second quarter of 2005.

The Agriculture segmentrevenues were lower in the second quarter of 2006 compared to the secondquarter of 2005 because lower case volume of processed pineapple sales wereonly partially offset by higher case volume of fresh pineapple sales. Additionally,heavy state-wide rains and cooler temperatures than normal during 2006 resultedin some delays in fruit maturity to the third quarter. Operating lossesreported by the Agriculture segment for the second quarters of 2006 and 2005included $1.1 million and $1.2 million, respectively, of accelerateddepreciation charges for assets where the estimated useful lives have beenreduced because of changes in our pineapple operations. In addition, theAgriculture segment recorded charges of $764,000 in the second quarter of 2006related to inventories that were considered obsolete with the change to the newfresh processing facility that went into operation in June 2006; and$525,000 of charges related to re-training employees.

*Canned and FreshOperations*

The case volume of fresh pineapple sales increased by38% and the average revenue per case of fresh pineapple sold decreased by 2% inthe second quarter of 2006 compared to the second quarter of 2005. Revenuesfrom fresh pineapple sales were approximately 54% of the Agriculture segmentnet sales for the second quarter of 2006, compared to approximately 35% for thesecond quarter of 2005.

The case volume of processed pineapple sales decreasedby 42% for the second quarter of 2006 as compared to the second quarter of 2005primarily reflecting our strategy to reduce supply to selected retail marketsegments. The average sales prices for our processed pineapple productsincreased by approximately 7% for the second quarter of 2006 compared to thesecond quarter of 2005.

Processed pineapple sold to the U. S. Government(primarily to the Department of Agriculture) comprised approximately 16% of ourcase volume of canned pineapple sales in the second quarter of 2006 compared to39% in the second quarter of 2005. The decrease in the percentage of processedpineapple sales to the U. S. Government is a result of unanticipated sales thatoccurred in 2005 that were not repeated in 2006.

The Agriculture segment cost of sales was lower by 14%in the second quarter of 2006 compared to the second quarter 2005, primarilyreflecting the reduced sales volume of processed pineapple partially offset bythe increased sales volume of fresh pineapple. The average per unit cost ofsales for processed pineapple was higher in 2006 compared to 2005 because ofthe reduced tonnage of fruit being processed, while the average per unit costof sales for fresh pineapple was about the same for both periods.

Agriculture segmentshipping and marketing cost increased by $426,000 or 20%, in the second quarterof 2006 as compared to the second quarter of 2005 principally reflecting thehigher sales volume of fresh pineapple and increased freight fuel surchargecosts. However, the average shipping and selling cost for our fresh pineapplewas lower in the second quarter of 2006 compared to the second quarter of 2005primarily because in 2006 we shipped approximately 69% our fresh product to themainland United States 

19

----

by oceantransportation (as compared to air freight, which is more costly) compared to62% in the second quarter of 2005.

**RESORT**

| ** **                   | ** ** | **Three Months Ended June 30,** | ** ** |
|------------------------------|------------|-----------------------------------------------------|------------|
| ** **                   | ** ** | **2006**                                            | ** ** | **2005** | ** ** | **difference** | ** ** |
| ** **                   | ** ** | **(in millions)**                              | ** ** |
| *Revenues*                   |       | $                                                   | 11.4       |   | $ | 8.1 |   |   | $ | 3.3 |   |   |
| *% of consolidated revenues* | * *   | *34*                                                | *%*        | *16* | *%* |   |   |   |   |
| *Operating  Loss*            |       | $                                                   | (1.9       | ) | $ | (2.3 | ) |   | $ | 0.4 |   |   |

 

The Resort segment reported an operating loss of $1.9million for the second quarter of 2006 compared to $2.3 million for the secondquarter of 2005. Resort segment revenues were $11.4 million for the secondquarter of 2006 compared to $8.1 million for the second quarter of 2005, anincrease of 41%, as a result of increased revenues from the Kapalua Villas andfrom our golf operations primarily due to rate increases.

The Plantation Course was closed during the entiresecond quarter of 2005 for renovation of the greens and bunkers. The closure ofthat golf course for four months in 2005 negatively impacted the operatingresults from Resort operations in the second quarter of 2005 compared to thesame period in 2006.

Hotel and condominium roomoccupancies at the Kapalua Resort and to a somewhat lesser extent for Maui ingeneral, largely drives resort activity as reflected by increased golf play andmerchandise sales. In early April 2006, the Kapalua Bay Hotel held itsfinal guest night and the hotel was permanently closed. This resulted in a 23%reduction in available rooms at Kapalua Resort for the second quarter of 2006compared to the second quarter of 2005, and as expected, negatively affectedthe results of Resort operations in the second quarter of 2006.

*Golf, Retail andVillas*

Revenues from golf operations increased by 38% for thesecond quarter of 2006 compared to the second quarter of 2005. Paid rounds ofgolf increased by 5% and average green and cart fees increased by 30% in thesecond quarter of 2006 compared to the second quarter of 2005.

Resort retail sales for the second quarter of 2006were about 1% higher than sales in the second quarter of 2005, reflecting lowersales in 2005 because of the closure of the Plantation Course, partially offsetby the reduction in retail area in the second quarter of 2006. InMay 2006, we closed our Logo Shop, Kids Shop and Home Store comprisingapproximately 5,800 square feet in the Kapalua Shops following the closure ofthe adjacent Kapalua Bay Hotel. We expect to have approximately 1,700 squarefeet of retail area for similar merchandise when Honolua Village opens in thecentral resort area in September 2006.

20

----

Revenues from the KapaluaVillas were higher in the second quarter of 2006 compared to the second quarterof 2005 reflecting a 14% higher average room rate and 14% increase in thenumber of occupied rooms. The increase in average room rate in the second quarterof 2006 compared to the second quarter of 2005 reflects an increase in directbookings and a more aggressive pricing strategy across all channels and productcategories.

**COMMUNITY DEVELOPMENT**

| ** **                   | ** ** | **Three Months Ended June 30,** | ** ** |
|------------------------------|------------|-----------------------------------------------------|------------|
| ** **                   | ** ** | **  2006  **                    | ** ** | **  2005  ** | ** ** | **difference** | ** ** |
| ** **                   | ** ** | **(in millions)**                                   | ** ** |
| *Revenues*                   |       |                                                | $          | 7.5 | * * |   |   | $ | 26.8 | * * |   |   | $ | (19.3 | ) |   |
| *% of consolidated revenues* | * *   | * *                                            | *22*       | *%* | * * | * * | *52* | *%* |   |   |   |   |   |
| *Operating  Profit*          |       |                                                | $          | 0.7 | * * |   |   | $ | 15.4 | * * |   |   | $ | (14.7 | ) |   |

 

The Community Development segment reported anoperating profit of $707,000 for the second quarter of 2006 compared to $15.4million for the second quarter of 2005. Revenues from this operating segmentwere $7.5 million for the second quarter of 2006 compared to $26.8 million forthe second quarter of 2005.

Lower results in 2006 primarily reflect land salestransactions during the second quarter of 2005. In the second quarter of 2005,the Company concluded the sale of approximately 25 acres of land andimprovements to the Hui No`eau Visual Arts Center. The Company also completedland sales of approximately 129 acres of Upcountry Maui land. Revenues of $14.5million and operating profit of $10.5 million from these two real estate salestransactions were recognized by the Community Development segment in the secondquarter of 2005.

Our equity in the lossesof Kapalua Bay Holdings LLC was $1.5 million in the second quarter of 2006compared to $29,000 in the second quarter of 2005. The increased loss wasprimarily the result of closure of the Kapalua Bay Hotel in April 2006 andthe preparation for and commencement of sales and marketing efforts for thewhole and fractional condominium units that will comprise the Residences atKapalua Bay project.

*Real Estate Sales*

Our Honolua Ridge Phase II subdivision consists of 25agricultural-zoned lots, which began selling in August 2005. Through theend of the second quarter of 2006, ten lots had closed escrow, with one lotclosing in the second quarter of 2006. Revenues and profit from this projectare being recognized on a percentage-of-completion method, under which werecognized revenues of $5.4 million in the second quarter of 2006. HonoluaRidge Phase II was approximately 69% complete at June 30, 2006. Ourbalance sheet at June 30, 2006 included deferred revenues of $7.3 millionrelated to Honolua Ridge Phase II, which represents cash received from the saleof lots that have not been recognized as revenues under thepercentage-of-completion method.

In the second quarter of2005, we recognized revenues of $9.9 million on a percentage-of-completionmethod, from our Honolua Ridge Phase I. This subdivision was approximately 92%complete at the end of the second quarter of 2005 and 22 lot sales had closedescrow through that date. All of the Honolua Ridge Phase I lots were sold andconstruction of the project was 100% complete by the end of 2005.

21

----

***Six Months Ended June 30, 2006 compared to SixMonths Ended June 30, 2005***

**CONSOLIDATED**

| ** **                         | ** ** | **Six Months Ended June 30,**                    | ** ** |
|------------------------------------|------------|----------------------------------------------------------------------|------------|
| ** **                         | ** ** | **     2006     ** | ** ** | **     2005     ** | ** ** | **     difference     ** | ** ** |
| ** **                         | ** ** | **(in millions, except per share amounts)** | ** ** |
| *Consolidated Revenues*            |       |                                                                 | $          | 92.5 |   |   |   | $ | 89.3 |   |   |   | $ | 3.2 |   |   |
| *Net Income*                       |       |                                                                 | $          | 11.2 |   |   |   | $ | 7.7 |   |   |   | $ | 3.5 |   |   |
| *Basic  Earnings Per Common Share* |       |                                                                 | $          | 1.54 |   |   |   | $ | 1.07 |   |   |   | $ | 0.47 |   |   |

 

We reported net income of$11.2 million ($1.54 per share) for the first six months of 2006 compared tonet income of $7.7 million ($1.07 per share) for the first six months of 2005. Consolidatedrevenues for the first six months of 2006 were $92.5 million compared to $89.3million for the first six of 2005. The improved results were attributable to thesale of non-core land in Upcountry Maui recorded by our Community Developmentsegment and improved operating results from our Resort operations, partiallyoffset by lower results from the Agriculture segment.

*General andAdministrative*

Consolidated general and administrative expensesincreased by 14% to $18.8 million for the first six months of 2006 from $16.5million for the first six months of 2005.

Themajor components of the difference in general and administrative expenses wereas follows:

| ** **                                         | ** ** | **Six Months Ended June 30,** | ** ** |
|----------------------------------------------------|------------|---------------------------------------------------|------------|
| ** **                                         | ** ** | **2006**                                          | ** ** | **2005** | ** ** | **difference** | ** ** |
| ** **                                         | ** ** | **(in millions)**                            | ** ** |
| Salaries &  wages                         |       | $                                                 | 5.5        |   | $ | 4.1 |   |   | $ | 1.4 |   |   |
| Employee  incentives & stock compensation |       | 2.2                                               |       | 1.4 |   |   | 0.8 |   |   |
| Professional  services                             |       | 2.5                                               |       | 2.5 |   |   | — |   |   |
| Depreciation  expense                              |       | 2.6                                               |       | 2.5 |   |   | 0.1 |   |   |
| Other                                              |       | 6.0                                               |       | 6.0 |   |   | — |   |   |
| Total                                              |       | $                                                 | 18.8       |   | $ | 16.5 |   |   | $ | 2.3 |   |   |

 

Approximately $700,000 of the increase in salaries andwages in the first six months of 2006 was due to salaries and wages for ourAgriculture segment personnel who were taken out of operations and are beingtrained for other work. These employees were removed from the pineappleoperations in connection with the transition to a less labor-intensiveoperation that is more focused on fresh fruit. The remaining increase insalaries and wages were the result of increases in personnel and wageadjustments. The increase in employee incentives and stock compensation expensewas principally the result of accruals for performance-based incentives,reflecting our increased emphasis on performance-based pay plans.

General and administrativeexpenses are incurred at the corporate level and at the operating segment level.All general and administrative expenses incurred at the corporate level areallocated to the operating segments. Such allocations are consistent with ourmanagement’s evaluation of the services provided to the operating segments.

*Interest Expense*

Interest expense was$29,000 for the first six months of 2006 compared to $237,000 for the first sixmonths of 2005. Interest incurred in the first half of 2006 was $821,000, ofwhich $792,000 was capitalized to construction projects. Our major capitalprojects under construction in 2006 include Honolua Ridge 

22

----

PhaseII, Honolua Village, the fresh processing facility and offices, and replacementof our accounting systems. In the first half of 2005, interest incurred was$574,000 of which $337,000 was capitalized. Our effective interest rate onborrowings was 7.3% in the first half of 2006 compared to 6.0% in the firsthalf of 2005.

**AGRICULTURE**

| ** **                   | ** ** | **Six Months Ended June 30,** | ** ** |
|------------------------------|------------|---------------------------------------------------|------------|
| ** **                   | ** ** | **2006**                                          | ** ** | **2005** | ** ** | **difference** | ** ** |
| ** **                   | ** ** | **(in millions)**                            | ** ** |
| *Revenues*                   |       | $                                                 | 30.3       |   | $ | 32.0 |   |   | $ | (1.7 | ) |   |
| *% of consolidated revenues* | * *   | *33*                                              | *%*        | *36* | *%* |   |   |   |   |
| *Operating  Loss*            |       | $                                                 | (5.7       | ) | $ | (4.7 | ) |   | $ | (1.0 | ) |   |

 

The Agriculture segmentproduced an operating loss of $5.7 million for the first six months of 2006compared to an operating loss of $4.7 million for the first six months of 2005.Revenues for the first six months of 2006 were $30.3 million or 6% lower thanthe first six months of 2005 primarily due to a lower case volume of processedpineapple sales that were only partially offset by higher case volume of freshpineapple sales. Additionally, heavy state-wide rains and cooler temperaturesthan normal during 2006 resulted in some delays in fruit maturity to the thirdquarter. Operating losses reported by the Agriculture segment for the first sixmonths of 2006 and 2005 include $2.2 million and $1.4 million, respectively, ofaccelerated depreciation charges related to assets where the estimated usefullives were reduced because of changes in our pineapple operations. In addition,the Agriculture segment recorded charges of $764,000 in June 2006 relatedto inventories that were considered obsolete with the change to the new freshprocessing facility that went into operation in June 2006; and $973,000 ofcharges related to re-training employees.

*Canned and FreshOperations*

The case volume of fresh pineapple sales increased by37% and the average revenue per case of fresh pineapple sold decreased by 1% inthe first six months of 2006 compared to the first six months of 2005. Revenuesfrom fresh pineapple sales were approximately 48% of the Agriculture segmentnet sales for the first six months of 2006, compared to approximately 33% forthe first six months of 2005.

The case volume of processed pineapple sales decreasedby 34% for the first six months of 2006 as compared to the first six months of2005 primarily reflecting our strategy to reduce supply to selected retailmarket segments. The average sales prices for our processed pineapple productsincreased by approximately 12% for the first six months of 2006 compared to thesame period of 2005.

Processed pineapple sold to the U. S. Government(primarily to the Department of Agriculture) comprised approximately 31% of ourcase volume of canned pineapple sales in the first six months of 2006 comparedto 39% in the first six months of 2005. The decrease in the percentage ofprocessed pineapple sales to the U. S. Government is a result of unanticipatedsales in 2005 that did not recur in 2006.

The Agriculture segment cost of sales was lower by 10%in the first six months of 2006 compared to the first six months of 2005,primarily reflecting the reduced sales volume of processed pineapple partiallyoffset by the increased sales volume of fresh pineapple. The average per unitcost of sales for processed pineapple was higher in 2006 compared to 2005because of the reduced tonnage of fruit being processed, while the average perunit cost of sales for fresh pineapple was about the same for both periods.

Agriculture segmentshipping and marketing cost increased by $553,000 or 13%, in the first sixmonths of 2006 as compared to the same period of 2005 principally reflectingthe higher sales volume of fresh pineapple and increased freight fuel surchargecosts. However, the average shipping and selling cost for 

23

----

ourfresh pineapple was lower in the first six months of 2006 compared to the firstsix months of 2005 primarily because in 2006 we shipped approximately 72% ofour fresh product to the mainland United States by ocean transportation (ascompared to air freight, which is more costly) compared to 64% in the first sixmonths of 2005.

**RESORT**

| ** **                   | ** ** | **Six Months Ended June 30,**        | ** ** |
|------------------------------|------------|----------------------------------------------------------|------------|
| ** **                   | ** ** | **    2006    ** | ** ** | **    2005    ** | ** ** | **    inc    ** | ** ** |
| ** **                   | ** ** | **(in millions)**                                   | ** ** |
| *Revenues*                   |       |                                                     | $          | 24.4 | * * |   |   | $ | 21.0 | * * |   |   | $ | 3.4 |   |   |
| *% of consolidated revenues* | * *   | * *                                                 | *26*       | *%* | * * | * * | *24* | *%* |   |   |   |   |   |
| *Operating  Loss*            |       |                                                     | $          | (1.4 | ) |   |   | $ | (2.0 | ) |   |   | $ | 0.6 |   |   |

 

The Resort segment reported an operating loss of $1.4million for the first six months of 2006 compared to $2.0 million for the firstsix months of 2005. Resort segment revenues were $24.4 million for the firstsix months of 2006 compared to $21.0 million for the first six months of 2005,an increase of 16% as a result of increased revenues from the Kapalua Villasand from our golf operations primarily due to rate increases.

The Plantation Course was closed from April throughJuly of 2005 for renovation of the greens and bunkers. The closure of thatgolf course for four months in 2005 negatively impacted the operating resultsfrom Resort operations in the first six months of 2005 compared to the sameperiod in 2006.

Hotel and condominium roomoccupancies at the Kapalua Resort, and to a somewhat lesser extent for Maui ingeneral, largely drive resort activity as reflected by increased golf play andmerchandise sales. In early April 2006, the Kapalua Bay Hotel held itsfinal guest night and the hotel was permanently closed. This resulted in a 10%reduction in available rooms for the first six months of 2006 compared to thefirst six months of 2005, and as expected, negatively affected the results ofResort operations in the first six months of 2006.

*Golf, Retail andVillas*

Revenues from golf operations increased by 3% for thefirst six months of 2006 compared to the first six months of 2005. Overall,paid rounds of golf increased by 1%, and average green and cart fees increasedby 23% in the first six months of 2006 compared to the first six months of2005.

Resort retail sales for the first six months of 2006were about 2% lower than sales in the first six months of 2005. Lower retailsales reflect the closure of the Kapalua Bay Hotel and the closure of our LogoShop, Kids Shop and Home Store in May 2006, and our Kapalua CollectionStore in March 2006. These shops were adjacent to the hotel andrepresented approximately 6,600 square feet of retail area. We expect to haveapproximately 1,700 square feet of retail area for merchandise when HonoluaVillage opens in the central resort area in September 2006.

Revenues from the KapaluaVillas increased in the first six months of 2006 compared to the first sixmonths of 2005 primarily reflecting a 22% increase in the average room rates,partially offset by a lower number of occupied rooms. The increase in averageroom rates were due to a greater number of direct bookings and a moreaggressive pricing strategy across all channels and product categories.

24

----

**COMMUNITY DEVELOPMENT**

| ** **                   | ** ** | **Six Months Ended June 30,** | ** ** |
|------------------------------|------------|---------------------------------------------------|------------|
| ** **                   | ** ** | **  2006  **                  | ** ** | **  2005  ** | ** ** | **  inc  ** | ** ** |
| ** **                   | ** ** | **(in millions)**                            | ** ** |
| *Revenues*                   |       |                                              | $          | 37.6 | * * |   |   | $ | 36.2 | * * |   |   | $ | 1.4 |   |   |
| *% of consolidated revenues* | * *   | * *                                          | *41*       | *%* | * * | * * | *41* | *%* |   |   |   |   |   |
| *Operating  Profit*          |       |                                              | $          | 24.1 | * * |   |   | $ | 19.3 | * * |   |   | $ | 4.8 |   |   |

 

The Community Development segment reported anoperating profit of $24.1 million for the first six months of 2006 compared to$19.3 million for the first six months of 2005. Revenues from this operatingsegment were $37.6 million for the first six months of 2006 compared to $36.2million for the first six months of 2005.

In the first six months of 2006, we recognizedrevenues of $22.9 million and a pre-tax gain of $21.5 million from the sale ofapproximately 1,800 acres of non-core Upcountry Maui land. In the first sixmonths of 2005, we recognized revenues of $14.5 million and operating profit of$10.5 million from two real estate sales transactions. In June of 2005, weconcluded the sale of approximately 25 acres of land and improvements to theHui No`eau Visual Arts Center. We also sold approximately 129 acres ofUpcountry Maui land.

Our equity in the lossesof Kapalua Bay Holdings, LLC was $1.4 million in the first six months of 2006compared to $140,000 in the first six months of 2005. The increased loss wasthe result of closure of the Kapalua Bay Hotel in April 2006 and thepreparation for and commencement of sales and marketing efforts for the wholeand fractional condominium units that will comprise the Residences at KapaluaBay project.

*Real Estate Sales*

Honolua Ridge Phase II residential subdivisionconsists of 25 agricultural lots, which began selling in August 2005. Throughthe end of the first six months of 2006, ten lots had closed escrow, with threelot sales closing in the first half of 2006. Revenues and profit from thisproject are being recognized on a percentage-of-completion method, under whichwe recognized revenues of $11.1 million in the first six months of 2006. HonoluaRidge Phase II was approximately 69% complete at June 30, 2006. Ourbalance sheet at June 30, 2006 included deferred revenues of $7.3 millionrelated to Honolua Ridge Phase II, which represents cash received from the saleof the lots that have not been recognized as revenues under thepercentage-of-completion method.

In the first six months of2005, we were selling lots in Honolua Ridge Phase I and recognized revenues of$17.2 million on a percentage-of-completion method. Honolua Ridge Phase I wasapproximately 92% complete at the end of the first six months of 2005 and 22lot sales had closed escrow through that date. All of the Honolua Ridge Phase Ilots were sold and construction of the project was 100% complete by the end of2005.

**LIQUIDITY ANDCAPITAL RESOURCES**

*Debt Position*

At June 30, 2006, ourtotal debt, including capital leases, was $19.3 million, compared to $11.1million at December 31, 2005. The increase was primarily due to capitalexpenditures and cash for operating activities. At June 30, 2006, theCompany had unused long-term credit lines of $24.5 million.

25

----

*Operating CashFlows*

In thefirst six months of 2006, consolidated net cash flows used in operatingactivities were $2.1 million, compared to cash flow provided by operatingactivities of $516,000 for the first six months of 2005. By operating segment,these cash flows were approximately as follows: 

| ** **                 | ** ** | **Six Months Ended June 30,**                                                        | ** ** |
|----------------------------|------------|----------------------------------------------------------------------------------------------------------|------------|
| ** **                 | ** ** | **        2006        ** | ** ** | **        2005        ** | ** ** |
| ** **                 | ** ** | **(in millions)**                                                                                        | ** ** |
| Agriculture                |       |                                                                                                     | $          | 0.8 |   |   |   | $ | (1.1 | ) |   |
| Resort                     |       |                                                                                                     | 4.4        |   |   |   | 0.6 |   |   |
| Community  Development     |       |                                                                                                     | (5.1       | ) |   |   | 1.7 |   |   |
| Interest, taxes  and other |       |                                                                                                     | (2.2       | ) |   |   | (0.7 | ) |   |
| Total                      |       |                                                                                                     | $          | (2.1 | ) |   |   | $ | 0.5 |   |   |

 

The increase in cash provided by operating activitiesfrom the Agriculture segment for the first six months of 2006 compared to thesame period in 2005 reflects increased collection of accounts receivable,partially offset by increased cash outflows for payments for pineappleinventories. The second and third quarters of the year is generally when higherthan average cash outflows occur in the pineapple operations for harvesting andpacking.

The increase in cash provided by operating activitiesfrom the Resort segment for the first six months of 2006 compared to the firstsix months of 2005 primarily reflect the timing of payment of accounts payable,improved collections of accounts receivable, and the approximate $600,000reduction in loss from operations.

Cash flows from operating activities in the CommunityDevelopment segment vary significantly with the amount of new real estateproduct sold and the amount of construction activity for real estateinventories. In the first six months of 2006, closing of lot sales at HonoluaRidge Phase II resulted in $8.5 million of cash proceeds. In the first sixmonths of 2005, the closing of lot sales at Honolua Ridge Phase I subdivisionresulted in cash proceeds of $8.9 million. Lot sales proceeds in 2006 and 2005were offset by payments for the construction of the improvements and otheroperating costs.

The increase in cashoutflows for interest, taxes and other primarily reflect income tax payments of$2.4 million in the first six months of 2006.

*Real Estate SalesProceeds*

In the first six months of2006, we sold approximately 1,800 acres, which resulted in net sales proceedsof $21.9 million that that we may reinvest on a tax-deferred basis under Section 1031of the Internal Revenue Code. In the first six months of 2006, the reinvestmentperiod expired on $16.3 million of proceeds from the previous sales of propertiesin 2005 and the funds were returned to us by the exchange intermediary. At June 30,2006, we had $21.9 million of real estate sales proceeds on deposit with anexchange intermediary.

*Future CashOutflows*

Contributions to pension plans and to other post-retirementplans are expected to be $2.6 million in 2006. We anticipate that if we are notsuccessful in reinvesting the sales proceeds from the land sales that closed inDecember 2005 and March 2006 on a tax-deferred basis, then we wouldbe required to make income tax payments with regard to those gains.

Cash obligations in connection with the constructionof the Residences at Kapalua Bay project are expected to total approximately$25.4 million in 2006. See Notes 14 and 15 to Condensed Consolidated 

26

----

Financial Statements. Weexpect to be able to fund this cash requirement with cash flows provided byoperating and investing activities and with debt proceeds.

Consolidated capital expenditures (property, plant andequipment) for 2006 are expected to be approximately $50 million of whichapproximately $13 million relates to the fresh fruit processing facility thatwill replace our existing fresh fruit packing facility, and $7 million are forthe replacement of other existing equipment and facilities. We expect to incurapproximately $9 million for deferred development costs, which will bereclassified to inventory or to fixed assets if and when the projects receivethe necessary governmental entitlements and management approvals to proceed. Inconnection with the planning for the various projects, we will analyze thefeasibility of proceeding with each project and will seek project specificnon-recourse financing for some of the capital projects.

Expenditures for HonoluaRidge Phase II, which we began selling in 2005, are expected to beapproximately $13.5 million in 2006. Expenditures for subdivisioninfrastructure improvements to date have been funded by proceeds from pre-salesof the lots. Fifteen lots in Phase II remain to be sold at June 30, 2006,with four of those in escrow and expected to close in September.

**FORWARD-LOOKINGSTATEMENTS**

This and otherreports filed by us, with the Securities and Exchange Commission containforward-looking statements intended to qualify for the safe harbor fromliability established by the Private Securities Litigation Reform Act of 1995. Thesestatements can be identified by the fact that they do not relate strictly tohistorical or current facts. They contain words such as “may,” “will,” “project,”“might,” “expect,” “believe,” “anticipate,” “intend,” “could,” “would,” “estimate,”“continue” or “pursue,” or the negative or other variations thereof orcomparable terminology. In particular, they include, among others, statementsrelating to:

·       thetiming and success of the Residences at Kapalua Bay project;

·       theclosing of lot sales at the Honolua Ridge residential subdivisions;

·       thetiming, cost and efficiency of the planned multi-client pineapple processingfacility;

·       thetiming and success of sale of “non-core” properties;

·       thetiming and success of the Kapalua Resort initiatives to enhance and improve theresort and the Kapalua Villas;

·       expectationsas to our cash commitments;

·       expectationsas to our cash flows from operating and investing activities;

·       expectationsas to the amount and terms of available credit;

·       recoverabilityfrom operations of real estate development deferred costs and the net bookvalue of our agriculture segment assets;

·       shiftingtowards greater levels of fresh fruit production;

·       thefuture cost of compliance with environmental laws; and

·       theeffect of assumption changes on net periodic pension and other benefit costs.

In addition, from time to time, we may publishforward-looking statements as to those matters or other aspects of ouranticipated financial performance, business prospects, new products, marketinginitiatives or similar matters.

27

----

Any forward-looking statements are made pursuant tothe Private Securities Litigation Reform Act of 1995 and, as such, speak onlyas of the date made. We undertake no obligation to publicly update anyforward-looking statements, whether as a result of new information, futureevents or otherwise. We have based these forward-looking statements on ourcurrent expectations and projections about future events.

We caution the reader thatforward-looking statements involve risks and uncertainties that cannot bepredicted or quantified and, consequently, actual results may differ materiallyfrom those expressed or implied by such forward-looking statements. Such risksand uncertainties include, but are not limited to, the factors discussed in thesections entitled “Business,” “Risk Factors,” and “Management’s Discussion andAnalysis of Financial Condition and Results of Operations” in our Annual Reporton Form 10-K for the year ended December 31, 2005, and thesection entitled “Management’s Discussion and Analysis of Financial Conditionand Results of Operations” in this Quarterly Report on Form 10-Q, aswell as other factors described from time to time in our reports filedwith the SEC.

**Item 3.**                        Quantitativeand Qualitative Disclosures about Market Risk

Our primary market riskexposure with regard to financial instruments is to changes in interest rates. Weattempt to manage this risk by monitoring interest rates and future cashrequirements, and evaluating opportunities to refinance borrowings at variousmaturities and interest rates. There were no material changes to our marketrisk exposure during the first half of 2006.

**Item 4.**                        Controlsand Procedures

We maintain disclosure controls and procedures (assuch term is defined in Rules 13a-15(e) and 15d-15(e) underthe Securities Exchange Act of 1934, as amended) that are designed to ensurethat information required to be disclosed in our Exchange Act reports isrecorded, processed, summarized and reported within the time periods specifiedin the SEC’s rules and forms, and that such information is accumulated andcommunicated to our management, including our Chief Executive Officer and ChiefFinancial Officer, as appropriate, to allow timely decisions regarding requireddisclosure.

In designing and evaluating the disclosure controlsand procedures, our management recognizes that any controls and procedures, nomatter how well designed and operated, can provide only reasonable assurance ofachieving the desired control objectives, and our management necessarily wasrequired to apply its judgment in evaluating the cost-benefit relationship ofpossible controls and procedures.

As required by Rule 13a-15(b) and 15d-15(b) underthe Exchange Act, we carried out an evaluation, under the supervision and withthe participation of our management, including our Chief Executive Officer andChief Financial Officer, of the effectiveness of the design and operation ofour disclosure controls and procedures as of the end of the fiscal quartercovered by this report. Based upon the foregoing, our Chief Executive Officerand Chief Financial Officer concluded that our disclosure controls andprocedures were effective to ensure that information required to be disclosedby us in our Exchange Act reports is recorded, processed, summarized andreported within the time periods specified in applicable SEC rules andforms.

There have been no changes in our internal controls overfinancial reporting during the most recent fiscal quarter that have materiallyaffected, or are reasonably likely to materially affect, our internal controlsover financial reporting.

28

----

**PART II   OTHERINFORMATION**

**Item 1A.**                RiskFactors

Potential risks and uncertainties include, among otherthings, those factors discussed in the sections entitled “Business”, “RiskFactors” and “Management’s Discussion and Analysis of Financial Condition and Resultsof Operations” in our Annual Report on Form 10-K for the year ended December 31,2005, the section entitled “Management’s Discussion and Analysis of FinancialCondition and Results of Operations” in this Quarterly Report on Form 10-Q,and as set forth below in this Item IA. Readers should carefully review thoserisks, as well as additional risks described in other documents we file fromtime to time with the Securities and Exchange Commission. We undertake noobligation to publicly release the results of any revisions to anyforward-looking statements to reflect anticipated or unanticipated events orcircumstances occurring after the date of such statements. The following riskfactors include material changes to the risk factors previously disclosed inour Form 10-K filed for the year ended December 31, 2005, butare not a complete list of all of our risk factors.

**We have enteredinto limited guarantees under which we may be required to guarantee completionof the Kapalua Bay project or certain limited recourse obligations of KapaluaBay, LLC.**

Kapalua Bay, LLC, a whollyowned subsidiary of Kapalua Bay Holdings, LLC, in which we own a 51% ownershipinterest, entered into a construction loan agreement with Lehman BrothersHoldings Inc. on July 14, 2006, pursuant to which Lehman may loan KapaluaBay up to $370 million. Kapalua Bay intends to construct a new projectconsisting of residential development on land that it owns at the site of theformer Kapalua Bay Hotel, and a spa on an adjacent parcel of land that is ownedby us and leased to Kapalua Bay. In connection with entering into theconstruction loan agreement by Kapalua Bay, we, and other members of KapaluaBay Holdings entered into a completion guaranty and a recourse guaranty. Underthe completion guaranty, members of Kapalua Bay Holdings agreed to guaranteesubstantial completion of the project and to reimburse Lehman for expensesincurred by Lehman toward completion of the project. Under the recourseguaranty, members of Kapalua Bay Holdings agreed to reimburse Lehman for lossesincurred by Lehman due to specified actions of Kapalua Bay Holdings, including,without limitation, fraud or intentional misrepresentation, gross negligence,physical waste of project assets, and breach of certain environmentalprovisions of the construction loan agreement. Our guarantees do not includepayment in full of the loan. If Kapalua Bay fails to complete the project ortakes any of the specified actions that result in expenses to Lehman and whichare covered by the guarantees that we entered into, we could incurunanticipated expenses that could materially and adversely affect our resultsof operations and financial condition.

**Item 4.**                        Submissionof Matters to a Vote of Security Holders

On May 8, 2006, the annual meeting of the Company’sshareholders was held. Proxies for the meeting were solicited pursuant toRegulation 14A under the Securities Exchange Act of 1934. The number ofoutstanding shares as of March 13, 2006, the record date of the annualmeeting, was 7,378,550. The results of the voting were as follows:

Proposal 1:   Election of Class One Directorsfor a three-year term:

| ** **          | ** ** | **Shares Voted For** | ** ** | **Shares Withheld** | ** ** |
|---------------------|------------|--------------------------------|------------|--------------------------|------------|
| David C. Cole       |       |                           | 6,127,674  |                     |       |   | 839,746 |   |   |
| Walter A. Dods  Jr. |       |                           | 6,130,781  |                     |       |   | 836,639 |   |   |
| Fred E. Trotter III |       |                           | 6,142,275  |                     |       |   | 825,145 |   |   |

 

29

----

Proposal2:   Ratification of Deloitte & Touche LLP the independentregistered public accounting firm of the Company for the fiscal year 2006:

| Shares voted for:      |   | 6,929,589 |   |
|------------------------|--------|-----------|--------|
| Shares voted  against: |   | 32,025    |   |
| Shares abstained:      |   | 5,806     |   |

 

Proposal 3:   Approval of amendment to theArticles of Association to authorize an additional 1,000,000 shares of commonstock

| Shares voted for:      |   | 6,141,906 |   |
|------------------------|--------|-----------|--------|
| Shares voted  against: |   | 813,845   |   |
| Shares abstained:      |   | 11,669    |   |

 

Proposal 4:   Approval of 2006 Equity andIncentive Award Plan

| Shares voted for:      |   | 3,914,057 |   |
|------------------------|--------|-----------|--------|
| Shares voted  against: |   | 1,786,717 |   |
| Shares abstained:      |   | 14,005    |   |

 

There were no broker non-votes on any matter votedupon at the meeting.

The terms of the followingmembers of the Company’s Board of Directors continued after the annualmeeting:  John H. Agee, Thomas M.Gottlieb, Warren H. Haruki, David A. Heenan, Kent T. Lucien and DuncanMacNaughton.

**Item 5.**                        OtherInformation

*Amendment*to Stock Option Agreement for David C. Cole—***On*August 7,2006, the Company and David C. Cole entered into an agreement to amend a stockoption agreement dated October 6, 2003. The amendment changed the exerciseprice for 133,333 shares of our common stock underlying the option from $19.70to $27.60, the fair market value of our common stock as of the date of theoption grant. The amendment is filed herewith as Exhibit 10.1.

*RestrictedStock Award Agreement for David C. Cole—**On* August 4,2006, the Company and David C. Cole entered into an agreement, effective as of May 8,2006, for the grant of 100,000 shares of our restricted common stock to Mr. Cole.The restricted stock award was approved by our Board and communicated to Mr. Coleon May 8, 2006. The restricted shares will vest following the end of thefiscal years ending December 31, 2007, 2008, and 2009, provided that theperformance criteria for the applicable year are achieved, as determined in thesole and complete discretion of the Compensation Committee of the Company’sBoard of Directors (the “Committee”). The vesting of the shares relating tofiscal year 2007 will require the Company’s principal subsidiaries to achieveprofitable operations for the fiscal year ending December 31, 2007 atperformance thresholds, and other performance criteria, to be adopted by theCommittee during the first quarter of fiscal year 2007. Specific performancecriteria for fiscal years 2008 and 2009 shall be established by the Committeeprior to the end of the first quarter of each fiscal year, as applicable. Allother terms and conditions are pursuant to the Restricted Stock Award Agreementand the Award Grant Notice, which are filed herewith as Exhibit 10.2.

*StockOption Agreement for David C. Cole—**On* August 4,2006, the Company and David C. Cole entered into an agreement, effective as of May 8,2006, for the grant of an option to purchase 200,000 shares of our common stockat $38.04 per share. The option grant was approved by our Board andcommunicated to Mr. Cole on May 8, 2006. The options vest ratablyover 12 quarters beginning on 

30

----

January 15, 2007 andending on October 15, 2009. All other terms and conditions are pursuant tothe Stock Option Agreement and the Stock Option Grant Notice, which are filedherewith as Exhibit 10.3.

*Amendmentto Stock Option Agreement for Brian C. Nishida—**On* August 7,2006, the Company and Brian C. Nishida entered into an agreement to amend astock option agreement dated January 1, 2004. The amendment changed theexercise price for an option to purchase 50,000 shares of our common stockunderlying the option from $27.25 to 35.50, the fair market value of our commonstock as of the date of the option grant. The amendment is filed herewith as Exhibit 10.4.

*RobertI. Webber Employment Agreement—**On* August 4,2006, the Company and Robert I. Webber entered into an employment agreementeffective as of May 1, 2006. The agreement includes an annual first yearsalary of $300,000 with a $50,000 signing bonus and a $50,000 guaranteed firstyear incentive payment after one year of employment. His annual salary for yeartwo will be $350,000 with any annual incentive pay to be negotiated. Theagreement included the grant of options to purchase 25,000 shares of commonstock (at the closing market price of MLP on May 8, 2006, which was $38.04per share) that will vest at 20% per year over a 5-year period, and25,000 shares of restricted stock that will vest over a 5-year periodbased upon performance metrics that will be annually determined by theCompensation Committee of the Board. If terminated from employment for anyreason other than “cause,” Mr. Webber will receive one year of base salaryas separation pay and the vesting of all stock options (but not unvestedrestricted stock) will be accelerated. The agreement includes a supplementalannual cash payment for living expenses of up to $36,000. The agreement isfiled herewith as Exhibit 10.5.

*RestrictedStock Award Agreement for Brian C. Nishida—**On* August 7,2006 the Company and Brian C. Nishida entered into an agreement, effective asof May 8, 2006, for the grant of 5,000 shares of our restricted commonstock to Mr. Nishida. The restricted stock award was approved by our Boardand communicated to Mr. Nishida on May 8, 2006. The restricted sharesshall vest following the fiscal year ending December 31, 2009 provided,that the performance criteria for the 2009 fiscal year is achieved, asdetermined in the sole and complete discretion of the Committee. Specificperformance criteria for fiscal year 2009 shall be established by the Committeeprior to the end of the first quarter of such fiscal year. The agreementincludes an additional provision such that if the certain performance criteriais achieved with regard to the Company’s pineapple operations in fiscal year2006, as set forth and defined in the Restricted Share Agreement dated June 30,2004 (the “2004 Agreement”) between the Company and Mr. Nishida, theCompany shall pay to Mr. Nishida a cash bonus equal to the federal andstate income and payroll taxes directly resulting from the vesting of sharesunder the 2004 Agreement for the fiscal year 2006, grossed up for taxesresulting from such cash bonus. All other terms and conditions are pursuant tothe Restricted Stock Award Agreement and the Award Grant Notice, which arefiled herewith as Exhibit 10.6.

*RestrictedShare Agreement for Robert I. Webber—**On* August 4,2006, the Company and Robert I. Webber entered into an agreement, effective asof May 8, 2006, for the grant of 25,000 shares of our restricted commonstock to Mr. Webber. The restricted stock award was approved by our Boardand communicated to Mr. Webber on May 8, 2006. The restricted shareswill vest at a rate of 5,000 shares per year following the end of the fiscalyears ending December 31, 2006, 2007, 2008, 2009 and 2010, provided thatthe performance criteria for the applicable year are achieved, as determined inthe sole and complete discretion of the Committee. In addition, if any sharesdo not vest in a particular fiscal year, the shares will be available foradditional vesting in the following years. For the 2006 and 2007 fiscal years,the restricted shares will vest if a minimum return on equity (as defined inthe agreement) is achieved by the Company. Specific performance criteria forfiscal years 2008 through 2010 shall be established by the Committee prior tothe end of the first quarter of such fiscal year. All other terms andconditions are pursuant to the Restricted Stock Award Agreement and the AwardGrant Notice, which are filed herewith as Exhibit 10.7.

*RestrictedShare Agreement for Fred W. Rickert*—On August 4,2006, the Company and Fred W. Rickert entered into an agreement, effective asof May 8, 2006, for the grant of 6,000 shares of our restricted 

31

----

common stock to Mr. Rickert.The restricted stock award was approved by our Board and communicated to Mr. Rickerton May 8, 2006. Up to all of the shares shall vest following the fiscalyear ending December 31, 2009; provided, that the performance criteria forthe 2009 fiscal year is achieved, as determined in the sole and completediscretion of the Committee. Specific performance criteria for fiscal year 2009shall be established by the Committee prior to the end of the first quarter ofsuch fiscal year. All other terms and conditions are pursuant to the RestrictedStock Award Agreement and the Award Grant Notice, which are filed herewith as Exhibit 10.8.

*First Amendment to Purchase and Sale Agreement—*OnAugust 7, 2006 the Company and David C. Cole and Margaret Cole, enteredinto the First Amendment to Purchase and Sale Agreement. As provided for in Section 2of the Purchase and Sales Agreement, the amendment reduces the actual acreagesubject to the transaction based on the completion of with a prorate adjustmentto the sales price of the parcel. The amendment is filed herewith as Exhibit 10.11.

*Purchaseand Sale Agreement*—On August 7, 2006 the Company entered intoan agreement to sell approximately 89 acres of Upcountry Maui land to DuncanMacNaughton, a Class III Director of the Company, for $3.6 million. Theagreement was structured in compliance with the Company’s policy for relatedparty real estate sales. Such policy requires an independent appraisal of theproperty value, allows for a 3% discount to the sales price in lieu of brokerscommissions, and requires review and approval of the sales price by the AuditCommittee of the Board of Directors. The sales agreement requires a $50,000deposit upon execution and the balance is payable in cash to the Company at thetime of the closing. Subdivision of the land parcel is a condition precedent tothe closing of the sale. The agreement is filed herewith as Exhibit 10.12.

**Item 6.**                        Exhibits

The following exhibits are filed herewith:

|        | (10)   | Material Contracts |   |
|--------|--------|--------------------|--------|
|   |   | 10.1               |   | Amendment to Stock  Option Agreement dated August 7, 2006, by and between Maui Land &  Pineapple Company, Inc. and David C. Cole. |
|   |   | 10.2               |   | Restricted Stock Award  Agreement and Award Grant Notice, dated as of August 4, 2006, by and  between Maui Land & Pineapple Company, Inc. and David C. Cole. |
|   |   | 10.3               |   | Stock Option Agreement  and Stock Option Grant Notice, dated as of August 4, 2006, by and  between Maui Land & Pineapple Company, Inc. and David C. Cole. |
|   |   | 10.4               |   | Amendment to Stock  Option Agreement, dated as of August 7, 2006, by and between Maui  Land & Pineapple Company, Inc. and Brian C. Nishida. |
|   |   | 10.5               |   | Employment Agreement,  dated August 4, 2006, by and between Maui Land & Pineapple  Company, Inc. and Robert I. Webber. |
|   |   | 10.6               |   | Restricted Stock Award  Agreement and Award Grant Notice, dated as of August 7, 2006, by and between  Maui Land & Pineapple Company, Inc. and Brian C. Nishida. |
|   |   | 10.7               |   | Restricted Stock Award  Agreement and Award Grant Notice, dated as of August 4, 2006, by and  between Maui Land & Pineapple Company, Inc. and Robert I.  Webber. |
|   |   | 10.8               |   | Restricted Stock Award  Agreement and Award Grant Notice, dated as of August 4, 2006, by and  between Maui Land & Pineapple Company, Inc. and Fred W.  Rickert. |
|   |   | 10.9               |   | Form of Award Grant  Notice and Stock Option Agreement, pursuant to the Maui Land &  Pineapple Company, Inc. 2006 Equity and Incentive Award Plan. |
|        |        |                    |        |  |  |

32

----

 

|        |   | 10.10  |   | Form of Restricted  Stock Award Grant Notice and Restricted Stock Award Agreement, pursuant to  the Maui Land & Pineapple Company, Inc. 2006 Equity and  Incentive Award Plan.     |
|--------|--------|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | 10.11  |   | First Amendment to  Purchase and Sale Agreement, dated as of August 7, 2006, by and between  Maui Land & Pineapple Company, Inc. and David C. Cole.                                |
|   |   | 10.12  |   | Purchase and Sale  Agreement, dated August 7, 2006, by and between Maui Land & Pineapple  Company, Inc. and Duncan MacNaughton.                                                                   |
|   | (31)   |   |   | Rule 13a – 14(a) Certifications                                                                                                                                                        |
|   |   | 31.1   |   | Certification of Chief Executive Officer Pursuant to  Rule 13a-14(d) / 15d-14(a) of the Securities  Exchange Act of 1934.                                                              |
|   |   | 31.2   |   | Certification of Chief  Financial Officer Pursuant to Rule 13a-14(d) / 15d-14(a) of  the Securities Exchange Act of 1934.                                                              |
|   | (32)   |   |   | Certification of Chief  Executive Officer and Chief Financial Officer Pursuant to Rule 13a-14(b) /  15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C.  Section 1350. |

 

33

----

**SIGNATURE**

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.

|                     | MAUI LAND &  PINEAPPLE COMPANY, INC.                         |
|---------------------|-----------------------------------------------------------------------|
| August 8, 2006 |                                                                  | /s/ ROBERT I. WEBBER |
| Date                | Robert I. Webber                                                      |
| ** **          | *Chief Financial Officer/Senior Vice President  Business Development* |
| ** **          | (Principal Financial Officer)                                         |
|                     |                                                                       |  |

 

34

----

**EXHIBITINDEX**

| Exhibit Number | ** ** | ** **                                                                                                                                                                                            | ** ** | **Description** |
|---------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------|
| 10.1                |       | Amendment to Stock  Option Agreement, dated as of August 7, 2006, by and between Maui  Land & Pineapple Company, Inc. and David C. Cole.                                           |
| 10.2                |       | Restricted Stock  Award Agreement and Award Grant Notice, dated as of August 4, 2006, by  and between Maui Land & Pineapple Company, Inc. and David C.  Cole.                      |
| 10.3                |       | Stock Option  Agreement and Stock Option Grant Notice, dated as of August 4, 2006, by  and between Maui Land & Pineapple Company, Inc. and David C.  Cole                          |
| 10.4                |       | Amendment to  Stock Option Agreement, dated as of August 7, 2006, by and between Maui  Land & Pineapple Company, Inc. and Brian C. Nishida                                         |
| 10.5                |       | Employment  Agreement, dated as of August 4, 2006, by and between Maui  Land & Pineapple Company, Inc. and Robert I. Webber                                                        |
| 10.6                |       | Restricted Stock  Award Agreement and Award Grant Notice, dated August 4, 2006, by and  between Maui Land & Pineapple Company, Inc. and Brian C.  Nishida.                         |
| 10.7                |       | Restricted Stock  Award Agreement and Award Grant Notice, dated August 4, 2006, by and  between Maui Land & Pineapple Company, Inc. and Robert I.  Webber.                         |
| 10.8                |       | Restricted Stock  Award Agreement and Award Grant Notice, dated August 4, 2006, by and  between Maui Land & Pineapple Company, Inc. and Fred W.  Rickert.                          |
| 10.9                |       | Form of  Award Grant Notice and Stock Option Agreement, pursuant to the Maui  Land & Pineapple Company Inc. 2006 Equity and Incentive Award Plan.                                       |
| 10.10               |       | Form of  Restricted Stock Award Grant Notice and Restricted Stock Award Agreement,  pursuant to the Maui Land & Pineapple Company Inc. 2006 Equity and  Incentive Award Plan.           |
| 10.11               |       | First Amendment  to Purchase and Sale Agreement dated August 7, 2006, by and between Maui  Land & Pineapple Company, Inc. and David C. Cole and Margaret  Cole.                    |
| 10.12               |       | Purchase and Sale  Agreement, dated August 7, 2006, by and between Maui Land & Pineapple  Company, Inc. and Duncan MacNaughton.                                                                   |
| 31.1                |       | Certification of  Chief Executive Officer Pursuant to Rule 13a-14(d) / 15d-14(a) of  the Securities Exchange Act of 1934.                                                              |
| 31.2                |       | Certification of  Chief Financial Officer Pursuant to Rule 13a-14(d) / 15d-14(a) of  the Securities Exchange Act of 1934.                                                              |
| 32                  |       | Certification of Chief  Executive Officer and Chief Financial Officer Pursuant to Rule 13a-14(b) /  15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C.  Section 1350. |

 

35

----