EXHIBIT 99.1
MAUNA LOA MACADAMIA PARTNERS, L.P. P.O. Box 1826
Honolulu, Hawaii 96805
Telephone (808) 536-4461
For Immediate Release Contact: Kent T. Lucien, President
November 6, 1997 Tel. (808) 544-6130
MAUNA LOA MACADAMIA PARTNERS
AND C. BREWER HOMES ANNOUNCE MERGER
Mauna Loa Macadamia Partners, L.P. and C. Brewer Homes, Inc. announced
today that they have reached an agreement, in principle, to merge the two
companies. Under the terms of the agreement, shareholders of C. Brewer Homes,
Inc. would receive .667 limited partnership units of Mauna Loa Macadamia
Partners, L.P. for each share of C. Brewer Homes, Inc. The combined Company
will be renamed "Hawaii Land and Farming Company" and will continue to be traded
as a New York Stock Exchange master limited partnership. The parties hope to
consummate the transaction in the second calendar quarter of 1998.
The merger plan is subject to execution of a formal merger agreement,
approval by the shareholders of both Mauna Loa Macadamia Partners and C. Brewer
Homes, and other normal closing conditions. Mauna Loa Macadamia Partners
President Kent T. Lucien stated, "I believe this merger is in the best interest
of the shareholders of both Mauna Loa Macadamia Partners and C. Brewer Homes.
For Mauna Loa Macadamia Partners the merger will provide the opportunity for
more rapid growth. Both companies should also benefit from lower administrative
costs as a result of combining."
Mauna Loa Macadamia Partners, L.P. is the world's largest grower of
macadamia nuts, owning or leasing 4,027 acres of orchards on the Island of
Hawaii, where macadamia yields are the highest in the world. It has earned a
profit and made a distribution to unitholders in every year since its formation
in 1986.
C. Brewer Homes, Inc. is a land developer and homebuilder in Hawaii with
operations on the islands of Maui, Kauai and Hawaii owning 2,689 acres of land
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with entitlements to construct 3,877 residential units or lots. C. Brewer
Homes' Class A Stock trades on the NASDAQ (symbol = CBHI).
Mauna Loa presently has 7,500,000 Class A units listed on the New York
Exchange (symbol = NUT). An additional 5,557,231 Class A units will be issued
to shareholders of C. Brewer Homes and also be listed on the exchange as a
result of the merger. Mauna Loa's Class B units will be terminated.
Earlier this year Congress passed the Taxpayer Relief Act of 1997 which
permits Mauna Loa Macadamia Partners to make an election to permanently extend
its partnership tax status. Mauna Loa Macadamia Partners will be subject to a
3.5% tax on gross income beginning in 1998 instead of the corporate tax it would
have had to pay if the tax law had not been amended. Lucien went on to say, "We
believe that the Taxpayer Relief Act of 1997 benefits both Mauna Loa Macadamia
Partners and C. Brewer Homes as it will result in substantially lower income
taxes for the Companies after the merger as compared to the alternative of being
taxed as a corporation." The Board of Mauna Loa Macadamia Partners elected
today to continue its favorable partnership tax status. As a result the Company
can eliminate most of its deferred tax liability account and will recognize a
gain of $13.8 million in the Company's third quarter.
The new organization, Hawaii Land and Farming Company, will develop,
improve, upgrade and market the significant real estate assets of the company,
rather than only building homes, and continue to farm the Company's 4,027 acres
of macadamia nut orchards.
Since Mauna Loa Macadamia Partners will continue to be treated as a
Partnership for income tax purposes, the shareholders of Mauna Loa Macadamia
Partners will continue to be taxed on their allocable share of the Company's
earnings. As such, the Company has stated that its initial policy after the
merger shall be to make cash distributions to shareholders in an amount
necessary to offset in whole or in part the shareholders allocable income tax
obligation. However, the declaration of any distribution and the amount
declared will be determined by the Board of Directors taking into account the
Company's earnings, financial condition, obligations and prospects.
Mauna Loa Macadamia Partners also today reported a 1997 third quarter net
profit of $14.1 million or $1.86 per Class A Unit. These figures include the
recognition of the $13.8 million reduction in the Company's deferred tax
liability. Last year's net profit in the third quarter was $527,000 or $.07 per
Class A Unit. For the first nine months of 1997, Mauna Loa Macadamia Partners
earned a net profit of $14.4 million or $1.90 per Class A Unit (which includes
the above mentioned $13.8 million gain). For the first nine months of 1996 the
Company
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reported net profit of $353,000 or $.05 per Class A Unit. Net profit
from operations improved for the 1997 nine-month period due mainly to higher nut
prices.
Mauna Loa Macadamia Partners currently estimates that the 1997 full year
nut price will be approximately $0.61 per pound compared to $0.58 per pound in
1996.
This press release contains forward-looking statements regarding future
events and future performance of the Company that involve risks and
uncertainties that could cause actual results to differ materially. We refer
you to documents that the Company files from time to time with the Securities
and Exchange Commission, such as Form 10-K, Form 10-Q and Form 8-K reports,
which contain a description of certain factors that could cause actual results
to differ from current expectations and the forward-looking statements contained
in this press release.
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MAUNA LOA MACADAMIA PARTNERS, L.P.
Balance Sheets (Unaudited)
(In Thousands)
September 30,
---------------------
1997 1996
--------- ---------
ASSETS
- ------
Current assets:
Cash and short term investments $ 2,798 9
Accounts receivable from related party 3,081 4,255
Annualized cost adjustment 1,475 1,089
Prepaid expenses and other assets 153 61
--------- ---------
Total current assets 7,507 5,414
--------- ---------
Land, orchards and equipment 73,214 73,214
Less accumulated depreciation
and amortization (16,121) (14,517)
--------- ---------
Land, orchards and equipment (net) 57,093 58,697
--------- ---------
Deferred charges (net) - 6
--------- ---------
Total assets $ 64,600 64,117
========= =========
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
Current liabilities:
Line of Credit payable $ - 430
Accounts payable to related parties 2,203 2,684
Distributions payable 568 379
Other current and accrued liabilities 278 287
--------- ---------
Total current liabilities 3,049 3,780
--------- ---------
Deferred income tax expense 1,232 14,982
Partners' capital:
General partners 603 454
Class A limited partners 59,716 44,901
--------- ---------
Total partners' capital 60,319 45,355
--------- ---------
Total liabilities and partners' capital $ 64,600 64,117
========= =========
================================================================================
See notes to financial statements.
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MAUNA LOA MACADAMIA PARTNERS, L.P.
Income Statements (Unaudited)
(In Thousands, Except Per Unit Data)
Three months Nine months
ended Sept. 30, ended Sept. 30,
---------------------- ----------------------
1997 1996 1997 1996
-------- -------- ------- --------
Macadamia nut sales to related party $ 3,081 4,255 5,320 6,316
Cost of goods sold:
Costs expensed under farming
contracts with related parties 1,987 2,888 3,264 4,286
Depreciation and amortization 477 557 701 843
Other 111 97 173 167
------- ------ ------ ------
2,575 3,542 4,138 5,296
------- ------ ------ ------
Gross profit margin 506 713 1,182 1,020
General and administrative expenses:
Costs expensed under management
contract with related party 133 115 372 345
Other 66 66 322 323
------- ------ ------ ------
199 181 694 668
------- ------ ------ ------
Operating income 307 532 488 352
Interest income (expense) 42 (5) 129 1
------- ------ ------ ------
Income before deferred tax credit 349 527 617 353
Deferred tax credit 13,750 - 13,750 -
------- ------ ------ ------
Net income $14,099 527 14,367 353
======= ====== ====== ======
====================================================================================================================================
Net cash flow (as defined in the
Partnership Agreement) $ 826 1,080 1,318 1,194
======= ====== ====== ======
Net income per Class A Unit $ 1.86 0.07 1.90 0.05
======= ====== ====== ======
Net cash flow per Class A Unit $ 0.11 0.14 0.17 0.16
======= ====== ====== ======
Cash distributions per Class A Unit $ 0.075 0.05 0.225 0.15
======= ====== ====== ======
Class A Units outstanding 7,500 7,500 7,500 7,500
======= ====== ====== ======
====================================================================================================================================
NOTES TO FINANCIAL STATEMENTS:
(1) Production costs are annualized for interim reporting purposes, with the
difference between costs incurred and costs expensed reported on the balance
sheet as an annualized cost adjustment.
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