**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C.  20549**

**FORM 10-Q**

| **(Mark One)**                                          | ** ** | ** **                                                                                              |
|---------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------|
| x                                                       | ** ** | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR  15(D) OF THE SECURITIES EXCHANGE ACT OF 1934**  |
| **For the quarterly period ended MARCH 31,  2005** |
| **OR**                                                  |
| **o**                                                   | ** ** | **TRANSITION REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 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  of incorporation or organization)      |       | (IRS Employer  Identification No.) |
| **P. O. BOX 187, KAHULUI, MAUI,  HAWAII   96733-6687** |
| (Address of  principal executive offices)                             |

 

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

**NONE**

Former name, 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 anaccelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes  o          No  x

Indicatethe number of shares outstanding of each of the issuer’s classes of commonstock, as of the latest practicable date.
| **Class**                   | ** ** | **Outstanding at May 2, 2005** |
|-----------------------------|------------|-------------------------------------|
| Common Stock, no  par value |       | 7,372,550 shares                    |

 

 

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

**TABLE OF CONTENTS**
|                                                                                                                                      | ** ** | **Page** |
|--------------------------------------------------------------------------------------------------------------------------------------|------------|----------|
| PART I.  FINANCIAL INFORMATION                                                                                                  |       |     |
| Item 1. Financial  Statements                                                                                                        |       |     |
| Condensed  Consolidated Balance Sheets,  March 31, 2005 and December 31, 2004 (Unaudited)                                  |       | 3        |
| Condensed  Consolidated Statements of Operations and Retained Earnings,  Three Months Ended March 31, 2005 and 2004 (Unaudited) |       | 4        |
| Condensed  Consolidated Statements of Comprehensive Income  Three Months Ended March 31, 2005 and 2004 (Unaudited)              |       | 5        |
| Condensed  Consolidated Statements of Cash Flows,  Three Months Ended March 31, 2005 and 2004 (Unaudited)                       |       | 6        |
| Notes  to Condensed Consolidated Financial Statements (Unaudited)                                                                    |       | 7        |
| Item  2. Management’s Discussion and Analysis of Financial Condition and Results of  Operations                                 |       | 12       |
| Item  3. Quantitative and Qualitative Disclosures About Market Risk                                                                  |       | 19       |
| Forward-Looking  Statements and Risks                                                                                                |       | 19       |
| Item 4. Controls and  Procedures                                                                                                     |       | 23       |
| PART II.  OTHER INFORMATION                                                                                                     |       |     |
| Item 1. Legal Proceedings                                                                                                            |       | 24       |
| Item 6. Exhibits                                                                                                                     |       | 24       |
| Signatures                                                                                                                           |       | 25       |

 

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**PART I   FINANCIAL INFORMATION**

**Item 1.**                        FinancialStatements

**MAUI LAND & PINEAPPLE COMPANY, INC. ANDSUBSIDIARIESCONDENSED CONSOLIDATEDBALANCE SHEETS(UNAUDITED)**
| ** **                                                                                                                                                                       | ** ** | **3/31/05**                          | ** ** | **12/31/04** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------------|------------|--------------|------------|
| ** **                                                                                                                                                                       | ** ** | **(Dollars in Thousands)** | ** ** |
| **ASSETS**                                                                                                                                                                       |       |                                 |       |         |       |
| Current Assets                                                                                                                                                                   |       |                                 |       |         |       |
| Cash and cash equivalents                                                                                                                                                        |       | $                                    | 5,778      |         | $          | 11,531 |   |
| Accounts and notes receivable                                                                                                                                                    |       | 12,960                               |       | 12,716       |       |
| Inventories                                                                                                                                                                      |       | 15,348                               |       | 15,100       |       |
| Other current assets                                                                                                                                                             |       | 7,805                                |       | 8,023        |       |
| Total current assets                                                                                                                                                             |       | 41,891                               |       | 47,370       |       |
| Property                                                                                                                                                                         |       | 241,973                              |       | 240,466      |       |
| Accumulated depreciation                                                                                                                                                         |       | (149,583                             | )          | (146,569     | )          |
| Property—net                                                                                                                                                                |       | 92,390                               |       | 93,897       |       |
| Other Assets                                                                                                                                                                     |       | 20,306                               |       | 19,656       |       |
| Total                                                                                                                                                                            |       | 154,587                              |       | 160,923      |       |
| **LIABILITIES AND STOCKHOLDERS’ EQUITY**                                                                                                                                    |       |                                 |       |         |       |
| Current Liabilities                                                                                                                                                              |       |                                 |       |         |       |
| Current portion of long-term debt and capital lease  obligations                                                                                                                 |       | 2,957                                |       | 3,314        |       |
| Trade accounts payable                                                                                                                                                           |       | 10,444                               |       | 12,703       |       |
| Deferred revenue                                                                                                                                                                 |       | 7,493                                |       | 13,018       |       |
| Other current liabilities                                                                                                                                                        |       | 7,662                                |       | 7,151        |       |
| Total current liabilities                                                                                                                                                        |       | 28,556                               |       | 36,186       |       |
| Long-Term  Liabilities                                                                                                                                                           |       |                                 |       |         |       |
| Long-term debt and capital lease obligations                                                                                                                                     |       | 13,259                               |       | 13,953       |       |
| Accrued retirement benefits                                                                                                                                                      |       | 33,480                               |       | 33,071       |       |
| Other long-term liabilities                                                                                                                                                      |       | 5,402                                |       | 5,588        |       |
| Total long-term liabilities                                                                                                                                                      |       | 52,141                               |       | 52,612       |       |
| Minority Interest in Subsidiary                                                                                                                                                  |       | 507                                  |       | 504          |       |
| Stockholders’  Equity                                                                                                                                                       |       |                                 |       |         |       |
| Common stock, no par value—8,000,000 shares  authorized, 7,228,550 and 7,226,550 issued and outstanding as of March 31,  2005 and December 31, 2004, respectively |       | 13,401                               |       | 13,335       |       |
| Additional paid-in-capital                                                                                                                                                       |       | 1,897                                |       | 1,456        |       |
| Retained earnings                                                                                                                                                                |       | 62,226                               |       | 60,971       |       |
| Accumulated other comprehensive loss                                                                                                                                             |       | (4,141                               | )          | (4,141       | )          |
| Stockholders’ equity                                                                                                                                                        |       | 73,383                               |       | 71,621       |       |
| Total                                                                                                                                                                            |       | $                                    | 154,587    |         | $          | 160,923 |   |

 

See accompanying Notes to Condensed Consolidated Financial Statements.

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**MAUILAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATEDSTATEMENTS OF**

**OPERATIONS AND RETAINED EARNINGS**

**(UNAUDITED)**
| ** **                                                                      | ** ** | **Three Months Ended**                                     | ** ** |
|---------------------------------------------------------------------------------|------------|----------------------------------------------------------------------|------------|
| ** **                                                                      | ** ** | **3/31/05**                                                          | ** ** | **3/31/04** | ** ** |
| ** **                                                                      | ** ** | **(Dollars in Thousands  Except Share Amounts)** | ** ** |
| Operating Revenues                                                              |       |                                                                 |       |   |   |
| Net sales                                                                       |       | $                                                                    | 27,470     |   | $ | 30,257 |   |
| Operating income                                                                |       | 10,410                                                               |       | 10,242 |   |
| Other income                                                                    |       | 256                                                                  |       | 15 |   |
| Total Operating  Revenues                                                       |       | 38,136                                                               |       | 40,514 |   |
| Operating Costs  and Expenses                                                   |       |                                                                 |       |   |   |
| Cost of goods sold                                                              |       | 15,643                                                               |       | 17,295 |   |
| Operating expenses                                                              |       | 9,240                                                                |       | 8,798 |   |
| Shipping and marketing                                                          |       | 3,796                                                                |       | 4,510 |   |
| General and administrative                                                      |       | 7,295                                                                |       | 7,383 |   |
| Total Operating  Costs and Expenses                                             |       | 35,974                                                               |       | 37,986 |   |
| Net Operating Income                                                            |       | 2,162                                                                |       | 2,528 |   |
| Equity in earnings (losses) of affiliates                                       |       | (104                                                                 | )          | 26 |   |
| Interest expense                                                                |       | (142                                                                 | )          | (377 | ) |
| Interest income                                                                 |       | 45                                                                   |       | 21 |   |
| Income From  Continuing Operations Before Income Taxes                          |       | 1,961                                                                |       | 2,198 |   |
| Income Tax  Expense                                                             |       | 706                                                                  |       | 740 |   |
| Income From Continuing Operations                                               |       | 1,255                                                                |       | 1,458 |   |
| Income From  Discontinued Operations  (net of income tax expense of $0 and $73) |       | —                                                               |       | 60 |   |
| Net Income                                                                      |       | 1,255                                                                |       | 1,518 |   |
| Retained Earnings, Beginning of Period                                          |       | 60,971                                                               |       | 61,354 |   |
| Retained Earnings, End of Period                                                |       | 62,226                                                               |       | 62,872 |   |
| Earnings Per Common Share—Basic and Diluted                                |       |                                                                 |       |   |   |
| Continuing Operations                                                           |       | .17                                                                  |       | .20 |   |
| Discontinued Operations                                                         |       | .—                                                              |       | .01 |   |
| Net Income                                                                      |       | $                                                                    | .17        |   | $ | .21 |   |

 

See accompanying Notes to Condensed Consolidated Financial Statements.

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**MAUILAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATEDSTATEMENTS OF**

**COMPREHENSIVE INCOME**

**(UNAUDITED)**
| ** **                                                               | ** ** | **Three Months Ended**     | ** ** |
|--------------------------------------------------------------------------|------------|--------------------------------------|------------|
| ** **                                                               | ** ** | **3/31/05**                          | ** ** | **3/31/04** | ** ** |
| ** **                                                               | ** ** | **(Dollars in Thousands)** | ** ** |
| Net Income                                                               |       | $                                    | 1,255      |   | $ | 1,518 |   |
| Other  Comprehensive Income—Foreign Currency Translation Adjustment |       | —                               |       | 111 |   |
| Comprehensive Income                                                     |       | $                                    | 1,255      |   | $ | 1,629 |   |

 

See accompanying Notes to Condensed Consolidated Financial Statements.

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**MAUI LAND & PINEAPPLE COMPANY, INC. ANDSUBSIDIARIESCONDENSED CONSOLIDATEDSTATEMENTS OF CASH FLOWS(UNAUDITED)**
| ** **                                                | ** ** | **Three Months Ended**     | ** ** |
|-----------------------------------------------------------|------------|--------------------------------------|------------|
| ** **                                                | ** ** | **3/31/05**                          | ** ** | **3/31/04** | ** ** |
| ** **                                                | ** ** | **(Dollars in Thousands)** | ** ** |
| Net Cash Provided by (Used in) Operating Activities       |       | $                                    | (1,464     | ) | $ | 14,154 |   |
| Investing  Activities                                     |       |                                 |       |   |   |
| Purchases of property                                     |       | (2,188                               | )          | (5,744 | ) |
| Proceeds from disposals of property                       |       | 5                                    |       | 2,638 |   |
| Other                                                     |       | (1,055                               | )          | (776 | ) |
| Net Cash Used in Investing Activities                     |       | (3,238                               | )          | (3,882 | ) |
| Financing  Activities                                     |       |                                 |       |   |   |
| Payments of long-term debt and capital lease  obligations |       | (1,051                               | )          | (11,016 | ) |
| Proceeds from long-term debt                              |       | —                               |       | 4,500 |   |
| Distributions to minority interest                        |       | —                               |       | (767 | ) |
| Net Cash Used in Financing Activities                     |       | (1,051                               | )          | (7,283 | ) |
| Net Increase (Decrease) in Cash                           |       | (5,753                               | )          | 2,989 |   |
| Cash and Cash Equivalents at Beginning of Period          |       | 11,531                               |       | 7,863 |   |
| Cash and Cash Equivalents at End of Period                |       | $                                    | 5,778      |   | $ | 10,852 |   |

 

Supplemental Disclosures of Cash Flow Information—Interest(net of amounts capitalized) of $169,000 and $398,000 was paid during the threemonths ended March 31, 2005 and 2004, respectively. Income taxes of$93,000 and $990,000 were paid during the three months ended March 31,2005 and 2004, respectively.

See accompanying Notes to Condensed Consolidated Financial Statements.

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**MAUI LAND & PINEAPPLE COMPANY, INC. ANDSUBSIDIARIESNOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)**

**1.**                 Inthe opinion of management, the accompanying condensed consolidated financialstatements contain all normal and recurring adjustments necessary to fairlypresent the statement of financial position, results of operations and cashflows for the interim periods ended March 31, 2005 and 2004.

**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.**                 Theeffective tax rate for 2005 and 2004 differs from the statutory federal rate of34% primarily because of the state tax provision and refundable state taxcredits.

**4.**                 Accountsand notes receivable are reflected net of allowance for doubtful accounts of$857,000 and $825,000 at March 31, 2005 and December 31, 2004,respectively.

**5.**                 Inventoriesas of March 31, 2005 and December 31, 2004 were as follows:
| ** **                           | ** ** | **3/31/05**                          | ** ** | **12/31/04** | ** ** |
|--------------------------------------|------------|--------------------------------------|------------|--------------|------------|
| ** **                           | ** ** | **(Dollars in Thousands)** | ** ** |
| Pineapple products                   |       |                                 |       |         |       |
| Finished goods                       |       | $                                    | 4,171      |         | $          | 3,477 |   |
| Work in progress                     |       | 421                                  |       | 438          |       |
| Raw materials                        |       | 645                                  |       | 751          |       |
| Real estate held  for sale           |       | 2,807                                |       | 2,966        |       |
| Merchandise,  materials and supplies |       | 7,304                                |       | 7,468        |       |
| Total Inventories                    |       | $                                    | 15,348     |         | $          | 15,100 |   |

 

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 crops harvestedduring 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 accrualmethod is the most appropriate method of accounting for the costs of growingpineapple because of the pineapple’s crop cycle (18 to 48 months) and theuncertainties about fruit quality and the number of crops to be harvested fromeach planting (one to three crops). AICPA Statement of Position No. 85-3(SOP), “Accounting by Agricultural Producers and Agricultural Cooperatives,”states that all direct and indirect costs of growing crops should beaccumulated and growing crops should be reported at the lower of cost or market.However, the SOP does not apply to growers of pineapple and sugarcane intropical regions because tropical agriculture (of which pineapple and sugarcaneproduction in Hawaii are examples) differs greatly from agriculture intemperate regions of the mainland United States. The Company’s growing(unharvested) crops at March 31, 2005, consisted of approximately 4,400acres in various stages of growth that will be harvested principally in theyears 2005 through 2007, and are expected to yield an average of approximately32 tons per acre. At December 31, 2004, growing crops consisted ofapproximately 4,200 acres that will be harvested in the years 2005 through2007, and are expected to yield an average of approximately 26 tons per acre. Theestimated average yield of tons per acre reflects the Company’s 

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expectation that it willharvest second ratoon crops (fruit from the third harvest), which yield lesstons per acre.

TheCompany uses the percentage-of-completion method to recognize revenues andprofits from the sale of residential land parcels where the Company isobligated to construct improvements (roads, sidewalks, drainage, and utilities)after the closing of the sale. Under this method, revenues are recognized overthe improvement construction period on the basis of costs incurred as apercentage of total costs to be incurred. In the first quarter of 2005, theCompany recognized revenues and profits using the percentage of completionmethod for the sale of lots that closed escrow in Honolua Ridge residentialsubdivision at the Kapalua Resort. In the first quarter of 2005, two lotsclosed escrow bringing the total lots sold to 19. At March 31, 2005,construction of the improvements was estimated to be approximately 78% complete.Costs of sales are allocated to each lot based on relative sales values. Thetotal estimated costs are approximately $12.8 million, and consist primarily ofexecuted contracts with contractors. This estimate could be affected byconstruction or land conditions that were not anticipated that could result inadditional change orders to the existing contracts or other unforeseenvariables that may affect the total cost of the improvements to be constructed.Construction of the project’s 25 residential lots and related improvements arescheduled to be completed by June 2005.

**6.****                 DeferredCosts**

Pursuant to an April 30, 2004 letter of intent,the Company and Miraval Holding, LLC (Miraval) were negotiating the formationof a joint venture to create and manage a health and wellness community at theKapalua Resort. In early May 2005, the parties agreed to discontinuenegotiations and to not proceed with a joint venture at this time. The Companyplans to continue with the development of a health and wellness community atKapalua Resort and is currently analyzing legal, design and other deferredcosts to determine which costs may be written off in the second quarter of 2005.On May 13, 2005, the Company’s Chairman, President & CEO resignedfrom the Board of Directors of Miraval. The Stephen M. Case Revocable Trust,representing 42% of the Company’s issued and outstanding shares, controls anentity that owns 70% of Miraval.

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**7.****                 OperatingSegment Information:**
| ** **                           | ** ** | **Three Months  Ended March 31** | ** ** |
|--------------------------------------|------------|-------------------------------------------------|------------|
| ** **                           | ** ** | **2005**                                        | ** ** | **2004** | ** ** |
| ** **                           | ** ** | **(Dollars in Thousands)**            | ** ** |
| Operating  Revenues                  |       |                                            |       |   |   |
| Pineapple                            |       | $                                               | 15,787     |   | $ | 21,725 |   |
| Resort                               |       | 13,419                                          |       | 12,627 |   |
| Community Development                |       | 8,912                                           |       | 6,146 |   |
| Other                                |       | 18                                              |       | 16 |   |
| Total Operating  Revenues            |       | 38,136                                          |       | 40,514 |   |
| Operating Profit (Loss)              |       |                                            |       |   |   |
| Pineapple                            |       | (2,088                                          | )          | (1,792 | ) |
| Resort                               |       | 293                                             |       | 100 |   |
| Community Development                |       | 3,921                                           |       | 4,339 |   |
| Other                                |       | (68                                             | )          | (93 | ) |
| Total Operating  Profit              |       | 2,058                                           |       | 2,554 |   |
| Interest Expense                     |       | (142                                            | )          | (377 | ) |
| Interest Income                      |       | 45                                              |       | 21 |   |
| Income Tax  Expense                  |       | (706                                            | )          | (740 | ) |
| Income—Continuing  Operations   |       | 1,255                                           |       | 1,458 |   |
| Income—Discontinued  Operations |       | —                                          |       | 60 |   |
| Net Income                           |       | $                                               | 1,255      |   | $ | 1,518 |   |

 

In2005, responsibility for the real estate leasing activity that was accountedfor in the Resort segment was transferred to the Community Development segment(previously called “Development” segment) and prior year amounts were restatedfor comparability. The Community Development segment as reorganized iscomprised of all of the Company’s real estate entitlement, development,construction, sales and leasing activities. The Community Development segmentalso includes the Company’s 51% equity interest in Kapalua Bay Holdings LLC,the owner and operator of the Kapalua Bay Hotel. Remaining in the Resortsegment are the operations of three championship golf courses, a tennisfacility, ten retail outlets, a vacation rental program (The Kapalua Villas), and Public UtilitiesCommission regulated water and sewage transmission operations at the KapaluaResort.

**8.****                 DiscontinuedOperations**

In December 2003, inconnection with the Company’s plan to cease a substantial portion of itsforeign pineapple operations, the Company entered into an agreement to sellsubstantially all of the assets of its 51% owned Costa Rican pineapplesubsidiary, and in 2003, title to all but two parcels of land in Costa Rica wastransferred to the buyer. In the first quarter of 2004, the Company ceased theremainder of its foreign pineapple operations; title to one of the remainingparcels was transferred to the buyer and $2.7 million of the previouslywithheld sales price was paid to the Company’s subsidiary. The results of theseoperations prior to the sales and the gains and other revenues and expensesrealized after the sales are being reported as discontinued operations, withprior period amounts restated for comparability. For the three months ended March 31,2004, revenues and operating profit attributable to this discontinued operationwere $1,837,000 and $133,000, respectively.

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**9.****                 AverageCommon Shares Outstanding Used to Compute Earnings Per Share**
| ** ** | ** ** | **Three Months Ended** | ** ** |
|------------|------------|----------------------------------|------------|
| ** ** | ** ** | **March 31**                | ** ** |
| ** ** | ** ** | **2005**                         | ** ** | **2004** | ** ** |
| Basic      |       | 7,226,572                        |       | 7,195,800 |   |
| Diluted    |       | 7,397,896                        |       | 7,315,937 |   |

 

**10.**          AtMarch 31, 2005 and 2004, the Company did not hold derivative instrumentsand did not enter into hedging transactions.

**11.****          Componentsof Net Periodic Benefit Cost**
| ** **                            | ** ** | **Pension Benefits**            | ** ** | **Other Benefits** | ** ** |
|---------------------------------------|------------|--------------------------------------|------------|-------------------------|------------|
| ** **                            | ** ** | **2005**                             | ** ** | **2004**                | ** ** | **2005** | ** ** | **2004** | ** ** |
| ** **                            | ** ** | **(Dollars in Thousands)** | ** ** |
| Service cost                          |       | $                                    | 429        |                    | $          | 501 |   | $ | 91 |   | $ | 98 |   |
| Interest cost                         |       | 781                                  |       | 726                     |       | 240 |   | 225 |   |
| Expected return  on plan assets       |       | (810                                 | )          | (745                    | )          | — |   | — |   |
| Amortization of  prior service cost   |       | 12                                   |       | 11                      |       | (32 | ) | (33 | ) |
| Amortization of  transition liability |       | 6                                    |       | 6                       |       | — |   | — |   |
| Special  termination benefits         |       | —                               |       | 106                     |       | — |   | 55 |   |
| Recognized  actuarial loss (gain)     |       | 126                                  |       | 98                      |       | (68 | ) | (75 | ) |
| Net expense                           |       | $                                    | 544        |                    | $          | 703 |   | $ | 231 |   | $ | 270 |   |

 

TheCompany expects to contribute $1,201,000 to its defined benefit pension plansand $675,000 to its other postretirement benefit plans in 2005. Specialtermination benefits for pension benefits and other benefits relate tomanagement changes in 2004.

**12.****          Contingencies**

Pursuant to a 1999 settlement agreement resulting froma lawsuit filed by the County of Maui, the Company and several chemicalmanufacturers have agreed that until December 1, 2039, they will pay for90% of the capital cost to install filtration systems in any future water wellsif the presence of a nematocide commonly known as DBCP exceeds specifiedlevels, and for the ongoing maintenance and operating cost for filtrationsystems on existing and future wells. To secure its obligations, the Companyand the other defendants in the lawsuit are required to furnish to the Countyof Maui an irrevocable standby letter of credit throughout the entire term ofthe agreement. The Company had estimated a range of its share of the cost tooperate and maintain the filtration systems for the existing wells and itsshare of the cost of the letter of credit, and recorded a liability of $250,000in 1999. In 2004, the Company recognized a liability and expense of $167,000for its share of the capital costs to install a filtration system for anexisting well. Adjustments to the liability through March 31, 2005 did nothave a material effect on the Company’s financial statements. The Company ispresently not aware of any plans by the County of Maui to install otherfiltration systems or to drill any water wells in areas affected byagricultural chemicals. The level of DBCP in the existing wells should declineover time as the wells are pumped, which may end the requirement for filtrationbefore 2039. There are procedures in the settlement agreement to minimize theDBCP impact on future wells by relocating the wells to areas unaffected by DBCPor by using less costly methods to remove DBCP from the water. Therefore, whileit is likely that the County of Maui will at sometime in the future drilladditional wells, the possible cost to the Company depends on many factors,including the location of the well, the availability of suitable alternativesites and ultimately, whether or not the contaminant DBCP is found in the water.Accordingly, a reserve for costs relating to any future wells was not recordedbecause the Company was not able to reasonably estimate the amount of liability(if any).

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In connection with pre-development planning for a landparcel in Upcountry Maui, pesticide residues in the parcel’s soil werediscovered in levels that are in excess of Federal and Hawaii State limits. Studiesby environmental consultants, in consultation with the State Department ofHealth, indicate that remediation probably will be necessary. Based on thepossible land use alternatives and the remediation alternatives proposed by theenvironmental consultants, estimates of the future remediation cost to theCompany range from -0- to $3.5 million. If the property wereultimately developed for sale, any remediation cost would be capitalized aspart of the project cost. At March 31, 2005, it was not probable that aliability for remediation cost had been incurred; accordingly, no liability wasrecorded.

The Company has a 51% membership interest in KapaluaBay Holdings LLC (“Bay Holdings”). Kapalua Bay LLC, which is a wholly ownedsubsidiary of Bay Holdings, secured a $45.0 million loan in connection with itspurchase of the Kapalua Bay Hotel assets. The Company and the other BayHoldings’ members (owners) executed a $5.0 million indemnity and guarantyagreement, pursuant to which each member is responsible for (and guaranteespayment to the lenders of) their pro rata share of costs and losses incurred bythe lenders as a result of the occurrence of specified triggering events duringthe term of the agreement. The maximum future payments the Company could berequired to make is $2.55 million, plus interest. The Company has recognized aliability of $180,000, representing the estimated fair value of its indemnitor’sobligation.

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

The Company, as an investor in various affiliates(partnerships, LLCs), may under specific circumstances be called upon to makeadditional capital contributions.

At March 31, 2005, the Company had commitmentsunder signed contracts totaling $4,434,000, which primarily relate to realestate development projects.

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

In January 2005,lines of responsibility among the Company’s operating segments were modified toenhance decision-making, to drive continuous improvement in day-to-dayperformance, and to reach the Company’s objectives for 2005, which are to:

·       Achieveprofitable Pineapple segment operations;

·       Enhanceoperating margins and management practices in Resort operations;

·       Executethe Community Development planning and entitlement agenda;

·       Drivecost savings by consolidating functions and processes; and

·       Improveemployee productivity through training, communication and professionaldevelopment.

Performance-based incentives covering all non-unionemployees in each of the operating segments were put in place.  Further reductions in the work force tookplace in the first quarter of 2005 as the Pineapple segment moved forward tochange its operations.

In February 2005, theCompany’s Board of Directors approved the expenditure of $17.2 million for theconstruction of a multi-client processing facility that will replace theCompany’s present pineapple cannery, can plant and fresh fruit packing facility.The new facility is expected to reduce the Company’s overall cost structure byintegrating the fresh fruit and canning processes and by upgrading much of thecurrent equipment. Construction of the new facility is expected to begin in July 2005and be completed in July of 2006. The new facility will be constructed ona portion of the present cannery site in Kahului.

**RESULTS OF OPERATIONS**

**CONSOLIDATED**

*Overview*

The Company reported netincome of $1.3 million ($.17 per share) for the first quarter of 2005 comparedto $1.5 million ($.21 per share) for the first quarter of 2004. Higheroperating losses from the Pineapple segment and lower operating profit from theCommunity Development segment were primarily responsible for the lower netincome in the first quarter of 2005. Revenues for the first quarter of 2005decreased by $2.4 million to $38.1 million from $40.5 million for the firstquarter of 2004.

*Generaland Administrative*

Consolidated general and administrative expensesdecreased by approximately 1% to $7.3 million for the first quarter of 2005compared to $7.4 million the first quarter of 2004.

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Themajor components of the difference in general and administrative expensebetween the first quarter of 2005 and the first quarter of 2004 were asfollows:
| ** **                                         | ** ** | **First Quarter**              | ** ** |
|----------------------------------------------------|------------|-------------------------------------|------------|
| ** **                                         | ** ** | **2005**                            | ** ** | **2004** | ** ** | **inc (dec)** | ** ** |
| ** **                                         | ** ** | **(Dollars in Millions)** | ** ** |
| Salaries &  wages                         |       | $                                   | 2.0        |   | $ | 1.7 |   |   | $ | 0.3 |   |   |
| Employee  incentives & stock compensation |       | 0.6                                 |       | 0.2 |   |   | 0.4 |   |   |
| Employee  severance expense                        |       | 0.3                                 |       | 1.1 |   |   | (0.8 | ) |   |
| Medical insurance  premiums                        |       | 1.1                                 |       | 1.3 |   |   | (0.2 | ) |   |
| Professional  services                             |       | 1.2                                 |       | 0.7 |   |   | 0.5 |   |   |
| Depreciation  expense                              |       | 0.8                                 |       | 0.5 |   |   | 0.3 |   |   |
| Other (net)                                        |       | 1.3                                 |       | 1.9 |   |   | (0.6 | ) |   |
| Total                                              |       | $                                   | 7.3        |   | $ | 7.4 |   |   | $ | (0.1 | ) |   |

 

The increase in salaries and wages is primarily theresult of additional employees in the Community Development segment in thefirst quarter of 2005. Further expansion of the Community Development staff isexpected in order to accomplish the projects and initiatives that are slated onthe agenda for this segment. The increase in employee incentives and stockcompensation expense was principally the result of accruals for performance-basedincentives, reflecting the Company’s increased emphasis on performance-basedvariable pay plans.

Employee severance expense was lower in the firstquarter of 2005 because of management changes at the corporate level in thefirst quarter of 2004. In the first quarter of 2005, employee severance chargesdue to reduction in the work force in the Pineapple segment was approximately$300,000 compared to $360,000 in the first quarter of 2004. The decrease inmedical insurance premiums largely reflects the reduction in the work force inthe Pineapple segment.

The increase in professional services primarilyreflects charges incurred in the first quarter of 2005 for adjustments to theCompany’s integrated accounting system and additional training of the Company’semployees on use of the system. The system was fully placed in service in January 2003and reduction in staffing and staff turnover, particularly in the Pineapplesegment, necessitated re-training in the first quarter of 2005.

The increase in depreciation charged to general andadministrative expense is due to a change in the estimated useful lives ofcertain Pineapple segment assets in March 2005 as a result of the decisionto construct a new plant to replace the current cannery, can plant and freshfruit processing facility.

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 withmanagement’s evaluation of the operating segments.

*Interest Expense*

Interest expense decreasedby 62% to $142,000 for the first quarter of 2005 compared to $377,000 for thefirst quarter of 2004. The decrease in interest expense was primarily due tolower average borrowings in 2005 and a higher amount of interest capitalized in2005. The Company’s effective interest rate on borrowings was slightly higherin 2005.

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**PINEAPPLE**

*Overview*

The Pineapple operating segment includes growing,packing and processing, and marketing of fresh and canned pineapple. The fruitgrown by the Company principally consists of three types of pineapple, HawaiianGoldTM (sold as fresh whole or canned fruit), Champaka(largely used for canning), and organic pineapple, sold as fresh whole fruit.

The Company is expanding its presence in the freshfruit market, while selectively reducing its reliance on the canned fruitmarket. Therefore, over recent years, the Company has decreased the tonnage offruit going to the cannery and, in 2004 began to commensurately reduce thenumber of markets that it serves. The Company’s strategy focuses on using thecanned pineapple operations to complement the fresh operations, therebyallowing the Company to market only the highest quality fresh pineapple. TheCompany directs fruit to either the canned or the fresh pack facility at thetime of harvest based on a variety of factors including: market conditions,fruit size and quality. The transition of the Company’s pineapple operationscontinues with an emphasis on upgrading and building production and cropcapacity to deliver a consistent and reliable supply of high quality fruit.

The fresh fruit market is a year-round business, whichrequires consistency of supply. Over the past year, significant progress hasbeen made in changing the Company’s agronomic practices and planting schedulesto produce a more consistent and predictable supply of fruit throughout theyear. In addition, significant progress has been made towards improved cropmaintenance and agronomic practices that are beginning to result in improvedplant yields (tons of fruit per acre) and a premium quality pineapple.

The Pineapple segment produced an operating loss fromcontinuing operations of $2.1 million for the first quarter of 2005 compared toan operating loss of $1.8 million for the first quarter of 2004. Revenues fromthis operation were $15.8 million for the first quarter of 2005, a reduction of27% compared to the first quarter of 2004, reflecting the Company’s strategy todiscontinue certain retail segments. Average sales prices for the Company’sfresh and canned pineapple improved in the first quarter of 2005 compared tothe first quarter of 2004 and the Company is making good progress towards its marketinggoals. Losses incurred in 2005 and 2004 in large part reflect the Company’shigh cost structure, and costs associated with transitioning from predominantlya canned pineapple supplier to a high-quality fresh fruit supplier.

As mentioned above, theCompany will begin construction in July 2005 of a new multi-clientprocessing facility that will replace the Company’s present pineapple cannery,can plant and fresh fruit packing facility. The new facility is expected toreduce the Company’s overall cost structure by integrating and streamlining thefresh fruit and canning processes and by upgrading much of the currentequipment. The Company is analyzing which equipment will not be incorporatedinto the new facility and based on current estimates began to depreciate theseassets over their remaining estimated useful lives starting in March 2005,which resulted in a charge to operations of $264,000 in March 2005. TheCompany will continue to incur increased depreciation charges in 2005 andthrough June 2006 because of the reduction in the estimated useful livesof assets that it does not expect to incorporate into the new processingfacility. In connection with the new processing facility, and as the Companytransitions its business to focus on the premium fresh fruit business, theCompany will continue to restructure its workforce, which may result inadditional charges to current year operating results.

*Canned and Fresh Operations*

The case volume of canned pineapple sales decreased by41% for the first quarter of 2005 as compared to the first quarter of 2004primarily reflecting the Company’s strategy to sharply reduce supply toselected retail market segments. This market refinement has resulted in theaverage sales prices for the Company’s canned pineapple products increasing byapproximately 5% for the first quarter of 2005 

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compared to the firstquarter of 2004. The Company implemented price increases for its canned productlines in March 2004, June 2004 and August 2004.

Canned pineapple sold to the U. S. Government(primarily to the Department of Agriculture) comprised approximately 39% of theCompany’s case volume of canned pineapple sales in the first quarter of 2005compared to approximately 28% in the first quarter of 2004. The Company willcontinue to participate in government programs that purchase pineapple forschool lunches, needy families and other areas, while working to increase thelevel of “customer service” that it can provide.

The case volume of fresh pineapple sales was flat inthe first quarter of 2005 compared to the first quarter of 2004. The sale offresh pineapple represented approximately 32% of net pineapple sales for thefirst quarter of 2005 compared to 21% for the first quarter of 2004. TheCompany’s average revenue per box of fresh pineapple sales increased byapproximately 8% in the first quarter of 2005 compared to the first quarter of2004 primarily reflecting the improved quality of its products and improvedmarketing efforts.

Pineapple cost of sales decreased by 25% in the firstquarter of 2005 compared to the first quarter of 2004, reflecting the lowersales volume of canned pineapple. The average per unit cost of sales is higherin the first quarter of 2005 compared to the first quarter of 2004 because in2004, cost of sales was reduced because of the impact of a liquidation ofinventory based on the LIFO (last-in, first-out) method of accounting forinventories.

Pineapple shipping andmarketing cost decreased by $1.3 million (38%) in the first quarter of 2005compared to the first quarter of 2004, largely reflecting the lower salesvolume of canned pineapple. Reductions in force at the Company’s sales andmarketing office also contributed to lower marketing cost in 2005. In addition,lower average shipping cost for fresh pineapple because of increased use ofsurface shipment instead of the higher cost air shipment, were responsible forthe lower cost in 2005. In the first quarter of 2005, the Company shippedapproximately 82% of its Hawaiian GoldTM freshpineapple by surface rather than by air, compared to about 64% in the firstquarter of 2004.

**RESORT**

*Overview*

The Resort segment consists of ongoing operations atthe Kapalua Resort. These operations include three championship golf courses, atennis facility, a vacation rental program (The Kapalua Villas), ten retailoutlets and Public Utilities Commission regulated water and sewage transmissionoperations.

The Company began to implement the Kapalua Goldprogram to upgrade and standardize The Kapalua Villas as well as other initiativesto enhance and improve the Kapalua resort. Achieving the highest quality guestexperience is considered a key to the Company’s success in this segment. TheCompany expects to have 40 to 60 Kapalua Gold villas renovations completed inthe fourth quarter of 2005.

Hotel and condominium room occupancies at the Resort,and to a somewhat lesser extent for Maui in general, largely drive the increasein resort activity as reflected by increased golf play, merchandise sales andincreased lease revenues from the hotel ground leases. Hotel and condominiumroom occupancies at Kapalua Resort increased by 8% in the first quarter of 2005compared to the first quarter of 2004. Occupancies for the island of Mauiincreased by 3% and for the State of Hawaii, occupancies increased by 5% in thefirst quarter of 2005 compared to the first quarter of 2004.

The Resort segment produced an operating profit of$293,000 in the first quarter of 2005 compared to $100,000 in the first quarterof 2004. Revenues of $13.4 million for the first quarter of 2005 were 

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approximately 6% higherthan the first quarter of 2004 primarily due to increased green and cart feerates, merchandise sales volume and higher average Kapalua Villas room rates.

Increased Resort revenueswere largely commensurate with higher room rates and occupancies. Higheroperating expense at the Resort for electricity, repairs and maintenance, andoutside consultants, more than offset lower workers compensation cost, andreduced payroll cost because of vacant administrative positions. Marketingexpense was higher in the first quarter of 2005 compared to the prior yearfirst quarter because of greater emphasis on marketing the Kapalua Resort.

*Golf, Merchandise and Villas*

Revenues from golfoperations increased by 8% for the first quarter of 2005 compared to the firstquarter of 2004, as a result of higher average green and cart fees. Paid roundswere about the same for both periods. Merchandise sales increased byapproximately 1% in the first quarter of 2005 compared to the first quarter of2004. Revenues from The Kapalua Villas increased by about 7% in the firstquarter of 2005 compared to the first quarter of 2004 reflecting a 2% increasein occupied rooms and 4% higher average room rates.

**COMMUNITY DEVELOPMENT**

*Overview*

The Community Development segment includes the Company’sreal estate entitlement, development, construction, sales and leasingactivities. A large portion of the focus for this segment is on the luxury realestate market on Maui. The segment also includes the operations of KapaluaRealty Company, a general brokerage real estate company located within theResort.

Community Development includes the management ofseveral leases, including the ground lease underlying the Ritz-Carlton, Kapaluaand through August 31, 2004, the ground lease for the Kapalua Bay Hotel. BeginningAugust 31, 2004, the Community Development segment includes the Company’s51% equity interest in Kapalua Bay Holdings LLC, the limited liability companythat owns and operates the Kapalua Bay Hotel, and that has the rights andinterest as landlord of the adjacent retail shops, including the retail leases.Plans are to demolish the hotel and shops after the land entitlements aresecured, which is presently estimated to be in 2006, and develop new whole andfractional residential units, an ocean-side spa and a beach club.

The Company has approximately 1,800 acres of land inMaui that are at various stages in the land entitlement process. Land must beappropriately entitled if development or construction is the intended use. Securingproper land entitlement is a process that requires obtaining county, state andfederal approvals, which can take several years to complete and entails avariety of risks.

The Community Development segment is working on a numberof real estate development and Kapalua Resort revitalization projects. HonoluaRidge Phase II, a residential subdivision at the Kapalua Resort, comprised of25 agricultural-zoned lots ranging in size from 2 to 30 acres, is anticipatedto be ready for sale in September 2005. In the first quarter of 2005, theCompany began the environmental impact statement process for Pulelehua, aplanned traditional community in West Maui for working families. Applicationsfor zoning and community plan amendment changes for Pulelehua were alsosubmitted in the first quarter of 2005. Master planning work began in the firstquarter of 2005 for Kapalua Mauka, a planned 690 unit residential community. Applicationfor a Special Management Area permit, part of the County of Maui entitlementprocess, was submitted in March 2005 for the first phase of KapaluaVillage, a planned commercial area in the Central Resort. Construction of thisphase of Kapalua Village, comprised of 12,000 square feet of commercial space,is expected to begin in September 2005.

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The Community Developmentsegment reported an operating profit of $3.9 million for the first quarter of2005 compared to $4.3 million for the first quarter of 2004. Operating profitfor 2005 includes $110,000 of losses from the Company’s equity interest in theKapalua Bay Hotel. Revenues from Community Development were $8.9 million in thefirst quarter of 2005 compared to $6.1 million in the first quarter of 2004. Increasedrevenues were due to increased real estate sales in the first quarter of 2005,partially offset by lower revenues from leasing activities.

*Real Estate Sales*

Revenues for the first quarter of 2005 include $7.3million from the sale of lots at the Honolua Ridge residential subdivision. Inthe first quarter of 2005, two lots closed escrow bringing the total lots soldto 19. Six Honolua Ridge lots were in inventory at the end of the firstquarter, of which two sales were expected to close escrow in May 2005. Revenuesand profit from Honolua Ridge are being recognized using thepercentage-of-completion method as the subdivision improvements are completed. Atthe end of the first quarter of 2005, these improvements were approximately 78%complete. Rain in the first quarter of 2005 has delayed the completion ofconstruction of the subdivision improvements by approximately two months. Constructionis expected to be substantially complete in June 2005. The Company’sbalance sheet at March 31, 2005, included $7.3 million of deferredrevenues related to Honolua Ridge.

The sale of a 6.5-acrelot at Kapalua Resort in the first quarter of 2004 contributed $4.2 million torevenues and $3.9 million to operating profit.

*Realty and Leasing*

Kapalua Realty’s commission income from the resale ofresidential units in the Kapalua Resort was approximately the same in the firstquarter of 2005 as the first quarter of 2004.

Revenues from leasingactivities decreased by 48% in the first quarter of 2005 compared to the firstquarter of 2004. The decrease primarily reflects the absence of lease revenuesfrom the Kapalua Shops retail leases and from the Kapalua Bay Hotel groundlease.

**LIQUIDITY,CAPITAL RESOURCES AND OTHER**

*Debt Position*

At March 31, 2005,the Company’s total debt, including capital leases, was $16.2 million, areduction of $1.1 million from December 31, 2004. The year 2005 began withno borrowings under the Company’s revolving credit lines and $11.5 million incash and cash equivalents. Such cash and cash equivalents were used to fundcash flows used in operating activities in the first quarter of 2005 and thescheduled repayments of existing debt. At March 31, 2005, the Company hadunused short- and long-term credit lines of $15.0 million.

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*Operating Cash Flows*

In thefirst quarter of 2005, cash flows used in operating activities was $1.5 million.Operating activities for the first quarter of 2004 provided $14.2 million ofnet cash flows. By operating segment, these cash flows were approximately asfollows:
| ** **                                   | ** ** | **Quarter Ended  March 31** | ** ** |
|----------------------------------------------|------------|---------------------------------------|------------|
| ** **                                   | ** ** | **2005**                              | ** ** | **2004** | ** ** |
| ** **                                   | ** ** | **(Dollars in  Millions)**       | ** ** |
| Pineapple                                    |       | $                                     | (0.6       | ) | $ | 11.8 |   |
| Resort                                       |       | 0.6                                   |       | 1.9 |   |
| Community  Development                       |       | 0.7                                   |       | 3.7 |   |
| Corporate,  interest, taxes & other |       | (2.2                                  | )          | (3.2 | ) |
| Total                                        |       | $                                     | (1.5       | ) | $ | 14.2 |   |

 

Cash used in operating activities in the first quarterof 2005 for the Pineapple segment includes approximately $2 million of paymentsfor payroll and accounts payable for 2004 operations. In the first quarter of2004, the high amount of cash from operating activities in the Pineapplesegment was primarily due to a higher than normal level of sales late in 2003that were collected in early 2004.

Cash flows from operatingactivities in the Community Development segment vary significantly with theamount of new real estate product sold. In the first quarter of 2005, the saleof two lots at the Honolua Ridge subdivision closed escrow. Revenues and profitare recognized on a percentage-of-completion method, therefore much of therevenues recognized in the first quarter of 2005 were from sales closed andcash received in 2004. In the first quarter of 2004, a $4.2 million sale of a6.5-acre parcel at Kapalua closed escrow.

*Future Cash Outflows*

Capital expenditures for the Pineapple segment areexpected to be $14.3 million in 2005, including $9.7 million (of a total of$17.2 million) for the planning, design and construction of the newmulti-client processing facility that will replace the present pineapplecannery, can plant and fresh fruit packing facility. The planned capitalexpenditures for 2005 also include $1.1 million for replacement of existingequipment.

Capital expenditures for the Resort segment areexpected to be $7.1 million in 2005. These expenditures include renovation ofthe Plantation Course greens and fairway bunkers, the Bay Course Clubhouserestaurant, and renovation or replacement of existing facilities and equipment.

Capital expenditures for the Community Developmentsegment in 2005 for the renovation of existing facilities and for newfacilities are expected to be approximately $14 million. Expenditures in 2005that will be accounted for as deferred development costs pending entitlementsand final project feasibility analyses are expected to be about $9 million; andexpenditures to complete Honolua Ridge Phase I and for Honolua Ridge Phase IIare expected to be approximately $20 million in 2005.

In total, expenditures forcapital, real estate inventory, planning, and new projects are expected to beover $50 million in 2005. In the first quarter of 2005, sales proceeds fromHonolua Ridge Phase I totaled $2.9 million; and the Company anticipates thatsales proceeds from the remaining six lots will be available in 2005 to fundother projects. The Company anticipates that some of Honolua Ridge Phase IIwill be funded by pre-sale proceeds and project specific financing will besecured for certain capital projects. In addition, some of the projects will befunded by proceeds from the sale of properties that the Company has identifiedas “non-core” to its primary businesses and its vision for the future. Based onpreliminary 

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discussionswith lenders, the Company believes that it will be able to secure adequatefunds to accomplish these projects.

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

The Company’s primarymarket risk exposure with regard to financial instruments is to changes ininterest rates. The Company attempts to manage this risk by monitoring interestrates and future cash requirements, and evaluating opportunities to refinanceborrowings at various maturities and interest rates. There were no materialchanges to the Company’s market risk exposure during the first three months of2005.

**FORWARD-LOOKINGSTATEMENTS AND RISKS**

This and otherreports published by the Company contain forward-looking statements (within themeaning of the Private Securities Litigation Reform Act of 1995) as to avariety of matters, including the following:

·       thetiming and success of the Kapalua Bay Hotel redevelopment;

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

·       thetiming, cost and efficiency of the planned multi-client processing facility;

·       thetiming and success of the Kapalua Resort initiatives to enhance and improve theresort, including renovations of the Plantation Golf Course, the Bay Club, theBay Course restaurant and the Villas;

·       thecost to remediate certain soils;

·       newprocedures and practices to balance revenue sources and timing of productionvolume to strengthen the pineapple operations;

·       reductionin the number of types of products canned and sold;

·       2005expectations as to cash commitments;

·       2005expectations as to cash flows from operating and investing activities;

·       recoverabilityfrom operations of real estate development deferred costs and the net book valueof Pineapple segment assets;

·       shiftingtowards greater levels of fresh fruit production;

·       thefuture cost of compliance with environmental laws;

·       improvementof practices in areas of soil, water and energy conservation;

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

·       theimpact from the continuation of work force restructuring of the Pineapplesegment.

In addition, from time to time, the Company maypublish forward-looking statements as to those matters or other aspects of theCompany’s anticipated financial performance, business prospects, new products,marketing initiatives or similar matters.

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Forward-lookingstatements contained in this report or otherwise made by the Company aresubject to numerous factors that could cause the Company’s actual results andexperience to differ materially from expectations expressed by the Company. Factorsthat might cause such differences, among others, include:

**Dependencyon certain key personnel.**

The Company is currently dependentupon the ability and experience of certain key management employees. There canbe no assurance that the Company will be able to retain their services. TheCompany does not currently carry key man insurance on any of these individuals,and loss of one or more can have a material adverse effect on financialresults.

**RealEstate Investments are subject to numerous risks.**

The Company is subject tothe risks that generally relate to investments in real property because itdevelops and sells real property, primarily for residential use. Also, theCompany has a 51% ownership interest in Kapalua Bay Holdings LLC, which ownsand operates the Kapalua Bay Hotel. When interest rates increase, the cost ofacquiring, developing, expanding or renovating real property increases and realproperty values may decrease as the number of potential buyers decreases. Similarly,as financing becomes less available, it becomes more difficult both to acquireand to sell real property. Under eminent domain laws, governments can take realproperty. Sometimes this taking is for less compensation than the ownerbelieves the property is worth. Any of these factors could have a materialadverse impact on our results of operations or financial condition. Inaddition, equity real estate investments are difficult to sell quickly and theCompany may not be able to adjust its portfolio of properties quickly inresponse to economic or other conditions.

**If the Company is unable to complete land developmentprojects within forecasted timing and budgeting, or at all, financial resultsmay be negatively affected.**

The Company intendsto develop resort properties, as suitable opportunities arise, taking intoconsideration the general economic climate. New project developments have anumber of risks, including risks associated with:

·       constructiondelays or cost overruns that may increase project costs;

·       receiptof zoning, occupancy and other required governmental permits andauthorizations;

·       developmentcosts incurred for projects that are not pursued to completion;

·       earthquakes,hurricanes, floods, fires or other natural disasters that could adverselyimpact a project;

·       defectsin design or construction that may result in additional costs to remedy orrequire all or a portion of a property to be closed during the period requiredto rectify the situation;

·       abilityto raise capital;

·       governmentalrestrictions on the nature or size of a project or timing of completion; and

·       potentiallack of adequate building/construction capacity for large development projects.

If any development projectis not completed on time or within budget, the Company’s financial results maybe materially affected.

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**If the Company is unable to obtain required land useentitlements at reasonable costs, or at all, its operating results would beadversely affected.**

The Company’s financialresults are highly dependent on its real estate development business segment. Thefinancial performance of the Company’s real estate development segment isclosely related to our success in obtaining land use entitlements for proposeddevelopment projects. Obtaining all of the necessary entitlements to develop aparcel of land is often times difficult, costly and may take several years, ormore, to complete. In some situations, the Company may be unable to obtain thenecessary entitlements to proceed with a real estate development or may berequired to alter its plans for the development.

**If the planning and construction of infrastructure inMaui is not improved, particularly in the area of transportation, this couldresult in additional difficulty or the inability of the Company to move forwardwith its planned development projects, which could negatively impact itsfinancial results.**

The roads and highways inMaui are currently inadequate to accommodate the planned growth of the island. Planningand construction of this infrastructure has not been done with a long-termperspective and in coordination with the needs of the community. This lack ofcomprehensive planning may result in infrastructure stress in Maui and can be amajor impediment to future development. Infrastructure stress can also lead toa deterioration of the visitor experience and the quality of life forresidents, which in turn can impact the Company’s ability to attract discriminatingcustomers, employees, vendors and contractors.

**The historical price and market for luxury real estateon Maui has been highly cyclical and if the market demand for luxury realestate were to decrease, the Company’s operating results could be adverselyaffected.**

The highs and lows in themarket cycle can prevail for multiple years at a time. During low periods ofdemand, real estate product may remain in inventory for much longer thanexpected or be sold at lower than expected returns, or even at a loss, whichcould impair the Company’s liquidity and ability to proceed with additionalland development projects and negatively affect the its operating results.

**If the Company is unable to successfully compete withother developers of luxury real estate on Maui, its financial results could bematerially affected.**

The Company’s real estateproduct faces competition from other luxury resort real estate properties onMaui, and from other luxury resort residential property in Hawaii and themainland United States. In many cases, the Company’s competitors are largerthan it is and have greater access to capital. If the Company is unable tocompete with these larger competitors, its financial results could bematerially affected.

**If the Company cannot attract and retain skilledworkers for its resort operations, its financial results could be negativelyimpacted. There is a potential lack of adequate skilled workers on Maui forlarger development projects.**

The Company’s three golfcourses require a large number of course and facility maintenance andoperations workers; and the hotel and villas require housekeepers, food andbeverage servers, front desk, and other operational and hospitality workers. Overall,the Company’s resort operations require a large number of workers to maintainthe quality and level of service that it strives to provide to its customers. TheCompany’s plans for development projects require that there be adequate laborin all of the construction trades. The labor market on Maui is very competitive,with the labor premium in West Maui being even greater than elsewhere on Maui. Thecost and insufficient supply of housing and the absence of adequate publicservices, such as schools, continue to be an impediment to attracting andretaining labor. If the Company and other Maui businesses are unable to workwith the government to allow for the 

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expansionof affordable housing and to implement plans to provide a higher level ofpublic services, including schools, further development in West Maui could beseverely restricted.

**The Company may be subject to certain environmentalregulations under which it may have additional liability and experienceadditional costs for land development.**

Various federal, state,and local environmental laws, ordinances and regulations regulate the Company’sproperties and could make it liable for the costs of removing or cleaning uphazardous or toxic substances on, under, or in property it currently owns oroperates or that it previously owned or operated. These laws could imposeliability without regard to whether the Company knew of, or was responsiblefor, the presence of hazardous or toxic substances. The presence of hazardousor toxic substances, or the failure to properly clean up such substances whenpresent, could jeopardize the Company’s ability to develop, use, sell or rentthe real property or to borrow using the real property as collateral. If theCompany arranges for the disposal or treatment of hazardous or toxic wastes, itcould be liable for the costs of removing or cleaning up wastes at the disposalor treatment facility, even if it never owned or operated that facility. Certainlaws, ordinances and regulations, particularly those governing the managementor preservation of wetlands, coastal zones and threatened or endangeredspecies, could limit the Company’s ability to develop, use, sell or rent itsreal property.

**The Company’s pineapple operations face significantcompetition from companies with greater financial resources and from foreigncompetition with lower cost structures.**

The Company sells its products in competition withboth foreign and United States companies. Its principal competitors are threeUnited States companies, Dole Food Company, Inc., Del Monte Food Co., andDel Monte Fresh Produce Company, each of which produces substantial quantitiesof pineapple products, a significant portion of which is produced in CentralAmerica and Southeast Asia. Other producers of pineapple products in CentralAmerica, Thailand and Indonesia also are a major source of competition. Producersof pineapple in foreign countries have substantially lower labor costs than theCompany.

The Company’s marketingstrategy is to compete based on the premium quality of our fresh pineappleproduct and being the only company that cans all of its pineapple in the UnitedStates. If the Company cannot compete effectively with these larger companiesand lower cost producers, its financial results could be adversely affected.

**If the multi-client processing facility is not able tosufficiently reduce the Company’s cost of processing and packing pineapple, theCompany’s financial results could be adversely affected.**

The Company is in theplanning and design phase for the construction of a multi-client processingfacility that will replace the present pineapple cannery, can plant and freshfruit packing facility. The Company’s current high cost structure is expectedto be reduced because of the efficiency of the new facility. While the Company’spersonnel and outside consultants have thoroughly evaluated the requirements ofthe new facility, variances from the estimates of the cost, timing ofcompletion or the efficiency of the new processing facility could adverselyaffect the Company’s financial results.

**If the Company is unable to successfully compete withother producers of fresh and canned pineapple, its financial results could bematerially affected.**

The fresh and cannedpineapple markets are highly competitive. A decline in the price of pineappleor increases in the price of fuel or packaging materials could adversely affectoperating results. The growing, planting and harvesting of crops can beaffected by adverse weather conditions, thereby increasing costs and erodingprofit margins. Agricultural chemicals used in the past have resulted incontingent liabilities that could result in future claims against the Company.

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**One customer has provided a substantial portion of theCompany’s canned pineapple sales; the loss of this customer may have a materialadverse effect on operating results.**

The United Statesgovernment represented approximately 35% and 20% of the Company’s cannedpineapple sales for 2004 and 2003, respectively. It is difficult to predictwhether the United States government will continue to represent such asignificant portion of the Company’s canned pineapple sales in the futurebecause there is no long-term contract to supply pineapple to the government. Ifit were to lose this customer, operating results would be negatively affected.

**Because the Company is located in Hawaii and thereforeapart from the mainland United States, it is more sensitive to certain economicfactors, which may adversely affect operating results.**

The Community Development segment and the Resortsegment are dependent on attracting visitors to Kapalua and to Maui and thestate of Hawaii as a whole. Economic factors that affect the number ofvisitors, their length of stay or expenditure levels will affect our financialperformance. Factors such as the cost of energy, events in the airline industrythat affect passenger capacity or traveling cost, and the threat or perceivedthreat of heightened terrorist activity in the United States, could affect apotential visitor’s choice of vacation destination or second home location.

The Company’s pineappleoperations are dependent on ocean, surface and air freight to transport cannedand fresh pineapple to customers on the mainland United States. Increases inthe cost of energy, and other factors that affect the cost and reliability ofocean, surface and air freight will affect the financial results from thePineapple segment.

**Item 4.**                        Controlsand Procedures

The Company maintains disclosure controls andprocedures (as such 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 the Company’s Exchange Act reportsis recorded, processed, summarized and reported within the time periodsspecified in the SEC’s rules and forms, and that such information isaccumulated and communicated to Company’s management, including its ChiefExecutive officer and Chief Financial Officer, as appropriate, to allow timelydecisions regarding required disclosure.

In designing and evaluating the disclosure controlsand procedures, the Company’s management recognizes that any controls andprocedures, no matter how well designed and operated, can provide onlyreasonable assurance of achieving the desired control objectives, and theCompany’s management necessarily was required to apply its judgment inevaluating the cost-benefit relationship of possible controls and procedures.

As required by Rule 13a-15(b) and 15d-15(b) underthe Exchange Act, the Company carried out an evaluation, under the supervisionand with the participation of the Company’s management, including the Company’sChief Executive Officer and Chief Financial Officer, of the effectiveness ofthe design and operation of the Company’s disclosure controls and procedures asof the end of the fiscal quarter covered by this report. Based upon theforegoing, the Company’s Chief Executive Officer and Chief Financial Officerconcluded that the Company’s disclosure controls and procedures were effectivein reaching a level of reasonable assurance in achieving the Company’s desiredcontrol objectives.

There have been no significant changes in the Company’sinternal controls over financial reporting during the most recent fiscalquarter that have materially affected, or are reasonably likely to materiallyaffect, the Company’s internal controls over financial reporting.

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**PART II   OTHER INFORMATION**

**Item 1.**                        LegalProceedings

There are no knownmaterial pending legal proceedings to which the Company or any of itssubsidiaries is a party or to which any of their property is subject. Certainof the Company’s subsidiaries are involved in ordinary routine litigationincidental to their respective businesses.

**Item 6.**                        Exhibits

The following exhibits are filed herewith:
| (31) |   | Rule 13a—14(a) Certifications |
|------|--------|----------------------------------------------|
| (32) |   | Section 1350  Certifications            |

 

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**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. |
|-------------------------|--------|-----------------------------------------------|
| Date: May 16, 2005 |   | /s/ FRED W. RICKERT                      |
|                    |   | Fred W. Rickert                               |
|                    |   | Vice President/Chief Financial Officer        |
|                    |   | (Principal Financial Officer)                 |

 

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