Royal Hawaiian Orchards (NNUTU) 10-Q 2006 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended  March 31, 2006

OR

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

Commission File Number 1-9145

ML MACADAMIA ORCHARDS, L.P.

 (Exact Name of registrant as specified in its charter)

DELAWARE	99-0248088
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
26-238 Hawaii Belt Road, HILO, HAWAII	96720
(Address of principal executive offices)	(Zip Code)
Registrant’s telephone number, including area code: (808) 969-8057
Registrant’s website: www.mlmacadamia.com

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

Title of Each Class	Name of Each Exchange on Which Registered
Depositary Units Representing
Class A Limited Partners’ Interests	New York Stock Exchange

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ý   No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer (as defined in Rule 12b-2 of the Act). Large accelerated filer  o   Accelerated filer  o   Non-accelerated filer  ý

Indicate by check mark whether the Registrant is a shell company as defined by Rule 12b-2 of the Securities Exchange Act of 1934. Yes  o   No  ý

As of March 31, 2006, Registrant had 7,500,000 Class A Units issued and outstanding.

ML MACADAMIA ORCHARDS, L.P.

INDEX

Part I - Financial Information
Item 1.	Consolidated Financial Statements
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.	Quantitative and Qualitative Disclosures About Market Risk
Item 4.	Controls and Procedures
Part II - Other Information
Item 2.	Changes in Securities
Item 5.	Other Information
Item 6.	Exhibits and Reports on Form 8-K
Signatures

2

ML Macadamia Orchards, L.P.

Consolidated Balance Sheets

(in thousands)

	March 31,				December 31,
	2006		2005		2005
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	1,491	$	211	$	378
Accounts receivable	1,841		3,344		8,433
Inventory of farming supplies	265		187		270
Deferred faming costs	1,400		549		—
Other current assets	199		283		178
Total current assets	5,196		4,574		9,259
Land, orchards and equipment, net	48,246		50,175		48,722
Intangible assets, net	63		40		65
Total assets	$	53,505	$	54,789	$	58,046
Liabilities and partners’ capital
Current liabilities
Current portion of long-term debt	$	425	$	435	$	434
Short-term borrowings	—		200		2,900
Accounts payable	193		108		770
Cash distributions payable	375		375		375
Accrued payroll and benefits	698		635		935
Other current liabilities	73		87		416
Total current liabilities	1,764		1,840		5,830
Long-term debt	1,600		2,026		1,600
Deferred income tax liability	1,227		1,207		1,227
Total liabilities	4,591		5,073		8,657
Commitments and contingencies
Partners’ capital
General partner	81		81		81
Class A limited partners, no par or assigned value, 7,500 units issued and outstanding	48,833		49,635		49,308
Total partners’ capital	48,914		49,716		49,389
Total liabilities and partners’ capital	$	53,505	$	54,789	$	58,046

See accompanying notes to consolidated financial statements.

3

Consolidated Income Statements (unaudited)

(in thousands, except per unit data)

	Three months ended March 31,
	2006			2005
Macadamia nut sales	$	600		$	2,168
Contract farming revenue	923			888
Total revenues	1,523			3,056
Cost of goods and services sold
Cost of macadamia nut sales	413			1,628
Cost of contract farming services	838			801
Total cost of goods and services sold	1,251			2,429
Gross income	272			627
General and administrative expenses
Costs expensed with related party	35			41
Other	294			217
Total general and administrative expenses	329			258
Extinguishment of management agreement	—			(326		)
Operating income (loss)	(57		)	43
Interest expense	(60		)	(50		)
Interest income	11			2
Other income	15			—
Loss before income taxes	(91		)	(5		)
Income tax expense	9			22
Net loss	$	(100	)	$	(27	)
Net cash flow (as defined in the Partnership Agreement)	$	(7	)	$	329
Net income (loss) per Class A Unit	$	(0.01	)	$	0.00
Net cash flow per Class A Unit (as defined in the Partnership Agreement)	$	0.00		$	0.04
Cash distributions per Class A Unit	$	0.05		$	0.05
Class A Units outstanding	7,500			7,500

See accompanying notes to consolidated financial statements.

4

ML Macadamia Orchards, L.P.

Consolidated Statements of Partners’ Capital (unaudited)

(in thousands)

	Three months ended March 31,
	2006			2005
Partners’ capital at beginning of period:
General partner	$	81		$	505
Class A limited partners	49,308			50,037
	49,389			50,542
Acquisition of ML Resources, Inc.:
General partner	—			(424		)
	—			(424		)
Cash distributions:
General partner	—			—
Class A limited partners	(375		)	(375		)
	(375		)	(375		)
Allocation of net loss:
General partner	—			—
Class A limited partners	(100		)	(27		)
	(100		)	(27		)
Partners’ capital at end of period:
General partner	81			81
Class A limited partners	48,833			49,635
	$	48,914		$	49,716

See accompanying notes to consolidated financial statements.

5

ML Macadamia Orchards, L.P.

Consolidated Statements of Cash Flows (unaudited)

(in thousands)

	Three months ended March 31,
	2006			2005
Cash flows from operating activities:
Cash received from goods and services	$	8,183		$	7,138
Cash paid to suppliers and employees	(3,729		)	(4,258		)
Interest paid	(60		)	(50		)
Interest received	11			2
Net cash provided by operating activities	4,405			2,832
Cash flows from investing activities:
Acquisition of equipment	(8		)	(7		)
Net cash used in investing activities	(8		)	(7		)
Cash flows from financing activities:
Proceeds from drawings on line of credit	700			1,400
Repayment of line of credit	(3,600		)	(3,400		)
Acquisition of general partner’s units	—			(424		)
Capital lease payments	(9		)	(8		)
Cash distributions paid	(375		)	(378		)
Net cash used in financing activities	(3,284		)	(2,810		)
Net increase in cash	1,113			15
Cash at beginning of period	378			196
Cash at end of period	$	1,491		$	211
Reconciliation of net loss to net cash provided by operating activities:
Net loss	$	(100	)	$	(27	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	103			362
Decrease in accounts receivable	6,592			3,632
Decrease (increase) in inventories	5			(42		)
Increase in deferred farming costs	(1,017		)	(268		)
Increase in other current assets	(21		)	(125		)
Decrease in accounts payable	(577		)	(517		)
Decrease in accrued payroll and benefits	(236		)	(237		)
Increase (decrease) in other current liabilities	(344		)	54
Total adjustments	4,504			2,859
Net cash provided by operating activities	$	4,405		$	2,832
Supplemental schedule of noncash financing activities  Distributions declared but not paid	$	375		$	375

See accompanying notes to consolidated financial statements

6

ML MACADAMIA ORCHARDS, L.P.

Notes to Consolidated Financial Statements

(1)BASIS OF PRESENTATION

In the opinion of management, the accompanying unaudited consolidated financial statements of ML Macadamia Orchards, L.P. (“the Partnership”) include all adjustments, consisting only of normal recurring adjustments, necessary to present fairly its financial position as of March 31, 2006, March 31, 2005 and December 31, 2005 and the results of operations, changes in partners’ capital and cash flows for the three months ended March 31, 2006 and 2005. The results of operations for the period ended March 31, 2006 are not necessarily indicative of the results to be expected for the full year or for any future period.

The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. These interim consolidated financial statements should be read in conjunction with the Financial Statements and the Notes to Financial Statements filed with the Securities and Exchange Commission in the Partnership’s 2005 Annual Report on Form 10-K.

(2)ACQUISTION OF ML RESOURCES, INC.

On January 6, 2005 the Partnership acquired all of the common stock of ML Resources, Inc. (“MLR”) for $750,000 in cash. The transaction was accounted for as an asset purchase as opposed to a business combination since MLR had no substantive operations and its principal purpose was to own and hold 75,757 general partner units of the Partnership. The acquisition of the general partner units held by MLR results in the Class A limited partners effectively owning 100% of the Partnership.

The purchase price was allocated between the acquired general partner units and the extinguishment of the management contract between MLR and the Partnership. The fair value of the general partner units at the date of acquisition was determined to be $424,000 which was recorded as a reduction in partners’ capital. The fair value of the general partner units was determined based on the quoted market value of Class A limited partner units. No discounts for lack of marketability or premiums for control preferences were applied in determining the fair value of the general partner units. The remaining $326,000 representing the extinguishment of the management contract was charged to expense.

As a result of the transaction, MLR’s operations have been included in the Partnership’s consolidated financial statements beginning with the first quarter of 2005.

(3)CONSOLIDATION

The consolidated financial statements include the accounts of the Partnership and MLR. All significant intercompany balances and transactions, including management fees and distributions, have been eliminated.

(4)SEGMENT INFORMATION

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

7

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

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

On January 5, 2006, a new nut purchase contract was signed with Purdyco International, Ltd. dba Island Princess for the delivery of approximately two million WIS pounds, effective January 1, 2007. The nut price will be determined every six months by mutual agreement based on prevailing market price for kernel from Hawaii and Australia.

On January 6, 2006, a new nut purchase contract was signed with Mac Farms of Hawaii, LLC for the delivery of between four and one-half million and five and one-half million WIS pounds, effective January 1, 2007. The nut price will be determined every six months by mutual agreement based on prevailing market price for kernel from Hawaii and Australia.

The following tables summarize each reportable segment’s operating income and assets as of and for the three-month periods ended March 31, 2006 and 2005.

Segment Reporting for the Three Months ended March 31, 2006

(in thousands)

	Owned Orchards			Contract Farming		Inter segment Elimination			Total
Revenues	$	600		$	2,212	$	(1,289	)	$	1,523
Composition of inter segment revenues	—			1,289		(1,289		)	—
Operating income (loss)	(93		)	36		—			(57		)
Depreciation expense	69			34		—			103
Segment assets	46,759			6,746		—			53,505
Expenditures for property and equipment	8			—		—			8

8

Segment Reporting for the Three Months ended March 31, 2005

(in thousands)

	Owned Orchards		Contract Farming		Inter segment Elimination			Total
Revenues	$	2,168	$	2,330	$	(1,442	)	$	3,056
Composition of inter segment revenues	—		1,442		(1,442		)	—
Operating income (loss)	13		30		—			43
Depreciation expense	308		54		—			362
Segment assets	48,404		6,385		—			54,789
Expenditures for property and equipment	—		7		—			7

All revenues are from sources within the United States.

(5)DEFERRED FARMING COSTS

Orchard costs (e.g. irrigation, fertilizer, pruning, etc.) are annualized for interim reporting purposes, with the difference between costs incurred to date and costs expensed to date (based on projected annual cost per nut harvested) being reported on the balance sheet as deferred farming costs, which amounted to $1.4 million and $549,000 at March 31, 2006 and 2005, respectively. The increase in deferred farming costs was attributable to lower than expected production during the first quarter 2006 in comparison to 2005. Management anticipates a significant increase in production during the remainder of 2006 compared to 2005.

(6)LONG-TERM DEBT

The Partnership has a $5 million revolving credit facility with American AgCredit, PCA, which expires on May 1, 2008. Amounts drawn on the line bear interest at the prime lending rate. There were no amounts drawn on the line at March 31, 2006. The outstanding balance at March 31, 2005 amounted to $200,000.

In addition to the revolving credit facility, the Partnership has a $4 million promissory note payable to American AgCredit, PCA, which is scheduled to mature in 2010. Amounts outstanding under the promissory note agreement bear interest at rates from 6.37 percent to 7.77 percent. At March 31, 2006 and 2005, the outstanding balance under the promissory note agreement amounted to $2.0 million and $2.4 million, respectively

The credit agreements with American AgCredit, PCA, contain various financial covenants. The Partnership was in compliance with all debt covenants at March 31, 2006 and 2005.

Capital lease obligations related to leased equipment amounted to $25,000 and $35,000 at March 31, 2006 and 2005, respectively.

(7)PARTNERS’ CAPITAL

Net income per Class A Unit is calculated by dividing 100% of Partnership net income by the average number of Class A Units outstanding for the period.

9

(8)CASH DISTRIBUTIONS

On March 2, 2006, a first quarter cash distribution was declared in the amount of five cents ($0.05) per Class A Unit, payable on May 15, 2006 to unit holders of record as of the close of business on March 31, 2006.

(9)PENSION PLAN

The Partnership sponsors a defined benefit pension plan covering employees that are members of a union bargaining unit. The Partnership’s funding policy is to contribute to the plan, an amount sufficient to meet the minimum funding requirements set forth in the Employee Retirement Income Security Act of 1974.

COMPONENTS OF NET PERIODIC BENEFIT COST

	Pension Benefits For the Three Months Ended March 31,
	2006		2005
Service cost	$	14,817	$	14,239
Interest cost	7,042		5,822
Expected return on assets	4,742		4,823
Amortization of unrecognized prior service costs	1,661		1,661
Amortization of unrecognized actuarial loss	741		51
Net periodic pension cost	$	19,519	$	16,950

10

ML MACADAMIA ORCHARDS, L.P.

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

Significant Accounting Policies and Estimates

The Partnership prepares its consolidated financial statements in conformity with accounting principles generally accepted in the Unites States of America. Certain of our accounting policies, including the estimated lives assigned to our assets, determination of bad debts, estimated nut price, deferred farming costs, asset impairment, self-insurance reserves and the calculation of our income tax liabilities, require that we apply significant judgment in defining the appropriate assumptions for calculation of financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. Our judgments are based on our historical experience, terms of existing contracts, our observance of trends in the industry and crop information provided by our customers and information available from outside sources, as appropriate. There can be no assurance that the actual results will not differ from our estimates. To provide an understanding of the methodologies we apply, our significant accounting policies are discussed where appropriate in this discussion and analysis and in the notes to consolidated financial statements.

Results of Operations

For the first quarter 2006, the Partnership incurred a net loss of $100,000 ($0.01 per Class A Unit) compared to a net loss of $27,000 ($0.00 per Class A Unit for the first quarter 2005).

The Partnership’s results of operation are principally driven by nut production, which is seasonal and highly contingent upon Hawaii’s climactic conditions. In general, nut production is highest during the third and fourth quarters of the fiscal year, with very low production in the first and second quarters. Unusual climactic conditions in 2004 and late 2005 resulted in higher than normal production in the first quarter of 2005 and lower than normal production in the first quarter of 2006. A 12% increase in the nut price received per pound helped to curb the net loss for the first quarter 2006. Although production in the first quarter of 2005 was higher, a $326,000 charge to expense was recorded for the extinguishment of the management agreement with MLR in January 2005, which was the principle reason for the $27,000 net loss.

Owned-orchard Segment

For the three-month periods ended March 31, 2006 and 2005, nut production, nut prices and nut revenues were as follows:

	For the Three Months Ended March 31,				Change
	2006		2005
Nuts harvested (000’s pounds Wet In Shell @25%)	998		3,887		-74	%
Nut price (per pound)	$	0.6010	$	0.5360	+12	%
Net nut sales ($000’s)	$	600	2,085		-71	%
Miscellaneous price adjustments (000’s)	—		83
Total nut sales ($000’s)	$	600	2,168

11

Production for the first quarter 2006 was significantly less than the first quarter of 2005, and 71% less than the Partnership’s 10-year first quarter production average of 3.4 million pounds. The unusually low production during the first quarter 2006 was primarily attributable to a shorter than normal flowering period the result of drier weather conditions in the Ka’u region. The unusually high production in the first quarter of 2005 was primarily attributable to heavy rainfall during 2004, which caused nuts that historically would have fallen from trees during the fourth quarter of 2004 to fall during the first quarter 2005.

The increase in nut price was primarily attributable to an increase in the price estimate from Mauna Loa Macadamia Nut Corporation (“Mauna Loa”) for 2006.

The price that the Partnership receives for a majority of its nuts is determined by a formula based 50% on the current year processing and marketing results of Mauna Loa and 50% on USDA-reported macadamia nut prices for the two preceding years. The USDA portion for the current year will be higher than the previous year by approximately 15%. The Mauna Loa portion of the current year’s nut price is currently estimated to be slightly higher than 2005. However, the final nut price for the year will not be known until the completion of the year, when Mauna Loa’s books have been closed and audited and that portion of the nut price is determined. For the full year 2005 the actual average nut price received by the Partnership was 55.5¢ per pound; however the price is subject to an audit, which has not yet been completed for that year. Management does not expect any downward price adjustments to result from the finalization for the 2005 nut price audit.

Production costs are based on annualized standard unit costs for interim reporting purposes. Cost of goods sold (owned-orchard segment) for the first quarter of 2006 was 41¢ per pound harvested, which was comparable to 42¢ per pound for the first quarter of 2005.

Farming Segment

Farming service revenue and expense for the first quarter of 2006 increased slightly compared to the first quarter 2005. Farming service revenue for the first quarter of 2006 was $923,000 compared to $888,000 for the first quarter of 2005. The cost of services sold was $838,000 for the first quarter of 2006 compared to $801,000 for the first quarter of 2005, which included $34,000 and $54,000 of depreciation expense, respectively.

General and Administrative Expenses

General and administrative expenses for the first quarter of 2006 were $328,000 compared to the first quarter of 2005 expenses of $258,000. The increase in expenses for the first quarter 2006 as compared to the first quarter 2005 was attributable to increased costs for Sarbanes-Oxley preparation, audit fees and board of directors fees offset by lower costs related to tax preparation services and SEC filings.

Other Income and Expenses

Interest expense increased by $10,000 during the first quarter of 2006 compared to the first quarter of 2005, primarily due to higher interest rates and a higher average outstanding balance on the revolving line of credit.

Interest income increased by $9,000 during the first quarter of 2006 compared to the first quarter of 2005, primarily due to higher interest rates and higher cash balances.

Other income for the first quarter of 2006 of $15,000 was primarily attributable to a distribution from American AgCredit, PCA.

Liquidity and Capital Resources

Macadamia nut farming is seasonal, with production peaking in the fall and winter, however, farming operations continue year round. In general, a significant amount of working capital is required for much of the harvesting season.

12

The Partnership has a master Credit Agreement with American AgCredit, PCA comprised of a $5 million revolving line of credit and a 10-year, $4 million term loan. The Credit Agreement contains certain restrictions, which are further discussed in Part II – Item 2 below.

At March 31, 2006 the Partnership had a cash balance of $1.5 million. Cash flows from operating activities totaled $4.4 million, which were used to pay distributions to unit holders, repay debt and operating expenses. At March 31, 2006 the Partnership’s working capital was $3.5 million and its current ratio 3.00 to 1, up from $2.7 million and 2.49 to 1 at March 31, 2005, primarily due to an increase in cash and deferred farming costs.

At March 31, 2006, the Partnership had $2.0 million in outstanding debt, comprised of $2.0 million, related to the term loan, and $25,000, related to capital lease obligations. At March 31, 2005, the Partnership had $2.5 million in outstanding long-term debt, comprised of $2.4 million, related to the term loan, and $61,000 related to capital lease obligations.

The Partnership anticipates borrowing from the revolving line of credit as necessary to fund working capital needs arising from the normal seasonal requirements of macadamia nut farming. It is the opinion of management that the Partnership has adequate cash on hand and borrowing capacity available to meet anticipated working capital needs for operations as presently conducted. However, the Partnership’s nut purchase contracts with Mauna Loa require Mauna Loa to make nut payments 30 days after the end of each quarter. During certain parts of the year, if payments are not received as the contracts require, available cash resources could be depleted.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Partnership is exposed to market risks resulting from changes in interest rates. The Partnership has market risk exposure on its Credit Agreement due to its variable rate pricing that is based on rates based on LIBOR, the Farm Credit Discount Note Rate and the Farm Credit Medium Term Note Rate. As of March 31, 2006, a one percent increase or decrease in the applicable rate under the Credit agreement will result in an annual interest expense fluctuation of approximately $20,000.

Item 4. Controls and Procedures

(a) As of the end of the period covered by this Quarterly Report on Form 10-Q we carried out the evaluation required by paragraph (b) of Rules 13a-15 or 15d-15 of the Securities Exchange Act of 1934, as amended. The Partnership’s management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined under Rule 13a-15(e)) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this quarterly report on Form 10-Q. Based on that evaluation, our principal executive officer and principal financial officer concluded that the Partnership’s disclosure controls and procedures are effective and designed to ensure that the information required to be disclosed in our reports filed or submitted under the Securities and Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the requisite time periods specified in the rules and forms of the Securities and Exchange Commission.

(b) There have been no significant changes (including corrective actions with regard to significant deficiencies or material weaknesses) in our internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation referenced in paragraph (a) above.

13

Part II - Other Information

Item 2. Changes in Securities

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

1.Minimum working capital of $2.5 million.

2.Minimum current ratio of 1.5 to 1.

3.Cumulative cash distributions beginning January 1, 2004 cannot exceed the total of cumulative net cash flow beginning January 1, 2004 plus a base amount of $3.3 million.

4.Minimum tangible net worth of $49.9 million (reduced by the amount of allowed cash distributions over net income).

5.Maximum ratio of funded debt to capitalization of 20%.

6.Minimum debt coverage ratio of 2.5 to 1.0.

The Partnership was in compliance with all debt covenants as of March 31, 2006.

Item 5. Other Information

Acquisition of macadamia tree acres

On April 05, 2006 the Partnership purchased 20 acres of mature macadamia nut trees from J. W. A. Buyers and Jeanne Rolles for cash in the amount of $440,000. The Partnership had previously farmed the orchard for the sellers.

Item 6. Exhibits and Reports on Form 8-K

(a)           The following documents are filed as part of this report:

Exhibit Number	Description
11.1	Statement re Computation of Net Income (Loss) per Class A Unit
31.1	Form of Rule 13a-14(a) [Section 302] Certification
31.2	Form of Rule 13a-14(a) [Section 302] Certification
32.1	Certification pursuant to 18 U.S.C. Section 1350 As adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification pursuant to 18 U.S.C. Section 1350 As adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

14

(b)           Reports on Form 8-K:

On January 9, 2006, the Partnership filed a “Regulation FD Disclosure” on Form 8-K, which included a copy of a press release issued by the Partnership setting forth Material Definitive Agreements with attachments of two nut purchase contracts.

On March 10, 2006, the Partnership filed a “Regulation FD Disclosure” on Form 8-K, which included a copy of a press release issued by the Partnership setting forth the results of operations for the quarter and year ended December 31, 2005.

15

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			ML MACADAMIA ORCHARDS, L.P.
						(Registrant)
	By				ML Resources, Inc.
					Managing General Partner
Date: May 11, 2006	By				/s/ Dennis J. Simonis
					Dennis J. Simonis
				Chief Executive Officer and
					President
	(and Duly Authorized Officer)
	By				/s/ Wayne W. Roumagoux
					Wayne W. Roumagoux
		Principal Accounting Officer

16