**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 SEPTEMBER 30, 2006**

**OR**

**o**                                 TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934

**Commissionfile number  1-6510****

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

(Exact name of registrantas specified in its charter)

| **HAWAII**                         | ** ** | **99-0107542**       |
|------------------------------------|------------|----------------------|
| (State or other jurisdiction       |       | (IRS Employer        |
| of incorporation  or organization) |       | Identification  No.) |

 

**P. O. BOX 187, KAHULUI,MAUI, HAWAII  96733-6687**

(Address of principalexecutive offices)

**Registrant’s telephone number,including area code:**(808) 877-3351

**NONE**

Former name, formeraddress and former fiscal year, if changed since last report

Indicate by check mark whether the registrant (1) hasfiled all reports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months (or for suchshorter period that the registrant was required to file such reports), and (2) hasbeen subject to such filing requirements for the past 90 days.

Yes  x    No  o

Indicate by check mark whether the registrant is alarge accelerated 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 |
|---------------------------|----------------------|--------------------------|

 

Indicate by check mark whether the registrant is ashell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  o    No  x

Indicate the number of shares outstanding of each ofthe issuer’s classes of common stock, as of the latest practicable date.

| **Class**                   | ** ** | **Outstanding at November 3, 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,  September 30, 2006 and December 31, 2005 (Unaudited)                                   |       |     | 3          |   |   |
| Condensed Consolidated Statements of Operations and  Retained Earnings,  Three Months Ended September 30, 2006 and 2005 (Unaudited) |       |     | 4          |   |   |
| Condensed Consolidated Statements of Operations and  Retained Earnings,  Nine Months Ended September 30, 2006 and 2005 (Unaudited)  |       |     | 5          |   |   |
| Condensed Consolidated Statements of Cash Flows,  Nine Months Ended September 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                                      |       |     | 16         |   |   |
| Forward-Looking  Statements                                                                                                              |       |     | 28         |   |   |
| Item 3. Quantitative and Qualitative Disclosures About  Market Risk                                                                      |       |     | 29         |   |   |
| Item 4. Controls and Procedures                                                                                                          |       |     | 29         |   |   |
| PART II.  OTHER INFORMATION                                                                                                         |       |     |       |   |   |
| Item 1A. Risk Factors                                                                                                                    |       |     | 31         |   |   |
| Item  5. Other Information                                                                                                               |       |     | 32         |   |   |
| Item 6. Exhibits                                                                                                                         |       |     | 32         |   |   |
| Signature                                                                                                                                |       |     | 33         |   |   |

 

2

----

**PART I   FINANCIALINFORMATION**

**Item 1.**                        FinancialStatements

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

| ** **                                                                                                                 | ** ** | **9/30/06**             | ** ** | **12/31/05** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------|------------|-------------------------|------------|--------------|------------|
| ** **                                                                                                                 | ** ** | **(in thousands)** | ** ** |
| *ASSETS*                                                                                                                   |       |                    |       |         |       |
| Current Assets                                                                                                             |       |                    |       |         |       |
| Cash and cash equivalents                                                                                                  |       | $                       | 1,436      |         | $          | 7,216 |   |
| Accounts and notes receivable                                                                                              |       | 20,114                  |       | 19,605       |       |
| Inventories                                                                                                                |       | 23,992                  |       | 17,305       |       |
| Other current assets                                                                                                       |       | 5,501                   |       | 5,271        |       |
| Total current assets                                                                                                       |       | 51,043                  |       | 49,397       |       |
| Property                                                                                                                   |       | 274,182                 |       | 236,250      |       |
| Accumulated depreciation                                                                                                   |       | (148,563                | )          | (139,315     | )          |
| Property—net                                                                                                          |       | 125,619                 |       | 96,935       |       |
| Other Assets                                                                                                               |       | 36,466                  |       | 39,667       |       |
| Total                                                                                                                      |       | $                       | 213,128    |         | $          | 185,999 |   |
| *LIABILITIES AND STOCKHOLDERS’ EQUITY*                                                                                |       |                    |       |         |       |
| Current Liabilities                                                                                                        |       |                    |       |         |       |
| Current portion of long-term debt and capital lease  obligations                                                           |       | $                       | 808        |         | $          | 837 |   |
| Trade accounts payable                                                                                                     |       | 17,171                  |       | 18,418       |       |
| Deferred revenue                                                                                                           |       | 7,637                   |       | 11,380       |       |
| Other current liabilities                                                                                                  |       | 8,657                   |       | 9,862        |       |
| Total current liabilities                                                                                                  |       | 34,273                  |       | 40,497       |       |
| Long-Term  Liabilities                                                                                                     |       |                    |       |         |       |
| Long-term debt                                                                                                             |       | 33,130                  |       | 10,284       |       |
| Accrued retirement benefits                                                                                                |       | 29,796                  |       | 29,792       |       |
| Other long-term liabilities                                                                                                |       | 13,804                  |       | 13,729       |       |
| Total long-term liabilities                                                                                                |       | 76,730                  |       | 53,805       |       |
| Minority Interest in Subsidiary                                                                                            |       | 532                     |       | 517          |       |
| Commitments and  Contingencies                                                                                             |       |                    |       |         |       |
| Stockholders’  Equity                                                                                                 |       |                    |       |         |       |
| Common stock, no par value—9,000,000 and 8,000,000  shares authorized, 7,260,779 and 7,254,779 issued and outstanding |       | 14,401                  |       | 14,186       |       |
| Additional paid-in-capital                                                                                                 |       | 4,446                   |       | 2,930        |       |
| Retained earnings                                                                                                          |       | 84,222                  |       | 75,540       |       |
| Accumulated other comprehensive loss                                                                                       |       | (1,476                  | )          | (1,476       | )          |
| Stockholders’ Equity                                                                                                  |       | 101,593                 |       | 91,180       |       |
| Total                                                                                                                      |       | $                       | 213,128    |         | $          | 185,999 |   |

 

See accompanying Notes to Condensed Consolidated Financial Statements.

3

----

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

**CONDENSEDCONSOLIDATED STATEMENTS OF OPERATIONSAND RETAINED EARNINGS**

**(UNAUDITED)**

| ** **                             | ** ** | **Three Months Ended**    | ** ** |
|----------------------------------------|------------|-------------------------------------|------------|
| ** **                             | ** ** | **9/30/06**                         | ** ** | **9/30/05** | ** ** |
| ** **                             | ** ** | **(in thousands**              | ** ** |
| ** **                             | ** ** | **except share amounts)** | ** ** |
| Operating Revenues                     |       |                                |       |   |   |
| Net sales                              |       | $                                   | 29,768     |   | $ | 35,510 |   |
| Operating income                       |       | 10,010                              |       | 8,557 |   |
| Other income                           |       | 83                                  |       | 35 |   |
| Total Operating  Revenues              |       | 39,861                              |       | 44,102 |   |
| Operating Costs  and Expenses          |       |                                |       |   |   |
| Cost of sales                          |       | 16,845                              |       | 18,570 |   |
| Operating expenses                     |       | 9,973                               |       | 9,462 |   |
| Shipping and marketing                 |       | 4,658                               |       | 3,878 |   |
| General and administrative             |       | 10,339                              |       | 9,299 |   |
| Total Operating  Costs and Expenses    |       | 41,815                              |       | 41,209 |   |
| Operating Income (Loss)                |       | (1,954                              | )          | 2,893 |   |
| Equity in income (loss) of affiliates  |       | (2,214                              | )          | 30 |   |
| Interest expense                       |       | (131                                | )          | (71 | ) |
| Interest income                        |       | 343                                 |       | 158 |   |
| Income (Loss)  Before Income Taxes     |       | (3,956                              | )          | 3,010 |   |
| Income Tax  Expense (Benefit)          |       | (1,463                              | )          | 1,006 |   |
| Net Income (Loss)                      |       | (2,493                              | )          | 2,004 |   |
| Retained Earnings, Beginning of Period |       | 86,715                              |       | 68,710 |   |
| Retained Earnings, End of Period       |       | $                                   | 84,222     |   | $ | 70,714 |   |
| Earnings Per  Common Share             |       |                                |       |   |   |
| Basic                                  |       | $                                   | (0.34      | ) | $ | 0.28 |   |
| Diluted                                |       | $                                   | (0.34      | ) | $ | 0.27 |   |

 

See accompanying Notes to Condensed Consolidated Financial Statements.

4

----

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

**CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Continued)AND RETAINED EARNINGS**

**(UNAUDITED)**

| ** **                             | ** ** | **Nine Months Ended**     | ** ** |
|----------------------------------------|------------|-------------------------------------|------------|
| ** **                             | ** ** | **9/30/06**                         | ** ** | **9/30/05** | ** ** |
| ** **                             | ** ** | **(in thousands**              | ** ** |
| ** **                             | ** ** | **except share amounts)** | ** ** |
| Operating Revenues                     |       |                                |       |   |   |
| Net sales                              |       | $                                   | 101,590    |   | $ | 106,789 |   |
| Operating income                       |       | 30,526                              |       | 26,229 |   |
| Other income                           |       | 278                                 |       | 415 |   |
| Total Operating  Revenues              |       | 132,394                             |       | 133,433 |   |
| Operating Costs  and Expenses          |       |                                |       |   |   |
| Cost of sales                          |       | 45,925                              |       | 53,968 |   |
| Operating expenses                     |       | 29,746                              |       | 27,218 |   |
| Shipping and marketing                 |       | 11,531                              |       | 10,845 |   |
| General and administrative             |       | 29,100                              |       | 25,801 |   |
| Total Operating  Costs and Expenses    |       | 116,302                             |       | 117,832 |   |
| Operating Income                       |       | 16,092                              |       | 15,601 |   |
| Equity in losses of affiliates         |       | (3,582                              | )          | (186 | ) |
| Interest expense                       |       | (160                                | )          | (308 | ) |
| Interest income                        |       | 1,155                               |       | 188 |   |
| Income Before  Income Taxes            |       | 13,505                              |       | 15,295 |   |
| Income Tax  Expense                    |       | 4,823                               |       | 5,552 |   |
| Net Income                             |       | 8,682                               |       | 9,743 |   |
| Retained Earnings, Beginning of Period |       | 75,540                              |       | 60,971 |   |
| Retained Earnings, End of Period       |       | $                                   | 84,222     |   | $ | 70,714 |   |
| Earnings Per  Common Share             |       |                                |       |   |   |
| Basic                                  |       | $                                   | 1.20       |   | $ | 1.35 |   |
| Diluted                                |       | $                                   | 1.18       |   | $ | 1.33 |   |

 

See accompanying Notes to Condensed Consolidated Financial Statements.

5

----

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

| ** **                                                | ** ** | **Nine Months Ended** | ** ** |
|-----------------------------------------------------------|------------|---------------------------------|------------|
| ** **                                                | ** ** | **9/30/06**                     | ** ** | **9/30/05** | ** ** |
| ** **                                                | ** ** | **(in thousands)**         | ** ** |
| Net Cash Provided  by (Used in) Operating Activities      |       | $                               | (15,788    | ) | $ | 3,449 |   |
| Investing  Activities                                     |       |                            |       |   |   |
| Purchases of property                                     |       | (36,029                         | )          | (11,250 | ) |
| Proceeds from disposal of property                        |       | 38,156                          |       | 2,740 |   |
| Contributions to affiliates                               |       | (7,523                          | )          | — |   |
| Other                                                     |       | (7,333                          | )          | (2,301 | ) |
| Net Cash Used in  Investing Activities                    |       | (12,729                         | )          | (10,811 | ) |
| Financing  Activities                                     |       |                            |       |   |   |
| Payments of long-term debt and capital lease  obligations |       | (53,263                         | )          | (12,287 | ) |
| Proceeds from long-term debt                              |       | 76,000                          |       | 11,600 |   |
| Net Cash Provided  by (Used in) Financing Activities      |       | 22,737                          |       | (687 | ) |
| Net Decrease in Cash and Cash Equivalents                 |       | (5,780                          | )          | (8,049 | ) |
| Cash and Cash Equivalents at Beginning of Period          |       | 7,216                           |       | 11,531 |   |
| Cash and Cash  Equivalents at End of Period               |       | $                               | 1,436      |   | $ | 3,482 |   |

 

Supplemental Disclosures of Cash Flow Information—Interest(net of amounts capitalized) of $-0- and $316,000 was paid duringthe nine months ended September 30, 2006 and 2005, respectively. Incometaxes of $6,534,000 and $303,000 were paid during the nine months ended September 30,2006 and 2005, respectively.

Non-Cash Investing Activities—Amounts included inaccounts payable for additions to property and other assets totaled $6,260,000and $2,041,000 at September 30, 2006 and 2005, respectively.

See accompanying Notes to Condensed Consolidated Financial Statements.

6

----

**MAUI LAND & PINEAPPLE COMPANY, INC. ANDSUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED 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 September 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 September 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 state tax credits.

**5.**                 Accountsand notes receivable are reflected net of allowance for doubtful accounts of$409,000 and $265,000 at September 30, 2006 and December 31, 2005,respectively.

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

| ** **                           | ** ** | **9/30/06**             | ** ** | **12/31/05** | ** ** |
|--------------------------------------|------------|-------------------------|------------|--------------|------------|
| ** **                           | ** ** | **(in thousands)** | ** ** |
| Pineapple products                   |       |                    |       |         |       |
| Finished goods                       |       | $                       | 5,299      |         | $          | 2,425 |   |
| Work in progress                     |       | 833                     |       | 367          |       |
| Raw materials                        |       | 1,953                   |       | 861          |       |
| Real estate held  for sale           |       | 8,354                   |       | 5,651        |       |
| Merchandise,  materials and supplies |       | 7,553                   |       | 8,001        |       |
| Total Inventories                    |       | $                       | 23,992     |         | $          | 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 pineappleproduction costs incurred during a year are charged to the costs of cropsharvested during that year. These costs include land preparation and planting,cultivation, irrigation, crop development, harvesting and hauling to thecannery. They also include certain overhead costs that are directly related tothe growing of pineapple. Accordingly, no costs are assigned to the growing(unharvested) crops. The annual accrual method is the most appropriate methodof accounting for the costs of growing pineapple because of pineapple’s cropcycle (18 to 48 months) and the uncertainties about fruit quality and thenumber of crops to be harvested from each planting (one to three crops). AICPAStatement of Position No. 85-3 (SOP), *Accounting by AgriculturalProducers and Agricultural Cooperatives*, states that all direct andindirect costs of growing crops should be accumulated and growing crops shouldbe reported at the lower of cost or market. However, SOP No. 85-3 does notapply to growers of pineapple and sugarcane in tropical regions becausetropical agriculture (of which pineapple and sugarcane production in Hawaii areexamples) differs greatly from agriculture in temperate regions of the mainlandUnited States. The Company’s growing (unharvested) crops at September 30,2006 consisted of approximately 3,700 acres that are expected to yieldapproximately 29 tons per acre. At December 31, 2005, growing cropsconsisted of approximately 5,500 acres that are expected to yield 

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.

The Company uses thepercentage-of-completion method to recognize revenues and profits from the saleof residential land parcels where the Company is obligated to constructimprovements (roads, sidewalks, drainage, and utilities) after the closing ofthe sale. Under this method, revenues are recognized over the improvementconstruction period on the basis of costs incurred as a percentage of totalcosts to be incurred. The Company recognizes revenues and profits using thepercentage-of-completion method for the sale of lots that closed escrow inHonolua Ridge Phase I and Phase II residential subdivision at the KapaluaResort. In the first nine months of 2006, eight lots closed escrow in HonoluaRidge Phase II bringing the number sold to 15, with 10 lots remaining to besold. At September 30, 2006, construction of the improvements for HonoluaPhase II was estimated to be approximately 83% complete. Construction ofHonolua Ridge Phase I and all of the lot sales were completed by the end of2005. Costs of 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 September 30, 2006, deferred revenues(current liability) on the Company’s balance sheet related to Honolua RidgePhase II were $6.5 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 September 30,2006, the re-investment period expired on $38 million of proceeds, includingthe March 2006 sale and previous sales of properties in 2005, and thefunds were returned to the Company by the exchange intermediary.

**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 $1,731,000 and $1,667,000for the nine months ended September 30, 2006 and 2005, respectively, and$522,000 and $500,000, for the three months ended September 30, 2006 and2005, respectively. The total tax benefit related thereto was $606,000 and$600,000, for the nine months ended September 30, 2006 and 2005,respectively, and $183,000 and $180,000, for the three months ended September 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 in December 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 nine months ended September 30,2006 is presented below:

| ** **                              | ** ** | **Shares** | ** ** | **Weighted  Average  Exercise  Price** | ** ** | **Weighted  Average  Remaining  Contractual  Term (years)** | ** ** | **Aggregate  Intrinsic  Value $(000)(1)** | ** ** |
|-----------------------------------------|------------|------------|------------|----------------------------------------|------------|------------------------------------------------------------------|------------|------------------------------------------------|------------|
| Outstanding at  December 31, 2005  |       | 613,500    |       |                                   | $          | 28.99                                                            |       |                                           |       |   |   |   |   |   |   |   |
| Granted                                 |       | 325,000    |       |                                   | $          | 37.86                                                            |       |                                           |       |   |   |   |   |   |   |   |
| Exercised                               |       | —     |       |                                   |       |                                                             |       |                                           |       |   |   |   |   |   |   |
| Forfeited                               |       | (26,500    | )          |                                   | $          | 38.95                                                            |       |                                           |       |   |   |   |   |   |   |   |
| Outstanding at  September 30, 2006 |       | 912,000    |       |                                   | $          | 31.86                                                            |       |                                           |       | 8.0 |   |   |   | $ | 2,411 |   |   |
| Exercisable at  September 30, 2006 |       | 302,233    |       |                                   | $          | 25.00                                                            |       |                                           |       | 6.2 |   |   |   | $ | 1,934 |   |   |

----

       (1) For in the money options

The weighted average fair value of options grantedduring the nine months ended September 30, 2006 and 2005 was $5,206,000and $1,899,000, respectively. The total fair value of shares vested during thenine months ended September 30, 2006 and 2005 was $1,060,000 and$780,000, respectively.

Forthe nine months ended September 30, 2006 and 2005, the fair value of theCompany’s stock options awarded to employees was estimated using aBlack-Scholes option pricing model and the following weighted averageassumptions:

| ** **                         | ** ** | **Nine Months Ended September 30,**                                                                          | ** ** |
|------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------|------------|
| ** **                         | ** ** | **          2006          ** | ** ** | **          2005          ** | ** ** |
| Expected life of  options in years |       |                                                                                                                             | 6.2        |   |   |   | 5.0 |   |   |
| Expected  volatility               |       |                                                                                                                             | 32.4       | % |   |   | 33.7 | % |   |
| Risk-free  interest rate           |       |                                                                                                                             | 5.0        | % |   |   | 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 6.3%. 

9

----

Estimated forfeitures willbe reassessed in subsequent periods and may change based on new facts andcircumstances.

As of September 30,2006, there was $7,654,000 of total unrecognized compensation for awardsgranted under the stock options plans that is expected to be recognized over aweighted average 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 nine months of2006, 6,000 shares of restricted stock vested as the directors’ servicerequirements were met. Theweighted average grant-date fair value of restricted stock granted during thenine months ended September 30, 2006 and 2005 was $35.94 and $39.00, pershare, respectively. 

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

| ** **                                    | ** ** | **Shares** | ** ** | **Weighted  Average  Grant Date  Fair  Value ($)** | ** ** |
|-----------------------------------------------|------------|------------|------------|--------------------------------------------------------------|------------|
| Nonvested balance  at December 31, 2005       |       | 123,771    |       |                                                         | 27.90      |   |   |
| Granted                                       |       | 149,750    |       |                                                         | 35.94      |   |   |
| Forfeited                                     |       | (6,250     | )          |                                                         | 34.62      |   |   |
| Vested                                        |       | (6,000     | )          |                                                         | 35.90      |   |   |
| Nonvested balance at  September 30, 2006 |       | 261,271    |       |                                                         | 32.99      |   |   |

 

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

| ** **                     | ** ** | **Three Months  Ended September 30** | ** ** | **Nine Months  Ended September 30** | ** ** |
|--------------------------------|------------|-----------------------------------------------------|------------|----------------------------------------------------|------------|
| ** **                     | ** ** | **2006**                                            | ** ** | **2005**                                           | ** ** | **2006** | ** ** | **2005** | ** ** |
| ** **                     | ** ** | **(in thousands)**                             | ** ** |
| Revenues                       |       |                                                |       |                                               |       |   |   |   |   |
| Agriculture                    |       | $                                                   | 18,231     |                                               | $          | 20,295 |   | $ | 48,495 |   | $ | 52,338 |   |
| Resort                         |       | 10,782                                              |       | 9,615                                              |       | 35,148 |   | 30,642 |   |
| Community Development          |       | 10,905                                              |       | 14,124                                             |       | 48,506 |   | 50,351 |   |
| Other                          |       | (57                                                 | )          | 68                                                 |       | 245 |   | 102 |   |
| Total Operating Revenues       |       | $                                                   | 39,861     |                                               | $          | 44,102 |   | $ | 132,394 |   | $ | 133,433 |   |
| Operating Profit (Loss)*       | ** ** | ** **                                          | ** ** | ** **                                         | ** ** | ** ** | ** ** | ** ** | ** ** |
| Agriculture                    |       | $                                                   | (3,972     | )                                                  | $          | (2,490 | ) | $ | (9,697 | ) | $ | (7,181 | ) |
| Resort                         |       | (1,975                                              | )          | (2,202                                             | )          | (3,400 | ) | (4,230 | ) |
| Community Development          |       | 2,028                                               |       | 7,631                                              |       | 26,098 |   | 26,967 |   |
| Other                          |       | (249                                                | )          | (16                                                | )          | (491 | ) | (141 | ) |
| Total Operating Profit  (Loss) |       | (4,168                                              | )          | 2,923                                              |       | 12,510 |   | 15,415 |   |
| Interest Expense               |       | (131                                                | )          | (71                                                | )          | (160 | ) | (308 | ) |
| Interest Income                |       | 343                                                 |       | 158                                                |       | 1,155 |   | 188 |   |
| Income Tax (Expense)  Benefit  |       | 1,463                                               |       | (1,006                                             | )          | (4,823 | ) | (5,552 | ) |
| Net Income (Loss)              |       | $                                                   | (2,493     | )                                                  | $          | 2,004 |   | $ | 8,682 |   | $ | 9,743 |   |

----

                 * 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 conservationactivities, and PublicUtilities Commission regulated water and sewage transmission operations.The Community Development segment also includes the Company’s 51% equityinterest in Kapalua Bay Holdings LLC (Note 14). Remaining in the Resort segmentare the operations of three championship golf courses, a tennis facility,several retail outlets, and a vacationrental program (The Kapalua Villas) at the Kapalua Resort.

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

| ** ** | ** ** | **Three Months**            | ** ** | **Nine Months**             | ** ** |
|------------|------------|----------------------------------|------------|----------------------------------|------------|
| ** ** | ** ** | **Ended September 30** | ** ** | **Ended September 30** | ** ** |
| ** ** | ** ** | **2006**                         | ** ** | **2005**                         | ** ** | **2006** | ** ** | **2005** | ** ** |
| Basic      |       | 7,258,800                        |       | 7,230,319                        |       | 7,256,815 |   | 7,228,501 |   |
| Diluted    |       | 7,258,800                        |       | 7,303,749                        |       | 7,350,597 |   | 7,315,657 |   |

 

For the three months endedSeptember 30, 2006, potentially dilutive common shares of 91,160 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**                                    | ** ** | **Nine Months**                                     | ** ** |
|---------------------------------------|------------|----------------------------------------------------------|------------|----------------------------------------------------------|------------|
| ** **                            | ** ** | **Ended September 30,**                        | ** ** | **Ended September 30,**                        | ** ** |
| ** **                            | ** ** | **    2006    ** | ** ** | **    2005    ** | ** ** | **2006** | ** ** | **2005** | ** ** |
| ** **                            | ** ** | **(in thousands)**                                  | ** ** |
| **Pension Benefits**                  |       |                                                     |       |                                                     |       |   |   |   |   |   |   |   |   |
| Service cost                          |       |                                                     | $          | 587                                                      |       |   |   | $ | 346 |   |   | $ | 1,389 |   | $ | 1,204 |   |
| Interest cost                         |       |                                                     | 947        |                                                     |       |   | 706 |   |   | 2,459 |   | 2,268 |   |
| Expected return  on plan assets       |       |                                                     | (909       | )                                                        |       |   | (804 | ) |   | (2,525 | ) | (2,424 | ) |
| Amortization of prior  service cost   |       |                                                     | 11         |                                                     |       |   | 17 |   |   | 35 |   | 41 |   |
| Amortization of  transition liability |       |                                                     | 7          |                                                     |       |   | 6 |   |   | 19 |   | 19 |   |
| Curtailment loss                      |       |                                                     | 74         |                                                     |       |   | — |   |   | 74 |   | — |   |
| Recognized  actuarial loss            |       |                                                     | 304        |                                                     |       |   | 33 |   |   | 498 |   | 285 |   |
| Net expense                           |       |                                                     | $          | 1,021                                                    |       |   |   | $ | 304 |   |   | $ | 1,949 |   | $ | 1,393 |   |
| **Other Benefits**                    |       |                                                     |       |                                                     |       |   |   |   |   |   |   |   |   |
| Service cost                          |       |                                                     | $          | 56                                                       |       |   |   | $ | 109 |   |   | $ | 250 |   | $ | 292 |   |
| Interest cost                         |       |                                                     | 101        |                                                     |       |   | 232 |   |   | 577 |   | 712 |   |
| Amortization of  prior service cost   |       |                                                     | (31        | )                                                        |       |   | (31 | ) |   | (95 | ) | (96 | ) |
| Special  termination benefits         |       |                                                     | 69         |                                                     |       |   | — |   |   | 69 |   | — |   |
| Curtailment  (gain)                   |       |                                                     | (7         | )                                                        |       |   | — |   |   | (7 | ) | — |   |
| Recognized  actuarial (gain)          |       |                                                     | (284       | )                                                        |       |   | (16 | ) |   | (386 | ) | (152 | ) |
| Net Expense                           |       |                                                     | $          | (96                                                      | )          |   |   | $ | 294 |   |   | $ | 408 |   | $ | 756 |   |

 

11

----

The Company expects tocontribute $2.2 million to its defined benefit pension plans and expects tocontribute $686,000 to its other post-retirement benefit plans in 2006. In September 2006,as a result of efficiencies gained with the new fresh fruit packing facilitythat commenced operations at the end of June 2006, the Company reduced itsworkforce by approximately 6%. This resulted in a curtailment loss to thebargaining and hourly pension plan and a curtailment gain to the postretirementhealth plan. The Company also recognized special termination benefits foradditional years of service credited to postretirement health insurancebenefits for the former workers who were eligible for retirement.

**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 are variousother claims and legal actions pending against the Company. In the opinion ofmanagement, after consultation with legal counsel, the resolution of theseother matters is not expected to have a material adverse effect on the Company’sfinancial 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 September 30,2006, the Company had commitments under signed contracts totaling $21.7million, which primarily relate to real estate development projects.

**13.**          RelatedParty Transactions

In March 2006, the Company entered into anagreement to sell 190 acres of Upcountry Maui land and improvements thereon toDavid C. Cole, the Company’s Chairman, President and Chief Executive Officer,for $4.9 million. As provided for in the purchase and sale agreement, in August 2006,the boundaries of the subject property were adjusted to accommodate natural topographicfeatures based on completion of a survey map; and accordingly, an amendment tothe agreement revises the sales price to $4.1 million for 157 acres. Priorto the closing of the sale, the Company will lease a 3,500 square footresidence that is located on the property to Mr. Cole for $1,500 permonth, which amount represents fair market value based on an estimate by athird party realtor.

In August 2006, the Company entered into anagreement to sell approximately 89 acres of Upcountry Maui land to DuncanMacNaughton, a member of the Company’s Board of Directors, for $3.6 million. Theagreement with Mr. MacNaughton was cancelled in November 2006.

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 land sale agreementswere structured in compliance with the Company’s policy for related party realestate sales. Such policy requires an independent appraisal of the propertyvalue, allows for a 

12

----

3% discountto the sales price in lieu of broker’s commissions, and requires review andapproval of the sales price by the Audit Committee of the Board of Directors(the “Committee”). The Committee reviewed the appraisals and the terms of theagreements with the other independent Directors, and the sales were approved byall of the independent Directors. The sales agreements require a deposit of$50,000 upon execution and the balance of the sales price is payable incash upon closing of the sale. Subdivision of the land parcels is a conditionprecedent to the closing of the sales. The Company estimates that the closingswill occur in 2007. The subject properties had been previously designated forsale in 2004 as part of the real estate that is considered non-core to theCompany’s operations.

**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 Bay entered into aConstruction Loan Agreement (the “Loan Agreement”) with Lehman BrothersHoldings Inc., a Delaware corporation (“Lehman”), for the lesser of $370million or 61.6% of the total projected cost of the project (the “Loan”). Uponclosing of the Loan, the lender disbursed an initial advance of $40.1 millionto Kapalua Bay. Kapalua Bay paid Lehman a loan fee of $3.7 million out ofthe 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 shall be used only for specified budgeted items for which suchproceeds were advanced. The lender is not obligated to make further advancesuntil certain building permits for the project have been issued. The Companyestimates that such building permits will be issued in the fourth quarter of2006. After issuance of the building permits, Kapalua Bay may borrow up to anadditional $44.9 million for certain purposes, for a total advance of $85 million.Subsequent borrowings by Kapalua Bay are contingent upon sales of residentialunits equal to or exceeding $285.0 million. As of October 2006, KapaluaBay has received approximately $190 million in non-binding sales commitments.

Interest accrues on the Loan at a floating rate equalto the one (1) month LIBOR rate plus two hundred twenty (220) basispoints, or 2.2% (the “Adjusted LIBOR Rate”). Subject to certain limitations,during the term of the Loan, Kapalua Bay may elect to have the then-currentAdjusted LIBOR Rate apply to some or all of the outstanding Loan amount. Allprincipal and interest amounts due under the Loan shall be due and payable infull on August 1, 2009 unless Kapalua Bay elects to extend the maturitydate for up to two additional terms of twelve (12) months, which elections aresubject to the satisfaction of certain conditions. Kapalua Bay may not prepaythe Loan at any time prior to the second anniversary of the Effective Date, butmay prepay the Loan thereafter, provided that it pays certain costs and fees asset forth in the Loan Agreement.

The Loan is collateralized by the project assets,including the fee simple interest in the land owned by Kapalua Bay, theadjacent spa parcel owned by the Company, and all of the sales contracts.

13

----

The Company and the other members of the joint venturehave guaranteed to the lender completion of the project and each member’s prorata share of costs and losses incurred by the lender as a result of theoccurrence of specified triggering events during the term of the Loan Agreement.The members’ guarantee to the lender does not include payment in full of theLoan. The Company has recognized a liability of $968,000, representing theestimated fair value of its obligation under this Loan Agreement. During thefirst nine months of 2006, the Company made cash contributions of $7.5 millionto the joint venture.

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

| ** **        | ** ** | **Three Months**             | ** ** | **Nine Months**              | ** ** |
|-------------------|------------|-----------------------------------|------------|-----------------------------------|------------|
| ** **        | ** ** | **Ended September 30,** | ** ** | **Ended September 30,** | ** ** |
| ** **        | ** ** | **2006**                          | ** ** | **2005**                          | ** ** | **2006** | ** ** | **2005** | ** ** |
| ** **        | ** ** | **(in thousands)**           | ** ** |
| Revenues          |       | $                                 | 197        |                              | $          | 6,689 |   | $ | 6,865 |   | $ | 18,727 |   |
| Expenses          |       | 4,539                             |       | 6,798                             |       | 13,890 |   | 19,110 |   |
| Net Profit (Loss) |       | $                                 | (4,342     | )                                 | $          | (109 | ) | $ | (7,025 | ) | $ | (383 | ) |

 

Note: Kapalua Bay Hotelwas closed for demolition in April 2006 in connection with theconstruction of the residential development. The Company’s portion of thelosses is recorded as “Equity in Losses of Affiliates” in the CondensedConsolidated Statements of Operations.

**15.**          NewAccounting Pronouncements

On July 13, 2006, the Financial AccountingStandards Board (FASB) issued FASB Interpretation No. 48, “Accounting forUncertainty in Income Taxes-an interpretation of FASB Statement No. 109”(FIN 48). This interpretation prescribes a recognition threshold andmeasurement attribute for the financial statement recognition and measurementof a tax position taken or expected to be taken in a tax return. This interpretationalso provides guidance on derecognition, classification, interest andpenalties, accounting in interim periods, disclosure, and transition. The newinterpretation will be effective for fiscal years beginning after December 15,2006. The Company will be required to adopt this interpretation in the firstquarter of 2007. At this time, the Company has not completed its review andassessment of the impact of adoption of FIN 48.

On September 15, 2006, the FASB issued Statementof Financial Accounting Standards No. 157 (SFAS No. 157), “Fair ValueMeasurements,” which defines fair value, establishes guidelines for measuringfair value, and expands disclosures regarding fair value measurements. SFAS No. 157does not require any new fair value measurements but rather eliminatesinconsistencies in guidance found in various prior accounting pronouncements. SFASNo. 157 is effective for fiscal years beginning after November 15,2007. The Company is currently evaluating the impact of SFAS No. 157, butdes not expect that the adoption of SFAS No. 157 will have a materialimpact on the Company’s consolidated financial position, results of operations,or cash flows.

On September 29,2006, the FASB issued Statement of Financial Accounting Standards No. 158(SFAS No. 158), “Employers’ Accounting for Defined Benefits Pension andOther Postretirement Plans.” The standard amends FASB Statements Nos. 87, 88,106 and 132(R) and would require an employer to recognize the over-fundedor under-funded status of a defined benefit postretirement plan (other than amultiemployer plan) as an asset or liability in its statement of financialposition and to recognize changes in that funded status in the year in whichthe changes occur though comprehensive income. The pension asset or liabilityis the difference between the plan assets at fair value and the projectedbenefit obligation as of year end. The Company is required to adopt thisstandard effective for the year ending December 31, 2006. 

14

----

TheCompany is currently assessing the impact of SFAS No. 158 on itsconsolidated financial position, results of operations, or cash flows.

**16.**          SubsequentEvent

On October, 27, 2006, the Company, as Borrower,entered into a Loan Agreement with the Bank of Hawaii, as Lender, which wassubsequently assigned by the Bank of Hawaii to GE Capital Public Finance, Inc.Pursuant to the terms of a Mortgage, Security Agreement, Assignment of Leasesand Rents and Fixture Filing executed by the Company in favor of the Lender,the loan is secured by approximately 24 acres of land and other real estatecomprising the Company’s cannery property. The principal amount of the loan is$10 million and interest on the loan accrues at a fixed rate of 6.93%. The loanis fully amortized over a 20-year term with monthly interest andprincipal payments of $77,169 commencing on December 1, 2006. The Companymay prepay the outstanding principal of the loan at anytime subject to aprepayment penalty of 2% in the first year and 1% in the second year of theloan.

15

----

**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 and 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 we believewill improve 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, several restaurants, and over 800 single familyresidential lots, condominiums and homes. We operate Kapalua Resort’s threegolf courses, the tennis facility, several retail shops, a vacation rentalprogram (The Kapalua Villas), and provide certain services to the Resort. As ofSeptember 30, 2006 we had 264 units in the Kapalua Villas vacation rentalprogram.

16

----

*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 realestate company 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. Kapalua BayHoldings LLC is demolishing the Kapalua Bay Hotel and the adjacent shops inorder to develop new whole and fractional residential units, an ocean-side spa,and a beach club at that location.

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. Detailed planning for KapaluaMauka is currently underway.

·       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 and apartmentsare intended to be affordable for working families as defined by the County ofMaui. 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 community wheresustainable agriculture, education, and green building principles are coredesign 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 thirdquarter of 2006, some of the Company’s significant transactions, events and keyinitiatives include the following:

·       Thethird quarter was the first full quarter of fresh fruit processing at theCompany’s new fresh fruit packing facility in Kahului. Operations commenced atthe new facility at the end of June.

·       InJuly, demolition of the Kapalua Bay Hotel commenced, and we began sales of fractionalownership units that will be constructed on the site. Sale of thewhole-ownership units began in June. Construction loan financing for thisproject was also concluded in July.

·       InJuly, we announced the formation of Hawaii BioEnergy LLC, an internationalconsortium including our Company. The LLC will research the viability ofrenewable energy crops, products and services in the State of Hawaii.

17

----

·       InJuly, our Agriculture segment and corporate services implemented a newaccounting system. Implementation of this system for our Resort and CommunityDevelopment segments was completed in May.

·       InAugust, we began implementation of our plans to centralize and reorganize ouraccounting and other corporate service functions.

·       InSeptember, we held a “Pineapple Festival” at our Kahului cannery grounds thatwas free to the public and celebrated the past, present and the future ofpineapple in Maui.

·       In September and earlyOctober, the Company terminated through voluntary resignation and layoffsapproximately 6% of its work force as the improved technology of our new freshfruit packing facility automated certain tasks.

**Critical AccountingPolicies and Estimates**

The preparation ofconsolidated financial statements in conformity with accounting principles generallyaccepted in the United States of America requires the use of accountingestimates. Changes in these estimates and assumptions are considered reasonablypossible and may have a material effect on the consolidated financialstatements and thus actual results could differ from the amounts reported anddisclosed herein. The Company’s critical accounting policies that require theuse of estimates and assumptions were discussed in detail in the most recentlyfiled Form 10-K and have not changed materially from thatdiscussion.

**RESULTS OFOPERATIONS**

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

**CONSOLIDATED**

| ** **                         | ** ** | **Three Months Ended September 30,**             | ** ** |
|------------------------------------|------------|----------------------------------------------------------------------|------------|
| ** **                         | ** ** | **   2006   **                         | ** ** | **   2005   ** | ** ** | **   difference   ** | ** ** |
| ** **                         | ** ** | **(in millions, except per share amounts)** | ** ** |
| *Consolidated  Revenues*           |       |                                                                 | $          | 39.9 |   |   |   | $ | 44.1 |   |   |   | $ | (4.2 | ) |   |
| *Net Income (Loss)*                |       |                                                                 | $          | (2.5 | ) |   |   | $ | 2.0 |   |   |   | $ | (4.5 | ) |   |
| *Basic  Earnings Per Common Share* |       |                                                                 | $          | (0.34 | ) |   |   | $ | 0.28 |   |   |   | $ | (0.62 | ) |   |

 

We reported a net loss of$2.5 million ($.34 per share) for the third quarter of 2006 compared to netincome of $2.0 million ($.28 per share) for the third quarter of 2005. Theprimary difference in operating results between the three months ended September 30,2006 and 2005 was due to $6.0 million in revenues and $5.6 million inconsolidated pre-tax profit from land sales that were recorded in the threemonths ended September 30, 2005. Consolidated revenues for the thirdquarter of 2006 were $39.9 million compared to $44.1 million for the thirdquarter of 2005. The reduction in consolidated revenues in the third quarter of2006 was partially due to a decrease of $2.1 million in revenues from theAgriculture segment and a decrease of $3.2 million in revenues from theCommunity Development segment, partially offset by an increase of $1.2 millionin revenues from the Resort segment.

*General andAdministrative*

Consolidated general and administrative expensesincreased by 11%, or $1.0 million to $10.3 million for the third quarter of2006 from $9.3 million for the third quarter of 2005.

18

----

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

| ** **                                         | ** ** | **Three Months Ended September 30,** | ** ** |
|----------------------------------------------------|------------|----------------------------------------------------------|------------|
| ** **                                         | ** ** | **   2006   **             | ** ** | **   2005   ** | ** ** | **   difference   ** | ** ** |
| ** **                                         | ** ** | **(in millions)**                                   | ** ** |
| Salaries &  wages                         |       |                                                     | $          | 2.8 |   |   |   | $ | 2.2 |   |   |   | $ | 0.6 |   |   |
| Employee  incentives & stock compensation |       |                                                     | 0.3        |   |   |   | 0.7 |   |   |   | (0.4 | ) |   |
| Employee  severance                                |       |                                                     | 1.7        |   |   |   | 0.2 |   |   |   | 1.5 |   |   |
| Pension and other  postretirement expense          |       |                                                     | 0.9        |   |   |   | 0.6 |   |   |   | 0.3 |   |   |
| Professional  services                             |       |                                                     | 1.3        |   |   |   | 1.9 |   |   |   | (0.6 | ) |   |
| Depreciation  expense                              |       |                                                     | 0.9        |   |   |   | 1.4 |   |   |   | (0.5 | ) |   |
| Other                                              |       |                                                     | 2.4        |   |   |   | 2.3 |   |   |   | 0.1 |   |   |
| Total                                              |       |                                                     | $          | 10.3 |   |   |   | $ | 9.3 |   |   |   | $ | 1.0 |   |   |

 

Approximately half of the increase in salaries andwages in the third quarter of 2006 was due to salaries and wages for ourAgriculture segment personnel who were taken out of operations to be trainedfor other work. These employees were removed from the pineapple operations inconnection with our transition to a less labor-intensive operation that is morefocused on fresh fruit. The remaining increase in salaries and wages was theresult of increases in personnel and wage adjustments. The increase in employeeseverance cost reflects the reduction in the Agriculture segment work force in September 2006.

Pension expense increased in the third quarter of 2006compared to the third quarter of 2005 primarily because of reduction in thediscount rate from 6% to 5.875% between the two periods and the use of anupdated mortality table in 2006.

The decrease in professional services primarilyreflects costs incurred in 2005 to maintain and adjust the accounting systemthat was being used by our corporate services and Agriculture segment. Adecision was made in the fourth quarter of 2005 to replace accountinginformation technology systems and standardize our primary accounting systemsand processes used by all of our businesses. In addition, the decrease inprofessional service costs in the third quarter of 2006 is due to higher costincurred in 2005 to prepare the Company for compliance with the Sarbanes-OxleyAct of 2002, Section 404.

The reduction in depreciation expense charged togeneral and administrative expense reflects the change in estimated usefullives for our cannery and can plant assets. In 2005, we estimated that the newcannery and can plant would be in service by the end of the second quarter of2006. In January 2006, our plans were revised to move forward with thefresh fruit packing facility and to postpone the completion of the cannery andcan plant renovations to 2007. We prospectively revised the depreciationcharges in the fourth quarter of 2005 for this change in estimated useful livesof the cannery and can plant. The reduction in depreciation expense for thecannery and can plant was partially offset by the acceleration of depreciationcharges for the agriculture and corporate accounting systems. These accountingsystem assets were fully depreciated in the first half 2006, as the newaccounting system was placed in service as of the beginning of the thirdquarter 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$131,000 for the third quarter of 2006 compared to $71,000 for the thirdquarter of 2005. Interest incurred in the third quarter of 2006 was $726,000,of which $595,000 was capitalized to construction projects. Our major capitalprojects under construction in 2006 include Honolua Ridge 

19

----

Phase II,The Village at Kapalua Resort, the fresh fruit packing facility and corporateoffices, and replacement of our accounting systems. In the third quarter of2005, interest incurred was $320,000 of which $249,000 was capitalized. Oureffective interest rate on borrowings was 7.8% in the third quarter of 2006compared to 6.6% in the third quarter of 2005.

**AGRICULTURE**

| ** **                   | ** ** | **Three Months Ended September 30,** | ** ** |
|------------------------------|------------|----------------------------------------------------------|------------|
| ** **                   | ** ** | **  2006  **                         | ** ** | **  2005  ** | ** ** | **  difference  ** | ** ** |
| ** **                   | ** ** | **(in millions)**                                   | ** ** |
| *Revenues*                   |       |                                                     | $          | 18.2 | * * |   |   | $ | 20.3 | * * |   |   | $ | (2.1 | ) |   |
| *% of consolidated revenues* | * *   | * *                                                 | *46*       | *%* | * * | * * | *46* | *%* |   |   |   |   |   |
| *Operating  Loss*            |       |                                                     | $          | (4.0 | *)* |   |   | $ | (2.5 | *)* |   |   | $ | (1.5 | ) |   |

 

The Agriculture segment produced an operating loss of$4.0 million for the third quarter of 2006 compared to an operating loss of$2.5 million for the third quarter of 2005. Revenues for the third quarter of2006 were $18.2 million or 10% lower than the third quarter of 2005.

The Agriculture segmentrevenues were lower in the third quarter of 2006 compared to the third quarterof 2005 because lower case volume of processed pineapple sales were onlypartially offset by higher case volume of fresh pineapple sales. Operatinglosses reported by the Agriculture segment for the third quarters of 2006 and2005 included $568,000 and $715,000, respectively, of accelerated depreciationcharges for assets where the estimated useful lives have been reduced becauseof changes in our pineapple operations. In addition, the Agriculture segmentrecorded charges of $387,000 and $210,000, in the third quarters of 2006 and2005, respectively, related to re-training employees; and severance charges of$1.6 million in the third quarter of 2006 as a result of the severance ofa portion of the Agriculture workforce because of production efficienciesgained by the operation of the new fresh fruit packing plant.

*Processed and FreshOperations*

The case volume of fresh pineapple sales increased by17% and the average revenue per case of fresh pineapple sold decreased by 7% inthe third quarter of 2006 compared to the third quarter of 2005. Revenues fromfresh pineapple sales were approximately 46% of the Agriculture segment netsales for the third quarter of 2006, compared to approximately 38% for thethird quarter of 2005.

The case volume of processed pineapple sales decreasedby 27% for the third quarter of 2006 as compared to the third quarter of 2005primarily reflecting our strategy to reduce supply to selected retail marketsegments. The average sales prices for our processed pineapple productsincreased by approximately 5% for the third quarter of 2006 compared to thethird quarter of 2005.

Processed pineapple sold to the U. S. Government(primarily to the Department of Agriculture) comprised approximately 44% of ourcase volume of canned pineapple sales in the third quarter of 2006 compared to46% in the third quarter of 2005.

The Agriculture segment cost of sales was lower by 15%in the third quarter of 2006 compared to the third 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 approximately 9% lower primarily reflectingefficiencies that the operation is beginning to realize with the operation ofthe new fresh fruit packing facility.

20

----

Agriculturesegment shipping and marketing cost increased by $519,000 or 19%, in the thirdquarter of 2006 as compared to the third quarter of 2005 principally reflectingthe higher sales volume of fresh pineapple and increased freight fuel surchargecosts. We have been able to partially mitigate the effects of increasedshipping costs by increasing our usage of ocean transportation to ship ourfresh product to the mainland United States. In the third quarter of 2006 weshipped approximately 95% of our fresh product to the mainland United States byocean transportation (as compared to air freight, which is more costly)compared to 79% in the third quarter of 2005.

**RESORT**

| ** **                   | ** ** | **Three Months Ended September 30,** | ** ** |
|------------------------------|------------|----------------------------------------------------------|------------|
| ** **                   | ** ** | **  2006  **                         | ** ** | **  2005  ** | ** ** | **  difference  ** | ** ** |
| ** **                   | ** ** | **(in millions)**                                   | ** ** |
| *Revenues*                   |       |                                                     | $          | 10.8 | * * |   |   | $ | 9.6 | * * |   |   | $ | 1.2 |   |   |
| *% of consolidated revenues* | * *   | * *                                                 | *27*       | *%* | * * | * * | *22* | *%* |   |   |   |   |   |
| *Operating  Loss*            |       |                                                     | $          | (2.0 | *)* |   |   | $ | (2.2 | *)* |   |   | $ | 0.2 |   |   |

 

The Resort segment reported an operating loss of $2.0million for the third quarter of 2006 compared to $2.2 million for the thirdquarter of 2005. Resort segment revenues were $10.8 million for the thirdquarter of 2006 compared to $9.6 million for the third quarter of 2005, anincrease of 12%, as a result of increased revenues from the Kapalua Villas and fromour golf operations primarily due to rate increases.

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, resulting inapproximately 20% fewer rooms available at Kapalua Resort, and as expected,negatively affecting the number of paid rounds of golf and retail sales in2006.

*Golf, Retail andVillas*

Revenues from golf operations increased by 7% for thethird quarter of 2006 compared to the third quarter of 2005. Paid rounds ofgolf decreased by 17% and average green and cart fees increased by 40% in thethird quarter of 2006 compared to the third quarter of 2005.

Resort retail sales for the third quarter of 2006 wereabout 10% lower than sales in the third quarter of 2005, reflecting the closurein May 2006 of 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. In mid-October 2006, our new 1,900 squarefoot Kapalua Collections store featuring upscale resort wear opened at the newHonolua Village Center in our central resort area.

Revenues from the KapaluaVillas were higher in the third quarter of 2006 compared to the third quarterof 2005 reflecting a 16% higher average room rate partially offset by a 9%decrease in the number of occupied rooms. The increase in average room rate inthe third quarter of 2006 compared to the third quarter of 2005 reflects anincrease in direct bookings and a more aggressive pricing strategy across allchannels and product categories that reflect a shift to higher-end products andservice at the Kapalua Resort.

21

----

**COMMUNITY DEVELOPMENT**

| ** **                   | ** ** | **Three Months Ended September 30,** | ** ** |
|------------------------------|------------|----------------------------------------------------------|------------|
| ** **                   | ** ** | **  2006  **                         | ** ** | **  2005  ** | ** ** | **  difference  ** | ** ** |
| ** **                   | ** ** | **(in millions)**                                   | ** ** |
| *Revenues*                   |       |                                                     | $          | 10.9 | * * |   |   | $ | 14.1 | * * |   |   | $ | (3.2 | ) |   |
| *% of consolidated revenues* | * *   | * *                                                 | *27*       | *%* | * * | * * | *32* | *%* |   |   |   |   |   |
| *Operating  Profit*          |       |                                                     | $          | 2.0 | * * |   |   | $ | 7.6 | * * |   |   | $ | (5.6 | ) |   |

 

The Community Development segment reported anoperating profit of $2.0 million for the third quarter of 2006 compared to $7.6million for the third quarter of 2005. Revenues from this operating segmentdecreased by 23% to $10.9 million for the third quarter of 2006 compared to$14.1 million for the third quarter of 2005.

Lower results in 2006 primarily reflect land salestransactions during the third quarter of 2005, and our equity in the losses ofKapalua Bay LLC that were recorded in 2006. In the third quarter of 2005, theCompany concluded the sale of approximately 109 acres of Upcountry Maui land. Revenuesof $6.0 million and operating profit of $5.6 million from this real estatesales transactions were recognized by the Community Development segment in thethird quarter of 2005.

Our equity in the lossesof Kapalua Bay Holdings, LLC was $2.2 million in the third quarter of 2006compared to $56,000 in the third 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 third quarter of 2006, 15 lots had closed escrow, with five lotsclosing in the third quarter of 2006. Revenues and profit from this project arebeing recognized on a percentage-of-completion method, under which werecognized revenues of $8.5 million in the third quarter of 2006. Honolua RidgePhase II was approximately 83% complete at September 30, 2006. Our balancesheet at September 30, 2006 included deferred revenues of $6.5 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 third quarter of2005, we recognized revenues of $5.8 million on a percentage-of-completionmethod, from our Honolua Ridge Phase I and Phase II. Honolua Ridge Phase I wasapproximately 96% complete at the end of the third quarter of 2005 and 24 lotsales 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. Honolua Ridge Phase II was 14% complete at the end of the third quarterof 2005.

***Nine Months Ended September 30, 2006 compared toNine Months Ended September 30, 2005***

**CONSOLIDATED**

| ** **                         | ** ** | **Nine Months Ended September 30,**              | ** ** |
|------------------------------------|------------|----------------------------------------------------------------------|------------|
| ** **                         | ** ** | **   2006   **                         | ** ** | **   2005   ** | ** ** | **   difference   ** | ** ** |
| ** **                         | ** ** | **(in millions, except per share amounts)** | ** ** |
| *Consolidated  Revenues*           |       |                                                                 | $          | 132.4 |   |   |   | $ | 133.4 |   |   |   | $ | (1.0 | ) |   |
| *Net Income*                       |       |                                                                 | $          | 8.7 |   |   |   | $ | 9.7 |   |   |   | $ | (1.0 | ) |   |
| *Basic Earnings  Per Common Share* |       |                                                                 | $          | 1.20 |   |   |   | $ | 1.35 |   |   |   | $ | (0.15 | ) |   |

 

22

----

We reported net income of$8.7 million ($1.20 per share) for the first nine months of 2006 compared tonet income of $9.7 million ($1.35 per share) for the first nine months of 2005.Consolidated revenues for the first nine months of 2006 were $132.4 millioncompared to $133.4 million for the first nine of 2005. The lower net incomewere attributable to increased losses from the Agriculture segment and areduction in operating profit from the Community Development segment, partiallyoffset by lower losses from our Resort operations.

*General andAdministrative*

Consolidated general and administrative expensesincreased by 13% to $29.1 million for the first nine months of 2006 from $25.8million for the first nine months of 2005.

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

| ** **                                         | ** ** | **Nine Months Ended September 30,** | ** ** |
|----------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                                         | ** ** | **  2006  **                        | ** ** | **  2005  ** | ** ** | **  difference  ** | ** ** |
| ** **                                         | ** ** | **(in millions)**                                  | ** ** |
| Salaries &  wages                         |       |                                                    | $          | 8.3 |   |   |   | $ | 6.3 |   |   |   | $ | 2.0 |   |   |
| Employee  incentives & stock compensation |       |                                                    | 2.4        |   |   |   | 2.1 |   |   |   | 0.3 |   |   |
| Employee  severance                                |       |                                                    | 1.9        |   |   |   | 0.6 |   |   |   | 1.3 |   |   |
| Pension and other  postretirement expense          |       |                                                    | 2.4        |   |   |   | 2.1 |   |   |   | 0.3 |   |   |
| Professional  services                             |       |                                                    | 3.9        |   |   |   | 4.3 |   |   |   | (0.4 | ) |   |
| Depreciation  expense                              |       |                                                    | 3.5        |   |   |   | 3.9 |   |   |   | (0.4 | ) |   |
| Other                                              |       |                                                    | 6.7        |   |   |   | 6.5 |   |   |   | 0.2 |   |   |
| Total                                              |       |                                                    | $          | 29.1 |   |   |   | $ | 25.8 |   |   |   | $ | 3.3 |   |   |

 

Approximately $1.0 million of the increase in salariesand wages in the first nine months of 2006 was due to salaries and wages forour Agriculture segment personnel who were taken out of operations to betrained 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 including stock option and restricted stock grants. The increase inemployee severance cost reflects the reduction in the Agriculture segment workforce in September 2006.

Pension expense increased in the first nine months of2006 compared to the same period in 2005 primarily because of a reduction inthe discount rate from 6% to 5.875% between the two periods and the usage of amore current mortality table in 2006.

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. In addition, the decrease in professional service costs in thefirst nine months of 2006 is due to higher cost incurred in 2005 to prepare theCompany for compliance with the Sarbanes-Oxley Act of 2002, Section 404.

The reduction in depreciation expense charged togeneral and administrative expense reflects the change in estimated usefullives for our cannery and can plant assets. In 2005, we estimated that the newcannery and can plant would be in service by the end of the second quarter of2006. In January 2006, our plans were revised to move forward with thefresh fruit packing facility and to postpone the completion of the cannery andcan plant renovations to 2007. We prospectively revised the depreciationcharges in the fourth quarter of 2005 for this change in estimated useful livesof the cannery and can plant. The reduction in depreciation expense for thecannery and can plant was partially offset by the acceleration of depreciationcharges for the agriculture and corporate accounting systems. These accountingsystem assets 

23

----

were fully depreciated inthe first half 2006, as the new accounting system was placed in service as ofthe 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 the services provided to the operating segments.

*Interest Expense*

Interest expense was$160,000 for the first nine months of 2006 compared to $308,000 for the firstnine months of 2005. Interest incurred in the first nine months of 2006 was$1,547,000, of which $1,387,000 was capitalized to construction projects. Ourmajor capital projects under construction in 2006 include Honolua Ridge PhaseII, The Village at Kapalua Resort, the fresh fruit packing facility andoffices, and replacement of our accounting systems. In the first nine months of2005, interest incurred was $894,000 of which $586,000 was capitalized. Oureffective interest rate on borrowings was 7.6% in the first nine months of 2006compared to 6.2% in the first nine months of 2005.

**AGRICULTURE**

| ** **                   | ** ** | **Nine Months Ended September 30,** | ** ** |
|------------------------------|------------|---------------------------------------------------------|------------|
| ** **                   | ** ** | **  2006  **                        | ** ** | **  2005  ** | ** ** | **  difference  ** | ** ** |
| ** **                   | ** ** | **(in millions)**                                  | ** ** |
| *Revenues*                   |       |                                                    | $          | 48.5 | * * |   |   | $ | 52.3 | * * |   |   | $ | (3.8 | ) |   |
| *% of consolidated revenues* | * *   | * *                                                | *37*       | *%* | * * | * * | *39* | *%* |   |   |   |   |   |
| *Operating  Loss*            |       |                                                    | $          | (9.7 | *)* |   |   | $ | (7.2 | *)* |   |   | $ | (2.5 | ) |   |

 

The Agriculture segment produced an operating loss of$9.7 million for the first nine months of 2006 compared to an operating loss of$7.2 million for the first nine months of 2005. Revenues for the first ninemonths of 2006 were $48.5 million or 7% lower than the first nine months of2005 primarily due to a lower case volume of processed pineapple sales thatwere only partially offset by higher case volume of fresh pineapple sales.

Operating losses reportedby the Agriculture segment for the first nine months of 2006 and 2005 include$1.9 million and $2.2 million, respectively, of accelerated depreciationcharges related to assets where the estimated useful lives were reduced becauseof changes in our pineapple operations. The Agriculture segment also recorded$1.9 million for employee severance cost in the first nine months of 2006primarily as a result of production efficiencies gained by the operation of thenew fresh fruit packing plant and charges of $764,000 related to inventoriesthat were considered obsolete with the change to the new packing facility thatwent into operation at the end of June 2006. In addition, the Agriculturesegment recorded $1.4 million of charges related to re-training employees inthe first nine months of 2006 compared to $210,000 of re-training charges inthe same period in 2005.

*Processed and Fresh Operations*

The case volume of freshpineapple sales increased by 28% and the average revenue per case of freshpineapple sold decreased by 3% in the first nine months of 2006 compared to thefirst nine months of 2005. Revenues from fresh pineapple sales wereapproximately 47% of the Agriculture segment net sales for the first ninemonths of 2006, compared to approximately 35% for the first nine months of2005.

The case volume ofprocessed pineapple sales decreased by 31% for the first nine months of 2006 ascompared to the first nine months of 2005 primarily reflecting our strategy toreduce supply to selected 

24

----

retailmarket segments. The average sales prices for our processed pineapple productsincreased by approximately 9% for the first nine months of 2006 compared to thesame period of 2005.

Processed pineapple soldto the U. S. Government (primarily to the Department of Agriculture) comprisedapproximately 36% of our case volume of canned pineapple sales in the firstnine months of 2006 compared to 41% in the first nine months of 2005. Thedecrease in the percentage of processed pineapple sales to the U. S. Governmentis a result of unanticipated sales in 2005 that did not recur in 2006.

The Agriculture segmentcost of sales was lower by 12% in the first nine months of 2006 compared to thefirst nine months of 2005, primarily reflecting the reduced sales volume ofprocessed pineapple partially offset by the increased sales volume of freshpineapple. The average per unit cost of sales for processed pineapple washigher in 2006 compared to 2005 because of the reduced tonnage of fruit beingprocessed, while the average per unit cost of sales for fresh pineapple waslower primarily reflecting efficiencies that the operation is beginning torealize with the operation of the new fresh packing facility.

Agriculturesegment shipping and marketing cost increased by $1.1 million or 15%, in thefirst nine months of 2006 as compared to the same period of 2005 principallyreflecting the higher sales volume of fresh pineapple and increased freightfuel surcharge costs. However, the average shipping and selling cost for ourfresh pineapple was lower in the first nine months of 2006 compared to thefirst nine months of 2005 primarily because in 2006 we shipped approximately81% of our fresh product to the mainland United States by ocean transportation(as compared to air freight, which is more costly) compared to 71% in the firstnine months of 2005.

**RESORT**

| ** **                   | ** ** | **Nine Months Ended September 30,** | ** ** |
|------------------------------|------------|---------------------------------------------------------|------------|
| ** **                   | ** ** | **  2006  **                        | ** ** | **  2005  ** | ** ** | **  difference  ** | ** ** |
| ** **                   | ** ** | **(in millions)**                                  | ** ** |
| *Revenues*                   |       |                                                    | $          | 35.1 | * * |   |   | $ | 30.6 | * * |   |   | $ | 4.5 |   |   |
| *% of consolidated revenues* | * *   | * *                                                | *27*       | *%* | * * | * * | *23* | *%* |   |   |   |   |   |
| *Operating  Loss*            |       |                                                    | $          | (3.4 | *)* |   |   | $ | (4.2 | *)* |   |   | $ | 0.8 |   |   |

 

The Resort segment reported an operating loss of $3.4million for the first nine months of 2006 compared to $4.2 million for thefirst nine months of 2005. Resort segment revenues were $35.1 million for thefirst nine months of 2006 compared to $30.6 million for the first nine monthsof 2005, an increase of 15%, as a result of higher revenues from the KapaluaVillas and 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 nine 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 closure resultedin approximately 20% fewer available rooms at Kapalua Resort, and as expected,negatively affecting the number of paid rounds of golf and retail sales in thefirst nine months of 2006.

25

----

*Golf, Retail andVillas*

Revenues from golf operations increased by 18% for thefirst nine months of 2006 compared to the first nine months of 2005. Overall,paid rounds of golf decreased by 5%, and average green and cart fees increasedby 38% in the first nine months of 2006 compared to the first nine months of2005.

Resort retail sales for the first nine months of 2006were about 5% lower than sales in the first nine 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. In mid-October 2006,our new 1,900 square foot Kapalua Collections store featuring upscale resortwear opened at The Honolua Village Center in our central resort area.

Revenues from the KapaluaVillas increased in the first nine months of 2006 compared to the first ninemonths of 2005, primarily reflecting a 20% 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.

**COMMUNITY DEVELOPMENT**

| ** **                   | ** ** | **Nine Months Ended September 30,** | ** ** |
|------------------------------|------------|---------------------------------------------------------|------------|
| ** **                   | ** ** | **  2006  **                        | ** ** | **  2005  ** | ** ** | **  difference  ** | ** ** |
| ** **                   | ** ** | **(in millions)**                                  | ** ** |
| *Revenues*                   |       |                                                    | $          | 48.5 | * * |   |   | $ | 50.4 | * * |   |   | $ | (1.9 | ) |   |
| *% of consolidated revenues* | * *   | * *                                                | *37*       | *%* | * * | * * | *38* | *%* |   |   |   |   |   |
| *Operating  Profit*          |       |                                                    | $          | 26.1 | * * |   |   | $ | 27.0 | * * |   |   | $ | (0.9 | ) |   |

 

The Community Development segment reported anoperating profit of $26.1 million for the first nine months of 2006 compared to$27.0 million for the first nine months of 2005. Revenues from this operatingsegment were $48.5 million for the first nine months of 2006 compared to $50.4million for the first nine months of 2005.

In the first nine 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 ninemonths of 2005, we recognized revenues of $20.5 million and operating profit of$16.1 million from five real estate sales transactions. In June of 2005,we concluded the sale of approximately 25 acres of land and improvements to theHui No`eau Visual Arts Center. We also sold approximately 240 acres ofUpcountry Maui land in the first nine months of 2005.

Our equity in the lossesof Kapalua Bay Holdings, LLC was $3.6 million in the first nine months of 2006compared to $195,000 in the first nine 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 nine months of 2006, 15 lots had closed escrow, with eightlot sales closing in the first nine months of 2006. Revenues and profit fromthis project are being recognized on a percentage-of-completion method, underwhich we recognized revenues of $19.6 million in the first nine months of 2006.Honolua Ridge Phase II was approximately 83% complete at September 30,2006. Our balance sheet at September 30, 2006 included deferred revenuesof $6.5 million related to 

26

----

Honolua Ridge PhaseII, which represents cash received from the sale of the lots that have not beenrecognized as revenues under the percentage-of-completion method.

In the first nine monthsof 2005, we were selling lots in Honolua Ridge Phase I and recognized revenuesof $22.0 million on a percentage-of-completion method. Honolua Ridge Phase Iwas approximately 96% complete at September 30, 2005 and 24 lot sales hadclosed escrow through that date. All of the Honolua Ridge Phase I lots weresold and construction of the project was 100% complete by the end of 2005. Inthe first nine months of 2005, we recognized revenues of $1.0 million from lotsales at Honolua Ridge Phase II, which was 14% complete at that time.

**LIQUIDITY ANDCAPITAL RESOURCES**

*Debt Position*

At September 30, 2006, our total debt, includingcapital leases, was $33.9 million, compared to $11.1 million at December 31,2005. The increase was primarily due to capital expenditures and cash used inoperating activities. At September 30, 2006, the Company had unusedlong-term credit lines of $14.2 million.

In September and October of2006, we concluded $14.5 million in additional long-term debt secured by ournew fresh fruit packing equipment and approximately 20 acres of land and otherreal estate comprising our Kahului cannery property. $4.5 million of suchlong-term debt is in the form of an equipment loan, which requires monthlyinterest and principal payments and is fully amortized over a 7-year term.Interest accrues under the 7-year term loan at the rate of 6.66% perannum. The remainder of such long-term debt is in the form of a $10 millionreal estate loan, which requires monthly interest and principal payments and isfully amortized over a 20 year term. Interest accrues under the 20-yearterm loan at the rate of 6.93% per annum. Both loans require that the Companymeet certain financial covenants that are similar to those for our revolvingcredit agreements.

*Operating CashFlows*

In thefirst nine months of 2006, consolidated net cash flows used in operatingactivities were $15.8 million, compared to cash flow provided by operating activitiesof $3.4 million for the first nine months of 2005. By operating segment, thesecash flows were approximately as follows:

| ** **                 | ** ** | **Nine Months Ended September 30,**                                                                          | ** ** |
|----------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------|------------|
| ** **                 | ** ** | **          2006          ** | ** ** | **          2005          ** | ** ** |
| ** **                 | ** ** | **(in millions)**                                                                                                           | ** ** |
| Agriculture                |       |                                                                                                                             | $          | (3.7 | ) |   |   | $ | (0.9 | ) |   |
| Resort                     |       |                                                                                                                             | (0.9       | ) |   |   | (0.1 | ) |   |
| Community  Development     |       |                                                                                                                             | (4.7       | ) |   |   | 5.1 |   |   |
| Interest, taxes  and other |       |                                                                                                                             | (6.5       | ) |   |   | (0.7 | ) |   |
| Total                      |       |                                                                                                                             | $          | (15.8 | ) |   |   | $ | 3.4 |   |   |

 

The increase in cash used by operating activities forthe Agriculture segment for the first nine months of 2006 compared to the sameperiod in 2005 primarily reflects the increased operating loss and cashoutflows for payments for pineapple inventories, partially offset by increasedcollection of accounts receivable. The second and third quarters of the year isgenerally when higher than average cash outflows occur in the pineappleoperations for harvesting and processing.

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 nine months of 2006, closing of lot sales at HonoluaRidge Phase II resulted in $12.6 million of cash proceeds. In the first ninemonths of 2005, the closing of lot sales at Honolua Ridge 

27

----

Phase I subdivisionresulted in cash proceeds of $16.5 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$6.5 million in the first nine months of 2006.

*Real Estate SalesProceeds*

In the first nine monthsof 2006, the re-investment period expired on $38 million of proceeds fromprevious sales of properties in 2005 and early 2006 and the funds were returnedto us by the exchange intermediary.

*Future CashOutflows*

Contributions to pension plans and to otherpost-retirement plans are expected to be $2.9 million in 2006.

Cash obligations in connection with the constructionof the Residences at Kapalua Bay project are expected to total approximately$16 million in 2006. See Note 14 to Condensed Consolidated Financial Statements.We expect 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 $48 million of whichapproximately $13 million relates to the fresh fruit processing facility thatwill replace our existing fresh fruit packing facility, and $7 million is forthe replacement of other existing equipment and facilities. We expect to incurapproximately $6 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 $13.0 million in 2006. Expenditures for subdivisioninfrastructure improvements to date have been funded by proceeds from pre-salesof the lots. Ten lots in Phase II remain to be sold at September 30, 2006.

**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;

28

----

·       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;

·       theimpact of government regulations on land use and real estate sales on Maui;

·       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.

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 thesections entitled “Management’s Discussion and Analysis of Financial Conditionand Results of Operations” and “Risk Factors” in this Quarterly Report on Form 10-Q,as well 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 nine months 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.

29

----

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.

As of July 2006, we completed the transition ofour accounting functions for all operating segments to new accounting systems. Thesechanges impacted the Company’s internal control over financial reporting forthe fiscal quarter ended September 30, 2006. In the fourth quarter of2006, we expect to complete our documentation, testing and internal controlself-assessment of our new systems and processes pursuant to the Sarbanes-OxleyAct of 2002, section 404.

30

----

**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 1A. 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.

**Recent legislationadopted by the County of Maui may increase land use entitlement costs,negatively impact land values, defer planned development projects, andmaterially impact operating results.**

**On November 3, 2006, the MauiCounty Council voted unanimously to adopt a Residential Workforce HousingPolicy (the “Policy”).  This measurerequires developers to sell or rent 40% to 50% of the total number of units indevelopments of five or more units at below market rates, or pay significantfees or contribute property with equivalent value to Maui County for low incomehousing.  Prior to the adoption of thePolicy, the affordable housing component of a development typically represented15% to 25% of total units.  We believethat the new Policy could significantly impact our cost of obtainingentitlements, increase our financing costs, potentially reduce the value of ourland, and delay the development of units across all market segments. **

**The Policy also sets forth certainrequirements for offering affordable units, including a lottery format forselecting potential residents.  Webelieve that this feature will open affordable projects to any party basedsolely on economic qualifications and chance. Ironically, the lottery requirement may serve as an additionaldisincentive to build affordable housing projects for local employees,teachers, public safety personnel, health care professionals and other workersthat provide critical services for our community.  These factors will result in a re-assessmentof planned projects with significant affordable housing components designatedfor local residents, such as our previously-announced Pulelehua project.**

**Our financial results are highlydependent on the Company’s Community Development business segment whereperformance depends, in part, on the entitlement environment.  Changes, delays or cancellations in any ofour planned projects could impact our financial results.  Although the full impact of the Policy is notcertain at this time, and the Policy may be subject to legal challenge orreversal, we believe that the Policy will negatively impact our ability to proceedwith our previously-planned projects, and that the value of our residentialzoned lands will decrease, all of which could have a material adverse effect onour ongoing operations, workforce size, and future financial results.**

**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 wholly owned subsidiary of KapaluaBay Holdings, LLC, in which we own a 51% ownership interest, entered intoa construction loan agreement with Lehman Brothers Holdings Inc. on July 14,2006, pursuant to which Lehman may loan Kapalua Bay up to $370 million. KapaluaBay intends to construct a new project consisting of residential development onland that it owns at the site of the former Kapalua Bay Hotel, and a spa on anadjacent parcel of land that is owned by us and leased to Kapalua Bay. Inconnection with entering into the construction loan agreement by Kapalua Bay,we, and other members of Kapalua Bay Holdings entered into a completionguaranty and a recourse guaranty. 

31

----

Under the completionguaranty, members of Kapalua Bay Holdings agreed to guarantee substantialcompletion of the project and to reimburse Lehman for expenses incurred byLehman toward completion of the project. Under the recourse guaranty, membersof Kapalua Bay Holdings agreed to reimburse Lehman for losses incurred byLehman due to specified actions of Kapalua Bay Holdings, including, withoutlimitation, fraud or intentional misrepresentation, gross negligence, physicalwaste of project assets, and breach of certain environmental provisions of theconstruction loan agreement. Our guarantees do not include payment in full ofthe loan. If Kapalua Bay fails to complete the project or takes any of thespecified actions that result in expenses to Lehman and which are covered bythe guarantees that we entered into, we could incur unanticipated expenses thatcould materially and adversely affect our results of operations and financialcondition.

**Item 5.        Other Information**

Effective November 3, 2006, the Company andDuncan MacNaughton executed a Termination of Purchase and Sale Agreementcovering approximately 89 acres of land. The agreement is filed herewith as Exhibit 10.1.

On November 3, 2006,the Company approved an employment separation between Thomas H. Juliano and theCompany. Mr. Juliano resigned from his positions with the Company andcertain affiliated entities on October 13, 2006. Terms of the separationletter include a severance payment of $250,000, continuation of health carebenefits for four months, release of claims and confidentiality provisions infavor of the Company, and other provisions set forth in the letter agreementfiled herewith as Exhibit 10.2.

**Item 6.**                        Exhibits

The following exhibits are filed herewith:

|        | (10)   | Material Contracts |
|--------|--------|--------------------|
|   |   | 10.1               |   | Termination of Purchase  and Sale Agreement dated August 7, 2006 between Duncan MacNaughton and  Maui Land & Pineapple Company, Inc. |
|   |   | 10.2               |   | Separation of Employment  Agreement, dated October 24, 2006 and effective as of November 3,  2006. |
|   | (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. |

 

32

----

**SIGNATURE**

Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.
|                       | MAUI LAND & PINEAPPLE  COMPANY, INC.                         |
|-----------------------|-----------------------------------------------------------------------|
| November 8, 2006 |                                                                  |        /S/ ROBERT  I. WEBBER |
| Date                  | Robert I. Webber                                                      |
|                  | *Chief Financial Officer/Senior Vice President  Business Development* |
|                  | (Principal Financial Officer)                                         |
|                       |                                                                       |  |

 

33

----

**EXHIBITINDEX**

| Exhibit Number | ** ** | **Description**                                                                                                                                                                                       |
|---------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.1                |       | Termination of Purchase and Sale Agreement dated  August 7, 2006 between Duncan MacNaughton and Maui Land &  Pineapple Company, Inc.                                               |
| 10.2                |       | Separation of Employment  Agreement, dated October 24, 2006 and effective as of November 3,  2006                                                                                           |
| 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. |

 

34

----