<PAGE>
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SECURITIES 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 and Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
or
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from __________ to __________
COMMISSION FILE NUMBER 1-14020
CASTLE & COOKE, INC.
(Exact name of registrant as specified in its charter)
HAWAII 77-0412800
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10900 WILSHIRE BOULEVARD, 16TH FLOOR
LOS ANGELES, CA 90024
(Address of principal executive offices and zip code)
(310) 208-3636
(Registrant's telephone number, including area code)
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 12 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 [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Shares Outstanding at July 31, 1998
----- ----------------------------------
Common Stock, without par value 17,008,171 shares
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<PAGE>
CASTLE & COOKE, INC.
FORM 10-Q
FOR THE QUARTER ENDED
JUNE 30, 1998
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - June 30, 1998 and
December 31, 1997. . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations - Quarter and six months
ended June 30, 1998 and June 30, 1997. . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows -- Six months ended
June 30, 1998 and June 30, 1997. . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . . . 8
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders. . . . . . . .13
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . .13
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
</TABLE>
2
<PAGE>
CASTLE & COOKE, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
----------- -------------
(Unaudited) (Audited)
<S> <C> <C>
Cash and cash equivalents $2,626 $1,612
Receivables, net 30,679 30,530
Real estate developments 519,724 506,784
Property and equipment, net 464,574 460,919
Other assets 23,474 19,415
----------- -------------
Total assets $1,041,077 $1,019,260
----------- -------------
----------- -------------
Notes payable $183,059 $176,101
Note payable to Dole 10,000 10,000
Accounts payable 21,041 18,162
Accrued liabilities 85,488 28,263
Deferred income taxes 177,611 176,357
Deferred income and other liabilities 34,121 26,633
----------- -------------
Total liabilities 511,320 435,516
----------- -------------
Common shareholders' equity
Common stock 511,998 511,616
Treasury stock, at cost (58,353) -
Retained earnings 76,112 72,128
----------- -------------
Total common shareholders' equity 529,757 583,744
----------- -------------
Total liabilities and shareholders' equity $1,041,077 $1,019,260
----------- -------------
----------- -------------
</TABLE>
The accompanying notes are an integral part of these
consolidated balance sheets.
3
<PAGE>
CASTLE & COOKE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT EARNINGS (LOSS) PER COMMON SHARE AMOUNTS)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30 June 30,
---------------------- ----------------------
1998 1997 1998 1997
------- -------- ------- --------
<S> <C> <C> <C> <C>
REVENUES
Residential and other property sales $34,754 $ 27,046 $ 61,531 $ 53,973
Resort revenues 21,983 15,282 39,323 30,284
Commercial and other revenues 12,743 12,729 25,876 24,978
------- -------- ------- --------
Total revenues 69,480 55,057 126,730 109,235
COST OF OPERATIONS
Cost of residential and other property sales 30,523 24,661 55,126 48,822
Cost of resort operations 23,269 17,928 42,001 36,161
Cost of commercial and other operations 8,341 7,388 16,201 14,676
General and administrative expenses 3,612 3,478 6,806 7,114
------- -------- ------- --------
Total cost of operations 65,745 53,455 120,134 106,773
------- -------- ------- --------
Operating income 3,735 1,602 6,596 2,462
Interest and other income, net 1,014 733 1,124 1,104
Interest expense, net 886 209 1,774 584
------- -------- ------- --------
Income before income taxes 3,863 2,126 5,946 2,982
Income tax provision (1,275) (840) (1,962) (1,178)
------- -------- ------- --------
Net income 2,588 1,286 3,984 1,804
Preferred stock dividend and accretion - (1,050) - (2,100)
------- -------- ------- --------
Net income (loss) available to common shareholders $2,588 $ 236 $3,984 $(296)
------- -------- ------- --------
------- -------- ------- --------
Basic and diluted earnings (loss) per common share $0.13 $0.01 $0.20 $(0.01)
------- -------- ------- --------
------- -------- ------- --------
</TABLE>
4
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
CASTLE & COOKE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months Ended
---------------------
June 30, June 30,
1998 1997
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $3,984 $1,804
Adjustments to reconcile net income to cash flow
provided by operating activities:
Depreciation and amortization 9,287 8,822
Other 40 40
Changes in operating assets and liabilities:
(Increase) decrease in receivables, net (149) 1,519
Increase in real estate developments (5,377) (46)
Decrease in income tax receivable - 7,083
Increase (decrease) in accounts payable 2,879 (3,904)
Decrease in accrued liabilities (907) (3,271)
Increase in deferred income taxes 1,254 1,108
Net change in other assets and liabilities 2,704 (2,630)
-------- --------
Net cash provided by operating activities 13,715 10,525
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment (20,001) (13,248)
-------- --------
Net cash used in investing activities (20,001) (13,248)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase under revolving loan agreement 6,958 1,536
Proceeds from exercise of stock options 342 33
Preferred stock dividends paid - (1,760)
-------- --------
Net cash provided by (used in) financing activities 7,300 (191)
-------- --------
Net increase (decrease) in cash and cash equivalents 1,014 (2,914)
Cash and cash equivalents at beginning of period 1,612 5,663
-------- --------
Cash and cash equivalents at end of period $2,626 $2,749
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
5
<PAGE>
CASTLE & COOKE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION
The consolidated financial statements included herein have been prepared by
Castle & Cooke, Inc. ("the Company"), without audit, and include all adjustments
which are, in the opinion of management, necessary for a fair presentation of
the results of operations for the quarters and six months ended June 30, 1998
and June 30, 1997, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures in such
financial statements are adequate to make the information presented not
misleading. The consolidated financial statements should be read in conjunction
with the Company's consolidated financial statements and the notes thereto for
the year ended December 31, 1997, included in the Company's Annual Report on
Form 10-K filed with the Securities and Exchange Commission.
The Company was formed on October 10, 1995 to be the successor of the assets
and related liabilities of the real estate and resorts business of Dole Food
Company, Inc. and its subsidiaries ("Dole"). On December 28, 1995, Dole
completed the separation of its real estate and resorts business from its food
business through a pro rata distribution of the stock of the Company to its
shareholders.
The Company's operating results are subject to significant variability as a
result of, among other things, the receipt of regulatory approvals, status of
development in particular projects and the timing of sales in developed
projects, income producing properties, and non-income producing properties. The
results of operations for the six months ended June 30, 1998, are not
necessarily indicative of the results to be expected for the full year. In
addition, the statements contained herein which are not historical facts, are
forward-looking statements based on economic forecasts, strategic plans and
other factors that, by their nature, involve risk and uncertainties. Potential
risks and uncertainties include, but are not limited to, such things as product
demand, the Company's lack of experience in operating in markets outside of its
current markets or in developing products that are different from its current
products, the effect of geographic concentration of assets or markets, the
impact of competitive products and pricing, and governmental regulations and the
need for governmental approvals. Other factors that could cause actual future
results to differ materially from past results include the following: business
conditions and general economy; competitive factors; political decisions
affecting land use; capital resources and interest rates; and other risks
inherent in the real estate business.
Certain reclassifications have been made to the 1997 consolidated financial
statements to conform to the 1998 presentation.
NOTE 2. EARNINGS PER COMMON SHARE
Basic earnings per share was computed by dividing net income (loss), after
reduction for preferred stock dividends and accretion, by the sum of (1) the
weighted average number of shares of common stock outstanding during the period
and (2) the weighted average number of non-employee director stock grants
outstanding during the period. The computation of diluted earnings per share
further assumes the dilutive effect of employee stock options. The weighted
average number of shares of common stock outstanding was 19,977,779 and
19,956,167 during the second quarter of 1998 and 1997, respectively. The
weighted average number of non-employee director stock grants outstanding was
5,648 and 3,172 during the second quarter of 1998 and the second quarter of
1997, respectively. The weighted average number of shares of common stock
outstanding was 19,987,756 and 19,956,625 during the first six months of 1998
and 1997, respectively. The weighted average number of non-employee director
stock grants outstanding was 5,303 and 2,727 during the first six months of 1998
and 1997, respectively.
6
<PAGE>
CASTLE & COOKE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2. EARNINGS PER COMMON SHARE (CONTINUED)
The computation of dilutive earnings per share includes the assumed exercise
of 131,535 and 39,893 options outstanding during the second quarter of 1998 and
1997, respectively. The computation of dilutive earnings per share during the
first six months of 1998 includes the assumed exercise of 94,818 options
outstanding. The computation of dilutive earnings per share during the first
six months of 1997 does not include the assumed exercise of 54,562 options
because their effect was anti-dilutive.
NOTE 3. COMMITMENTS AND CONTINGENCIES
The Company and its subsidiaries are contingently liable as joint indemnitors
to surety companies for subdivision, off-site improvement and construction bonds
issued on their behalf.
The Company is involved from time to time in various claims and legal actions
arising in the normal course of business. In the opinion of management, the
final resolution of these matters is not expected to have a material adverse
effect on the Company's financial position or results of operations.
NOTE 4. SUPPLEMENTAL CASH FLOW INFORMATION
The Company made interest payments of approximately $6.7 million and $5.9
million during the first six months of 1998 and 1997, respectively. Total
interest capitalized into real estate developments and property and equipment
under construction totaled approximately $5.6 million and $5.3 million during
the first six months of 1998 and 1997, respectively.
During the first six months of 1998, the Company made income tax payments of
approximately $703,000. During the first six months of 1997, the Company made
income tax payments of $71,000 and received income tax refunds of approximately
$7.1 million.
NOTE 5. NEW ACCOUNTING PRONOUNCEMENT
Effective January 1, 1998, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 130-"Reporting Comprehensive Income" (SFAS
No. 130). This statement establishes standards for reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements. The implementation of SFAS No. 130 did not have an impact
on the Company's results of operations or financial position.
In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No.
133- "Accounting for Derivative Instruments and Hedging Activities," which
establishes accounting and reporting standards for derivative instruments and
hedging activities. It requires an entity to recognize all derivatives in the
statement of financial position and measure those instruments at fair value.
The Company must implement SFAS No. 133 by the first quarter of 2000, and it is
not expected to have a significant adverse effect on the results of operations.
NOTE 6. STOCK REPURCHASE
In connection with its "Dutch Auction" self-tender offer, the Company
repurchased 3,015,764 shares of the Company's common stock at a price of $19.25
per share on July 6, 1998. The total repurchase price of approximately $58
million was accrued at June 30, 1998.
7
<PAGE>
CASTLE & COOKE, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
REVENUES
Second quarter consolidated revenues increased 26% to $69.5 million in 1998
from $55.1 million in 1997, and consolidated revenues for the first six months
of the year increased 16% to $126.7 million in 1998 from $109.2 million in 1997.
Second quarter residential and other property sales increased 28% to $34.8
million in 1998 from $27.0 million in 1997. Residential property sales for the
first six months of the year increased 14% to $61.5 million in 1998 from $54.0
million in 1997. This increase is primarily due to increased home deliveries at
the Oahu developments, and the commencement of homesite deliveries at the
Company's new Keene's Pointe development in Orlando, Florida. Second quarter
Oahu home deliveries increased 8% to 93 homes in 1998 from 86 homes in 1997, and
Oahu home deliveries for the first six months increased 8% to 171 homes in 1998
from 159 homes in 1997. The second quarter average price per home increased 4%
to $264,000 in 1998 from $255,000 in 1997. Second quarter mainland homesite
deliveries increased 46% to 275 homesites in 1998 from 188 homesites in 1997,
and mainland homesite deliveries for the first six months increased 8% to 427
homesites in 1998 from 396 homesites in 1997. Included in the second quarter
mainland deliveries were the first 46 homesites at the new Orlando development.
The second quarter average price per homesite increased 62% to $34,000 in 1998
from $21,000 in 1997. Second quarter resort revenues increased 44% to $22.0
million in 1998 from $15.3 million in 1997, and resort revenues for the first
six months increased 30% to $39.3 million in 1998 from $30.3 million in 1997.
This increase is primarily due to increased luxury resort residential sales of
$6.1 million during the second quarter of 1998 compared to the second quarter of
1997, and $6.7 million during the first six months of 1998 compared to the first
six months of 1997. These increases are primarily due to the sale of three
luxury townhomes at the Terraces at Manele Bay and one homesite at the Manele
Bay development in the second quarter of 1998.
COST AND EXPENSES
Second quarter consolidated cost of operations increased to $65.7 million in
1998 from $53.5 million in 1997, and consolidated cost of operations for the
first six months increased to $120.1 million in 1998 from $106.8 million in
1997. The cost of residential property sales as a percentage of residential
property sales decreased to 88% in the second quarter of 1998 from 91% in the
second quarter of 1997 and was 90% for the first six months of both years. The
decrease in the second quarter is primarily due to the new Orlando project and
improved results at the Seven Oaks development in Bakersfield, California,
partially offset by decreased margins at the Oahu projects. Excluding luxury
resort residential sales and depreciation, the cost of resort operations as a
percentage of resort revenues improved to 100% during the first six months of
1998 from 108% during the first six months of 1997. This improvement is
primarily due to increased occupancy and average daily room rates. Since a
significant portion of the resort operations' costs are fixed costs, these costs
will not increase or decrease proportionately as occupancy and resort revenues
increase or decrease. The second quarter luxury resort residential operating
margin increased to $2.2 million in 1998 from $841,000 in 1997, and the six
month luxury resort residential operating margin increased to $1.8 million in
1998 from $905,000 in 1997. Resort depreciation was $2.3 million and $2.4
million during the second quarter of 1998 and 1997, respectively. Resort
depreciation was $4.5 million and $4.7 million during the first six months of
1998 and 1997, respectively.
8
<PAGE>
CASTLE & COOKE, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
COST AND EXPENSES (CONTINUED)
Total interest incurred in the second quarter and first six months of 1998
was $3.7 million and $7.4 million, respectively. Total interest capitalized
into real estate developments and property and equipment under construction in
the second quarter and first six months of 1998 was $2.8 million and $5.6
million, respectively. Total interest incurred in the second quarter and first
six months of 1997 was $3.0 million and $5.9 million, respectively. Total
interest capitalized into real estate developments and fixed assets under
construction in the second quarter and first six months of 1997 was $2.8 million
and $5.3 million, respectively. Total borrowings were $193.1 million at June 30,
1998 compared to $153.7 million at June 30, 1997. Amortization in cost of sales
of previously capitalized interest totaled approximately $2.0 million and $1.3
million for the first six months of 1998 and 1997, respectively.
NET INCOME AND EARNINGS PER SHARE
The Company's effective income tax rate decreased to 33% in 1998 from 39.5%
in 1997. The 33% effective tax rate in 1998 is primarily due to low-income
housing credits.
The preferred stock dividend and accretion in 1997 relates to the $35 million
cumulative preferred stock issued in connection with the Company's separation
from Dole in December of 1995. The Company redeemed all of its outstanding
preferred stock in December of 1997.
Second quarter net income available to common shareholders increased to $2.6
million in 1998 from $236,000 in 1997. The net income available to common
shareholders for the first six months of 1998 was $4.0 million compared to net
loss available to common shareholders of $296,000 for the first six months of
1997. This increase is primarily due to better operating results described
above.
9
<PAGE>
CASTLE & COOKE, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
BACKLOG
The Company's new orders and backlog for homes and homesites for 1998
compared to 1997 were as follows:
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
1998 1997 1998 1997
-------- -------- ------- --------
<S> <C> <C> <C> <C>
BACKLOG-HOMES
Units
Backlog at beginning of the period 81 65 46 55
Add: New orders 113 105 226 188
Less: Deliveries (97) (88) (175) (161)
-------- -------- ------- --------
Backlog at end of the period 97 82 97 82
-------- -------- ------- --------
-------- -------- ------- --------
Dollars
Backlog at beginning of the period $21,607 $18,711 $11,920 $15,143
Add: New orders 31,429 27,898 61,006 50,442
Less: Deliveries (25,561) (22,475) (45,451) (41,451)
-------- -------- ------- --------
Backlog at end of the period $27,475 $24,134 $27,475 $24,134
-------- -------- ------- --------
-------- -------- ------- --------
MAINLAND BACKLOG- HOMESITES
Units
Backlog at beginning of the period 761 261 405 232
Add: New orders 149 126 657 363
Less: Deliveries (275) (188) (427) (396)
-------- -------- ------- --------
Backlog at end of the period 635 199 635 199
-------- -------- ------- --------
-------- -------- ------- --------
Dollars
Backlog at beginning of the period $32,942 $8,448 $19,964 $7,959
Add: New orders 3,815 3,163 23,223 9,589
Less: Deliveries (9,475) (3,952) (15,905) (9,889)
-------- -------- ------- --------
Backlog at end of the period $27,282 $7,659 $27,282 $7,659
-------- -------- ------- --------
-------- -------- ------- --------
</TABLE>
The increase in new homesite orders for the first six months of 1998 as compared
to 1997 is primarily due to the new Keene's Pointe development in Orlando,
Florida and increased activity at the Bakersfield developments. Included in
backlog at June 30, 1998, are homesites to be sold to builders under option
contracts, pursuant to which approximately 142 homesites with an aggregate sales
price of approximately $5.5 million are expected to close after June 30, 1999.
10
<PAGE>
CASTLE & COOKE, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company requires capital to operate its resorts, to purchase and develop
land, to construct homes and homesites and to acquire, develop and operate
commercial property.
On May 16, 1997, the Company's existing credit agreement with a syndicate of
banks was amended and restated (the "Credit Agreement"). Pursuant to this
Credit Agreement, the banks agreed to provide a three-year revolving credit
facility of up to $250 million, based upon a percentage of value of certain
commercial properties and home building inventory (the "Borrowing Base"). At
June 30, 1998, the Borrowing Base allows the Company to borrow up to $250
million. The Credit Agreement bears interest at a variable rate based on the
London Interbank Offered Rate ("LIBOR") or at an alternative rate based upon a
designated bank's prime rate or the federal funds rate. At June 30, 1998, total
borrowings under the Credit Agreement were $181 million and the weighted average
interest rate was 7.15%. Effective October 1, 1997, the Company entered into
two five year interest rate contracts to hedge against rising interest rates.
These contracts effectively convert $80 million of the Company's variable rate
debt to fixed rated debt at an average rate of 7.4%, as adjusted based on the
Company's total debt outstanding. Market risk exposure is limited to the net
interest differential between the variable rate debt under the credit facility
and the fixed rate debt, which is reflected in interest incurred. At June 30,
1998, the Company is in compliance with the various financial covenants of the
Credit Agreement.
In connection with its "Dutch Auction" self-tender offer, the Company
repurchased 3,015,764 shares of the Company's common stock at a price of $19.25
per share on July 6, 1998. The total repurchase price of approximately $58
million was accrued at June 30, 1998, and was funded primarily from borrowings
under the Credit Agreement.
The Company believes that, in addition to its existing financial resources,
the Company will need to obtain additional capital to meet its short-term and
long-term cash needs. The Company expects to raise this capital through a
combination of such things as selective sales of commercial assets, additional
bank financing and private debt placement. There can be no assurance, however,
that the existing capital together with such additional capital will be
sufficient. The Company may be required to seek additional capital from a
variety of other potential sources.
Residential development spending was $52.3 million in the first six months of
1998. Spending during the first six months of 1998 at the Mililani, Royal Kunia
and Lalea residential developments on Oahu was approximately $16.7 million, $9.0
million and $4.6 million, respectively. Spending during the first six months of
1998 at the Bakersfield, California; Sierra Vista, Arizona; and Orlando, Florida
residential developments was approximately $9.2 million, $1.7 million and $9.6
million, respectively.
Total resort development and capital spending was approximately $10.4 million
during the first six months of 1998. Included in the $10.4 million was spending
at the Manele and Koele luxury home developments, which was approximately $5.7
million and $231,000, respectively.
Capital expenditures at the commercial projects totaled $17.7 million during
the first six months of 1998 and primarily related to the construction of the
129,000 square foot Two Premier Plaza in Atlanta, Georgia ($2.8 million), the
43,000 square foot Regents Center II in Tempe, Arizona ($1.5 million), the
Coyote Creek Golf Course in San Jose, California ($5.0 million), the Keene's
Pointe golf course in Orlando, Florida ($2.6 million) and the Marketplace
shopping center in Bakersfield, California ($2.9 million). Construction costs
during the remainder of 1998, relating to the Coyote Creek Golf Course and
Keene's Pointe Golf Course are expected to be $5.2 and 7.1 million,
respectively. The Company expects to spend approximately $8.0 million during
the remainder of 1998 for proposed office buildings.
11
<PAGE>
CASTLE & COOKE, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
Cash flow from operating activities increased $3.2 million during the first
six months of 1998 as compared to the corresponding period in 1997. The
increase is primarily due to improved operating results. Cash flow used in
investing activities increased $6.8 million during the first six months of 1998
as compared to the corresponding period in 1997. The increase is primarily due
to increased construction activity on the commercial developments. Cash flow
provided by financing activities increased $7.5 million during the first six
months in 1998 as compared to the corresponding period in 1997. The change is
primarily due to net borrowings under the Credit Agreement (or its predecessor)
of $7.0 million during the first six months of 1998 compared to net borrowings
of $1.5 million in 1997.
The Company uses software and related technologies that will be affected by
the date change in the Year 2000. The Company continues to assess the impact of
the Year 2000 issue on its operations, including the development of cost
estimates for, and the extent of changes required to address this issue.
Maintenance or modification costs will be expensed as incurred, while the costs
of new software will be capitalized and amortized over the software's useful
life. These costs are not expected to have a significant impact on the Company's
ongoing results of operations. Similarly, while it is not possible to quantify
the cost to the Company that may result from year 2000 problems that may be
experienced by its suppliers, the Company does not anticipate that they will
have a material adverse impact on its business.
12
<PAGE>
CASTLE & COOKE, INC.
PART II.
OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
Castle & Cooke, Inc. held its Annual Meeting of Stockholders (the
"Meeting") on May 14, 1998, at which the Company's stockholders voted:
(1) to elect the nominated slate of seven directors, each to serve
until the next meeting and until his or her successor has been duly
elected and qualified: Edward M. Carson, Lodwrick M. Cook, Edward J.
Hogan, Wallace S. Miyahira, David H. Murdock, Lynne Scott Safrit, and
Dell Trailor; and (2) to elect Arthur Andersen LLP as the Company's
independent public accountants and auditors for the 1998 fiscal year.
Holders of record of the Company's common stock as of March 9, 1998
were entitled to vote at the meeting. On March 9, 1998, there were
19,998,288 shares of common stock outstanding and entitled to vote and
18,534,542 were represented at the Meeting. Each of the directors
received at least 99.0% of the shares cast in favor of his or her
election. The shares cast for each director are as follows: Edward M.
Carson: 18,493,135 for and 41,407 withheld; Lodwrick M. Cook:
18,492,931 for and 41,611 withheld; Edward J. Hogan: 18,493,428 for
and 41,114 withheld; Wallace S. Miyahira: 18,496,917 for and 37,625
withheld; David H. Murdock: 18,493,055 for and 41,487 withheld; Lynne
Scott Safrit: 18,496,250 for and 38,292 withheld; Dell Trailor:
18,493,567 for and 40,975 withheld. With respect to the election of
Arthur Andersen LLP, the shares cast were 18,509,835 shares for,
11,924 shares against, and 12,783 shares in abstention.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
No.
- -------
<S> <C>
4.3 Amendment No. 1 to the Amended and Restated Credit Agreement
4.4 Amendment No. 2 to the Amended and Restated Credit Agreement
4.5 Amendment No. 3 to the Amended and Restated Credit Agreement
4.6 Temporary Waiver Agreement relating to the Amended and Restated Credit Agreement
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K
THE REGISTRANT FILED NO REPORTS ON FORM 8-K DURING THE QUARTER ENDED
JUNE 30, 1998.
All other items required under Part II are omitted because they are not
applicable.
13
<PAGE>
CASTLE & COOKE, INC.
SIGNATURES
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.
CASTLE & COOKE, INC.
Registrant
Date: August 13, 1998 BY /s/ Edward C. Roohan
--------------------------
Edward C. Roohan
Vice President and
Chief Financial Officer
(Principal financial officer)
Date: August 13, 1998 BY /s/ Scott J. Blechman
--------------------------
Scott J. Blechman
Vice President and
Corporate Controller
(Principal accounting officer)
14
<PAGE>
<PAGE>
AMENDMENT NO. 1 TO
AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDMENT NO. 1 TO THE AMENDED AND RESTATED CREDIT
AGREEMENT is made as of September 8, 1997 by and among CASTLE & COOKE, INC.,
a Hawaii corporation (the "Borrower"), the Lenders (as defined in Article I),
the Co-Agents (as defined in Article I), and The Chase Manhattan Bank
(formerly known as Chemical Bank), a New York banking corporation, as agent
(in such capacity, the "Agent"), administrative agent (in such capacity,
"Administrative Agent") and collateral agent (in such capacity, the
"Collateral Agent") for the Lenders.
WHEREAS, the Borrower, the Lenders, the Co-Agents and the
Agent are parties to the Amended and Restated Credit Agreement dated as of
May 16, 1997 (the "Credit Agreement"), pursuant to which the Lenders have
agreed to make loans to the Borrower;
WHEREAS, the Borrower has requested that the Lenders,
Co-Agents and the Agent make certain amendments to the Credit Agreement and
the Lenders, Co-Agents and the Agent are willing to amend certain provisions
of the Credit Agreement upon the terms set forth herein;
NOW, THEREFORE in consideration of the foregoing premises, and
for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and fully intending to be legally bound by
this Amendment No. 1, the parties agree to amend the Credit Agreement as
follows:
1. DEFINITIONS. Capitalized terms used herein without definition shall have
the meanings assigned to such terms in the Credit Agreement.
2. AMENDMENTS TO THE CREDIT AGREEMENT. Effective as of the date
hereinabove, the Credit Agreement is amended as follows:
2.1. The word "Eurodollar" is inserted before the word "Borrowing" on Line
10 of Section 2.02. LOANS (a): and the following sentence is inserted
at the end of said Section 2.02. LOANS (a):
"The Loans comprising any ABR Borrowing shall be in an aggregate
principal amount that is (i) an integral multiple of $500,000 and not
less than $1,000,000 or (ii) equal to the remaining available balance
of the Applicable Revolving Credit Commitments."
2.2. The phrase "of a Eurodollar Loan" is inserted before the word "shall"
on Line 15 of Section 2.11. PREPAYMENT (a): and the following phrase
is inserted before the period at the end of Section 2.11. PREPAYMENT
(a):
"and any partial prepayment of an ABR Loan shall be in an amount that
is an integral multiple of $500,000 and no less than $1,000,000."
1
<PAGE>
3. CONSENT TO PRIOR BORROWINGS AND PREPAYMENTS. The parties hereto
acknowledge their consent to any ABR Borrowings and prepayments
thereof occurring prior to the date hereof in amounts which do not
conform to the requirements of Section 2.02. LOANS (a): and 2.11.
PREPAYMENT (a): prior to this Amendment No. 1, but conform
to such requirements as amended hereby.
4. As hereby amended, the Credit Agreement and the other Loan Documents
are ratified and confirmed in all respects.
In WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 1 to be duly executed by their respective authorized officers
as of the day and year first above written.
CASTLE & COOKE, INC.,
BY: /s/ Dean R. Estrada
--------------------------
Name: Dean Estrada
Title: Assistant Treasurer
THE CHASE MANHATTAN BANK
(formerly known as Chemical Bank),
BY: /s/ Marc E. Costantino
--------------------------
Name: Marc E. Costantino
Title: Vice President
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
BY: /s/ Mary Bowman
--------------------------
Name: Mary Bowman
Title: Vice President
THE BANK OF NOVA SCOTIA,
SAN FRANCISCO AGENCY,
BY: /s/ Bruce Ganong
--------------------------
Name: Bruce Ganong
Title: Relationship Manager
2
<PAGE>
WELLS FARGO BANK, NATIONAL
ASSOCIATION,
BY: /s/ Jeffrey P. Johnson
--------------------------
Name: Jeffrey P. Johnson
Title: A.V.P.
BANK OF HAWAII,
BY: /s/ S. G. Pagliaro
--------------------------
Name: S. G. Pagliaro
Title: Vice President
FIRST NATIONAL BANK OF CHICAGO,
BY: /s/ Michael A. Parisi
--------------------------
Name: Michael A. Parisi
Title: Corporate Banking Officer
SOCIETE GENERALE,
BY: /s/ J. Staley Stewart
--------------------------
Name: J. Staley Stewart
Title: Vice President
KREDIETBANK N.V.,
BY: /s/ Robert Snaufler
--------------------------
Name: Robert Snaufler
Title: Vice President
BY: /s/ Tod R. Angus
--------------------------
Name: Tod R. Angus
Title: Vice President
3
<PAGE>
AMENDMENT NO. 2 TO
AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDMENT NO. 2 TO THE AMENDED AND RESTATED CREDIT AGREEMENT (the
"2ND. AMENDMENT") is made as of February 20, 1998, by and among CASTLE &
COOKE, INC., a Hawaii corporation (the "BORROWER"), the Lenders (as defined
in Article I), the Co-Agents (as defined in Article I), and The Chase
Manhattan Bank (formerly known as Chemical Bank), a New York banking
corporation, as agent (in such capacity, the "AGENT") for the Lenders.
WHEREAS, the Borrower, the Lenders, the Co-Agents and the Agent are
parties to the Amended and Restated Credit Agreement dated as of May 16, 1997
(the "CREDIT AGREEMENT"), as amended pursuant to a certain Amendment No. 1 to
Amended and Restated Credit Agreement dated as of September 8, 1997, pursuant
to which the Lenders have agreed to make loans to the Borrower;
WHEREAS, the Borrower has requested that the Lenders, Co-Agents and the
Agent make certain amendments to the Credit Agreement and the Lenders,
Co-Agents and the Agent are willing to amend certain provisions of the Credit
Agreement upon the terms set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises, and for
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and fully intending to be legally bound by this 2nd.
Amendment, the parties agree to amend the Credit Agreement as follows:
1. DEFINITIONS. Capitalized terms used herein without definition shall have
the meanings assigned to such terms in the Credit Agreement.
2. AMENDMENTS TO THE CREDIT AGREEMENT. Effective as of the date first
above written, the Credit Agreement is amended as follows:
2.1 The following sentence is added at the end of Section 2.05(a):
"For the purpose of calculating the Commitment Fee in accordance with
the provisions of this Section 2.05(a), the applicable interest rate
during each fiscal quarter shall remain fixed until redetermination
based upon the Borrowing Base and Total Indebtedness as of the close
of business on the last day of the preceding fiscal quarter, as shown
on the relevant Borrowing Base Certificate and the Total Indebtedness
Certificate submitted pursuant to Section 5.04(d), (ii) any change in
the interest rate pursuant to such redetermination shall be effective
as of the date fifty (50) days following the end of the preceding
fiscal quarter and (iii) the interest rate shall thereafter remain
fixed until redetermination in accordance with the preceding
provisions of this sentence, notwithstanding any change in the ratio
of Total Indebtedness to the Borrowing Base."
2.2 The following sentence is added at the end of Section 2.05(c):
<PAGE>
"For the purpose of calculating the L/C Participation Fee in
accordance with the provisions of this Section 2.05(c), the applicable
interest rate during each fiscal quarter shall remain fixed until
redetermination based upon the Borrowing Base and Total Indebtedness
as of the close of business on the last day of the preceding fiscal
quarter, as shown on the relevant Borrowing Base Certificate and the
Total Indebtedness Certificate submitted pursuant to Section 5.04(d),
(ii) any change in the interest rate pursuant to such redetermination
shall be effective as of the date fifty (50) days following the end of
the preceding fiscal quarter and (iii) the interest rate shall
thereafter remain fixed until redetermination in accordance with the
preceding provisions of this sentence, notwithstanding any change in
the ratio of Total Indebtedness to the Borrowing Base."
2.3 The following clause is deleted from Section 2.06(b):
"It is expressly agreed that the applicable interest rate margin over
the Adjusted LIBO Rate set forth above shall remain fixed during each
fiscal quarter, notwithstanding any decrease in the ratio of Total
Indebtedness to the Borrowing Base during such fiscal quarter, subject
only to the following exceptions:"
and replaced by the following clause:
"It is expressly agreed that during each fiscal quarter, (i) the
applicable interest rate margin over the Adjusted LIBO Rate set forth
above shall remain fixed until redetermination based upon the
Borrowing Base and Total Indebtedness as of the close of business on
the last day of the preceding fiscal quarter, as shown on the relevant
Borrowing Base Certificate and the Total Indebtedness Certificate
submitted pursuant to Section 5.04(d), (ii) any change in the interest
rate margin pursuant to such redetermination shall be effective as of
the date fifty (50) days following the end of the preceding fiscal
quarter and (iii) the interest rate margin shall thereafter remain
fixed until redetermination in accordance with the preceding
provisions of this sentence, notwithstanding any change in the ratio
of Total Indebtedness to the Borrowing Base, subject only to the
following exceptions:"
3. RATIFICATION AND CONFIRMATION. As hereby amended, the Credit
Agreement and the other Loan Documents are ratified and confirmed in
all respects.
4. COUNTERPARTS. This 2nd. Amendment may be executed in one or more
counterparts, each of which shall be an original but all of which,
when taken together, shall constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
In WITNESS WHEREOF, the parties hereto have caused this 2nd. Amendment
to be duly executed by their respective authorized officers as of the day
and year first above written.
CASTLE & COOKE, INC.
By: /s/ EDWARD C. ROOHAN
----------------------------------
Name: Edward C. Roohan
Title: Vice President and
Chief Financial Officer
By: /s/ DEAN R. ESTRADA
----------------------------------
Name: Dean R. Estrada
Title: Assistant Treasurer
THE CHASE MANHATTAN BANK
(formerly known as Chemical Bank)
By: /s/ MARC E. COSTANTINO
----------------------------------
Name: Marc E. Costantino
Title: Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ D. SCOTT LEE
----------------------------------
Name: D. Scott Lee
Title: Vice President
THE BANK OF NOVA SCOTIA, SAN FRANCISCO
AGENCY
By: /s/ BRUCE GANONG
----------------------------------
Name: Bruce Ganong
Title: Relationship Manager
<PAGE>
WELLS FARGO BANK, NATIONAL ASSOCIATION
By: /s/ JEFF JOHNSON
----------------------------------
Name: Jeff Johnson
Title: Asst. Vice President
BANK OF HAWAII
By: /s/ SAL G. PAGLIARO
----------------------------------
Name: Sal G. Pagliaro
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ GREGORY A. GILBERT
----------------------------------
Name: Gregory A. Gilbert
Title: Vice President
SOCIETE GENERALE
By: /s/ J. STALEY STEWART
----------------------------------
Name: J. Staley Stewart
Title: Vice President
BANKBOSTON, N.A.
<PAGE>
By: /s/ ALICIA SZENDIUCH
----------------------------------
Name: Alicia Szendiuch
Title: Director
BANKERS TRUST COMPANY
By: /s/ STEVEN P. LEPHAM
----------------------------------
Name: Steven P. Lepham
Title: Vice President
<PAGE>
AMENDMENT NO. 3 TO
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDMENT NO. 3 TO AMENDED AND RESTATED CREDIT AGREEMENT
(the "3RD AMENDMENT") is made as of June 5, 1998 by and among CASTLE
& COOKE, INC., a Hawaii corporation (the "BORROWER"), the Lenders (as defined
in Article I), the Co-Agents (as defined in Article I), and The Chase
Manhattan Bank (formerly known as Chemical Bank), a New York banking
corporation, as agent (in such capacity, the "Agent") for the Lenders.
WHEREAS, the Borrower, the Lenders, the Co-Agents and the
Agent are parties to the Amended and Restated Credit Agreement dated as of
May 16, 1997, as amended pursuant to (1) the certain Amendment No. 1 to
Amended and Restated Credit Agreement dated as of September 8, 1997, and (2)
that certain Amendment No 2. to Amended and Restated Credit Agreement dated
as of February 20, 1998; (as amended, The "Credit Agreement");
WHEREAS, the Borrower has requested that the Lenders,
Co-Agents and the Agent make certain amendments to the Credit Agreement and
the Lenders, Co-Agents and the Agent are willing to amend certain provisions
of the Credit Agreement upon the terms set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises,
and for other good valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and fully intending to be legally bound by
this 3rd Amendment, the parties agree to amend the Credit Agreement as
follows:
1. DEFINITIONS. Capitalized terms used herein without definition
shall have the meanings assigned to such terms in the Credit Agreement.
2. AMENDMENTS TO THE CREDIT AGREEMENT. Effective as of the date
first above written, the Credit Agreement is amended as follows:
(1) So long as the Lake Elsinore Debt Coverage Ratio is
greater than or equal to 1.25, the term "Third Party Indebtedness" as used in
Section 6.01 (g) of the Credit Agreement shall not include any portion of
principal or interest on the Allocated Partnership Loan Amount; provided,
however, that in the event that the Lake Elsinore Debt Coverage Ratio shall
be less than 1.25, then effective as of the date of filing of the Compliance
Certificate indicating the same, the term "Third Party Indebtedness" as used
in Section 6.01 (g) of the Credit Agreement shall include the then
outstanding principal of the Allocated Partnership Loan Amount. The term
"Third Party Indebtedness," as used in Section 6.01 (g) of the Credit
Agreement and the form of Compliance Certificate attached to the Credit
Agreement as Exhibit H, are amended in conformity with the foregoing.
As used herein, the following terms shall have the respective
meanings indicated:
<PAGE>
(a) "Allocated Partnership Loan Amount" means the
portion of the Second Horizon Limited Partnership Loan allocated to the LLC
pursuant to its Class B Interest under the Second Horizon Limited Partnership
Agreement, which was in the original principal amount of $29,500,000.
(b) "Class B Interest" means the LLC's rights and
interests in and to the Lake Elsinore Project acquired by the LLC through the
LLC's acquisition of a limited partnership interest in Second Horizon Limited
Partnership.
(c) "Lake Elsinore Debt Coverage Ratio" means, for any
period of four consecutive fiscal quarters, the ratio of (a) EBITDA
attributable to the Lake Elsinore Project for such period, over (b) the sum
of interest expense, PLUS required principal payments, in each case
attributable to the Allocated Partnership Loan Amount for such period. The
Lake Elsinore Debt Coverage Ratio shall be determined quarterly.
(d) "Lake Elsinore Project" means the shopping complex
known as the Lake Elsinore Outlet Center located in Lake Elsinore, California.
(e) "Second Horizon Limited Partnership" means a secured
loan in the original aggregate principal amount of $99,300,000 made by Nomura
Asset Capital Corporation to Second Horizon Limited Partnership.
(f) "Second Horizon Limited Partnership" means Second
Horizon Group Limited Partnership, a Delaware partnership.
(g) "Second Horizon Limited Partnership Agreement" means
the Second Horizon Group Limited Partnership Amended and Restated Agreement
of Limited Partnership, dated April 1, 1998, among Second HGI, Inc., a
Delaware corporation, Horizon/Glen Outlet Centers Limited Partnership, a
Delaware limited partnership.
(h) "LLC" means Castle & Cooke Outlet Centers, LLC, a
California limited liability company.
(2) The definition of "Income Producing Property" set forth
in Section 1.01 of the Credit Agreement is amended to include "Approved Golf
Courses" (as defined below) not attached to or part of Resort Property. In
connection therewith, the definition of the term "Income Producing Property"
set forth in Section 1.01 is amended to read in its entirety as follows:
"INCOME PRODUCING PROPERTY" shall mean any multi-family
residential, commercial, industrial or retail property (including, without
limitation, Approved Golf Courses), owned or leased by the Borrower or any
Subsidiary and improved with a building of which 80% or more of the total
square feet is leased or held for the purposes of leasing to unaffiliated
third parties (treating Dole for these purposes as an unaffiliated third
party) but not including any Resort Property". "Income Producing Property"
shall also include the real property owned by the Borrower and ground leased
pursuant to that certain Lease dated July 3, 1997, between
2
<PAGE>
the Borrower, as lessor, and Home Depot U.S.A., Inc., as lessee, covering the
property located in Iwilei, Hawaii more particularly described therein
provided said lease remains in full force and effect. As used herein, the
term "Approved Golf Courses" means (i) two 18 hole golf courses known as the
Coyote Creek Golf Courses located in Coyote, California (provided that at
least one of such golf courses is open for business at all times during
regular golfing hours ) and (ii) any other golf course with a minimum of 18
holes owned by the Borrower or a Subsidiary, with respect to which operations
have produced a positive net operating cash flow for the period of twelve
consecutive months immediately preceding the time in question (provided such
golf courses remain open for business at all times during regular golfing
hours).
(3) The terms and provisions of the Credit Agreement are
amended in conformity with the foregoing amendments.
3. RATIFICATION AND CONFIRMATION. As hereby amended, the Credit
Agreement and the other Loan Documents are ratified and confirmed in all
respects.
4. COUNTERPARTS. This 3rd Amendment may be executed in one or
more counterparts, each of which shall be an original but all of which, when
taken together, shall constitute one and the same instrument.
In WITNESS WHEREOF, the parties hereto have caused this 3rd
Amendment to be duly executed by their respective authorized officers as of
the day and year first above written.
CASTLE & COOKE, INC.
By: /s/ EDWARD C. ROOHAN
------------------------------
Name: Edward C. Roohan
Title: Vice President and
Chief Financial Officer
By: /s/ DEAN R. ESTRADA
------------------------------
Name: Dean R. Estrada
Title: Assistant Treasurer
THE CHASE MANHATTAN BANK
(formerly known as Chemical Bank)
By: /s/ MARC E. COSTANTINO
------------------------------
Name: Marc E. Costantino
Title: Vice President
3
<PAGE>
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: /s/ D. SCOTT LEE
------------------------------
Name: D. Scott Lee
Title: Vice President
THE BANK OF NOVA SCOTIA,
SAN FRANCISCO AGENCY
By: /s/ BRUCE GANONG
------------------------------
Name: Bruce Ganong
Title: Relationship Manager
WELLS FARGO BANK,
NATIONAL ASSOCIATION
By: /s/ JEFF JOHNSON
------------------------------
Name: Jeff Johnson
Title: Assistant Vice
President
BANK OF HAWAII
By: /s/ SAL G. PAGLIARO
------------------------------
Name: Sal G. Pagliaro
Title: Vice President
THE FIRST NATIONAL BANK
OF CHICAGO
By: /s/ GREGORY A. GILBERT
------------------------------
Name: Gregory A. Gilbert
Title: Vice President
SOCIETE GENERALE
4
<PAGE>
By: /s/ BRIAN MCDONALD
------------------------------
Name: Brian McDonald
Title: Vice President
BANKBOSTON, N.A.
By: /s/ ALICIA SZENDIUCH
------------------------------
Name: Alicia Szendiuch
Title: Director
BANKERS TRUST COMPANY
By: /s/ ALEXANDER JOHNSON
------------------------------
Name: Alexander Johnson
Title: Managing Director
5
<PAGE>
TEMPORARY WAIVER AGREEMENT
THIS TEMPORARY WAIVER AGREEMENT (this "Waiver Agreement") is dated as of
June 5, 1998, by and among CASTLE & COOKE, INC., a Hawaii corporation (the
"Borrower"), the Lenders listed below (the "Required Lenders") and The Chase
Manhattan Bank, as Collateral Agent and Administrative Agent for the Lenders
(in such capacity, the "Agent").
WITNESSETH
WHEREAS, the Borrower, the Lenders, and the Agent are parties to the
Amended and Restated Credit Agreement dated as of May 16, 1997, as amended
(as amended, the "Credit Agreement");
WHEREAS, the clause (I) of Section 6.01 (g) of the Credit Agreement sets
forth a maximum aggregate principal amount of certain Indebtedness permitted
thereunder, equal to the lesser of (1) the Total Commitment (i.e.
$250,000,000) PLUS $10,000,000, or (2) the Borrowing Base, PLUS $10,000,000;
and
WHEREAS, the Borrower has requested that the Required Lenders
temporarily waive, and the Required Lenders are willing to temporarily waive,
the foregoing cap in Indebtedness, on the terms and conditions set forth
below;
NOW, THEREFORE, in consideration of the foregoing premises, and for
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and fully intending to be legally bound by this
Temporary Waiver Agreement, the parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms used herein without definition shall
have the meanings assigned to such terms in the Credit Agreement.
2. TEMPORARY WAIVER.
(a) Effective only during the "Waiver Period" (as defined below), the
maximum aggregate principal amount of Indebtedness allowed under clause (i)
of Section 6.01 (g) of the Credit Agreement shall be equal to the lesser of
(1) the Total Commitment, PLUS $10,000,000, PLUS the Debt Cushion (as defined
below), or (2) the Borrowing Base, PLUS $10,000,000, plus the Debt Cushion.
(b) As used herein, the following terms shall have the meaning
indicated.
(1) "Debt Cushion" means additional debt in the amount shown on
Schedule A attached hereto under the column labeled Debt Cushion relating to
the shares of Borrower's common stock repurchased pursuant to the Tender
Offer.
(2) "Tender Offer" means that Offer to Purchase dated May 15,
1998,
<PAGE>
whereby the Borrower has offered to purchase for cash up to 3,000,000 shares
of its common stock at a purchase price not greater than $19.50 nor less than
$17.75 per share.
(3) "Waiver Period" means the period commencing on the date of
this Waiver Agreement and terminating on October 31, 1998 or such earlier
date on which the Debt Cushion is repaid.
(c) Upon termination of the Waiver Period, the waiver set forth above
in this numbered paragraph 2 shall thereupon and thereafter be of no further
force or effect.
3. LIMITATION, RATIFICATION AND CONFIRMATION. The waiver set forth in the
preceding numbered Paragraph 2 shall be strictly construed and shall not,
except as expressly provided, constitute a waiver or amendment of any terms
or conditions of the Credit Agreement. Except as specifically set forth in
numbered paragraph 2 above, all terms of the Credit Agreement and the other
Loan Documents are ratified and confirmed in all respects.
4. COUNTERPARTS. This Waiver Agreement may be executed in one or more
counterparts, each of which shall be an original but all of which, when taken
together, shall constitute one and the same instrument.
IN WITNESS WHEREOF,. the parties hereto have caused this Waiver Agreement
to be duly executed by their respective authorized officers as of the day and
year first above written.
CASTLE & COOKE, INC.
By: /s/ EDWARD C. ROOHAN
----------------------------
Name: Edward C. Roohan
Title: Vice President and
Chief Financial Officer
By: /s/ DEAN R. ESTRADA
----------------------------
Name: Dean R. Estrada
By: Assistant Treasurer
THE CHASE MANHATTAN BANK
By: /s/ MARK E. COSTANTINO
----------------------------
Name: Mark E. Costantino
Title: Vice President
<PAGE>
THE BANK OF NOVA SCOTIA,
SAN FRANCISCO AGENCY
By: /s/ BRUCE GANONG
----------------------------
Name: Bruce Ganong
Title: Relationship Manager
WELLS FARGO BANK
NATIONAL ASSOCIATION
By: /s/ JEFF P. JOHNSON
----------------------------
Name: Jeff P. Johnson
Title Assistant Vice President
BANK OF HAWAII
By: /s/ SAL. G. PAGLIARO
----------------------------
Name: Sal. G. Pagliaro
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ GREGORY A. GILBERT
----------------------------
Name: Gregory A. Gilbert
Title: Vice President
SOCIETE GENERALE
By: /s/ BRIAN MCDONALD
----------------------------
Name: Brian McDonald
Title: Vice President
<PAGE>
BANKBOSTON, N.A.
By: /s/ ALICIA SZENDIUCH
----------------------------
Name: Alicia Szendiuch
Title: Director
BANKERS TRUST COMPANY
By: /s/ ALEXANDER JOHNSON
----------------------------
Name: Alexander Johnson
Title: Managing Director
<PAGE>
CASTLE & COOKE, INC. SCHEDULE A
<TABLE>
<CAPTION>
SHARES REPURCHASED DEBT CUSHION
--------------------- ------------
<S> <C>
3,000,000 - 2,750,001 20,000,000
2,750,000 - 2,500,001 15,000,000
2,500,000 - 2,000,001 10,000,000
2,000,000 or less 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0001002506
<NAME> CASTLE & COOKE, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 2,626
<SECURITIES> 0
<RECEIVABLES> 30,679
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 630,853
<DEPRECIATION> 166,279
<TOTAL-ASSETS> 1,041,077
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 511,998
<OTHER-SE> (58,353)
<TOTAL-LIABILITY-AND-EQUITY> 1,041,077
<SALES> 126,730
<TOTAL-REVENUES> 126,730
<CGS> 113,328
<TOTAL-COSTS> 120,134
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,774
<INCOME-PRETAX> 5,946
<INCOME-TAX> 1,962
<INCOME-CONTINUING> 3,984
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,984
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
</TABLE>
